The City of San Clemente and the Reserve Maintenance Corporation initiated a lawsuit against the Department of Transportation (DOT) and the Sierra Club. The lawsuit sought to invalidate a settlement agreement between the DOT and the Sierra Club, which had resolved conflicts regarding the plans for extending a road near the Reserve Maintenance Corporation's community.

The Foothill/Eastern Transportation Corridor Agency approved extensions of State Route 241 in Orange County. Environmental groups sued to challenge the approvals (see our page on Environment Law). In 2016, the agency agreed to a settlement creating an "Avoidance Area" to protect sensitive resources in future planning. In 2020, the Reserve Maintenance Corporation, representing homeowners, sued to invalidate the Avoidance Area provisions. After losing several motions, the Reserve dismissed their lawsuit but sought attorney fees as a successful party under Code of Civil Procedure section 1021.5.

Background

San Onofre State Beach is south of San Clemente near the border of Orange County. In the 2000s, the Corridor Agency planned to extend State Route 241 south through open space east of San Clemente. Environmental groups formed the Save San Onofre Coalition (SSOC) to oppose extension plans that would impact the park and surrounding open space. SSOC sued under CEQA over the "Green Alignment" plan approved in 2006. The state also sued to protect Native American heritage sites. The Corridor Agency later proposed the shorter "Tesoro Extension," which SSOC also sued over in 2013.

In November 2016, the lawsuits were settled. The Corridor Agency rescinded approvals for the Green Alignment and Tesoro Extension. An "Avoidance Area" was defined east of San Clemente that could not be impacted by future Route 241 extensions. The agreement allowed the Corridor Agency to pursue other options that avoided the Avoidance Area. In 2020, the Avoidance Area was codified into law. The agreement preserved the Corridor Agency's discretion for alignments outside the Avoidance Area.

The Corridor Agency pursued other options, including extending Los Patrones Parkway. In 2017-2020 they studied various ideas, including 3 that extended Route 241. In March 2020 they adopted "Alternative 22" to extend Los Patrones Parkway and decided to not further study an extension near the Reserve community. A bill was introduced to prohibit Route 241 extensions, which the Board opposed.

In 2017, the Reserve demanded the settlement be declared void, but this was rejected. They sued to invalidate the settlement and protective agreements. Their goal was to avoid a Route 241 extension near their community. They sought writs of mandate directing the agreements be set aside as beyond the agencies' authority. The trial court upheld the agreements as valid and ruled the Reserve hadn't proven them ultra vires. In 2020, the Reserve dismissed their lawsuit after failing to invalidate the agreements.

Motions for Attorney Fees

The Environmental Parties and the Reserve filed motions for attorney fees under section 1021.5 after the Reserve dismissed its case. The Environmental Parties argued they were successful in defending the agreements and met the section 1021.5 factors. The Reserve argued it was entitled to fees because the Agency abandoned extending the road, partly due to the Reserve's litigation.

The trial judge tentatively denied both attorney fees motions. She found the evidence was divided on whether the Reserve's litigation caused the Agency's decision. She also found the Reserve did not seek the change in the manner sought by the litigation. She awarded costs to the Environmental Parties and Agency as prevailing parties. After a hearing, her final order omitted the lack of settlement attempt as a reason to deny the Reserve's motion.

The judge denied fees to the Environmental Parties because the Reserve did not adversely affect public rights by initiating the litigation. She found the Reserve sought to correct perceived legal violations. She did not make a finding on the necessity of the Environmental Parties' participation.

The judge granted costs to the Environmental Parties and Agency because the Reserve was not the prevailing party. She excluded some costs and awarded the Environmental Parties $7,769 and the Agency $94,062.50.

Analysis: The Reserve's Motion

The Reserve argues they met the criteria for receiving attorney fees as a successful party under section 1021.5. They claim the litigation was the catalyst for the Corridor Agency's decision to abandon building an extension of State Route 241 near the Reserve community.

Section 1021.5 allows a prevailing party to recover attorney fees in a case enforcing an important public right. To recover fees, a party must show: 1) they are a successful party, 2) the litigation enforced an important public right, 3) it conferred a significant benefit, and 4) fees are appropriate due to the necessity and burden of private enforcement.

The Reserve argues their lawsuit catalyzed the Corridor Agency to abandon plans to extend State Route 241. Under the catalyst theory, a party shows they are "successful" by showing the litigation caused the defendant to change its behavior substantially in the manner sought by the litigation.

The trial judge found the Reserve did not show the litigation was a substantial factor in the Corridor Agency's decision. This conclusion was supported by evidence of the agency's deliberations and conclusion that an alternative route was better. The agency also did not completely abandon extending the route in the future.

The judge found the Reserve's primary goal was invalidating the settlement's Avoidance Area, not stopping the route extension. This finding was supported by the causes of action and engagement agreement focusing on invalidating the settlement. Since the Reserve did not achieve this primary goal, denying fees was reasonable.

The judge properly awarded costs to the Corridor Agency under section 1032 as defendants for whom dismissal was entered. The Reserve did not establish an exception to this rule under a catalyst theory. The judge acted within her discretion in determining the cost amount was reasonable and not requiring apportionment.

Analysis: Environmental Parties' Motion

The Environmental Parties argued they were entitled to attorney fees under section 1021.5 for successfully enforcing an important public right in the litigation. The trial judge misapplied the exception that denies fees when a party litigates purely private interests in a case involving public issues.

The Supreme Court created a narrow exception in Joshua S. v. Sharon S, denying fees to a party who prevailed on an important issue but did not adversely affect public interests beyond being on the losing side. This does not apply here, where the Reserve compromised public rights by attacking agreements protecting land. Like in Wal-Mart v. City Council, fees can be imposed for litigation detrimental to public rights.

The Reserve's goal of avoiding highway construction is irrelevant. Their lawsuit would have negatively impacted public rights, regardless of their purpose. The judge erred in focusing on their motivations rather than the litigation's effects. Like in Pasadena Police Officers Ass'n v. City of Pasadena, subjective intent does not matter.

Save Our Heritage does not support extending the exception, as the Reserve is not similar to the nonprofit conservation group there. Homeowner groups like the Reserve are precisely the type of party intended to pay fees.

Though the Environmental Parties seem to satisfy the section 1021.5 factors, the judge should resolve necessity and exercise discretion on a final award, considering their role in the prior litigation.

Conclusion

The appellate court reversed the judge's ruling that denied attorney fees and costs to the Environmental Parties and remanded for a hearing to determine if awarding fees is suitable and how much should be awarded. The rest of the judgment remains unchanged, and the Environmental Parties are entitled to recover their costs on appeal.

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