Surf Cat

A Laguna Beach couple’s legal effort to preserve the seawall protecting their recently remodeled $25 million beachfront rental has been rejected.

Orange County Superior Court Judge Randall J. Sherman ruled earlier this month that the state Coastal Commission was within its rights when it determined that the Jeffrey and Tracy Katz violated the conditions of the seawall permit, which dictated that there could be no further development of the site unless the barrier was removed.

The commission decided unanimously last August that the remodel of the house completed earlier that year — which the Katzes said increased its value by $11 million — was significant enough to constitute new development. Because of that, the agency ordered the seawall removed and fined the owners $1 million. It’s likely at least partial demolition of the beachfront house would become necessary without the seawall.

While ruling in favor of the commission on the central issue, Sherman invalidated the fine and has not yet ruled on portions of the Katzes’ suit calling on the state to reimburse them for the cost of the house and for $70,000 per month in rent that they say has been lost since the commission began proceedings last year. The Katzes live next door and bought the contested property, located at 11 Lagunita Drive, in 2015.

Katzes’ attorney Steven Kaufmann said the couple intend to appeal Sherman’s ruling on the seawall’s removal. Sherman’s ruling was entered July 3.

“My clients, who are just regular people, don’t feel they did anything wrong,” said Kaufmann, adding that the Katzes believe work on the 4,900-square-foot house did not necessitate Coastal Commission review. “The city advised them that this was a minor remodel.”

‘House shouldn’t be there’

The 1952 home is perched on a popular pocket of sand known as Victoria Beach, considered the birthplace of modern skimboarding.

To protect the structure from high waves and an eroding coastline, the owners at the time constructed an unpermitted seawall in 2005 and subsequently received an emergency permit from the commission that expired later that year.

The wall then remained unpermitted for nearly 10 years, when those owners won a commission permit to keep and upgrade the seawall. However, the commission told the owners that their planned remodel was too extensive to win approval. Soon afterward, the property was sold to the Katzes.

Lisa Haage, the commission’s chief enforcement officer, said that when the commission retroactively approved the seawall in 2015, it did so with the presumption that the house was approaching the end of its lifespan, and would be replaced by a new dwelling sited farther away from the ocean.

“This house shouldn’t be there,” Haage told the commission at its hearing on the matter last August. “It’s in the wrong place.”

The commission typically does not approve seawalls or other coastal armoring for new development, a result of its “managed retreat” policy for accommodating sea level rise and natural erosion. Additionally, the commission — as well as environmental groups — generally oppose seawalls because they can hasten the disappearance of beaches. A primary mission of the Coastal Commission is to maintain beaches and public access to them.

However, because the Katzes did not seek a commission permit before remodeling, the issue did not come to the commission’s attention until a neighbor complained to the agency — and provided photos — after construction was underway.

When the Katzes applied for and received city permits, they were told by the city that they didn’t need a commission permit, according to court documents. In support of the Katzes claim, the city filed a brief arguing that “less than 50% of the exterior wall framing or floors and roof systems had been demolished, and that the construction was well under the 50% threshold necessary to constitute a ‘major remodel.’”

The square footage after remodeling remained the same, as did the footprint of the home. Much of the court case focuses on whether at least half of the house was remodeled and so would require a commission permit.

In response, attorneys for the commission wrote, “the Katzes replaced all the plywood sheeting, added new framing that effectively replaced the old framing, sistered much of the old framing with new beams and joists and replaced the roof exterior.”

Construction photos show the house stripped down to its original framing, with all interior and exterior walls — as well as the roof — removed.

Next steps

While Sherman’s ruling favored the commission in terms of removing seawall, he sided with the Katzes’ argument that they  believed a commission permit was not needed and so they should not be fined.

“Petitioners had a good faith belief, reasonably entertained, that work done, … (was an) exempt minor remodel,” according to their lawsuit, again pointing to the city’s position that a state permit was not necessary.

That $1 million fine approved by the commission was twice what its staff had recommended.

Still unresolved in the lawsuit is whether the state is obliged to buy the house, with the Katzes alleging the commission’s decision represents a taking of private property for public use, and whether state should compensate the Katzes for lost rent.

Attorney Kaufmann said the Katzes will decide whether to continue to pursue payment or to drop those two portions of the lawsuit so they can proceed with an appeal of the central issue of the suit, removing the seawall.

The commission, meanwhile, applauded Sherman’s ruling.

“We were very gratified that the judge upheld the (seawall removal) order — that was very significant,” said commission spokeswoman Noaki Schwartz. “This case is important and will enable the commission to better protect public beaches and access for all.”