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Tentative Ruling
Judge Colleen Sterne
Department 5 SB-Anacapa
1100 Anacapa Street P.O. Box 21107 Santa Barbara, CA 93121-1107

CIVIL LAW & MOTION

Tom Pappas v. State of California, et al.

Case No: 1417388
Hearing Date: Mon Aug 27, 2018 9:30

Nature of Proceedings: Motion to Intervene

Tom Pappas, et al., v. State Coastal Conservancy, et al.,

Case No. 1417388 (Judge Colleen K. Sterne)

 

Hearing Date:                  August 27, 2018

 

Motion:    Motion  to Intervene of Gaviota Coastal Trail Alliance

 

Attorneys:                          

For Plaintiffs The Hollister Ranch Cooperative and the Hollister Ranch Owners’ Association: Steven A. Amerikaner, Beth Collins, Hillary H. Steenberge, Brownstein Hyatt Farber Schreck, LLP

 For Plaintiffs Tim Behunin, Trustee of the Behunin Family Trust, Carolyn Pappas, Patrick L. Connelly, individually and on behalf of the Plaintiff Classes: Marcus S. Bird, Hollister & Brace

For Defendants California Coastal Commission and State Coastal Conservancy: Xavier Becerra, Jamee Jordan Patterson, Office of the California Attorney General

For Defendant Rancho Cuarta: Joseph Liebman

For Moving Party Gaviota Coastal Trail Alliance: Ellison Folk, Rica V. Garcia, Shute, Mihaly & Weinberger LLP; Marc S. Chytilo, Ana Citrin, Law Office of Marc Chytilo, APC; Todd T. Cardiff    

 

Tentative Ruling:

 

(1)       For the reasons set forth herein, the motion of Gaviota Coastal Trail Alliance to intervene in this action as a defendant is granted. The proposed answer in intervention lodged with the court is ordered filed and deemed filed and served as of the date of this hearing.

(2)       The court on its own motion continues the hearing on final approval of the class action settlement now scheduled for September 10, 2018, to November 19, 2018, at 1:30 p.m. All parties may file and serve their initial responses to the court’s request for information herein on or before September 24, 2018. Any party may respond to the filing of any other party by filing and serving such a response on or before October 15, 2018. Any party may reply to a response by filing and serving such a reply on or before October 29, 2018.

 

Background:

 

 

In this class action, plaintiffs seek to quiet title as to easements and other asserted rights of access and use within and across private property known as the Hollister Ranch. Plaintiffs assert that the public access easements are unenforceable and provide no rights of access or use. Defendants California Coastal Commission and State Coastal Conservancy (State Defendants) have opposed the claims of plaintiffs supporting the validity of the asserted public access rights.

 

The parties have reached a conditional settlement of this action (the Settlement). In very general terms, the Settlement provides that the State Defendants abandon any claim to rights pursuant to the underlying offer to dedicate upon which the State Defendants have based their claims for public access rights. In exchange, plaintiffs grant a license for public access to certain beach areas, accessible only by the ocean and subject to various restrictions, and the expansion of the Hollister Ranch Managed Access Program, providing certain controlled access for primary and secondary school children and for approved non-profit groups.

 

On May 21, 2018, the court granted preliminary approval of this class action Settlement. In granting preliminary approval, the court noted the unusual procedural posture of this matter in that, unlike a traditional class action, this is a class action by the owners of the underlying real property interests to quiet title and declare unenforceable the property interests set forth in the offer of dedication giving rise to the claim for public access. A traditional class notice would have been provided only to the settlement class of property owners. The court noted that although the public interest in the public access ostensibly granted by the offer of dedication is represented by the State Defendants, the Settlement abandons disputed rights of public access without having first provided notice to the public. The court determined that notice to the public was appropriate, but cautioned that the public, as neither a member of the plaintiff class nor a party to the action, is not permitted to participate in this action simply by voicing an opinion as to the merits of the action or as to the wisdom of the Settlement without first becoming a party to the action, ordinarily by obtaining leave of court to intervene in the action.

 

The court approved a notice to the public requiring a member of the public wishing to intervene to file and serve a motion to intervene no later than July 23, 2018.

 

In response to the notice to the public, moving party Gaviota Coastal Trail Alliance (GCTA) has filed this motion to intervene in order to oppose final approval of the Settlement. GCTA has lodged a proposed verified answer in intervention (PAI). The answer alleges that the GCTA is an ad hoc alliance of organizations, including the Gaviota Coast Conservancy, the California Coastal Protection Network, the Coastwalk/ California Coastal Trail Association, and the Santa Barbara County Trails Council. (PAI, ¶ 1.) GCTA is committed to effectuating “appropriate vertical access to Hollister Ranch beaches to provide safe and appropriate coastal access for members of the public.” (Ibid.) Members of GCTA organizations include residents of Santa Barbara County who currently use and enjoy the ocean and beaches of Santa Barbara County for a variety of recreational purposes and who are thereby affected by the public access aspects of the Settlement. (PAI, ¶ 2.) GCTA seeks to intervene in this action to oppose the Settlement and to assert public access rights not adequately being asserted by the State Defendants. (Motion, pp. 9-13.)

 

On August 2, 2018, based on the ex parte application of plaintiffs, the court continued the hearing of this motion to intervene to this hearing date.

 

The State Defendants have filed a notice that they do not oppose the motion of GCTA to intervene, although the State Defendants support final approval of the Settlement. The motion is separately opposed by the plaintiff class (the Class) and by plaintiffs Hollister Ranch Owners’ Association and The Hollister Ranch Cooperative (collectively, HROA).

 

Analysis:

 

“An intervention takes place when a nonparty, deemed an intervenor, becomes a party to an action or proceeding between other persons by doing any of the following:

            “(1) Joining a plaintiff in claiming what is sought by the complaint.

            “(2) Uniting with a defendant in resisting the claims of a plaintiff.

            “(3) Demanding anything adverse to both a plaintiff and a defendant.” (Code Civ. Proc., § 387, subd. (b).)

 

“The court may, upon timely application, permit a nonparty to intervene in the action or proceeding if the person has an interest in the matter in litigation, or in the success of either of the parties, or an interest against both.” (Code Civ. Proc., § 387, subd. (d)(2).)

 

“The purpose of allowing intervention is to promote fairness by involving all parties potentially affected by a judgment.” (Simpson Redwood Co. v. State of California (1987) 196 Cal.App.3d 1192, 1199 (Simpson Redwood).) “[S]ection 387 should be liberally construed in favor of intervention.” (Id. at p. 1200.)

 

“ ‘If proper procedures are followed [citation], the court has discretion to permit a nonparty to intervene in litigation pending between others, provided: [¶] The nonparty has a direct and immediate interest in the litigation; and [¶] The intervention will not enlarge the issues in the case; and [¶] The reasons for intervention outweigh any opposition by the existing parties. [Citations.]’ [Citation.]” (Truck Insurance Exchange v. Superior Court (1997) 60 Cal.App.4th 342, 346, italics omitted.)

 

            (A)       Timeliness

 

One or more motions to intervene were invited by the court in response to the court’s ruling on the on the motion for preliminary approval of the class action settlement. This motion is timely based upon the timelines set forth in the public notice. Notwithstanding the court’s invitation, HROA argues that the motion is untimely when the stage of the proceedings is considered, citing Noya v. A.W. Coulter Trucking (2006) 143 Cal.App.4th 838 (Noya).

 

In Noya, the “California Department of Transportation (CalTrans) was sued for wrongful death and injuries arising from a traffic collision in the area of a state highway construction project.” (Noya, supra, 143 Cal.App.4th at p. 840.) CalTrans’s insurer refused a tender of defense for this action. (Ibid.) After learning that CalTrans had agreed to a sizable settlement, which included a right to monies that CalTrans might recover against its insurer for breach of contract and bad faith, the insurer filed an ex parte motion to intervene. (Ibid.) The trial court denied the application. (Ibid.) The Court of Appeal affirmed. (Ibid.) The Noya court observed: “The trial court did not abuse its discretion when it denied [the insurer’s] application for intervention as untimely. Although no statutory time limit is placed on motions to intervene, it is significant that [the insurer] took no steps to participate in the litigation until several years had passed and a comprehensive settlement agreement had been reached between CalTrans and plaintiffs. Allowing [the insurer] to intervene at this late juncture could delay or impede the resolution reached by those parties. Intervention might also interject additional coverage issues into the litigation.” (Id. at p. 842.)

 

HROA argues that in this case, like in Noya, the constituent members of GCTA have monitored the litigation and seek to intervene at the last minute now that a settlement has been reached. GCTA argues that the motion to intervene is timely because it was not known that the State Defendants had ceased to advocate for public access via the disputed rights until the court’s public notice order, citing Ziani Homeowners Association v. Brookfield Ziani LLC (2015) 243 Cal.App.4th 274 (Ziani).

 

In Ziani, a homeowners association sued the builders and others for construction defects in a condominium development. (Ziani, supra, 243 Cal.App.4th at p. 276.) The association kept the individual unit owners informed of the status of the litigation, assuring them that there would be no settlement which did not pay for all past and future plumbing defects. (Id. at p. 277.) After several years of litigation, the association settled the action a couple of months before trial, with a settlement agreement by which the individual unit owners would be left with some direct or indirect expenses. (Ibid.) Some of the individual unit owners filed a motion to intervene, which the trial court denied as untimely. (Id. at pp. 277-280.) The Court of Appeal reversed: “In sum, the [trial] court here used the wrong date as the starting point for determining the timeliness of the Motion. The court should have used the date on which Movants knew or should have known their interests in this litigation were not being adequately represented by the HOA, not the date on which Movants knew or should have known about this litigation. This was an error of law.” (Id. at p. 282.)

 

In Noya, the insurer refused tender, causing CalTrans to litigate the action without its insurer’s direct participation. By refusing tender, the insurer knew that the interests of the insurer would not be advocated or pursued in the litigation by CalTrans alone. The insurer only belatedly sought to intervene when the litigation developed not unexpectedly, but adversely to the insurer. Here, like Ziani, the public had not previously been given sufficient information about this litigation and its settlement to determine whether the public access issue was being adequately represented by the State Defendants, and hence whether intervention by members of the public would be appropriate. (See Chytilo decl., ¶¶ 2-4 & exhibits A-C.) There is nothing per se improper about the State Defendants conducting their litigation discussions in closed session and out of the public eye. Nonetheless, the necessary consequence of keeping litigation matters in closed session is that the public lacks information about the decisions or directions given by the State Defendants. As discussed below, the position taken by GCTA is that the State Defendants had been litigating the public access issue consistent with the goals of the GCTA members, but that the terms of the Settlement represent a substantial and inconsistent change from these goals so that the State Defendants now advocate for approval of a Settlement adverse to the goals asserted by GCTA. It is sufficient for purposes of this motion that the immediate litigation goals of the State Defendants and GCTA are now, and only recently were shown to be, adverse.

 

The court finds the motion is timely made.

 

            (B)       Interest in the Litigation

 

The first factor for discretionary intervention is that the nonparty has a direct and immediate interest in the litigation. The objection to this factor by the Class and HROA is that the only remaining issue to litigate—the fairness of the settlement—is a matter about which GCTA has no interest because the fairness question depends only upon the fairness to the Class and not at all upon fairness to the public as represented by the State Defendants. GCTA argues that it has a direct and immediate interest in the litigation as representing the public who would use the access at issue in the litigation.

 

There is no meaningful dispute that the Settlement as a whole affects the status of the public access rights asserted by the State Defendants in defense of this action and that the Class and HROA seek to limit or eliminate such public access rights. As representatives of intended users of those public access rights (to the extent they may exist) which the parties to this action now seek to extinguish, GCTA has a direct and immediate interest in the litigation. (See Simpson Redwood, supra, 196 Cal.App.3d at p. 1200.)

 

The issue raised by plaintiffs Class and HROA that GCTA has no present interest in this litigation is a difficult one because of the unusual procedural posture of this case. Ordinarily, the absent class members are the only parties whose interests may be adversely affected by a class settlement. GCTA asserts the interests of members of the public whose interests are adversely affected by the class settlement entered into by the State Defendants. This issue is further complicated by the argument by plaintiffs that there are two independent settlements: the settlement of the class action (i.e., the Settlement) which affects the plaintiff class and must be approved by the court, and a prior settlement as between HROA and the State Defendants (sometimes referred to as the Prior Settlement or the 2017 Settlement), which HROA asserts is final and would be unaffected by the determination of the fairness hearing.

 

HROA points out that the public notice approved by the court includes the sentence: “The Prior Settlement Agreement is final and not the subject of this notice.” The court did not intend by this statement to make any ruling as to the 2017 Settlement, substantively or procedurally. No issue regarding the 2017 Settlement was then before the court. The issue now before the court in the immediate future is the fairness hearing on the class action Settlement. Whether the 2017 Settlement is independent of the class action Settlement and whether the 2017 Settlement has any specific relevance to the determination of the fairness hearing are matters to be addressed, as necessary, in the context of the merits of the fairness hearing. The court has not resolved any of these issue by the language of the public notice.

 

“A settlement or compromise of an entire class action, or of a cause of action in a class action, or as to a party, requires the approval of the court after hearing.” (Rules of Court, rule 3.769(a).) “Before final approval, the court must conduct an inquiry into the fairness of the proposed settlement.” (Rules of Court, rule 3.769(g).)

 

Although usually discussed in the context of fairness to a plaintiff class, the task of the court in a fairness hearing is broad: “In sum, the trial court must determine that the settlement was not the product of fraud, overreaching or collusion, and that the settlement is fair, reasonable and adequate to all concerned.” (Reed v. United Teachers Los Angeles (2012) 208 Cal.App.4th 322, 337, emphasis added.) In the ordinary case, the parties most vulnerable to an unfair settlement are the absent class members. But there may be other groups of persons who would be vulnerable to an unfair settlement other than absent class members. GCTA argues that it asserts the interests of such a group consisting of members of the public who are affected by the Settlement and to whom the Settlement is not fair, reasonable and adequate. The factor at issue in this intervention motion is whether GCTA has a sufficient interest to make its argument as to the unfairness of the Settlement to all concerned, including unfairness to them. The court concludes that GCTA has a sufficient interest to intervene.

 

            (C)       Enlargement of Issues

 

A variation on the same arguments is made by plaintiffs with respect to the second factor of enlargement of issues. The arguments of the parties depends upon what scope of issues is considered. Plaintiffs again argue that the issues are limited to the fairness of the Settlement to the Class and nothing more. Because GCTA asserts unfairness as to a segment of the public, by plaintiffs’ reasoning, the issues are significantly enlarged. From GCTA’s perspective, GCTA is merely continuing along the path that the State Defendants had followed until the Settlement and so the issues are unchanged relative to the litigation as a whole.

 

The issue immediately at hand is the fairness hearing to address the Settlement. Nothing further is happening with this action until the fairness hearing is resolved. If the court grants the motion notwithstanding GCTA’s objections, the issues in the case would be necessarily limited to the consequences of an approved Settlement. If the court denies the motion, the issues in the case would be the same issues presented prior to the Settlement. The underlying claims, facts, and arguments of the case are essentially the same as without permitting intervention. The court finds that intervention by GCTA would not impermissibly enlarge the issues of the case.

 

            (D)       Balance of Interests

 

The third factor is whether the reasons for intervention outweigh any opposition by the existing parties. Plaintiffs are opposed to intervention; the State Defendants do not oppose intervention.

 

A useful case in addressing this factor is Simpson Redwood, supra, 196 Cal.App.3d 1192. In Simpson Redwood, a lumber company filed a complaint to quiet title and for declaratory relief against the State of California. (Id. at p. 1196.) Title to the land at issue was claimed by the State as acquired for inclusion in state park lands by donation from the proposed intervenor in 1932. (Id. at p. 1198.) The lumber company owned adjacent land and, owing to disputed surveys, claimed ownership of the land held by the State. (Ibid.) The proposed intervenor moved to intervene in the action, but the trial court denied the motion. (Id. at p. 1199.) The Court of Appeal reversed the denial. In so doing, the court found that the proposed intervenor, an organization formed and existing for the purpose of conserving lands, had a sufficient interest to intervene and that intervention would not prolong, confuse, or disrupt the lawsuit. (Id. at pp. 1200-1203.) The court concluded:

 

“A final telling factor in our decision is the conviction that appellant’s own substantial interests probably cannot be adequately served by the State’s sole participation in the suit, since it here seeks merely to protect its fee interest in the property, which may turn out to be simply pecuniary in nature. The State might, for example, choose to settle the case for a monetary consideration in exchange for relinquishment of its claims of title to the land. But appellant’s interest in the litigation—to preserve the property in its natural condition—is singular and indeed unique, and powerfully militates in favor of intervention.” (Id. at pp. 1203-1204.)

 

As in Simpson Redwood, the purpose of intervention here is founded upon the now-divergent interests of GCTA and the State Defendants with respect to the fairness of the Settlement to all concerned. The balance favors intervention precisely because the court would benefit from having the participation of GCTA in presenting views on fairness that are not now being presented by the State Defendants or by plaintiffs. The court finds that the third factor favors granting intervention.

 

            (E)       Conclusion and Further Briefing on the Merits

 The court will grant the motion of GCTA to intervene in this action as a defendant. Permitting intervention, of course, means only that GCTA gains the status of a party to the action. Nothing in this ruling should be construed by any person as suggesting any determination on the merits of the fairness hearing.

 

To that end, the court recognizes that the unusual procedural posture of this case requires a more involved process than may be typical of motions for final approval of a class action settlement. To permit a complete consideration of the issues for the fairness hearing, the court has looked ahead to the scope of issues to be decided. In so doing, the court has a few points upon which further briefing would be useful. These points are raised for the purpose of being exhaustive in its consideration of issues in this unusual situation.

 

Among the factors cases have identified as proper matters to be considered in determining whether a class action settlement is fair is the amount offered in settlement. (E.g., Reed v. United Teachers Los Angeles, supra, 208 Cal.App.4th at p. 336.) There are some issues are presented regarding the value of the settlement consideration for which further briefing would assist the court:

 

  1. In its reply to this motion for intervention, GCTA provides evidence and argument that the public has pre-existing rights to use of the affected beach that are broader than the rights licensed under the Settlement. Plaintiffs have not had the opportunity to address this evidence and argument. The court would appreciate plaintiffs’ response and further discussion of this issue.

 

  1. The Settlement includes changes to the Hollister Ranch Managed Access Program as well as rights to use of the affected beach. To what extent, if any, is implementation of the Settlement or public use as permitted under the Settlement (including the Prior Settlement) dependent upon obtaining permits or review through public hearings under the California Coastal Act or under any other applicable environmental or land use law? (See, e.g., Pub. Resources Code, § 30106 [“development” includes “change in the density or intensity of use of land” and “change in the intensity of use of water, or of access thereto”].) To the extent there are required public processes for permits or review, how, if at all, do those requirements affect the value of the consideration for the Settlement for purposes of determining the fairness of the Settlement?

 

  1. An issue raised by the plaintiffs in this motion is the effect of the Prior Settlement on the scope of issues in the fairness hearing. While the court recognizes this is discussed by the parties in part, the court would appreciate the parties to provide further briefing focused on the following:

            a.         Is the Prior Settlement dependent or contingent in any way upon the approval of the court of the class action Settlement? If so, to what extent?

            b.         If the Prior Settlement is not contingent upon the approval of the court of the class action Settlement, how do the rights as determined by the Prior Settlement affect the value of the consideration given in support of the class action Settlement?

 

In responding to these requests for information, any party may include further argument or evidence responding to the evidence or argument of any other party as appropriate. Each party should confirm for itself that all evidence it wants the court to consider is properly and fully before the court. Absent a showing that matter could not have been presented earlier or other extraordinary circumstance, the court will not consider evidence or argument made for the first time in reply.

 

The issues raised in the fairness hearing require careful review of the arguments and evidence of the parties. The court will continue the fairness hearing to give the parties sufficient time to respond to the court’s requests for information and to give the court an adequate opportunity to address the matters presented. The court again emphasizes that its requests for information are based upon considerations of thoroughness and should not be viewed as reflecting any preliminary view of the court on any issue.

 

 
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