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.
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