1. Single Economic Parcel Theory Workshop Stanley W. Lamport Cox Castle & Nicholson, LLP California Coastal Commission May 11, 2010 Agenda Item 20

2. Overview Framing the Issue – What Is Going On Here? Framing the Issue – What Is Going On Here? California’s strong presumption of ownership California’s strong presumption of ownership What Happens When There Are Different Owners? What Happens When There Are Different Owners?

3. What This Issue Is About

4. This Is About… Whether the Coastal Commission can get around the constitutional mandate to pay just compensation for a taking. Whether the Coastal Commission can get around the constitutional mandate to pay just compensation for a taking.

5. The State Can Take Property The State always can take land for a public purpose The State always can take land for a public purpose Including by denying the owner the ability to make economically viable use of it Including by denying the owner the ability to make economically viable use of it Under the U.S. and State Constitutions, the State must pay the owner for the value of the property it takes Under the U.S. and State Constitutions, the State must pay the owner for the value of the property it takes

6. The State Has a Duty Not to engage in schemes to evade its duty to pay for what it takes Not to engage in schemes to evade its duty to pay for what it takes Kissinger v. City of Los Angeles (1958) 161 Cal.App.2d 454, 462 Kissinger v. City of Los Angeles (1958) 161 Cal.App.2d 454, 462 Klopping v. City of Whittier (1972) 8 Cal.3d 39 Klopping v. City of Whittier (1972) 8 Cal.3d 39

7. The Commission Has a Duty Not to engage in schemes to evade the mandate to pay for what it takes Not to engage in schemes to evade the mandate to pay for what it takes Pub. Res. Code Section 30010: Pub. Res. Code Section 30010: The commission is not authorized “to exercise [its] power to grant or deny a permit in a manner which will take or damage private property for public use, without the payment of just compensation therefor." The commission is not authorized “to exercise [its] power to grant or deny a permit in a manner which will take or damage private property for public use, without the payment of just compensation therefor."

8. Single Economic Parcel Theory Is a scheme Is a scheme To evade the State’s duty to pay for what it takes To evade the State’s duty to pay for what it takes To gerrymander ownerships to avoid a constitutional mandate To gerrymander ownerships to avoid a constitutional mandate

9. Ownership Is Key

10. Two Lots, One Owner Lot 1 ESHA policy applied to allow an economically viable use ESHA policy applied to allow an economically viable use Lot 2 ESHA policy applied to deny an economically viable use ESHA policy applied to deny an economically viable use May not be a taking if the parcels are a single unit of ownership May not be a taking if the parcels are a single unit of ownership

11. Two Lots, Separate Owners Lot 1 ESHA policy applied to allow an economically viable use ESHA policy applied to allow an economically viable use Lot 2 ESHA policy applied to deny economically viable use ESHA policy applied to deny economically viable use State must either: State must either: Pay the owner for the taking or Pay the owner for the taking or Allow the owner an economically viable use Allow the owner an economically viable use It does not matter whether the lots are “linked” It does not matter whether the lots are “linked”

12. Entities Are People Under the Coastal Act and the Corporations Code Under the Coastal Act and the Corporations Code They are distinct from their owners They are distinct from their owners Alter Ego is the exception, not the rule Alter Ego is the exception, not the rule

13. California’s Presumption of Ownership Evidence Code Sec 662 Evidence Code Sec 662 "[t]he owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof.“ "[t]he owner of the legal title to property is presumed to be the owner of the full beneficial title. This presumption may be rebutted only by clear and convincing proof.“ The owner of record is presumed to own the land The owner of record is presumed to own the land Extremely rigorous burden of proof to rebut. Extremely rigorous burden of proof to rebut.

14. Clear & Convincing Proof Evidence that is "sufficiently strong to command the unhesitating assent of every reasonable mind." Evidence that is "sufficiently strong to command the unhesitating assent of every reasonable mind." In re Marriage of Weaver (1990) 224 Cal.App.3d 478, 487. In re Marriage of Weaver (1990) 224 Cal.App.3d 478, 487. Speculation is not enough Speculation is not enough The evidence must be beyond debate The evidence must be beyond debate

15. When There Are Different Owners Alter Ego & Implied Partnership Do Not Produce Result in Single Ownership

16. Alter Ego: Two Entities with Different Owners Entity 1/Person 1 Result: Still have separate ownerships Result: Still have separate ownerships Alter Ego does not apply to individuals Alter Ego does not apply to individuals You can’t pierce a person You can’t pierce a person Entity 2/Person 2

17. Partnerships Don’t Change Ownership Corporations Code § 16204(d) Corporations Code § 16204(d) Property acquired in the name of one or more of the partners, without an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership and without use of partnership assets, is presumed to be separate property, even if used for partnership purposes. Property acquired in the name of one or more of the partners, without an indication in the instrument transferring title to the property of the person’s capacity as a partner or of the existence of a partnership and without use of partnership assets, is presumed to be separate property, even if used for partnership purposes.

18. Implying a Partnership Does Not Change Ownership Lot 1 – Owner 1 Result: No common ownership Result: No common ownership The statutory presumption is that the lots are separately owned absent clear & convincing proof that: The statutory presumption is that the lots are separately owned absent clear & convincing proof that: The property was purchased with partnership assets and The property was purchased with partnership assets and For partnership purposes For partnership purposes The Commission is not in a position to adjudicate this question The Commission is not in a position to adjudicate this question Lot 2 – Owner 2

19. Conclusion The Commission cannot engage in schemes to avoid its constitutional mandate to pay for what it takes. The Commission cannot engage in schemes to avoid its constitutional mandate to pay for what it takes. LLCs and LLLPs and separate from their owners. LLCs and LLLPs and separate from their owners. Alter ego and implied partnerships do not result in common ownership when there are different owners Alter ego and implied partnerships do not result in common ownership when there are different owners