COUNTY OF HUMBOLDT, Plaintiff, Cross-defendant and
Appellant, v. ROBERT C. McKEE et al., Defendants,
Cross-complainants and Respondents; LINDA HILL, as Assessor,
etc., Cross-defendant and Appellant.

A117325

COURT OF APPEAL OF CALIFORNIA, FIRST APPELLATE DISTRICT,
DIVISION FIVE

2008 Cal. App. LEXIS 1248


August 15, 2008, Filed

PRIOR HISTORY:
Superior Court of Humboldt County, No. DR020825, W. Bruce Watson, Jr., Judge.

COUNSEL: Morgan Miller Blair, Christian M. Carrigan, Kevin R. Brodehl, Todd
A.
Williams, and Bryan W. Wenter; Wendy B. Chaitin, Interim County Counsel,
Richard
D. Hendry, Deputy County Counsel and Deputy District Attorney, for Plaintiff,
Cross-defendant and Appellant, and Cross-defendant and Appellant.

Edmund G. Brown, Jr., Attorney General, Mary E. Hackenbracht, Senior
Assistant
Attorney General, Richard M. Thalhammer and Ellyn S. Levinson, Deputy
Attorneys
General, as Amicus Curiae for California Department of Conservation on
behalf of
Plaintiff, Cross-defendant and Appellant and Cross-defendant and Appellant.

Jennifer B. Henning for California State Association of County on behalf of
Plaintiff, Cross-defendant and Appellant, and Cross-defendant and Appellant.

Christian C. Schuering and Jack L. Rice for California Farm Bureau Federation
and Sierra Club on behalf of Plaintiff, Cross-defendant and Appellant, and
Cross-defendant and Appellant.

Allen Matkins Leck Gamble Mallory & Natsis LLP, James L. Meeder, Michael P.
Durkee and David H. Blackwell, for Defendants, Cross-complainants and
Respondents.

JUDGES: Opinion by Simons, Acting P. J., with Needham and Reardon *, JJ.,
concurring.

* Judge of the Alameda County Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.

OPINION BY: Simons

OPINION

SIMONS, ACTING P. J.--In 1965, the Legislature confronted two troubling
trends in California: the loss of agricultural land to development and the
haphazard growth of suburbia, requiring the "extension of municipal services
to
remote residential enclaves, and interfer[ing] with agricultural
activities." (
Sierra Club v. City of Hayward (1981) 28 Cal.3d 840, 850 (Sierra Club),
superseded by statute on other grounds as stated in Friends of East Willits
Valley v. County of Mendocino (2002) 101 Cal.App.4th 191, 204-205.) "The
Legislature perceived as one cause of these problems the self-fulfilling
prophecy of the property tax system: taxing land on the basis of its market
value compels the owner to put the land to the use for which it is valued by
the
market." (Ibid.) In response, it enacted the Williamson Act (Gov. Code, §
51200
et seq.), 1 which employs a two-step strategy to conserve agricultural
lands.
The local government first establishes and regulates agricultural preserves,
and
then executes land conservation contracts with landowners. (§§ 51230-51239,
51240-51257.) These contracts limit the land to agricultural and compatible
uses
for their duration and may also include terms and conditions more restrictive
than those required by the Williamson Act. (§§ 51240, 51243, subd. (a).) In
return for accepting restrictions on the land, the landowner is "guaranteed a
relatively stable tax base, founded on the value of the land for open space
use
only and unaffected by its development potential." (Sierra Club, at p. 851.)
The
hallmark of this statutory scheme is its reliance on voluntary agreements
between the government and the landowner, where the landowner chooses, on an
annual basis, to accept certain limits on his or her use of the land in
return
for an explicit property tax reduction.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -1
Unless
otherwise indicated, all statutory references are to the Government Code.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

In 1977, plaintiff County of Humboldt (County) and Arthur Tooby made and
entered into a Williamson Act contract, which covered a Class B agricultural
preserve consisting of approximately 12,580 acres. Among other things, this
contract set a minimum parcel size of 160 acres for subsequent divisions of
the
land, consistent with the agricultural preserve guidelines then in effect.
One
year later, through Regulation No. 78-64, the County Board of Supervisors
(the
Board) revised those guidelines, increasing the minimum parcel size for
divisions to 600 acres (the 1978 Guidelines). In 2000, defendants Buck
Mountain
Ranch Limited Partnership (BMR), Robert C. McKee and Valery McKee, 2
purchased
this acreage, and then divided and sold much of the land. Though each parcel
sold was larger than 160 acres, some were less than 600 acres.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -2
Hereafter, the three defendants, BMR, Robert C. McKee and Valery McKee, are
collectively referred to as McKee.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

In 2002, County sued McKee and others for violation of the Williamson Act,
violation of the Subdivision Map Act (§ 66410 et seq.), breach of contract,
nuisance, and violation of the Unfair Competition Act (Bus. & Prof. Code, §
17200 et seq.) BMR filed a cross-complaint against County and the County
Assessor (Assessor), alleging Assessor continued to assess property taxes to
BMR
for parcels transferred to third party purchasers. The trial court ruled in
favor of McKee. It relied upon the contract clauses of the state and federal
Constitutions (U.S. Const., art. I, § 10; Cal. Const., art. I, § 9) to
conclude
that the 1978 Guidelines could not applied be constitutionally to a
Williamson
Act contract executed in 1977. We disagree and reverse. Subsequent to the
adoption of the 1978 Guidelines, the parties voluntarily renewed their
contract
numerous times, and the new contract created with each renewal incorporated
the
1978 Guidelines.

BACKGROUND

The Tooby Guidelines

On February 1, 1977, the Board adopted Resolution No. 77-19, which
established approximately 12,580 acres of the 13,700-acre Tooby Ranch as a
Class
B agricultural preserve (Tooby Preserve). On February 15, 1977, the Board
rescinded Resolution No. 77-19 and replaced it with Resolution No. 77-30 (the
Tooby Guidelines), which contained a corrected legal description of the Tooby
Preserve. 3 The Tooby Guidelines provided in part: "WHEREAS, the land to be
included within the agricultural preserve is, and will continue to be, used
for
the purposes of producing agricultural commodities for commercial purposes
and
uses compatible with agriculture; and [P] WHEREAS, this Board is authorized
by
statute to determine according to uniform rules what constitutes a compatible
use of land within each preserve; [P] NOW, THEREFORE, BE IT RESOLVED as
follows:
[P] 1. The hereinafter described real property located in the County of
Humboldt
is hereby designated and established as an agricultural preserve within the
meaning of and pursuant to the [Williamson Act], including amendments
thereto,
and shall be known as and may be referred to as: [P] Agricultural Preserve
No.
77-19." (Underscoring in original.)

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -3 The
two
resolutions are substantively identical.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

The Tooby Guidelines listed compatible uses permitted on the Tooby Preserve.
The guidelines further provided that "The land described herein shall not be
divided if, as a practical matter, it would result in the reduction of land
devoted to the production of agricultural commodities for commercial
purposes.
This section shall not prohibit a division of land if the parcels created
thereby are of such size, shape and other physical characteristics that they
are
capable of producing agricultural commodities and if as a practical matter
the
amount of land devoted to agricultural uses will not be reduced. All
divisions
of land shall comply with all applicable local ordinances and State laws."

The Tooby Contract

On February 1, 1977, the same day the Board established the Tooby Preserve,
Arthur Tooby entered into a Williamson Act contract with County (Tooby
Contract)
. 4 The Tooby Contract restricted the Tooby Preserve to agricultural and
compatible uses.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -4
Although
the Williamson Act contract was signed by Arthur Tooby on February 8, 1977,
the
effective date of the contract was designated as February 1, 1977.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

The Tooby Contract stated, in relevant part, "WHEREAS, OWNER warrants that he
owns certain land particularly described hereinafter, which is presently
devoted
to agricultural and compatible uses; and [P] WHEREAS, said land is located
in an
agricultural preserve heretofore established by COUNTY by Resolution No.
77-19,
and [P] WHEREAS, both OWNER and COUNTY desire to establish binding
restrictions
which will limit the use of said land to agricultural and compatible uses:
[P]
NOW, THEREFORE, the parties agree as follows: [P] 1. This contract is made
and
entered into pursuant to the [the Williamson Act] and is subject to all the
provisions of said Act as it now exists. [P] . . . [P] 3. During the term of
this contract or any extension thereof, the land described herein shall not
be
used for any purpose other than agricultural uses, as defined by said Act, or
those 'compatible uses' as set forth in Resolution No. 77-19. [P] 4. This
contract shall be effective on the date first written above, hereinafter the
anniversary date, and shall remain in effect and shall be for an initial
term of
ten (10) years. On the first anniversary date and on each succeeding
anniversary
date, one year shall automatically be added to the unexpired term unless
notice
of non-renewal is given as provided by law. [P] 5. This contract shall run
with
the land described herein and shall be binding upon, and inure to the benefit
of, all successors in interest of the OWNER. [P] 6. Land subject to this
contract may not be divided into parcels of less than 160 acres except for
purposes of rental or lease for agricultural and compatible uses provided no
additional dwellings shall be constructed or placed upon such divided
parcels."

The 1973 and 1978 Guidelines

Resolution No. 73-163 (1973 Guidelines), adopted by the Board on December 18,
1973, was in effect at the time the Tooby Contract was executed. The 1973
Guidelines set forth the regulations governing agricultural preserves, and
provided in part, "Land within a Class A preserve and under contract may not
be
divided into parcels less than 20 acres. Land within a Class B preserve and
under contract may not be divided into parcels of less than 160 acres."

On March 28, 1978, the year after the Tooby Preserve was established and the
Tooby Contract was executed, the Board adopted the 1978 Guidelines. The 1978
Guidelines set forth revised regulations governing agricultural preserves,
and
stated in part, "Land within a Class B preserve and under contract shall not
be
divided into parcels smaller than 600 acres. Land within a Class A or C
preserve
and under contract shall not be divided into parcels smaller than 100 acres.
(Effective for 1979 preserves and under contract)." The 1978 Guidelines
expressly rescinded the 1973 Guidelines.

Sale of the Tooby Ranch

In August 2000, McKee formed BMR for the purpose of purchasing and selling
the Tooby Ranch. On October 17, 2000, McKee closed escrow on the purchase of
13,340 acres of the Tooby Ranch from the estate of Arthur Tooby. 5 In March
2001, Omsberg & Company, a surveying and engineering firm, submitted a
report to
County in support of McKee's application for lot line adjustments on the
Tooby
Ranch. The report explained McKee's plans to divide the Tooby Ranch into 44
parcels of 160 acres or more and sell them as "ranchettes." 6

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -5 The
remaining 360 acres were sold to a third party.
6 McKee later withdrew his application for lot-line adjustments.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

Since 2000, McKee has transferred approximately 25 separate parcels of land
to third party purchasers. Some of the parcels conveyed to third party
purchasers are smaller than 600 acres, but there is no evidence that any of
the
transferred parcels are smaller than 160 acres. At the time of trial, in
2006,
McKee retained ownership of approximately 3,000 acres of the Tooby Ranch.

McKee has not filed a notice of nonrenewal of the Tooby Contract. McKee has
continued to receive a preferential tax assessment and has paid an average
of 44
cents per acre, 10 to 15 percent of the taxes he would have paid had the land
not been under a Williamson Act contract.

Procedural History

On December 31, 2002, County filed a complaint against McKee and 47 third
party purchasers alleged to have bought parcels of the Tooby Ranch from
McKee.
County filed a first amended complaint on April 1, 2003. County alleged
causes
of action for violation of the Williamson Act, violation of the Subdivision
Map
Act, breach of contract, nuisance, and violation of the Unfair Competition
Act.
County sought penalties, damages, and declaratory and injunctive relief,
including an order prohibiting future transfers of Tooby Ranch land and
declaring the prior transfers null and void.

BMR filed a cross-complaint against County and Assessor on June 11, 2003, and
filed a first amended cross-complaint on August 27, 2003. BMR alleged that
Assessor continued to assess property taxes to BMR for parcels transferred to
third party purchasers. The cross-complaint sought declaratory relief and an
injunction prohibiting Assessor from assessing taxes to BMR for the
transferred
parcels.

On December 4, 2003, the trial court issued the first of two bifurcation
orders. The court granted McKee's motion to bifurcate the proceedings into
two
phases: trial of County's claims against McKee, followed by trial of County's
claims against the third party purchasers. The court ordered that the third
party defendants would not participate or be subject to discovery until the
second phase of the action. 7

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -7 This
appeal is from the trial court's judgment as to County's claims against McKee
and McKee's related cross-claims. The third party purchasers are not parties
to
this appeal.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

On July 25, 2005, the trial court issued its second bifurcation order. The
court separated out two predominantly legal issues to be briefed and decided
prior to trial of County's claims against McKee: "(1) whether . . . County
can
legally nullify McKee's conveyances of parcels of the Tooby Ranch to third
parties; and (2) whether . . . County's Williamson Act [g]uidelines can be
applied retroactively to pre-existing Williamson Act [c]ontracts."

On November 2, 2005, the court issued a ruling on these two legal issues.
First, the court ruled that County's 1978 Guidelines could not be applied to
the
1977 Tooby Contract. The court reasoned that application of the 1978
Guidelines,
which amended the minimum parcel size for Class B preserves from 160 to 600
acres, would violate the contract clauses of the state and federal
Constitutions. The court concluded that application of the 600-acre parcel
minimum would substantially impair the Tooby Contract, and found that County
had
failed to show that this impairment was reasonable and necessary to an
important
public purpose. Second, the court ruled that County could not seek
nullification
of the parcel conveyances in the instant proceeding. Following a motion for
reconsideration by County, the court permitted supplemental briefing and oral
argument from both parties. On February 7, 2006, the court issued a "Ruling
On:
Reconsideration of Bifurcated Issues," affirming its November 2 decision and
clarifying that in light of its finding that the 1978 Guidelines could not
constitutionally be applied to the Tooby Contract, it did not reach the
issue of
nullification.

Beginning on August 14, 2006, the court held a bench trial on County's causes
of action against McKee for violation of the Williamson Act, violation of the
Subdivision Map Act, breach of contract, declaratory relief, and violation of
the Unfair Competition Act to the extent this violation was predicated on
violations of the Williamson Act or Subdivision Map Act. The court also tried
BMR's first amended complaint against County and Assessor. County dismissed
its
cause of action for violation of the Subdivision Map Act prior to the
presentation of evidence. On November 2, 2006, after County completed its
presentation of evidence, McKee moved for judgment pursuant to Code of Civil
Procedure section 631.8. The court issued an oral ruling granting the motion
for
judgment on November 2, 2006, and issued a written statement of decision and
judgment in favor of McKee on January 16, 2007.

In its statement of decision, the court concluded that McKee had not violated
the Williamson Act or the Tooby Contract. The 600-acre minimum in the 1978
Guidelines could not constitutionally applied to the 1977 Tooby Contract, and
County had produced no evidence that any parcel conveyed by McKee to third
party
purchasers was less than the 160-acre minimum established by the Tooby
Contract
and the governing 1973 Guidelines. County had also failed to produce
evidence of
other alleged breaches of the Tooby Contract: County "failed to produce any
evidence that the division of the Tooby Ranch created parcels 'of such size,
shape and other physical characteristics that they are not capable of
producing
agricultural commodities.' Indeed, . . . County could not identify a single
parcel that failed to meet this requirement of [the Tooby Guidelines]. In
addition, . . . County failed to produce any evidence that [McKee's]
conveyance
of parcels, as a practical matter, reduced the amount of land devoted to
agricultural uses." The court issued a judgment in favor of McKee as to
County's
claims for violation of the Williamson Act, breach of contract, declaratory
relief, violation of the Unfair Competition Act, and injunctive relief, and
in
favor of BMR as to its cross-complaint. The judgment awarded costs to McKee
in
an unspecified amount. On April 2, 2007, the court issued an order fixing
costs
in the amount of $ 26,986.77.

On March 16, 2007, County and Assessor filed a timely notice of appeal from
the judgment.

DISCUSSION 8

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -8 On
June
15, 2007, McKee filed a motion to dismiss this appeal. On August 1, 2007, we
denied the motion to dismiss "without prejudice to inclusion of the issues
raised in the motion in [McKee's] briefing on the merits."

On September 21, 2007, McKee filed a second motion to dismiss the appeal.
Again, we denied the motion to dismiss "without prejudice to inclusion of the
issues raised in the motion in [McKee's] briefing on the merits."

McKee did not include the issues raised in the motions to dismiss in the
respondents' brief filed December 28, 2007, and therefore we do not address
these issues.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

I. The Williamson Act

The Williamson Act is a legislative effort to preserve agricultural and open
space land and discourage premature urban development. (§ 51220.) 9 It
authorizes local governments to establish "agricultural preserve[s]," which
consist of lands devoted to agricultural and compatible uses. (§ 51230.) The
preserves "shall be established for the purpose of defining the boundaries of
those areas within which the city or county will be willing to enter into
contracts pursuant to this act." (§ 51230.) Local governments are required to
adopt rules governing the administration of agricultural preserves and apply
those rules uniformly throughout the preserve. (§ 51231.)

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -9
Section
51220 provides:

"The Legislature finds:

"(a) That the preservation of a maximum amount of the limited supply of
agricultural land is necessary to the conservation of the state's economic
resources, and is necessary not only to the maintenance of the agricultural
economy of the state, but also for the assurance of adequate, healthful and
nutritious food for future residents of this state and nation.

"(b) That the agricultural work force is vital to sustaining agricultural
productivity; that this work force has the lowest average income of any
occupational group in this state; that there exists a need to house this work
force of crisis proportions which requires including among agricultural uses
the
housing of agricultural laborers; and that such use of agricultural land is
in
the public interest and in conformity with the state's Farmworker Housing
Assistance Plan.

"(c) That the discouragement of premature and unnecessary conversion of
agricultural land to urban uses is a matter of public interest and will be of
benefit to urban dwellers themselves in that it will discourage discontiguous
urban development patterns which unnecessarily increase the costs of
community
services to community residents.

"(d) That in a rapidly urbanizing society agricultural lands have a definite
public value as open space, and the preservation in agricultural production
of
such lands, the use of which may be limited under the provisions of this
chapter, constitutes an important physical, social, esthetic and economic
asset
to existing or pending urban or metropolitan developments.

"(e) That land within a scenic highway corridor or wildlife habitat area as
defined in this chapter has a value to the state because of its scenic beauty
and its location adjacent to or within view of a state scenic highway or
because
it is of great importance as habitat for wildlife and contributes to the
preservation or enhancement thereof.

"(f) For these reasons, this chapter is necessary for the promotion of the
general welfare and the protection of the public interest in agricultural
land."
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

After establishing agricultural preserves, the local government may enter
into contracts with landowners with respect to land within a designated
preserve
and devoted to agricultural use. (§§ 51240, 51242.) These contracts must
limit
the land to agricultural and compatible uses for the duration of the
contract,
and, in return, "the landowner is guaranteed a relatively stable tax base,
founded on the value of the land for open space use only and unaffected by
its
development potential." (Sierra Club, supra, 28 Cal.3d at p. 851.)

Because the Williamson Act permits preferential tax assessment of land under
contract, the California Constitution requires enforceable restrictions on
the
use of contracted land. (Cal. Const., art. XIII, § 8; § 51243.6.) The
California
Constitution states, in relevant part, "To promote the conservation,
preservation and continued existence of open space lands, the Legislature may
define open space land and shall provide that when this land is enforceably
restricted, in a manner specified by the Legislature, to recreation,
enjoyment
of scenic beauty, use or conservation of natural resources, or production of
food or fiber, it shall be valued for property tax purposes only on a basis
that
is consistent with its restrictions and uses." (Cal. Const., art. XIII, §
8.)

The Williamson Act was intended "to deny the tax benefits of the act to short
term speculators and developers of urban fringe land and to [e]nsure that the
constitutional requirement of an 'enforceable restriction' is met"; and,
therefore, "the Legislature deliberately required a long-term commitment to
agriculture or other open-space use." (Sierra Club, supra, 28 Cal.3d at p.
852.)
Each contract between the landowner and local government must have an initial
term of at least 10 years, and "shall provide that on the anniversary date of
the contract or such other annual date as specified by the contract a year
shall
be added automatically to the initial term unless notice of nonrenewal is
given
as provided in Section 51245." (§ 51244.) If either the landowner or local
government does not wish to renew the contract, the party "shall serve
written
notice of nonrenewal of the contract upon the other party in advance of the
annual renewal date of the contract. Unless such written notice is served by
the
landowner at least 90 days prior to the renewal date or by the city or
county at
least 60 days prior to the renewal date, the contract shall be considered
renewed as provided in Section 51244 or Section 51244.5." (§ 51245.) The
contract is binding on all successors in interest of the owner. (§ 51243,
subd.
(b).)

If the local government or landowner serves a notice of nonrenewal, the land
use restrictions in the existing contract remain in effect for the balance of
the contract term. (§ 51246.) Upon notice of nonrenewal, "taxes on [the
landowner's] property gradually return to the level of taxes on comparable
nonrestricted property, as the term of restriction draws nearer to
expiration."
(Sierra Club, supra, 28 Cal.3d at p. 852, citing Rev. & Tax. Code, § 426.)

II. Applicability of the 1978 Guidelines to the Tooby Contract

A. The 1978 Guidelines Were Intended to Apply to Pre-1979 Preserves

County and Assessor contend the 1978 Guidelines were intended to apply both
to preserves established in 1979 and to preserves established before 1979,
including the Tooby Preserve established in 1977. McKee asserts that the 1978
Guidelines were intended to apply only to preserves established in 1979 and
later, and therefore do not govern the Tooby Preserve.

We review this issue of statutory interpretation de novo. (City of Saratoga
v. Hinz (2004) 115 Cal.App.4th 1202, 1212.) The interpretation of local
ordinances and resolutions is subject to ordinary rules of statutory
construction. (Da Vinci Group v. San Francisco Residential Rent etc. Bd.
(1992)
5 Cal.App.4th 24, 28.) "'In statutory construction cases, our fundamental
task
is to ascertain the intent of the lawmakers so as to effectuate the purpose
of
the statute. [Citation.] "We begin by examining the statutory language,
giving
the words their usual and ordinary meaning." [Citations.] If the terms of the
statute are unambiguous, we presume the lawmakers meant what they said, and
the
plain meaning of the language governs. [Citations.] If there is ambiguity,
however, we may then look to extrinsic sources, including the ostensible
objects
to be achieved and the legislative history. [Citation.] In such cases, we
"'"select the construction that comports most closely with the apparent
intent
of the Legislature, with a view to promoting rather than defeating the
general
purpose of the statute, and avoid an interpretation that would lead to absurd
consequences."'" [Citation.]' [Citations.]" (City of Saratoga, at pp.
1212-1213
.)

We agree with County and Assessor. The 1973 Guidelines provided that "In
order to qualify for a Class B preserve and contract, land shall comply with
the
following requirements: [P] (1) Minimum Preserve Area. The preserve area
shall
contain not less than 600 acres of land, and no individual lot or parcel of
land
shall be less than 160 contiguous acres." (Underscoring in original.) The
1973
Guidelines further provided, "Land within a Class B preserve and under
contract
may not be divided into parcels of less than 160 acres." The revised 1978
Guidelines retained the requirement that in order to qualify for a Class B
preserve, the preserve area must contain at least 600 acres of land and
individual parcels must be at least 160 contiguous acres. However, the 1978
Guidelines revised the restriction on divisions of land under contract in
Class
B preserves. The 1978 Guidelines stated, "Land within a Class B preserve and
under contract shall not be divided into parcels smaller than 600 acres. Land
within a Class A or C preserve and under contract shall not be divided into
parcels smaller than 100 acres. (Effective for 1979 preserves and under
contract)." The 1978 Guidelines further provided that "Resolution No. 73-163
[(the 1973 Guidelines)] is hereby rescinded."

In interpreting the 1978 Guidelines, both parties focus on the parenthetical
that follows the restriction on divisions of land in Class B preserves:
"(Effective for 1979 preserves and under contract)." County and Assessor urge
that this parenthetical means the 600-acre minimum parcel size is effective
both
for land in 1979 preserves and for land in preserves already under contract.
McKee argues that this phrase means the 600-acre minimum is to be applied
only
to land within preserves created in 1979 or later and then placed under
contract. We find the language of this parenthetical ambiguous and
susceptible
to both constructions. 10

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -10 The
language of the restriction itself is also susceptible to these two
constructions.

Both parties rely on declarations from former County officials purporting to
explain the intent of the 1978 Guidelines. McKee cites to 2005 declarations
from
two former County staff persons and a former planning commissioner, all of
whom
were involved in the adoption of the 1978 Guidelines. Each of the
declarations
state that the 600-acre minimum parcel requirement in the 1978 Guidelines was
intended to apply only to newly established Class B preserves, not to
preexisting Class B preserves. County and Assessor point to a 2006
declaration
from a former County planning commissioner involved in the adoption of the
1978
Guidelines, which states that the 1978 Guidelines were intended to apply to
preserves already under contract in 1978. We conclude that these
declarations,
written over 25 years after the adoption of the 1978 Guidelines and stating
conflicting understandings of the 1978 Guidelines' intent, do not dictate any
particular construction of the 1978 Guidelines.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

The construction suggested by McKee, however, would lead to an absurd result.
The final provision of the 1978 Guidelines rescinds the 1973 Guidelines,
rendering them void and inoperative. If the 1978 Guidelines were intended to
apply only to preserves established from 1979 onward, as McKee suggests, then
the passage of the 1978 Guidelines would have left County with no operative
regulations for preserves established before 1979. This result is contrary to
the apparent purpose of the 1978 Guidelines, to establish revised regulations
governing agricultural preserves. Moreover, County's failure to maintain
operative regulations for pre-1979 preserves would violate the Williamson
Act,
which requires local governments to adopt rules governing the administration
of
agricultural preserves. (§ 51231.) We construe the 1978 Guidelines so as to
avoid this consequence, and conclude the 1978 Guidelines were intended to
apply
to both 1979 preserves and preserves already "under contract," that is, both
preexisting and future preserves. Therefore, the 1978 Guidelines were
intended
to apply to the Tooby Preserve, which had been established in 1977.

At oral argument, McKee contended that his interpretation of the 1978
Guidelines would not leave County without operative regulations for pre-1979
preserves. McKee appeared to argue that the 1978 Guidelines rescinded only
those
provisions of the 1973 Guidelines related to the establishment of new
preserves,
leaving intact the provisions related to the ongoing regulation of preserves.
But, the 1978 Guidelines broadly state that "Resolution No. 73-163 [(the 1973
Guidelines)] is hereby rescinded," without limiting that rescission to any
particular aspect of the 1973 Guidelines.

McKee also contended at oral argument that divisions of the Tooby Preserve
need not be governed by the 1973 or 1978 Guidelines, because those divisions
were governed by the 1977 Tooby Guidelines. But this argument provides little
comfort to McKee. The Tooby Guidelines directly address the issue in our case
and provide, "All divisions of land shall comply with all applicable local
ordinances and State laws." 11 This provision is properly interpreted to
require
compliance with the local and state laws in existence at the time of the land
divisions. (City of Torrance v. Workers' Comp. Appeals Bd. (1982) 32 Cal.3d
371,
379 ["'when an instrument provides that it shall be enforced according
either to
the law generally or to the terms of a particular . . . statute, the
provision
must be interpreted as meaning the law or the statute in the form in which
it
exists at the time of such enforcement'"]; Hermosa Beach Stop Oil Coalition
v.
City of Hermosa Beach (2001) 86 Cal.App.4th 534, 556 (Hermosa).) Thus, even
if
McKee is correct and the Tooby Guidelines govern, any division of land in the
Tooby Preserve would be subject to the Board rules in existence at the time
of
division.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -11 We
note
that the Tooby Contract, when executed, provided for a minimum parcel size on
division of 160 acres, which was consistent with the requirements then
imposed
by County's zoning ordinances and the 1973 Guidelines.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

McKee also contends the 1978 Guidelines cannot be construed to apply to
pre-1979 preserves absent a clear indication of intent to do so, because
this is
a retroactive application of the 1978 Guidelines. It is well settled that
"[s]tatutes do not operate retroactively unless there is a clear indication
of
intent that they do so. [Citations.]" (Hermosa, supra, 86 Cal.App.4th at p.
549
.) However, application of the 1978 Guidelines to preserves established
before
1979 is not, as McKee suggests, a retroactive application. "A statute has
retroactive effect if it substantially changes the legal effect of past
events.
[Citations.] 'A statute does not operate "retrospectively" merely because it
is
applied in a case arising from conduct antedating the statute's enactment
[citation], or upsets expectations based on prior law. Rather, the court must
ask whether the new provision attaches new legal consequences to events
completed before its enactment.'" (Id. at p. 550, quoting Landgraf v. USI
Film
Products (1994) 511 U.S. 244, 269-270.) Application of the 600-acre parcel
minimum in the 1978 Guidelines to preserves established in 1978 and earlier
is a
prospective application of the law so long as it applies only to future (that
is, post-1978) divisions of existing Class B preserves. As with a new zoning
regulation, this revision of the minimum parcel size for existing Class B
preserves may upset the expectations of landowners, but it is not a
retroactive
application of the law. (See Landgraf, at p. 269, fn. 24 ["[e]ven
uncontroversially prospective statutes may unsettle expectations and impose
burdens on past conduct: a new property tax or zoning regulation may upset
the
reasonable expectations that prompted those affected to acquire property"].)
Thus, we do not require a clear indication of intent that the 1978 Guidelines
apply to pre-1979 preserves.

Finally, McKee argues that County advised McKee that the 160-acre minimum
parcel size governed the Tooby Preserve, and County's and Assessor's current
position that the 1978 Guidelines were intended to apply to pre-1979
preserves
"is simply contrary to . . . the repeated admissions of . . . County." McKee
refers us to several letters written by County staff persons between 2000 and
2002, which informed McKee that the Tooby Ranch land could not be divided or
conveyed in parcels of less than 160 acres. However, these letters do not
discuss either the 1973 or the 1978 Guidelines, and make no representations
as
to whether the 1978 Guidelines apply to the Tooby Preserve. Indeed, two of
the
three letters expressly refer McKee to County's zoning regulations for Class
B
preserves, which prohibit conveyances of parcels of less than 160 acres. A
county's agricultural preserve guidelines are separate from, and may be more
restrictive than, its zoning regulations. (See 54 Ops.Cal.Atty.Gen. 90, 92
(1971).)

McKee also relies on a 1987 memorandum from County's deputy counsel to its
planning director regarding a different agricultural preserve. The memo
stated
the deputy counsel's opinion that a proposed rezoning of land under contract
in
the "Branstetter Estate" would be permissible: "The land under contract is
governed by the Williamson Act provisions of the Government Code, Humboldt
County Resolution No. 73-163 [(the 1973 Guidelines)] (which sets forth the
guidelines for establishing agricultural preserves at the time this preserve
was
established), Resolution No. 77-16 (which established this specific
preserve),
and the land conservation contract entered into by Ms. Branstetter. . . . [P]
Because the contract does not prohibit divisions except those into parcels of
less than 160 acres, the proposed minimum parcel size for Parcel 2 would not
appear to violate the contract because the minimum proposed parcel size is
193
acres." This memo was not written to McKee and did not relate to the Tooby
Preserve.

McKee's reliance on County's prior "admissions" as to the applicability of
the 1973 Guidelines is, in essence, an argument that County should be
estopped
from applying the 1978 Guidelines to the 1977 Tooby Preserve. In general, the
four required elements for application of the doctrine of equitable estoppel
are: "'(1) the party to be estopped must be apprised of the facts; (2) he
must
intend that his conduct shall be acted upon, or must so act that the party
asserting the estoppel had a right to believe it was so intended; (3) the
other
party must be ignorant of the true state of facts; and (4) he must rely upon
the
conduct to his injury.'" (City of Long Beach v. Mansell (1970) 3 Cal.3d 462,
489
.) In addition, a government agency may be bound by an equitable estoppel
only
if "the elements requisite to such an estoppel against a private party are
present and, in the considered view of a court of equity, the injustice which
would result from a failure to uphold an estoppel is of sufficient dimension
to
justify any effect upon public interest or policy which would result from the
raising of an estoppel." (Id. at pp. 496-497.) Estoppel against a government
agency will be applied only "in the most extraordinary case where the
injustice
is great and the precedent set by the estoppel is narrow." (Smith v. County
of
Santa Barbara (1992) 7 Cal.App.4th 770, 775.)

McKee cannot demonstrate that this is an extraordinary case justifying
application of the narrow doctrine of government estoppel. McKee does not
attempt to satisfy the four required elements of estoppel against a private
party, or to meet the heightened standard for application of an estoppel
against
the government. McKee never seeks to explain why opinions regarding zoning
laws
or opinions provided to different landowners should estop the application of
the
1978 Guidelines to the Tooby Preserve. County is not estopped from applying
these guidelines to the Tooby Preserve.

B. The Tooby Contract Incorporated the 1978 Guidelines Upon Renewal

Having concluded that the 1978 Guidelines were intended to apply to
preexisting preserves, including the 1977 Tooby Preserve, we next address the
trial court's ruling that the contract clauses contained in the federal and
California Constitutions barred application of the 1978 Guidelines to the
1977
Tooby Contract. County and Assessor argue the contract clause analysis was
unnecessary, because the 1978 Guidelines were incorporated into the Tooby
Contract when the parties renewed the contract following adoption of the 1978
Guidelines. McKee contends that interpreting the Tooby Contract to
incorporate
the 1978 Guidelines upon contract renewal would permit County to unilaterally
amend the Tooby Contract, rendering the contract unjust and inequitable. This
presents issues of statutory and contract interpretation subject to de novo
review. (City of Saratoga v. Hinz, supra, 115 Cal.App.4th at p. 1212;
Hermosa,
supra, 86 Cal.App.4th at pp. 548-549.)

Under the Williamson Act's automatic renewal provisions, each contract must
provide that on the contract's anniversary date or another specified annual
date, a year will automatically be added to the contract term unless the
landowner or local government gives notice of nonrenewal. (§ 51244.) If, in a
given year, either party wishes not to renew the contract, the party must
serve
written notice of nonrenewal in advance of the annual renewal date. (§
51245.)
In the absence of timely notice of nonrenewal, "the contract shall be
considered
renewed" on the anniversary date or other specified date. (§ 51245.)

In County of Marin v. Assessment Appeals Bd. (1976) 64 Cal.App.3d 319 (Marin
), the Court of Appeal held that, because a Williamson Act agreement was
renewed
by the parties each year, laws enacted after the original contract date
could be
considered when analyzing the agreement. (Id. at p. 327, fn. 7.) In Marin,
landowners entered into several Williamson Act agreements in 1966 and 1967
that
restricted the land to agricultural use. The agreements expressly
incorporated
all provisions of the Williamson Act, and stated, in compliance with the
renewal
provisions of the act, 12 that "this agreement shall be automatically
renewed at
the end of each year for an additional ten (10) year period, unless notice of
non-renewal is given as provided in Section 51245." (Id. at pp. 325-326 & fn.
5.) In 1971, following 1969 legislative amendments to the Williamson Act, the
county requested that the landowners consent to modification of the
agreements.
The landowners refused, and the assessor then denied preferential tax
assessment
for the land. (Id. at pp. 322-323.) On appeal, the county argued that the
agreements did not contain enforceable restrictions, as they did not contain
substantially similar or more restrictive terms than those required by the
Williamson Act. (Marin, at p. 323.) The Court of Appeal rejected this
argument,
holding that the agreements contained enforceable restrictions and therefore
the
land was entitled to preferential tax treatment. (Id. at p. 325.)

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -12 At
the
time the Marin agreements were executed in 1966 and 1967, section 51244 of
the
Williamson Act read in part, "The term of each contract shall be 10 years.
The
contract shall be automatically renewed at the end of each year for an
additional 10-year period, unless notice of nonrenewal is given as provided
in
Section 51245." (Stats. 1965, ch. 1443, § 1, p. 3378.) In 1967, this
paragraph
was amended to read, "Each contract shall be for an initial term of 10 years.
Each contract shall provide for renewal options so that on the anniversary
date
of the contract or such other annual date as specified by the contract a year
shall be added automatically to the initial term unless notice of nonrenewal
is
given as provided in Section 51245." (Stats. 1967, ch. 1371, § 3, p. 3216.)
The
1967 revision of the renewal provision was not intended to be a substantive
change. (Assemblymember Pattee, letter to Governor Ronald Reagan re Assem.
Bill
No. 1725 (1967-1968 Reg. Sess.) Aug. 10, 1967, Governor's chaptered bill
files,
ch. 1371.)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

The Court of Appeal acknowledged an apparent conflict between provisions in
the agreements and the Williamson Act: the eminent domain clauses in the
agreements were more favorable to the landowners than the eminent domain
provisions in the 1965 Williamson Act and the 1969 amendment to the
Williamson
Act. (Marin, supra, 64 Cal.App.3d at pp. 326-327.) The court relied on the
1969
amendment in its analysis of the earlier 1966 and 1967 agreements, reasoning
that "[t]he 1969 amendment to the Williamson Act may be properly considered
in
this contractual dispute, because in a legal sense every year a new
agreement is
entered into between the parties. As noted earlier, pursuant to an express
proviso, the Agreements are automatically renewed at the end of each year
for an
additional 10-year period unless a notice of nonrenewal is given by the
parties
. . . ." (Id. at p. 327, fn. 7.) The court held that because the agreements
expressly incorporated all provisions of the Williamson Act, the disputed
provisions of the agreements would be interpreted to conform with the more
restrictive provisions of the act. (Id. at pp. 325-328.) 13

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -13 We
note
that unlike the Marin agreements, the Tooby Contract itself does not
expressly
incorporate the provisions of the Williamson Act or other applicable laws.
However, as discussed, ante, Resolution No. 77-19, which established the
Tooby
Preserve and was adopted on the effective date of the Tooby Contract, does
contain such language: the resolution states that "All divisions of land
shall
comply with all applicable local ordinances and State laws."
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

As in Marin, the 1978 Guidelines "may be properly considered in this
contractual dispute," because the parties entered into a new contract each
year
pursuant to the automatic renewal provisions in the Tooby Contract and the
Williamson Act. (Marin, supra, 64 Cal.App.3d at p. 327, fn. 7.) In compliance
with the Williamson Act renewal provisions (§§ 51244, 51245), the Tooby
Contract
provided that "This contract shall be effective on the date first written
above,
hereinafter the anniversary date, and shall remain in effect and shall be
for an
initial term of ten (10) years. On the first anniversary date and on each
succeeding anniversary date, one year shall automatically be added to the
unexpired term unless notice of non-renewal is given as provided by law."
Neither party to the Tooby Contract has given notice of nonrenewal of the
Tooby
Contract, and McKee has continued to receive preferential tax treatment on
the
Tooby Preserve land. In the absence of timely notice of nonrenewal, "the
contract shall be considered renewed" on each anniversary date. (§ 51245.)
Thus,
the Tooby Contract, originally entered into between Arthur Tooby and County
on
February 1, 1977, was renewed on February 1, 1978, again on February 1, 1979,
and on each anniversary date thereafter.

We agree with the reasoning in Marin that, as a legal matter, by renewing a
Williamson Act contract on each anniversary date, the parties entered into a
new
contract each year. (See Black's Law Dict. (8th ed. 2004) p. 1322, col. 2
[defining "renewal" as "3. The re-creation of a legal relationship or the
replacement of an old contract with a new contract, as opposed to the mere
extension of a previous relationship or contract"].) Each year, a landowner
bound by a Williamson Act contract has a choice: give timely notice of
nonrenewal, which preserves the current 10-year contract, or decline to give
notice of nonrenewal, which renews the contract for a new 10-year term. By
choosing not to give notice of nonrenewal, the landowner gains both the
burdens
and the benefits of a new 10-year contract. The landowner remains burdened by
restrictions on the use of the contracted land for the balance of the new
10-year term, but also benefits from the preferential tax assessment
guaranteed
for enforceably restricted agricultural land. (§ 51243; Sierra Club, supra,
28
Cal.3d at p. 851.) This preferential tax assessment is not available once the
landowner gives notice of nonrenewal: upon notice of nonrenewal, taxes
gradually
return to the level of taxes on comparable nonrestricted property. (Rev. &
Tax.
Code, § 426; Sierra Club, at p. 852.) Thus, the decision not to give a
notice of
nonrenewal binds the landowner to a new 10-year contract.

Because the parties to the Tooby Contract entered into a new 10-year contract
on February 1, 1979, all applicable laws and ordinances then in existence,
including the 1978 Guidelines, became part of the Tooby Contract. (Castillo
v.
Express Escrow Co. (2007) 146 Cal.App.4th 1301, 1308.) In the 22 years after
adoption of the 1978 Guidelines, Arthur Tooby and McKee collectively renewed
the
original contract at least 22 times. The 600-acre minimum parcel size for
divisions of Class B preserves imposed by the 1978 Guidelines applied to the
subsequent divisions of the Tooby Preserve.

McKee argues that Marin is distinguishable, because the renewal provision in
the Marin agreements is worded differently than the renewal provision in the
Tooby Contract. The Marin provision stated that "[t]his agreement shall be
automatically renewed at the end of each year for an additional ten (10) year
period, unless notice of non-renewal is given as provided in Section 51245."
(
Marin, supra, 64 Cal.App.3d at pp. 325-326, fn. 5.) The Tooby Contract
provided,
"This contract shall be effective on the date first written above,
hereinafter
the anniversary date, and shall remain in effect and shall be for an initial
term of ten (10) years. On the first anniversary date and on each succeeding
anniversary date, one year shall automatically be added to the unexpired term
unless notice of non-renewal is given as provided by law." McKee argues that
the
Tooby Contract language indicates that the original contract remains in
effect,
whereas the Marin language suggests the contract is renewed.

Although the Tooby Contract renewal provision is worded slightly differently
than the Marin renewal provision, we do not find this difference significant.
The Tooby Contract provision, together with the governing Williamson Act
provisions, make it clear that the Tooby Contract is automatically renewed
each
year absent notice of a contrary intent. (§§ 51244, 51245.) The Tooby
Contract
states that a year is automatically added to the initial contract term on
each
anniversary date "unless notice of non-renewal is given as provided by law."
This provision is in compliance with the Williamson Act, which requires each
contract to provide that "a year shall be added automatically to the initial
term unless notice of nonrenewal is given" and states that unless timely
notice
of nonrenewal is given prior to the renewal date, "the contract shall be
considered renewed." (§ 51244, 51245.) These provisions make clear that the
contract is annually "renewed," and does not simply remain in effect. In
addition, published decisions addressing the Williamson Act have consistently
described sections 51244 and 51245 as effecting automatic renewal of the
contract each year. Our Supreme Court explained, "[i]f neither party gives
timely notice to the other of a contrary intent, the contract automatically
renews itself each year, tacking on an additional year to the period of
restriction." (Sierra Club, supra, 28 Cal.3d at p. 852; see also Borel v.
County
of Contra Costa (1990) 220 Cal.App.3d 521, 527, fn. 7; Honey Springs
Homeowners
Assn. v. Board of Supervisors (1984) 157 Cal.App.3d 1122, 1131.)

McKee contends that interpreting the Tooby Contract to incorporate the 1978
Guidelines upon renewal would make the contract "'extraordinary, harsh,
unjust,
[and] inequitable.'" In interpreting Williamson Act contracts, ordinary
principles of contract interpretation apply. (Marin, supra, 64 Cal.App.3d at
p.
324.) Among these principles, "[W]here a contract is susceptible of two
interpretations, the courts shall give it such a construction as will make it
lawful, operative, definite, reasonable and capable of being carried into
effect
if it can be done without violating the intention of the parties.
[Citation.] .
. . [T]he court shall avoid an interpretation which will make a contract
extraordinary, harsh, unjust, inequitable or which would result in absurdity
[citations]." (Id. at p. 325, italics omitted.) McKee argues that County's
and
Assessor's proffered interpretation would violate these principles, because
it
would subject the contract to "unilateral amendment by . . . resolution at
any
time." We disagree.

Under the interpretation advanced by County and Assessor, County is not free
to "unilaterally amend" the Tooby Contract. The Board is authorized, and i
ndeed
required, to pass uniform rules applicable to agricultural preserves. (§
51231.)
When, as here, the Board adopts a resolution that affects land under
contract,
the landowners who are parties to those contracts and do not wish to be
governed
by the new resolution may choose not to renew their contracts. If, however, a
landowner decides to renew the contract, and avail him or herself of
continued
preferential tax treatment, the renewed contract incorporates the recently
adopted resolution. We do not find this scheme inequitable or unjust.

McKee further argues that "such putative power to amend existing Williamson
Act contracts by resolution conflicts with numerous provisions in the
Williamson
Act which limit that power." McKee points to provisions of the Williamson Act
that authorize local governments to enter into contracts with terms more
restrictive than those required by the act (§ 51240), and permit parties to
rescind a contract upon mutual agreement under certain circumstances (§§
51254,
51255). McKee argues that permitting local governments to "unilaterally amend
the use of agricultural land" would render Williamson Act contracts
"meaningless." Again, we disagree. The Williamson Act expressly contemplates
regulation of agricultural preserves by local government resolutions, as
well as
by contract. (§§ 51231, 51240.) Interpreting Williamson Act contracts to
incorporate new regulations upon renewal does not allow local governments to
unilaterally amend Williamson Act contracts, because the landowner who
chooses
to renew the contract agrees to accept the burdens as well as the benefits of
the new agreement. We do not find this interpretation in conflict with any of
the cited provisions of the Williamson Act.

The facts of this case, on the other hand, demonstrate the inequity that
would result from adopting the interpretation put forth by McKee. For more
than
20 years after adoption of the 1978 Guidelines, the owners of the Tooby Ranch
elected, on an annual basis, to obtain the tax benefits offered by County.
They
should not be able to ignore the reciprocal burdens imposed.

The significance of this inequity cannot be overstated. As noted by amicus
curiae California State Association of Counties, approximately 16.6 million
acres of agricultural land in California, or roughly half of all agricultural
land in California, is under Williamson Act contracts. (Butcher, The
Forgotten
Intent of the Williamson Act: The Regulation of Noncontracted Lands Within
Agricultural Preserves (2005) 12 Hastings W.-Nw. J. of Envtl. L. & Pol'y 37,
38.) Many Williamson Act contracts date from the late 1960's and early
1970's,
and "[p]rogram enrollment has been relatively stable at its present [16]
million
acres since 1975, with only a relatively small portion of the total entering
or
leaving during that time." (Will, The Land Conservation Act at the 32 Year
Mark:
Enforcement, Reform, and Innovation (1999) 9 San Joaquin Agric. L.Rev. 1, 8.)
These long-term contracts are in keeping with the act's intent to require
"long-term commitment to agriculture or other open-space use" (Sierra Club,
supra, 28 Cal.3d at p. 852), and its requirements of a 10-year minimum
initial
contract term and automatic annual renewal (§ 51244).

However, such long-term contracts present serious problems if they do not
incorporate later-adopted regulations upon renewal: application of any
regulation adopted after the original contract date could be challenged under
the contract clause. This would create substantial uncertainty, among both
landowners and local governments, about what regulations apply to land under
Williamson Act contracts. Moreover, it would greatly limit the local
government's power to address changing land use needs for property under
Williamson Act contracts. Land under contract could effectively be shielded
from
all subsequent efforts to regulate its use.

In addition, if Williamson Act contracts do not incorporate new laws upon
renewal, then land under different Williamson Act contracts would be
governed by
different regulations. The regulations applicable to a particular piece of
contracted land would depend on the date of the original contract, and on
whether application of any subsequent regulations had been challenged and
declared unconstitutional under the contract clause. Different regulations
could
apply even to different parcels of land within a single preserve, since one
agricultural preserve may include land under several different contracts.
This
would create administrative problems, and would also conflict with the
Williamson Act, which requires local governments to adopt rules governing
the
administration of agricultural preserves and to apply those laws "uniformly
throughout the preserve." (§ 51231.)

We conclude that the 1978 Guidelines were incorporated into the Tooby
Contract upon its renewal in February 1979, and the 600-acre minimum applied
to
all subsequent transfers of the Tooby Preserve. Therefore, McKee breached
the
Tooby Contract by transferring parcels smaller than 600 acres. In light of
our
conclusion that the Tooby Contract incorporated the 1978 Guidelines upon
renewal, we need not reach the issue of whether retroactive application of
the
1978 Guidelines to the original 1977 Tooby Contract would violate the
contract
clauses of the state and federal Constitutions. (U.S. Const., art. I, § 10;
Cal.
Const., art. I, § 9.) 14

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -14
County
and Assessor further contend that McKee violated the Williamson Act and the
Tooby Contract because (1) McKee failed to maintain commercial agricultural
production on the Tooby Ranch, (2) the transfer of parcels reduced the
amount of
land devoted to commercial agricultural production, and (3) the resulting
parcels were not capable of commercial agricultural production. County and
Assessor argue that substantial evidence does not support the judgment under
Code of Civil Procedure section 631.8 in favor of McKee as to these issues.
Because we conclude that reversal of the judgment is required based on the
court's erroneous conclusion that the 1978 Guidelines could not be applied to
the Tooby Contract, it is unnecessary to address these additional grounds for
reversal. (Natter v. Palm Desert Rent Review Com. (1987) 190 Cal.App.3d 994,
1001.)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

III. Nullification

County and Assessor next contend that the trial court should be instructed to
apply nullification as an appropriate remedy or, in the alternative, the
nullification issue should be remanded for determination by the trial court.
McKee argues that we should not reach the issue of nullification, but instead
should permit the trial court to address this issue upon remand.

County's first amended complaint sought, among other remedies, an order
declaring that the transfers from McKee to third party purchasers, and
successive transfers from third party purchasers, were null and void ab
initio.
On February 7, 2006, the court issued a "Ruling On: Reconsideration of
Bifurcated Issues," clarifying that in light of its conclusion that the 1978
Guidelines could not constitutionally be applied to the Tooby Contract, it
did
not reach the issue of whether County could seek nullification of the parcel
transfers.

The Williamson Act does not require any specific remedy for breach of a
Williamson Act contract. (§ 51251.) Instead, section 51251 provides in part,
"The county, city, or landowner may bring any action in court necessary to
enforce any contract, including, but not limited to, an action to enforce the
contract by specific performance or injunction." Even if nullification of the
transfers from McKee to third party purchasers is a permissible remedy for
breach of a Williamson Act contract, County and Assessor cite no authority
compelling the conclusion that the trial court is required to apply this
remedy
in the instant case. Cancellation or nullification of the transfers is not
available as a matter of right; instead, "the propriety of granting equitable
relief in a particular case by way of cancellation, rescission, restitution
or
impressment of a constructive trust, generally rests upon the sound
discretion
of the trial court exercised in accord with the facts and circumstances of
the
case." (Hicks v. Clayton (1977) 67 Cal.App.3d 251, 265.) On remand, the trial
court has discretion to fashion an appropriate remedy based on the particular
facts of this case. We express no opinion on whether nullification is a
permissible remedy, but instead permit the trial court to address this issue
as
necessary upon remand.

IV. Costs

The trial court awarded costs to McKee. "An order awarding costs falls with a
reversal of the judgment on which it is based. [Citation.]" (Merced County
Taxpayers' Assn. v. Cardella (1990) 218 Cal.App.3d 396, 402.) Because we
conclude that the judgment in favor of McKee must be reversed, the order
awarding costs must also be reversed.

DISPOSITION 15

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -15 On
February 25, 2008, County/Assessor requested that we take judicial notice of
a
February 21, 2008 article in the San Ramon Valley Times entitled "Growth
threatening growers." We do not find the article relevant to our decision and
deny the request for judicial notice.

Separately, on February 28, 2008, McKee objected to County/Assessor's reply
appendix. In response to McKee's objections, County/Assessor requested, in
the
alternative, that we take judicial notice of the documents contained in the
reply appendix. The documents contained in the reply appendix were filed in
the
trial court after judgment was entered in this case in January 2007. These
documents were not part of the record when judgment was entered, and
therefore
will not be considered on appeal. (Reserve Insurance Co. v. Pisciotta (1982)
30
Cal.3d 800, 813.)
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -

The judgment on County's complaint and BMR's related cross-complaint and the
order awarding costs are reversed. The matter is remanded with instructions
to
the trial court to (1) vacate its order applying the contract clauses to
preclude application of the 1978 Guidelines to the Tooby Contract, (2) issue
a
new order finding that the 1978 Guidelines do apply to the Tooby Contract and
that the division and sale of parcels less than 600 acres violate the
guidelines, and (3) impose an appropriate remedy for any such violation.
County
and Assessor are entitled to their costs on appeal.

Needham, J., and Reardon, J. *, concurred.

- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -* Judge
of
the Alameda County Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -