In Muskan Foods & Fuel v. City of Fresno (2021) 69 Cal.App.5th 372, the Fifth District Court of Appeal held that Muskan Foods (Petitioner) failed to exhaust their available administrative appeals to challenge the approval of a competing development, despite an acknowledged ambiguity in the City of Fresno (City) Municipal Code’s administrative appeal procedures.

In November 2016, developers applied for a conditional use permit (CUP) to construct a gas station and market to sell specialty groceries and alcohol in the City (Project). The Project would be constructed across the street from Petitioner’s gas station and convenience store. Petitioner objected to the proposal, arguing that approval of the Project would lead to an oversaturation of similar businesses in the area selling alcohol. A planner at the City’s development and resource management department (DARM) prepared a staff memorandum recommending approval of the application. The memorandum found that, while specialty grocery stores were permitted in the site’s zone by right, the addition of the alcoholic beverage license required a CUP subject to additional regulations for special uses present in the City’s municipal code. Further, the memorandum also found that specialty grocery stores following the City’s design guidelines may qualify for an exception from the oversaturation and location restrictions for new establishments selling alcoholic beverages. Following the imposition of conditions to the Project to ensure consistency with the regulations and design requirements, DARM’s Director approved the CUP. Petitioner filed an administrative appeal of DARM’s decision, which was denied. Following the administrative appeal, the Planning Commission approved the CUP.

Petitioner sent a letter to DARM’s Director stating that they were appealing the Planning Commission’s decision to the Fresno City Council. The Director responded to the letter, noting that if Petitioner wished to appeal the decision to the City Council, they may do so by appealing to the mayor or the councilperson in charge of the Project’s location. Petitioner met with the applicable councilmember to discuss the Planning Commission’s decision, and (because they could not obtain contact information for the mayor) also completed an online contact form including a petition requesting that the mayor appeal the Planning Commission’s decision. Petitioner also contacted the Fresno chapter of the American Petroleum and Convenience Store Association (APSCA), which forwarded Petitioner’s concerns to the mayor directly. Despite these communications, the mayor and councilmember failed to submit an appeal to the City Council, and the Planning Commission’s decision became final.

Following Project approval, Petitioners filed a petition for writ of mandate. The superior court found that Petitioner had exhausted administrative remedies, and denied the petition on substantive grounds. This appeal followed.

On appeal, Petitioners maintained that they had sufficiently exhausted administrative remedies because the City’s Municipal Code provisions describing the procedure for appealing a CUP to City Council were vague and minimal, and Petitioner’s communications to the councilperson and mayor was enough to initiate the administrative appeal. The City argued that no appeal was submitted, and that the communications Petitioner had with the mayor and councilmember did not indicate a desire to actually appeal the Planning Commission’s decision. In the City’s view, “voicing displeasure with a decision is not tantamount to petitioning for an appeal” within the requirements of the Municipal Code.

The Court held that the Municipal Code’s use of the word “petition” was undefined and ambiguous as to the level of formality required. An oral request, in the Court’s view, could suffice to meet this bar. However, the Court found that no such petition had been filed. While Petitioner claimed that they had made an oral request to appeal the decision at the meeting with the councilperson, they could offer no evidence of this beyond their attorney’s statements in briefing. The Court held that statements by an attorney made in court or in a brief are not evidence, and that Petitioner failed to satisfy the Municipal Code’s requirement. The Court similarly rejected the superior court’s reliance on Petitioner’s evidence of the meeting as unsupported by substantial evidence. Because Petitioner failed to cite evidence in the record supporting a finding that the councilmember received an oral appeal, the Court held that Petitioner failed to exhaust its administrative remedies under the City’s code.

The Court also rejected APSCA’s direct email to the mayor as evidence of a requested appeal. The email had referred to the longstanding, general problem of oversaturation of developments in the City selling alcohol. The Court found it unreasonable to interpret a general request for the mayor to consider a problem as a specific request that the mayor submit an appeal of the Planning Commission’s decision. In the Court’s view, a reasonable person acting as mayor would not think that APSCA’s letter was a request to comply with the City’s timing requirements for appealing a Planning Commission decision. The Court concluded that allowing generalized statements of concern to impliedly fulfill the City’s code requirement would encourage end-runs, cut contrary to judicial efficiency, and undermine the City Council’s autonomy as the elected body with the ultimate authority over land use decisions.

The Court elected to not reach the substantive issues raised in the appeal because of their ruling on exhaustion, and affirmed the judgement of the trial court.

Key Point:

Failure to create a record establishing that administrative remedies have been exhausted is generally fatal in CEQA litigation. When filing an appeal, it is critical to follow an agency’s rules (see, e.g., Tahoe Vista Concerned Citizens v. County of Placer (2000) 81 Cal.App.4th 577 and Mount Shasta Bioregional Ecology Center v. County of Siskiyou (2012) 210 Cal.App.4th 184).