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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In the unpublished portion of the opinion, the Court rejected Citizens’ CEQA claims that: (1) the EIR certified by the city did not mandate adequate mitigation measures for the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.

Fourth District Court of Appeal Publishes Case Reducing Attorney Fees Following Limited Success on CEQA Challenge

Wednesday, April 15th, 2015

On April 13, 2015, the California Court of Appeal for the Fourth District granted a request by respondent County of San Bernardino (County) and real party Al-Nur Islamic Center to publish its recent decision in Save Our Uniquely Rural Community Environment v. County of San Bernardino, 2015 Cal. App. LEXIS 307 (Cal. App. 4th Dist. Mar. 18, 2015). In the decision, the appellate court affirmed the trial court’s 80% reduction of requested attorney fees following a challenge under the California Environmental Quality Act to a proposed Islamic community center and mosque (project).

The key issue on appeal involved petitioner’s degree of success at trial and whether the final judgment merited recovery of full attorney fees. Petitioner initially sought to vacate a Mitigated Negative Declaration (MND) and all related project approvals and enjoin further work on the project until the County prepared an Environmental Impact Report.  However, the relief granted by the trial court was limited to setting aside the MND for the sole purpose of analyzing the project’s impact on wastewater treatment. After analyzing the relief petitioner sought compared to the relief petitioner obtained, the court held petitioner failed to satisfy its burden of proving the trial court abused its discretion.

The court also upheld the trial court’s reduction in the number of hours and hourly rate charged by petitioner’s attorney.

A complete summary of the case is available here: http://www.thomaslaw.com/blog/court-substantially-reduces-attorney-fees-following-limited-success-on-ceqa-challenge-to-islamic-center-in-san-bernardino-county/.

Court Substantially Reduces Attorney Fees Following Limited Success on CEQA Challenge to Islamic Center in San Bernardino County

Tuesday, March 24th, 2015

In an unpublished opinion in Save Our Uniquely Rural Community Environment (SOURCE) v. County of San Bernardino, 2015 Cal. App. Unpub. LEXIS 1976, the Fourth District Court of Appeal affirmed the trial court decision and reduced petitioner’s attorney fees by 80 percent in a challenge under the California Environmental Quality Act (CEQA) to a proposed Islamic community center and mosque (project). Petitioner sought $231,098 in attorney fees, but the trial court awarded $19,176.

A key issue on appeal was petitioner’s degree of success at trial and whether the final judgment merited recovery of full attorney fees. Petitioner initially sought to vacate the Mitigated Negative Declaration (MND) and all related project approvals and enjoin further work on the project until an environmental impact report was completed. At trial, petitioner’s narrow relief was limited to setting aside the MND for the sole purpose of analyzing the project’s impact on wastewater treatment.

The court held petitioner failed to satisfy its burden of proving the trial court abused its discretion. Although compelling an analysis of waste water treatment was “not insignificant,” it was still reasonable for the trial to reduce the awarded fees because of the rejection of the majority of petitioner’s other contentions. As the court stated, “That a court might have exercised its discretion in the manner [petitioner] asserts, is not . . . sufficient to demonstrate that it was an abuse of discretion not to award the fees [petitioner] sought.”

The court also upheld the trial court’s reduction in the number of hours and hourly rates charged by petitioner’s attorney. The Los Angeles-based law firm for petitioner improperly billed at partner rates for clerical tasks and failed to provide evidence that experienced CEQA attorneys were not available in the San Bernardino market.

Finally, the court rejected petitioner’s argument that the trial court did not adequately explain how it arrived at the amount awarded. The trial court expressed its legitimate reasons for reducing the fee award, even if it “failed to make its arithmetic transparent.” Therefore, the trial court’s calculation was not an abuse of discretion

Appellate Court Denies Attorney Fees in CEQA Litigation Over Washoe Meadows State Park Land Transfer

Monday, January 12th, 2015

In an unpublished decision in Washoe Meadows Community v. California Department of Parks & Recreation, 2014 Cal. App. Unpub. LEXIS 9256, the First District Court of Appeal reversed the trial court’s order granting petitioner’s attorney fees and held Washoe Meadows Community (Washoe) did not achieve its primary relief sought through the litigation.

In November 2011, Washoe filed a petition for a writ of mandate challenging the State Park and Recreation Commission’s (Commission) approval of a land swap between Washoe Meadows State Park and the Lake Valley State Recreation area. Washoe alleged several violations of the California Environmental Quality Act including the failure to adopt a statement of overriding considerations (SOC) and mitigation, monitoring, and reporting program (MMRP). Washoe sought an order requiring the Commission to set aside the certification of the environmental impact report (EIR) and suspend any activities on the project.

Following the lawsuit, in January 2012 the Commission corrected several procedural defects in the approval process including the adoption of an SOC and approval on an MMRP. Washoe filed a second suit challenging the January 2012 approval and adequacy of the EIR. Washoe and the Commission stipulated to the dismissal of the November 2011 lawsuit, but among other conditions, allowed Washoe to still seek attorney fees for that lawsuit.

On Washoe’s motion for attorney fees from the first lawsuit, the trial court held Washoe was a “successful party” under California Code of Civil Procedure section 1021.5. The trial court reasoned that even though Washoe did not obtain judicial relief, Washoe’s lawsuit was the catalyst that motivated the Commission to provide relief on a “significant issue.”

In reversing the trial court, the court held the trial court erred by only requiring Washoe to succeed on a “significant issue.” Instead, under the catalyst theory, the court stated Washoe must succeed on the primary relief it sought in the November 2011 litigation. Washoe did not succeed in setting aside the certification of the EIR or suspending the project and Washoe could not establish the November lawsuit influenced the content of the SOC or MMRP in any way. Washoe merely effectuated a “limited do-over” of the project’s approval.

In concluding Washoe was not entitled to attorney fees for its November 2011 lawsuit, the court clarified that Washoe’s case for the primary relief is still pending in the January 2012 lawsuit. As a result, Washoe would still be entitled to seek attorney fees in that case.