Santa Clara County Superior Court Judge Drew Takaichi issued a ruling on the North 40 lawsuit Wednesday, saying the town was wrong when it rejected the proposed development.

The judge’s ruling orders the town to set aside its September 2016 decision that rejected the proposal made by Grosvenor Americas, SummerHill Homes and Eden Housing.

The ruling directs the town council to reconsider the developers’ proposal to build 320 homes and 66,000 square feet of commercial and retail space on approximately half of the 44-acre North 40, which is now mostly orchard at the interchange of highways 17 and 85.

The developers sued Los Gatos after the town council rejected their application, saying they had complied with the previously approved North 40 Specific Plan.

An email sent Wednesday evening by town attorney Rob Schultz said, “The decision and judgement determined that approval of the proposed project must comply with the applicable provisions of the California Subdivision Map Act.”

The town council rejected the proposed North 40 development after receiving comments and emails from hundreds of residents who complained the development was too big, did not fit with the “look and feel” of Los Gatos and did not comply with the North 40 Specific Plan. The council also said it would like to see the homes spread throughout the North 40.

Schultz’s email addressed the issue of subjective versus objective issues, which was a cornerstone of the developers’ lawsuit.

“The Court concluded that the findings were discretionary determinations of subjective policies in the specific plan as opposed to objective findings,” Schultz wrote. “The decision and judgment states that the town must reconsider petitioners’ applications and the project under the provisions of Government Code section 65589.5 and if, during the course of reconsideration, the town determines to again deny the applications and project, the town shall specify the applicable, objective general plan, specific plan and zoning standards which the project failed to comply. If the town determines that the project does so comply, then the town shall make written findings, supported by substantial evidence on the record, that (1) the project would have a specific, adverse impact upon the public health or safety unless the project is disapproved, and (2) there is no feasible method to satisfactorily mitigate or avoid that specifically identified adverse impact other than the disapproval of petitioners’ applications.”

Schultz said the town council will meet in closed session to discuss the decision, and consider its options and next steps.