Listen to this post

The Fourth District Court of Appeal recently issued its opinion in Save Our Heritage Organisation v. City of San Diego (2017) 11 Cal.App.5th 154, the latest round of litigation over the site development plan for a revitalization project in San Diego’s Balboa Park, finding that, under some circumstances, a project proponent may recover attorneys’ fees under Code of Civil Procedure section 1021.5.

Save Our Heritage Organisation (SOHO) previously challenged the project, which involved closing off parts of Balboa Park to traffic and diverting traffic via a new bridge to a parking structure, under CEQA.  SOHO filed the action against the City of San Diego, as lead agency, and the Plaza de Panama Committee (“Committee”), as real party in interest.  The Committee was founded to shepherd the project through the design and review process.  The superior court granted SOHO’s petition for writ of mandate, and SOHO and the Committee both filed appeals on different issues.  The City did not appeal.  The Court of Appeal rejected SOHO’s arguments and reversed the trial court, finding that SOHO failed to demonstrate that the City had abused its discretion.

The Committee filed a motion for attorneys’ fees under Code of Civil Procedure (“CCP”) section 1021.5, arguing that it met the standard for an award of fees under that section because (1) it was a successful party, (2) the project approval it vindicated conferred a substantial benefit on the general public, and its efforts were necessary to that vindication (because the City did not appeal the adverse judgment), and (3) the cost of the appeal was greater than the Committee’s pecuniary interest in the project (in fact, it had none).

SOHO opposed the fees motion.  Although SOHO did not dispute that the Committee satisfied the three-prong test set forth in CCP section 1021.5, it argued that fees are not available to project proponents because such an award would undermine the rationale behind CCP section 1021.5: promoting public interest litigation. The superior court agreed, denying the Committee’s motion.

The Court of Appeal upheld the denial of a fee award, but disagreed with the lower court’s reasoning.  First, the court stated that because a “successful party” is generally understood to mean any party to litigation who achieves its objectives, project proponents are not categorically barred from obtaining fees under CCP section 1021.5.  However, the court went on to conclude that fees could not be awarded against SOHO, based on a recognized exception to CCP section 1021.5 where the three-prong test is met, but the litigant against whom fees are sought “did nothing to adversely affect the public interest.”  The court stated that the “relevant inquiry in cases where the defendant or real party in interest prevails in defending against litigation and seeks attorney fees from the party who initiated the litigation is whether the litigation was detrimental to the public interest because it sought to curtail or compromise important public rights.”  In this case, the court answered that question in the negative.

This case seems significant at first glance but is unlikely to materially affect CEQA practice.  The recovery of attorneys’ fees under CCP section 1021.5 has historically been a one-way street, with fees potentially recoverable by successful petitioners against respondents, but not the other way around.  Potential fee awards against petitioners could have the effect of deterring meritless and nuisance-type lawsuits.  However, the bar set by the court makes such a shift in practice unlikely.  Most courts will be extremely reluctant to find that any CEQA lawsuit, even if meritless or brought by a self-interested NIMBY group, is “detrimental to the public interest because it sought to curtail or compromise important public rights.”  Thus, it is unlikely we will see courts approving fee awards against CEQA petitioners any time soon.