Opinion
NOT TO BE PUBLISHED
Contra Costa County JCCP No. 4255.
SIMONS, J.
In this consolidated appeal, Attorneys Kay Holley, Steven E. Mendelson and Donald Amamgbo (appellants) appeal court orders providing for distribution of unclaimed class action settlement payments to the “cy près fund” (Code Civ. Proc., § 384) respondent Richmond Childrens Foundation (RCF). Appellants contend the court erred in ordering unclaimed class settlement funds distributed to RCF ahead of payment of appellants’ contingent attorney fees. We reject the contention and affirm.
We note that the parties elected to proceed with appellants’ and respondent’s appendices in lieu of a clerk’s transcript. (Cal. Rules of Court, rule 8.124.)
In 2001, General Chemical Corporation (GCC) owned and operated a sulfuric acid manufacturing facility in Richmond, California. On or about May 1 and November 29, 2001, the facility released chemicals into the air. During these incidents, “shelter in place” (SIP) warnings were given to community members. Several lawsuits, including a class action, were filed against GCC and other defendants on behalf of approximately 48, 000 plaintiffs for personal injury damages and damages resulting from sheltering in place caused by the incidents. The cases were consolidated and, thereafter, the underlying parties stipulated to class certification solely for settlement purposes. Appellants served as plaintiffs’ counsel. Holley was designated “Plaintiffs’ Liaison Counsel, ” or one of two “Plaintiffs’ Co-Liaison Counsel.” Mendelson and Amamgbo were members of the “Direct Action Management Committee, ” and Mendelson was designated “Plaintiffs’ Management Committee Lead Counsel.”
None of the parties to the underlying litigation is a party to the instant appeal.
In December 2005, the underlying parties filed a joint motion seeking preliminary approval of the settlement of the GCC class action litigation consistent with the “Settlement Agreement, ” conditional approval of the stipulated settlement class and approval of the proposed “notice concerning settlement.” In late January 2006, the court (Judge Bruiniers) granted the motion and set a hearing for final approval of the settlement class for late April 2006.
RCF was not a party to the underlying action and, therefore, not a party to the Settlement Agreement.
Settlement Agreement
Pursuant to the Settlement Agreement, plaintiffs were to be paid $6.25 million, referred to as the “Settlement Amount.” Section 3.3, entitled “Allocation of Settlement Amount, ” provides the Settlement Amount “shall be applied to the following:
All undesignated “Section” references are to the Settlement Agreement.
“(a) Costs of giving Class Notice;
“(b) Costs of administration of the Settlement Amount not to exceed $375,000;
“(c) Payment of approved medical bills and costs and consequential damage claims not to exceed $650,000 (the ‘Special Fund of $650,000’);
“(d) Payment of $2,500 to the Class Representative subject to Court approval;
“(e) Payment of Plaintiffs’ Counsel fees and costs, as set forth in Section 5.2, below, subject to court approval;
Section 5.2 provides: (a) for payments to Plaintiffs’ Counsel R. Patrick Jaress; and (b) $1.25 million in payments to counsel for the Direct Action Plaintiffs for common benefit fees and costs, subject to court approval.
“(f) The balance of the Settlement Amount after payment of the amounts pursuant to Sections 3.3(a) through (e) shall be paid to all Members of the Plaintiffs’ Settlement Class who are eligible to receive payment pursuant to Section 3.4 and 3.5, below, in an equal amount to each person, less any payments subject to the provisions of any valid retainer agreements to the extent approved by the Court;
Section 3.4 provided for monthly and final accountings of all funds received and disbursed by plaintiffs.
Section 3.5 provided that payments to “Direct Action Plaintiffs, ” defined as, “all named Plaintiffs other than putative class representatives and Absent Class Members, ” would be conditioned on each such plaintiff submitting a claim questionnaire and “shall be subject to the provisions of any valid retainer agreements to the extent approved by the Court.”
“(g) Any settlement check that has not been cashed within one year of the date of the date of the original check and [six] months of the date of any replacement check, whichever date is sooner, shall be deemed to have been forfeited by the Plaintiff or Absent Class Member to whom the check has been sent. Said forfeited funds, if any, shall be donated to [RCF] and Plaintiffs’ Co-Liaison Counsel shall cause these funds to be delivered to [RCF] within 10 days of it being determined pursuant to the terms set forth above that said funds have been forfeited....”
Article 5 of the Settlement Agreement, entitled “ATTORNEYS’ FEES AND OTHER COSTS, ” provides in part:
“Section 5.1 Attorney’s Fee Payments. The Defendants and the Released Parties shall have no obligation for the payment of Plaintiffs’ attorney’s fees and costs. The Defendants’ and the Released Parties’ obligations to pay money pursuant to the Settlement Agreement are limited to that amount... agreed to by and between the Parties prior to and without regard for any payments of attorneys’ fees and costs. Any payments made to any Plaintiffs’ Counsel for fees and costs shall only be made after the amount of such payment has been approved by the Court and found to have met all applicable rules of fairness to the Class Members.”
“Section 5.5 Other Fees and Costs. The payment of attorneys fees and costs set forth in this Article 5, shall be the sole payment of attorney’s fees and costs by Defendants..., which amounts shall be deducted from the Settlement Amount, and the parties agree that any and all other fees and costs shall be borne by the respective Parties. In addition, Plaintiffs’ Direct Action Counsel shall receive fees and costs pursuant to valid Retainer Agreements to the extent approved by the Court.”
Pursuant to the Settlement Agreement, the court retained exclusive and continuing jurisdiction regarding the performance, interpretation and enforcement of the terms and conditions of the Settlement Agreement. The Settlement Agreement expressly provided that none of its provisions was “intended to create any third-party beneficiary to this Settlement Agreement other than the Released Parties who are not a signatory hereto, ” and contained a standard integration clause. Holley executed the Settlement Agreement as “Plaintiffs’ Co-Liaison Counsel” and Mendelson and Amamgbo each executed it as “Plaintiffs’ Counsel and Plaintiffs’ Management Committee Member.”
The “NOTICE CONCERNING SETTLEMENT” provides in part: “In order to be eligible to receive settlement payments, members of the class must have completed or must by the specified deadline complete a questionnaire detailing his or her claim. For eligible claimants who are not making a claim that they suffered personal injuries or consequential damages (including by way of example, for medical bills, for emotional distress and/or pain and suffering damages and/or lost income), payments shall be made in equal amounts to each eligible claimant in an amount, depending on the number of eligible claims, estimated to be approximately $100 (net of amounts due pursuant to valid retainer agreements to the extent approved by the court).”
On May 25, 2006, a hearing was held on a joint motion for final approval of the class action settlement. Judge Bruiniers approved payment of $1.25 million in common benefit fund attorney fees to be later allocated to counsel for the Direct Action Plaintiffs. The court also approved a contingency fee of 28 percent for adult plaintiffs and 20 percent for minor plaintiffs for whom there were valid retainer agreements. It noted that the notice concerning settlement stated that nonpersonal injury SIP claims were estimated to be approximately $100 per claimant, but did not address the issue of contingency fees. After it was suggested that the $100 payment was to be made to claimants after deducting attorney fees, the court stated, “I think the notice was less than clear in that respect, but I’m comfortable as long as the net recovery to the plaintiffs would be at least the amount indicated in the notice of approximately $100. [¶] As long as that remains the case, then I’m prepared to authorize and approve the contingent fees, ... in the amounts requested, 20 percent to the minors, ... and 28 percent for the adults. [¶]... [¶] The cost recovery should come off the top. I think that’s appropriate. But that after the cost recovery and before application of the contingency, that the distribution would be at least $100, and the contingency fee would apply to amounts in excess [of] that. [¶] And I think that deals with any ambiguity in the notice, so I’m prepared with that modification to approve the... contingent fees, for any individual plaintiff for whom there is a valid retainer agreement, and those amounts, with first deduction of costs, then payment to the plaintiff of at least $100, and then contingent fees applicable to any amounts in excess.”
This amount was later increased to $2.25 million.
Judge Bruiniers’s June 2006 written order granting the motion for final approval of the class action settlement found the settlement was a rough approximation of the plaintiffs’ probable total recoveries and the settling defendants’ proportional liability, and noted, “[t]he settlement will result in a net payment to each Plaintiff Class Member of a minimum of $100 (net of $12 per Plaintiff Class Member for costs and net of any contingent fees payable to plaintiffs’ counsel).”
On November 28, 2006, two days before a scheduled hearing for plaintiffs to report to the court the identity of claimants eligible for payment under the terms of the Settlement Agreement, Holley filed a written “NOTICE” stating that on November 19, 2006, she was advised there were 3, 400 to 4, 000 additional SIP claimants whose questionnaires had been timely filed but whose names did not appear in the database of completed SIP claims plaintiffs’ counsel received from defendants. The notice also stated: the data contained in this database “provided the foundational basis for determining payment to claimants (less resolved duplicates plus approved Absent Class members less provisional determinations). Although... Holley had been advised by several offices that the list was incomplete, the difference in numbers reported was relatively small and it was anticipated that these claims, if proved up and approved by the Court, would be paid somewhat later. It was not until the November 19th conference call that those offices who submitted their data electronically reported that their shortfall was 3, 200 [to] 3, 400.... [¶] Plaintiffs cannot change, add or remove names from the database received from the defendants to include the additional plaintiffs without Court approval. However, the 3, 400 number in controversy is so large... the accuracy of the original database is open to question. It has also been reported that some names that appeared on the list of duplicate representation had been dismissed in 2005 for lack of a questionnaire. Lastly, there is a significant ‘ripple effect’ on the other issues pertaining to payment of the claims on the database including possible duplicate representation and medical claims. [¶] [On November 19, ] plaintiffs were within [10] hours of submitting the list of initial payees to [the claims administrator] for final processing prior to finalization of the checks. There is sufficient funding for payment of the [SIP] claims even if the additional names are approved, however, costs and fees to attorneys may have to be paid on a delayed basis.... The question is whether the foundational database is accurate. [¶]... [¶] The primary importance in this process are the claimants and that they should not be prejudiced. Plaintiffs seek the Court’s guidance on how to proceed to ensure that all qualified claimants receive payment of their claims in a prompt manner.”
In late February 2007, the issue of the “4, 000 or so” additional claimants was taken up in a continued hearing before Judge Flinn. Holley again represented that if each of these additional claimants was allowed there would still be sufficient funds to pay each claimant at least $100. She stated, “What there isn’t [sufficient funding for] is the tricky one, and we knew it the way we were backing into it, frankly is the attorneys’ fees. I think that there will still be a payment of attorneys’ fees if not to the last dollar then a substantial amount of the attorneys’ fees, but it’s going to come later as opposed to sooner. The primary thing is partly because of the notice. [¶]... [¶]... [W]hat we propose at this time is to pay all of the attorneys the $12 cost that was previously approved by Judge Bruiniers and see where we are with the uncashed checks, the interest, and an overage from the medical claims fund.” Holley further stated, “And so what we believe is that there will be an overage in the medical fund, and that overage can be used... [¶]... as a pourover either for the [SIP] claimants or... for the fees. [¶] At this point... [, ] even if every last claim... is approved[, ]... there is enough money to pay [each SIP claimant] the basic $100 [and their] attorney the basic $12 costs.”
All further references to “the court” are to Judge Flinn.
An April 2007 order approved the SIP claims of individuals listed in an “ACCOUNTING AND REVIEW, ” and again ordered that each approved SIP claimant be paid $100 “net of fees and costs.” The order stated the court reserved ruling on any award of further attorney fees and stated, “It is the intention of the Court that fees and costs for [SIP] claimants shall be paid from the [SIP] fund....” In November 2007, an amended order issued approving checks for the 3, 418 additional previously court-approved SIP claimants. The order stated each approved SIP claimant was to be paid $100 “net of fees and costs, ” and attorneys of record for each of those claimants were to be paid $12 in costs for each claim.
Subsequently, of the $6.25 million settlement amount, $2.25 million was paid in common benefit attorney fees, $101,045.69 was paid for the cost of giving notice to the class, and $2,500 was paid to the named class representative. The remaining $3,896,454.31 was segregated into a medical claims fund, a claims administration fund, and a general fund.
At the commencement of a February 26, 2009 hearing regarding attorney fees, the court stated, “I want to say to everybody the big picture shows a lot of attorneys’ fees have been paid out in this case, and I intend to look [at that] as a part of any decisions I make for requests that are now being made by attorneys.... You know, I’m not about to pay out 50 percent of the settlement proceeds to attorneys, period.” The court noted that the deadline for SIP claimants to cash their checks had come and gone and stated its tentative view was to order payment to RCF. The court clarified that as to those checks, none of the SIP contingent fees would be paid. Holley asserted that because the notice of class settlement required each SIP claimant to receive a minimum of $100, by the time plaintiffs’ counsel distributed checks to the additional 4, 000 to 5, 000 SIP claimants in 2008, counsel knew there was not sufficient money to pay the attorneys their SIP claim contingent fees, and no contingent fees had been paid for SIP claimants. The court acknowledged that the failure to identify the additional SIP claimants prior to entering into the settlement was the fault of the defense attorneys who were responsible for the data work. Counsel for RCF argued that pursuant to the terms of the Settlement Agreement, the amount of the uncashed checks as of late 2008 should be transferred to RCF rather than be used to pay plaintiffs’ counsel the SIP contingent fees. The court tentatively ruled that the funds from uncashed claimant checks would not be used to pay SIP contingent fees, and permitted counsel to file additional papers on the issue.
An April 21, 2009 declaration by Holley in support of a “motion for disbursement of attorneys’ fees to individual counsel” stated the following: The intent of the Settlement Agreement was in part to provide for payment of claims, payment of fees to counsel for the overall conduct of the case and fees to individual counsel for services performed on behalf of their clients, and a cy près payment to be made to RCF from the residual. At the time the court ordered payment to the approved SIP claimants, plaintiffs’ counsel agreed to “defer” receipt of individual fees; however, at no time did they propose, discuss, or intend to waive their fees. In an e-mail to Holley and plaintiffs’ counsel/Direct Action Management Committee member Timothy Jaress, the court stated that attorneys would receive their fees prior to a distribution to the RCF. At the February 2009 hearing, the court first announced its intention to award money to RCF prior to paying individual attorneys’ fees, even if this resulted in attorneys not receiving any fees. Had Holley known in early 2007 that accepting the additional SIP claimants might result in the loss of attorney fees for her individual SIP cases, she “may” have objected to the inclusion of additional claimants. She relied on what she believed was the “implied intention” of the court that individual attorney fees would be paid pursuant to the Settlement Agreement. She continued to work on individual cases “in reliance and knowledge that the fee [she] would receive would be small but that [she] would be paid sometime in the future....” Had she known that RCF would be paid before attorney fees, she “might” have explored other options.
The motion papers are not included in the appellate record.
Although the e-mail is not attached to the declaration, Holley appears to be referring to the court’s January 22, 2009 e-mail mentioned in footnote 14 below.
A July 2009 declaration by Mendelson asserted that, based on his 1, 021 original SIP claimants and 166 additional SIP claimants, he was entitled to contingent fees of $38.50 per claimant and total contingent fees of $45,699.50. A July 2009 declaration by Amamgbo stated his understanding was that monies left after payment to claimants would be used to pay attorney fees, costs and other parties with a legitimate claim. Based on his 3, 999 claimants he sought fees of $38.50 per claimant and total fees of $153,961.50.
At a July 23, 2009 hearing, the court again took up the issue of the unpaid SIP claimant contingent fees, noting that if the funds from the uncashed SIP claimant checks were paid to RCF, there would not be sufficient funds to pay the contingent fees. The court stated that plaintiffs’ counsel had made the mistake of authorizing the notice of class settlement, which provided $100 per SIP claimant be paid out with the understanding that the fund would later pay the contingent fee share. The court tentatively ruled that the $100 per SIP claimant amount be treated as a gross rather than a net payment so that a percentage of that amount would be put back into the fund to be used to pay the contingent attorney fees. Appellants argued that the intent of the Settlement Agreement was that the settlement amount would first be used for payment of the claimants and the attorneys, with any surplus going to RCF. They asserted that since the claimants had been paid, the remaining funds should be used for attorney fees. RCF argued that, in early 2006, there were 27, 000 proposed claimants, in November 2006 an additional 4, 000 or 5, 000 additional claimants were discovered, but the actual number of claimants was 26, 000, a thousand less claimants than originally claimed. Thus, RCF argued there was no mistake regarding the 4, 000 or 5, 000 additional claimants. RCF also argued that the mistake of settling the case too low, obtaining so many claimants or promising that all claimants would get at least $100 were calculated decisions made by plaintiffs’ counsel and any mistake regarding those decisions should be borne by plaintiffs’ counsel, not RCF.
The court noted that SIP claimants had cashed checks representing 34.8 percent of the total settlement amount and interest earned thereon, the contingent fees on the medical claims had been paid, and the contingent fees remained unpaid on the SIP claims. Holley’s cocounsel, Karen Kibler, said: “As far as the mistake, ... however you want to label it, it was certainly of the plaintiffs’ attorneys.” She asserted that at the time the Settlement Agreement was proposed, the $100 was based on the number of claimants thought to exist at that time and it was assumed that that number would decrease. Holley acknowledged that “contingent fee attorneys by nature are gamblers.”
September 1, 2009 Decision and Order
On September 1, 2009, the court issued its “Decision and Order as to Funds Ordered ‘Forfeited’ Under the Settlement Agreement.” The decision found that $572,300 remained in the general fund, representing 5, 723 checks in the amount of $100 not cashed within the time frame specified in the Settlement Agreement. The court concluded these “forfeited” funds were cy près funds and ordered that they and any future uncashed checks issued to claimants be donated to RCF. The decision and order stated the following: “There can be no doubt that the [Direct Action Management Committee] miscalculated the economics of the claims administration process, when it determined, during the settlement approval process, that each person with a valid [SIP] claim... would receive $100 without deduction for the payment to his or her attorney of any fee agreed upon in a retainer agreement with that attorney.” Plaintiffs’ attorneys requested and received $2.25 million in attorney fees and costs for “common benefit” work, and $100,000 for the notice to class members. This left $2,875,000 for SIP claims and their connected costs. With almost 24, 000 SIP claims filed, $250,000 was left in the general account and contingent fee claims were more than twice that amount. The court noted that even after an anticipated overage in the medical fund and a possible overage in the claims administration fund were transferred to the general fund, there would still be insufficient funds to pay the requested contingent fees.
This is one of the two orders appealed from.
The court also ordered $48,125.52 in unclaimed medical claim checks from the medical fund donated to RCF. That amount is not challenged on appeal.
The court concluded that the plain meaning of the Settlement Agreement and the order approving the Settlement Agreement were consistent—“monies that would have been used to pay checks which became void with time (as specifically provided), would go to a cy près purpose.” It reasoned that the defendant and class members could rightfully rely on the expectation that a portion of the settlement payments would go to such a cy près purpose, and concluded the court so relied in fixing the use of the settlement funds. It found that plaintiffs’ attorneys had already received 41.7 percent of the settlement funds, or 48.8 percent of the net recovery after deducting claims administration costs, and stated, “[s]hould they be allowed to invade the cy près fund, the attorneys would have received 51.4 [percent] of the net recovery. The public is not accepting of class actions having such a result.”
The court also found that after adding any surplus from the medical and claims administration funds to the general fund, the contingent fee attorneys might receive more than 63 percent of their requested contingent fees. The court concluded: “By making an adjustment to place the shortfall more on the committee members who have already received substantial fees rather than those who have not received monies, an even fairer result can be reached.” Appellants timely appealed the September 2009 order.
In November 2009, RCF sought an order to show cause (OSC) as to plaintiffs’ counsel’s failure to release the funds specified in the September 2009 order. In response, Holley submitted a declaration stating that the issue of the court’s priority of payment to RCF over payment of attorneys’ contingent fees had been raised in January 16, 2009 e mails between Timothy Jaress, Patrick Jaress and Holley, and a final e-mail by the court on January 22, 2009. The e-mails were attached to Holley’s declaration.
The court’s January 22, 2009 e-mail states, “The [cy près] funds are the last out. If there is a shortfall in other areas they come ahead of [cy près].”
Thereafter, a November 19, 2009 order on the OSC request noted an appeal had been taken from the September 2009 order, but no stay of execution had been issued. The court thus ordered the previously ordered funds paid to RCF.
December 2009 Order
On December 17, 2009, the court issued an order that included the following findings: Medical and SIP claims were analyzed by various plaintiffs’ attorneys who, based on contingent fee arrangements, represented approximately 96 percent of the claimants. Approximately $77,000 remained in the medical fund, approximately $51,000 remained in the claims administration fund, and aproximately $250,000 remained in the general fund. If contingent fees for SIP claimants were paid in full, Holley would be entitled to $186,953, Amamgbo would be entitled to $135,197, and Mendelson would be entitled to $39,904. The court noted that Holley had already received $433,000, Mendelson had already received $350,000 and Amamgbo had already received $140,000 in attorney fees.
The court also listed the amounts that other nonappealing plaintiffs’ attorneys would be entitled to for SIP claim contingent fees.
The court stated, “As to the contingent fees [for SIP claimants], no claiming attorney came forward when the matter was proceeding and it was discovered that approximately 4, 000 claims had been left out of the ‘database’ and urged that the $100 payments not be made as suggested in the notice of settlement to class members.” The court concluded that $313,948.44 remained in the general fund for payment of the contingent fee claims. Because this amount was not sufficient to pay the full amount in contingent fee claims, the court decided to allocate the available funds to the appealing and nonappealing attorneys based on whether any part of the work of each claiming attorney had been compensated, and whether the work of other attorneys had benefited the claiming attorney. Thereafter, the court ordered the following funds distributed to appellants: $40,100 to Amamgbo, $40,100 to Holley and $28,100 to Mendelson.
DISCUSSION
I. The Court Did Not Err in Disbursing Uncashed SIP Claimant Checks to RCF
Appellants contend the court misinterpreted the Settlement Agreement in disbursing the amount of the uncashed SIP claimant checks to RCF rather than disbursing those funds to appellants as payment of SIP claimant contingent fees. Appellants concede the Settlement Agreement is not ambiguous or contrary to the intent of the parties. However, they argue that “the contract has two sections which cannot both be enforced as written due to the fact that the contract was entered into under a mistake” regarding the number of claimants.
We reject this contention for three related reasons. First, the terms of the Settlement Agreement were clear and unambiguous and do not reflect any preference for the payment of the attorney fees at issue here over the payments to RCF. Second, any mistake regarding the number of claimants should not abrogate Section 3.3(g) of the agreement. Finally, the court did not abuse its discretion in deciding to limit the fees when appellants moved for disbursement of fees in 2009.
Appellants erroneously refer to RCF as the “third party beneficiary, ” despite the fact that the Settlement Agreement expressly provides that none of its provisions was “intended to create any third-party beneficiary to this Settlement Agreement other than the Released Parties who are not a signatory hereto.”
A. Interpreting the Settlement Agreement
Since a settlement agreement is a contract, the legal principles that apply to contracts generally apply to settlement agreements. (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810-811.) Thus, the interpretation of the Settlement Agreement is a matter for our de novo review. (See Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866.) “Under long-standing contract law, a ‘contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ (Civ. Code, § 1636.) Although ‘the intention of the parties is to be ascertained from the writing alone, if possible’ (id., § 1639), ‘[a] contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates’ (id., § 1647). ‘However broad may be the terms of a contract, it extends only to those things... which it appears that the parties intended to contract.’ (Id., § 1648.)” (Hess v. Ford Motor Company (2002) 27 Cal.4th 516, 524-525 (Hess).)
Here, as conceded by appellants and determined by the court, the plain language of Section 3.3(g) is that uncashed settlement checks “shall” be donated to RCF within 10 days of it being determined that these funds are forfeited. Even assuming Section 3.3(g) does not apply until the Settlement Amount is allocated pursuant to Section 3.3(a) through (e), the Settlement Agreement does not establish that appellants are entitled to payment of their SIP claim contingent fees before payment of uncashed check monies to RCF. Section 3.3(e) provides for payment of attorney fees before payment to RCF “as set forth in Section 5.2.” However, Section 5.2 does not provide for attorney fees for SIP claims. Instead, it provides solely for attorney fees to R. Patrick Jaress and payments to counsel for the Direct Action Plaintiffs for common benefit fees. Appellants were paid their common benefit fees and such fees are not at issue on appeal. Appellants could have included payment of SIP contingent fees within Section 5.2, but did not do so.
In addition, appellants agreed to a notice of class settlement which specified that SIP claimants would receive approximately $100 “net of amounts due pursuant to valid retainer agreements to the extent approved by the court.” Had the class notice not specified a particular amount net of attorney fees, any later change in the anticipated number of SIP claimants would presumably not have impacted the amount of contingent fees paid to appellants. Had this been the parties’ intent, the Settlement Agreement could have been drafted to so provide.
B. Mutual Mistake
Appellants contend that due to a mutual mistake of fact, Section 3.3(g), providing for distribution to RCF of an amount equal to the value of the uncashed checks, should not be enforced, since such disbursement would be contrary to the intent of the Settlement Agreement to pay appellants’ contingent fees. The thrust of the argument is that the defendants’ database error misled appellants and the court as to a material factor in determining the acceptability of the Settlement Agreement and the contents of the class notice. We conclude appellants’ claim lacks merit.
Our review of appellants’ claim is guided by fundamental principles. “ ‘When, through... mistake..., a written contract fails to express the real intention of the parties, such intention is to be regarded, and the erroneous parts of the writing disregarded.’ (Civ. Code, § 1640.) If there is ‘a mutual mistake of the parties, ’ a written contract ‘may be revised, on the application of a party aggrieved, so as to express that intention, so far as it can be done without prejudice to rights acquired by third persons, in good faith and for value.’ (Id., § 3399.) In reforming the written agreement, a court may ‘transpose[], reject[], or suppl[y]’ words [citation], but has ‘ “no power to make new contracts for the parties” ’ [citation]. Rather, the court may only reform the writing to conform with the mutual understanding of the parties at the time they entered into it, if such an understanding exists. [Citation.] [¶] To raise mutual mistake as a defense, the aggrieved party does not have to ask ‘for a reformation of the contract or’ have ‘the same reformed.’ [Citation.] The party need only allege and prove mutual mistake in order to avoid enforcement of the erroneous terms. [Citations.] [¶] In determining whether a mutual mistake has occurred, a court may consider parole evidence. [Citation.]” (Hess, supra, 27 Cal.4th at pp. 524-525.) A party alleging mutual mistake must “ ‘aver facts showing how the mistake was made, whose mistake it was, and what brought it about, so that the mutuality may appear.’ ” (Totten v. Underwriters at Lloyd’s London (1959) 176 Cal.App.2d 440, 448.) A mutual mistake of fact “must affect in some material way one of the essential elements of the contract, ... so that it clearly appears that the complaining party would not have entered into it except for his or her mistaken belief.” (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 259, p. 289.)
Simply stated, nothing in the record establishes that the mistake in the number of claimants led appellants to agree to Section 3.3(g). Whatever the number of potential claimants, there is reason to believe the parties to the Settlement Agreement would have provided for the likelihood that some of the checks distributed to claimants would not be cashed. There is no reason to believe that the parties would have changed the distribution scheme set out in Section 3.3(g) if they had known the true number of claimants before arriving at a settlement. Instead, as the court recognized, the mistake as to the number of claimants led the parties to provide for too large a payment for each claimant in the class notice. That is, had the appellants known the correct number of claimants, it is likely the size of the payments to each would have been reduced, but there is no reason to believe Section 3.3(g) would have been altered. Thus, any mutual mistake would not have justified deleting, altering or refusing to enforce that section.
C. The Court’s Exercise of Discretion
Most significantly, whatever the merits of appellants’ arguments regarding the interpretation of the Settlement Agreement, the court has a duty to review and approve the attorney fees awarded in a class action settlement. (Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127.) “Even where the parties agree as to the amount of attorney fees in... a settlement agreement, courts properly review and modify the agreed-upon fees if the amount is not reasonable.” (Ibid.) Moreover, each of the Settlement Agreement’s provisions regarding attorney fees specifies that such fees are “subject to court approval.” Section 5.5 specifically provides “Plaintiffs’ Direct Action Counsel shall receive fees and costs pursuant to valid Retainer Agreements to the extent approved by the Court.”
We review the court’s fee award under the deferential abuse of discretion standard. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1809.) Although in giving final approval of the Settlement Agreement in 2006, Judge Bruiniers approved a contingency fee of 28 percent for adult plaintiffs and 20 percent for minor plaintiffs, the award of contingent fees was not guaranteed. When appellants realized a mistake had been made in calculating the number of SIP claimants, they notified the court. After concluding this mistake would impact their fees, appellants moved to have a portion of those fees paid from the forfeited checks. In response to this request, the court acted within its discretion in refusing to approve the amount of SIP contingent fees sought by appellants. The court determined that the contingent fees sought by appellants, in addition to the fees previously awarded, would constitute more than 51 percent of the Settlement Amount. In light of all the circumstances, the court’s decision to deny the request for that reason was not an abuse of discretion.
II. Attorney Fees on Appeal
RCF requests contractual attorney fees on appeal pursuant to Section 17.17, which provides: “If any action or proceeding is required to enforce any and all provisions of this Settlement Agreement, the prevailing Party shall be entitled to the recovery of reasonable attorneys’ fees and costs incurred in seeking such enforcement of this Settlement Agreement.” Appellants rejoin that RCF is not a party to the underlying case and therefore is not entitled to contractual attorney fees. However, appellants request such fees if this court determines attorney fees may be awarded.
A notice of motion to claim contractual attorney fees on appeal—other than fees for services on appeal before rendition of the trial court judgment—must be served and filed in the trial court. (Cal. Rules of Court, rules 3.1702(c)(1), 8.278(c)(1); Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2010) ¶ 14:122.8, p. 14-33.) We remand the matter to the trial court for its determination of the parties’ requests for fees on appeal. (See Bardales v. Duarte (2010) 181 Cal.App.4th 1262, 1273.)
DISPOSITION
The orders are affirmed. The matter is remanded to the trial court to determine the parties’ requests for fees on appeal. Respondent is awarded costs on appeal.
We concur: JONES, P.J., NEEDHAM, J.