City’s Arrangement With Outside Counsel Did Not Violate Defendant Property Owner’s Due Process Rights, Fee Award Was Not Meant To Penalize Defendant For Defending Property Rights, And Trial Court Properly Determined City The Prevailing Party Under Catalyst Theory.
Plaintiff City and defendant property owner had a long history of conflict regarding substandard conditions on defendant’s property – going all the way back to 2007 – and resulting in criminal charges against defendant at one point in City of Norco v. Mugar, Case No. E072858 (4th Dist., Div. 2 December 11, 2020) (unpublished). In 2017, defendant’s property was red tagged and declared a substandard building, a public nuisance, and unsafe to occupy. When defendant failed to abate the 19 cited conditions, even after an extension of time, City filed a receivership action through its outside counsel, to abate what it described as “life-safety hazards.” Although a receiver was appointed and filed his oath, he took no abatement action as City and defendant had reached an agreement that allowed defendant another opportunity to abate the conditions himself, obtain any necessary permits, and schedule, undergo and pass a final inspection. In the parties’ stipulation, City reserved its “right to file a motion to be declared the prevailing party in this matter and/or a motion for attorneys’ fees and costs.” After some continuances and deadline extensions, defendant finally abated the 19 conditions, and City requested termination of the receivership. City then successfully sought to be declared the prevailing party and for an award of $60,798.94 in attorney fees and costs under Health and Safety Code § 17980.7(c)(11) .
The 4/2 DCA affirmed. Defendant’s arguments that his due process rights were violated by the arrangement between City and its outside counsel were not supported by the record. Rather, City’s contract with outside counsel showed that each of City’s demands and responses were determined by the City Council – not City’s outside counsel. Additionally, outside counsel was not hired on a contingency basis and had no direct financial interest in the outcome of the litigation.
The panel also was not persuaded by defendant’s argument that the fees/costs award was an unconstitutional burden on his First Amendment right to access and petition the courts as it penalized him for defending his property rights. While the purpose of the fee award is not to penalize petitioning activity, but to encourage litigation by the successful party by making it financially feasible, the panel acknowledged that a prevailing party fee statute may cause incidental restriction on conduct protected by the First Amendment. However, as is the case here, under United States v. O’Brien, 391 U.S. 367, 377 (1968), such incidental restriction is sufficiently justified “[1] if it is within the constitutional power of the Government; [2] if it furthers an important or substantial governmental interest; [3] if the governmental interest is unrelated to the suppression of free expression; and [4] if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.”
Finally, the 4/2 DCA found no abuse of discretion in the trial court’s finding that City was the prevailing party using the catalyst theory – with City achieving its litigation objective to abate a public nuisance . The trial court reasonably determined defendant would not have complied with City’s abatement demands without the appointment of a receiver.
BLOG UPDATE: We can now report that City of Norco v. Mugar was certified for publication on January 8, 2021.
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