Tuesday, May 3, 2011
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Judge Can’t Give City Break on Legal Fees, C.A. Rules
By SHERRI M. OKAMOTO, Staff Writer
This district’s Court of Appeal yesterday ruled that properly documented attorney fees cannot be cut simply because a losing party is a governmental entity.
Div. Eight explained that Los Angeles Superior Court Judge Kevin C. Brazile’s determination that “the money should be spent in Lynwood and not on the lawyers” was not an appropriate factor upon which to reduce the fee award to the attorneys who represented residents of a mobile home park in a lawsuit against the city.
The residents sued the city in 2004, alleging that a proposed Lynwood Redevelopment Agency plan to change the mobile home park where they lived into town homes would result in the loss of low income rental housing units and would force them out of the city because it otherwise lacked housing they could afford.
During the course of litigation, the agency repeatedly failed to respond to discovery and at various times claimed it could not locate documents concerning budgets, general ledgers, bank accounts, and audit reports. Because of the agency’s deficient record-keeping, the residents’ lawyers were sometimes required to recreate records the agency should have routinely prepared, maintained and produced, they said.
The trial court imposed issue and evidence sanctions against the agency, as well as monetary penalties, in December 2008.
Shortly before trial was set to begin in 2009, the agency and the residents entered into a settlement which provided that the residents could “recover reasonable attorneys’ fees and costs” but that the agency was not precluded “from raising its financial condition (including the financial obligations assumed by the [agency] in connection with this Settlement Agreement) in response to any such effort to recover [reasonable attorneys’ fees and costs].”
The residents thereafter moved for an award of fees and costs pursuant to Code of Civil Procedure Sec.1021.5, supported by a series of attorneys’ declarations and accompanying billing documentation. The aggregate sum requested or “lodestar based on the hours worked and applicable hourly rates” totaled approximately $2.7 million.
The agency opposed the motion, contending the most it could pay in attorneys’ fees without harming its affordable housing mission—including its obligations under the settlement—was roughly $160,000.
Brazile ruled that the residents were the prevailing parties in the dispute, and that the litigation had “conferred a significant public benefit” in that the settlement would result in “the development of almost 100 new affordable housing units.” He also praised counsel for the residents as having done “a fantastic job.”
The judge, however, applied a negative multiplier of 0.2 to the lodestar requested by the residents, citing his concern that “the requested attorneys’ fees would significantly reduce the amount that the [LRDA] has to provide additional low-income housing.”
He explained that “I just think that money is better directed to...Lynwood in helping those people with the housing.”
Writing for the appellate court, Presiding Justice Tricia A. Bigelow said this was an abuse of discretion. She explained that “some identified, legally justifiable circumstance must exist in support for a decision to diverge from the lodestar.”
The justice noted the absence of any case precedent which “affirmed a negative multiplier attorneys’ fees award against a governmental agency which was based on the express factor that it would be ‘better’ for a governmental entity not to pay the lodestar so that the entity’s ability to fund its ongoing operations are not be affected.”
She said this was “not surprising given that the funding of a governmental entity’s ongoing operations has little, if any, bearing on the ‘fair market value’ of attorneys’ fees for the legal work performed by lawyers who represented a prevailing party in an action against that governmental entity.”
Even though the residents’ attorneys provided their services on a pro bono basis, Bigelow said this fact did not justify a reduction in their fees, emphasizing that the “fair market value” standard is “the controlling factor” in determining a fee award.
Joined by Justices Laurence D. Rubin and Madeleine Flier, Bigelow directed the matter be remanded for the trial court to determine if the agency’s financial condition would preclude it from paying the lodestar fee award, and then to consider this fact “one of several factors” in fixing the amount of fees.
The attorneys on the case were Richard A. Rothschild of the Western Center on Law and Poverty, and Shashi Hanuman and Lisa R. Jaskol of Public Counsel, for the residents and Royce K. Jones and Donald P. Johnson of Kane, Ballmer & Berkman for the agency.
The case is Rogel v. Lynwood Redevelopment Agency, 11 S.O.S. 2225.
Copyright 2011, Metropolitan News Company