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Court of Appeal, First District, Division 4, California.

Pearlie TAYLOR, Rosario Schuler, Rosie Stephens, Individually and on behalf of all persons in Alameda County applying for or receiving welfare benefits, Plaintiffs and Respondents, v. Jack F. McKAY, a Director of the Alameda County Human Resources Agency, Defendant and Appellant.

Civ. 40032.

Decided: January 05, 1978

Richard J. Moore, County Counsel, County of Alameda, Lorenzo E. Chambliss, Deputy County Counsel, Oakland, for defendant and appellant. Legal Aid Society of Alameda County, Eric P. Gold, Stephen L. Kostka, III, Clifford C. Sweet, Oakland, for plaintiffs and respondents.

This cause was originally tried in 1974. Petitioners filed a class action writ of mandate against appellant Jack McKay, Director of the Alameda County Human Resources Agency (hereinafter referred to as Agency). The petition alleged that respondents were welfare recipients who had fair hearings that resulted in the Department of Benefit Payments of the State of California ordering the Agency to provide them with welfare benefits. The Agency failed to implement the decision immediately because it contended that compliance was not required until there was a rehearing of the matter as provided under Welfare and Institutions Code section 10960.1

Thus, the sole issue presented at the original trial was whether the Agency had to comply immediately with the fair hearing decisions. Judgment for petitioners resulted. That judgment did not make an award of attorney's fees to plaintiffs and specifically provided: “The Court reserves jurisdiction to award attorneys' fees.” On appeal from that judgment2 which was affirmed, we held that the judgment below did not encompass the issue of attorney's fees and no order concerning attorney's fees was before this court. On remand the trial court granted a hearing and awarded attorney's fees. This appeal is limited to the propriety of awarding attorney's fees.

Respondents Are Not Entitled To Attorney's Fees Under Welfare and Institutions Code Section 10962

Appellant contends that attorney's fees are not authorized under section 10962, which provides as follows: “The applicant or recipient or the affected county, within one year after receiving notice of the director's final decision, may file a petition with the superior court, under the provisions of Section 1094.5 of the Code of Civil Procedure, praying for a review of the entire proceedings in the matter, upon questions of law involved in the case. Such review, if granted, shall be the exclusive remedy available to the applicant or recipient or county for review of the director's decision. The director shall be the sole respondent in such proceedings. . . . No filing fee shall be required for the filing of a petition pursuant to this section. Any such petition to the superior court shall be entitled to a preference in setting a date for hearing on the petition. No bond shall be required in the case of any petition for review, nor in any appeal therefrom. The applicant or recipient shall be entitled to reasonable attorney's fees and costs, if he obtains a decision in his favor.” (Emphasis added.)

Under this section, attorney's fees are provided to enable a needy person to establish through judicial proceedings his or her statutory benefits. (Le Blanc v. Swoap (1976) 16 Cal.3d 741, 129 Cal.Rptr. 304, 548 P.2d 704; Silberman v. Swoap (1975) 50 Cal.App.3d 568, 123 Cal.Rptr. 456.) This provision, as all provisions relating to a public assistance program, must be liberally construed to effect the program's purpose.3 (Welf. & Inst. Code, s 11000; Tripp v. Swoap (1976) 17 Cal.3d 671, 131 Cal.Rptr. 789, 552 P.2d 749.) However, the court cannot ignore the plain words of the statute, unless it appears that the words are, beyond question, contrary to what was intended by the Legislature. (County of Madera v. Carleson (1973) 32 Cal.App.3d 764, 108 Cal.Rptr. 515.)

In the present case, respondents filed their petition for writ of mandate against the Agency. Section 10962 provides for review of the director's decision and specifies that the “director shall be the sole respondent in such proceedings.” This obviously is not the case before us. We are not concerned with a review of the director's decision and the director is not the sole respondent, he is not even a party to the action.4 The respondents admit as much. The respondents' petition for writ of mandate states: “The provisions for rehearing (s 10960) and for judicial review (s 10962) are for challenging the (director's) fair hearing decision. Petitioners herein are not challenging the hearing decisions, but rather are requesting implementation of those decisions.” Accordingly, we conclude there is no basis for an award of attorney's fees to respondents under section 10962.

Respondents Are Not Entitled To An Award Of Attorney's Fees Under The Substantial Benefit Rule

Section 1021 of the Code of Civil Procedure provides in pertinent part that: “Except as attorney's fees are specifically provided for by statute, the measure and mode of compensation of attorneys and counselors at law is left to the agreement, express or implied, of the parties . . . .” In the present case, there was no express or implied agreement relative to attorney's fees. However, the substantial benefit rule permits an award of attorney's fees as an exception to the principle expressed in section 1021. (See Knoff v. City Etc. of San Francisco (1969) 1 Cal.App.3d 184, 81 Cal.Rptr. 683; Fletcher v. A. J. Industries, Inc. (1968) 266 Cal.App.2d 313, 72 Cal.Rptr. 146; D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 112 Cal.Rptr. 786, 520 P.2d 10; Mandel v. Hodges (1976) 54 Cal.App.3d 596, 127 Cal.Rptr. 244.)

The substantial benefit rule is an extension of the common-fund doctrine.5 (Fletcher, supra, 266 Cal.App.2d at p. 323, 72 Cal.Rptr. 146.) The power of the court, however, to award attorney's fees is derived not from the fact that a fund has been created but from the broad power of equity in doing justice as between a party and the beneficiaries of the litigation. (Fletcher, at p. 323, 72 Cal.Rptr. 146.) Without question, the action has resulted in a pecuniary benefit to respondents. This, however, is not the source from which the respondents are seeking attorney's fees.

Respondents assert that they are entitled to an award of attorney's fees from the county. The Agency argues that the respondents have failed to show that the county has benefited substantially as a result of the litigation.

The trial court found: “5. The action resulted in a disposition that conferred, and will continue to confer, substantial benefits to respondent. These benefits include, but are not limited to: a) the savings of monies by prompt compliance with fair hearing decision disallowing or reducing benefits; b) compliance with its legal duties and obligations and the directives of the State Department of Benefit Payments; c) proper performance of its function in administering the laws and regulations governing public social service programs in Alameda County.” We do not find substantial evidence in the record to support these findings.

The only evidence offered in support of the motion for attorney's fees was the affidavits of Eric Gold, Stephen Kostka and Sally Laidlaw. These affidavits detailed the amount of time spent by each of them in preparing petitioner's case for the trial and appellate proceedings. No evidence was presented of the savings of monies that would result from prompt compliance with fair hearing decisions. Respondents argue that by prompt payment of welfare benefits (which come primarily from federal funds) the county will save monies because it will decrease the number of persons on the county's general assistance program, which is supported by county taxpayers. However, the record does not show that the county will in fact save such monies.

With regard to findings 5(b) and (c), we recognize that the courts have continually maintained that a substantial benefit can be nonpecuniary as well as pecuniary. (See D'Amico v. Board of Medical Examiners, supra, 11 Cal.3d 1, 25, 112 Cal.Rptr. 786, 520 P.2d 10; Menge v. Farmers Ins. Group (1975) 50 Cal.App.3d 143, 147, 123 Cal.Rptr. 265; Mandel v. Hodges,supra, 54 Cal.App.3d 596, at p. 620, 127 Cal.Rptr. 244; Russell v. Carleson (1973) 36 Cal.App.3d 334, 348, 111 Cal.Rptr. 497; Fletcher v. A. J. Industries, Inc., supra, 266 Cal.App.2d 313, 72 Cal.Rptr. 146.) The leading case on this issue is Fletcher, supra, in which a shareholders' derivative action was brought against A. J. Industries for breaches of fiduciary obligation by its president and some of the board members. The case was eventually settled prior to trial, except the question as to whether plaintiffs were entitled to attorney's fees. The Court of Appeal held that the substantial benefit rule may be applied to permit an attorney's fee award in the absence of a common fund (266 Cal.App.2d p. 323, 72 Cal.Rptr. 146), as the benefit may be nonpecuniary in nature such as changes in corporate management for the betterment of the corporation.

We note, however, that in Serrano v. Priest (1977) 20 Cal.3d 25, 42, 141 Cal.Rptr. 315, 323, 569 P.2d 1303, 1311 (Serrano III), the Supreme Court, after recognizing the “enormous service ” the attorneys had rendered to the state and “all of its citizens,” held “. . . that to award fees on the ‘substantial benefit’ theory on the basis of considerations of this nature separate and apart from any consideration of actual and concrete benefits bestowed would be to extend that theory beyond its rational underpinnings. If the effectuation of constitutional or statutory policy, without more, is to serve as a sufficient basis for the award of attorneys fees in this state, the rationale for such awards must be found in a theory more directly concerned with considerations of this nature.” In the light of Serrano III, the plaintiffs are not entitled to attorney's fees under the substantial benefit theory.

Respondents Are Not Entitled To Recovery Of Attorney's Fees Under The Private Attorney General Rule

Respondents' last contention is that they are entitled to an award of attorney's fees under the private attorney general rule. In Serrano III, the Supreme Court adopted the private attorney general concept in California. The court also, at page 45, 141 Cal.Rptr. at page 326, 569 P.2d at page 1314 specified the test for its application. “These are in general: (1) the strength or societal importance of the public policy vindicated by the litigation, (2) the necessity for private enforcement and the magnitude of the resultant burden on the plaintiff, (3) the number of people standing to benefit from the decision. (See generally, Comment, Equal Access, supra, 122 U.Pa.L.Rev. 636, 666-674.) Thus it seems to be contemplated that if a trial court, in ruling that a motion for fees upon this theory, determines that the litigation has resulted in the vindication of a strong or societally important public policy, that the necessary costs of securing this result transcend the individual plaintiff's pecuniary interest to an extent requiring subsidization, and that a substantial number of persons stand to benefit from the decision, the court may exercise its equitable powers to award attorney fees on this theory.”

The court however did limit the application of the rule, stating at pages 46-47, 141 Cal.Rptr. at page 326, 569 P.2d at page 1314, “(t)he trial court, in awarding fees to plaintiffs, found that the public policy advanced by this litigation was not one grounded in statute but one grounded in the state Constitution. Thus, the trial court concluded as a matter of law: ‘If as a result of the efforts of plaintiffs' attorneys rights created or protected by the State Constitution are protected to the benefit of a large number of people, plaintiffs' attorneys are entitled to reasonable attorney's fees from the defendants under the private attorney general equitable doctrine.’ (Italics added.) Its factual findings, which are not here challenged, establish that the interests here furthered were constitutional in stature. Those findings also make clear that the benefits flowing from this adjudication are to be widely enjoyed among the citizens of this state and that the nature of the litigation was such that subsidization of the plaintiffs is justified in the event of their victory. In these circumstances we conclude that an award of attorneys fees to plaintiffs and their attorneys was proper under the theory posited by the trial court.”

Serrano III specifically states it is not addressing the question of whether the doctrine applies to cases having a statutory basis rather than constitutional. “The resolution of this question must be left for an appropriate case.” (Id., at p. 47, 141 Cal.Rptr. at p. 327, 569 P.2d at p. 1315.) This presents the issue of whether the present action is an appropriate case. The Supreme Court in Serrano III stated: “In these circumstances” an award of attorney's fees was proper. The “circumstances” the Supreme Court referred to were a right created or protected by the Constitution not statute, and the suit would benefit a “large number of people,” and “be widely enjoyed among the citizens of this state.” None of these circumstances appear in the present case. The right involved was created by statute, the findings do not indicate a large number of people will benefit, or that the benefits will be widely enjoyed among the citizens of this state. Actually, all of the monies due the plaintiffs were paid to them; the issue in the case was the time of payment. We thus conclude the private attorney general theory is not applicable to this case.

Respondents' “Application for Findings of Fact and for Judicial Notice of Court Record” is denied.

The judgment re attorney's fees is reversed.


1.  Unless otherwise specified, all statutory references are to the Welfare and Institutions Code.

2.  Taylor v. McKay, 53 Cal.App.3d 644, 126 Cal.Rptr. 204.

3.  This rule of liberal construction applies to all parts of division nine. (Henderling v. Carleson (1974) 36 Cal.App.3d 561, 111 Cal.Rptr. 612.)

4.  In fact, the courts have taken particular care to ensure that the record indicates that the respondent is the Director of Benefit Payments. (See Cartwright v. Swoap (1974) 40 Cal.App.3d 567, 568, fn. 1, 115 Cal.Rptr. 402; Oliva v. Swoap (1976) 59 Cal.App.3d 130, 133, fn. 1, 130 Cal.Rptr. 411.) We have not found any California Supreme Court or Court of Appeal decisions in which attorney's fees have been awarded under section 10962, unless the Director of Benefit Payments (or Director of the Department of Social Welfare, prior to 1974) is named as the sole respondent.

5.  Plaintiffs and their attorneys are not relying on the common-fund doctrine in this case.

CALDECOTT, Presiding Justice.