City of San Marcos v. Loma San Marcos
Annotate this CaseLoma San Marcos, LLC, Questhaven Pacific View, LLC, and La Paz Sunset, Inc. (collectively "Loma San Marcos") purchased a 15-acre property subject to a security and lien agreement with the City of San Marcos. The agreement was entered into by the property's former owner to securitize fees due pursuant to a conditional use permit that allowed the owners to convert the property from a recycling facility to a movie studio. Under the agreement the property owner was obligated to pay the City impact mitigation fees by dates certain. After purchasing the property and negotiating an amendment to the agreement extending the payment deadlines, Loma San Marcos failed to pay the fees. As a result and based on other terms of the agreement, the City brought a judicial foreclosure action. After trial, the court entered judgment in favor of the City. Loma San Marcos appealed, arguing the fees were not due because: (1) the City had not yet issued permits; (2) the renegotiated agreement was unenforceable because it was not supported by valid consideration; and (3) even if otherwise otherwise enforceable, the fees set in the agreement were illegal under the California Mitigation Fee Act and the takings clause of the Fifth Amendment to the United States Constitution. After review, the Court of Appeal rejected these arguments and concluded Loma San Marcos, represented by sophisticated real estate investors, entered a binding agreement with the City to pay the fees at issue or face foreclosure of the property.
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