Mayor Catherine Blakespear wrote a great little history of the city's troubled housing plan - which was recently certified by the California Department of Housing and Community Development.
Here's a quick summary with some added color:
After the voters passed Proposition A in 2013, which requires voter approval of any up-zoning, the city tried to pass long term housing plans that would comply with state law in two different elections (Measure T in 2016 and Measure U in 2018). A coalition of special interest groups fought against both plans, running online ads, placing signs around the city, and campaigning against the measures. There was no natural constituency in favor of the plans... and so there was no balancing force against the NIMBY groups. Both measures went down to defeat.
The city was sued because it was out of compliance with state law (which requires that cities create a path for building enough housing - including affordable housing - to provide for future population growth).
The court required the city to suspend Prop A and comply with state law by adopting a housing plan that could be certified by the state. Encinitas submitted Measure U (the second housing plan put in front of voters in 2018). As a condition of approval, the state required Encinitas to pursue city-initiated litigation to establish the limits of Prop A (formally resolving the issue of pre-emption, namely that this local law does not pre-empt state law).
Encinitas found a defendant willing to take the other side of the argument: A special interest group called "Preserve Prop A". This group initially signed up to be the defendant, hoping to make their case in court. However, the group turned tail before the lawsuit got off the ground... so the city dropped them as a defendant and sued the state instead. Preserve Prop A was never served.
The city never sued Preserve Prop A. The city sure as hell didn't sue any residents.
The coda to this whole mess is that Preserve Prop A decided to jump back into the lawsuit recently, making an about-face after their about-face. That little maneuver will simply cost us all more money... because ultimately we are on the hook for the costs.
Catherine Blakespear's much longer and more comprehensive story is at the link below: