In a published opinion filed February 9, 2021, the Sixth District Court of Appeal affirmed the trial court’s judgment dismissing a CEQA action challenging the EIR and project approvals for two development options (1.2 million square feet of light industrial, or 436,880 square foot data center/PG&E substation/728,000 square feet of light industrial) on a 64.5-acre fallow farmland site in the City of San Jose. Organizacion Comunidad de Alviso v. City of San Jose (Microsoft Corporation, et al., Real Parties in Interest) (2021) 60 Cal.App.5th 783. The Court of Appeal held that the trial court did not err in dismissing the action as time-barred after plaintiff OCA failed to timely join a necessary and indispensable real party in interest (Microsoft Corporation) within 30 days of the City’s filing of a second Notice of Determination (NOD) for the project. (As full disclosure, I represented Microsoft in this action.)
The second NOD filed by the City correctly named Microsoft as the project approval applicant and recipient. The City initially had filed an inaccurate NOD incorrectly naming the prior owners of the property and original applicants (Cilker). A City planner had provided a copy of the earlier incorrect NOD to plaintiff OCA member Mark Espinoza promptly after his email request, but did not email or mail him a copy of the correct NOD filed a few days later.
Plaintiff apparently did not check the public record for project-related NODs filed with the County Clerk. It filed its CEQA action naming Cilker as real parties within 30 days of the date of the first NOD. But OCA did not file its amended petition naming Microsoft within either 30 days of the filing of the second, corrected and operative NOD, or within 30 days after Cilker’s attorneys informed it that Microsoft (not Cilker) was the correct real party. (Cilker had sold Microsoft the project property and assigned the application rights prior to the project being approved.) Instead, OCA filed its amended petition naming Microsoft as the real party over a month after Cilker’s communication and over 70 days after the City’s filing of the second, correct and legally operative NOD, which had provided constructive notice to the public of the correct parties to sue.
Finding Microsoft to be a necessary and indispensable party to the action challenging its project approvals, the trial court held the CEQA action was barred by CEQA’s 30-day statute of limitations (Pub. Resources Code, § 21167(c)), which was triggered by the City’s filing of the second, valid NOD. It rejected OCA’s arguments that the statutory limitations bar could be avoided because the City did not timely mail it the second NOD (as required by statute), or by operation of the “relation back” doctrine or estoppel.
The Court of Appeal’s Opinion
In its brief opinion’s final introductory paragraph, the Court of Appeal summarized the arguments on appeal and its conclusions leading to affirmance as follows:
“Plaintiff argues on appeal that the trial court applied the incorrect statute of limitations, and alternatively that the trial court should have applied either estoppel or the relation back doctrine (Code Civ. Proc., § 474) in light of the city’s conduct. We acknowledge that the city violated CEQA by failing to send the second NOD to Espinoza. But the second NOD was properly filed with the county clerk, it provided constructive notice of the correct parties to sue, and plaintiff did not timely amend its petition to name Microsoft. Our close examination of the relevant statutes leads us to the uncomfortable conclusion that dismissal of the CEQA action was not error, and we must affirm the judgment.”
Key holdings and takeaways from the Court of Appeal’s opinion include:
Conclusion and Implications
While the Court of Appeal expressed some empathy for plaintiff’s frustration at not being able to rely on the first incorrect NOD provided by the City, it nonetheless followed applicable and well established statutory and case law principles in affirming the judgment. The law provides salutary “bright line” rules that govern this aspect of CEQA litigation and provide the certainty intended by the Legislature, i.e., the agency’s filing of a facially valid NOD is the statute of limitations trigger; the NOD provides constructive notice to the public and all potential litigants of the parties required to be sued; and potential plaintiffs have the responsibility to check the public record for and to review such notices, and any revisions to them, with care prior to filing their actions. (Author’s Note: Plaintiff/Appellant filed a petition for review of the Court of Appeal’s decision, which was denied by the California Supreme Court on May 26, 2021.)