Opinion
Review Granted Sept. 1, 1999.
Certified for Partial Publication.
Pursuant to rules 976 and 976.1, California Rules of Court, this opinion is certified for publication, except for part II(B).
Previously published at 72 Cal.App.4th 395
Lawrence N. Hensley, Nagleys&sMeredith, Inc., Sacramento, Counsel for Plaintiff, Cross-defendant and Appellant.
Joe Ross McCray, San Francisco, Frederick Bruce Legernes, Lewis, D'Amato, Brisboiss&sBisgaard, Costa Mesa, Counsel for Defendants, Cross-complainants and Respondents.
JONES, P.J.
Leslie Flannery prevailed in an action that she filed in Alameda County against her former employer alleging violations of the California Fair Employment and Housing Act (FEHA) (GOV.CODE , § 12900 et seq.). (See Flannery v. California Highway Patrol (1998) 61 Cal.App.4th 629, 632, 71 Cal.Rptr.2d 632 (Flannery ).) Flannery was awarded attorney fees under Government Code section 12965, subdivision (b). (Flannery, supra, at p. 632, 71 Cal.Rptr.2d 632.)
Unless otherwise indicated, all further statutory references are to the Government Code.
Flannery then brought this action against the attorneys who had represented her in connection with the Alameda County litigation, namely, John F. Prentice, John H. Scott and the law firms of Prentice s&sScott and Bleys&sBley (hereafter collectively counsel or former counsel). In this action, Flannery sought a judicial declaration establishing her entitlement to the attorney fees awarded in the Alameda County litigation. Flannery also sought damages for counsel's alleged malpractice. Prentice, Scott and Prentices&sScott (hereafter collectively Ps&sS) filed a cross-complaint against Flannery. The trial court granted summary judgment to counsel and summary adjudication to Ps&sS on one cause of action in their cross-complaint. Flannery appeals these decisions. We reverse.
In the published portion of this opinion, we conclude that attorney fees awarded under section 12965, subdivision (b), belong to the party, who may agree to give these fees to counsel as compensation. Whether such an I. FACTUAL AND PROCEDURAL BACKGROUND
Flannery sued her former employer, the California Highway Patrol (CHP), alleging FEHA violations. (See Flannery, supra, 61 Cal.App.4th at p. 632, 71 Cal.Rptr.2d 632.) Flannery prevailed in that litigation and received a general verdict of $250,000. (Id. at p. 632, 71 Cal.Rptr.2d 632.) The trial court awarded attorney fees to Flannery in the amount of $1,088,231. (Ibid.) The trial court based the fee award on section 12965, subdivision (b), which is part of the FEHA, and Code of Civil Procedure section 1021.5 (§ 1021.5). (Flannery, supra, at p. 632, 71 Cal.Rptr.2d 632.)
On appeal, Division One of this district concluded that the award of attorney fees was improper under section 1021.5. (Flannery, supra, 61 Cal.App.4th at pp. 633-638, 71 Cal.Rptr.2d 632.) Moreover, with respect to the award of fees under FEHA, Division One concluded that "[t]he trial court ... did not apply the correct standards in determining the amount of the award" and, accordingly, remanded "the matter for a reconsideration of the amount of the award." (Flannery, supra, at p. 647, 71 Cal.Rptr.2d 632.) On remand, the Alameda County Superior Court awarded a reduced amount of attorney fees.
The Alameda County Superior Court's order on remand does not indicate the precise amount of the attorney fees awarded but indicates that the court used a 1.7 multiplier to calculate reasonable attorney fees rather than the 2.0 multiplier that the court had initially used, and confirmed the lodestar fees and costs set forth in its initial order. (See Flannery, supra, 61 Cal.App.4th at p. 633, 71 Cal.Rptr.2d 632.)
Meanwhile, Flannery brought this action against her former counsel. Flannery's first amended complaint included causes of action for declaratory relief, breach of fiduciary duty, legal malpractice and constructive fraud. Flannery's claim for declaratory relief sought an order acknowledging her entitlement to the statutory fee award. Flannery alleged that she and her counsel had entered into an oral contingency fee agreement that entitled her counsel to "40% of the net settlement or net award of the jury." Flannery therefore concluded that the statutory fee award belonged to her. The first amended complaint also contended that counsel's failure to advise Flannery of the terms and conditions of their representation and to obtain her full and informed consent to a fee agreement constituted a breach of fiduciary duty, legal malpractice and constructive fraud. The first amended complaint also included causes of actions for breach of fiduciary duty and legal malpractice in which Flannery contended that counsel failed to present competent evidence of future wage loss in the FEHA litigation.
Ps&sS filed a cross-complaint against Flannery, seeking declaratory relief regarding their entitlement to the statutory fee award and, in the alternative, seeking quantum meruit or damages for breach of contract. Ps&sS contended that the contingency agreement provided that they would receive either "forty percent of the amount recovered from a jury verdict or the entirety of statutory fees that might be awarded...." Bleys&sBley filed a cross-complaint against Prentice and Scott, seeking equitable indemnity and contractual damages.
All counsel moved for summary judgment on Flannery's complaint. Ps&sS also moved for summary adjudication on their declaratory-relief cause of action. The trial court granted both motions.
Counsel dismissed the remaining claims in the cross-complaints.
II. DISCUSSION
A. Attorney Fees
The parties dispute who is entitled to the attorney fees awarded in the Alameda County litigation. The trial court concluded that Flannery was not entitled to the statutory fee award and granted summary judgment on Flannery's complaint in favor of counsel and summary adjudication in favor of Ps&sS on their cause of action for declaratory relief.
The attorney fees at issue in this appeal were awarded under the authority of section "As with any statutory construction inquiry, we must look first to the language of the statute. 'To determine legislative intent, a court begins with the words of the statute, because they generally provide the most reliable indicator of legislative intent.' [Citation.] If it is clear and unambiguous our inquiry ends. There is no need for judicial construction and a court may not indulge in it. [Citation.] 'If there is no ambiguity in the language, we presume the Legislature meant what it said and the plain meaning of the statute governs.' [Citation.]" (Diamond Multimedia Systems, Inc. v. Superior Court (1999) 19 Cal.4th 1036, 1046-1047, 80 Cal.Rptr.2d 828, 968 P.2d 539 (Diamond Multimedia ).) "If, however, the terms of a statute provide no definitive answer, then courts may resort to extrinsic sources, including the ostensible objects to be achieved and the legislative history. [Citation.]" (People v. Coronado (1995) 12 Cal.4th 145, 151, 48 Cal.Rptr.2d 77, 906 P.2d 1232.)
Accordingly, the starting point of our analysis is the language of section 12965. (See Diamond Multimedia, supra, 19 Cal.4th at pp. 1046-1047, 80 Cal.Rptr.2d 828, 968 P.2d 539.) That language provides for the award of attorney fees to the "prevailing party" and, unlike other attorney-fees statutes (see, e.g., Fam.Code, § 272, subd. (a)), makes no mention of the party's attorney. By the express terms of section 12965, the fee award belongs to the party in the first instance.
Because the legislative history of section 12965 also supports our conclusion, the result in this case would not change even if we were to find that the attorney-fees language of section 12965 is ambiguous. (Cf. Levy v. Superior Court (1995) 10 Cal.4th 578, 582, 41 Cal.Rptr.2d 878, 896 P.2d 171 ["word 'parties' [as used in Code of Civil Procedure section 664.6] is reasonably susceptible to more than one interpretation"] ). The attorney-fees provision of section 12965 was modeled after 42 United States Code section 2000a-3, subdivision (b). (Assem. Bill No.1915, 3d reading, Jan. 18, 1978). The federal civil rights attorney-fees provision set forth in 42 United States Code section 1988 was also patterned after 42 United States Code section 2000a-3. (Hanrahan v. Hampton (1980) 446 U.S. 754, 758 fn. 4, 100 S.Ct. 1987, 64 L.Ed.2d 670.) While no reported federal decision has addressed the ownership of attorney fees awarded under 42 United States Code section 2000a-3, the United States Supreme Court has addressed that ownership issue in the context of attorney fees awarded under 42 United States Code section 1988. (See Evans v. Jeff D. (1986) 475 U.S. 717, 106 S.Ct. 1531, 89 L.Ed.2d 747 (Evans ).) Federal decisions, while not binding on this court (Flannery, supra, 61 Cal.App.4th at p. 643, 71 Cal.Rptr.2d 632), can be instructive when the federal decision interprets a statute similar to the state statute under consideration. (Los Angeles Met. Transit Authority v. Brotherhood of Railroad Trainmen (1960) 54 Cal.2d 684, 688-689, 8 Cal.Rptr. 1, 355 P.2d 905). 42 United States Code section 1988 and the attorney-fees provision of section 12965 each share 42 United States Code section 2000a-3, subdivision (b) as their genesis. Accordingly, we 42 United States Code section 1988, provides that "the court, in its discretion, may allow the prevailing party ... a reasonable attorney's fees" in enumerated civil rights actions. (42 U.S.C § 1988, subd. (b).) In Evans, supra, 475 U.S. 717, 106 S.Ct. 1531, 89 L.Ed.2d 747, the United States Supreme Court considered "whether attorney's fees must be assessed [under 42 United States Code section 1988] when the case has been settled by a consent decree granting prospective relief to the plaintiff class but providing that the defendants shall not pay any part of the prevailing party's fees or costs." (Evans, supra, 475 U.S. at p. 720, 106 S.Ct. 1531, emphasis in original.) The United States Supreme Court concluded that the statute "did not prevent the party from waiving this eligibility [for fees] anymore than it legislated against assignment of this right to an attorney...." (Evans, supra, at pp. 730-731, 106 S.Ct. 1531.) In reaching this conclusion, the United States Supreme Court reasoned that a "straightforward reading of § 1988 accords with the view" that the entitlement to a 42 United States Code section 1988 award belongs to the plaintiff rather than the attorney. (Evans, supra, 475 U.S. at p. 730 fn. 19, 106 S.Ct. 1531; see Venegas v. Mitchell (1990) 495 U.S. 82, 89, 110 S.Ct. 1679, 109 L.Ed.2d 74.)
42 United States Code section 2000a-3, subdivision (b), provides, in its entirety, as follows: "In any action commenced pursuant to this subchapter, the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs, and the United States shall be liable for costs the same as a private person."
We may take judicial notice of this portion of the legislative history. (See, e.g., People v. Ledesma (1997) 16 Cal.4th 90, 98 fn. 4, 65 Cal.Rptr.2d 610, 939 P.2d 1310; People v. York (1998) 60 Cal.App.4th 1499, 1505 fn. 7, 71 Cal.Rptr.2d 303 [implicitly taking judicial notice].)
Another source of instructive case law is federal decisions construing the attorney-fees provision of title VII, 42 United States Code section 2000e et seq. "... California courts often adopt standards developed by federal courts in employment discrimination claims arising under title VII ... because of similarities in the statutory language. [Citations.]" (Flannery, supra, 61 Cal.App.4th at p. 643, 71 Cal.Rptr.2d 632.) Under title VII, the court "in its discretion, may allow the prevailing party ... a reasonable attorney's fee ... as part of the costs...." (42 U.S.C. § 2000e-5, subd. (k).) Federal courts have construed this language--as we construe the language of section 12965--as plainly entitling the plaintiff, not the plaintiff's attorney, to an award of attorney fees. (See Soliman v. Ebasco Services Inc. (2d Cir.1987) 822 F.2d 320, 322; Turner v. Secretary of Air Force (11th Cir.1991) 944 F.2d 804, 807.)
For example, our courts have expressly declined to follow federal decisions concerning the calculation of reasonable attorney fees. (See Flannery, supra, 61 Cal.App.4th at pp. 643-647, 71 Cal.Rptr.2d 632.) However, in that instance, our decisions diverged from those of our federal counterparts because the federal decisions were "based in substantial part on federal legislative history, for which there is no California parallel." (Id. at p. 646, 71 Cal.Rptr.2d 632.) Here, in contrast, the federal decisions have construed the language of similarly-worded federal statutes and have done so without resort to legislative history.
Counsel urges that we disregard these authorities and conclude that a fee award under section 12965 belongs to the attorney. Counsel's argument relies on language in Folsom v. Butte County Assn. of Governments (1982) 32 Cal.3d 668, 186 Cal.Rptr. 589, 652 P.2d 437 (Folsom ) stating that fee "... awards are properly made to the plaintiffs' attorneys rather than to the plaintiffs themselves...." (See id. at p. 682 fn. 26, 186 Cal.Rptr. 589, 652 P.2d 437.) Counsel reads Folsom too expansively. First, Folsom did not involve section 12965 in any fashion. Second, Folsom relies upon Serrano v. Priest (1977) 20 Cal.3d 25, 141 Cal.Rptr. 315, 569 P.2d 1303 (Serrano ). (Folsom, supra, 32 Cal.3d at p. 682 fn. 26, 186 Cal.Rptr. 589, 652 P.2d 437.) Serrano, which also did not consider section 12965, merely notes that the court's equitable powers would permit a direct award of fees to the plaintiff's attorney rather than to the plaintiff. (Serrano, supra, 20 Cal.3d at p. 47 fn. 21, 141 Cal.Rptr. 315, 569 P.2d 1303.) Serrano did not conclude, however, that attorney fees must be awarded directly to the attorney.
Counsel also argues that interpreting section 12965 as awarding fees to the party is inconsistent with decisions such as Kay v. Ehrler (1991) 499 U.S. 432, 111 S.Ct. 1435, 113 L.Ed.2d 486 (Kay ) and Trope v. Katz (1995) 11 Cal.4th 274, 45 Cal.Rptr.2d 241, 902 P.2d 259 (Trope ). Those decisions are inapposite. First, each decision concerns the propriety of an award of attorney fees. (Kay, supra, at pp. 437-438, 111 S.Ct. 1435 Furthermore, with respect to United States Supreme Court precedent, we find Blanchard v. Bergeron (1989) 489 U.S. 87, 109 S.Ct. 939, 103 L.Ed.2d 67 (Blanchard ) to be more on point than Kay. In Blanchard, the United States Supreme Court explained that "where there are lawyers or organizations that will take a plaintiff's case without compensation, that fact does not bar the award of a reasonable fee" under 42 United States Code section 1988. (Blanchard, supra, 489 U.S. at p. 94, 109 S.Ct. 939.) Thus, under United States Supreme Court precedent the amount of the fee owed by the plaintiff to his or her attorney is a separate matter from the amount of the fee award.
The conclusion of Trope does not conflict with Blanchard. Trope interpreted Civil Code section 1717 which does not discuss "reasonable attorney fees," but instead permits the recovery of fees "incurred to enforce the contract." (See Trope, supra, 11 Cal.4th at p. 279, 45 Cal.Rptr.2d 241, 902 P.2d 259; Civ.Code, § 1717.)
Cortez v. Bootsma (1994) 27 Cal.App.4th 935, 33 Cal.Rptr.2d 20 (Cortez ) reached a similar conclusion with respect to the "reasonable attorney's fees" recoverable under Labor Code section 3709. In Cortez, Division One of the Fourth District concluded that a local rule limiting the recovery of "reasonable attorney's fees" to the amount agreed upon between plaintiff and his attorney conflicted with Labor Code section 3709 and hence was inapplicable. (Id. at pp. 937, 939, 33 Cal.Rptr.2d 20.) The Cortez decision reasons that "[t]he determination of what amount would be 'reasonable' is vested in the trial judge." (Cortez, supra, 27 Cal.App.4th at p. 939, 33 Cal.Rptr.2d 20.)
Counsel argues that our interpretation of section 12965 does not ensure proper compensation for attorneys and therefore will defeat the goal of attracting competent counsel. We disagree. Section 12965 guarantees that a prevailing plaintiff who has been represented by counsel will have money with which to pay a reasonable attorney fee. To guarantee payment of that money, the attorney need only secure an appropriate fee agreement with the party. Counsel's problem in this case arises not because of section 12965's provision of attorney fees to the prevailing party but because counsel failed to secure or retain a written fee agreement (despite the requirements of Business and Professions Code section 6147). We think it is reasonable to require the attorney to take the modest step of securing a proper agreement with the client in order to ensure his or her entitlement to some or all of the money that the plaintiff receives as a fee award under section 12965.
For this reason, we are not persuaded by U.S. v. Jerry M. Lewis Truck Partss&sEquipment (9th Cir.1996) 89 F.3d 574 (Jerry M.). In Jerry M., the United States Court of Appeal for the Ninth Circuit concluded in a qui tam action that "[t]he client's right [to reasonable attorney fees] is really a power to obtain fees for his attorney; the attorneys' right does not come into being until the client exercises that power; the defendant's liability will only arise if that power is exercised." (Jerry M., supra, 89 F.3d at p. 577.) "Once the power is exercised, however, the attorneys' right vests, and the defendant's duty becomes fixed." (Id. at p. 578.) The Ninth Circuit's primary reason for this result, however, was its concern for the attorney's ability to obtain compensation. (See id. at p. 579.) We do not share that concern because, as we have explained, a little advance planning will prevent the problem that this case presents. We are instead persuaded by the concurring opinion in Jerry M., which concludes In fact, the position that counsel advocates in this case might work to the advantage of the attorney at the expense of his or her client. Under counsel's construction of section 12965, the party would own the verdict in a FEHA action and the attorney would own the attorney fees award. Such a division of ownership might make it possible for counsel to enter into a contract with the client for a percentage of the verdict without advising the client about the possibility of a statutory fee award because the attorney owns the fee award outright. We do not purport to decide whether such conduct would be legal or ethical, but this scenario clearly illustrates the problems that might arise if ownership of the sums paid by the defendant in a FEHA case is not vested exclusively with the party.
Having decided that section 12965 does not in itself entitle counsel to recover the attorney fees awarded in the Alameda County litigation, the question that remains is whether an agreement between Flannery and her counsel created such an entitlement. As to this question, there exist numerous questions of fact that preclude summary judgment in favor of counsel. Accordingly, we remand for further proceedings.
This aspect of our decision disposes of Flannery's arguments regarding the trial court's rulings on her motions to strike and her demurrer.
We do not consider Flannery's appeal to the extent that it argues that counsel cannot claim any portion of the statutory fee award unless they have a written fee agreement with Flannery. This portion of Flannery's appeal effectively seeks judgment on her behalf on the declaratory relief causes of action. The appeal, however, arises after the grant of summary judgment to counsel on Flannery's first amended complaint and the grant of summary adjudication to Ps&sS on their cause of action for declaratory relief. Accordingly, Flannery's request for a determination that any agreement concerning the statutory attorney fees must be in writing in order to be enforceable exceeds the scope of the appeal.
See footnote *, ante.
III. DISPOSITION
The judgment and the orders granting summary judgment and summary adjudication are reversed. Costs on appeal are awarded to Flannery.
HANING, J., and STEVENS, J., concur.