Title: Cattano v. Bragg

State: virginia

Issuer: Virginia Supreme Court

Document:

Present:  All the Justices 
 
JOHN P. CATTANO, ET AL. 
 
                                   OPINION BY 
v.  Record No. 110692 
JUSTICE LEROY F. MILLETTE, JR.
 
 
                              April 20, 2012 
CAROLINE D. BRAGG 
 
FROM THE CIRCUIT COURT OF ALBEMARLE COUNTY 
William R. Shelton, Judge Designate 
 
In this appeal, we address the standing of a dissenting 
minority shareholder bringing a derivative suit under Code 
§ 13.1-672.1 against the majority shareholder of a two-
shareholder corporation while simultaneously seeking the 
judicial dissolution of the corporation.  We also address the 
award of attorneys' fees and costs to the minority shareholder. 
I. Background 
This case arises out of a dispute between two attorneys, 
John Cattano and Caroline Bragg, the only shareholders of 
Cattano Law Firm, P.C. ("the Firm").  In October 2008, after 
discovering that checks were written from the Firm's 
escrow/trust account to Cattano's wife and children, Bragg 
wrote Cattano a letter requesting that all corporate records be 
made available for inspection.  Cattano responded with a letter 
terminating Bragg's employment.  Cattano then called a special 
meeting of the shareholders (himself and Bragg) to remove Bragg 
as director.  Bragg attended the meeting and objected.  Cattano 
allegedly counted only his own vote at the shareholder meeting 
and continued to refuse to produce corporate documents, at 
which point Bragg filed suit. 
Bragg's original complaint was filed solely in an 
individual capacity, seeking judicial dissolution, accounting 
of assets, and division of assets.  She later filed an amended 
complaint adding derivative actions.  Her amended complaint 
included the following claims:  a writ of mandamus for the 
copying and inspection of corporate records pursuant to Code 
§§ 13.1-773 and -773.1 (Count I, filed individually); breach of 
fiduciary duty (Count II, filed derivatively); conversion 
(Count III, filed derivatively); breach of contract (Count IV, 
filed individually); and judicial dissolution (Count V, filed 
individually). 
Cattano filed a demurrer, arguing, inter alia, that Bragg 
had no standing to file a derivative claim because she did not 
fairly and adequately represent the interests of the 
corporation as required by Code § 13.1-672.1(A)(4).  The 
demurrer was overruled.  The standing argument was raised again 
in a motion to strike, which the court also overruled. 
The circuit court appointed a receiver pursuant to Code 
§ 13.1-748, directing the receiver to perform a complete 
accounting of books and records of the Firm, including but not 
limited to the disposition of all payments, "the disposition of 
approximately $234,000 representing fees payable to the Firm 
from a certain personal injury settlement (the 'Baker Fees')," 
and a valuation of the assets of the Firm.1  Pursuant to a court 
order, Cattano produced corporate financial documents to the 
receiver for review.  The receiver testified before the jury 
that he did question the validity of some of Cattano's expenses 
and reimbursements, such as gift cards from retail stores and 
his wife's cell phone bill, and noted that it was unusual to 
see an attorney take disbursements from the client trust 
account.  The receiver ultimately opined that there did not 
appear to be widespread criminal conduct or elaborate fraud, 
but an ultimate evaluation of which expenses were proper 
depended on the legal agreement between the parties and how 
profits were shared, which was in dispute. 
Cattano and the Firm requested a jury trial, and the 
circuit court bifurcated the issue of attorneys' fees.  Count 
I, seeking a writ of mandamus, was ultimately not sent to the 
jury as the court concluded that "the effect of the mandamus 
has been accomplished [via the production of documents to the 
                     
1 Although the circuit court was statutorily authorized to 
grant the receiver the power to bring suit on behalf of the 
Firm to garner its assets, the court declined to do so in this 
instance.  Because the order designating the powers of the 
receiver simultaneously directed the Clerk to file the amended 
complaint containing claims that placed the ownership and 
division of assets in front of a jury, and all necessary 
parties were already joined, the amended complaint was a 
sufficient alternative mechanism to allocate assets without 
authorizing additional suits by the receiver. 
receiver]."  The verdict included a factual finding that Bragg 
owned 27.35% of the Firm. 
In addition, the jury found in Bragg's favor on Count III 
(derivative conversion), awarding the Firm $234,412.18, the 
exact amount of the Baker Fees.  Of this amount, the jury 
specified that 27.35%, or $64,111.77, should go to Bragg.  The 
jury also awarded Bragg $10,416.66 individually on the breach 
of contract claim and $7,409.90 on the judicial dissolution 
claim. The jury did not find in Bragg's favor on the allegation 
of breach of fiduciary duty. 
The issue of attorneys' fees was handled in a bench trial.  
Cattano, who had interpreted the circuit court's refusal to 
submit Count I to the jury as a grant of the defense's motion 
to strike on the basis that the claim was moot, argued that 
Bragg was not entitled to attorneys' fees on the writ of 
mandamus.  Cattano also argued that Bragg had failed to state 
with particularity the reasons for her request to review 
corporate records in her letter pursuant to Code § 13.1-771, 
and thus could not recover fees under Code § 13.1-773(C).  
Finally, Cattano argued that Bragg was not entitled to recover 
fees under the derivative claim of conversion (Count III) 
because she had rendered no substantial benefit to the 
corporation as required by Code § 13.1-672.5(1). 
In its final judgment order, however, the circuit court 
concluded that Count I had been resolved in favor of Bragg and 
that the conversion claim had yielded a substantial benefit to 
the corporation.  Accordingly, the circuit court awarded what 
it determined to be reasonable fees to Bragg in the amount of 
$269,813, plus costs and expenses of $19,415.71. 
Cattano now raises five assignments of error:  (1) whether 
the circuit court erred in failing to strike Bragg's derivative 
claim for failure to fairly and adequately represent the 
interests of the corporation; (2) whether the circuit court 
erred in failing to instruct the jury on the issue of fair and 
adequate representation; (3) whether the circuit court erred in 
assigning attorneys' fees on the writ of mandamus count; (4) 
whether the circuit court erred in concluding that the 
proceeding substantially benefitted the corporation; and (5) 
whether the circuit court abused its discretion in its award of 
attorneys' fees.  For the reasons stated herein, we conclude 
that there was no error in the judgment of the circuit court, 
and will affirm. 
II. 
Discussion 
A. Fair and Adequate Representation in Derivative Claims 
Cattano raises the threshold issue of whether the circuit 
court erred in failing to strike Bragg's derivative claims on 
the ground that she lacked standing under Code § 13.1-672.1(A).  
This section states that "[a] shareholder shall not commence or 
maintain" a derivative proceeding unless the shareholder was a 
shareholder at the time of the act complained of and "[f]airly 
and adequately represents the interests of the corporation in 
enforcing the right of the corporation."  Id.  As a mixed 
question of fact and law, we review the issue de novo, with 
deference to any findings of fact made by the circuit court.  
Mulford v. Walnut Hill Farm Group, 282 Va. 98, 106, 712 S.E.2d 
468, 473 (2011). 
 
Cattano first argues that derivative actions are designed 
to prevent a multiplicity of suits from a class and thus are 
not appropriate when only a single shareholder supports the 
claim.  Our precedent is not consistent with such a 
restriction.  In Simmons v. Miller, 261 Va. 561, 573, 576, 544 
S.E.2d 666, 674-75 (2001), we noted that "[t]he overwhelming 
majority rule is that an action for injuries to a corporation 
cannot be maintained by a shareholder on an individual basis 
and must be brought derivatively," and we "decline[d] to adopt 
a closely held corporation exception to the rule requiring that 
suits for breach of fiduciary duty against officers and 
directors must be brought derivatively on behalf of the 
corporation and not as individual shareholder claims." 
 
Other jurisdictions have acknowledged instances where the 
"class" of shareholders represented in a derivative action may 
consist of only one person.2  See, e.g., Larson v. Dumke, 900 
F.2d 1363, 1368-69 (9th Cir. 1990); Jordon v. Bowman Apple 
Products Co., Inc., 728 F. Supp. 409, 412-13 (W.D. Va. 1990); 
Halsted Video, Inc., v. Guttillo, 115 F.R.D. 177, 179-80 (N.D. 
Ill. 1987) (finding a "legitimate class of one" where there was 
no indication plaintiff was operating under "ulterior motives" 
or would "not adequately enforce" the company's rights); 
Brandon v. Brandon Construction Co., Inc., 776 S.W.2d 349, 353-
54 (Ark. 1989); Hall v. Tennessee Dressed Beef Co., 957 S.W.2d 
536, 540 (Tenn. 1997) (holding that, given no evidence to 
support a finding that the plaintiff was unable to fairly 
represent the interests of the corporation while maintaining 
his individual suit, the existence of both was not a per se bar 
to standing); Eye Site, Inc. v. Blackburn, 796 S.W.2d 160, 161-
63 (Tex. 1990).  Cf. Smith v. Ayres, 977 F.2d 946, 948 (5th 
Cir. 1992) ("Only in the rarest instances may there be a 
shareholder derivative action with a class of one.").  
Instances of a two-shareholder corporation may be precisely the 
sort of rare instance suggested in Ayres. 
                     
2 The language of Federal Rule of Civil Procedure 23.1 
requires that the plaintiff fairly and adequately represent the 
interests of the "shareholders or members who are similarly 
situated," as opposed to the interests of the "corporation."  
We have previously noted the linguistic distinction but found 
the Virginia statute to be "substantially similar."  Jennings 
v. Kay Jennings Family Ltd. P'ship, 275 Va. 594, 601 & n.3, 659 
S.E.2d 283, 288 & n.3 (2008). 
 
Cattano next argues that, under the factors adopted by 
this Court in Jennings v. Kay Jennings Family Limited 
Partnership, 275 Va. 594, 659 S.E.2d 283 (2008), Bragg cannot 
fairly and adequately represent the Firm.  In Jennings, we held 
that the widely accepted Davis factors were the primary 
relevant considerations in evaluating whether a person meets 
the standard for fair and adequate representation: 
(1) economic antagonisms between the representative 
and members of the class; (2) the remedy sought by 
the plaintiff in the derivative action; (3) 
indications that the named plaintiff is not the 
driving force behind the litigation; (4) plaintiff's 
unfamiliarity with the litigation; (5) other 
litigation pending between the plaintiff and 
defendants; (6) the relative magnitude of 
plaintiff's personal interests as compared to his 
interests in the derivative action itself; (7) 
plaintiff's vindictiveness toward the defendants; 
and (8) the degree of support plaintiff is receiving 
from the shareholders he purports to represent. 
 
Id. at 601-02, 659 S.E.2d at 288 (citing Davis v. Comed, Inc., 
619 F.2d 588, 593-94 (6th Cir. 1980)).3  We observed that these 
factors "are not exclusive and must be considered in the 
totality of the circumstances found in each case."  Id. at 602, 
659 S.E.2d at 288.  We further explained: 
                     
3 Jennings involved a limited partnership, and we have not 
yet had the opportunity to apply the Jennings factors to a 
corporate derivative claim in Virginia.  Yet the Davis case 
itself, from which we explicitly adopted the Jennings factors, 
concerned a corporate derivative action.  Davis, 619 F.2d at 
589.  We therefore apply the same analysis to corporate 
derivative claims in the Commonwealth. 
[I]t is frequently a combination of factors which leads 
a court to conclude that the plaintiff does not [have 
standing] (although often a strong showing of one way 
in which the plaintiff's interests are actually 
inimical to those he is supposed to represent . . . 
will suffice in reaching such a conclusion). 
Id. (quoting Davis, 619 F.2d at 593). 
 
While the present case contains economic antagonism as 
well as apparent animosity between the Firm's only two 
shareholders, we do not find this to be a determinative factor 
when evaluating a closely held corporation; nor do we find it 
determinative that the sole other shareholder does not support 
the derivative suit.  To so hold would be to enact a de facto 
bar on derivative suits in two-shareholder corporations.  
Charged emotions and economic antagonism are virtually endemic 
to disputes in closely held corporations.  Nevertheless, a 
single shareholder derivative claim is still possible, provided 
that the totality of the circumstances support a finding that 
the plaintiff's personal interests do not preclude the 
shareholder from fairly and adequately representing the 
corporation.  See, e.g., Hall, 957 S.W.2d at 540.  In closely 
held corporations, we must look beyond the mere presence of 
economic and emotional conflict, placing more emphasis on 
whether the totality of the circumstances suggest that the 
plaintiff will vigorously pursue the suit and that the remedy 
sought is in the interest of the corporation. 
We hold that, applying the Jennings factors to the 
specific facts of this case, the "totality of the 
circumstances" combine to show that Bragg "[f]airly and 
adequately represent[ed] the interests of the corporation" as 
required under Code § 13.1-672.1(A).  The remedy sought – the 
return of funds, misappropriated by an officer, to the 
corporation – is highly appropriate for a derivative claim.  
There is no evidence in the record of external parties 
motivating Bragg, and she is intimately familiar with the 
litigation.  Bragg's additional individual claims – breach of 
contract and judicial dissolution – do not reflect an 
inappropriate conflict of interest.  Significantly, as a 
portion of the funds returned would go to her upon dissolution, 
Bragg's personal interests are in line with those of the 
corporation, so that the return of assets to the Firm will 
clearly be vigorously litigated. 
Cattano argues that Bragg is acting solely in her own 
interest because a derivative claim offers her the possibility 
of an award of attorneys' fees and costs, whereas mere judicial 
dissolution, which could provide the same remedy, provides no 
such fee-shifting mechanism.  See Gianotti v. Hamway, 239 Va. 
14, 29, 387 S.E.2d 725, 734 (1990) (affirming the circuit 
court's judgment ordering directors to restore funds owed to 
the corporation at the dissolution stage but refusing to award 
plaintiff minority shareholders attorneys' fees and expenses).  
Yet the additional advantage of providing a limited fee-
shifting mechanism in derivative claims is a deliberate policy 
choice on the part of the General Assembly, not a reason to bar 
the claim.  See Code § 13.1-672.5(1).  The Supreme Court of the 
United States explained in Mills v. Electric Auto-Lite Co., 396 
U.S. 375, 391-92, 396-97 (1970), that recovery of attorneys' 
fees in a derivative action is a mechanism to prevent unjust 
enrichment when a substantial benefit has inured to the 
shareholders of a corporation.  Bragg sought to recover 
misappropriated funds, an appropriate objective of a derivative 
action. 
Cattano also argues that Bragg cannot simultaneously act in 
the Firm's interest and seek to dissolve it.  This proposition 
ignores the fact that, in the circumstances presented in this 
case, the Firm's dissolution was essentially commenced by 
Cattano in firing Bragg, and the dissolution was, by the time 
the suit was brought, decidedly mutual.  Bragg was not seeking 
to terminate an otherwise functional corporation.  The 
corporation ceased to operate years ago. 
Whether winding up or not, it is clearly in the interest of 
the corporation to have misappropriated funds returned, and the 
verdict returned tangible assets to the Firm.  Judicial 
dissolution is a remedial mechanism that exists in addition to, 
rather than as a substitute for, shareholders rights.  Baylor 
v. Beverly Book Co., 216 Va. 22, 24, 216 S.E.2d 18, 19 (1975).  
It therefore cannot act as a per se bar to a derivative claim. 
Given the totality of the circumstances, we conclude that 
the circuit court did not err in failing to strike the 
derivative claim under Code § 13.1-672.1(A). 
B.  Jury Instructions 
Cattano next argues that the circuit court erred in 
failing to place the issue of standing in front of a jury.  
This Court has never held that an issue of standing must be 
placed before a jury, and we do not rule on the issue now.  It 
is sufficient to say that, as a predicate for submission to a 
jury, a proffered instruction must concern in some way a 
factual dispute appropriately adjudicated by the factfinder.  
See Etheridge v. Medical Center Hospitals, 237 Va. 87, 96, 376 
S.E.2d 525, 529 (1989) ("The resolution of disputed facts 
continues to be a jury's sole function.  The province of the 
jury is to settle questions of fact, and when the facts are 
ascertained the law determines the rights of the parties." 
(internal quotation marks omitted)).  In the case at bar, there 
were no disputed facts regarding the issue of fair and adequate 
representation, and the circuit court's refusal to instruct the 
jury on that issue was appropriate. 
As previously stated, the issue of fair and adequate 
representation is a mixed question of fact and law.  In this 
case, all facts relevant to the Jennings factors, which 
represent the legal standard, were undisputed.  Both parties 
acknowledged their economic antagonism.  Neither disputed the 
remedy sought.  The defendant did not allege that a third party 
was the driving force behind the litigation or that Bragg was 
unfamiliar with the litigation.  The only pending litigation 
was before the trial court at that time.  Both parties 
recognized that Bragg had a direct personal interest in 
recovering funds due to the judicial dissolution, and that she 
stood to benefit from attorneys' fees accompanying a derivative 
claim.  Both parties testified to a relationship that began 
well but had soured, and it was clear that Cattano did not 
support Bragg in the derivative suit. 
As a result, the judge needed only to apply the law to the 
undisputed facts.  No finding of fact was required as to this 
issue.  We therefore hold that the circuit court did not err in 
refusing to send the question of fair and adequate 
representation to the jury. 
C. Relief and Attorneys' Fees under Count I: 
Writ of Mandamus for the Inspection of Corporate 
Records Pursuant to Code §§ 13.1-773 and -773.1. 
 
Cattano assigns error to the circuit court's award of 
relief and attorneys' fees pursuant to Code § 13.1-773, which 
affords redress for a corporation's failure to permit a 
shareholder to inspect documents in accordance with Code 
§ 13.1-771.  Cattano alleges that he had reasonable grounds for 
denying Bragg access to the documents because Bragg failed to 
comply with the statutory requirements of Code § 13.1-771(D),4 
which provides that "[a] shareholder may inspect and copy the 
records identified in subsection C only if:  . . . [t]he 
shareholder describes with reasonable particularity the 
shareholder's purpose." 
Count I, as articulated in Bragg's first amended 
complaint, repeatedly invoked not only Code § 13.1-773, but 
also Code § 13.1-773.1, which states: 
A. 
A director of a corporation is entitled to inspect 
and copy the books, records and documents of the 
corporation at any reasonable time to the extent 
reasonably related to the performance of the director's 
duties as a director, including duties as a member of a 
committee, but not for any other purpose in any manner 
that would violate any duty to the corporation. 
 
B. 
The circuit court . . . may order inspection and 
copying of the books, records and documents upon 
application of a director who has been refused such 
inspection rights, unless the corporation establishes that 
the director is not entitled to such inspection rights. 
                     
4 At the time of trial, the language currently set out in 
subsection (D) of Code § 13.1-771 was contained in subsection 
(C) of the statute.  The amendment by 2010 Acts ch.782 rewrote 
the statute, in part by redesignating former subsection (C) as 
current subsection (D) and updating the reference in that 
subsection to "records identified in subsection B" to read 
"records identified in subsection C."  The 2010 amendments have 
no other impact on this appeal. 
The court shall dispose of an application under this 
subsection on an expedited basis. 
 
C. 
If an order is issued, the court may . . . order the 
corporation to reimburse the director's reasonable costs, 
including reasonable counsel fees, incurred in connection 
with the application if the director proves that the 
corporation refused inspection without a reasonable basis 
for doubt about the director's right to inspect the 
records demanded. 
 
Although Cattano originally denied that Bragg was a 
director of the corporation, Bragg was explicitly found by the 
circuit court in its final order to be a director of the 
corporation, a finding acknowledged by Cattano's own admission.  
Accordingly, Bragg had the authority as a director to review 
documents under Code § 13.1-773.1, which does not have a 
reasonable particularity requirement.  As there was a 
sufficient alternative ground for the circuit court's award 
based on its unchallenged factual finding, regardless of 
whether Bragg articulated the reasons for her request, the 
circuit court did not err in awarding fees to redress the 
corporation's refusal to permit her to inspect documents. 
D.  Substantial Benefit Doctrine 
 
Cattano additionally argues that the circuit court erred 
in concluding that Bragg rendered a substantial benefit to the 
firm.  This mixed question of fact and law is reviewed de novo, 
with deference to the factual findings of the circuit court.   
Mulford, 282 Va. at 106, 712 S.E.2d at 473. 
 
Code § 13.1-672.5(1) provides that: 
On termination of a derivative proceeding, the court 
shall:  
 
1. Order the corporation to pay the plaintiff's reasonable 
expenses (including counsel fees) incurred in the 
proceeding if it finds that the proceeding has resulted 
in a substantial benefit to the corporation . . . . 
No Virginia court has had occasion to interpret the relevant 
portion of this Code section.  The key term "substantial 
benefit," however, was invoked and interpreted by the Supreme 
Court of the United States: 
"[A] substantial benefit must be something more 
than technical in its consequence and be one that 
accomplishes a result which corrects or prevents 
an abuse which would be prejudicial to the rights 
and interests of the corporation or affect the 
enjoyment or protection of an essential right to 
the stockholder's interest." 
 
Mills, 396 U.S. at 396 (alteration in original)(quoting with 
approval Bosch v. Meeker Cooperative Light & Power Ass'n, 101 
N.W.2d 423, 426-27 (Minn. 1960)). 
 
Bragg successfully brought a derivative suit for 
conversion against a director of the Firm, resulting in a jury 
award returning over $234,000 to the Firm.  Based on this 
outcome, the circuit court concluded that a substantial benefit 
was conveyed to the Firm.  Particularly in light of the fact 
that this made up approximately one quarter of the Firm's 
annual gross income, this was a reasonable conclusion.  We 
therefore conclude that the circuit court did not err in 
finding that Bragg rendered a substantial benefit to the 
corporation. 
E. Abuse of Discretion 
 
Finally, Cattano argues that the circuit court abused its 
discretion in its award of $289,228.71 in attorneys' fees and 
costs, which included fees and costs associated with the 
receiver and the derivative suit.  The record shows that the 
circuit court reviewed an extensive accounting of fees and 
costs.  In its final order, the circuit court explicitly 
evaluated the rates paid to experts and lead counsel in this 
case and found them to be reasonable "in this particular case."  
We see no reason for this Court to substitute its judgment for 
that of the circuit court that oversaw these complicated 
proceedings, which commenced in 2008 and did not see a final 
judgment order until 2011.  We therefore hold that the circuit 
court did not abuse its discretion. 
III. Conclusion 
 
For the aforementioned reasons, we will affirm the 
judgment of the circuit court. 
Affirmed. 
JUSTICE McCLANAHAN, dissenting.
 
I dissent from the opinion of the Court because I do not 
believe Bragg had standing to pursue the derivative claims on 
 
 
behalf of the corporation pursuant to Code § 13.1-672.1, nor do 
I believe she was entitled to attorneys' fees and costs under 
Code § 13.1-773.1(C). 
I. 
Standing Under Code § 13.1-672.1 
 
Considering the "totality of the circumstances found in 
[this] case," Jennings v. Kay Jennings Family Ltd. P'ship, 275 
Va. 594, 602, 659 S.E.2d 283, 288 (2008), I cannot agree that 
Bragg could "[f]airly and adequately represent[] the interests 
of the corporation in enforcing the right of the corporation."  
Code § 13.1-672.1(A)(4).*  Because Bragg was seeking to recover 
damages for breach of contract against the Firm as well as 
seeking judicial dissolution of the Firm, her interests were 
antagonistic to the interests of the Firm.  In Count IV of her 
                     
* Since the Firm consisted of only two shareholders, not all of 
the factors discussed in Jennings are relevant, such as whether 
Bragg is the driving force behind and familiar with the litigation.  
Furthermore, "the degree of support [Bragg] is receiving from the 
shareholders [she] purports to represent" should not be 
determinative in this case since Cattano was the only other 
shareholder.  Jennings, 275 Va. at 602, 659 S.E.2d at 288.  As the 
majority correctly observes, placing too much emphasis on this 
factor would hinder the ability of a shareholder to bring a 
derivative suit on behalf of the corporation in two-shareholder 
corporations.  Rather, as we recognized in Jennings, we should focus 
on the factors that bear on whether "the plaintiff's interests are 
actually inimical to those [she] is supposed to represent."  Id. 
(internal quotation marks and citation omitted).  Thus, while I 
agree the factors discussed in Jennings should not be applied so as 
to preclude a shareholder in a closely held corporation from 
pursuing a derivative claim on behalf of the corporation, by the 
same token, the plaintiff shareholder's antagonistic interests 
should not be ignored simply because the corporation only consists 
of two shareholders. 
 
 
amended complaint, Bragg alleged that the Firm and Cattano 
breached their agreement with her in failing to pay Bragg her 
monthly draw after she requested copies of the corporate books.  
In Count V, Bragg asked the court to judicially dissolve the 
Firm and enjoin both the Firm and Cattano from disbursing the 
Baker Fees or paying any money to Cattano in excess of his 
monthly draws.  In my opinion, Bragg could not fairly and 
adequately represent the interests of the Firm while 
simultaneously pursuing her individual breach of contract claim 
against the Firm and termination of the Firm's existence since 
her interests were "actually inimical" to the Firm's interests.  
Jennings, 275 Va. at 602, 659 S.E.2d at 288. 
 
In fact, the addition of Bragg's derivative claims did not 
advance the interests of the Firm but provided a benefit to her 
alone.  When Bragg filed her initial complaint, she sought 
judicial dissolution of the Firm under Code § 13.1-
747(A)(1)(b), providing for dissolution when "[t]he directors 
or those in control of the corporation have acted, are acting, 
or will act in a manner that is illegal, oppressive, or 
fraudulent," and Code § 13.1-747(A)(1)(d), providing for 
dissolution when "[t]he corporate assets are being misapplied 
or wasted."  Bragg asserted that Cattano's "waste, self-
dealing, self-interest and breach of fiduciary duty" caused the 
Firm's assets "to be looted, misapplied and wasted."  Bragg 
 
 
requested that the court "enjoin and restrain Cattano, pursuant 
to Virginia Code § 13.1-747(E), from further self-dealing and 
committing waste," and appoint "a receiver, pursuant to 
Virginia Code § 13.1-748, to perform an accounting and 
determine the amounts improperly paid by Cattano to himself and 
his adult children and the amounts properly due Bragg."  Her 
complaint specifically included an accounting of the Baker 
Fees.  Additionally, Bragg asked that the receiver be empowered 
to sue and recover all payments improperly made to Cattano and 
his children. 
 
In amending her complaint to add the derivative claims to 
the already pending claim for judicial dissolution, Bragg 
simply reiterated her request for determination and recovery of 
funds or assets improperly misappropriated by Cattano, 
including the Baker Fees.  In Count II of her amended 
complaint, Bragg alleged Cattano breached his fiduciary duties 
to the firm by misappropriating the Baker Fees and other 
assets.  In Count III of her amended complaint, Bragg alleged 
Cattano improperly exercised or assumed control over the Baker 
Fees and other assets of the Firm.  Thus, Bragg added the 
derivative claims for breach of fiduciary duty and conversion 
despite the fact that she was already seeking the same 
determinations and relief in her claim for judicial 
dissolution.  Her derivative claims served no purpose except to 
 
 
provide a mechanism for recovery of attorneys' fees and costs 
not available under her claim for judicial dissolution and 
appointment of the receiver.  See Gianotti v. Hamway, 239 Va. 
14, 29, 387 S.E.2d 725, 734 (1990) (attorneys' fees and costs 
not authorized under dissolution statute) (decided under former 
Code § 13.1-94, now in substance, § 13.1-747)).  In pursuing 
these claims, Bragg was not representing the interests of the 
Firm, but rather her own personal interest in obtaining 
attorneys' fees and costs. 
 
In sum, when considering "the remedy sought by [Bragg] in 
the derivative action," "other litigation pending between 
[Bragg] and defendants," and "the relative magnitude of 
[Bragg's] personal interests as compared to [her] interests in 
the derivative action itself," I am of the opinion that Bragg 
does not satisfy "the representational requirements" of Code 
§ 13.1-672.1(A).  Jennings, 275 Va. at 601-02, 659 S.E.2d at 
288.  Therefore, I would hold the circuit court erred in 
failing to strike the derivative claims based on Bragg's lack 
of standing.  Accordingly, I would reverse the judgment 
rendered under Count III of Bragg's amended complaint and the 
award of attorneys' fees and costs attributable to this claim. 
II. 
Attorneys' Fees and Costs under Code § 13.1-773.1 
I would further hold the circuit court erred in awarding 
attorneys' fees and costs attributable to Bragg's claim in 
 
 
Count I seeking a writ of mandamus for the inspection and 
copying of corporate records. 
Although in her amended complaint, Bragg set forth a claim 
under Code §§ 13.1-773 and -773.1 asking the court to "enter an 
[o]rder on an expedited basis" permitting Bragg to inspect and 
copy the Firm's corporate records, Bragg did not pursue this 
claim, and the circuit court did not enter such an order.  
Shortly after Bragg filed her initial complaint, she moved for 
appointment of a receiver pursuant to Code § 13.1-748 to 
perform an accounting to determine amounts improperly paid by 
Cattano to himself and his children as well as amounts properly 
due to Bragg for the reasons set forth in her complaint.  At 
the hearing in which the court considered Bragg's motion for 
leave to file an amended complaint, the court granted Bragg's 
motion for appointment of a receiver.  The court entered an 
order requiring Cattano and the Firm to provide the receiver 
with access to the financial data and records for the purposes 
of performing his accounting.  The order also directed counsel 
to meet and confer to resolve defendants' specific objections 
to discovery requests propounded after the initial complaint 
was filed.  The order appointing the receiver, requiring access 
by the receiver to corporate records, and directing counsel to 
meet and resolve discovery disputes was entered in response to 
Bragg's motion for a preliminary injunction and to compel 
 
 
discovery filed before Bragg moved to amend her complaint to 
add the statutory claim for inspection and copying.  And after 
the amended complaint was filed adding the statutory claim for 
inspection and copying, Bragg did not seek to obtain an order 
under either Code §§ 13.1-773 or -773.1. 
While the majority states that Code §§ 13.1-773 and -773.1 
afford redress for a corporation's failure to permit a 
shareholder or director to inspect documents, those statutes 
only permit an award of attorneys' fees and costs if an order 
is entered pursuant to one of those statutes.  See Code 
§§ 13.1-773(C) and -773.1(C).  Because no such order was 
entered, or even pursued, there was no basis for an award of 
attorneys' fees and costs under either statute.  Therefore, I 
would reverse the circuit court's judgment awarding attorneys' 
fees and costs attributable to the claim under Count I.