Peretz v. Legal Aid Foundation of L. A., BV 024997.
| Citation | 122 Cal.App.4th Supp. 1,18 Cal.Rptr.3d 863 |
| Decision Date | 04 August 2004 |
| Docket Number | No. BV 024997.,BV 024997. |
| Court | United States Superior Court (California) |
| Parties | Avi PERETZ, Plaintiff and Appellant, v. LEGAL AID FOUNDATION OF LOS ANGELES, Defendant and Respondent. |
Law Office of Allen R. King, Los Angeles, for Plaintiff and Appellant.
Legal Aid Foundation of Los Angeles, Cesar Noriega, Los Angeles, and Kenyon R. Dobberteen, for Defendant and Respondent.
Plaintiff and appellant Avi Peretz (Peretz) appeals from the trial court's order awarding attorney fees to defendant Kenneth Bernard (Bernard).1
On April 21, 2003, Peretz filed a complaint in unlawful detainer against Bernard. According to the record, Peretz, as landlord, and Bernard, as tenant, entered into a lease agreement on February 1, 2002, for the lease of an apartment for $318.27 per month. Bernard allegedly failed to pay the rent when it was due, was served with a three-day notice to pay rent or quit, and failed to vacate following the expiration of the three-day period. Attorney fees were requested in the complaint.
On April 29, 2003, Bernard filed a general denial. On May 1, 2003, the Legal Aid Foundation of Los Angeles (LAFLA) became the attorney of record for Bernard.
A court trial took place on May 16, 2003. The trial court entered judgment for Bernard after concluding that payment was made in accordance with the lease.
On June 16, 2003, Bernard filed a motion for attorney fees pursuant to his lease. Peretz argued in his opposition that because LAFLA is funded by the Legal Services Corporation (LSC), it is precluded under federal law from receiving the requested award.
On July 11, 2003, the trial court granted Bernard's motion for attorney fees and awarded fees in the amount of $1,860. Peretz filed a timely notice of appeal on July 23, 2003. LAFLA was assigned defendant's rights in the judgment and has been designated the respondent on this appeal. This appeal is directed solely to the validity of the award of attorney fees.
Peretz argues that California Civil Code section 1717—which he concedes permits the award of the attorney fees—is preempted by federal law. He primarily relies upon an LSC-promulgated regulation, 45 Code of Federal Regulations (hereafter Regulation) part 1642.3 (2003), which provides in relevant part: "[N]o recipient [of LSC funding] or employee of a recipient may claim, or collect and retain attorneys' fees in any case undertaken on behalf of a client of the recipient." Attorney fees are defined as "an award to compensate an attorney of the prevailing party made pursuant to common law or Federal or State law permitting or requiring the awarding of such fees...." (Reg. § 1642.2(a) (2003).)
LAFLA concedes that it is a "recipient" of LSC funds but urges that Regulation part 1642.3 does not pertain to a contractually created right to attorney fees, and applies only to claims created by substantive statute or by common law doctrine. LAFLA argues that LSC agrees with its interpretation of the Regulation, citing a November 26, 1997, letter from LSC staff to the San Francisco Neighborhood Legal Assistance Foundation. LAFLA also urges that this court lacks authority to take cognizance of the defense to attorney fees asserted. It points to federal law, which it says so dictates, and to its supremacy over any contrary California law under article VI, section 1, clause 2, of the United States Constitution, commonly referred to as the supremacy clause.
LSC is a nonprofit corporation created by the Legal Services Corporation Act of 1974 (the Act) (Pub L. No. 93-355 (July 25, 1974) 88 Stat. 378 (codified as amended in 42 U.S.C. § 2996 et seq.)). It administers grants to local organizations—such as LAFLA—that provide free legal assistance to indigents in noncriminal matters. (See Act § 1006(A) et seq; 42 U.S.C. § 2996b(a).) While LSC is not a federal agency, it has many agency-like powers and is generally treated by courts as akin to one. It is authorized to adopt regulations to implement the Act. (See generally Texas Rural Legal Aid v. Legal Services Corp. (D.C.Cir.1991) 940 F.2d 685, 689-690.)
Three fundamental principles guide our analysis: (1) the supremacy clause of the United States Constitution requires state law to yield to contrary federal statutes and regulations where Congress or the administrative agency expressly or impliedly intended that result; (2) an administrative agency's interpretation of its governing law and its own regulations is generally given great weight by courts; and (3) courts will not enforce a contract that sanctions illegality. (See Beneficial Nat. Bank v. Anderson (2003) 539 U.S. 1, 9-10, 123 S.Ct. 2058, 156 L.Ed.2d 1.)
Enforcement of the terms of the Act and regulations promulgated thereunder is vested in LSC. (42 U.S.C. § 2996e.) The statutory and regulatory scheme is one of oversight; LSC oversees grant recipients and disciplines their improper use of funds, and Congress oversees LSC. (Grassley v. Legal Services Corp. (S.D.Iowa 1982) 535 F.Supp. 818, 824 [analyzing congressional intent].) LSC has created a means by which alleged violations of the Act or its regulations can be brought to its attention by interested persons and a means by which it can take disciplinary action against an offending recipient. (Reg. §§ 1618.3, 1618.5 (2003).) Violation of the Regulation can result in termination of financial support from LSC. (Reg. § 1618.5 (2003).)
LSC's jurisdiction to enforce the Act and its regulations is exclusive. The Act and LSC regulations do not create a private right of action. Nor do they create an obligation enforceable against a grant recipient in private litigation. ].)
It warrants emphasis that the mere fact that a statute or regulation exists does not create a claim or defense, or the right to assert a claim or defense in a particular forum. "`Statutory rights and obligations are established by Congress, and it is entirely appropriate for Congress, in creating these rights and obligations, to determine in addition who may enforce them and in what manner.'" (Grassley v. Legal Services Corp., supra, 535 F.Supp. at p. 827; see also Southern Pac. Transp. Co. v. Commercial Metals Co. (1982) 456 U.S. 336, 344-345, 102 S.Ct. 1815, 72 L.Ed.2d 114 [].)
No intent to permit private enforcement by affirmative claim or defense (here, a "defense" to a motion) appears in the language or history of the Act, or LSC regulations. Their language and history reveal an intent for the LSC to oversee use of grant money, not creation of third party rights.2 (Grassley v. Legal Services Corporation, supra, 535 F.Supp. at pp. 826-827.)
45 Code of Federal Regulations part 1618.1 (2003) explains that the intent was not to create a defense: "In order to insure uniform and consistent interpretation and application of the Act, and to prevent a question of whether the Act has been violated from becoming an ancillary issue in any case undertaken by a recipient, this part establishes a systematic procedure for enforcing compliance with the Act." (Italics added.)3
In short, while the Regulation undoubtedly has an in terrorem effect on the exercise of the ability to claim attorney fees, its violation can be redressed only by LSC, and only pursuant to the disciplinary scheme created by its regulations. Congressional and regulatory history dictate that the Regulation not be used by a court to provide a defense to a motion for attorney fees. Peretz's sole remedy is to complain to LSC about LAFLA's alleged violation of the Regulation....
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