In Citizens for a Better Eureka v. City of Eureka (2025) __ Cal. App. 5th __, the First District Court of Appeal affirmed a judgment dismissing a CEQA action that challenged an approval for the redevelopment of a City of Eureka (City) parking lot into affordable housing (Project). The Court affirmed the dismissal because Petitioner failed to timely join the Wiyot Tribe, the Project developer. In finding the Tribe to be a necessary and indispensable real party, the Court ruled that the statute of limitations had run for joinder.
Background
In April 2023 the City sought to authorize the removal and redevelopment of a City-owned parking lot into affordable housing. A public hearing was held on the matter, with the City’s resolution finding that the action qualified for a class 12 (Section 15312) surplus government property sale categorical exemption from CEQA. The City found that the decision to declare the property surplus and the subsequent lease and sale of the same formed the basis of the exemption.
Citizens for a Better Eureka (CBE) filed a writ petition on May 5, 2023 challenging the City’s resolution and CEQA exemption of the sale and lease of the property on the ground that the City’s action improperly piecemealed the project. CBE argued that the resolution and exemption improperly focused on the parking lot’s demolition without considering the land’s future use.
On July 18, 2023, the City selected the Wiyot Tribe (Tribe) as the affordable housing developer of the lot pursuant to a request for proposals issued in connection with the April resolution. The City also filed a CEQA Notice of Exemption (NOE), exempting the project under the affordable housing exemption contained in CEQA sections 21159.21 and 21159.23 and Guidelines sections 15192 and 15194. The NOE identified the Tribe as the developer, but did not reference the surplus property exemption relied upon in the April resolution.
In December 2023, CBE filed a motion for a preliminary injunction, the first CBE filing since its May petition. Subsequently, the Tribe made a special appearance and moved to dismiss CBE’s petition on the basis that the Tribe was a necessary and indispensable real party in interest. The Tribe argued that dismissal was necessary because it had not been named in the action, it could not be joined due to sovereign immunity, and it would be prejudiced by a judgment rendered in its absence.
CBE opposed the motion, countering that its May petition concerned only the decision to remove the parking lot, not the affordable housing development approved following its petition. It also attempted to invoke the “public rights” exception to traditional joinder rules. On March 11, 2024, the trial court granted the motion to dismiss; CBE then appealed.
The Court of Appeal
The First District reviewed the trial court’s decision for abuse of discretion, first finding that the action challenged by CBE encompassed the property’s development by the Tribe. In so doing, the Court noted that CBE’s own petition clearly demonstrated that the challenged action was of both the resolution authorizing the parking reduction and the subsequent redevelopment of the lot. Importantly, the Court found that future redevelopment of the lot was not ancillary to CBE’s position. The Tribe was therefore a necessary party, as the real party in interest, because it was the developer of the affordable housing project and was identified in the City’s July 2023 NOE.
Because the NOE identifying the Tribe was filed in July, but CBE never attempted to name or serve the Tribe following that date, the statute of limitations barred the Tribe’s joinder. As such, the Court noted that it did not need to address the issue of whether the Tribe’s sovereign immunity prevented joinder.
The Court then upheld the trial court’s dismissal of the action through its finding that the trial court did not abuse its discretion when it held that the Tribe was an indispensable party. The Court first quoted the factors it was required to consider, which were: (1) to what extent a judgment rendered in a party’s absence might be prejudicial to them; (2) the extent to which any measures can be employed to lessen or avoid the prejudice; (3) whether a judgment rendered in the party’s absence will be adequate; and (4) whether the plaintiff or cross-complainant will have an adequate remedy if the action is dismissed. While no factor is “determinative or inherently more important than another” “potential prejudice to the unjoined party is of ‘critical importance.’” (Save Berkeley’s Neighborhoods v. Regents of University of California (2021) 70 Cal.App.5th 705, 721.)
In looking at the first factor, the Court noted that judgment rendered for CBE in the Tribe’s absence would prejudice the Tribe by preventing it from moving forward with its redevelopment plans. And, even if the project was not entirely stopped, such a judgment would jeopardize the work already done by the Tribe, such as pursuing funding. Moreover, the Court noted that the prejudice would not be speculative because significant time and resources had already been expended by the Tribe.
In finding that the “public rights” exception to joinder did not apply to prevent dismissal, the Court differentiated People ex rel. Lungren v. Community Redevelopment Agency (1997) 56 Cal.App.4th 868, which concerned a public agency contract to transfer land to a tribe. There, the public rights exception was found to apply because the court decided that finding otherwise would place the property beyond the state’s police power. By contrast, here, the Court pointed out that CBE had provided no evidence that the property would be beyond the reach of the state’s police power. The Court also noted that the memorandum of understanding prepared between the Tribe and the City expressly required the Tribe and any third party contractors to comply fully with all federal state and local laws.
The Court quickly addressed the second factor, finding that it weighed in favor of dismissal because CBE didn’t argue that there was any method to lessen the prejudice. And the third factor weighed in favor of dismissal because the interests of the City and Tribe were not sufficiently aligned to ensure that the Tribe’s rights would not be impaired. The Tribe’s role in developing, building, managing, and operating the project created an economic interest that was separate and distinct from the City’s.
Lastly, the Court found that the fourth factor – whether CBE would have an adequate remedy if its action was dismissed – was neutral: it did not weigh clearly in favor of either party. The Court did observe that the record did not contain information about litigation CBE could bring to challenge the project or otherwise provide a remedy and noted that CBE’s remedy could be restricted by dismissal. However, it also asserted that CBE’s lack of an adequate remedy directly resulted from CBE’s failure to join the tribe as a necessary party within the limitations period, which was entirely within its control. The Court also noted that dismissal was without prejudice, and therefore CBE could challenge future approvals related to the development.
Because three of the four factors weighed in favor of dismissal, and one of them was the critical factor of prejudice to the Tribe, the Court upheld the dismissal below of CBE’s action.
Conclusion
This case demonstrates the importance of carefully monitoring ongoing CEQA litigation and project development to ensure that any real party in interest is timely joined—even if that real party arises only after the lawsuit is filed. Failure to join carries with it a significant risk of dismissal.