LAGUNA BEACH : City Ordered to Pay $650,000 in Legal Fees

Laguna Beach has suffered another blow in its bitter court battle against South Laguna’s “granny-flat” apartments with a court order that the city must pay $650,000 toward its opponents’ legal fees.

The decision by Orange County Superior Court Judge William F. McDonald is the latest salvo in a five-year war over the fate of hundreds of South Laguna’s bootleg apartments, also known as “granny flats.”

After South Laguna was annexed in 1987, Laguna Beach advised landlords that such add-on apartments had to conform to city building codes and provide adequate parking, or they would have to be dismantled.

Property owners, some of whom say they need the rental income to help pay their mortgages, fought the city for the right to apply for conditional use permits under a more lenient state law.

Property owners lost the first legal round in Superior Court in 1990. However, last year the 4th District Court of Appeal ruled that a city law governing the add-on dwellings cannot be applied to South Laguna.

The city appealed to the state Supreme Court in June but the court declined to hear the case.

Most recently, plaintiffs had asked the city to pay $1.5 million in litigation expenses, including $750,000 in attorney’s fees. But McDonald ruled Friday that the city must pay $650,000 toward the plaintiffs’ legal fees, City Attorney Philip Kohn said.

“I guess it was expected that some amount might be awarded,” Kohn said Monday. “We’re obviously pleased the court did not award them the amount they were seeking. The amount awarded we still feel is excessive.”

Kohn said the City Council, which is scheduled to hold a budget workshop on Saturday, will probably meet before that session to determine whether to appeal the ruling. If the board chooses not to appeal, the city is allowed 10 years to pay the sum, he said.

Kohn said any appeal would center on whether $650,000 is excessive, not whether the city should pay some of the plaintiffs’ legal bills. The city’s own legal fees for this case have amounted to about $120,000, he said.

Harold L. Wilson, one of two plaintiffs in the original class-action suit, said the city will probably lose more money if it presses on legally.