Coalition for a Sustainable Future in Yucaipa v. City of Yucaipa (July 6, 2015) __ Cal.App.4th __, Case No. E57589.

A petitioner group challenged the City of Yucaipa’s certification of an EIR and approval of land use entitlements for a Target shopping center project. The project was to be developed on land owned by Palmer General Corporation. The trial court denied the petition and petitioner appealed. That appeal became moot when both Target and the landowner abandoned the project due to a contract dispute, which caused the city to revoke the entitlements. The Court of Appeal directed that the order below be reversed with directions to dismiss the action with prejudice due to mootness. After the trial court dismissed the action as directed, petitioner brought a motion for attorneys’ fees under Code of Civil Procedure section 1021.5, asserting the petition was the catalyst for the city’s action to revoke the entitlements—the relief petitioner had sought at trial. The trial court denied the motion and petitioner appealed again. The Court of Appeal affirmed, finding petitioner’s action was not the catalyst for the city’s actions.

A party seeking attorneys’ fees under Code of Civil Procedure section 1021.5 must first show it is a “successful party.” It is not necessary to achieve a favorable final judgment so long as the petitioner’s actions were the “catalyst” for the defendant’s actions. More specifically, the catalyst theory permits an award of fees absent judicial resolution if the defendant changes its behavior substantially because of, and in the manner sought by, the litigation. To obtain attorneys’ fees under this theory, a plaintiff must establish that (1) the lawsuit was a catalyst motivating the defendants to provide the primary relief sought; (2) the lawsuit had merit and achieved its catalytic effect by threat of victory, not by dint of nuisance and threat of expense; and (3) the plaintiffs reasonably attempted to settle the litigation prior to filing the lawsuit. To satisfy the first prong, a petitioner need not show that litigation was the only cause of respondent’s acquiescence, only that it was a substantial factor.

Here, the court found that evidence supported the trial court’s finding that petitioner’s action was not a substantial factor contributing to the entitlement revocation.

First, before the land use entitlements were revoked, the trial court had denied the petition, which was a win for the city. Petitioner did not prevail, but instead appealed the judgment. Filing an appeal from the adverse judgment did not convert the unsuccessful action into a meritorious one. And the court’s direction to dismiss the action with prejudice on remand was not a favorable outcome. The court noted that none of the cases applying the catalyst theory involved situations in which an adverse judgment had already been rendered against the party seeking attorneys’ fees. Thus, having lost twice, petitioner could not show that it had prevailed by “threat of victory.”

Second, the city did not change its behavior substantially because of, and in the manner sought by,the litigation. The city had been successful in defending the CEQA action and did not revoke the entitlements for any reason related to the EIR or the CEQA violations alleged by petitioner. Rather, the city revoked the entitlements because the developer and the landowner had both abandoned the project due to a contract dispute. Petitioner could not demonstrate a nexus between the merits of its action and the city’s revocation of the entitlements. Therefore, the action was not the catalyst for the revocation and petitioner was not entitled to attorneys’ fees.