Second District, Division 8 Believed Financial Factor Could Be Considered Based on Settlement Agreement, But Did Not Beiieve Ongoing Operational “Cut” Rationale Was Justified.
A redevelopment agency in Rogel v. Lynwood Redevelopment Agency, Case No. B219626 (2d Dist., Div. 8 May 2, 2011) (certified for publication) was exposed to up to $2.7 million in attorneys’ fees requested by plaintiffs prevailing in a public interest suit based upon the private attorney general statute (CCP § 1021.5). However, after the parties settled under an agreement allowing the trial court to consider agency’s financial condition, the lower court cut the $2.7 million lodestar down to $540,000, applying a 0.2 negative multiplier in the process. The reasoning? Agency introduced proof that a fee award in excess of $536,000 would be made at the expense of low and moderate income housing for the City of Lynwood’s residents, with the lower court determining that the money was bettter spent funding ongoing governmental operations rather than paying the prevailing parties in the litigation.
The appellate court, on review, found this constituted an inappropriate reason to cut the lodestar. Although the settlement agreement allowed consideration of agency’s financial situation, it should not be allowed to override the fact prevailing parties were entitled to a lodestar compensating their attorneys for the market value of their work. “In our view, Serrano III [Serrano v. Priest, 20 Cal.3d 25, 49 (1977)], Horsford [v. Board of Trustees of California State University, 132 Cal.App.4th 359, 400-401 (2005], and Schmid [v. Lovette, 154 Cal.App.3d 466, 476 (1984)] preclude a rule which awards less than the fair market value of attorneys’ fees merely because the case was filed against a government agency. We also see a strong public policy against such a rule. Allowing properly documented attorneys’ fees to be cut simply because a losing party is a governmental entity would defeat the purpose of the private attorney general doctrine codified in Code of Civil Procedure section 1021.5 and would also incentivize governmental entities to negligently or deliberately run up a claimant’s attorneys’ fees, without any concern for consequences.” (Slip Opn., p. 15.) Reversed and remanded for reconsideration of a proper fees award.