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August 5, 2011

Court of Appeal Allows CEQA Petitioner to Recover Attorney’s Fees Incurred to Exhaust Administrative Remedies Prior to Litigation.

Court of Appeal Allows CEQA Petitioner to Recover Attorney’s Fees Incurred to Exhaust Administrative Remedies Prior to Litigation.

Edna Valley Watch v. County of San Luis Obispo (2nd District, No. B223653, Filed 8/2/11)

 

By Andrea A. Matarazzo

Under the “American Rule” of attorney’s fees, each party in a lawsuit is responsible for paying its own attorney unless specific authority granted by statute or contract allows the assessment of those fees against the other party. Under the American Rule every party — even the party prevailing — must pay its own attorney’s fees.  In California, Code of Civil Procedure section 1021.5 provides a limited exception to the American Rule by allowing successful litigants in public interest cases to recover their attorney’s fees, if the successful party can satisfy certain criteria regarding the public significance of the outcome in relation to the litigant’s personal financial stake in it.

A recent opinion by the Second District Court of Appeal applied section 1021.5 in an action alleging CEQA violations in connection with a church project.  The appellate decision reversed the trial court’s ruling regarding the fee award under section 1021.5.  The trial court had determined the petitioner to be the successful party and awarded attorney’s fees under 1021.5 based on the “catalyst theory,” (i.e., the petitioners’ lawsuit was the catalyst for a change that significantly benefitted the public), but had denied the portion of attorney’s fees that had been incurred in an administrative hearing.

A church planned to build an 11,000-square-foot complex in the Edna Valley area of San Luis Obispo County (“County”).  The County Planning Commission granted the church a conditional use permit for its project, which was appealed to the County’s Board of Supervisors by an owner of property adjacent to the project site.  The Board denied the appeal.

The neighboring property owner and a local environmental group filed a petition for writ of mandate alleging that the County to comply with CEQA before approving the project.  Six days after the petition was filed, the church’s counsel sent a letter to the petitioners stating the church was abandoning the approval it received from the County and would return to the permitting process.  The letter requested that the parties take no further action on the writ petition.

Petitioners refused to dismiss the action.  The church’s counsel followed up with further correspondence stating that the church would not reenter the approval process because the project was dead.  Petitioners still refused to dismiss.  Over the first few months that the case was pending, a number of case management conferences were held.  By the time of the case management conference four months after the suit was filed, the Board had adopted a resolution rescinding the project’s approval.  Petitioners refused to dismiss until two months later, in January 2009.  In April 2009, the petitioners filed a motion for attorney’s fees pursuant to section 1021.5, in which they sought to recover $35,045.50:  $19,329.50 for the administrative appeal to the Board; $8,041 for “litigation”; and $7,674.50 for the fee motion.

The trial court found that the writ petition was the “catalyst” for the ultimate withdrawal of the project application.  As such, the court concluded, some award of fees was appropriate.  The court further concluded that, as a matter of law, the petitioners were not entitled to an award of fees incurred in administrative proceedings leading up to the lawsuit.  (Citing Best v. California Apprentice Council (1987) 193 Cal.App.3d 1448, 1457-1458.)  The Court of Appeal reversed.

In reaching its decision, the appellate court noted that section 1021.5 allows an award of fees “in any action.”  The question, according to the appellate court, was whether the administrative proceedings fell within the definition of “action” under 1021.5.  The court turned to the opinion in Best v. California Apprenticeship Council, supra, 193 Cal.App.3d 1448, in which an electrical apprenticeship program disciplined Best for refusing to work at a nuclear power plant.  Best appealed on the ground his refusal was based on his religious beliefs.  He prevailed in an administrative hearing, but the California Apprenticeship Council, a state-created agency, reversed.  Best ultimately prevailed on appeal from the denial of his petition for writ of mandate.

Best moved for attorney’s fees under section 1021.5.  The trial court awarded fees for the writ petition, but denied them for the administrative proceedings.  The Court of Appeal reversed the denial of fees for the administrative hearing.  Best noted, “The term ‘action,’ as defined in the Code of Civil Procedure, refers to a distinction between two classes of judicial remedies:  (1) actions, which are ordinary proceedings derived from actions at law or suits in equity, and (2) special proceedings, which are established by statute and usually create new remedies unknown to the common law or equity courts. . . .  Thus, the distinction between ‘action’ and ‘proceeding’ in the Code of Civil Procedure has nothing to do with the distinction between judicial and administrative proceedings, but rather distinguishes between two types of judicial proceedings.”

Best relied on In re Head (1986) 42 Cal.3d 223.  There the question was whether fees may be awarded under section 1021.5 in habeas corpus proceedings to vindicate prisoner’s rights.  The Supreme Court rejected the Court of Appeal’s conclusion that fees could not be awarded because habeas corpus is a special proceeding of a criminal nature and not a civil action.  (Head, at p. 226.)  The court held “the nature of the relief sought, not the label or procedural device by which the action is brought, is determinative of the right to seek fees under section 1021.5.”  (Ibid.; Best v. California Apprenticeship Council, supra, 193 Cal.App.3d at p. 1461.)  Best concluded, “[T]he term ‘action’ in section 1021.5 encompasses administrative proceedings which were useful and necessary to the public interest litigation.”  (Id. at p. 1461.)

Here the trial court concluded Best did not apply because the administrative proceedings were not sufficiently connected to the court action.  The Court of Appeal disagreed, pointing out that the exhaustion of administrative remedies is a prerequisite to a lawsuit challenging a CEQA determination.  (Citing Pub. Res. Code, § 21177.)  “Thus,” the appellate court concluded, “the administrative proceedings here qualify under Best as “useful and necessary to the public interest litigation.”  (Best v. California Apprenticeship Council, supra, 193 Cal.App.3d at p. 1461.)  In fact, there can be no public interest litigation without first filing an administrative proceeding.

The appellate court distinguished the decision in Ciani v. San Diego Trust & Savings Bank (1994) 25 Cal.App.4th 563, in which the petitioner brought an action to establish the Coastal Commission’s jurisdiction over a demolition permit.  The Ciani court decided the commission had jurisdiction.  Petitioner subsequently participated in the commission’s administrative hearings on the permit, and sought attorney’s fees under section 1021.5.  The court cited Best in determining that the subsequent administrative hearings were not useful and necessary to the public interest in establishing the commission’s jurisdiction.  In distinguishing the Ciani case, the Court of Appeal further concluded that the word “action” as used in section 1021.5 is not limited to the common definition of “action” found in the Code of Civil Procedure.  (Citing In re Head supra, 42 Cal.3d at pp. 227-228.)  According to the appellate court, a petition for a writ of administrative mandate, classified as a special proceeding in the Code of Civil Procedure, qualifies as an action within the meaning of section 1021.5.

The court reasoned that “[i]n deciding what constitutes an ‘action’ within the meaning of section 1021.5, we must look to the purpose of the section.  Section 1021.5 is a codification of the private attorney general doctrine.  (In re Head, supra, 42 Cal.3d at pp. 226-227.)  Its purpose is to encourage suits effectuating a strong public policy by awarding fees to persons who through lawsuits successfully bring about the benefits of such policies to a broad class of citizens.  (Id. at p. 227.)”  Petitioners could not have brought their lawsuit without exhausting administrative remedies.  “Under the circumstances,” the court stated, “to say that administrative proceedings are not part of the ‘action,’ as that term is used in section 1021.5, would defeat the purpose of the statute and could discourage many lawsuits in the public interest.”

The court did not decide the question whether a party who only participates in an administrative proceeding, and not a court action, is entitled to fees.

 

By Andrea Matarazzo

 

Andrea advises and advocates for private and public clients in all aspects of project permitting and entitlements, environmental compliance, and litigation, particularly regarding environmental review under CEQA and NEPA, land use and zoning issues, air quality regulation, climate change law and policy, water supply and water quality mandates, state and federal endangered species laws, wetlands permitting, and other regulatory requirements.

 

(916) 496-8500

(916) 737-5838 (Direct)

andrea@pioneerlawgroup.net

 

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