Beasley v. Wells Fargo Bank

235 Cal. App. 3d 1407, 1 Cal. Rptr. 2d 459, 91 Cal. Daily Op. Serv. 8998, 91 Daily Journal DAR 13951, 1991 Cal. App. LEXIS 1300
CourtCalifornia Court of Appeal
DecidedNovember 12, 1991
DocketA049948
StatusPublished
Cited by54 cases

This text of 235 Cal. App. 3d 1407 (Beasley v. Wells Fargo Bank) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Beasley v. Wells Fargo Bank, 235 Cal. App. 3d 1407, 1 Cal. Rptr. 2d 459, 91 Cal. Daily Op. Serv. 8998, 91 Daily Journal DAR 13951, 1991 Cal. App. LEXIS 1300 (Cal. Ct. App. 1991).

Opinion

Opinion

REARDON, J.

I. Introduction

This case is a companion to Beasley v. Wells Fargo Bank, A048490, ante, page 1383 [1 Cal.Rptr.2d 446], in which we affirm a $5,227,617 judgment in a class action which challenged Wells Fargo Bank’s assessment of fees against credit card customers who failed to make timely payments or exceeded their credit limits. In the present action we affirm a subsequent judgment requiring the bank to pay the plaintiffs their attorney fees, costs and expenses in the total sum of $1,958,509, based on California’s “private attorney general" statute. (Code Civ. Proc., § 1021.5.)

We hold as follows: (1) the award was not precluded by the fact the litigation resulted in a common fund recovery from which attorney fees could have been paid; (2) this consumer protection action was in the public interest for purposes of a private attorney general award; (3) the trial judge did not abuse his discretion in applying a lodestar multiplier to the fee award; and (4) expert witness fees and other nonrecoverable expenses may be awarded under the private attorney general statute.

II. Background

After judgment on the merits, the plaintiffs moved for an award of $1,133,570 in “lodestar” attorney fees with a 2.0 multiplier, $11,157 in recoverable costs (Code Civ. Proc., § 1033.5), $198,679 in expenses (primarily expert witness fees) that were nonrecoverable as ordinary costs (id., § 1033.5, subd. (b)), and $51,433 in additional attorney fees for preparing the fee request. The judge granted the motion, citing as alternative grounds for recovery the private attorney general statute (id., § 1021.5) and the reciprocal contractual attorney fees statute (Civ. Code, § 1717). The judge’s order on the motion deviated from the plaintiffs’ request in three respects: it applied a multiplier of 1.5 rather than 2.0 to the lodestar attorney fees (for an increased attorney fee award of $1,700,355) due to the plaintiffs’ partial lack of success on the merits, it awarded $196,997 rather than $198,679 in nonrecoverable expenses, and it awarded $50,000 rather than $51,433 for *1413 preparation of the fee request. The court rendered a judgment incorporating the order, and Wells Fargo filed a timely notice of appeal.

III. Discussion

A. Code of Civil Procedure Section 1021.5

Wells Fargo first challenges the award of attorney fees to the extent it was based on Code of Civil Procedure section 1021.5. 1 The private attorney general statute permits a fee award when the following criteria are met: (1) the action “has resulted in the enforcement of an important right affecting the public interest,” (2) “a significant benefit” has been “conferred on the general public or a large class of persons,” (3) “the necessity and financial burden of private enforcement are such as to make the award appropriate,” and (4) the fees “should not in the interest of justice be paid out of the recovery, if any.” (§ 1021.5; see Los Angeles Police Protective League v. City of Los Angeles (1986) 188 Cal.App.3d 1, 6 [232 Cal.Rptr. 697].) Wells Fargo contends the “financial burden,” “interest of justice” and “public interest” criteria are absent here.

1. The financial burden and interest of justice criteria.

Wells Fargo argues that in class action litigation that yields a common fund recovery, attorney fees should not be awarded under section 1021.5 because they may be paid from the common fund, 2 so that there is no financial burden from private enforcement beyond the usual American practice of requiring litigants to bear their own attorney fees, and hence the interests of justice do not preclude payment from the frind.

This is essentially an issue of first impression. There is only one published opinion on point, Bank of America v. Cory (1985) 164 Cal.App.3d 66 [210 Cal.Rptr. 351], upon which Wells Fargo places great reliance. The court in that case, however, dealt with the issue only summarily. The trial judge had awarded fees under both the common fund theory and section 1021.5. The appellate court modified the judgment to deduct the portion of the award based on section 1021.5, because “[t]hose benefiting from the recovery of the fund . . . must bear their share of the cost of litigation.” *1414 (164 Cal.App.3d at pp. 90-91.)The court provided no meaningful analysis of the underlying question, whether the provisions of section 1021.5 authorize a fee award despite the existence of a common fund. That task is left to us.

It is generally said that the financial burden criterion of section 1021.5 is satisfied when the cost of litigation is disproportionate to the plaintiff’s “individual” stake in the matter. (E.g., Baggett v. Gates (1982) 32 Cal.3d 128, 142 [185 Cal.Rptr. 232, 649 P.2d 874]; Woodland Hills Residents Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 941 [154 Cal.Rptr. 503, 593 P.2d 200]; Friends of “B” Street v. City of Hayward (1980) 106 Cal.App.3d 988, 994 [165 Cal.Rptr. 514].) Wells Fargo argues that in common fund class actions the cost of litigation should be compared to the entire common fund that is recovered, not merely to each plaintiff’s individual stake, because the common fund doctrine makes the entire fund available to pay attorney fees.

The problem with this argument is that although it is persuasive to the extent we should not limit our inquiry to each plaintiff’s individual stake, it is based on a fundamental misconception that the focal point is the common fund that is actually recovered. As amici curiae point out, in comparing the cost of litigation to the plaintiffs’ stake in the matter, we do not look at the plaintiffs’ actual recovery after trial, but instead we consider “the estimated value of the case at the time the vital litigation decisions were being made . . . .” (Los Angeles Police Protective League v. City of Los Angeles, supra, 188 Cal.App.3d at pp. 9-10, italics added.) In other words, the inquiry looks forward from the outset of counsel’s vital litigation decisions, rather than backward after judgment. This is because the purpose of section 1021.5 is to encourage public interest litigation by offering the “bounty” of a court-ordered fee (188 Cal.App.3d at p. 10), and the focus of that incentive is on the point in time when vital litigation decisions are being considered.

The opinion in Los Angeles Police Protective League prescribes a two-step process for determining the “estimated value” of the case. First, the court must determine the monetary value of the “gains actually attained” by the successful litigants.

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Bluebook (online)
235 Cal. App. 3d 1407, 1 Cal. Rptr. 2d 459, 91 Cal. Daily Op. Serv. 8998, 91 Daily Journal DAR 13951, 1991 Cal. App. LEXIS 1300, Counsel Stack Legal Research, https://law.counselstack.com/opinion/beasley-v-wells-fargo-bank-calctapp-1991.