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Public Interest Standing Not Automatically Precluded by Commercial Interest, Private Attorney General Doctrine Fee Award Upheld

Wednesday, November 7th, 2018

No billboards are visible from one of the City of Pomona’s busiest highway interchanges. (AARoads)

In Citizens for Amending Proposition L. v. City of Pomona, (2018) Cal.App.LEXIS 1014, the Second District Court of Appeal held an attorneys’ fees award, pursuant to Code of Civil Procedure section 1021.5, was appropriate where a residents’ group’s action to enforce a voter-approved proposition prohibiting additional billboards in the City of Pomona (City) had standing and conferred an important public interest of significant benefit, was necessary, and was financially burdensome for the group.

In May 1993, the City entered into an agreement with Regency Outdoor Advertising, Inc. (Regency) to erect and manage billboards along a City highway. In November 1993, City voters passed a ballot initiative, Proposition L, which prohibited the construction of additional billboards and grandfathered in already-existing agreements. In June 2014, the City’s agreement with Regency expired by its terms while the City was negotiating to extend it. In July 2014, the City and Regency entered into an agreement purporting to amend the 1992 agreement, including construction of digital billboards. Citizens for Amending Proposition L and Vernon Price (Citizens) filed suit against the City alleging that the July agreement was passed in violation of Proposition L.

The trial court held that the July agreement was in fact a new agreement enacted in violation of Proposition L. Because the City did not adopt the agreement until after the original agreement had expired, it was a new agreement subject to the rules, regulations, and official policies in effect at the time of its execution, July 2014.

Citizens moved for attorney’s fees pursuant to Code of Civil Procedure section 1021.5, the private attorney general doctrine. They asked for $189,990, representing 389.8 hours of work at a rate of $500 per hour. They also requested that a multiplier of three be employed in the calculation to account for the complexity of the case, their complete victory, and other factors. Thus, the total fee request was for $569,700. At its discretion, the trial court found that Citizens met the statutory criteria for Section 1021.5 and granted the motion. However, the number of hours billed and the billing rate were found to be excessive. Accordingly, the trial court reduced the award to 250.67 hours at a rate of $300 per hour. The trial court further found that there was no basis for enhancing the fees with a multiplier. As such, the trial court awarded $75,200.40 to Citizens. The City timely appealed the award.

On appeal, the Court reviewed the City’s claim that Citizens lacked standing to bring the mandamus action. The City claimed that Citizens lacked a beneficial interest in the litigation, equivalent to the Federal “injury in fact” test. This must be “direct and substantial.” The Court found no evidence that Citizens experienced any actual, imminent, or particularized invasion of a legally protected interest as a result of the City’s adoption of the ordinance.

The City then claimed that the public interest exception to the beneficial interest requirement did not apply to Citizens’ mandamus action. Public interest standing is established where “the object of the mandamus is to procure the enforcement of a public duty.” Reviewing the trial court’s decision for an abuse of discretion, the Court found that Citizens indeed had public interest standing where “the duty is sharp and the public need [for enforcement] is weighty.” Citizens specifically alleged that the City violated its own municipal law, a claim with a “sharp” public interest. Further, the record showed that, absent Citizens’ intervention in the negotiations, billboards might have been constructed without broad public awareness of any potential issue, thus demonstrating a “weighty public need.”

The Court specifically dismissed the City’s claim that Citizens’ personal interest in the suit precluded standing, as it did for the plaintiffs in Waste Management of Alameda County, Inc. v. County of Alameda (2000) 79 Cal.App.4th 1223. First, there was no evidence that Vernon Price or Citizens for Amending Proposition L advanced a commercial interest in bringing the suit. Vernon Price was an individual living within the City and the group was an unincorporated association of City residents; neither situation demonstrated an individualized interest. Even so, following the holding in SJJC Aviation Services, LLC v. City of San Jose (2017) 12 Cal.App.5th 1043, 1058, the Court held that “a personal objective is one factor the court may consider when weighing the propriety of public interest.” The Court warned that to rule otherwise would be impractical as “truly neutral parties are unlikely to bring citizen suits.”

The Court separately held Citizens for Amending Proposition L had organizational standing. Following the holding in San Francisco Apartment Association v. City and County of San Francisco (2016) 3 Cal.App.5th 463, the Court held that the group had demonstrated “(1) its members otherwise would have standing to sue in their own right; (2) the interests it [sought] to protect [were] pertinent to the association’s purpose; and (3) neither the claim asserted nor the relief requested require[d] participation of the association’s individual members.” Vernon Price, a member of the group, had demonstrated his personal standing, the group’s purpose was to enforce Proposition L, as it did here, and compliance with Proposition L did not require the participation of other group members. Both Vernon Price and Citizens for Amending Proposition L had adequate standing.

The Court then turned to the merits of the appeal and established that Section 1021.5 allows for an award of attorneys’ fees at the discretion of the court where an action has resulted in “the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement …are such to make the award appropriate, and (c) such fees should not, in the interest of justice, be paid out of the recovery, if any.”

Considering this, the moving party must establish “(1) he or she is a ‘successful party,’ (2) the action has resulted in the enforcement of an important right affecting the public interest, (3) the action has conferred a significant benefit on the public or a large class of persons, and (4) an attorney fees award is appropriate in light of the necessity and financial burden of private enforcement.”

Reviewing the trial court decision for an abuse of discretion, and noting the broad deference conferred on the trail court, the Court affirmed the award.

The City contended that Citizens did not vindicate an important public interest, as required under 1021.5. The City argued that the trial court failed to analyze the benefit of the case “from a practical perspective” and did not evaluate the “significance of the benefit to the public.” The Court held that Citizens vindicated an important public right in ensuring that Proposition L was properly enforced, a benefit to the entire City. As such, Citizens conferred an important public interest of significant benefit.

Next, the City contended that the necessity and financial burden requirement was not met, that private enforcement was not necessary, and that the financial burden of private enforcement did not warrant subsidizing the successful party. The Court found that there was “ample” evidence in the record that Citizens’ goal of enforcing Proposition L was not self-serving, but benefitted all City residents. Further, there was no evidence in the record demonstrating that either Vernon Price or Citizens for Amending Proposition L would personally benefit from the July agreement being invalidated. Relying on Arnold v. California Exposition and State Fair (2004) 125 Cal.App.4th 498, a financial interest must be “specific, concrete, and significant and based on objective evidence.” Here, the Court found none. Even if one or both Respondents were competitors of Regency, the Court found there was no financial benefit in seeking the enforcement of the Proposition L prohibition.

The Court affirmed the trial court holding.

Key Point:

Public interest standing is not precluded by a petitioner’s commercial interest in a case where a sharp public interest and weighty public need outweigh an individual interest.

An award of attorney’s fees under the private attorney general doctrine is appropriate where a party conferred an important public interest of significant benefit, the action was necessary, and to bring the action was financially burdensome for the group.

Private Attorney General Doctrine Attorney’s Fees Proper For Party Successful in Invalidating Specific Plan Variances

Thursday, May 3rd, 2018

The partially-completed Target Superstore sits dormant on the corner of Sunset Boulevard and Western Avenue in the Hollywood Neighborhood of Los Angeles. (Edwin Folven)

In La Mirada Neighborhood Association v. City of Los Angeles (2018) 22 Cal.App.5th 1149, the Second District Court of Appeal held that attorneys’ fees were properly awarded per California Code of Civil Procedure section 1021.5 (Section 1021.5) where the challengers were successful in conferring a significant benefit in the public interest—invalidating six of eight specific plan variances approved for a single project.

Under Section 1021.5, a trial court, at its discretion, may award attorneys’ fees to a successful party that acts as the catalyst that motivates a public agency to alter its behavior. A successful party confers a significant benefit on the general public if it enforces an important right affecting the public interest, and that enforcement benefits a large number of individuals. Further, a successful party is not precluded from seeking attorneys’ fees if, after obtaining a judgment that a project violates the zoning laws then in existence, a city later changes the zoning laws.

The City of Los Angeles (City) approved a Target Superstore Project, including eight variances from the applicable specific plan. These variances excused the Project from the specific plan’s height restrictions, many design element requirements, parking space limits, delivery time restrictions, and home delivery requirements. La Mirada Neighborhood Association (La Mirada), a community association, filed suit.

The trial court partially granted and partially denied La Mirada’s writ petition; six of the eight special plan variances were found invalid because they were not supported by substantial evidence. Only the parking variance and home delivery variance were upheld. The judgment also authorized La Mirada to seek attorneys’ fees. La Mirada moved for attorneys’ fees pursuant to Section 1021.5, the “private attorney general doctrine.” The trial court granted $793,817.50 to La Mirada for success in litigating the matter and conferring a significant benefit on the City’s residents. Target and the City appealed this award.

The Appellate Court opined that, while generally parties pay their own attorneys’ fees, Section 1021.5 is an exception to this rule to encourage parties to “pursue meritorious public interest litigation vindicating important rights and benefitting a broad swath of citizens.” Therefore, a party recovering attorneys’ fees must establish “(1) it is a successful party in an action, (2) the action has resulted in the enforcement of an important right affecting the public interest, (3) the action has conferred a significant benefit on the general public or a large class of persons, and (4) an award of attorney fees is appropriate in light of the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity.”

The Court first established that La Mirada is a “successful party.” Under Section 1021.5, a successful party is one that “achieves its objectives.” Contrary to Target’s claim, a party need not receive a final judgement in a case, need not be successful on all claims, and need not personally benefit from a judgement. Instead, the Court stated, the definition is broad and measured by “the impact of the action.” Essentially, a party is successful where the lawsuit serves as a “catalyst that motivate[s] the defendant to alter its behavior.” Here, La Mirada was successful where six of the eight variances were set aside and the lawsuit motivated the City to amend the special plan to allow the Target Superstore. The lawsuit “directly prompt[ed] a legislative fix;” La Miranda was a successful party.

The Court then established that La Mirada conferred a significant benefit on the public in requiring the City to adhere to the law. This determination is a function of “(1) the significance of the benefit, and (2) the size of the class receiving [the] benefit.” The Court stated that “a benefit need not be monetary to be significant.” Rather, a party may secure a nonpecuniary benefit to the public, including the benefit of the proper enforcement of the law, if it can “show that the law being enforced furthers a significant policy.” Here, the Court found that the standard was clearly met because La Mirada’s lawsuit resulted in (1) the City adhering to legal requirements for granting variances, which the California Supreme Court has consistently recognized the importance of preserving the integrity of zoning laws as an important public policy, and (2) benefited a large group of individuals, as all residents of the City “benefit from the trial court’s ruling that holds the City Council’s zoning decisions to the letter and spirit of the Municipal Code.”

Target claimed that La Mirada was not successful because the validity of the Project under the subsequently-amended specific plan is still pending. Target claimed that La Mirada’s objective was to stop the Project from ever being built and that the City may still prevail in obtaining a ruling that the Project is valid under the new zoning law. The Court found that this argument was both factually inaccurate and legally untenable. First, the Court explained that La Mirada’s stated goal in filing the writ petition was to set aside and invalidate the eight variances granted by the City and to enjoin further construction of the Project contingent on the validity of the eight variances. The Court stated that “[a]t no point did [La Mirada] allege that their writ petitions were aimed at stopping the Project forevermore.”

Secondly, the Court explained that success under Section 1021.5 “does not require a showing that the successful party put the entire dispute to rest for once and all.” In fact, the code authorizes “interim attorney fee awards” for successes conferring significant benefits before a matter is finalized. In this case, the Court explained that, since the trial court’s judgment that the specific plan variances were invalid was left intact after the first appeal, the judgment is more final than the typical interim ruling. It can be considered “interim only against the backdrop of the broader litigation between the parties, which continues only because the City amended the zoning laws and thereby promoted a new round of petitions challenging the Project” during this appeal. Further, the Court explained, a Court may only grant writ relief after applying the law in existence at the time of its decision. Target’s argument, on the other hand, would require parties to succeed under the law in existence at time and “as it might be amended in the future.” The Court, however, declined “to define success as requiring one to achieve the impossible.”

The Court held the attorneys’ fee award to La Mirada did not demonstrate an abuse of the trial court’s discretion.

Key Point:

A party is “successful” for the purposes of being granted an award of attorney’s fees under the private attorney general doctrine where it achieves at least a portion of the stated goals of bringing the petition.

Private Attorney General Doctrine Attorney’s Fee Award Proper Where Financial Burden Disproportionate to Financial Stake

Friday, January 12th, 2018

Homes along the wetlands of Heron Bay, San Leandro, California that may have suffered environmental impacts by the project. (SWA Group)

In Heron Bay Home Owner’s Association v. City of San Leandro (2018) 19 Cal.App.5th 376, the First District Court of Appeal affirmed a trial court judgement awarding partial attorneys’ fees where the financial burden of enforcement made an award appropriate pursuant to Code of Civil Procedure section 1021.5. The Heron Bay Homeowners’ Association (Heron Bay) was successful in their CEQA suit and while a “pecuniary interest in the outcome of the litigation [was] not disqualifying…the issue [was] whether the financial burden placed on the party is out of proportion to its personal stake in the lawsuit.”

Real Party in Interest Halus Power Systems manufactures wind turbines on a five-acre parcel in the City of San Leandro’s (City) industrial zone. Halus Power proposed to build a single 100-foot tall wind turbine on its property for renewable power generation and on-site research and development (Project). During the public comment period, Heron Bay expressed concern regarding the Project’s impacts on views, wildlife, aircraft navigational radar, noise and vibration levels, and property values. The City approved the Project, granted a height restriction variance, and issued a mitigated negative declaration. Heron Bay filed suit.

The trial court found there was substantial evidence supporting a fair argument that the Project as mitigated would have significant environmental impacts and directed the City to set aside its approval until the City had prepared an EIR. Halus Power ultimately decided not to proceed with the Project.

Heron Bay moved for an award of attorneys’ fees under Code of Civil Procedure section 1021.5 (Section 1021.5), the private attorney general doctrine. The trial court determined that the value of the suit to Heron Bay was approximately $5.8 million, and reasonably anticipated legal costs should have totaled approximately $240,000. The trial court also noted that Section 1021.5 was intended to address the problem of affordability in public interest litigation, and pointed out that a lawsuit aimed at avoiding financial loss, such as an anticipated harm to property values, may be especially hard to finance. Balancing these findings, the trial court awarded Heron Bay $181,471.70 in attorneys’ fees. The City timely appealed.

The Court found that to qualify for Section 1021.5 attorneys’ fees, a plaintiff must establish: (1) that the suit resulted in enforcement of an important right affecting the public interest; (2) that a significant benefit was conferred on the public or a large class of persons; and (3) that the necessity and financial burden of enforcement are such as to make the award appropriate. The City disputed Heron Bay’s claim that they met the third requirement.

The Court found that, contrary to the City’s assertions, Heron Bay faced a substantial financial burden compared to the potential benefit at stake in the litigation. Membership in the homeowners’ association was mandatory, each member had a vote, and only a few properties in the 629-unit development were likely to be within view of the Project. Accordingly, the Court reasoned that many members likely did not have sufficient individual financial motivation to retain counsel for CEQA litigation absent the possibility of Section 1021.5 fees.

The Court pointed out Heron Bay retained counsel on a “partially contingent fee basis,” allowing it to initially pay less than a third of the amount that retained-counsel actually billed. This “indicated Heron Bay and its members did not actually value the ‘benefit’ here sufficiently to undertake the litigation absent the incentive of a potential fee award under [S]ection 1021.5.” Further, the benefit Heron Bay sought was not “immediately bankable” and could not be used to pay counsel. The Court agreed with the trial court that the CEQA litigation costs would be a “much larger financial commitment” than the previous administrative proceeding they had been through. A court must evaluate these factors when determining whether the personal interests of Heron Bay “transcended the litigation costs.”

The Court then held some amount of pecuniary interest does not disqualify a party from being awarded attorneys’ fees. Heron Bay demonstrably was not solely motivated by a desire to avoid a loss in property values where its members submitted comments during the public comment period regarding not only property values, but also impacts on wildlife, aesthetics, health, and noise levels. The City’s argument that Heron Bay was ineligible for attorneys’ fee awards because it acted purely out of self-interest was unfounded. The City’s alternative argument—that Heron Bay was not authorized by its governing documents to pursue a purely altruistic action—was similarly dismissed.

The City’s final argument was that the trial court contradicted itself by concluding that Heron Bay’s “financial incentive” was “mitigated by the uncertain value of the benefit sought,” because the trial court assigned a subjective value, informed by Heron Bay’s claims, of $5.8 million to Heron Bay’s avoided property value loss. The Court stated that the trial court erred in applying an arbitrary evaluation, but found this did not affect the question of whether Heron Bay’s financial incentive was so large and the benefit so certain that it precluded any award. Since the City gave no credible evidence for a specific valuation of the projected loss, the Court could not agree that Heron Bay’s financial stake made Heron Bay ineligible for attorneys’ fees—the trial court conclusion was supported by substantial evidence.

Finally, the Court rejected speculative evidence regarding the Project’s projected harm to property values. The trial court’s ruling could not guarantee the City would refuse the requested variance or require Halus Power to make changes to the project following adoption of an EIR, or that Halus Power would abandon the project.

Accordingly, the Court affirmed the trial court’s ruling and awarded Heron Bay its costs on appeal, including attorneys’ fees, in an amount to be determined by the trial court.

Key Point:

A financial interest in the litigation does not automatically preclude an award of attorney’s fees under the private attorney general doctrine. Where the financial burden of bringing the lawsuit is disproportionate to a party’s financial stake in the lawsuit, fees may be awarded.

FIFTH APPELLATE DISTRICT HOLDS REAL PARTY IN INTEREST CAN RECOVER COST OF PREPARING RECORD AFTER REIMBURSING THE LEAD AGENCY

Wednesday, September 28th, 2016

The City of Ceres approved the development of a 300,000 sq. ft. shopping center anchored by a 190,000 sq. ft. Wal-Mart Supercenter to replace an existing Wal-Mart store after an extensive environmental review process. Citizens for Ceres (Citizens) filed a petition for writ of mandate pursuant to CEQA, alleging several defects in the environmental documents the City certified when it approved the project. The trial court denied the petition and Citizens appealed.

After prevailing in the trial court Wal-Mart, as the real party in interest, filed a memorandum of costs in which it requested, among other things, an award against Citizens of $48,889.71 for the cost of preparing the administrative record. Wal-Mart incurred these costs because the City required Wal-Mart to reimburse the City’s costs to have outside counsel prepare the record. The trial court struck this item from Wal-Mart’s memorandum of costs and Wal-Mart filed a separate appeal.

In a partially published opinion, Citizens for Ceres v. City of Ceres, 2016 Cal. App. LEXIS 759, the Fifth Appellate District affirmed the trial court’s denial of Citizens’ petition for writ of mandate, and reversed as to Wal-Mart’s appeal on the cost of preparing the administrative record.

In the unpublished portion of the opinion, the Court rejected Citizens’ CEQA claims that: (1) the EIR certified by the city did not mandate adequate mitigation measures for the urban decay impact of the project; (2) the EIR did not sufficiently analyze the project’s impacts on landfill and recycling facilities and did not mandate adequate mitigation measures for those impacts; (3) the EIR failed to contain adequate information correlating the project’s air pollution impacts with resulting effects on human health; and (4) the City’s statement of overriding considerations was not supported by substantial evidence.

The Court then addressed Citizens’ motion to tax costs. Wal-Mart argued that the trial court erred when it applied Hayward Area Planning v. City of Hayward (2005) 128 Cal.App.4th 176 (Hayward) to bar an award of costs to Wal-Mart for preparation of the administrative record. The Court agreed, explaining that Code of Civil Procedure section 1032 states that a prevailing party is “entitled” to a cost award “as a matter of right” in “any action or proceeding,” except “as otherwise expressly provided by statute.” While Public Resources Code section 21167.6 requires an agreement with the petitioner before an agency can delegate record preparation to a real party, as stated in Hayward, the Court held that an agreement with the petitioner was not required where a real party covers an agency’s costs after the record has been prepared by the agency.

Key Point: Prevailing real parties in interest in CEQA matters may recover costs associated with the preparation of an administrative record where it reimburses an agency’s costs after the record has been prepared by the agency.

COURT OF APPEAL EXTENDS CEQA HOLDING ON RECORD PREPARATION LABOR COSTS TO OTHER ADMINISTRATIVE RECORD CASES

Monday, August 1st, 2016

After successfully defending a challenge to a resolution granting nonconforming use status to a mining operation in Santa Clara County, Respondent’s attorney filed a motion to recover costs associated with the preparation of the administrative record. This included the labor costs for the attorneys and paralegals who had assisted with the preparation of the large and complex record. Respondent was not otherwise entitled to recover attorney’s fees, and Petitioner argued that to grant these fees in the context of labor costs would be the equivalent of granting attorney’s fees.

While the trial court found that there was good reason to grant the costs due to the complexity of the record, it ultimately denied the motion because there was no appellate legal authority on point. In No Toxic Air v. Lehigh Southwest Cement Co., 2016 Cal. App. LEXIS 624, the Court of Appeal provided that authority by extending CEQA precedent to other proceedings that involve an administrative record.

In the CEQA context, this issue was definitively decided in Otay Ranch, L.P. v. County of San Diego (2014) 230 Cal.App.4th 60,where the court ruled that the prevailing party could recover the labor costs of attorneys and paralegals in the creation of the administrative record as long as the labor costs were reasonably and necessarily incurred. To hold otherwise, the court stated, would undermine the statutory policy of shifting the costs and expenses of preparing the administrative record.

Here, the Sixth District held that the same reasoning used in Otay Ranch applied in other cases in which an administrative record was prepared. Accordingly, the Court held that labor costs for attorneys and paralegals to prepare the administrative record are recoverable as expenses under Code of Civil Procedure, section 1094.5, subdivision (a).

Key Point: A prevailing party can recover the labor costs of attorneys and paralegals in the creation of the administrative record, even in non-CEQA administrative mandamus cases, as long as the labor costs were reasonably and necessarily incurred.

APPELLATE COURT ALLOWS ATTORNEY’S FEES CLAIM TO PROCEED AGAINST CORPORATE ALTER EGO 4 YEARS AFTER ORIGINAL JUDGMENT

Tuesday, February 2nd, 2016

In Highland Springs Conference & Training Center v. City of Banning, 2016 Cal. App. LEXIS 53, the Fourth Appellate District held that a motion to amend a judgement filed four years after the initial award was not automatically time-barred.

In 2008, plaintiffs Highland Springs Conference and Training Center and Banning Bench Community of Interest Association (“Plaintiffs”) prevailed in a CEQA lawsuit against the City of Banning and SCC/Black Bench, LLC and, along with two additional plaintiffs, were awarded over $1 million in attorney fees. Four years later, Plaintiffs had not been paid any part of the award and filed a motion to amend the judgement to include SCC Acquisitions, Inc. (“SCCA”) as the alter ego of SCC/Black Bench. Despite stating that it likely would have found that SCAA was the alter ego of SCC/Black Bench, the trial court denied the motion to amend because the four-year delay was unreasonable and showed a “lack of due diligence.”

The Court of Appeals reversed, holding that the equitable remedy of amending a judgment to add alter ego liability does not have a statute of limitations and SCC/Black Bench’s only recourse in this situation is asserting the equitable affirmative defense of laches. The Court held that a presumption of prejudice from SCCA’s bare assertion of “materially changed circumstances” since 2008 was insufficient to satisfy the burden of production required for the defense.

The Court then remanded to the trial court to determine whether Plaintiffs proved their alter ego claim against SCCA.

Key Point:

Alter ego liability is an equitable remedy that may be brought at any time after judgment through a motion to amend under Code of Civil Procedure section 187. To assert the equitable affirmative defense of laches, the defendant must show both an unreasonable delay by the plaintiff and prejudice to the defendant resulting from the delay (or acquiescence in the act about which the plaintiff complains).

The Sixth District Court of Appeal Upholds $750/hour Fee in Unpublished Decision

Tuesday, October 20th, 2015

In Habitat and Watershed Caretakers v. City of Santa Cruz (H040762, Oct. 6, 2015), the petitioner successfully challenged the trial court’s application of a negative multiplier to its fees on the merits and a “downward adjustment” to its fees for the fee litigation. The Sixth District Court of Appeal held that the trial court abused its discretion and consequently reversed and remanded the case for further proceedings.

After a partial success in litigation regarding the City of Santa Cruz’s EIR to amend the City’s sphere of influence to include an undeveloped portion of UC Santa Cruz, petitioner had sought $486,800 in merit fees for 837.3 hours of attorney time, with hourly rates ranging from $300 per hour for its associates to $750 per hour for its lead attorney. Petitioner also sought compensation for an additional 131.8 hours of attorney time for the fees litigation. The trial court did not take issue with the hourly fees or the number of hours billed, finding both to be reasonable. However, because the result achieved was only “a 50 percent success,” the trial court had adjusted the merit fee downward by half to reflect petitioner’s “partial success in litigation.” The trial court also reduced the fee for the fees litigation by 60 percent because the City and UC Regents “did not create any extraordinary difficulties in this case.”

On appeal, the City and UC Regents challenged the trial court’s calculation of the lodestar and petitioner challenged the negative downward adjustment.

The Court of Appeal upheld the trial court’s determination that the lodestar was reasonable because local counsel was unavailable; the hourly rates were within the range of market rates for attorneys of comparable experience in the San Francisco Bay Area; and the case was taken on a contingency fee basis. The Court was unpersuaded by the City and UC Regent’s argument that the Bay Area rates were not limited to environmental attorneys and that the lead attorney had submitted no evidence that he had ever charged or been awarded fees at a rate of $750 per hour. The Court held that the purpose of the private attorney general statute is to provide adequate financial incentive to encourage attorneys to take on the litigation, and thus “no valid comparison can be made between public interest attorneys who work on a contingent fee basis and land use defense attorneys who can expect timely recompense for all of their work regardless of the outcome of the litigation.”

The Court then held that the trial court had abused its discretion by applying negative downward adjustments to petitioner’s merit fees. A negative adjustment based on a “partial success” theory is only appropriate if the petitioner did not achieve their requested relief. In other words, it is the result that matters, not the outcome on individual theories. Here, petitioner had achieved both of its objectives because the City was required to vacate its certification of the EIR and its approval of the project. In regard to the fee for the fee litigation, the Court held that the trial court abused its discretion by reducing the amount by 60 percent due to defendant’s compliance, finding that fees for fee litigation may be enhanced due to the defendant creating difficulties but not reduced due to compliance.

Key Point:

When calculating the lodestar, the court looks at the attorney’s legal market (not the market where the case originates) and does not limit its review to the attorney’s specialty or what that particular attorney has charged in the past. Higher attorney’s fees can be requested when the work was done on a contingency basis.

Court of Appeal Publishes Case Clarifying “Catalyst Theory” Attorney Fees

Tuesday, July 7th, 2015

On July 6, 2015, the Fourth District Court of Appeal ordered publication of Coalition for a Sustainable Yucaipa v. City of Yucaipa (July 6, 2015, E057589) __Cal.App.4th__.   The court upheld the trial court’s ruling denying attorney’s fees to the Coalition for a Sustainable Yucaipa (Coalition) after the City of Yucaipa (City) rescinded project approvals for reasons unrelated to the litigation.   The court held the Coalition was not a prevailing party under the “catalyst theory” because the Coalition failed to show that they were a substantial factor in the City’s decision to revoke the entitlements.

Key Point

Plaintiffs who claim they are a prevailing party eligible to recover under the “catalyst theory” bear the burden of showing they were a substantial factor in the decision that rendered the litigation moot.

Read Thomas Law Group’s original blog on the case at:

http://www.thomaslaw.com/blog/court-of-appeal-denies-attorneys-fees-motion-in-ceqa-litigation-after-contract-dispute-resulted-in-revocation-of-project-approvals/

Court Upholds Substantial Reduction in Attorney Fee Award Based on Limited Success of the Prevailing Party

Monday, July 6th, 2015

In North County Watch v. County of San Louis Obispo, 2015 Cal. Unpub. LEXIS 4275, the Second District Court of Appeal affirmed the trial court’s decision to award only a small portion of the attorney fees sought by the petitioner on the basis of their limited success in the litigation.  The dispute resulting in the underlying litigation began when Santa Margarita Ranch (SMR) applied for San Luis Obispo County (County) permission to divide its 14,000 acre property into 111 residential parcels, five open space parcels, and one remainder parcel. North County Watch (NCW) sued, alleging the County’s EIR certification violated CEQA, the County’s findings were not supported by substantial evidence, the County’s approval of the tentative tract map violated the Subdivision Map Act, and that the project conflicted with the County’s General Plan.

The trial court ruled that the County violated CEQA by limiting off-site air mitigation fees to $204 per household, and that the County had not complied with federal protocol for determining the presence of Vernal Pool Fairy Shrimp (VPFS) in the project’s seven vernal pools. The County performed a one-year VPFS study where a two-year study was required by the standard protocol for VPFS studies.

NCW moved for attorney fees under Cal. Civil Code section 1021.5. NCW requested approximately $269,000 but were awarded $54,600 plus $11,774 in costs. The court reasoned that NCW only succeeded on three litigated matters: the air pollution issue, the vernal pool issue, and the attorney fee motion. The court held SMR and the County each liable for half of the fees.

NCW appealed, alleging the trial court applied the wrong formula for partial success and should have awarded the undisputed amount spent on matters that were clearly necessary to the litigation. The appellate court disagreed, ruling that the trial court did not abuse its discretion by reducing the attorney fees award. The court cited similar decisions where courts substantially reduced fees awarded relative to the success of claims raised by the prevailing parties.

The County also cross-appealed the lower court’s decision, claiming they were not an “opposing party” and therefore not liable for NCW’s attorney fees. The court disagreed, holding that a public agency that initiates and maintains an action or policy that is challenged, cannot avoid a fee award by refusing to oppose the litigation.

The County also argued it was not a losing party in the litigation. The County argued a party cannot become a losing party unless it places itself in a position that is adverse to the prevailing party. The court disagreed, ruling that a party is liable for attorney sees under section 1021.5 if they are responsible for initiating and maintaining actions or policies that are harmful to public interest and give rise to litigation. Here, the County was an opposing party because it was responsible for initiating and maintaining the actions and policies that led to the litigation.

Court of Appeal Denies Attorney’s Fees Motion in CEQA Litigation after Contract Dispute Resulted in Revocation of Project Approvals

Tuesday, June 23rd, 2015

In Coalition for a Sustainable Yucaipa v. City of Yucaipa (2015) Cal.App.Unpub. LEXIS 4016, the Coalition for a Sustainable Yucaipa (Coalition) challenged the City of Yucaipa’s (Yucaipa’s) approval of the Oak Hills Marketplace (Project). The Project was to be built on land owned by the Palmer General Corporation (Palmer) and developed by the Target Corporation (Target).

Coalition’s initial petition for writ of mandate was denied, and Coalition appealed. But, pending appeal, the Project was dropped following a contract dispute between Palmer and Target. The City then revoked the Project’s land use entitlements, and the court of appeal reversed the order denying mandate, but with direction to dismiss the action with prejudice, since it was now moot.

Coalition moved for attorney’s fees, claiming under the “catalyst theory,” they were entitled to attorney’s fees, since the defendants substantially changed their behavior because of the litigation. The court denied their motion, and Coalition appealed again, alleging the trial court abused its discretion in denying attorney’s fees.

The court of appeal affirmed, holding Coalition was not a “prevailing party” to recover under the “catalyst theory” because Coalition did not show that they caused the City to revoke the land use entitlements. Coalition was not required to show that they were the only cause of the revocation, but that they were a substantial factor in the decision. The court reasoned that Coalition did not catalyze the entitlement revocation because: (1) Coalition did not prevail, but had appealed a denial of their petition for writ of mandate; (2) Yucaipa did not revoke the entitlements for any reason related to the Environmental Impact Report or CEQA violations Coalition had alleged; and (3) Coalition had not shown any “threat of victory” in the lower court.