LAGUNA BEACH : City Settles Suit Over Rejected Home Plan

Four years after this city's Design Review Board rejected plans to build a hillside home partly because it would have cast a shadow on a neighboring house, the city has agreed to a settlement with the spurned property owners, who sued the city when their building plans were halted.

Under the closed-session agreement, the city will pay Meredith and Eugene Gratz $3,000 a month for the next five years, City Atty. Philip D. Kohn said this week. The payments total $180,000.

Mayor Kathleen Blackburn said the council made the decision last month to avoid protracted litigation that could have cost the city even more.

Gratz said this week that the property he had planned to develop has since been foreclosed upon and that he considers the settlement appropriate.

"I lost my cash investment, lost all the development cost and probably about 10 to 15 years of my life," said Gratz, who lives elsewhere in Laguna Beach. "I'm certainly relieved to have the action and the . . . stress it caused me behind me."

The review board rejected the Gratzes' design plan in 1991 after neighbors who lived downhill complained that the 5,200-square-foot house proposed by the couple would cast a shadow over their home, which was smaller.

The Gratzes maintained that they were being discriminated against by a city that favored "cottage architecture" to larger homes. In dealing with objections to their plans, the Gratzes said, they spent $7,000 for sun studies.

In 1992, the Gratzes sued the city for unspecified damages, alleging "personal injuries" and civil rights violations.

In the agreement struck last month, neither side admits liability or wrongdoing.

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