Case Summary: Plaintiff is a board member of a non-profit organization (“NPO”) operated by the City of Irvine, California. The NPO had to elect a new CEO. Defendant issued a nation wide inquiry for a new CEO, receiving 150 applications. Of the 150 applications, defendant hired a recruiting agency whom narrowed the list to 12 candidates and interviewed five. Of the five, one person obtained an interview with the directors.
The person eventually turned down the position. Plaintiff later learned that the candidate, along with the previous CEO had conflicts of interest and personal relationships with other directors. Upon learning this, plaintiff requested to review all 150 applications. The board refused. Plaintiff then filed a writ of mandate under California Corporation Code Section 6334 and California Code of Civil Procedure Section 1085 to demand defendant release the documents. Defendant demurred.
The day before the hearing, parties entered into a settlement agreement whereby plaintiff could review the applications behind closed doors. After reviewing the documents, plaintiff filed for attorney fees under California Code of Civil Procedure Sections 1021.5 and California Corporation Code Section 6337. The lower court denied the request stating it did not believe either party clearly prevailed nor did the public benefit from the release of the information. Plaintiff appealed.
The appellate court took up the issue as to whether or not Plaintiff did prevail and whether or not the outcome provided a vast public benefit.
Section 1021.5 states that a prevailing party may recover attorney’s fee where 1) the result effect the public interest, 2) the general public received a significant benefit, 3) the financial burden of the private enforcement makes the award appropriate, 4) and the interest of justice dictates the fee should not be paid out of the recovery. Cal. Civ. Pro. Code §1021.5.
The first test requires a determination as to whether or not plaintiff prevailed. The lower court argued that since there was no official judgment, it could not determine the prevailing party. A prevailing party, however, does not need to meet a traditional standard. Instead, “the critical fact is the impact of the action, not the manner of resolution. If the impact has been the enforcement of an important right affecting the public interest and as a consequence of a significant benefit on the general public or a large class of persons a Section 1021.5 award is not barred because the case was won on a preliminary issue or because it was settled before trial. (County of Colusa v. California Wildlife Conservation Bd. (2006) 145 Cal.App.4th 637, 649.)
In this matter, defendant sought to deny plaintiff access to the applications. Only upon filing the writ of mandate, did defendant, after filing a demurer, settle the matter by allowing access to the documents. Where plaintiff filed the writ to obtain the documents and the filing resulted in plaintiff getting the requested documents, regardless of a judgment by the court, plaintiff did prevail.
Next, upon plaintiff prevailing, the appellate court must determine whether or not the public, or large class of persons, received a significant benefit. A court, “should generally realistically assess the significance of that right in terms of its relationship to the achievement of fundamental legislative goals.” (Woodland Hills Residents Assn., Inc. v. Cit Council (1979) 23 Cal.3d 917, 936.) The benefit need not be actual or concrete and the effecutation of a statute or a constitutional purpose may suffice. (Braude v. Automobile Club of Southern California (1986) 178 Cal.App.3d 994, 1011.) An impact on the public interest requires an impact on others besides the people involved. Id. The court must decide the significance or social importance of the rights involved. Id.
Plaintiff’s action helped protect the NPO and the City of Irvine from the improper dealings of the other directors. As a director, plaintiff also complied in his duty of proper governance in selecting a new CEO. Because the plaintiff actively sought to protect his interest and also help protect the interest of the NPO and city, he met the necessary requirements.
The third and fourth tests require the payment of fees be just. Here, plaintiff did not seek monetary relief and the action would not have been brought otherwise. Therefore, payment of fees is appropriate.
The appellate court can only over turn the decision upon a finding of prejudicial abuse of discretion. The lower court’s discretion is not unlimited, and the appellate court may reverse where no reasonable basis for the action exists. (Baggett v. Gates (1982) 32 Cal.3d 128, 143.) Further, the lower court ma not rule “where no reasonable basis for the action is shown.” Wal-Mart Real Estate Business Trust v. City Council of City of San Marcos (2005) 132 Cal.App.4th 614, 620.)
Plaintiff appropriately filed the writ of mandate and successfully obtained the desired result. Upon meeting all of the criteria of California Code of Civil Procedure Section 1021.5, plaintiff was entitled to attorney’s fees and costs. Because the lower court failed to justify its refusal to award the fees and costs, it abused its discretion. The appellate court, therefore, overturned the lower court and ordered the lower court to assess fair attorney fees and costs paid to plaintiff.