The Fourth Appellate District affirmed a judgment in part, reversed in part, and remanded the action for further proceedings. The court held that a City was subject to inverse condemnation damages where it arbitrarily and capriciously refused to lift unduly restrictive “spot zoning” imposed on landowners’ undeveloped parcel.

In the early 1980s, Avenida San Juan Partnership (Owners) obtained approval from the City of San Clemente to construct four residences on an undeveloped 2.85-acre parcel. The project was well within then-current land use restrictions, which permitted six dwellings per acre.