County of Orange v. Heim

In California’s Upper Newport Bay (UNB), the Irvine Company (Irvine) (plaintiff) owned (1) 243 acres of tidelands, subject to a public-trust easement; and (2) approximately 170 acres of upland, owned in fee-simple. The County of Orange (Orange County) (plaintiff), in which UNB was located, owned 306 acres of tidelands in UNB. Through a combination of county ownership and public-trust easements, the public had access to the entire UNB shoreline. As part of a plan to develop a harbor in UNB, Irvine and Orange County entered into a land-exchange agreement under which (a) Irvine would convey to Orange County 170 acres of upland plus 184 acres of Irvine-owned tidelands; and, in exchange, (b) Orange County would convey to Irvine 98 acres of county-owned tidelands and, in addition, Orange County would remove the public-trust easement on the 60 acres of tidelines Irvine retained from its original plot. After the land-exchange, there would be 636 acres of publicly accessible tidelands, down from the original 646 acres. However, because of the geography and the proposed harbor development, the land-exchange would result in the public losing access to 77 percent of the UNB shoreline. V.A. Heim (defendant), the Orange County Auditor, along with several local citizens’ groups, sued to invalidate the land-exchange agreement between Irvine and Orange County, arguing (i) the approximately 160 acres of tidelands Orange County proposed to alienate, either by direct conveyance or by removal of easements, did not constitute a relatively small parcel conveyed as part of a beneficial land exchange; and (ii) Orange County therefore did not have authority to grant Irvine fee-simple ownership over those tidelands. Irvine and Orange County challenged, arguing that the 160 acres of conveyed tidelands represented a small portion of the overall acreage involved in the agreement. The trial court upheld the land-exchange agreement, holding that it involved a relatively small conveyance because the net loss of publicly accessible tidelands would only be about 10 acres. Heim appealed.