In City of San Clemente v. Department of Transportation (2023) 92 Cal.App.5th 1131, the Fourth District Court of Appeal held that a homeowner’s association (Association), who challenged a proposed state highway extension alignment and a CEQA settlement that required the highway to avoid sensitive areas, was not entitled to attorney’s fees under the “private attorney general” doctrine codified in Code of Civil Procedure section 1021.5 (Section 1021.5) because the Court determined that the Association’s suit was not a substantial factor in the lead agency’s decision to avoid routing the planned extension near the Association’s community. The Court also found that the trial court did not abuse its discretion in awarding costs against the Association and remanded the determination of whether the named real party environmental groups, who joined the lead agency in defending against suit, were entitled to attorney’s fees under Section 1021.5.

Background

In 2006 and 2013, the Foothill/Eastern Transportation Corridor Agency (Corridor Agency) approved the extension of State Route 241 through portions of southern Orange County, which would run through conservancy land and other open space. After years of litigation with Sierra Club, National Audubon Society, Defenders of Wildlife, and Natural Resources Defense Council (collectively, Environmental Parties), among others, the Corridor Agency and Environmental Parties entered into a settlement agreement (Settlement) requiring any highway extension to take place outside of an “Avoidance Area” encompassing environmentally sensitive, undeveloped lands east of San Clemente.

Shortly thereafter, fearing the results of the Settlement would cause the Corridor Agency to re-route extension of the highway near their community, the Association began attempts to set aside the Settlement, taking the position that the Settlement’s protection of the Avoidance Area was beyond the Corridor Agency’s authority. After a motioned hearing, the Court determined that the Settlement did not restrict the Corridor Agency’s discretionary authority, and the Corridor Agency sought leave to file dispositive motions against the Association’s claims. Also, by this time, the Corridor Agency had already decided to route the highway extension away from the Association’s community, choosing a cheaper, more efficient alternative route. The Association subsequently stipulated to dismissal of their lawsuit. The Association and Environmental Parties sought to recover attorney’s fees under Section 1021.5, and the trial court rejected both motions but awarded costs to both the Corridor Agency and Environmental Parties as prevailing parties.

Court of Appeal

On appeal, the Association argued that the award of attorney’s fees was proper as their lawsuit was the catalyst that caused the Corridor Agency to abandon its plans to extend the highway near their community. The Court disagreed, finding the trial court’s determination—that the lawsuit was not a substantial factor in the Corridor Agency’s decision to pick a different route—was supported by substantial evidence and, therefore, not an abuse of the trial court’s discretion. Considering Section 1021.5 requires the plaintiff to have achieved their primary relief sought, the Court, further, upheld the trial court’s finding that the Association’s primary litigation objective was to invalidate the Settlement, not to stop a specific highway extension route. Having determined that the Association’s litigation was not the catalyst for the Corridor Agency’s change in plans, the Court also found that it was logical to conclude that the Association was not a prevailing party in the litigation and upheld the award of costs to Environmental Parties and the Corridor Agency.

Conversely, Environmental Parties argued on appeal that they were entitled to attorney’s fees because they were successful parties whose participation was necessary in enforcing an important right benefitting the public, and that the trial court erred in misapplying an exception to awarding such fees. Under this exception to application of Section 1021.5, even if the party qualifies for the award of attorney’s fees, the court need not make an award where the losing party is not the type of party upon whom private attorney general fees are supposed to be imposed. Under this exception, however, when a party initiates litigation that is determined to be detrimental to a public interest, attorney’s fees can be imposed. Although the Association argued that they did not seek to adversely impact public rights and were only seeking to avoid a highway extension whose route was chosen based on illegal decisions, the Court determined that the Association, in fact, sought to curtail or compromise important public rights and that Environmental Parties not only helped to secure those public rights through the Settlement but also defended them in litigation against the Association. Accordingly, the Court held that Section 1021.5 does not preclude the award of attorney’s fees where a litigant defends against a suit that sought to limit the government’s power to protect important public rights. Because the trial court never actually addressed the threshold question of whether Environmental Parties were entitled attorney’s fees under Section 1021.5, the Court—after determining that Environmental Parties’ defense resulted in the enforcement of an important right affecting the public interest that conferred a benefit on the general public—remanded to the trial court the factual determination of whether Environmental Parties’ private enforcement actions were, in fact, necessary. In doing so, the Court noted that the trial court should consider the fact that Environmental Parties were named by the Association as real parties in interest and did not seek to intervene in the litigation on their own.

Key Takeaways

• Section 1021.5 does not preclude the award of attorney’s fees where a litigant defends against a suit that seeks to limit the government’s power to protect important public rights.
• Determining what qualifies as a lawsuit “to limit the government’s power to protect important rights” could be an important point of litigation in the future and open the door for obtaining attorney’s fees from unsuccessful CEQA petitioner

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