Opinion
A160420
05-27-2021
STEVEN L. GOMES, Plaintiff and Respondent, v. MENDOCINO CITY COMMUNITY SERVICES DISTRICT, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Mendocino County Super. Ct. No. SCUK-CVPT-15-65985)
The Mendocino City Community Services District (the district) appeals an order awarding district resident Steven L. Gomes $129,000 in private attorney general fees (Code Civ. Proc., § 1021.5 (section 1021.5)). The order was issued on remand from this court's decision affording Gomes partial success in his challenge to a groundwater-extraction cap that the district sought to apply to his property. (Gomes v. Mendocino City Community Services Dist. (2019) 35 Cal.App.5th 249 (Gomes I).) We held that although the district has statutory authority to impose such a limitation, it had not followed the required procedures to adopt the program, rendering the disputed regulations void and invalidating $35,000 of fines that the district had imposed on Gomes. (Id. at p. 255.) On remand, Gomes filed a motion seeking $240,000 in fees. The court awarded roughly half that sum after finding that Gomes had enforced an important right affecting the public interest, benefitting a large class of persons—findings not challenged on appeal—and that the need for and financial burden of private enforcement justified an award. The district contends the court failed to apply the applicable legal standard in making the latter finding, and that substantial evidence does not support a finding that the financial burden of the litigation substantially outweighed the personal benefits that Gomes reasonably anticipated receiving as a result of the lawsuit. The district's contentions here differ significantly from the argument it made in the trial court, largely explaining why the trial court's extensive order does not directly address those contentions. Nonetheless, we conclude that the court properly applied section 1021.5 and that the record amply supports its findings. We will thus affirm the order.
All monetary figures in this opinion are rounded to the nearest thousand dollars.
Factual and Procedural History
Gomes I summarizes Mendocino's lack of a public water system; Gomes's use of a century-old, 23-foot-deep well on his family's land; the history of the 1987 state law authorizing the district to "establish programs for the management of groundwater resources" (Wat. Code, § 10702; see Stats. 1987, ch. 472, § 1, codified at Wat. Code, § 10700 et seq. (the Act)); the district's subsequent adoption of various groundwater regulations culminating in the challenged program, which compelled all property owners, upon declaration of a water shortage emergency, to obtain extraction permits that would limit, in perpetuity, the quantity of water they could extract; the district's imposition of $35,000 in fines on Gomes based on his refusal to obtain such a permit; and his fruitless administrative challenges to the program. (Gomes I, supra, 35 Cal.App.5th at pp. 252-256.)
Gomes's pleading combined a petition for a writ of mandamus with a complaint for monetary and declaratory relief. He sought many forms of relief: (1) invalidation of the regulations and of the declaration of a "stage four water shortage emergency"; (2) a declaration that the district had not followed its own ordinance in declaring the emergency, had effected a taking of his property, and had denied him due process and equal protection; (3) compensation for the taking; (4) a determination that the fines were unconstitutionally excessive; and (5) an injunction prohibiting their collection. The trial court held that the Act authorizes the regulations and that the regulations were properly adopted, denying Gomes's claims for monetary relief. On appeal, we held that, contrary to Gomes's contention, the Act authorizes extraction limits, but that the district had failed to adopt its regulations in compliance with the mandatory notice-and-protest procedure specified in the statute, thus invalidating the regulations and the fines imposed on Gomes pursuant to those regulations. (Gomes I, supra, 35 Cal.App.5th at p. 252.)
The parties cite the reporter's transcript and clerk's transcript from the prior appeal. We grant their implicit request to take judicial notice of the record in that appeal.
On remand, Gomes moved to recover just under $240,000 in attorney fees and costs—$118,000 incurred in the trial court proceedings, $109,000 incurred on appeal, and $13,000 incurred for the fees motion. After a hearing, the trial court issued a 10-page order awarding $48,000 in trial court fees, $80,000 in appellate fees, and $1,000 for the fee motion—a total of $129,000. The order includes numbered headings corresponding to three of the prerequisites set out in section 1021.5: "1. Gomes is the Prevailing Party"; "2. A Significant Benefit Has Been Conferred on a Large Class of Persons"; and "3. The Financial Burden of Private Enforcement Supports an Award of Fees." A final section of the order, titled "Fixing the Amount of Fees," apportions the fees among those claims that failed versus the claim on which Gomes succeeded, and those that sought private financial relief versus those that sought relief enforcing public rights benefitting a large class of persons.
The section titled "The Financial Burden of Private Enforcement Supports an Award of Fees" comprises a single paragraph addressing only the necessity for private enforcement but not the financial burden of the litigation. The paragraph reads in full: "This element of [section] 1021.5 focuses on whether there is a need for a private attorney general for enforcement purposes. When there is no governmental agency available to challenge an official action, the necessity of private enforcement is 'obvious' and 'readily met.' [Citation.] In other words, when the action is brought against the only agency that has responsibility for complying with the asserted constitutional or statutory right, [the] necessity of private enforcement is manifest. [Citation.] Here, there is no other governmental agency in existence to enforce against the district the provisions of [the Act]. Therefore, the challenge to the district's actions necessarily had to be done by a private attorney general; in this case, Gomes."
The district timely filed a notice of appeal from the order.
Discussion
Section 1021.5 authorizes a fee award to "a successful party . . . 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 . . . 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."
The district's contention on appeal is that the trial court abused its discretion in finding that the "necessity and financial burden of private enforcement" justified an award. The facts relevant to the issue of financial burden are as follows. Gomes had alleged that the extraction limits would "reduce the value of [his] property . . . by $200,000, the value of the unlimited use of . . . water he enjoyed before the District declared the Stage 4 water shortage"; he had claimed $200,000 in damages and sought relief from $35,000 in fines. At trial, he offered expert testimony that his land was worth $195,000, and that loss of the well as a source of water would reduce its value by up to 31 percent, or $59,000. The expert also testified that installing a tank and catchment system and trucking water to the property to compensate for losing the unlimited use of the well would cost $25,000, and that the net present value of 25 years of operating costs for such a system would be $81,000.
" ' "Under the private burden prong of section 1021.5, fees are recoverable ' "when the cost of the claimant's legal victory transcends his personal interest, that is, when the necessity for pursuing the lawsuit placed a burden on the plaintiff 'out of proportion to his individual stake in the matter.' " ' [Citation.] 'If the enforcement of the public interest is merely "coincidental to the attainment of . . . personal goals" [citation] or is "self-serving," [citation], then this requirement is not met.' [Citation.] 'Stated otherwise, "The private attorney general doctrine . . . was not intended to reward litigants motivated by their own pecuniary interests who only coincidentally protect the public interest." ' [Citation.] We review an attorney fee award under . . . section 1021.5 for abuse of discretion. ' " 'Whether the statutory requirements have been satisfied so as to justify a fee award is a question committed to the [sound] discretion of the trial court, unless the question turns on statutory construction, which we review de novo.[' "] ' " ' " (Boatworks, LLC v. City of Alameda (2019) 35 Cal.App.5th 290, 307 (Boatworks).) The necessity-and-financial-burden requirement " ' " 'really examines two issues: whether private enforcement was necessary and whether the financial burden of private enforcement warrants subsidizing the successful party's attorneys.' " ' " (Id. at p. 309, quoting Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1214-1215.)
"In considering the second prong of this inquiry, financial burden on litigants, courts focus 'not only on the costs of the litigation but also any offsetting financial benefits that the litigation yields or reasonably could have been expected to yield.' (Conservatorship of Whitley, supra, 50 Cal.4th at p. 1215.) . . . To weigh the costs and benefits, '[t]he trial court must first fix—or at least estimate—the monetary value of the benefits obtained by the successful litigants themselves. . . . Once the court is able to put some kind of number on the gains actually attained it must discount these total benefits by some estimate of the probability of success at the time the vital litigation decisions were made which eventually produced the successful outcome.' [Citation.] After approximating an estimated value of the case, the court then determines the cost of the litigation. [Citation.] Finally, the court 'place[s] the estimated value of the case beside the actual cost and make[s] the value judgment whether it is desirable to offer the bounty of a court-awarded fee in order to encourage litigation of the sort involved in this case . . . . [A] bounty will be appropriate except where the expected value of the litigant's own monetary award exceeds by a substantial margin the actual litigation costs.' " (Boatworks, supra, 35 Cal.App.5th at p. 309.)
In the district's view, the court "did not make any attempt to balance Gomes's financial burden against his financial benefit or even make a finding that the burden was out of proportion to the benefit." The district deems this a fundamental error compelling reversal, citing Robinson v. City of Chowchilla (2011) 202 Cal.App.4th 382, disagreed with on other ground by Collins v. City of Los Angeles (2012) 205 Cal.App.4th 140, 154, fn. 10. That case urges a "two-step approach" to reviewing section 1021.5 awards: "First, the appellate court considers whether the superior court applied the proper legal standards in reaching its determination. [Citation.] If the superior court's order is not consistent with the applicable principles of law, the order necessarily falls outside the scope of [its] discretion. [Citation.] In completing this step . . . , an appellate court must pay particular attention to the superior court's stated reasons for denying fees." (202 Cal.App.4th at p. 391.)
The reason the trial court did not address this question directly is undoubtedly that the district raised the "financial burden of private enforcement" issue in only a cursory manner, without challenging Gomes's failure to quantify and compare his private financial incentives with his costs. And while in the section of its order titled "The Financial Burden of Private Enforcement . . ." the court did not address the costs of the litigation in relation to the anticipated individual benefits, it did so elsewhere in the order. In the section titled "Fixing the Amount of Fees," the court considered whether the expected value of Gomes's potential monetary benefits substantially exceeded his litigation costs. (See Boatworks, supra, 35 Cal.App.5th at p. 309.) The court wrote: "The [amount of] fees to be awarded at the trial court level is . . . difficult to assess. When the plaintiff pursues both a private interest and a public interest, the judge may reduce the claimed amount to account for the time spent pursuing the private interest. (Galante Vineyards v. Monterey Peninsula Water Management Dist. (1997) 60 Cal.App.4th 1109, 1125-1138[, disagreed with on other ground by Bakersfield Citizens for Local Control v. City of Bakersfield (2004) 124 Cal.App.4th 1184, 1199-1200].) This principle must be applied here. Some of Gomes's claims were personal, to wit, the takings claims and excessive [fines] causes of action. The court rejects the argument that it should deny fees because Gomes was acting purely out of self-interest."
The trial court's discussion of the Galante Vineyards decision confirms that the court did consider whether Gomes's potential private benefits outweighed his costs of enforcement. In Galante Vineyards, the Sixth Appellate District upheld a section 1021.5 award to the proprietors of four vineyards who had obtained a writ of mandate compelling a water management district to set aside its certification of an environmental impact report. (Galante Vineyards v. Monterey Peninsula Water Management Dist., supra, 60 Cal.App.4th at pp. 1113, 1116.) The trial court granted the vineyard petitioners' ensuing section 1021.5 motion, stating: " 'In light of the significant financial interest in the outcome of this case by [those] petitioners . . . , the Court finds that an apportionment of fees is appropriate, and reduces the award by a factor of 50% for this sole reason.' " (Id. at p. 1126.) The Sixth District affirmed on invited-error grounds. Noting that "the question of whether the cost of petitioners' legal victory transcends their personal interests was a close one," the court found "no abuse of discretion in the trial court solving this problem by doing what the District suggested in its opposition to [the fee motion,] i.e., reducing fees to reflect the financial interest of [the vineyard] petitioners. To the extent that the District is arguing it was improper to award any fees prior to reaching a determination on the third prerequisite to an award[, i.e., the financial-burden requirement] . . . , it has invited the error." (Id. at p. 1128.)
Galante Vineyards differs from the present case in that the petitioners there succeeded on their single claim for relief, whereas Gomes succeeded on one but failed on most of his multiple claims, several of which sought personal monetary relief. While the situation in Galante Vineyards differed, and the Court of Appeal there based its decision on the ground of invited error, the ultimate issue in that case was whether a party's potential financial benefits significantly outweighed its litigation costs so as to preclude an award of fees. The trial court here construed the case as recognizing that it should avoid inappropriately subsidizing claims brought primarily for an individual's benefit. To avoid that outcome, the court apportioned Gomes's fees among his various claims. The court then stated that it "rejects the argument that it should deny fees because Gomes was acting purely out of self-interest." As explained more fully below, the court implicitly rejected the argument that Gomes's expected economic benefits significantly outweighed his litigation costs. It might have been more appropriate to address this issue in the section of the order headed, "The Financial Burden of Private Enforcement . . . ," but we review the correctness of the court's ruling, not the logical tidiness of its order. (Estate of Beard (1999) 71 Cal.App.4th 753, 776.)
The district emphasizes that the court never expressly quantified or estimated the personal financial benefits Gomes could reasonably have expected to receive as a result of the litigation. Nor did it expressly compare those expected benefits to the fees Gomes incurred to determine whether " 'the expected value of [Gomes]'s own monetary award exceeds by a substantial margin the actual litigation costs.' " (Boatworks, supra, 35 Cal.App.5th at p. 309.) The court stated only that it "rejects the argument that it should deny fees because Gomes was acting purely out of self-interest."
While the latter statement may suggest that the trial court focused on Gomes's subjective motives in pursuing the litigation, objective economic incentives are the proper focus of financial-burden analysis. (Conservatorship of Whitley, supra, 50 Cal.4th at pp. 1221, 1224.) The court is required to " 'place[] the estimated value of the case beside the actual cost and make[] the value judgment whether it is desirable to offer the bounty of a court-awarded fee in order to encourage litigation of the sort involved in this case.' " (Id. at p. 1216.) The question is whether a reasonable litigant in Gomes's position would have required the incentive of a fee award to pursue "litigation of the sort involved in this case," not what subjective motivations in fact led Gomes to pursue the litigation. However, in Whitley the Supreme Court acknowledged that inapt references to subjective motivation are common in this context, and harmless: "The use of language concerning motivation in the case law is understandable. . . . [A]lthough 'subjective motivation for bringing the lawsuit is not a controlling factor in determining whether a . . . section 1021.5 fee award is appropriate,' a court may speak of the litigant's motivation 'as a shorthand reference to the court's conclusion that the objective financial incentives for prosecuting the lawsuit were not disproportionate to the financial burden.' Motivation language is particularly useful because in assessing the financial burdens and benefits in the context of section 1021.5, we are evaluating incentives rather than outcomes. ' "[W]e do not look at the plaintiff's actual recovery after trial, but instead we consider 'the estimated value of the case at the time the vital litigation decisions were being made.' " [Citation.] The reason for the focus on the plaintiff's expected recovery at the time litigation decisions are being made, is that . . . section 1021.5 is intended to provide an incentive for private plaintiffs to bring public interest suits when their personal stake in the outcome is insufficient to warrant incurring the costs of litigation.' [Citation] Although objective financial incentives and subjective motives may overlap, and indeed sometimes may be indistinguishable, . . . only the former is the proper subject of the court's inquiry . . . ." (Id. at pp. 1220-1221.)
In this case, Whitley's guidance reinforces "a basic presumption . . . that the trial court . . . kn[ew] and applied the correct statutory and case law in the exercise of its official duties." (People v. Mack (1986) 178 Cal.App.3d 1026, 1032.) We thus conclude that the trial court implicitly found that the expected value of Gomes's personal financial benefit did not substantially exceed his litigation costs.
At oral argument, counsel for the district placed heavy reliance on Department of Forestry & Fire Protection v. Howell (2017) 18 Cal.App.5th 154, disagreed with on other ground by Presbyterian Camp & Conference Centers, Inc. v. Superior Court (2019) 42 Cal.App.5th 148, 152, review granted Jan. 22, 2020, S259850, for the need to reject a fee award under section 1021.5 where the trial court does not appear to have weighed the financial burden of the litigation against the prevailing party's financial interests. However, in that case, which was resolved on the pleadings, the record contained virtually no information concerning the financial stakes of the litigation for the prevailing defendants and no indication that the trial court had considered them. Moreover, the appellate court added that it did not appear that, if the trial court had considered those factors, "it could reasonably have found defendants' costs in pursuing their legal victory transcended their personal interest in avoiding liability." (Id. at p. 202.) Here, in contrast, it cannot be said that the trial court was unaware of or did not consider the benefits Gomes sought or could reasonably have expected to obtain from the litigation, and the record provides reliable evidence of those actual and prospective benefits which this court can compare, on appeal, to the evidence of his costs.
The district contends that the evidence compels a finding that Gomes's potential financial benefits from the litigation totaled $175,000 (the sum of the fines, lost property value, and cost of an alternate system that he avoided) and that this amount significantly outweighs Gomes's financial burden of $129,000. Initially, Gomes incurred $245,000 in attorney fees in pursuing the litigation; $129,000 is only the portion of the fees that the court attributed to the successful claim benefitting the public. Moreover, Gomes correctly points out that the district's calculation of the amount he stood to gain is based on double-counting: his loss of the unrestricted use of the well would have caused him either to suffer a reduction in his property's value or to incur costs for an alternative water system—not both. If Gomes paid to replace the well with another water system, his loss of full use of the well would not have reduced his property value. The district's reply does not address—and thus implicitly concedes—that point. Thus, Gomes's potential financial benefit from the litigation, calculated most generously to the district, was roughly $141,000, representing his avoidance of the $106,000 cost for a replacement system and $35,000 in fines. And this calculation undoubtedly is over-generous to the district. It assumes that, had this court upheld the regulations, Gomes would have made the economically irrational choice to pay $106,000 for an alternative water-supply system rather than either abandoning the well as a source of groundwater, resulting in a reduction in property value of up to $59,000, or obtaining an extraction permit, resulting in a loss equal to the cost of a permit application plus any loss of property value caused by the limitation on the amount of groundwater the well could produce.
Whatever the amount and whether or not it could ever be said to " 'exceed[] by a substantial margin" litigation costs of $129,000, much less $245,000, the district's calculations also fail to "discount [the litigant's] total benefits by some estimate of the probability of success at the time the vital litigation decisions were made." (Boatworks, supra, 35 Cal.App.5th at p. 309) The outcome of the litigation was far from certain when the action was filed. Indeed, Gomes did not prevail at all in the trial court. Hence, a substantial reduction must be made in estimating the anticipated value of Gomes's recovery at the outset. All things considered, substantial evidence supports the trial court's implicit finding that Gomes's potential financial benefits from the litigation, discounted by the likelihood of success, did not significantly outweigh the financial burden of private enforcement.
Disposition
The challenged order is affirmed.
POLLAK, P. J. WE CONCUR: STREETER, J.
TUCHER, J.