This decision affirms a private attorney general fee award to lawyers for a group of private investors duped by Investco. Investco had been sued by the Department of Business Oversight, which agreed to a settlement that left Investco’s promoters in charge of winding up the company’s business under only loose supervision by a DBO-appointed receiver. Investco moved for an injunction against the private investors’ separate actions urging those actions would interfere with its ability to administer the windup for the benefit of all investors. The attorneys opposed that motion and objected to the DBO settlement, particularly insofar as it left Investco’s insiders in charge of the windup. The attorneys and their clients prevailed in part, allowing their suits to go forward as to some defendants and also obtaining changes to the DBO’s settlement with Investco, most particularly in having a receiver take day-to-day charge of the windup. Though the private investors never formally intervened they were not officious intermeddlers, having been brought in initially as targets of Investco’s motion. The trial court properly awarded the fees against both the DBO and Investco. Both opposed the private investors in seeking to enjoin their private suit. The investors’ counsel enforced important public rights under the Corporate Securities Law, benefiting a large group of investors. The financial burden justified the award since the only benefit the investors received from prevailing in the People’s action was non-entry of a stay of their private litigation—too speculative a benefit to bar a fee award.
California Court of Appeal, First District, Division 4 (Reardon, J.); April 18, 2018; 2018 WL 1887393