Court revives homeowner's lawsuit over delayed second dwelling approval

A California appeals court has allowed a homeowner's lawsuit against the City of Palos Verdes Estates to move forward after officials allegedly took more than three years to approve his secondary home, causing over $1 million in financial losses. In a ruling published on October 23, the California Court of Appeal, Second Appellate District, Division Four, overturned a lower court decision that had dismissed the case.

The three-judge panel found that state laws requiring quick approval of accessory dwelling units, often called granny flats or ADUs, were designed to protect property owners from costly delays caused by local officials. According to court documents published by Justia Law, homeowner Wei Shi first applied to the City of Palos Verdes Estates in 2020 for a permit to build an accessory dwelling unit on his residential property.

He planned to build the second home at the same time as the main house on the lot. However, the lawsuit alleges that city officials failed to meet legal deadlines and required reviews that were not allowed under state law. These actions delayed final permit approval until 2023.Allegations of unauthorized reviews and administrative delaysCalifornia law, under Government Code section 66317, requires local governments to review and approve eligible accessory dwelling unit applications through a standard process.

This means officials must make a decision without public hearings or discretionary reviews. The law requires local permitting agencies to approve or reject a completed application within 60 days. Despite these clear legal requirements, Shi claimed that the City of Palos Verdes Estates put his application through a lengthy planning process that violated state law. According to the complaint described in the appeals court documents, city staff told Shi that his proposed accessory dwelling unit needed a conditional use permit, discretionary architectural reviews, and formal approval from the Palos Verdes Homes Association Art Jury.

The complaint also alleged that a city planning commissioner actively encouraged nearby residents to oppose the project. Because it took three years to receive the building permits, Shi said he suffered major financial losses. The complaint lists several types of damages, including being unable to use the property, rising construction costs, design and professional fees, extra interest payments, and a drop in the property's overall value.

The total losses were estimated to exceed $1 million.Trial court dismissal overturned on appealShi first sued the city in October 2024 in the Los Angeles County Superior Court. He sought financial compensation under Government Code section 815.6, part of the California Government Claims Act. This law allows public agencies to be held responsible when they fail to carry out a legal duty that was created to protect people from a specific type of harm.

The City of Palos Verdes Estates asked the court to dismiss the lawsuit. City lawyers argued that California's accessory dwelling unit laws were created to address the state's housing shortage for the general public, not to protect individual property owners from financial losses caused by permit delays. The trial court agreed with the city and dismissed the case. It ruled that the permitting laws were intended to increase the state's housing supply, rather than protect individual property owners' financial investments.

Shi then appealed the decision.Appeals panel rules mandatory duty protects applicantsIn its decision, the appeals court rejected the city's arguments. The panel found that the legal requirement to approve or reject eligible applications within 60 days was created in part to protect individual applicants from bureaucratic delays. The appeals court explained that increasing housing across California was a major goal of the law.

However, the specific requirement for local governments to process permits quickly, without unnecessary discretionary reviews, also protects applicants from extra property expenses and rising construction costs. The court found that Shi had presented a valid legal claim under the Government Claims Act. It therefore overturned the lower court's decision and sent the case back for further proceedings.

The ruling allows Shi's lawsuit seeking more than $1 million in damages from the City of Palos Verdes Estates to continue toward trial.You use AI every day. Now get your AI Quotient. Take the AIQ test.