HERE'S THE COMPLAINT TO BE FILED WITH BUILDING & SAFETY OVER FRAUDULANT PERMITS AT "DIRT" BURNELL IN MT. WASHINGTON
ZUMA DOGG has obtained a complaint to be filed regarding with Building and Saftey, that I understand they agreed to hear, regarding Dirt Burnell -- a six home housing project that this complaint claims is being built under fraudulant permits.
Additionally, this is the same parking lot Captain Jack has been parrotting about on this blog for many a month, now, savvy.
So besides this ACTION TO REVOKE from this fine group of folks, you have, "Come now, ye plaintiffs" being shouted from Captian Jack's barge.
HERE'S THE SIGNIFICANCE OF THIS COMPLAINT: Planning, after being specifically told about the fraud, did nothing, and furthermore, issued the last clearances that allowed the building permit to be issued. Councilmembers hands are tied because the decision is not before council; it's all tied up in bureaucracy. But Building and Safety agreeing to hear the "complaint"/"appeal", means it COULD eventually go to Council, if appealed high enough. (And if we're talking fraudulant permits, why wouldn't it be?)
Request for City Building and Safety Action to Revoke Building Permit Obtained Through Fraud and Artifice on City Officials
1657 Burnell Drive
Permit No. 0510 10000 01662
Permit No. 06041 9000 29765
Permit No. 06030 10000 03723
A speculation developer named Michael Zenon assembled nine lots in a row along “dirt” Burnell Drive in the Mount Washington area. Under the California Environmental Quality Act (“CEQA”) a project that involves more than three single-family houses does not qualify for a Categorical Exemption under the CEQA Guidelines. Under the California Environmental Quality Act and state guidelines, generally the construction of 3 or fewer single family homes, unless one of five exceptions apply, will not trigger an obligation of the lead agency to conduct an Initial Study to assess potential significant environmental impacts. (CEQA Guidelines 15303(a).) However, even one single-family house can trigger an obligation to prepare an Environmental Impact Report if one of the exceptions is triggered. (See exceptions listed at Guidelines 15300.2.) Zenon knew he planned to build between 6-8 and such a project would absolutely require the preparation of an initial study to determine if there were potential significant negative environmental effects. [CLICK READ MORE TO CONTINUE]
The site along “dirt” Burnell has a number of obvious serious environmental issues. Having knowledge of these issues, Zenon set about to manipulate the nominal title of a portion of the lots by selling or transferring title to a passive partner, Roman Z. Phifer, a former NFL player who is not known to be an independent real estate developer. Using these different titled owners, he submitted applications for three houses of the four lots he transferred to Roman Phifer. Zenon waited two months and then sent his employee to file applications for three more house applications under his company’s name. On all six of these houses, he and his design/construction company was the project applicant and owner’s representative. All six houses in a row along “dirt” Burnell Drive constitute a single project.
The applications Zenon filed omitted any disclosure to the City of the existence of the other five related projects. The applications actively misrepresented the street in front of the lots as 30 feet wide with “curb” when in fact, it was a “dirt” unimproved road. Each application also actively misrepresented the number of trees and actively concealed from the City that the overwhelming majority of the trees were native California Black Walnut trees, an endangered plant community. The combined effect of his fraudulent actions to run the houses through the planning process resulted in three of the six houses receiving Project Permit Approvals without ANY environmental review of the potential impacts or the imposition of proper mitigation measures to protect surrounding neighbors.
Notice of these three house approvals went to adjoining landowners under City Code, but in fact, only one or two adjoining properties were owned by someone other than Zenon or his partner. The Project Permit Determinations for these three permits were mailed to the wrong neighborhood council so the adjoining neighbors were denied due process of law because they were given no meaningful means to know of and file a timely appeal of the three approvals.
Months after appeal periods expired for these permits, the adjoining landowners first learned of the approvals and the Mount Washington Homeowners Alliance investigated. The investigation revealed the manipulation of the title to the property and submission of only three houses at a time under differing owner names. All of this fraud was described in a detailed letter to the City Planning Department who failed to read the letter or take action to protect the adjoining community by revoking the permits. In October 2006, the MWHA arranged an on-site meeting with City planners and representatives from the office of Jose Huizar. Despite promises by City planners to read the MWHA’s letter, on November 8, 2006, the same planners issued the final planning clearances that enabled Mr. Zenon to get the building and grading permits issued for 1657 Burnell Drive.
Because the entire approval process for this house is tainted by the fraud of Michael Zenon on City Planners, all city approvals are legally null and void. Zenon never obtained a lawful set of City approvals and the City of Los Angeles has the authority, indeed the duty, to protect the adjoining homeowners by revoking all approvals based upon fraud. This is consistent with well-established California case law that a vested right to build a project only occurs when an owner obtains a lawfully issued permit and begins construction. Although Zenon has begun construction, the neighborhood has been irrevocably harmed by the lack of site-specific mitigation measures and native trees have been cut down and maimed by shoddy work of the developer. This project might qualify for completion in the future, but at the present time the developer is building under City approvals vitiated with the initial fraudulent actions of Michael Zenon and his agents. The approvals must be immediately revoked and a proper public review process initiated to assure appropriate protections of the environment and the surrounding community.
Initial Assembly of Title to Nine Lots in a Row
On August 13, 1997, March 25, 2003, and July 16, 2003 various owners of vacant lots along Burnell Drive in the Mount Washington area transferred their interests to Michael Zenon, a speculation real estate developer who has constructed other speculation houses in the area. Additionally, on June 24, 2003 an owner transferred his interest to an entity called “Brunell Properties LLC” for one other lot. (This appears to a misspelled name of “Burnell Properties LLC” a company formed by Zenon to hold and develop 9 or more lots along “dirt” Burnell Drive). The addresses and lot numbers and title owner as of March 30, 2004 were as follows:
Lot 406 – 1657 Burnell Drive – Michael V. Zenon
Lot 405 – 1651 Burnell Drive – Michael V. Zenon
Lot 404 – 1647 Burnell Drive – Michael V. Zenon
Lot 403 – 1641 Burnell Drive – Michael V. Zenon
Lot 402 – 1637 Burnell Drive – Michael V. Zenon
Lot 401 – 1629 Burnell Drive – Michael V. Zenon
Lot 400 – 1619 Burnell Drive – Michael V. Zenon
Lot 399 – 1607 Burnell Drive – Brunell Properties LLC (Deed has misspelled name)
Lot 398 – 1601 Burnell Drive – Michael V. Zenon
(Copies of the relevant deeds that show how Zenon assembled all of these properties into his control are attached in Exhibit 1).
On March 30, 2004, Michael V. Zenon executed deeds that transferred his interest, or in the case of Lot 399, his company’s interest, in the lots to these other persons or entities:
Lot 406 – 1657 Burnell Drive – Burnell Properties LLC
Lot 405 – 1651 Burnell Drive – Burnell Properties LLC
Lot 404 – 1647 Burnell Drive – Burnell Properties LLC
Lot 403 – 1641 Burnell Drive – Burnell Properties LLC
Lot 402 – 1637 Burnell Drive – Burnell Properties LLC and on to Roman Z. Phifer
Lot 401 – 1629 Burnell Drive – Burnell Properties LLC and on to Roman Z. Phifer
Lot 400 – 1619 Burnell Drive – Burnell Properties LLC and on to Roman Z. Phifer
Lot 399 – 1607 Burnell Drive – Roman Z. Phifer
Lot 398 – 1601 Burnell Drive – No action. Remained in name of Michael V. Zenon
(Copies of the relevant deeds that show how Zenon transferred some of the lots into his controlled limited liability corporation and some of the lots into the name of his passive business partner, Roman Phifer are attached in Exhibit 2.)
Every speculation developer like Michael Zenon knows that a multi-house project above the state law threshold of three houses will trigger greater environmental review and possibly the imposition of mitigation measures to protect surrounding landowners from negative environmental impacts of the project. Every speculation developer knows that if he can submit house projects as single, stand alone projects, each could qualify for a Categorical Exemption from any environmental review at all and cumulative impact review might be completely avoided. (This is especially true because City of Los Angeles review processes for single-family homes also fail to consider routinely the 5 exceptions under the CEQA statute that may take even a single house out of the Categorical Exemption and require further review.)
Anyone looking at the “dirt” Burnell Drive area would observe the following potential environmental issues:
There is no improved street at all and thus, the whole project would require completion of a new public street, water lines, sewer lines, storm sewer drains, public street lighting, and curbs. This street deadends with no second outlet for fire and safety protection.
Any roadway constructed will include steep grades which will concentrate runoff from homes and will require some type of drainage, possibly including the need for an easement on downhill properties for drainage.
There is a visible landslide halfway down the roadway.
There is obviously a woodland of endangered plant community, the California Black Walnut tree. There are at least 85 extremely mature Black Walnut trees, some measuring 30” around the trunk.
The street access to the site consists of a 16-foot wide roadway which is grossly substandard and steeply sloped.
Michael Zenon, as an experienced speculation developer, had to have known and recognized the serious environmental issues that would have to be examined if he applied to construct all 9 lots. He then took actions, which cumulatively resulted in the submittal of this seven-house project under different owner names, and then for each titled owner, he submitted three or less houses for City Planning approval. Although his scheme resulted in two different title owners of the 9 lots, Michael Zenon and his company, Design Controls Inc. handled the preparation and submittal of all six of the seven houses for which applications were filed to date. This was a scheme or artifice for Michael Zenon’s design/construction company to be the project applicant and owner’s representative on applications for seven houses next to each other on “dirt” Burnell, do all the design work, and manage all the construction.
There is overwhelming evidence in the case files for the six houses that Zenon submitted to the City that demonstrates that although nominal title to four of the nine lots were transferred to Roman Phifer, this was from the beginning and still is Michael Zenon’s construction project.
The record establishes that on March 30, 2004 Michael Zenon transferred title for seven of the nine lots from himself to a limited liability company owned by him called “Burnell Properties LLC.” The MWHA documented all of these transactions in its June 21, 2006 letter to the Planning Department. On the same day, he transferred title to three of those same seven lots and one other lot already titled in his company’s name from his company to Roman Z. Phifer.
Within four weeks after that, Roman Z. Phifer signed the “Owner’s Affidavit” on the City’s Master Application Form for three of the four lots Phifer now nominally owned. The application form showed Phifer was the owner but Design Control, Zenon’s design and construction company, whose address was identical to Burnell Properties LLC, was the applicant and owner’s representative.
On August 12, 2004, Zenon, on behalf of Phifer, filed applications for three nearly identical modern stucco houses. On that day, City staff filled out a Categorical Exemption form indicating the City’s staff’s determination that because less than four houses had been applied for, each house qualified for a Categorical Exemption. Although Phifer took title to four lots on Burnell, Zenon only submitted three houses because he presumably knew that if he submitted all four of Phifer’s lots at the same time, the City staff would have refused to issue a Categorical Exemption and ordered an initial study of environmental impacts.
It is significant that the City is well aware of the risk of fraudulent, incomplete or misleading applications. On the CEQA Categorical Exemption signed by the City planner on August 12, 2004, Zenon and Phifer were given the following notice:
“THE APPLICANT CERTIFIES THAT HE OR SHE UNDERSTANDS THE FOLLOWING: Completion of this form by an employee of the City constitutes only a staff recommendation that an exemption from CEQA be granted. A Notice of Exemption is only effective if, after a public review and any required public hearings, it is adopted by the City agency having final jurisdiction (including any appeals) over the project application. If a CEQA exemption is found inappropriate, preparation of a Negative Declaration or Environmental Impact Report will be required. IF THE INFORMATION SUBMITTED BY THE APPLICANT IS INCORRECT OR INCOMPLETE SUCH ERROR OR OMISSION COULD INVALIDATE ANY CITY ACTIONS ON THE PROJECT, INCLUDING CEQA FINDINGS.”
Right below this warning, Michael Zenon printed and affixed his signature to the Categorical Exemption issued for each of the three Phifer houses. Michael Zenon signed each of these three Categorical Exemptions with knowledge that they were not the only houses for which applications were going to be submitted by his firm on the same paper street with obvious major environmental issues. Thus, the City gave fair warning to Zenon and Phifer that failure to disclose relevant information about the scope of the total seven-house project or potential impacts of a project could result in the City’s decision to require more environmental review or result in revocation of any City approvals including a building permit issued in error because of misleading or erroneous information in the application.
Thereafter, City Planners began processing the three Phifer houses (1637, 1629, and 1619 Burnell) under the Categorical Exemptions.
After he had gotten Phifer’s three applications underway, Zenon waited a little over two months and then prepared the applications for three more single-family house projects on “dirt’ Burnell. These applications were on behalf of Burnell Properties LLC, Michael Zenon’s own limited liability corporation formed to hold title. Again, on each of these three applications, Design Control Inc., and Michael Zenon were the applicant and owner’s representative for these three houses.
Once the paperwork was all ready to take to the City’s public counter, Michael Zenon DID NOT walk into the City offices to make the application himself. After all, two months before, he had personally walked Phifer’s three houses through the application process at the Public Counter. Planners at the counter might remember his face from previous projects. Instead he sent a man named Roger P. Arquinez to walk the next three houses through the Public Counter process on behalf of Michael Zenon’s companies. From his action of carrying these applications into the City Public Counter, Arquinez acted as Zenon’s authorized employee or representative, particularly because his telephone number listed on City documents is Zenon’s business phone number. Arquinez signed the same Categorical Exemption acknowledgements for Zenon just as Zenon personally signed on behalf of Phifer. Thus, Zenon is charged with knowledge that any misrepresentations and omissions on the applications would subject the project to greater environmental review or invalidation of any City approvals if it later were revealed the applications were erroneous or misleading.
Thereafter, City planners began review of the three Zenon houses (1657, 1651, and 1641) under these three additional Categorical Exemptions. At this point, Zenon and his company, Design Control Inc. were the Applicant and Owner’s Representative for six houses in a row on “dirt’ Burnell Drive.
Identical Omissions And Misleading Information On All Six Applications
A review of the applications filed by Michael Zenon on behalf of himself and Roman Phifer reveal some obvious misrepresentations about the environmental setting. On the three applications Zenon prepared for Phifer’s houses, Phifer signed the affidavit. On the three applications for his own three houses, Zenon signed the owner’s affidavit. The owner’s affidavit states that all information on the Master Land Use Permit Application and the attached Request for Determination are “true and correct to the best of my knowledge” and signature in front of a notary is required under penalty of perjury. Despite this sworn affirmation, all six applications prepared under Zenon’s supervision included glaring omissions or misleading statements that had the effect and must be presumed were intended to mislead City planners from ordering proper environmental review and imposition of proper mitigation measures. The moment these applications were submitted to the City, the permits were tainted with Zenon’s fraud:
On every application, the Master Land Use Permit Application Question #5 requires the applicant to “List any related or pending case numbers relating to this site that have been filed with the Planning Department:” On every application, Zenon not only failed to list the other two houses being submitted the same day, but he failed to notify the City Planning Department of the other houses submitted on the same paper street for which his company was preparing plans, preparing applications, or had already filed applications. In other words, the City imposed an affirmative duty on Zenon as the Applicant for all six of these houses to disclose related development projects and he intentionally and knowingly omitted this information in a scheme or device to deprive the City of all the information required to determine the proper level of environmental review. This omission led the City to erroneously recommend and begin processing each individual house as a separate project instead of considering the potential cumulative impacts of the WHOLE project (a project of at least six houses and perhaps eventually as many as eight houses in the end).
On every application, Zenon claimed that the Street Width was “30 feet measured from curb” In fact, “dirt” Burnell is a totally unimproved street that cannot be driven safely by a vehicle and there is no paving and no curbs. The check marking of the word “curb” by Zenon was clearly intended to mislead the City planner into thinking this was merely a single house being added to an existing improved street that was 30 feet wide.
On every application, Zenon listed fewer trees than the number of actual trees on the lot.
On every application, Zenon listed some number of trees as “Significant” and absolutely never did he list any of the trees as “Native” trees. Because the native California Black Walnut is a threatened plant community, the failure to list the existence of any Native trees meant that City planners would not be alerted to the presence of a particularly mature stand of California Black Walnut trees on these lots. In fact, the site is overgrown with a dense canopy of Black Walnut Trees and the application fails to disclose the presence of this significant environmental condition. Mr. Zenon is alleged to have built other speculation houses in the Mount Washington Glassell Park Specific Plan area and this blatant misrepresentation of the status of the trees on the properties is circumstantial evidence of an intentional effort to mislead City officials.
On every application, Zenon represented that no grading or construction activity would occur within the driplines of a Native or Significant Tree, yet later studies of the lots showed that many trees not proposed to be cut down and removed from the lots were adjacent to the proposed house, drainage or other construction proposed for the property.
On every application, Zenon represented that the adjoining houses were “bungalows or contemporary style.” But in fact, there are no adjoining houses except the identical, cookie cutter, “modern” houses Zenon was proposing and that fact was not disclosed to the City planners at all.
(Compare all six Master Land Use Permit Application Forms, Mount Washington/Glassell Park Specific Plan Project Permit Application Determination Request Forms, and Categorical Exemptions attached for each house in Exhibits 3, 4, 5, 6, 7, and 8.)
The cumulative effect of these serious omissions and affirmatively misstated status of the adjoining street and types of trees on the properties was substantially misleading to City Planning staff.
What Did City Planning Know and When Did It Know It?
There is some evidence City Planners realized that there were more than three houses in this overall project but passively did nothing to correct the lack of any environmental review. Apparently, the house plans submitted by Zenon for the six houses were substantially the same. One of the critical elements of the Mount Washington/Glassell Park Specific Plan is the requirement that each house significantly differ from others in order to preserve the unique architectural diversity of the neighborhood. As City planners reviewed some of Zenon’s houses, they must have realized that there were three other houses under review under Phifer’s name. This is evidenced by a December 17, 2004 Notice of Suspension of Zenon’s permit applications for 1641 and 1651 Burnell Drive. The reason for the suspensions cited by City planners was that the house at 1641 was “The architectural style and design elements for the subject property is similar to the proposed projects at 1619, 1629, and 1637 N. Burnell Drive.” (See Exhibit 9.) These were the three houses Zenon was proposing as applicant for Roman Phifer so in December 2004, City planners were aware that six houses in a row were being developed by Michael Zenon.
City Planning Issues Approvals for Two Of Three Phifer Houses One Month Later
The unfortunate reality is that at the City of Los Angeles, once a Categorical Exemption is issued for a single-family home on the FIRST day the application is filed, most planners put the obligations under CEQA out of mind. The City’s processes call for the evaluation of environmental impacts on the day the application is first filed with the City instead of when the application is deemed complete. The failure of City processes to require re-evaluation or evaluation of environmental issues once the file is deemed complete and ready for planning review means there is a substantial risk of error in the review of environmental issues. And because there is no incentive for a planner to “go back” and reconsider environmental issues when the application has truly been made complete, most planners simply say to themselves: “This is categorically exempt, I can go ahead a approve this project.”
On January 18, 2005, just 30 days after notice to Zenon that 1641 was “too similar to 1637, 1629 and 1619 Burnell,” the City Planning Department issued the Project Permit Determination for 1619 Burnell. A few days later, on January 21, 2005, despite the City determination in December 2004 that 1641, 1637, 1629 and 1619 were too similar in design, the City issued a Project Permit Determination for the house next door at 1629 Burnell without resolving the similarity of design question.
Three Weeks Later Planning Approves One of Zenon’s Houses
On February 14, 2005, the Planning Director issued a Project Permit Determination for 1657 Burnell, the site currently under construction.
The Categorical Exemptions issued by the City for each of these houses in reliance on the materially misleading applications filed by Michael Zenon and his authorized agents were the supporting environmental document. There was no environmental review conducted due to the fraud on the City.
Due Process Failures Regarding Notice
The City supposedly mailed notice of the Project Permit Determinations to adjoining landowners based upon mailing labels provided by Michael Zenon. We have not had an opportunity to inspect the labels used but we know that a civil rights attorney who lives next door to the 1657 Burnell project, the one and only occupied property adjacent to these projects is confident that she received no notice or copy of the Project Permit Determination. (See her environmental comment letter that denies she was ever notified. Exhibit 10.) Additionally, we expect the adjoining landowner on Bridgeport to also deny that she ever received such project notice. This is hardly surprising because in fact, most of the adjoining landowners were Zenon himself or Roman Phifer. If notices were in fact mailed, under the City’s notice ordinance, most would have been mailed to Zenon and Phifer as adjoining lot owners. The City’s notice process denied due process to the nearby landowners and residents because they received no timely notice of the decisions and were not given a meaningful opportunity to appeal the decisions before expiration of the City appeal period and the indeed, even the 180 day CEQA statute of limitation.
The community also reports that they never observed the posting of the required Notice of Intent signs for most of these projects. After the City approvals were issued and the appeal period expired, neighbors documenting the trees on the property found some Notice of Intent signs down the hillside, in some cases lying on the ground or posted behind trees.
The City also mailed notice to the Glassell Park Neighborhood Council. This was incorrect, as the property lies within the boundaries of the Greater Cypress Park Neighborood Council, not Glassell Park. The failure to give notice to the proper neighborhood council violated the intent of the City Charter in forming neighborhood councils in order to give communities a voice in land use decisions. Thus, in this case, the developer can demonstrate absolutely no notice at all to the community was given.
Phifer Borrows Construction Funds for Unlawfully Obtained Permit Determinations
On August 24, 2005, six months after getting approvals for two of his lots, Roman Z. Phifer transferred his four lots received from Michael Zenon to a company called “Haven Hill Estates LLC.” Thus, by the end of these transactions, vested title was as follows:
Lot 406 – 1657 Burnell Drive – Burnell Properties LLC
Lot 405 – 1651 Burnell Drive – Burnell Properties LLC
Lot 404 – 1647 Burnell Drive – Burnell Properties LLC
Lot 403 – 1641 Burnell Drive – Burnell Properties LLC
Lot 402 – 1637 Burnell Drive – Haven Hill Estates LLC
Lot 401 – 1629 Burnell Drive – Haven Hill Estates LLC
Lot 400 – 1619 Burnell Drive – Haven Hill Estates LLC
Lot 399 – 1607 Burnell Drive – Haven Hill Estates LLC
Lot 398 – 1601 Burnell Drive – Michael V. Zenon
On September 1, 2005, Phifer signed notes and Deeds of Trust on behalf of Haven Hill Estates LLC obtained a construction loan for ALL FOUR LOTS he obtained from Zenon including lot 399 for which no application had yet been made. (See Exhibit 11.)
Suspension of Other Permit Applications for Identical or Similar Designs
Ultimately, the project applications for 1637 Burnell (titled in Phifer), 1641 Burnell and 1651 Burnell (titled in Zenon) were suspended due to identical or substantially similar designs in violation of the Specific Plan.
December 2005 Neighbors Learn of the City Approvals
Neighbors first learned of the Project Permit Determinations nearly a year after the Planning Director’s Project Permit Approvals and after the expiration of the statute of limitation for a CEQA lawsuit. The MWHA began an investigation. In a telephone conversation between the City planner and Martha Esplange-Alvarez, Land Use Chair of the MWHA, he indicated that if he had known that Michael Zenon was constructing a seven (7) house project with partner Roman Phifer, he would have required the preparation of an Initial Study and more environmental review from the start.
Council Office Supports EIR for Entire “Dirt” Burnell Project
In March 2006, the MWHA representatives and neighbors personally met with Councilmember Jose Huizar and he agreed that there were too many potentially significant environmental issues for issuance of permits based upon Categorical Exemptions or even a Mitigated Negative Declaration. He submitted a letter to the Planning Department demanding that an EIR be conducted for the Burnell properties.
July 21, 2006 Letter of MWHA to Mayor, Planning Director, Planning Department and East Los Angeles Planning Commission
After completing an exhaustive title search, the MWHA on July 21, 2006, submitted a comprehensive 9-page letter and extensive documentation detailing how Michael Zenon shifted title to some of his Burnell lots to Phifer and asked for the City to revoke the Project Permit Determinations by the Planning Director. (See Exhibit 12 which includes a copy of the letter without most exhibits except a useful map of the site.) Attached to the letter were copies of all the relevant deeds showing the chain of title and the Secretary of State registrations for Design Control Inc. and Burnell Properties LLC at the same Culver City address of Zenon. This letter was sent to the Mayor, the Director of Planning, the Planning Commission, the East Los Angeles Planning Commission, Councilmember Reyes’ office, Councilmember Huizar’s office and it was addressed and sent to Jimmy Aguiano and Jose-Carlos Romero, the two City Planners with direct responsibility for this project. In the eight months since the submission of this thoroughly documented letter to all these City officials, not a single public official responded to the letter or even acknowledged in writing receipt of the letter.
During this same time period, MWHA representatives sent letters and e-mails to the City Planning Department demanding to be notified of all actions on all of the Burnell Drive lots.
On-Site Visit With Planning Officials and Council Office
After getting no response from any City of Los Angeles representative for three months, the Martha Esplange-Alvarez, Land Use Chair of the MWHA, arranged a meeting at the Burnell site with Jimmy Aguiano and Jose-Carlos Romero of City Planning, Frank Aguirre and Luis Hernandez of the Council District 14 Field Office, and Daniel Wright, Martha Esplange-Alvarez, and Daniel Marlos of the MWHA. This meeting occurred in October of 2006. Those attending the meeting walked the Burnell roadway and discussed the content of the MWHA’s letter. Both City Planners indicated that they had not yet read the MWHA letter although it had been in their possession for more than three months. MWHA representatives reiterated their request that the three erroneously approved permits be revoked on the ground that fraud and artifice had been used to improperly obtain them. MWHA emphasized the need for greater mitigation measures to protect the community and accurate information to determine the environmental impacts of the entire seven-house project.
Aguiano suggested that perhaps everyone could hope that the developer would not exercise the permit approvals as it had been nearly one and three-quarter years since the approvals. City Planning staff was uncertain whether they had the authority to revoke the permits because there had been no appeals filed and the permits had become “final.” MWHA reminded Planning staff that no one from the community could confirm that notice letters were received which is why there were no appeals. Not only were there fundamental due process problems with the notice but also City Planning staff admittedly issued the permits without knowing the full scope of the project. Aguiano and Romero promised that they would read the July 21, 2006 letter of the MWHA and look into the revocation as a proper remedy. MWHA never heard from anyone again. To the best of the knowledge of MWHA no one in the Planning Department ever took any action as a result of the personal meeting with Planning Department staff at the project site.
Planning Staff Issues Final Clearances of 1657 Burnell Drive Building Permit
On November 8, 2006, Aguiano, without ever getting back to the MWHA to address its concerns, issued the final clearance enabling Zenon to pull a building permit for the first lot, Lot 406 at 1657 Burnell Drive. By mid-November, the Zenon began erecting a construction fence around his three lots. On the day the construction fences were erected, the MWHA had a series of e-mail and telephone conversations with the City Planning staff, the City Planning Environmental unit, and the Council office. Understandably, after all the efforts to educate the Planning Department of the impact of the fraud and a personal meeting at the site, the MWHA representatives were very upset that the City staff would not provide the courtesy of a written response to the meeting before proceeding to issue clearances to allow the building permit to be issued.
Despite, MWHA insistent demands to the City to revoke the unlawfully obtained permits, the City Planning Department continued to be non-responsive. Further clearances were issued and in early December 2006, the developer’s crew started to cut down mature Black Walnut trees on lot 406 at 1657 Burnell Drive. By 1:00 p.m. on that day, at the request of the Council office, the City issued a stop work order until the developer could produce an arborist’s report that identified which trees were to be cut down. The City persisted in its refusal to issue a stop work order to investigate the alleged fraud that made all the prior permit approvals null and void.
The Other Two Permits Appear to Have Expired
The approvals for 1629 and 1619 Burnell were issued in January of 2005. By their own terms, the permits expired two years later in January 2007. The MWHA assumes that both of these permits have expired and require new applications for Project Permit Determinations. If the Planning Department has issued any extension of these approvals, the MWHA adds these approvals to those for which stop work orders and revocation of all approvals is requested.
All City Approvals for These Projects Are Tainted With The Developer’s Fraud And Black Letter California Case Law Obligates The City Of Los Angeles To Protect The Adjoining Community By Immediate Issuance of a Stop Work Order and Revocation Of All City Approvals for These Projects
Case law in California, established from the very beginning of the state, holds that fraud vitiates a transaction and is a defense against all claims in court. In the context of a sealed deed obtained through fraud, our Supreme Court observed:
“There is no particular sanctity about a sealed instrument, which will estop a party from alleging fraud in the execution, or in the obtaining of it, but on the other hand, fraud is a legitimate defence, at all times and in all proceedings – at least under our system.” Hopkins v. Beard (1856) 6 Cal. 664, 665.
This case is good law today. At all times and in all proceedings, the obtaining of something by fraud is always subject to cancellation because the fraud nullifies the transaction.
There is a recent 1992 case that is binding in Los Angeles County. The facts are identical to this case in that a developer used a fraudulent application to obtain a permit in a way intended to defeat required environmental review. In that case, a developer of a wireless antenna project, at a site in the middle of a residential neighborhood, fraudulently convinced the staff of the municipal approving authority that the new antenna construction was consistent with and could be approved under an existing conditional use permit of another antenna previously built on the hilltop site. The clear motivation of the wireless antenna developer was to obtain the project permit approval under a previously issued antenna permit so as to avoid the preparation of an environmental impact report under CEQA. Neighbors objected after construction began and appealed the case to the legislative body of the municipal authority urging that the building permit was unlawful. The authority agreed that its staff had been misled into issuing the permit but because the construction of the antenna was nearly complete, the authority concluded the permit was vested and could not be revoked. After an adverse trial court ruling, on appeal by the neighbors, the Second Appellate District Court of Appeal held that a permit obtained by fraud or error can never vest and therefore can be revoked at any time, even upon completion of the construction. The court of appeal reversed the trial court decision and invalidated the municipal authority’s determination that it had no authority to revoke the permit – obtained fraudulently for the specific purpose of avoiding environmental review under CEQA. As a result, the antenna was subject to an order of removal as having been unlawfully obtained.
Smith v. County of Santa Barbara (1992) 7 Cal. App. 4th 770 is this recent case. A review of the facts shows the essential similarity to Zenon’s case. There was a successful scheme or artifice that misled the approving authority to issue the permit in a way that specifically resulted in the avoidance of proper environmental review. In Smith, the appellate court succinctly summarized the facts that led to the erroneous issuance of the land use permit procured through fraud of the agent of the telecommunications company seeking to build three antennas in a residential district. We quote the facts as summarized by the Court:
“Several businesses have erected communication facilities on Gibralter Peak in Santa Barbara County. The land is zoned for single family residences, but communications facilities are allowed as a conditional use.
In 1984 a conditional use permit was granted to "Comsite/Bud-North Shore, Inc." to build "FM and TV Facilities" on a Gibralter Peak parcel. The permit made no reference to microwave or telephone communications.
Thereafter TMC Communications wanted to build a telephone microwave station on the parcel. TMC hired Raymond Yount, a former County employee familiar with County zoning regulations, to help it apply for the permits.
Instead of applying for its own conditional use permit, which would have required an environmental impact report, TMC sought to rely on the conditional use permit already obtained by Comsite. The County went along with TMC's plan. On December 10, 1987, the resource management department issued a land use permit for three towers with one microwave dish per tower. In issuing the permit, resource management found that TMC's project was in "substantial conformity" with the existing conditional use permit.
On December 11, 1987, the building department issued a building permit. Eleven days later TMC's agent Yount submitted drawings to the building department showing a different shape to the antenna support towers and two microwave dishes per support tower instead of one. The drawings were labeled "revised structural details." Despite the drawings, Yount represented the total number of dishes would remain at three. The building department authorized the revisions, but, in fact, had no authority to authorize more dishes than the three that had been approved by resource management. TMC's agent Yount knew, or should have known, this.
When construction started, a neighboring property owner, Norman Smith, complained to the County. Based on the complaint and on evidence TMC was installing five instead of three dishes, the County issued a stop work order. Two weeks later the County rescinded the stop work order.
Smith appealed the validity of the permit and the withdrawal of the stop work order to the planning commission. After public hearings, the commission denied the appeal, finding that TMC had made substantial expenditures on a three-dish antennae system in reliance on the land use permit.
Smith appealed to the County board of supervisors. At the hearing, TMC's vice-president and chief technical officer, James Speirs, testified that TMC had installed five microwave dishes at Gibralter Peak and that the "removal of any of the dishes from Gibralter Peak will result in degraded service to our customers and would essentially cause us to be noncompetitive with other carriers in the area." He also testified that TMC had about $500,000 invested at the site, and that construction was about 90 percent complete when resource management issued its stop work order.
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The board denied the appeal. It found that the land use permit was not in substantial conformity with the conditional use permit on which it was based, and that an environmental assessment should have been prepared prior to issuing a proper conditional use permit for TMC's project. Nevertheless, TMC expended substantial sums in good faith reliance on the land use permit, and thus has a vested right to maintain three antennas with one dish each. The harm to TMC if authority to operate the facilities were to be withdrawn would substantially outweigh any harm to the public or the environment.
Smith petitioned the superior court for a writ of administrative mandate. Smith appeals from the denial of the petition. (Id. at pp. 772-775; bold italic emphasis added).
When the Santa Barbara County Board of Commissioners found that the land use permit issued to TMC was “not in substantial conformity with the conditional use permit on which it was based,” the Board was saying that the developer’s permit had been issued in violation of the applicable law. The Board concluded that the permit was obtained by circumventing the substantive requirement to obtain a separate conditional use permit for the new towers and the purpose of avoiding a separate and new conditional use permit was to avoid having to prepare an initial study and potential environmental impact report under CEQA.
Despite, the correct finding by the County Board that the permit was illegally obtained by the fraud of TMA’s agent on the county Planning staff, the Board erred, according to the Court of Appeal, when the Board thought it was barred or “estopped” from asserting that violation of the law as a basis to override the substantial construction expense already invested in the property – some $500,000. Significantly, the Court of Appeal rejected the idea that TMC ever obtained a permit upon which it could legally rely to commence construction. While acknowledging that there are a narrow set of circumstances where a public entity can be estopped from asserting its zoning or other laws, the idea that an unlawfully obtained permit could ripen into a lawful one by merely beginning construction was not such a case.
The Court of Appeal said:
“The instant case would establish a broad precedent allowing government to operate in violation of its own laws.
It is not enough to say that public policy will not be adversely affected by the application of estoppel because TMC's [antenna] structure creates no health or environmental hazard. The point is that public policy may be adversely affected by the creation of precedent where estoppel can too easily replace the legally established substantive and procedural requirements for obtaining [zoning and building] permits. As the court in City of Imperial Beach v. Algert (1962) 200 Cal.App.2d 48, 52 [19 Cal.Rptr. 144], stated, "each case [of governmental estoppel] must be examined carefully and rigidly to be sure that a precedent is not established through which, by favoritism or otherwise, the public interest may be mulcted or public policy defeated." (Cited with approval in City of Long Beach v. Mansell, supra, 3 Cal.3d 462, 495, fn. 30.)
Our decision here is in line with the vast majority of cases which hold that a governmental entity is not estopped from enforcing the law. (See, e.g., Pettitt v. City of Fresno (1973) 34 Cal.App.3d 813, 820 [110 Cal.Rptr. 262]; Strong v. County of Santa Cruz (1975) 15 Cal.3d 720 [125 Cal.Rptr. 896, 543 P.2d 264]; Chaplis v. County of Monterey (1979) 97 Cal.App.3d 249, 258-259 [158 Cal.Rptr. 395]; People ex rel. Dept. Pub. Wks. v. Ryan Outdoor Advertising, Inc. (1974) 39 Cal.App.3d 804, 812-813 [114 Cal.Rptr. 499]; but see Anderson v. City of La Mesa (1981) 118 Cal.App.3d 657, 661 [173 Cal.Rptr. 572].)” Id. at pp. 775-776
Thus, the Court of Appeal found that the artifice and fraud TMC practiced on the Santa Barbara County Planning officials could never ripen into an invincible permit. The Court of Appeal concluded that the County, upon discovery of the fraud, had the authority to take action to revoke the ill-begotten permits and require the applicant to start the planning approval process over again. Significantly, the Court of Appeal found that the fact that the antennas were 90% completed at a cost of $500,000 to be irrelevant where the permit was not ever lawfully issued. The Court of Appeal found that to hold otherwise would be to create an incentive for local government to operate illegally to issue permits in violation of the law on the premise that significant construction expenditures could turn an unlawfully obtained permit into a lawful one. This, the Court of Appeal refused to do.
The Smith case is on point with the Zenon case in one more important way: Mr. Smith challenged the issuance of the building permit and not the underlying discretionary decision approving the antenna which was implicitly supported with either a Categorical Exemption or a staff determination that issuance under the existing conditional use permit meant the project was exempt from CEQA. In Smith, despite the fact that the CEQA statute of limitation had expired, Smith successfully challenged the building permit after construction commenced. The Court of Appeal had no problem holding that the entire set of approvals were invalidated by the TMC scheme to mislead the county officials to avoid CEQA review, despite the fact that the CEQA statute of limitation expired before Smith even learned of improper permits. The same is true in the case of Zenon. There is some circumstantial evidence that Notice of Intent signs were posted way down a steep hillside behind trees. The City’s fatally flawed notice of the determinations meant no one in the affected community received actual notice. Zenon’s spider web of deceit eventually ended in three of the six applications being granted with no CEQA review at all. In this case too, the fact that the CEQA statute of limitation had expired before the neighbors even learned of the approvals is irrelevant because it is the fraud that vitiates the entire transaction. The law cannot reward Zenon for fraud. It is incumbent upon City officials to protect the integrity of its zoning and land use policy by complete revocation of all ill-begotten permits.
The Smith case is completely consistent with a related line of California cases. This line of cases hold that if a planning or building permit is lawfully issued, and the owner, in reliance on the permit begins to make significant expenditures, the permit becomes a vested right for the owner to complete the project as lawfully approved. In this line of cases, a municipal approval authority tried to apply a later enacted ordinance, law or rule to the project. These cases hold that once the owner, through significant construction expense, relies upon a lawfully issued permit, the owner shall be allowed to build in accordance with the prior zoning rule even though the municipal authority has subsequently changed the law. See for example, the California Supreme Court case of Avco Community Developers, Inc. v. South Coast Regional Commission (1976) 17 Cal. 3d 785, 791-800 where the Supreme Court, in an extended public policy discussion, held that until a developer obtains a lawfully issued final permit, even $2 million dollars spent on the entitlement process could not ripen into a vested right to build.
The Zenon case is conceptually indistinguishable from the binding precedent of the Smith and Avco cases. Zenon took a set of actions to manipulate land titles and the application process so as to obtain that to which he was not entitled: Project Permit Determinations for houses in a six house project with no environmental review at all. Just like TMC’s agent in Santa Barbara County, Zenon’s goal was violate the substantive disclosure requirements of the Mount Washington/Glassell Park Specific Plan regarding Native trees, to misrepresent the condition of the roadway, and fail to alert the City staff of the total number of houses in the project, all for the purpose of avoiding proper procedural environmental review (and possible mitigation measures). The Smith case teaches that Zenon’s illegally obtained permits could never, despite construction expense, ripen into a lawful permit. The Avco case teaches the flip side of Smith: until Zenon obtained a lawfully issued permit, costs expended could not ripen into an entitlement to build -- if the permit was never lawfully issued.
It is fundamental that neighbors and those living in a particular zoning district are entitled to expect the municipal zoning authority to properly enforce the zoning law enacted by the municipality for their protection and benefit and to properly enforce the state environmental laws for which the municipality is the Lead Agency. Leading national treatises on zoning law confirm that California law is in conformity with the universal rule in every other state:
“A permitee has no vested rights against the local government when the permit was procured through fraudulent misrepresentation or by any other impermissible means.
Generally, it is held that, where a permit has been invalidly issued; and, even though the later may have taken some action thereunder with the incurring of obligations, the permit may, nevertheless, be revoked by the local government upon its discovery of the illegal issuance. A permit for a use or structure prohibited by a valid zoning enactment, regulation or restriction is void, of no effect and generally subject to revocation. This is true although the permit was issued under a mistake of fact. The Vermont Court points out that, since permits for uses prohibited by zoning enactments are void, “such permit may be revoked not withstanding that the permittee may have acted on it, and any expenditures made in reliance upon such permit are made at his peril. The public has an interest in zoning which cannot be set naught by the unauthorized acts of its officers.” Antieu on Local Government Law, 2d Ed. §58.01 Revocation of Invalid Permits.
Another national treatise on Zoning Law is in accord with California:
“There is a long line of decisions holding that a permit holder acquires no vested right where the permit is issued in violation of the zoning ordinance. As one court said:
A municipal permit issued illegally or in violation of the law, or under a mistake of fact, confers no vested right or privilege on the person to whom the permit has been issued and may be revoked notwithstanding that he may have acted upon the permit; and expenditures made in reliance upon such permit are made at his peril.
A New York court held that no vested right was acquired when a permit was issued on a misstatement of fact. No vested right can be acquired when the building official issuing the permit is without power to do so or exceeds his or her authority.” Zoning Law and Practice, 4th Ed., Volume 2, E.C. Yokley, § 14.6.
The City of Los Angeles put Michael Zenon on notice when he signed the Categorical Exemption that all approvals could be invalidated by misleading or omitted information submitted to the City. This appeal calls the City at its word to protect its residents by meaning what it says in CAPITAL LETTERS on the Categorical Exemption Form: IF THE INFORMATION SUBMITTED BY THE APPLICANT IS INCORRECT OR INCOMPLETE SUCH ERROR OR OMISSION COULD INVALIDATE ANY CITY ACTIONS ON THE PROJECT, INCLUDING CEQA FINDINGS.
The Mount Washington Homeowners Alliance and Daniel Marlos respectfully request that the City of Los Angeles do the following:
Immediately issue a stop work order commanding Michael Zenon and Burnell Properties LLC, and Design Control Inc. to halt work under the building permit and planning permit determination issued for 1657 Burnell Drive. The stop work order would preserve the status quo while the hearing process for this appeal of the Building Permit is heard by the City.
To invalidate and revoke all project approvals for all three unlawfully issued Project Permit Determinations.
Issue and order to Burnell Properties LLC to remove all improvements, replace all destroyed California Black Walnut trees, and restore the natural grade.