In The End, This Dispute Was Driven By The Fee Clauses “Four Corner” Interpretation.
Justice Fybel, as the authoring justice in Dohr v. Lintz, Case Nos. G056144/G058796 (4th Dist., Div. 3 Mar. 24, 2021) (unpublished), was faced with consolidated appeals where a $795,728 fee award was trying to be sustained and where a $926,170 fee request was denied as untimely and not allowable under a promissory note fees clause. In the end, all was affirmed but he (on behalf of his panel) steered through some interesting fee analytics.
Litigant Dohr obtained a $795,728 fee award out of a requested $2,208,512.50. The other side appealed, principally arguing it was a tort claim not recoverable under Civil Code section 1717 and was a derivative claim which at the most capped at the $50,000 bond limitation set forth in Corporations Code section 800. The appellate court rejected the challenges to the fee award. Although agreeing that tort claims are not recoverable under Civil Code section 1717, the fee clause under the stock purchase agreement, had to be independently assessed, and it was broad enough to allow fee recovery. The aggrieved party Lintz argued that she could not be held liable on a derivative claim, but she—as a shareholder of the corporation—stood in its shoes such that she became a party to the stock purchase agreement and the $50,000 limitation did not apply in the context of this case where there were other fee entitlement bases.
With respect to the denial of the $926,170 fee request, it was untimely, there was a dismissal of the note claim effectively (such that Santisas kicked in), and the tort allegations were not tethered to the note fees clause. All things said, there was nothing wrong in denying this fee request.
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