Kashian v. Simonian CA5 ( 2013 )

Filed 8/28/13 Kashian v. Simonian CA5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
EDWARD KASHIAN et al.,
F064325
Plaintiffs and Respondents,
(Super. Ct. No. 06CECG03890)
v.
DAVID SIMONIAN et al., OPINION
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Fresno County. Donald S.
Black, Judge.
Georgeson and Belardinelli, C. Russell Georgeson, Richard A. Belardinelli and
Christopher B. Noyes for Defendants and Appellants.
Lang, Richert & Patch and Scott J. Ivy for Plaintiffs and Respondents.
-ooOoo-
In this business litigation case, some of the founding members of two limited
liability companies (LLCs) became embroiled in a dispute with the other founding
members over the nature and validity of certain financial transactions and other matters
affecting the LLCs and the members’ rights and obligations therein. One faction,
consisting of Edward Kashian individually and Harry Mazgedian as trustee of the Harry
Mazgedian 1991 Living Trust (plaintiffs), filed a lawsuit against the other faction,
consisting of David Simonian, Harold Simonian and Patricia Simonian as trustee of the
David E. Simonian and Patricia M. Simonian Living Trust (defendants). The lawsuit
included causes of action for breach of fiduciary duty, declaratory relief and dissolution
of the LLCs. In response to the lawsuit, defendants not only filed an answer but also
served a notice of exercise of their rights under Corporations Code1 section 17351,
subdivision (b) (§ 17351(b)), to purchase plaintiffs’ interest in the two LLCs in order to
avoid dissolution.2 However, the parties agreed they would not undertake the appraisal
process of section 17351(b) until a number of disputed issues were first resolved, and
they stipulated to having a private judge, the Honorable Nickolas J. Dibiaso, retired (the
Referee), hear and decide all disputed issues.3 The issues submitted by this stipulation
were essentially the same as those set forth in plaintiffs’ lawsuit, albeit narrower in scope.
Following extensive litigation, the Referee resolved nearly all of the disputed issues in
plaintiffs’ favor. Thereafter, plaintiffs moved for an award of attorney fees under the
1Unless otherwise indicated, all further statutory references are to the Corporations
Code.
2Section 17351(b) provides for a special appraisal process to ascertain the fair
market value of an LLC member’s interest that is sought to be purchased to avoid
dissolution, and it allows for recovery of attorney fees under limited circumstances not
applicable here.
3
Retired Justice Dibiaso was appointed to so act by order of the superior court,
pursuant to the parties’ stipulation and Code of Civil Procedure section 638.
2.
attorney fees provisions set forth in the operating agreements for the two LLCs. The
Referee found plaintiffs to be the prevailing parties and granted the motion.
Defendants appeal from the order granting attorney fees, arguing that the attorney
fees award was improper because they invoked their purchase rights under
section 17351(b). According to defendants, once they invoked their rights under
section 17351(b), the special proceedings articulated in that statute supplanted or trumped
any other basis for attorney fees. Since the limited conditions for recovery of attorney
fees under section 17351(b) were not present in this case, defendants argue that none
should have been awarded. We find it is unnecessary to decide whether section 17351(b)
might, in some cases, operate in the manner suggested by defendants. Here, we merely
conclude that since the parties expressly agreed to litigate certain disputed issues prior to
submitting the matter to the appraisers under section 17351(b), the attorney fees incurred
during that distinct litigation were recoverable under the contractual provisions. As the
Referee reasonably determined, plaintiffs prevailed in that litigation by obtaining, in
substance, declaratory relief in their favor on the majority of the disputed issues. For
these reasons, we affirm the trial court’s order awarding attorney fees to plaintiffs.
FACTS AND PROCEDURAL HISTORY
The Pleadings and Defendants’ Notice under Section 17351(b)
Plaintiffs’ original complaint was filed November 17, 2006, relating to two LLCs
owned jointly by plaintiffs and defendants. The two LLCs engaged in farming
enterprises, one known as Arvin 155, LLC (Arvin LLC) and the other known as
Elkhorn 167, LLC (Elkhorn LLC). The parties signed an operating agreement for each of
the two LLCs, which agreements set forth the parties’ capital contributions, management
responsibilities and other matters. The operating agreements referred to plaintiffs as the
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“Fresno Members” and to defendants as the “Simonian Members.”4 Paragraph 13.17 of
both of the operating agreements contained the following attorney fees provision: “In the
event that any dispute between the Company and the Members or among the Members
should result in litigation, the prevailing party in such dispute shall be entitled to recover
from the other party all reasonable costs and expenses of the prevailing party, including,
without limitation, reasonable attorney’s fees and expenses.”
Pursuant to the operating agreement for Elkhorn LLC, plaintiffs contributed a 167-
acre parcel of Fresno County real property encumbered by an existing debt, which debt
the parties agreed would be assumed by Elkhorn LLC. Since defendants had expertise in
agricultural matters, defendants would manage the day-to-day farming operations and
would also be responsible to “contribute cash” to the LLC “as needed” for production of
an “initial crop” (e.g., purchasing and planting the fruit trees, installing drip irrigation,
etc.) as well as for payment of interest and principal on any and all debt of the LLC.
Additionally, defendants were responsible to “loan cash” to the LLC “as needed … to
produce crops (other than the initial crop)” and for “the payment of the interest and
principal on any and all debt” of the LLC. The operating agreement further provided,
under the heading “Harvesting and Packing,” as follows: “The Members understand that
a ‘Grower Agreement’ shall be entered into with the Simonian Fruit Company, a
California Corporation. The Simonian Fruit Company shall be paid its normal and
customary charges which charges shall not exceed the lowest fee charged by the
Simonian Fruit Company to unrelated parties.” Defendants David Simonian and Harold
Simonian were the owners and/or sole shareholders of Simonian Fruit Company.
Under the operating agreement for Arvin LLC, plaintiffs contributed a 155-acre
parcel of Kern County real property. The real property was encumbered by an existing
4 The Referee and the parties’ appellate briefs generally use this same terminology
to describe plaintiffs and defendants.
4.
debt of $602,000 to Metropolitan Life, which debt the parties agreed would be assumed
by Arvin LLC. Defendants were required to initially “contribute cash” of $112,000 to the
LLC. Defendants would manage the day-to-day farming operations and were also
responsible to “loan cash” to the LLC “as needed for cultural costs to produce crops” and
for “the payment of the interest and principal on any and all debt” of the LLC. Aside
from the differences made apparent by this summary (e.g., the particular land, debt, and
defendants’ initial cash contribution), the terms of the Arvin LLC operating agreement
were substantially the same as those in the Elkhorn LLC operating agreement, including
the provision authorizing an agreement with Simonian Fruit Company for harvesting and
packing services.
Subsequently, the parties entered into a first addendum to the Arvin LLC
operating agreement (the addendum). The addendum provided, among other things, that
plaintiffs would contribute an additional sum of $12,838.89 directly to the LLC, and
defendants would contribute an additional sum of $55,875 to the LLC “by paying said
amount directly to Metropolitan Life in partial repayment of [Arvin LLC]’s debt to
Metropolitan Life.” In consideration of these further payments, it was agreed that
plaintiffs would not be required to make any additional capital contributions to the LLC.
The addendum also expressly permitted checks, drafts and other instruments to be signed
by one of defendants (“a Simonian Member”) without the necessity of obtaining the
signature of one of plaintiffs (“a Fresno Member”).
Having outlined the parties’ contractual relationship as alleged in the complaint
and as shown by the operational agreements attached thereto, we now turn to plaintiffs’
allegations of wrongful conduct. A major dispute that arose between the parties
concerned the amount of debt that was purportedly owed by the LLCs to Simonian Fruit
Company. According to plaintiffs’ characterization of events, defendants failed to
“personally” loan money to the LLCs as required, but instead they “financed the LLCs by
funneling a portion of monies loaned by banks to their related entity, Simonian Fruit
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Company, to the LLCs.” With “no personal funds at stake,” defendants “used the
woefully unprofitable LLCs as a ‘loss leader,’ while their related company earned
millions in packing charges and interest charged on the purported loans to the LLCs.”
According to plaintiffs, “[b]y late 2006, the LLCs’ alleged ‘debt’ to [Simonian Fruit
Company] was almost $4,000,000 which, if a valid debt, would have rendered
[plaintiffs’] interests in the LLCs worthless.”5 Another significant dispute arose when
defendants insisted that plaintiffs pay the Metropolitan Life debt, even though the parties
had agreed that debt would be assumed by Arvin LLC.
Plaintiffs’ complaint included a cause of action for breach of fiduciary duties.
That cause of action alleged that defendants breached their fiduciary duties by the
following conduct: (1) misappropriating assets of Arvin LLC and Elkhorn LLC;
(2) creating liabilities for Arvin LLC and Elkhorn LLC, which inured exclusively to
defendants’ benefit as the owners of Simonian Fruit Company; (3) allowing companies
owned solely by defendants to create artificial and/or unauthorized fees and charge said
improper fees to Arvin LLC and Elkhorn LLC; (4) misrepresenting and concealing the
financial affairs of Arvin LLC and Elkhorn LLC; (5) failing to provide timely or accurate
financial information; (6) allowing Simonian Fruit Company to violate its obligations as a
fruit broker under California statutory law; (7) demanding that plaintiffs pay the
Metropolitan Life debt expressly assumed by Arvin LLC; (8) failing to loan cash to Arvin
LLC to pay interest and principal on the Metropolitan Life debt, as required in the Arvin
LLC operational agreement; (9) demanding plaintiffs sign a deed of trust in the name of
Arvin LLC to secure an alleged debt of over $3.6 million in favor of Simonian Fruit
Company; (10) making their demand for said deed of trust in contravention of the terms
of the Arvin LLC operational agreement; (11) failing to provide an accounting of how
5 The purported debt was described in the pleadings as approximately $3.6 million,
but at trial as approximately $4 million.
6.
Arvin LLC incurred a debt of more than $3.6 million to Simonian Fruit Company; and
(12) using unjustified demands as a means to harass plaintiffs, extract additional money
from plaintiffs in contravention of the addendum, and force them out of the business.
The other causes of action in plaintiffs’ complaint, including constructive fraud,
declaratory relief, dissolution, accounting, appointment of receiver and injunctive relief,
were all premised on the same allegations or on matters related thereto. In the fourth
cause of action for declaratory relief, plaintiffs incorporated by reference the same set of
facts and sought a judicial declaration to resolve the parties’ disputed issues. The fifth
cause of action, for dissolution of Arvin LLC and Elkhorn LLC, added further allegations
that grounds for dissolution of the LLCs existed, including internal dissension between
the members of the LLCs, causing “deadlock” in the management, and the fact that
defendants, as the day-to-day managers of the LLCs, “knowingly countenanced persistent
and pervasive fraud, mismanagement, and unfairness towards Plaintiffs.”
Defendants filed an answer in the form of a general denial and assertion of
numerous affirmative defenses. A few weeks later, defendants served notice of the
exercise of their rights to purchase the membership interests of plaintiffs in Arvin LLC
and Elkhorn LLC, pursuant to section 17351(b) (the notice of exercise).
Section 17351(b)(1) provides, in relevant part: “In any suit for judicial dissolution, the
other members may avoid the dissolution of the limited liability company by purchasing
for cash the membership interests owned by the members so initiating the proceeding …
at their fair market value.” To ascertain fair market value when the parties are unable to
agree thereon, a special appraisal process is set forth in section 17351(b)(3).
We note that under section 17351(b)(2), the party exercising its right to purchase
may, after providing a bond, apply to the court for an order staying the “winding up and
dissolution proceeding” while the appraisal and purchase process is carried out. Here,
however, there is nothing in the record before us to indicate that defendants ever obtained
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such a stay order from the Referee or trial court. Instead, defendants’ notice of exercise
asked plaintiffs to voluntarily stay the dissolution proceeding.
By letter, plaintiffs responded through counsel to defendants’ notice of exercise,
including the stay request. Plaintiffs agreed that although the actual dissolution of the
LLCs would not occur until after the valuation and appraisal proceedings, “the remaining
claims must not be stayed.” Plaintiffs emphasized the existence of the material dispute
between the parties regarding the validity of “the disputed debt” carried by each of the
LLCs, and asserted that unless the valuation somehow excluded or removed that disputed
debt, it did not make sense to proceed with the appraisal process until a trier of fact first
determined the disputed claims.
On June 12, 2008, plaintiffs filed their first amended complaint. The first
amended complaint was the same as the original complaint, but added causes of action
for fraud and breach of contract based on defendants’ alleged failure to comply with their
promise to personally loan money to fund the operations of the LLCs. Defendants’
answer to the first amended complaint included a statement seeking enforcement of their
rights to purchase under section 17351(b), and prayed for a full declaration of the parties’
rights and duties.
Stipulation to Appoint Private Judge
Finally, in July 2008, the parties reached an agreement on how to proceed by
entering into their “STIPULATION TO APPOINT PRIVATE JUDGE” (the stipulation). The
stipulation, approved by order of the superior court on July 7, 2008, provided among
other things that “the Honorable Nickolas Dibiaso (Retired)” shall be assigned “for the
purpose of presiding over the litigation and trial of this matter, pursuant to Code of Civil
Procedure §638.” It was agreed in the stipulation that “Judge Dibiaso shall have the
power to hear and rule upon any issue which would otherwise have been presented to the
Fresno County Superior Court, including the power to grant all forms of legal and
equitable relief.” The stipulation expressly outlined the phases in which the disputed
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issues would be tried, beginning with a trial regarding the “rights, duties and obligations
of the parties and the legal effect” of the parties’ various contracts. Among the issues to
be resolved under the stipulation were, “the legal effect, if any, of money allegedly
advanced/loaned by Simonian Fruit Company to Arvin … LLC and Elkhorn LLC, [and]
who, if anyone, bears the legal/contractual responsibility for paying the Metropolitan Life
Insurance balloon payment.”
The stipulation clearly provided that resolution of the disputed issues would
precede the implementation of the appraisal and valuation process referenced in
section 17351(b)(3). Specifically, after outlining the steps of the contemplated litigation
process, the stipulation stated: “PROVIDED HOWEVER, the issue of the legal effect of
Defendants[’] exercise of Corporations Code §1735[1](b) Right to Purchase Membership
Interest … shall not be determined until all other legal and equitable determination shall
first be made, including any accountings deemed necessary by [the Referee].”
Litigation of the Disputed Issues
We briefly note some of the determinations that were made by the Referee. In the
initial phase of litigation, the Referee found in his statement of triable issues that the
loans or advances by Simonian Fruit Company to the LLCs were not authorized by the
operating agreements. In so holding, the Referee acknowledged that remaining issues
existed of whether, based on principles of waiver, estoppel, laches or ratification, any
portion of the monies loaned or advanced to the LLCs by Simonian Fruit Company
became a legitimate liability of the LLCs. The Referee also held that plaintiffs did not
have any obligation under the Arvin LLC operating agreement to pay the Metropolitan
Life debt. The Referee noted that plaintiffs did have an obligation to pay the debt under
their original financing agreement with Metropolitan Life, such that, if Arvin LLC
defaulted on its assumed obligations to plaintiffs to pay the debt before the due date of
the final installment, defendants would be obligated to indemnify plaintiffs under the
terms of the parties’ indemnity agreement. On the other hand, if Arvin LLC did not
9.
default on its assumed obligations to pay the debt before the final installation was due but
defaulted on its assumed obligations to pay the final installment, defendants would not be
obligated to indemnify plaintiffs.
A second phase of the trial covered certain unresolved issues. After this phase of
the trial, the Referee held in his “DECISION ON UNRESOLVED ISSUES” that the
unauthorized loans by Simonian Fruit Company to the LLCs were not transformed into
legitimate debts of the LLCs through waiver, estoppel, laches or ratification. The Referee
stated further: “In the context of this case, then, the questioned loan transactions
constitute both a forbidden fiduciary transaction [by defendants] independent of the
[operating agreements] and a forbidden contractual transaction under the [operating
agreements].”
A third phase of the trial occurred in June 2009. On September 11, 2009, the
Referee issued his “DECISION ON PHASE III ISSUES.” The Referee decided, among other
things, that (1) none of the unauthorized loans constituted enforceable grower “advances”
as suggested by defendants; (2) the unauthorized loans should not be carried as liabilities
on the books of the LLCs for the reasons expressed in the Referee’s prior decisions;
(3) $980,000 in funds from defendants’ related company could not be classified as
defendants’ personal capital contributions; and (4) the amount of the Metropolitan Life
debt should not be disregarded as a liability of Arvin LLC for purposes of valuation, and
plaintiffs are entitled to be indemnified by defendants for certain interest payments on the
Metropolitan Life debt made by plaintiffs. Based on such rulings, none of which were
appealed by defendants, the Referee restated the balance sheets of the LLCs to conform
to his rulings.
Finally, given that all of the disputed issues had at that point been decided, the
Referee’s September 11, 2009, decision instructed the parties to commence the appraisal
and valuation proceedings under section 17351(b).
10.
Appraisal Proceedings under Section 17351(b)
The valuation and appraisal procedures of section 17351(b) then proceeded. The
parties were unable to agree upon the fair market value of plaintiffs’ membership interest
in the LLCs and, accordingly, a bond was given by defendants and three appraisers were
appointed as required by section 17351(b) to ascertain the fair market value of plaintiffs’
membership interest in the LLCs.6 After the appraisers submitted their reports, further
hearings were held before the Referee and the valuation of plaintiffs’ interest was
confirmed by the Referee in a final statement of decision. The final statement of decision
also included the Referee’s final statement of findings on disputed issues in the case.
A form of alternative decree (entitled “ORDER CONFIRMING APPRAISERS’ AWARD
AND CORPORATIONS CODE §17351(b)(3) DECREE”) was presented by the Referee to the
superior court, along with the Referee’s final statement of decision and the Referee’s
report to the superior court. The Referee also transmitted to the superior court an original
form of judgment. The superior court signed and filed the alternative decree, and, once it
was confirmed that defendants paid the purchase price required for plaintiffs’ interest in
the LLCs, entered the judgment.
There is no dispute that defendants timely tendered the purchase price for
plaintiffs’ interests in the LLCs, in the amount determined by the appraisers and
confirmed by the Referee and superior court.
The Motion for Attorney Fees
After judgment was entered, the superior court referred the matter back to the
Referee to hear and decide any motions for attorney fees. Plaintiffs and defendants both
claimed to be the prevailing parties and both moved for recovery of contractual attorney
6 The purpose of a bond is this: if the party exercising its purchase rights under
section 17351(b) fails to timely pay the purchase price in accordance with the court’s
decree, the other party will be able to recover its attorney fees and costs associated with
the appraisal and valuation proceedings under the statute. (§ 17351(b)(3).)
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fees. In his interim ruling on motions for costs and attorney fees, the Referee noted the
several issues that were placed in dispute by the pleadings and the stipulation,7 and
determined that plaintiffs prevailed on nearly every issue. Accordingly, the Referee
found that plaintiffs were the prevailing parties in the litigation. Plaintiffs were awarded
attorney fees in the amount of $647,734.05 and costs of $44,503. An amended judgment
incorporating said attorney fees and costs was entered on January 6, 2011.
Defendants appeal from the order awarding attorney fees and costs.
DISCUSSION
I. Standard of Review
“‘On review of an award of attorney fees after trial, the normal standard of review
is abuse of discretion. However, de novo review of such a trial court order is warranted
where the determination of whether the criteria for an award of attorney fees and costs in
this context have been satisfied amounts to statutory construction and a question of law.’”
(Connerly v. State Personnel Bd. (2006) 37 Cal.4th 1169, 1175, citing Carver v. Chevron
U.S.A., Inc. (2002) 97 Cal.App.4th 132, 142.) “Stated another way, to determine whether
an award of attorney fees is warranted under a contractual attorney fees provision, the
reviewing court will examine the applicable statutes and provisions of the contract.
Where extrinsic evidence has not been offered to interpret the [contract provision], and
the facts are not in dispute, such review is conducted de novo. [Citation.] Thus, it is a
discretionary trial court decision on the propriety or amount of statutory attorney fees to
be awarded, but a determination of the legal basis for an attorney fee award is a question
7 The Referee noted that “Though the [first amended complaint] is pled expansively
and in detail, the Stipulation for the Reference and the course of the proceedings
narrowed the issues in the case to a few defined claims presented and contested in a
variety of ways during the Reference .…” The Referee then listed those issues and
spelled out how plaintiffs prevailed on virtually all of them.
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of law to be reviewed de novo. [Citation.]” (Carver v. Chevron U.S.A., Inc., supra, at
p. 142.)
II. The Scope of the Attorney Fee Provision
Defendants primarily contend that the attorney fees award was improper because
the right to contractual fees was trumped by section 17351(b). Before addressing that
issue, we provide some foundational background to our discussion by noting the statutory
underpinnings for awarding contractual attorney fees and by observing that the subject
attorney fees provisions were sufficiently broad in scope that they easily encompassed the
entire spectrum of issues litigated by the parties below.
Code of Civil Procedure section 1021 provides: “Except as attorney’s fees are
specifically provided for by statute, the measure and mode of compensation of attorneys
and counselors at law is left to the agreement, express or implied, of the parties .…” (See
also Code Civ. Proc., § 1033.5, subd. (a)(D)(10)(A) [attorney fees allowable as costs
under Code Civ. Proc., § 1032 to prevailing party “when authorized by … Contract”].)
In accordance with these statutes, it is recognized that “‘[P]arties may validly agree that
the prevailing party will be awarded attorney fees incurred in any litigation between
themselves, whether such litigation sounds in tort or in contract.’” (Santisas v. Goodin
(1998) 17 Cal.4th 599, 608, quoting Xuereb v. Marcus & Millichap, Inc. (1992) 3
Cal.App.4th 1338, 1341 (Xuereb) [construing Code Civ. Proc., § 1021].)8 For example,
in cases where the attorney fees provision allows an award of attorney fees to the
prevailing party in “‘any dispute’” resulting in litigation between the parties, the
provision is broad enough to encompass all types of claims, whether classified as
8 Section 1021 of the Code of Civil Procedure, consistent with section 1033.5,
subdivision (a)(D)(10)(A) of that code “recognizes that attorney fees … may be
recovered as costs only when they are otherwise authorized by statue or by the parties’
agreement.” (Santisas v. Goodin, supra, 17 Cal.4th at p. 607, fn. 4, italics added.)
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contract, tort or otherwise. (Maynard v. BTI Group, Inc. (2013) 216 Cal.App.4th 984,
993 (Maynard); Miske v. Coxeter (2012) 204 Cal.App.4th 1249, 1259.)
Civil Code section 1717 also addresses the recovery of attorney fees pursuant to a
contractual provision. It states, in relevant part, as follows: “In any action on a contract,
where the contract specifically provides that attorney’s fees and costs, which are incurred
to enforce that contract, shall be awarded either to one of the parties or to the prevailing
party, then the party who is determined to be the party prevailing on the contract … shall
be entitled to reasonable attorney’s fees in addition to other costs.” (Civ. Code, § 1717,
subd. (a).) By its terms, Civil Code section 1717 “covers only contract actions, … where
the contract sued upon itself specifically provides for an award of attorney fees incurred
to enforce that contract.” (Xuereb, supra, 3 Cal.App.4th at p. 1342.) The primary
purpose of Civil Code section 1717 is to ensure mutuality of remedy for attorney fees
claims under such contractual attorney fee provisions. (Santisas v. Goodin, supra, 17
Cal.4th at p. 610.) Section 1717 is not applicable to tort or other noncontract claims.
(Santisas v. Goodin, supra, at p. 615.)
Here, the Referee assumed that Civil Code section 1717 was applicable in this
case, at least to the extent contract claims were asserted by plaintiffs, and the parties do
not dispute the matter. Plaintiffs point out that Code of Civil Procedure section 1021 was
applicable, in addition to section 1717, due to the broad wording of the attorney fees
clause. Was the action, or any part of it, on the contract for purposes of section 1717 of
the Civil Code? Although only one of the 10 causes of action in plaintiffs’ first amended
complaint was for breach of contract, there were, intertwined within the other causes of
action (including declaratory relief and breach of fiduciary duty), allegations that
defendants failed to comply with duties owed under the operating agreements. A
complicating factor was that the issues raised in the pleadings were later distilled and
reformulated into the parties’ stipulation to have disputed issues resolved by the Referee.
Still, we do not disagree that many of the disputed issues were contractual in nature, even
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though the relief given was essentially that of declaratory relief. In this regard, we note
that a cause of action may be on a contract where the relief granted is declaratory relief
regarding the parties’ rights under the contract (Silver Creek, LLC v. BlackRock Realty
Advisors, Inc. (2009) 173 Cal.App.4th 1533, 1538; Exxess Electronixx v. Heger Realty
Corp. (1998) 64 Cal.App.4th 698, 710-711) and/or where it is for breach of fiduciary
duty arising out of a contract (Kangarlou v. Progressive Title Co., Inc. (2005) 128
Cal.App.4th 1174, 1178).
However, it is unnecessary for us to dissect the disputed issues to decide which of
them were on the contract since, in this case, not only were such issues intertwined with
the other claims, but more importantly, the attorney fees provisions were so broad that
they included all of the litigated issues.9 “While it is clear that an attorney fee provision
may authorize an award of fees only to the party who prevails on a claim to enforce the
terms of the contract containing that provision, it is equally clear that an attorney fee
provision need not be so limited.” (Maynard, supra, 216 Cal.App.4th at p. 991.) As
recognized by Code of Civil Procedure section 1021, contracting parties may reach a
broader agreement for attorney fees encompassing any litigation between them, including
claims sounding in tort or contract. (See, e.g., Maynard, supra, at pp. 989-993; Miske v.
Coxeter, supra, 204 Cal.App.4th at p. 1259; Hasler v. Howard (2005) 130 Cal.App.4th
1168, 1171; Xuereb, supra, 3 Cal.App.4th at p. 1342.) That is precisely what occurred
here.
Although in some instances the wording of a particular attorney fees provision
may be unclear as to “whether the parties intended fees to be recovered by the party who
prevails only on a breach of contract claim or by the party who prevails in a broader
9 Along the same lines, “[i]f the attorney fee provision is broad enough to
encompass contract and noncontract claims, in awarding fees to the prevailing party it is
unnecessary to apportion fees between those claims.” (Maynard, supra, 216 Cal.App.4th
at p. 992, citing Cruz v. Ayromloo (2007) 155 Cal.App.4th 1270, 1277.)
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sense, considering the action as a whole” (Maynard, supra, 216 Cal.App.4th at p. 990),
that was not the case here. In this case, the attorney fees were awarded to plaintiffs based
on the following provision, which was set forth in both of the operating agreements: “In
the event that any dispute between the Company and the Members or among the
Members should result in litigation, the prevailing party in such dispute shall be entitled
to recover from the other party all reasonable costs and expenses of the prevailing party,
including, without limitation, reasonable attorney’s fees and expenses.” We agree with
the Referee that this expansive language referring to any dispute among the members that
results in litigation “on its face covers all disputes of whatever nature or legal formulation
that were actually litigated between [plaintiffs] and [defendants] in this action.” Thus,
when plaintiffs filed their lawsuit, the fee provisions were activated and applied to the
entire scope of the dispute that was litigated below.
III. No Abuse of Discretion in Finding that Plaintiffs Prevailed
We next consider defendants’ challenge to the finding that plaintiffs were the
prevailing parties in the litigation. “The trial court’s determination of the prevailing party
for purposes of awarding attorney fees is an exercise of discretion which should not be
disturbed on appeal absent a clear showing of abuse of discretion.” (Ritter & Ritter, Inc.
Pension & Profit Plan v. The Churchill Condominium Assn. (2008) 166 Cal.App.4th 103,
126.) Under Civil Code section 1717, the prevailing party in a contract action is the one
who obtained “a greater relief” thereon. (Id., subd. (b)(1).) “If neither party achieves a
complete victory on all the contract claims, it is within the discretion of the trial court to
determine which party prevailed on the contract or whether, on balance, neither party
prevailed sufficiently to justify an award of attorney fees.” (Scott Co. v. Blount, Inc.
(1999) 20 Cal.4th 1103, 1109.) “[I]n determining litigation success, courts should respect
substance rather than form, and to this extent should be guided by ‘equitable
considerations.’ For example, a party who is denied direct relief on a claim may
nonetheless be found to be a prevailing party if it is clear that the party has otherwise
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achieved its main litigation objective.” (Hsu v. Abbara (1995) 9 Cal.4th 863, 877, italics
omitted.)
As to noncontract claims beyond the reach of Civil Code section 1717 (i.e., tort
causes of action), “a court may base its attorney fees decision on a pragmatic definition of
the extent to which each party has realized its litigation objectives, whether by judgment,
settlement, or otherwise.” (Santisas v. Goodin, supra, 17 Cal.4th at p. 622.) Code of
Civil Procedure section 1032 provides that a prevailing party includes the party “with a
net monetary recovery .…” (Id., subd. (a)(4).) “When any party recovers other than
monetary relief and in situations other than as specified, the ‘prevailing party’ shall be as
determined by the court .…” (Ibid.) Where, as here, the attorney fees provisions were so
broad in scope that they applied to the entire controversy or litigation regardless of the
nature of the claims, “the prevailing party entitled to recover fees normally will be the
party whose net recovery is greater, in the sense of most accomplishing its litigation
objectives .…” (Maynard, supra, 216 Cal.App.4th at p. 992.)10
Applying these principles, it is clear that the Referee’s determination (confirmed
by the trial court) that plaintiffs prevailed in the litigation was not an abuse of discretion.
The Referee based his determination on the fact that plaintiffs received a favorable ruling
on the vast majority of the disputed issues in the litigation. Those issues began with the
10 Maynard also held that, in such cases, the contract cause of action should not be
viewed in isolation from the related causes of action, but the question of which party
prevailed should be determined from the litigation as a whole: “One should not ‘confuse
the notion of prevailing in the lawsuit with that of prevailing “on the contract.”’
[Citation.] While prevailing on the contract is alone significant if the attorney fee
provision limits fee entitlement to the party prevailing on the contract claim, it is not
controlling if the provision authorizes fees to the party prevailing in the resolution of the
entire controversy.” (Maynard, supra, 216 Cal.App.4th at p. 993; see also pp. 992-995.)
The court held that where the latter type of fees provision is involved, a party could
prevail in the entire controversy and thus be the sole prevailing party under the fee
provision, “whether or not that party prevailed on a contract cause of action.” (Id. at
p. 992.)
17.
pleadings, but later were distilled and narrowed into the matters set forth in the parties’
stipulation. As explained by the Referee in the interim ruling on motions for costs and
attorney fees: “Though the [first amended complaint] is pled expansively and in detail,
the Stipulation for the Reference and the course of the proceedings narrowed the issues in
the case to a few defined claims presented and contested in a variety of ways during the
Reference .…” After enumerating the principal disputed issues in the litigation pursuant
to the parties’ stipulation, the Referee summarized how plaintiffs were predominantly
successful:
“The [plaintiffs] fit within every conceivably applicable definition of
‘prevailing party’ with respect to all but two of these litigated issues. The
Referee found, contrary to the position taken by [defendants] and consistent
with the position taken by [plaintiffs], that (1) the [Simonian Fruit
Company] loans were not legitimately incurred by [defendants] on behalf
of either LLC and that there was no other legal basis upon which [Simonian
Fruit Company] could enforce any of the loans against either of the LLCs,
(2) [defendants] were not entitled to credits to their capital accounts in the
amounts of the unpaid annual carryovers of the loans, (3) [plaintiffs] were
entitled to indemnity for all payments made by [plaintiffs] for maintenance
of the Elkhorn property and for all payments made by [plaintiffs] on the
Met Life debts against the LLCs except for the last balloon payment of
$296,000 on the Arvin Met Life debt, (4) the Memorandum had no legal
effect after the [operating agreements] became effective, and (5) the
Elkhorn [LLC] development costs were not to be considered capital
contributions of [defendants]. The only issues found by the Referee in
accord with the positions taken by [defendants] and contrary to the
positions taken by [plaintiffs] were that (1) if Arvin [LLC] defaulted on its
assumed obligation to pay the final installment on the Met Life debt when it
was due, [defendants] were not obliged to indemnify [plaintiffs] for the
payment of the final installment of the Arvin [LLC] Met Life debt, and
(2) the amount of the Arvin [LLC] Met Life debt should remain as a stated
liability on the balance sheet of Arvin [LLC].
“Consequently, [plaintiffs] obtained greater relief with respect to the
litigated issues and achieved all but two of their litigation objectives with
respect to those issues. [Citations.] This outcome was not an equally good
news, bad news proposition for both parties; it was instead largely good
news for [plaintiffs] and largely bad news for [defendants]. [Citation.]
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… [Defendants] won a couple of battles but [plaintiffs] won all the others
and the war. [Citation.] In practical effect, the outcome of the prevaluation
aspect of this case was a declaration in favor of [plaintiffs] with respect to
most of the disputes in issue. [Citation.]”
The Referee’s conclusion that plaintiffs were the prevailing parties was clearly
correct. For the reasons thoroughly explained within the Referee’s ruling, which are
supported by the record, plaintiffs obtained the greater relief and succeeded in most of its
litigation objectives.11 Defendants have failed to demonstrate any abuse of discretion on
this point.
We also find unpersuasive defendants’ argument that since no judgment for
damages was entered under plaintiffs’ first amended complaint, plaintiffs could not have
prevailed. We disagree with this argument because, in deciding which party prevailed,
courts look to substance over form. (Hsu v. Abbara, supra, 9 Cal.4th at p. 877.) The
issues in the pleadings were, by stipulation, narrowed and submitted to the Referee for
litigation and trial. Plaintiffs prevailed in that litigation by obtaining what was, in
essence, declaratory relief on the various disputed issues of contractual and fiduciary
obligations. And, although damages were not awarded to plaintiffs, the determinations
on the disputed issues ultimately resulted in a greatly enhanced valuation of their interests
in the LLCs. As the Referee correctly explained: “The decisions on the litigated issues
did result in accounting adjustments rather than damages, but [plaintiffs] nonetheless
11 Defendants argue that since Simonian Fruit Company was not itself a party to the
action, the Referee could not make a binding decision that Simonian Fruit Company
could not enforce the debts against the LLCs. Defendants’ point is misplaced, since what
mattered was that the Referee did resolve, in plaintiffs’ favor, how the disputed debt
would be treated as between the parties to the litigation. Also, the Referee was well
aware that Simonian Fruit Company was not a party and might have sought to bring a
separate action to enforce the debts. The Referee noted that said issue became moot
when, based on valuations that did not consider the Simonian Fruit Company loans as
liabilities of the LLCs, plaintiffs’ interests in the LLCs were finally bought out and
judgment entered.
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‘realized [their] litigation objectives’ with respect to the main litigated disputes .…
[Citation.]” For example, plaintiffs’ litigation success with respect to the Simonian Fruit
Company loans to the LLCs “operated to [plaintiffs’] direct, positive financial advantage,
which was ultimately realized by the purchase payments required of [defendants] under
the Alternative Decree.” Finally, the attorney fees provisions set forth in the operating
agreements were sufficiently broad in scope to allow the Referee (and trial court) to
reasonably determine that plaintiffs were the prevailing parties within the meaning of the
parties’ attorney fees provisions, even though no monetary damages were awarded under
plaintiffs’ causes of action.
IV. Right to Contractual Fees Was Not Trumped by Section 17351(b)
Defendants’ main contention on appeal is that the award of attorney fees was
improper because, once they invoked their purchase rights under section 17351(b), any
contractual right to recover attorney fees was supplanted by the special proceedings in
section 17351(b). We begin our consideration of this argument by reviewing the
language and purpose of section 17351.
A. Overview of Section 17351(b) Proceedings
Subdivision (a) of section 17351 provides for judicial dissolution of LLCs. It
states that pursuant to an action filed by any member or manager of an LLC, a court “may
decree the dissolution of [an LLC]” whenever certain conditions occur, including “[t]he
management of the [LLC] is deadlocked or subject to internal dissention” and/or “[t]hose
in control of the [LLC] have been guilty of, or have knowingly countenanced persistent
and pervasive fraud, mismanagement, or abuse of authority.” (§ 17351, subd. (a)(4) &
(5).)
When such an action is filed, subdivision (b) of section 17351 gives the other
members the option of avoiding dissolution by buying out the interests of those seeking
dissolution. Specifically, section 17351(b)(1) states, in part: “In any suit for judicial
dissolution, the other members may avoid the dissolution of the [LLC] by purchasing for
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cash the membership interests owned by the members so initiating the proceeding (the
‘moving parties’) at their fair market value.”
Section 17351(b)(2) furnishes a procedure to obtain a court-ordered stay of the
dissolution action. It states: “If the purchasing parties (A) elect to purchase the
membership interests owned by the moving parties, (B) are unable to agree with the
moving parties upon the fair market value of the membership interests, and (C) give bond
with sufficient security to pay the estimated reasonable expenses, including attorneys’
fees, of the moving parties if the expenses are recoverable under paragraph (3), the court,
upon application of the purchasing parties, either in the pending action or in a proceeding
initiated in the superior court … by the purchasing parties, shall stay the winding up and
dissolution proceeding and shall proceed to ascertain and fix the fair market value of the
membership interests owned by the moving parties.” (§ 17351(b)(2).)
Section 17351(b)(3) then provides for a special appraisal or valuation process,
which is followed by the trial court’s issuance of an alternative decree. It states: “The
court shall appoint three disinterested appraisers to appraise the fair market value of the
membership interests owned by the moving parties, and shall make an order referring the
matter to the appraisers so appointed for the purpose of ascertaining that value. The order
shall prescribe the time and manner of producing evidence, if evidence is required. The
award of the appraisers or a majority of them, when confirmed by the court, shall be final
and conclusive upon all parties. The court shall enter a decree that shall provide in the
alternative for winding up and dissolution of the [LLC] unless payment is made for the
membership interests within the time specified by the decree. If the purchasing parties do
not make payment for the membership interests within the time specified, judgment shall
be entered against them and the surety or sureties on the bond for the amount of the
expenses, including attorneys’ fees, of the moving parties.…” (§ 17351(b)(3).)
As should be apparent, the objective of section 17351(b)(3) is to provide a buyout
option as an alternative to dissolution through use of a summary process to ascertain fair
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market value. (See Abrams v. Abrams-Rubaloff & Associates, Inc. (1980) 114
Cal.App.3d 240, 247-248 [§ 2000 is special summary proceeding where usual rules of
procedure do not apply]; Trahan v. Trahan (2002) 99 Cal.App.4th 62, 75 [stating
objectives of § 2000].) The summary process utilizes three court-appointed appraisers to
assess the fair market value of the interests of the members seeking dissolution, with the
court then issuing an alternative decree based on the appraisers’ reports. Although
evidence is permitted, if required, the proceeding is not a trial between adversaries
attempting to prove their respective cases to a trier of fact. Rather, it is a submittal of the
valuation question to a special appraisal process, “with minimal expenditure of time and
money that would otherwise be spent in litigation” (Go v. Pacific Health Services, Inc.
(2009) 179 Cal.App.4th 522, 531), and concerning which “[t]he award of the appraisers
or a majority of them, when confirmed by the court, shall be final and conclusive upon all
parties” (§ 17351(b)(3)).
It is also clear that attorney fees are recoverable in the statutory proceedings if the
party invoking section 17351(b) fails to timely complete the purchase and, in that event,
the bond would be looked to for the recovery of such fees. (§ 17351(b)(3).) The attorney
fees addressed by the statute are only those incurred in the appraisal process itself. (Go v.
Pacific Health Services, Inc., supra, 179 Cal.App.4th at p. 531 [construing § 2000].)12
B. Merits of Defendants’ Argument
To recapitulate, defendants’ position is that once they served their notice of
exercise to purchase plaintiffs’ interests in the LLCs under section 17351(b), that
section and the special proceedings established therein governed the issue of whether
attorney fees were awardable in this case. According to defendants, not only was
12 We note the Referee excluded from the award, any attorney fees that may have
been incurred during the appraisal proceeding itself and, to that limited extent, the
Referee agreed the statute supplanted other grounds for attorney fees. That aspect of the
Referee’s decision is not in dispute.
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plaintiffs’ claim for involuntary dissolution automatically stayed, but the parties’ entire
litigation of disputed issues was supplanted by, or subsumed under, section 17351(b). In
other words, once section 17351(b) was invoked, the litigation of disputed issues became
incidental to, or part-and-parcel of, the statutory appraisal and buyout process. Under this
theory, plaintiffs could only recover attorney fees to the extent authorized under
section 17351(b); that is, if defendants failed to timely complete the purchase. And since
defendants timely completed the purchase, no attorney fees could be awarded—or so the
argument goes.
Preliminarily, we reject the argument that the entirety of the underlying lawsuit
and the litigation of disputed issues were automatically stayed merely by defendants
giving notice of their intention to purchase plaintiffs’ interests under section 17351(b).
The statute sets forth a particular procedure to be followed for obtaining a court-ordered
stay of dissolution. (See § 17351(b)(2).) Defendants failed to obtain such a prelitigation
stay order. Instead, they intentionally chose by their stipulation to litigate certain
disputed issues in advance of implementing the appraisal and buyout process. As that
stipulation expressly provided, “the issue of the legal effect of Defendants[’] exercise of
Corporations Code [section] 17351(b) Right to Purchase Membership Interest of
Members … shall not be determined until all other legal and equitable determination
shall first be made, including any accountings deemed necessary by [the Referee].”
Accordingly, we find no merit in defendants’ argument that an alleged stay precluded the
award of attorney fees concerning disputed issues that the parties’ agreed to litigate and,
in fact, did litigate.
Defendants further argue that section 17351(b), once invoked, operated to supplant
plaintiffs’ entire action and the litigation of disputed issues, including any right to
contractual attorney fees therein. In support of this theory, defendants refer to Go v.
Pacific Health Services, Inc., supra, 179 Cal.App.4th 522, a case that involved
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section 2000, the parallel statute applicable to corporations. We now consider that case
in detail.
In Go v. Pacific Health Services, Inc., the plaintiff (Go) filed a complaint seeking
the involuntary dissolution of a close corporation of which she was a shareholder. Go
also sought damages in her complaint based on claims of breach of fiduciary duty and
fraud. (Go v. Pacific Health Services, Inc., supra, 179 Cal.App.4th at p. 527.) The
defendants, who were the other shareholders of the corporation, filed a cross-complaint
for breach of contract, misappropriation of corporate opportunities, and breach of duty of
loyalty. The defendants subsequently sought to purchase Go’s shares under section 2000
by moving for a stay of the dissolution proceedings and requesting that the value of Go’s
shares be fixed by the appraisal process set forth in section 2000. The trial court granted
the stay of the dissolution proceedings, appointed the appraisers, and upon receiving the
appraisers’ reports, determined the value of the Go’s shares in the corporation. Pursuant
to section 2000, the trial court then issued an alternative decree that the defendants pay
Go the value of her shares by a certain date, or, in the alternative, the involuntary winding
up and dissolution “‘shall proceed immediately.’” (Go v. Pacific Health Services, Inc.,
supra, at p. 529.) The defendants, even though they had commenced the appraisal and
buyout proceedings under section 2000, appealed from the alternative decree on the
ground that they still had a right to litigate or “‘defend themselves’” on the merits of Go’s
claim for involuntary dissolution. (Go v. Pacific Health Services, Inc., supra, at p. 529.)
The Court of Appeal in Go v. Pacific Health Services, Inc. rejected the defendants’
contention, holding that when the defendants obtained a stay of the dissolution
proceedings and implemented the appraisal process of section 2000, they were agreeing
to use that summary proceeding in lieu of litigating their claims in the involuntary
dissolution action: “[T]hat is precisely the concession [the] defendants chose when they
elected to proceed under section 2000.” (Go v. Pacific Health Services, Inc., supra, 179
Cal.App.4th at p. 531.) As the Court of Appeal further explained: “[The defendants]
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could have chosen to litigate their cross-complaint and defend the … action for
involuntary dissolution on its merits. They chose instead to use the summary procedure
afforded by section 2000, which resulted in a stay of the dissolution proceedings,
valuation of the corporation, and an alternative decree to either pay Go the designated
amount or have judgment of dissolution entered against them. If this were not the
inevitable outcome, then all majority shareholders facing an action for involuntary
dissolution would invoke section 2000 if only for the purpose of delay, with nothing to
lose other than the expense of the appraisal and attorney fees, knowing they could
eventually litigate the action for involuntary dissolution on its merits. The plain language
of section 2000, and the apparent legislative purpose inherent in the language of the
statute, do not permit such an interpretation.” (Id. at pp. 531-532.) It was in this context
that the Court of Appeal stated: “The procedure permitted by section 2000, which is
entirely optional, embodies a summary proceeding which supplants the action for
involuntary dissolution pursuant to section 1800.” (Id. at p. 530.)
Based on the above quoted language, defendants maintain that the entire litigation
in the present case was likewise supplanted by section 17351(b) and exclusively
governed by it, including the issue of attorney fees.13 Plaintiffs disagree, countering that
Go v. Pacific Health Services, Inc., supra, 179 Cal.App.4th 522 merely stands for the
proposition that the party invoking the special proceedings under section 2000 (or
§ 17351(b)) to avoid dissolution does so at a cost; that is, that party gives up his or her
right to litigate the dissolution cause of action on the merits. However, according to
plaintiffs, the party seeking dissolution of a corporation or LLC in an action that includes
other claims does not lose its right to litigate those other claims when the defendant
13 We note that although section 17351(b)(3) specifies when attorney fees may be
awarded in the statutory appraisal/valuation process, it says nothing about the availability
of attorney fees in other contexts (e.g., litigation preceding the appraisal/valuation
process).
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invokes its right to avoid dissolution under section 2000 (or § 17351(b)). In other words,
plaintiffs’ position is that “Go does not hold … that Corporations Code §17351 provides
a vehicle by which a party invoking its right to avoid dissolution can also make claims
other than the dissolution cause of action … simply disappear without any litigation or
trial on the merits of those claims (i.e. be ‘supplanted’).”14
Having briefly framed the issue, we resolve it without the necessity of statutory
construction of section 17351(b). We need not decide whether, in some contexts, the
invocation of section 17351(b) (in conjunction with obtaining a stay of the dissolution
action and initiating the appraisal proceedings), would potentially operate in the manner
suggested by defendants with respect to contractual attorney fee recovery. Here, it is
simply not an issue because the parties expressly agreed that prior to implementing or
proceeding with the statutory appraisal process, they were going to first litigate certain
disputed issues. It is not as though the litigation was stopped or stayed so that the parties’
respective claims could then be submitted to the appraisers to assess how such claims
might impact the LLCs’ appraised values.15 Rather, the parties entered the stipulation to
engage in litigation to resolve their disputed issues before going forward with the special
appraisal process. Go v. Pacific Health Services, Inc., supra, 179 Cal.App.4th 522 is
readily distinguishable on that ground alone, and also because in Go, the party seeking to
14 The Referee’s view was in accord with this. The Referee held that while “the
optional valuation and buy out proceeding under section 17351, subdivision (b),
supplanted [plaintiffs’] cause of action for involuntary dissolution,” the mere fact that
plaintiffs did not obtain an involuntary dissolution “did not inactivate the fee provision or
deprive [plaintiffs] of their status as the prevailing parties in the action.”
15 There is case law suggesting that some types of pending claims or lawsuits may be
valued by the appraisers (e.g., as assets) and accounted for when ascertaining the fair
market value of the interest in the corporation or LLC. (Cotton v. Expo Power Systems,
Inc. (2009) 170 Cal.App.4th 1371, 1381 [value of derivative action could be appraised].)
That possibility was not an issue here, because the parties did not submit their claims to
the appraisers for an assessment of value, but litigated the disputed issues beforehand.
26.
pursue the dissolution action had already obtained a stay order and actually submitted the
valuation issue to the appraisers. Here, by contrast, the parties actually, separately and
extensively litigated the disputed issues to complete resolution before proceeding with
the summary appraisal process.
For these reasons, when plaintiffs prevailed in the litigation of those issues, the
Referee was correct in treating the litigation as distinct from the statutory
appraisal/valuation proceedings under section 17351(b) for purposes of awarding
attorney fees under the contractual provision. The Referee properly found that although
many issues were resolved as balance sheet adjustments, “these adjustments were not an
‘integral part’ of the section 17351 valuation proceedings; they were litigated disputes
between the members over balance sheet entries that were required to be decided before
the valuation proceedings could go forward.” (Italics added, fn. omitted.) The Referee
further held: “It is true that the resolution of the preexisting disputes which prompted this
litigation affected the final valuation of [plaintiffs’] interests in the LLCs, but none of the
decisions on those issues, alone or collectively, established the actual fair market
valuations for purposes of the statutory buy out of [plaintiffs’] interests. Instead, the
resolution of the preexisting disputes set the stage, in the form of the restated balance
sheets of the LLCs, for the valuations determined by the appraisers … in a summary
proceeding outside the adversary processes of conventional litigation.”
To summarize, as stated in the operating agreements of the LLCs, the parties
agreed that in the event that “any dispute” between them “result[ed] in litigation, the
prevailing party in such dispute shall be entitled to recover” reasonable attorney fees.
Such a dispute occurred here, resulting in extensive litigation between the parties.
Although defendants served a notice of exercise of their right to purchase plaintiffs’
interests in the LLCs pursuant to section 17351(b), the parties agreed by stipulation to
litigate the disputed issues before proceeding with or implementing the summary
appraisal/valuation proceedings under that statute. On this record, we hold that when
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plaintiffs prevailed on a majority of the litigated issues, the Referee (and trial court)
properly granted plaintiffs’ motion for an award of attorney fees.
DISPOSITION
The order awarding attorney fees to plaintiffs is affirmed. Costs on appeal are
awarded to plaintiffs.
_____________________
Kane, J.
WE CONCUR:
_____________________
Cornell, Acting P.J.
_____________________
Detjen, J.
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