Filed 4/18/18
                            CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                              FIRST APPELLATE DISTRICT

                                          DIVISION FOUR


 THE PEOPLE,
          Plaintiff and Appellant,
                                                    A143307, A143406
 v.
 INVESTCO MANAGEMENT &                              (City & County of San Francisco
 DEVELOPMENT LLC et al.,                            Super. Ct. No. CGC-11-507316)
          Defendants and Appellants.


                                     I.    INTRODUCTION
        These consolidated appeals challenge the award of attorney fees to respondents
Kim Agasaveeran and Jeffrey Bryant (respondents) under Code of Civil Procedure
section 1021.5 (section 1021.5). Respondents specially appeared in an already-settled
securities fraud action brought by the Commissioner of the Department of Business
Oversight (DBO) against real estate investment company Investco Management &
Development LLC (Investco M&D) and its promoters, Christopher P. Epsha, Steven G.
Thompson, Barry D. LeBendig, and Douglas R. Hanson (the promoters). Respondents—
victims of the securities fraud—successfully opposed a motion that would have stayed all
individual actions by them and other defrauded investors against these defendants.
Respondents also raised several issues concerning the fairness of the settlement, resulting
in substantive changes to the stipulated interlocutory judgment and special master order
in the DBO action.
        We conclude the trial court did not abuse its discretion in finding that respondents:
were successful parties against the DBO, Investco M&D and the promoters; enforced an
important right affecting the public and a large group of securities fraud victims; and


                                                1
provided necessary, non-duplicative, and significant benefits to this group of investors,
while incurring litigation expenses that were out of proportion to their personal interests.
Accordingly, we affirm.
              II.    FACTUAL AND PROCEDURAL BACKGROUND
       Investco M&D and the promoters offered and sold memberships in numerous
Investco AV limited liability corporations (Investco AV LLCs) to the public through
trade shows and fairs throughout California. According to the DBO, these membership
interests constituted “securities” within the meaning of the Corporations Code but were
sold without qualification or exemption from qualification by the Department of
Corporations. Investco M&D and the promoters represented to prospective investors that
the investment funds would be used to purchase specific real property in rural Los
Angeles County at a favorable price. However, Investco M&D and the promoters failed
to disclose that for each of the Investco AV LLCs, there was a corresponding Landco
LLC that had purchased the same property only weeks or months before for a
substantially lower price and sold the properties to each Investco AV LLC, resulting in
undisclosed profits to Investco M&D and the promoters. This scheme reached 443
investors and raised approximately $22,725,000. In February 2009, the DBO issued a
desist and refrain order against Investco M&D, Epsha and Thompson, directing them to
immediately refrain from offering or selling securities and from making any material
misrepresentations or omissions about these securities.
       A. The DBO Action
       In January 2011, the DBO filed a civil action against Investco M&D, the
promoters, and several Investco AV LLCs for violations of the Corporate Securities Law
of 1968 (CSL) and the February 2009 desist and refrain order. The DBO sought to enjoin
these defendants from any further selling of unregistered limited liability membership
interests in numerous Investco AV LLCs, restitution for the individual investors who
were harmed, disgorgement of profits, and civil penalties. In June 2011, the DBO
obtained a preliminary injunction that prevented Investco M&D, the promoters, and
named Investco AV LLCs from selling, transferring, or otherwise disposing of the real


                                              2
property owned by the LLCs without court approval and from using the LLC bank
accounts for anything other than property management and development.
       In May 2012, the DBO action settled. Under the confidential settlement
agreement, Investco M&D, the promoters, and the named Investco AV LLCs agreed to a
permanent injunction enjoining them from: offering to sell or selling any security of any
kind, including interests in the LLCs, unless such securities are qualified or exempt;
offering or selling any security by means of written or oral communications that contain
untrue statements of material fact or omit to state material facts; and violating the
February 2009 desist and refrain order. In exchange, the DBO released these defendants
from all claims that were or could have been brought by the DBO. On May 14, 2012, the
trial court (Hon. Harold Kahn) entered the stipulated interlocutory judgment.
       In January 2013, the trial court (Hon. Marla J. Miller) appointed James H. Donell
as special master to monitor and approve the sale of the real properties held by the LLCs.
Under the appointment order, any development plan or sale of property had to be
approved by the special master based on his good faith belief that the sale or development
plan was in the best interests of the investors of the Investco AV LLCs. The special
master’s duties did not involve the day-to-day management or development of any
Investco AV LLC property or day-to-day management of Investco M&D.
       In March 2013, the DBO sent notices of the settlement to approximately 443
investors in the Investco AV LLCs, including respondents. In August 2013, respondents
each filed civil actions against Investco M&D, the promoters, the Investco AV LLCs, and
various entity and individual defendants, asserting causes of action for the unlawful offer
and sale of unqualified non-exempt securities, material misrepresentations and omissions
in the offer and sale of securities, fraud and deceit, and various torts including
negligence, conversion, and breach of fiduciary duty.1


       1
        The DBO’s request for judicial notice of respondents’ complaints is granted.
(Evid. Code, § 452, subd. (d).) The complaints largely mirror one another, with the main
difference being the named defendants. In Agasaveeran’s complaint, the defendants are
Investco M&D, the promoters, Investco AV20 and AV21, and Skyfusion AV18 LLC,

                                              3
       In December 2013, Investco M&D, the promoters, and several Investco AV LLCs
(the moving defendants) moved to amend the interlocutory judgment to stay all actions
against them arising out of the subject matter of the settlement agreement pending
completion of their obligations under the settlement agreement. The moving defendants
argued that if respondents obtained the relief they sought in their individual actions, the
Investco AV20 and AV21 LLCs would almost certainly be forced to sell their real estate
holdings at reduced prices to satisfy the judgments, which would interfere with the terms
of the settlement, give respondents far more than their pro rata share of the assets owned
by the LLCs in which they invested, and create a shortfall for the remaining Investco
AV20 and AV21 LLC investors.
       The DBO filed a written joinder to the moving defendants’ motion, “adopt[ing]
the request and memorandum of points and authorities and supporting documents filed
therewith.” Additionally, the DBO argued that “[i]f the two individual investors who
have recently filed their own separate civil actions . . . are allowed to proceed with their
own actions before the Special Master has completed his oversight and review of real
property sales and distribution of proceeds, these particular investors advance their own
interests at the expense of all investors.” The DBO stated that “[i]n the interests of
promoting the interests of each and all investors equally, and without favoring one
investor over another, the Commissioner joins in the Defendants’ Motion to Modify the
Interlocutory Judgment to enjoin investors, . . . and all other persons or entities from
seeking from defendants relief of any kind, in law or in equity, creating or enforcing a
lien upon any real property, or the doing of any act or thing whatsoever to interfere with
the oversight, control, or management of the special master during the course of his
appointment in this action and until the filing of Final Judgment.”
       Respondents filed a “special appearance” as “interested parties” in opposition to
the motion to modify. They argued that they were involuntarily bound by the settlement



while the defendants in Bryant’s complaint are Investco M&D, the promoters, Investco
AV21, Dareld Phillips, Sr., and Bonnie Phillips.

                                              4
agreement and were denied due process because they received no notice of the settlement
nor any opportunity to be heard, object, or opt out. They further argued that the
settlement agreement was unduly favorable to Investco M&D and the promoters because
it permitted them to retain the fruits of their fraud and allowed them to remain in control
of the underlying properties and investment vehicles, subject to limited oversight.
Respondents further contended the settlement agreement was unfairly punitive against
them because it limited their income, restricted their damages, modified their private
contractual relations, forced them to be involuntary partners with the promoters, and
replaced their right to legal recourse with a revocable, unsecured personal “guarantee” of
70 percent return on their principal investment. Respondents further argued that a forced
liquidation of the underlying properties would not necessarily result because the
promoters were personally liable for respondents’ damages, and respondents were also
seeking rescission, which would revest title in the underlying properties back to the
moving defendants.
       The trial court (Hon. Ernest H. Goldsmith) held three lengthy hearings on the
motion, which we summarize below.
       1. The March 7, 2014 Hearing
       During the first hearing, the trial court immediately expressed concerns about
several aspects of the settlement. The court stated that the LLCs’ assets “can be
dissipated” while the investor actions were stayed, leaving them with “thin air to go
against.” Respondents’ counsel, Val Hornstein, added that his clients would be left with
“an unsecured promise by crooks” to try to make a 70 percent return to his clients while
they maintained control of the LLCs’ properties. The trial court responded, “I’m very
queazy [sic] about it, going along with this. I think the State is in it, and that was highly
persuasive. It could be highly persuasive to the Court to approve it.” The trial court went
on to voice concerns about the promoters managing the properties, referring to this as a
“fox in the hen house problem,” and positing whether it would be better to appoint a
receiver. The DBO’s counsel, Edward Shinnick, responded that although the DBO
“take[s] no position” on the “LLCs’ [being] managed by the bad guys,” a receivership


                                              5
would add expenses for the investors, so it was more economical for the special master to
oversee the promoters.
       The court also questioned Mr. Hornstein about whether his clients would receive
an unequal share of the proceeds relative to the other investors if the individual actions
moved forward. During this discussion, the trial court observed, “There could be a class
action here. . . . Somebody could have filed a class action.” Mr. Hornstein responded, “It
could have been, but that’s not the case.” Mr. Hornstein went on to argue that the
settlement agreement “overrides [his clients’] private contract rights, and that cannot be
done constitutionally either. . . . [I]t makes my clients involuntary partners with crooks.
They have a right to rescind those contracts. The Department is not seeking recission
[sic]. It is seeking to enjoin their conduct, and then allow them to manage the property
and give an unsecured promise of a 70 percent return.”
       The trial court later commented, “I’ll tell you what I’m concerned about. It’s the
fox in the hen house kind of thing that concerns me, and also no one has addressed the
Constitutional issue that Mr. Hornstein has raised.” In response, Mr. Shinnick argued
that because the DBO action was not a class action, there were no due process procedures
involved. “We’re a regulatory body. We never appeared in here as a body representing
the investors. We’re looking out for the best situation for all investors, just like the SEC
is.” The court responded, “I have to tell you, if the State wasn’t in this, I would have lit a
match to the papers.”
       2. The April 4, 2014 Hearing
       During early remarks at the second hearing, the trial court stated that it was “not
inclined to grant the modification of the interlocutory judgment in the present form that it
has taken” and questioned why it would not be viable to allow the lawsuits to go forward
against the promoters. The trial court also questioned the limited nature of the special
master’s powers. “He’s supposed to see that . . . the promoters, who would still be in
charge and have the key, don’t loot Investco. And that’s about all the power he has. . . .
And it’s left up to the promoters to run the show. You know, I mean, here the State took



                                              6
this extraordinary action, closed them down— . . . took them over, and the same people
are going to run the show. I mean, there’s a disconnect there, and I don’t get it.”
       The trial court also recognized that because the DBO action was not a class action
on behalf of the investors, there was no reason to provide investors with the ability to opt
out. Mr. Hornstein responded, “the due process issue here . . . is that . . . you cannot bind
non-parties to a settlement agreement.” After Mr. Hornstein called the DBO action an
“attempt to craft a class action settlement without due process rights,” the trial court
responded, “They didn’t. . . . But I still will tell you there’s an equity issue.”
       The trial court continued to question Mr. Hornstein on whether his clients’ actions
could harm the interests of the other investors. The court further commented, “I may
send you back to the drawing board, but in the present form of this, I find it very hard to
approve. That’s not saying that there might be something I’d approve, but it’s pretty
obvious that I am highly reluctant to approve this.”
       The trial court again raised concerns over the lack of notice to the investors,
saying “there is a due process issue here. I don’t know why people didn’t get notice. . . .
I appreciate the due process issue. I think that if there had been notice, you probably
would have a class action with all the protections that go along with that. [¶] I’m trying
to think of what you can do if I send you back to the drawing board. If this is take-it-or-
leave it, I’m not going to take it.” Mr. Hornstein offered the suggestion to modify the
complaint to make it a class action and represent all of the plaintiffs in one action.
However, Alan Sparer, the moving defendants’ attorney, raised questions about the
viability of a class action given the differing circumstances of the individual investments.
The DBO also argued that a class action was not a good solution because the LLCs would
pay the class attorney’s fees, lowering the return to each investor. The trial court agreed,
but stated that a class action is “always a fallback.”
       The trial court once again raised the option of appointing a receiver and
commented that “no one has ever told me how expensive it would be, why is that not
appropriate.” Mr. Sparer explained that “the thinking about keeping the promoters in was
that part of the settlement was that they were guaranteeing that they would be liable for


                                               7
shortfalls that occurred in returning investors their money. [¶] So the idea was to
incentivize them to put in efforts for which you might have to pay somebody else a lot of
money.” The court responded, “I don’t find that highly persuasive. [¶] I am also
concerned about their good intentions to pay the differential if the money that they made
on this deal by selling to the LLCs is dissipated or it’s somewhere else or it’s in aunt
Martha’s bank account.”
       At the end of the hearing, the trial court directed the DBO to submit further
briefing regarding a new plan for management of the two LLCs’ properties as well as a
summary of the financial history.
         3. The May 19, 2014 Hearing
       At the third and final hearing on the motion, the trial court reiterated its concerns
that respondents would “step in front of” the other investors. Mr. Hornstein continued to
attack the settlement agreement and the lack of notice to the investors, leading the trial
court to comment, “This should have been a class action.” The trial court also expressed
concerns about “cutting off [the investors’] rights to sue.”
       The trial court also stated that the DBO’s further briefing was sort of the same
recital and that the court still did not “know what the financial situation of the promotors
is. You know, I did look at some of these cost figures, and what they paid for this land,
and then what they sold it to the LLCs for. So I mean, they made some serious money
there. Where is it?”
       The trial court also continued to attack the unsecured promise of a 70 percent
return. “This is illusory, sir. It’s illusory, Counsel. We don’t know, we haven’t the
faintest idea if they can make up the difference or any of it.” “If they have assets, those
assets can be in Bermuda by 2018. I mean, they already broke the law once. I don’t
know what they are going to do again. So that doesn’t mean anything to me. It’s
illusory, the 70 percent. [¶] Because we don’t know if they got two bits or they got
money away somewhere; the State should have been mindful of that issue from the start.
And that’s a major default in this whole thing.”



                                              8
       In the end, the trial court stayed respondents’ actions as to the Investco AV LLCs,
but allowed their actions against Investco M&D and the promoters to continue. The
court further held that the special master would obtain full management and control of the
LLCs and would make the final determination of when to liquidate them. On July 9,
2014, the court issued its final order granting in part and denying in part the moving
defendants’ motion to modify. The court also entered the amended interlocutory
judgment and amended order appointing Mr. Donell special master.
       B. Respondents’ Motion for Attorney Fees
       Respondents moved for attorney fees against the moving defendants and the DBO
jointly and severally under section 1021.5. Respondents argued that through their efforts
opposing the motion to modify, they obtained the right to immediately institute private
litigation against Investco M&D and the promoters, removal of the promoters from any
role in managing or operating the Investco AV LLCs and their properties or funds, a
significant expansion in the special master’s role such that he solely manages and
operates the Investco AV LLCs, and an order tolling relevant statutes of limitation and/or
repose.
       At the September 9, 2014 hearing on the matter, the trial court stated: “I think [the
investors] are in a safer position with the removal of the promotors. I feel that the result
with the expanded powers of the Special Master was a good result. [¶] I think the
alternative, the only alternative, would have been a class action, which would have
involved more litigation, more expense. I think that there is a substantial savings to all
involved with the kind of litigation that would ensue. [¶] Because I think it was a head-
in-the-sand approach to think that this venture could proceed after the violation of
California Securities Law by the promoters. As I said before, and I’ll say it again, it was
putting the fox in the henhouse. [¶] . . . [¶] I believe there was an enforcement of an
important right affecting the public interest. I think a benefit was resulted, and not just on
the 441 individual investors who were the people that need protection or assistance, if
you will, but the public generally. [¶] I think the optics of this case go beyond its four
corners because I think it says to those out there who might promote something along the


                                              9
lines of the Investco promotors, that they cannot act with impunity; that no matter what
kind of a deal they strike, there is going to be litigation that is going to presumably
protect the public. [¶] So I think that the interested parties have met their burden under
CCP 1021.5[.]”
       Notably, the trial court stated the fee award would not be against the DOB. In
response, Mr. Hornstein argued that it was because the DBO “joined with the defendants
to shield the promotors” that private enforcement was necessary, and the DBO was
responsible for the insufficient protections in the original settlement. Mr. Shinnick
responded that the DBO joined in the motion to protect the settlement and increase the
likelihood of maximizing recovery, but the court responded, “That was your leitmotif in
this whole thing. [¶] . . . [¶] . . . I just disagreed with you all the way in your approach on
this. I thought it was a recipe for disaster to have the promotors in charge of this.” The
trial court also mused as to whether “there’s an opening here that if somehow that’s not
paid, then maybe the State should have to back them up. I don’t know if I can do that.”
       The docket entry immediately following the September 9th hearing indicated that
the motion for attorney fees was “granted against the promoters but not against the
State.” However, the September 24, 2014 order prepared by the court stated that attorney
fees in the amount of $149,500 were payable “jointly and severally” by the DOB and the
moving defendants. The order further held that the following benefits were achieved:
“Preservation of the right of investors to bring lawsuits against the defendant promoters
[from] . . . removing defendant promoters from financial and management control of the
LLCs holding the real estate which was the subject of the fraudulent sales; expanded
powers of a Special Master including management of the LLCs; Court supervision of the
Amended Interlocutory Judgment; tolling of [the statute of] limitations for investors; and,
avoiding the necessity of a lengthy and expensive class action lawsuit.” The court further
found “the necessity for private enforcement inasmuch as reliance on public enforcement,
as structured prior to the intervention, would not have resulted in the enumerated benefits
to the class” and that the fee award “is justified because the financial burden of private



                                              10
enforcement would have prevented intervention by the Interested Parties and other
investors.”
       C. Appeal
       On October 8, 2014, the DBO filed a timely notice of appeal. (Apex LLC v.
Korusfood.com (2013) 222 Cal.App.4th 1010, 1015–1016 [order granting motion for
attorney fees qualifies as appealable collateral order].) On October 14, 2014, Investco
M&D, Thompson and Hanson (the appealing defendants) also filed a timely notice of
appeal. The appeals were consolidated for briefing, argument and decision.
                                   III.   DISCUSSION
       Code of Civil Procedure “[s]ection 1021.5 codifies California’s version of the
private attorney general doctrine, which is an exception to the usual rule that each party
bears its own attorney fees. [Citation.] The purpose of the doctrine is to encourage suits
enforcing important public policies by providing substantial attorney fees to successful
litigants in such cases. [Citation.]” (Robinson v. City of Chowchilla (2011) 202
Cal.App.4th 382, 390 (Robinson).)
       The statutory language of section 1021.5 “can be divided into the following
separate elements. A superior court may award attorney fees to (1) a successful party in
any action (2) that has resulted in the enforcement of an important right affecting the
public interest if (3) a significant benefit has been conferred on the general public or a
large class of persons, (4) private enforcement is necessary because no public entity or
official pursued enforcement or litigation, (5) the financial burden of private enforcement
is such as to make a fee award appropriate, and (6) in the interests of justice the fees
should not be paid out of the recovery.” (Robinson, supra, 202 Cal.App.4th at p. 390, fn.
omitted.)2 “As section 1021.5 states the criteria in the conjunctive, each of the statutory
criteria must be met to justify a fee award. [Citations.]” (County of Colusa v. California
Wildlife Conservation Bd. (2006) 145 Cal.App.4th 637, 648.)



       2
        The sixth element is not applicable here because only injunctive relief was
obtained.

                                             11
       A. Standard of Review
       “ ‘On review of an award of attorney fees after trial, the normal standard of review
is abuse of discretion.’ ” (McGuigan v. City of San Diego (2010) 183 Cal.App.4th 610,
622 (McGuigan).) “ ‘Whether a party has met the requirements for an award of fees and
the reasonable amount of such an award are questions best decided by the trial court in
the first instance. [Citations.] That court, utilizing its traditional equitable discretion,
must realistically assess the litigation and determine from a practical perspective whether
the statutory criteria have been met. [Citation.] Its decision will be reversed only if there
has been a prejudicial abuse of discretion. [Citation.] To make such a determination we
must review the entire record, paying particular attention to the trial court’s stated reasons
in denying or awarding fees and whether it applied the proper standards of law in
reaching its decision. [Citations.]’ ” (Crawford v. Board of Education (1988) 200
Cal.App.3d 1397, 1405–1406 (Crawford).) However, “[w]here the material facts are
undisputed, and the question is how to apply statutory language to a given factual and
procedural context, the reviewing court applies a de novo standard of review to the legal
determinations made by the trial court. [Citation.]” (McGuigan, supra, 183 Cal.App.4th
at p. 623.)
       The DBO and appealing defendants (collectively appellants) argue that de novo
review is appropriate because the pertinent facts are undisputed and the issue on appeal is
simply whether each element under section 1021.5 is met. We disagree, because the trial
court resolved disputed contentions based on the facts and evidence before it to reach its
decision. For instance, it found the investors were ultimately better off with a
receivership rather than allowing the promoters to continue managing the underlying
properties, a finding that appellants still dispute by arguing that the investors will receive
a lower return than they otherwise would under the original interlocutory judgment. The
trial court also considered financial information regarding the LLCs and the underlying
properties in evaluating whether to continue to allow the promoters to manage the
properties and/or expand the special master’s powers. These are precisely the types of
determinations best decided by the trial court in the first instance. (See Crawford, supra,


                                               12
200 Cal.App.3d at pp. 1405–1406.) Thus, our review is simply to determine whether the
result was within the range of the superior court’s discretion. (Robinson, supra, 202
Cal.App.4th at p. 391.)
       Karuk Tribe of Northern California v. California Regional Water Quality Control
Bd., North Coast Region (2010) 183 Cal.App.4th 330 (Karuk Tribe) and Center for
Biological Diversity v. California Fish & Game Com. (2011) 195 Cal.App.4th 128
(Center for Biological Diversity) are plainly distinguishable. In those cases, our
colleagues in Division Two exercised independent review to reverse fee awards because
the interim victories the plaintiffs obtained—remand orders that required administrative
agencies to reconsider previously decided matters but did not result in a change in the
ultimate decisions—did not satisfy the “ ‘successful’ ” party requirement as a matter of
law. Here, respondents did not simply obtain an “ ‘augmented explanation’ ” for a
decision that did not otherwise change the overall state of affairs. (See Center for
Biological Diversity, supra, 195 Cal.App.4th at p. 131; Karuk Tribe, supra, 183
Cal.App.4th at p. 335.) Rather, their efforts resulted in substantive changes to the
interlocutory judgment and special master’s powers, and they averted a complete stay of
their individual actions. It cannot be said that respondents were unsuccessful as a matter
of law.
       B. Successful Parties in an Action
       A successful party is one who “ ‘ “succeed[s] on any significant issue in litigation
which achieves some of the benefit the parties sought in bringing suit.” ’ [Citation.]”
(Maria P. v. Riles (1987) 43 Cal.3d 1281, 1292.) To determine whether a party is
“successful,” courts look at the outcomes the parties sought in commencing the action,
the situation before the party commenced the suit, and the situation today. (Folsom v.
Butte County Assn. of Governments (1982) 32 Cal.3d 668, 685, fn. 31.) In order to
effectuate the policy of Code of Civil Procedure section 1021.5, courts take “a broad,
pragmatic view of what constitutes a ‘successful party.’ ” (Graham v. DaimlerChrysler
Corp. (2004) 34 Cal.4th 553, 565 (Graham).) Thus, “[a] party who satisfies the criteria
for intervention and who contributes to the success of public interest litigation should be


                                             13
entitled to an award of attorneys’ fees on the same terms as any other party.” (City of
Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 87; see also Crawford, supra, 200
Cal.App.3d at p. 1407, fn. omitted [relying on federal decisional authority holding that
interveners who make “a clear showing of some unique contribution to the litigation”
may be entitled to fees under section 1021.5].) Furthermore, the limited nature of success
does not preclude a fee award, but merely requires that the amount of the award be
reduced accordingly. (Weiss v. City of Los Angeles (2016) 2 Cal.App.5th 194, 219
(Weiss).)
       Appellants argue that because respondents did not formally intervene in the DBO
action, they are not entitled to section 1021.5 attorney fees. Appellants cite our decision
in Savaglio v. Wal-Mart Stores, Inc. (2007) 149 Cal.App.4th 588 (Savaglio) for the
position that an attorney fee award is not permitted under section 1021.5 where the party
chose to file a motion instead of institute an action. In Savaglio, the defendant-retailer
was sued for violating meal and rest break laws. During the litigation, the defendant filed
records conditionally under seal without complying with California Rules of Court, rules
2.550 and 2.551. After a newspaper moved to unseal the records under rule 2.551(h),3
the defendant filed a belated motion to seal, which the trial court granted in part. The
trial court also denied the newspaper’s request for attorney fees under section 1021.5.
We reversed the trial court’s order to the extent that it granted the motion to seal, but
affirmed the denial of attorney fees to the newspaper. In doing so, we noted that the
newspaper “did not file a complaint in intervention under Code of Civil Procedure
section 387, and the court declined to find it a de facto intervener.” (Savaglio, supra, 149
Cal.App.4th at p. 602.) We further held that because the motion to seal “was entirely
unrelated to the objective of the lawsuit,” the newspaper’s success was an “ancillary part
of the litigation.” (Id. at p. 603.)




       3
        This rule allows a “member of the public” to move to unseal a record. (Cal.
Rules of Court, rule 2.551(h)(2).)

                                             14
       Unlike the newspaper in Savaglio, respondents were not strangers to the DBO
action. The motion to modify the interlocutory judgment specifically targeted their civil
actions by name and case number and sought to have the actions stayed. Appellants cite
no authority requiring such clearly interested parties to formally move to intervene in
order to obtain section 1021.5 fees, and under the circumstances presented here, we
decline to require it. (See Graham, supra, 34 Cal.4th at p. 566 [procedural device used to
enforce important right is not determinative of entitlement to section 1021.5 fees].) From
a broad and pragmatic view, respondents’ special appearance was the functional
equivalent of intervention. While in Savaglio, we specifically noted that the trial court
declined to find the newspaper to be a “de facto intervener” (Savaglio, supra, 149
Cal.App.4th at p. 602), here, the trial court referred to respondents as “the Intervenor[s],
or call them ‘Interested Parties’ if you will” who “hired Mr. Hornstein to bring this
intervention,” and the trial court’s final order also referred to respondents’ special
appearance as an “intervention.”
       Furthermore, unlike the newspaper’s success on the motion to unseal in Savaglio,
respondents’ success was not “ancillary” or “entirely unrelated to the objective of the
lawsuit.” (Savaglio, supra, 149 Cal.App.4th at p. 603.) The interlocutory judgment and
order setting forth the powers and duties of the special master comprised the core relief
negotiated in the DBO action. The trial court sharply criticized this settlement structure
in several respects, referring to one of the key terms as “illusory,” and respondents were
successful in causing substantive changes to be made to the settlement. These successes
were related to the objective of the DBO action because, in the court’s reasonable view,
they provided better protections to the victims of the securities fraud.
       Appellants also rely on Consumer Cause, Inc. v. Mrs. Gooch’s Natural Food
Markets, Inc. (2005) 127 Cal.App.4th 387 (Consumer Cause), disapproved on other
grounds by Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260, 269, but we
find Consumer Cause to be distinguishable. There, the court upheld the denial of section
1021.5 attorney fees to a putative class member who successfully objected to a proposed
classwide settlement. The court held that the objector was not a successful party because


                                              15
he merely “interposed objections that, while sustained, simply permitted the original
parties to the lawsuit . . . to continue with their lawsuit as initially filed.” (Consumer
Cause, supra, 127 Cal.App.4th at p. 404.) Here, after the special appearance by
respondents, the DBO and moving defendants did not simply continue on as before.
Rather, they were subject to substantive changes in the settlement structure and control of
the underlying properties.
       Appellants contend that respondents were not successful parties relative to their
main objectives in opposing the motion to modify because they did not obtain all the
relief they sought, they did not obtain an immediate return of their investments, and the
trial court implicitly rejected their constitutional/due process arguments. Appellants
further argue that respondents cannot claim success for the additional investor protections
because they never asked the court to amend the interlocutory judgment to remove the
promoters from management and control or give the special master full control of the
LLCs. Appellants claim it was the trial court who raised the “fox in the hen house” issue
sua sponte.
       We disagree with these points. Respondents successfully opposed a motion that
would have completely stayed their respective individual actions. Comparing the
situations before and after they took private action (see Folsom, supra, 32 Cal.3d at
p. 685, fn. 31), respondents obtained part of the outcome they expressly sought. They did
not, as appellants contend, affirmatively seek an immediate return of their investments;
rather, they opposed a motion that, if granted, would have restrained them from
continuing to litigate, and they partially prevailed. The limited nature of their success
does not undermine their entitlement to fees (Weiss, supra, 2 Cal.App.5th at p. 219), and
appellants do not contend that the fee award should have been further reduced to account
for partial success.4


       4
         The DBO argues for the first time in its reply brief that we should grant a
reasonable offset for the DBO’s role in obtaining the amended orders so that respondents
will not be compensated for results they did not seek. The DBO has waived this
particular argument because it was not raised in the proceedings below or in appellants’

                                              16
       The trial court did not, as appellants contend, reject respondents’ due process and
constitutional arguments. Rather, the court repeatedly stated its concerns about due
process, notice to the investors, and “cutting off their rights to sue.” The court took these
issues seriously, if not as a strict constitutional problem, then as an issue of fundamental
fairness or “an equity issue” because, as Mr. Hornstein argued, the settlement agreement
and proposed modifications threatened to impact the investors’ rights and possibility of
recovery.
       The “fox in the hen house” concern that appellants credit solely to the trial court
was first discussed in respondents’ opposition brief. Respondents specifically argued that
it was unfair to allow the promoters to remain in control of the underlying properties and
to replace the investors’ right to immediate legal recourse with a revocable, unsecured
personal guarantee of 70 percent return on their investment. As recounted above, these
arguments successfully resonated with the trial court. The expansion of the special
master’s role was a solution that logically stemmed from the problems briefed by
respondents. Furthermore, the trial court stated that the benefits to the investors were
“directly derived” from respondents’ efforts and “never would have happened
otherwise.” The record amply supports the conclusion that respondents were
“ ‘demonstrably influential’ ” in “prompting a change in the state of affairs” (Karuk
Tribe, supra, 183 Cal.App.4th at p. 363), and as de facto interveners, provided a “unique
contribution to the litigation.” (Crawford, supra, 200 Cal.App.3d at p. 1407, fn. omitted.)
       In its reply brief, the DBO argues that respondents cannot obtain fees because they
failed to provide the DBO with prelitigation notice and an opportunity to settle the
dispute. Besides improperly raising this argument for the first time in its reply brief, the
DBO erroneously presumes that respondents seek attorney fees under a “catalyst theory.”
Under this theory, fees may be awarded “even when litigation does not result in a judicial
resolution if the defendant changes its behavior substantially because of, and in the



opening briefs. (Children’s Hospital & Medical Center v. Bontá (2002) 97 Cal.App.4th
740, 776–777.)

                                             17
manner sought by, the litigation.” (Graham, supra, 34 Cal.4th at p. 560.) However, in
the proceedings below, the DBO did not change its behavior in a way that mooted
judicial resolution. Rather, there was judicial resolution in the form of a partial denial of
the motion to modify and court-approved changes to the interlocutory judgment and
special master order. Because the circumstances here are not analogous to a catalyst
theory, the lack of prelitigation notice is not a bar to section 1021.5 attorney fees. (See
Vasquez v. State of California (2008) 45 Cal.4th 243, 260.) We conclude the trial court
did not abuse its discretion in finding respondents to be successful parties.
       C. The DBO Was an Opposing Party
       “[O]nly an opposing party can be liable for attorney fees under section 1021.5.”
(Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1176.) “An ‘opposite party’
means ‘[a]n adversary in litigation.’ [Citation.] Thus, we construe the term ‘opposing
party’ as used in section 1021.5 to mean a party whose position in the litigation was
adverse to that of the prevailing party. Simply put, an ‘opposing party’ within the
meaning of section 1021.5 is a losing party.” (Nestande v. Watson (2003) 111
Cal.App.4th 232, 240–241 (Nestande).) “[A] public entity may be held liable for
attorney fees only if the agency or its representatives was an ‘opposing party’ in the
litigation.” (Id. at p. 240.)
       The DBO argues it was not an opposing party because its interests were always
aligned with the investors. Procedurally however, the DBO stood on the opposite side of
respondents on the motion to modify, and the DBO’s original alignment of interests with
the investors was not dispositive. (See McGuigan, supra, 183 Cal.App.4th at p. 618
[settlement of class action “fundamentally changed the original positions” of parties from
adversaries to allies against objectors].) Although the DBO originally acted in the
interests of all investors when it sued Investco M&D and the promoters, it fundamentally
changed positions relative to respondents when it joined in the moving defendants’ effort
to stay their individual actions.
       The DBO argues it was not an opposing party because it merely filed a joinder in
the motion to modify, did not file a reply brief after respondents specially appeared, and


                                             18
simply sought the court’s guidance, without taking a position adverse to respondents.
The DBO cites Wal-Mart Real Estate Business Trust v. City Council of San Marcos
(2005) 132 Cal.App.4th 614 (Wal-Mart) in support. There, the public entity did not
oppose a petition for writ of mandate or take a legal position adverse to the real parties in
interest. (Id. at p. 625.) Rather, the public entity and city clerk filed its response, in
which they sought the court’s guidance on the proper verification of petition signatures,
and the city’s counsel only spoke briefly at the hearing. (Ibid.) As for the other real
party in interest in Wal-Mart who filed a written joinder to the petitioning party’s papers,
the court found that it was not an opposing party because it simply filed the joinder and
made no arguments at the hearing. (Ibid.)
       In contrast, the DBO filed a written joinder that not only adopted the request,
arguments, and supporting documents filed by the moving defendants, but included
additional arguments and legal authorities in support. Practically speaking, the DBO, in
advocating a stay of all investor actions, took a legal position adverse to respondents.
Thereafter, the DBO was actively involved in oral argument at all three hearings. Even if
the DBO’s dialogue with the court could be characterized as seeking the court’s
guidance, this posture developed after the court expressed reservations about granting the
motion and pressed all of the participants for alternative ideas. The DBO’s initial
position was fully in favor of the motion being granted, and its efforts to modify the
settlement in a way that satisfied the court’s concerns was necessary to avoid a complete
loss. As the trial court stated, “If this is take-it-or-leave-it, I’m not going to take it.”
Although the DBO submits that its motive was always to protect all of the investors—a
“leitmotif” that the trial court disagreed with—the DBO still acted on that motive in a
manner that was adverse to the position of respondents in the procedural and factual
context of the motion to modify.
       The DBO argues that the trial court’s final order on the fee motion makes clear
that the real dispute was between the moving defendants and the investors. However, a
realistic and practical assessment of respondents’ success requires us to look at not just
the final order but the entire factual and procedural context discussed above. Although


                                               19
the trial court was initially inclined to award fees only against the moving defendants and
not the DBO, we assume the trial court changed its mind based on the arguments made at
the September 9th hearing, including Mr. Hornstein’s point that the DBO was responsible
for the identified problems in the settlement agreement that were eventually addressed
after several rounds of hearings and submissions.
       Citing Nestande, supra, 111 Cal.App.4th at p. 242, the DBO argues that section
1021.5 was never intended to allow private parties like respondents to intervene in
government enforcement actions, claim disagreement with the agency’s discretionary
actions, and then use the public treasury as compensation. In the cited portion of
Nestande, however, the court rejected an argument that section 1021.5 attorney fees
should be paid by a public entity who allegedly failed to vigorously defend a ballot issue
in court, but was not an opposing or losing party for section 1021.5 purposes. (Ibid.)
Here, the DBO was an opposing party in relation to respondents in the motion to modify
proceedings.
       Finally, the DBO argues that to the extent the trial court awarded attorney fees
against the DBO to “back [the promoters] up” in the event of bankruptcy, this was
improper. However, we will assume the DBO was included in the final order because the
statutory bases for the award of section 1021.5 fees were satisfied, not based on the trial
court’s offhand comment.
       D. Enforcement of an Important Right Affecting the Public Interest
       Section 1021.5 permits a fee award “ ‘ “ ‘in any action which has resulted in the
enforcement of an important right affecting the public interest’ regardless of its source—
constitutional, statutory or other.’ ” [Citation.]’ ” (Weiss, supra, 2 Cal.App.5th at
p. 218.) “Although section 1021.5 provides no concrete standard or test against which a
court may determine whether the right vindicated in a particular case is sufficiently
‘important’ to justify a private attorney general fee award, the statutory language and the
pertinent federal authorities provide at least some guidance in this area. First, . . . the
broad statutory language and the federal precedents indicate that a right need not be
constitutional in nature to justify the application of the private attorney general doctrine;


                                              20
. . . [¶] Second, the Legislature obviously intended that there be some selectivity, on a
qualitative basis, in the award of attorney fees under the statute, for section 1021.5
specifically alludes to litigation which vindicates ‘important’ rights and does not
encompass the enforcement of ‘any’ or ‘all’ statutory rights. Thus, again like the federal
cases, the statute directs the judiciary to exercise judgment in attempting to ascertain the
‘strength’ or ‘societal importance’ of the right involved.” (Woodland Hills Residents
Assn., Inc. v. City Council (1979) 23 Cal.3d 917, 935 (Woodland Hills).)
       The general purpose of the CSL is to protect the public against the imposition of
unsubstantial, unlawful and fraudulent stock and investment schemes and the securities
based thereon. (People v. Rankin (1958) 160 Cal.App.2d 93, 96; see also People v.
Martinson (1986) 188 Cal.App.3d 894, 899 [intent behind Corp. Code, § 25530 was to
create governmental cause of action to protect investing public].) In its complaint against
Investco M&D, the promoters, and the Investco AV LLCs, the DBO stated that it was
bringing the action “in the public interest in the name of the People of the State of
California.” The securities fraud scheme at issue targeted the investing public in
California and reached hundreds of individual investors, raising approximately
$22,725,000. Thus, the statutory rights under the CSL enforced here were important and
affected the public interest.
       The DBO argues that respondents did not enforce any such rights in relation to the
DBO because the only CSL violations at issue were those of the moving defendants.
However, as discussed above, the DBO was an “opposing party” in this context because
it stood on opposite sides of respondents in the context of the motion to modify. During
these proceedings, the trial court took seriously the concerns raised by respondents about
due process, lack of notice to the investors, and “cutting off their rights to sue,” and
criticized the settlement terms negotiated by the DBO. Even if these matters did not rise
to the level of strict constitutional violations, the trial court reasonably concluded that the
efforts of respondents strengthened the settlement in ways that were important to
hundreds of victims of securities fraud.



                                              21
       Consumer Cause and Karuk Tribe are distinguishable in that they involved
procedural successes that did not result in any substantive changes. In Karuk Tribe, the
fee claimants simply obtained a court order requiring a regional water quality control
board to provide an “augmented explanation” on the same decision it had previously
made. (Karuk Tribe, supra, 183 Cal.App.4th at p. 369.) In Consumer Cause, the fee
applicant’s successful objection to a class action settlement simply “[f]ree[d] [the]
putative class members from the constraints of a proposed settlement agreement they had
the right to disregard by exercising their opt-out right.” (Consumer Cause, supra, 127
Cal.App.4th at p. 404.) In contrast, respondents obtained actual, substantive changes to
the interlocutory judgment and special master’s powers that, in the trial court’s
reasonable estimation, better protected hundreds of victims of securities fraud. The trial
court did not abuse its discretion in finding that an important public right was enforced.
       E. Significant Benefit to the General Public or Large Class of Persons
       “[T]he ‘significant benefit’ that will justify an attorney fee award need not
represent a ‘tangible’ asset or a ‘concrete’ gain but, in some cases, may be recognized
simply from the effectuation of a fundamental constitutional or statutory policy.”
(Woodland Hills, supra, 23 Cal.3d at p. 939.) In adjudicating a motion for attorney fees
under section 1021.5, a trial court should “determine the significance 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.)
       The record supports the trial court’s finding that significant benefits resulted to a
large class of persons and the public. These benefits included: the removal of the
promoters from management and control of the LLCs, the expansion of the special
master’s powers, the preservation of the investors’ rights to sue the promoters, and the
deterrent effect or “cautionary message” to other promoters of similar securities. (See
Sokolow v. County of San Mateo (1989) 213 Cal.App.3d 231, 246 [significant benefit
where litigation had deterrent effect against similar violations].) As discussed above, we



                                              22
reject appellants’ argument that the additional investor protections and expansion of the
special master’s powers were not causally related to respondents’ efforts.
       Appellants argue that the special master’s expanded powers do not confer a
significant benefit to the investors because each investor is now expected to receive a
lower return than they otherwise would have received under the original interlocutory
judgment. In appellants’ view, the promoters had more of an incentive than the special
master to sell the property at the highest price because the promoters were not
compensated for their efforts and wanted to avoid personal liability. However, appellants
cite no evidence in the record supporting the conclusion that the investors will receive a
lower return under a receivership, and we see nothing unreasonable in the trial court’s
contrary view that the promoters could not be trusted to control the LLCs and the
underlying properties. It appears the court never obtained the evidence it requested
regarding the purportedly high costs of a receivership, and the trial court was justifiably
suspicious of the unsecured promise of a 70 percent return given the facts and history of
the case. Nothing in this record demonstrates the trial court acted unreasonably in
concluding that the investors significantly benefitted from having more trustworthy
management of the underlying properties.
       Appellants argue that allowing investor actions to proceed against the promoters is
not a significant benefit because it only benefits respondents. Even so, we conclude the
other investor protections would sufficiently support the significant benefit element.
       Finally, appellants argue that respondents deserve no credit for avoiding class
action litigation when it was their counsel who suggested turning respondents’ actions
into a class action. We disagree with this characterization of the discussion. Throughout
the hearings, the trial court repeatedly commented that there should have been a class
action and referred to the class action option as a “fallback” if a better solution could not
be reached. Mr. Hornstein’s suggestion to amend his clients’ actions into a class action
on behalf of all investors was made in the course of this discussion. The trial court
reasonably concluded that its ruling adequately preserved the rights of the investors while



                                             23
avoiding the “tremendous amount of litigation” in proceeding as a class action, thereby
conferring a net benefit to the investors as a whole.
       We conclude the trial court did not abuse its discretion in finding that respondents’
efforts conferred a significant benefit on a large group of people and the public.
       F. Necessity of Private Enforcement
       The necessity of private enforcement “factor ‘ “looks to the adequacy of public
enforcement and seeks economic equalization of representation in cases where private
enforcement is necessary.” ’ [Citation.]” (Committee to Defend Reproductive Rights v. A
Free Pregnancy Center (1991) 229 Cal.App.3d 633, 639 (Committee to Defend
Reproductive Rights).) “Important factors the trial court should address in determining if
the services of the private party were necessary, so as to support that ultimate finding, are
these: (1) Did the private party advance significant factual or legal theories adopted by
the court, thereby providing a material non de minimis contribution to its judgment,
which were nonduplicative of those advanced by the governmental entity? (2) Did the
private party produce substantial evidence significantly contributing to the court’s
judgment which was not produced by the governmental entity, and which was neither
duplicative of nor merely cumulative to the evidence produced by the governmental
entity?” (Id. at pp. 642–643, fn. omitted.)
       Appellants argue that respondents’ special appearance was not necessary because
the DBO had already sued to stop the CSL violations, obtained a preliminary injunction,
and negotiated the settlement and appointment of the special master. However, the
necessity element is not lacking simply because a private party and public entity co-
litigate against a common private defendant. (See Committee to Defend Reproductive
Rights, supra, 229 Cal.App.3d at p. 645.) The trial court believed the settlement terms
negotiated by the DBO were insufficient to protect the investors’ rights and interests, and
the issues brought to light by respondents in their special appearance eventually led to
changes in the negotiated settlement and management of the underlying properties that,
from the trial court’s standpoint, added beneficial protections for the investors. Thus, the
record supports the finding that respondents advanced significant factual and legal


                                              24
theories that were adopted by the court and provided a material, non de minimis
contribution to the final ruling. (Id. at p. 642.) These services were not “duplicative,
unnecessary, [or] valueless” (id. at pp. 643), and the trial court expressly stated that
respondents’ special appearance was necessary to achieve these results. We see no abuse
here.
        G. Financial Burden of Private Enforcement
        “ ‘ “An award on the ‘private attorney general’ 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 burden on the plaintiff ‘out of proportion to his
individual stake in the matter.’ [Citation.]” ’ [Citation.] ‘This requirement focuses on
the financial burdens and incentives involved in bringing the lawsuit.’ [Citation.]”
(Conservatorship of Whitley (2010) 50 Cal.4th 1206, 1215 (Whitley).)5 “ ‘ “Code of Civil
Procedure section 1021.5 is intended to provide an incentive for private plaintiffs to bring
public interest suits when their personal stake in the outcome is insufficient to warrant
incurring the costs of litigation.” ’ ” (Whitley, supra, 50 Cal.4th at p. 1221.) However,
“[w]hen each of the [section 1021.5] criteria is met, the fact the primary effect of the




        5
         In Whitley, the Supreme Court discussed “[t]he method for weighing costs and
benefits … illustrated in Los Angeles Police Protective League v. City of Los Angeles
(1986) 188 Cal.App.3d 1 (Los Angeles Police Protective League)” which involves fixing
the monetary value of the benefits “actually attained” by the successful litigants,
discounting this amount by an estimate of the probability of success, and comparing the
estimated value of the case to the actual costs of litigation. (Whitley, supra, 50 Cal.4th at
pp. 1215–1216.) However, “Courts of Appeal have interpreted Whitley differently as to
whether this test is required in every instance[.]” (Heron Bay Homeowners Assn. v. City
of San Leandro (2018) 19 Cal.App.5th 376, 391, fn. 11 (Heron Bay); see Summit Media,
LLC v. City of Los Angeles (2015) 240 Cal.App.4th 171, 192 (Summit Media) [rejecting
arguments that Los Angeles Police Protective League test applies in every case and that
absence of monetary award equates to zero financial benefits].) Given the unique
procedural posture of the instant case, we will not apply the Los Angeles Police
Protective League test and will look to other case authorities examining financial
incentives in the absence of a monetary award.


                                              25
action was to vindicate a plaintiff’s personal economic interests does not foreclose an
award of attorney fees.” (Robinson, supra, 202 Cal.App.4th at p. 400.)
       The trial court concluded that the attorney fee award of $149,500 was justified
because the financial burden of private enforcement would have prevented intervention
by respondents and other investors. Implied in this conclusion is the finding that the
litigation costs transcended any personal interests or financial incentives that respondents
may have had in specially appearing.
       On appeal, appellants argue that respondents were not entitled to section 1021.5
attorney fees because any benefit they achieved for other investors was merely
coincidental to their expected personal monetary gain in their individual actions (i.e.,
$475,000 in compensatory damages,6 punitive damages, treble damages, disgorgement,
and conversion value of real property). Respondents counter that they had no immediate
monetary gain to achieve from opposing the motion to modify and were forced to move
defensively in a case separate from their own to oppose a motion which sought to deny
all investors the right to sue the promoters.
       The absence of a monetary award is not, by itself, dispositive of whether there is a
sufficient financial incentive to justify litigation in economic terms. This principle was
illustrated in Millview County Water Dist. v. State Water Resources Control Bd. (2016) 4
Cal.App.5th 759 (Millview), a decision from Division One of this court. In Millview,
three plaintiffs successfully challenged a cease and desist order (CDO) issued by the
State Water Resources Control Board (the Board) that would have severely restricted
diversion under a water rights claim. Two of the plaintiffs (Hill and Gomes) had sold the
water rights claim to the third plaintiff, Millview County Water District (Millview), for
$2.1 million, but the final purchase price above a $500,000 down payment was
contingent upon the outcome of proceedings challenging the CDO, with reductions in
Millview’s diversion resulting in corresponding reductions to the purchase price.

       6
        This figure is based on allegations in respondents’ complaints that Agasaveeran
purchased securities in the total amount of $375,000, and Bryant purchased securities in
the amount of $100,000.

                                                26
(Millview, supra, 4 Cal.App.5th at p. 764.) The Millview court reversed the award of
attorney fees to the plaintiffs, finding they had sufficient financial incentives to justify
their challenge to the CDO. (Id. at pp. 767–769.)
       Specifically as to Hill and Gomes, the Millview court held their financial incentive
was “unmistakable” because “[i]f the proposed CDO was endorsed by the Board, they
would be limited to retaining the down payment under the purchase agreement, forfeiting
the portion of the purchase price that was due if no governmental order was entered
limiting diversion under the [water rights] claim. . . . Defeating entry of the proposed
CDO had the potential to earn them as much as an additional $1.6 million under the
purchase agreement.” (Millview, supra, 4 Cal.App.5th at p. 769.) As for Millview, the
court held that if the CDO was entered severely curtailing its diversion, the water rights
claim it had paid $500,000 for “would be rendered worthless.” (Id. at p. 770.) The court
also observed that the ability to divert water was “plainly valuable” to Millview because
it was willing to pay $2.1 million for the claim and hoped to gain the ability to provide
independent water service to customers on a waiting list, as well as a supply of “ ‘free’ ”
water once the purchase costs of the claim were depreciated. (Ibid.)
       Millview relied on Summit Media, supra, 240 Cal.App.4th 171 as controlling
authority. In that case, an outdoor advertising company successfully challenged a
settlement agreement between the city and two other outdoor advertising companies that
exempted the settling companies from a municipal ban on alterations to existing
billboards, allowing them to convert their billboards to digital displays. On appeal from
the trial court’s denial of section 1021.5 attorney fees, the plaintiff argued that the
financial burden criterion was met because it sought and obtained no monetary damages.
The court rejected this argument, citing declarations, deposition testimony, and pleadings
in which the plaintiff’s owner repeatedly referred to the financial injury his business
would continue to suffer due to the lack of fair competition caused by the settlement
agreement. (Summit Media, supra, 240 Cal.App.4th at pp. 188–190.) The court held that
the absence of a monetary award did not prevent the trial court from considering the
plaintiff’s other financial incentives, and “[t]he record support[ed] the trial court’s


                                              27
conclusion that plaintiff had a personal financial stake in this litigation that was sufficient
to warrant its decision to incur significant attorney fees and costs in the vigorous
prosecution of this lawsuit.” (Id. at pp. 193–194.)
       In Beach Colony II v. California Coastal Com. (1985) 166 Cal.App.3d 106 (Beach
Colony II), a real estate development partnership brought an administrative mandamus
proceeding to void a permit condition issued by the coastal commission that would have
increased the partnership’s costs to build condominium units by $300,000. The appellate
court reversed the award of attorney fees to the partnership, finding the partnership made
“no attempt to compare its litigation costs to the immediate economic benefit it
personally received from judicially establishing its right to restore its property, or to the
commercial economic gain it anticipates from the renewed ability to build its housing
development.” (Id. at p. 113.) The court further held that that “the benefits [the
partnership] obtained [were] immediately and directly translated into monetary terms”
due to the savings in construction costs. (Ibid.)
       In these cases, the prevailing plaintiffs had sufficient financial incentives to
warrant their decisions to incur litigation costs, despite the absence of a monetary award,
because the failure to litigate would have resulted in losses of money or value to their
assets or investments. The instant matter is distinguishable. Respondents did not avoid
any loss of money or value to their assets or investments by specially appearing in the
DBO action, and there were no benefits that “immediately and directly translated into”
economic terms for respondents as a result of their success. (Beach Colony II, supra, 166
Cal.App.3d at p. 113.) Had the interlocutory judgment been modified as requested, the
individual actions would have been stayed, but that by itself would not have had any
direct financial consequence for respondents.7




       7
        While respondents’ special appearance also brought to light concerns that the
promoters might loot or mismanage the LLCs, any avoidance of investment loss in this
sense was not personal to respondents. As we discussed in section III., E., ante, the
additional investor protections constituted a significant benefit to all of the investors.

                                              28
       Appellants argue that respondents had a financial incentive to oppose the stay
because it would have postponed their expected recovery. This is not a disqualifying
interest for purposes of section 1021.5. Where personal benefits are a step removed from
the results of the litigation, the potential financial benefit is indirect and speculative, and
thus, a trial court does not abuse its discretion in concluding that the financial burden
criterion is satisfied for purposes of section 1021.5. (See Heron Bay, supra, 19
Cal.App.5th at pp. 394–395, citing Keep Our Mountains Quiet v. County of Santa Clara
(2015) 236 Cal.App.4th 714, 740.)
       In Heron Bay, a homeowners association (HOA) and its members successfully
challenged the City of San Leandro’s decision to allow a wind turbine maker (Halus
Power) to construct a wind turbine on its property. In affirming the award of section
1021.5 attorney fees, a different panel of this court held that the plaintiffs were not
disqualified from the award despite their pecuniary interest in preserving property values.
The court found that the plaintiffs “neither expected nor received any direct pecuniary
benefit from their litigation” and “[a]ny benefit they received in the form of avoiding a
loss in property values was at least once removed from the results of the litigation,
because the trial court’s ruling did not guarantee San Leandro would refuse the requested
variance or require Halus Power to make changes to the project following adoption of an
[environmental impact report], or that Halus Power would abandon the project. The
amount of any monetary advantage, therefore, was speculative.” (Heron Bay, supra, 19
Cal.App.5th at p. 395, fn. omitted.)
       Likewise, respondents neither expected nor received any direct pecuniary benefit
from their special appearance, and any anticipated recovery in their individual actions is
still at least once removed, because the trial court’s ruling on the motion to modify did
not guarantee them any future recovery. Respondents must still prevail on the merits in
their individual actions in order to obtain the pecuniary benefits sought in their
complaints. Thus, the amount or value of any personal benefit to respondents is
speculative. Respondents are not “cut off from the benefits of section 1021.5 because



                                               29
they pursued litigation that ‘ “might someday help them . . . secure their [financial]
interests.” ’ [Citations.]” (Heron Bay, supra, 19 Cal.App.5th at p. 395.)
       Accordingly, we conclude the trial court did not abuse its discretion in finding that
respondents satisfied the financial burden criterion of section 1021.5.
       H. Corporations Code Section 25530, Subdivision (a) Does Not Immunize the
           DBO from an Award of Attorney Fees
       The DBO argues it is immune from an award of attorney fees under Corporations
Code section 25530, subdivision (a). This statute provides in relevant part: “No action at
law or in equity may be maintained by any party against the commissioner, or a receiver,
monitor, conservator, or other designated fiduciary or officer of the court, by reason of
their exercising these powers or performing these duties pursuant to the order of, or with
the approval of, the superior court.” (Corp. Code, § 25530, subd. (a).) Based on the
statute’s plain language, however, we find it simply does not apply to the instant matter
because respondents did not maintain an action against the DBO.8
                                  IV.    DISPOSITION
       The order awarding respondents attorney fees is affirmed. Respondents shall
recover their costs on appeal.




       8
         Because we find the statute’s language to be unambiguous, we deny respondents’
request for judicial notice of various materials pertaining to the legislative history of
Corporations Code section 25530 as not relevant to a material issue in this case.
(Moraga-Orinda Fire Protection Dist. v. Weir (2004) 115 Cal.App.4th 477, 482, fn. 4.)

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                                                              _________________________
                                                              REARDON, J.


We concur:


_________________________
STREETER, ACTING P. J.


_________________________
SCHULMAN, J.*




*Judge of the Superior Court of California, County of San Francisco, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.


A143406 & A143307 People v. Investco Mgmt.




                                                        31
Trial Court:                          San Francisco City & County Superior Court



Trial Judge:                          Hon. Ernest H. Goldsmith



Counsel for Appellant:                Holman & Martin
                                      A Russell Martin


                                      Mary Ann Smith
                                      Deputy Commissioner
                                      Douglas M. Gooding
                                      Assistant Chief Counsel
                                      Edward Kelly Shinnick
                                      Senior Counsel
                                      Danielle A. Stoumbor

Counsel for Respondents:              Hornstein Law
                                      Val D. Hornstein
                                      Matthew R. Harrison

                                      Timothy F. Perry




A143406 & A143307 People v. Investco Management & Development




                                                 32
