Children & Families Comm'n of Fresno Cnty. v. Brown

• Decision Date: 22 July 2014
• Docket Number: F066233
• Citation: 174 Cal.Rptr.3d 874,228 Cal.App.4th 45
• Court: California Court of Appeals Court of Appeals
• Parties: CHILDREN AND FAMILIES COMMISSION OF FRESNO COUNTY, et al., Plaintiffs and Appellants, v. Edmund G. BROWN, Jr., as Governor, etc., et al., Defendants and Respondents.

228 Cal.App.4th 45

174 Cal.Rptr.3d 874

CHILDREN AND FAMILIES COMMISSION OF FRESNO COUNTY, et al., Plaintiffs and Appellants,

v.Edmund G. BROWN, Jr., as Governor, etc., et al., Defendants and Respondents.

F066233

Court of Appeal,

Fifth District, California.

Filed July 22, 2014

See 7 Witkin, Cal. Procedure (5th ed. 2008) Judgment, § 256 et seq.

APPEAL from an order of the Superior Court of Fresno County. Debra J. Kazanjian, Judge. (Super. Ct. No. 11CECG01077)

Law Offices of Richard M. Pearl and Richard M. Pearl, Berkeley; Baker Manock & Jensen, Fresno, Kenneth J. Price, Robert D. Wilkinson, and Amanda M. Neal, for Plaintiffs and Appellants.

Kamala D. Harris, Attorney General, Douglas J. Woods, Senior Assistant Attorney General, Mark R. Beckington and Seth E. Goldstein, Deputy Attorneys General, for Defendants and Respondents.

OPINION

Gomes, Acting P.J.

Plaintiffs Children and Families Commission of Fresno County (Fresno Commission), Madera County Children and Families Commission (Madera Commission), First 5 Merced County (Merced Commission), First 5 Solano Children and Families Commission (Solano Commission) and Kendra Rogers (collectively the Commissions), appeal from a postjudgment order denying their motion for attorney fees sought under the private attorney general doctrine. ( Code Civ. Proc., § 1021.5) ¹ We conclude section 1021.5 does not apply because, as the trial court correctly determined, the financial burden of this litigation was not out of proportion to the Commissions' pecuniary stakes in the proceedings. We therefore affirm the order denying attorney fees.

FACTUAL AND PROCEDURAL BACKGROUND

In November 1998, California voters adopted Proposition 10, the California Children and Families First Act of 1998. (Prop. 10, § 5, adopted Nov. 3, 1998; Health & Saf. Code, § 130100, subd. (c); hereafter Prop 10 or the Act.) Prop 10 created a program to promote, support and improve “the early development of children from the prenatal stage to five years of age [,]” “through the establishment, institution, and coordination of appropriate standards, resources, and integrated and comprehensive programs emphasizing community awareness, education, nurturing, child care, social services, health care, and research.” (Health & Saf. Code, § 130100.)

To pay for these programs, Prop 10 imposes a surtax on cigarettes and tobacco products, which is deposited into the California Children and Families Trust Fund (the Trust Fund) in the State Treasury. (Health & Saf. Code, § 130105, subd. (a); Rev. & Tax. Code, §§ 30131, 30131.2.) Prop 10 also established a new state commission, known as the California Children and Families Commission (the state commission), and authorized each county to establish a county children and families commission. (Health & Saf. Code, §§ 130110, 130140, subd. (a)(1)(A).) The state and county commissions administer the programs authorized by the Act. (Health & Saf. Code, § 130100, subd. (b).)

The Trust Fund moneys are allocated and appropriated as follows: (1) 20 percent to separate accounts of the state commission; and (2) 80 percent to county commissions, which are deposited into local trust funds administered by each county commission. (Health & Saf. Code, § 130105, subd. (d).) Moneys in the local trust funds are to be “expended only for the purposes authorized by this [A]ct and in accordance with the county strategic plan approved by each county commission.” (Health & Saf. Code, § 130105, subd. (d)(2)(A).)

Prop 10 provides that moneys raised pursuant to the cigarette and tobacco taxes “shall be appropriated and expended only for the purposes expressed in [the Act], and shall be used only to supplement existing levels of service and not to fund existing levels of service. No moneys in the [ ] Trust Fund shall be used to supplant state or local General Fund money for any purpose.” (Rev. & Tax. Code, § 30131.4.) The Act authorizes the Legislature to amend its provisions by a two-thirds vote of both houses and provides that all amendments “shall be to further the [A]ct and must be consistent with its purposes.” (Stats. 1998, Proposition 10, § 8.)

In March 2011, Assembly Bill No. 99 (AB 99) was approved by more than two-thirds of each house of the Legislature and signed by the Governor. AB 99 was enacted because of California's “severe fiscal crisis, which has resulted in funding shortfalls for many services at the state and local levels. Health and human services programs that serve children are among the most seriously affected by this lack of funding.” (Stats. 2011, ch. 4 (AB 99), § 1(a).) The Legislature found that funding shortfalls had forced counties to eliminate essential health and human services to children that had been paid for with state funds, and while many county commissions maintained substantial balances in their Prop 10 trust funds, they were unable to use the money to make up the shortfall due to the Act's prohibition against supplanting existing service levels. (Stats. 2011, ch. 4 (AB 99), § 1(d).) ²

To solve this problem, AB 99 authorized the transfer of a specified amount of funding from the state and county trust funds. AB 99 added three Health and Safety Code sections: (1) section 130156, which established the Children and Families Health and Human Services Fund (Human Services Fund) in the State Treasury which was to be used “upon appropriation by the Legislature, to provide health and human services, including, but not limited to, direct health care services, to children from birth through five years of age”; (2) section 130157, which directed that $50 million be transferred from the state commission's accounts to the Human Services Fund; and (3) section 130158, which directed that $950 million from the combined balances of all the county commissions' trust funds be transferred to the Human Services Fund. The Legislature asserted this transfer did not supplant existing levels of service because the services were no longer being funded and that requiring Prop 10 funds to be used in this manner would help counties achieve the Act's “overall objective of promoting, supporting, and optimizing early childhood development.” (Stats. 2011, ch. 4 (AB 99), § 1(g).)

Each non-exempt county commission was supposed to remit 50 percent of its county commission funding for deposit into the Human Services Fund by June 30, 2012. (Health & Saf. Code, § 130158, subd. (c)(2).) ³ These remissions were not to cause any county commission's fund balance to fall below the amount the county commission received from the Trust Fund in the 2009–10 fiscal year. ( Health & Saf. Code, § 130158, subd. (c)(3).) To the extent the total remitted by all county commissions exceeded $950 million, the excess was to have been proportionally returned to all contributing county commissions. ( Health & Saf. Code, § 130158, subd. (c)(5).)

On April 5, 2011, the Fresno, Madera and Merced Commissions, as well as taxpayer Kendra Rogers, filed a petition for writ of mandate in Fresno County Superior Court, naming Governor Edmund G. Brown, Jr., California State Controller John Chiang, and California Director of Finance Ana J. Matosantos as defendants (collectively the state officials). The Commissions alleged the Legislature exceeded its authority in enacting AB 99, asserting the measure interfered with local control of commission funds, violated Prop 10's prohibition on using those funds to supplant existing services, and threatened to allow expenditures for services to all age groups, rather than children to age five and their families. The Commissions sought a writ of mandate prohibiting the state officials from implementing or complying with AB 99; they also asked for declaratory and injunctive relief, as well as attorney fees pursuant to section 1021.5.

Pursuant to a stipulation, the Solano Commission joined the initial three commissions in prosecuting the action. Six other county commissions filed similar suits throughout the state. All of these cases eventually were consolidated in Fresno County.

Governor Brown's initial budget proposal in January 2011 called for using $1 billion of the more than $2 billion held in the state and county commissions trust funds to fund Medi–Cal services for children through age five to allow continued funding of core programs providing early childhood health services, subject to voter approval. This approach changed in the May Revision to the 2011–12 budget which increased funding to the Health and Human Service Agency by $1 billion in light of the legal challenges brought against the state's use of Prop 10 funding for the Medi–Cal program. While the May Revision noted the state would continue to defend the legal challenges, the Administration elected to take a conservative approach and restore the General Fund costs. The 2011–12 budget the Governor signed on June 30, 2011 did not include the transfer of the Prop 10 funds for use by the Health and Human Services Agency.

On November 21, 2011, after briefing by the parties and argument, the trial court issued its order on the petition. The issue before the court was whether AB 99 was a valid amendment to Prop 10, which turned on whether AB 99 furthered Prop 10's purposes. The court rejected the state officials' assertion that the undisputed purpose of Prop 10 was funding programs for preschool children, finding instead that Prop 10 was intended to “ ‘emphasize local decision-making’ and ‘provide for greater local flexibility in designing delivery systems.’ ” The court determined the purposes of the two laws were conflicting: while Prop 10 “clearly requires” local experts and community representatives to decide how the 80% funds are to be spent, AB 99 “clearly divests” the county commissions of that authority and vests it in the Legislature. As the court explained, “[t]o claim that transferring decision-making from local communities to the state legislature is ‘consistent with’ Prop 10 is like asking the court to find...