Filed 1/12/23 Kracke v. City of Santa Barbara CA2/6

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions 

not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion 

has not been certified for publication or ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

THEODORE P. KRACKE, 

Plaintiff and Appellant, 

v.

CITY OF SANTA BARBARA,

Defendant and Respondent. 

 

2d Civ. No. B316993

(Super. Ct. No. 56-2016-

00490376-CU-MC-VTA)

(Ventura County)

Theodore P. Kracke sued the City of Santa Barbara (City), 

claiming it had unlawfully banned short-term vacation rentals 

(STVRs) within the California coastal zone. Kracke prevailed in 

that action, and we affirmed the trial court’s order granting his 

petition for writ of mandate and enjoining the City’s enforcement 

of the STVR ban in the coastal zone unless it satisfies certain 

conditions. (Kracke v. City of Santa Barbara (2021) 63 

Cal.App.5th 1089, 1098 (Kracke).) 

Kracke appeals the trial court’s denial of his second motion 

for attorney fees under the private attorney general statute, Code 
2

of Civil Procedure section 1021.5.

1 (See Conservatorship of 

Whitley (2010) 50 Cal.4th 1206, 1217 (Whitley).) Kracke contends 

the trial court abused its discretion by denying his motion, but he 

failed to meet his burden of producing substantial evidence of his 

personal financial stake in the litigation. In the absence of such 

evidence, we affirm. 

I. FACTUAL AND PROCEDURAL BACKGROUND

Since 2007, Kracke has been “the proprietor of Paradise

Retreats World Class Vacation Rentals (‘Paradise Retreats’), a 

local business engaged in operating, managing and servicing 

vacation rentals in and around the [City].” Kracke markets his 

business as “the leader in luxury vacation rental management.” 

The rental rates for the properties he manages range from $400

to $5,984 per night, plus taxes and fees. 

“Prior to 2015, the City . . . encouraged the operation of 

[STVRs] along its coast by treating them as permissible 

residential uses. In June 2015, the City began regulating STVRs 

as ‘hotels’ under its municipal code, which effectively banned 

STVRs in the coastal zone. The City did not seek a coastal 

development permit (CDP) or an amendment to its certified local 

coastal program (LCP) prior to instituting the ban.” (Kracke,

supra, 63 Cal.App.5th at p. 1092.) 

In November 2016, Kracke petitioned for a writ of mandate 

enjoining the City’s enforcement of the STVR ban in the coastal 

zone unless it obtains a CDP or LCP amendment. During 

discovery, Kracke declined to produce evidence of the rental rates 

and fees his business charged to overnight guests prior to 2015. 

Kracke stipulated he would not introduce during trial any 

evidence referencing his business. 

1 All statutory references are to the Code of Civil Procedure 

unless otherwise stated. 
3

Kracke also did not provide this evidence in support of his 

first motion for attorney fees. The trial court denied that motion, 

finding he had failed to establish his personal financial stake in 

the action. Kracke presented evidence that only 9.7 percent of 

his income is from STVRs in the coastal zone, but the court found 

“this bare percentage . . . unhelpful . . . .” 

Kracke renewed his request for attorney fees in a second 

motion filed after we affirmed, in a published decision, the trial 

court’s order granting his petition for writ of mandate. (Kracke,

supra, 63 Cal.App.5th at p. 1098.) “[A]rmed with a published 

opinion establishing the broad public impact of this case,” Kracke 

claimed he had incurred over $600,000 in attorney fees, and that 

his business netted just $41,693 from his coastal zone properties 

during the period critical litigation decisions were being made in 

the case. Kracke maintained he had more than satisfied his 

entitlement to section 1021.5 fees. 

The trial court rejected the City’s argument that Kracke 

was equitably estopped from renewing his motion for attorney 

fees, but again denied his motion. It stated: “Kracke once again 

has not presented substantial evidence – at least some of which 

he presumably has available to him and could have easily 

submitted (e.g., regarding his historical earnings from STVRs in 

the Coastal Zone both before and after the STVR ban) -- in 

support of his claim that his costs of litigating this lawsuit 

outweigh his personal stake in the action. In the absence of 

substantial evidence of Kracke’s expected financial benefit from 

this action, it would constitute an abuse of discretion for the court 

to grant Kracke’s request for [section] 1021.5 fees.” 
4

II. DISCUSSION

A. Standard of Review and Applicable Law

“The burden is on the party requesting section 1021.5 fees 

to demonstrate all elements of the statute, including that the 

litigation costs transcend his or her personal interest. . . . ‘The 

trial court’s judgment on whether a plaintiff has proved each of 

the prerequisites for an award of attorney fees under section 

1021.5 “will not be disturbed unless the appellate court is 

convinced that it is clearly wrong and constitutes an abuse of 

discretion.”’ [Citation.] With respect to the issues of necessity 

and financial burden, the trial court abuses its discretion in 

making an award under section 1021.5 when there is no 

substantial evidence to support the required findings.” (Millview

County Water Dist. v. State Water Resources Control Bd. (2016) 4 

Cal.App.5th 759, 769 (Millview).) 

“‘[T]he Legislature adopted section 1021.5 as a codification 

of the “private attorney general” attorney fee doctrine that had 

been developed in numerous prior judicial decisions.’” (Whitley,

supra, 50 Cal.4th at p. 1217.) Section 1021.5 “is an exception to 

the general rule in California, commonly referred to as the 

American rule and codified in section 1021, that each party to a 

lawsuit must ordinarily pay his or her own attorney fees.” 

(Adoption of Joshua S. (2008) 42 Cal.4th 945, 954.) “‘The 

doctrine rests upon the recognition that privately initiated 

lawsuits are often essential to the effectuation of the 

fundamental public policies embodied in constitutional or 

statutory provisions, and that, without some mechanism 

authorizing the award of attorney fees, private actions to enforce 

such important public policies will as a practical matter 

frequently be infeasible.’” (Whitley, at p. 1218, italics omitted.)
5

“A court may award attorney fees under section 1021.5 only 

if the statute’s requirements are satisfied. Thus, a court may 

award fees only to ‘a successful party’ and only if the action has

‘resulted in the enforcement of an important right affecting the 

public interest . . . .’ [Citation.] Three additional conditions must 

also exist: ‘[1] a significant benefit, whether pecuniary or 

nonpecuniary, has been conferred on the general public or a large 

class of persons, [2] the necessity and financial burden of private 

enforcement . . . are such as to make the award appropriate, and 

[3] such fees should not in the interest of justice be paid out of the 

recovery, if any.’” (Vasquez v. State of California (2008) 45 

Cal.4th 243, 250-251; Whitley, supra, 50 Cal.4th at p. 1214.) 

In evaluating the element of financial burden, “the inquiry 

before the trial court [is] whether there were ‘insufficient 

financial incentives to justify the litigation in economic terms.’” 

(Summit Media, LLC v. City of Los Angeles (2015) 240 

Cal.App.4th 171, 193 (Summit Media), quoting Whitley, supra, 50 

Cal.4th at p. 1211.) If the plaintiff had a “personal financial 

stake” in the litigation “sufficient to warrant [the] decision to 

incur significant attorney fees and costs in the vigorous 

prosecution” of the lawsuit, an award under section 1021.5 is 

inappropriate. (Summit Media, at pp. 193-194; Millview, supra,

4 Cal.App.5th at pp. 768-769; Whitley, at p. 1211 [“[A] litigant 

who has a financial interest in the litigation may be disqualified 

from obtaining such fees when expected or realized financial 

gains offset litigation costs”].) 

“‘Section 1021.5 was not designed as a method for 

rewarding litigants motivated by their own pecuniary interests 

who only coincidentally protect the public interest.’” (Davis v. 

Farmers Ins. Exchange (2016) 245 Cal.App.4th 1302, 1329 

(Davis).) “‘Instead, its purpose is to provide some incentive for 
6

the plaintiff who acts as a true private attorney general, 

prosecuting a lawsuit that enforces an important public right and 

confers a significant benefit, despite the fact that his or her own 

financial stake in the outcome would not by itself constitute an 

adequate incentive to litigate.’” (Flannery v. California Highway 

Patrol (1998) 61 Cal.App.4th 629, 635.)

In sum, “‘“[a]n award on the ‘private attorney general’ 

theory is appropriate when the cost of the claimant’s legal victory 

transcends his personal interest, that is, when the necessity for 

pursuing the lawsuit placed a burden on the plaintiff ‘out of 

proportion to his individual stake in the matter.’ [Citation.]”’

‘This requirement focuses on the financial burdens and incentives 

involved in bringing the lawsuit.’” (Whitley, supra, 50 Cal.4th at 

p. 1215.) 

B. The Trial Court Did Not Abuse Its Discretion by

Denying Kracke’s Second Motion for Fees Under Section 1021.5

Kracke contends the trial court abused its discretion by 

considering only the financial burden requirement in denying his 

motion for attorney fees. He claims the court was required to

make findings as to all the statutory criteria and engage in a 

balancing test. We disagree. “[W]here the court finds that one of 

the statutory criteria is not met, it is unnecessary to make 

findings concerning the remaining criteria.” (Satrap v. Pacific 

Gas & Electric Co. (1996) 42 Cal.App.4th 72, 81, fn. omitted

(Satrap); Millview, supra, 4 Cal.App.5th at p. 773.) 

Kracke further asserts the trial court abused its discretion 

by denying his motion for attorney fees because he failed to meet 

his burden of establishing his personal financial stake in the 

case. Once again, we disagree.

In Millview, the Court of Appeal determined the plaintiffs

had failed to provide substantial evidence to support a finding 
7

that pursuing the lawsuit placed a burden on them out of 

proportion to their individual stake. (Millview, supra, 4 

Cal.App.5th at p. 770-771.) The plaintiffs in that case prevailed 

in an action challenging a proposed cease and desist order (CDO). 

“With respect to the ‘financial burden’ element, [the] plaintiffs 

argued the litigation would result in no financial benefit to them 

because they did not receive a monetary award. At most, they 

argued, the litigation protected ‘an interest that they previously 

had.’” (Id. at p. 766.)

 The court observed, however, that “Millview had a 

similarly ample financial incentive for challenging issuance of the 

proposed CDO. Most obviously, Millview had paid $500,000 for 

an asset that would be rendered worthless if a CDO was entered 

severely curtailing diversion under the [applicable] claim. 

Preserving the value of its investment was a substantial 

incentive.” (Millview, supra, 4 Cal.App.5th at p. 770; see Summit

Media, supra, 240 Cal.App.4th at pp. 192-194 [given the threat 

to its profitable business, “[t]he record supports the trial court’s 

conclusion that plaintiff had a personal stake in this litigation 

that was sufficient to warrant its decision to incur significant 

attorney fees and costs in the vigorous prosecution of this 

lawsuit”]; Children & Families Com. of Fresno County v. Brown 

(2014) 228 Cal.App.4th 45, 60-63 [fee award inappropriate 

because the plaintiff stood to lose millions in funding if its 

lawsuit was unsuccessful].) 

 Kracke had a similar financial incentive to challenge the 

STVR ban. It is undisputed he has financial interests in rental 

properties in the coastal zone. For example, Kracke alleged in 

his first amended petition for writ of mandate that “[a]t all times 

relevant hereto since October of 2012, [he] has been the owner of 

the real property commonly known as 16 East Arrellaga Street in 
8

Santa Barbara . . . , which he operates as a short term vacation 

rental . . . .” He further alleged that “[a]t all times relevant 

hereto since 2007, [he] has been the proprietor of [Paradise 

Retreats], a local business engaged in operating, managing and 

servicing vacation rentals in and around the [City]. Paradise 

Retreats currently operates twenty-five (25) rental properties 

within the [City’s] limits, eight (8) of which are located within the 

[City’s] Coastal Zone . . . .” Kracke noted he had “577 total guest 

reservations” between January 1, 2015 and November 3, 2016.

Given Kracke’s financial interest in these properties, he 

had ample financial incentive to challenge the STVR ban in the 

coastal zone. (See Millview, supra, 4 Cal.App.5th at p. 770.) It is 

true that we do not look to the plaintiff’s actual recovery after 

trial; instead, we consider “‘“the estimated value of the case at 

the time the vital litigation decisions were being made.”’ 

[Citation.] The reason for the focus on the plaintiff's expected 

recovery at the time litigation decisions are being made, is that 

[section] 1021.5 is intended to provide an incentive for private 

plaintiffs to bring public interest suits when their personal stake 

in the outcome is insufficient to warrant incurring the costs of 

litigation.” (Satrap, supra, 42 Cal.App.4th at p. 79.) 

Kracke contends the evidence he produced of his actual 

STVR rental income between 2016 and 2018, the period in which 

he claims vital litigation decisions were being made, established

his personal financial stake. He is incorrect. The City began 

enforcing the STVR ban in June 2015. Evidence of Kracke’s 

relatively minimal STVR income after that date cannot qualify as

substantial evidence of his personal financial stake. (See 

Millview, supra, 4 Cal.App.5th at p. 769.) Rather, that stake is 

what he would have expected to earn during that period in the 

absence of the STVR ban. (See ibid.) 
9

The trial court suggested, by way of example, that evidence 

of Kracke’s historical earnings from his STVRs in the coastal 

zone could satisfy his burden of proving his expected financial 

gain. Kracke declined to produce that evidence and, 

notwithstanding his burden to prove the issue, offered no other 

means of estimating his expected financial gain. The court 

properly ruled that “[i]n the absence of substantial evidence of 

Kracke’s expected financial benefit from this action, it would

constitute an abuse of discretion for the court to grant Kracke’s 

request for [section] 1021.5 fees.”2 

III. DISPOSITION

The order denying Kracke’s motion for fees is affirmed. 

The City shall recover its costs on appeal. 

NOT TO BE PUBLISHED.

CODY, J.*

We concur:

GILBERT, P.J. 

BALTODANO, J. 

2 Given our decision, we need not reach the City’s collateral 

estoppel argument.

 

*Judge of the Ventura Superior Court assigned by the Chief 

Justice pursuant to article VI, section 6 of the California 

constitution.
10

Mark S. Borrell, Judge

Superior Court County of Ventura

______________________________

Rogers, Sheffield & Campbell, Travis C. Logue and Nathan 

C. Rogers, on behalf of Plaintiff and Appellant. 

Ariel Pierre Calonne, City Attorney, and Robin L. Lewis, 

Assistant City Attorney, on behalf of Defendant and Respondent.