Broker-Dealer Litigation - Greenberg Traurig LLP

The court held that the trustee was entitled to an award of fees under the FSIPA which
specifically provides for an award of attorneys’ fees to the prevailing party. The court
determined that the award should include the fees the trustee incurred defending against the
FSIPA claim and also the fees he incurred defending against the beneficiary’s other fraud claims
to the extent the claims were interrelated. Utilizing the lodestar method, the court held that the
hourly rates sought were reasonable for the area. The court also determined that some of defense
counsel’s bills were excessive. To account for this, the court reduced the base number and hours
of the request by 20%. The court then discounted the base figure by 50%, since the billing
records did not permit an easy division between compensable and non-compensable hours.
U.S. Bank N.A. v. Cold Spring Granite Co., 802 N.W.2d 363 (Minn. 2011).
The minority shareholders in a corporation sued when a reverse stock split forced them to
take cash in exchange for their shares. The Minnesota Supreme Court upheld the lower courts’
holding dismissing all of the plaintiffs’ claims. The court held that because the plaintiffs were
not entitled to dissenter’s rights, they were not entitled to interest, costs, or fees under Minnesota
Statute 302A.473. Additionally, they were not entitled to attorneys’ fees or expenses under
Minnesota Statute 302A.467 since they were not prevailing parties.
Taylor v. AIA Servs. Corp., 261 P.3d 829 (Idaho 2011).
The court held that recovery of attorneys’ fees is not appropriate where the commercial
transaction at issue is illegal. The defendant corporation entered into a stock redemption
agreement with the plaintiff – the corporation’s majority shareholder – to purchase all of his
shares. When the corporation ultimately defaulted on payments under the agreement, the
plaintiff sued. The lower court found the redemption agreement illegal and unenforceable
because of Idaho statutory provisions that restrict the funds a corporation can use to redeem its
shares.
On appeal, the Idaho Supreme Court declined to consider whether the lower court erred
in refusing to consider the corporation’s promises to release the plaintiff and indemnify him.
The court noted that the illegality of the redemption agreement was a defense to this argument.
Because the redemption agreement was illegal, the defendants were not entitled to attorneys’ fees
under Idaho Code § 12-120(3), which permits a prevailing party in a civil action on any
commercial transaction to recover reasonable attorneys’ fees. The plaintiff was not entitled to
fees because he was not a prevailing party.
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