Serrano v. Priest

Decision Date27 April 1982
Citation182 Cal.Rptr. 387,131 Cal.App.3d 188
CourtCalifornia Court of Appeals Court of Appeals
Parties, 3 Ed. Law Rep. 1047 John SERRANO, Jr., et al., Plaintiffs, Respondents and Cross-Appellants, v. Ivy Baker PRIEST, et al., Defendants, Appellants and Cross-Appellees. Civ. 62552.

Richard A. Rothschild, Western Center on Law & Poverty, Inc., Sidney M. Wolinsky, Public Advocates, Inc., Fred H. Altshuler, Altshuler & Berzon, San Francisco, for plaintiffs, respondents and cross-appellants.

George Deukmejian, Atty. Gen., Richard D. Martland, Asst. Atty. Gen., Jeffrey J. Fuller and John J. Klee, Jr., Deputy Attys. Gen., for defendants, appellants and cross-appellees.

STEPHENS, Acting Presiding Justice.

The present appeal--the fifth in this protracted proceeding--stems from the repeated efforts of plaintiffs' counsel to enforce a trial court judgment awarding them attorneys' fees. The trial court filed its initial order on August 1, 1975, directing the various state defendants to pay $400,000 each to Public Advocates, Inc. ("Public Advocates") and the Western Center on Law and Poverty, Inc. ("Western Center"), counsel for plaintiffs and respondents throughout this landmark litigation. The attorneys' fee award followed plaintiffs' constitutional challenge to public school financing in this state. In Serrano v. Priest (1976) 18 Cal.3d 728, 135 Cal.Rptr. 345, 557 P.2d 929 ("Serrano II "), the Supreme Court affirmed the Los Angeles County Superior Court judgment, entered on September 3, 1974, which held that the California public school financing system violated state constitutional provisions guaranteeing equal protection of the laws.

Defendants Unruh (then and presently the State Treasurer), Riles (then and presently the State Superintendent of Public Instruction), and Cory (then and presently the State Controller) appealed from the August 1975 order for attorneys' fees. In Serrano v. Priest (1977) 20 Cal.3d 25, 141 Cal.Rptr. 315, 569 P.2d 1303 ("Serrano III "), the Supreme Court affirmed the $800,000 fee award to Public Advocates and Western Center. The Supreme Court held that "the trial court acted within the proper limits of its inherent equitable powers" in awarding fees to plaintiffs' attorneys on the "private attorney general" theory. (Id., at p. 47, 141 Cal.Rptr. 315, 569 P.2d 1303.) The majority opinion declared that the efforts of plaintiffs' attorneys in the Serrano II litigation protected rights grounded in the state Constitution to the benefit of a large number of people. (Id., at pp. 46-47, 141 Cal.Rptr. 315, 569 P.2d 1303.) The Supreme Court concluded that the burden of presenting the successful constitutional claims qualified the $800,000 fee award under the equitable "private attorney general" doctrine. (Id., at pp. 48-49, 141 Cal.Rptr. 315, 569 P.2d 1303.) 1

The state defendants have not yet paid the amount due under the judgment despite the finality of the judicial ruling. After unsuccessful attempts to obtain voluntary payment of the August 1975 award, Public Advocates and Western Center moved the trial court for an order directing defendants to satisfy the earlier judgment. 2 On February 22, 1980, the trial court granted the motion and entered the order at issue in this appeal. The order, inter alia, directs the State Controller to pay $800,000 plus interest from funds appropriated by the Legislature for the "operating expenses and equipment" of the Department of Education, Superintendent of Public Instruction, and State Board of Education, "including the funds appropriated pursuant to Item 307(b) of the Budget Act of 1979...." 3 The trial court also ordered the state defendants to set aside sufficient funds from the 1979-80 "operating expenses and equipment" appropriation for the Department of Education to satisfy the August 1975 judgment with interest. 4

Defendants Riles and Cory appealed from the February 1980 order. On May 8, 1980, the Supreme Court stayed that portion of the trial court order requiring defendants to set aside funds for the satisfaction of the attorneys' fee award. Item 307(b) of the 1979-80 Budget Act appropriated $51,717,921 for the "[o]perating expenses and equipment" of the Department of Education, Superintendent of Public Instruction, and State Board of Education. (Stats.1979, ch. 259, § 2, item 307(b), p. 678.) Nearly all of those funds, however, were either disbursed or earmarked for the payment of departmental contracts by June 30, 1981. 5 With the Supreme Court's stay of the "set aside" order, the "unencumbered balance" currently remaining from item 307(b), if any, is clearly insufficient to satisfy the judgment herein.

On June 18, 1981, the Supreme Court filed its opinion in Mandel v. Myers (1981) 29 Cal.3d 531, 174 Cal.Rptr. 841, 629 P.2d 935. The plaintiff in Mandel was an employee in the Department of Health Services. In an earlier lawsuit, she successfully challenged the constitutionality of the department's practice which afforded state employees "paid time off" on Good Friday. The trial court included in the judgment an attorneys' fee award of $25,000. After repeated efforts to obtain payment of this sum failed, plaintiff secured a trial court order directing the Controller to pay $25,000 plus interest from funds appropriated in the 1978-79 Budget Act for the "operating expenses and equipment" of the Department of Health Services. (Id., at pp. 537-539, 174 Cal.Rptr. 841, 629 P.2d 935; see Stats.1978, ch. 359, § 2, item 244(b), p. 817.) In affirming the payment order, the Supreme Court held that the department's "operating expense appropriation," as defined by the 1978-79 Budget Act, was sufficiently broad to encompass court-awarded attorney fees. (Mandel, supra, at pp. 542-545, 174 Cal.Rptr. 841, 629 P.2d 935.)

Shortly after the Mandel decision was rendered, Public Advocates and Western Center moved this court to dismiss defendants' appeal and summarily affirm the payment order at issue herein. The public interest law firms asserted that defendants' appeal was "wholly without merit" since Mandel established the propriety of applying the instant order against item 307(b) of the 1979-80 Budget Act, as well as "subsequent operating expense appropriations." In their response to the preceding motion, the state defendants conceded that Mandel made the February 1980 order applicable against item 307(b). But defendants indicated the "unencumbered balance" in that support appropriation was insufficient to satisfy the attorneys' fee award. And defendants argued that Mandel did not resolve the issue of applying the February 1980 order to "operating expense appropriations" for the Department of Education in years subsequent to 1979-80.

On August 13, 1981, this court approved a stipulation and order which disposed of respondents' motion to dismiss the present appeal. Pursuant to the parties' agreement, we summarily affirmed the trial court's order to the extent that it directed payment of the attorneys' fee award from the 1979-80 "operating expenses and equipment" appropriation for the Department of Education. The "set aside" order stayed by the Supreme Court was vacated as moot. 6 In accordance with the August 1981 directive, only two issues remain for this court's resolution: (1) whether the February 1980 payment order was intended to apply to "operating expenses and equipment" appropriations for the Department of Education in budget years subsequent to 1979-80; and (2) whether the payment order may properly be applied to the department's subsequent "operating expense appropriations" in light of restrictive provisions inserted in the 1980-81 and 1981-82 Budget Acts.

Public Advocates and Western Center contend that the language in the February 1980 order demonstrates the trial court's intent to apply the directive to budget years following 1979-80. Respondents point to the first paragraph of the order directing payment of the attorneys' fee award from funds appropriated for the "operating expenses and equipment" of the Department of Education, "including the funds appropriated pursuant to [i]tem 307(b) of the Budget Act of 1979...." (Ante, fn. 3, italics added.) The public interest law firms also indicate that the paragraphs of the order addressed to the Controller and Treasurer are stated without restriction to a particular budget year. Conversely, respondents state that the "set aside" order expressly named the 1979-80 "operating expense appropriation" merely to facilitate the collection of the judgment. (Ante, fn. 4.)

By its very terms, respondents argue that the payment order "includes" item 307(b), but is not limited to the 1979-80 support appropriation. According to Public Advocates and Western Center, the variation in language between the payment order and "set aside" provision shows that where the trial court intended to limit its order to a particular budget year such intent was clearly stated. Respondents submitted the Mandel order as a reference for the trial judge in this case. (See Mandel, supra, 29 Cal.3d 531, 539, fn. 3, 174 Cal.Rptr. 841, 629 P.2d 935.) While the Mandel order was expressly directed to a line-item appropriation in a single budget act, respondents assert that the lower court did not confine the instant order to a particular budget year. Public Advocates and Western Center conclude that when the order was entered in this case, the trial court had "ample basis for presuming" that the Legislature would continue annual appropriations for the Department of Education's "operating expenses and equipment."

Article XVI, section 7 of the California Constitution provides: "Money may be drawn from the Treasury only through an appropriation made by law and upon a Controller's duly drawn warrant." Similarly, Government Code section 12440 states, in pertinent part: "[A] warrant shall not be drawn unless authorized by law, and unless unexhausted specific appropriations provided by law are available to meet it."...

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