Prevailing Plaintiff Did Not Bring An Action Or Proceeding Under Sections 1600 Or 1601 Such That Section 1604’s Permissive Fee Statute Did Not Apply.
The next case we post on counsels that if you are seeking attorney’s fees under a statute, you must often bring an action or a proceeding under that specific statute under penalty of not obtaining fee recovery if the statutory language requires that trigger—general tort or declaratory actions are no substitute for prosecuting disputes directly under the applicable fee-granting statutes with language requiring a direct causal link.
Chen v. Lu, Case No. H053356 (6th Dist. Oct. 9, 2026) (unpublished) involved a corporate dispute where plaintiff prevailed against defendants for misappropriating corporate funds and concealing material business information. However, plaintiff’s complaint had general tort and declaratory relief claims, no specific claims under Corporations Code sections 1600 or 1601 and no petition to compel production of information under these statutory provisions. Plaintiff did prevail, with the lower court ordering a corporate dissolution, awarding plaintiff $433,836 in damages against defendants, denying defendants any relief on their cross-complaint, and later awarding plaintiff $137,184 in attorney’s fees under Corporations Code sections 1601 and 1604 as well as CCP section 1033.5(a)(10) [the general costs provision allowing for fee awards tethered to a statute]. ($11,908.94 in litigation costs were awarded, with defendants conceding on appeal that they were not challenging the costs award.)
Defendants appealed both the merits and fee rulings, with the merits judgment affirmed on appeal but with the $137,184 fees order reversed/stricken as a matter of law. The reversal stemmed from the plain language of the statutory fee-shifting provisions. Corporations Code section 1604, the key provision relied on by the lower court, only applies to actions or proceedings brought “in connection with” sections 1600 or 1601. This causation standard prevented fee entitlement because the general tort and declaratory relief claims were not the equivalent of directly suing under the statutory provisions. Also, the general costs statute did not make a difference because it only allowed for fees based on a statute (with the statutes here not being triggered).