A developer's lawsuit alleging that the City of Wasco breached a development agreement by withdrawing funding for infrastructure is not subject to the statute of limitations in the Subdivision Map Act, the Fifth District Court of Appeal has ruled. The court ruled that the dispute was over an interpretation of the development agreement, which was not an action arising out of the Subdivision Map Act. The map act's 90-day statute of limitations provision (Government Code § 66499.37) has been in effect since 1975 "and no published decision has applied §66499.37 to a breach of contract claim," the court held. The ruling sent the lawsuit back to the trial court, which had earlier ruled for the city. The dispute involves the 480-acre Valley Rose Estates subdivision. In November 1992, Wasco and the Valley Rose Estates developer, The Legacy Group, entered into a development agreement. Two months later, they signed an acquisition agreement, in which the city agreed to pay up to $5.2 million for streets, storm drains and other public improvements constructed by Legacy. The city created an assessment district and began the process of issuing bonds for the infrastructure. The bonds were eventually issued after the developer sued. What spurred the suit was the Wasco City Council's decision in October 1994 to invoke the lien-to-value ration of 1:3 that was contained in the acquisition agreement. The city contended Legacy had not maintained the ratio, so the city ceased funding the project until the lien-to-value ratio returned to at least 1:3. Almost six months later, Legacy filed its lawsuit. The city argued that the Legacy lawsuit was too late because of the Subdivision Map Act's 90-day statute of limitations, and that two agreements precluded Legacy from recovering monetary damages. Kern County Superior Court Judge Jon Stuebbe accepted the city's arguments and ruled against the developer. The Legacy Group appealed, and in a partially published opinion, a unanimous three-judge panel of the Fifth District overturned Judge Stuebbe. The published portion of the decision addressed the statute of limitations issue, for which the court found no precedent. The city argued that the Subdivision Map Act's statute of limitations applied because the lawsuit challenged a City Council decision "concerning a subdivision." The Legacy Group contended that its lawsuit stemmed from the city's failure to meet contractual obligations and from misrepresentations by city officials — and those were outside the scope of the Subdivision Map Act. The appellate court found three bases for siding with the developer: A book, a state Supreme Court decision in a case indirectly on point, and the lack of any published decision supporting the city's argument. The book was the 2002 edition of Environmental Law & Land Use Practice by Kenneth Manaster and Daniel Selmi. They wrote, "Since a development agreement is a contract, presumably the normal contract statute of limitations will apply if either party wants to sue for breach of that contract." The state Supreme Court case was the takings case Hensler v. City of Glendale, (1994) 8 Cal.4th 1 (see CP&DR Legal Digest, September 1994). In Hensler, the court ruled that a "decision to adopt, amend or modify a development agreement is not an ‘action involving a controversy over or arising out of the Subdivision Map Act,'" Justice Gene Gomes wrote for the Fifth District. "It then follows," Gomes continued, "that a decision concerning only the interpretation of a clause in a development agreement — a decision less significant than a decision to adopt a development agreement — also is not a decision ‘concerning a subdivision' for purposes of §66499.37." Finally, there was the lack of any published opinion extending the Subdivision Map Act's statute of limitations to a contractual dispute. The only part of Legacy's lawsuit subject to the 90-day statute of limitations was a claim concerning the city's failure to approve final maps, the court held. The unpublished portion of the opinion addressed the merits of the lawsuit, although the court did not dig deeply before remanding the case to the trial court. The Fifth District did overturn the lower court decision regarding the agreements' limitations on damages. The appellate panel ruled that the agreements were not as clear as the trial court had found them to be and that the limitation in the contracts may have only restricted the amount of damages to the amount of funds the city had available. The question of whether or not The Legacy Group maintained the 1:3 lien-to-value ratio was also remanded to the trial court, as was the developer's contention that the city was required to carry out the agreements. The Case: The Legacy Group v. City of Wasco, No. F038382, 03 C.D.O.S. 2291, 2003 DJDAR 2911. Filed March 13, 2003. The Lawyers: For Legacy: Robert Scapa, California Lawyers Group, (818) 981-3712. For Wasco: N. Thomas McCartney, (661) 334-8011.