The Supreme Court's decision in Vasquez v. State of California, ___ Cal.4th ___ (Nov. 20, 2008) is now up. The Court held that in non-catalyst cases, section 1021.5 contains no "categorial" rule requiring a prelitigation demand as a prerequisite to an attorneys' fees award. In other words, the Court limited its holding in Graham v. DaimlerChrysler Corp., 34 Cal.4th 553 (2004) to catalyst cases. The Court also held that evidence of prelitigation efforts to resolve a dispute may be considered, in the trial court's discretion, when determining whether "the necessity ... of private enforcement ... [was] such as to make the award appropriate."
An excerpt from the opinion:
The State argues a court may never award attorney fees under section 1021.5 unless the plaintiff attempted to settle before resorting to litigation. Neither the language of the statute nor the cases interpreting it impose[s] such a categorical requirement. In determining, however, whether “the necessity and financial burden of private enforcement ... are such as to make the award appropriate” (§ 1021.5), a court properly takes into consideration whether the party seeking fees attempted to resolve the matter without litigation.
We have not interpreted section 1021.5 as imposing a prelitigation settlement demand requirement in noncatalyst cases. In Graham, supra, 34 Cal.4th 553, we did require prelitigation demands, but only in catalyst cases.
Slip op. at 7, 9 (emphasis in original).