Defendant’s Fee Award Reversed Because Plaintiff’s Pleadings Based on Statutory Corporations Code Duty, Not a Contract With a Fees Clause.
Tabibian v. Waldman, Case No. B220760 (2d Dist., Div. 7 Feb. 9, 2011) (unpublished) is a case where plaintiff sued for breach of fiduciary duty/loyalty under Corporations Code section 309 even though there was an LLC operating agreement with a fees clause. However, no breach of contract claim was brought. Defendant prevailed and was awarded $50,000 (out of a requested $87,875) in attorney’s fees under Civil Code section 1717, based on the operating agreement’s fees clause.
The fee award was reversed. Reason? The action was not “on the contract,” but was a statutory breach of duty claim. The crucial focus was on plaintiff’s pleading, which established no contract claim was involved. (Kangarlou v. Progressive Title Co., Inc., 128 Cal.App.4th 1174, 1178-1179 (2005).)