Stanley v. State Lottery Com. 9/25/03 CA3

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State: California

Court: 1st District Court of Appeal 1st District Court of Appeal

Docket No: C041036

Case Date: 09/25/2003

Preview:Filed 9/25/03

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT (Sacramento) ---AMY STANLEY, Plaintiff and Respondent, v. CALIFORNIA STATE LOTTERY COMMISSION, Defendant and Appellant. C041036 (Super. Ct. No. 00AS05463)

APPEAL from a judgment of the Superior Court of Sacramento County, Morrison C. England, Jr., J. Reversed. Bill Lockyer, Attorney General, Jacob Appelsmith, Senior Assistant Attorney General, Vincent J. Scally, Jr., Supervising Deputy Attorney General, and David I. Bass, Deputy Attorney General, for Defendant and Appellant California State Lottery Commission. Hagens Berman, Kevin P. Roddy; Law Office Of Tracey BuckWalsh and Tracey Buck-Walsh for Plaintiff and Respondent Amy Stanley.

In this appeal, we address whether a plaintiff may be deemed a "successful party" entitled to recover attorney fees

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under Code of Civil Procedure section 1021.5 (hereinafter section 1021.5)1 -- the "private attorney general" statute -where all of plaintiff's claims have been denied as a matter of law and plaintiff has never received any type of judicial relief during the proceeding. We conclude that the term, "successful

party," cannot be stretched that far. Plaintiff Amy Stanley brought this action against the defendant, the California State Lottery Commission (the Lottery Commission), alleging that the Lottery Commission sold instant scratch game tickets ("Scratchers") long after all represented and advertised grand prizes had been awarded or claimed. The

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Code of Civil Procedure section 1021.5 states: "Upon motion, a court may award attorneys' fees to a successful party against one or more opposing parties in any action which has resulted in the enforcement of an important right affecting the public interest if: (a) a significant benefit, whether pecuniary or nonpecuniary, has been conferred on the general public or a large class of persons, (b) the necessity and financial burden of private enforcement, or of enforcement by one public entity against another public entity, are such as to make the award appropriate, and (c) such fees should not in the interest of justice be paid out of the recovery, if any. With respect to actions involving public entities, this section applies to allowances against, but not in favor of, public entities, and no claim shall be required to be filed therefor, unless one or more successful parties and one or more opposing parties are public entities, in which case no claim shall be required to be filed therefor under Part 3 (commencing with Section 900) of Division 3.6 of Title 1 of the Government Code. "Attorneys' fees awarded to a public entity pursuant to this section shall not be increased or decreased by a multiplier based upon extrinsic circumstances, as discussed in Serrano v. Priest [(1977)] 20 Cal.3d 25, 49." (Italics added.)

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trial court rejected each of plaintiff's claims as a matter of law, never granted plaintiff any interim relief during the course of the proceeding, and entered judgment in favor of the Lottery Commission. The trial court nonetheless awarded plaintiff $351,717.38 in attorney fees under section 1021.5 on the theory that plaintiff's lawsuit had served as a "catalyst" to the Lottery Commission's decision to take certain voluntary corrective actions while the action was pending, such as adding a disclaimer to its Scratchers game tickets that some prizes may have already been claimed and withdrawing Scratchers tickets from retailers for those games in which the top prizes had been claimed. Although our state Supreme Court has ruled that "an attorney fee award may be justified even when plaintiff's legal action does not result in a favorable final judgment" where the action has nonetheless "served to vindicate an important right" (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1290-1291), the statutory language in section 1021.5 that the party must be "successful" in order to be entitled to an award cannot be stretched so far as to cover a plaintiff against whom judgment was entered as a matter of law, and to whom no interim judicial relief was ever awarded. To conclude otherwise would deem a

legally meritless action the catalyst for the enforcement of a right that the action was determined inadequate to enforce and would award attorney fees expended by the plaintiff in losing

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the action at every stage of the litigation.

The trial court's

finding to the contrary in this case was error, and its order awarding attorney fees to plaintiff's counsel must therefore be reversed. FACTUAL AND PROCEDURAL BACKGROUND I. The Underlying Litigation

In her complaint, plaintiff alleged that the Lottery Commission and its licensed retailers routinely and knowingly "[sold] instant scratch games well after all represented and advertised grand prizes ha[d] been awarded or claimed," and that players "who purchase[d] scratch tickets during that time ha[d] no chance of winning the prizes that [were] the primary inducement for those games." According to plaintiff, the Lottery Commission "kn[e]w[] when the last prize ha[d] been claimed because it monitor[ed] the dates when each prize [was] given away, [was] aware of how many prizes exist[ed] and how many remain[ed] for each scratch game," and yet "d[id] not instruct or require the retailers to cease selling prize-less scratch game tickets or to inform the scratch players that such tickets [did] not conform" to the Lottery Commission's representations and advertisements. Based on these facts, the complaint sought damages and equitable relief on a variety of theories, including breach of contract, breach of express warranty, breach of implied warranty, breach of the implied covenant of good faith and fair dealing, and breach of the Lottery Commission's duty under 4

Government Code section 8880.24 to ensure that the State Lottery complied with the letter and spirit of the laws governing false advertising.2 The Lottery Commission demurred to the complaint, and the trial court sustained, without leave to amend, the demurrer to all causes of action, except the cause of action based on the Lottery Commission's duty under Government Code section 8880.24. Plaintiff thereafter filed a first amended complaint and a petition for writ of mandate (collectively referred to as the petition), which sought a writ of mandate directing the State Lottery "to comply with the provisions of [s]ection 8880.24 of the Government Code" and the laws governing false advertising, a declaration that the State Lottery "refrain from representing or advertising grand prizes [that] are not available unless it notifies lottery players at the time of purchase of the nonavailability of each represented and advertised prize," and other related relief, including attorney fees.

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In relevant part, Government Code section 8880.24 provides: " . . . [

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