Defendant Did Not Satisfy Nedlloyd Interest Analysis To Swing The Scales Back To California.
This next case may have limited utility because its result really hinged on defendant’s failure to meet its burden of proof under the appropriate choice-of-law analysis.
In River Oaks Self-Storage TIC 4, LP v. River Oaks Storage, LLC, Case No. A155418 (1st Dist., Div.2 Sept. 12, 2019) (unpublished), defendant—a Texas LLC alleged to have a business presence in California—was sued by three out-of-state entities involving disputes under a Tenant In Common Agreement and LLC Agreement relating to a self-storage property facility in Texas. Defendant defeated plaintiffs’ TIC Agreement claims on demurrer, and plaintiffs voluntarily dismissed the LLC Agreement claims on the eve of a defense summary judgment motion. Defendant then moved for $201,003 in fees as the prevailing party under the two written agreements, a request denied in entirety by the lower court.
The 1/2 DCA affirmed on narrow grounds.
Defendant first relied on a Texas statute which only unilaterally applies to prevailing plaintiffs, but argued it was reciprocal based on California Civil Code section 1717, and then the TIC Agreement which only applied to tenants in common. (The trial judge determined that defendant was not a tenant in common, so the TIC Agreement theory did not work.)
The appellate court determined that defendant had not made enough of a nuanced argument to show whether Texas or California had a greater interest in the dispute so as to justify fees, which means the fee denial order had to be affirmed. It did discuss the conflicting ABF Capital decisions (see our Choice of Law category for a discussion of these two Second District decisions), but simply determined that defendant did not show why Texas law rather than California reciprocity principles should apply given the competing interests of both states. That result was likely salted by the fact that the dispute involved Texas property.
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