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Citizens for Amending Proposition L v. City of Pomona
Citation: Not availableDocket: B283740
Court: California Court of Appeal; November 6, 2018; California; State Appellate Court
Original Court Document: View Document
In June 1993, the City of Pomona entered into a development agreement with Regency Outdoor Advertising, allowing Regency to erect ten new billboards in exchange for removing thirty existing billboards and paying various fees. Following the passage of Proposition L by Pomona citizens in November 1993, which prohibited the construction of additional billboards, the agreement was set to expire in June 2014. However, in July 2014, Pomona’s city council adopted an ordinance to extend the agreement for another twelve years. The plaintiffs, Citizens for Amending Proposition L and others, challenged this extension, arguing it constituted a new agreement that violated Prop. L. The trial court ruled in favor of the plaintiffs, determining the amendment was effectively a new agreement, awarded attorney's fees to the plaintiffs under Code of Civil Procedure section 1021.5, and denied Pomona's claims regarding standing, indispensable parties, and entitlement to attorney fees. The Court of Appeal affirmed the trial court's decision and denied respondents' motion for sanctions. The factual background indicates that the original agreement was designed to regulate billboard placement in specific eligible display areas adjacent to major freeways, and included provisions for fees and billboard removal. The agreement was set to expire ten years from either the completion of the New Structures or twelve months after its Effective Date. It included a provision for automatic extension for an additional ten years, subject to fee increases, unless terminated or modified by the agreement’s terms or mutual consent. The first term ended on June 24, 2004, and the agreement automatically renewed for a second term expiring on June 24, 2014. In November 1993, citizens of Pomona approved Proposition L, which prohibits new or altered offsite billboards without voter approval, but allows existing signs to remain if they are "grandfathered" under the 1993 agreement. In 2010, midway through the second term, Regency proposed a 15-year extension of the agreement. City staff suggested that extending the agreement would not conflict with Prop. L, as it does not require removal of existing signs. The city council engaged in discussions about billboards, but no resolution was reached. In January 2011, Stephens, representing Valley Outdoor, opposed the extension, arguing it violated Prop. L’s intent and suggesting Pomona could negotiate better terms. He reiterated these concerns in February 2011 and invited negotiations for a revenue-sharing agreement. Regency requested a delay in negotiations in March 2011, which the city council honored. Negotiations continued until early 2014, during which Regency withdrew its request to digitize billboards and proposed various extensions with different terms. City staff reports indicated that billboards under a 1993 agreement were to be removed by June 2014 if not extended. In February 2014, Pomona and Regency agreed to a 12-year extension of the agreement, with Regency making a one-time payment of $1,000,000. During a city council meeting on June 2, 2014, opposition to the extension was voiced by Plaintiff Stephens and a representative from the Alameda Corridor-East Construction Authority due to conflicts with a $1 billion railroad expansion project. The council postponed the decision to June 16, 2014, allowing Regency time to revise the proposal. The updated proposal acknowledged the original termination date of June 24, 2014, and included provisions for relocating and removing billboards interfering with the railroad project, as well as a revised indemnity clause. On June 16, 2014, the city council introduced Ordinance No. 4190 to approve the amendment extending the agreement for an additional twelve years. After the second reading on July 7, 2014, the council unanimously adopted the ordinance. Following this, on August 13, 2014, Plaintiffs filed a verified petition for writ of mandate and a complaint for declaratory relief against Pomona, not Regency. The petitioners included an unincorporated association, Citizens for Amending Proposition L, and individuals Vernon Price and J. Keith Stephens, the latter asserting that the development agreement would adversely affect him despite his previous support for the 1993 agreement. Plaintiffs initiated a legal action against the City of Pomona, claiming that the adoption of Ordinance No. 4190 exceeded the city's authority and constituted an abuse of discretion. They argued that a 1993 agreement permitting certain billboards expired on June 24, 2014, which required the removal of those billboards. By not enforcing this, the city allowed the placement of new signs, violating Proposition L. Plaintiffs contended that the city was obligated to comply with state and local laws, including the California Environmental Quality Act and Proposition L, and claimed a beneficial interest in enforcing these provisions. In their second cause of action, they sought a judicial declaration that Ordinance 4190 and the amendment to Development Agreement 93-001 were illegal and void. They also requested attorney’s fees under the private attorney general provisions of state law. Pomona filed a demurrer, asserting that the plaintiffs failed to include Regency as an indispensable party and a motion to strike certain allegations, particularly those related to Proposition L, as it was not applicable to the earlier agreement. The trial court overruled the demurrer, stating Regency was not indispensable, and denied most of the motion to strike, granting it only for two specific paragraphs. The court allowed plaintiffs to amend their claims, but they did not do so. After a 18-month stay, plaintiffs submitted memoranda identifying themselves as “Pomona Residents to Fix the Budget Without a Tax Increase” and “J. Keith Stephens,” omitting mention of plaintiffs Price or Citizens. Pomona contested this change, arguing it undermined the petition's verification and indicated a lack of standing. The city maintained that Regency was indispensable and that the extension of the 1993 agreement was within the city’s discretion. In response, plaintiffs asserted the change was a clerical mistake. During a hearing on April 7, 2017, the trial court granted the petition, accepted the plaintiffs' explanation for the caption error, and concluded that Citizens and Price had standing as Pomona residents. The court determined that while Regency was a necessary party, it was not indispensable, allowing the case to proceed without it. The trial court determined that the 1993 agreement between Pomona and Regency expired on June 24, 2014, rendering the subsequent July 7, 2014, agreement extension a new agreement governed by the regulations in effect at that time, including Proposition L, which prohibits new or altered offsite billboards. Consequently, the court granted a petition to set aside Ordinance No. 4190, entering judgment on May 10, 2017. Following this, plaintiffs sought attorney’s fees under section 1021.5, initially requesting $569,700 based on a lodestar calculation of $189,900 for 379.8 hours at $500 per hour. Pomona opposed the request, arguing against the statutory requirements and the reasonableness of the fees. The court ultimately awarded $75,200.40 in fees, reducing the hourly rate to $300 and total hours to 250.67, without a multiplier enhancement. Pomona filed an appeal on July 7, 2017, contesting both the judgment and the fee award. Plaintiffs then sought sanctions, claiming the appeal aimed to delay the writ of mandate, requesting a minimum of $200,000. Additionally, Pomona challenged the standing of the plaintiffs—Price, Stephens, and Citizens—arguing they lacked a beneficial interest for the mandamus action and were pursuing their competitive interests rather than the public interest. The trial court upheld that Price and Citizens had public interest standing. Writs of mandate under section 1085 compel public entities to fulfill legal duties, and the court reviews administrative actions for arbitrariness or lack of evidentiary support, correcting abuses of discretion without directing specific outcomes. A party must possess a 'beneficial interest' to seek a writ of mandate, defined as having a special interest or particular right that exceeds the general interest shared with the public. This interest must be direct and substantial, akin to the federal 'injury in fact' standard, which requires proof of a concrete and actual or imminent legal interest invasion. However, in cases concerning public rights and duties, a petitioner may act as a citizen to enforce laws without demonstrating a specific legal interest, known as ‘public interest standing’ or ‘citizen standing.’ This exception is applied when the public duty is significant, allowing courts to balance the petitioner’s need for relief against the public need for enforcement. Courts may grant mandamus based on the public interest when the public need is pronounced, while a lesser public need necessitates a stronger demonstration of personal interest. The trial court’s decisions regarding standing are subject to de novo review for legal questions and substantial evidence for factual findings, while the application of the public interest exception is reviewed for abuse of discretion. In this case, the trial court found that the plaintiffs had public interest standing regarding the enforcement of Proposition L against billboard construction, and the implication is that the plaintiffs did not have a beneficial interest in the writ of mandamus. The trial court need not consider the public interest exception unless plaintiffs can demonstrate a beneficial interest, which they failed to do. They claimed a beneficial interest in ensuring compliance with laws, but this is insufficient unless a special interest greater than that of the general public is shown. The record indicates no actual or imminent invasion of a legally protected interest for plaintiffs Citizens, Price, or Stephens due to Pomona’s Ordinance No. 4190. A general desire for legal compliance does not equate to a beneficial interest, though it may support public interest standing, which the court found applies to Price and Citizens. Pomona challenges this public interest standing, asserting that the plaintiffs are pursuing their own competitive goals rather than the public's welfare. Pomona argues that the plaintiffs did not demonstrate any public interest in preventing the city from extending a legally authorized development agreement that benefits the city financially and that their actual aim is the removal of a competitor's billboards. Pomona cites two cases, Waste Management and SJJC, to support its argument against public interest standing. In Waste Management, the court ruled against the plaintiff, stating they were pursuing their own economic interests rather than environmental concerns central to CEQA. Similarly, SJJC involved an unsuccessful bidder claiming unfair treatment, focusing on competitive disadvantage rather than public interest. Neither case substantiates Pomona's claim that the trial court abused its discretion in recognizing public interest standing for the plaintiffs in this instance. The trial court upheld the city's demurrer, which the court of appeal affirmed, citing lack of standing for SJJC. The court rejected SJJC's claim of public interest standing, noting that when a litigant's motives are personal rather than communal, standing may be denied. SJJC's argument that it, as a potential airport competitor, should influence public needs was insufficient, as it did not demonstrate any error by the City Council regarding a competitor’s proposal or identify statutory violations regarding the procurement process or municipal laws. Pomona argued that Price and Citizens were primarily pursuing commercial interests; however, Price was recognized as a resident and chairperson of Citizens, an unincorporated association focused on protecting Proposition L. The court found no evidence linking them as competitors with Regency or as affiliates of Stephens, who was pursuing his own business interests. Although neutrality is not mandatory for public interest standing, personal objectives are a factor in its assessment. Unlike SJJC, the plaintiffs here alleged that the city breached its municipal law, emphasizing a strong public duty to enforce compliance with a law enacted by voter initiative. This public necessity warranted the court granting a mandamus for a citizen seeking enforcement. Pomona contested Citizens' standing, claiming lack of evidence for its membership beyond Price and questioned its legitimacy. Citing a precedent that an association's standing derives from its members' standing, Pomona argued that without multiple members, Citizens lacked standing. However, the court concluded that Price, as a member, had public interest standing, as did other citizens linked to Citizens, since their purpose aligned with protecting Prop. L and the claims and requested relief did not necessitate individual member participation. Plaintiffs Price and Citizens were found to have public interest standing to sue. Pomona challenged the trial court's decision that Regency was not an indispensable party, arguing that the court abused its discretion by not considering all statutory factors under section 389, subdivision (b), and by suggesting Pomona could adequately represent Regency’s interests. The court disagreed, citing that section 389 outlines the criteria for joinder of parties, noting a person must be joined if their absence prevents complete relief or impairs their ability to protect their interests. If a person cannot be joined, the court must decide if the case should proceed or be dismissed, considering factors such as potential prejudice from a judgment rendered in their absence, the adequacy of judgment, and whether the plaintiff would have an adequate remedy if the action is dismissed. Necessary parties must be addressed before determining if they are indispensable, with no single factor being determinative. The trial court's evaluation of indispensability is reviewed for abuse of discretion. Initially, at the demurrer stage, the trial court recognized Regency as a necessary party under Public Resources Code section 21167.6.5 due to the plaintiffs’ CEQA claim, and this ruling was not contested by the parties. The trial court analyzed the four factors under section 389, subdivision (b) regarding whether Regency was an indispensable party in the litigation. 1. **Prejudice**: The court found no prejudice to Regency, asserting that the City, under the Development Agreement, would adequately protect its interests by cooperating in the litigation. This arrangement was likened to a precedent case, Deltakeeper, where nonjoined parties had rights to participate in litigation. Both Regency and Pomona had financial stakes in the agreement, with the City’s $1 million obligation reinforcing its motivation to defend the Amendment, thus protecting Regency’s interests. 2. **Mitigation of Prejudice**: The court determined that Regency's potential contribution if joined would be minimal, as both Regency and the City would present similar defenses. Their shared financial interests and mutual goals in enforcing the Amendment further indicated that Regency's involvement would not significantly change the litigation dynamics. 3. **Adequacy of Judgment**: The court assessed if complete relief could be granted without Regency. It concluded that a judgment rendered without Regency would be sufficient, as any ruling declaring the Amendment unenforceable would prevent Regency from successfully challenging the City’s obligations due to legal impossibility. 4. **Remedy for Plaintiffs**: The court found that the plaintiffs would lack adequate remedies if the case were dismissed for not including Regency, mirroring a situation in Deltakeeper where the statute of limitations had expired for adding parties. After evaluating all four factors, the court ruled that Regency was not an indispensable party, allowing the litigation to proceed. Pomona later reiterated its position on Regency's indispensability, citing the Simonelli case as supportive; however, the trial court declined to reconsider its decision, distinguishing Simonelli based on the specific language in the agreements that allowed Regency to control its defense in litigation, thus ensuring its interests were protected even if not formally joined in the suit. The City and Regency have aligned interests due to the City's desire to uphold its million-dollar contract with Regency. Pomona argues that the trial court abused its discretion by not considering all factors necessary for determining indispensability, claiming the court focused only on the third factor. However, the trial court identified and discussed all four factors listed in section 389, subdivision (b) when it overruled Pomona's demurrer, and this was confirmed in a subsequent ruling. The court's reference to its previous analysis indicates that it adequately considered the relevant factors and had discretion to reiterate its earlier findings. Pomona also contends that the trial court incorrectly determined that Regency's interests would be sufficiently protected, citing reliance on an outdated indemnity provision. The applicable provision is from the July 7, 2014 agreement, which replaced the original indemnity clause. Pomona did not sufficiently inform the court of this in its arguments. The updated indemnity provision obligates the Developer to defend and indemnify the City against any actions that seek to modify or annul the development agreement. Additionally, it stipulates that the City has the right to approve its legal counsel for defense, and that the Developer will cover reasonable legal expenses incurred by the City. Developer agrees not to contest the City Attorney’s Office representing the City in legal matters. The City must inform the Developer of any legal actions within ten business days; failure to do so allows the Developer to terminate its indemnification obligations. Both parties will collaborate in preparing and defending against legal actions, including the administrative record and court filings, to minimize costs. The City retains the right to review and approve all filings made on its behalf. Each party will receive independent legal advice and cannot settle any action without the other's approval. The City must not unreasonably reject settlements; if it does, the Developer may proceed to settle, and the City will defend the action at its own expense. Pomona argues that these provisions do not demonstrate aligned interests between it and Regency, referencing the Simonelli case. In Simonelli, the court found that the developer was an indispensable party because the indemnity provision did not ensure the City would protect the developer’s interests, as the City maintained control over the litigation, potentially acting contrary to the developer's interests. The appellate court affirmed this, emphasizing the necessity of the developer’s involvement to safeguard its interests in the litigation. Pomona contends that the rationale in Simonelli applies to the current case, arguing that an obligation to defend does not equate to adequate representation of the payor's interests. The Simonelli court highlighted that a city could conduct litigation in a manner adverse to a developer's interests, suggesting that the City’s counsel here might similarly prioritize its own interests over those of Regency. A legal treatise interprets Simonelli to indicate that the mere requirement for a nonjoined party to defend and indemnify does not suffice for establishing adequate representation if that party lacks control over the defense. Although the indemnity provision gives Regency more control than the developer had in Simonelli, Pomona argues this is insufficient to guarantee protection of Regency’s interests, particularly given their agreement to independently advise their respective counsel. It is noted that the facts of Simonelli differ significantly from the current case. In Simonelli, the city had no vested interest in the developer's project, while here, Pomona stands to gain financially from upholding a contract worth $1 million. The trial court did not err in concluding that Pomona, having a direct interest in the agreement, would vigorously advocate for its validity. Pomona emphasizes that shared litigation objectives do not ensure adequate representation, but asserts that in this scenario, Pomona and Regency’s interests align both legally and financially. Unlike the disparate interests in County of Imperial, Pomona and Regency do not dispute their alignment. Pomona also raises additional factors from section 389, subdivision (b) that it believes support a finding of indispensability, which the trial court allegedly did not address. Pomona failed to adequately justify its proposed balancing of discretionary factors in its favor, leading the court to determine that Regency was not indispensable to the litigation, despite the potential impact on Regency's interests. The rights in question pertain to compliance with city ordinances, which are independent of the contractual rights established in the agreement. Even if Regency had been joined, its arguments would have been limited to the same legal issues regarding Pomona’s compliance with Prop. L. Pomona contends the trial court erred in granting a writ of mandamus for several reasons: it argues that amending a development agreement is a legislative act subject to a deferential review standard; it claims that any mandatory duty imposed by Prop. L requires a discretionary finding regarding the billboards, which the city did not make; and it asserts that the trial court misinterpreted the contract, disregarding the parties' intent. None of these arguments were found persuasive. The legal principles outlined state that a writ of mandate compels the performance of a legally mandated act when there is no other adequate remedy. The trial court must evaluate whether the agency had a ministerial duty, which is required by statute, or a quasi-legislative duty, which receives more deference. Ministerial duties require strict compliance with legal mandates, while discretionary duties involve judgment and are not typically compelled through mandate unless there is an abuse of discretion. A public entity must comply with its valid and unambiguous rules and regulations, and the classification of an action as ministerial or discretionary is critical in determining the appropriateness of a writ of mandate. A court assessing whether a public agency has abused its discretion must not replace the agency's judgment. If reasonable minds could disagree about the agency's actions, those actions must be upheld. The review focuses on whether the agency's conduct was arbitrary, capricious, lacked evidentiary support, or failed to comply with legal procedures. In reviewing a writ of mandate, factual findings are evaluated under a substantial evidence standard, while legal issues undergo independent review. Statutory interpretation is subject to de novo review. In this context, Pomona argued that amending a development agreement involved discretion and that the trial court erred by claiming it abrogated a duty. Pomona contended it acted within its discretion without being arbitrary or lacking evidentiary support. However, the court disagreed, confirming that the letting of contracts by government entities requires a discretionary exercise that prioritizes public welfare. Government Code section 65867.5 specifies that development agreements are legislative acts requiring ordinance approval and are subject to referendum. The trial court questioned whether Pomona's agreement with Regency constituted a development agreement under these provisions. The presumption of validity for legislative enactments can be challenged only by compelling evidence showing unreasonableness. The plaintiffs successfully demonstrated that Pomona violated Prop. L, which prohibits new or structurally altered billboards, by allowing billboards to remain post-agreement expiration. Despite acknowledging the requirement to remove the billboards before June 24, 2014, Pomona adopted Ordinance No. 4190 on July 7, 2014, which contravened Prop. L and could only be amended through a citizen vote. The trial court correctly concluded that Pomona failed to comply with Prop. L by entering into a contract that violated its terms, thus abdicating its duty to adhere to state statutes and local ordinances. Additionally, Pomona's discretion to overlook Prop. L was deemed an abuse of discretion, properly classified as arbitrary, capricious, or lacking evidentiary support. Pomona contends that the trial court incorrectly classified the July 7, 2014 agreement as a new contract instead of an extension or amendment of the 1993 agreement. The court's interpretation of the agreement is reviewed de novo, applying established principles of contract law. Contracts are to be interpreted to reflect the mutual intention of the parties at the time of contracting, primarily based on the written document. Courts focus on the outward expression of agreements rather than unexpressed intentions, with terms understood in their ordinary sense unless specified otherwise. The original agreement between Regency and Pomona indicates a 20-year duration, terminating unless modified or extended by mutual consent. Generally, a contract terminates upon the expiration of its specified duration, and once terminated, it cannot be extended or modified without an existing valid contract. The definitions of "extension" and "modification" rely on the existence of a binding contract, as both terms imply continuity or alteration of an active agreement. The 1993 agreement expired on June 24, 2014, leaving no valid contract for amendment or extension. Pomona argues that an implied-in-fact contract exists based on mutual intent and conduct, referencing California Civil Code and case law that allow for such contracts. However, the court determined that no implied-in-fact contract existed, as the undisputed facts indicate that both Pomona and Regency acknowledged the need for any amendment or extension to follow public procedures and be documented in writing. These procedures include specific requirements for introducing and passing ordinances, which were not met. Pomona's claim that the court's interpretation rendered the agreement unlawful was rejected, as there was no reasonable basis to view the late July 7, 2014 agreement as an extension of the original agreement, which had already terminated. Pomona’s argument that it had discretion to extend the agreement was also dismissed, noting explicit time limits had expired before the city council adopted a new ordinance. Additionally, the trial court awarded attorney's fees of $75,200.40 to the plaintiffs under section 1021.5. Pomona argues that the trial court improperly awarded attorneys' fees to the plaintiffs by failing to consider whether they vindicated an important public interest, misjudging the litigation's public benefit, and incorrectly assessing the necessity and financial burden of private enforcement. The court affirmed the award under Section 1021.5, which allows for attorneys' fees to successful parties in public interest litigation if certain criteria are met: the enforcement of an important right affecting the public interest, significant benefit conferred on the public, necessity and financial burden of private enforcement, and that fees should not be taken from any recovery. The statute supports the private attorney general doctrine, encouraging public interest litigation. The moving party must demonstrate they are successful, their action served the public interest, conferred public benefit, and that fees are warranted due to the circumstances of enforcement. The appellate review of such awards typically follows an abuse of discretion standard, presuming correct application of the law by the trial court unless proven otherwise. Pomona contends the trial court did not properly evaluate the importance of the plaintiffs' claims and relied on insufficient legal precedents, specifically arguing that merely enforcing a statute is inadequate for fee justification. Citing the Woodland Hills case, Pomona highlights the necessity for courts to assess the practical implications of a plaintiff's victory on preliminary issues to determine if it vindicated an important right deserving of fees. The Court emphasized the public benefit from enforcing statutes, instructing the trial court to realistically assess the significance and size of the benefiting class in each case. In this instance, the trial court found that the plaintiffs successfully vindicated their right to enforce Proposition L, which addressed public concerns over billboard proliferation in Pomona, and determined that this enforcement provided a significant benefit to the entire citizenry of Pomona. The court noted that the trial court recognized the public interest and appropriately evaluated the benefits derived from enforcing Proposition L. Furthermore, the necessity and financial burden aspects were examined, considering whether private enforcement was required due to inadequate public enforcement of the important rights involved. The financial burden included litigation costs and any expected financial benefits for the plaintiffs. The inquiry focused on whether the plaintiffs' legal costs outweighed their personal financial interests. The trial court's award of attorney fees under section 1021.5 was deemed appropriate unless the plaintiffs’ expected benefits substantially exceeded their litigation costs. Pomona argued that the trial court erred in finding private enforcement necessary, claiming the plaintiffs' assertions about the city council ignoring Proposition L were vague and unsupported. However, the trial court had sufficient evidence to support the plaintiffs' claims. The city was aware that the 1993 agreement regarding the billboards was expiring and that the billboards needed to be removed by the expiration date, with Prop. L potentially preventing their alteration or relocation. The court indicated that private enforcement was necessary as, without litigation, the City would have renewed the development agreement. Pomona contended that the trial court incorrectly determined that the plaintiffs did not have a financial interest in the litigation's outcome, arguing that the plaintiffs created pressure on the City to replace lost revenue opportunities. However, the court found no evidence that the plaintiffs, Price or Citizens, were competitors of Regency or stood to gain from the contract's cancellation. Unlike the case of Arnold, where the plaintiff had a clear financial interest tied to a specific contract, there was no objective evidence showing that Price or Citizens intended to benefit financially from this lawsuit. Consequently, the trial court's finding that neither had a financial stake in the suit was upheld. Additionally, Respondents filed for sanctions against Pomona, claiming the appeal was intended to delay proceedings. Respondents requested sanctions of $200,000, representing an estimated one-month revenue from Regency's billboard operations, arguing that the appeal was frivolous and intended to cause delay. Under California law, sanctions may be imposed for frivolous appeals, defined as those lacking merit or pursued for improper motives, such as harassment or delay. The court found that the appeal raised arguable issues and was not frivolous, concluding that the request for sanctions lacked a basis in the record. Consequently, the court denied the motion for sanctions, affirmed the trial court's judgment and order, and awarded costs to the respondents for the appeal.