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LAGUNA BEACH

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A federal judge Thursday dismissed a lawsuit the Festival of Arts filed against the city in December, alleging its first amendment rights had been violated because the city had been charging what the group felt was exorbitant rent--$585,000 last year.

“We’re elated,” said Philip D. Kohn, the city’s attorney. “We feel the court’s ruling vindicates what we’ve been thinking all along, that the suit had no merit. We’re hoping it causes the festival to reassess its situation.”

The festival’s lease with the city expires in September 2001. The festival originated in Laguna Beach 68 years ago. The festival board on Tuesday signed a tentative, nonbinding lease agreement with San Clemente to move the summer festival to a 20-acre site near San Clemente’s Talega development.

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Festival president Sherri M. Butterfield could not be reached for comment Thursday.

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