Failure to Timely Join an Indispensable Party Identified After CEQA Suit was Filed Mandated Dismissal

The Court of Appeal held upheld the dismissal of a CEQA action for failure to timely name a developer that became a real party in interest during the pendency of the action. Citizens for a Better Eureka v. City of Eureka, 111 Cal.App.5th 1114 (2025).

On April 4, 2023, the City of Eureka adopted a resolution authorizing the removal of a public garage in order to facilitate development of affordable housing, relying on a Class 12 exemption under CEQA for the disposal of surplus government property. 

On May 5, Petitioner CBE filed a petition challenging the April 4 Resolution, alleging the City piecemealed the project—which it characterized as including both removal of the garage and development of affordable housing—such that the project did not qualify for a Class 12 exemption. 

On July 18, the City adopted a Resolution selecting the Wiyot Tribe as the “preferred proposer” for the affordable housing development, relying on CEQA sections 21159.21 and 21159.23 and CEQA Guidelines sections 15192 and 15194 to exempt the affordable housing development. On July 19, the City filed a notice of exemption listing the Tribe as the affordable housing project developer. 

On December 22, the City and Tribe entered into an MOU for the affordable housing development. That same day, CBE moved for a preliminary injunction against the City to enjoin any approvals of the affordable housing development. 

On February 9, 2024, the Tribe moved to dismiss the petition on the basis that CBE failed to join the Tribe as a necessary and indispensable party, and that the statutory date to join the Tribe had expired.

The First District relied on (1) CBE’s piecemealing theory to hold that the “project” challenged comprised both the removal of the garage and the affordable housing development, and (2) the City’s identification of the Tribe as the "proposed developer" of the affordable housing project on the July 19 notice of exemption. 

The court reasoned that “CBE plainly knew that the redevelopment of the lot would eventually and necessarily require a developer.” Accordingly, “CBE had a duty to add the Tribe, as a real party in interest, when the July notice of exemption and award of redevelopment rights took place.” The issuance of successive approvals and filing of successive notices of exemption did not relieve CBE of an ongoing duty—imposed by its own legal theory—to add real parties of interest as they may be identified. The Tribe, as developer, was an indispensable party, and the time to add the Tribe had clearly run; therefore, the appropriate remedy was dismissal of the action.