City of Carson v. City of La Mirada

Filed 3/15/07 City of Carson v. City of La Mirada CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

APPEAL from a judgment of the Superior Court of Los Angeles County,
Emilie Elias, Judge. Affirmed.

Aleshire & Wynder, William W. Wynder and Anthony R. Taylor, for Plaintiff and Appellant.

Stradling, Yocca, Carlson & Rauth and Douglas J. Evertz for Defendants and Respondents.

_________________________

INTRODUCTION

In the underlying lawsuit, the City of Carson (Carson) sought to force the defendants, City of La Mirada, City Council of the City of La Mirada, and the La Mirada Redevelopment Agency (together La Mirada), to comply with the requirements of Health and Safety Code section 33426.7 and Government Code section 53084, commonly known as Assembly Bill No. 178 (Assem. Bill No. 178 (1999-2000 Reg. Sess.)  3 & 2, respectively (A.B. No. 178), Stats. 1999, ch. 462). A.B. No. 178 was designed to prevent competition between municipalities for big box retailers, by requiring the city to which the retailer moves to share tax revenues with the city that it leaves. We reversed the trial courts ruling that denied Carsons petition for writ of mandate. In a published opinion (City of Carson v. City of La Mirada (2004) 125 Cal.App.4th 532 (Carson v. La Mirada) we held that Corporate Express, which had been lured away from Carson by La Mirada, was a big box retailer as defined by A.B. No. 178 with the result that La Mirada had to comply with the revenue sharing provisions of A.B. No. 178.

Carson now appeals from the subsequent order of the trial court that denied its attorney fees under the private attorney general fee doctrine (Code Civ. Proc.,  1021.5). We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

After we published Carson v. La Mirada, Carson moved the trial court for $223,246 in attorney fees pursuant to Code of Civil Procedure section 1021.5. It argued that this litigation had conferred a significant benefit on the general public because in establishing the definition of  big box retailer  under Health and Safety Code section 33426.7, the case eliminated any  grey area  about to whom A.B. No. 178 applies. Additionally, Carson argued, the interests of justice dictated that attorney fees be paid by La Mirada because, despite acknowledging Carsons colorable claim under A.B. No. 178, La Mirada nonetheless refused to offer a proper sales tax sharing agreement, to hold public hearings, or to pursue a validation action, and so Carson was forced to expend public funds to sue La Mirada.

La Mirada opposed the fee motion. It observed that over the course of the 10-year statutory period of revenue sharing under A.B. No. 178, Carson may expect to receive a minimum of $450,000 annually, for a total that could exceed $5 million. La Mirada argued that Carson did not bring this action in a representative capacity simply to secure an interpretation of A.B. No. 178 for the purpose of benefiting the general public, but solely to protect its own economic interests. Hence, Carson was not entitled to an award under Code of Civil Procedure section 1021.5.

The trial court denied Carsons fee motion. It found that Carson had not satisfied the third element of the test under Code of Civil Procedure section 1021.5. That element, namely, that the necessity and financial burden of private enforcement rendered the award appropriate, justifies a fee award only where the cost of the legal victory transcends the claimants personal interest; in other words, where the burden of pursuing the litigation is out of proportion to the plaintiffs individual stake in the matter.  The trial court found that the cost of litigation did not transcend Carsons personal stake. The court disagreed with Carson that Los Angeles Police Protective League v. City of Los Angeles (1986) 188 Cal.App.3d 1 (Protective League), compelled the conclusion that an action resulting in a published decision necessarily renders the otherwise personally motivated case suitable for attorney fees under section 1021.5. Carsons timely appeal followed.

CONTENTION

Carson contends that the trial court erred in denying the fee request because it applied the wrong standard of review and because the litigation benefited the public statewide.

DISCUSSION

The private attorney general fee doctrine rests upon the recognition that privately initiated lawsuits are often essential to the effectuation of the fundamental public policies embodied in constitutional or statutory provisions, and that, without some mechanism authorizing the award of attorney fees, private actions to enforce such important public policies will as a practical matter frequently be infeasible. [Citations.] (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 933.)

Code of Civil Procedure section 1021.5 codifies the private attorney general fee doctrine. Entitlement to fees under section 1021.5 requires a showing that the litigation: (1) served to vindicate an important public right; (2) conferred a significant benefit on the general public or a large class of persons; and (3) imposed a financial burden on plaintiffs which was out of proportion to their individual stake in the matter. [Citation.] (California Licensed Foresters Assn. v. State Bd. of Forestry (1994) 30 Cal.App.4th 562, 569.)[1]

Generally, [t]he decision whether to award attorney fees lies within the discretion of the trial court and will not be disturbed on appeal absent a prejudicial abuse of discretion resulting in a manifest miscarriage of justice. [Citation.] (California Licensed Foresters Assn. v. State Bd. of Forestry, supra, 30 Cal.App.4th at p. 569; accord, City of Hawaiian Gardens v. City of Long Beach (1998) 61 Cal.App.4th 1100, 1112.) Some cases apply a de novo standard of review when the appellate court has published an opinion enforcing the underlying legal right. (See Protective League, supra, 188 Cal.App.3d at pp. 7-8.) Nevertheless, deference is given to the trial courts application of the third element of Code of Civil Procedure section 1021.5 if the trial court acquires the necessary evidence and uses valid methodology to arrive at the required estimates. (Protective League, supra, at p. 11.)

Of the three requisite elements under Code of Civil Procedure section 1021.5, the one at issue here is the third, namely, that the litigation imposed a financial burden on plaintiffs which was out of proportion to their individual stake in the matter. In the words of another Division of this District Court of Appeal, the necessity and financial burden of private enforcement . . . transcend the litigants personal interest in the controversy. [Citation.] (City ofHawaiian Gardens v. City of Long Beach, supra, 61 Cal.App.4th at p. 1112.)

As the Supreme Court explained in its leading case on Code of Civil Procedure section 1021.5, this element applies  when the necessity for pursuing the lawsuit placed a burden on the plaintiff out of proportion to his individual stake in the matter. [Citation.]  (Woodland Hills Residents Assn., Inc. v. City Council, supra, 23 Cal.3d at p. 941.) Alternatively, the element is satisfied when the claimants litigation expenses placed a disproportionate burden on them compared to a minimal personal financial interest in the lawsuit. (Ibid.) That is, [e]ntitlement to such an award does not turn on a balance of the litigants private interests against those of the public but on a comparison of the litigants private interests with the anticipated costs of suit. [Citation.] Section 1021.5 is intended as a bounty for pursuing public interest litigation, not a reward for litigants motivated by their own interests who coincidentally serve the public. [Citations.] The private attorney general theory recognizes citizens frequently have common interests of significant societal importance, but which do not involve any individuals financial interests to the extent necessary to encourage private litigation to enforce the right. [Citation.] To encourage such suits, attorneys fees are awarded when a significant public benefit is conferred through litigation pursued by one whose personal stake is insufficient to otherwise encourage the action. [Citations.] (California Licensed Foresters Assn. v. State Bd. of Forestry, supra, 30 Cal.App.4th at p. 570.) Thus, where  the enforcement of the public interest is merely coincidental to the attainment of . . . personal goals [citation] or is self serving, [citation], then this [third] requirement is not met. [Citation.] (Bowman v. City of Berkeley (2005) 131 Cal.App.4th 173, 181.)

Carson argues there is no dispute that the underlying litigation benefited the public statewide, resulted in a published opinion, and settled an area of law with statewide implications, just as if the Attorney General had brought the case on behalf of Carson. As evidence that the underlying lawsuit concerned an issue of statewide importance, Carson points to our statement that [t]he effect [of La Miradas misconduct] was to deprive Carson of critical general fund money for public services . . . along with our quotation of the legislative preamble to A.B. No. 178 that limiting . . . competition for sales tax revenues is an issue of statewide concern . . . . (City of Carson v. City of La Mirada, supra, 125 Cal.App.4th at p. 544, quoting from Stats. 1999, ch. 462, 1.)

However, the benefit to the general public in establishing the meaning of big box retailer under A.B. No. 178 does not transcend Carsons personal interest in this lawsuit. (City ofHawaiian Gardens v. City of Long Beach, supra, 61 Cal.App.4th at p. 1112.) It is clearly incidental to the primary objective of Carson to recoup the tax money it claimed was unlawfully taken from it when La Mirada poached Office Express. Carson expended $223,246 over five years to collect what could exceed $5 million over 10 years. Thus, the financial burden of this litigation was, if anything, disproportionately small compared to Carsons stake. Receiving the A.B. No. 178 tax money was Carsons very motive for bringing this lawsuit. Establishing a statewide meaning of big box retailer under A.B. No. 178 was only coincidental to Carsons primary objective of protecting its income from sales tax revenue. (Bowman v. City of Berkeley, supra, 131Cal.App.4th at p. 181.) Thus, Carsons motivation for bringing the action did not transcend its personal interest.

Carson insists that as a public agency, it acted on behalf of the public and served the public interest when it brought the lawsuit. Yet, vindicating an important public right is the first of the three elements under section 1021.5 of the Code of Civil Procedure. Thus Carsons argument addresses a wholly different criterion. Carson did not satisfy its burden to meet the third factor under section 1021.5 merely by acting in its representative capacity on behalf of the residents of the city given that Carson may only act in such a capacity.

Carson cites Protective League, supra, 188 Cal.App.3d 1 to argue that the trial court erred by not discounting the benefits by the courts estimate of the probability of success at the time when vital litigation decisions were made and before the outcome of the case. The appellate court in Protective League reversed a trial court judgment in a published opinion. In the subsequent proceeding for the award of attorney fees under the private attorney general fee doctrine, Protective League held that where the appellate court had published an opinion in the case, it was in a better position than the trial court to decide the merits of the first two elements under Code of Civil Procedure section 1021.5 when an attorney fee issue is decided on appeal. (Protective League, supra, at pp. 7-9.) However, with respect to the third element, the test presents a more complex issue, the appellate court stated. (Id. at p. 9.) Protective League set out the method for determining whether the cost of the legal victory transcends the claimants personal interest. First, the trial court must fix or estimate the monetary value of the benefits obtained by the successful litigants themselves. []This ordinarily is a far different figure than the benefits conferred on the general public or similarly situated individuals and groups.[] (Ibid.) Second, the court discounts the total benefits by an estimate of the probability of success at the time the vital litigation decisions were made which eventually produced the successful outcome. (Ibid.) The court then places the actual costs of litigation beside the estimated value of the case to determine whether it is desirable to offer the reward of a fee to encourage litigation of the sort involved in the case. The reward is appropriate unless the expected value of the litigants own monetary award exceeds by a substantial margin the actual litigation costs. (Id. at pp. 9-10, italics added.)

Protective League explained with reference to the computation for the last element of the private attorney general fee doctrine, that when the trial court acquires the necessary available evidence and uses valid methodology to arrive at the required estimates, its conclusions about the third and fourth elements of the [Code of Civil Procedure section] 1021.5 test will merit deference by the appellate courts. (Protective League, supra, 188 Cal.App.3d at p. 11.)

Here, the trial court acceded to Carsons request that it take the matter under submission to consider Protective League. We agree with the trial court that Protective League does not compel a different result here. The actual cost of litigation was always de minimus compared to the value to Carson of this lawsuit and the likelihood of success. As in Protective League, Carson had ample economic incentive to prosecute the case at the trial-court level and for that reason is not entitled to fees incurred at trial. Unlike Protective League, which awarded fees for the first appeal, here, Carsons economic incentive remained compelling in the first appeal. In Protective League, the benefits to the plaintiffs were so modest that there was a threat that they would recover no monetary benefit. Here, Carsons costs of litigation always amounted to a minute proportion of the total it reasonably calculated it could gain from pursuing the appeal. Where Carson stood to gain such a large economic recovery, the fact that its litigation on appeal coincidentally clarified an area of law does not support a fee award. In short, no amount of discounting the probability of success at the time vital litigation decisions were made can reduce the $5 million recovery here to make it smaller than the actual cost to Carson of litigating this matter through the first appeal.

Carson seeks attorney fees on appeal. The request is denied.

DISPOSITION

The judgment is affirmed. Each party to bear its own costs of appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

ALDRICH, J.

We concur:

KLEIN, P. J.

CROSKEY, J.

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[1] Code of Civil Procedure section 1021.5 reads in relevant part:  Upon motion, a court may award attorneys fees to a successful party against one or more opposing parties in any action which 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, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any. With respect to actions involving public entities, this section applies to allowances against, but not in favor of, public entities, and no claim shall be required to be filed therefor, unless one or more successful parties and one or more opposing parties are public entities, in which case no claim shall be required to be filed therefor under Part 3 (commencing with Section 900) of Division 3.6 of Title 1 of the Government Code. (Italics added.)