Law firm will go after City Hall for attorney fees
CITY HALL — The City of Santa Monica has settled a lawsuit that forbids local government from denying housing projects based on whether they fit in with a neighborhood.
Under the agreement, city officials reserve the right to still argue the case in court when lawyers try to make City Hall pay their attorney fees, which could be hundreds of thousands of dollars.
City officials maintain that they comply with a state law that forbids cities from denying market-rate housing projects based on subjective findings, and as a result, it’s a non-issue.
“I think we are following the law, and I don’t think there is a dispute,” said City Attorney Marsha Moutrie. “The question of whether there was a controversy will be decided in the context of attorney fees. I don’t think we should have to pay attorney fees.”
The Santa Monica Housing Council and the California Housing Council filed a joint lawsuit against City Hall in 2002 because they believe the city violates state law when it denies housing projects that otherwise conform to zoning codes for not being compatible with surrounding buildings.
Santa Monica Superior Court Judge Linda Lefkowitz also agreed that there was no controversy when the case was first heard early last year. But then attorneys from Harding, Larmore, Kutcher & Kozal provided specific examples of projects turned down by City Hall, which kept the case alive. The case was set to go to trial on May 10, said Ken Kutcher, a partner in the Santa Monica-based law firm, which argued the case for the housing councils.
City officials say they rarely deny projects or reduce the number of units in a building based on aesthetics or neighborhood compatibility.
“But the problem has always been the threat,” Kutcher said. “(Developers) will roll over because they can’t afford to litigate and they don’t have the time, but now they can’t threaten anyone.”
The state law to which the lawsuit refers has existed for many years, and was initially enacted to prevent cities from excluding affordable housing from being built. However, Moutrie has said in the past that that is hardly the case in Santa Monica, where the City Council has long had an aggressive policy toward building more affordable housing in the city.
The state law is superseded by a federal ruling that limits cities’ authority to only denying projects based on public health and safety, not on the welfare of the neighborhood.
But to argue that City Hall already complies with the law and to get the case dismissed would have possibly required going all the way to the Supreme Court. City Hall decided to cut its losses and settle the case.
“Every minute more we litigate the case, the more attorney fees incur,” Moutrie said. “The question was, ‘do you proceed or end the case and stop the meter from running?’”
City Hall’s position while the lawsuit was being threatened was that the state law didn’t necessarily limit the city’s authority. “... to interpret this statute in the manner that you propose would represent a significant and unprecedented intrusion into both local control and a charter city’s exercise of its constitutional police powers,” Moutrie wrote in a letter to Chris Harding, an attorney for the Santa Monica Housing Council, in September of 2002. “Finally, we do not believe that the statute and its legislative history demonstrates that the legislature intended this result. Nor do we believe that the case law compels it.”
Kutcher said his firm will attempt to collect attorney fees from City Hall because they argued the case on the public’s behalf.
“We are the catalyst in changing this and it has resulted in a public benefit so the public should pay,” he said. “For us, we’ve been vindicated.
“It’s a total victory on our part.” The state law, which has changed significantly over the years, effectively takes away local control to govern housing projects. But cities can establish design standards through ordinances and codes in an effort to keep uniformity.
Moutrie said in the past that the city has an excellent record of allowing market-rate housing to be built, especially in the city’s downtown area, and the state has certified the city’s plan for building its share of regional housing.
The Santa Monica Housing Council has successfully sued the city four times in the past 10 years, according to the lawsuit. Harding told the Daily Press in 2002 that the city has paid more than $1 million during the past decade in attorneys fees to successful plaintiffs who have sued the city to force compliance with state housing laws.
Harding, Larmore, Kutcher & Kozal, a land use and property rights firm, has sued City Hall dozens of times in the past decade on a range of cases.
Originally published in the Santa Monica Daily Press print edition on April 19, 2004. Read the original PDF.