Westlands Water Dist. v. All Persons Interested

1

WESTLANDS WATER DISTRICT, Plaintiff and Appellant, v. ALL PERSONS INTERESTED etc. et al., Defendants and Respondents.

F085374

California Court of Appeals, Fifth District

August 2, 2024

NOT TO BE PUBLISHED

APPEAL from a judgment of the Superior Court of Fresno County, No 19CECG03887 D. Tyler Tharpe, Judge.

Stradling Yocca Carlson & Rauth, Allison E. Burns and Douglas S. Brown for Plaintiff and Appellant.

Law Offices of Stephan C. Volker, Stephan C. Volker, Stephanie L Clarke and Jamey M.B. Volker for Defendants and Respondents North Coast Rivers Alliance, Winnemem Wintu Tribe, California Sportfishing Protection Alliance, Institute For Fisheries Resources, Pacific Coast Federation of Fishermen's Associations, and San Francisco Crab Boat Owners Association.

OPINION

PENA Acting P. J.

Code of Civil Procedure section 1021.5 (section 1021.5) authorizes an award of attorney fees to a successful party in any action resulting in the "enforcement of an important right affecting the public interest" if, inter alia, a "significant benefit" has been conferred upon society or a large class of people. The statute codifies the private attorney general doctrine and "the courts' 'traditional equitable discretion' concerning attorney fees . . ., and within the statutory parameters courts retain considerable discretion." (Vasquez v. State of California (2008) 45 Cal.4th 243, 251.) "In deciding whether to award fees, the court 'must realistically assess the litigation and determine, from a practical perspective, whether or not the action served to vindicate an important right so as to justify an attorney fee award under a private attorney general theory.'" (Ibid.)

This appeal challenges a trial court's decision to award fees pursuant to section 1021.5 in a validation action. Appellant Westlands Water District (Westlands) had an existing contract with the federal government that was about to expire and both sides intended to enter into a new agreement. Westlands' complaint sought a judicial decree regarding the validity of the anticipated contract. However, the contract presented to the trial court for validation was missing key terms regarding Westlands' financial obligations under the agreement.

The trial court said it likely would have validated the contract, despite the omissions, but for the opposition of multiple parties, including respondents herein. Respondents pointed out the absence of material terms in the draft agreement and lack of public disclosure of the missing information. The trial court ultimately refused to validate the contract. Westlands' complaint was ordered dismissed, and respondents were later awarded over $100,000 in attorney fees. In its fees ruling, the trial court noted the importance of "transparency and accountability in public contracts."

Westlands argues there were no successful parties in the validation action. It also claims the trial court erred by finding respondents helped enforce "an important right" and conferred a "significant benefit" upon the general public. (§ 1021.5.) Westlands' strongest argument focuses on the significant benefit requirement. The trial court did not rule the contract was unlawful; it declined to affirmatively validate it due to Westlands' failure to meet the applicable burdens. There was no evidence to suggest the dismissal of Westlands' validation action had any impact on Westlands' contractual relationship with the federal government. The contracting parties entered into a revised agreement while the action was still pending, and they had been performing under the new contract for over two years by the time respondents' motion for attorney fees was granted.

On the other hand, the dismissal of Westlands' complaint was affirmed by this court in a published opinion, Westlands Water Dist. v. All Persons Interested (2023) 95 Cal.App.5th 98. The case presented a novel issue, arising from an unusual set of facts, regarding the propriety of validating an incomplete contract when the missing terms are material to the contractual subject matter of local government debt and expenditure. "The publication of an opinion suggests that the case involved a matter of public importance." (Doe v. Westmont College (2021) 60 Cal.App.5th 753, 764.) Publication may also confer a significant benefit by "clarifying existing law and requiring it to be followed." (McCormick v. Public Employees' Retirement System (2023) 90 Cal.App.5th 996, 1010.) In deference to the trial court's considerable discretion, we affirm its decision to award attorney fees under section 1021.5.

FACTUAL AND PROCEDURAL BACKGROUND

This court is familiar with the parties and the underlying litigation from prior appeals. A comprehensive background is provided in Westlands Water Dist. v. All Persons Interested, supra, 95 Cal.App.5th at pages 104 through 124, which we incorporate by reference. Due to the nature of the issues in this appeal, much of the information is repeated in the first part of this summary.

Overview and Prior Merits Determinations

Westlands is a public agency formed for the purpose of obtaining federal reclamation water from the Central Valley Project (CVP) and distributing the water to its constituents. In 1963, Westlands and the United States Bureau of Reclamation (Bureau) entered into a 40-year water service contract. When the original contract expired, Westlands and the Bureau executed a series of interim renewal contracts to maintain the status quo until they could meet the requirements of the Central Valley Project Improvement Act (Pub.L. No. 102-575 (Oct. 30, 1992) 106 Stat. 4706), which had imposed restrictions on long-term renewals of water service contracts.

In late 2016, Congress enacted the Water Infrastructure Improvements for the Nation Act (Pub.L. No. 114-322 (Dec. 16, 2016) 130 Stat. 1628) (WIIN Act). This legislation authorized a limited-time opportunity for water contractors like Westlands to convert their existing water service contracts into a type of agreement known as a "repayment contract." (WIIN Act, § 4011.) Converted contracts had to be executed by December 2021. (Id., § 4013.) Such conversions were also contingent upon the contractor's repayment of all outstanding project construction cost obligations in a "lump sum," or "in approximately equal installments, no later than 3 years after the effective date of the repayment contract .. .." (Id., § 4011(a)(2)(A).)

By 2019, Westlands and the Bureau had agreed in principle to convert their sixth interim renewal contract to a repayment contract. On October 15, 2019, Westlands' board of directors (Board) met and formally authorized the execution of a converted contract "in substantially the form presented to [it]," which at the time was an incomplete draft missing four exhibits referenced in the body of the document. On October 25, 2019, Westlands filed its validation complaint in the Fresno Superior Court pursuant to Code of Civil Procedure section 860 et seq., Government Code section 53510 et seq., and Water Code section 35855.

We pause here to note that public agencies are not required to seek judicial validation of their contracts and related financial decisions. "Instead, an agency may choose to do nothing and allow the agency decision or act to be validated by operation of law based on the passage of time." (Davis v. Fresno Unified School Dist. (2020) 57 Cal.App.5th 911, 927.)

In other words, "an agency may indirectly but effectively 'validate' its action by doing nothing to validate it[.]" (City of Ontario v Superior Court (1970) 2 Cal.3d 335, 341.) "[U]nless an 'interested person' brings an action of his own under [Code of Civil Procedure] section 863 within [a] 60-day period, the agency's action will become immune from attack whether it is legally valid or not." (Ibid.)

The reason Westlands filed a validation action was because of a clause in its draft agreement with the Bureau. The provision stated: "Promptly after the execution of this amended Contract, the Contractor [Westlands] will provide to the Contracting Officer [the Bureau] a certified copy of a final decree of a court of competent jurisdiction in the State of California, confirming the proceedings on the part of the Contractor for the authorization of the execution of this amended Contract. This amended Contract shall not be binding on the United States until the Contractor secures a final decree."

Westlands' validation complaint included the following prayer for relief:

"That judgment be entered determining that: ... the Converted Contract, [i.e., the draft attached as an exhibit] and each and every provision of said Converted Contract, is valid under applicable California law; ... all of the proceedings of [Westlands] and its Board of Directors leading up to and including the making and approval of said Converted Contract were in all respects legal and valid; . . . [and] that said Converted Contract is in all respects valid under applicable California law and binding upon the respective parties thereto . . .."

Four groups of defendants filed answers to the validation complaint: (1) respondents; (2) the Counties of San Joaquin and Trinity (Counties); (3) a group led by the California Water Impact Network (collectively CWIN); and (4) the Central Delta Water Agency and the South Delta Water Agency (collectively, CDWA). All defendants characterized the lawsuit as premature. They claimed the Bureau had not yet completed its "review and decision-making" on the matter and had "extended an initial 60-day comment period on Westlands' 'draft repayment contract' until January 8, 2020."

Respondents alleged the actions taken by Westlands' Board violated state and federal environmental laws. Respondents further alleged Westlands had violated...