Filed 9/2/14 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

FRANK CUTLER,
Plaintiff and Appellant,

v.
FRANCHISE TAX BOARD,
Defendant and Respondent. B248270
(Los Angeles County Super. Ct. No. BC421864)

APPEAL from a judgment of the Superi or Court for the County of Los Angeles. Elizabeth A. White, Judge. Reversed and remanded.

Reed Smith, Mardiros H. Dakessian, Marg aret M. Grignon, Zareh A. Jaltorossian and Kasey J. Curtis for Plaintiff and Appellant.

Kamala D. Harris, Attorney General, Paul D. Gifford, Assistant Attorney General, W. Dean Freeman, Diane Spence r Shaw and Marta L. Smith, De puty Attorneys General, for Defendant and Respondent.

___________________ _________________2 SUMMARY In 2012, we held in an earlier appeal in this case that a tax statute discriminated on
its face on the basis of an interstate elem ent in violation of the commerce clause. ( Cutler
v. Franchise Tax Board (2012) 208 Cal.App.4th 1247 ( Cutler I ).) When plaintiff Frank Cutler sought attorney fees unde r Code of Civil Procedure se ction 1021.5, the “private attorney general” attorney fee statute (section 1021.5), the trial court denied his application. The court c oncluded plaintiff’s lawsuit did not meet two statutory prerequisites: first, it did not confer “a significant benefit, whether pecuniary or nonpecuniary, . . . on the general public or a large class of persons,” and second, the “necessity and financial burden of private enfo rcement” were not “such as to make the award appropriate . . . .” (§ 1021.5.) On the first point, the trial court foun d it was “speculative” that the lawsuit conferred any benefit on the ge neral public or a large class of people. On the second point, the court found an award was not appropr iate because plaintiff sought a refund of “a significant sum of money” ($442,000), so – even though he incurre d attorney fees of more than $685,000 – he ha d an incentive to bring the litigation, and any benefit he conferred on the public was incidental.
We conclude the court erred on both points. We reverse the order denying attorney fees and remand for a determination of the amount of fees to be awarded.
FACTS When plaintiff filed the underlying la wsuit seeking a tax refund, Revenue and
Taxation Code sections 18038. 5 and 18152.5 allowed an i ndividual taxpayer to defer gains on the sale of qualified small busin ess stock if the taxpayer purchased other qualified small business stock within 60 days. The deferral was available, however, only if the stock sold and purchased was issued by corporations that used 80 percent of their
assets in the conduct of business in Califor nia and that maintained 80 percent of their payrolls in California. In 1998, plaintiff sold stoc k in an internet start-up co mpany and used some of the proceeds to purchase stock in several other sm all businesses. The stock he sold did not3 meet the California property and payroll requir ement. Plaintiff nevertheless deferred that part of the gain from the sale that he invested in three other small businesses on his 1998
California tax return. The Franchise Tax Bo ard (the Board) disallowed the deferral. Plaintiff filed a protest; the Board denied the protest; and plaintiff appealed to the State Board of Equalization. Plainti ff paid the $442,000 in tax, penalties and interest that the Board assessed. The State Board of Equalizati on denied plaintiff’s a ppeal. In September 2009, plaintiff filed the underlying lawsuit for a refund, claiming the California property and payroll requirement violated the commer ce clause. The trial court granted summary judgment in favor of the Boar d, and plaintiff appealed. ( Cutler I
, supra , 208 Cal.App.4th at pp. 1251-1252.) We reversed, concluding the statute was di scriminatory on its face and could not stand under the commerce clause. ( Cutler I
, supra, 208 Cal.App.4th at p. 1261.) We
could not determine the amount of the refund th at was owed to plaintiff, if any, because there were material disputes over whether pl aintiff qualified for the tax deferral for other reasons apart from the California prop erty and payroll requirement. ( Id. at p. 1262.) Consequently, the case was remanded to th e trial court for further proceedings.
After this court’s decision became fina l, the Board issued a notice dated December 21, 2012, outlining how it planned to rectify its past enforcement of the
unconstitutional elements of Re venue and Ta xation Code sections 18 152.5 and 18038.5. (In McKesson Corp. v. Florida Alcohol & Tobacco Div. (1990) 496 U.S. 18, 31, 40-41, the high court held a state must provide “meaningful backward-l ooking relief” for an unlawful tax collection, and identified three ways to do so: by i ssuing refunds, making
retroactive assessments of tax increas es, or a combination of the two.)
The Board’s notice stated that , for tax years before January 1, 2008, because of the statute of limitations, “the only way to plac e similarly situated taxpayers in the same position is to allow the exclusion/deferral to taxpayers who meet the requirements of the
statutes other than the unconstitutional Calif ornia property and payroll requirements.”
The notice stated that after Ja nuary 1, 2008, the Board intende d to disallow all exclusions4 and deferrals and thus to i ssue notices of proposed asse ssments to taxpayers who had
benefited from the discriminato ry exclusions and deferrals. In February 2013, plaintiff filed a motion for attorney fees under section 1021.5.
He submitted evidence that he incurred $685,868 in a ttorney fees litiga ting this case for a refund of at most $442,000 (including in terest and penalties). He contended he vindicated a constitutional right of a large cl ass of California taxpayers by obtaining our ruling that ended the discriminatory treat ment of taxpayers who invest in small
businesses with more than 20 percent of assets or payro ll outside California, allowing “a large class of similarly situated taxpayers who, like [plaintiff], i nvested in multi-state
and out-of-state small businesse s to request a refund of taxe s that were unconstitutionally
levied.” Plaintiff also pointed to a Board analysis in 1993 projecting th at the small business stock capital gain exclusion would decreas e California tax revenues by more than $250 million between 1998 an d 2005, arguing this showed the provisions “have a substantial impact on California investors.” The Board opposed plaintiff’s motion, contending plaint iff had the resources to prosecute the action, and the statute was not in tended to apply to a sophisticated investor who engages in multimillion dollar stock transa ctions and seeks a $442,000 refund. The Board argued there was no benefit to Californi a or Californians, because the incentive to
invest in small businesses in California had been eliminated; taxpayers for tax years 2008 and after may be subject to additional tax liability; and going forwar d, taxpayers cannot claim any deferral or exclusion. Further, the Board argued that plaintiff was sufficiently motivat ed by his own selfinterest in getting a substantial refund, beca use he had claimed deferral or exclusion of gains on qualified small business stock not onl y for 1998 but also for tax years 1999 and 2000. A declaration from Ann Hodges, tax co unsel for the Board, stated the Board had disallowed plaintiff’s claims for 1999 and 2000, and the tax amounts in dispute for those years were $804,948 and $6 74,541, respectively (not including interest and any applicable penalties). The 1999 and 2000 tax years were not at issue in this lawsuit,5 Ms. Hodges said, because plaintiff had not exhausted his administrative remedies for those years. The Board argued any potential be nefit to the public “was only incidental to [plaintiff’s] primary objective of obtaining a refund.”
The trial court denied fees. The court ac knowledged that plain tiff had enforced an important right affecting the public interest. But, the court held, the “benefit conferred upon others may not prove to be significant.” The “practical effect” was the elimination of deferrals for all taxpayers for taxable year s 2008 and after (as the Board announced in its December 2012 notice), whic h would result in the Board’s retroactive assessment against taxpayers. This, the court found, was a “significant detriment,” and it was “speculative at best” whether the benefit to taxpayers for taxable years 2007 and earlier would outweigh the detrimen t from the retroactive asse ssments for 2008 and after. Consequently, the trial court found the litigati on did not confer “a significant benefit, whether pecuniary or nonpecuniary, . . . on the general public or a large class of persons.” (§ 1021.5) Further, the court held, plaintiff did not sa tisfy the requirement that “the necessity and financial burden of private enforcemen t . . . are such as to make the award appropriate . . . .” (§ 1021.5 .) This was because plaintiff sought a refund of $442,000, which was a tax on investment gains. “In ot her words, Plaintiff has significant assets, and was seeking to recover a significant sum of money. The private attorney general attorney fee statute is not requ ired to provide Plaintiff an in centive to bring this litigation, and any benefit Plaintiff conferred up on the public is incidental.” Plaintiff filed a timely appeal of the trial court’s order.
DISCUSSION The trial court’s judgment on whether a plaintiff has proved each of the prerequisites for an award of attorney fees under section 1021.5 “w ill not be disturbed unless the appellate court is convinced that it is clearly wrong and constitutes an abuse of discretion.” ( Planned Parenthood v. Aakhus (1993) 14 Cal.App.4th 162, 170; Robinson v. City of Chowchilla (2011) 202 Cal.App.4th 382, 391 [“If the superior court’s order is not consistent with the applicable principles of law, the order necessarily falls outside the6 scope of the superior court’s discretion.”].) In this case, we ar e convinced the trial court’s decision was clearly wrong.
1. The Governing Principles The principles applicable to an attorney fee award under section 1021.5 are these. First, “eligibility for section 1021.5 a ttorney fees is established when ‘(1) plaintiffs’ action “has resu lted in the enforcement of an important right affecting the public interest,” (2) “a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large cl ass of persons,” and (3) “the necessity and financial burden of private en forcement are such as to make the award appropriate.” ’ ” ( Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1214 ( Whitley ), quoting Woodland Hills Residents Assn., In c. v. City Council (1979) 23 Cal.3d 917, 935 ( Woodland Hills ). And, there is a fourth requirement: that “such fees should not in the interest of justice be paid out of the recovery, if any.” (§ 1021.5.) (In Woodland Hills (and Whitley ) that factor did not apply because the plaintiffs ’ action produced no monetary recovery. ( Woodland Hills, supra, at p. 935.)) Second, Woodland Hills offered two principal points of guidance on the requirement that the lawsuit confer a signifi cant pecuniary or nonp ecuniary benefit on the general public or a large class of persons. Firs t, the statutory language “recognizes that in many cases the important gains or contributio ns rendered by public interest litigation will be reflected in nonmonetary advances.” ( Woodland Hills, supra, 23 Cal.3d at p. 939.) Second, in some cases the “significant bene fit” may be recognized “simply from the
effectuation of a fundamental cons titutional or statutory policy.” ( Ibid. ) The Legislature “contemplated that . . . a tria l court would determine the signi ficance of the benefit, as well as the size of the class receiving benefit, from a realistic assessment, in light of all the pertinent circumstances, of the gains which have resulted in a particular case.” ( Id. at pp. 939-940.) Third, the Supreme Court has given clear direction concerning “the financial burden of private enforcement.”7 “[C]ourts have long construed this langua ge to mean, among other things, that a litigant who has a financial interest in the litigation may be disqua lified from obtaining such fees when expected or realized financial gains offset litigation costs.” ( Whitley,

supra, 50 Cal.4th at p. 1211.) Whitley explains that “the purpose of section 1021.5 is not to compensate with at torney fees only those litigants who have altruistic or lofty motives, but rather all litigants and attorneys who step forward to engage in public interest litigation when there are insufficient financ ial incentives to justify the litigation in economic terms.” ( Ibid .) “ ‘ “An award on the ‘private attorney genera l’ theory is appropriate when the cost of the claimant’s legal victory transcends his personal interest, that is, when the necessity for pursuing the lawsuit placed a bu rden on the plaintiff ‘out of proportion to his individual stake in the matter.’ [Citation.]” ’ [Citation.] ‘This requirement focuses on the financial burdens and incentives involv ed in bringing the lawsuit.’ [Citation.]” ( Id. at p. 1215.) Whitley also describes the method for weighing the costs and benefits of a public interest lawsuit, using Los Angeles Police Protective League v. City of Los Angeles (1986) 188 Cal.App.3d 1 ( Los Angeles Police Protective League ) to illustrate the point.
“ ‘The trial court must first fix—or at leas t estimate—the monetary value of the benefits obtained by the successful litigants themselves. . . . Once the court is able to put some kind of number on the gains actually attained it must discount these total benefits by some estimate of the probability of success at the time the vital litigation decisions were made which eventually produc ed the successful ou tcome. . . . Thus, if success would yield . . . the litigant group . . . an aggregat e of $10,000 but there is only a one-third chance of ultimate victory they won’t proceed—as a rational matter—unless their litigation costs are substantially less than $3,00 0. [¶] After approximating the estimated
value of the case at the time th e vital litigation decisions were being made, the court must
then turn to the costs of th e litigation—the legal fees, deposition costs, expert witness fees, etc., which may have been required to br ing the case to fruition. . . . [¶] The final step is to place the estimated value of the case beside the actual cost and make the value judgment whether it is desirabl e to offer the bounty of a court-awarded fee in order to8 encourage litigation of the sort involved in this case.’ ” ( Whitley, supra, 50 Cal.4th at pp. 1215-1216, quoting Los Angeles Police Protective League, supra, at pp. 9-10.) Whitley concluded: “ ‘[A] bounty will be ap propriate except where the expected value of the litigant’s own monetary award ex ceeds by a substantial margin the actual litigation costs

. ’ ” ( Whitley
, supra , 50 Cal.4th at p. 1216, quoting Los Angeles Police Protective League , supra , 188 Cal.App.3d at p. 10.)
2. This Case Here, the trial court correctly found that plaintiff enforced an important right affecting the public interest, sa tisfying the first prong of the st atute. But the court erred in concluding the second and third prongs were not satisfied. And, while the court did not consider the fourth prong – whet her “such fees should not in the interest of justice be paid out of the recovery, if any” – we find it would not serve the inte rest of justice for any part of the fees to be paid out of plaintiff’s r ecovery of any illegally collected taxes. (See Laurel Heights Improvement Assn. v. Re gents of the University of California (1988) 47 Cal.3d 376, 42 7 [agreeing with Wilkerson v. City of Placentia (1981) 118 Cal.App.3d 435, 445, where the Court of Appeal “appropri ately noted” that where the entire basis for the fee award was the appellate opinion, “ ‘w e should make the decision that it qualifies as a case for granting of fees’ ”; a Court of Appeal “is not required to remand to the trial court the question of whether to aw ard fees under section 1021.5”].)

a. Significant benefits conferred on a large class of persons The trial court erroneously concluded that the benefit plaintiff’s lawsuit conferred on others “may not prove to be significant.” The court’s ra tionale was that, because of plaintiff’s lawsuit, the Board decided to eliminate the benef it of tax deferrals previously
available to investors in small businesses th at met the 80 percent California assets and payroll requirements, and retroa ctively assess taxes against such investors for the years 2008 and beyond. The court reasoned this was a “significant detriment” to those taxpayers, and although some taxpayers for the years 2007 and earlier would benefit, it was speculative whether there was a net benefit. This reasoning was erroneou s for several reasons.9 Section 1021.5 on its f ace looks only to whether the litigation conferred a significant benefit on “a large class of person s” – not to whether some other class of persons might be negatively a ffected by the equal treatment of all persons similarly situated. The courts may not add a requirement to the statute that does not exist. The analysis of the court in Environmental Protection Information Center v. Department of Forestry & Fire Protection (2010) 190 Cal.App.4th 217 ( EPIC ) is instructive.
In EPIC , the court rejected the argument of the defendants that “ ‘the courts must balance the respective equities of the benefits and detriments conferre d by each party to the suit, and deny fees if on balance no net be nefit has been conferred by the [plaintiffs] on a large class of individuals or the general public.’ ” ( EPIC , supra , 190 Cal.App.4th at p. 231.) The court disagreed, saying the defe ndants pointed “to nothing in the statutory text that supports their argument. [Citation. ] The statute asks whether the successful party’s action has conferred a ‘s ignificant benefit’ (§ 1021 .5, subd. (a)), not, . . . a ‘net significant benefit.’ We are disinclined to adop t a construction of the statute that ‘neither the context nor the language of secti on 1021.5 demands.’ [Citation.]” ( Ibid .) The Board argues EPIC does not apply, because the court addressed only whether it is appropriate to consider the respective benefits conferred by the opposing parties, while here the trial court considered “only the objective impact of [plaintiff’s] efforts” when it found no significant benefit. We se e no pertinent distinction; the fact remains
that the statute does not ask wh ether the litigation conferred a “net” significant benefit. It asks only whether the lawsuit conferred a signi ficant benefit on a large class of persons. Plainly it did, because California tax law no lo nger discriminates in favor of investors in small businesses with 80 percent of their as sets and payroll in California and against investors (and small business owners) with less than 80 percent of their assets and payroll
in California. Legislative action taken after the trial c ourt rendered its decision below eliminated the “significant detriment” the trial court ha d found. The Board ha d planned to rectify the constitutional violation by assessing ta x liability retroactiv ely on taxpayers who benefited from the unlawful deferral provisions. But a statute enacted after the trial10 court’s decision effectively reversed the Bo ard’s plan to disallo w all exclusions and deferral of gains after January 1, 2008, and to impose retroactive tax assessments. In October 2013, the Legislature enacted Asse mbly Bill No. 1412 which, as the Board acknowledges, eliminated the need fo r retroactive tax assessments.
The Board contends we should not consid er this point and that any benefits taxpayers may receive from Assembly Bill No. 1412 may not be characterized as having been conferred by plaintiff. We disagree. A legislative committee an alysis described the
Cutler I decision and the basis for it at some lengt h (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 1412 (2013-2014 Reg. Sess.) as amended Sept. 6, 2013, pp. 4-5), and it is simply not open to doub t that the decision, followed by the Board’s determination to implement it by making retroactive assessments, precipitated the legislative action.
The Board relies on Crawford v. Board of Education (1988) 200 Cal.App.3d 1397, where the court said that the pr ivate attorney general doctrine “limits awards of fees to litigants who successfully utilize the judicial process to achieve their aims,” and does not “encompass successful lobbying efforts by those who seek to influence the Legislature or the electorate on any particular issue.” ( Id. at p. 1408.) Crawford is entirely inapposite. Crawford was a complex desegregation case in volving litigation over busing as a remedy. The court denied fees to several in terveners, concluding they were “simply not prevailing parties within the mean ing of . . . section 1021.5.” ( Id. at p. 1410.) During the litigation, the voters passed Proposition 1, the e ffect of which was to prohibit state courts from ordering mandatory busing on the basis of race, except under certain circumstances. ( Crawford
, at p. 1403.) The court concluded the interveners “failed to affirmatively demonstrate a causal relationship between their participation in the remedial phase of this litigation and the practical result which obtained ,” and that “none of the interveners . . . can point to any successes resu lting from their participation in this litigation independent of the passage of Proposition 1.” ( Id. at pp. 1408, 1409.) This case is not like Crawford

. The legislation here was a direct result of the Cutler I decision and the Board’s proposed implementation of it.11 In the end, there is simply no proper basis for the trial court’s conclusion that plaintiff’s lawsuit did not co nfer a significant benefit on a large class of persons. Certainly the general public benefits by no ndiscriminatory tax laws that encourage investment by California taxpayers in start-up companies, whether or not 80 percent of the property and payroll of the start-up comp anies are in California or elsewhere. The public benefits because those investments create new business and job opportunities. And the proliferation of start-up companies nationwide in recent decades demonstrates there is a large class of persons who wish to invest in such companies and who will benefit by nondiscriminatory ta x incentives to do so.
b. The financial burden of private enforcement
The trial court also erred when it conclude d that because plaintiff sought recovery of a large amount of money paid as tax on investment gains, and therefore had “significant assets,” he did not need the incentiv e of the private attorn ey general statute to bring his lawsuit – so that “any benefit Plainti ff conferred upon the public is incidental.” As is apparent from our recitation of the governing principles, ante , the Supreme Court’s direction on the application of the third factor – “the necessity and financial burden of private enforcement” – is quite clea r. The court is required to focus “ ‘on the
financial burdens and incentives involved in brin ging the lawsuit.’ [Citation.]” ( Whitley
, supra , 50 Cal.4th at p. 1215.) An award is appropriate “ ‘ “when the necessity for pursuing the lawsuit placed a burden on the plai ntiff ‘out of propor tion to his individual stake in the matter.’ [Cita tion.]” ’ [Citation.]” ( Ibid. ) The court must weigh the monetary value of the case “ ‘at the time the vital litigation decisions were being made’ ” against the costs of bringing the case to fru ition, and “ ‘the bounty of a court-awarded fee’ ” will be appropriate “ ‘except wher e the expected value of the litigant’s own monetary award exceeds by a substantial margin the actual litigation costs.’ [Citation.]” ( Id. at pp. 1215-1216.)
The trial court did not follow these direc tions. The court merely observed that plaintiff sought a refund of $4 42,000, and did not consider that the fee award he sought totaled $685,868 – over $200,000 more than th e hoped-for tax refund. Nor did the court12 discount the $442,0 00 benefit plaintiff sou ght by the probability of success at the time he undertook the litigation, as required by Whitley (50 Cal.4th at p. 1215). Plainly, the claimed litigation costs exceed ed plaintiff’s personal mone tary stake by a “substantial margin” – not the reverse. The trial court erroneously relied on cases such as Beach Colony II v. California
Coastal Com. (1985) 166 Cal.App.3d 106, where the court observed that section 1021.5 “was not designed as a method for rewarding litigants motivat ed by their own pecuniary interests who only coincidentally protect the public interest.” ( Beach Colony II , at p. 114.) But in Beach Colony II
, the basis for reversing the trial court’s award of $50,550 in fees ( id. at p. 109) was that the plaintiff made no attempt to compare its litigation costs to the benefits of saving $300,000 in offsite improvement expenses and establishing its right to develop the property for significant commercial gain. ( Id. at pp. 113-114.) That is not the case here, where plaintiff produced ev idence of legal fees that were more than $200,000 greater than th e refund he sought.
The trial court’s fundamental error was th e assumption that it need not undertake the analysis described in Whitley when a plaintiff is wealthy. Nothing in Whitley allows or implies such a distinction. Indeed, the contrary is so. The Whitley court’s description of the legislative history of section 1021.5 is instructive. For example: “ ‘[S]ubstantial benefits to the general public should not depe nd upon the financial status of the plaintiff or upon the charity of foundations or upon the charity of public-minded lawyers alone. Where the benefit is conferred upon a large nu mber of persons, it is inequitable that a person who steps forward to enforce the rights should bear the entire cost.’ ” ( Whitley
, supra , 50 Cal.4th at p. 1219, q uoting Testimony of John R. Phillips to Sen. Judiciary Com, Aug. 16, 1977, in supp ort of Assem. Bill No. 1310 (1977-1978 Reg. Sess.) pp. 7-8 (Phillips testimony).) Whitley found it “noteworthy” that th e legislative history it cited “does not focus on litigants’ initial subjective motivation—on what may cause them to want to bring a public interest lawsuit. Wh at section 1021.5 does address is the problem of affordability of such lawsuits.” ( Whitley , at p. 1219.)13 Whitley further observed that “public interest litigation prior to section 1021.5 depended on subsidies either from well-heeled litigants and th eir supporters, or from the pro bono work of attorneys.” ( Whitley
, supra , 50 Cal.4th at pp. 1219-1220, citing Phillips testimony, supra , at pp. 7-8.) The court continued: “Section 1021.5 addresses this affordability problem with the inducement of attorney fees for public interest litigation when certain conditions in the statute are met. Stated another way, the Legislature that enacted section 1021.5 was not so much concerned with what brought a litigant with a potential public interest case into an attorn ey’s office, but rather with allowing that litigation to move forward from there by offering at least the prospect that the financial burden of the litiga tion could be shifted to the opposing party if the litigant prevailed.” ( Whitley
, at p. 1220.) Of course, it is certainly the case, as the Board points out, that the “central problem that section 1021.5 se eks to address” is the “inhe rent unaffordability of legal services for public interest cases yiel ding primarily nonpecuniary benefits.” ( Whitley
, supra , 50 Cal.4th at p. 1225.) But nothing in Whitley or other Supreme Court precedents suggests that a different analysis may be ap plied in public intere st cases that do yield pecuniary benefits, or that “well-heeled litigants” should nevertheless be required to subsidize public interest litigation. ( Id. at p. 1219.) The point of section 1021.5 was to make that unnecessary. The statute itself anti cipates the benefit may be “pecuniary or nonpecuniary.” (§ 1021.5.) In short, Whitley is clear that the only pertinent inquiry when a court assesses the financial burden of the litigation is the pl aintiff’s “objective financial incentives” – whether the expected value of the litigant’s own monetary aw ard, discounted by the risk of achieving the desired award, exceeds by a s ubstantial margin the actual litigation costs.
The court failed to adhere to this standard, and therefore erred. We note one further point. The trial c ourt, at the hearing on the attorney fee motion, stated that “plaintiff had approximat ely $450,000 at stake here . . . .” The
evidence before the court sh owed only that the “expected value of the litigant’s own monetary award” from the litigation ( Whitley
, supra , 50 Cal.4th at p. 1216) was – at the14 most – approximately $450,000. The Board nonetheless tells us the trial court “was aware that the true value of this case to [p laintiff] far outweighed any ‘costs,’ ” because two other tax years (1999 and 2000) were at issue in admi nistrative proceedings below, so that plaintiff “was pursuing a total financia l benefit of more than $1.7 million dollars.” There is no support for this argument in th e record. The Board no w asks us to take judicial notice of three documents (a memo randum of September 23, 2009, with two attachments, documents plaintiff’s counsel file d with the Board) that it asserts show the
issues before the Board for the ot her two tax years were “identical ” to those in this case. We deny the request for judicial notice, fo r several reasons. The first is that the Board did not provide these documents to the tr ial court, even though they were available
and could have been submitted had the Board chosen to do so. “ ‘Reviewing courts generally do not take judicial notice of eviden ce not presented to the trial court’ absent exceptional circumstances.” ( Haworth v. Superior Court (2010) 50 Cal.4th 372, 379, fn. 2.) There are no exceptional circumstances here. Second, “[w]hile we may take judicial notic e of court records and official acts of state agencies . . . , the truth of matters as serted in such documents is not subject to judicial notice . . . .” ( Arce v. Kaiser Foundation Health Plan, Inc. (2010) 181 Cal.App.4th 471, 482, cita tions omitted.) Here, the Board’s brief makes clear that it wants this court to take judicial notice of th e truth of statements by plaintiff’s counsel in the two attachments, to the effect that this case involves the same issues as the pending proceedings before the Board involving plai ntiff’s claims for the 1999 and 2000 tax years. This we may not do. Third, and from a practical perspective, th e most significant point is that these documents shed no light on what amount of taxe s, if any, plaintiff may recover (or not be required to pay) for 1999 and 2000. The Boar d contends in its brief that the 1999 and 2000 tax years “have remained in [deferral] status as of the date of this brief [March 18, 2014],” so what tax obligations plaintiff may avoid for those years remains in dispute. Because it is premature to infer what recove ry plaintiff might obtai n for tax years 1999 and 2000, the matters we are asked to judici ally notice are irrelevant to this appeal.15 We reiterate one important point. As Whitley tells us, the “monetary value of the benefits obtained” must be discounted by th e probability of success at the time plaintiff was considering whether to file this lawsuit. ( Whitley
, supra , 50 Cal.4th at p. 1215.) Here, plaintiff faced very long odds of su ccess and undertook the risk of incurring substantial costs and fees. Persuading a court to declare any statute unconstitutional -- particularly a tax statute that favors Californi a interests -- is always an uphill battle. The difficulty of persuading a court to decl are these tax statutes unconstitutional is demonstrated by the trial court’s grant of summary judgment in favor of the Board, rejecting plaintiff’s constitutional challenge. In sum, the monetary value of this ca se discounted by the probability of success
was far from sufficient to ab sorb the costs of litigation and provide an incentive to litigate.

c. The “interest of justice” - payment of fees out of the recovery
Because the trial court conclu ded that other statutory f actors were not met, it did
not consider the final factor in section 1021. 5, whether fees should in the interest of justice be paid out of the rec overy, if any. (§ 1021.5.) The Board contends the interest of jus tice demands payment out of the recovery, because this litigation “would have been pursued absent a ny prospect of a fee award given the totality of the circumst ances.” We are not persuaded. First, the Board’s premise, as we have al ready concluded, is wrong. The case was a risky one where the expected value of the case was not sufficient to absorb litigation costs and still provide an incentive to litigate. Second, the cases that find a ttorney fees should be paid out of the recovery are uniformly cases where a fund has been created -- a fund containing money besides the amount due to the plaintiff -- from which fees could be paid. Typically, these cases are class actions, where courts have determined th at part or all of the fees should be paid under the equitable “common fund” theory. (See Collins v. City of Los Angeles (2012) 205 Cal.App.4th 140, 148, fn. 5 [“When a su ccessful litigant’s efforts result in the16 creation of a fund from which others derive benefits, the fund is known as a ‘common fund.’ ”].) There are taxpayer cases where a fund has been created, but they are unusual. “Generally, taxpayers’ suits resu lt in the vindication of an im portant public right, but do not result in the creation of a fund.” ( Bank of America v. Cory (1985) 164 Cal.App.3d 66, 89; id. at pp. 71, 90-91 [common fund was cr eated as the result of complicated litigation involving enforcement of the unclaim ed property law; court held that those benefitting from the recovery of the fund “must bear their share of the cost of litigation,”
and confined the award of fees to the common fund theory rather than section 1021.5];
see also Rider v. County of San Diego (1992) 11 Cal.App.4th 1410, 1422, 1421, fn. 5, 1423 [holding fees should not be paid under section 1021.5; interest of justice mandated payment of taxpayers’ attorney fees “from the recovered fund of invalidly collected supplemental sales tax revenues rather than from the general funds of the County,” where
tax revenues were collected and retained pending final decision in the taxpayer action challenging the tax].)
This case did not lead to the creation of any “common fund” or “recovered fund.” Indeed, when the trial court ru led on attorney fees, plaintiff had recovered nothing at all, as other aspects of plaintiff’s qualification for the tax deferral were still in dispute. Apparently, the parties have settled the disput e as to the 1998 ta x year only, but we presume the settlement was confidential, becaus e no party has told us that plaintiff ever actually recovered any of the $442,000 he paid for that tax year while pursuing his appeal and this litigation.
Where no “common fund” has been created, and where it ha s been established that the financial burden of private enforcement ex ceeded the plaintiff’s personal stake in the litigation, the trial court does not have the di scretion to determine, “in the interest of justice,” that fees nonetheless should be paid from the plaintiff’s own recovery. Therefore, no purpose would be served by remanding for the tr ial court to decide whether
the final factor in section 10 21.5 has been met, as that is the only conclusion one may reach as a matter of law. (See Los Angeles Police Protective League
, supra ,17 188 Cal.App.3d at p. 14 [“This disparity be tween financial burden and financial benefit is enough in itself to satisfy the fourth element of the section 1021 .5 test. Clearly it would be inappropriate to require the attorney fees to be paid out of the proceeds of the litigation since that would completely wipe out the [union] members’ monetary recovery.”]; Henneberque v. City of Culver City (1985) 172 Cal.A pp.3d 837, 847 [where it was “clear
the financial burden which this suit placed on [the plaintiff] was out of proportion to his personal stake” in the litigation, “[f]or the sa me reason, we have no difficulty holding [the plaintiff’s] attorney fees ‘should not in the interest of justice be paid out of the recovery’ and it would be an abuse of discretion to hold they should.”].)
Because all the elements for an award of fees under section 1021.5 were established, the trial court abused its discretion in refusing to award fees.
DISPOSITION
The order is reversed and th e cause is remanded to the trial court with directions to determine the amount of attorney fees to be awarded to plaintiff. Plaintiff shall recover costs on appeal.

GRIMES, J.

We concur: BIGELOW, P. J.

FLIER, J.