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Esperanza Rogel et al v. Lynwood Redevelopment Agency

May 2, 2011


(Los Angeles County Super. Ct. No. BS106592) APPEAL from a judgment of the Superior Court of Los Angeles County. Kevin C. Brazile, Judge. Reversed and remanded.

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


It is well settled that a trial court is vested with wide discretion in fixing the amount to be awarded to a prevailing party for attorneys' fees, and that a court's award will not be disturbed on appeal unless the record discloses an abuse of discretion. (See Serrano v. Priest (1977) 20 Cal.3d 25, 49 (Serrano III).) The primary question here is whether the trial court abused its discretion by applying a negative multiplier in setting the amount of an attorneys' fees award against a government agency based on the conclusion that it would be "better" for less money to be paid to the prevailing parties for their attorneys' fees so as to leave the agency with more money for its ongoing governmental operations. We find this is not an appropriate factor upon which to reduce otherwise documented attorneys' fees.


The Statutory Setting for the Litigation

The Community Redevelopment Law (CRL; Health & Saf. Code, § 33000 et seq.)*fn1 is a comprehensive statutory scheme intended to help local governments revitalize blighted areas. To accomplish this end, the CRL allows for the financing of redevelopment projects through "tax increment financing." Tax increment financing works this way: redevelopment agencies do not have the power to tax, but may finance redevelopment projects through loans or the sale of bonds. When a redevelopment project results in increased property values, the tax attributable to the increase in value -- the "tax increment" -- is collected by the taxing authority and distributed to the redevelopment agency, which then uses the money to pay off its debt. The basic concept is a redevelopment project " 'in effect pays for itself.' " (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 866.)

In recent years, the Legislature has enacted a number of statutes out of a concern that implementation of the CRL may adversely impact housing, particularly low income housing. For example, section 33334.2 requires redevelopment agencies to set aside "not less than 20 percent" of its tax increment proceeds in a low and moderate income housing (LMIH) fund. Other statutes require agencies to provide relocation benefits to persons displaced by a redevelopment (§§ 33411, 33411.1), to include prescribed percentages of units for low and moderate income housing in redevelopment-assisted housing projects, with covenants to keep those units affordable for prescribed periods, and to replace affordable units lost because of redevelopment activities (§§ 33413, 33418).

The Litigation

In December 2006, Esperanza Rogel and other residents of a mobile home park (Plaintiffs) in the City of Lynwood filed a complaint and verified petition for writ of mandate against the City, the City Council of the City of Lynwood, and the Lynwood Redevelopment Agency (LRDA). Plaintiffs' complaint alleged that a proposed plan to change the mobile home park into townhomes would result in the loss of low income rental housing units and would force Plaintiffs out of the City because it otherwise lacked housing they could afford. Plaintiffs alleged that the LRDA had violated (and had a history of violating) statutes requiring relocation assistance, setting aside money to assist affordable housing goals, and building affordable units with covenants to keep them affordable. Plaintiffs prayed for declaratory and injunctive relief against the LRDA, and for a writ of traditional mandate directing the City, through its City Council, to prepare and adopt a housing component into the City's general plan compliant with statutorily mandated elements. In April 2007, following procedural matters not relevant to the current appeal, Plaintiffs filed a first amended complaint and writ petition which largely re-alleged the claims summarized above.

In August 2007, the trial court (Hon. Dzintra Janavs) denied Plaintiffs' petition for writ of mandate against the City and City Council. In October 2007, the court lifted a stay of Plaintiffs' claims against the LRDA and transferred the case for reassignment to a trial department.*fn2

Plaintiffs' initial lawyers were affiliated with Public Counsel and the California Affordable Housing Law Project. In October 2007, Plaintiffs filed notice that the law firm of O'Melveny & Myers LLP (O'Melveny) had become associated as Plaintiffs' co-counsel.

In January 2008, the LRDA moved to stay discovery until Plaintiffs' appeal of the denial of their writ petition had been completed. The parties later stipulated to take the motion off calendar. In April 2008, the LRDA filed a motion to strike almost 200 allegations from Plaintiffs' first amended complaint, including single words such as "unlawful," references to the City (on the ground the City was no longer a party), and dozens of other passages which, in the eyes of the LRDA, constituted objectionable legal conclusions. In June 2008, the trial court denied the LRDA's motion upon finding the agency was attacking "unimportant" parts of the pleading. At the same time, the court set a trial date for December 2008.

During the ensuing course of the litigation, the LRDA repeatedly failed to respond to discovery, and Plaintiffs filed multiple discovery-related motions. The record suggests that the LRDA's repeated failures to comply with discovery were the result of its internal failures to maintain ordinary records. At various times, the LRDA claimed it could not locate documents concerning budgets, general ledgers, bank accounts, and audit reports. In this vein, the LRDA's housing manager and the person it designated as "most qualified" to testify on affordable housing issues both testified the LRDA's records were so disorganized that it would be difficult for the agency even to determine the number of redevelopment projects in which it had been involved. In the words of LRDA's lawyer at one hearing: "I know that the Agency does not have a very good record of what it did in 1994 to 2001 simply because that's too long ago." Because of the LRDA's deficient record-keeping, Plaintiffs' lawyers were sometimes required to recreate records the LRDA should have routinely prepared, maintained and produced.

Plaintiffs' discovery efforts included the following: In May 2008, Plaintiffs filed a motion to compel responses to their request for production of documents. In September 2008, Plaintiffs filed a motion to compel further response to their request for production of documents, and a motion to compel further responses to their requests for admissions and their form interrogatories. In December 2008, Plaintiffs filed a motion for issue and evidence sanctions based on the LRDA's discovery failures, a motion for an order deeming Plaintiffs' requests for admissions admitted (and to compel responses to special interrogatories), and a motion to produce documents responsive to Plaintiffs' second request for production of documents. For all practical purposes, Plaintiffs won all of their discovery-related motions.

On December 23, 2008, the trial court granted in part Plaintiffs' motion for issue and evidence sanctions against the LRDA. The court ordered that matters included in three sets of Plaintiffs' requests for admissions were to be deemed admitted, and that the LRDA could not introduce evidence of any document responsive to Plaintiffs' first request for production of documents unless the documents were produced by December 31, 2008. The court also imposed monetary sanctions against the LRDA.

Meanwhile, O'Melveny's ability or agreeability to continue with its role as Plaintiffs' co-counsel "became more limited." In August 2008, Plaintiffs' public interest lawyers persuaded Gibson, Dunn & Crutcher LLP to assume the role of lead co-counsel in preparation for trial.

On January 2, 2009, the LRDA served its response to requests for admissions, admitting each matter covered by the discovery request. Together, the matters deemed admitted by the trial court's December 23, 2008 order and the LRDA's January 2, 2009 admissions essentially established the following elements of Plaintiffs' action:

* The LRDA never provided relocation assistance to persons displaced from dwelling units within its jurisdiction.

* The LRDA never determined how many housing units it should have produced to fulfill its housing obligations, or how many ...

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