Not Huge Amounts, But Some Challenges Were Untimely And Some Were Not Meritorious.
To end the year, we post on Storix, Inc. v. Johnson, Case Nos. D075308/D077096 (4th Dist., Div. 1 Dec. 31, 2020) (unpublished), which was a very contested dispute between software company Storix and founder Mr. Johnson, which dragged in various directors of Storix. The disputes involved separate fiduciary duty, shareholder derivative, and malicious prosecution actions relating to the overall business dispute. Johnson lost the shareholder derivative dispute based on a lack of standing after he had voluntarily posted the Corporations Code section 800 bond. His malicious prosecution suit was SLAPPed. Subsequently, the lower court decided that Johnson’s bond should not be released and was liable for up to $50,000 in fees/costs in the shareholder derivative action. On the SLAPP win, Individual Defendants were awarded $12,237.50 in fees and $2,364.45 in costs, with some of the fees amount being “fees on fees.”
Johnson’s challenges to the fees/costs award were not successful on appeal, some of which were forfeited because there was no separate timely appeal of the fee/costs orders (something we have posted on many times before—in doubt, separately appeal!). Johnson’s main argument that he lacked standing in the shareholder derivative suit such that he was never a plaintiff and his bond exonerated was not bought by the appellate court. Even a lack of standing allows the adverse party on a section 800 litigation expense bond dispute to recover fees and costs. With respect to the SLAPP fee/costs award, the orders were affirmed because (1) in the SLAPP context, it does not matter if fees were actually incurred versus being indemnified by another (i.e., Individual Directors were indemnified by Storix); and (2) the trial judge did reduce for limited success on some SLAPP issues, but the overall award was justified based on the reduction because additional “fees on fees” were warranted.
Comments