Keen v. City of Manhattan Beach CA2/8

Filed 8/15/23 Keen v. City of Manhattan Beach CA2/8
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
DARBY T. KEEN, as Trustee of B314744
The Darby T. Keen Living Trust,
Los Angeles County
Plaintiff and Appellant, Super. Ct. No. 19STCP02984
v.
CITY OF MANHATTAN BEACH,
et al.,
Defendants and
Respondents.
APPEAL from an order of the Superior Court of
Los Angeles County, Mitchell L. Beckloff, Judge. Affirmed.
Angel Law and Frank P. Angel for Plaintiff and Appellant.
Richards, Watson & Gershon, Quinn M. Barrow, Ginetta L.
Giovinco, and Sarah E. Gerst for Defendants and Respondents.
____________________
Darby Keen sued the City of Manhattan Beach to enjoin it
from preventing him from renting his house in the City on a
short-term basis. The rise of online services like Airbnb made
this short-term rental issue acute for the City. Keen won in the
trial court and on appeal. (Keen v. City of Manhattan Beach
(2022) 77 Cal.App.5th 142, 144-151.)
On remand, Keen sought an attorney fee award under
section 1021.5 of the Code of Civil Procedure.
This statute allows attorney fees generally only if the
private incentive to sue was too small to motivate the litigation.
In other words, if the expected private gain from the suit
outweighs its private costs, there is usually no warrant for a
public interest fee award. Fee awards under those circumstances
can be an abuse of discretion. (See, e.g., Millview County Water
Dist. v. State Water Resources Control Bd. (2016) 4 Cal.App.5th
759, 767-773.)
Here that private incentive was large enough, held the trial
court in a careful written analysis. The court awarded no fees.
We affirm.
I
The trial court found Keen could expect to net about
$90,000 from his lawsuit, which sufficed to motivate him without
the need for an attorney fee award.
The court used a logical and detailed method to calculate
this $90,000 benefit. The court estimated Keen’s annual net
income from renting his house would be about $121,000 a year.
The court found the litigation would yield this annual benefit for
five years, thus creating a total benefit for Keen of at least
$605,000 (which is the product of five times $121,000). The court
estimated Keen’s probability of success at 65 percent, thus
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reducing the total private financial benefit to $393,250 ($605,000
times 65 percent). Reducing that figure by the alleged market
value of Keen’s attorney’s fees in the case, $305,565.86, Keen’s
financial benefit exceeded his fees by almost $90,000. The court
thus rejected Keen’s request for a fee award, and he appealed.
II
We review for abuse of discretion, except that we
independently review statutory construction and questions of
law. (Serrano v. Stefan Merli Plastering Co., Inc. (2011) 52
Cal.4th 1018, 1025-1026.)
Keen mounts seven challenges to the trial court’s decision.
A
Keen incorrectly argues the trial court’s analysis is flawed
because any benefit he received is “once removed” from the result
of the litigation. This argument errs because the trial court
judgment invalidated the ordinances and left Keen immediately
free to rent as he pleased. He could begin reaping this financial
benefit the day the trial court entered judgment in his favor. No
barriers blocked this benefit. It was not “once removed.”
Keen speculates the California Coastal Commission, in the
future, might allow the City to enact a less restrictive ban or
other regulation on short term rentals. The trial court did not
abuse its discretion by finding that Keen’s pecuniary benefits
were immediate, direct, and tangible.
These facts distinguish the cases Keen cites. (See Baggett
v. Gates (1982) 32 Cal.3d 128, 143 [winning the right to appeal an
adverse employment action was no guarantee the appeal would
succeed]; Early v. Becerra (2021) 60 Cal.App.5th 726, 741-742
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[litigant won place on ballot but no guarantee he would be
elected, so to count the salary benefit from the elected position
was improper speculation]; Boatworks, LLC v. City of Alameda
(2019) 35 Cal.App.5th 290, 310 [litigant successfully challenged
ordinance setting development fees but had not received approval
of its project so had no guarantee it would benefit from the
reduced fee]; People v. Investco Mgmt. & Dev. LLC (2018) 22
Cal.App.5th 443, 470 [litigants opposed motion to stay separate
cases but won no guarantee they ultimately would win the
litigation]; Citizens Against Rent Control v. City of Berkeley
(1986) 181 Cal.App.3d 213, 230 [litigants successfully challenged
ordinance limiting campaign contributions but had no guarantee
of defeat for the measure they opposed]; Otto v. Los Angeles
Unified School Dist. (2003) 106 Cal.App.4th 328, 330-331, 333
[litigants won right to appeal but not a guarantee of appellate
victory].)
B
Keen next claims the trial court erred by not crediting his
evidence that he had no financial incentive to bring the suit
because he could have made more money by renting his house on
a long-term basis, which the ordinances allowed him to do. He
argues that this showed he had a financial disincentive to bring
suit.
Keen’s argument is unsupported and untenable. The trial
court noted Keen provided no evidence he had rented his property
out long-term or would ever do so. As far as the record shows,
Keen had never made money renting his property out long-term.
But he did gross about $400,000 over a four-year period renting
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his property for short terms. The trial court did not abuse its
discretion in finding Keen’s short-term rental income provided a
financial incentive to litigate. (See Children and Families
Commission of Fresno County v. Brown (2014) 228 Cal.App.4th
45, 58 [trial court did not abuse discretion denying award because
personal stake sufficed to encourage litigation].)
C
Keen complains the trial court inflated his benefit by
cherry-picking the highest occupancy rate and highest rental rate
instead of using an average of each over the four years. Keen’s
complaint fails because the trial court had logical reasons for its
method. Keen declared he did not think he could rent his house
out for more than 121 days a year. The court took him at his
word. This was conservative. Common sense suggests Keen
could rent a beach house in Southern California for more of the
year because, in a balmy climate, it is pleasurable to be near the
ocean year-round. The trial court did not abuse its discretion in
accepting the 121-day figure. The trial court noted that since
2017 Keen’s rental rates had increased. The court therefore
chose the most recent nightly rate as the best prediction of what
current rates would be. This was reasonable.
D
Keen disputes the trial court’s decision to multiply his
annual income by five. He argues the court knew he could not
rent out the property for at least a portion of the time from 2019
to 2024 because it generally takes at least a year for a petition of
mandate relying on an evidentiary record to result in a
judgment. The trial court selected the five-year timeframe
because Keen testified he would be moving back into the property
in 2024. The trial court noted, however, the City’s valid objection
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that there was no evidence that Keen planned to move back in
2024 when he made the decision to litigate in 2019. The trial
court’s selection of a five-year window was generous to Keen. The
court reasonably could have selected a longer window. A five-
year window for estimating Keen’s incentives was not an abuse of
discretion.
E
Keen argues the trial court erred by finding he had a 65
percent probability of succeeding instead of a 50 percent
chance. Keen argues the City did not object to the 50 percent
estimate and no evidence supports the 65 percent figure. Keen
maintains 50 percent was the largest credible success estimate,
given that, when he made the decision to litigate, there were two
court decisions going against his position and only one in his
favor. The trial court, however, noted the decision favoring Keen
was after a trial, while the two contrary decisions merely
concerned motions for preliminary injunctions. A trial result is
more significant than decisions about preliminary injunctions.
Where the trial court uses a valid method with the necessary and
available evidence, its conclusions merit deference. (Los Angeles
Police Protective League v. City of Los Angeles (1986) 188
Cal.App.3d 1, 11.) As Keen notes, we may “correct” a
“questionable estimate or a faulty calculation.” (Ibid.) Here, the
trial court looked at the available evidence and made a
reasonable estimate. We do not disturb it.
F
Keen faults the trial court for not granting him fees on the
theory that his litigation produced such a marked public benefit
that the ratio between that benefit and his private gain showed
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his efforts were particularly deserving. The most recent case
Keen cites in support of this argument is City of Oakland v.
Oakland Police & Fire Retirement System (2018) 29 Cal.App.5th
688, 703 (Oakland), which stated this theory applies in the
“unusual case.” (Ibid.) As Keen states in his reply brief, the
parties “argued at some length” about this issue at the hearing.
The court did not apply this theory in this case, which was
no abuse of discretion. The Oakland decision gave several
reasons for offering the bounty of a court-awarded fee to
encourage litigation of the kind involved in that case. The
Oakland plaintiff group faced many barriers to collective action.
The group had difficulty communicating with its elderly
members, many of whom were scattered throughout the United
States. These people lacked internet access, lived in care homes,
had not provided telephone numbers, or had turned their
finances over to others. The group’s staff members were few in
number and were able to speak to only a few dozen pensioners.
The group had carefully set its membership dues at $15 a month
because charging more would have impaired its ability to attract
members. At least one member had resigned from the group
because he needed to save money for himself rather than fund
the litigation. (Id. at pp. 703, 705-708 & fns. 6 & 7.) The
Oakland opinion concluded these factors “—including the relative
poverty of the [plaintiff group] and its members—[were] all valid
considerations in a section 1021.5 fee analysis and tip the scales
decisively in favor of a fee award in these proceedings . . . .” (Id.
at p. 708.)
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Keen faced none of these barriers to his litigation effort.
Keen owned property in an expensive part of an expensive city.
He sought to free property owners like himself to continue to
exploit a profit opportunity. His lawsuit brought him a personal
$90,000 bounty. There is a sense in which Keen’s case was
“public interest litigation,” but the trial court did not abuse its
discretion by deciding this case was not an “unusual case”
deserving of an extra litigation incentive.
G
Keen argues the trial court erred in not apportioning
fees. Apportionment becomes an issue, however, only after a
party establishes an entitlement to fees. (Doe v. Westmont
College (2021) 60 Cal.App.5th 753, 767 (Doe) [on remand, if the
trial court determines criteria of section 1021.5 are met, it must
award fees and “only then” should the court determine
apportionment issues].) The court found Keen did not meet the
criteria for a fee award, so there was nothing to apportion.
Keen argues case law requires a separate analysis of
attorneys’ and clients’ incentives and burdens under Section
1021.5. The cases he cites are inapposite. Doe held a court may
not refuse to award fees on the ground that apportionment would
be too difficult. (Doe, supra, 60 Cal.App.5th at p. 767.) That is
not the issue. For general principles about creating incentives for
attorneys to take such cases, Keen cites Ketchum v. Moses (2001)
24 Cal.4th 1122, 1132-1133, Broad Beach Geologic Hazard
Abatement Dist. v. 31506 Victoria Point LLC (2022)
81 Cal.App.5th 1068, 1096, and Sonoma Land Trust v. Thompson
(2021) 63 Cal.App.5th 978, 983-984. None of these cases held it
to be an abuse of discretion to fail to award attorney fees where
the trial court found sufficient individual motivation for the
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litigant because the attorney had not charged market rates. A
court has discretion to restrict an award to only the portion that
furthered the litigation of public issues. Keen errs in arguing
this implies a court must provide some award of fees.
Keen emphasizes his attorneys took this case at a
discounted rate. That was their business decision. The trial
court did not use the amount Keen paid, but accepted the
attorneys’ lodestar amount calculated using the alleged market
rates. This was not an abuse of discretion.
DISPOSITION
We affirm the order and award costs to the City.
WILEY, J.
We concur:
STRATTON, P. J.
GRIMES, J.
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