Fee Clause Interpretation: Hefty Fee Award To Winning Controlling Partners In LLC Declaratory Relief Dispute Affirmed On Appeal

 

Elephant Tramping Grass Language By Some Parties On Appeal Caught Attention Of Reviewing Court.

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1921.  Library of Congress.

    Hammer Lane R.V. Ministorage v. Scofield, Case No. C074606 (3d Dist. Oct. 27, 2016) (unpublished) is an opinion which began this way:

    “Defendant Sharon Scofield, as Trustee of the Sharon Scofield Family Trust (Scofield), begins her appeal by quoting an African proverb that where elephants fight, the grass suffers. In Scofield’s version of the case, the elephants are two partners who fought for control of a limited partnership. Although the dispute was settled by a temporary restraining order, the fight continued. The grass these elephants trampled consisted of innocent minority partners, including Scofield. Plaintiffs, including Hammer Lane R.V. & Mini-Storage, LP (Hammer Lane R.V.), argue Scofield’s literary flourish is appropriate, since her claims are as fictitious as the imaginary elephants trampling the grass.   [¶ ] Pachyderms and grass aside, the case before us concerns the formation of a limited partnership, Hammer Lane R.V., and the subsequent rancorous disagreements between investors.”

    What happened was that plaintiff controlling partners won a declaratory relief action against minority limited partners based on the language of an LLC Agreement, replete with a broadly phrased fees clause allowing fee recovery by a prevailing party which was a signatory to the agreement (which included all partners).   The lower court found for plaintiffs on the declaratory relief claim and then awarded them $642,285 in fees and $47,586.60 in costs as against all defendants jointly and severally.  The appellate court affirmed, agreeing that plaintiffs did prevail in the declaratory relief suit and that the joint/several award was justified given that defendants actively participated in the litigation.

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