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Choi v. Orange County Great Park Corp.

June 30, 2009

STEVEN CHOI ET AL., PLAINTIFFS AND APPELLANTS,
v.
ORANGE COUNTY GREAT PARK CORPORATION, DEFENDANT AND RESPONDENT.



Appeal from an order of the Superior Court of Orange County, Derek W. Hunt, Judge. Reversed and remanded. (Super. Ct. No. 30-2008-00101131).

The opinion of the court was delivered by: Rylaarsdam, Acting P. J.

CERTIFIED FOR PUBLICATION

OPINION

Plaintiffs and appellants Steven Choi and Christina Shea, in their capacities as directors of defendant Orange County Great Park Corporation, appeal an order denying them attorney fees under Code of Civil Procedure section 1021.5 (section 1021.5) and Corporations Code section 6337, claiming the evidence showed they met each of the criteria necessary to recover such fees. We agree they were entitled to attorney fees under section 1021.5 and remand for the trial court to determine the amount.

FACTS AND PROCEDURAL HISTORY

Defendant is a public benefit nonprofit corporation formed in 2004 to develop the former United States Marine Corps Air Station property. It will manage over $400 million dollars in connection with development of the Great Park on that property. Defendant‟s board consists of nine members, the five members of the Irvine City Council and four other at-large directors chosen by the other board members. Plaintiffs are minority members of the board. The three other Irvine City Council members, led by Larry Agran, are the majority in opposition to plaintiffs, and, according to an Orange County Grand Jury report, control defendant.

For the first three years after defendant‟s formation defendant had three CEO‟s, each of whom was an Irvine city employee. After the third CEO, Marty Bryant, resigned in 2007, defendant agreed to conduct a nationwide search for a replacement. Shea and a previous director of defendant, Richard Sim, who had been an executive with the Irvine Company, had recommended such a search since 2005.

Defendant formed a search committee consisting of four of the directors, including Agran but not plaintiffs, and two employees of the City of Irvine. The committee hired a Santa Ana-based recruiting firm, The Mills Group, to conduct a nationwide search. Mills ran advertisements and obtained some names from members of the search committee to find candidates and reported it received about 150 resumes. Mills narrowed potential candidates to the top twelve and with the search committee interviewed five of them. From those five they proposed one candidate, Kurt Haunfelner, a vice-president of the Chicago Museum of Science and Industry, to be interviewed by the full board. Before the board voted Shea asked Mills for copies of the resumes of the five candidates but was refused. Defendant offered the position to Haunfelner but he declined.

Mills then notified Shea that the search committee recommended the second choice candidate, Rod Cooper, the Great Park‟s then operations manager, be offered the position. Shea asked for a copy of Cooper‟s resume and for the full board to interview him but was refused. Cooper withdrew his name from consideration before he was offered the position.

Shortly thereafter a story in the Los Angeles Times revealed that Haunfelner was "a longtime friend" of Agran and his late brother had been an aide to Agran. This information had not been disclosed to the board prior to the vote offering Haunfelner the position. The same story also reported that the most recent CEO, Bryant, a long-time Irvine city employee, had an 18-year-old conviction for embezzling funds from the City of San Juan Capistrano to purchase cocaine. A subsequent story reported Agran as saying it was not defendant‟s responsibility to screen the CEO‟s background but that it should have been done by the Irvine City Manager.

Plaintiffs again asked to see all resumes Mills had obtained during the search process. Defendant refused to provide the documents because, according to Agran, it had the duty to protect the privacy of the candidates and feared plaintiffs might publicly disclose the names. Plaintiffs made at least two additional written demands to inspect the documents, one to which they never received a direct answer and one to which they received no reply. Documents were never provided.

Plaintiffs then filed a petition for writ of mandate under Corporations Code section 6334 and Code of Civil Procedure section 1085 to compel defendant to produce the documents. In response the board voted seven to one to have the search committee keep the identity and resumes of the candidates confidential except for a candidate the search committee recommended be hired. Defendant answered and demurred to the petition, arguing that the City of Irvine was an indispensable party because it owned the documents. Both the demurrer and the petition itself were set for hearing.

The day before the hearing, the parties entered into a stipulation to settle the controversy. Defendant agreed to provide plaintiffs "with complete copies of all materials collected or prepared by [Mills] and/or the . . . [s]earch [c]committee in conjunction with [the] efforts to recruit a new CEO for the Great Park . . . [¶] . . . [¶] . . . at a properly convened closed-session meeting of the Great Park‟s Board of Directors authorized pursuant to Government Code section 54950[] et seq.[] ([]Brown Act[]) . . . ." The parties also agreed that "all information disclosed at such meeting, including without limitation the identity of the candidates, shall be treated in accordance with the Brown Act." The stipulation also stated defendant would provide plaintiffs with additional documents related to recruitment of the CEO as they were received or created. The City of Irvine was not a party to the stipulation.

Plaintiffs filed a motion to recover attorney fees under section 1021.5 and Corporations Code section 6337. In denying the award the court stated it "[did not] know who [plaintiffs] prevailed over. [They] certainly [have not] prevailed in the traditional sense of a lawsuit . . . [because] there is no judgment. There is nothing of a character that would represent that there was adjudication of the case. I don‟t think it was adjudicated. It was settled. . . . It was probably a reasonable solution to the problem, but . . . handing out $44,000 for a settlement of this sort just strikes me as being a radical over-interpretation of what the concept of prevailing parties means under the circumstances of this case." The court also described the settlement as "a meeting in a closed door room where a lot of people went through a lot of documents that weren‟t disclosed to the public" and stated it could not identify any "vast public benefit" resulting from it. It reiterated, "Basically two people went into a room which no one else was allowed to go into and they spent some time doing this and that. That doesn‟t strike me as a . . . public benefit which can be quantified, publicized." The court did not rule on the argument that fees should be awarded under Corporations Code section 6337.

DISCUSSION

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