It Was Not Necessary For Court To Apportion Fees Between Contract-Based Causes Of Action, Claims Dismissed Before Trial, Defense of Defendant Corporation, and Defense of Corporation’s CEO Because Plaintiff’s Causes Of Action All Stemmed From A Common Factual Core, And All Claims Against CEO Were Also Alleged Against Entity.
In Grant v. AssistMed, Inc., Case No. B289996 (2d Dist., Div. 1 March 1, 2019) (unpublished), Plaintiff filed his original complaint against former employer and its CEO alleging 5 causes of action related to his employment agreement. The trial court sustained Defendants’ joint demurrer, and Plaintiff filed a first amended complaint alleging 5 causes of action with some changes to the causes of action from the original complaint. Defendants again filed a joint demurrer which was sustained. Finally, Plaintiff filed his second amended complaint alleging 2 causes of action – breach of contract and fraud in the inducement. The trial court partially sustained Defendants’ joint demurrer to this second amended complaint – leaving Plaintiff with only the breach of contract cause of action.
The case proceeded to bench trial against only the Corporation as the CEO died and was dismissed as a party shortly before trial. At trial, the court granted Corporation’s Code Civ. Proc. section 631.8 request for Motion for Judgment (based on evidence – or lack thereof – presented by Plaintiff). A month later, Plaintiff requested the trial court take judicial notice of the fact that Corporation had ceased business operations several months earlier, and made “an Assignment for the Benefit of Creditors to BOT Financial.” Corporation acknowledged this fact, and neither party provided any other documents related to the assignment.
In a postjudgment motion, Corporation requested attorney fees incurred in defending against the three different iterations of Plaintiff’s complaint – basing the request on a prevailing party attorney fees provision in the employment agreement. Plaintiff argued that Corporation did not have standing to seek attorney fees in light of the Assignment, and should not recover fees incurred defending non-contract claims or fees incurred defending CEO. The trial court disagreed – noting that Plaintiff had waived arguments regarding the Assignment by waiting several months after learning of it to raise it with the court – and awarded Corporation $92,155 in attorney fees after a reasonableness reduction. Plaintiff appealed.
The 2/1 DCA concluded that the trial court did not err in concluding Corporation had standing to collect an attorney fee award as the record was unclear as to what assets were included in the Assignment. It further concluded that Plaintiff had the opportunity to bring the assignee into the case below, but made no effort to do so after learning of the Assignment. Finally, citing Bell v. Vista Unified School Dist. (2000) 82 Cal.App.4th 672, the 2/1 DCA concluded that all causes of action alleged by Plaintiff shared a “primary economic focus” such that the litigation did not involve “separate and distinct claims, one entitled to statutory fees and the other not.” The appellate court also concluded that the trial court did not err in determining apportionment was not required for the fees attributable to defending Corporation as opposed to its CEO as the claims at issue were made against both Defendants, and were so factually interrelated that it would have been impossible to separate the activities.
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