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New West Charter Middle School v. Los Angeles Unified School District

August 19, 2010

NEW WEST CHARTER MIDDLE SCHOOL, PLAINTIFF AND APPELLANT,
v.
LOS ANGELES UNIFIED SCHOOL DISTRICT, ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from a judgment of the Superior Court of Los Angeles County, James C. Chalfant, Judge. Judgment is modified and, as modified; is affirmed. (Los Angeles County Super. Ct. No. BS115979).

The opinion of the court was delivered by: Croskey, J.

CERTIFIED FOR PUBLICATION

Proposition 39, approved in 2000, amended Education Code section 47614 to provide, in pertinent part, "Each school district shall make available, to each charter school operating in the school district, facilities sufficient for the charter school to accommodate all of the charter school's in-district students in conditions reasonably equivalent to those in which the students would be accommodated if they were attending other public schools of the district." Plaintiff and appellant New West Charter Middle School ("New West") sought school facilities for the 2008-2009 school year from defendant and respondent Los Angeles Unified School District ("LAUSD"),*fn1 pursuant to Education Code section 47614.

LAUSD offered New West a number of classrooms and the shared use of other facilities at Fairfax High School. New West accepted the offer; thereafter, LAUSD purported to withdraw it, and refused to allow New West to co-locate at Fairfax. New West sought and obtained writ relief requiring LAUSD to provide facilities at Fairfax or another location satisfying LAUSD's duties under Education Code section 47614. LAUSD then offered facilities at Logan Elementary School. New West rejected the offer as wholly inadequate, and sought an order compelling compliance with the trial court's writ. The trial court agreed that the Logan offer did not comply with its writ, and fined LAUSD. However, by this time, the 2008-2009 school year was well under way, and it was too late for New West to relocate from its commercially-leased facility to a LAUSD campus. The trial court therefore concluded that no space would be provided to New West for the 2008-2009 school year, and instead awarded New West damages.

After a hearing, the trial court awarded New West $175,630.72 in damages. New West sought attorney fees under the private attorney general statute. (Code Civ. Proc., § 1021.5.) The trial court denied fees on the basis that New West's victory did not provide a significant benefit to a large class of individuals. New West appeals, contending that the award of damages is insufficient and the trial court erred in denying its motion for attorney fees. We modify the judgment to slightly alter the amount of damages awarded, and otherwise affirm.

FACTUAL AND PROCEDURAL BACKGROUND

As LAUSD no longer contests its liability for rescinding the Fairfax offer, it is unnecessary to discuss, in any detail, the factual circumstances giving rise to the trial court's conclusion that LAUSD was liable. We discuss only the facts necessary to a determination of the proper amount of damages and New West's appeal of the denial of its motion for attorney fees.

1. The Terms of the Improperly Withdrawn Fairfax Offer

New West has a campus located in a building on Pico Boulevard, in a property it has leased since 2003 from a private party. We hereafter refer to New West's campus as "Pico." In some ways, Pico is better than the facilities offered to New West at Fairfax. For example, Pico has private administrative offices, a full media center, and a library/music room. In other ways, however, Fairfax is superior. Pico does not have a large auditorium or a large outdoor area for physical education. It rents space at other facilities for these purposes. LAUSD's offer of co-locating New West at Fairfax would have given New West the opportunity for the shared use (two days per week and alternating fifth days) of such facilities at Fairfax. New West also would have been given the exclusive use of 12 classrooms at Fairfax.

When New West was offered the shared use of Fairfax, there were certain costs associated with the offer. Education Code section 47614, subdivision (b)(1) provides that the school district may pass on to the charter school a pro rata share of certain defined costs. "The charter school shall not be otherwise charged for use of the facilities." (Ibid.) We refer to this amount as the "pro rata share." In LAUSD's offer of Fairfax, LAUSD indicated that the pro rata share was $6,378. New West does not argue that the pro rata share was incorrectly calculated.

Governing regulations also provide that while the facilities, furnishings and equipment provided to a charter school shall remain the property of the school district (Cal. Code Regs., tit. 5, § 11969.4, subd. (a)), the "ongoing operations and maintenance of facilities and furnishings and equipment is the responsibility of the charter school" (Cal. Code Regs., tit. 5, § 11969.4, subd. (b)). As part of its offer of co-location at Fairfax, LAUSD offered a draft Use Agreement, under which LAUSD would provide maintenance and operations (M&O) services for the entirety of Fairfax, and New West would reimburse LAUSD for the M&O costs related the classrooms it exclusively used, and its proportionate share of M&O costs for the shared facilities. The M&O charges also included a proportionate share of the costs of utility services. LAUSD calculated New West's M&O obligation for co-location at Fairfax to be $276,266. Although New West accepted LAUSD's offer of co-location at Fairfax, New West did not accept the provision that it was to be responsible for $276,266 in M&O expenses, believing the charges to be out of compliance with governing law.

When LAUSD revoked the Fairfax offer after New West had accepted it, New West renewed its five-year lease of Pico, and brought the instant action for writ of mandate. New West obtained a writ compelling LAUSD to honor its offer.

2. The Rationale of the Trial Court's Ruling

On September 5, 2008, after briefing and a hearing, the trial court granted the petition for writ of mandate. The court's tentative ruling, which it adopted, states, "Plainly, as a matter of contract law, the parties had a binding contract. LAUSD made an offer and New West timely accepted it. The fact that New West reserved its right to challenge any aspect of the offer that was unlawful does not affect this acceptance. The purported 'withdrawal' letter was therefore legally meaningless as a matter of contract law. [¶] The withdrawal was also meaningless under Proposition 39. Neither that law, nor any other provision of the Charter Schools Act, provides LAUSD with any authority to 'withdraw' its mandatory obligation to share facilities with New West. The 'withdrawal' only means that LAUSD failed to perform its mandatory duty under Proposition 39." The court summed up its ruling by stating, "In short, LAUSD has violated its statutory obligation to accommodate New West students. It has also breached a contract to do so." The court's ruling concluded, "LAUSD is ordered to fulfill its Proposition 39 duty, and its offer to New West, for the facilities offered at Fairfax High or other acceptable location for the school year 2008-09."*fn2

3. LAUSD's Inadequate Offer Leads to Briefing on Damages

LAUSD was required to provide New West with appropriate facilities, at either Fairfax or another location. In purported compliance, LAUSD offered New West the use of some facilities at Logan Elementary School, which the trial court ultimately determined to be inadequate under the law. The court fined LAUSD $1000 for its refusal to comply with the writ. The court asked New West if it still sought compliance with the writ, considering the passage of time. Counsel for New West elected to forgo a further order of compliance, and simply sought damages. The court set a briefing schedule on the issue of damages.

In its motion which led to the trial court's determination that the Logan offer was wholly inadequate, New West had sought damages "in the amount of $261,191.28. This amount represents the difference between New West's [Pico] rent for the 2008-2009 school year, and the pro rata charge identified by LAUSD in its [Fairfax] offer." (Emphasis omitted.) However, when the trial court sought briefing on the issue of damages, New West sought a new measure of damages.

4. New West's Opening Brief on Damages

New West's new briefing was based on the premise that Fairfax was, in fact, superior to Pico. New West sought damages in the amount of: (1) the hypothetical cost of replicating the facilities it would have obtained at Fairfax; plus (2) the costs it allegedly incurred as the result of the revocation of the Fairfax offer. At no point in its opening brief on damages did New West consider any offset against these amounts for costs it would have paid LAUSD had it accepted the Fairfax offer.*fn3

New West obtained an expert appraiser, James H. Pike, to determine the hypothetical rental costs for similar facilities to those it would have had at Fairfax. Performing a market analysis of the rents of properties that could be used as charter schools in the Fairfax area, and taking into account reduced rent for the part-time use of shared facilities, Pike concluded that fair rental value would be in the range of $400,000 to $470,000.

Pike's report noted that his analysis related only to rental value. He speculated that there may be other damages suffered by New West, such as the denial of access to equipment or services that may have been provided at Fairfax; however, this was noted to be beyond the scope of his report. Pike also noted that, although his market rent analysis included rent for the shared-use facilities, none of the comparison properties he considered actually had all such facilities (e.g., auditorium, sports field) on a single property. Pike noted that Fairfax had all of the facilities on an single integrated campus, and that, had New West co-located at Fairfax, it would have had the benefit of such an integrated campus.

With this language as a starting point, New West then embarked on an attempt to give value to the benefit of location at a so-called integrated campus. New West did not consider, for example, the tangible costs of transporting students to satellite facilities. Instead, New West attempted to place a value on the intangible benefits of an integrated campus. New West's calculations went as follows: New West has 284 pupils, who should have been housed at a facility costing $470,000 per year to rent. This amounts to a $1,655 per student expense for facilities. The funds provided New West by the State of California amount to $8,547 per pupil. Subtracting the $1,655 facilities cost from the $8,547 per pupil leaves $6,892 as the non-facilities or "operating" cost per pupil. Private schools, on the other hand, obtain $25,000 in tuition per pupil. Subtracting the same $6,892 operating cost per pupil results in a determination that private schools spend the remaining $18,108 per pupil on facilities. New West then concludes that private schools spend $16,453 ($18,108 - $1,655) more on facilities per pupil, an amount which allegedly "reflects [the] added value ...


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