Laguna Beach Settles Suit Over Streets

Ending a 14-year legal dispute that once threatened to bankrupt the municipal government, city officials will pay nearly $1 million to settle a lawsuit filed by property owners in a rural hillside community who sued to have streets installed so 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 plaintiffs and build and maintain the streets so 19 owners can build on their properties, which offer breathtaking ocean views.

Both sides claimed victory, even as they agreed to “give something” in order to settle the case, considered one of Southern California’s longest 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 includes two trials and two appeals and had promised to consume an additional three or four years of litigation before the settlement, Frank said. The city spent more than $900,000 on its legal fees, he said.

Several plaintiffs did not return phone calls Tuesday seeking comment.

The conflict emerged in 1984 when owners of 38 empty lots--some of whom had more than one parcel--in the Diamond Crestview area complained that their properties were virtually worthless because the city refused to build adequate roads.

The homes that existed at the time--whose owners did not sue--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 streets, Frank said.

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

The city eventually paved the roads, but that led to yet another debate over whether they were adequate.

No damage payments are being made to landholders under the settlement, Frank said. In the last 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.”