Operating Agreement Fees Clause Was Broad, And No Allocation Needed With Respect To Time Spent On A Nominal Defendant.
This next case is very factually interesting in nature. In essence, the underlying dispute involved an attorney and clients having some claim to $12 million in California State Lottery winnings by a decedent. Attorney took the case on contingency and was able to obtain his clients over one half of what was dispute, both in connection with the lottery winnings and some unrelated real property interests. Attorney and clients then formed an LLC with an operating agreement by which all were members in connection with the real property recovery which was “monetized” through an LLC. The operating agreement had an attorney’s fees clause. Clients then filed various tort/accounting claims against attorney, but clients lost their case after a jury trial against attorney.
Attorney moved for attorney’s fees based on the operating agreement’s fee clause encompassing resolution of “any disputes between members or against any member” of the LLC. The trial judge awarded $340,000 out of a requested $450,216 in fees, refusing to allocate out any time as to a nominal defendant.
The appellate court in Haslerig v. Dyson, Case No. D067387 (4th Dist., Div. 1 Mar. 2, 2016) (unpublished) affirmed.
The fees clause in the operating agreement was broad enough to encompass tort/accounting claims between the parties, given that all were members of the LLC. No apportionment was required for two reasons: first, no apportionment was requested such that the request was waived; and, second, on the merits, no time for a nominal defendant had to be apportioned out based upon the circumstances of the matter.