Fee Clause Broadly Encompassed Any Dispute Resulting In Litigation, Executives/Directors Were Fee Clause Nonsignatories Entitled To Fees, And No Apportionment Was Needed Given Breadth Of Fees Clause.
In Sugarman v. Benett, Case No. B338610 (2d Dist., Div. 8 Aug. 3, 2026) (unpublished), there was contentious, aggressive litigation involving plaintiff and his trust (plaintiff being a former Board chairman, president, and CEO of Banc of California) who sued primarily corporate executives and officers for breach of various agreements involving plaintiffs and Banc of California and for various torts in light of an apparent scandal which resulted in Mr. Sugarman’s resignation from the Bank. The defense SLAPPed seven of eight causes of action after a prior appellate opinion affirming some SLAPP claims and then reversing SLAPP denials on certain claims as a matter of law. The defense demurred to the remaining tortious interference of contract claim, which the trial court overruled, although the appellate court granted a writ and directed entry in favor of executives and directors because they were no “strangers” because they were agents of Banc of California which could not be held liable for any interference based on their agency status. The defense then moved for attorney’s fees of $1,062,813.20 under a broad contractual fees clause in a Subscription Agreement (excluding SLAPP fees previously granted), with that amount being granted after the lower court was provided with supplemental fee explanatory papers by the defense. (The lower court did lower the hourly rate of one junior associate.)
Plaintiffs appealed, but the fee award was affirmed on appeal.
Fee Entitlement. Fee entitlement was found based on a broad fee clause in a Subscription Agreement relating to “a dispute regarding the Agreement” which resulted in litigation. This encompassed both contract and tort claims, with plaintiffs’ First Amended Complaint citing the Subscription Agreement on many occasions and with plaintiffs’ discovery responses showing the tortious interference claim was linked to the fee clause governing “a dispute.”
Entitlement to Executives/Directors. The prior writ ruling found that executives and directors were no “strangers” to the Subscription Agreement under the tortious interference count, so that they fell within non-signatory exceptions for fee entitlement. (See Cargill, Inc. v. Souza, 201 Cal.App.4th 962, 968 (2011).)Failure to Apportion. Plaintiffs argued there was a need to apportion between the tortious interference and other claims for which SLAPP recovery did not provide full compensation. The appellate court disagreed, given the breadth of the “dispute” language in the fees clause which contrasted with narrow fee clauses which might require an apportionment for compensable claims within the scope of such more restricted provisions.