Laguna Beach, Landowners Reach Settlement on Rural Roadways

Ending a 14-year legal dispute that once threatened to bankrupt Laguna Beach, city officials will pay nearly $1 million to settle a lawsuit filed by property owners of a rural hillside community who sued to have streets installed so that they could build homes on the land.

Under terms of the settlement announced Tuesday, the city will pay $926,820 in attorney fees for the landowners and build and maintain the streets so 19 property holders can build on their land, which offers breathtaking ocean views.

Both sides claimed victory, even as they both agreed to “give something” in order to settle the case, considered one of Southern California’s lengthiest land-use battles.

“The advantage in settling the case for the city is manifold,” said Kenneth C. Frank, Laguna Beach’s city manager. “First, it stopped the drain of legal costs. Second, it stopped the drain of our staff, not only in negotiation but also preparing for trial. Third, it eliminated the possibility that a judge might actually side with the plaintiffs. . .and award them some outrageous sum.”

Ronald Mulcare, attorney for the landowners, said his clients are also satisfied: “Everybody wants to go on with their lives,” he said.

The case’s tortured legal history included two trials and two appeals and had promised to consume another three or four years of litigation, Frank said. The city alone spent more than $900,000 on its legal fees, he said.

Several plaintiffs contacted Tuesday did not return phone calls seeking comment.

The conflict emerged in 1984 when owners of 38 empty lots in the Diamond Crestview area complained that their properties were rendered virtually worthless because city workers refused to build adequate roads.

The homes that existed at the time were accessible only by poorly paved or dirt roads. The case lingered in the legal system because there was no clear precedent as to who was responsible for building and maintaining such roads, Frank said.

“It’s an extremely complicated case, involving an area of the law that was still in flux,” Frank said. “There was no easy resolution.”

No damage payments are being made to land holders under the settlement, Frank said. In the past two years, a few property owners who did not sue the city have begun construction.

“It’s been a tremendously difficult case,” Frank said. “I don’t think anybody could have conceived in the beginning that it would last this long.”