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Court of Appeal:
Denying Out-of-Area Market Rates for Attorney Fees Was Error
Opinion Calls for Awards of Higher Amounts Where Qualified Local Counsel Is Unavailable
By a MetNews Staff Writer
The Third District Court of Appeal has held that where good faith efforts were made to find local counsel and there was no evidence that the opposing party had, in fact, offered to resolve an issue underlying litigation before settlement, a trial court erred in declining to apply out-of-area market rates in determining the amount of attorney fees, reducing a fee award by 30 percent, and declining to include fees for litigating fees and costs.
Justice Louis Mauro wrote the unpublished opinion, filed Monday, reversing in part an order by Butte Superior Court Judge Stephen E. Benson. Presiding Justice Laurie M. Earl and Justice Stacy Boulware Eurie joined in the opinion.
To accomplish the expansion of a landfill, the Butte County Department of Public Works granted California Open Lands a conservation easement as required under a permit issued by the United States Army Corps of Engineers. Open Lands agreed to keep a portion of the property predominately in its natural condition in perpetuity.
The easement identified an approximately three-acre parcel containing a stormwater detention basin, wetlands, and buffer zones as “the preserve.” A term of the easement prohibited the parties from engaging in certain delineated activities that would undermine the conservation purpose of the easement.
Provision of Easement
The easement provided that in the event of a violation, after written notice to Public Works demanding corrective action, Open Lands was entitled to bring suit to enforce the easement and require restoration of the preserve. The easement provided for costs and attorney fees for the prevailing party in such an action to enforce.
On June 19, 2020, Open Lands filed a complaint for declaratory and injunctive relief against Public Works, seeking a declaration that the defendant violated the easement through certain activities such as excavation of soil, destruction of vegetation, use of motorized equipment, discharge of methane gases.
Public Works filed a cross-complaint for declaratory relief, asserting that it was permitted to conduct certain maintenance activities objected to by Open Lands in the stormwater basin of the preserve.
Open Land was represented in the matter by Andrew Lloyd Packer and William N. Carlon of the Law Offices of Andrew Lloyd Packer, a public interest, environmental and consumer advocacy firm located in Petaluma.
In 2022, the parties settled the matter and Open Lands moved for an award of $766,078.00 in attorney fees, reflecting the market rates for attorneys in the San Francisco Bay Area, and $59,325 in costs. Public Works opposed the motion.
Benson’s Order
In the order awarding reduced fees, Benson explained that “this is not a complex Clean Water Act case, but at its core is a breach of contract case.” Under those circumstances, he declined to exercise discretion in applying attorney fees at the market rates for San Francisco-area attorneys in an action in Butte County.
He wrote: “While it is true that environmental issues overlay context, that does not change the fact that legal analysis boiled down to contractual interpretation and questions of breach. Therefore, the Court finds that specialized expertise requiring higher hourly rates was not required nor necessary. Therefore, the Court is exercising its discretion in declining to apply ‘out of town rates. ’”
Benson set the rates at $350 per hour for lead counsel, and $200 per hour for associate counsel.
He found that the circumstances of the case supported diminution of the fees and costs sought by Open Lands and reduced the final attorney fee award by 30 percent, finding that Public Works had offered to restore the land before litigation began.
Benson explained:
“Where the ratio between public benefits and expected litigant benefits is relatively low so must be the ratio between expected litigant benefits and litigant costs in order to justify a fee award….Here, it cannot be said that the litigation furthered an achievement of the benefit of restoration since it was available pre-litigation.”
He found that litigation costs must be directly related to the litigation and that consulting expert fees and Open Land staff hours were not “litigation costs” and not recoverable.
The judge did not award attorney fees for the hours spent litigating the issue of fees and costs.
Market Rate
Mauro recited that “[i]n determining a reasonable attorney’s fee award, a trial court generally begins by calculating a lodestar figure based on the hours reasonably spent multiplied by the reasonable prevailing hourly rate for private attorneys performing comparable legal services in the community on a noncontingency basis.”
However, he noted that out-of-market rates may be the appropriate standard in some cases. Mauro wrote:
“Although the general rule is that the reasonable hourly rate is the prevailing rate for similar work in the community where the court is located, where local counsel was unavailable or hiring local counsel was impracticable, a trial court must consider out-of- area market rates in calculating the lodestar amount.”
Mauro said that Open Lands Executive Director Holly Nielsen established that she could not find local counsel to represent the plaintiff in the suit and that Andrew Packard was the only law firm she could find that was willing to assume the role of lead counsel on a contingency basis.”
The justice was not persuaded by arguments that Open Lands did not need to find counsel with expertise in conservation easements or the Clean Water Act, as the organization chose to do. Mauro wrote:
“That the Butte County action may have turned out to be less complex than Open Lands had anticipated was not necessarily a reason to reject out-of-area rates.”
The case was remanded the matter to the trial court to allow the court to “fully consider the applicability of out-of-area market rates by determining whether qualified local counsel was unavailable to represent Open Lands.”
Reduced Fee Award
Turning to the trial court’s reduction of the fee award by 30 percent, Mauro found that Benson justified this reduction by a factual finding unsupported by the evidence. He explained:
“The trial court reduced the fee award by 30 percent based on its finding that before Open Lands filed the Butte County action, Public Works offered to restore the Preserve in a manner similar to the restoration provided in the settlement agreement….However, no substantial evidence supports the trial court’s finding that Public Works made a pre-lawsuit offer to restore the Preserve in the manner provided in the settlement agreement.”
He found that “none of the declarations presented by Public Works indicate that Public Works communicated” any of its specific proposals for restoration “to Open Lands before Open Lands filed its lawsuit.”
Litigation of Fees
Mauro took issue with Benson’s decision not to award any attorney fees for work in support of Open Lands’ motion for fees and costs. He said:
“Absent circumstances rendering the award unjust, an attorney’s fee award should include compensation for all hours reasonably spent, including time spent litigating a motion for attorney’s fees.”
Mauro remarked:
“The trial court did not state why it denied an award of attorney’s fees for the reply papers and we do not discern a basis for the denial.”
Experts, Staff
Open Lands sought an award for an expert witness fees relating to the deposition of an expert designated by Public Works and for an agency that provided consulting services to Open Lands.
Mauro wrote:
“[T]he fees of experts not ordered by the trial court or agreed to by contract are not allowable unless otherwise expressly authorized by law.”
Similarly, Mauro found that Open Lands’ request for an award of $35,290 for the time spent by Nielsen in enforcing the easement to be without merit. In finding no abuse in discretion by the trial court in denying such costs, Mauro said:
“None of the authorities cited by Open Lands hold that charges for staff time are recoverable as costs.”
The case is California Open Lands v. Butte County Department of Public Works, C097297.
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