Alcott v. M. E. v. Corp.

Opinion

BRAUER, J.

This stockholder derivative action collapsed after all defendants had prevailed in pretrial skirmishes: one defendant obtained dismissal for failure to serve summons in time, and the others secured either summary judgment or judgment upon demurrer sustained without leave to amend. Thereafter defendants filed cost bills containing demands for attorneys’ fees. This appeal is taken from an order awarding defendants their attorneys’ fees, i.e., from a denial of a motion to tax costs. Plaintiffs also challenge the amount of the fees awarded, an issue we do not reach in view of our conclusion that no attorneys’ fees are recoverable here.

I

The action was commenced in 1980 under authority of Corporations Code section 800 whose provisions, to the extent relevant, are set forth in a footnote.

1

[799]

No security was ever sought or posted. The attorneys’ fees clause in section 800, subdivision (d) is the only statutory basis for the trial court’s ruling.

Section 800 is susceptible of two constructions: (1) Attorneys’ fees are recoverable only out of the security, if posted; (2) Prevailing defendants are entitled to their attorneys’ fees.

Two authorities have arrived at different conclusions, Balantine and Sterling

2

favoring the first alternative and Marsh

3

the second. We need not analyze the conflicting rationales because the Supreme Court has spoken.

In Freeman

v.

Goldberg

(1961) 55 Cal.2d 622 [12 Cal.Rptr. 668, 361 P.2d 244], a derivative suit was dismissed after plaintiffs failed to post the security demanded. Thereafter the prevailing defendants filed a cost bill including attorneys’ fees. A motion to tax was denied below, but the Supreme Court unanimously reversed, holding that the statute “contains no provision for an award of attorney’s fees where, as here, security is not furnished . . . .”