Settlement Agreement’s Reservation Of Fee Determination Based on Trade Secret Misappropriation Statute Did Allow Lower Court To Determine If Fee Entitlement Proven In Postjudgment Fee Proceeding
Denial of Fee Recovery Reversed and Remanded.
Khavarian Enterprises, Inc. v. Commline, Inc., Case No. B243467 (2d Dist., Div. 4 May 14, 2013) (published) demonstrates that appellate courts will honor settlement agreement procedures reserving fee determinations in a post-dismissal cost proceeding.
What happened here is that plaintiff and defendants entered into a settlement agreement prior to trial in a a trade secret misappropriation suit, agreeing that plaintiff could file a motion for fees/costs under Civil Code section 3426.7 (a trade secret misappropriation fee-shifting section requiring proof of willful/malicious misappropriation) and Code of Civil Procedure section 1033.5 (the routine costs provision). Plaintiff dismissed its action based on the settlement. However, the trial court denied fees to plaintiff, reasoning that there had been no finding of willful and malicious misappropriation before the dismissal was filed.
Fee denial reversed on appeal. The principal basis was that the settlement agreement procedure governed, such that plaintiff should be able to obtain a fixing of fees it if could prove that fee entitlement was appropriate after demonstrating willful/malicious misappropriation. Any other interpretation would render the settlement agreement nugatory in nature, and nothing in Civil Code section 1717 found post-dismissal fee awards to be against public policy. Remand to have another fee hearing on the issue.
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