However, He Was Not Entitled To Injunction-Related Fees Not Directly Tethered To The Statutory Buyout Appraisal Process.
A statutory scheme, when considered in context, may well govern what attorney’s fees are awardable in a certain context. That is what occurred in Schrage v. Schrage, Case No. B288478 (2d Dist., Div. 7 Aug. 19, 2020) (unpublished).
What happened in this case was that brother Leonard filed an action against his two brothers to involuntarily dissolve a family owned business. The two brothers invoked the statutory right to buyout the business rather than risk a dissolution order. The problem is that the two brothers went through the appraisal process, obtained a purchase number, but did not perform. Leonard moved to recoup attorney’s fees under various sections of the Corporations Code which guide this process, namely, sections 2000(c), 15908.02(d), and 17707.03(c)(3). Leonard sought some referee expenses, $379,009.50 for appraisal-related fees, and $561,393.63 in injunction-related fees (given he obtained some injunctions to keep the other two brothers from abusing the family company). In some bizarre procedural contortions, the first judge issued a tentative to grant the fees except for the injunction-related fees, but never issued an order. A second judge was later assigned, who granted the entirety of the fees request, which gave rise to the appeal.
The 2/7 DCA affirmed, but it did not sustain the entire fee request award. Rather, after analyzing the Corporations Code fee-shifting provisions, it determined that only appraisal-related fees were allowable, not the injunction-related fees. The appellate court also found that it was no error for the second judge to fail to conduct a hearing, because it was not required under the statutory scheme. So, even though some of the costs/fees award was affirmed, $561,393.63 went bye-bye as a matter of law.
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