By Glen C. Hansen
Only in California can you (1) pay taxes to create and support an unconstitutional agency, (2) pay taxes so that the unconstitutional agency defends itself, (3) win a ruling on the unconstitutionality, (4) force a legislative change, and (5) retain the privilege of paying for your own attorneys fees. Who says government is broken?
A lawsuit by a nonprofit corporation that challenged orders by the California Coastal Commission (“Commission”) forced the Legislature to change an unconstitutional appointment and removal process for members of the Commission. But that is not the relief that the nonprofit ultimately wanted in the case. When the case was over, the nonprofit still had to comply with the Commission’s orders. As a result, the Court of Appeal for the Third Appellate District held in Marine Forests Society v. California Coastal Commission (No. C052872, March 4, 2008) 2008 Cal.App.LEXIS 309, held that the nonprofit was not entitled to attorneys fees under Code of Civil Procedure section 1021.5.
The Marine Forests Society is a nonprofit corporation that developed experimental research programs for the creation of marine forests to replace lost marine habitat. After it planted an artificial reef near Newport Harbor in Orange County, California, the Commission issued cease and desist orders to remove the reef. Marine Forests sued. Among other things, Marine Forests argued that the Commission should be enjoined from issuing cease and desist orders because the Commission was made up of members who were appointed and removed in a manner that violated the separation of powers clause of the California Constitution. The trial court and the Court of Appeal agreed. The Legislature then statutorily changed the appointment and removal procedures in order to save the Commission.
The trial court then awarded Marine Forests its section 1021.5 attorney fees. But the Court of Appeal reversed on the ground that the public’s interest in the resolution of the separation of powers issue was incidental to Marine Forests’ primary objective of preventing the Commission from ordering it to remove its artificial reef or pay monetary penalties. Marine Forests failed to meet its burden under section 1021.5 of proving that the financial burden of pursuing the litigation outweighed its personal stake in maintaining its artificial reef and avoiding penalties.
The Supreme Court then granted review of the Court of Appeal’s decision on the separation of powers issue. The Supreme Court held that Marine Forests was not entitled to the injunctive relief it sought against the Commission because the new statutory changes governing the composition of the Commission were constitutional, and because the Commission’s actions in the past were valid under the de facto officer doctrine.
After the case was returned to the trial court, Marine Forests was again awarded its section 1021.5 attorneys fees, this time under the “catalyst” theory. The trial court found that the lawsuit triggered, and was the catalyst for, the legislative amendments. Recently, the Court of Appeal reversed the attorney fee award, again.
The Court of Appeal explained that Marine Forests no longer was the prevailing party because it did not ultimately achieve judicially sanctioned relief after the Supreme Court decision. In addition, Marine Forests was not entitled to attorneys fees under the catalyst theory since the Commission did not change its behavior substantially because of, and in the manner sought by, the litigation. The catalyst theory requires that the plaintiff establish “that (1) the lawsuit was a catalyst motivating the defendants to provide the primary relief sought; (2) that the lawsuit had merit and achieved its catalytic effect by threat of victory, not by dint of nuisance and threat of expense, …and (3) that the plaintiffs reasonably attempted to settle the litigation prior to filing the lawsuit.” In this case, Marine Forests failed to meet this criteria. The “primary relief” or “primary goal” of the litigation was to preserve the artificial reef, and to prevent its removal, not to have a statute regarding the Commission declared unconstitutional or to change the composition of the Commission. “In sum, Marine Forests failed to establish that defendant provided the primary relief sought in its litigation.”
Collectively, the Marine Forests decisions demonstrate that, in order to recover attorneys fees under section 1021.5, a plaintiff must either (1) ultimately achieve judicially sanctioned relief and establish that the financial burden of pursuing the litigation outweighed the plaintiff’s personal financial stake in the litigation; or (2) demonstrate that the defendant provided the “primary relief” or “primary objective” that the plaintiff sought in the litigation. While its lawsuit forced the Legislature to correct an unconstitutional governmental structure and change the makeup of a state commission, Marine Forests nevertheless failed to satisfy this criteria, remaining liable for its attorneys fees.
Glen Hansen is a senior associate with Abbott & Kindermann, LLP. For questions relating to this article or any other California land use, environmental and planning issues contact Abbott & Kindermann, LLP at (916) 456-9595.
The information presented in this article should not be construed to be formal legal advice by Abbott & Kindermann, LLP, nor the formation of a lawyer/client relationship. Because of the changing nature of this area of the law and the importance of individual facts, readers are encouraged to seek independent counsel for advice regarding their individual legal issues.