By Bridget McDonald, Esq.
In an unpublished opinion filed on December 11, 2023, the First District Court of Appeal in Green Tree Headlands, LLC v. City of Sausalito upheld the denial of a petition for writ of mandate that challenged the City of Sausalito’s (City) approval of a new single-family home. The Court of Appeal rejected the petitioner’s claim that the trial court misinterpreted and afforded undue deference to the City’s interpretation of a 1993 settlement agreement that governed how the contested lot could be developed. [Green Tree Headlands, LLC v. City of Sausalito, Unpub., Case A167054 (1st Dist. Dec. 11, 2023).]
Factual and Procedural Background
Between December 1989 and January 1990, the City of Sausalito circulated and certified a Final Environmental Impact Report (FEIR) for “Wolfback Ridge Estates Subdivision” (Wolfback Estates)—a proposed subdivision overlooking the Marin Headlands and Golden Gate National Recreation Area. The FEIR identified environmental impacts and proposed mitigation measures to guide future development of the subdivision. As part of the project description, the FEIR stated that the subdivision’s 13 custom homes were expected to range in 2,000 to 4,000 square feet and feature three to four bedrooms, two to three bathrooms, and two car garages.
In 1990, the City tried to deny approval of the subdivision, but the developers sued. The parties entered into a settlement agreement in 1993, which they later amended in 1997 to create Wolfback Estates. The agreement provided that the parties:
. . .extracted those portions of the FEIR which pertain directly to the development of the property in the manner as agreed to in the settlement agreement, provided, however, that to the extent that any provision of the agreement is unclear, incomplete, or at variance with the FEIR, the FEIR shall be the overriding document and prevail.
The agreement also incorporated an architectural design standard, which provided that hillside and ridge top design should incorporate a combination of “small volume and varying surface planes” to create visual interest and avoid conspicuous large bulk structures.
The Project
In 2017, Real Parties in Interest purchased “Lot 5” within the subdivision, and hired an architect to help them develop their residence. In July 2018, Real Parties’ architect applied to the City for a design review permit to construct a 5,210 square foot single-family residence with a 1,465 square-foot subterranean garage. The City’s Planning Commission resolved to approve the Project and design review permit on April 21, 2021. Green Tree Headlands (Green Tree), who owns Lot 3 in Wolfback Estates, appealed the Commission’s decision to the City Council, which ultimately upheld the approval denied the appeal.
At the Trial Court
In October 2021, petitioner Green Tree filed a petition for writ of mandate challenging the City’s design review approval. Petitioner alleged that the proposed size of the home violated the provisions of the settlement agreement and that the City’s findings in support thereof were not supported by substantial evidence.
The trial court denied the petition, finding that the settlement agreement extracted certain portions of the EIR, such as architectural standards, but did not state that all guidelines or mitigation measures must be implemented for lots within the subdivision. The court noted that the agreement did not specify any limits on size and did not expressly incorporate any portion of the EIR that provided for size limitations. On the other hand, the City’s interpretation of the architectural standard’s term “small volume” was reasonable, as the plain language of that term relates to surface planes, not building size.
The Court of Appeal’s Decision
Petitioner timely appealed, contending that the trial court erred in interpreting the settlement agreement and in giving great weight to the City’s incorrect and inconsistent understanding of that agreement. Petitioner maintained that the City and trial court erroneously: (1) failed to consult the entire FEIR to interpret unclear and ambiguous phrases in the architectural standards; and (2) ignored the standard’s “small volume” requirement, which was inherently ambiguous without reference to the size restrictions in the FEIR.
Notwithstanding the parties’ disagreement over the applicable standard of review, the First District concluded that, even if it did not defer to the City’s interpretation of the settlement agreement, it would still conclude that neither the City nor the trial court erred in finding the Project complied with its terms.
Developable Size
As to petitioner’s first contention, the court concluded that the trial court correctly interpreted the meaning and effect the agreement’s “incorporation” clause. The plain language of the disputed provision stated that the parties would extract those portions of the FEIR that pertained directly to developing the property, and provided specific citations to the FEIR’s applicable pages. Given this specificity, it did not appear that the parties intended for the entire FEIR to govern interpretation of the development’s architectural standards.
Regardless, even if the court needed to consult the entire FEIR—as petitioner urged—petitioner’s interpretation of allowable size limits would be untenable. Nowhere does the FEIR contain express size limits on the residences that may be constructed. The 2,000 to 4,000 square-foot figure that petitioner seized upon is contained in the FEIR’s general project description, not specific guidelines or mitigation measures that must be met. Moreover, that language Is vague and nonspecific—referring only to “Anticipated Home Characteristics” with likely features and approximate sizes, rather than outright mandates or limitations. The court thus disagreed with petitioner’s assertion that the FEIR’s project description constituted an upper limit on the size of homes that may be constructed in Wolfback Estates.
“Small Volume”
Petitioner also faulted the City and the trial court for failing to consult the FEIR’s project description to ascertain the meaning of ambiguous and non-objective phrases contained in the architectural standards. Petitioner asserted that the project description gave meaning to the phrase “small volume,” particularly as that term was used in the architectural standards that were incorporated into the settlement agreement. The trial court disagreed, finding that “small volume,” on its face, related to “surface planes” not building size.
The appellate court observed a slight linguistic discrepancy between the settlement agreement and the FEIR. While the agreement’s architectural standards provided that “Hillside and ridge top design should incorporate a combination of small volume and varying surface planes to create visual interest…”, the FEIR stated that:
Hillside and ridgetop building designs should incorporate a combination of small volumes and varying surface planes to create visual interest…
Because the express terms of the settlement agreement appeared “at variance with the FEIR,” the court would interpret the meaning of the phrase as it appeared in the FEIR.
After conducting its independent review of the record, the court still disagreed with petitioner that the phrase was ambiguous. Based on the plain language of the agreement and the context in which it appeared, there was no ambiguity as to its meaning and intent. First, the words of the architectural standard clearly indicated that the standard was concerned with visual appearances, not square footage or building size. In particular, the standard describes using small volumes and varying surface planes in the design of the building to break up the façade and avoid the appearance of large-bulk structures—all of which evince standards tailored towards the development’s visual impact, not its overall size.
Looking at the FEIR in its entirety, as petitioner urged, only reinforced the court’s interpretation of the disputed standard. The architectural standards that the settlement agreement incorporated came from the FEIR’s “Visual Factors” section, which unambiguously explained that they would mitigate any visual impacts associated with additional residential development along the Wolfback Ridge.
Moreover, nothing in the settlement agreement or the FEIR suggested that the phrase “small volumes” was meant to limit the square footage of future homes. The FEIR’s only reference to building size was contained in the general project description, which appeared in an entirely separate section from the architectural standards and only provided approximations of building sizes, not specific limits. The standards similarly did not discuss, reference, or cite to the project description or its size approximations. Thus, had the settlement agreement intended to restrict the size of the buildings to a maximum square footage, it easily could have done so.
Conclusion and Implications
For these reasons, the court held that the City did not abuse its discretion because the court’s de novo review of the terms of the settlement agreement led it to conclude that the language of the architectural standard was not ambiguous and not susceptible to an interpretation that places an express square footage limit on the size of the homes to be developed in Wolfback Estates.
Though unpublished, the First District Court of Appeal’s opinion succinctly analyzes the meaning and intent of architectural standards captured in a nearly 20-year-old FEIR and settlement agreement. Contrary to petitioner’s urging, the FEIR’s reference to approximate square footage was not binding on future proposed developments. The court offers a methodical interpretation of competing terms to harmonize their purpose and effectuate a logical outcome. The opinion provides a useful development in case law that requires de novo interpretation of contractual and environmental documents. The court’s opinion is available online at: https://www.courts.ca.gov/opinions/nonpub/A167054.PDF
Background and Settlement Agreement
Between December 1989 and January 1990, the City of Sausalito circulated and certified a Final Environmental Impact Report (FEIR) for “Wolfback Ridge Estates Subdivision” (Wolfback Estates)—a proposed subdivision overlooking the Marin Headlands and Golden Gate National Recreation Area. The FEIR identified environmental impacts and proposed mitigation measures to guide future development of the subdivision. As part of the project description, the FEIR stated that the subdivision’s 13 custom homes were expected to range in 2,000 to 4,000 square feet and feature three to four bedrooms, two to three bathrooms, and two car garages.
In 1990, the City tried to deny approval of the subdivision, but the developers sued. The parties entered into a settlement agreement in 1993, which they later amended in 1997 to create Wolfback Estates. The agreement provided that the parties:
- . . .extracted those portions of the FEIR which pertain directly to the development of the property in the manner as agreed to in the settlement agreement, provided, however, that to the extent that any provision of the agreement is unclear, incomplete, or at variance with the FEIR, the FEIR shall be the overriding document and prevail.
The agreement also incorporated an architectural design standard, which provided that hillside and ridge top design should incorporate a combination of “small volume and varying surface planes” to create visual interest and avoid conspicuous large bulk structures.
The Project
In 2017, Real Parties in Interest purchased “Lot 5” within the subdivision, and hired an architect to help them develop their residence. In July 2018, Real Parties’ architect applied to the City for a design review permit to construct a 5,210 square foot single-family residence with a 1,465 square-foot subterranean garage. The City’s Planning Commission resolved to approve the Project and design review permit on April 21, 2021. Green Tree Headlands (Green Tree), who owns Lot 3 in Wolfback Estates, appealed the Commission’s decision to the City Council, which ultimately upheld the approval denied the appeal.
At the Trial Court
In October 2021, petitioner Green Tree filed a petition for writ of mandate challenging the City’s design review approval. Petitioner alleged that the proposed size of the home violated the provisions of the settlement agreement and that the City’s findings in support thereof were not supported by substantial evidence.
The trial court denied the petition, finding that the settlement agreement extracted certain portions of the EIR, such as architectural standards, but did not state that all guidelines or mitigation measures must be implemented for lots within the subdivision. The court noted that the agreement did not specify any limits on size and did not expressly incorporate any portion of the EIR that provided for size limitations. On the other hand, the City’s interpretation of the architectural standard’s term “small volume” was reasonable, as the plain language of that term relates to surface planes, not building size.
The Court of Appeal’s Decision
Petitioner timely appealed, contending that the trial court erred in interpreting the settlement agreement and in giving great weight to the City’s incorrect and inconsistent understanding of that agreement. Petitioner maintained that the City and trial court erroneously: (1) failed to consult the entire FEIR to interpret unclear and ambiguous phrases in the architectural standards; and (2) ignored the standard’s “small volume” requirement, which was inherently ambiguous without reference to the size restrictions in the FEIR.
Notwithstanding the parties’ disagreement over the applicable standard of review, the First District concluded that, even if it did not defer to the City’s interpretation of the settlement agreement, it would still conclude that neither the City nor the trial court erred in finding the Project complied with its terms.
Developable Size
As to petitioner’s first contention, the court concluded that the trial court correctly interpreted the meaning and effect the agreement’s “incorporation” clause. The plain language of the disputed provision stated that the parties would extract those portions of the FEIR that pertained directly to developing the property, and provided specific citations to the FEIR’s applicable pages. Given this specificity, it did not appear that the parties intended for the entire FEIR to govern interpretation of the development’s architectural standards.
Regardless, even if the court needed to consult the entire FEIR—as petitioner urged—petitioner’s interpretation of allowable size limits would be untenable. Nowhere does the FEIR contain express size limits on the residences that may be constructed. The 2,000 to 4,000 square-foot figure that petitioner seized upon is contained in the FEIR’s general project description, not specific guidelines or mitigation measures that must be met. Moreover, that language Is vague and nonspecific—referring only to “Anticipated Home Characteristics” with likely features and approximate sizes, rather than outright mandates or limitations. The court thus disagreed with petitioner’s assertion that the FEIR’s project description constituted an upper limit on the size of homes that may be constructed in Wolfback Estates.
“Small Volume”
Petitioner also faulted the City and the trial court for failing to consult the FEIR’s project description to ascertain the meaning of ambiguous and non-objective phrases contained in the architectural standards. Petitioner asserted that the project description gave meaning to the phrase “small volume,” particularly as that term was used in the architectural standards that were incorporated into the settlement agreement. The trial court disagreed, finding that “small volume,” on its face, related to “surface planes” not building size.
The appellate court observed a slight linguistic discrepancy between the settlement agreement and the FEIR. While the agreement’s architectural standards provided that “Hillside and ridge top design should incorporate a combination of small volume and varying surface planes to create visual interest…”, the FEIR stated that:
- Hillside and ridgetop building designs should incorporate a combination of small volumes and varying surface planes to create visual interest…
Because the express terms of the settlement agreement appeared “at variance with the FEIR,” the court would interpret the meaning of the phrase as it appeared in the FEIR.
After conducting its independent review of the record, the court still disagreed with petitioner that the phrase was ambiguous. Based on the plain language of the agreement and the context in which it appeared, there was no ambiguity as to its meaning and intent. First, the words of the architectural standard clearly indicated that the standard was concerned with visual appearances, not square footage or building size. In particular, the standard describes using small volumes and varying surface planes in the design of the building to break up the façade and avoid the appearance of large-bulk structures—all of which evince standards tailored towards the development’s visual impact, not its overall size.
Looking at the FEIR in its entirety, as petitioner urged, only reinforced the court’s interpretation of the disputed standard. The architectural standards that the settlement agreement incorporated came from the FEIR’s “Visual Factors” section, which unambiguously explained that they would mitigate any visual impacts associated with additional residential development along the Wolfback Ridge.
Moreover, nothing in the settlement agreement or the FEIR suggested that the phrase “small volumes” was meant to limit the square footage of future homes. The FEIR’s only reference to building size was contained in the general project description, which appeared in an entirely separate section from the architectural standards and only provided approximations of building sizes, not specific limits. The standards similarly did not discuss, reference, or cite to the project description or its size approximations. Thus, had the settlement agreement intended to restrict the size of the buildings to a maximum square footage, it easily could have done so.
Conclusion and Implications
For these reasons, the court held that the City did not abuse its discretion because the court’s de novo review of the terms of the settlement agreement led it to conclude that the language of the architectural standard was not ambiguous and not susceptible to an interpretation that places an express square footage limit on the size of the homes to be developed in Wolfback Estates.
Though unpublished, the First District Court of Appeal’s opinion succinctly analyzes the meaning and intent of architectural standards captured in a nearly 20-year-old FEIR and settlement agreement. Contrary to petitioner’s urging, the FEIR’s reference to approximate square footage was not binding on future proposed developments. The court offers a methodical interpretation of competing terms to harmonize their purpose and effectuate a logical outcome. The opinion provides a useful development in case law that requires de novo interpretation of contractual and environmental documents. The court’s opinion is available online at: https://www.courts.ca.gov/opinions/nonpub/A167054.PDF
(Bridget McDonald)
