Heron Bay Homeowners Association v. City of San Leandro, Halus Power Systems, Real Party in Interest

Real parties in interest Halus Power Systems and Louis A. Rigaud individually

and dba Halus Power Systems (collectively, Halus Power), appeal from the trial court’s

post-judgment order granting in part plaintiff Heron Bay Homeowners Association’s

(Heron Bay HOA’s) motion for attorneys’ fees pursuant to Code of Civil Procedure1

section 1021.5. Defendant City of San Leandro (San Leandro) also appeals and joins in

all arguments presented in Halus Power’s opening and reply briefs. For reasons stated

below, we affirm the order.



1

All undesignated statutory references below are to the Code of Civil Procedure.

2

I. BACKGROUND

A. Facts

San Leandro is located in the San Francisco Bay. Halus Power owned an

approximately five-acre parcel in an industrial zone in San Leandro, where it designed,

manufactured, and remanufactured wind turbines used to generate electricity. It proposed

to install a single 100-foot-tall wind turbine on its property to generate renewable energy

for its business and conduct on-site research and development. To do so, it sought a

variance from zoning restrictions on height.

The California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.)

(CEQA) “requires that a public agency determine whether a project may have significant

environmental impacts before it approves the project. [Citations.]” (Preserve Poway v.

City of Poway (2016) 245 Cal.App.4th 560, 574 (Preserve Poway).) Accordingly, San

Leandro conducted a review of the proposed project. The proposed turbine would have

been located within the San Francisco Bay Estuary, a major refuge for many species of

waterfowl and shorebirds, including four threatened or endangered species. Additionally,

the proposed location would have been approximately 500 feet from some of the homes

included in the 629-unit Heron Bay residential development.

“Under CEQA, an agency must require an [environmental impact report (EIR)] for

any project that ‘may have a significant effect on the environment,’ unless a categorical

exemption applies. [Citations.]” (Preserve Poway, supra, 245 Cal.App.4th at p. 574.)

Alternatively, if there is substantial evidence “the project will have a significant

environmental effect, but that effect may be reduced to a level of insignificance by

implementing mitigation measures, the agency may adopt [a mitigated negative

declaration (MND)] allowing the project to go forward subject to those measures.

[Citations.]” (Id. at p. 575.) San Leandro here circulated a notice, attaching an initial

study, and advising that it proposed the project proceed through an MND, with two

specified mitigation measures.

3

Various entities and individuals submitted comments in response. The East Bay

Regional Park District observed that the proposed location was “sandwiched between two

marshes . . . harbor[ing] high concentrations of waterbirds, shorebirds, and numerous

raptor species,” and it objected that San Leandro had not provided the data necessary to

determine whether the project would result in significant environmental impacts. The

California Department of Fish and Game recommended eight mitigation measures to

minimize threats to birds. Counsel representing Heron Bay HOA and its individual

members, owners of the 629 units in the residential development, submitted comments,

demanding San Leandro prepare an EIR, and expressing concern, among other things,

about the project’s potential impact on views, birds and their habitats, aircraft

navigational radar, noise and vibration levels, and property values. Individual Heron Bay

homeowners also submitted comments, raising various issues, including concerns about

the potential impact on homeowner property values.

San Leandro did not change course, but, instead, released a revised MND adding

eight mitigation or monitoring levels, essentially those recommended by the Department

of Fish and Game. Heron Bay HOA and its members submitted further comments in

response, again insisting an EIR was required and again expressing concern, among other

things, regarding an anticipated resulting decline in property values if the project were

completed. San Leandro’s Board of Zoning Adjustments ultimately approved the MND,

after adding one further mitigation measure, and granted the variance. Heron Bay HOA

appealed the board’s decision, but the city council affirmed it, approving the project.

B. Procedural History

1. The Merits

Heron Bay HOA filed a petition for a writ of mandate in the trial court seeking an

order directing San Leandro to set aside its approvals, and to comply with CEQA by

preparing an EIR. The trial court granted the petition, finding that San Leandro failed to

4

comply with CEQA.2

Under CEQA, the court observed, an agency may proceed “by way

of a MND only if there is no substantial evidence before the agency that the project as

revised may have a significant effect on the environment. [Citations.]” “ ‘Whenever

there is substantial evidence supporting a fair argument that a proposed project may

have a significant effect on the environment, [the court noted,] an EIR normally is

required. . . . . “The fair argument standard is a ‘low threshold’ test for requiring the

preparation of an EIR,” ’ ” and there is “ ‘ “a preference for resolving doubts in favor of

environmental review.” ’ ” (Quoting Citizens for Responsible & Open Government v.

City of Grand Terrace (2008) 160 Cal.App.4th 1323, 1331-1332.) Noting that most

Heron Bay residents would not be able to see the proposed turbine, however, and that

“ ‘obstruction of a few private views in a project’s immediate vicinity [was] not generally

regarded as a significant environmental impact[,] [citation],’ ” the trial court did “not find

substantial evidence supporting a fair argument that the project as mitigated [might] have

a significant effect on private aesthetics.” The trial court found, however, that there was

“substantial evidence supporting a fair argument that the project as mitigated [would]

have a significant effect on biological resources” (specifically birds), “on noise,” and “on

aesthetic resources” (i.e., on the public’s views “from the anticipated Bay Trail”). In

light of these findings, the trial court (1) directed San Leandro to set aside its approvals,

and (2) directed San Leandro and Halus Power not to proceed with work on the project

unless and until San Leandro had approved a CEQA-compliant EIR. The court entered

judgment in favor of Heron Bay HOA. Halus Power and San Leandro did not challenge

the ruling or judgment on appeal. San Leandro subsequently filed a return to the writ of

mandate, advising the trial court that it had adopted a resolution setting aside its approval



2

The trial court also found that San Leandro failed to comply with its own zoning

code in granting the variance.

5

of the MND and the variance, and its affirmance of the Board of Zoning Adjustment’s

decision. Halus Power did not proceed with the project.

2. Attorneys’ Fees

Following entry of judgment, Heron Bay HOA moved the trial court for an award

of attorneys’ fees under section 1021.5. The fees motion advised that the Law Offices of

A. Alan Berger (the Berger law firm) represented Heron Bay HOA in the administrative

proceedings, while the law firm of Rogers Joseph O’Donnell (the RJO law firm)

represented it in the CEQA litigation before the trial court. According to the moving

papers, Heron Bay HOA members, through their membership dues, paid the Berger law

firm $84,720.00. Additionally, under a partial contingency agreement, they paid the RJO

law firm $64,638.00, and the firm agreed to seek reimbursement for the remainder of its

fees ($166,981.50) as part of an eventual attorney fee award.

3

The fees’ motion

requested a 2.0 multiplier for the latter amount ($166,981.50), to compensate the RJO

law firm for the contingency-related risk. In total, therefore, Heron Bay HOA sought a

fee award of $483,321.00 (i.e., $166,981.50 (contingency amount) x 2.0 = $333,963.00 +

$64,638.00 (paid to the RJO law firm) and $84,720.00 (paid to the Berger law firm) =

$483,321.00).

Halus Power and San Leandro filed a joint opposition to the fees motion. They

contended: Heron Bay HOA did not have legal authority to prosecute a case in the public

interest; Heron Bay HOA was motivated exclusively by a desire to protect its members

from the significant anticipated decline in their property values if the turbine were

constructed; and this pecuniary interest clearly outweighed the fees Heron Bay HOA had

paid, negating its right to recovery under section 1021.5.



3

Altogether, Heron Bay HOA advised, it paid more than $149,000 out-of-pocket

in attorneys’ fees.

6

Following a hearing, the trial court issued an order granting the fees motion in

part. The court concluded “[t]he lawsuit conferred a significant benefit on the public.”

But it also found the Heron Bay HOA “had a significant financial incentive to initiate the

litigation” because it feared installation of the proposed turbine would reduce members’

property values. After discounting the suggestion of Heron Bay HOA’s president, based

on unspecified “studies,” that the total reduction could be between $30 million and $150

million, the trial court acknowledged that any valuation of real estate involved

uncertainty, and that the project’s impact here would be distributed unevenly among

Heron Bay HOA members, “with properties closer to the turbine and with a better view

of the turbine suffering larger declines in value.”

Nonetheless, the court determined it was possible to value the projected loss that

Heron Bay HOA and its members feared. Attempting to do so, the court “[a]ssum[ed] a

rational fear of an average 2.5% drop in value” for all of the 629 residences. (Italics

added.) Crediting evidence that each residence on average was worth $500,000, the court

concluded this “suggest[ed]” Heron Bay HOA and its members “sought to avoid a

property loss in the neighborhood of $[7.8 million].” (Italics added.) Finding that

“experienced CEQA counsel would have thought there was a 75% probability of success

when the litigation commenced,” the trial court then discounted its $7.8 million estimate

by the corresponding 25 percent risk of a loss, and concluded the “probable monetary

value of the benefit of the litigation was in the neighborhood of $[5.8 million]” (italics

added) (or $9,000.00 per residence). In comparison, the trial court judge found, based on

knowledge of the case, including the “procedural, factual, and legal complexity,” and

based on fee awards entered in other CEQA cases the same judge had handled, Heron

Bay HOA could have reasonably estimated, “[w]hen deciding to initiate the lawsuit,” that

its fees would total about $240,000.00.4





4

Although the trial court’s order gave the amount as $232,500.00, the

accompanying calculations indicate the court intended the number to read “$242,000.00,”

7

Citing the Supreme Court’s decision in Conservatorship of Whitley (2010)

50 Cal.4th 1206 (Whitley), the court next considered the mechanism for paying counsel.

In Whitley, the Supreme Court observed that section 1021.5 was intended to address “the

problem of affordability” in public interest litigation where “litigants will be unable either

to afford to pay an attorney hourly fees or to entice an attorney to accept the case with the

prospect of contingency fees.” (Id. at p. 1219.) In light of this statutory purpose, the trial

court concluded, it was necessary to consider here “whether anticipated benefits from the

litigation [could] be used to pay counsel,” i.e., “whether any financial benefit [was]

immediately bankable.” The trial court reasoned, “A plaintiff who expects a lawsuit to

result in an immediate financial gain can finance the lawsuit through a contingent fee

agreement because if the lawsuit is successful then the plaintiff can pay her or his lawyers

from the plaintiff’s immediately bankable financial recovery. In contrast, a plaintiff

who expects a lawsuit to result in financial benefits that accrue over a period of years

may have more difficulty financing the lawsuit through a contingent fee agreement

because . . . the plaintiff may have difficulty retaining counsel who agree to be paid over

that period of years. Similarly, a plaintiff who expects a lawsuit to result in avoiding a

financial loss may have more difficulty financing the lawsuit because the plaintiff would

still need to pay the lawyer out of his or her now [un]diminished assets.”

Weighing these anticipated benefits and costs, the trial court concluded it was “a

very close call” whether Heron Bay HOA was entitled to a fee award. If “required to

make an all or nothing decision on fees,” the trial court observed, it would deny the

motion. But, the court interpreted the relevant case law as allowing it the discretion

instead to apportion (or adjust) the amount of the award to account for Heron Bay HOA’s

“significant financial incentive” to initiate litigation. “[W]here a party pursues litigation



which it rounded down to the nearest thousand. This is evident because, after stating the

total estimated fees, the order estimated costs would likely total $10,000, and it

concluded fees and costs together would total $252,500, which it “rounded to $250,000.”

8

for both its private pecuniary interest and in the public interest,” it concluded, a court

could award fees to alleviate “the financial burden of bringing the lawsuit,” while

deducting “ ‘an amount reflecting the fee that plaintiffs could reasonably have been

expected to bear themselves.’ ” (Quoting Woodland Hills Residents Assn., Inc. v. City

Council (1979) 23 Cal.3d 917, 942, fn. 13 (Woodland Hills).)

Applying these conclusions, the trial court granted Heron Bay HOA’s fees motion

in part. Concluding Heron Bay HOA and its members were sufficiently motivated to

retain counsel in the administrative proceedings by their concern completion of the

project would reduce their property values collectively by $7.8 million, the trial court

apportioned responsibility for the Berger law firm’s fees ($84,720.00) entirely to Heron

Bay HOA, denying the latter’s motion insofar as it applied to those fees. The same

concerns motivated Heron Bay HOA to retain the RJO law firm to initiate the CEQA

litigation, the court concluded; but that action involved “different risks and a much larger

financial commitment.” The court, therefore, apportioned responsibility for the RJO law

firm’s reasonable fees ($231,619.50) equally between Heron Bay HOA, on the one hand,

and Halus Power and San Leandro, on the other hand. Finding the RJO law firm was

entitled to a multiplier of 1.2 for its time, because of the risk it assumed under the partial

contingency fee agreement (i.e., $231,619.50 x 1.2 = $277,943.40), the court ordered

Halus Power and San Leandro to together pay the RJO law firm (1) $138,971.70 for its

work on the CEQA litigation (i.e., $277,943.40 x 0.5), and (2) $42,500.00 for its work on

the fees motion (an amount the court calculated by applying a reasonable attorney hourly

rate of $425 per hour multiplied by 100 hours),

5

or a total of $181,471.70.

Halus Power and San Leandro filed a timely appeal of this ruling.



5

The RJO law firm had sought $77,769.50 for its work on the fee motion, which

represented 180.3 attorney hours multiplied by each attorney’s respective hourly rate.

The attorneys’ hourly rates ranged between $185 and $695 per hour, with most hours

billed at $425 per hour.

9

II. DISCUSSION

A. General Legal Principles

“ ‘[T]he Legislature adopted section 1021.5 as a codification of the “private

attorney general” attorney fee doctrine that had been developed in numerous prior

judicial decisions. . . . [T]he fundamental objective of the private attorney general

doctrine of attorney fees is “ ‘to encourage suits effectuating a strong [public] policy by

awarding substantial attorney’s fees . . . to those who successfully bring such suits and

thereby bring about benefits to a broad class of citizens.’ ” [Citations.] The doctrine

rests upon the recognition that privately initiated lawsuits are often essential to the

effectuation of the fundamental public policies embodied in constitutional or statutory

provisions, and that, without some mechanism authorizing the award of attorney fees,

private actions to enforce such important public policies will as a practical matter

frequently be infeasible.’ [Citation.]” (Whitley, supra, 50 Cal.4th at pp. 1217-1218.)

“Because public interest litigation often yields nonpecuniary and intangible or widely

diffused benefits, and because such litigation is often complex and therefore expensive,

litigants will be unable either to afford to pay an attorney hourly fees or to entice an

attorney to accept the case with the prospect of contingency fees, thereby often making

public interest litigation ‘as a practical matter . . . infeasible.’ [Citation.] . . . .

Section 1021.5 addresses this affordability problem with the inducement of attorney fees

for public interest litigation when certain conditions in the statute are met.” (Id. at

pp. 1219-1220.)

“[E]ligibility for section 1021.5 attorney fees is established when ‘(1) [the

plaintiff’s] action “has resulted in the enforcement of an important right affecting the

public interest,” (2) “a significant benefit, whether pecuniary or nonpecuniary has been

conferred on the general public or a large class of persons,” and (3) “the necessity and

financial burden of private enforcement are such as to make the award appropriate.” ’

10

[Citation.]” (Whitley, supra, 50 Cal.4th at p. 1214.)6

“ ‘ “[Utilizing] its traditional

equitable discretion,” [the trial] court “must realistically assess the litigation and

determine, from a practical perspective” [citation] whether or not the statutory criteria

have been met.’ [Citation.]” (Summit Media, LLC v. City of Los Angeles (2015)

240 Cal.App.4th 171, 187.)

“ ‘We review an attorney fee award under section 1021.5 generally for abuse of

discretion. Whether the statutory requirements have been satisfied so as to justify a fee

award is a question committed to the sound discretion of the trial court, unless the

question turns on statutory construction, which we review de novo.’ [Citation.] ‘ “An

abuse of discretion occurs if, in light of the applicable law and considering all of the

relevant circumstances, the court’s decision exceeds the bounds of reason and results in a

miscarriage of justice. [Citations.] This standard of review affords considerable

deference to the trial court provided that the court acted in accordance with the governing

rules of law. We presume that the court properly applied the law and acted within its

discretion unless the appellant affirmatively shows otherwise.” ’ [Citation.]” (Espejo v.

The Copley Press, Inc. (2017) 13 Cal.App.5th 329, 378 (Espejo).)

B. Analysis

On appeal, and before the trial court, Halus Power and San Leandro do not and did

not dispute that Heron Bay HOA’s action resulted in the enforcement of an important

right affecting the public interest, a significant benefit was conferred on the general

public or a large class of persons, and there was a necessity for private enforcement. Our



6

Section 1021.5 provides in pertinent part: “Upon motion, a court may award

attorneys’ fees to a successful party against one or more opposing parties in any action

which has resulted in the enforcement of an important right affecting the public interest

if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on

the general public or a large class of persons, (b) the necessity and financial burden of

private enforcement, or of enforcement by one public entity against another public entity,

are such as to make the award appropriate, and (c) such fees should not in the interest of

justice be paid out of the recovery, if any.”

11

focus is limited, therefore, to the final element of section 1021.5’s eligibility test, and

particularly, to the question of whether the “financial burden of private enforcement . . .

[is] such as to make the award appropriate.”7

(§ 1021.5, subd. (b).) “In determining the

financial burden on litigants, courts have quite logically focused not only on the costs of

the litigation but also any offsetting financial benefits that the litigation yields or

reasonably could have been expected to yield. ‘ “An award on the ‘private attorney

general’ theory is appropriate when the cost of the claimant’s legal victory transcends his

personal interest, that is, when the necessity for pursuing the lawsuit placed a burden on

the plaintiff ‘out of proportion to his individual stake in the matter.’ [Citation.]” ’

[Citation.] ‘This requirement focuses on the financial burdens and incentives involved

in bringing the lawsuit.’ [Citation.]” (Whitley, supra, 50 Cal.4th at p. 1215.)

“ ‘[S]ection 1021.5 is intended to provide an incentive for private plaintiffs to bring

public interest suits when their personal stake in the outcome is insufficient to warrant

incurring the costs of litigation.’ [Citation.]” (Id. at p. 1221.)

Here, the trial court concluded Heron Bay HOA and its members had “a

significant financial incentive to initiate the litigation” because they feared installation of

the proposed turbine would reduce their property values. This made Heron Bay HOA’s

entitlement to attorneys’ fees a “very close call,” the court observed. Reasoning that the

financial incentive was “mitigated by the uncertain value of the benefit sought,” however,

the court exercised its discretion by granting the fees motion in part, denying it in part,

and then apportioning responsibility for payment of Heron Bay HOA’s attorneys’ fees

among the parties. The resulting award was less than half the amount Heron Bay HOA

originally requested (i.e., $181,471.70 rather than $483,321.00).



7

Although in their briefs opposing the fees motion and on appeal, Halus Power

and San Leandro (collectively, appellants) included a few remarks suggesting the value

of the public benefit the action conferred was minimal, they offered no legal arguments

on this point, and agreed in their appellate reply brief the financial burden element was

“the only issue presented on this appeal.”

12

Appellants assert the trial court erred in applying apportionment principles to grant

a partial fee award. They contend the trial court could only consider apportionment when

determining the amount of the fee award, after concluding a party’s financial interest in

the litigation was insufficient to disqualify it from receiving any fee award. Here, as the

trial court estimated Heron Bay HOA’s potential loss at about $5.8 million and the

reasonable fees expenditure at $250,000, appellants submit, the court must have skipped

a step, moving on to consider apportionment, without properly evaluating whether Heron

Bay HOA’s costs transcended its members’ personal interests. We disagree, because the

trial court ultimately concluded the “value of the benefit sought” was uncertain and that

conclusion was supported by substantial evidence.

As the trial court noted, membership in the Heron Bay HOA was mandatory, each

member had a vote, and “properties closer to the turbine and with a better view of the

turbine [would] suffer[] larger declines in value.” In granting the writ petition, the trial

court found that the proposed turbine would be visible from only a few Heron Bay

residences. Although the potential loss of property value for some residents may have

been significant, therefore, it was reasonable to question whether the majority of Heron

Bay HOA members would have had sufficient incentive to retain counsel for the CEQA

litigation, having previously incurred litigation fees to no avail in the administrative

proceedings, if there had not been the possibility of securing an award under

section 1021.5.8

The uncertainty was underscored by the fact that Heron Bay HOA

actually secured representation for the CEQA litigation here “on a ‘partially contingent

basis,’ ” which apparently allowed it, at least initially, to pay the RJO law firm less than a



8

This is particularly true as San Leandro produced a study during the

administrative proceedings finding “no evidence . . . that home prices surrounding wind

facilities [were] consistently, measurably, or significantly affected by either the view of

wind facilities or the distance of the home to those facilities.” Heron Bay HOA cited this

study as support for its argument, in its fees motion, that it did not seek “any reasonably

certain financial benefit” through this litigation.

13

third of the amount the firm actually billed. This indicated Heron Bay HOA and its

members did not actually value the “benefit” here sufficiently to undertake the litigation

absent the incentive of a potential fee award under section 1021.5.9

Additionally, as the court noted, it was relevant that the benefit Heron Bay HOA

and its members sought through the litigation could not be used to pay counsel and was

not “immediately bankable.” Unlike a “plaintiff who expects a lawsuit to result in an

immediate financial gain [and] can finance the lawsuit through a contingent fee

agreement,” the trial court observed, a “plaintiff who expects a lawsuit to result in

avoiding a financial loss may have more difficulty financing the lawsuit because the

plaintiff would still need to pay the lawyer out of his or her now [un]diminished assets.”

CEQA litigation costs could be “significant,” the court observed, and represented a

“much larger financial commitment” than the previous administrative proceeding. These

factors were pertinent in evaluating whether the personal interests of Heron Bay HOA’s

members transcended the litigation costs. (See, e.g., Woodland Hills, supra, 23 Cal.3d at

p. 938 [under section 1021.5, the trial court “must realistically assess the litigation . . .

from a practical perspective”].)

Although the trial court did not expressly state a finding on the financial burden

element before discussing apportionment, the record supports an implied finding that



9

Appellants, in their reply brief, attempt to refute this suggestion and the idea that

the trial court relied on it by noting the trial court’s observation that Heron Bay HOA

could pay litigation costs from its reserves or by borrowing money. Neither the trial

court nor appellants cite any portion of the record confirming the existence of such

reserves. Regardless, the availability of funds is irrelevant to the question of whether a

majority of the members of Heron Bay HOA had a financial incentive to expend such

funds on litigation when, according to the trial court, only a few members would have

had views of the proposed turbine. We do not agree with appellants that the existence of

a partial contingency agreement here was entirely irrelevant, or that we must disregard

the nature of the agreement because Heron Bay HOA declined to produce the actual

agreement, citing attorney-client privilege; there is no indication appellants attempted to

compel production.

14

Heron Bay HOA had a sufficient financial incentive to incur some, but not all, of the

costs of the litigation. (See, e.g., Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140

[“ ‘ “All intendments and presumptions are indulged to support [the judgment] on matters

as to which the record is silent” ’ ”].) The trial court’s apportionment discussion reflected

this implied finding. The court stated that it would “apportion fees between those that

[Heron Bay] HOA would have reasonably incurred to further its own interests and those

of its members and those that the HOA would not have incurred, or could not have

retained counsel to incur, without the prospect of a fee award under [section] 1021.5.” In

Woodland Hills, supra, our Supreme Court confirmed apportionment was appropriate in

such circumstances: “[I]f the trial court finds that plaintiffs’ potential benefit was such

that individuals in their position could reasonably have been expected to incur attorney

fees if the amount of the fee bore a more reasonable relation to such benefit, the trial

court, in awarding fees under section 1021.5, may deduct from the total reasonable

attorney fee an amount reflecting the fee that plaintiffs could reasonably have been

expected to bear themselves.” (Woodland Hills, supra, 23 Cal.3d at p. 942, fn. 13; see

also Collins v. City of Los Angeles (2012) 205 Cal.App.4th 140, 155-156 [“the court may

award against the opposing party the difference between the full amount of reasonable

attorney fees and an amount that the successful litigant could reasonably be expected to

bear”]; cf. Whitley, supra, 50 Cal.4th at p. 1226 [apportionment of fees may be

appropriate in connection with the “public interest” requirement].) The trial court acted

within its discretion, therefore, in apportioning to Heron Bay HOA (1) full responsibility

for paying the Berger law firm’s fees (for representation in the administrative

proceedings) and (2) 50 percent responsibility for paying the RJO law firm’s reasonable

fees (for representation in the CEQA litigation), while apportioning to appellants’ the

remaining 50 percent responsibility for the RJO law firm’s reasonable fees.

Appellants suggest, in the alternative, that Heron Bay HOA was ineligible to seek

attorneys’ fees because it acted purely out of self-interest or, if it acted for altruistic

15

purposes, that it lacked authority to do so, because its governing documents did not

permit it to pursue public interest or environmental litigation. But “[a] pecuniary interest

in the outcome of the litigation is not disqualifying. ‘If the party claiming fees has a

pecuniary interest in the outcome of the lawsuit, the issue is whether the financial burden

placed on the party is out of proportion to its personal stake in the lawsuit.’ [Citations.]”

(Lyons v. Chinese Hospital Assn. (2006) 136 Cal.App.4th 1331, 1352; see also Whitley,

supra, 50 Cal.4th at p. 1211 [section 1021.5 is not intended to “compensate with attorney

fees only those litigants who have altruistic or lofty motives”].) As discussed, the trial

court implicitly answered the threshold question in the affirmative here, although it

concluded apportionment was appropriate. Even if this were not the case, however,

appellants’ argument that Heron Bay HOA lacked authority to pursue public interest or

environment litigation fails because they do not cite any specific provision of the 48-page

governing document that they contend effected this restriction, and our review of the

document also uncovered no such proscription.

Notably, the trial court did not find, and the record does not support the

conclusion, that Heron Bay HOA and its members were motivated in initiating this

litigation solely by a desire to avoid a loss in property values. Although the public

comments that Heron Bay HOA and its individual members submitted during the

administrative process raised concerns about the project’s potential impact on property

values, they also expressed worries about the potential impact on wildlife, aesthetics,

health, and noise levels. Heron Bay HOA additionally submitted a consultant’s report

suggesting the project would “have a potentially significant impact on aesthetics,

biological resources, and noise.” The fact that a party had a pecuniary interest in

initiating litigation does not automatically signify more altruistic concerns played no role

in the decision.

Appellants additionally contend the trial court’s conclusion that Heron Bay HOA’s

“financial incentive” here was “mitigated by the uncertain value of the benefit sought”

16

contradicted its earlier estimate assigning a value to Heron Bay HOA’s avoided property

value loss. We do not discern a contradiction, however, but, rather view the court’s

statement as confirmation that it did not ultimately value the projected property loss at

$5.8 million. The court arrived at that figure by assuming Heron Bay HOA and its

members subjectively feared “an average 2.5% drop in [the] value” of all 629

residences,

10 and then plugging that number into the test described in Whitley, supra, for

weighing costs and benefits. (See Whitley, supra, 50 Cal.4th at pp. 1215-1216.) Under

that test, “ ‘[t]he successful litigant’s reasonably expected financial benefits are

determined by discounting the monetary value of the benefits that the successful litigant

reasonably expected at the time the vital litigation decisions were made by the probability

of success at that time. [Citations.] The resulting value must be compared with the

plaintiff’s litigation costs actually incurred, including attorney fees, expert witness fees,

deposition costs and other expenses.’ [Citation.]” (Espejo, supra, 13 Cal.App.5th at

p. 379.)11

It is questionable whether a trial court may rely on an arbitrary estimate in

evaluating the extent of a party’s personal stake in litigation under section 1021.5. (See

Keep Our Mountains Quiet v. County of Santa Clara (2015) 236 Cal.App.4th 714, 740 &

fn. 14 (Keep Our Mountains Quiet) [rejecting as conjecture attempt to quantify the value



10

Although the trial court used the terms “reasonable” and “rational” in

describing Heron Bay HOA’s expectation and fear, it confirmed in a footnote it was

applying a subjective standard.

11

Courts of Appeal have interpreted Whitley differently as to whether this test is

required in every instance, an issue that we do not decide. (See, e.g., Millview County

Water Dist. v. State Water Resources Control Bd. (2016) 4 Cal.App.5th 759, 772

[Whitley only referred to the test as “ ‘illustrat[ive]’ ” in underscoring the need for courts

to focus on monetary, rather than nonmonetary benefits]; Summit Media LLC v. City of

Los Angeles, supra, 240 Cal.App.4th at p. 192 [Whitley did not require that the test “be

applied literally in every case”]; Norberg v. California Coastal Commission (2013)

221 Cal.App.4th 535, 545 (Norberg) [automatically applying the test discussed in

Whitley].)

17

of an avoided property loss based on an unsupported assumption].) But the trial court

undoubtedly erred in concluding that a subjective standard applied when evaluating a

party’s personal stake in the outcome of litigation under section 1021.5. “Although

objective financial incentives and subjective motives may overlap, and indeed sometimes

may be indistinguishable,” Whitley confirmed that “only the former is the proper subject

of the court’s inquiry when assessing the financial burden of litigation under

section 1021.5.” (Whitley, supra, 50 Cal.4th at p. 1221.)

The error is not fatal to the trial court’s decision, however, because, as noted, it did

not actually rely on its own arbitrary assessment in deciding the fees motion.12

Instead,

after concluding Heron Bay HOA “had a significant financial incentive to initiate the

litigation,” the court observed that the value of the benefit remained “uncertain” and

could be addressed through apportionment. Appellants do not dispute that Heron Bay

HOA had a significant financial incentive to initiate litigation, and Heron Bay HOA did

not appeal the trial court’s conclusion on this point. The only question, therefore, is

whether the incentive was so large and the benefit so certain that it precluded any award.

Appellants assert “abundant evidence” confirmed the answer was yes. Aside from

the court’s arbitrary valuation of Heron Bay HOA’s feared loss, however, the only

specific valuation appellants cite is a broad estimate of the total loss for all 629

residences that Heron Bay HOA President Benny Lee asserted, without citing any

evidence or authority, in one sentence of a multipage public comment he submitted

during the administrative process. In the one sentence, Lee asserted that (1) unspecified



12

We note the trial court did not even state an express finding that Heron Bay

HOA and its members subjectively feared a $5.8 million reduction in their property

values. Instead, the court couched its “estimate” in qualifying language, stating that it

“[a]ssum[ed] a rational fear of an average 2.5% drop”; this “suggest[ed]” a motive to

avoid a property loss “in the neighborhood” of $7.8 million; and “[t]o the extent” Heron

Bay HOA’s litigation prevented a reduction in property value, it “derived a financial

benefit for its members.” (Italics added.)

18

“[s]tudies . . . suggested” the values of properties within a mile of a turbine dropped

between 10 percent and 30 percent, and (2) applied here, this would represent a total

reduction of “between $15,000 to $150,000 per home or $30 [sic] million to $150 million

for the community.”13

(Italics added.) Although, as the court noted, property owners

may offer opinions regarding the value of their property (Evid. Code, § 813), a trier of

fact is not obligated to accept the opinion (see, e.g., City of Perris v. Stamper (2016) 1

Cal.5th 576, 598-599 [fact finder determines a property’s value]) and there is no claim

the court erred here in rejecting the HOA president’s unsupported assertion regarding the

potential value of the loss for all homeowners. As appellants cite no other evidence

suggesting a specific valuation of the projected loss, we cannot agree the evidence here

required a finding that Heron Bay HOA’s stake in the litigation made it ineligible for a

fee award of any size.

Appellants contend it is well established that “preservation of property values can

be a disqualifying pecuniary interest” under section 1021.5 (italics added), and “need not

be quantified with absolute mathematical precision.” As support for this proposition,

appellants rely particularly on Beach Colony II v. California Coastal Com. (1985)

166 Cal.App.3d 106 (Beach Colony II). There, a real estate development partnership,

which planned to construct 10 condominium units in a coastal area, sought to void a

permit condition that would have increased its costs by $300,000. (Id. at pp. 109, 114.)

The partnership ultimately prevailed, obtaining a published opinion, and was awarded

attorneys’ fees. (Id. at pp. 109, 111-112.) The Court of Appeal reversed the award,

however, because the partnership made “no attempt to compare its litigation costs to the

immediate economic benefit” that it received through the litigation—apparently offering



13

Heron Bay HOA incorporated and adopted by reference Lee’s entire multipage

public comment in its own public comments, and its board of directors included the

“$50,000 to $150,000” estimate in an e-mail urging members to attend a city hearing

regarding the proposed project.

19

no evidence at all regarding the amount of attorneys’ fee it incurred—contending instead

simply “that the general public got something for nothing at [its] expense.” (Id. at p. 113

& fn. 5.) As support for its decision to reverse the award, the Court of Appeal relied on

the following facts: the partnership’s sole motive in initiating litigation was “economic

self-interest” (id. at p. 114); “the benefits it obtained [were] immediately and directly

translated into monetary terms” (id. at p. 113) in that its victory allowed the partnership

to save $300,000 in improvement expenses (id. at p. 114); and the partnership did not

produce “any evidence to support an inferred finding that its legal costs transcend[ed] its

personal interest in [the litigation].” (Id. at p. 115, italics added.)

The decision is easily distinguishable as none of those key facts existed here. To

the contrary, the record here contains evidence that Heron Bay HOA and its members

were motivated to initiate the CEQA litigation in part by non-pecuniary interests,

including concerns about the proposed turbine’s potential impact on wildlife, aesthetics,

health and noise levels. The trial court agreed that the monetary value of the benefit they

sought was uncertain. And Heron Bay HOA submitted detailed evidence demonstrating

the financial costs of its litigation, including attorneys’ fees.

14



While Beach Colony II is not instructive, other cases are on point. Citizens

Against Rent Control v. City of Berkeley (1986) 181 Cal.App.3d 213 (Citizens Against

Rent Control) is one example. There, a group of Berkeley landlords successfully

challenged the constitutionality of a city ordinance that would have limited the funds they

could contribute to defeating a proposed rent-control ordinance. (Id. at pp. 219-221,



14

Appellants rely to a lesser degree on Schwartz v. City of Rosemead (1984) 155

Cal.App.3d 547, but it is distinguishable for the same reasons. The Court of Appeal there

affirmed denial of a fee award for a landowner who had filed a “private nuisance” action

for “purely private” reasons—i.e., to force construction of an electrical power generation

plant in a different location, “away from his property line” (id. at p. 559)—and the

landowner himself estimated he thereby avoided a $100,000 loss in property value, while

incurring only $22,000 in attorneys’ fees (id. at p. 560), estimates that the trial court

apparently credited.

20

230.) When the landlords subsequently sought a fee award under section 1021.5, the city

opposed the request, contending plaintiffs were sufficiently motivated to pursue the

litigation by their private pecuniary interests because they feared enactment of rent

control would decrease rental property values. (Id. at p. 230.) The Court of Appeal

rejected this argument, however, affirming the trial court’s fees award. (Id. at pp. 219-

220, 230.) It reasoned that the plaintiffs had received no direct pecuniary benefit from

their litigation, and that “[a]ny benefit in the form of preventing erosion of property

values was at least once removed from the results of the litigation” because “freedom

from the contribution limit” did not guarantee defeat of the initiative measure. (Id. at

p. 230.) “[T]he amount of any monetary advantage was speculative,” therefore, the court

concluded. (Ibid.) Further, after noting the plaintiffs’ motivations “clearly extended

beyond preventing rent control,” because the plaintiffs continued to defend their

judgment after rent control became a reality in the city, the Court of Appeal remarked:

“On these facts, [the] argument of financial motivation disintegrates into a claim that

property owners are cut off from the benefits of section 1021.5 whenever they pursue

litigation that might someday help them further or secure their property interests. The

claim is untenable.” (Id. at pp. 230-231.)

The same conclusions apply here, for reasons aptly summarized in a second case,

Keep Our Mountains Quiet, supra, 236 Cal.App.4th 714, which involved key facts

almost identical to those at issue in this case. In Keep Our Mountains Quiet, as here, an

association of local residents filed a CEQA challenge, seeking to require preparation of

an EIR, after the county adopted an MND that would have allowed a neighboring

landowner to commence a project—securing a use permit to host numerous special

events per year—despite noise and traffic concerns. (Id. at pp. 719-721, 727.) After

granting the association’s request, the court awarded attorneys’ fees, and the landowner

appealed. (Id. at pp. 719, 727.) As appellants do here, the landowner contended the

association and its members were disqualified from receiving a fees award because many

21

members submitted written comments confirming they had a financial incentive to

initiate the litigation, namely, a desire to avoid property value losses. (Id. at pp. 719, 727,

739.) The Court of Appeal rejected this argument, based on reasoning that is equally

applicable here.

The court began by observing that “[n]o evidence was submitted attempting to

quantify any potential property value reductions.” (Keep Our Mountains Quiet, supra,

236 Cal.App.4th at pp. 739-740.) Although the landowner’s attorney had posited a

figure, assuming each members’ residence would sustain a $20,000 reduction in value,

the Court of Appeal rejected the figure, because it was “based on conjecture.” (Id. at

p. 740 & fn. 14.) Quoting Citizens Against Rent Control, supra, 181 Cal.App.3d at

p. 230, the Court of Appeal then ruled that any benefit in the form of an avoided loss in

property values was indirect as the trial court’s ruling did not guarantee changes to the

challenged project, the amount of any resulting monetary advantage was speculative, and

neighboring property owners were not disqualified from seeking an award under

section 1021.5 simply because they pursued litigation “ ‘that might someday help them

further or secure their property interests.’ [Citation.]” (Keep Our Mountains Quiet,

supra, 236 Cal.App.4th at p. 740.) “Because ‘[a]ny potential financial incentive for [the

Association] and its members [was] indirect and largely speculative,’ ” the Court of

Appeal determined, the “ ‘trial court did not abuse its discretion in concluding the

financial burden criterion was satisfied.’ ” (Ibid., quoting Plumbers & Steamfitters, Local

290 v. Duncan (2007) 157 Cal.App.4th 1083, 1099; see also Galante Vineyards v.

Monterey Peninsula Water Management Dist. (1997) 60 Cal.App.4th 1109, 1116, 1124,

1126-1127 [although plaintiffs were “probably the greatest beneficiaries” of their CEQA

litigation, the trial court did not err in awarding them 50 percent of their reasonable

attorneys’ fees, because plaintiffs sustained “no direct pecuniary benefit” by obtaining a

writ of mandate requiring a supplemental EIR considering the impact of the proposed

project on viticultural issues, and “any future money advantage” was “speculative”].)

22

We reach the same conclusions for the same reasons here. As in Citizens Against

Rent Control and Keep Our Mountains Quiet, plaintiff Heron Bay HOA and its members

neither expected nor received any direct pecuniary benefit from their litigation. Any

benefit they received in the form of avoiding a loss in property values was at least once

removed from the results of the litigation, because the trial court’s ruling did not

guarantee San Leandro would refuse the requested variance or require Halus Power to

make changes to the project following adoption of an EIR, or that Halus Power would

abandon the project.15

The amount of any monetary advantage, therefore, was

speculative. On these facts, we reject the suggestion Heron Bay HOA and its members

were cut off from the benefits of section 1021.5 because they pursued litigation that

“ ‘might someday help them . . . secure their property interests.’ ” (Keep Our Mountains

Quiet, supra, 236 Cal.App.4th at p. 740, quoting Citizens Against Rent Control, supra,

181 Cal.App.3d at pp. 230-231.)

Although appellants devote considerable effort to distinguishing the facts,

discrediting the analysis, and minimizing the importance of the Keep Our Mountains

Quiet decision, we are unconvinced. Appellants attempt to distinguish the facts, for

example, by contending that, unlike in Keep Our Mountains Quiet, here there was

evidence quantifying the amount of the reduction in property value that Heron Bay HOA

initiated litigation to prevent. Appellants presumably refer to Heron Bay HOA’s

president’s unsupported suggestion which we previously quoted that all members might

see the value of their homes reduced by “between $50,000 to $150,000.” But, again, the

trial court rejected this estimate, giving it no weight, in a ruling that is not challenged on

appeal. Appellants cite no other evidence except “the trial court’s . . . analysis”, but the



15

Although the trial court stated that the evidence suggested Heron Bay HOA

wanted to prevent installation of the turbine entirely, and not just to delay or require

changes to the project, the decision about whether and how the project would proceed did

not rest with Heron Bay HOA, and the end result, therefore, remained uncertain after the

trial court entered judgment in its favor.

23

latter does not fill the gap as it is the trial court’s duty “to weigh and interpret evidence”

(National Football League v. Fireman’s Fund Insurance Company (2013)

216 Cal.App.4th 902, 918), not to create it.

Appellants also attempt to differentiate this case by observing that, while Keep

Our Mountains Quiet concluded any financial benefit was indirect and speculative—

because the trial court’s ruling granting a writ of mandate did not guarantee changes to

the proposed project (Keep Our Mountains Quiet, supra, 236 Cal.App.4th at p. 740)—

here the trial court found the financial benefit was “direct” and “non-speculative,” and

Halus Power ultimately did abandon the project. Appellants cite the pages of the trial

court’s order in which it initially assigned a value of $5.8 million to the loss that Heron

Bay HOA and its members subjectively feared. As discussed, however, the trial court did

not ultimately rely on this tentative estimate, concluding instead the value of the benefit

that Heron Bay HOA and its members sought remained “uncertain.” Further, appellants’

argument does not address the fact that the trial court’s ruling here—as in Keep Our

Mountains Quiet—did not directly produce any financial “benefit.” The trial court did

not, and could not, for example, order San Leandro to withhold approval for the project.

Thus, “ ‘[a]ny benefit in the form of preventing erosion of property values was at least

once removed from the results of the litigation.’ ” (Keep Our Mountains Quiet, at

p. 740.)

Appellants suggest it would “write the ‘financial burden’ element entirely out of

Section 1021.5” if the value of the asserted financial benefit in the form of loss of

property value, must be quantified with objective evidence before it is considered,

particularly in CEQA cases. Appellants point to three cases in which courts applied the

financial burden element to conclude plaintiffs were ineligible for fee awards without

requiring “ ‘empirically-derived’ economic data.” But, in two of those cases, the courts

had a basis for assigning a value, while in the third case the court affirmed denial of an

award relying primarily on other grounds. (See, Norberg, supra, 221 Cal.App.4th at

24

p. 544 [plaintiff’s had a financial incentive to initiate litigation to overturn residential

permit application conditions so that he could make $250,000 in improvements to his

oceanfront property]; Edna Valley Watch v. County of San Luis Obispo (2011)

197 Cal.App.4th 1312, 1317, 1322 [plaintiff had a financial incentive to initiate litigation,

requiring county to rescind approval of a neighboring project, which would have

seriously impacted his plan to turn his $1 million home into a bed-and-breakfast inn after

he made $350,000 in upgrades];16 Christward Ministry v. County of San Diego (1993)

13 Cal.App.4th 31, 49-50 [affirming denial of fee award based on conclusion the

plaintiff’s litigation did not confer a significant benefit on the general public].)17

Finally, appellants contend the trial court erred in concluding it should give Heron

Bay HOA “the benefit of the doubt” in light of the “uncertainties regarding the prelitigation

cost/benefit analysis.” Citing Norberg, they note Heron Bay HOA had the



16

It is worth noting that in Edna Valley Watch v. County of San Luis Obispo,

supra, the Court of Appeal actually reversed the trial court’s order denying fees based on

the Supreme Court’s decision in Whitley, supra, 50 Cal.4th at p. 1211, because the trial

court there had relied on the plaintiff’s “ ‘personal stake’ ” in blocking the project, a

nonpecuniary interest. (Edna Valley Watch, supra, 197 Cal.App.4th at pp. 1315, 1320.)

Although the Court of Appeal concluded the plaintiff also had a financial interest in

stopping the project, it did not affirm denial of the fee award on that basis but, rather,

remanded the matter to the trial court to reconsider the issue in light of Whitley. (Id. at

pp. 1321-1322.)

17

It is not actually clear whether the Court of Appeal in Christward Ministry v.

County of San Diego, supra, relied on the existence of a pecuniary or a nonpecuniary

private interest as an additional basis for affirming denial of the plaintiff’s fees motion.

The court mentioned the plaintiff’s eligibility under the financial burden element in a

single sentence after a lengthier analysis of the significant benefit element, stating only

that it found the trial court’s “assessment of Christward’s private interest in the litigation”

to be reasonable. (Christward Ministry, supra, 13 Cal.App.4th at p. 50.) The trial court

had stated that “Christward’s ‘private interests . . . with reference to the use of their

property [was] the real basis for [the] action.” (Id. at p. 49.) Although the Court of

Appeal’s decision indicated Christward, a nonprofit corporation, operated a retreat on its

property, “ ‘for the experience of God-in-nature’ ” (id. at p. 36), it did not confirm or

directly suggest Christward’s private financial interests were at stake in the litigation.

25

burden of proving its litigation costs transcended the private interests it sought to benefit.

(Norberg, supra, 221 Cal.App.4th at pp. 545-546.) While appellants are correct about the

burden of proof, we are not persuaded the trial court misunderstood this point. Rather,

our review of the entire record confirms the trial court held Heron Bay HOA to its

burden—denying its fees motion in part, and declining to award even half of its

reasonable attorneys’ fees—based on its conclusion that Heron Bay HOA had a

significant financial incentive to initiate litigation, even though evidence confirming the

existence and value of the benefit sought was minimal at best.

To the extent appellants contend Heron Bay HOA failed to meet its burden of

proof, for example, by failing to adequately and objectively quantify the potential

reduction in property values that it avoided through this litigation, we disagree. As an

initial matter, we note the contention appears to contradict appellants’ assertions, in

support of other arguments, that it was not necessary to precisely quantify the value of the

benefit that Heron Bay HOA sought. Leaving this point aside, however, we conclude

that Heron Bay HOA did meet its burden of proving the financial burden of the litigation

transcended the value of its private pecuniary interests, making a partial award

appropriate. Heron Bay HOA’s fees’ motion provided detailed information regarding its

litigation costs, and correctly pointed out that Heron Bay HOA and its members received

no “reasonably certain financial benefit” by securing an order directing San Leandro to

prepare an EIR. (See Citizens Against Rent Control, supra, 181 Cal.App.3d at pp. 230-

231; Keep Our Mountains Quiet, supra, 236 Cal.App.4th at p. 740.) On appeal, Halus

Power and San Leandro had the burden of proving the trial court abused its discretion in

granting the partial fee award (In re Marriage of Minkin (2017) 11 Cal.App.5th 939,

954), for example, by ignoring evidence, if such existed, that Heron Bay HOA and its

members received a financial benefit disqualifying them from receiving any award. It

has not met this burden.

We affirm the judgment. Heron Bay HOA is entitled to its costs on appeal,

including its attorneys’ fees for successfully defending this appeal, with the amount to be determined by the trial court. (See Beasley v. Wells Fargo Bank (1991) 235 Cal.App.3d 1407, 1422 [granting fees on appeal under section 1021.5], disapproved on other grounds by Olson v. Automobile Club of Southern California (2008) 42 Cal.4th 1142; § 1033.5, subd. (a)(10).)18

As neither Halus Power nor San Leandro directly responded to Heron Bay HOA’s request for attorneys’ fees on appeal, the appropriateness of this award is not in

dispute.