Court Opinion

ID: 9561458
Source: CourtListenerOpinion
Date Created: 2023-08-21 18:10:03.911592+00
Date Added: 2024-06-11T09:13:49.537911
License: Public Domain

Fletcher, Presiding Justice.
Minority shareholder Alvis Waite sued Industrial Distribution Group (IDG), a Georgia corporation, and its majority shareholders seeking judicial dissolution due to a shareholder deadlock. The trial court refused to dissolve the corporation and appoint a receiver, but ordered other relief and awarded attorney fees to Waite. The Court of Appeals affirmed the award,1 and we granted certiorari to determine if Waite was entitled to attorney fees. Because no Georgia statute gives Waite authority to recover attorney fees and the trial court did not act as the substantial equivalent of a receiver, we hold that Waite is not entitled to attorney fees for bringing this dissolution action as an individual shareholder. Accordingly, we reverse.
Waite, a former division president and owner of 45 percent of IDG’s stock, sued IDG and three of its shareholders seeking dissolution of the corporation under OCGA § 14-2-1430, appointment of a receiver, damages, and equitable relief. The trial court held a bench trial on the dissolution claim, but denied the relief sought, finding that dissolution would hurt suppliers, customers, employees, and lenders. It did find that the shareholders were deadlocked, as Waite *116alleged, and lowered the quorum requirement for shareholder meetings to a simple majority. In addition, the trial court required IDG to make distributions to Waite, instituted cumulative shareholder voting, mandated board approval of all major transactions and compensation decisions, gave a right of first refusal of all stock sold to existing stockholders, and ordered all future stock to be issued pro rata. No party appealed the judgment. Subsequently, the trial court found that Waite was entitled to $100,000 in attorney fees under OCGA § 9-8-13 and Ga. Veneer &c. Co. v. Fla. Nat. Bank.2 The Court of Appeals affirmed on the theory that Waite’s action preserved a common fund and thus authorized an equitable award of attorney fees under OCGA § 9-8-13 (c).3
1. As a general rule, Georgia law does not provide for the award of attorney fees to the prevailing party unless authorized by statute or contract.4 OCGA § 9-8-13, cited by the trial court as the statutory authority for the fees award, provides in subsection (a):
In all cases where a receiver is appointed under the laws of this state to take charge of the assets of any person, firm, or corporation and a fund is brought into court for distribution, the court having jurisdiction thereof shall award to counsel filing the petition and representing the moving creditor or creditors, out of the fund, no greater sum as fees for services rendered in filing the petition and bringing the fund into court than the services are actually worth.
Thus, subsection (a) permits the award of attorney fees when two requirements are mét: (1) a court appoints a receiver to take charge of the corporation’s assets, and (2) a fund is brought into court for distribution. In this case, neither statutory requirement was met. The trial court denied Waite’s request for the appointment of a receiver and did not establish a common fund. Therefore, Waite is not entitled to a fees award under subsection (a) of the receivership statute.
2. OCGA § 9-8-13 (c), which the Court of Appeals cited, provides: “In all cases, the presiding judge or other competent tribunal shall allow such compensation to the attorney or attorneys filing the original petition and to the receiver or receivers appointed thereunder as their services are reasonably worth.” The Court of Appeals interpreted this subsection as permitting attorney fees in this case despite the absence of a receivership.
Subsection (c), however, does not provide independent authority *117for an equitable award of attorney fees. Its reference to “all cases” means all cases in which a receiver is appointed, as shown by its placement in the receivership statute. Enacted in 1898, the language in current subsection (c) was placed at the end of what is now subsection (b) to show how the fees of counsel and receivers were allowed.5 It was unnecessary to repeat the clause “where a receiver is appointed” because that phrase was stated at the beginning of the section. We conclude that subsection (c), like subsection (a), does not permit the award of attorney fees unless a receiver is appointed.
3. As an exception to the general rule, a court of equity may allow attorney fees to a party who maintains a successful suit for the .protection or increase of common property or a common fund.6 Relying on our decision in Ga. Veneer, Waite argues that he is entitled to attorney fees because the trial court exercised its equitable powers to resolve the shareholder deadlock and eliminate corporate waste to the common benefit of all IDG’s shareholders.
In Ga. Veneer, this Court concluded that the trial court’s actions in supervising and controlling the corporation’s assets were “in substance the equivalent of a receivership.” Although the corporation retained physical possession of the assets, it held the property in trust for the shareholders. We concluded:
Where, as a result of the prosecution of an action by minority stockholders, the majority have been prevented from fraudulently sacrificing corporate assets and the court has obtained control of those assets, the petitioners are entitled to an order of the court allowing the payment from the com-
mon fund of the necessary expenses and counsel fees incurred by them.7
Unlike the situation in Ga. Veneer, the trial court here did not supervise the corporation’s daily operations or control its assets; nor was a common fund created by the sale of the corporation’s assets or any other method. Although the trial court ordered a change in the corporation’s bylaws to break the shareholder deadlock and retained jurisdiction to enforce its judgment, these actions are not the sub-*118stantial equivalent of a receivership.
As a result, neither the receivership statute nor our decision in Ga. Veneer provides authority for an award of attorney fees to Waite for bringing this dissolution action. Because the issue is not presented here, we decline to address whether this Court should adopt the substantial benefit doctrine, which allows the award of attorney fees to a plaintiff who sues as an individual shareholder.8

Judgment reversed.

All the Justices concur, except Carley, J., who dissents.

 Industrial Distribution Group v. Waite, 222 Ga. App. 233 (474 SE2d 28) (1996).

 198 Ga. 591 (32 SE2d 465) (1944).

 222 Ga. App. at 235.

 Walker v. Walker, 266 Ga. 414 (467 SE2d 583) (1996).

 Ga. L. 1898, pp. 86, 87. The amended statute read:
Sec. II. Be it further enacted, That in all cases when a receiver is appointed to take charge of the assets of any person, firm or corporation, the court having jurisdiction thereof shall award to such receiver as full compensation for his services out of the fund coming into his hands . . . ; provided further, that in all cases the presiding judge, or other competent tribunal, shall allow such compensation to the attorney or attorneys filing the original petition, and the receiver or receivers appointed thereunder, as their services are reasonably worth.

 Ewing v. First Nat. Bank, 209 Ga. 932 (76 SE2d 791) (1953).

 198 Ga. at 614.

 See Tandycrafts, Inc. v. Initio Partners, 562 A2d 1162 (Del. 1989); Recent Case, Attorneys’ Fees — Substantial Benefit Doctrine — Delaware Supreme Court Grants Fees to Plaintiff Suing as Individual Shareholder, 103 Harv. L. Rev. 1187 (1990).