Folsom v. Butte County Assn. of Governments

• Decision Date: 28 October 1982
• Docket Number: S.F. 24326
• Citation: 652 P.2d 437,32 Cal.3d 668,186 Cal.Rptr. 589
• Court: California Supreme Court
• Parties: , 652 P.2d 437 Martha FOLSOM et al., Plaintiffs and Respondents, v. BUTTE COUNTY ASSOCIATION OF GOVERNMENTS et al., Defendants and Appellants

Page 589

186 Cal.Rptr. 589

32 Cal.3d 668, 652 P.2d 437

Martha FOLSOM et al., Plaintiffs and Respondents, v. BUTTE COUNTY ASSOCIATION OF GOVERNMENTS et al., Defendants and Appellants.

S.F. 24326.

Oct. 28, 1982.

Daniel V. Blackstock, County Counsel, Delbert Siemsen, Acting County Counsel, Leonard & Lyde and Gerald Hermansen, Oroville, for defendants and appellants.

Daniel L. Siegel, Alan Lieberman, Michael R. Bush, Andrew T. Holcombe, Chico, Roberta Ranstrom, Sacramento, and Martin H. Flam, Yuba City, for plaintiffs and respondents.

NEWMAN, Justice.

In a settlement agreement silent as to costs and attorney fees, plaintiffs promised to dismiss their action, with prejudice, on substantial performance of defendants' promise to establish four transit systems. Our central question is whether that agreement operates as a merger and bar of all preexisting claims, depriving the trial court of jurisdiction to award costs and statutory attorney fees. (Code Civ.Proc., §§ 1032, 1021.5.) ¹

If the agreement is not a bar, we must decide whether, under section 1021.5, (1) fees may be awarded to legal services groups funded primarily by public monies, and (2) a litigant who settles may be a "successful party."

We conclude that an agreement silent as to costs and fees does not create a bar to either a cost bill or a motion pursuant to section 1021.5. We also conclude that the fee award here was proper, that an award may be made under section 1021.5 to a legal services group funded primarily by public monies, and that a claimant settling a lawsuit may be a "successful party" within the meaning of the section if the underlying action contributed substantially to remedying conditions at which it was directed.

Plaintiffs are resident taxpayers of Butte County who aver they are elderly, disabled, of limited means and, hence, transit-dependent. They sought declaratory and injunctive relief against county allocations to street and road projects of funds collected under the Transportation Development Act of 1971 (Act). (Gov. Code, §§ 29530-29536; Pub.Util. Code, §§ 99200-99407 [also known as the Mills-Alquist/Deddeh Act].) ² The Act was based on legislative findings that "public transportation systems provide an essential public service" and should be so designed and operated "as not to deprive the elderly, the handicapped, the youth, and the citizens of limited means of the ability to freely utilize" them. (PUB.UTIL. CODE, § 99220. )³ The Legislature further found "[i]t ... in the interest of the state that funds available for transit development be fully expended to meet the transit needs that exist in California." (§ 99222.) ⁴ Under the Act counties are authorized to contract with the Board of Equalization to increase taxes on motor vehicle fuel by 1 percent and to deposit that increment in a local fund for allocation by a local transportation planning agency for purposes set forth in the Act.

Under implementing regulations (Cal.Admin. Code, tit. 21, §§ 6600-6680) the local agency may not allocate funds collected under the Act (TDA funds) to local streets and roads until it has held a hearing, on 10 days' public notice, and determined in a public record that there are "no unmet public transportation needs" within the jurisdiction. (Cal.Admin.Code, tit. 21, § 6658.) "The determination of no unmet transit needs which can reasonably be met must make specific reference to the efforts undertaken in the development of the Regional Transportation Plan to identify the public transportation needs of the transit dependent, especially the elderly, handicapped and poor ...." (Ibid.)

Since 1972, TDA funds have been collected and allocated by the Butte County Association of Governments (BCAG). ⁵ In November 1978 BCAG adopted resolutions stating that no unmet public transit needs existed in Biggs (Resolution 78-2), Gridley (78-3), Oroville (78-4), Chico (78-5), or Butte County (78-6) and, accordingly, allocating all available TDA funds to street and road projects. Thus the request of the Chico City Council that $140,400 be allocated to an intra-city system in Chico was rejected.

Plaintiffs filed their action on December 5, 1978, seeking relief against BCAG, the Cities of Gridley, Oroville, and Biggs, Butte County, and the county auditor-controller as trustee of the county's TDA funds (Local Defendants), as well as against the state officials responsible for administering the Act, viz., the Secretary of the Business and Transportation Agency and the Director of the Department of Transportation (State Defendants). Plaintiffs averred that BCAG's allocations for fiscal 1973-1974 through 1978-1979 were invalid for failure to identify unmet transit needs and to comply with section 6658 of the regulations. They sought to enjoin further allocations and to rescind unexpended allocations to street and road projects until "such time as an adequate public transportation system is operating which reasonably meets the public transit needs in the incorporated and unincorporated areas of Butte County." They also sought an order that BCAG approve the request of the Chico City Council and that State Defendants establish a system whereby local-agency allocation decisions would be reviewed. The prayer included a request for costs and statutory attorney fees.

All defendants answered except the county auditor-controller, who informed county counsel by memo of December 18, 1978, that he deemed his involvement purely ministerial and hence intended to neither answer nor demur. The memo stated that "sufficient cause [appeared] for the complaint" and that the controller intended not to release "any TDA ... monies to any entity for any purpose, unless so ordered by a court of competent jurisdiction during the remainder of [his] term of office." (Italics in original.) ⁶ The parties stipulate that the effect of this decision was to freeze approximately $3 million in TDA funds.

In June 1979 BCAG rescinded all prior allocations for street and road purposes, and Local Defendants moved for partial summary judgment on two principal grounds: ⁷ (a) that relief for years prior to 1978-1979 should be denied for mootness because those allocations had been rescinded and restored to the fund, and (b) that section 6658 of title 21 of the California Administrative Code was invalid as having been in excess of the authority of the Secretary of the Business and Transportation Agency to promulgate. State Defendants objected to the motion alleging inter alia that rescission of prior years' allocations violated both section 6648 and section 6659 of the regulations. ⁸

After a hearing on July 6, 1979, the trial court granted the motion in an order entered November 1, 1979, which struck all averments relating to the regularity or adequacy of prior TDA allocations on condition that BCAG (1) rescind all outstanding allocations from the local fund, (2) refrain from encumbering or expending funds not encumbered on July 6, 1979, until such time as there were further allocations, and (3) preface 1979-1980 allocations with a survey of unmet needs "as required by the statutes and the regulations." The court thus denied the motion insofar as it was based on alleged lack of authority of the Secretary to adopt section 6658 and expressly found such regulation valid. The court also retained jurisdiction "until the allocations have been made to assure that they have been made in accordance with the plan, the statutes, and the regulations" and accorded leave to plaintiffs to amend their complaint "to allege irregularities in the ultimate allocations."

The settlement agreement was filed on January 7, 1980. Its stated purpose was "to settle plaintiffs' claim regarding the alleged improper allocations of ltf [local transportation fund] monies between 1974 and 1978, and any claims regarding the legality of ltf allocations made for fiscal year 1979-1980." In consideration for Local Defendants' promise to establish four new transit systems ⁹ plaintiffs promised to (1) inform the county auditor and fiscal officers of Oroville, Gridley, and Biggs that "all funds frozen as a result of this lawsuit may be immediately released without challenge from plaintiffs" and (2) "file with the Court a dismissal of Local Defendants, with prejudice, within one week of the date that the last new transit system has initiated service as defined in p 10 below." Paragraph 10 provided that "[a] new transit system shall be deemed to have initiated service when service has been established on all routes and within the hours of service as provided [elsewhere in the agreement]."

On January 17, 1980, plaintiffs filed a cost bill and also a motion for attorney fees under section 1021.5. Defendants opposed both, on grounds urged in this appeal. On April 18, 1980, the court ruled that plaintiffs were entitled to an award of fees and pronounced them " 'successful parties', inter alia, by virtue of the condition in the Court's order of November 1, 1979, to the effect that the Butte County Association of Governments rescind all remaining outstanding allocations of money from the local transportation fund. This obviously became at least one of the bases for B.C.A.G.'s further action in meeting the transportation needs of Butte County." ¹⁰

After proceedings on computation the court on August 1, 1980, awarded fees of $35,257.50 ¹¹ and costs, as requested, of $2,068. The order declared that "this action has resulted in the enforcement of an important right affecting the public interest in that, inter alia, public transit funds have been allocated to meet public transit needs in Butte County; that a significant benefit has been conferred on both a large class of persons and on the general public; [and] that the necessity and financial burden of private enforcement are such as to make this award of attorney's fees appropriate." ¹² Defendants appeal. ^*

I

Defendants contend the agreement operated as a merger and bar of all...