In March 2012, the federal government and the attorneys general of 49 states and the District of Columbia (every state except Oklahoma) brought suit in federal court against the nation's five largest mortgage servicers, i.e., Ally (formerly GMAC), Bank of America, Citigroup, J.P. Morgan Chase, and Wells Fargo (collectively, Bank defendants), alleging a number of violations of federal law. The case was resolved by settlement agreement (the National
California's share of this $2.5 billion direct payment was about $410 million. In Exhibit B-2 to the NMS, former Attorney General Kamala Harris provided fairly detailed instructions as to how these funds should be used. We describe these instructions later in the opinion.
After the consent judgments were entered, the Legislature enacted Government Code 1 section 12531, creating a special deposit fund in the treasury (the National Mortgage Special Deposit Fund) where 90 percent of the $410 million amount would be deposited.
In March 2014, the National Asian American Coalition, COR Community Development Corporation, and the National Hispanic Christian Leadership Conference filed a petition for writ of mandate and complaint for declaratory and injunctive relief against the Governor, the director of finance, and the controller, seeking the
The trial court concluded section 12531 was intended to effectuate the terms of the federal consent judgments, which required compliance with the instructions provided by former Attorney General Harris in Exhibit B-2 to the National Mortgage Settlement designating the permissible uses of the $410 million direct payment. Rejecting defendants' contention subdivision (e) of that section permitted the director of finance to use the National Mortgage Special Deposit Fund to offset General Fund expenditures regardless of whether such offsets were consistent with these instructions, the trial court reasoned such a reading of the statute would "raise serious doubts about the legality of the statute, not only as to whether the Legislature may override a federal judgment, but also whether the Legislature constitutionally may delegate to an agency the authority to decide how millions of dollars of state funds shall be spent with virtually no guidance or direction from the Legislature." Turning to the question of whether the particular offsets were consistent with the former Attorney General's instructions, the trial court concluded $331,044,084 was unlawfully appropriated from the National Mortgage Special Deposit Fund for purposes inconsistent with these instructions. Nevertheless, pointing out that it lacked the constitutional authority to order the Legislature to appropriate funds, the trial court declared an оbligation to restore the unlawfully diverted funds and ordered such restoration "as
These appeals followed. Defendants contend: (1) plaintiffs lack standing to seek a writ of mandate directing the National Mortgage Special Deposit Fund to be reimbursed for the challenged expenditures; (2) section 12531 does not restrict the director of finance's ability to use the National Mortgage Special Deposit Fund to offset General Fund expenditures, aside from requiring Legislative approval of such offsets; (3) the Legislature possessed absolute authority to approve the challenged expenditures regardless of whether they were consistent with the federal consent judgments; and (4) even if section 12531 required consistency with the federal consent judgments, the challenged expenditures were consistent with both the purposes of the direct payment set forth in Exhibit B to the National Mortgage Settlement and the former Attorney General's instructions set forth in Exhibit B-2. Plaintiffs dispute each of these contentions and, in their appeal, contend: (1) the amount unlawfully diverted from the National Mortgage Special Deposit Fund was actually $350 million; and (2) the trial court erred in concluding separation of powers principles prevented it from ordering the immediate restoration of the unlawfully diverted funds.
On July 10, 2018, we issued an opinion concluding plaintiffs hаve public interest standing to seek the requested writ of
After we issued our original opinion in this case, defendants petitioned our Supreme Court for review. While that petition was pending, the Legislature passed and the Governor signed into law Senate Bill No. 861 (2017 - 2018 Reg. Sess.) (Stats. 2018, ch. 331 (SB 861)), amending section 12531 to add subdivision (h), the text of which we provide in its entirety later in this
Thereafter, on October 10, 2018, our Supreme Court granted the petition for review and transferred the matter to this court with directions to vacate our original opinion and reconsider the matter in light of this new statutory enactment. Having done so, and giving SB 861 all due consideration, we confirm the conclusions reached in our original opinion.
ADDITIONAL BACKGROUND
Having already provided a description of the events giving rise to this appeal in order to provide context for the parties' contentions and our resolution thereof, we shall not repeat ourselves here. Rather, we elaborate on those portions of context deliberately omitted above. Specifically, we shall provide (1) a fuller description of the terms of the NMS, including the former Attorney General's instructions for use of the $410 million direct payment amount, (2) the complete text of section 12531, as originally enacted, creating the National Mortgage Special Deposit Fund and authorizing disbursements to offset General Fund expenditures, (3) the details of the challenged disbursements made from the National Mortgage Special Deposit Fund, and (4) the Legislature's amendment to section 12531 expressing its view that these disbursements were consistent with both the legislative intent and the National Mortgage Settlement.
The National Mortgage Settlement
The stated purpose of the NMS "is to remediate harms allegedly resulting from
Paragraph 1 of Exhibit B provides in relevant part:
"b. State Payment Settlement Amounts . In accordance with written instructions from each State Attorney General, the Escrow Agent shall distribute cash payments in the total amounts set forth in the attached Exhibit B-1.[
"i. Each State Attorney General shall designate the uses of the funds set forth in the attached Exhibit B-1. To the extent practicable, such funds shall be used for purposes intended to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to enhance law enforcement efforts to prevent and prosecute financial fraud, or unfair or deceptive acts or practices and to compensate the States for costs resulting from the alleged unlawful conduct of [the Bank defendants]. Such permissible purposes for allocation of the funds include, but are not limited to, supplementing the amounts paid to state homeоwners under the Borrower Payment Fund,[
"ii. No more than ten percent of the aggregate amount paid to the State Parties under this paragraph 1(b) may be designated as a civil penalty, fine, or similar payment. The remainder of the payment[ ] is intended to remediate the harms to the States and their communities resulting from the alleged unlawful conduct of the [Bank defendants] and to facilitate the implementation of the Borrower Payment Fund and consumer relief."
In Exhibit B-2, former Attorney General Harris provided the following general instructions:
"a) Ten percent of the payment shall be paid as a civil penalty and deposited in the Unfair Competition Law Fund;
Creation of the National Mortgage Special Deposit Fund
After the federal court approved the National Mortgage Settlement and entered consent judgments incorporating its terms, the department of finance submitted a letter (Finance letter) to the Senate Budget and Fiscal Review Committee requesting, among other things, trailer bill language authorizing "the Director of Finance to allocate funds received pursuant to the [NMS]" and creating a special fund where these settlement funds would be deposited. The Finance letter states: "For 2011-12 and 2012-13, $94.2 million of the [direct payment amount] will be used to offset General Fund costs of programs that support public protection, consumer fraud enforcement and litigation, and housing related programs. An additional $198 million will be used for debt service рayments for programs funded with Proposition 46 and Proposition 1C housing bonds that assist homeowners. The remaining $118.4 million will be reserved for similar use in 2013-14."
About six weeks later, the Legislature enacted section 12531 as part of a trailer bill to the 2012 Budget Act. At the time of its enactment, this section provided in full:
"(b) There is hereby created in the State Treasury the National Mortgage Special Deposit Fund. Notwithstanding Section 13340, all moneys in the fund are hereby continuously appropriated, and shall be allocated by the Department of Finance.
"(c) Direct payments made to the State of California as civil penalties pursuant to the National Mortgage Settlement shall be deposited in the Unfair Competition Law Fund as required by the settlement.
"(d) Direct payments made to the State of California pursuant to the National Mortgage Settlement, except for those payments made pursuant to subdivision
"(e) Notwithstanding any other law, the Director of Finance may allocate or otherwise use the funds in the National Mortgage Special Deposit Fund to offset General Fund expenditures in the 2011-12, 2012-13, and 2013-14 fiscal years. The Department of Finance and the Controller's office shall recognize this fiscal alignment accordingly for the purpose of the state budget process and legal basis of accounting.
"(f) Not less than 30 days prior to allocating any moneys pursuant to subdivision (e), the Department of Finance shall submit an expenditure plan to the Joint Legislative Budget Committee detailing the proposed use of the moneys in the National Mortgage Special Deposit Fund.
"(g) Notwithstanding any other law, the Controller may use the funds in the National Mortgage Special Deposit Fund for cashflow loans to the General Fund as provided in Sections 16310 and 16381." ( § 12531.)
About two months after the National Mortgage Special Deposit Fund was created, the escrow agent wired the entirety of California's direct payment into the state's Litigation Deposits Fund. Thereafter, pursuant to section 12531, 10 percent of that amount was redirected into the Unfair Competition Law Fund and 90 percent was redirected into the National Mortgage Special Deposit Fund.
Before setting forth the details of the challenged disbursements, we briefly note those that are not challenged. Consistent with section 12531, subdivision (g), the 2012 Budget Act authorized a $100 million loan from the National Mortgage Special Deposit Fund to the General Fund to be repaid by June 30, 2014. Such a loan was made on September 24, 2012 and repaid with interest on April 11, 2014. The 2012 Budget Act also appropriated about $18 million from the National Mortgage Special Deposit Fund to the State Department of Justice, $8 million of which was appropriated to support the Office of the California Monitor, who assists the Attorney General in ensuring the Bank defendants comply with the terms of the NMS, and the remaining $10 million was appropriated for grants to assist homeowners affected by the foreclosure crisis. These disbursements are clearly consistent with the former Attorney General's general instructions for use of the funds and are not challenged in these appeals.
The challenged disbursements total about $350 million. The expenditure plan submitted by the Department of Finance pursuant to section 12531, subdivision (f), proposed the following offsets:
"General Fund debt service payments for Propositions 1C and 46 Housing Bonds will be offset by [$292.4 million, i.e.,] $106 million, $92 million, and $94.4 million in 2011-12, 2012-13, and 2013-14[,] respectively."
"The Department of Justice's (DOJ's) General Fund expenditures will be offset by [$49.2 million, i.e.,] $14.9 million, $17.8 million, and $16.5 million in 2011-12, 2012-13, and 2013-14[,] respectively."
"The Department of Fair Employment and Housing's General Fund expenditures will be offset by [$9 million, i.e.,] $3 million in 2011-12, 2012-13, and 2013-14[,] respectively."
While the department of finance did not receive a response to this expenditure plan, that department's Final Change Book for the 2012-13 Budget indicates the
2018 Amendment to Section 12531
After we issued our original opinion concluding the vast majority of these challenged disbursements (over $331 million) were unlawful, the Legislature enacted SB 861, effective September 10, 2018, amending section 12531 to add subdivision (h). This subdivision provides: "The Legislature hereby confirms and ratifies that the allocations of funds from the National Mortgage Special Deposit Fund in the 2011-12, 2012-13, and 2013-14 fiscal years were consistent with the direction given to the Director of Finance in subdivision (e) to offset General Fund expenditures in those years. The Legislature further confirms and ratifies that because those allocations were displayed in the Governor's proposed budget for the 2012-13 and 2013-14 fiscal years, and left unchanged in the budget acts adopted for the 2012-13 and 2013-14 fiscal years, the Legislature was aware of, and approved, the allocation and expenditure of funds from the National Mortgage Special Deposit Fund to offset General Fund expenditures in those fiscal yеars. This subdivision is declaratory of existing law." ( § 12531, subd. (h) ; Stats. 2018, ch. 331, § 3.)
SB 861 states in uncodified section 2: "It is the intent of the Legislature in [adding subdivision (h) to section 12531 ] to confirm that allocations and uses of funds made by the Director of Finance from the National Mortgage Special Deposit Fund pursuant to [ section 12531 ] in the 2011-12, 2012-13, and 2013-14 fiscal years were consistent with legislative direction and intent and to abrogate the holding of the Court of Appeal in [this case]. The Legislature further declares that the allocations made by the Director of Finance pursuant to [ section 12531 ] were made for purposes consistent with the National Mortgage Settlement." (Stats. 2018, ch. 331, § 2, subd. (a).)
I
Standard of Review
Plaintiffs sought a writ of mandate from the trial court, as well as declaratory and injunctive relief, compelling defendants to return the $350 million they claim was unlawfully diverted from the National Mortgage Special Deposit Fund. "A writ of mandate 'may be issued by any court ... to compel the performance of an act which the law specially enjoins, as a duty resulting
On appeal, we defer to the trial court's factual determinations if supported by substantial evidence. However, as always, we review questions of law de novo. ( Kavanaugh v. West Sonoma County Union High School Dist. , supra ,
II
Standing
Defendants contend plaintiffs "cannot enforce the consent judgments under federal law, and lack standing to bring their claims under California law." While we agree the individual homeowners plaintiffs seek to assist in staying in their homes " 'are merely incidental beneficiaries of the National Mortgage Settlement,' " and therefore have "no standing to enforce the consent judgment[s]" ( Graham v. Bank of America, N.A. (2014)
The law governing standing to seek a writ of mandate is well-settled. "As a general rule, a party must be 'beneficially interested' to seek a writ of mandate. ( Code Civ. Proc., § 1086.) 'The requirement that a petitioner be "beneficially interested" has been generally interpreted to mean that one may obtain the writ only if the person has some special interest to be served or some particular right to be preserved or protected over and above the interest held in common with the public at large. ... The beneficial interest must be direct and substantial. [Citations.]' " ( Save the Plastic Bag Coalition v. City of Manhattan Beach (2011)
However, " 'where the question is one of public right and the object of the mandamus is to procure the enforcement of a public duty, the [petitioner] need not show that he [or she] has any legal or special interest in the result, since it is sufficient that [the petitioner] is interested
Here, the trial court concluded plaintiffs did not have beneficial interest standing, explaining they "have no direct interest in the legal duty sought to be compelled and will gain no direct benefit from its performance." However, the trial court also concluded plaintiffs fell within the "well-established 'public interest' exception to thе beneficial interest requirement." Because we agree with the latter conclusion, we need not consider the former.
As we explained in Shaw v. People ex rel. Chiang (2009)
Nevertheless, defendants argue, "the public interest exception should not apply" in this case becаuse "the alleged interest is 'outweighed ... by competing considerations of a more urgent nature,' " and cite this court's decision in Sacramento County FireProtection Dist. v. Sacramento County Assessment Appeals Bd. (1999)
Defendants argue, "[s]imilar risks arise here" because providing plaintiffs with standing in this case allows them to "override" provisions in the National Mortgage Settlement that "excluded third-parties like [them] from the list of parties who could bring enforcement proceedings" and "threatens to undermine the State's ability to enter into future settlement agreements that seek to bring finality to the State and other litigants." Not so. This is not a suit to enforce the NMS. It is an action in mandamus to compel defendants to return to the National Mortgage Special Deposit Fund money plaintiffs claim was misappropriated in contravention of section 12531. As we have explained, there is a sharp duty to comply with restrictions placed on the expenditure of public funds and a weighty public need for enforcement of such restrictions. Providing plaintiffs with standing in this case does nothing to undermine California's ability to enter into settlement agreements.
III
Proper Interpretation of Section 12531
We now turn to defendants' contention the trial court misconstrued section 12531. The trial court concluded section 12531 was intended to effectuate the terms of the federal consent judgments, which required compliance with the instructions provided by former Attorney General Harris in Exhibit B-2 to the National Mortgage Settlement designating the permissible uses of the $410 million direct payment. Rejecting defendants' contention subdivision (e) of that section permitted the director of finance to use the National Mortgage Special Deposit Fund to offset General Fund expenditures regardless of whether such offsets were consistent with these instructions, the trial court reasoned such a reading of the statute would "raise serious doubts about the legality of the statute, not only as to whether the Legislature may override a federal judgment, but also whether the Legislature constitutionally may delegate to an agency the authority to decide how millions of dollars of state funds shall be spent with virtually no guidance or direction from the Legislature."
Defendants assert this interpretation of section 12531 runs "[c]ontrary to the plain meaning of the statute" and argues the plain meaning of subdivision
A.
Applicable Principles of Statutory Construction
"Pursuant to established principles, our first task in construing a statute is to ascertain the intent of the Legislature
While "the interpretation of a statute is an exercise of the judicial power the Constitution assigns to the courts" ( Western Security Bank v. Superior Court (1997)
Because our construction of the meaning of section 12531, set forth in our original opinion, was pending review before our Supreme Court at the time the Legislature enacted SB 861, it cannot be considered a final and conclusive construction of the law. We must therefore "give the Legislature's views 'due consideration.' " ( Carter , supra ,
B.
Analysis
Having considered the views of our current Legislature, expressed in SB
Because subdivision (a) makes reference to the former Attorney General's successful negotiation of the National Mortgage Settlement, and subdivisions (b) through (d) effectuate California's receipt of the settlement proceeds as set forth in the former Attorney General's instructions, i.e., 10 percent to the Unfair Competition Law Fund and 90 percent into a special deposit fund (the National Mortgage Special Deposit Fund), and because the purpose of creating a special deposit fund is to house money that is "collected or received for specific purposes" (§ 16372), it is only reasonable to concludе the Legislature intended the specific purposes set forth in the former Attorney General's instructions are also the purposes for which the National Mortgage Special Deposit Fund money may be spent.
Nevertheless, defendants claim the Legislature intended to allow the director of finance to disregard the former Attorney General's instructions and use the money in the National Mortgage Special Deposit Fund to offset any General Fund expenditures. This supposed intent, they argue, may be found in the phrase "[n]otwithstanding any other law" in subdivision (e), before that subdivision directs the director of finance to "offset General Fund expenditures in the 2011-12, 2012-13, and 2013-14 fiscal years." ( § 12531, subd. (e).) We are not persuaded that this phrase was intended to untether the offsets from the purposes for which the money was received. Indeed, defendants' reading of the statute would effectively defeat the purpose of creating a special deposit fund to house the money. Moreover, the fact that the Legislature intended the National Mortgage Special Deposit Fund to be a special deposit fund with restrictions on the use of the money housed therein is also supported by subdivision (g), which allows for "cashflow loans to the General Fund as provided in Sections 16310 and 16381." (Id ., subd. (g).) Sections 16310 and 16381 allow for such loans from special deposit
Our reading of the statute, and that of the trial court, is also bolstered by the legislative history. The Legislative Counsel's Digest for section 12531 states: "This bill would establish the [National Mortgаge Special] Deposit Fund in the State Treasury as a continuously appropriated fund and would require certain direct payments made to the state under the National Mortgage Settlement to be deposited in the fund for allocation by the Director of Finance, as specified. This bill would further authorize the Director of Finance to allocate moneys from the fund to offset General Fund expenditures during the 2011-12, 2012-13, and 2013-14 fiscal years for purposes
We also agree with the trial court's conclusion that defendants' reading of the statute would "raise serious doubts about the legality of the statute, not only as to whether the Legislature may override a federal judgment, but also whether the Legislature constitutionally may delegate to an agency the authority to decide how millions of dollars of state funds shall be spent with virtually no guidance or direction from the Legislature." Defendants address the first of these concerns by arguing the Legislature has plenary power over appropriations that includes the authority to override an Attorney General's settlement agreement as long as doing so does not interfere with a party's vested rights (primarily relying on Van de Kamp v. Gumbiner (1990)
We need not decide these potential constitutional issues because our reading of section 12531, supported by the language of the statute and its legislative history, avoids them entirely. "When faced with a statute reasonably susceptible of two or more interpretations, of which at least one raises constitutional questions, we should construe it in a manner that avoids any doubt about its validity." ( Association for Retarded Citizens v. Department of Developmental Services (1985)
Nor does the Legislature's 2018 amendment to section 12531 alter our conclusion this provision was intended to effectuate the terms of the National Mortgage Settlement, including the former Attorney General's instructions. In their supplemental briefing on the new enactment, defendants argue, "the intended effect of SB 861 was to clarify that the allocations of funds
In Western Security , supra ,
Reversing the Court of Appeal's decision, our Supreme Court first explained the Legislature's subsequent enactment did not seek to change the law, but rather sought to construe and clarify the meaning of existing law. Such an amendment, the court explained, " ' "must be accepted as the legislative declaration of the meaning of the original act, where the amendment was adopted soon after the controversy arose as to the interpretation of the original act ...." [Citation.]' [Citation.]" ( Western Security , supra , 15 Cal.4th at pp. 243-244,
Similarly, in Carter , supra ,
Here, as set forth in detail above, SB 861 added subdivision (h) to section 12531, confirming and ratifying the director of finance's allocations of funds from the National Mortgage Special Deposit Fund as having been "consistent with the direction given to the Director of Finance in subdivision (e) to offset General Fund expenditures ...." ( § 12531, subd. (h).) This amendment may well alleviate the potential unconstitutional delegation problem. (See, e.g., California Chamber of Commerce v. State Air Resources Bd. (2017)
Consistency with the National Mortgage Settlement
We now turn to the question of whether the offsets carried out by the director of finance are consistent with the National Mortgage Settlement. As mentioned, the trial court concluded over $331 million was unlawfully diverted from the National Mortgage Special Deposit Fund for purposes inconsistent with the NMS, specifically the former Attorney General's general instructions set forth in Exhibit B-2 thereto. Defendants argue these expenditures were consistent with both the purposes of the direct payment set forth in Exhibit B to the NMS and the former Attorney General's instructions. In their appeal, plaintiffs contend the amount unlawfully diverted from the National Mortgage Special Deposit Fund was actually
As a preliminary matter, we reject defendants' assertion that consistency with the purposes set forth in Exhibit B would suffice to authorize the expenditures even if those expenditures were contrary to the former Attorney General's instructions. The NMS provided that the direct payment amount "shall be distributed in the manner and for the purposes specified in Exhibit B." Paragraph 1 of Exhibit B provides that "[e]ach State Attorney General shall designate the uses of the funds" and then states: "To the extent practicable, such funds shall be used for purposes intended to avoid preventable foreclosures, to ameliorate the effects of the foreclosure crisis, to enhance law enforcement efforts to prevent and prosecute financial fraud, or unfair or deceptive acts or practices and to compensate the States for costs resulting from the alleged unlawful conduct of [the Bank defendants]. Such permissible purposes for allocation of the funds include, but are not limited to, supplementing the amounts paid to state homeowners under the Borrower Payment Fund, funding for housing counselors, state and local foreclosure assistance hotlines, state and local foreclosure mediation programs, legal assistance, housing remediation and anti-blight projects, funding for training and staffing of financial fraud or consumer protection enforcement еfforts, and civil penalties. Accordingly, each Attorney General has set forth general instructions for the funds in the attached Exhibit B-2 ." (Italics added.) Thus, while Exhibit B provides general permissible purposes for use of the direct payment, it expressly incorporates the more specific instructions provided by the former Attorney General in Exhibit B-2. Because, as we have concluded, section 12531 was intended to effectuate the NMS, the offsets made by the director of finance must be consistent with the former Attorney General's instructions.
These instructions provide: "The remainder [i.e., 90 percent of the direct payment] shall be paid and deposited into a Special Deposit Fund created for
Relying on our decision in Shaw , supra ,
We agreed with this determination, explaining: "There is a clear distinction between transferring revenue from the PTA to the General Fund to pay current debt obligations on mass transportation bonds and transferring such revenue to reimburse for past debt obligations. In the case of the former, the revenue flows from the source to the present obligation via the General Fund to serve a mass transportation purpose. Although the money passes through the General Fund, it is still actually being used for the identified mass transportation purpose. In the Legislature's discretion, this may include the payment of current bond debt on mass transportation bonds. In the case of offsets or reimbursement of past debt service payments, however, there is no mass transportation debt obligation to be paid with the PTA funds. The debt was paid by the General Fund in the prior fiscal years. No actual debt remains. Money from the PTA under the label of offsetting or reimbursing
Applying this reasoning, the trial court in this case invalidated all transfers to the General Fund to offset debt service payments for housing bonds (totaling $292.7 million). The trial court also invalidated transfers made to the General Fund during the 2012-13 and 2013-14 fiscal years to offset DOJ and DFEH expenditures for the 2011-12 and 2012-13 fiscal years, (totaling $38.4 million), as those expenditures had also already been paid by the General Fund. We agree with this assessment.
Nevertheless, defendants argue the fact that "the Legislature knew and understood how the Director of Finance intended to use the money" and did not "object is strong evidence that the plan complied with the Legislature's intent in enacting section 12531." This argument is bolstered by SB 861, as we have explained above. However, we still are not persuaded. While this is evidence the Legislature may have believed the director of finance's proposed offsets were consistent with section 12531 and the NMS, confirmed by the current Legislature's declared belief "that the allocations ... were made for purposes consistent with the National Mortgage Settlement" (Stats. 2018, ch. 331, § 2, subd. (a)), we reiterate that such a "belief is not binding on a court. ... The interpretation of a statute or a [settlement agreement]
The remaining $19.5 million was transferred from the National Mortgage Special Deposit Fund to the General Fund during the 2013-14 fiscal year to pay certain DOJ and DFEH expenditures incurred that year. The trial court declined to invalidate these transfers concluding there was no evidence the obligations were already paid at the time of the transfers. In their appeal, plaintiffs claim these payments should also have been invalidated, arguing these offsets "rest upon an accounting fiction" and the fact that DOJ and DFEH "might have something to do with administering programs or enforcing regulations related to the purposes for which the [National Mortgage
V
Appropriate Remedy
Finally, we address the question of the appropriate remedy. The trial court concluded principles of separation of powers prevented it from issuing a writ of mandate directing the Legislature to appropriate funds to restore the $331 million unlawfully diverted from the National Mortgage Special Deposit Fund. Instead, the trial court declared an obligation to restore the unlawfully diverted funds and ordered such restoration "as soon as there is a sufficient appropriation 'reasonably' and 'generally' available for such purpose."
Plaintiffs do not dispute that directing an appropriation would violate the separation of powers. Instead, they argue: "The legal violations аt issue in this case lie not in a failure to appropriate the requisite funds, but in a series of executive orders, issued by the Defendant Director of Finance to the Defendant Controller, that unlawfully transferred the funds that had already been appropriated. Accordingly, the appropriate remedial order would simply direct Defendants to rescind those transfers-or, equivalently, to transfer equal sums back from the General Fund to the [National Mortgage Special] Deposit Fund." We agree.
" Article III, section 3 of the California Constitution provides that '[t]he powers of state government are legislative, executive, and judicial. Persons charged with the exercise of one power may not exercise either of the others except as permitted by this Constitution.' Article XVI, section 7 provides that '[m]oney may be drawn from the Treasury only through an appropriation made by law and upon a Controller's duly drawn warrant.' Article IV, sections 10 and 12 set forth the respective powers of the Legislature and Governor over the enactment of appropriations. It has long been clear that these separation-of-powers principles limit judicial authority over appropriations. [Citations.]" ( Butt v. State of California (1992)
For example, in Butt , supra ,
In reaching the latter conclusion, the court distinguished Mandel v. Myers (1981)
Returning to Butt , supra ,
For these reasons, our case is more analogous to Daugherty , supra ,
Here, too, money was unlawfully diverted from a special fund in contravention of the purposes for which that special fund was established. Of course, Daugherty, supra, 1 Cal.2nd 298,
DISPOSITION
The portion of the judgment declining to issue the requested writ of mandate is reversed and the matter is remanded to the trial court with directions to issue a writ of mandate directing defendants, Gavin C. Newsom, Governor (successor to Edmund G. Brown, Jr.), Keely Bosler, Finance Director, and Betty Yee, Controller, to retransfer from the General Fund to the National Mortgage Settlement Deposit Fund the sum of $331,044,084. Plaintiffs, National Asian American Coalition, COR Community Development Corporation, and National Hispanic Christian Leadership Conference, are awarded costs on appeal. ( Cal. Rules of Court, rule 8.278(a)(1).)
We concur:
RAYE, P. J.
HULL, J.
Notes
As we explain in greater detail later, in accordance with former Attorney General Harris's instructions, 10 percent of the direct payment amount would be "paid as a civil penalty and deposited in the Unfair Competition Law Fund." (See § 12531, subd. (c) ["payments made to the State of California as civil penalties pursuant to the National Mortgage Settlement shall be deposited in the Unfair Competition Law Fund as required by the settlement"].)
Organizational plaintiffs are California-based charitable organizations that either provide counseling to homeowners seeking to avoid foreclosure or stand ready to do so should funding become available through replenishment of the National Mortgage Special Deposit Fund.
Since both parties appealed from the trial court's judgment, we refer to National Asian American Coalition et al. as plaintiffs and Gavin C. Newsom (successor to Edmund G. Brown, Jr., as Governor) et al. as defendants.
The request for judicial notice filed by defendants on December 7, 2018 is granted.
Exhibit B-1 lists California's share of the state payment settlement amount as $410,576,996.
As mentioned, the vast majority of damages paid by the Bank defendants under thе NMS, more than $20 billion, was designated to provide financial relief for individual borrowers. Exhibit C to the NMS set forth the details regarding administration of the distribution of cash payments to such borrowers.
Defendants ask this court to take judicial notice of the State Department of Housing and Community Development's record of Proposition 1C bond awards through December 31, 2013, explaining this government document was before the trial court and is part of the record on appeal, but the copy therein is "corrupt and illegible." Plaintiffs do not oppose this request, which we grant. (Evid. Code, § 452, subds. (c), (h).) We deny defendants' further request that we take judicial notice of a motion to vacate judgment and trial court order denying that motion in another case, Shaw v. Chiang , Sacramento County Superior Court Case No. 07CS01179. These materials are irrelevant to our resolution of the issues raised in this appeal. (See Towns v. Davidson (2007)
For example, whereas $94.4 million was proposed for offsetting General Fund debt service payments for Propositions 1C and 46 housing bonds in the 2013-14 fiscal year, the amount transferred for these purposes was actually $94.7 million. The precise total amount of challenged transfers is $350,360,084.
This section provides in full: "The Legislature hereby finds and declares the following:
"(a) The state has funded and allocated billions of dollars for affordable housing in the past several years.
"(b) The 2018-19 budget alone includes $5.1 billion in state and fеderal funds across multiple programs and departments to address housing and homelessness.
"(c) The Governor and Legislature developed a legislative package of 15 bills signed in September 2017 that collectively shorten the housing development approval process, provide incentives to streamline development, promote local accountability to adequately plan for needed housing, and invest in affordable housing production. The housing package establishes a $75 document recording fee on real estate transactions, excluding home sales, beginning January 1, 2018, to create a sustainable funding source for state affordable housing programs.
"(d) The 2017 legislative package also places a $4 billion bond on the November 2018 ballot, with $3 billion in general obligation bonds for affordable housing, and $1 billion for veterans housing to be supported by participants' loan repayments.
"(e) To encourage housing development, the Legislature provided local governments with tools to help fulfill their housing priorities and responsibilities, including:
"(1) Chapter 386, Statutes of 2013 (SB 743), which provides an alternative approach for CEQA analysis of transportation impacts of transit-oriented development and new exemptions for certain projects.
"(2) Chapter 785, Statutes of 2014 (SB 628), which allows cities and counties to create an enhanced infrastructure financing district that utilizes property taxes and other available funding for various types of projects including low and moderate income housing projects.
"(3) Chapter 319, Statutes of 2015 (AB 2), which allows specified disadvantaged areas of California to create a community revitalization and investment authority that utilizes property taxes and other available funding for various types of projects, including affordable housing.
"(4) Various statutes that reduce minimum parking requirements and expand size and other bonuses for developers that meet affordability requirements.
"(5) Chapters 720 and 735, Statutes of 2016 (SB 1069 and AB 2299), which streamline permits and require local ordinances to facilitate the development of these low-cost housing options that provide additional living quarters on single-family lots that are independent of the primary dwelling unit.
"(6) Chapter 453, Statutes of 2016 (AB 2031), allows a local government, with an existing successor agency to a former redevelopment agency, to bond against the property tax revenues it receives as a result of redevelopment agency dissolution for the purposes of affordable housing development.
"(f) In 2016 the Governor signed into law the No Place Like Home Program, which funds the construction of permanent supportive housing targeted to the chronically homeless and those at risk of chronic homelessness with mental health services needs. The program is funded with a $2 billion bond, secured by Mental Health Services Act (Proposition 63) revenues, and will be on the November 2018 ballot to accelerate the issuance of program funds.
"(g) The Veteran's Housing and Homeless Prevention Bond Act of 2014 (Proposition 41) repurposed $600 million in bond funds to fund multifamily housing for veterans and their families.
"(h) The California Tax Credit Allocation Committee, which administers the low-income housing tax credit program, has made a number of regulatory changes to increase the utilization of this program. Tax credit financing supports nearly all deed-restricted affordable housing in California; improvements to this program benefit low-income families across the state. These efforts resulted in a historic high of 20,847 housing units financed with '4 percent' federal tax credits in 2016.
"(i) In addition, the California Tax Credit Allocation Committee has worked with the California Debt Limit Allocation Committee to convene a High Cost Task Force to address the growing housing development costs that limit the impact of public investment. As a result, the state has set a high-cost threshold for funded projects, provided incentives for the construction of larger projects with lower costs per unit, and removed state funding requirements that prioritize expensive projects.
"(j) The California Housing Financing Agency has increased its multifamily lending activity each year since the Great Recession, providing $369 million in financing in 2016-17 to support 2,100 affordable housing units. The agency also issued $682 million in private activity bonds for affordable housing since 2015.
"(k) The state's first-time homebuyers downpayment assistance program has provided $4 billion to moderate-income families that do not qualify for the low-income programs." (Stats. 2018, ch. 331, § 1.)