West Hill Farms, Inc. v. Rco Ag Credit, Inc.

170 Cal.App.4th 710, 88 Cal.Rptr.3d 458 (2009)

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Nature of the Case

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Facts

D was sued by West Hills Farms, Inc. and California Pistachio, LLC, (Ps) based on allegedly unnecessary fees paid by D to a related corporate entity. D made a motion under Corporations Code section 800 to require Ps to furnish a bond in the amount of $50,000 as security for D's anticipated litigation expenses to defend the action. The motion was granted, and Ps furnished the required bond was posted. The trial court found that D's litigation expenses would likely exceed $50,000; and therefore, Ps were required to provide a bond in the amount of $50,000, the maximum permitted under the statute. Judgment was entered in D's favor. D motioned for an award of attorney fees in the amount of $351,478 and costs in the amount of $9,848.71, for a total award against Ps of $361,326.71. The trial court awarded defendant only $50,000 in fees and costs because it believed that “the plain language of section 800 expressly limits a prevailing defendant's recovery of fees and costs to the amount of the posted security, in this case, $50,000.” This appeal followed.