Wednesday, March 11, 2020

People ex rel. Becerra v. Shine (Cal. Ct. App. - March 11, 2020)

I understand that this opinion was originally unpublished, so perhaps isn't crafted as carefully as one originally designated for publication.  After all, the trustee here basically just wants to know if he's indeed getting stiffed for over $3 million, and the Court of Appeal unambiguously says "Yes."  In light of that central result, one might legitimately give some leeway if the explanation of why the Court of Appeal comes out that way isn't spot-on perfect.  After all, the money flows the way it does regardless.

That said, try as I might -- and I've tried hard -- I can't exactly tell what Justice Jones is trying to say in this opinion.

If her point is that the trial court awarded $1.4 million in fees and costs to California and that wasn't an abuse of discretion given these facts, yep, right on.  Exactly right.  The trial court was there, the trustee definitely did some bad stuff, there's an attorney fee provision in the statute, and given all of the above, what the trial court did makes sense.  Affirmed.  Every time.

But I feel like she's trying to say more.  Like, in several places in the opinion, that she's saying that the ordinary things that you look at when you decide whether fees are reasonable -- i.e., the level of success -- don't matter in the context of state-initiated charitable trust actions.  (See., e.g., "Shine contends section 12598 “allows only ‘reasonable’ fees to be considered,” which “requires courts to appraise the fee claimant’s goals and results in the litigation.” We are not persuaded.")

To that I must say:  Nay, nay, a thousand times nay.

The statute says that only "reasonable" attorney's fees may be recovered.  We've pretty much always read that to mean that the fees need to be based upon things like the lodestar, the degree of success, complexity, etc.  It's typically not "reasonable" to spend fifty million dollars on fees to get, say, a $100,000 recovery.  A paying client typically wouldn't do that.  Neither should a prevailing party under a fee-shifting statute, lest we encourage unnecessary/wasteful/socially deleterious litigation.

Justice Jones says that this statute is different because an earlier version expressly said that the court must make express findings regarding the nature of the success and made particular findings in that regard a precondition of a cost award.  ("[T]he court shall make findings on whether the Attorney General’s action has resulted in pecuniary benefits or corrected a breach of trust for any charitable organization, or charitable purpose. If the court finds in the affirmative, the court shall award recovery of costs.")  There must have been a reason for that change, she says, and that reason was to make degree of success irrelevant to a determination of the reasonableness of fees.

Not so.  First, eliminating a factual precondition to a cost award isn't the same as saying that event isn't relevant to a fee award.  The two are different.  Second, merely saying that you no longer have to make express findings about something similarly doesn't mean that you're no longer able to consider it.  Finally, the change had a separate purpose as well; the former statute defined success as limited to two specified results ("resulted in pecuniary benefits" or "corrected a breach of trust"), whereas the revised version permits success based on any of the ordinary measures of success, not merely these two.  So defining the statutory term "reasonable" fees to mean the same thing the Legislature pretty much always intends it to mean hardly is disproven by the amendment of the statute.

Nor would such a reading of the statute lead to beneficial results.  For all the plethora of reasons the courts have repeatedly expressed for permitting (indeed, requiring) an assessment of relative success when a court determines whether or not the fees incurred in obtaining that result are reasonable.

So I'm more than okay with the result here.  It doesn't seem much challenged.

But the rationale and statutory interpretation part; that part seems both unnecessary as well as unwise and unsound.

Better to have just gone with the narrowest way of resolving this case; namely, that the award here was reasonable.