Court Opinion

ID: 8899125
Source: CourtListenerOpinion
Date Created: 2022-11-27 00:42:06.943251+00
Date Added: 2024-06-11T17:07:42.431751
License: Public Domain

SWYGERT, Circuit Judge
(dissenting in part).
The district court refrained from assessing damages against Continental under count I even though the bank was found liable to Black Company on a derivative claim for relief. It based its decision on the equitable doctrine of unjust enrichment. The court held that had Meister Brau not been guilty of unlawful acts damages would have been awarded. Thus, a fund would have been created for the benefit of Black Company and plaintiff would have been entitled to reasonable attorneys’ fees from that fund.
The majority concedes the law is well settled in this general area; a shareholder may be reimbursed for attorneys’ fees and litigation expenses when he has vindicated a corporate claim for relief that substantially benefits all the shareholders. Mills v. Electric Auto-Lite Co., 396 U.S. 375, 389-97, 90 S.Ct. 616, 624-628, 24 L.Ed.2d 593, 604-609 (1970). Nonetheless, the majority maintains that the obligation to compensate a shareholder in a successful derivative suit is an obligation of the corporation and can*997not be passed on to the losing party to a suit. The majority concludes that, accordingly, the general American rule is applicable — attorneys’ fees are not recoverable by the winning party to a lawsuit absent specific statutory authorization.
I disagree. The majority employs a formalistic approach to its analysis which obscures the purpose of the rule enunciated in Mills and thereby achieves an inequitable result. That purpose is to insure that the costs of litigation are not borne solely by one or a few shareholders.
In my opinion a substantial benefit was conferred on all the shareholders when an abuse was corrected which was prejudicial to the interests of the corporation. It was no less substantial because the benefit was not pecuniary. The Supreme Court recognized this in Mills, supra at 396, 90 S.Ct. at 627, 24 L.Ed.2d at 608 when it said “[I]t may be impossible to assign monetary value to the benefit” and only “corporate therapeutics” may be involved. The matter of crucial importance is that equity be done in a particular situation:
“Although the earliest cases recognizing a right to reimbursement involved litigation that had produced or preserved a “common fund” for the benefit of a group, nothing in these cases indicates that the suit must actually bring money into the court as a prerequisite to the court’s power to order reimbursement of expenses, (citation omitted) ‘[T]he foundation for the historic practice of granting reimbursement for the costs of litigation other than the conventional taxable costs is part of the original authority of the chancellor to do equity in a particular situation.’ Sprague v. Ticonic Nat. Bank, 307 U.S. 161, 166, 59 S.Ct. 777, 83 L.Ed. 1184 (1939). Mills, supra, 396 U.S. at 392-393, 90 S.Ct. at 626, 24 L.Ed.2d at 606.
If equity is to prevail in the instant case we may properly create a legal fiction. Union Refrigerator Transit Co. v. Kentucky, 199 U.S. 194, 208, 26 S.Ct. 36, 39, 50 L.Ed. 150, 155 (1905).* We can assume that a common fund was created and award plaintiff his rightful attorneys’ fees. Black Company was properly denied recovery because recovery would permit its majority shareholder, Meister Brau, to benefit from its wrongful acts. Continental should not be regarded as a loser in a law suit having to pay attorneys’ fees and expenses to the winner. But for the application of the doctrine of unjust enrichment Continental would have been assessed damages much in excess of the sum awarded as attorneys’ fees. Under this analysis Alyeska Pipeline Co. v. Wilderness Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975) has no application. I would affirm the district court’s judgment in all respects.

 “A legal fiction is the assumption, for purposes of justice, of a fact that does not or may not exist.” Dodo v. Stocker, 74 Colo. 95, 219 P. 222 (1923).