Opinion
NOT TO BE PUBLISHED
City & County of San Francisco Super. Ct. No. CGC-07-466409
Pollak, J.
Plaintiff Rural Media Arts and Education Project (Rural Media) appeals from an order denying its motion for attorney fees under Code of Civil Procedure section 1021.5 after it settled its action against defendants California Cultural and Historical Endowment (the endowment), California State Library, Susan Hildreth, in her capacity as California’s State Librarian, and Diana Matsuda, in her capacity as Executive Officer of the endowment. Defendants contend that the motion was properly denied because the action did not vindicate an important right affecting the public interest or confer a significant benefit on a large class of people. We agree and shall affirm the order.
All statutory references are to the Code of Civil Procedure unless otherwise noted.
Factual and Procedural Background
In 2002, the Legislature enacted the California Cultural and Historical Endowment Act, Education Code section 20050 et seq. (the Act), which established the endowment. The endowment exists within the California State Library and consists of 10 members, including the State Librarian. The State Librarian, or his or her designee, serves as chair of the endowment. (Ed. Code, § 20053.) The endowment is authorized to “award grants and loans on a competitive basis to public agencies and nonprofit organizations, including museums, to encourage development of a systematic and coordinated assemblage of buildings, sites, artifacts, museums, cultural landscapes, illustrations, written materials, and displays and interpretive centers to preserve and tell the stories of California as a unified society and of the many groups of people that together comprise historic and modern California. In addition to preserving and interpreting California’s missions, gold rush and pioneer sites, and other examples of early European exploration and settlement, the endowment shall give priority to funding projects to preserve, interpret, and enhance understanding and appreciation of the state's subsequent cultural, social, and economic evolution.” (§ 20070, subd. (a).) The endowment is directed to (1) “give priority to funding projects that preserve, document, interpret, or enhance understanding of threads of California’s story that are absent or underrepresented in existing historical parks, monuments, museums, and other facilities, and to achieve careful balance geographically, among communities and organizations of large and small size, and among diverse ethnic groups,” and (2) “ensure that California's historic and cultural resources are accessible and available to the people of California, especially traditionally underserved communities, by encouraging programs including, but not limited to, traveling exhibitions, illustrative publications, exchanges, Web sites and digitalization of materials, and programs in conjunction with school districts to bring school children into contact with these materials, and may fund projects for these purposes.” (§ 20070, subds. (c) & (d).)
Following its inception, the endowment adopted and implemented policies and procedures for consideration of applications for funding pursuant to the Act. The record reflects that between 2004 and 2007 there were three rounds of funding. Various modifications in the policies and procedures were adopted over the course of the first three rounds. The procedures applicable to the second round required grant applications to be submitted “in hard copy along with a CD-ROM containing the identical information submitted in the hard copy” and the endowment “provided an online fillable application form that applicants were required to use.” According to the application guidelines, “endowment staff would initially review timely-filed funding applications for completeness and eligibility, and would then assign each application to a funding division based on the type of project and the size of the applicant’s organization. Following staff review, the applications would be sent to review panels. The review panels would assign numerical scores based on criteria adopted by the defendants....The panels would then forward those applications scoring in the top 25% within each division to the endowment board. The forwarded applications would be considered by the endowment board for funding.”
Rural Media is a California not-for-profit corporation headquartered in the old Masonic Hall in the historic district of downtown Mariposa. Its mission is “to open cultural and educational access and build and strengthen community through the media arts.” In January 2006, Rural Media submitted a grant application to the endowment for consideration in the second round of funding. The application requests a grant of funds to “stabilize, rehabilitate and renovate the old Masonic Hall building” to better serve Mariposa’s residents and tourists and to allow greater use of the space for community events. Due to an alleged “ ‘bug’ in the endowment’s system,” certain budgetary information was not readable on the CD-ROM that Rural Media submitted with its application. In May 2006, Rural Media was informed that its application had been rejected by the review panel because the information was missing from the CD-ROM.
In August 2007, Rural Media filed a complaint against defendants alleging that the endowment’s procedural requirements for grant applications were arbitrary and unlawful. An amended complaint similarly challenged the endowment’s allegedly “arbitrary and unlawful policies and procedures.” The first three causes of action allege that the application procedures, policies and criteria were adopted in violation of the Administrative Procedure Act, Government Code section 11340 et seq. The fourth cause of action alleges that “[t]he endowment’s adoption and use of new application criteria and procedures for round two without first holding public hearings throughout the state violates [the Act].” A fifth cause of action alleges that “[d]efendants’ arbitrary and capricious enforcement of unreasonable and unlawful application procedures deprived plaintiff of its statutorily conferred interest in being considered for funding by the endowment board, in violation of plaintiff’s California Constitutional right to due process.” The sixth cause of action asserted a claim for equitable estoppel. Rural Media sought an order declaring that “all policies, rules, regulations, criteria, procedures and instructions utilized by the endowment to grant or deny a funding application under the [Act] are invalid.” Rural Media also sought injunctive relief requiring the endowment to reconsider its application and “resubmit the application... to the same review panel to be rescored, and present the application to the endowment board for funding consideration in the same manner [as]... applications originally forwarded to the board were considered.” The court sustained without leave to amend defendants’ demurrer to the first three causes of action on the ground that the endowment is exempt from the requirements of the Administrative Procedures Act.
In May 2008, the lawsuit was settled. The settlement agreement permitted Rural Media to present its grant proposal to the endowment’s governing board, without rescoring of the grant application by the review panel. The board agreed to consider the application, but “under no obligation to provide funding for [the] project.” Ultimately the board approved a grant in the amount of $1.3 million for the project.
Rural Media filed a motion for attorney fees pursuant to section 1021.5. The trial court denied the motion on the ground that the litigation had not conferred a significant benefit on a large class of people. Rural Media timely filed a notice of appeal.
Section 1021.5 provides in relevant 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.”
Discussion
“Section 1021.5 codifies the ‘private attorney general doctrine’ adopted by our Supreme Court in Serrano v. Priest (1977) 20 Cal.3d 25. [Citations.] The doctrine is designed to encourage private enforcement of important public rights and to ensure aggrieved citizens access to the judicial process where statutory or constitutional rights have been violated. [Citation.] In determining whether to award attorney fees under section 1021.5 to the ‘successful party,’ we apply a three-prong test inquiring whether (1) the litigation resulted in the enforcement of an important right affecting the public interest, (2) a significant benefit has been conferred on the general public or a large class of individuals, and (3) the necessity and financial burden of private enforcement renders the award appropriate.” (Ryan v. California Interscholastic Federation (2001) 94 Cal.App.4th 1033, 1044.) Each of these requirements must be met to warrant an award of attorney fees under section 1021.5. (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 934-935 (Woodland Hills).)
“The decision whether the claimant has met his burden of proving each of these prerequisites and is thus entitled to an award of attorney fees under section 1021.5 rests within the sound discretion of the trial court.” (Ryan v. California Interscholastic Federation, supra, 94 Cal.App.4th at p. 1044.) In Haraguchi v. Superior Court (2008) 43 Cal.4th 706, 711-712, the court elaborated, “The abuse of discretion standard is not a unified standard; the deference it calls for varies according to the aspect of a trial court’s ruling under review. The trial court’s findings of fact are reviewed for substantial evidence, its conclusions of law are reviewed de novo, and its application of the law to the facts is reversible only if arbitrary and capricious.” (Fns. omitted.)
Enforcement of an Important Right Affecting the Public Interest
As to the first requirement, the Supreme Court explained in Woodland Hills that “the trial court, utilizing its traditional equitable discretion... must realistically assess the litigation and determine, from a practical perspective, whether or not the action served to vindicate an important right so as to justify an attorney fee award under a private attorney general theory.” (Woodland Hills, supra, 23 Cal.3d at p. 938.) The Supreme Court stated that “the Legislature obviously intended that there be some selectivity, on a qualitative basis, in the award of attorney fees under the statute, for section 1021.5 specifically alludes to litigation which vindicates ‘important’ rights and does not encompass the enforcement of ‘any’ or ‘all’ statutory rights. Thus,... the statute directs the judiciary to exercise judgment in attempting to ascertain the ‘strength’ or ‘societal importance’ of the right involved.” (Woodland Hills, supra, at p. 935.) And in determining the importance of the particular right that was vindicated, courts must “realistically assess the significance of that right in terms of its relationship to the achievement of fundamental legislative goals.” (Id. at p. 936.)
Here, Rural Media suggests that “[t]he case was about due process: fairness and consistency in the administration of a government program in the absence of formal regulations that might otherwise have constrained the agency’s arbitrary practices.” It adds, “Realistically assessed, the right in this case was the right to fair and equitable distribution of state bond money appropriated for the purpose of promoting California’s cultural and historical heritage.” Defendants, on the other hand, characterize the case as involving no more than the consequences of a one-time “unresolved computer software glitch.”
The causes of action designed to invalidate endowment policies and procedures based on the means by which they were adopted were dismissed at the start of the litigation. The ruling reduced the case to an action to compel the endowment to consider Rural Media’s grant application. Rural Media alleged that strictly enforcing the grant application requirements was arbitrary and contrary to the purposes of the Act because a project that otherwise met the objectives of the Act was denied funding. As a result of the settlement, in which defendants denied liability, Rural Media successfully obtained review of its application. That success, however, did not necessarily vindicate an important right affecting the public interest. No decision was entered invalidating any of the endowment’s policies or procedures. The record indicates that the settlement did not result in the modification of any policies or procedures and it certainly did not establish a precedent applicable to the consideration of other grant applications.
The declaration of Susan Hildreth, the State Librarian and chair of the endowment, states: “The [endowment] Board approved the criteria and procedures used in all three rounds of [endowment] funding before this litigation was filed. [The endowment] did not modify its grant procedure or grant criteria as a result of this litigation. The litigation filed by [Rural Media] did not result in any changes in the way [the endowment] carries out its grant program.” Rural Media does not dispute these statements.
The fact that Rural Media alleged that the refusal to consider its application was a denial of due process does not mean that a significant public interest was vindicated. The mere fact that the allegation was made is not sufficient to warrant attorney fees under section 1021.5. (See Press v. Lucky Stores, Inc. (1983) 34 Cal.3d 311, 319, fn. 7 [“Of course, not all lawsuits enforcing constitutional guarantees will warrant an award of fees”]; Pacific Legal Foundation v. California Coastal Com. (1982) 33 Cal.3d 158 [litigation enforcing plaintiffs’ right to be free from an unconstitutional taking of their private property did not involve important right affecting the public interest]; Ellerbroek v. Saddleback Valley Unified School Dist. (1981) 125 Cal.App.3d 348, 378 [enforcement of principal’s due process rights did not vindicate important right affecting the public interest].)
Nor did this action promote the purpose of the Act by preserving and protecting a part of California’s historical heritage. In County of Colusa v. California Wildlife Conservation Bd. (2006) 145 Cal.App.4th 637, 649 (Colusa), cited by Rural Media, the court held that an award of attorney fees under section 1021.5 was appropriate where settlement resulted in the modification of a conservation easement to permit grazing on certain property. The court held that the action vindicated an important public right because the action promoted the goals of the Williamson Act (Gov. Code, § 51200 et seq.) “which recognizes the importance of agriculture to the economy of the State of California and seeks to maintain agricultural use on the agricultural land.” (Colusa, supra, at p. 652.) The court explained, “[i]n these circumstances, the County’s action against the State Agencies significantly promoted the Williamson Act’s legislative goals of allowing local governmental input and control over the preservation of agricultural land and open spaces (see, e. g., [Gov. Code,] §§ 51230, 51231) by seeking to compel the State Agencies to comply with the procedural requirements of the Williamson Act. As a consequence of the County’s action and the preliminary injunction and stay, the State Agencies were forced to consult with the County regarding its Williamson Act concerns, resulting in an amendment to the easement to allow continued agricultural use of the property through livestock grazing. The amendment fostered the public interest in maintaining agricultural production on lands covered by Williamson Act Contracts, an interest which the Legislature has itself declared to be an important one.” (Id. at p. 654.)
Here, Rural Media did not succeed in requiring the endowment to engage the public, through hearings or otherwise, or to modify its grant criteria or procedures. Nor did the action add to the body of law concerning the conservation of historic property in California. Although the trial court denied the attorney fee motion solely on the ground that Rural Media failed to show that the “litigation resulted in a significant benefit conferred on a large class of people,” the ruling is also sustainable for the failure to establish that it resulted in the enforcement of an important right affecting the public interest.
Choi v. Orange County Great Park Corp. (2009) 175 Cal.App.4th 524, cited in Rural Media’s supplemental letter brief, is also distinguishable. In that case, the court found that plaintiffs had enforced an important right affecting the public interest by obtaining a settlement that required a public nonprofit corporation to disclose to minority board members the identities and resumes of the chief executive officer (CEO) candidates under consideration by its search committee. (Id. at p. 531.) The court explained that “[g]iven the checkered history of the CEO search and the ongoing public criticism of the ‘revolving door of Great Park executives,’ ” the request for documents to determine how the search had been conducted to date “was an act to maintain the integrity of the process itself, a significant benefit to the public, protecting its interest.” (Ibid.) In contrast, the present action was not necessary, and did nothing, to ensure the integrity of the process by which the endowment awards grants.
Significant Benefit Conferred on the General Public or Large Class of Individuals
“The significant benefit criterion calls for an examination whether the litigation has had a beneficial impact on the public as a whole or on a group of private parties which is sufficiently large to justify a fee award. This criterion thereby implements the general requirement that the benefit provided by the litigation inures primarily to the public.” (Beasley v. Wells Fargo Bank (1991) 235 Cal.App.3d1407, 1417, overruled on another ground in Olson v. Automobile Club of Southern California (2008) 42 Cal.4th 1142, 1151.) The trial court determines “the significance of the benefit, as well as the size of the class receiving benefit, from a realistic assessment, in light of all the pertinent circumstances, of the gains which have resulted in a particular case.” (Woodland Hills, supra, 23 Cal.3d at pp. 939-940.)
Rural Media argues that this litigation conferred a significant benefit on the residents of Mariposa and the town’s visitors in that the grant will permit restoration of a building located in an historic downtown district, in which other nonprofit organizations operate and provide services to the public. It argues that the litigation conferred a significant benefit on the people of California by preserving a historic building, consistent with the stated objectives of the Act. Rural Media concludes, “Plainly, if [its] project did not serve a broad class of people it would not have been funded by [the endowment].”
While Rural Media suggests that the litigation conferred a benefit on “other nonprofit groups” that are “users” of the building, nothing in the record indicates how many other groups use the building and for what purpose.
Defendants argue that Rural Media confuses the public benefits conferred by the grant program itself with the benefit conferred by this litigation. It suggests that the sole benefit conferred by the settlement of this litigation is that “one entity, and one entity only, [was afforded] an opportunity to make a presentation for a chance to receive funding. No other applicant or potential applicant was similarly situated, and no other applicant did or could receive this opportunity.” They argue that without this litigation the $1.3 million awarded to Rural Media would still have been spent in furtherance of the public good, albeit on a different project.
The trial court’s conclusion that the litigation did not confer a significant benefit on the general public or a large class of people was neither arbitrary nor capricious. However many people may be affected by restoration of the building, the settlement of the action did not guarantee funding of Rural Media’s project. Rather, the project was funded because the endowment board determined that the project met the goals of the Act. Under the terms of the settlement the board had the right to reject the application if it concluded that the project did not meet the funding criteria. More importantly, while in the absence of the litigation it appears that the grant would not have been made as part of the endowment’s second round of funding, no determination was ever made that Rural Media’s project did not satisfy the funding criteria. Nothing in the record suggests that its application could not have been resubmitted and granted in a subsequent round of funding. The endowment board initially announced three rounds of funding, with third round funding anticipated to occur in April 2007. Moreover, the record suggests that the endowment intends to continue making grants until 2012. Hence, there is no basis to conclude that Rural Media’s project would not have been funded in the absence of this litigation.
Rural Media’s reliance on Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 685 is misplaced. In that case the court found that an award of attorney fees under section 1021.5 was appropriate where the settlement required the local government defendants to establish four new transit systems, estimated to serve between 267,000 and 335,600 one-way passengers per year, in an unincorporated portion of the county. (Id. at p. 675.) The connection between the settlement and the benefit conferred on a large class of people in that case is far more certain and direct than the connection between this litigation and the benefit conferred by inducing the endowment to accept Rural Media’s application and consider it under the unique procedure designed to settle this controversy.
Disposition
The order denying attorney fees is affirmed.
We concur: McGuiness, P. J., Jenkins, J.