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Inyo Cnty. Local Agency Formation Comm'n v. S. Mono Healthcare Dist.

COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento)
May 13, 2021
No. C085138 (Cal. Ct. App. May. 13, 2021)

Opinion

C085138 C086087

05-13-2021

INYO COUNTY LOCAL AGENCY FORMATION COMMISSION et al., Plaintiffs and Appellants, v. SOUTHERN MONO HEALTHCARE DISTRICT, Defendant and Respondent. INYO COUNTY LOCAL AGENCY FORMATION COMMISSION et al., Plaintiffs and Respondents, v. SOUTHERN MONO HEALTHCARE DISTRICT, Defendant and Appellant.


NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34201580002247CUWMGDS)

Northern Inyo Healthcare District (Northern Inyo) and Southern Mono Healthcare District (Southern Mono) are local healthcare districts organized under Health and Safety Code section 32000 et seq. that share a boundary at the Inyo-Mono county line. This consolidated appeal arises out of a petition for writ of mandate and complaint filed by Northern Inyo and Inyo County Local Agency Formation Commission (the Commission) and against Southern Mono alleging that Southern Mono violated Government Code section 56133 by extending services outside of its jurisdiction without first obtaining approval from the Commission. Specifically, the action challenges Southern Mono's refusal to submit an application to the Commission before opening a new facility in Inyo County in 2015. The trial court denied the petition and the complaint for declaratory relief, concluding, in part, that the action is barred by the statute of limitations and laches. Thereafter, Southern Mono sought attorneys' fees pursuant to Code of Civil Procedure section 1021.5. The court denied the motion.

Plaintiffs appeal the trial court's entry of judgment, and Southern Mono appeals the trial court's subsequent order denying its motion for attorneys' fees. We consolidated the appeals. Plaintiffs contend their action is not barred by the statute of limitations or laches. Southern Mono disagrees and also contends we should affirm on the alternative ground that it is exempt from Government Code section 56133 because it is authorized to provide healthcare services outside of its district under Health and Safety Code section 32121. We reject this invitation and will affirm on the grounds reached by the trial court.

Local districts have the power "[t]o establish, maintain, and operate, or provide assistance in the operation of, one or more health facilities or health services, including, but not limited to, outpatient programs, services, and facilities; . . . or other health care programs, services, and facilities and activities at any location within or without the district for the benefit of the district and the people served by the district." (Health & Saf. Code, § 32121, subd. (j).)

I. BACKGROUND

Southern Mono and Northern Inyo each operate a hospital within its district. In 2003, as the result of a lack of orthopedic services available in the area, Northern Inyo and a physician affiliated with Southern Mono agreed for him to work at a clinic on Pioneer Lane in Bishop in Inyo County. The demand for these services increased and, in 2011, Southern Mono opened a clinic on West Line Street in Bishop and added physical therapy services. In 2012, Southern Mono relocated its orthopedic services to Iris Street in Bishop. Southern Mono later vacated the Pioneer Lane clinic.

In 2014, Southern Mono leased property on South Main Street in Bishop.

The Commission is a local agency formation commission under Government Code section 56000 et seq. (See Gov. Code, § 56027.) As relevant to this proceeding, it has the power "[t]o authorize a city or district to provide new or extended services outside its jurisdictional boundaries pursuant to [Government Code s]ection 56133." (Gov. Code, § 56375, subd. (p).)

Subject to certain exceptions, " '[d]istrict' or 'special district' are synonymous and mean an agency of the state, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries and in areas outside district boundaries when authorized by the commission pursuant to [Government Code s]ection 56133." (Gov. Code, § 56036, subd. (a).)

In May 2015, the Commission sent Southern Mono a letter explaining that its Bishop operations had not been approved and inviting Southern Mono to submit an application to comply with Government Code section 56133. Southern Mono responded that it would not submit an application because the new facility did not require approval. In June 2015, Southern Mono opened the clinic on South Main Street and moved its orthopedic and physical therapy services to that location.

In August 2015, the Commission and Northern Inyo filed a petition for writ of mandate and complaint for declaratory and injunctive relief against Southern Mono. The complaint alleges the healthcare districts' cooperative arrangement ended in 2010. The complaint challenges Southern Mono's operation of the South Main Street facility without obtaining approval for new and extended services outside of its boundaries from the Commission under Government Code section 56133. The complaint also alleges generally that Southern Mono extended its services outside its jurisdictional boundaries without the required preapproval.

After hearing argument, the trial court issued a ruling stating that if Southern Mono "provides new or extended services by contract or agreement outside its jurisdictional boundary, and those services are not 'alternative or substitute' services, pursuant to Government Code section 56133, subdivision (e), it must first request and receive written approval from" the Commission. "However, regardless of whether Government Code section 56133 applies," the court continued, Plaintiffs had the burden to prove they were entitled to relief, in part by showing Southern Mono was providing new or extended services. The court determined, "At some point in time, [Southern Mono] began to provide 'new' or 'extended' services, requiring . . . approval. Indeed, [Southern Mono] provided expanded or new services in 2011 when it opened the West Line Street facility and also offered physical therapy services in addition to orthopedic services. However, the Court cannot conclude that the Main Street [f]acility marks an expansion from this level of service." The court determined the action was barred by the statute of limitations and laches.

Government Code section 56133 does not apply to "two or more public agencies where the public service to be provided is an alternative to, or substitute for, public services already being provided by an existing public service provider and where the level of service to be provided is consistent with the level of service contemplated by the existing service provider." (Gov. Code, § 56133, subd. (e)(1).)

The court entered judgment in Southern Mono's favor, and Plaintiffs filed a timely appeal.

Subsequently, Southern Mono sought about $250,000 for attorneys' fees pursuant to Code of Civil Procedure section 1021.5. The court denied the motion, and Southern Mono filed its own appeal.

We consolidated these cases for all further appellate procedures and have considered them for decision together.

II. DISCUSSION

A. Statute of Limitations

The application of the statute of limitations is usually a question of fact, though it may be resolved as a matter of law where the relevant facts are undisputed. (Aryeh v. Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191 (Aryeh); Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1112.) Plaintiffs do not challenge the trial court's factual findings, claiming that the statute of limitations issues rely on facts that are not in dispute.

The limitations period "runs from the moment a claim accrues." (Aryeh, supra, 55 Cal.4th at p. 1191.) "Generally speaking, a cause of action accrues at 'the time when the cause of action is complete with all of its elements.' " (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806.) Plaintiffs claims were based on Southern Mono's alleged extension of services outside its jurisdictional boundaries without preapproval as required by Government Code section 56133.

Under Government Code section 56133, subdivision (a), "[a] city or district may provide new or extended services by contract or agreement outside its jurisdictional boundary only if it first requests and receives written approval from the commission." Subdivision (d) sets forth a procedure for the review of such a request. First, the executive officer has 30 days to determine whether the request is complete. (Gov. Code, § 56133, subd. (d).) If it is not, the executive officer so informs the requestor. (Ibid.) "When the request is deemed complete, the executive officer shall place the request on the agenda of the next commission meeting for which adequate notice can be given but not more than 90 days from the date that the request is deemed complete, unless the commission has delegated approval of requests made pursuant to this section to the executive officer. The commission or executive officer shall approve, disapprove, or approve with conditions the extended services. If the new or extended services are disapproved or approved with conditions, the applicant may request reconsideration, citing the reasons for reconsideration." (Ibid.) The statute provides no procedures or deadlines for challenging a district's failure to request approval at all.

Code of Civil Procedure section 338, subdivision (a) sets forth a three-year statute of limitation for "[a]n action upon a liability created by statute, other than a penalty or forfeiture." "An action is an ordinary proceeding in a court of justice by which one party prosecutes another for the declaration, enforcement, or protection of a right, the redress or prevention of a wrong, or the punishment of a public offense." (Code Civ. Proc., § 22, italics added.) Plaintiffs assert their claims are "administrative in nature," and therefore not subject to the limitations period set forth in Code of Civil Procedure section 338. They are mistaken. Code of Civil Procedure section 338 does apply to court proceedings like this one. The Legislature in Code of Civil Procedure section 22 "defined an 'action' to refer to a court proceeding, [and] the courts of this state have long interpreted that term to exclude administrative hearings." (Niles Freeman Equipment v. Joseph (2008) 161 Cal.App.4th 765, 779.) As such, the statute of limitations set forth in Code of Civil Procedure section 338 does not apply to an administrative proceeding. (City of Oakland v. Public Employees' Retirement System (2002) 95 Cal.App.4th 29, 48.) A letter inviting a healthcare district to apply for approval under Government Code section 56133 is not itself an administrative action. There has been no administrative proceeding in this case, nor is one apparently available for the claims raised by Plaintiffs. Instead, Plaintiffs brought a court proceeding seeking a declaration or enforcement of a right. As such, Code of Civil Procedure section 338 applies to their claims.

Though not applicable to this proceeding, the time limitation set forth in Code of Civil Procedure section 338, subdivision (a) can apply to a petition for writ of mandate to overturn an administrative decision. (City of Oakland v. Public Employees' Retirement System, supra, 95 Cal.App.4th at p. 51.)

As set forth above, the trial court found that Southern Mono "provided expanded or new services in 2011 when it opened the West Line Street facility and also offered physical therapy services in addition to orthopedic services. However, the Court [could not] conclude that the Main Street [f]acility mark[ed] an expansion from this level of service." Plaintiffs' challenge the trial court's ruling with respect to the statute of limitations, but, as we will demonstrate, they are constrained by this factual determination that the Main Street facility was not an expansion of service.

Plaintiffs had the burden to demonstrate their claims survived based on a nonstatutory exception to the basic limitations period. (Aryeh, supra, 55 Cal.4th at p. 1197.) On appeal, Plaintiffs assert the applicability of three such exceptions: the continuing violation doctrine, the theory of continuous accrual, and the discovery rule. (See id. at p. 1192.) In the trial court, none were raised in their briefing. At oral argument in the trial court, Plaintiffs suggested for the first time there was a continuing violation and the Commission did not know Southern Mono was providing services in Bishop without Northern Inyo's consent until 2015. The court observed that Plaintiffs' statute of limitations arguments were not "fully briefed or brought to the attention of the Court in the written briefs so that the Court could adequately consider it." Further, "any dispute as to the applicable statute of limitations and the argument about a continuing violation was clearly not set forth in the briefs." It thus appears these issues were forfeited by Plaintiffs' failure to adequately raise them in the trial court. (See Rancho Pauma Mutual Water Co. v. Yuima Municipal Water Dist. (2015) 239 Cal.App.4th 109, 118 [arguing "general notion" for first time during oral argument in the trial court was insufficient to preserve issue for appeal].) To the extent Plaintiffs have not forfeited these issues, they have failed to establish error with respect to any of them.

1. The Continuing Violation Doctrine

Under the continuing violation doctrine, "a pattern of reasonably frequent and similar acts may . . . justify treating the acts as an indivisible course of conduct actionable in its entirety, notwithstanding that the conduct occurred partially outside and partially inside the limitations period." (Aryeh, supra, 55 Cal.4th at p. 1198.)

"The continuing violation doctrine serves a number of equitable purposes. Some injuries are the product of a series of small harms, any one of which may not be actionable on its own. [Citation.] Those injured in such a fashion should not be handicapped by the inability to identify with certainty when harm has occurred or has risen to a level sufficient to warrant action. [Citations.] Moreover, from a court-efficiency perspective, it is unwise to impose a limitations regime that would require parties to run to court in response to every slight, without first attempting to resolve matters through extrajudicial means, out of fear that delay would result in a time-barred action." (Aryeh, supra, 55 Cal.4th at pp. 1197-1198.)

We are not persuaded that, as Plaintiffs now assert, Southern Mono's "provision of . . . services in Bishop in violation of [Government Code section] 56133 was a continuous and indivisible course of conduct." Government Code section 56133, subdivision (a) requires a district to request written approval from the Commission before providing new or extended services by contract or agreement outside its jurisdiction. The commission or executive officer then approves, disapproves, or approves with conditions "the extended services." (Gov. Code, § 56133, subd. (d).) Plaintiffs cite no authority applying the continuing violation doctrine to an alleged violation of a similar type of statute. More importantly, Plaintiffs have not demonstrated any of the relevant facts occurred within three years of the filing of their action. Nor did the trial court find any relevant expansion of service that would trigger the requirement to obtain approval occurred inside the limitations period. Additionally, "nothing in the operative complaint alleges the presence of factors that might warrant application of the continuing violation doctrine." (Aryeh, supra, 55 Cal.4th at p. 1198.) The operative pleading alleges South Mono "extended its services outside its jurisdictional boundaries, but did not receive written . . . pre-approval" from the Commission. (Italics added.) Specifically, the complaint is based on Southern Mono's contracting to lease the South Main Street facility without seeking prior approval. Indeed, Plaintiffs' briefing in the trial court argued their action was "targeted at [Southern Mono]'s establishment of the Bishop facility in June 2015" and was timely for this reason. The continuing violation doctrine does not apply to the allegation of such a discrete, independently actionable alleged wrong. (Ibid.) The trial court did not err by not applying this doctrine.

2. The Theory of Continuous Accrual

The theory of continuous accrual "applies whenever there is a continuing or recurring obligation," and provides that each new breach "may be treated as an independently actionable wrong with its own time limit for recovery." (Aryeh, supra, 55 Cal.4th at p. 1199.) "To determine whether the continuous accrual doctrine applies here, we look not to the claim's label . . . but to the nature of the obligation allegedly breached." (Id. at p. 1200.)

Again, the focus of the complaint was Plaintiffs' allegation that Southern Mono breached an obligation to seek preapproval for the South Main Street lease under Government Code section 56133, subdivision (a). On appeal, Plaintiffs argue the continued provision of services without approval violates the statute, and the opening of the South Main Street facility without approval should be deemed a separate wrong or violation, at which time a separate claim accrued. This assertion fails because it contradicts the trial court's explicit finding that the South Main Street facility does not involve new or expanded service, and therefore did not require approval. Thus, there was no new violation of Government Code section 56133. Plaintiffs have not established the trial court erred in not applying the theory of continuous accrual to their claim.

3. The Discovery Rule

Plaintiffs' final argument with respect to accrual relies on the delayed discovery rule, which another court of appeal has applied in the context of Code of Civil Procedure section 338. (See Craig v. City of Poway (1994) 28 Cal.App.4th 319, 342 [discovery rule applied where no public notice of agency's use of funds that formed the basis for claim].) Plaintiffs argue the three-year statute of limitations set forth in the statute does not bar the Commission's claims because there was no evidence the Commission, in particular, became aware of Southern Mono's operations in Bishop prior to February 2015.

"In order to rely on the discovery rule for delayed accrual of a cause of action, '[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.' " (Fox v. Ethicon Endo-Surgery, Inc., supra, 35 Cal.4th at p. 808.) Further, it was Plaintiffs' burden to demonstrate their claims survived based on a nonstatutory exception to the limitations period. (Aryeh, supra, 55 Cal.4th at p. 1197.) The trial court's ruling indicates the argument that Plaintiffs should be treated separately for statute of limitations purposes was not raised until oral argument. In its reply brief in this court, Plaintiffs argue Southern Mono's claim that the Commission should have known of Southern Mono's violation in 2011 was not supported by substantial evidence, and assert that, "[a]t worst, [Southern Mono]'s argument raises a factual issue that should be resolved by the trial court, not this Court." This misunderstands Plaintiffs' burden to raise the issue and introduce supporting evidence in the trial court.

The petition and complaint made no reference to discovery. Rather, the pleadings allege that, in April 2015, the Commission informed Southern Mono that it could not open and operate the South Main Street facility or provide healthcare services without first submitting an application for approval under Government Code section 56133, subdivision (a). On this record, the discovery rule did not apply and the trial court did not err in concluding anything actionable in the operative pleading was barred by the statute of limitations.

In light of this conclusion, we need not address whether the action was also barred by laches. B. Attorneys' Fees

Southern Mono argues the trial court erred in denying its motion for attorneys' fees pursuant to Code of Civil Procedure section 1021.5.

"As a general rule, parties in litigation pay their own attorney's fees." (La Mirada Avenue Neighborhood Assn. of Hollywood v. City of Los Angeles (2018) 22 Cal.App.5th 1149, 1155.) "Derived from the judicially crafted 'private attorney general doctrine,' " Code of Civil Procedure section 1021.5 is an exception to that rule that compensates successful litigants with an award of attorneys' fees in order to encourage "meritorious public interest litigation vindicating important rights and benefitting a broad swath of citizens." (Id. at pp. 1155-1156.) Specifically, Code of Civil Procedure section 1021.5 provides, in relevant part, that "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." Because the statute does not distinguish between plaintiffs and defendants, a party "who successfully defeats a petition for writ of mandate may recover [its] attorney fees under section 1021.5" if it meets all of the elements of the statute. (Sandlin v. McLaughlin (2020) 50 Cal.App.5th 805, 828.) Those elements are: " '(1) [the] action "has resulted in the enforcement of an important right affecting the public interest," (2) "a significant benefit, whether pecuniary or nonpecuniary has been conferred on the general public or a large class of persons" and (3) "the necessity and financial burden of private enforcement [or of enforcement by one public entity against another] are such as to make the award appropriate." ' " (Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1214; see Vasquez v. State of California (2008) 45 Cal.4th 243, 251.) "The applicant bears the burden of establishing each criterion required for an attorney fee award under [Code of Civil Procedure] section 1021.5." (Bui v. Nguyen (2014) 230 Cal.App.4th 1357, 1375, fn. 9.) "Since the statute states the criteria in the conjunctive, each element must be satisfied to justify a fee award. [Citation.] Accordingly, we may uphold the trial court's order denying the attorney fees motion if we determine any one of these elements is missing." (Children & Families Com. of Fresno County v. Brown (2014) 228 Cal.App.4th 45, 55.)

The trial court found Southern Mono was a successful party in the litigation but it "cannot meet the other requirements of [Code of Civil Procedure s]ection 1021.5. Pertinent here, [Southern Mono]'s pecuniary interest clearly outweighs the fees it expended in this litigation. Its continued operation in Inyo County and its investment in the Bishop Main Street [f]acility were at stake. It is [Southern Mono]'s burden to demonstrate with substantial evidence that the costs of the litigation transcend its personal pecuniary stake."

Southern Mono contends the court did not properly analyze the necessity and financial burden element. We review eligibility for attorneys' fees under Code of Civil Procedure section 1021.5 "with a mixed standard of review: To the extent we construe and define the statutory requirements for an award of attorney's fees, our review is de novo; to the extent we assess whether those requirements were properly applied, our review is for an abuse of discretion." (La Mirada Avenue Neighborhood Assn. of Hollywood v. City of Los Angeles, supra, 22 Cal.App.5th at p. 1156.)

As our Supreme Court has explained in the context of a motion for attorneys' fees made by a private plaintiff, "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." ' " (Conservatorship of Whitley, supra, 50 Cal.4th at p. 1214.) We will address each issue separately.

1. Necessity of Enforcement by One Public Entity Against Another

The first issue "has long been understood to mean simply that public enforcement is not available, or not sufficiently available." (Conservatorship of Whitley, supra, 50 Cal.4th at p. 1217.) "Where, as here, the action is between . . . public entities . . . , the question is the necessity of 'enforcement by one public entity against another public entity.' " (Sweetwater Union High School Dist. v. Julian Union Elementary School Dist. (2019) 36 Cal.App.5th 970, 992.) Southern Mono cites Health and Safety Code section 32125, which provides that its board of directors is responsible for operating "health care facilities . . . leased by the district, according to the best interests of the public health. . . ." Southern Mono argues it had a statutory duty to defend this action, and the trial court disregarded this fact. The trial court's ruling did not refer to the necessity of defense, but concluded that Southern Mono was financially motivated to pursue the litigation. The court stated it was "unconvinced by [Southern Mono]'s argument that it has a statutory duty to operate its health care facilities in the best interest of public health, and was appearing to defend the interests of the people it serves. Had [Southern Mono] not actively participated in the litigation, it would have been unable to operate the Main Street [f]acility, and suffered substantial financial losses." (Italics added.) The trial court's comments reference its conclusion regarding the financial burden of enforcement—pointedly, the only requirement for which it articulated its reasoning. A determination that enforcement by one public entity against another is necessary still leaves open the question of whether " 'the financial burden of . . . enforcement' in this case is such as to make an attorney fee award appropriate under the private attorney general theory." (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 941; Heron Bay Homeowners Assn. v. City of San Leandro (2018) 19 Cal.App.5th 376, 386-387.) We will turn next to this dispositive question.

2. Financial Burden of Enforcement

In Conservatorship of Whitley, supra, 50 Cal.4th 1206, our Supreme Court explained, "In determining the financial burden on litigants, courts have quite logically focused 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. ' "An award on the 'private attorney general' theory is appropriate 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.]" ' [Citation.] 'This requirement focuses on the financial burdens and incentives involved in bringing the lawsuit.' " (Id. at p. 1215.)

Our Supreme Court further stated that "[t]he method for weighing costs and benefits is illustrated in Los Angeles Police Protective League v. City of Los Angeles (1986) 188 Cal.App.3d 1[, 232 Cal.Rptr. 697] (Los Angeles Police Protective League). 'The 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. . . . Thus, if success would yield . . . the litigant group . . . an aggregate of $[]10,000 but there is only a one-third chance of ultimate victory they won't proceed—as a rational matter—unless their litigation costs are substantially less than $3,000.

" 'After approximating the estimated value of the case at the time the vital litigation decisions were being made, the court must then turn to the costs of the litigation—the legal fees, deposition costs, expert witness fees, etc., which may have been required to bring the case to fruition. . . . [¶] The final step is 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. . . . [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.' (Los Angeles Police Protective League, supra, 188 Cal.App.3d at pp. 9-10.)" (Conservatorship of Whitley, supra, 50 Cal.4th at pp. 1215-1216.) Southern Mono argues the trial court "failed to undertake the required multi-step analysis" detailed in Los Angeles Police Protective League, such as by discounting its interest based on the probability of success. The test for weighing costs and benefits articulated in Los Angeles Police Protective League need not be applied literally in every case. (Summit Media LLC v. City of Los Angeles (2015) 240 Cal.App.4th 171, 192.) Southern Mono also grafts on language from Los Angeles Police Protective League's discussion of the relationship between the "factors" that our Supreme Court did not adopt: "Where the benefits achieved for others are very high it will be more important to encourage litigation which achieves those results." (Los Angeles Police Protective League, supra, at p. 10.) Thus, Southern Mono's assertion that the court must specifically weigh the "benefits achieved for others" as part of the financial burden element is incorrect. Additionally, "we note that a trial court is 'not required to issue a statement of decision with regard to [a] fee award.' " (Sweetwater Union High School Dist. v. Julian Union Elementary School Dist., supra, 36 Cal.App.5th at p. 981.) Therefore, we will not fault a trial court for not showing its work. "The pertinent question is whether the grounds given by the court for its denial of an award are consistent with the substantive law of [Code of Civil Procedure] section 1021.5 and, if so, whether their application to the facts of this case is within the range of discretion conferred upon the trial courts under [Code of Civil Procedure] section 1021.5, read in light of the purposes and policy of the statute." (City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1298.) We reject Southern Mono's contention that we must reverse because the trial court did not apply the proper legal test.

Plaintiffs cite the following comments made by the trial court during the hearing on their motion for attorneys' fees: "[I]n the court's view, we can't be looking at necessarily the public's interest in the services. The Court has to look at the litigant's personal interests. [¶] So what is your client's personal interest in defending the case?" (Italics added.) This does not establish error. In discussing the interrelationship between the "factors" set forth in Code of Civil Procedure section 1021.5, Los Angeles Police Protective League, supra, 188 Cal.App.3d 1, explained that "[w]here the benefits achieved for others are very high it will be more important to encourage litigation which achieves those results. . . . This means the court sometimes should award fees even in situations where the litigant's own expected benefits exceed its actual costs by a substantial margin." (Id. at p. 10, italics added.) It is "an unusual case" that does so. (City of Oakland v. Oakland Police & Fire Retirement System (2018) 29 Cal.App.5th 688, 703 [reversing order denying attorneys' fees to police officer association in action regarding retirement benefits].) It is true that "[a] pecuniary interest in the outcome of the litigation is not disqualifying. 'If the party claiming fees has a pecuniary interest in the outcome of the lawsuit, the issue is whether the financial burden placed on the party is out of proportion to its personal stake in the lawsuit.' " (Lyons v. Chinese Hospital Assn. (2006) 136 Cal.App.4th 1331, 1352.) It was not error for the court to focus on the pecuniary interest question, and the court's final ruling reflects an accurate understanding of the substantive law.

Similarly, we cannot conclude the trial court abused its discretion in determining Southern Mono did not establish its burdens were out of proportion with its stake in the litigation. Southern Mono submitted evidence that, if the court ordered it to close the South Main Street clinic and cease operations, it "would lose its substantial investments in tenant improvements ($750,000) and equipment ($30,000). It would also continue to incur its substantial lease payments ($8,550/month) with no ability to re-coup its costs by using the facilities." Southern Mono also submitted evidence it employs 11 people at this clinic, with an annual payroll of $500,000 plus benefits. The clinic has 200 physical therapy patient visits per week and 210 orthopedic patient visits per month.

Southern Mono "concedes it has a pecuniary interest in serving the Eastern Sierra from its [South Main Street c]linic," but suggests the trial court erred by disregarding other considerations. Specifically, Southern Mono argues the court should have considered that it is a public entity prohibited from profiting from the services of independent contractor physicians or that its interest was in avoiding a loss. It is not clear why Southern Mono believes the court did not consider this information. Nonetheless, the court found Southern Mono's continued operation in Inyo County and its investment in the South Main Street facility were at stake. The fact Southern Mono cannot operate at a profit and that its interest was in avoiding a loss do not negate this pecuniary interest. (See Jobe v. City of Orange (2001) 88 Cal.App.4th 412, 418-419 [in action seeking to compel city to set aside its approval of school expansion, nonprofit did not show the cost of its legal victory transcended its pecuniary interest in the expansion of the school it owned and operated].) Southern Mono also contends the trial court failed to consider whether the benefit Southern Mono's success conferred on others justified a fee award despite its financial incentive. We find no error. The trial court concluded Southern Mono met none of the requirements of Code of Civil Procedure section 1021.5 other than being a successful party. Thus, the trial court implicitly determined its judgment in the underlying proceeding did not secure a significant benefit on a large class of persons. This is not a case where the trial court erroneously believed that a pecuniary interest alone was disqualifying. The trial court found that "the practical effect of the litigation is that the Main Street Facility remained open despite the fact that the litigation sought to enjoin [Southern Mono]'s operations in Inyo County." Southern Mono suggests its defense "resulted in maintaining valuable healthcare services for the Eastern Sierra" and avoiding "long drives over mountain roads and in inclement weather." Further, Southern Mono asserts it enforced the public policies of patient choice and healthcare competition. These claims are not bolstered by any citation to the record. Regardless, we cannot conclude the trial court abused its discretion in finding these interests did not justify an award of attorneys' fees. The requirement that the financial burden makes the award of attorneys' fees appropriate requires that " ' "the cost of the claimant's legal victory transcends his personal interest, that is, . . . the necessity for pursuing the lawsuit placed a burden on the plaintiff 'out of proportion to his individual stake in the matter.' [Citation.]" ' [Citation.] In other words, '[Code of Civil Procedure s]ection 1021.5 was not designed as a method for rewarding litigants motivated by their own pecuniary interests who only coincidentally protect the public interest.' " (Bui v. Nguyen, supra, 230 Cal.App.4th at p. 1367.) As set forth above, the trial court was "unconvinced by [Southern Mono]'s argument that it has a statutory duty to operate its health care facilities in the best interest of public health, and was appearing to defend the interests of the people it serves. Had [Southern Mono] not actively participated in the litigation, it would have been unable to operate the Main Street [f]acility, and suffered substantial financial losses." In essence, the trial court found the protection of the public interest was coincidental. On this record, the trial court's conclusion that the burden of defending the lawsuit did not transcend Southern Mono's personal stake in the action was not an abuse of discretion. As such, the trial court did not err in denying Southern Mono's request for attorneys' fees.

With respect to this element, " '[t]he substantial benefit may be conceptual or doctrinal, and need not be actual and concrete, so long as the public is primarily benefited.' " (Family Planning Specialists Medical Group, Inc. v. Powers (1995) 39 Cal.App.4th 1561, 1570; Woodland Hills Residents Assn., Inc. v. City Counsel, supra, 23 Cal.3d at p. 939 ["the Legislature did not intend to authorize an award of attorney fees in every case in which first amendment issues are only marginally involved"].)

III. DISPOSITION

The judgment is affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)

/S/_________

RENNER, J.

We concur:

/S/_________

BLEASE, Acting P. J.

/S/_________

KRAUSE, J.


Summaries of

Inyo Cnty. Local Agency Formation Comm'n v. S. Mono Healthcare Dist.

COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento)
May 13, 2021
No. C085138 (Cal. Ct. App. May. 13, 2021)
Case details for

Inyo Cnty. Local Agency Formation Comm'n v. S. Mono Healthcare Dist.

Case Details

Full title:INYO COUNTY LOCAL AGENCY FORMATION COMMISSION et al., Plaintiffs and…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento)

Date published: May 13, 2021

Citations

No. C085138 (Cal. Ct. App. May. 13, 2021)