Judge: Mitchell L. Beckloff, Case: 19STCP02984, Date: 2023-02-10 Tentative Ruling

Case Number: 19STCP02984    Hearing Date: February 10, 2023    Dept: 86

KEEN v. CITY OF MANHATTAN BEACH

Case Number: 19STCP02984

Hearing Date: February 10, 2023

[Tentative]       ORDER GRANTING MOTION FOR ATTORNEY’S FEES

In 2015, Respondent, the City of Manhattan Beach, adopted Ordinance No. 15-0010 prohibiting short term rentals (STRs) in residential zones within the Coastal zone.[1] On July 15, 2019, Petitioner filed a petition for a writ of mandate to prevent the City from implementing and enforcing the ordinance. Petitioner asserted the STR regulations had not been reviewed and certified by the California Coastal Commission as required by the California Coastal Act of 1976 (the Coastal Act), Public Resources Code section 30000, et seq.

The trial court (Hon. James C. Chalfant) granted judgement in favor of Petitioner, enjoined the City from enforcing the STRs ban, and issued the requested writ. The City appealed.

While the City’s appeal was pending, Petitioner sought attorney fees from the trial court in the amount of $576,721.720 pursuant to Code of Civil Procedure section 1021.5 (Section 1021.5). On July 1, 2021, this court denied Petitioner’s request.[2]

On June 29, 2022, the Court of Appeal affirmed the judgment enjoining the enforcement of bans on STRs in the City. (See Keen v. City of Manhattan Beach (2022) 77 Cal.App.5th 142.)

Petitioner now seeks attorney fees in the amount of $402,528.10 pursuant to Section 1021.5 for attorney’s fees incurred on appeal (Post-Appeal Fee Motion). More specifically, Petitioner seeks $125,284.17 for successful defense of the City’s appeal of the trial court decision, $16,841.67 for his unsuccessful motion to attorney’s fees (trial court proceedings), $60,000 for the Post-Appeal Fee Motion, $12,476 for “other post-appeal time commitments,” and a 2.5 multiplier. (Notice 3.)

The City opposes the motion.

Petitioner’s request for judicial notice (RJN) is granted in part. The court takes judicial notice of Exhibits 3 (as to the text of the statutes only), 6 and 7. The court finds the remaining material irrelevant to the issues before the court (Exhibits 1, 2, 4 and 5) or not judicially noticeable (Exhibits 8, 9, 10, 11, 12, 13, 14, 15 and 16).

The motion is GRANTED.

APPLICABLE LAW

Section 1021.5, authorizing an attorneys’ fees award in “public interest” litigation, sets forth the requirements for an award of attorney’s fees. Section 1021.5 provides in relevant part:

“. . . a court may award attorneys’ fees 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 basic objective of the “private attorney general” doctrine “is to encourage suits enforcing important public policies by providing substantial attorney fees to successful litigants in such cases.” (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1289; Graham v. DaimlerChrysler Corp. (2004) 34 Cal.4th 553, 565.) The statute “codifies the private attorney general doctrine and acts as an incentive to pursue ‘public interest litigation that might otherwise have been too costly to bring.’ “ (Hall v. Department of Motor Vehicles (2018) 26 Cal.App.5th 182, 188.) Section 1021.5 awards successful public interest litigants with attorney fees where three statutory requirements are established. (Vasquez v. State of California (2008) 45 Cal.4th 243, 250-251.) The burden is on the fee claimant to establish each statutory requirement, including that its litigation costs transcend its personal interest in the litigation. (Save Open Space Santa Monica Mountains v. Superior Court of Los Angeles County (2000) 84 Cal.App.4th 235, 246.)

“ ‘An award of attorney[] fees under . . . section 1021.5 is an obligation’ if the claimant meets the criteria for such an award. [Citation.]” (Doe v. Westmont College (2021) 60 Cal.App.5hh 753, 767.)

ANALYSIS

Through his Post-Appeal Fee Motion, Petitioner seeks $402,528.10 as and for a reasonable attorney’s fees award pursuant to Section 1021.5.

Petitioner Is Entitled to an Award of Attorney’s Fees Pursuant to Section 1021.5:

Petitioner has the burden of establishing entitlement to fees under Section 1021.5. (See Millview County Water Dist. v. State Water Resources Control Bd. (2016) 4 Cal.App.5th 759, 769. [“The burden is on the party requesting section 1021.5 fees to demonstrate all elements of the statute, including that the litigation costs transcend his or her personal interest.”]) Petitioner argues the requirements of Section 1021.5 have been established here such that he is entitled to an award of attorney’s fees.

The City asserts otherwise. The City contends Petitioner fails to satisfy two requirements for Section 1021.5 fees. First, Petitioner’s own financial interests transcends the cost of litigation. Second, Petitioner did not confer a significant benefit on the general public.

              Significant Benefit on the General Public

To obtain an award of attorney’s fees under Section 1021.5, the lawsuit must confer “a significant benefit” on “the general public or a large class of persons.” (Code Civ. Proc.,

§ 1021.5, subd. (a).) When considering the significant benefit factor, the Court must assess the size of the class of persons and significant benefit “in light of all the pertinent circumstances of the gains which have resulted in the particular case.” (Christward Ministry v. Co. of San Diego (1993) 13 Cal.App.4th 31, 50.)

“The trial court determines the significance of the benefit, and the group receiving it, from a realistic assessment, in light of all the pertinent circumstances, of the gains which have resulted in a particular case. The courts are not required to narrowly construe the significant benefit factor. The extent of the public benefit need not be great to justify an attorney fees award. And fees may not be denied merely because the primary effect of the litigation was to benefit the individual rather than the public.” (Indio Police Command Unit Association v. City of Indio (2014) 230 Cal.App.4th 521, 543 [cleaned up].)

The court previously found the City’s no-significant-benefit-to-the-general-public argument unpersuasive. The City’s position is no different today than it was in July 2021 when the court rejected in when considering whether Section 1021.5 compelled an award of attorney’s fees based on proceedings in the trial court. (Compare Minute Order July 1, 2021 pp. 3-4 with Opposition 13:1-14:4.)

Moreover, that the litigation resulted in a published appellate opinion further strengthens Petitioner’s claim the litigation resulted in a significant benefit to the general public. (Protect Our Water v. County of Merced (2005) 130 Cal.App.4th 488, 496, fn. 8. [“Publication of the Opinion alone supports a conclusion that the result was of significant statewide public interest.”])

Based on the foregoing, the court finds Petitioner has demonstrated the appellate litigation resulted in a significant benefit to the general public.

              Financial Burden of Private Enforcement

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.” (Collins v. City of Los Angeles (2012) 205 Cal.App.4th 140, 154.) It is not intended “as a method for rewarding litigants motivated by their own pecuniary interests who only coincidentally protect the public interest . . . .” (Beach Colony II v. California Coastal Com. (1985) 166 Cal.App.3d 106, 114.)

“[T]he necessity and financial burden requirement ‘ “really examines two issues: whether private enforcement was necessary [first prong] and whether the financial burden of private enforcement warrants subsidizing the successful party's attorneys [second prong].” ’ [Citations.] The ‘necessity’ of private enforcement “ ‘ “looks to the adequacy of public enforcement and seeks economic equalization of representation in cases where private enforcement is necessary.” ’ [Citations.]” ’ ” (Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1214-1215.)

“The second prong of the inquiry addresses the ‘financial burden of private enforcement.’ 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.” (Id. at 1215.) “ ‘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.’ ” (Id. at 1216.)

                             Was Private Enforcement Necessary?

As to the first part of the analysis, Petitioner has demonstrated private enforcement was necessary here. The City is a governmental agency with its ordinance under challenge. Where litigation is against the government, the necessity of private enforcement is “obvious.” (City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1299 [citation omitted].) “In such situations private citizens alone must ‘guard the guardians' and the disparity in legal resources is likely to be greatest.” (Ibid. See also Boatworks, LLC v. City of Alameda [Boatworks] (2019) 35 Cal.App.5th 290, 309.)

Does the Financial Burden of Private Enforcement Warrant Subsidizing Petitioner’s Attorneys?

“[T]he purpose of section 1021.5 is not to compensate with attorney fees only those litigants who have altruistic or lofty motives, but rather all litigants and attorneys who step forward to engage in public interest litigation when there are insufficient financial incentives to justify the litigation in economic terms.” (Conservatorship of Whitley, supra, 50 Cal.4th at 1211.) “If the plaintiff had a “personal financial stake” in the litigation “sufficient to warrant [the] decision to incur significant attorney fees and costs in the vigorous prosecution” of the lawsuit, an award under section 1021.5 is inappropriate.” (Millview County Water Dist. v. State Water Resources Control Bd., supra, 4 Cal.App.5th at 768–769.)

“In considering . . . [the] 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.’ ” (Boatworks, supra, 35 Cal.App.5th at 309 [quoting Conservatorship of Whitley, supra, 50 Cal.4th at 1215.) “Financial incentives may exist even where . . . the plaintiff seeks no monetary award in the litigation.” (Ibid.)

“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.’ [Citations.]” (Ibid. [Emphasis added.])

Petitioner correctly argues the court’s prior determination he was not entitled to fees for proceedings in the trial court has no preclusive effect here. In addition, according to Petitioner, the circumstances are now different because the financial burden of private enforcement analysis has changed. More specifically, Petitioner argues his financial burden has increased as a result of the City’s appeal of the underlying substantive decision. Petitioner argues the City’s appeal “has driven up the financial burden of enforcement for both Keen and Angel Law since this court rule on [the trial court services fee motion], so much so that even using the $393,250 used by this Court on July 1, 2021 as [Petitioner’s] financial incentive . . . this purported expected value of [Petitioner’s] economic benefit no longer exceeds the actual litigation costs.” (Memo 22:4-7.) Petitioner also notes Petitioner’s attorney’s fees related solely to the appeal “exceeds the expected value of [Petitioner’s] assumed economic benefit by $37,600.03 ($430,850.03 - $393,250).” (Memo 22:10-11.) Thus, the court must consider whether the financial burden of private enforcement under the circumstances today warrants the bounty of court awarded attorney’s fees.

As noted by Petitioner, the court previously relied on Petitioner’s representation he incurred attorney’s fees in the trial court (without the application of a multiplier) of $305,565.86.[3] Petitioner now represents he incurred post-judgment attorney’s fees of $214,601.84 (again without application of the requested 2.5 multiplier). (See Notice of Motion p. 3.) Accordingly, Petitioner has now incurred $520,167.70 as and for attorney’s fees in invalidating the City’s STRs ordinance.[4] (Memo 22:13.)

The court’s prior award denying Petitioner attorney’s fees found Petitioner did not demonstrate “pursuing the lawsuit place a burden on [Petitioner] out of proportion to [Petitioner’s] individual stake in the matter.” (Conservatorship of Whitley, supra, 50 Cal.4th at 1215 [cleaned up].) The court’s conclusion turned on an examination of Petitioner’s financial interests in his own STRs.

As recognized by Petitioner, the court previously concluded the net financial benefit at stake in the litigation when Petitioner made the decision to litigate was at least $605,000. (Order, July 1, 2021, p. 9.) At that time, Petitioner represented, as he does now, he has been planning to return to California and “live in [his] Manhattan Beach home by 2024 at the latest.” (Keen Decl., ¶ 20 [intention when litigation initiated].) Thus, based on the evidence, any financial benefit to Petitioner from his STR will cease sometime in 2024, and the court’s prior calculation of Petitioner’s financial benefit at stake in the litigation at $605,000 remains.[5] After the 65 percent discount to account for the probability of success, Petitioner’s financial incentive to pursue this litigation is $393,250.[6]

In its prior decision denying Petitioner an award of attorney’s fees for pre-judgment work under Section 1021.5, the court did not address the City’s claim Petitioner’s actual and real financial obligation should be used to analyze the financial burden of enforcement. (Order filed July 1, 2021, fn. 15.) As the issue was not determinative, the court did not address the issue.

The City again raises the issue, and the issue could now be determinative. (Opposition 11:8-21.) The City asserts the financial benefit analysis must consider the actual attorney’s fees paid by Petitioner which are much less than the lodestar sought here.

Petitioner’s counsel concedes Petitioner paid reduced hourly rates for the legal services provided. (Angel Decl., ¶ 89 [$450 per hour Frank Angel; $200 per hour McManus].) Nonetheless, Petitioner contends he is entitled to a fully compensatory attorney’s fees award because “[a]ttorney fee awards are generally based on the fair market value of the services provided, not the actual cost to the party.” (Sonoma Land Trust v. Thompson (2021) 63 Cal.App.5th 978, 984.) Petitioner notes “California courts have routinely awarded fees to compensate for legal work performed on behalf of a party pursuant to an attorney-client relationship, although the party did not have a personal obligation to pay for such services out of his or her own assets.” (Lolley v. Campbell (2002) 28 Cal.4th 367, 373.)[7]

The court acknowledges Conservatorship of Whitley, supra, 50 Cal.4th at 1216 quotes Los Angeles Police Protective League v. City of Los Angeles (1986) 188 Cal.App.3d 1, 9-10 [LAPPL] and LAPPL’s use of “actual cost” for consideration of a comparison of the financial burden of the litigation. Given the long line of authorities providing that attorney’s fees awards “should be fully compensatory” (Ketchum v. Moses, supra, 24 Cal.4th at 1133.), the court cannot find Conservatorship of Whitley’s reference to actual costs is a departure from the long-standing rule that the court consider the lodestar for the financial burden analysis of Section 1021.5.[8]

Accordingly, the court finds Petitioner has established his entitlement to attorney’s fees for post-judgment work pursuant to Section 1021.5. The court agrees with Petitioner: “At this stage, a [Private Attorney General] fee award is clearly justified.” (Memo 22:19-20.)

Whether Petitioner’s Attorney’s Fees are Reasonable:

Petitioner requests attorney’s fees in the amount of $214,601.84. He also requests a multiplier of 2.5.

When assessing the amount of any attorneys’ fee award, whether made under Section 1021.5 or otherwise, courts ordinarily determine what is reasonable through the application of the “lodestar” method with adjustments for what hours and rates are reasonable given the expertise of counsel and difficulty of the matter presented. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1136.)

Under the lodestar method, a base amount is calculated from a compilation of (1) time reasonably spent and (2) the reasonable hourly compensation of each attorney. (Serrano v. Priest (1977) 20 Cal.3d 25, 48; see also Meister v. Regents of University of California (1998) 67 Cal.App.4th 437, 448-449.) The court is vested with discretion to determine whether claimed hours were reasonably spent as well as an attorney’s reasonable hourly rate. (Dover Mobile Estates v. Fiber Form Products, Inc. (1998) 220 Cal.App.3d 1494, 1501.)

              Hourly Rates

Normally, a “reasonable” hourly rate is the prevailing rate charged by attorneys of similar skill and experience in the relevant community for similar work. (PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1095.) That amount may then be adjusted through consideration of various factors, including “(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, and (4) the contingent nature of the fee award.” (Ketchum v. Moses, supra, 24 Cal.4th at 1132.) The court may also rely on its own knowledge of reasonable attorney fees in the community to determine whether hourly rates are reasonable. (See PLCM Group, Inc. v. Drexler, supra, 22 Cal.4th at 1096 [explaining trial court has its own expertise in determining value of legal services and may make its own determination without necessity of expert testimony].)

Petitioner seeks attorney’s fees at an hourly rate of $750 to $850 (Frank Angel), $300 (Talia Nimmer), $275 (Cooper Kass) and $250 (paralegal Lake McManus).

To support the hourly rates of his counsel as reasonable, Petitioner submits the declarations of

Attorney Frank Angel, Cooper Kass and Lake McManus to support the reasonableness of these fees. (Angel Decl., ¶¶ 70-84; Kass Decl., ¶¶ 4-8; McManus Decl., ¶¶ 3-8.) Most importantly, Petitioner’s attorney Frank Angel represents his hourly rate is consistent with the community’s prevailing market rates as well as his experience, skill and education in the specialized field of land use. (Angel Decl., ¶¶ 70-79.)

The City does not challenge the hourly rates of Petitioner’s counsel. Instead, the City contends the hourly rates undermine any request for a multiplier.

Accordingly, the court finds the rates charged by Petitioner’s counsel (and paralegal) are reasonable under the circumstances.

              Hours Incurred

The City challenges the hours incurred by Petitioner’s counsel as unreasonable. The City generally objects to each category of service for which Petitioner seeks attorney’s fees: proceedings the Court of Appeal ($125,284.17), the attorney’s fees motion for work in the trial court ($16,841.67), the Post-Judgment Fee Motion ($60,000), and other post-appeal work ($12,476).

[Based on the general nature of the City’s objections, the court intends to discuss the expense of the services provided during argument.]

              Multiplier

Petitioner requests a 2.5 multiplier to the lodestar of $125,284.17 for the successful defense of the judgment on appeal. The City opposes the request suggesting a multiplier is unwarranted here.

A lodestar amount “ ‘may be adjusted by the court based on factors including . . . (1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, (4) the contingent nature of the fee award.’ ” (Graham v. DaimlerChrysler Corp., supra, 34 Cal.4th at 579.) Courts explain “[t]he question to be answered is whether the litigation required extraordinary legal skill or whether there are other factors justifying augmentation of the unadorned lodestar in order to approximate the fair market rate for such services.” (EnPalm, LLC v. Teitler (2008) 162 Cal.App.4th 770, 784.)

Petitioner argues a multiplier of 2.5 is appropriate under the circumstances because Petitioner’s counsel took a substantial risk by accepting Petitioner’s case on partial contingency basis and at a below-market rate for a public interest case with the potential for a significant benefit delivered to the community. Petitioner notes if he lost the case, Petitioner’s attorneys would have received only part of a reasonable hourly rate. (Keen Decl., ¶ 10.)

Petitioner also argues the court should award a multiplier in consideration of the skill displayed by counsel in presenting the issues in this case. (Nishiki v. Danko Meredith, APC (2018) 25 Cal.App.5th 883, 897.) The court notes it approved a reasonable hourly rate for Petitioner’s counsel of $850, a rate on the higher end of hourly rates within the community for this type of litigation. While the court acknowledges the skill and experience in which Petitioner’s attorneys litigated this action, the court cannot find “the quality of representation far exceeds the quality of representation that would have been provided by an attorney of comparable skill and experience billing at the hourly rate used in the lodestar calculation.” (EnPalm, LLC v. Teitler, supra, 162 Cal.App.4th at 792.) To hold otherwise under the circumstances here would “result in unfair double counting and be unreasonable.” (Id.)

“[T]he purpose of a fee enhancement is primarily to compensate the attorney for the prevailing party at a rate reflecting the risk of nonpayment in contingency cases as a class.” (Ketchum v. Moses, supra, 24 Cal.4th at p. 1138.) The court is inclined to find a multiplier is appropriate in this matter to reflect the partially contingent nature of the fee arrangement between Petitioner and his attorneys. That said, the court is inclined to award a multiplier in a lesser amount than that requested.

END