Justice Comes to Half Moon Bay

Today’s New York Times brings us a lachrymose tale about Half Moon Bay, a posh little town in Norhern California, that is facing a financial crisis. Jesse McKinley, In a Beachside Tourist Town,  A Wrenching Decision to Outsource, N.Y. Times, April 4, 2011, at p. A12. Quoth the Times: “Half Moon Bay is a world apart: a comfortable surf-and skate town” that  borders on the waters of San Francisco Bay. It boasts of  “sweeping ocean views,” to say nothing of a Ritz-Carlton hotel. In short, it’s pretty much the sort of place where God would live if He could only afford it. So what’s the problem?

The problem that attracted the New York Times’ attention is that Half Moon Bay, facing a $500,000 municipal deficit — welcome to California, folks — has had to disband its police department and  turn over its policing function to the local sheriff’s department. Why that happened is a bit difficult to fathom, given the enviable economic status of the town’s inhabitants. To say nothing of the fact that instead of meeting their financial obligations, only last fall the city’s voters turned down a sales tax measure that would have helped, thereby raising the justified suspicion that the assertedly impoverished status of  Half Moon Bay may be self-inflicted.

If you harbor such suspicions, go to the head of the class. That vote is a small part of the city’s problems, and it casts an illuminating light on what passes for municipal morality these days.  As the Times puts it, “Half Moon Bay had been struggling with the impact of an $18 million settlement from a lawsuit filed by a local developer over a parcel of land the city had apparently accidentally flooded. “Apparently?” “Accidentally?” What chutzpa.

You can find the gory details of that litigation in the decision of the U.S. District Court for the Northern District of California, Yamagiwa v. Half Moon Bay, 523 F.Supp.2d 1036 (N.D.Cal. 20007). It’s a long and fact-intesive opinion, so if you are into inverse condemnation, you should sit down, take a stiff drink, and have a go at reading it in its entirety. Suffice it to say that what the city did, among other things, was to build a storm drain so that  the periphery of the subject property was raised, and since the city also “borrowed” some13,000 cubic yards of dirt from it, that transformed it into a shallow “bathtub” with no drainage. Indeed, the city also led its own drainage onto the land. When the owner tried to drain the lot, the city forbade it. To add insult to injury, the city also imposed a $962,987.76 assessment against the subject property, and expected it to be paid off even though the owner could not build anything there.

Nor is that all. When the predictable happened, when the “bathtub” filled up with rain and runoff water, the city had the chutzpa to claim that this was a natural wetland that could neither be drained nor built upon. The state courts agreed — hey, it’s California, man — so the owners tried to pusue their inverse condemnation claim, still in state court, as required by the Williamson County case. It was at this point that the city removed the case to federal court. Bad move. His Honor took a dim view of the city’s conduct which continued unabated. The case was pending in federal court for some two years, during which it heard testimony by 22 witnesses, including seven experts, and considered 300 exhibits. The bench trial took over a week. It was only then that the city tried to pull a fast one.

At the end of the trial, when the court asked for post-trial briefing, the city was suddenly born again and took the position that, actually, this case shouldn’t have been in federal court at all, and that it should be remanded back to state court where everybody would start all over again. But the case was originally filed in state court and it was the city that had it removed to federal court. Cconsequently, his Honor was not amused. And rightly so.

We could go on about this litigational gem for a while, but all good things must come to an end, and it all ended when the court entered a $36.8 million judgment for the property owner. The city threatened to appeal, but after cooler heads and new counsel gave it some thought, it decided that settlement would be a more prudent option. The plaintiff-developer, being a sensible chap, settled for half the judgment amount, or $18 million. Which as far as we can tell was more than merely reasonable because once liability was established, the city’s appraiser conceded that damages ran to $26.6  million, so that in the end the owner settled for some 67% of the city’s own estimate of damages.

So now, along comes the New York Times shedding crocodile tears over the plight of this arrogant, rich community that refuses to meet its legal responsibility either toward its own policing obligations, or for the harm it has inflicted on others. Poor babies.

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