Private Attorney General: Nonprofit Plaintiff Suspended Corporation During Short-Framed Validation Action Denied Private Attorney General Fees Under CCP § 1021.5 Where Suspension Not Disclosed To Trial Court Or Opponent

 

First Impression Issue, But Unique Circumstances, Required Reversal Of Fee Grant Involving Substantial Fee Recovery To Nonprofit.

     This case shows how unique factual circumstances can drive cases, especially in the attorney’s fees recovery area of the law. Hold on, this is a wild ride but not necessarily given the unique factual circumstances involved.

     In City of San Diego v. San Diegans For Open Government, Case Nos. D068939/D069890 (4^th Dist., Div. 1 Sept. 22, 2016) (published), a nonprofit corporation brought an ultimately successful validation action against City on a plan to levy a special tax to finance the expansion of the San Diego Convention Center. But, there was a “retro” hitch: nonprofit was a suspended corporation at the time that it filed an answer as an interested party, a fact known to both the nonprofit and its counsel, and a fact never revealed to the trial judge or the City—despite the fact that validation actions are governed by a very fast statute of limitations by prosecuting parties. Nonprofit, despite this nondisclosure and after prevailing, moved to recovery private attorney general fees under CCP § 1021.5, with the lower court expressing great concern about the nondisclosure but nonetheless awarding partial fees to the tune of $258,629.89 in favor of nonprofit and against City.

     City successfully appealed the fee recovery in favor of the nonprofit entity. Although grounded in the specific facts at issue (but one of first impression), the appellate court reversed completely the fee recovery because it found that the nonprofit’s suspension during a critical statute of limitations time to respond, in tandem with the lack of candor by the nonprofit and its counsel, justified fully a denial of fees under a public interest-oriented statute.