In Millview County Water District v. State Water Resources Control Board, published October 26, 2016, the First District Court of Appeal, Division 1, vacated a trial court decision granting the plaintiffs in the case attorney fees under the private attorney general fee statute, Code of Civil Procedure section 1021.5. The plaintiff water district bought a water rights claim for $2.1 million shortly before the defendant Board issued a cease and desist order that would have restricted water diversion under the claim. The district and the sellers of the claim jointly prevailed on a writ of mandate action challenging the order. They sought their attorney fees under section 1021.5, arguing that because they stood to gain no money judgment from the action, the cost of the litigation outweighed the benefits to them. The trial court found that the action was a "financial burden" upon the plaintiffs, and granted them fees.
The court of appeal held that no substantial evidence supported the trial court's finding that the plaintiffs lacked a sufficient financial incentive to justify challenging the cease and desist order. An award of fees under section 1021.5 requires that the cost of the claimant's legal victory transcend his personal stake in the matter. If the order had remained in place, the sellers would have been limited under their sales contract to retaining the down payment of around $500,000, forfeiting the other $1.6 million due if no governmental order was entered limiting diversion of water under the claim. The purchaser, the District, risked having the asset for which it paid the $500,000 down payment rendered useless. Protecting what the plaintiff has is a sufficient financial incentive to pursue litigation without the need of a section 1021.5 "bounty."
Comments