Sixth District Affirms Fee Denial by Lower Court.
As we have stated before, the first step in seeking fee recovery in California state courts is to find a firm fee “entitlement anchor,” either a contract or statute conferring the ability for a litigant to recoup attorney’s fees. In the next case, there was a buy-sell agreement, but it was not really involved in the corporate voluntary dissolution action brought by one of the shareholders. The lesson: no fees basis, no fees.
In Carpentier v. Mangar, Case No. H032731 (6th Dist. Sept. 9, 2009) (unpublished), one of the shareholders brought a voluntary dissolution petition in the name of the company, and the other shareholder consented to a decree winding up the corporation. Petitioning shareholder was also ordered to reimburse certain sums to the corporation, and a corporate dissolution decree was entered also. Petitioning shareholder then moved for an award of $148,906.50 in attorney’s fees, citing Civil Code section 1717, Code of Civil Procedure section 1021, and Corporations Code section 1904. The lower court denied the motion, and petitioning shareholder appealed.
The Sixth District affirmed. The buy-sell agreement did not provide a basis for recovery because “[t]his action was brought in the name of the corporation for voluntary dissolution, not to enforce any of the provisions or rights under the Agreement” and “Civil Code section 1717 does not transform the parties’ contract into a source of fees when they voluntarily dissolve the corporation” (Slip Opn., pp. 20-21.) The dissolution action was not “on a contract,” with the mere existence of a contract in the background of the parties’ business relationship not being tantamount to enforcement under the same contract. Code of Civil Procedure section 1021 was inapt, because the buy-sell agreement was not being enforced in the dissolution proceeding. Petitioning shareholder apparently did not raise Corporations Code section 1904 as a recovery basis on appeal, because it was not even discussed.
End result: the trial court was correct; no fee basis, no fees.