Court Voids Lawyers’ Penalties in Suit Judge Called Frivolous

The U.S. 9th Circuit Court of Appeals has reversed a $611,000 penalty levied against two Thousand Oaks attorneys who a federal court judge believed had filed a frivolous lawsuit.

The appeals court said U.S. District Judge Dickran Tevrizian abused his discretion in imposing sanctions on attorneys Shelby H. Moore Jr. and Theresa A. Hooks. The lawyers represented the Westlake North Property Owners Assn. in its effort to force the city of Thousand Oaks to complete a full environmental impact report on a planned 2,257-unit housing project.

“We hold that, viewed objectively, Moore and Hooks had a good faith argument for their view of what the law is, or should be,” Judge J. Clifford Wallace wrote in his opinion for the court. “The pleadings were not interposed for an improper purpose.”

The decision was hailed as a boost to homeowners groups that might otherwise have difficulty finding attorneys to represent them in lawsuits against developers.

The penalty “was simply an attack on homeowners and their attorneys,” said Gerald A. Silver, coordinator for the Alliance to Control Development, an umbrella organization he said represents about 1,200 California homeowners groups. “It was raw, bald intimidation.”

Tevrizian imposed the sanctions last April after dismissing the homeowners’ lawsuit. The homeowners filed suit against the city and the developers, Lang Ranch Co. and Anden Group, charging that the city had improperly negotiated a court settlement with the developer in October, 1986, without conducting a full environmental report. That settlement had been approved by Tevrizian.

In his ruling, Tevrizian said the homeowners group was bound by the 1986 settlement because its members, as residents, were represented by the city of Thousand Oaks when it agreed to the housing project. The judge also ordered the homeowners group to pay a penalty, later set at $123,000, to help offset the developers’ legal fees and the costs of project delays.

Acting on a request from the developer, Tevrizian found that Moore and Hooks acted frivolously because they filed the lawsuit even though they knew about the binding effect of the settlement on the homeowners group. The attorneys had said the settlement was not binding.

Hooks said Monday that the ruling “gives citizens a little more faith in the system. We hope it tells them that sometimes you have to gut out the intimidation from the developers, and sometimes the system works for you.”

The homeowners group did not appeal Tevrizian’s ruling.

Silver said the decision enforces his belief that the homeowners group would have won the case had it also appealed. Hooks said the group has no immediate plans to reopen litigation against the company.