Case Law: Heron Bay Homeowners Association v. City of San Leandro
Heron Bay Homeowners Association v. City of San Leandro (2018) – 19 Cal.App.5th 376
Case Summary
Halus Power Systems sought approval from the City of San Leandro for a zoning variance to construct a 100-foot-tall wind turbine on an industrial parcel. The property is located in an estuary, where many species of waterfowl and shorebirds, including threatened or endangered species, reside. The property is also roughly 500 feet from the 629-unit Heron Bay residential development. The city approved the construction of the turbine, finding that the significant environmental effects of the project could be reduced to insignificance through mitigation measures. The Heron Bay Home Owners Association filed suit under California Environmental Quality Act (CEQA), asserting that the city needed to prepare an environmental impact report (EIR) for the project.
The trial court entered judgment in favor of the Association. The Association then requested an award of attorneys’ fees under California Code of Civil Procedure section 1021.5, which authorizes an award of attorneys’ fees to the prevailing party in a case that enforces an important right affecting the public interest. The trial court awarded the Association only part of the fees it sought, finding that the Association “had a significant financial incentive to initiate the litigation,” since the Association members had brought the suit in part because they feared the turbine would cause their property values to decrease. However, it also found that they were also motivated by “non-pecuniary” concerns for the project’s impact on wildlife, aesthetics, health and noise levels. As a result, the court apportioned financial responsibility for their attorneys’ fees during the administrative proceedings entirely to the Association, but because of the “different risks and much larger financial commitment” of CEQA litigation, it divided equally the responsibility for the fees the HOA incurred for the litigation between the HOA on one side, and the city and Halus Power on the other.
Halus Power and the city appealed the award of attorneys’ fees, arguing that a fee award was not appropriate because the value of the benefit to the members of the Association (i.e., maintenance of their property values) far exceeded the financial burden of litigation. However, the Court of Appeal found that any financial benefit to the homeowners was speculative since the litigation was not certain to prevent construction of the turbine or even change the project, and preservation of property values was not immediately or certainly “bankable” and that fees could be apportioned because the record supported a finding that the Association’s motivations were not purely financially self-interested.
Takeaway
Trial courts have considerable discretion in awarding and apportioning attorneys’ fees under Section 1021.5 based on the particular facts of each case. More importantly, it makes it crystal clear that CEQA plaintiffs that might avoid a decrease in their property values by successfully challenging a project are not cut off from recovering section 1021.5 attorneys’ fees. Also, before initiating an action regarding an offsite issue, check the governing documents to make sure association is authorized to use association funds.
