In an opinion filed May 14, and later ordered published on June 11, 2025, the First District Court of Appeal (Div. 3) affirmed a judgment dismissing a CEQA action challenging an approval for a City parking lot redevelopment/affordable housing project due to the Petitioner’s failure to timely join the necessary and indispensable real party developer of the project’s housing component. Citizens for a Better Eureka v. City of Eureka (Wiyot Tribe, Real Party in Interest) (2025) ___ Cal.App.5th ___.
Factual and Procedural Background of the Project and Litigation
Respondent City of Eureka (City) through its Council held an April 4, 2023 public hearing on its plan to redevelop a City-owned downtown public parking lot into affordable housing. It thereafter adopted a resolution authorizing reduction or removal of public parking from the lot to facilitate the housing project and finding its action qualified for a Class 12 surplus government property categorical exemption from CEQA. (CEQA Guidelines, § 15312.) The same day City’s Council authorized release of an RFP for affordable housing projects on the lot.
On May 5, 2023, petitioner Citizens for a Better Eureka (CBE) filed a writ action challenging City’s resolution and exemption under CEQA on the grounds that it improperly “piecemealed” the project by focusing on the parking lot’s disposition without considering the land’s future use.
On July 18, 2023, after another public hearing, City’s Council adopted another resolution selecting the Wiyot Tribe (Tribe) as the preferred affordable housing developer pursuant to the RFP, and authorizing a Memorandum of Agreement establishing the Tribe’s tasks and the process for negotiating a future development agreement with it. The July resolution found the affordable housing development was a “project” but was exempt under Public Resources Code sections 21159.21 and 21159.23 and Guidelines sections 15192 and 15194 as meeting the criteria and conditions for the affordable housing exemption; it did not reference the Class 12 exemption for surplus property sales relied on by the earlier April resolution. The next day, July 19, 2023, City filed a NOE for the parking lot redevelopment project that identified the Tribe as its developer.
In December 2023, City and the Tribe entered an MOU concerning their responsibilities regarding the affordable housing development, and CBE – in its first filing since its petition seven (7) months earlier – sought a preliminary injunction in its pending action to enjoin City from issuing any approvals for construction of the redevelopment, citing City’s award of redevelopment rights to the Tribe.
On February 9, 2024, the Tribe specially appeared and moved to dismiss CBE’s petition on the grounds that it was a necessary and indispensable real party in interest that had not been named and could not be joined due to sovereign immunity, and that it would be prejudiced by a judgment rendered in its absence. City did not oppose the motion, but CBE did primarily on the ground that its petition concerned the removal of parking, not the post-petition award of affordable housing development rights and related agreements. It also argued the Tribe would not be prejudiced and that a “public rights” exception to traditional joinder rules outweighed any prejudice. In reply, the Tribe disputed these arguments and raised the additional argument that its joinder was also barred by expiration of the statute of limitations to challenge the NOE that identified it as the project developer.
On March 11, 2024, the trial court granted the motion to dismiss; CBE then appealed and the First District affirmed.
The Court of Appeal’s Opinion
After noting that failure to join an indispensable real party may constitute grounds for dismissal under Code of Civil Procedure (CCP) § 389(b), the Court observed that the “central issue” in CBE’s petition involved not merely the April 2023 parking reduction resolution, but the “whole of the [City’s] action,” i.e., the entire affordable housing project enabled by the April resolution. Indeed, CBE’s petition repeatedly argued the whole project had been improperly “piecemealed” by City’s April resolution because it omitted consideration of the parking lot’s redevelopment into affordable housing. Accordingly, as “the redevelopment of the lot was the project that was the subject of CBE’s petition,” CBE had an obligation to join the Tribe as a necessary party since it was a real party in interest developer, and real parties in CEQA actions are automatically deemed necessary parties who should be joined in an action if possible under CCP § 389(a). (Citing Save Berkeley’s Neighborhoods v. Regents of University of California (2021) 70 Cal.App.5th 705, 718-720, my October 26, 2021 post on which can be found here, and Pub. Resources Code, § 21167.5.6(a) [providing “bright-line rule” that persons named in NODs and NOEs must be named and served as real parties in CEQA actions to ensure cases may be fully adjudicated in one proceeding].)
Exercising its discretion to reach the issue even though it was not raised by the Tribe until its reply brief below, the Court next agreed that the statute of limitations barred the Tribe’s joinder. The Tribe was identified as the real party project developer in the NOE filed on July 19, 2023, and CBE presumptively became aware of its role on that date. (Citing Organizacion Comunidad de Alviso v. City of San Jose (2021) 60 Cal.App.5th 783, 793, my June 1, 2021 post on which can be found here.) Petitioner nonetheless never made any attempt to name or serve the Tribe (whether within the limitations period of 35 days from the NOE’s filing or at any point in the proceedings thereafter). Having resolved the statute of limitations issue so as to conclude the Tribe could no longer be joined as a party, the Court did not reach the argument that sovereign immunity also precluded its joinder.
The final step in the Court’s analysis was its holding that the trial court did not abuse its discretion in finding the Tribe was an indispensable party, in whose absence the action could not “in equity and good conscience” proceed, under CCP § 389(b)’s four factors. Briefly stated, those factors are: (1) to what extent a judgment entered in the person’s absence might prejudice him or those already parties; (2) the extent to which the prejudice can be lessened by protective provisions in the judgment, the shaping of relief or other measures; (3) whether a judgment rendered in the person’s absence will be adequate; and (4) whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder. While “[n]o factor is determinative or inherently more important than another[,]… potential prejudice to the unjoined party is of “critical importance.”” (Citing and quoting from Save Berkeley, 70 Cal.App.5th at 721.)
Noting that developers are often, but not invariably, held to be indispensable parties to CEQA actions challenging development projects, and that a case-by-case discretionary determination by the trial court analyzing the four equitable factors is required, the Court of Appeal proceeded to address those factors. Regarding the first, it found a judgment rendered in CBE’s favor – i.e., a writ setting aside project approval – in the Tribe’s absence would plainly prejudice the Tribe by preventing it from moving forward with its redevelopment project plans and even if the project were not completely stopped it would jeopardize work already done by the Tribe, including pursuing funding. The Court distinguished Lungren v. Community Redevelopment Agency (1997) 56 Cal.App.4th 868, which involved a public agency’s transfer of property to a tribe to build and operate a casino. That case applied a “public rights” exception to traditional joinder rules to hold the necessary party tribe (which couldn’t be joined on sovereign immunity grounds) was not indispensable because so finding would place the property beyond the reach of the State’s police power; here, by contrast, pursuant to the City/Tribe MOU, the affordable housing project would remain subject to state and local laws and jurisdiction, and did not implicate the State’s jurisdiction to prohibit or regulate gambling. Accordingly, the Lungren exception did not apply to outweigh the prejudice to the Tribe, which was “only amplified by CBE’s failure to diligently pursue its litigation objective” as shown by its seven-month hiatus in filings in the face of the project’s “clear and public progress.” The first factor thus weighed heavily in favor of dismissal.
Regarding the second factor, CBE did not argue there is any way to avoid or lessen prejudice to the Tribe if removal of parking from the project site is prohibited or reduced, other than to advance arguments the Court had already rejected; hence, the second factor also weighed in favor of dismissal.
The third factor – adequacy of a judgment rendered in the Tribe’s absence – also weighed in favor of dismissal because the interests of existing and absent parties were not sufficiently aligned to ensure the absent party’s rights necessarily will not be affected or impaired. Here, the Tribe’s role in developing, constructing, and operating the affordable housing project created an economic interest distinct from the City’s interest in adding affordable housing.
Finally, the Court found the fourth factor – whether CBE would have an adequate remedy if its action were dismissed – to be neutral. While the record contained no information about other alleged “ongoing litigation by CBE” that might provide a remedy, and its remedy to challenge initial project approvals “may indeed be restricted by a dismissal,” the Court “note[d] that the lack of an adequate remedy to challenge those approvals is a direct result of CBE’s own failure to join the Tribe as a necessary party within the limitations period, which was entirely within its control.” The dismissal was also expressly without prejudice and CBE would not necessarily be prevented from challenging future approvals related to the redevelopment project.
Given that three of the four equitable factors of CCP § 389(b), including the critically important factor of prejudice to the Tribe, weighed in favor of dismissal, the Court held CBE had not met its burden to show the trial court had abused its discretion in weighing the factors, finding the Tribe to be an indispensable party, and dismissing the action.
Conclusion and Implications
The main takeaways from this case are that (1) the nature of an action and the relief sought thereby will determine how absent parties are affected, and potentially prejudiced, if not joined, and (2) in CEQA actions challenging “the whole of an action” that constitutes a CEQA “project,” plaintiffs must be diligent and remain alert to the lead agency’s public proceedings and its filing of public notices in connection with the challenged projects – and be aware that notices such as NODs and NOEs identify real parties in interest that will automatically be necessary parties plaintiffs have an obligation to timely join in the action. Should CEQA plaintiffs fail to diligently pursue their action and stay informed regarding public agency notices filed in connection with it that trigger joinder obligations, they do so at risk, and their actions may be dismissed if they fail to timely join a necessary real party also found to be indispensable.
