CALIFORNIA SERVICE STATION AND AUTOMOTIVE REPAIR ASSOCIATION, Plaintiff and Appellant, v. UNION OIL COMPANY OF CALIFORNIA, Defendant and Respondent.
Appellant California Service Station and Automotive Repair Association appeals the denial of its motion for attorney fees under Code of Civil Procedure section 1021.5,1 following its action for declaratory and injunctive relief against respondent Union Oil Company of California, dba Unocal.
PROCEDURAL HISTORY AND FACTS
Appellant's action alleged that Unocal's petroleum franchise transfer policy violated Business and Professions Code section 21148, and sought $77,858.13 in attorney fees under Business and Professions Code section 21140.4. On January 17, 1990, the trial court entered judgment in favor of appellant. On February 2 the court heard respondent's motion to tax costs, after which it awarded appellant $60,440.50 in attorney fees pursuant to Business and Professions Code section 21140.4. On February 6 Unocal filed its notice of appeal from the judgment and award of attorney fees. In that appeal (No. A048580) we affirmed the judgment, but reversed the award of attorney fees under Business and Professions Code section 21140.4.
On April 12, 1990 appellant moved for $77,858.13 in attorney fees under section 1021.5. A declaration by Jim Campbell, appellant's Executive Director, in support of the motion stated the following: Appellant is a nonprofit voluntary association of service station franchisees and automotive repair facility operators engaged in various lobbying activities affecting service station franchisees and automotive repair shop owners. Of appellant's 2,700 members, 1,700 are service station dealers from California, of which 450 (25 percent) are Unocal dealers. There are 7,300 service station dealers in California, of which 1,800 (23 percent) are Unocal dealers. Appellant brought the underlying action for the benefit of all service station dealers and those interested in becoming dealers in California, and not just its own Unocal service station members. Campbell's declaration further states that it is his belief that had Unocal's interpretation of Business and Professions Code section 21148 gone unopposed, other oil companies would have taken the same position regarding franchise transfers. On that premise he concluded that appellant's legal action benefitted all service station franchisees in California. Campbell further declared that the action was also pursued on behalf of those members of the general public who wish to purchase existing Unocal franchises, but would be unable to or forced to take one-year trial franchises rather than receive an assignment of an existing franchise. Appellant sought no financial gain from the action and expended substantial funds thereon because any individual service station dealer would have suffered great economic hardship and pressure from Unocal had he or she appeared as a plaintiff. Sixty-two thousand ten dollars and ninety cents ($62,010.90) in attorney fees and costs was expended through trial.
The trial court ruled that appellant's fee request was “ancillary and collateral to the judgment previously entered against [Unocal]” and, therefore, the court had jurisdiction to award such fees. However, the court denied the motion on the merits after determining: (1) Appellant or its members or others affected by the judgment are not a large class of persons or the general public; (2) appellant's members or others affected by the judgment have made a substantial profit as a result of the decision in terms of the value of the subject franchises, therefore the burden of attorney fees is not out of proportion to the benefits obtained from the judgment; and (3) substantial attorney fees were previously awarded under Business and Professions Code section 21140.4.
Appellant contends the court abused its discretion in denying attorney fees under section 1021.5. Respondent rejoins that the court was without jurisdiction to consider the motion for attorney fees under section 1021.5 while the previous award of attorney fees under Business and Professions Code section 21140.4 was pending on appeal.
The private attorney general theory of section 1021.5 is one of several exceptions to the general rule that each party must bear its own attorney fees. (No Oil, Inc. v. City of Los Angeles (1984) 153 Cal.App.3d 998, 1005, 200 Cal.Rptr. 768.) Section 1021.5 provides, in relevant part: “Upon motion, a court may award attorneys' fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any․” The private attorney general doctrine applies to both constitutional and statutory rights. (Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 935, 154 Cal.Rptr. 503, 593 P.2d 200; Beach Colony II v. California Coastal Com. (1985) 166 Cal.App.3d 106, 111, 212 Cal.Rptr. 485.)
Section 916, subdivision (a), provides, in relevant part: “[T]he perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, ․, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” If the issue of costs is incidental to the merits of the cause being tested on appeal, the trial court has jurisdiction to dispose of it as an ancillary and collateral matter. (Hoover Community Hotel Development Corp. v. Thomson (1985) 168 Cal.App.3d 485, 487, 214 Cal.Rptr. 264.)
A statutory fee motion under section 1021.5 is a collateral matter, ancillary to the main cause. (Serrano v. Unruh (1982) 32 Cal.3d 621, 636–637, 186 Cal.Rptr. 754, 652 P.2d 985; Marini v. Municipal Court (1979) 99 Cal.App.3d 829, 834, 160 Cal.Rptr. 465.) Unlike nonstatutory attorney fees which are part of the relief sought and therefore must be pleaded and proven at trial, attorney fees under section 1021.5 are intended to be initiated after the result in the action is known, but subject to no express time limit. (No Oil, Inc. v. City of Los Angeles, supra, 153 Cal.App.3d at pp. 1005–1006, 200 Cal.Rptr. 768; Marini v. Municipal Court, supra, 99 Cal.App.3d at p. 834, 160 Cal.Rptr. 465.) A motion for attorney fees under section 1021.5 “ ‘need not be made and determined until after the judgment is final.’ ” (No Oil, Inc. v. City of Los Angeles, supra, 153 Cal.App.3d at p. 1006, 200 Cal.Rptr. 768, quoting Marini v. Municipal Court, supra, 99 Cal.App.3d at p. 835, 160 Cal.Rptr. 465.) The trial court retains jurisdiction under section 1021.5 to hear an application for attorney fees after the judgment in the underlying action is final. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1289, 240 Cal.Rptr. 872, 743 P.2d 932.)
Although the award of attorney fees under Business and Professions Code section 21140.4 was decided in the underlying action and was a subject of the original appeal, the issue of attorney fees under section 1021.5 was not a subject of that appeal. We conclude the issue of attorney fees under section 1021.5 was ancillary and collateral to the merits of the underlying action and was not related to or affected by the original appeal. (See In re Marriage of Horowitz (1984) 159 Cal.App.3d 377, 381, 205 Cal.Rptr. 880.) Consequently, section 916 did not divest the trial court of jurisdiction to hear the motion for attorney fees under section 1021.5
The real thrust of Unocal's argument appears to be that respondent should have requested attorney fees under all possible bases at the time of its original fee request, and should not be permitted to request fees under one statute prior to judgment, and thereafter, following judgment and notice of appeal, move for fees based on another statute. This argument has a logical ring, but it appears that section 1021.5, which allows litigants to move for attorney fees at any time, authorized appellant's motion for fees in the instant case. (See Maria P. v. Riles, supra, 43 Cal.3d at p. 1289, 240 Cal.Rptr. 872, 743 P.2d 932; No Oil, Inc. v. City of Los Angeles, supra, 153 Cal.App.3d at p. 1006, 200 Cal.Rptr. 768.) However, we suggest that the policy behind section 1021.5, which permits litigants to move for such fees at any time, should be reexamined, at least in cases like the instant one, where attorney fees may be awarded under multiple theories or authorities. Permitting litigants to seek fees on one statutory basis prior to judgment, and, when the judgment becomes final, to move for fees under another, results in multiple evidentiary hearings before the trial court, and multiple appeals. This seemingly piecemeal approach seems contrary to well-established policies of judicial economy and concern that fee litigation not be never-ending. (See Serrano v. Unruh, supra, 32 Cal.3d at pp. 638–639, 186 Cal.Rptr. 754, 652 P.2d 985.) Perhaps litigants should be required to request fees under all theories, including section 1021.5, in a single proceeding, prior to appeal. We note that while section 1021.5 permits a litigant to wait until after judgment is filed to move for attorney fees (Maria P. v. Riles, supra, 43 Cal.3d at p. 1289, 240 Cal.Rptr. 872, 743 P.2d 932; No Oil, Inc. v. City of Los Angeles, supra, 153 Cal.App.3d at p. 1006, 200 Cal.Rptr. 768), he or she is not prohibited from requesting such fees sooner. In the instant case, two appeals have already been brought on the issue of attorney fees and a third appeal is certainly possible after the case is remanded for a hearing to determine the amount of fees to which appellant is entitled under section 1021.5. At a time when the Legislature and Judicial Council are attempting to reduce delay in the judicial process, concern must be focused on avoiding multiple hearings and appeals on the same issue.
We next consider whether the trial court abused its discretion in denying appellant's fee motion. “[T]he private attorney general 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.’ Thus, the fundamental objective of the doctrine is to encourage suits enforcing important public policies by providing substantial attorney fees to successful litigants in such cases.” (Maria P. v. Riles, supra, 43 Cal.3d at p. 1289, 240 Cal.Rptr. 872, 743 P.2d 932, quoting Woodland Hills Residents Assn., Inc. v. City Council, supra, 23 Cal.3d at p. 933, 154 Cal.Rptr. 503, 593 P.2d 200.)
Whether appellants have met their burden of establishing their entitlement to fees under this theory is a matter within the discretion of the trial court and will be reversed on appeal only for a prejudicial abuse of that discretion. (Bartling v. Glendale Adventist Medical Center (1986) 184 Cal.App.3d 97, 103, 228 Cal.Rptr. 847.) To determine abuse we must review the entire record on this issue, paying particular attention to the court's reasons for denying fees and whether it applied the proper legal standards in reaching its decision. (Ibid.)
As we previously stated, the trial court denied appellant's motion on three grounds: (1) Appellant, its members or others affected by the court's decision are not a large class of persons or the general public; (2) appellant's members or others affected by the court's decision have made a substantial profit as a result of the decision in terms of the value of the subject franchises, therefore the burden of attorney fees is not out of proportion to the benefits obtained from the court's decision; and (3) substantial attorney fees were previously awarded under Business and Professions Code section 21140.4.
Section 1021.5 does not require that the benefit of the litigation inure to a majority of California residents. (California Common Cause v. Duffy (1987) 200 Cal.App.3d 730, 749, 246 Cal.Rptr. 285.) In addition, the rights enforced or vindicated need not only benefit a class of persons currently in existence, but may benefit a future class of potential interested persons. (Slayton v. Pomona Unified School Dist. (1984) 161 Cal.App.3d 538, 551–552, 207 Cal.Rptr. 705.) In the instant case, the evidence indicates that the court's ruling that Unocal's policy violated Business and Professions Code section 21148 will beneficially affect the general public or a large class of persons. The judgment will impact the 1,800 California Unocal dealers who may now more freely assign their service station franchises. Moreover, the other service station dealers in California may be affected by the decision because those who are not Unocal dealers may more easily obtain an assignment of an existing Unocal franchise. Finally, the decision also affects the population at large, i.e., persons who do not now own service station franchises, but are interested in purchasing an existing Unocal franchise. Consequently, the impact of appellant's legal victory is a continuing one affecting a large class of persons. We thus conclude the court erred in making a contrary finding on this issue.
The financial burden of the private enforcement requirement means that attorney fees under section 1021.5 are appropriate only when “the cost of the claimant's legal victory transcends his [or her] 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.” (Woodland Hills Residents Assn., Inc. v. City Council, supra, 23 Cal.3d at p. 941, 154 Cal.Rptr. 503, 593 P.2d 200, citations and internal quotation marks omitted; Luck v. Southern Pacific Transportation Co. (1990) 218 Cal.App.3d 1, 30, 267 Cal.Rptr. 618.) The focus of this factor is on the financial incentives and burdens of bringing the action, not on the litigant's abstract personal stake in the case. (Luck v. Southern Pacific Transportation Co., supra.)
In support of its finding that “[appellant's] members or others who are affected by the court's decision” have made a substantial profit as a result of the decision, the court focused on trial testimony that franchises which were valueless without the relief ordered are now valued at between $50,000 and $500,000 per franchise. Based on this evidence the court concluded that the burden of attorney fees was not out of proportion to the benefits obtained from the court's decision.
However, in determining the effect of the financial burden of private enforcement, the focus is on the financial incentives and burdens of the claimant in bringing the action, and not on any pecuniary benefit that may inure to “others who are affected by the court's decision.” In the instant case, appellant reaped no pecuniary benefit from the litigation, but did expend substantial funds in bringing the action.
The court's third ground for denying attorney fees under section 1021.5—that it had already awarded fees under Business and Professions Code section 21140.4—is invalid in light of our decision in the previous appeal that appellant lacked entitlement to such fees.
Consequently, appellant is entitled to attorney fees under section 1021.5. Accordingly, the cause is reversed and remanded to the superior court to determine and award a reasonable fee, consistent with the views expressed in this opinion.
1. Unless otherwise indicated, all further statutory references are to the Code of Civil Procedure.
HANING, Associate Justice.
LOW, P.J., and KING, J., concur.