No Arbitration, No Basis For Fees.
Plaintiff’s complaint in a court case was dismissed with prejudice based on the sustaining of a demurrer to a second amended complaint. Defendant LLC in Axten v. John Foster, LLC, Case No. G049665 (4th Dist., Div. 3 Mar. 25, 2015) (unpublished) then moved for contractual fee recovery based on a fees clause in the LLC Operating Agreement between the parties, a request denied by the lower court.
Upon an appeal by the disappointed defendant, that determination was affirmed in a 3-0 decision authored by Justice Fybel. The reason was simple: the clause only allowed fee recoupment in connection with an arbitration, something which did not occur.
BLOG UNDERVIEW—The lower court also cited an unpublished state court decision in support of its decision. Although agreeing that this is not allowable under California Rule of Court 8.1115(a), the appellate court found this did not prejudice the defense and its own de novo review confirmed the fee denial was correct.