House-Design Rejection Sparks Suit : Law: Laguna Beach’s review panel turned the plan down, partly because the home would cast a shadow.

A lawsuit has been filed against the city by a couple whose plans to build a hillside home were rejected by the Design Review Board, partly because it would cast a shadow on another home.

The suit alleges that Eugene and Meredith Gratz were deprived of their state and federal constitutional rights when their plans were denied by the board and later by the City Council. The action, filed Tuesday in Orange County Superior Court, is the third lawsuit pending against the city related to Design Review Board denials.

“There’s more to come,” said Meredith Gratz, whose husband, a lawyer, is also handling one of the other pending cases. “It’s like (a line in) that movie: ‘I’m mad as hell and I’m not gonna take it anymore.’ ”

The suit seeks $1 million in punitive and exemplary damages, $500,000 for the loss of the right to use and enjoy their property, $200,000 in damages because their property now allegedly cannot be developed, plus assorted fees and costs.

The Gratzes’ suit, which also names the City Council and the Design Review Board as defendants, alleges that the board was “arbitrary, capricious and unreasonable” in denying their plans.

The defendants acted with intent of “terrorizing and terrifying” the Gratzes and others in Laguna Beach, the lawsuit also alleges.

“I have formed the conclusion,” Eugene Gratz said Wednesday, “that the Design Review Board and the City Council are following a secret agenda by prohibiting all development in Laguna Beach by making it as difficult and expensive as possible to do the simplest thing. It’s like a reign of terror.”

The board chairman, John Gasparotti, denied the allegations, saying most plans are approved by the panel.

“It is not an ever-growing circle of victims,” Gasparotti said. “Routinely, the board passes projects first time in. Routinely.”

City Atty. Philip Kohn called the Gratzes’ claims “absolutely false” and said the couple was given a chance to modify the design to gain the board’s approval but rejected that option.

“Basically, a deprivation of civil and constitutional rights suggests you’ve been denied all use of your property,” Kohn said. “That argument might be the case where the city said it was not going to let you build, period. Whereas in this particular case, all (the council) said is this particular design is not acceptable for the following reasons.”

The council rejected the Gratzes’ appeal largely on the grounds that a 4,950-square-foot home would be too big for the neighborhood and out of character with it.

The design board also focused on the shadow the house would cast on the home of a neighbor, who had lived in a house downhill from the Gratzes’ property since 1935.

The Gratzes hired a “sun expert” who argued that the shading would be minimal. The couple’s lawsuit states that city zoning laws do not include regulations about the casting of shadows on other properties and that such an issue has never been used before to deny design approval in the city.

But the city’s Kohn said the court would deal only with the City Council’s rejection, which he said was not related to the sun.

“The shadow had nothing to do with what the council did,” the city attorney said. “That entire issue is a red herring, based on concerns expressed by the Design Review Board.”

Eugene Gratz is also representing Nick and Denise Karagozian in a $1-million lawsuit against the city. The Karagozians were first denied permission to move into their new home last year because they had painted it white instead of “sandstone,” a color approved by the city. They were allowed to move in after the house was painted a compromise shade of white.

In a third lawsuit, M. William Dultz is suing the city for rejecting his plan for a single-family house on a vacant oceanfront lot. The board withheld its approval of Dultz’s plans after neighbors complained that they would lose their views if the home was built.