Tuesday, February 26, 2013

West Hills Farms, Inc. v. RCO Ag Credit, Inc. case brief

West Hills Farms, Inc. v. RCO Ag Credit, Inc. case brief summary
170 Cal. App. 4th 710

-Defendant corporation ultimately prevailed in a derivative action by plaintiff shareholders. The Superior Court of Fresno County, California, limited an award of attorney fees and costs to the corporation to $ 50,000, the amount of the bond that the shareholders had furnished pursuant to Corp. Code, § 800, as security for the corporation's anticipated litigation expenses to defend the action. The corporation appealed.

ARGUMENT:  The corporation argued that under § 800 it was entitled to recover all of its attorney fees and costs, regardless of the amount of the bond.

The court found that the bond provisions of § 800 provided a measure of protection to the defendant in a derivative action by creating a mechanism by which the plaintiff might be required, as a condition of maintaining the derivative lawsuit, to supply a bond (not to exceed $ 50,000) as security for litigation expenses in the event the defendant ultimately prevailed.

-Aside from its bond protection, § 800 made no mention at all of attorney fees or expenses.
-Indeed, the only references in the statute to attorney fees or other expenses were within the limited context of describing what the bond would secure.
-Accordingly, the wording and structure of § 800 made it clearly a bond or security statute, not an open-ended attorney fee liability statute.
-The statute did not provide for recovery of attorney fees and costs independent of the bond.
-Section 800 merely allowed the prevailing defendant in a derivative action to recover its attorney fees and costs by recourse to the bond, if one was posted, until the full amount of the bond had been exhausted.

OUTCOME: The court affirmed the trial court's order.

Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?

No comments:

Post a Comment

The Ins and Outs of Class Action Lawsuits: A Comprehensive Guide

Sometimes, you may buy a product only to find it defective. To make it worse, your search for the product reveals mass complaints. You can ...