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In Save Berkeley’s Neighborhoods v. The Regents of the University of California, Case No. A160560, the Court of Appeal held that under the California Environmental Quality Act (“CEQA”) and related procedural rules, real parties in interest are not automatically considered indispensable parties to CEQA litigation.  Whether a real party in interest is indispensable turns on the case-by-case analysis outlined in California Code of Civil Procedure (“CCP”) section 389(b), and each court must make that determination as to the specific entity at issue, including real parties in interest.  This case departs from earlier precedent and the Legislature’s efforts to create clearer rules concerning the naming of real parties in interest, thus making it easier for petitioners to make procedural errors without legal consequences.

The Regents of the University of California, approved a project that included development of academic buildings and on-campus housing at the UC Berkeley campus.  The Regents filed a Notice of Determination (“NOD”) for the project on May 17, 2019, which identified the developer and the ground lessee/borrower as the two real parties in interest and project proponents (“Real Parties”).  Save Berkeley’s Neighborhoods (“SBN”), filed a petition for writ of mandate, challenging the EIR prepared for the project under CEQA and naming only the Regents and University officials as respondents.  On September 18, 2019, long after the CEQA statute of limitations had passed, SBN filed an amended petition that added the developer and ground lessee/borrower as real parties in interest.

The trial court sustained the Real Parties’ demurrers on the grounds that they were not named as parties within the statute of limitations and dismissed the Real Parties from the litigation.  However, the court rejected the argument that the Real Parties were indispensable under Code of Civil Procedure section 389(b) and thus entire case must be dismissed for failure to timely name them.  The trial court applied the factors in CCP section 389(b) and found that the Real Parties did not qualify as indispensable.

Real Parties appealed both the trial court’s determination that they were not indispensable and the trial court’s refusal to dismiss the case in its entirety.  SBN cross-appealed the dismissal of Real Parties, arguing that SBN timely named the Real Parties.

The First District Court of Appeals affirmed the trial court’s decision.  The Court analyzed the legislative history and context of CEQA—specifically, Public Resources Code (“PRC”) section 21167.6.5, which provides that real parties in interest are necessary parties in CEQA litigation—and rejected an interpretation that a failure to name real parties must result in dismissal of the entire case.  The Court interpreted PRC section 21167.6.5(d), which states that “[f]ailure to name potential persons, other than those real parties in interest described in subdivision (a), is not grounds for dismissal pursuant to Section 389 of the Code of Civil Procedure” (emphasis added), to mean that the failure to name real parties could be grounds for dismissal, subject to the factors outlined in CCP section 389.  Such a reading, the Court said, is consistent with the legislative history of PRC section 21167.6.5, which defined who constitutes a real party, and past cases such as Quantification Settlement Agreement Cases (2011) 210 Cal.App.4th 758, where real parties were not deemed indispensable under CCP section 389.  The Court pointed out that when the Legislature amended PRC section 21167.6.5 to make real parties necessary, it did not amend the indispensability analysis.  Therefore, the Court reasoned, the failure to name a real party can support dismissal, but does not mandate it.

According to the Court of Appeals, the trial court was not wrong to determine that the Real Parties were not indispensable, because the Regents’ interests sufficiently protected the Real Parties’ interests.  The Court found no abuse of discretion, though it did note that often developers are found to be indispensable in CEQA litigation.

The Court also rejected SBN’s cross-appeal, where SBN argued that the trial court erred in finding that the Real Parties should be dismissed based on the statute of limitations.  SBN argued that the NOD was insufficient for failing to mention analysis in the EIR regarding the impacts of student enrollment increases.  The Court rejected this, holding that the NOD’s characterization of the project was sufficient because nothing in CEQA requires agencies to describe the baseline or EIR analyses in NODs.  CEQA merely requires that the NOD state whether the project will or will not have significant impacts on the environment.