The First District Court of Appeal has blocked a developer's request to collect from its courtroom opponents the cost of preparing the administrative record in a California Environmental Quality Act lawsuit.

The court held that the developer, Hayward 1900, Inc., was not eligible for the money because the City of Hayward had improperly delegated preparation of the administrative record to the developer.

In 2002, the Hayward Area Planning Association, the Hayward Hills Property Owners Association and Greenbelt Alliance filed a lawsuit against the City of Hayward and the Hayward Unified School District over the environmental review for a controversial, long-discussed subdivision in the hills of the East Bay city. Hayward 1900 was the real party in interest. The project opponents later dismissed their claims against the school district.

In June 2003, Alameda County Superior Court Judge Bonnie Lewman Sabraw ruled against the project opponents and awarded costs to the city and Hayward 1900. Hayward 1900 then sought $50,421, all but $228 of which was for preparation of the administrative record. The project opponents - who had never agreed to have the developer prepare the record - asked the court to reject the developer's bill because preparation of the record was the city's responsibility, because various costs included in the $50,000 bill were unreasonable, and because the bill included costs of preparing the school district record, which the district had waived.

The trial court found some of the costs to be excessive, so the developer reduced its bill to $20,359. But the project opponents asked the appellate court to bar any cost recovery for the developer's preparation of the administrative record. A unanimous three-judge panel of the First District did just that.

The decision centered on interpretation of one portion of CEQA, Public Resources Code § 21167.6.

“Section 21167.6 authorizes only three ways to prepare a CEQA record, none of which were followed in this case,” Justice Linda Gemello wrote for the court. “The three alternatives are (1) that the public agency prepare and certify the record; (2) that the petitioner prepare the record, subject to certification by the public agency; or (3) that the parties agree to alternative method of preparing the record, subject to certification by the public agency. The city's delegation of the task to the real party in interest without obtaining the consent of plaintiffs was inconsistent with this statutory scheme.”

Hayward 1900 argued that the statute did not bar its cost recovery, and the court conceded that the statute is ambiguous. Still, the intent of the statute is to minimize the cost of record preparation, and none of the usual restraints on cost preparation were in place here because of the city's unilateral delegation of record preparation to the developer, the court determined. The plaintiffs could not control costs because they were given no choice on the arrangement with the developer, the city itself did not submit a bill that it was forced to justify in public, and the city did not attempt to control the developer's costs, Gemello noted.

“Although courts have allowed public agencies to collect the labor costs of outside assistance when they prepare the record under § 21167.6, subdivision (b)(1), no court has condoned the unilateral delegation of the task to a party with an interest in the litigation,” Gemello wrote.

Thus, the court ruled, the developer's cost recovery must be denied.

The Case:
Hayward Area Planning Association v. City of Hayward, No. A104903, 05 C.D.O.S. 2993, 2005 DJDAR 4033. Filed April 5, 2005.
The Lawyers:
For Hayward Area Planning Association: Jewell Hargleroad, McInerney & Dillon, (510) 465-7100.
For Hayward 1900, Inc.: Philip Aktins-Pattenson, Sheppard, Mullin, Richter & Hampton, (415) 434-9100.