The opinion
Filed 5/28/21
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
KCSFV I, LLC, et al., C088824
Plaintiffs and Respondents, (Super. Ct. No.
34201700216260CUWMGDS)
v.
FLORIN COUNTY WATER DISTRICT et al.,
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Sacramento County, Richard
K. Sueyoshi, Judge. Affirmed.
Kronick, Moskvitz, Tiedmann & Girard, William T. Chisum and Jeffrey A.
Mitchell for Defendants and Appellants.
Lewis Brisbois Bisgaard & Smith and Christopher R. Rodriguez and Andrew D.
Bluth, for Plaintiffs and Respondents.
* Pursuant to California Rules of Court, rules 8.1105 and 8.1110, this opinion is certified
for publication with the exception of part III of the Discussion.
1
Florin County Water District (district), its board of directors (board), and its
general manager (collectively defendants) 1 appeal from the trial court’s judgment setting
aside the district’s December 2016 water rate increase for violating Proposition 218
(known as the Right to Vote on Taxes Act), as requested by KCSFV I, LLC and KCSFV
II, LLC (collectively plaintiffs)2 in their verified petition for writ of mandate and
complaint for declaratory and injunctive relief (petition). Defendants assert the rate
increase complied with the procedural and substantive requirements of Proposition 218,
and the trial court erred in rejecting their affirmative defenses under Government Code
section 66022 and the exhaustion of administrative remedies doctrine. Defendants
further challenge the trial court’s judgment awarding plaintiffs their attorney fees
pursuant to Code of Civil Procedure section 1021.5.
In the published portion of the opinion, we reject defendants’ arguments pertaining
to the validity of the water rate increase. We further reject defendants’ challenge to the
attorney fees decision in the unpublished portion of the opinion. Accordingly, we affirm.
LEGAL BACKGROUND
Proposition 218, approved by voters in 1996, added articles XIII C and XIII D to
the California Constitution3 and “is one of a series of voter initiatives restricting the
ability of state and local governments to impose taxes and fees.” (Plantier v. Ramona
Municipal Water Dist. (2019) 7 Cal.5th 372, 380, 381 (Plantier).) “Article XIII C
1 The district, its board, and its general manager were respondents and defendants in
the underlying action. We collectively refer to them as defendants rather than
respondents to avoid confusion as to their appellant status on appeal.
2 KCSFV I, LLC and KCSFV II, LLC were petitioners and plaintiffs in the
underlying action. We collectively refer to them as plaintiffs to correspond to our use of
defendants, as discussed in footnote 1.
3 All further article and section references are to the California Constitution unless
otherwise specified.
2
concerns voter approval for many types of local taxes other than property taxes. Article
XIII D addresses property-based taxes and fees.” (Id. at p. 381.) This appeal pertains to
a water rate increase adopted under article XIII D.
“Article XIII D imposes distinct procedural and substantive limitations.
[Citation.] The procedures an agency must follow before ‘imposing or increasing any fee
or charge’ are found in subdivision (a) of article XIII D, section 6. An agency seeking to
impose or increase a property-related fee must hold a hearing and send written notice of
the hearing to the owner of each affected parcel. [Citation.] The notice must specify the
amount of the proposed fee, the basis of calculation, and the reason for the fee. It must
note the date, time, and location of the public hearing. [Citation.] At that hearing, ‘the
agency shall consider all protests against the proposed fee or charge.’ [Citation.] In
addition to mandating that the agency ‘consider’ all protests, Proposition 218 establishes
a majority protest remedy. ‘If written protests against the proposed fee or charge are
presented by a majority of owners of the identified parcels, the agency shall not impose
the fee or charge.’ [Citation.] Article XIII D does not define the term ‘protest’ or explain
what form a written protest must take.” (Plantier, supra, 7 Cal.5th at pp. 381-382, fns.
and italics omitted.)
“Even when an agency is generally authorized to impose or modify fees, so long
as it complies with the notice and hearing requirements, Proposition 218 places other
substantive limitations on the agency. Those substantive limitations on property-related
fees appear in subdivision (b) of article XIII D, section 6. Under these limitations:
(1) revenues derived from the fee may not exceed the cost of providing the property-
related service [citation]; (2) those revenues may not be used for any purpose other than
the one for which the fee was imposed [citation]; (3) the amount of the fee ‘shall not
exceed the proportional cost of the service attributable to the parcel’ [citation]; (4) a fee
may not be imposed for a service unless that service is available to the property owner
[citation]; and (5) a fee may not be imposed upon property owners for a general
3
governmental service, like fire protection, if the service is available to the general public
in substantially the same manner as it is to property owners [citation].” (Plantier, supra,
7 Cal.5th at p. 382, italics omitted.)
“The notice and hearing requirements of subdivision (a) of section 6 of California
Constitution article XIII D [are intended to] facilitate communications between a public
water agency’s board and its customers, and the substantive restrictions on property-
related charges in subdivision (b) of the same section should allay customers’ concerns
that the agency’s water delivery charges are excessive.” (Bighorn-Desert View Water
Agency v. Verjil (2006) 39 Cal.4th 205, 220-221.)
After an agency adopts a property-related fee increase subject to Proposition 218,
as here, ratepayers can challenge the quasi-legislative act by filing a petition for writ of
mandate. Such litigation differs in two crucial respects from typical mandamus
proceedings challenging an agency’s action. First, article XIII D places the burden of
proving compliance with the article on the agency, rather than on the person challenging
the agency’s action, as in a typical mandamus proceeding. (Art. XIII D, § 6, subd.
(b)(5).) Second, unlike in a typical mandamus proceeding -- in which the trial court
applies a deferential standard of review to the agency’s action -- the trial court exercises
its independent judgment in determining whether a fee increase is consistent with article
XIII D. (Silicon Valley Taxpayers’ Assn., Inc. v. Santa Clara County Open Space
Authority (2008) 44 Cal.4th 431, 437.) On appeal, we also apply our independent
judgment to the agency’s action, deferring to neither the agency nor the trial court.
(Morgan v. Imperial Irrigation Dist. (2014) 223 Cal.App.4th 892, 912.)
FACTUAL AND PROCEDURAL BACKGROUND
I
The District’s Adoption Of The Rate Increase
The following facts were taken from the administrative record and the trial court’s
unchallenged findings in its final statement of decision.
4
A
The Notice
On October 6, 2016, the district prepared a document titled “Florin County Water
District Notice of Proposed Increases to Monthly Water Rates” (notice), stating: “Florin
County Water District, the ‘District’, proposes to increase its monthly water rates for all
users. The new rates would be phased in over a period of 3 ½ years as follows:
“Example: Current 1” Residential @ $20.00 per month. [¶] January 1st 2017 -
$30.00 per month[;] [¶] July 1st 2017 - $40.00 per month[;] [¶] July 1st 2018 - $50.00
per month[;] [¶] July 1st 2019 - $60.00 per month[.] [¶] All other classifications would
increase by an equal percentage.
“The rate increases are being proposed in order to provide sufficient revenue to
pay for the increasing costs of maintenance and operation of the District’s water system,
also to provide funding for physical plant and distribution system replacement. The
proposed rates for each classification of property are determined by the cost of providing
water service to customers in that classification based upon the water use characteristics
of such property.
“The governing board will hold a public hearing on the proposed rate increases on
December 12, 2016 at 7 p.m., or as soon thereafter as the matter may be heard, in the
District’s Office located at 7090 McComber Street, Sacramento, CA 95828.”
The notice further provided property owners and tenants could, subject to certain
requirements, file written protests against the proposed water rate increase at or before
the public hearing and, “[i]f written protests against the proposed increases are received
from the property owners or tenants of a majority of the affected properties, the rates will
not be increased.”
5
B
The Hearing
The district held a public hearing on the proposed rate increase on December 12,
2016. Prior to the hearing, the district received over 150 written protest letters.
“As part of the December 12, 2016 public hearing, the District’s Board of
Directors considered a summary chart comparing the impact of potentially increasing
rates by 25%, 37.5% and 50% over the course of the next four years.” The chart sets
forth four tables, each with four columns, as follows (formatting, type face, and bold
modified):
2016-2017 $5.00=25% per $7.50=37.5% per $10.00=50% per
month month month
REVENUE 1,449,730 1,771,895 1,932,975
EXPENSE 1,378,465 1,378,465 1,378,465
CAPITAL
EXPENSE 393,690 393,690 393,690
TOTAL EXPENSE 1,772,155 1,772,155 1,772,155
NET (322,485)[4] (260) 160,820
2017-2018 $5.00=25% per $7.50=37.5% per $10.00=50% per
month month month
REVENUE 1,771,895 2,255,140 2,577,300
EXPENSE 1,530,095 1,530,095 1,530,095
CAPITAL
EXPENSE 437,000 437,000 437,000
TOTAL EXPENSE 1,967,095 1,967,095 1,967,095
NET (195,200) 288,045 610,205
4 This total should be (322,425) based on the revenue and expense figures
presented, not (322,485).
6
2018-2019 $5.00=25% per $7.50=37.5% per $10.00=50% per
month month month
REVENUE 2,094,060 2,738,385 3,221,625
EXPENSE 1,713,710 1,713,710 1,713,710
CAPITAL
EXPENSE 489,440 489,440 489,440
TOTAL EXPENSE 2,203,150 2,203,150 2,203,150
NET (109,090) 535,235 1,018,475
2019-2020 $5.00=25% per $7.50=37.5% per $10.00=50% per
month month month
REVENUE 2,416,225 3,221,630 3,865,950
EXPENSE 1,936,490 1,936,490 1,936,490
CAPITAL
EXPENSE 553,070 553,070 553,070
TOTAL EXPENSE 2,489,560 2,489,560 2,489,560
NET (73,335) 732,070 1,376,390
The following handwritten note is located below the chart: “5 YEAR
INFLATION.” “The Board of Directors voted to approve the 50% per month increase.”
7
II
The Litigation
A
The Petition
Plaintiffs filed the petition challenging the district’s rate increase for
noncompliance with section 6, subdivisions (a) and (b), of article XIII D.5 Plaintiffs
operate a 256-unit residential apartment complex within the district’s boundaries.
Plaintiffs alleged they did not receive the notice and were unaware the district was
considering a rate increase at the December 2016 meeting. Plaintiffs purportedly first
learned of the rate increase when they received their January 2017 water bill, indicating
their bi-monthly water rate had increased from $10,446 to $15,624.
Plaintiffs sought an order commanding defendants to set aside the water rate
increase decision, an award of damages, a judicial declaration that the decision was
unlawful and invalid, an injunction precluding defendants from collecting the water rate
increases, an award of attorney fees under Code of Civil Procedure section 1021.5, and
any other relief deemed appropriate by the court.
B
The Statement Of Decision
The trial court entered judgment in favor of plaintiffs, finding and stating in its
statement of decision that defendants had failed to satisfy their burden of demonstrating
the rate increase complied with the substantive requirements of section 6,
subdivision (b)(1), and that any of the affirmative defenses applied.
The trial court explained: “[Defendants] argue that the 50% increase allows the
District to ‘essentially break even upon adoption of the new fees, and in future years it
5 All further references to section 6 are to article XIII D.
8
would allow for the rebuilding of the District’s reserves.’ [Citation.] [Defendants]
further argue that the District should be allowed to collect fees to prepare for inflation,
and that to be prudent, it needed to build funds to ‘help insure future operations by
replacing infrastructure as necessary.’ [Citation.] [Defendants] close their argument
with, ‘the District opted to increase rates to allow for the building of meaningful
reserves.’ [Citation.]
“[Defendants] do not cite to any authority for the proposition that Article XIII D,
section 6, subdivision (b)(1) permits the District to charge amounts resulting in net
revenue designated for ‘rebuilding of the District’s reserves.’ The plain language of the
provision clearly contradicts this argument. The requirement that the revenues shall ‘not
exceed the funds required to provide the property related service’ directs an agency to
calculate the amounts necessary to provide the subject services, in this case, water
services. While conceivably, this requirement could permit charges for operating costs
and potentially, for certain capital improvement expenses, it certainly does not allow the
District simply to build up net reserves or otherwise create generalized net revenue from
a rate increase as the District appears to be doing here. Notably, in the present
circumstances, this ‘Net’ revenue is substantial. The administrative record indicates that
by the 2019-2020 cycle, as a result of the 50% rate increase that it approved, the District,
after having fully paid its projected ‘Total Expense,’ will enjoy a ‘Net’ revenue as much
as $1,376,390. [Citation.] The Court finds that Article XIII D, section 6,
subdivision (b)(1) allows no such result.” (Fn. omitted.)
In the accompanying footnote, the trial court noted the chart considered at the
December 2016 meeting “includes a handwritten note at the bottom that stated ‘5 Year
Inflation.’ However, there is no explanation as to who wrote this note, what it means, the
basis for any assertion it may arguably make, or any other foundation to support an
assertion that the ‘Net’ (or any other category identified on the chart) accurately accounts
for inflation that will occur during the multiple years of the rate increase. [Defendants]
9
cite only generally to [pages in the administrative record], which are a series of
documents concerning cost of living, minimum wage, and gross national product. Absent
is any explanation as to how these documents purportedly support a finding that the ‘Net’
is an accurate representation of ‘funds required to provide the property related service.’ ”
As to defendants’ exhaustion of administrative remedies affirmative defense, the
trial court ruled: “The Court has reviewed the protest letters included in the
administrative record, which the parties acknowledge were received by the District prior
to the vote approving the subject rate increase. Pursuant to the meeting minutes,
‘Manager Beal presented the Board with 98 independent letters and 65 form letters from
one association of opposition of [sic] rate hike. There were also 14 constituents in
attendance.’ [Citation.] The Court finds that many of the opposition letters raise the
complaint that the rate increase is excessive -- the same claim that P[laintiffs] raise now.
[Citations.] The Court finds that the District was presented with arguments that the
subject rate increase was improper, including arguments that the amount proposed was
beyond the amount appropriate for the services provided. Further, the Court finds it
unnecessary for the opposition letters to articulate the same specific legal arguments
eventually set forth by P[laintiffs] with the subsequent assistance of their counsel.
“Where, as here, the District approved the rate increase regardless of over 150
letters in opposition, many of which make the same complaint as P[laintiffs do] now, the
Court finds [defendants’] argument that P[laintiffs] failed to exhaust their administrative
remedies to be unavailing. Therefore, to the extent that Proposition 218 requires
administrative exhaustion the Court finds that it would have been futile because the
argument P[laintiffs] make now was already placed before the District by other protesting
water users. As [defendants] argue, the purpose of exhaustion is to permit the challenger
to raise ‘alleged defects at the administrative level at which time the agency would have
had the chance to address the perceived problems and formulate a resolution.’ [Citation.]
In sum, because water users had raised challenges to the excessive amount of the rate
10
increase as part of the administrative process, the record supports the Court’s finding that
P[laintiffs]’ protests would have been futile, and the purpose of administrative exhaustion
was otherwise fulfilled.” (Fn. omitted.)
The trial court further considered defendants’ Government Code section 66022
affirmative defenses, finding the statute inapplicable under the facts of this case.
Specifically, the trial court found defendants failed to carry their burden of proving the
rate increase qualifies as a capacity charge under Government Code section 66013,
subdivision (b)(3), a fee under Government Code section 66013, subdivision (b)(5), or a
service charge under Government Code section 66022, subdivision (c).
The trial court did not consider or rule on plaintiffs’ arguments that the district had
violated the procedural requirements under section 6, subdivision (a). The trial court
entered judgment in favor of plaintiffs on November 26, 2018, allowing any claims for an
award of attorney fees and/or costs to be filed postjudgment. The notice of appeal was
timely filed.
C
Attorney Fees
Plaintiffs filed a motion for attorney fees pursuant to Code of Civil Procedure
section 1021.5. The trial court granted the motion and awarded plaintiffs $66,345.50 in
attorney fees. For the reader’s ease, we discuss the trial court’s decision on the motion
for attorney fees post in the pertinent portion of the Discussion.
DISCUSSION
I
The District Failed To Comply With Section 6’s Substantive Requirement
Defendants argue the trial court erred in finding the rate increase violated the
substantive requirements of the California Constitution because the trial court applied a
narrow rather than broad construction of section 6, subdivision (b)(1) when it determined
the district could not charge amounts designated for rebuilding its reserves. They further
11
assert the rate increase complied with the substantive requirements for the following
reasons: (1) “[a]s a County Water District, the District has limited powers as prescribed
by the Water Code” and it “can only use such fees for the water-related powers given to it
by the Legislature”; (2) “[t]he record contains no indication that revenues collected by the
District have been used for other than its statutory purpose”; (3) the district reasonably
allocated its costs in determining the rate increase because the notice “expressly advised”
the rates for each property classification were “determined by the cost of providing water
service to the customers in that classification, based upon the water use characteristics of
such property”; (4) the water service is immediately available to the district’s customers;
and (5) the district does not provide general government services. We conclude
defendants failed to meet their burden of demonstrating the rate increase complied with
section 6’s substantive requirement.
We generally agree with defendants’ first argument that reserves may
appropriately be included as a component of a property-related fee. As this court
previously explained: “The theme of [section 6] is that fee or charge revenues may not
exceed what it costs to provide fee or charge services. Of course, what it costs to provide
such services includes all the required costs of providing service, short-term and long-
term, including operation, maintenance, financial, and capital expenditures. The key is
that the revenues derived from the fee or charge are required to provide the service, and
may be used only for the service. In short, the section 6(b) fee or charge must reasonably
represent the cost of providing service.” (Howard Jarvis Taxpayers Assn. v. City of
Roseville (2002) 97 Cal.App.4th 637, 647-648.)
That said, defendants failed to meet their burden of demonstrating the rate increase
at issue here does not exceed what it costs to provide the water service. (§ 6,
subd. (b)(5).) Defendants provide only conclusory arguments; they fail to support the
arguments with evidence. In their opening brief, defendants essentially rely on a single
document to demonstrate proportionality -- the notice. (AOB 30(c)-31) But, the notice
12
also contains only a conclusory statement, i.e., that “[t]he proposed rates for each
classification of property are determined by the cost of providing water service to
customers in that classification, based upon the water use characteristics of such
property.” (Cf. Morgan v. Imperial Irrigation Dist., supra, 223 Cal.App.4th at pp. 900-
901 [cost of service study made available to public].)
As to the information purportedly presented at the hearing, the flat percentage
increase approved by the board was projected to “net” $160,820 in the first year,
$610,205 in the second year, $1,018,475 in the third year, and $1,376,390 in the fourth
year. Nothing in the administrative record explains how the net revenue forms a
component of the cost to provide property-related service or how the net revenue derived
per property is proportional to the cost of service attributable to that property. In simple
terms, the net revenue appears to be a profit after expenses are deducted from revenues.
Thus, defendants have failed to show the rate increase reasonably represents the cost of
providing service to the affected properties. (Howard Jarvis Taxpayers Assn. v. City of
Roseville, supra, 97 Cal.App.4th at p. 648.)
In their reply brief, defendants argue that, at the hearing, the board considered
information the district was operating at a deficit and it was necessary to draw funds from
the district’s reserves to meet its obligations. In defendants’ view: “Given the need to
make sure it had sufficient revenue both for the current year as well as future years and
given the uncertainties and unknowns as to future costs, the District opted to increase
rates to allow for the rebuilding of meaningful reserves.” Again, however, the district
asks us to take an attorney’s argument as evidence, which we cannot do. (Evid. Code, §
140; People v. Kiney (2007) 151 Cal.App.4th 807, 815; Van de Kamp v. Bank of America
(1988) 204 Cal.App.3d 819, 843.) Nothing in the record identifies or quantifies historic
or projected reserves needed for the service provided by the district. Nor does anything
in the record pledge the net revenue for any specific purpose. For that reason,
defendants’ reliance on Moore is misplaced. (Moore v. City of Lemon Grove (2015) 237
13
Cal.App.4th 363, 369-375 [considering the evidence presented in support of the
sanitation fees and charges imposed].) The mere fact that the district is a special district
does not, by itself, meet defendants’ burden of demonstrating proportionality. To carry
its burden, an agency must generally provide evidence identifying the data used,
analyzing the cost of service, and demonstrating the proportionality of the rate increase.
None of this information was provided or made available to the district’s customers.
Defendants rely on pages 52 through 55 and page 105 of the administrative record
for the argument that the rate increase would “allow the District to essentially break even
upon adoption of the new fees, and in the future years it would allow for the rebuilding of
the District’s reserves.” Defendants do not explain their logic or analysis for the
foregoing statement. Pages 52 through 55 consist of the proposed budget for 2016-2017
dated July 11, 2016 (identifying information for “2015-2016,” “YTD Total,” and “2016-
2017”). Page 53 identifies the “[t]ransfer from reserves” for “2015-2016” as $150,000,
the “YTD” as $50,000, and the “2016-2017” as $150,000. The net income reflected in
the proposed budget is: $36,600 for “2015-2016”; $81,765.42 for “YTD”; and, $172,400
for “2016-2017.” Pages 54 to 55 purportedly provide the profit and loss comparison for
July 2015 through June 2016 as compared to July 2014 through June 2015. The net
income reflected for July 2014 to June 2015 is negative $178,825.54 and July 2015 to
June 2016 is negative $133,671.67.
Defendants fail to explain how the foregoing figures support their position that the
“net” anticipated by the rate increase of $160,820 in the first year, $610,205 in the second
year, $1,018,475 in the third year, and $1,376,390 in the fourth year correspond to the
foregoing figures. We are not obligated to make arguments for defendants and may and
do disregard conclusory arguments failing to disclose the reasoning by which defendants
reached the conclusions they ask us to adopt. (United Grand Corp. v. Malibu Hillbillies,
LLC (2019) 36 Cal.App.5th 142, 153.)
14
Because we conclude defendants failed to meet their burden of proving
compliance with the proportionality requirement under section 6, we do not address their
remaining arguments pertaining to compliance with the other substantive requirements.
II
None Of The Affirmative Defenses Apply
A
Defendants Failed To Prove Government Code Section 66022 Applies
Defendants raise two affirmative defenses under Government Code section 66022:
(1) plaintiffs failed to file the petition within 120 days of the hearing adopting the rate
increase and thus the petition was untimely under subdivision (a) of the statute; and
(2) plaintiffs did not comply with the validation act procedures under subdivision (b) of
the statute and thus the trial court lacked jurisdiction to consider their petition. Plaintiffs
assert Government Code section 66022 is inapplicable because defendants failed to meet
their burden of proving the rate increase falls within the definition of fees, capacity
charges, or service charges, as provided in subdivision (c) of the statute. We agree with
plaintiffs.
As the trial court noted and plaintiffs point out, Government Code section 66022
applies “only to fees, capacity charges, and service charges described in and subject to
Sections 66013, 66014, and 66016.” (Gov. Code, § 66022, subd. (c).) Defendants argue
the rate increase qualifies as a capacity charge under Government Code section 66013
and, “[w]hile arguably constituting a ‘fee’ within the scope of Section 66013[,
subdivision ](b)(5), the subject rates also constitute ‘service charges’ within the scope of
Section 66022.”
We do not consider defendants’ lurking argument that the district’s rate increase
could “arguably” constitute a fee under Government Code section 66013, subdivision
(b)(5). Defendants present no argument in that regard. As explained ante, we can and do
disregard conclusory arguments failing to disclose the reasoning by which defendants
15
reached a conclusion they ask us to adopt. (United Grand Corp. v. Malibu Hillbillies,
LLC, supra, 36 Cal.App.5th at p. 153.)
Defendants have further failed to meet their burden of proving the rate increase
constitutes a service charge within the meaning of Government Code section 66022,
subdivision (c). The argument relies on the following quote from Paland, which
defendants characterize as providing that “charges for water delivery constitute charges
for a service:” “Our Supreme Court has also indicated, however, that ‘domestic water
delivery through a pipeline is a property-related service within the meaning of [article
XIII D]. [Citation.] Accordingly, once a property owner . . . has paid the connection
charges and has become a customer of a public water agency, all charges for
water delivery incurred thereafter are charges for a property-related service, whether the
charge is calculated on the basis of consumption or is imposed as a fixed monthly fee.’ ”
(Paland v. Brookstrails Township Community Services Dist. Bd. of Directors (2009) 179
Cal.App.4th 1358, 1367-1368.) Paland did not consider the meaning of the term “service
charge” as defined and used in Government Code section 66022 and the incorporated
statutes identified in subdivision (c) thereof. Cases are not authority for propositions not
considered. (McWilliams v. City of Long Beach (2013) 56 Cal.4th 613, 626.)
As to the capacity charge argument, defendants assert any rate increase that
includes as a component thereof a charge for capital improvements qualifies as a capacity
charge under Government Code section 66013. (Citing Utility Cost Management v.
Indian Wells Valley Water District (2001) 26 Cal.4th 1185; Utility Cost Management v.
East Bay Municipal Utility Dist. (2000) 79 Cal.App.4th 1242; and Regents of Univ. of
Cal. v. City and County of San Francisco (2004) 115 Cal.App.4th 1109.) Defendants
direct us to a sentence in the notice and the category titled “capital expense” on the chart
presented at the hearing as evidence the rate increase included an amount for capital
improvements. The sentence in the notice stated, “[t]he rate increases are being proposed
in order to provide sufficient revenue to pay for the increasing costs of maintenance and
16
operation of the District’s water system, also to provide funding for physical plant and
distribution system replacement.” In defendants’ view, “[t]he fact that the charges are
also used for operating expenses does not take them outside of Section 66020 [sic].”
Plaintiffs disagree with defendants’ assertion Government Code section 66022
applies when a portion of the rate increase qualifies as a capacity charge. They further
argue a capacity charge “concerns charges for acquired or constructed ‘new public
facilities’ ” only and there is no evidence the district followed the other requirements in
Government Code section 66013, subdivision (c) that “any payment received pursuant to
a ‘capacity charge’ must be deposited into a separate capital facilities fund, and such
funds must be accounted for to avoid any commingling with other moneys.”
We need not address the merits of defendants’ argument that a rate increase
containing a capacity charge as a component of the increase triggers application of
Government Code section 66022. The problem with defendants’ argument is that they
failed to prove the rate increase included any charge for public facilities within the
meaning of Government Code section 66013, subdivision (b)(3). Defendants have the
burden of proving an affirmative defense. (Evid. Code, § 500.)
As amended in 2007, effective January 1, 2008 (Stats. 2007, ch. 94, §1), capacity
charge is defined in Government Code section 66013, subdivision (b)(3) as a “charge for
public facilities in existence at the time a charge is imposed or charges for new public
facilities to be acquired or constructed in the future that are of proportional benefit to the
person or property being charged, including supply or capacity contracts for rights or
entitlements, real property interests, and entitlements and other rights of the local agency
involving capital expense relating to its use of existing or new public facilities. A
‘capacity charge’ does not include a commodity charge.” The term public facilities
means “public improvements, public services, and community amenities.” (Gov. Code,
§§ 66013, subd. (b)(6), 66000, subd. (d).)
17
Although the district stated in the notice that a portion of the rate increase would
serve to provide funding for physical plant and distribution system replacement, there is
no evidence in the record to support the conclusory assertion. The “capital expense” line
item on the chart presented at the hearing also does not show or prove that a portion of
the rate increase was a charge for public facilities. The chart merely lumps together
revenue and deducts from that revenue the lumped together categories of expense and
capital expense. The notice and chart do not show, as defendants assert, that “the
information before the Board established that the fees were, in part, for physical plant,
distribution system replacement and capital expense.” We agree with the trial court that
defendants “have not produced sufficient evidence to establish persuasively that any
portion of the rate increase, in fact, satisfies the[ Government Code section 66013,
subdivision (b)(3)] requirements.” Thus, defendants failed to satisfy their burden of
proving Government Code section 66022 applies to the rate increase. Nothing in the
cases relied upon by defendants supports a conclusion to the contrary. (People v. Thomas
(1992) 2 Cal.4th 489, 516 [“When we decide issues of sufficiency of evidence,
comparison with other cases is of limited utility, since each case necessarily depends on
its own facts”].)
B
Plaintiffs Are Excused From Complying With The Exhaustion Doctrine, If It Applies
Defendants assert the trial court erred in applying the futility exception to the
exhaustion doctrine in this case and believe this appeal requires us to decide whether the
public participation process provided in section 6 constitutes an administrative remedy
that must be exhausted before a ratepayer (i.e., plaintiffs) may challenge the substantive
propriety of a property-related fee increase in court -- an issue expressly not decided by
our Supreme Court in Plantier. (Plantier, supra, 7 Cal.5th at p. 388 [“We do not decide
and express no view on the broader question of whether a Proposition 218 hearing could
ever be considered an administrative remedy that must be exhausted before challenging
18
the substantive propriety of a fee in court”].) Defendants believe the exhaustion doctrine
applies and plaintiffs are thus barred from seeking to invalidate the rate increase because
they failed to participate in the Proposition 218 protest process.
Plaintiffs assert “[t]his action . . . not only challenges the District’s unlawful rate
hike, but also the purported methodology employed in implementing the rate hike,” as in
Plantier. Thus, in plaintiffs’ view, they did not need to participate in the protest process
to preserve their substantive challenges to the rate increase. In the alternative, plaintiffs
assert the trial court’s finding that the futility exception applies is supported by
substantial evidence.
Defendants reply that plaintiffs’ challenge is unlike the methodological challenge
considered in Plantier and the notice and hearing provided by the district provided an
adequate remedy in this case.
We agree with defendants that the futility exception to the exhaustion doctrine
does not apply under the facts of this case. We also agree with defendants that plaintiffs’
allegations are unlike those raised in Plantier. Like our Supreme Court in Plantier,
however, we decline to consider whether the public participation process provided in
section 6 constitutes an administrative remedy that must be exhausted prior to litigation.
(Plantier, supra, 7 Cal.5th at p. 388.) We conclude that, even if the exhaustion doctrine
applies, plaintiffs were excused from complying with it because defendants’ notice did
not meet the procedural requirements under section 6.
1
The Exhaustion Doctrine Generally
“Generally, ‘a party must exhaust administrative remedies before resorting to the
courts. [Citations.] Under this rule, an administrative remedy is exhausted only upon
“termination of all available, nonduplicative administrative review procedures.” ’
[Citations.] ‘The rule “is not a matter of judicial discretion, but is a fundamental rule of
procedure . . . binding upon all courts.” ’ [Citation.]
19
“The exhaustion doctrine is primarily grounded on policy concerns related to
administrative autonomy and judicial efficiency. [Citation.] The doctrine favors
administrative autonomy by allowing an agency to reach a final decision without
interference from the courts. [Citation.] Unless circumstances warrant judicial
involvement, allowing a court to intervene before an agency has fully resolved the matter
would ‘constitute an interference with the jurisdiction of another tribunal.’ [Citation.] If
exhaustion were not required, a litigant would have an incentive to avoid securing an
agency decision that might later be afforded deference. [Citation.] Further, creating an
agency with particular expertise to administer a specific legislative scheme would be
frustrated if a litigant could bypass the agency in the hope of seeking a different decision
in court.
“As to judicial efficiency, the doctrine allows an administrative agency to provide
relief without requiring resort to costly litigation. [Citation.] Even when an
administrative remedy does not resolve all issues or provide complete relief, it still may
reduce the scope of litigation. [Citation.] Requiring a party to pursue an available
administrative remedy aids judicial review by allowing the agency to draw upon its
expertise and develop a factual record for the court’s consideration.” (Plantier, supra, 7
Cal.5th at pp. 382-383.)
“Even when a procedure is considered an administrative remedy, a party may be
excused from exhausting it if an exception applies.” (Plantier, supra, 7 Cal.5th at p.
384.) The exceptions generally cover circumstances in which the policies in favor of the
exhaustion requirement are outweighed by considerations of fairness and practicality,
such as “where ‘the administrative remedy is inadequate [citation]; where it is
unavailable [citation]; or where it would be futile to pursue such remedy [citation].’ ”
(Automotive Management Group, Inc. v. New Motor Vehicle Bd. (1993) 20 Cal.App.4th
1002, 1015.)
20
2
The Futility Exception Does Not Apply
The futility exception is very narrow and does not apply unless the person
invoking it can positively state that the agency declared what its decision will be in a
particular proceeding. (Sea & Sage Audubon Society, Inc. v. Planning Com. (1983) 34
Cal.3d 412, 418.) In asserting the futility exception, plaintiffs relied on the over 150
letters submitted to the district by other customers in advance of the rate increase hearing.
Those letters do not demonstrate that the district positively decided to adopt the 50
percent rate increase proposal prior to the hearing. The trial court thus erred in applying
the futility exception.
3
This Case Is Not Like Plantier
In Plantier, a restaurant owner objected to the water district’s decision “that the
[equivalent dwelling units] assigned to his property were being changed from 2.0 to 6.82,
resulting in a substantial fee increase.” (Plantier, supra, 7 Cal.5th at p. 378.) The
restaurant owner and two other commercial property owners sued the water district after
the water district denied their administrative claim that the equivalent dwelling unit
assignment method violated Proposition 218’s proportionality requirement. (Ibid.) The
water district asserted the complaint was barred because the plaintiffs in that case failed
to challenge the method of allocating the equivalent dwelling units during the water
district’s Proposition 218 rate increase proceedings in 2012, 2013, and 2014. (Id. at
pp. 377-378, 379.) The trial court concluded Proposition 218 created an additional
unexhausted remedy; the Court of Appeal reversed. (Id. at pp. 379-380.) Our Supreme
Court affirmed. (Id. at p. 390.)
Our Supreme Court, “[f]or purposes of th[e] analysis, . . . assume[d] that a
Proposition 218 rate hearing is an ‘administrative remedy’ because that is the way the
parties and the courts below ha[d] framed the issue presented by th[e] dispute.”
21
(Plantier, supra, 7 Cal.5th at pp. 383-384.) The court held that, “[e]ven if a Proposition
218 hearing could be considered an administrative remedy, it would not provide an
adequate remedy for a challenge to the method used to allocate the fee burden in th[at]
case.” (Id. at p. 376.) It explained “a Proposition 218 rate increase hearing is not a forum
to protest an existing rate structure . . . .” (Id. at p. 387.)
Here, plaintiffs are not challenging the district’s methodology as to the allocation
of the water service fee in relation to what other parcels within the district’s service area
are charged. Plaintiffs instead directly challenge the rate increase based on defendants’
noncompliance with the procedural and substantive requirements of Proposition 218.
This case is thus unlike Plantier and the analysis applied in that case is inapplicable
under the facts presented.
4
The Inadequate Remedy Exception Nonetheless Applies
Now rested at our feet is defendants’ argument that we must decide whether the
notice and hearing requirements in section 6 create an administrative remedy that must be
exhausted before a ratepayer may seek relief in court. Like our Supreme Court in
Plantier, we see no need to address the broad question posed by defendants. Presuming
without deciding that section 6’s public participation procedure is considered an
administrative remedy, we conclude plaintiffs were excused from the exhaustion
requirement under the inadequate administrative remedy exception to the doctrine.6
(Plantier, supra, 7 Cal.5th at p. 384 [“Even when a procedure is considered an
administrative remedy, a party may be excused from exhausting it if an exception
applies”].)
6 Given this conclusion, we decline defendants’ invitation to consider the
application and merits of Hill RHF Housing Partners, L.P. v. City of Los Angeles (2020)
51 Cal.App.5th 621, review granted September 16, 2020, S263734.
22
“ ‘A party is not required to exhaust the available administrative remedies when
those administrative procedures are the very source of the asserted injury.
[Citation.] This rule is merely another facet of the inadequate administrative remedy
exception to the exhaustion rule. [Citation.] Under this exception, a party is excused
from exhausting the administrative remedies where the challenge is to the
constitutionality of the administrative agency itself or the agency’s procedure.’ ”
(Unnamed Physician v. Bd. of Trustees (2001) 93 Cal.App.4th 607, 621.) The exception
applies, for example, when an administrative remedy fails to satisfy the standards of due
process. (Imagistics International, Inc. v. Dept. of General Services (2007) 150
Cal.App.4th 581, 591; AIDS Healthcare Foundation v. Dept. of Health Care Services
(2015) 241 Cal.App.4th 1327, 1350.)
We asked the parties to submit supplemental briefs addressing whether the due
process exception to the exhaustion doctrine should apply under the facts of this case.
Defendants appropriately note due process protections do not apply to quasi-legislative
decisions but acknowledge section 6 provides “a person or entity challenging the new
rates with certain procedural rights.” Defendants further argue the notice and protest
provisions of section 6 are consistent with due process and the district complied with
those procedural requirements, precluding the application of an exception to the
exhaustion doctrine. In defendants’ view, there is no basis for excusing plaintiffs’ failure
to exhaust the section 6 protest procedure when considering the significant interests and
concerns underlying the exhaustion doctrine.
Plaintiffs argue the district’s violation of the procedural requirements under
section 6 provides an additional basis for being excused from exhausting any
administrative remedy. They assert the district violated section 6’s notice requirements
by: (1) providing “a generic example of how one hypothetical customer’s fee would
increase” rather than the actual amount of the rate increase pertinent to each parcel; (2)
failing to explain in the notice how the amount of the rate increase was calculated; and
23
(3) failing to prove the notice was mailed to all ratepayers. Plaintiffs further argue the
district’s hearing was inadequate because “the Administrative Record reveals the District
engaged in no public (or any) explanation of its consideration of the proposed Rate
Hike.”
We conclude that, even if the exhaustion doctrine applies to plaintiffs’ challenge,
plaintiffs were excused from the exhaustion requirement under the inadequate
administrative remedy exception because the district’s notice failed to comply with the
express procedural requirements set forth in the California Constitution. It seems
anomalous to suggest that a ratepayer may not challenge a section 6 rate increase for
failing to participate in the protest procedure outlined in section 6 when the agency failed
to comply with the express notice requirements set forth in that procedure -- especially
where the agency fails to carry its burden of proving the notice was mailed to all
ratepayers and plaintiffs assert they did not receive the notice and were unaware the rate
increase was being considered. Thus, while defendants are correct that due process
protections do not extend to quasi-legislative proceedings (Monsanto v. Office of
Environmental Health Hazard Assessment (2018) 22 Cal.App.5th 534, 562), we find the
notice and hearing provisions in section 6 analogous to due process protections and
believe the inadequate administrative remedy exception appropriately applies here.
Defendants assert the district complied with the notice requirements under section
6 because: (1) it prepared and mailed the notice to record owners subject to the rate
increase, relying on the notice and the declaration of Richard Bedal; (2) the notice “listed
the current rate for a residential customer and indicated how each step of the increase
would increase that rate by 50 percent,” allowing a customer to “look at his or her current
rate and determine how the increase would impact rates in the future”; (3) the notice
“indicated the basis for the increase”; and (4) the notice “advised of the date, time and
location of the hearing.” We conclude the notice is deficient for three reasons.
24
First, defendants fail to mention or acknowledge that the trial court denied
defendants’ request to take judicial notice of Bedal’s declaration because the “document
is not part of the administrative record and is not proper for judicial notice.” Defendants
do not challenge that evidentiary determination on appeal. Thus, the only evidence in the
record upon which defendants rely to prove the district provided the notice to its
ratepayers is a copy of the notice. Unquestionably, a mere copy of the notice by itself
does not meet defendants’ burden of proving compliance with this constitutional
procedural requirement.
Second, the district’s hide-the-ball approach as to amount of the rate increase is
simply incongruent with the purpose of the procedural requirements. “We ‘ “ ‘must
enforce the provisions of our Constitution and “may not lightly disregard or blink at . . . a
clear constitutional mandate.” ’ ” ’ [Citation.] In so doing, we are obligated to construe
constitutional amendments in a manner that effectuates the voters’ purpose in adopting
the law.” (Silicon Valley Taxpayers’ Assn., Inc. v. Santa Clara County Open Space
Authority, supra, 44 Cal.4th at p. 448.) The purpose of the procedural requirements was
to enhance ratepayer consent. (Ibid.) Viewed through that lens, a local government must
provide ratepayers with notice of the actual amount of the rate increase pertinent to him,
her, or it to allow the ratepayer a meaningful opportunity to determine whether to consent
to or oppose it. The hypothetical example provided by the district does not meet this
standard. The hypothetical in the notice does not square with the constitutional
obligation imposed upon the district to calculate the amount of the charge to be imposed
upon each parcel and to provide ratepayers with notice of such amounts. (§6, subd.
(a)(1).) The district clearly had the information at its disposal given that it calculated the
total revenue it anticipated to receive from the rate increase, as presented at the hearing.
(AR 105)
Third, section 6 provides the notice of a rate increase shall provide the basis upon
which the amount was calculated. (§ 6, subd. (a)(1).) The following portion of the notice
25
relied upon by the district does not meet the basis requirement: “The rate increases are
being proposed in order to provide sufficient revenue to pay for the increasing costs of
maintenance and operation of the District’s water system, also to provide funding for
physical plant and distribution system replacement. The proposed rates for each
classification of property are determined by the cost of providing water service to
customers in that classification, based upon the water use characteristics of such
property.”
The first sentence provides the reason not the basis for the rate increase. The
reason for the increase was purportedly to “provide sufficient revenue to pay for the
increasing costs of maintenance and operation of the District’s water system, also to
provide funding for physical plant and distribution system replacement.”7 The second
sentence also does not provide the basis upon which the increase was calculated. The
proposed increase was a flat percentage applied to all parcels within the district. The
notice, however, simply stated that the “proposed rates for each classification of property
are determined by the cost of providing water service to customers in that classification,
based upon the water use characteristics of such property.” This merely states why
different rates are charged to different types of properties, but it fails to inform ratepayers
how the district calculated the flat proposed 50 percent rate increase across all parcels.
The notice thus does not comply with the procedural requirement of providing a basis for
the proposed rate increase.
We are mindful that “Proposition 218 was designed to: constrain local
governments’ ability to impose assessments[ and property-related fees]; place extensive
requirements on local governments charging assessments[ and property-related fees];
shift the burden of demonstrating assessments’ [and property-related fees’] legality to
7 Notably absent from the stated reason is any mention of rebuilding the district’s
reserves due to previous budget shortfalls.
26
local government; make it easier for taxpayers to win lawsuits; and limit the methods by
which local governments exact revenue from taxpayers without their consent.” (Silicon
Valley Taxpayers’ Assn., Inc. v. Santa Clara County Open Space Authority, supra, 44
Cal.4th at p. 448.) Compliance with section 6’s procedural requirements is fundamental
to ensure ratepayers have the information necessary to determine whether to, among
other things, submit a written protest to the rate increase in advance of the hearing.
Moreover, application of the exception under these facts does not run afoul with
the exhaustion doctrine’s policy concerns related to administrative autonomy or judicial
efficiency. Instead, under the circumstances presented, the policies in favor of the
exhaustion requirement are outweighed by considerations of fairness and practicality.
We thus conclude that, inasmuch as the district’s procedure for adopting the rate increase
did not comply with the procedural requirements imposed by the California Constitution,
plaintiffs were excused from exhausting any administrative remedy that may apply under
section 6.
III
The Attorney Fee Award Was Appropriate
Code of Civil Procedure section 1021.58 “ ‘ “codifies the ‘private attorney
general’ doctrine under which attorney fees may be awarded to successful litigants. ‘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. [Citations.]’ [Citation.] Entitlement to fees under section
1021.5 requires a showing that the litigation: ‘(1) served to vindicate an important public
8 All further references to section 1021.5 in part III of the Discussion are to the
Code of Civil Procedure.
27
right; (2) conferred a significant benefit on the general public or a large class of persons;
and (3) imposed a financial burden on plaintiffs which was out of proportion to their
individual stake in the matter.’ ” (Robles v. Employment Development Dept. (2019) 38
Cal.App.5th 191, 199.)
Defendants argue: (1) plaintiffs did not demonstrate they conferred a significant
benefit on the general public or a large class of people; (2) plaintiffs failed to show the
burden of private enforcement outweighed their own personal interest when comparing
the significance of the rate increase plaintiffs faced (which defendants estimated to
exceed $200,000) and the amount in legal fees expended to protect their rights;
(3) plaintiffs failed to establish the hours expended were reasonable because their
“redacted statements do not fully describe each billed activity”; and (4) the trial court
erred and abused its discretion in failing to reduce plaintiffs’ fee amount because
plaintiffs did not attain all of their goals in this litigation. We disagree on all points.
A
Plaintiffs Conferred A Significant Benefit On A Large Class Of Persons
The trial court found no merit in defendants’ argument that plaintiffs “failed to
produce evidence that this litigation conferred a significant benefit on the general public
and has merely made conclusory arguments that such a benefit exists.” The court
explained “that unlike the cases [defendants] cite[d], this case does not merely involve
the ‘sending of a message’ in order to demonstrate a significant benefit to a large class of
persons.” The court found defendants failed to “contradict P[laintiffs]’ assertions in their
opening brief that over 7,500 District customers directly benefited from P[laintiffs]’
challenge as the rate increase was going to result in an approximately 200% increase to
all customers.” Thus, “[w]hile P[laintiffs]’ success may also send a message, the
evidence cited by P[laintiffs] supports a finding that it results in a direct impact on [the
district’s] customers who would otherwise have been required to continue to pay the
unconstitutional rate hike. This is a significant benefit to a large class of persons, and
28
certainly goes beyond P[laintiffs]’ own personal interest, contrary to [defendants’]
arguments.”
Defendants argue the trial court erred for the following reasons: (1) plaintiffs
presented no evidence “that [their] victory provided a significant benefit to a large class
of people or the public in general other than those limited rate payers owning an
apartment or multi-unit complex within the District”; (2) plaintiffs’ victory cannot
demonstrate a significant benefit to a large class of people because, “[w]hile the rates of
water users within the same category as [plaintiffs] might go down, the District might
need to go through the process of increasing rates for other residents in order to
compensate for and replace the operating revenue lost due to [plaintiffs’] challenge”; and
(3) “any impact beyond an acknowledgment that the District must adhere to the
provisions of Article XIII D could be extremely limited” because “the series of rate
increases last only through July of 2019.”
First, defendants’ attempt to limit the impact of the judgment to “rate payers
owning an apartment or multi-unit complex” is not well taken. The trial court issued a
peremptory writ of mandate commanding defendants to “[s]et aside and vacate the water
rate increases approved by FLORIN COUNTY WATER DISTRICT on December 12,
2016.” The judgment and peremptory writ of mandate were not limited to the rate
increase pertaining to apartments or multi-unit complexes. Second, defendants do not
challenge the trial court’s reliance on plaintiffs’ factual assertion that over 7,500 district
customers benefited from the underlying action. We fully agree with the trial court’s
analysis, to which defendants provide no credible challenge. Any actions defendants may
take in the future in response to the judgment -- i.e., the threatened increased rates that
may be imposed on other classes of water users -- do not diminish what plaintiffs
achieved in this litigation.
29
B
The Trial Court Did Not Abuse Its Discretion
In Applying The Financial Interest Prong
The financial burden of private enforcement prong of section 1021.5 “ ‘focuses on
the financial burdens and incentives involved in bringing the lawsuit.’ ”
(Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1215.) “ ‘ “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.’ ” ’ ” (Ibid.) The trial court weighs the costs and benefits by “plac[ing] the
estimated value of the case beside the actual cost and mak[ing] the value judgment
whether it is desirable to offer the bounty of a court-awarded fee in order to encourage
litigation of the sort involved in this case . . . . [A] bounty will be appropriate except
where the expected value of the litigant’s own monetary award exceeds by a substantial
margin the actual litigation costs.’ ” (Id. at p. 1216.)
As noted in Los Angeles Police Protective League, however, the section 1021.5
factors are interrelated: “Where the benefits achieved for others are very high it will be
more important to encourage litigation which achieves those results. Accordingly, it will
be more important to offer the bounty of a court-awarded fee than where the public
benefits are less significant. Thus, the courts should be willing to authorize fees on a
lesser showing of need than they might where the public benefits are less dramatic. This
means the court sometimes should award fees even in situations where the litigant’s own
expected benefits exceed its actual costs by a substantial margin. [¶] In contrast, where
the public benefits are rather modest the courts should award fees only where the
litigant’s own expected benefits do not exceed its costs by very much (or possibly are
even less than the costs of the litigation). To put it another way, when the ratio between
public benefits and the litigant’s expected benefits is high the court should award fees
30
even though the ratio between expected litigant benefits and litigant costs is high. On the
other hand, 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.” (Los Angeles Police Protective League v. City of Los
Angeles (1986) 188 Cal.App.3d 1, 10.)
The trial court considered defendants’ argument that plaintiffs failed to show “the
cost of pursuing this matter was disproportionate to the monetary benefit obtained”
because the “annual increase of $92,256 [in plaintiffs’ rate], as well as the potential
decrease in property value of several million dollars if the rate increases remained” far
exceeded the approximately $66,000 in legal fees. Relying on Los Angeles Police
Protective League, the trial court found “that while P[laintiffs] did indeed have a
financial interest in the outcome of this litigation, the benefits achieved for others were
very high in this matter. If the unconstitutional rate increase went unchallenged,
[defendants] were to collect a significant net profit annually, to the detriment of all rate
payers. The Court, [in] its discretion, finds that considering P[laintiffs]’ own expected
benefits in this matter, P[laintiffs]’ actual costs, and the significant public benefits that
were achieved, including benefits to over 7500 rate payers, it is important to provide a
court-awarded fee in this matter . . . .” (Citing Los Angeles Police Protective League v.
City of Los Angeles, supra, 188 Cal.App.3d at p. 10.)
On appeal, defendants simply reiterate the arguments made in the trial court. They
assert plaintiffs’ recovery of attorney fees under section 1021.5 is not justified because
the “overall cost [of the rate increase] for [plaintiffs] w[ould] exceed $200,000” and
plaintiffs alleged the rate increase, “if . . . allowed to stand, w[ould] reduce the fair
market value of the Sunflorin Apartments by several million dollars.” Plaintiffs’ personal
stake in the outcome of the case was thus, in defendants’ view, disproportionate to the
burden of private enforcement as demonstrated by the approximately $66,000 in attorney
fees awarded to plaintiffs.
31
Defendants fail to mention, address, or challenge the trial court’s reasoning and
findings under the balancing approach it employed in accordance with Los Angeles
Police Protective League -- i.e., that attorney fees are appropriate because, even though
plaintiffs had a financial interest in the outcome of the litigation, the public benefits
achieved were high. By merely reiterating the arguments made in the trial court,
defendants in essence ask us to substitute our judgment for that of the trial court under a
de novo standard of review and disregard the trial court’s exercise of discretion. This we
will not do.
The trial court’s analysis and findings are subject to an abuse of discretion
standard of review. (Los Angeles Police Protective League v. City of Los Angeles, supra,
188 Cal.App.3d at p. 11; Sweetwater Union High School Dist. v. Julian Union
Elementary School Dist. (2019) 36 Cal.App.5th 970, 994.) “ ‘Discretion is abused
whenever, in its exercise, the court exceeds the bounds of reason, all of the circumstances
before it being considered. The burden is on the party complaining to establish an abuse
of discretion, and unless a clear case of abuse is shown and unless there has been a
miscarriage of justice a reviewing court will not substitute its opinion and thereby divest
the trial court of its discretionary power.’ ” (Denham v. Superior Court (1970) 2 Cal.3d
557, 566.)
Defendants do not argue the trial court applied an incorrect legal standard, or its
decision was arbitrary, irrational, or otherwise exceeded the bounds of reason. Indeed, by
failing to address the trial court’s reasoning and findings, defendants raise no argument
that the trial court abused its discretion at all. Even if we were to agree with defendants
that plaintiffs’ expected benefits exceeded the actual costs of litigation by a substantial
margin (which we do not decide), defendants fail to show the trial court abused its
discretion in applying the next step of the analysis as stated in Los Angeles Police
Protective League -- that the bounty is nonetheless appropriate because the public
benefits achieved were high. We thus affirm the trial court’s finding.
32
C
The Trial Court Did Not Abuse Its Discretion In Determining The Award Amount
“[W]e review the amount of an attorney fees award for an abuse of discretion.
[Citation.] Unless an award is ‘clearly wrong,’ no such abuse of discretion can be
demonstrated. [Citation.] In other words, a trial court’s attorney fee award will not be
set aside ‘absent a showing that it is manifestly excessive [under] the circumstances.’ ”
(Cruz v. Fusion Buffet, Inc. (2020) 57 Cal.App.5th 221, 237.)
Here, defendants presented the trial court with two arguments as to why the fee
amount was unreasonable. First, defendants argued some of plaintiffs’ fee statements
contained entries that were “improperly block-billed” or “overly-redacted such that the
Court cannot determine the hours spent were reasonable.” The trial court disagreed,
finding: “The Court has reviewed the objected-to entries, and does not find the entries
are improperly redacted or block-billed. The Court, in its discretion, finds that the
provided information is sufficient to determine that the hours spent were reasonable, and
finds that the hours spent were in fact reasonable.”
Second, defendants argued the requested fee amount needed to be reduced because
plaintiffs failed to prevail on several legal theories, their request for damages, an ex parte
application to stay enforcement of the rate increase, and a motion to compel discovery
responses. The trial court again disagreed, stating: “This Court finds the time
P[laintiffs]’ counsel spent was reasonable, even on legal theories or motions for which
P[laintiffs] did not prevail. The Court, in its discretion, declines to reduce the hours
sought on the basis that P[laintiffs] were not successful in every aspect of this litigation.”
Defendants challenge both findings on the same grounds asserted in the trial court.
We have reviewed the timesheets and billing information attached to the declaration of
Andrew D. Bluth in support of the motion for attorney fees and conclude the trial court
did not abuse its discretion in finding it had sufficient information to determine whether
the hours spent were reasonable. As to the requested reduction in the fee amount,
33
nothing in defendants’ brief explains why or how the trial court abused its discretion
under the facts of this case. Defendants merely assert, in conclusory fashion, that “given
the lack of total success on all goals, the trial court should have exercised its discretion
and reduced the amount of fees recovered related to the ex parte application, the motion
to compel including time spent drafting the underlying discovery and related to recovery
of damages.” Defendants again fail to disclose the reasoning by which they ask us to
reach the conclusion they want us to adopt -- that is that the trial court abused its
discretion. (United Grand Corp. v. Malibu Hillbillies, LLC, supra, 36 Cal.App.5th at
p. 153.) We will not substitute our judgment for that of the trial court and find no basis
for reversing the trial court’s finding.
DISPOSITION
The amended judgment is affirmed. Plaintiffs shall recover their costs on appeal.
(Cal. Rules of Court, rule 8.278(a)(1)-(2).)
/s/
Robie, J.
We concur:
/s/
Raye, P. J.
/s/
Blease, J.
34