Judge Rules Against City on Warner Ridge : Lawsuits: The decision, unless overturned, leaves only one legal issue in the case: how much is owed to the developer in damages.

In a second major defeat for the city in a case with far-reaching fiscal implications, a Superior Court judge ruled Tuesday that the Los Angeles City Council deprived the owners of Warner Ridge of “all economically viable use” of their property by illegally rezoning the parcel in 1990.

Unless overturned on appeal, Tuesday’s ruling by Judge Kathryn Doi Todd means that the only legal issue left in the Warner Ridge lawsuit is how much money the city owes the developer in damages, attorneys for both sides agreed.

As the developer plaintiffs celebrated with a champagne victory party, Councilwoman Joy Picus--who led the fight to block their plans for a half-dozen mid-rise office towers on the Woodland Hills site--expressed bitterness over the ruling. “I’m dismayed and disappointed,” Picus said.

The development partnership, Warner Ridge Associates, is seeking damages ranging as high as $100 million if the city remains steadfast in refusing to allow construction of a commercial project on the site, said Robert McMurry, the partnership’s attorney. It was McMurry who gave the champagne party in his office after the ruling.

Todd’s ruling follows on the heels of a 3-0 decision by a state Court of Appeal panel that upheld a lower court’s ruling that the council violated the law by rezoning the 21.5-acre Warner Ridge site for 65 single-family homes on Jan. 22, 1990. The council acted at the request of Picus, who said she was responding to widespread opposition from constituents to the planned commercial project.

The appellate court held that the single-family zoning was illegal because the property was designated for commercial development in the local community plan.

Picus said she would try to persuade the council to appeal both unfavorable rulings, taking the Court of Appeal decision to the state Supreme Court. The council is scheduled to hold a closed-door meeting Friday to map out its future legal strategy in the case.

Robert Gross, president of the Woodland Hills Homeowners Organization, said his group--which has opposed the Warner Ridge commercial project--may seek to join any appeal to supplement the city’s legal arguments.

“It’s time for the courts to hear more than what they’ve been hearing from the city,” Gross said. Gross said the court has not heard enough about the real effects of a commercial project on a community already distressed by over-development.

“It’s a bitter pill to swallow,” the homeowner leader said of Tuesday’s ruling. “But I’m not convinced all is lost.”

But the back-to-back defeats in one of the most bitterly fought land-use cases in the city’s history might generate enough political momentum to settle the damages issue without a trial, McMurry said.

“I hope the council wakes up and says ‘enough is enough’ when they realize that the damage caused by this lawsuit has now reached proportions beyond Picus’ district,” McMurry said.

His client, McMurry said, is seeking about $500,000 in additional damages for each month it does not have the zoning necessary to build the project. “And that doesn’t even account for the city’s own legal costs” in fighting the case, he said.

But the costs to the city of these unfavorable rulings, city officials also fear, may transcend even the immediate Warner Ridge lawsuit.

City planning officials have estimated that there might be as many as 8,000 parcels in the city, which--as is Warner Ridge--are zoned for single-family development but are designated on the community plans for commercial or multifamily uses.

If the appellate court opinion stands, the city may need to rezone all those parcels or amend the plans affecting them, a costly and time-consuming process, city Planning Director Melanie Fallon has said.

Moreover, city officials fear that the success of the Warner Ridge suit could encourage similar lawsuits. Citing the Warner Ridge precedent, a Woodland Hills couple a week ago sued the city for $2.5 million, making allegations similar to those made in the Warner Ridge case--that they were denied the zoning they were entitled to under the community plan designation for their 7.5-acre property.

During oral arguments in court Tuesday, lawyers for the city made no headway in trying to persuade Todd to back down from her tentative ruling in the case, which she had given hours earlier to both sides. “You’re arguing in circles,” Todd told the city attorneys at one point.

Todd later told both sides that she intended to finalize her ruling with a few minor word changes today.