Lack Of Derivative Standing Required Reversal Of Fee Award Obtained By Some Defendants Against Losing Non-shareholder Plaintiffs.
In Jarrett v. Diversis Management LLC, Case Nos. B277855/B279242 (2d Dist., Div. 1 Oct. 10, 2018) (unpublished), plaintiffs filed a derivative suit against a number of defendants, losing on a summary judgment motion which was affirmed on appeal. The trial judge also awarded attorney’s fees under an Asset Purchase Agreement against plaintiffs and in favor of certain defendants. On review, the fee award in favor of certain defendants as to two losing plaintiffs was reversed because they were not shareholders having any right to sue derivatively on behalf of the company. Because these losing plaintiffs would not have been entitled to fee recovery, the same result occurred as to the prevailing defendants. (Santisas v. Goodin, 17 Cal.4th 599, 611 (1998) [our Leading Case No. 6].)