On Friday, November 18, 2022, the Court of Appeal for the Sixth Appellate District (Sixth District Court) reversed the Santa Clara County Superior Court’s denial of an attorneys’ fees award in favor of a group of California irrigation districts and water agencies (Districts) that successfully challenged the State Water Resources Control Board’s (State Board) decision to issue certain water right curtailment notices during the 2015 drought. The Sixth District Court held that the Districts are entitled to attorneys’ fees incurred prosecuting the Superior Court litigation against the State Board. The full Opinion is here.

In the underlying Superior Court litigation, the trial court issued writs of mandate finding that the State Board unlawfully issued water diversion curtailment notices to the Districts without jurisdiction under Water Code section 1052(a), and in violation of the Districts’ constitutional due process rights. The Sixth District Court recently affirmed the trial court’s ruling on the merits in an opinion issued on September 12, 2022, found here. Additional information regarding the opinion on the merits is here.

After the trial court issued writs of mandate as against the State Board in the underlying litigation, the Districts sought recovery of attorneys’ fees under California’s private attorney general doctrine, codified by Code of Civil Procedure section 1021.5. This statute allows a successful party to recover attorneys’ fees incurred in an action enforcing an important right that affects the public interest if: (a) a significant benefit has been conferred on the general public or a large class of persons; (b) the necessity and financial burden of private enforcement, or enforcement by one public entity against another, makes the award appropriate; and (c) it would not be in the interests of justice for the fees to be paid out of the successful party’s recovery.

Despite the Districts’ success on the merits below, the trial court denied the Districts’ post-judgment motions seeking recovery of attorneys’ fees incurred in the court litigation on the ground that the Districts did not show that their financial burden in bearing the fees exceeded their pecuniary interest in the litigation. Specifically, the trial court considered the threat of fines and penalties for violating curtailments, including those threatened in administrative enforcement proceedings; the economic losses that would result from compliance with curtailments; damages sought in takings claims; the value of the Districts’ water rights; and the value of landowners’ agricultural interests within the Districts’ boundaries.

The Sixth District Court disagreed with the trial court:

 “The Districts’ victory in the curtailment notice mandate actions plainly ‘resulted in the enforcement of an important right affecting the public interest’ and conferred ‘a significant benefit . . . on the general public or a large class of persons,’ and the trial court did not find otherwise. (§ 1021.5.) [. . .] [T]he Districts’ victory, requiring the Board to act within its jurisdiction and to accord water right holders due process, merely protected the existing value of the Districts’ water rights and the interests of the landowners within the Districts. The Districts did not thereby obtain any pecuniary gain that they could utilize to offset the burden of their attorney fees.”

In so finding, the Sixth District Court recognized that most of the litigation occurred after the curtailment notices had been partially rescinded. The Districts thus incurred the bulk of their attorneys’ fees after the threat of fines or penalties, or the need to incur losses due to compliance, had ended. The Sixth District Court continued to find that there was no reasonable basis for the trial court’s consideration of the value of the Districts’ water rights and landowners’ agricultural interests within Districts’ service areas, given that future pecuniary gains to landowners are merely speculative. Moreover, the Districts, as governmental agencies, did not obtain a direct pecuniary benefit from the litigation. Thus, the Sixth District Court concluded: “The Districts bore millions of dollars in attorney fees but realized no direct pecuniary gain as a result of their victory on due process and jurisdictional grounds.”

The Sixth District Court determined that “the trial court abused its discretion”, necessitating reversal and direction to the trial court on remand “to award the Districts under section 1021.5 the attorney fees that they incurred for the court litigation.” The Sixth District Court declined to extend attorneys’ fees or cost recovery to the related administrative proceeding.

Somach Simmons & Dunn represented Byron-Bethany Irrigation District as a Respondent in the State Board’s appeal on the merits and as the Appellant in the District’s appeal related to attorneys’ fee recovery before the Sixth District Court. Somach Simmons & Dunn also represented Byron-Bethany Irrigation District throughout the trial court and administrative enforcement proceedings precipitating the appeals and serves as general counsel to the district.

If you have any questions about this opinion or water rights in general, please contact Michael Vergara (mvergara@somachlaw.com), Theresa Barfield (tbarfield@somachlaw.com), Alyson Ackerman (aackerman@somachlaw.com),  Jared Mueller (jmueller@somachlaw.com), or Ellen Moskal (emoskal@somachlaw.com) for more information.

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