A California appeals panel agreed the city of Huntington Beach owes more than $3.5 million in legal fees to an advocacy group that won a lawsuit accusing the city of failing to properly account for affordable housing in future development plans, even though the city asserted the group's lawsuit was motivated by the desire to extract taxpayer-funded legal fees.
The Kennedy Commission sued the city for allegedly violating the California Housing Element Law when it amended its 2013-2021 citywide housing element plan in 2015 to reduce population density in the Beach Edinger Corridors Specific Plan, effectively eliminating the potential to build low-income housing in the community.
Los Angeles County Superior County Court Judge Michael Stern ruled in favor of the city, finding the amended Beach Edinger plan was void because it was inconsistent with the citywide plan, but refused to order the city had to implement the full plan as written. He then ordered the city to pay $648,512 in legal fees with a 1.4 multiplier.
The city appealed to the California Fourth District Appellate Court, which reversed the petition because Huntington Beach is a charter city, and such units were at the time exempted from consistent housing element requirements. The panel remanded that version of the complaint so the Commission could pursue portions it had voluntarily dismissed. The city appealed the attorney fees award, which the panel reversed because the Commission was no longer the prevailing party, but noted the potential argument for entitlement to fees under a catalyst theory.
The Commission amended its petition, and in February 2020 the city adopted further housing plan amendments, which the state Department of Housing and Community Development approved, as it set aside units for low-income housing in other parts of the city to meet its Regional Housing Needs Allocation requirement. At that time, the Commission and the city agreed to the dismissal of the amended complaint but agreed the Commission could still pursue attorney fees.
The Commission formally requested those fees in January 2021, and the trial court awarded $2.5 million, again with a 1.4 multiplier, for a total of $3.53 million. The city appealed that ruling, saying the judge was wrong to apply the catalyst theory and to find the Commission’s lawsuit met statutory requirements while also insisting the fees weren’t reasonable.
Justice Douglas Miller wrote the panel’s opinion on that appeal, issued May 11; Justices Carol Codrington and Richard Fields concurred.
According to the panel, the Commission’s reading of the catalyst theory is that its lawsuit and change to the state law were the reasons the city ultimately changed its plan to include adequate affordable housing. The city argued the Commission only sought to void the amended Beach Edigner plan, which still has not been voided, and as such “Kennedy’s lawsuit was not the catalyst for the determination by the city to adopt the” revised citywide plan in compliance with state law, Miller wrote.
The panel said a plaintiff need not show its lawsuit was the sole cause of a defendant’s acquiescence, but must prove it the litigation to be a substantial factor. That is the conclusion Judge Stern reached, Miller wrote, which makes sense as “Kennedy achieved its primary objective of the city complying with their RHNA.”
Miller further noted “Kennedy’s attorneys helped with the passage of (Senate Bill) 1333, which eliminated the exemption for charter cities. Kennedy continued with its lawsuit in order to ensure that the city met its RHNA requirement without delay” and voluntarily dismissed the amended complaint once the city became compliant with state law.
While the panel agreed the Commission didn’t sue in order to bring about the changes SB 1333 enacted, it explained the legal barrier for the catalyst theory was only to show litigation was part of the motivation for the city to provide the primary relief the litigation pursued.
The panel further determined the Commission’s efforts weren’t frivolous, unreasonable or groundless and said Judge Stern had reasonable grounds to agree the Commission made sufficient effort to settle the dispute before suing.
Huntington Beach failed to convince the panel the Commission was only suing to obtain high legal fees and that the litigation yielded no public benefit. The panel also rejected arguments the fee award was unreasonable and said the multiplier was not an abuse of judicial discretion.
Huntington Beach is represented by City Attorney Michael Gates, Chief Assistant Michael Vigliotta and deputies Nadin Said and Lauren Rose.
The Kennedy Commission is represented by Community Legal Aid SoCal, the Public Interest Law Project and Public Law Center.