39 Laguna Beach Landowners Sue City : Seek Nearly $6 Million for View Lots on Which They Cannot Build

With slow-growth sentiments mounting throughout Orange County, 39 Laguna Beach landowners went to court Monday to try to collect nearly $6 million, a figure they say is the price tag for ocean-view lots on which they cannot build.

The owners of the unimproved lots, with estimated values of between $100,000 and $175,000 each, allege that Laguna Beach city officials illegally imposed a building ban two years ago in the guise of zoning restrictions.

In doing so, the city not only violated their constitutional rights but in effect condemned their view lots and should pay for them, the homeowners say.

Trial of the unusual lawsuit began Monday before Orange County Superior Court Judge Jerrold S. Oliver. The suit involves building rights in a 62-year-old subdivision on a hill at the south end of Laguna Beach, near Arch Beach Heights.

City Atty. Philip D. Kohn flatly denied that other landholders on the hill--including City Councilwoman Martha Collison, a former mayor--were allowed to improve their land, while the 39 plaintiffs were prohibited from doing so.

Action Called ‘Disaster’

For the landowners, the city’s action “is not only illegal, it’s a disaster,” Joseph M. Gughemetti, their lawyer, told Oliver.

The landowners cannot build without first widening existing roads--a process that would cost millions of dollars and permanently mar the hillside, Gughemetti said.

Orange County accepted a developer’s subdivision map in 1925, and Laguna Beach annexed the area two years later. Since then, approximately 140 persons have built homes. The area has 440 tracts.

But beginning in the mid-1960s, Laguna Beach enacted a series of ordinances--under pressure from existing homeowners--that have made further building impossible, Gughemetti contended.

“We’ve got to make it into a greenbelt,” was the way Gughemetti characterized the city’s thinking in changing its policy. “We’ve got to stop development on that hill or the people (there) will go crazy.”

The lawyer called it “an environmental movement in Laguna Beach to turn that hill into a park . . . led, by and large, by people who already owned there.”

Move Called Legal

But Kohn argued that the city’s restrictions have been reasonable and legal. A 1965 requirement that no building may take place on lots that do not front on streets at least 16 feet wide--an ordinance that has, in effect, halted development on the hill--was enacted “to ensure accessibility by police, fire and emergency vehicles,” Kohn said.

Councilwoman Collison owned a home--not an unimproved lot--and was allowed to improve and expand her house by variance, Kohn said. She was treated “no different from any other owner of a tract that had been built prior to 1965,” Kohn said.

“There has been no new construction. Admittedly, there has been modification and alteration, but the city has uniformly applied its standards,” Kohn told Oliver.

The lots involved in the lawsuit were purchased between 1959 and 1982 for prices ranging from $901 to $42,000, according to the court records.

“No reasonable person who bought those lots--which average $8,000 to $9,000 in price--could have believed these were legal building sites,” Kohn said.

The motive, Kohn said, was “the expectation--perhaps speculation--that at some time in the future, these lots may become available to development.”

Suit Filed in 1985

The lawsuit was not filed until 1985, after five of the landowners requested real property reports from the city detailing restrictions on development. The landowners assert that it was the first formal written notice they received alerting them that they could not develop their property until street improvements were made.

The homeowners say the city has discriminated against them, violated their civil rights and has, in effect, condemned their land.

Kohn contends that the city’s actions have been justifiable and reasonable.

“The plaintiffs are demanding that the city extend city streets beyond their present limit, as a windfall to them, and at the expense of city residents and other developers who have paid (for the improvements),” he said.

The non-jury trial is expected to last eight days.