Monday, April 27, 2026
Page 3
Court of Appeal:
Expending $20 Million on Project Created No Vested Rights
Justices Reject Contention of Company That Owns Apartment Units That City, After Issuing Building Permits for Renovation Work and Monies Were Spent, Could Not Thwart Receipt of Anticipated Profits Through New Law
By a MetNews Staff Writer
Vested rights of a company that owns and manages 24 multi-family apartment buildings were not impaired when Culver City—after granting more than 100 permits for the rehabilitation of the 1974 structures and their units and after $19.7 million had been expended on the project—enacted a requirement that tenants displaced by renovations must be allowed to return later at the same lease rates, the Court of Appeal has held.
Justice Audra Mori of this district’s Div. Four authored the unpublished opinion, filed Thursday. It affirms an order by Los Angeles Superior Court Judge James Chalfant denying a petition for a writ of mandate sought by Fox Hills Canterbury Co.
The company is challenging the city’s Tenant Protection Ordinance (“TPO”), adopted on Sept. 29, 2020, after work on those buildings denominated “Meadows South” was completed, but with construction on “Meadows North” in progress.
Fox Hills argued on appeal that the city is saying, in effect, that “even if the TPO would suck the economic lifeblood out of the partially finished project,” it “could have imposed tenant protections as a use condition at the time the permits were issued, so what was the difference?”
Answering that question, Fox Hills said the difference is that it is “now $ 20 million down a road where it would have made a different investment decision had it known what was coming.”
Fox Hill’s Contention
Its brief, by Kevin H. Brogan and Dean E. Dennis of Hill. Farrer & Burrill, sets forth:
“In our system of property regulation (1) once an owner’s improvement project is governmentally approved, (2) the government grants a building permit (which includes the owner paying the going rate for permit fees), and (3) the owner has completed substantial work and incurred liabilities in good faith reliance on the permits, the government may not interfere with an owner’s vested right to complete the project as approved….Later imposed project conditions that were not contemplated or imposed at the time the government issued the permits are disallowed and subject to judicial removal….Otherwise, the government would be changing the rules in the middle of the game which would be fundamentally unfair to the owner….Like any improper land use regulation, the alternative, if the government does not remove a middle-of-the-game change, is to pay the owner for the property damage as a taking….
“This common law ‘vested right’ is an attempt to strike a balance between an owner’s right to do what it wants with its property under then applicable government imposed rules, and the government’s right to regulate the owner’s property in the public interest. And estoppel principles recognize that there is a point at which government regulation must stop imposing new requirements so that an owner can have economic certainty for development of its project.”
Mori’s Opinion
In her opinion rejecting that position, Mori said:
“Fox Hills’s first amended petition alleged that before the TPO was enacted. Fox Hills obtained numerous building permits for its renovation project at Meadows North and expended substantial sums in reliance thereon. However, the rights that vest through reliance on government permits are only those rights specifically granted by the permits themselves….Fox Hills neither alleged nor identified any permit under which it obtained the right to complete the project without having to comply with subsequent tenant protection laws. Indeed, Fox Hills remains free to complete the renovation project as specified in the permits. The permits thus did not give Fox Hills a vested right to be exempt.”
Mori went on to say:
“Fox Hills’s estoppel argument also fails. It does not point to anything in the record that could be interpreted as a promise from the City that it would be exempt from any future tenant protection laws.”
She added:
“Until Fox Hills submits a rent adjustment application, and the City determines whether to exercise its discretion to grant a rent adjustment, it is not possible to determine whether Fox Hills will receive a sufficient return on its investment. The trial court therefore properly sustained the demurrer to the inverse condemnation claim on the basis that it was not ripe.”
The case is Fox Hills Canterbury Co. v. City of Culver City, B342302.
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