Assignor Controlling Litigation Should Not Avoid Fee Exposure Via Assignment.
Plaintiff owner and his wholly-owned corporation lost a specific performance, rescission, and declaratory relief suit to trustees of a revocable trust after trustees obtained an evidentiary preclusion order upon plaintiffs’ refusal to provide discovery on the “ready, willing, and able” purchaser issue. Then, the trial court held plaintiff owner individually liable for attorney’s fees of $816,683.80 and $41,544.67 of costs under a fees clause in the purchase agreement, notwithstanding his assignment of interests in the litigation to his corporation on the eve of trial.
He appealed the merits and fees/costs judgments, but lost on appeal in Clement v. Alegre, Case No. A125953 (1st Dist., Div. 2 Oct. 18, 2011) (unpublished).
Simplicity often times determines cases, as it did here. An assignment carries with it all rights of the assignor. Even though the assignor can transfer his or her rights, the assignor cannot escape the burden of his or her obligation by an assignment. Plaintiffs could cite no cases holding “that a plaintiff may evade its liability for attorney fees by assigning its rights in the litigation to its coplaintiff”--all the more so because plaintiff controlled the litigation since inception.
BLOG UNDERVIEW--For all you California real estate practitioners, this case has a great discussion of the “ready, willing, and able purchaser” case law. Also, it demonstrates that if you put an issue at stake in a case, you better provide the other side discovery on that issue or risk preclusion (the “you cannot blow hot and cold” principle).
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