MANDEL v. MYERS (1980)

This is the third appeal taken by the same appellants in an action brought against them by respondent Shelley Mandel. They are the Department of Health Services of the State of California, its director, the Governor, the Controller, the State Personnel Board, and its members. This court decided their two previous appeals. (Mandel v. Hodges (1976) 54 Cal.App.3d 596, 127 Cal.Rptr. 244; Mandel v. Lackner (1979) 92 Cal.App.3d 747, 155 Cal.Rptr. 269.)^[FN1]

On the first appeal (“Mandel I ”), we affirmed a judgment in which the trial court had awarded respondent $25,000 in attorneys' fees to be paid by the State. The judgment became final, but the award was not paid because the Legislature declined to appropriate the necessary funds. Respondent attempted to enforce its collection on the second appeal (“Mandel II ”), but was unsuccessful. The trial court then made an order requiring that the $25,000 be paid from the funds currently budgeted and appropriated for the support of appellant Department of Health Services. The present appeal is from this order. We reverse it.

Perspective requires that the complicated procedural and related sequences be described in detail. The initial judgment was entered in respondent's action on April 6, 1973. Among other things, it (1) enjoined the Governor from continuing his former practice of ordering the closure of State offices on the religious holy day of Good Friday, between noon and 3 p. m., on constitutional grounds; (2) enjoined the Controller, on the same grounds, from paying State employees for time taken off from work during the three-hour period mentioned; (3) awarded respondent $25,000 in attorneys' fees, to be paid by the State to her attorneys, for the services they had rendered before the judgment was entered. (Mandel I, supra, 54 Cal.App.3d 596 at pp. 601-602, 127 Cal.Rptr. 244.)

Appellants challenged both the injunctive provisions and the award of attorneys' fees on their first appeal. (Mandel I, supra, 54 Cal.App.3d 596 at pp. 601-602, 127 Cal.Rptr. 244.) We affirmed the injunctive provisions on the ground that closure of State offices on a religious holy day violated the Establishment Clause of the First Amendment to the United States Constitution, as made applicable to the States by the Fourteenth Amendment (id., at pp. 610-615, 127 Cal.Rptr. 244), and the parallel clause of section 4 of article I of the California Constitution. (Id., at pp. 615-617, 127 Cal.Rptr. 244.) We affirmed the award of attorneys' fees pursuant to the “substantial benefit” doctrine, on the basis that the outcome of respondent's action had conferred significant benefits on the citizens and taxpayers of the State by saving funds which had previously been expended in paying State employees for work not performed. (Id., at pp. 619-623, 127 Cal.Rptr. 244.)

The award became final when the Supreme Court denied a hearing in Mandel I on March 18, 1976. (Mandel I, supra, 54 Cal.App.3d 596 at p. 624, 127 Cal.Rptr. 244.) Respondent's attorneys filed a claim for its payment with the State Board of Control. That agency approved the claim in August, 1976, and requested an appropriation for its payment in an omnibus claims bill which was introduced in the Legislature in 1977. The Legislative Analyst opposed the appropriation, and it was deleted from the bill in legislative committee proceedings that year. Another appropriation for payment of the award was requested in the Governor's budget for fiscal 1978-1979. The Legislative Analyst again opposed it, and it was deleted in committee proceedings on the budget bill.

Appellants had meanwhile taken their second appeal (Mandel II ). That appeal was from an order in which the trial court had made an award of attorneys' fees to compensate respondent's attorneys for the services they had rendered on the appeal in Mandel I.^[FN2] Mandel II was pending in 1978, when it became apparent that the Legislature would not appropriate funds for the payment of the $25,000 award which had been affirmed in Mandel I. Respondent then filed in Mandel II a motion in which she attempted to have this court enforce collection of the $25,000 award “on grounds of . . . contempt of the superior court.” (Mandel II, supra, 92 Cal.App.3d at p. 762, 155 Cal.Rptr. at p. 279.) Citing the lack of a supporting record, we denied the motion on the ground that Mandel II provided us with “no valid basis” for enforcing collection of the award. (Id., at pp. 762-763, 155 Cal.Rptr. 269.)

Undeterred, respondent returned to the trial court and noticed a motion “for orders enforcing” the $25,000 award. The court granted the motion in a memorandum decision and filed a formal order on January 10, 1979. The order is entitled “Amended Order Granting Motion To Treat Attorneys' Fees As Court Costs And Directing Payment Of Judgment.” Its pertinent text is reproduced in the margin.^[FN3] This appeal followed.

REVIEW

We may properly refer to the trial court's memorandum decision for the purpose of ascertaining the grounds upon which the order was made. (6 Witkin, California Procedure (2d ed. 1971) Appeal, s 231, pp. 4221-4222.) That source shows two grounds, which we consider in sequence. The first appears in this language: “. . . (R)easoning from the equitable foundations of the substantial benefit doctrine, the court concludes that the award of attorneys' fees against the State should be paid out of the appropriation for the support of the agency on whose behalf the State appeared.”

The court thus referred to our affirmance of the award on the basis of the “substantial benefit doctrine.” (Mandel I, supra, 54 Cal.App.3d 596 at pp. 621-623, 127 Cal.Rptr. 244.) That doctrine is a judicially developed exception to the general rule, codified in section 1021 of the Code of Civil Procedure, that attorneys' fees are not recoverable by a prevailing litigant in the absence of an agreement or statutory authorization. (Id., at p. 619, 127 Cal.Rptr. 244.) The so-called “equitable foundations” of the doctrine have been defined by the Supreme Court as follows:

“ ‘. . . (W)hen a class action or corporate derivative action results in the conferral of substantial benefits, whether of a pecuniary or nonpecuniary nature, upon the defendant in such an action, that defendant may, in the exercise of the court's equitable discretion, be required to yield some of those benefits in the form of an award of attorney's fees.’ ” (Emphasis added.) (Serrano v. Priest (1977) 20 Cal.3d 25, 34, 141 Cal.Rptr. 315, 318, 569 P.2d 1303, 1306 (quoting from D'Amico v. Board of Medical Examiners (1974) 11 Cal.3d 1, 25, 112 Cal.Rptr. 786, 520 P.2d 10).) When we applied the doctrine in Mandel I, we held that the $25,000 award and its details were proper exercises of the trial court's “ ‘broad equitable powers.’ ” (Mandel I, supra, 54 Cal.App.3d 596 at p. 622, 127 Cal.Rptr. 244.)

The trial court thus concluded that its equitable authority to make the award (which is not questioned on this appeal) vested it with the additional authority to compel payment of the award from the currently budgeted “appropriation for the support of the agency on whose behalf the State appeared” in respondent's action. This extension of the substantial benefit doctrine is barred by the constitutional principle of separation of powers.

Section 3 of article III of the California Constitution provides: “The powers of state government are legislative, executive and judicial. Persons charged with the exercise of one power may not exercise either of the others except as permitted by this Constitution.” Section 1 of article IV provides in pertinent part: “The legislative power of this State is vested in the California Legislature . . . .” It has long been established that “the power to collect and appropriate the revenue of the State is one peculiarly within the discretion of the Legislature.” (Myers v. English (1858) 9 Cal. 341, 349.) For these reasons, it has repeatedly been held that a court cannot constitutionally order the payment of a judgment against the State in the absence of a proper legislative appropriation. (Myers v. English, supra; Westinghouse Electric Co. v. Chambers (1915) 169 Cal. 131, 135, 145 P. 1025; California State Employees' Ass'n v. State of California (1973) 32 Cal.App.3d 103, 108-109, 108 Cal.Rptr. 60; cf. County of Fresno v. Superior Court (1978) 82 Cal.App.3d 191, 193-195, 146 Cal.Rptr. 880.)

“The general rule is well established that a judgment against the state . . . merely liquidates and establishes the claim against the state, and that, in the absence of an express statute so providing, such judgment cannot be collected by execution against the state or its property, or by any of the ordinary processes of law provided for the enforcement of judgments; it remains for the state, after such judgment, to provide for the payment thereof in such manner as it sees fit . . ., and the judgment creditor can obtain payment in no other way than that provided.” (Westinghouse Electric Co. v. Chambers, supra, 169 Cal. 131 at p. 135, 145 P. 1025 at p. 1026 (emphasis added).)

Respondent suggests that these principles should not apply here because they were formulated in an era which preceded the current “time of budget surpluses in excess of 5 billion dollars.” The transitory solvency of the State does not affect the validity of the constitutional principle of separation of powers. Continuing recognition of the Legislature's exclusive power to appropriate money and control its expenditure is essential because “(y) esterday's surplus may be tomorrow's dire need.” (See Veterans of Foreign Wars v. State of California (1974) 36 Cal.App.3d 688, 695, 111 Cal.Rptr. 750, 755.) The Supreme Court has recognized that power in its recent decisions. (See, e. g., Payne v. Superior Court (1976) 17 Cal.3d 908, 920, fn. 6, 132 Cal.Rptr. 405, 553 P.2d 565.)

Respondent contends that the trial court properly exercised its judicial powers because the order merely disposes of funds which had “already” been appropriated by the Legislature. This argument ignores the fact that the funds involved were not appropriated for the purpose now ordered. The challenged order directs payment of the $25,000 award from “the funds of the Department of Health Services pursuant to Item 244(b) of the 1978-1979 Budget of the State of California.” (See fn. 3, ante ). As enacted in the “1978-1979 Budget” and approved by the Governor, that item appropriates funds to the Department for “(o)perating expenses and equipment.” (Stats.1978, ch. 359, s 2, Item 244(b), p. —-; see also id., p. —- (Governor's line-item comment reducing Item 244(b)).)

Respondent has cited no authoritative legislature or judicial basis for interpreting payment of the $25,000 award of attorneys' fees as an expenditure for the “operating expenses and equipment” of the Department of Health Services. Given the Legislature's explicit refusal to appropriate funds for payment of the award on two occasions, she cannot plausibly claim a legislative intent to authorize its payment from funds appropriated for a wholly distinct purpose in a subsequent budget. The Constitution does not permit a court to order a deviation from that purpose. (See Westinghouse Electric Co. v. Chambers, supra, 169 Cal. 131 at p. 138, 145 P. 1025; Ingram v. Colgan (1895) 106 Cal. 113, 117-119, 38 P. 315; Veterans of Foreign Wars v. State of California, supra, 36 Cal.App.3d 688 at pp. 696-697, 111 Cal.Rptr. 750.) A federal decision cited by respondent is inapplicable because its intragovernmental context is factually and legally distinguishable. (See Red School House, Inc. v. Office of Economic Oppor. (D.Minn.1974) 386 F.Supp. 1177, 1195-1196.)

The trial court's memorandum decision also demonstrates that the order was made on statutory grounds involving provisions of the single chapter of the Code of Civil Procedure which authorizes and controls the recovery of costs in a civil action.^[FN4] One of these provisions is section 1028, which requires that a judicial award of “costs” against the State be paid from funds currently appropriated by the Legislature “for the support of the agency on whose behalf the State appeared” in the action.^[FN5] The trial court expressly concluded that “where attorneys' fees are awarded against the State under the doctrine of substantial benefit, such fees are costs within the meaning of section 1028.”

This construction of section 1028 is paraphrased in paragraph 2 of the order. (See fn. 3, ante.) The court based it on an interpretation of section 1021.5, which also appears in the costs chapter. Section 1021.5 authorizes an award of attorneys' fees to a party who has prevailed in public interest litigation under specified circumstances.^[FN6] It does not apply to the order under review for several reasons,^[FN7] and the trial court noted that it was “not controlling.” The court nevertheless concluded that its location in the costs chapter evinced a legislative intent to make an award of attorneys' fees, in public interest litigation, an item of “costs” for purposes of section 1028.

We disagree with this conclusion for several reasons. The costs chapter commences with section 1021, which is bifurcated between its forepart and its last clause.^[FN8] The forepart is a general provision banning the recovery of “attorney's fees” in an action except as provided by statute or agreement. The last clause is an enabling provision which authorizes the recovery of “costs” (“costs and disbursements”) pursuant to the chapter. The explicit bifurcation between these provisions (“but”) imports a legislative intent that the “attorney's fees” mentioned in the one are not to be defined as “costs” recoverable under the other.

The general provision actually does not mention “costs” at all. We may therefore infer that its ban on the recovery of attorneys' fees was incorporated into the costs chapter because it is a statutory abrogation of the common-law rule under which attorneys' fees were both recoverable by a prevailing party and taxable as costs. (See Alyeska Pipeline Co. v. Wilderness Society (1975) 421 U.S. 240, 247, fn. 18, 95 S.Ct. 1612, 44 L.Ed.2d 141; Fleischmann Corp. v. Maier Brewing (1967) 386 U.S. 714, 717, 87 S.Ct. 1404, 18 L.Ed.2d 475; Woodward v. Bruner (1951) 104 Cal.App.2d 83, 85, 230 P.2d 861.) As stated there in section 1021, the ban contemplates statutory exceptions. Section 1021.5 is logically located there because it is one of the contemplated exceptions. (See also s 1021.6.) We infer that it was placed there because it trails the general provision of section 1021 relative to “attorney's fees” but not its enabling provision relative to “costs.” The location of section 1021.5 in the costs chapter thus does not show a legislative intent to define an award of attorneys' fees as an item of “costs” to be recovered pursuant to the chapter.

A pertinent procedural distinction also appears in the costs chapter. “Costs” recoverable pursuant to its provisions are “allowed of course” (s 1032) when a party prevailing in an action “claims” them by serving and filing a memorandum of costs and disbursements. (s 1033.) In contrast, an award of attorneys' fees pursuant to section 1021.5 requires a “motion” by the party seeking it in public interest litigation. (See fn. 6, ante.)

Finally, it has been held in a consistent line of decisions that attorneys' fees are not “costs” when they are recovered pursuant to statutory authorization. (Schallert-Ganahl L. Co. v. Neal (1892) 94 Cal. 192, 193, 29 P. 622; Estate of Bevelle (1947) 81 Cal.App.2d 720, 722, 185 P.2d 90; Cirimele v. Shinazy (1954) 124 Cal.App.2d 46, 52, 268 P.2d 210; see also United States v. Equitable Life (1966) 384 U.S. 323, 330-331, 86 S.Ct. 1561, 16 L.Ed.2d 593.) It was held in another case that attorneys' fees were not “costs” within the meaning of former section 1038, a statutory predecessor of present section 1028. (Sullivan v. Gage (1905) 145 Cal. 759, 767, 79 P. 537, disapproved on another point in Metropolitan Water Dist. v. Marquardt (1963) 59 Cal.2d 159, 175, 28 Cal.Rptr. 724, 379 P.2d 28.)

It is presumed that the Legislature had knowledge of these decisions, and acted in light of them, when it enacted section 1021.5. (Estate of Banerjee (1978) 21 Cal.3d 527, 537, 147 Cal.Rptr. 157, 580 P.2d 657; Buckley v. Chadwick (1955) 45 Cal.2d 183, 200, 288 P.2d 12.) We must assume that if the Legislature had intended that attorneys' fees awarded pursuant to section 1021.5 would be recoverable as “costs,” within the meaning of section 1028 or otherwise, “it would have plainly said so.” (Consumers Lobby Against Monopolies v. Public Utilities Com. (1979) 25 Cal.3d 891, 910, 160 Cal.Rptr. 124, 135, 603 P.2d 41, 52.) The absence of any such language in the statute accordingly commands the contrary interpretation. (See ibid.) We find nothing in it which warrants construing an award of attorneys' fees against the State as an item of “costs” within the meaning of section 1028.

The trial court also perceived in section 1021.5 an intent by the Legislature to “delegate to the courts the authority to award attorneys' fees” without the necessity of a separate legislative appropriation for the purpose of funding each award made. Because the statute provides only that attorneys' fees may be recovered by a party in the circumstances it describes (see fn. 6, ante ), it vests the courts with jurisdiction to award the fees in the exercise of the judicial powers vested in them by the Constitution. It does not otherwise “delegate” to them “the authority to award attorneys' fees,” and it cannot constitutionally be interpreted as “delegating” any aspect of the powers of appropriation which are vested in the Legislature alone. (Cal.Const., art. III, s 3; id., art. IV, s 1; California State Employees' Ass'n v. State of California, supra, 32 Cal.App.3d 103 at pp. 107-108, 108 Cal.Rptr. 60.)

In sum, there is no constitutional or statutory ground on which the challenged order may be sustained. This means that respondent has again been frustrated in collecting the award we affirmed in her favor years ago. The result does not avoid the “distressing prospect of a confrontation between the legislative and judicial branches of government” which we perceived when she attempted to enforce the award on the second appeal. (Mandel II, supra, 92 Cal.App.3d 747 at p. 762, 155 Cal.Rptr. 269.) As we were compelled to conclude then, however, “we have no valid basis for enforcing it on this one.” (Id., at p. 763, 155 Cal.Rptr. at p. 279.)

The order is reversed.

FOOTNOTES

1.  The Department of Health Services was sued in respondent's action under its former name (“Department of Public Health”). The trial court has successively amended the pleadings to show the agency's current name and the proper names of the various State officers who are defending the action.

2.  The award challenged on Mandel II is to be distinguished from the one at issue here. During the pendency of Mandel I, respondent applied to this court for an award of fees to compensate her attorneys for the services they had rendered on that appeal. We deferred the question to the discretion of the trial court, and vested it with jurisdiction to hear and act upon the application in subsequent proceedings. (Mandel I, supra, 54 Cal.App.3d 596 at p. 624, 127 Cal.Rptr. 244.) After our decision in Mandel I had become final and the remittitur had been filed, respondent pursued the application by making an appropriate motion in the trial court. That court awarded her $75,000. On Mandel II, which followed, we reversed the award as to its amount and remanded it to the trial court with directions to recalculate it. (Mandel II, supra, 92 Cal.App.3d 747 at pp. 758, 763, 155 Cal.Rptr. 269.)

3.  The dispositive text of the order reads in pertinent part:“IT IS ORDERED, ADJUDGED AND DECREED as follows:“1. That the award of attorneys' fees to . . . (respondent's attorneys) . . . of $25,000.00 in the judgment of April 6, 1973, in this cause, shall be, and it hereby is, deemed to be costs within the meaning of Code of Civil Procedure Section 1028; and,2. Defendants, BEVERLEE MYERS, Director of the Department of Health Services, and DEPARTMENT OF HEALTH SERVICES OF THE STATE OF CALIFORNIA, and KENNETH J. CORY, State Controller, and STATE OF CALIFORNIA, are ordered to pay to . . . (the attorneys) . . . the said sum of $25,000.00, plus interest from April 6, 1973, from the funds of the Department of Health Services pursuant to Item 244(b) of the 1978-79 Budget of the State of California. . . .“

4.  Statutory references after this point are to the Code of Civil Procedure. The chapter mentioned is chapter 6 (“Costs in Trial and Reviewing Courts,” commencing with s 1021) of title 14 of part II. We cite it on occasion as the “costs chapter.”

5.  The full text of section 1028 reads: “Notwithstanding any other provisions of law, when the State is a party, costs shall be awarded against it on the same basis as against any other party and, when awarded, must be paid out of the appropriation for the support of the agency on whose behalf the State appeared.”

6.  Section 1021.5 provides: “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. With respect to actions involving public entities, this section applies to allowances against, but not in favor of, public entities, and no claim shall be required to be filed therefor.”

7.  The reasons are these: Section 1021.5 codifies the so-called “private attorney general doctrine” as a basis for awarding attorneys' fees in the context of public interest litigation now described in the statute. (See Woodland Hills Residents Ass'n, Inc. v. City Council (1979) 23 Cal.3d 917, 933, 154 Cal.Rptr. 503, 593 P.2d 200.) When we reviewed respondent's $25,000 award in Mandel I, we expressly declined to apply that doctrine and affirmed the award pursuant to the “substantial benefit” doctrine alone. (Mandel I, supra, 54 Cal.App.3d 596 at pp. 620-623, 127 Cal.Rptr. 244.) Our decision in Mandel I became final shortly after March 18, 1976. (See id., at p. 624, 127 Cal.Rptr. 244.) Section 1021.5 was not enacted until 1977 and did not take effect until January 1, 1978 (Stats.1977, ch. 1197, s 1, p. 3979; Kievlan v. Dahlberg Electronics, Inc. (1978) 78 Cal.App.3d 951, 959, 144 Cal.Rptr. 585), when the validity of the award was no longer pending on appeal. (Compare Woodland Hills Residents Ass'n, Inc. v. City Council, supra, 23 Cal.3d at pp. 928-932, 154 Cal.Rptr. 503, 593 P.2d 200; Kievlan v. Dahlberg Electronics, Inc., supra.) The order under review pertains in all events to the enforcement of the award, not to the authority on which it was made.

8.  Section 1021 provides in full as follows: “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; but parties to actions or proceedings are entitled to costs and disbursements, as hereinafter provided.” (Emphasis added.)

RATTIGAN, Associate Justice.

CALDECOTT, P. J., and CHRISTIAN, J., concur. Hearing denied; MANUEL, J,. did not participate.