In First Impression Issue, Decides that Immediate, Direct Financial Interest Not Required, With Potential Impact on Competition in a Mall Project Enough.
The Fifth District in LandValue 77, LLC v. Bd. of Trustees of Calif. State Univ., Case No. F063653 (5th Dist. Jan. 14, 2014) (unpublished) affirmed a lower court’s determination that Plaintiffs had at least an indirect financial incentive in delaying or slowing the Campus Pointe project on the CSUF campus based on one of the LLC member’s management interest in the Sierra Vista Mall in Clovis, given that competition from the proposed project might mean a competitive impact on a theater in the Clovis mall. Plaintiffs, after obtaining a voiding of a theater sub-sublease based on a CSUF Board trustee’s conflict of interest and after obtaining some re-dos based on CEQA (in a prior published appellate opinion), sought to recover more than $700,000 in attorney’s fees under California’s private attorney general statute, CCP § 1021.5.
Plaintiffs lost at both the trial and appellate levels for failing to meet their burden of showing that a financial interest in the Sierra Vista Mall did not outstrip the amount of attorney’s fees expended in a contentious fight with CSUF as well as a local developer.
Although rather factually based, the interesting—and in fact, first impression—determination on appeal was the idea that the financial interest element can be established by something other than immediate and direct benefits on the benefits side of the benefits/costs equation mandated under the California Supreme Court’s Whitley decision [one of our Leading Cases, #14]. Even though finding no high state court authority on the issue, the Fifth District found the wording of section 1021.5 was broad enough to encompass more non-immediate, indirect benefits, somewhat departing from other published cases which had suggested more remote benefits should not be considered. “Because courts are capable of estimating the value of settlements with contingencies, nonmonetary consideration, or both, we conclude, in the context of motions for attorney fees under section 1021.5, they also are capable of estimating the monetary value of benefits obtained in litigation that are not immediate and direct. Therefore, we will not adopt a bright-line rule of law that precludes the trial court from considering and estimating the monetary value of benefits that are not immediate and direct.” (Slip Opn., p. 27.)
BLOG OBSERVATION—Co-contributor Mike was involved with briefing by Appellants along with some great colleagues, David Doyle of Doyle & Schallert, Lee Smith of Weintraub Tobin, and Steve Vartabedian of Dowling Aaron. Mr. Vartabedian was a former Fifth District jurist who skillfully argued the case before the appellate panel. Co-contributor Mike at least thinks that the discussion of non-immediate, indirect benefits should have been published based on the court’s rejection of a “bright-line rule of law.”