The laudable efforts of the Legislature in adopting “super statutes” such as the Housing Accountability Act (“HAA”; Gov. Code, § 65589.5) notwithstanding, housing in California remains a scarce and precious commodity.  The interplay of the HAA with another “super statute” – CEQA (Pub. Resources Code, § 21000 et seq.) – also continues to be the subject of interesting and important litigation in which the core objectives and provisions of these two statutory schemes clash and must be reconciled.  The First District Court of Appeal’s mostly published 36-page opinion in Coalition of Pacificans for an Updated Plan v. City Council of the City of Pacifica (2025) ___ Cal.App.5th ___, filed on December 30, 2025, deals with the immediate economic fallout from such a clash; the context of the decision was the parties’ post-judgment battle over attorneys’ fees in a case where the CEQA plaintiff prevailed in challenging the HAA-protected housing development approvals for a small infill project in a physically challenging location.  While the City and housing developer prevailed in their appeal of an adverse fee award, their victory might be short-lived or of limited impact in light of the narrow grounds on which the Court of Appeal reversed, and the significant discretion the trial court still retains in reconsidering the fee award on remand.  Thus, in one of the opinion’s many ironies, the case could actually represent a setback for those seeking to use the protections of the HAA to defend housing projects from being sued, and to protect local agencies and developers from hefty fee awards when such suits are successful.

Factual and Procedural Background

The case involves a $1.3 million fee award for CEQA petitioners who had succeeded in overturning approvals for a housing project in Pacifica.  The city had prepared an initial study/mitigated negative declaration (IS/MND) for the eight-unit project, which was comprised of four three-story buildings with two side-by-side townhouses in each, to be constructed on a steeply sloping, densely vegetated 1.2-acre site in the city of Pacifica.  Portions of the project site had been found (in connection with an application submitted three decades earlier) to contain “an erosional gully with active or recently active landslides.”  A decade later, in 2002, another developer applied to develop the Project, but the City did not deem that application complete until 2015.  The Project, which included one affordable (i.e., below market) townhome unit, was finally approved in 2020 after the City Council voted 3-2 to uphold the Planning Commission’s approvals on appeal.  The site was physically constrained and challenging; as the trial court noted in its later merits ruling, the Project would grade 0.7 acres of the site, remove seven (7) heritage trees, and 50 other trees, and destroy 96 feet of ephemeral drainage and 0.26 acres of arroyo willow riparian habitat.

The plaintiffs sued, claiming a full-blown EIR was required under CEQA, and that the project approvals violated the General Plan law.  As is often the case with an IS/MND, the trial court ruled that the plaintiffs had provided substantial evidence of a fair argument that the project, even as mitigated, may have a significant environmental effect.  Potential effects included impacts to wildlife and bird deaths, slope destabilization and erosion, aesthetics, and air quality.  After prevailing under CEQA, plaintiffs agreed to dismiss their General Plan claim, and the court entered a final judgment that no party appealed.  The trial court also issued a writ commanding the city to set aside the Project approvals.

Plaintiffs then sought their attorneys’ fees under Code of Civil Procedure (“CCP”) section 1021.5, the “private attorney general” statute.  The trial court granted the motion, finding that the litigation conferred a significant public benefit and that private enforcement was necessary.  The court directed plaintiffs to prepare a formal order; after meeting and conferring, the parties were unable to agree on the terms of the order, and so the court requested additional briefing.  At that point, real parties in interest argued for the first time that a new provision of the HAA, Government Code section 65589.5, subdivision (p)(1), required the court to make additional findings in order to award fees under CCP section 1021.5.  After further briefing and argument, the court awarded plaintiffs almost $1.3 million in fees, including all requested fees with a 1.5 multiplier.  $1 million was awarded jointly and severally against respondents and real parties, and the remaining $300,000 was awarded jointly and severally against the real parties only.  Respondents and real parties appealed.

The Court of Appeal’s Decision

Despite reviewing the trial court’s order under the deferential abuse of discretion standard, the Court of Appeal reversed the fee award.  It did so based on its interpretation of certain provisions of Government Code section 65589.5(p)(1).  In the case of a successful challenge to a housing development approval, the statute requires a court in ruling on a fee motion under CCP section 1021.5 to consider certain additional factors, i.e., whether the approval had furthered the policies of the HAA; the suitability of the site for housing; and the reasonableness of the approving agency’s action. 

The trial court had ruled that requirements of CCP section 1021.5 were satisfied given that the plaintiffs had provided expert evidence that the project could have significant environmental impacts.  With respect to section 65589.5(p)(1), the trial court found that the project’s eight units would not substantially advance the policies of the HAA given the statewide deficit of two million housing units.  The trial court also found that the policy encouraging development in urban areas is not furthered because Pacifica is not urban in nature.  Finally, the trial court found that respondents had acted unreasonably in approving the Project given its potential environmental impacts, as established by its unappealed judgment on the merits.

The City and developer appellants challenged the post-judgment fee award order on two bases: (1) that the trial court had misinterpreted section 65589.5(p)(1) inasmuch as that statute imposes a higher burden on CCP section 1021.5 fee awards in the context of a housing project, and (2) that the court’s analysis of the various factors under section 65589.5(p)(1) was erroneous.  The Court of Appeal disagreed as to the first point.  Appellants argued it was erroneous for the trial court to consider potential environmental impacts at all under section 65589.5(p)(1), but the Court of Appeal rejected that argument, holding that it is within the discretion of the trial court to also consider such factors in giving the required “due weight” to the factors that must be considered under section 65589.5(p)(1).  Per the Court:  “The statute does not state a court is prohibited from considering other factors [such as a project’s potential environmental impacts or possible benefits from further study of the same] that may be relevant on one side or the other of the weighing process. ….  In the type of case specified in the statute (i.e., one challenging a local agency’s approval of a housing development project), th[e] inquiries [regarding significant benefit and necessity of private enforcement that a court must always conduct under CCP § 1021.5] are modified, not displaced, by section 65589.5, subdivision(p)(1).”

In addition to this plain language analysis, the Court concluded that the legislative history provided no support for appellants’ position in this regard.  Nor did other provisions in the HAA and related statutes providing additional protections relating to liability standards (Gov. Code, §§ 65589.5.1(a)(3), 65589.5.2(a)(3)) and attorneys’ fees (§ 65589.5(a)(3)) support appellants’ arguments because those provisions expressly apply only to denser projects of at least 15 units per acre.  The same was true of section 65589.5(k)(1)(A)(ii)(II)(ia), which the Court also found inapposite to interpretation of section 65589.5(p)(1) because it deals with project disapprovals that violate the HAA, rather than project approvals that violate other laws, such as CEQA.

The Court of Appeal did, however, agree with the appellants in certain respects on their second point, i.e., that the trial court abused its discretion and erred in interpreting and applying two of the factors to which it was required to give “due weight” under the HAA.  As noted above, the trial court had concluded that the project’s eight units were effectively de minimis when compared with the statewide 2 million unit shortfall, and thus did not “further” the HAA’s policy of expanding the housing supply.  While the Court of Appeal did not mention it, the irony of the trial court’s reliance on such a “drop in the bucket” analysis in applying the HAA’s requirements in this regard will not be lost on CEQA practitioners who are familiar with the courts’ uniform and consistent rejection of such “logic” in the context of analyzing a project’s cumulative impacts (such as GHG impacts) on the environment under CEQA.  Given the HAA’s overarching legislatively-mandated statutory imperative to interpret and implement its provisions “in a manner to afford the fullest possible weight to the interest of, and the approval and provision of, housing” (Gov. Code, § 65589.5(a)(L)) – an injunction befitting a “super statute” and somewhat paralleling CEQA’s judge-made rule requiring its interpretations to afford the fullest possible protection to the environment within the reasonable scope of the statutory language (California Building Industry Assn. v. Bay Area Air Quality Management Dist. (2015) 62 Cal.4th 369, 383) – the trial court’s anti-housing perspective on this issue seems a little “tone-deaf.”  In any event, the Court of Appeal correctly held that using a statewide benchmark was an abuse of discretion, because obviously no single housing project of any size could be considered to significantly expand the housing supply when compared with the 2 million unit statewide deficit.  The Court of Appeal therefore held that this analysis must be based on “a more localized consideration of the circumstances surrounding a particular project.” 

After reiterating that the environmental impacts of a project could still be considered in the section 65589.5(p)(1) balancing analysis, the Court also held that the trial court had erred in ruling that Pacifica as a whole was not an “urban area” under the statute.  Instead of finding an entire county or city to be “urban” or otherwise, the Court held that courts should look more granularly at the specific area at issue.  (It did reject the appellants’ citation to the definition of “urbanized area” in Public Resources Code section 21071, however.)  We observe that the trial court’s error here was also somewhat ironic given recent analogous CEQA precedent analyzing when a site is “substantially surrounded by urban uses” for purposes of applying that aspect of CEQA’s Class 32 categorical exemption for “in-fill development” projects.  (See, Working Families of Monterey County v. King City Planning Commission (2024) 106 Cal.App.5th 833, this blog’s 11/21/24 post on which can be found here.)

The Court rejected appellants’ argument that whether the project site is “suitable” for housing should be adjudged by the General Plan and zoning designations, holding that site-specific conditions (such as the risk of landslide and erosion for the project at issue) could factor into this analysis.

Finally, the Court of Appeal held that the trial court’s finding that city acted unreasonably, so as to weigh in favor of a fee award, was not an abuse of discretion given the multiple bases upon which it had concluded that an EIR was required in for the project.  This anti-HAA conclusion seems to us a bit premature, given the trial court’s adjudicated failure to properly interpret, and thus properly weigh, all factors relevant to the “reasonableness” determination in the first instance.

In the final, unpublished portions of its opinion, the Court of Appeal rejected appellants’ arguments that the failure of plaintiffs’ General Plan claim warranted a reduction in fees, and that the real parties in interest should not be held liable for the fees.  With regard to the first point, because plaintiffs’ goal in both the CEQA and General Plan claims was to have the project approvals set aside, and because they were successful in achieving that goal, the Court held the claims were “related” so as to justify the full award.  Again, the deferential abuse of discretion standard militated in favor of an affirmance on that issue.  The same was true for real parties’ argument – the Court upheld as a proper exercise of discretion the trial court’s finding that real parties were liable for the fees, given their participation in the litigation and the fact that it was their project at issue.

Conclusion and Implications

The decision is a decidedly mixed bag.  The plaintiffs prevailed on all issues except those involving interpretation of the section 65589.5(p)(1) factors related to furthering housing generally and in urban areas, which issues would be revisited by the trial court following remand.  Thus, for developers seeking to build housing that the Legislature has repeatedly stated is essential, the risk remains not only that such approvals can be set aside under CEQA, but that the developers will be hit with a hefty fee award (including a multiplier), even in the face of the HAA and its attempt to limit awards in the context of housing projects.  Thus, while the fee award here was reversed, the limited basis for the reversal may provide only cold comfort to many developers, especially those of smaller, less-dense infill housing development projects like the one at issue here.  Of course, it remains possible that on remand the trial court will conclude that the project’s contribution to the permitting of new housing in Pacifica – which the Court of Appeal’s opinion noted averaged only 16 units per year from 2015-2020 – was sufficiently significant so as to render a fee award unwarranted, or to require its substantial reduction.  So, while one can always hope, our first impression is that this case represents something of a setback in terms of encouraging housing development in California, and espouses a judicial interpretation of the HAA that does not entirely fulfill the Legislature’s intent to substantially limit the incentives to challenge HAA-protected housing development projects.

Questions? Please contact Arthur F. Coon of Miller Starr Regalia. Miller Starr Regalia has had a well-established reputation as a leading real estate law firm for more than sixty years. For nearly all that time, the firm also has written Miller & Starr, California Real Estate 4th, a 12-volume treatise on California real estate law. “The Book” is the most widely used and judicially recognized real estate treatise in California and is cited by practicing attorneys and courts throughout the state. The firm has expertise in all real property matters, including full-service litigation and dispute resolution services, transactions, acquisitions, dispositions, leasing, financing, common interest development, construction, management, eminent domain and inverse condemnation, title insurance, environmental law and land use. For more information, visit www.msrlegal.com