Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from a judgment of the Superior Court of Los Angeles County, John P. Shook, Judge, Los Angeles County Super. Ct. Nos. BC351140, BC354657.
Howrey, Scott B. Garner, and Todd W. Smith for Defendants and Appellants.
Irell & Manella, Brian J. Hennigan, and Michael H. Strub, Jr., for Plaintiff and Respondent.
Quinn Emanuel Urquhart Oliver & Hedges, George R. Hedges, Danielle L. Gilmore, and Sara Brenner for Interveners and Respondents.
SUZUKAWA, J.
Respondents, a closely-held corporation and its majority shareholders, sued appellants, the minority shareholders, for declaratory relief to resolve a dispute regarding the scope of a supermajority voting provision. Appellants, in turn, filed a related action against respondents. After both actions were consolidated, all three parties moved for summary judgment. The trial court granted respondents’ motions, denied appellants’ motion, and entered judgment for respondents. We affirm the judgment.
BACKGROUND
Respondent Monrovia Nursery Company, Inc. (Monrovia), a closely-held corporation, is one of the three largest container nurseries in the country. Seven of Monrovia’s eight shareholders are parties to this litigation.
Appellants Harry E. Rosedale, Jr., and Richard Vanlandingham belong to the minority faction of shareholders and own a combined 44.68 percent of Monrovia’s outstanding capital stock. Respondents William Bruce Usrey, Miles R. Rosedale, Lance H. Rosedale, Susan Kay Brierly, and Joanne M. Hummer comprise the majority faction and own a combined 53.54 percent of Monrovia’s outstanding capital stock.
I. The Supermajority Provision
The two shareholder factions are locked in a dispute over the scope of a supermajority provision that was added to Monrovia’s articles of incorporation by the shareholders’ unanimous written agreement in 2004 (the 2004 amendment or articles amendment). Given that minority shareholder Harry E. Rosedale, Jr., owns 41 percent of the company’s outstanding capital stock, it is impossible to obtain the 66⅔ percent supermajority approval required by the 2004 amendment without his consent.
The shareholders unanimously approved the 2004 amendment in a written agreement titled “Action by Written Consent of the Shareholders of Monrovia Nursery Company” (the written consent agreement). According to the written consent agreement, the supermajority provision only applies to the seven “changes to the Company’s capital or voting structure” listed in the 2004 amendment. The following is a summary of those seven changes, only the italicized portion of which is at issue in this appeal: (1) the issuance, delivery, or sale of any shares of voting capital stock of the corporation; (2) any increase or decrease in the authorized number of voting capital stock; (3) any issuance, delivery, or sale of any bonds, debentures, notes, or other indebtedness of the corporation that provide voting rights; (4) any issuance, delivery, or sale of warrants, convertible debt, or other securities that could be converted or exchanged for shares of voting capital stock; (5) “[a]ny reclassification or other adjustments to the terms of the capital stock” (italics added); (6) any recapitalization or other reorganization of the corporation; and (7) any amendment of the articles or bylaws, or any agreements, understandings, or commitments effecting any of the above.
This appeal concerns the phrase, “[a]ny reclassification or other adjustments to the terms of the capital stock” (paragraph 5). Appellants contend that paragraph 5 requires supermajority approval for any changes to the terms of Monrovia’s capital stock. Respondents, on the other hand, contend that paragraph 5 requires supermajority approval only for those changes to the terms of the capital stock that affect Monrovia’s capital or voting structure, as stated in both the consent agreement and Corporations Code section 202.
A corporation’s capital structure includes the number and classes of shares that the corporation is authorized to issue. Corporations Code section 202 requires corporations to include in their articles of incorporation “[a] statement as to the corporation’s capital structure, comprising the number and classes of shares that a corporation is authorized to issue . . . . [See Corp. Code, § 202, subds. (d), (e).] The number chosen is at the discretion of the corporation and is generally an arbitrary number. The capital structure of a corporation can be very simple, specifying only one class of stock, or it can be extremely complicated, specifying multiple classes of stock with varying rights and privileges. [See Corp. Code, § 202, subds. (d), (e).]” (1 Cal. Transactions Forms, Business Entities, § 4:20.)
II. The Pleadings
This litigation arose after the minority shareholders objected that several corporate actions could not be approved without supermajority approval under the 2004 amendment. Contending that the supermajority provision did not apply to the disputed actions, Monrovia filed a declaratory relief action (case No. BC351140) seeking to: (1) validate the termination, without supermajority approval, of Monrovia’s obligations under a 1984 stock purchase agreement, including Monrovia’s obligation to repurchase shares upon the death of a shareholder (the “buy back” provision); (2) validate an agreement to indemnify Monrovia’s corporate officers; and (3) establish that the supermajority provision applies only to the seven corporate actions enumerated in the 2004 amendment that would change the company’s capital or voting structure.
The majority shareholders intervened as plaintiffs in the declaratory relief action. In addition to joining in Monrovia’s claims, the majority shareholders filed a complaint in intervention, seeking to validate the following actions taken without supermajority approval: (1) disbanding the board of directors; (2) amending the bylaws to reduce the board from seven to five members; and (3) electing a new five-member board.
The minority shareholders filed a related election contest action against Monrovia (case No. BC354657), seeking to invalidate, for lack of supermajority approval, the bylaws amendment reducing the size of the board and the election of the new five-member board. The majority shareholders intervened in the election contest action as defendants. The trial court consolidated the declaratory relief and election contest actions.
III. The Summary Judgment Motions
Monrovia, the majority shareholders, and the minority shareholders each moved for summary judgment. Only one of the claims resolved by the summary judgment ruling is at issue on appeal: the validity of the termination, without supermajority approval, of Monrovia’s obligations under the stock purchase agreement. The minority shareholders contend that the termination was invalid under paragraph 5 of the 2004 amendment, which requires supermajority approval for “[a]ny reclassification or other adjustments to the terms of the capital stock.”
A. The Stock Purchase Agreement
Of the shareholders in this litigation, only minority shareholder Richard Vanlandingham did not sign the stock purchase agreement in 1984 because he was not a shareholder at that time. Vanlandingham did sign, however, a nearly identical 2001 version of the agreement after he became a shareholder. For purposes of reviewing the summary judgment motions, we need not differentiate between the two versions of the agreement because they are so similar.
The stock purchase agreement’s stated purpose was to keep Monrovia in the hands of the original shareholders and “to insure its continuity of management and ownership.” The agreement accomplished this by restricting the shareholders’ ability to transfer stock and requiring Monrovia to incorporate by reference the terms of the stock purchase agreement in all of its stock certificates.
Section F provided: “Each of the certificates representing the subject shares and each of the certificates representing additional shares, if any, which may hereafter be issued by the corporation in connection with such subject shares, or otherwise, shall have endorsed upon it the following words: [¶] ‘Sale or transfer of the shares represented by this Certificate is restricted by the provisions of a Stock Purchase Agreement dated _______, 1984, a copy of which may be inspected at the principal office of the corporation and all of the provisions of which are incorporated herein.’”
Both agreements (the 1984 and 2001 versions) imposed identical restrictions on the shareholders’ ability to transfer stock. Section A, which is not at issue in this appeal, restricted transfers made during a shareholder’s lifetime. It granted Monrovia a right of first refusal and, if the right was not exercised by Monrovia, granted the remaining shareholders an option to purchase the stock at the same price that was offered to Monrovia.
Section B, which is at issue in this appeal, applied to transfers made after a shareholder’s death. It prohibited shareholders from transferring stock to their heirs by requiring Monrovia to purchase all of the shares of a deceased shareholder. The agreement stated that it was in the best interests of the shareholders and Monrovia that “the stock of a deceased shareholder be acquired by the corporation. The corporation shall arrange to provide the funds necessary to acquire some or all of the subject shares of a deceased shareholder through life insurance policies on some of the lives of the shareholders.”
Both agreements allowed the shareholders to terminate, by a majority vote of the outstanding shares, Monrovia’s obligations under the agreement. Section H.1.c. stated that “all restrictions on stock transfers created hereby shall terminate as to the corporation” upon the “execution of a written instrument by the corporation and the shareholders then owning a majority of the issued and outstanding stock subject to this Agreement, which instrument expressly provides for the termination of this Agreement.” In contrast, section M required the unanimous written consent of the shareholders to modify the agreement.
B. The Termination of Monrovia’s Obligations Under the Stock Purchase Agreement
The majority shareholders requested that the board terminate Monrovia’s obligations under the stock purchase agreement pursuant to section H.1.c. of the agreement. Although the shareholders disagreed (and continue to disagree) as to what it means to terminate only Monrovia’s obligations under the agreement, they agreed that at a minimum, it would end Monrovia’s obligation to buy back the stock of a deceased shareholder.
C. The Parties’ Conflicting Interpretations of Paragraph 5
In the parties’ cross-motions for summary judgment, the parties sought to establish either the applicability or inapplicability of the supermajority requirement under paragraph 5 of the 2004 amendment to the termination of Monrovia’s obligation under the stock purchase agreement. Paragraph 5, as previously stated, requires supermajority approval for “[a]ny reclassification or other adjustments to the terms of the capital stock.” The minority shareholders argued that terminating Monrovia’s obligation to buy back stock upon the death of a shareholder constituted a change in the terms of the capital stock, for which paragraph 5 requires supermajority approval. Monrovia and the majority shareholders, on the other hand, argued that paragraph 5 applies only to changes to the terms of the capital stock that must be included in the articles of incorporation under Corporations Code section 202. In other words, as the trial court stated, the supermajority provision applies only to those “‘certain changes to the Company’s capital or voting structure’—i.e., the seven corporate actions enumerated in Article EIGHTH.”
Monrovia and the majority shareholders contended that when the parties amended the articles of incorporation, they had no intention of amending section H.1.c. of the stock purchase agreement, which allows the agreement to be terminated as to Monrovia by a majority vote of the outstanding shares. The 2004 amendment did not implicitly amend section H.1.c. of the stock purchase agreement, they argued, because: (1) the shareholders never discussed amending the stock purchase agreement when they amended the articles of incorporation; (2) the stock purchase agreement is not part of the articles of incorporation and was not mentioned in either the articles amendment or the written consent agreement; and (3) terminating the buy back provision would not change Monrovia’s capital or voting structure. They pointed out that if the shareholders had intended to use the supermajority provision to amend section H.1.c. of the stock purchase agreement, they could and would have done so expressly.
IV. The Summary Judgment Ruling
After considering the competing summary judgment motions, the trial court agreed with the majority shareholders that paragraph 5 of the articles amendment did not revise section H.1.c. of the stock purchase agreement. The trial court concluded that the supermajority provision as a whole applied only to those seven changes that would alter Monrovia’s capital or voting structure as enumerated in the 2004 amendment. Noting that the stock purchase agreement was not even mentioned in the 2004 amendment, the trial court found nothing in the amendment’s express language that suggested an intent to amend section H.1.c. of the stock purchase agreement. The trial court stated that “[t]he plain language of the 2004 amendment . . . limits the requirement of supermajority approval to ‘certain changes to the Company’s capital or voting structure’—i.e., the seven corporate actions enumerated in Article EIGHTH. [The minority shareholders] have not raised a triable issue of material fact as to the scope of ¶5 of Article EIGHTH. Specifically, [the minority shareholders] have not shown that [Monrovia’s] repurchase obligation is a ‘reclassification or other adjustment[] to the terms of the capital stock . . . of the corporation.’ [The minority shareholders] have not offered any extrinsic evidence that is relevant to show that ¶5, in particular, is reasonably susceptible of interpretation to include [Monrovia’s] repurchase obligation. As [Monrovia] correctly contends, based on the context of the Amendment and the fact that the Amendment nowhere references the Agreement, the only reasonable interpretation is that the supermajority provision does not apply to [Monrovia’s] repurchase obligation.”
Finding no triable issues of material fact, the trial court granted the summary judgment motions of Monrovia and the majority shareholders, and denied that of the minority shareholders. The trial court entered judgment for Monrovia and the majority shareholders, who successfully moved for costs and attorney fees pursuant to the fee provision in the stock purchase agreement.
V. This Appeal
The minority shareholders have timely appealed from the judgment. They contend that: (1) paragraph 5 of the 2004 amendment’s supermajority provision is reasonably susceptible to the interpretation that it implicitly altered section H.1.c. of the stock purchase agreement by requiring supermajority approval to terminate the agreement as to Monrovia; (2) all of the undisputed extrinsic evidence supports the minority shareholders’ position that paragraph 5 of the supermajority provision implicitly amended section H.1.c. of the stock purchase agreement; and (3) notwithstanding the supermajority provision, we should invalidate section H.1.c. of the stock purchase agreement because terminating only Monrovia’s obligations would lead to an absurd and unenforceable agreement. The minority shareholders also challenge the award of attorney fees and costs to respondents.
We note that there are two consolidated appeals. In B197739, the minority shareholders appealed from the initial judgment of January 4, 2007, which awarded fees to respondents in an unspecified amount. In B199444, the minority shareholders appealed from the amended judgment of March 21, 2007, which determined the amount of the fee awards.
DISCUSSION
I. The Summary Judgment Ruling
The standard of review for summary judgment is well established. The motion “shall be granted if all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c, subd. (c).) We independently review an order granting summary judgment. (Saelzler v. Advanced Group 400 (2001) 25 Cal.4th 763, 767.) In performing our independent review of the evidence, “we apply the same three-step analysis as the trial court. First, we identify the issues framed by the pleadings. Next, we determine whether the moving party has established facts justifying judgment in its favor. Finally, if the moving party has carried its initial burden, we decide whether the opposing party has demonstrated the existence of a triable, material fact issue. [Citation.]” (Chavez v. Carpenter (2001) 91 Cal.App.4th 1433, 1438.)
A. Interpreting the Written Documents
Appellants contend that the trial court erroneously failed to apply paragraph 5 of the 2004 amendment to the termination of Monrovia’s obligations under the stock purchase agreement. We disagree.
The trial court’s determination that the language of the relevant documents was unambiguous is a question of law that is subject to independent review. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165-1166.) In interpreting those documents, we apply the same principles applicable to any other contractual agreement. (Id. at p. 1165.) We must decide whether the language is reasonably susceptible to the interpretation urged by the individual parties. “When a dispute arises over the meaning of contract language, the first question to be decided is whether the language is ‘reasonably susceptible’ to the interpretation urged by the party. If it is not, the case is over. [Citation.]” (Southern Cal. Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839, 847-848.)
In interpreting a contract, we must give effect to the parties’ intent at the time they entered into the agreement and, whenever possible, ascertain that intent from the writings alone. We also consider the circumstances under which the contract was made and the matters to which it relates. (Civ. Code, §§ 1636, 1639, 1647; American Alternative Ins. Corp. v. Superior Court (2006) 135 Cal.App.4th 1239, 1245.) We consider a contract as a whole and interpret its language in context, rather than interpret a provision in isolation. (Civ. Code, § 1641; American Alternative Ins. Corp., supra, 135 Cal.App.4th at p. 1245.)
The minority shareholders argue that because paragraph 5 of the supermajority provision was “broadly written to require a supermajority vote for ‘ any reclassification or other adjustments to the terms of the capital stock,’ there can be no question that the Majority Shareholders’ elimination of key terms of Monrovia’s stock falls within that ambit. . . . The fact that the Supermajority Provision does not expressly reference the Stock Purchase Agreement . . . does not mean the Agreement is beyond its reach. To the contrary, the Supermajority Provision is intentionally written broadly, and Paragraph 5 applies to ‘ any reclassification or other adjustments to the terms of the capital stock . . . .’ [Citations omitted.] (emphasis added). Surely, if a majority of shareholders tomorrow entered into an agreement calling for the issuance of new shares (Paragraph 1 of the Supermajority Provision) or the reorganization of the Company (Paragraph 6 of the Supermajority Provision), Respondents would not argue that such an agreement was beyond the scope of the Supermajority Provision. That the Supermajority Provision does not explicitly mention the Stock Purchase Agreement by name does not change the result that actions taken pursuant to that Agreement are limited by the Supermajority Provision of the Articles Amendment.”
Monrovia and the majority shareholders, on the other hand, contend that paragraph 5 must be read in conjunction with the written consent agreement, which limited the application of the supermajority provision to those “changes to the Company’s capital or voting structure” listed in paragraphs 1-7 of the amendment. They also argue that, like the other enumerated paragraphs that applied the supermajority provision to acts that would change the capital or voting structure, paragraph 5 applied the supermajority provision to those reclassifications or adjustments to the terms of the capital stock that would change the capital or voting structure and, therefore, must be listed in the articles of incorporation under Corporations Code section 202.
Viewing the 2004 amendment and written consent agreement as a whole, we conclude the express language of the agreements fails to support the broad construction urged by the minority shareholders. Nothing in the express language of the 2004 amendment or the written consent agreement reasonably suggests that the shareholders intended to amend section H.1.c. of the stock purchase agreement when they amended the articles of incorporation. Nothing in the agreements indicates that the shareholders intended to require supermajority approval to terminate Monrovia’s obligations under the stock purchase agreement.
B. The Extrinsic Evidence
The minority shareholders contend that the only undisputed extrinsic evidence in the record supports their interpretation of the documents. We are not persuaded.
The minority shareholders rely upon the recitals contained in the stock purchase agreement, the shareholder memorandum written by Monrovia’s corporate counsel Bob Kopple, and the memorandum to the board of directors written by respondent and majority shareholder Miles Rosedale. This evidence, according to the minority shareholders’ opening brief, “establishes two things. First, it demonstrates the critical role played by the Buy Back Provision in keeping stock ownership and control within the hands of existing shareholders and providing a ready market for the shares of a deceased shareholder — two goals all of the shareholders held as dear. Second, it demonstrates that the Supermajority Provision is reasonably susceptible of being interpreted as requiring a supermajority shareholder vote in order to terminate the Buy Back Provision and the restrictions on stock transferability contained in it. Given the significance with which the Company and the shareholders view the Buy Back Provision, both back in 1984 and today, it is more than reasonable to expect that the shareholders would require something more than a simple majority to terminate it. [Fn. omitted.]”
Extrinsic evidence is relevant to prove a meaning to which the language of an agreement is reasonably susceptible. (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co. (1968) 69 Cal.2d 33, 37.) Here, the extrinsic evidence purporting to establish that the 2004 amendment’s supermajority provision applies to the stock purchase agreement does not prove a meaning that can be gleaned from a fair reading of the express language used by the parties. If the parties understood that by amending the articles, they were implicitly amending the stock purchase agreement, the articles amendment and written consent agreement could have clearly said so. Instead, the plain language of the written consent agreement expressly limited the supermajority provision to those “changes to the Company’s capital or voting structure” listed in paragraphs 1-7 of the amendment.
Even if we assume the minority shareholders believed that by amending the articles, they were implicitly amending section H.1.c. of the stock purchase agreement, there is no evidence that they communicated this belief to the majority shareholders at the time the amendment was discussed and approved. Appellant Harry E. Rosedale, Jr., testified at his deposition that although he believed the supermajority provision was to be applied broadly, he did not inform the majority shareholders of his belief when the shareholders approved the 2004 amendment. Accordingly, his undisclosed intent was irrelevant to interpreting the supermajority provision, and appellants do not contend otherwise. (See Blumenfeld v. R. H. Macy & Co. (1979) 92 Cal.App.3d 38, 46.)
The minority shareholders do not argue that terminating the buy back provision would change the number, class, or voting rights of the capital stock. Appellants make no argument and we are unaware of any evidence to suggest that terminating the buy back provision would change Monrovia’s capital or voting structure.
C. Section H.1.c.
The minority shareholders contend that, notwithstanding the supermajority provision, the summary judgment ruling must be reversed because terminating only Monrovia’s obligations under the stock purchase agreement would lead to an absurd result. In other words, the minority shareholders seek to invalidate section H.1.c. of the stock purchase agreement for reasons unrelated to the supermajority provision. The problem, however, is that the minority shareholders did not seek this relief in their complaint.
Although the parties dispute what it means to terminate only Monrovia’s obligations under the stock purchase agreement, it is beyond the scope of this appeal to resolve this issue, which was not raised in opposition to Monrovia’s and the majority shareholders’ summary judgment motions. A party generally may not urge a new theory as a defense to a summary judgment motion. In City of Hope Nat. Medical Center v. Superior Court (1992) 8 Cal.App.4th 633, 639, the court explained: “No fraud claim is raised by [plaintiff’s] complaint, directly or indirectly, and [plaintiff] therefore was not entitled to oppose [defendant’s] summary judgment motion with a claim of fraud. (Robinson v. Hewlett-Packard Corp. (1986) 183 Cal.App.3d 1108, 1132 [a plaintiff opposing summary judgment may not advance a new unpleaded legal theory to defeat the motion]; [citation].)” The minority shareholders have not persuaded us to deviate from this rule in this case.
II. Attorney Fees and Costs
Pursuant to Civil Code section 1717, the trial court awarded Monrovia and the majority shareholders their respective attorney fees under section L of the stock purchase agreement, which stated: “In the event any party hereto shall institute an action to enforce any rights granted hereunder, the prevailing party in such action shall be entitled, in addition to any other relief awarded by the court, to such reasonable attorneys’ fees as the court may award.”
Monrovia (represented by Irell & Manella) recovered fees and costs of $767,931.25 and $30,311.12, respectively. The majority shareholders (represented by Quinn Emanuel Urquhart Oliver & Hedges) recovered fees and costs of $469,734.20 and $25,132.88, respectively.
A. Minority Shareholder Richard Vanlandingham
As previously mentioned, minority shareholder Richard Vanlandingham did not sign the original 1984 stock purchase agreement because he did not own any Monrovia stock at that time. He did sign, however, a nearly identical 2001 version of the stock purchase agreement after he acquired his shares. For the first time on appeal, Vanlandingham argues that because he signed a different version than the majority shareholders, they are not parties to the same agreement and he cannot be liable to them for attorney fees under an agreement he did not sign.
Assuming that this issue was not waived by Vanlandingham’s failure to raise it below (see Martinez v. Scott Specialty Gases, Inc. (2000) 83 Cal.App.4th 1236, 1249 [a new theory generally will not be considered if raised for the first time on appeal]), the record does not support his assertion. As previously mentioned, section F required Monrovia to incorporate by reference the terms of the 1984 stock purchase agreement in all of its stock certificates. Presumably, the stock certificates issued to Vanlandingham were in compliance with section F and incorporated by reference the terms of the 1984 stock purchase agreement, and he does not contend otherwise. The documents support only one reasonable interpretation, which is that when Vanlandingham signed the 2001 stock purchase agreement, he signaled his assent to be bound by the earlier 1984 agreement among the other shareholders. Given that the terms of the two agreements are nearly identical and created reciprocal rights that would only be meaningful if all future shareholders were bound by the same agreement, we conclude that the documents permit no other interpretation.
B. The Election Contest Action
The minority shareholders seek to reverse the legal fees awarded to Monrovia and the majority shareholders in the election contest action, for which no attorney fee provision applies. We conclude that because the record shows that fees attributable to the election contest action were deducted from the respective fee requests, the minority shareholders have failed to establish an abuse of discretion.
The record shows that Monrovia excluded $123,748.75 from its fee request, to avoid recovering fees incurred in the election contest action. The record also shows that the majority shareholders reduced their fee request by 15 percent for the same reason.
Although the minority shareholders argue that these reductions were insufficient to eliminate all of the fees incurred in the election contest action, the minority shareholders have failed to point to evidence in the record that establishes an abuse of discretion. “Where fees are authorized for some causes of action in a complaint but not for others, allocation is a matter within the trial court’s discretion. (Erickson v. R.E.M. Concepts, Inc. (2005) 126 Cal.App.4th 1073, 1083.) A trial court’s exercise of discretion is abused only when its ruling ‘“‘“exceeds the bounds of reason, all of the circumstances before it being considered.”’”’ (San Dieguito Partnership v. San Dieguito River Valley Regional etc. Authority (1998) 61 Cal.App.4th 910, 920, disapproved on another point in PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084.)” (Amtower v. Photon Dynamics, Inc. (2008) 158 Cal.App.4th 1582, 1604; see Ramos v. Countrywide Home Loans, Inc. (2000) 82 Cal.App.4th 615, 621 [abuse of discretion in award of fees and costs does not occur unless “no reasonable basis for the court’s action can be shown”].)
C. Action on the Stock Purchase Agreement
The minority shareholders contend that respondents were not entitled to any fees incurred in the declaratory relief action. They argue that the declaratory relief action was not an action on the stock purchase agreement, but an action on the supermajority provision, which contained no attorney fee clause. We disagree.
A main objective of the declaratory relief action was to validate the termination of Monrovia’s obligations under the stock purchase agreement. The declaratory relief action sought to enforce the right under section H.1.c. of the stock purchase agreement to terminate Monrovia’s obligations by a majority vote of the outstanding shares. Section L of the stock purchase agreement provides for recovery of fees by the prevailing party to recover fees in any action brought to enforce rights granted under the agreement. We therefore reject as factually unsupported the minority shareholder’s contention that the declaratory relief action was not an action on the stock purchase agreement.
D. Unreasonably Excessive Fees
The minority shareholders challenge Monrovia’s and the majority shareholders’ fee awards as unreasonably excessive. They contend that there was much duplication of effort by respondents’ respective attorneys, who charged unreasonably high fees for such a relatively simple lawsuit. We again conclude that the minority shareholders have failed to point to evidence that establishes an abuse of discretion.
“‘“The ‘experienced trial judge is the best judge of the value of professional services rendered in his court, and while his judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong’—meaning that it abused its discretion.”’ (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095, quoting Serrano v. Priest (1977) 20 Cal.3d 25, 49, and citing Fed-Mart Corp. v. Pell Enterprises, Inc. (1980) 111 Cal.App.3d 215, 228 [an appellate court will interfere with a determination of reasonable attorney fees ‘only where there has been a manifest abuse of discretion’].) As we recently pointed out in a case in which the reasonableness of an attorney fee award was under review, ‘“[t]he scope of discretion always resides in the particular law being applied, i.e., in the ‘legal principles governing the subject of [the] action . . . .’ Action that transgresses the confines of the applicable principles of law is outside the scope of discretion and we call such action an ‘abuse’ of discretion.”’ (Lealao v. Beneficial California, Inc. (2000) 82 Cal.App.4th 19, 25 . . ., quoting City of Sacramento v. Drew (1989) 207 Cal.App.3d 1287, 1297; see also Ramos v. Countrywide Home Loans, Inc. (2000) 82 Cal.App.4th 615, 621-622.)” (Thayer v. Wells Fargo Bank (2001) 92 Cal.App.4th 819, 832-833 (Thayer).)
The minority shareholders contend that the respondents’ attorneys duplicated each other’s efforts by appearing at the same court hearings and depositions, reviewing each other’s work product, and conferring excessively with each other. In support of their position, the minority shareholders cite Thayer, supra, 92 Cal.App.4th 819, which involved five coordinated class complaints handled by nine plaintiffs’ firms. We conclude that the reliance on Thayer is misplaced. In Thayer, the defendant bank capitulated within two months of the filing of the first action by rescinding the disputed checking account fees, thereby rendering all of the substantive issues moot. While the bank discussed settlement, the plaintiff’s attorney in one of the subsequently filed actions engaged in tactics that, according to the bank, were designed solely to increase the lodestar award and multiplier used to calculate the fee award. The bank, which did not challenge the accuracy of that attorney’s underlying billing records, argued that the amount of time spent on the case was unreasonable under the circumstances. The appellate court agreed, stating that not only were the factors justifying a multiplier to enhance the lodestar amount wholly missing, but “the unjustified duplication of work that took place requires a negative multiplier decreasing the lodestar.” (Id. at p. 834.)
In this case, on the other hand, the issues remained in dispute throughout the summary judgment proceedings and there was never a settlement agreement. Although the majority shareholders and Monrovia sought the same relief, they were not identically situated class action plaintiffs as in Thayer. Even though this litigation was resolved on summary judgment less than a year after the complaints were filed, the minority shareholders have failed to show that the work performed by the two opposing firms was manifestly duplicative, unreasonable, or ineffective. The trial court was entitled to disregard the analysis of the minority shareholders’ legal consultant, Robert Martin, regarding the time spent by opposing counsel on various matters. In short, the minority shareholders have failed to show that the trial court abused its discretion by granting respondents their respective attorney fees in this case.
E. Electronic Research Costs
The majority shareholders recovered $18,766.90 in costs for electronic research expenses. The minority shareholders seek reversal of this award under Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 776 (Ladas), arguing that their motion to tax costs was erroneously denied. Ladas is distinguishable, however, because it arose under Code of Civil Procedure section 1033.5 and did not involve an action on a contract that contained an attorney fee clause. (See Wakefield v. Bohlin (2006) 145 Cal.App.4th 963, 973-974 [Code Civ. Proc., § 1033.5 applies when attorney fees are incurred to litigate tort or other noncontract claims that are outside the scope of Civ. Code, § 1717].) Accordingly, the rationale in Ladas for reversing the award of electronic legal research expenses (i.e., attorney fees) as costs under Code of Civil Procedure section 1033.5 does not apply here.
In their reply brief, the minority shareholders argue for the first time that Civil Code section 1717 does not apply because, in their cost memorandum, the majority shareholders did not seek to recover electronic research expenses as attorney fees. The minority shareholders do not mention whether they raised this objection below when the majority shareholders could have responded. In any event, we decline to address this issue because the minority shareholders have failed to show good cause for not raising it in the opening brief. (See Scott v. CIBA Vision Corp. (1995) 38 Cal.App.4th 307, 322; 9 Witkin, Cal. Procedure (4th ed. 1997) Appeal, § 616, pp. 647-648.)
DISPOSITION
The judgment is affirmed. Respondents are awarded their costs.
We concur: EPSTEIN, P. J., WILLHITE, J.