Judge: Curtis A. Kin, Case: 19STCV08504, Date: 2022-09-29 Tentative Ruling

Case Number: 19STCV08504    Hearing Date: September 29, 2022    Dept: 72

MOTION FOR FEES AND COSTS

Date:               9/29/22 (8:30 AM)

Case:               Lad S. Lengyel et al. v. Richard Schlander et al. (19STCV08504)

TENTATIVE RULING:

Provisional Director Keenan Brown’s Motion for Fees and Costs is GRANTED IN PART.

On May 14, 2019, the Court, Hon. James C. Chalfant presiding, appointed Keenan Brown as a provisional director for Town & Country Farm School, Inc. (“TCFS”) corporation. (Corp. Code § 308(a).) Under Corporations Code § 308(c), “[a] provisional director shall have all the rights and powers of a director until the deadlock in the board or among shareholders is broken or until such provisional director is removed by order of the court or by approval of the outstanding shares (Section 152). Such person shall be entitled to such compensation as shall be fixed by the court unless otherwise agreed with the corporation.”

Brown now seeks an order reimbursing him for fees and costs in the amount of $3,440 and attorney fees and costs in the amount of $26,945 for his attorney.

As a preliminary matter, the Court has jurisdiction to rule on this motion.  Although all claims in the operative complaint and cross-complaint have been voluntarily dismissed with the exception of a single claim for partition, the Court retains jurisdiction to award fees and costs. (See Mesa Shopping Center-East, LLC v. O Hill (2014) 232 Cal.App.4th 890, 898 [“trial courts retain jurisdiction to award attorney fees and costs following a voluntary dismissal”].)

The motion also complies with Rules of Court 3.1110(a) and 3.1113(b). Rule of Court 3.1110(a) states: “A notice of motion must state in the opening paragraph the nature of the order being sought and the grounds for issuance of the order.” Here, the notice of motion states the amount of fees and costs sought, for whom the fees and costs are sought, and the authority under which the motion is brought. (Mtn. at 1:25-28 [“Provisional Director, Keenan Brown will and hereby does move this Court, pursuant to California Corporations Code section 308, for an order granting reimbursement to Mr. Keenan Brown for $3,440.00, in fees and costs, and $26,945.00 for attorney's fees and costs, incurred in winding down the corporation, Town & Country Farm School”].)  Rule of Court 3.1113(b) states: “The memorandum must contain a statement of facts, a concise statement of the law, evidence and arguments relied on, and a discussion of the statutes, cases, and textbooks cited in support of the position advanced.” Here, the points and authorities contain a statement of facts (Mtn. at 3:8-4:8), a statement of the law (Mtn. at 4:9-28), and the evidence upon which the memorandum relies (Mtn. at 5:1-10).

The Court finds that Brown is entitled to his fees under Corporations Code § 308(c). The $200 hourly rate corresponds to the hourly rate for extraordinary or unusual services that was set forth in Brown’s fee schedule presented to the Court before he was appointed provisional director. (Plaintiffs/Cross-Defendants’ Supplemental Proposed List of Provisional Directors filed on 5/14/19, Retz Decl. ¶ 2 & Ex. A.) The billing entries set forth in Brown’s invoice appear reasonably incurred in Brown’s capacity as provisional director during the winding down of TCFS. (Brown Decl. ¶ 8 & Ex. B.) 

However, the Court declines to award the fees and costs for Brown’s attorney, Scott P. Schomer. Corporations Code § 308(c) grants a provisional director “all the rights and powers of a director until the deadlock in the board or among shareholders is broken or until such provisional director is removed by order of the court or by approval of the outstanding shares.” The board of directors of a corporation manages the business and affairs of the corporation. (Corp. Code § 300(a).) Brown cites no authority allowing for a director to retain an attorney for the director’s own benefit, as opposed to the benefit of the corporation. (Brown Decl. ¶ 5 [“When I received word that I was appointed in this matter, I contacted Mr. Schomer and asked that he represent me, which he agreed to do”]; Schomer Decl. ¶ 4 [“When I received word that that he was appointed Provisional Director in this matter, I agreed to represent him”].) Because Brown presents no evidence that the corporation retained Schomer, Schomer’s fees and costs are denied.

The motion is GRANTED IN PART. Keenan Brown is awarded $3,440 in fees and costs to be paid by Town & Country Farm School, Inc. Because Brown was the provisional director of TCFS, this order for payment of compensation is directed to the corporation only. (See United States Liab. Ins. Co. v. Haidinger-Hayes, Inc. (1970) 1 Cal.3d 586, 595 [“Directors and officers are not personally liable on contracts signed by them for and on behalf of the corporation unless they purport to bind themselves individually”].)