Heron Bay Homeowners Ass'n v. City of San Leandro

• Decision Date: 12 January 2018
• Docket Number: A143985
• Citation: 19 Cal.App.5th 376,227 Cal.Rptr.3d 885
• Court: California Court of Appeals Court of Appeals
• Parties: HERON BAY HOMEOWNERS ASSOCIATION, Plaintiff and Respondent, v. CITY OF SAN LEANDRO, Respondent, Defendant, and Appellant; Halus Power Systems et al., Real Parties in Interest and Appellants.

19 Cal.App.5th 376

227 Cal.Rptr.3d 885

HERON BAY HOMEOWNERS ASSOCIATION, Plaintiff and Respondent,

v. CITY OF SAN LEANDRO, Respondent, Defendant, and Appellant;Halus Power Systems et al., Real Parties in Interest and Appellants.

A143985

Court of Appeal, First District, Division 4, California.

Filed January 12, 2018

Rogers Joseph O'Donnell, Robert C. Goodman, San Francisco, Ann Maria Blessing, and Nicholas T. Niiro, San Francisco; Law Office of A. Alan Berger, A. Alan Berger, San Jose; Law Offices of Richard M. Pearl, Richard M. Pearl, Berkeley, for Plaintiff and Respondent.

Myers Nave, Richard Delmendo PioRoda and Edward A. Grutzmacher, Oakland, for Defendant, Respondent, and Appellant.

Miller Starr Regalia, Arthur F. Coon and Matthew C. Henderson, Lake Forest, for Real Parties in Interest and Appellants.

Rivera, J.Real parties in interest Halus Power Systems and Louis A. Rigaud individually and dba Halus Power Systems (collectively, Halus Power), appeal from the trial court's post-judgment order granting in part plaintiff Heron Bay Homeowners Association's (Heron Bay HOA's) motion for attorneys' fees pursuant to Code of Civil Procedure ¹ section 1021.5. Defendant City of San Leandro (San Leandro) also appeals and joins in all arguments presented in Halus Power's opening and reply briefs. For reasons stated below, we affirm the order.

I. BACKGROUND

A. Facts

San Leandro is located in the San Francisco Bay. Halus Power owned an approximately five-acre parcel in an industrial zone in San Leandro, where it designed, manufactured, and remanufactured wind turbines used to generate electricity. It proposed to install a single 100-foot-tall wind turbine on its property to generate renewable energy for its business and conduct on-site research and development. To do so, it sought a variance from zoning restrictions on height.

The California Environmental Quality Act ( Pub. Resources Code, § 21000 et seq. ) (CEQA) "requires that a public agency determine whether a project may have significant environmental impacts before it approves the project. [Citations.]" ( Preserve Poway v. City of Poway (2016) 245 Cal.App.4th 560, 574, 199 Cal.Rptr.3d 600 ( Preserve Poway ).) Accordingly, San Leandro conducted a review of the proposed project. The proposed turbine would have been located within the San Francisco Bay Estuary, a major refuge for many species of waterfowl and shorebirds, including four threatened or endangered species. Additionally, the proposed location would have been approximately 500 feet from some of the homes included in the 629–unit Heron Bay residential development.

"Under CEQA, an agency must require an [environmental impact report (EIR) ] for any project that ‘may have a significant effect on the environment,’ unless a categorical exemption applies. [Citations.]" ( Preserve Poway , supra , 245 Cal.App.4th at p. 574, 199 Cal.Rptr.3d 600.) Alternatively, if there is substantial evidence "the project will have a significant environmental effect, but that effect may be reduced to a level of insignificance by implementing mitigation measures, the agency may adopt [a mitigated negative declaration (MND) ] allowing the project to go forward subject to those measures. [Citations.]" ( Id . at p. 575, 199 Cal.Rptr.3d 600.) San Leandro here circulated a notice, attaching an initial study, and advising that it proposed the project proceed through an MND, with two specified mitigation measures.

Various entities and individuals submitted comments in response. The East Bay Regional Park District observed that the proposed location was "sandwiched between two marshes ... harbor[ing] high concentrations of waterbirds, shorebirds, and numerous raptor species," and it objected that San Leandro had not provided the data necessary to determine whether the project would result in significant environmental impacts. The California Department of Fish and Game recommended eight mitigation measures to minimize threats to birds. Counsel representing Heron Bay HOA and its individual members, owners of the 629 units in the residential development, submitted comments, demanding San Leandro prepare an EIR, and expressing concern, among other things, about the project's potential impact on views, birds and their habitats, aircraft navigational radar, noise and vibration levels, and property values. Individual Heron Bay homeowners also submitted comments, raising various issues, including concerns about the potential impact on homeowner property values.

San Leandro did not change course, but, instead, released a revised MND adding eight mitigation or monitoring levels, essentially those recommended by the Department of Fish and Game. Heron Bay HOA and its members submitted further comments in response, again insisting an EIR was required and again expressing concern, among other things, regarding an anticipated resulting decline in property values if the project were completed. San Leandro's Board of Zoning Adjustments ultimately approved the MND, after adding one further mitigation measure, and granted the variance. Heron Bay HOA appealed the board's decision, but the city council affirmed it, approving the project.

B. Procedural History

1. The Merits

Heron Bay HOA filed a petition for a writ of mandate in the trial court seeking an order directing San Leandro to set aside its approvals, and to comply with CEQA by preparing an EIR. The trial court granted the petition, finding that San Leandro failed to comply with CEQA.² Under CEQA, the court observed, an agency may proceed "by way of a MND only if there is no substantial evidence before the agency that the project as revised may have a significant effect on the environment. [Citations.]" " ‘Whenever there is substantial evidence supporting a fair argument that a proposed project may have a significant effect on the environment, [the court noted,] an EIR normally is required. .... "The fair argument standard is a ‘low threshold’ test for requiring the preparation of an EIR," ' " and there is " ‘ "a preference for resolving doubts in favor of environmental review ." ’ " (Quoting Citizens for Responsible & Open Government v. City of Grand Terrace (2008) 160 Cal.App.4th 1323, 1331–1332, 73 Cal.Rptr.3d 202.) Noting that most Heron Bay residents would not be able to see the proposed turbine, however, and that " ‘obstruction of a few private views in a project's immediate vicinity [was] not generally regarded as a significant environmental impact[,] [citation],’ " the trial court did "not find substantial evidence supporting a fair argument that the project as mitigated [might] have a significant effect on private aesthetics." The trial court found, however, that there was "substantial evidence supporting a fair argument that the project as mitigated [would] have a significant effect on biological resources" (specifically birds), "on noise," and "on aesthetic resources" (i.e., on the public's views "from the anticipated Bay Trail"). In light of these findings, the trial court (1) directed San Leandro to set aside its approvals, and (2) directed San Leandro and Halus Power not to proceed with work on the project unless and until San Leandro had approved a CEQA-compliant EIR. The court entered judgment in favor of Heron Bay HOA. Halus Power and San Leandro did not challenge the ruling or judgment on appeal. San Leandro subsequently filed a return to the writ of mandate, advising the trial court that it had adopted a resolution setting aside its approval of the MND and the variance, and its affirmance of the Board of Zoning Adjustment's decision. Halus Power did not proceed with the project.

2. Attorneys' Fees

Following entry of judgment, Heron Bay HOA moved the trial court for an award of attorneys' fees under section 1021.5. The fees motion advised that the Law Offices of A. Alan Berger (the Berger law firm) represented Heron Bay HOA in the administrative proceedings, while the law firm of Rogers Joseph O'Donnell (the RJO law firm) represented it in the CEQA litigation before the trial court. According to the moving papers, Heron Bay HOA members, through their membership dues, paid the Berger law firm $84,720.00. Additionally, under a partial contingency agreement, they paid the RJO law firm $64,638.00, and the firm agreed to seek reimbursement for the remainder of its fees ($166,981.50) as part of an eventual attorney fee award.³ The fees' motion requested a 2.0 multiplier for the latter amount ($166,981.50), to compensate the RJO law firm for the contingency-related risk. In total, therefore, Heron Bay HOA sought a fee award of $483,321.00 (i.e., $166,981.50 (contingency amount) x 2.0 = $333,963.00 + $64,638.00 (paid to the RJO law firm) and $84,720.00 (paid to the Berger law firm) = $483,321.00).

Halus Power and San Leandro filed a joint opposition to the fees motion. They contended: Heron Bay HOA did not have legal authority to prosecute a case in the public interest; Heron Bay HOA was motivated exclusively by a desire to protect its members from the significant anticipated decline in their property values if the turbine were constructed; and this pecuniary interest clearly outweighed the fees Heron Bay HOA had paid, negating its right to recovery under section 1021.5.

Following a hearing, the trial court issued an order granting the fees motion in part. The court concluded "[t]he lawsuit conferred a significant benefit on the public." But it also found the Heron Bay HOA "had a significant financial incentive to initiate the litigation" because it feared installation of the proposed turbine would reduce members' property values. After discounting the suggestion of Heron Bay HOA's president, based on unspecified "studies," that the total reduction could be between $30 million and $150 million, the trial court acknowledged that any valuation of real estate involved uncertainty, and that the project's impact here would be distributed unevenly among Heron Bay HOA members, "with properties closer to the turbine...