Citizens for a Better Eureka v. City of Eureka
(Cal. Ct. App., May 14, 2025, No. A170214)

Introduction

In Citizens for a Better Eureka v. City of Eureka, the California Court of Appeal’s First District affirmed dismissal of a CEQA challenge to the City of Eureka’s designation of a downtown parking lot as surplus public property and subsequent efforts to redevelop the site for affordable housing. After wrestling with the intersection of procedural rules and project-specific realities, the court concluded that dismissal was appropriate as Citizens for a Better Eureka (CBE) improperly failed to join a necessary and indispensable party – namely, the Wiyot Tribe (Tribe) as the project developer.

Factual Background

In April 2023, the City approved a resolution (the April resolution) finding that the removal of public parking on a City-owned parking lot, for purposes of facilitating affordable housing development, was exempt from CEQA via the Class 12 exemption for the sale of surplus government property. CBE filed a writ petition challenging the April resolution in May 2023, arguing the City unlawfully segmented its CEQA review by piecemealing the disposition of the property from the development of the property.

In July 2023, following its receipt of responses to a request for proposals, the City selected the Tribe as the preferred developer for affordable housing on the former parking lot site and applied a CEQA exemption specific to affordable housing development in support of that approval (the July resolution). The City filed a notice of exemption (NOE) in support of the July resolution, and that notice identified the Tribe as the project developer.

In December 2023, the City and Tribe executed an MOU addressing implementation aspects of the affordable housing project. On the same day that the MOU was fully executed, CBE filed a motion for a preliminary injunction seeking to preclude the City from issuing any approvals required to proceed with site redevelopment. The Tribe moved to dismiss the action in response, asserting that it was a necessary and indispensable party, and that sovereign immunity and CEQA’s statute of limitations prevented its joinder. The trial court granted the motion, dismissing the case without prejudice. CBE appealed.

Issues and Court’s Analysis

On appeal, the issue before the court was whether the Tribe was a necessary party and an indispensable party, such that CBE’s failure to join the Tribe – as real party in interest – required dismissal of the case. As framed by the court, “[w]hether a party is a real party in interest and thus deemed a necessary party is a separate and preliminary inquiry from whether that party is indispensable.”

At the outset, and in an effort to stymie dismissal, CBE argued the Tribe was not implicated in the case in the first instance, because its petition only challenged the City’s April resolution on the sale of the parking lot. The court disagreed, finding that the petition – through its arguments regarding improper piecemealing and segmentation – facially targeted the full redevelopment project (removal of public parking coupled with the development of affordable housing), and therefore necessarily concerned the Tribe’s interests as developer.

The court next turned to the applicable statutory deadlines under CEQA and the procedural requirements for naming real parties in interest.  The court addressed whether the Tribe was a necessary party, with reference to Public Resources Code section 21167.6.5, subdivision (a), which plainly provides that petitioners “shall name” as a real party in interest any persons identified by the lead agency in its NOE. The court found the Tribe qualified as a real party in interest because it was awarded development rights to the affordable housing project and was identified in the NOE filed following the City’s adoption of the July resolution. The court emphasized that CEQA defines a “project” as the total activity being approved, not each individual approval; therefore, allowing a petitioner to delay naming a real party in interest would frustrate CEQA’s purpose of resolving all issues and parties in one action.

The court also found that the statute of limitations barred joinder of the Tribe. Under CEQA, a petitioner must file suit within 35 days of a NOE and must name and serve any real party in interest identified in the NOE within 20 business days of serving the petition on the lead agency. Although CBE timely filed its petition, it failed to name or serve the Wiyot Tribe at any point in the proceedings. The court reasoned CBE was aware of the Tribe’s role as of the NOE’s filing date (the day after the July resolution) and rejected CBE’s argument that the Tribe was not a real party in interest. Because over 21 months had passed, the Tribe could no longer be joined.[1]

Once the court determined the Tribe was a necessary party that could not be joined due to the expiration of the statute of limitations period, it applied the equitable balancing test under Code of Civil Procedure section 389, subdivision (b), for purposes of determining whether the Tribe was an indispensable party. Despite CBE’s attempts to downplay the impact of the requested judicial relief, the court found it clear that any judgment setting aside project approvals would directly and prejudicially impair the Tribe’s ability to move forward with redevelopment of the site, particularly given its investment of time and resources.  The court held, therefore, that CBE had not met its burden to show the trial court abused its discretion in dismissing the case.

Conclusion

Here, a petitioner’s failure to timely name a real party in interest ultimately barred its ability to proceed with a CEQA action, even though the identity of that party was not known upon the initial filing of the lawsuit. This case serves as a cautionary reminder to CEQA litigators that it is essential to: (1) consider the totality of the project being challenged when identifying the necessary parties to the litigation, and (2) monitor related developments at the agency level that post-date the initial petition filing, as such developments may trigger additional statutory obligations for which compliance is essential in order to advance the lawsuit.

[1] As CBE’s failure to timely identify the Tribe as real party in interest precluded the Tribe’s joinder, the court’s decision does not reach the issue of whether sovereign immunity grounds also prevented joinder.

[This alert does not constitute legal advice and no attorney-client relationship is created by viewing or responding to this alert. Legal counsel should be sought for answers to specific legal questions.]