Opinion

National Asian American Coalition v. Brown

Court: California Court of Appeal
Filed: Jul 10, 2018
Status: Published
Cited by: 0 cases
Authority: More cited than 4.7%

The opinion

Filed 7/10/18

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

NATIONAL ASIAN AMERICAN

COALITION et al., C079835

Plaintiffs and Appellants, (Super. Ct. No.

34201480001784CUWMGDS)

EDMUND G. BROWN, JR., as Governor,

etc., et al.,

Defendants and Appellants.

APPEAL from a judgment of the Superior Court of Sacramento County,

Timothy M. Frawley, Judge. Reversed in part and remanded with directions.

REMCHO, JOHANSEN & PERCEL, Robin B. Johansen and Margaret R.

Prinzing for Edmund G. Brown Jr., as Governor, and Michael Cohen, Director of

Finance; Office of the State Controller, Richard J. Chivaro, Ronald V. Placet and

David I. Brownfield for Betty T. Yee, Controller, Defendants and Appellants.

JENNER & BLOCK, Rick Richmond, L. David Russell, Neil M. Barofsky (admitted

pro hac vice), Jessica Ring Amunson (admitted pro hac vice) and Robert L. Gnaizda for

Plaintiffs and Appellants.

This appeal arises out of the subprime mortgage crisis, a nationwide banking

emergency that began in 2007 with the collapse of a housing financing bubble created in

large part by an increase in housing speculation and subprime lending practices. This

crisis led to a deep recession in the United States and around the globe. California was

hit particularly hard. While the recession ended in mid-2009, at least as a definitional

matter, persistent high unemployment continued throughout 2012, along with the

continuing decline in home values, increase in foreclosures and personal bankruptcies,

and the concomitant decrease in state revenue.

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 Mortgage Settlement or NMS), the terms of which the federal

court formally entered as consent judgments in April 2012. In addition to setting

comprehensive new mortgage servicing standards and providing more than $20 billion in

financial relief for homeowners damaged by the mortgage crisis, the NMS also provided

for about $2.5 billion to be paid to the states directly, “which sum shall be distributed in

the manner and for the purposes specified in Exhibit B” to the agreement. Exhibit B

states that “[e]ach State Attorney General shall designate the uses of the funds” and

requires, “[t]o 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].”

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

Code1 section 12531, creating a special deposit fund in the treasury (the NMS Deposit

Fund) where 90 percent of the $410 million amount would be deposited.2 (§ 12531,

subds. (b), (d).) The Legislature provided, “all moneys in the [NMS Deposit Fund] are

hereby continuously appropriated, and shall be allocated by the Department of Finance”

(id., subd. (b)), and further provided: “Notwithstanding any other law, the Director of

Finance may allocate or otherwise use the funds in the [NMS Deposit Fund] to offset

General Fund expenditures in the 2011-12, 2012-13, and 2013-14 fiscal years.” (Id.,

subd. (e).) While the Legislature did not specify which General Fund expenditures may

be offset using the NMS Deposit Fund, subdivision (f) required the Department of

Finance to “submit an expenditure plan to the Joint Legislative Budget Committee

detailing the proposed use of the moneys in the [NMS Deposit Fund]” at least “30 days

prior to allocating moneys pursuant to subdivision (e).” (Id., subd. (f).)

Pursuant to this procedure, the Director of Finance received approval for various

expenditures from the NMS Deposit Fund “to offset General Fund costs of programs that

1 Undesignated statutory references are to the Government Code.

2 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”].)

support public protection, consumer fraud enforcement and litigation, and housing related

programs” during the specified fiscal years. We set forth the details of these expenditures

later in the opinion. For present purposes, we note they nearly exhausted the NMS

Deposit Fund.

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 immediate

return of approximately $350 million they alleged was unlawfully diverted from the NMS

Deposit Fund to the General Fund in contravention of both section 12531 and the federal

consent judgments.3

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 NMS 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

3 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 NMS Deposit Fund.

Since both parties appealed from the trial court’s judgment, we refer to National

Asian American Coalition et al. as plaintiffs and Edmund G. Brown Jr. et al. as

defendants.

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 NMS 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 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.”

These appeals followed. Defendants contend: (1) plaintiffs lack standing to seek a

writ of mandate directing the NMS Deposit Fund to be reimbursed for the challenged

expenditures; (2) section 12531 does not restrict the Director of Finance’s ability to use

the NMS 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 NMS 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.

We conclude plaintiffs have public interest standing to seek the requested writ of

mandate. We also conclude, as did the trial court, section 12531 was intended by our

Legislature to effectuate the terms of the National Mortgage Settlement, including the

former Attorney General’s instructions regarding the proper uses of the money. The trial

court also correctly concluded over $331 million was unlawfully appropriated from the

NMS Deposit Fund for purposes inconsistent with the NMS. Where we part ways with

the trial court is the issue of remedy. As we explain, because the unlawfully diverted

funds are “in law still in the [NMS Deposit Fund]” (Daugherty v. Riley (1934) 1 Cal.2d

298, 312 (Daugherty), separation of powers principles do not preclude this court from

ordering the immediate return of these funds. We shall therefore reverse the judgment in

part and remand the matter to the trial court with directions to issue a writ of mandate

directing the immediate retransfer from the General Fund to the NMS Deposit Fund the

sum of $331,044,084.

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

National Mortgage Settlement, including the former Attorney General’s instructions for

use of the $410 million direct payment amount, (2) the complete text of section 12531,

creating the NMS Deposit Fund and authorizing disbursements to offset General Fund

expenditures, and (3) the details of the challenged disbursements made from the NMS

Deposit Fund.

The National Mortgage Settlement

The stated purpose of the National Mortgage Settlement “is to remediate harms

allegedly resulting from the alleged unlawful conduct of the [Bank defendants.]” The

portion of the NMS relevant to these appeals provided for about $2.5 billion to be paid

directly to the states. As mentioned, the agreement provided this amount “shall be

distributed in the manner and for the purposes specified in Exhibit B.”

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.[4]

“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 homeowners under the Borrower Payment Fund,[5] 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 efforts, and civil penalties. Accordingly, each Attorney General has set

forth general instructions for the funds in the attached Exhibit B-2.

4 Exhibit B-1 lists California’s share of the state payment settlement amount as

$410,576,996.

5 As mentioned, the vast majority of damages paid by the Bank defendants under

the 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.

“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;

“b) The remainder shall be paid and deposited into a Special Deposit Fund

created for the following purposes: for the administration of the terms of this Consent

Judgment; monitoring compliance with the terms of this Consent Judgment and enforcing

the terms of this Consent Judgment; assisting in the implementation of the relief

programs and servicing standards as described in this Consent Judgment; supporting the

Attorney General’s continuing investigation into misconduct in the origination, servicing,

and securitization of residential mortgage loans; to fund consumer fraud education,

investigations, enforcement operations, litigation, public protection and/or local

consumer aid; to provide borrower relief; to fund grant programs to assist housing

counselors or other legal aid agencies that represent homeowners, former homeowners, or

renters in housing-related matters; to fund other matters, including grant programs, for

the benefit of California homeowners affected by the mortgage/foreclosure crisis; or to

engage and pay for third parties to develop or administer any of the programs or efforts

described above.”

Creation of the NMS Deposit Fund

After the federal court approved the National Mortgage Settlement and entered

consent judgments incorporating its terms, the State 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

payments 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.”6

About six weeks later, the Legislature enacted section 12531 as part of a trailer bill

to the 2012 Budget Act. This section provides in full:

“(a) The Legislature finds and declares that California, represented by the

California Attorney General, entered a national multistate settlement with the country’s

five largest loan servicers. This agreement, the National Mortgage Settlement stemmed

from successful resolution of federal court action (Consent Judgment, United States v.

Bank of America (No. 1:12-cv-00361, Banzr. D.C. Apr. 4, 2012). The National

6 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) 147

Cal.App.4th 461, 473, fn. 3 [declining to take judicial notice of irrelevant filings in

another appeal].)

Mortgage Settlement is broad ranging, with California’s share of this settlement

estimated to be up to eighteen billion dollars ($18,000,000,000). Of this amount,

approximately four hundred ten million dollars ($410,000,000) will come directly to the

state in costs, fees, and penalty payments.

“(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 (c), shall

be deposited in the National Mortgage Special Deposit Fund.

“(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.)

Disbursements from the NMS Deposit Fund

About two months after the NMS 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 NMS 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 NMS 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 NMS 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 State 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 Legislature accepted the request made in the Finance letter that preceded enactment

of section 12531, i.e., that the direct payment would be used to offset General Fund costs

of programs that support public protection, consumer fraud enforcement and litigation,

and housing related programs. Various executive orders executed the offsets proposed in

the expenditure plan, with minor alterations to the amounts.7

DISCUSSION

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 NMS 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 from an office, trust, or station . . . .’ (Code Civ. Proc., § 1085, subd. (a).)”

(Kavanaugh v. West Sonoma County Union High School Dist. (2003) 29 Cal.4th 911,

916.) Plaintiffs were required to show a “ ‘clear, present, and usually ministerial duty’ ”

on the part of defendants to return the allegedly diverted funds, and that plaintiffs have a

“ ‘clear, present and beneficial right . . . to the performance of that duty.’ ” (Santa Clara

7 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.

County Counsel Attys. Assn. v. Woodside (1994) 7 Cal.4th 525, 539-540, superseded by

statute on another point as stated in Coachella Valley Mosquito and Vector Control Dist.

v. California Public Employment Relations Bd. (2005) 35 Cal.4th 1072, 1077.) “A

ministerial duty is an act that a public officer is obligated to perform in a prescribed

manner required by law when a given state of facts exists.” (Alliance for a Better

Downtown Millbrae v. Wade (2003) 108 Cal.App.4th 123, 129.)

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, 29 Cal.4th at p.

916.) Here, whether or not the $350 million in question was unlawfully diverted from the

NMS Deposit Fund turns not on disputed facts, but on the proper interpretation of section

12531 and the National Mortgage Settlement. We therefore “exercise our independent

judgment and review the matter de novo.” (Alliance for a Better Downtown Millbrae v.

Wade, supra, 108 Cal.App.4th at p. 129; see also California Medical Ass’n v. Brown

(2011) 193 Cal.App.4th 1449, 1455-1456.)

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)

226 Cal.App.4th 594, 615-616), this does not mean plaintiffs lack standing to seek a writ

of mandate under California law to require defendants to comply with section 12531.

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) 52 Cal.4th 155, 165.)

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 as a citizen in having the laws executed and the duty in question

enforced.’ ” (Board of Social Welfare v. Los Angeles County (1945) 27 Cal.2d 98, 100-

101.) “The exception promotes the policy of guaranteeing citizens the opportunity to

ensure that no governmental body impairs or defeats the purpose of legislation

establishing a public right” and “has often been invoked by California courts.” (Green v.

Obledo (1981) 29 Cal.3d 126, 144.) As this court has explained: “When the duty is sharp

and the public need weighty, the courts will grant a mandamus at the behest of an

applicant who shows no greater personal interest than that of a citizen who wants the law

enforced.” (McDonald v. Stockton Met. Transit Dist. (1973) 36 Cal.App.3d 436, 440; see

also Urban Habitat Program v. City of Pleasanton (2008) 164 Cal.App.4th 1561, 1581.)

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 the 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) 175 Cal.App.4th 577

(Shaw), “[t]he Legislature has plenary lawmaking authority over the state’s budget (Cal.

Const., art. IV, § 12) and we are aware of no constitutional prohibition precluding it from

creating specific funds in the State Treasury for any number of governmental purposes.”

(Id. at p. 602.) Unless the Legislature clearly conveys a contrary intention, “ ‘[i]t is the

policy of the law . . . to have . . . funds authorized for a particular purpose expended for

such purpose.’ [Citations.]” (Stanson v. Mott (1976) 17 Cal.3d 206, 213.) Here, such a

fund was created for purposes we describe below, the money deposited therein was

continuously appropriated, and the State Department of Finance was tasked with

expending the money for those purposes. (§ 12531, subd. (b).) We consider the duty to

comply with restrictions placed by our Legislature on the expenditure of public funds to

be “sharp.” Indeed, as we explain more fully later in this opinion, money

misappropriated from a special deposit fund is considered a loan by operation of law and

a writ of mandate may issue to direct reimbursement. (See Daugherty, supra, 1 Cal.2d at

pp. 309, 312.) We also consider “weighty” the public need to have such restrictions

enforced. Petitioners therefore have standing to challenge the expenditures they claim

are inconsistent with section 12531.

Nevertheless, defendants argue, “the public interest exception should not apply” in

this case because “the alleged interest is ‘outweighed . . . by competing considerations of

a more urgent nature,’ ” and cite this court’s decision in Sacramento County Fire

Protection Dist. v. Sacramento County Assessment Appeals Bd. (1999) 75 Cal.App.4th

327 as an example of a situation in which competing considerations prevailed over the

public interest sought to be vindicated by issuance of the writ. There, we held a fire

protection district, as a property tax recipient, had no standing to seek a writ of mandate

challenging an assessment appeals board’s valuation of certain property located within

the district. With respect to the public interest exception to the beneficial interest

requirement, we held the public interest sought to be protected by the district’s challenge

to the valuation was “ ‘outweighed . . . by competing considerations of a more urgent

nature . . . .’ ” (Id. at p. 334.) As we explained, providing standing to the fire protection

district, and inevitably other entities for which the county collects taxes, would create

“chaos” in the taxing process. Moreover, denying standing to the fire protection district

would not render unreviewable the assessment appeals board’s valuation decision

because that decision could be challenged by the State Board of Equalization or by a

county or city. (Ibid.)

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 NMS 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.