Pacific Shores Property Owners Ass'n v. Department of Fish & Wildlife (244 Cal. App. 4th 12, 2016)

Opinion

NICHOLSON, Acting P. J.

In this inverse condemnation action, we face a unique situation where a state agency assumes control of a local flood control process, and it determines to provide less flood protection than historically provided by a local agency in order to protect environmental resources. We affirm the trial court’s judgment finding the state agency liable in inverse condemnation for a physical taking of plaintiffs’ properties, and not liable for a regulatory taking. We reverse the judgment to the extent the court found another state permitting agency liable in inverse condemnation.

Since the late 1800’s, Del Norte County residents, and eventually the County of Del Norte (County), regularly breached a sandbar when water levels in a large coastal lagoon that the sandbar separated from the ocean rose above four feet mean sea level (msl). This process protected lands along the lagoon’s shore devoted to agricultural and residential uses against flooding.

In the early 1960’s, the County approved a large residential subdivision along the lagoon’s shore. Developers designed the subdivision on the premise the sandbar would continue to be breached when the lagoon’s water level exceeded four feet msl. Buyers, including plaintiffs, acquired the lots, but they never developed them.

Federal and state environmental legislation adopted in the 1970’s imposed permitting requirements on developing the subdivision and on breaching the sandbar. The County obtained federal approval from the United States Army Corps of Engineers (the Army Corps) to continue breaching at four feet msl for 10 years. During that time, the state Department of Fish and Game (now the Department of Fish and Wildlife (the Department)) began adopting plans and purchasing properties to protect the lagoon and its significant environmental resources. The Department also gained possession of the sandbar, and it authorized the County by contract to continue breaching at four feet msl.

When the 10-year permit expired in 1987, the County sought to obtain permits from the Army Corps and the California Coastal Commission (Commission), which had obtained land use jurisdiction over the sandbar and the subdivision, to continue breaching at four feet msl. However, the Department believed the breaching adversely impacted the lagoon’s environment. It sought to limit breaching to times when the lagoon’s water level reached six feet msl and, in 1990, it jointly applied with the County for federal and state permits to breach at that level. When other agencies expressed concern about breaching at six feet msl, the Department withdrew its permit applications. From 1989 until 2005, no permanent or long-term permit to breach the sandbar was issued. Over those 16 years, while the Department submitted and withdrew various applications to breach at six and then eight feet msl, breaching occurred only pursuant to emergency and interim permits issued by the Commission when the lagoon’s water level rose above eight feet msl and began flooding properties and roads in the residential subdivision.

Finally, in 2005, the Department approved a management plan for the lagoon that called for breaching the sandbar at eight to 10 feet msl. The Commission and the Army Corps approved permits to breach at that level. Plaintiffs, whose properties suffered flooding damage when the lagoon level rose above eight feet msl, filed this action in 2007 for inverse condemnation. They alleged they suffered a physical taking from the Department’s actions, and a regulatory taking by the Commission retaining land use jurisdiction over the subdivision throughout this time instead of transferring it to the County. Plaintiffs also sought precondemnation damages and statutory attorney fees.

The trial court found the Department and the Commission (collectively, the State) liable for a physical taking and awarded damages, but it concluded plaintiffs’ claim for a regulatory taking was barred. It rejected the State’s arguments that the statute of limitations barred plaintiffs’ complaint. It awarded plaintiffs attorney fees in the amount they incurred under a contingency agreement, but it denied plaintiffs any precondemnation damages.

Both the State and plaintiffs appeal. The State contends the trial court erred because (1) plaintiffs’ complaint was time-barred; (2) the State could not be liable because it owed no duty to provide any flood protection; and (3) it also could not be liable because any protection it provided, it did so reasonably. Alternatively, the State asks us to grant it a flowage easement over plaintiffs’ properties.

The plaintiffs contend the trial court erred by (1) denying their claim for a regulatory taking; (2) denying their claim for precondemnation damages; and (3) not awarding reasonable attorney fees based on the hours expended and rates charged by counsel.

Except to reverse the judgment against the Commission, we affirm the judgment and remand the matter for the trial court to grant the Department a flowage easement over plaintiffs’ properties. Regarding the State’s appeal, we hold, first, plaintiffs’ cause of action for a physical taking against the Commission was not timely, but the cause against the Department was timely, as it did not accrue until the Department’s actions against plaintiffs’ properties stabilized, a point achieved in 2005 when the Department obtained a long-term development permit to breach the sandbar. Plaintiffs filed their action within the three-year limitation period after their cause accrued.

Second, the Department is strictly liable for the damages it caused in this instance. Strict liability applies because the Department intentionally designed the breaching to flood plaintiffs’ properties by reducing the flood protection plaintiffs had historically enjoyed, and its primary purpose for doing so was not to provide flood protection, but to protect environmental resources.

Third, even if the State was not strictly liable, it still would be liable under a standard of reasonableness applied to inverse condemnation actions for damages caused by flood control projects. Substantial evidence supports the trial court’s determination that because of the Department’s intentional actions, plaintiffs contributed more than their fair share to the Department’s efforts to protect environmental resources.

Regarding plaintiffs’ appeal, we hold, first, the trial court correctly ruled their cause of action for regulatory taking was barred, as plaintiffs failed to comply with California law governing recovery for a regulatory taking. Plaintiffs were required to seek a development permit and challenge the application of any permit restriction by petition for writ of mandate before bringing an action for inverse condemnation based on a regulatory taking. Plaintiffs did not do this. Also, the administrative jurisdiction exception to the prerequisites for bringing an inverse condemnation action does not apply here.

Second, the trial court correctly denied plaintiffs’ request for precondemnation damages, as the Commission’s retaining land use authority over the subdivision was not improper or unreasonable.

Third, the trial court correctly awarded attorney fees in this instance in accordance with the terms of plaintiffs’ contingency agreement, which limited fee awards to the amount of fees plaintiffs had actually incurred.

We remand the matter solely for the trial court to grant the Department flowage easements over plaintiffs’ properties.

FACTS

We present a detailed history of events leading up to this case primarily to address whether the action is barred by the statute of limitations.

Lake Earl and Lake Tolowa are located approximately four miles north of Crescent City and adjacent to the Pacific Ocean. Although referred to as lakes, Lake Earl and Lake Tolowa form a coastal lagoon connected to each other by a narrow channel. A sandbar separates the lake’s western edge from the Pacific Ocean. The lake’s normal water level behind the sandbar is four feet above msl. Heavy precipitation and runoff, and occasional overflow from the nearby Smith River, raise the lake’s level. When the lake reaches a level of 10 to 14 feet above msl, the water overflows the sandbar and erodes an outlet to the ocean, referred to by the parties as the breaching site. As the outlet at the breaching site increases in size, lake water flows into the ocean and the lake’s water level drops until reaching equilibrium with the average tides. The lake comes under marine tidal influence until storms, wind, and tides rebuild the sandbar. Lake Earl rises again, and the process repeats.

Lake Earl is California’s largest coastal lagoon. It supports numerous habitat types and provides a resting and wintering area for over 250 species of birds on the “Pacific Flyway.” Forty species of mammals occur within its environs. Fourteen endangered or threatened species of plants and animals occur there, as do 25 fish, amphibian, and avian species of concern.

By 1869, settlers had built sawmills on Lake Earl’s eastern shore. The establishment of the timber industry began the long-standing controversy over lake levels that is at issue in this case. Mill operators preferred higher water levels for transporting and storing logs. Farmers wanted lower water levels to reclaim land for pasture and prevent the seasonal flooding of lands already reclaimed. “This controversy over lake levels took the form of legislative action, lawsuits, construction of water control structures, digging ditches in the lake bottom, artificial opening and closing the sandbar, as well as face-to-face confrontations.”

The controversy between timber and agriculture ended in 1891 with the building of a railroad to move timber. Agricultural interests continued to manipulate the lake’s water levels by manually breaching the sandbar, but, beginning in the 1920’s, conservationists and recreationists began to voice concern over the artificial breaching. Agricultural and eventually residential interests prevailed in the debate for a time, and they established farms and homes in areas where the lake level would naturally fluctuate if no breaching occurred. Government studies in 1948, 1954, and 1962 concluded any kind of permanent flood control device to prevent the lake level from rising was economically infeasible.

In 1955, the County, through the Del Norte County Flood Control District, assumed responsibility for manually breaching the sandbar for flood control. To do this, it tmcks bulldozers to the breaching site and excavates a large channel through the sandbar. Heavy rainstorms and surf could make it impractical or unsafe to perform a breaching. Until 1987, the County attempted to breach the sandbar whenever Lake Earl rose above four feet msl. When it did breach at that level, the lake’s water level would often drop to below one and one-half feet msl. Despite the efforts of settlers, farmers, and eventually the County, records show Lake Earl exceeded four feet msl in 1861, 1890, 1927, 1950, 1953, and 1955.

In 1963, the County approved development of a residential subdivision on Lake Earl’s northwest shore. The subdivision, called Pacific Shores, comprises 1,524 half-acre lots over 1,486 acres. The County paved roads and constructed drainage ditches within the subdivision and installed an electrical transmission line, but no other infrastructure was, or has been, constructed. Despite the lack of infrastructure, the lots sold out in two years, primarily to residents of Southern California. Plaintiffs Thomas W. Resch and the Pacific Shores Property Owners Association (Owners Association) own lots in Pacific Shores.

The Pacific Shores drainage system was designed to operate on the assumption Lake Earl’s water level would not exceed four feet above msl. If the lake’s water level rose to between four and eight feet msl, the drainage ditches would fill with water and not drain. If the water level rose above eight feet msl, the water would begin flooding the subdivision’s roads. The higher the water level, the more roads the lake would flood.

A real estate subdivision disclosure written in 1963 and given to purchasers of Pacific Shores lots stated the lots were safe but could be subject to a risk of flooding. It informed purchasers it was the County’s opinion that “flood hazards have been removed from this subdivision to the point public health and safety will be protected. The [County] believes that a time could come, due to the physical location of the subdivision, that flooding could occur, where the Smith River breaks into the Lake Earl watershed.” The disclosure did not inform buyers of any risk of flooding due to rising lake levels that occur without any flooding from the Smith River.

Despite regular breaching by the County, Lake Earl’s water level exceeded four feet msl in 1964, 1966, 1970, and 1972. The County chose not to breach the sandbar in the 1972 incident because flooding conditions made the work unsafe. The county department of public health informed the board of supervisors that year that it had warned people interested in buying residential property in the Lake Earl floodplain that the property is subject to flooding. Later that year, the department of public health told the Owners Association it had informed by certified mail all lot owners who had requested information of the hazards associated with Pacific Shores, including the drainage problems and localized flooding. At trial, plaintiff Resch, president of the Owners Association, testified he never received any such notice and was not aware if the Owners Association received the notice.

In 1975, the Owners Association commissioned an engineering firm to investigate the feasibility of developing Pacific Shores. The firm recommended the Owners Association form a community services district in order to assess landowners to fund construction and operation of sewer and water systems. Because the water table was shallow, individual septic tanks and individual wells could not be used. The report also recommended building a levee to protect against flooding from the Smith River, and regularly breaching the sandbar to keep Lake Earl low.

No water, sewer, or flood control projects have ever been built for Pacific Shores. The Owners Association in 1987 created a special water district, the Pacific Shores Subdivision California Water District (Pacific Shores Water District), to provide water and sewage infrastructure, but it was dissolved in 2007 because, despite making attempts to develop the subdivision, it had been, and continued to be, unable to do so. To date, no development, other than the placement of a trailer, has occurred at Pacific Shores since the lots were first sold. Lot owners have used their properties for occasional camping, but nothing more.

In the 1970’s, new federal and state environmental legislation imposed additional regulatory and permitting requirements on the Pacific Shores subdivision. Congress adopted the National Environmental Policy Act of 1969 (42 U.S.C. § 4321 et seq.) (NEPA), which required environmental review for federally approved projects. It adopted the Clean Water Act of 1977 (33 U.S.C. § 1251 et seq.), which vested regulatory authority over wetlands in the Army Corps, in addition to the authority the Army Corps exercised under the Rivers and Harbors Appropriation Act of 1899 (33 U.S.C. § 403 et seq.). Congress also adopted the Endangered Species Act of 1973 (16 U.S.C. § 1531 et seq.), which granted regulatory authority to the United States Fish and Wildlife Service (USFWS) over endangered animal and plant species.

During the same time period, the California Legislature adopted the California Environmental Quality Act (Pub. Resources Code, § 21000) (CEQA), and the California Coastal Act of 1976 (Pub. Resources Code, § 30001 et seq.; Coastal Act). CEQA, in general, requires state and local agencies to conduct environmental review for all development projects needing their approval. The Coastal Act prohibits development in the coastal zone, in which Pacific Shores lies, unless the developer obtains a development permit from the Commission or a local agency whose local coastal program governing land use in the coastal zone had been approved by the Commission. (Pub. Resources Code, § 30600, subd. (a).) These statutes significantly broadened the state and federal governments’ regulatory and environmental control over Pacific Shores.

The County in 1976 obtained a permit from the Army Corps to continue breaching the sandbar when Lake Earl rose above four feet msl. The permit was valid for 10 years. The County breached the sandbar during most of the permitted years. In 1979, the lake exceeded four feet msl and was not breached until lake levels reached over eight feet msl.

In 1979, the Department began to take steps to protect Lake Earl’s environmental resources. Along with the state Department of Parks and Recreation, the Department purchased almost all of Lake Earl, most of its shoreline, and several thousand adjacent acres to establish the Lake Earl Wildlife Area. The Lake Earl Wildlife Area is a habitat management area, and part of a statewide effort to protect, enhance, and manage coastal wetlands. The State Lands Commission (SLC) owns the remaining portion of Lake Earl, including the breaching site, which the Department leases. In 1980, the Department entered into an agreement with the County to continue allowing breaching at the breaching site.

In addition to establishing the Lake Earl Wildlife Area, the Department in 1979 began to acquire lots in the Pacific Shores subdivision from willing sellers that were at or below the 10-feet msl contour. The Department now owns 779 lots in the subdivision.

In 1981, the County sought approval of its local coastal program’s land use plan from the Commission, as required by the Coastal Act. The land use plan proposed designating Pacific Shores for urban residential development. The Commission certified the land use plan except as it related to Pacific Shores. It declared the subdivision to be an “area of deferred certification” due to concerns about development impacts on numerous environmental resources such as wetlands and habitat located in the subdivision, and about the subdivision suffering seasonal inundation from Lake Earl. Designating the subdivision as an area of deferred certification obligated the property owners, before developing their lots, to obtain a development permit directly from the Commission instead of local authorities. (Pub. Resources Code, § 30600, subd (c).)

In 1987, after its 10-year breaching permit expired, the County applied to the Army Corps for a five-year permit to breach the sandbar when Lake Earl reached four feet msl. However, the Department expressed concern that breaching the sandbar when the lake level was at four feet msl was adversely impacting wildlife and their habitat at the lake. Lower water levels reduced fish and wetland habitat, adversely affecting fish and wildlife species. Lower levels also raised water temperatures, adversely impacting anadromous fish. The Department was working with the Department of Water Resources (DWR) to conduct a hydrologic study of the lake to determine the true impacts of the lake’s fluctuating levels on resources and property interests. Pending that study, DWR proposed breaching to occur at six feet msl and only between October and April unless county roads were in imminent peril of flooding. It believed breaching at six feet msl would better protect the lake’s fish and wildlife resources while at the same time protect county roads.

Commission staff also reviewed the permit application and determined a coastal development permit would be required from the Commission. Commission staff anticipated the County would ask for an emergency permit to breach the sandbar while its application for the five-year permit was pending. Prior to issuing any emergency permits, “a consensus was quickly reached” among staff from the Commission, the Department, the County, and DWR that no significant flooding problems occurred when the lake’s elevation was kept below six feet msl. Based on that agreement, the Commission in 1987 “resolved the agricultural/natural resource conflicts in favor of protecting the natural resources,” and it issued a two-year permit conditioned on breaching the sandbar at six feet msl and only between October and April. From the expiration of this permit until 2005, and except for a two-year interim permit issued in 1999, all further breaching of the sandbar occurred pursuant to emergency permits issued by the Commission upon a showing of urgent need.

In 1990, the Department for the first time sought to control breaching at the sandbar. It joined with the County in applying to the Commission and the Army Corps for new five-year permits to breach the sandbar at six feet msl. The Pacific Shores Water District opposed the application to the Commission. It contended the water level then being maintained (six feet msl) kept a 168-acre parcel owned by the Owners Association under water and flooded septic tanks owned by other lakeshore residents. Instead of seeking any kind of Commission approval, the Pacific Shores Water District asked the Commission to vest regulatory control of the breaching with the County.

The Department thereafter asked to continue the hearing on its application for about one year. The Commission agreed, but when it did so, Commission staff directed the Department to address the project opponents’ concerns that the proposed breaching at six feet msl constituted a taking. Three months later, in January 1991, the Department withdrew its permit application to the Commission. That week, the Commission approved an emergency permit to breach the sandbar at 8.6 feet msl.

Meanwhile, the Department had not yet withdrawn its application for a permit from the Army Corps. The Army Corps had preliminarily determined, among other matters, that breaching at six feet msl would benefit endangered Aleutian Canada geese by providing them more feeding areas. The geese apparently fed along grasslands and pastures above the six feet msl line.

Reviewing the Department’s application to the Army Corps, the USFWS expressed serious concern about breaching the sandbar at six feet msl. Breaching at that level would reduce the lake’s area and depth from its natural condition, adversely affecting principal habitats for waterfowl and juvenile salmonids. The USFWS also noted there was no longer any concern for protecting Aleutian Canada geese feeding areas above six feet msl, as the species’ entire population in the area no longer used the lake for foraging. The USFWS also wanted no manual breaching until there were sufficient studies documenting the environmental effects of breaching.

The Department thereafter withdrew its permit application from the Army Corps. The County, however, did not have the time or money to perform the studies the USFWS requested. If there was no manual breaching, the sandbar would not breach naturally until water levels reached 12 feet msl. At that level, water would flood Lower Lake Road, a county road running north of the lake, by two feet and would inundate 1,000 acres of land and many residences.

The County thus applied to the Army Corps for a two-year permit to breach the sandbar at eight feet msl between September and February, and to breach it again if, on February 15, the lake was at five feet msl. The County determined that if it breached the sandbar at that level, there was “almost zero probability” the lake would flood Lower Lake Road. Also, recognizing the Army Corps’s and Commission’s regulatory control over wetlands such as the lake, the County stated it was requesting permits to breach at eight feet msl only to avoid flooding on Lower Lake Road. It disclaimed responsibility “for other issues and concerns.” The County applied for a similar permit from the Commission.

The Commission in early 1992 granted the County a two-year permit to breach the lake during the rainy seasons, but to do so at four feet msl instead of eight feet msl, provided the County obtain an approved permit or lease from the SLC for the breaching site and a permit or letter of permission from the Army Corps. In the absence of additional hydrological and biological studies (DWR’s hydrological study had not been completed), the Commission could not find that breaching the sandbar when the lake was at eight feet msl was consistent with the Coastal Act.

The County was not able to obtain the needed approvals from the SLC and the Army Corps. The Army Corps determined that it, like the Commission, lacked sufficient environmental analysis. It informed the County it needed to prepare an environmental impact assessment (EIS) under NEPA for the project.

Also, the Department opposed breaching the sandbar when the lake level was at four feet msl. After the Commission granted the permit to breach at four feet msl, the Department withdrew its permission from the County to breach at four feet msl. Meanwhile, the Commission issued emergency permits in February 1992, January 1993, and February 1994 to breach at eight feet msl.

In 1994, the SLC and the Department amended their lease of the breaching site. In the lease, the Department proposed, and the SLC agreed, that the Department could breach the sandbar only between September and February if the lake level rose above eight feet msl, and on February 15 if the lake was above five feet msl on that date. The lease authorized the Department to conduct this “interim annual breaching” pending completion of an EIS and/or an environmental impact report (EIR) under CEQA to determine whether breaching was in the public interest.

Later in 1994, the Department and the County applied to the Army Corps and the Commission for two-year permits to breach the sandbar when the lake rose to eight feet msl between September and February, and on February 15 if lake levels were above five feet msl. This project application was not intended to establish the ultimate management level of the lake, but was intended to authorize breaching for two years pending completion of environmental studies. The Department and the County anticipated submitting permit applications at the end of two years for a long-term breaching program.

In 1995, Commission staff expressed concern that the Department had been unable up to that time to provide it with the necessary environmental information to evaluate the application. It had not received enough information to justify the Department returning to the Commission with a request to breach the sandbar at a height above four feet msl. Commission staff also expressed concern over continually issuing emergency permits while applications for long-term permits were withdrawn due to lack of environmental information. Staff felt this ongoing process “undermines the due process rights of the Coastal Commission and the public as they don’t have an opportunity to review and comment on either the emergency permit or the proposed permit in a public setting.” The Commission nonetheless issued emergency permits in January and December 1995 and December 1996 to breach at eight feet msl.

In 1997, the Department withdrew its application for the Commission permit. It stated it was working with the County, a working group of interested parties, and the Pacific Shores Water District to obtain information the Commission had requested about how the lake functioned as a coastal lagoon and the environmental impacts from breaching, and it needed additional time. It anticipated reapplying at a later date for a new development permit.

After withdrawing its permit application, however, the Department informed plaintiffs and the working group it would not resubmit an application for any type of breaching permit. The Department stated that, as lessee of the breaching site, it would deny access to any permittee who intended to breach at a level less than eight feet msl. It stated any further breaching would have to be done by emergency permit.

In December 1997, the Commission issued another emergency permit to breach the sandbar, as lake levels had reached 8.9 feet msl and flooding had occurred.

In 1998, and despite the Department’s earlier announcement, the County and the Department again applied to the Commission for a two-year permit to breach the sandbar at eight feet msl. As with the earlier permit application, the County and the Department viewed this permit as an “interim” permit. The Army Corps was at that time conducting a study of Lake Earl’s biological resources and hydrology. The County and the Department intended to operate under the two-year permit while the Army Corps completed its study. After that time, the County and the Department intended to apply for a long-term permit and develop a habitat management plan based on the results of the Army Corps’s study.

While the application was pending, the Commission issued two additional emergency permits to breach the sandbar at the nine-foot msl level; one in 1998 and a second in February 1999.

In May 1999, the Commission granted the two-year interim permit. It was to be used pending completion by the Army Corps of its studies. Under this permit, the County breached the sandbar once, in December 1999.

In November 2000, the Department informed the Commission it had begun revising and updating its management plan for the Lake Earl Wildlife Area. It stated it would prepare an environmental analysis for that project, and part of its analysis would review breaching the sandbar at Lake Earl at various water levels. After this process was complete, the Department and the County anticipated reapplying for a “long-term breaching permit” in 2003. In the meantime, it applied for a three-year permit based on the same terms as the previous emergency permits.

Pursuant to Commission instruction, Commission staff suspended processing the application. The Commission had earlier instructed staff not to accept for filing any application for an additional interim breaching permit until a management plan and an environmental analysis had been completed for the Lake Earl Wildlife Area.

The Commission granted additional emergency permits in late 2000, 2001, two in 2002, and one in 2003. The County sought the 2003 emergency permit because heavy rain had raised the lake level to 10.45 feet msl. Kellogg Road, the only access road into the Pacific Shores subdivision, was flooded to a depth of 15 inches. Lower Lake Road, the only access to Kellogg Road, was flooded to a depth of three inches.

In 2003, the Department prepared the Lake Earl management plan (the Management Plan), a long-term plan for managing Lake Earl. The Department also released a draft EIR analyzing the Management Plan’s environmental impacts. The Management Plan called for breaching the sandbar when Lake Earl’s water level rose to between eight and 10 feet msl between September 1 and February 15, and if the level exceeded five feet msl on February 15.

The EIR evaluated two alternative breaching levels: (1) four to six feet msl, and (2) allowing the sandbar to breach naturally at 12 to 14 feet msl. The Department concluded in the EIR that breaching at four feet msl would reduce habitat, an adverse environmental impact that could not be avoided or mitigated. Breaching at four feet msl would also adversely affect the amount of available wetlands and the wildlife that depended on those wetlands. The EIR concluded that continuing to breach when the lake reached eight- to 10-feet msl was the environmentally superior alternative “because it represents a balance between adverse effects on resources under the Department’s trusteeship and adverse effects on other land uses in the lagoon vicinity.”

The Department certified the final EIR in December 2004 and approved the Management Plan in 2005. It then applied to the Commission for a five-year coastal development permit, and to the Army Corps for a 10-year permit, to breach the sandbar at the eight- to 10-feet msl level in the fall and winter, and on February 15 if the lake level was at five feet msl. The Commission and the Army Corps approved the permits in 2005.

PROCEDURAL HISTORY

Plaintiffs filed this action for inverse condemnation in April 2007. In their fourth amended complaint, plaintiffs alleged they represented a class of private owners of Pacific Shores lots. The action named the Department, the Commission, the SLC, and the Wildlife Conservation Board (Conservation Board), the Department’s purchasing agent, as defendants, and alleged their actions constituted both a physical taking and a regulatory taking.

In 2010, the trial court granted summary judgment in favor of the SLC and the Conservation Board, and the matter went to trial in 2011 against the Department and the Commission. Evidence at trial indicated Lake Earl flooded for a significant period of time in 2009. Lake levels exceeded nine feet msl from March 20, 2009, until July 1, 2009. During that time period, lake levels exceeded 10 feet msl on May 15 and 16. Photos from March and May of 2009 show flooded roads, including Kellogg Road, the only access road to Pacific Shores.

In the liability phase, the trial court determined the Department and the Commission were liable for a physical taking or damaging of plaintiffs’ properties. However, it ruled they were not liable for a regulatory taking because plaintiffs had wrongly sought relief in inverse condemnation instead of administrative mandamus. The court also determined the statute of limitations did not bar plaintiffs’ claims, but plaintiffs were not entitled to precondemnation damages.

After the damages trial, the jury awarded the lot owners $10,500 for each of the eight interior lots at issue and $30,500 for the one ocean-fronting lot, for a total of $114,500. The court later awarded plaintiffs their attorney fees ($45,800) and costs ($29,727.28).

DISCUSSION

The State appeals and contends the judgment should be reversed because (1) plaintiffs’ claim for inverse condemnation is barred by the statute of limitations; (2) the State is not liable for the natural flooding of plaintiffs’ properties as it had no duty to protect against that risk; and (3) the State is not liable because its decision not to breach below eight to 10 feet msl was reasonable. If we affirm the judgment, the State asks us to modify the judgment to award it a permanent flowage easement.

Plaintiffs also appeal and contend the trial court erred by (1) barring their claims for regulatory talcing; (2) disallowing precondemnation damages; and (3) awarding approximately $45,000 in attorney fees when plaintiffs requested over $550,000, a calculation based on the hours their attorneys worked at allegedly reasonable rates. We address the parties’ arguments in turn.

I

The State’s Appeal

A. Statute of limitations

The State contends the trial court erred by concluding plaintiffs’ claims for inverse condemnation were not barred by the applicable statutes of limitations. We conclude the trial court erred in part. Plaintiffs’ claim against the Department was not time-barred, as the court ruled, but the claim against the Commission was time-barred. We thus reverse the judgment against the Commission, but affirm the court’s finding of timeliness against the Department.

1. Claim against the Commission

An aggrieved person has a right to judicial review of any “decision or action” taken by the Commission so long as he files a petition for writ of administrative mandate within 60 days after the “decision or action” becomes final. (Pub. Resources Code, § 30801; see Serra Canyon Co. v. California Coastal Com. (2004) 120 Cal.App.4th 663, 668, fn. 1 [16 Cal.Rptr.3d 110].)

There is no evidence plaintiffs filed a writ petition challenging the Commission’s 2005 permit or any other decision or action within 60 days after that permit, decision, or action became final. Plaintiffs’ failure to do so bars their claim for inverse condemnation against the Commission. “ ‘[Requiring that an inverse condemnation claim be joined with an administrative mandate action filed within 60 days after the Commission decision becomes final serves the salutary purpose of promptly alerting the Commission that its decision is being questioned and that the State may be liable for inverse condemnation damages.’ [Citation.] Once the Commission’s permit decision becomes final, the affected property owner is estopped from relitigating the validity of the decision in a subsequent inverse condemnation action. [Citation.]” (Serra Canyon Co. v. California Coastal Com., supra, 120 Cal.App.4th at p. 670.)

Plaintiffs contend the 60-day statute and the requirement to file first a petition for writ of mandate do not apply in this instance because the Commission’s actions constituted a physical talcing. We disagree, as there is no evidence the Commission physically invaded or damaged plaintiffs’ properties. Plaintiffs argue the Commission physically took their property interests by “abett[ing] [the Department’s] flooding agenda from the early 1990s, facilitating the ‘emergency’ breaching regime through 2005.” These statements admit the Commission’s actions were limited to denying and issuing various permits, not physically damaging or occupying plaintiffs’ property interests. Accordingly, the 60-day statute applied to plaintiffs’ claims of inverse condemnation against the Commission. Because plaintiffs failed to file a petition for writ of mandate within 60 days, their claim against the Commission for a physical taking is barred.

2. Claim against the Department

We turn now to the statute of limitations governing plaintiffs’ inverse condemnation action against the Department, a more complex issue. Normally, the determination of when a plaintiff’s cause of action accrues is a question of fact we review on appeal for substantial supporting evidence. (Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 487 [59 Cal.Rptr.2d 20, 926 P.2d 1114]; Smith v. County of Los Angeles (1989) 214 Cal.App.3d 266, 281 [262 Cal.Rptr. 754] [accrual of inverse condemnation claim].) However, where the underlying facts are not in dispute or susceptible of more than one legitimate inference, the question of when a cause of action accrues is a question of law, subject to independent review. (Ibid.; Bookout v. State of California ex rel. Dept. of Transportation (2010) 186 Cal.App.4th 1478, 1484 [113 Cal.Rptr.3d 356] (Bookout) [accrual of inverse condemnation claim]; Armstrong Petroleum Corp. v. Tri-Valley Oil & Gas Co. (2004) 116 Cal.App.4th 1375, 1388 [11 Cal.Rptr.3d 412].) The underlying facts in this case are not in dispute. We thus review the trial court’s ruling independently.

Claims for damage to real property must be filed within three years after the cause of action accrues. (Code Civ. Proc., § 338, subd. (j).) A claim for inverse condemnation based on an ongoing taking by flooding is subject to a unique rule of accrual. A property owner’s cause of action does not accrue and the statute of limitations period “ ‘does not begin to run until the situation has stabilized.’ ” (Lee v. Los Angeles County Metropolitan Transportation Authority (2003) 107 Cal.App.4th 848, 857 [132 Cal.Rptr.2d 444], original italics (Lee).)

This rule originated in United States v. Dickinson (1947) 331 U.S. 745 [91 L.Ed. 1789, 67 S.Ct. 1382] (Dickinson), where the Supreme Court held inverse condemnation claims against the federal government for a continuous taking by flooding — in that case, damages from flooding caused by higher water levels behind a new dam — do not accrue “until the situation becomes stabilized.” (Id. at p. 749.) The Supreme Court stated the owner may wait until “the consequences of inundation have so manifested themselves that a final account may be struck.” (Ibid.)

California has adopted Dickinson’s stabilization rule. (Pierpont Inn, Inc. v. State of California (1969) 70 Cal.2d 282, 293 [74 Cal.Rptr. 521, 449 P.2d 737] (Pierpont Inn), disapproved on another ground in Los Angeles County Metropolitan Transportation Authority v. Continental Development Corp. (1997) 16 Cal.4th 694, 708 [66 Cal.Rptr.2d 630, 941 P.2d 809].) “ ‘[W]hen the Government chooses not to condemn land but to bring about a taking by a continuing process of physical events, the owner is not required to resort either to piecemeal or to premature litigation to ascertain the just compensation for what is really “taken.” ’ ” (Pierpont Inn, supra, 70 Cal.2d at p. 293.)

Plaintiffs filed this action on April 6, 2007. The trial court ruled plaintiffs filed their action within three years of their claims’ accrual. Citing Dickinson and Lee, the court held plaintiffs’ claims were not barred by the statute of limitations because the Department’s actions were not stabilized until the Department adopted the Management Plan in 2005 and “subsequent resulting flooding” of plaintiffs’ lands became certain.

The Department contends the trial court erred. It asserts plaintiffs’ claims stabilized long before 2005. Plaintiffs knew the Department had allowed Lake Earl to rise above eight feet msl nearly every year since 1987, and they had complained to the Department and the Commission about property damage from those actions prior to 2001. The Department argues these facts demonstrate as a matter of law plaintiffs’ action accrued more than three years before they filed their complaint.

We disagree, and we affirm the trial court’s conclusion that plaintiffs’ claims against the Department stabilized no sooner than 2005.

Published California opinions have applied the stabilization doctrine to different facts, but they have not set forth a test for applying the doctrine. In Pierpont Inn, the Supreme Court stated it was not called upon to determine when the plaintiff’s action accrued; it was sufficient to hold the plaintiff’s tort claim, filed more than two years (the limitations period) after the government began constructing a freeway over the plaintiff’s land but before workers completed the portion of the project that took his property, was not untimely. (Pierpont Inn, supra, 70 Cal.2d at pp. 293-294.)

In Stonewall Ins. Co. v. City of Palos Verdes Estates (1996) 46 Cal.App.4th 1810 [54 Cal.Rptr.2d 176] (Stonewall), the Court of Appeal held a landowner’s claim for erosion caused by a public storm drain was not barred where the owner filed the claim under a one-year claims, statute, 11 years after the storm drain’s construction but four years before a mudslide triggered by the drain destroyed the owner’s property. (Id. at pp. 1832, 1843.)

In Lee, the Court of Appeal, following Pierpont Inn and Stonewall, held a plaintiff’s cause of action for inverse condemnation had not stabilized when she filed her complaint in 2000, where the transportation authority began constructing subway tunnels in 1993, the construction caused noticeable damage to the plaintiff’s property beginning in 1995, and her property began settling in 1997. (Lee, supra, 107 Cal.App.4th at pp. 851-852, 858.)

Unlike California case law, federal takings jurisprudence has established a test for applying the Dickinson stabilization doctrine. The test is sound, and we apply it here. Under federal takings law, an inverse condemnation claim for an ongoing taking stabilizes “when it becomes clear that the gradual process set into motion by the government has effected a permanent taking, not when the process has ceased or when the entire extent of the damage is determined. Thus, during the time when it is uncertain whether the gradual process will result in a permanent taking, the plaintiff need not sue, but once it is clear that [1] the process has resulted in a permanent taking and [2] the extent of the damage is reasonably foreseeable, the claim accrues and the statute of limitations begins to run.” (Boling v. U.S. (Fed.Cir. 2000) 220 F.3d 1365, 1370-1371 (Boling).)

Boling clarified Dickinson's stabilization doctrine. In Boling, the plaintiffs sued the government for ongoing erosion to their coastal properties caused by man-made canals constructed decades earlier to form a contiguous Atlantic Intracoastal Waterway. The Court of Federal Claims ruled the takings claims accrued once any portion of a parcel had suffered erosion damage. (Boling, supra, 220 F.3d at pp. 1368-1369.) The plaintiffs on appeal argued stabilization did not occur until their parcels had been completely eroded. The federal circuit court of appeals rejected both theories. As to the plaintiffs’ theory, the court wrote: “Properly understood, stabilization as discussed in Dickinson is not deferred until the progressive environmental damage stops, but occurs when the environmental forces have substantially and permanently invaded the private property such that the permanent nature of the taking is evident and the extent of the damage is reasonably foreseeable.” (Id. at p. 1371.)

The federal circuit also rejected the Court of Federal Claims’s stabilization test as too rigid an application of the stabilization doctrine. (Boling, supra, 220 F.3d at p. 1372.) “[T]he touchstone for any stabilization analysis is determining when the environmental damage has made such substantial inroads into the property that the permanent nature of the taking is evident and the extent of the damage is foreseeable.” (Ibid.) The appellate court noted this point would vary from parcel to parcel. On remand, it directed the trial court to take into account all the factual circumstances that would affect when the permanent nature of the taking became evident such that the landowner should have known his property had suffered erosion damage. (Id. at pp. 1372-1373.)

Subsequent federal cases have applied this standard and illuminate for us its operation. Banks v. U.S. (Fed.Cir. 2003) 314 F.3d 1304 (Banks II) concerned the effect jetties in Lake Michigan had on down-shore properties. The Army Corps completed construction of the jetties in 1903 and improved them between 1950 and 1989. The presence of the jetties significantly increased the annual rate of shoreline erosion. The Army Corps acknowledged this long-standing problem since at least the mid 1970’s. (Id. at p. 1306.) To mitigate the problem, the Army Corps regularly filled the beaches with fine sand. After 15 years of doing this, it determined the fine sand did not hold the beaches well. It then deposited coarse material on the shoreline between 1986 and 1993. In 1995, it expanded its efforts to include placing barge loads of large rock into the lake. (Id. at pp. 1306-1307.) The Army Corps’s reports in 1996, 1997, and 1999 (made public in 2000) noted that despite limited success from their efforts, the erosion was irreversible and potentially permanent. (Id. at p. 1307.) Affected landowners sued the Army Corps in 1999 for a taking. (Id. at p. 1306.)

The federal circuit court of appeals ruled the statute of limitations did not bar the plaintiffs’ complaints. While the mitigation efforts were underway, and were changed when not successful, the plaintiffs’ claims remained uncertain until the Army Corps reported in 1996, 1997, and 1999 that the erosion was permanent. The plaintiffs’ claims did not accrue until 2000, when the Army Corps’s reports “collectively indicated that erosion was permanent and irreversible.” (Banks II, supra, 314 F.3d at p. 1310.) “ ‘[A] claim stabilizes when the “permanent nature” of the taking is evident.’ ” (Id. at p. 1309, quoting Fallini v. U.S. (Fed.Cir. 1995) 56 F.3d 1378, 1382.) Any promises by the government to mitigate damages caused by a continuous physical process delays a property owner’s takings claim when the owner demonstrates that “ ‘predictability [and permanence] of the extent of damage to the [plaintiffs’] land’ was made justifiably uncertain by the [government’s] mitigation efforts.” (Banks II, supra, 314 F.3d at p. 1309, quoting Applegate v. U.S. (Fed.Cir. 1994) 25 F.3d 1579, 1583.)

Northwest Louisiana Fish & Game Preserve Com. v. U.S. (Fed.Cir. 2006) 446 F.3d 1285 (Northwest Louisiana) also found a federal complaint for an ongoing taking was not time-barred. The case concerned a state commission that managed a game preserve. The state commission controlled aquatic weeds in a preserve lake by drawing down the lake into the Red River. Meanwhile, federal law obligated the Army Corps to assure navigation on the Red River. The Army Corps did this by constructing a series of locks and dams on the river. (Id. at p. 1286.) In 1988, it began constructing a lock that would impound water at 95 feet msl, 4.5 feet lower than the lake’s ordinary elevation. This impoundment limited the lake’s drawdown capability to between 3.5 and 6.5 feet less than the state commission required to control the lake’s weeds. The state commission asked the Army Corps to seek alternatives to alleviate potential impacts. (Id. at p. 1287.) From 1988 through 1994 when the water level reached 95 feet msl, the Army Corps conducted studies and evaluated alternatives to minimize the impacts to the lake. In 1995, an aquatic weed, hydrilla, was rediscovered and spread through the lake. The state commission asked the Army Corps to lower the water level behind the lock to allow it to draw down the lake. In 1997, the Army Corps denied the request, and it suggested the state commission use herbicides and a limited drawdown. (Id. at pp. 1287-1288.)

After filing a state action and an administrative claim, the state commission sued the Army Corps in 2001 for a taking. (Northwest Louisiana, supra, 446 F.3d at p. 1288.) The federal circuit court of appeals ruled the complaint was not barred by the six-year statute of limitations. The state commission’s claim accrued under the stabilization doctrine in 1997 after both the appearance of significant hydrilla growth and the Army Corps’s first definite refusal to draw down the water level. (Id. at pp. 1290-1291.) That was when the commission knew or should have known of the damage and “ ‘all events which fix[ed] the government’s alleged liability [had] occurred.’ ” (Id. at p. 1290, quoting Boling, supra, 220 F.3d at p. 1370.)

Applying the Boling stabilization test here, we conclude plaintiffs’ claims did not accrue under the stabilization doctrine until the completion of the Management Plan in 2005. Although the type of damage that would occur from breaching the sandbar at eight feet msl was known prior to 2005, as the bar had been breached at that level many times, the taking did not become permanent until at least 2005, when the Commission approved the Management Plan and granted the Department a five-year permit to breach at eight to 10 feet msl. It was at that time when the Department’s desire to breach at eight feet msl obtained a type of permanent approval on which it could act without having to return to the Commission for ad hoc approval until the permit expired. Approving the Management Plan and obtaining the 2005 permit were the events that fixed the Department’s liability.

The permit application history supports our determination that plaintiffs’ claims did not accrue until 2005. In 1987, the County applied for a five-year permit. After reviewing the permit application, the Commission granted a two-year permit to breach the sandbar at six feet msl between October and April. In 1992, the Commission granted a two-year permit to breach the sandbar during the rainy season at four feet msl, but the Department refused to accept the permit. The Commission would not grant another development permit for breaching until 2005. Instead, it authorized all breaching from 1991 until 2005 under emergency permits and interim permits when flooding was imminent or occurring pending the resolution of various permit applications and environmental reviews.

In 1994, the Department applied for a permit to breach at eight feet msl, but three years later, the Department withdrew its application and told the County it would not apply for another permit. In 1998, the Department and the County applied for a two-year “interim” permit to breach at eight feet msl. In 2000, the Department asked the Commission for a three-year permit pending completion of the Management Plan and its environmental review. The Commission refused to process that application, as the Department had yet to provide it with sufficient environmental analysis.

In the environmental review the Department eventually performed, the Department analyzed breaching the sandbar at eight to 10 feet msl and four to six feet msl as part of determining when it should breach for purposes of the Management Plan. While this review was ongoing, the Commission again granted only emergency permits to breach the sandbar when flooding was imminent or occurring. Finally, in 2004, the Department certified the EIR and in 2005 approved the Management Plan. At that point, the Commission approved a five-year development permit to breach at eight to 10 feet msl. It was not until then that the ongoing process set in motion by the Department to take control of breaching the sandbar — applying for development permits, revoking its permit applications pending additional studies, and operating under emergency permits when the need arose — stabilized and a reasonable person could realize the Department’s actions had become permanent. Plaintiffs filed their complaint within three years of that time. These undisputed facts demonstrate plaintiffs’ complaint against the Department was not time-barred.

The Department argues plaintiffs were aware of the permanent nature of the takings since 1987. Since then, the Department and the Commission allowed the lake level to rise to eight feet msl and higher every year. The Department contends this case is similar to Bookout, supra, 186 Cal.App.4th 1478, and Mildenberger v. U.S. (Fed.Cir. 2011) 643 F.3d 938 (Mildenberger), two cases where courts held the takings claims were time-barred. We disagree with the Department’s arguments.

The Department in its briefing ignores the context in which the Department and Commission allowed the lake level to rise to eight feet msl and higher each year. From 1989, the rises all occurred and were abated pursuant to emergency permits, issued without public review and for a one-time breach due to the imminent threat of flooding, or pursuant to interim permits. Both types of permits were issued while applications for development permits to perform the breaching on a long-term basis were either pending or withdrawn. Neither of these types of approval demonstrates the Department’s talcing had stabilized.

Emergency permits are just that — valid only for an emergency. The Commission’s regulations authorize the Commission’s executive director to grant an emergency permit to allow development only when an emergency exists that requires action more quickly than could be permitted by the procedures for ordinary Commission permits, and the work is consistent with the Coastal Act. (Cal. Code Regs., tit. 14, § 13009.) All of the emergency permits granted by the Commission from 1991 until 2005 were issued on an ad hoc basis, not as part of a regular or adopted regime. An emergency did not exist and the County could not apply for an emergency permit until the water level exceeded eight feet msl because flooding of roads and property did not begin until the water level exceeded eight feet msl. The authorized breaching levels reflect only the emergency that was happening, not the final decision by the Commission or the County to breach at that level as a matter of policy.

Indeed, by their very terms, emergency permits cannot demonstrate the Department’s policy of breaching at eight feet msl had stabilized. The permit stated the Commission considered the breaching to be performed under the permit to be “temporary” work done in an emergency. In this context, when breaching happened only due to an emergency while applications for long-term permits were pending or withdrawn, and when the last development permit approved by the Commission authorized breaching at four feet msl, a person could not reasonably foresee the Department’s action of breaching at eight feet msl had become stabilized or permanent.

Interim permits also failed to establish stability. In their applications for an interim permit, the Department admitted the interim permit was needed only while the Department developed a permanent policy for breaching. The Department’s policy had not stabilized while it was still formulating the Management Plan and its breaching policy.

Moreover, when the Department finally performed an EIR, it evaluated breaching at four to six feet msl and not breaching at all as alternatives to breaching at eight to 10 feet msl. Thus, the Department was still considering the possibility of breaching at a water level other than eight feet msl up until 2005. It was not until the Management Plan stating breaching would occur at eight to 10 feet msl was approved and the development permit issued that the Department’s actions gained sufficient permanence to put plaintiffs on notice their property rights may have been taken.

Bookout and Mildenberger, relied upon by the Department, are distinguishable and do not apply here. In Bookout, the Court of Appeal, Second Appellate District, Division Six, ruled the three-year statute of limitations barred the plaintiff’s action for inverse condemnation. (Bookout, supra, 186 Cal.App.4th at p. 1481.) The plaintiff’s property suffered intermittent flooding from an inadequate storm drainage system constructed around 1939 and modified around 1977. The plaintiff purchased his property in 2000. Evidence indicated the plaintiff complained to the community services district about the flooding every time it rained. He specifically did so in December 2002. He also indicated to the county in June 2002 that his property flooded once a year. (Id. at pp. 1481-1482.) The plaintiff filed his complaint for inverse condemnation in May 2006. He testified he discovered the flooding in 2004. (Bookout, supra, 186 Cal.App.4th at p. 1482.) The trial court ruled his complaint was time-barred. (Id. at pp. 1484 — 1485.)

The Bookout plaintiff contended on appeal the stabilization doctrine applied because conditions changed since the 1970’s due to maintenance activities, nearby construction, and an accumulation of debris. The Court of Appeal disagreed, holding the damage annually caused by the inadequate storm drain had stabilized. It stated none of the alleged changed conditions compelled the trial court to conclude flooding was not relatively consistent and static (i.e., stable) for several years prior to the plaintiff’s purchase of his property. (Bookout, supra, 186 Cal.App.4th at pp. 1484-1485.) In any event, the evidence supported the trial court’s determination that the plaintiff knew about the flooding in 2002, inferring his claim could have accrued no later under the circumstances. (Id. at pp. 1485-1486.)

In Bookout, the defective drain had existed in its condition since the 1970’s without significant alteration or review by the state, some 30 years before the plaintiff filed his complaint. Here, the Department began reviewing the propriety of breaching at four feet msl, six feet msl, and eight feet msl in 1991, and did not reach a permanent or stable decision until 2005. Bookout is not similar to our case.

In Mildenberger, the federal circuit court of appeals determined the stabilization doctrine did not apply. Again, the case is distinguishable. The plaintiffs in Mildenberger contended the Army Corps’s management of Lake Okeechobee in Florida resulted in a taking of their riverfront properties. Pursuant to an official management policy, the Army Corps released lake water into a series of connected canals and waterways to manage the lake’s water level. It and the state constructed those canals beginning in the late 1800’s. The stat