LLC Operating Agreement Clause Was Broad and Post-Judgment Activity Recovery Broadened Under 1992 Amendment.
In Fiscal Funding Co., Inc. v. Dones, Case No. A140460 (1st Dist., Div. 3 Feb. 13, 2015) (unpublished), Fiscal Funding brought a writ petition to unsuccessfully challenge an arbitrator’s decision to disqualify an attorney, who happened to be the sole owner, officer, and director of Fiscal Funding. The trial court denied the writ petition and awarded the opposing parties $55,698 in fees under a broad LLC Operating Agreement fees clause. Then, later, the trial court granted the same parties an additional $13,067.50 in fees for post-judgment efforts to add the disqualified attorney as an alter ego judgment debtor.
Interestingly, Fiscal Funding appealed, which dashed many of the merits arguments because the disqualified attorney, who was aggrieved, did not appeal. However, Fiscal Funding did face fee exposure, so it had standing to challenge the fee awards.
Nothing changed. The LLC Operating Agreement fees clause was broad, such that it encompassed disputes between LLC members, covering the writ petition dispute. With respect to the alter ego judgment debtor issue, Fiscal Funding relied on Chelios v. Kaye, 219 Cal.App.3d 75, 80-81 (1990), which might have had some clout long ago except that a 1992 amendment to CCP § 685.040 abrogated the decision such that the additional fees were indeed properly awarded.