The developer introduced a prima facie case during which the undertaking opponents lacked a possible trigger and acted within the pursuit of CEQA litigation with malice – litigation, mediation and arbitration

United States:

The developer presented a prima facie case in which the project opponents lacked a probable cause and acted with malice in the pursuit of CEQA litigation

July 27, 2021

Perkins Coie LLP

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A property developer found a likelihood of enforcing its malicious prosecution claims if evidence showed that the neighboring owner had no probable cause to pursue CEQA litigation and acted fraudulently. Dunning v. Johnson, 64 Cal. App. 5.156 (2021).

Clews Horse Ranch challenged a decision by the City of San Diego to allow Cal Coast to build a private secondary school adjacent to the commercial horse ranch and equestrian center. Clews claimed the city’s use of a watered-down negative declaration in place of an EIR was in violation of CEQA as the project would have a significant impact on historical resources, fire hazards, noise, and transportation and traffic. The court of first instance denied the request and the appellate court said yes, concluding that Clews had failed to demonstrate that there was solid evidence to support a valid argument that the project could have a significant environmental impact.

In Cal Coast’s subsequent malicious indictment against Clews and his attorneys, the defendants filed an anti-SLAPP motion alleging that Cal Coast had failed to demonstrate that the defendants entered the CEQA trial for no probable cause would have prosecuted with malice.

The appeals court upheld the rejection of the anti-SLAPP motion, finding that defendants had no likely reason to pursue at least one of their CEQA claims, namely that an EIR was required to assess the noise impact of the project. According to CEQA, the question is whether a project is affecting the environment of people in general, rather than specific individuals, and the only clues in the noise level records in relation to the expected impact on the operations of Clews Horse Ranch. The court dismissed defendants’ claim that the noise from the project would affect the surrounding community in general, ruling that the evidence cited consisted of speculative and generalized warnings that did not constitute material evidence.

The court also found that it was “unambiguous [was] sufficient evidence to show that Clews Horse Ranch was malevolently pursuing the CEQA litigation, “an integral part of a malicious indictment. The evidence showed that Clews consistently and aggressively opposed any use and development on the project site. Clews previously harassed owners of the land, restricted the previous owner’s access to the property and “used hostile and malicious behavior to deter property owners from developing their land.” This evidence, and reasonable inferences from it, constituted a prima facie showing that Clews were similarly inappropriate The motives behind the persecution were the CEQA process.

On the other hand, the evidence did not support the finding that Clews’ attorneys were also malicious. Clews’ inappropriate motives in pursuing the CEQA litigation could not be attributed to the attorneys, and the proven lack of probable grounds for initiating the litigation alone was insufficient to establish malice.

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