Opinion ID: 1245386
Heading Depth: 1
Heading Rank: 2

Heading: The Common Fund Theory

Text: (1) Although American courts, in contrast to those of England, have never awarded counsels' fees as a routine component of costs, at least one exception to this rule has become as well established as the rule itself: that one who expends attorneys' fees in winning a suit which creates a fund from which others derive benefits, may require those passive beneficiaries to bear a fair share of the litigation costs. ( Quinn v. State of California (1975) 15 Cal.3d 162, 167 [124 Cal. Rptr. 1, 539 P.2d 761]; fns. omitted.) This, the so-called common fund exception to the American rule regarding the award of attorneys fees (i.e., the rule set forth in section 1021 of our Code of Civil Procedure), is grounded in the historic power of equity to permit the trustee of a fund or property, or a party preserving or recovering a fund for the benefit of others in addition to himself, to recover his costs, including his attorneys' fees, from the fund of property itself or directly from the other parties enjoying the benefit. ( Alyeska Pipeline Co. v. Wilderness Society (1975) 421 U.S. 240, 257 [44 L.Ed.2d 141, 153, 95 S.Ct. 1612]; fn. omitted.) First approved by this court in the early case of Fox v. Hale & Norcross S.M. Co. (1895) 108 Cal. 475 [41 P. 328], the common fund exception has since been applied by the courts of this state in numerous cases. (See, e.g., Glendale City Employees' Assn., Inc. v. City of Glendale (1975) 15 Cal.3d 328, 341, fn. 19 [124 Cal. Rptr. 513, 540 P.2d 609]; Estate of Reade, supra, 31 Cal.2d 669, 671-672; Winslow v. Harold G. Ferguson Corp. (1944) 25 Cal.2d 274, 277 [153 P.2d 714]; Farmers etc. Nat. Bank v. Peterson (1936) 5 Cal.2d 601, 607 [55 P.2d 867]; Estate of Kann (1967) 253 Cal. App.2d 212, 223 [61 Cal. Rptr. 122]; see generally Dawson, Lawyers and Involuntary Clients: Attorney Fees from Funds (1974) 87 Harv.L.Rev. 1597.) In all of these cases, however, the activities of the party awarded fees have resulted in the preservation or recovery of a certain or easily calculable sum of money  out of which sum or fund the fees are to be paid. [5] We can find no such fund in this case. (2) In relevant findings of fact the trial court found that plaintiffs have proven that the sum of money available for public education in California is not being spent in accordance with the California Constitution and have protected the sum of money available for public education in the state. Plaintiff urges that these findings are tantamount to a determination that a fund of money for educational use was created by their efforts. The trial court, however, concluded otherwise, reasoning that whatever additional monies are made available for public education as a result of the Serrano judgment will flow from legislative implementation of the judgment, not from the judgment itself. That judgment requires substantial equality in educational opportunity for the school children of this state without regard to the taxable wealth per student in the particular district in which a student lives. It does not require any particular level of expenditure. [6] Accordingly, it cannot be said that the efforts of plaintiffs have created or preserved any fund of money to which they should be allowed recourse for their fees. Plaintiffs place great emphasis on the trial court's finding that under the 1972 and 1973 legislation which we have referred to in our Serrano II opinion as S.B. 90 and A.B. 1267 (see Serrano II at pp. 736-737, 741-744), passed in response to our decision in Serrano I, an annual pool of some $550 million has come into existence for purposes of education and property tax relief. Moreover, they point out, it is quite likely that under subsequent legislation substantial further sums of money will become available for these purposes. Again, however, we point out that any such increases in the total educational budget, while they may be termed a response to our Serrano decisions, are by no means required by them. It is for the Legislature to determine, in its conjoined political wisdom, whether the achievement of that degree of equality of educational opportunity which is required by the state Constitution is to be accompanied by an overall increase in educational funding. Finally, even if it were determined that the monies to become available for education in the wake of Serrano should be considered a fund for these purposes, plaintiffs and their attorneys nowhere suggest that payment should be made to them out of such monies. [7] Instead they seem to indicate, with perhaps intentional vagueness, that their fees should be paid by the State. Apparently their primary authority in this respect is the case of Brewer v. School Board of City of Norfolk, Virginia (4th Cir.1972) 456 F.2d 943 (cert. den. (1972) 406 U.S. 933 [32 L.Ed.2d 136, 92 S.Ct. 1778]), in which the Court of Appeals ordered the award of reasonable attorneys fees against a school district after determining that its desegregation plan was inadequate insofar as it failed to provide a practical method of free transportation for students assigned to schools beyond normal walking distance from their homes. There the court, stating that this was a case for at least a quasi-application of the `common fund' doctrine (456 F.2d at p. 951), reasoned that whereas each of the students involved had secured a right worth approximately $60 per year to each of them, it would defeat the basic purpose of the relief provided to impose a charge against them for a proportionate share of the attorneys fees ( id., at p. 952). The only feasible solution in this particular situation, the court held, would seem to be in requiring the school district itself to supplement its provision of free transportation with payment of an appropriate attorney's fee to plaintiffs' attorneys for securing the addition of such a provision to the plan of desegregation. ( Id. ) We, along with the concurring judge in Brewer (Winter, Cir. J., conc. specially, 456 F.2d at pp. 952-954), are of the view that the Brewer case, to the extent that it relies upon the terminology used, represents an improper application of the common fund theory. (See also Dawson, Lawyers and Involuntary Clients in Public Interest Litigation (1975) 88 Harv.L.Rev. 849, 895-896; Comment, Equal Access, supra, 122 U.Pa.L. Rev. 636, 695-696.) In any event it is not consistent with the law of this state. We hold that here, where plaintiffs' efforts have not effected the creation or preservation of an identifiable fund of money out of which they seek to recover their attorneys fees, the common fund exception is inapplicable. The trial court was correct in so concluding.