Filed 5/14/20 Premiere Raspberries, LLC v. Dutra CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

PREMIERE RASPBERRIES, LLC,

Plaintiff and Appellant,

v.

JAMES M. DUTRA,

Defendant and Respondent.

H045594

(Santa Cruz County

Super. Ct. No. 17CV02334)

James R. Dutra (decedent), a managing member of appellant Premiere Raspberries LLC (the LLC), transferred his interest in the LLC to a trust prior to his death. Litigation ensued between the LLC and the successor trustee of decedent’s trust, respondent James M. Dutra (Dutra or “successor trustee”). In the action underlying this appeal, the LLC sought injunctive and declaratory relief to prevent Dutra from trespassing onto property leased by the LLC. After the LLC failed to obtain a preliminary injunction, it dismissed the lawsuit without prejudice, and Dutra, as successor trustee, recovered attorney fees as the prevailing party pursuant to an attorney fee clause in the LLC’s operating agreement.

On appeal, the LLC contends that the fee award was error because the successor trustee was not a member of the LLC within the meaning of the operating agreement. The LLC also challenges another aspect of the trial court’s ruling, namely whether the doctrine of judicial estoppel precluded the LLC from challenging the successor trustee’s purported member status due to prior, inconsistent assertions it had made in the underlying action and in other litigation.

We find that the successor trustee was not a member of the LLC within the meaning of the attorney fee clause, and the doctrine of judicial estoppel did not preclude the LLC from challenging the successor trustee’s entitlement to attorney fees under the terms of the LLC operating agreement. We nonetheless conclude that the successor trustee was entitled to recover attorney fees in his capacity as the deceased member’s legal representative exercising the member’s rights under the terms of the operating agreement. We affirm the award of attorney fees to the successor trustee.

I. FACTUAL AND PROCEDURAL BACKGROUND

The LLC is a California limited liability company formed in August 2009. At all relevant times, the LLC had two members, decedent and M&J Processing, LLC (M&J Processing). Decedent was a managing member with a 49 percent interest in the LLC until his death in March 2016. Decedent transferred his interest in the LLC to the James R. Dutra Living Trust (the trust) prior to his death. Respondent Dutra became the successor trustee of the trust on October 31, 2016. M&J Processing and the LLC were not informed of decedent’s transfer of his interest until after his death.

The LLC filed a first amended complaint against Dutra, both individually and in his capacity as successor trustee, in August 2017. The LLC sought in relevant part specific performance of certain provisions of the LLC’s operating agreement (operating agreement) allowing the LLC to purchase decedent’s membership interest. Other causes of action included conversion and quiet title to personal property. We refer to this lawsuit as the initial action.

The LLC filed a second lawsuit against Dutra, individually and as successor trustee, in September 2017. We refer to this lawsuit as the underlying action. In the underlying action, the LLC sought injunctive and declaratory relief to prevent Dutra from operating a personal business on LLC property. The verified complaint (complaint) alleged that decedent, Dutra’s father, had managed the LLC’s farming operations before his death. During that time, decedent had allowed Dutra to operate a pumpkin selling business and children’s bounce house on an acre of the property for some weeks around Halloween. Dutra did not pay rent to the LLC for use of the property, and the LLC did not share in any revenues of the business. When Dutra tried to set up the pumpkin patch again in August 2017 (after decedent’s death), the LLC rejected his request and filed for relief from trespass.

The complaint alleged that the operating agreement, section 1.01(s), provides that “a member ‘has no interest in specific property of [the] Company.’ ” It alleged that Dutra’s pumpkin operation deprived the LLC of full use and enjoyment of its property and violated local zoning code for the LLC’s farm, exposing the LLC to potential liability. The LLC sought a temporary restraining order, and preliminary and permanent injunction against Dutra’s entry on the property and operation of his business without LLC consent. The complaint also alleged that a controversy existed between the LLC and Dutra concerning the parties’ rights and duties under the operating agreement and sought a judicial determination and declaration of those respective rights.

Dutra opposed the request for preliminary injunction after the trial court issued an order to show cause. After considering the arguments presented, the trial court found that the LLC had not shown a reasonable probability of success on the merits or a likelihood that it would suffer irreparable injury. The court denied the application for preliminary injunction. The next day, the LLC dismissed the underlying action without prejudice and filed a notice of entry of dismissal.

Dutra moved for an award of attorney fees as the prevailing party in the underlying action. The motion claimed that Dutra, as successor trustee of decedent’s trust, was entitled to recover his reasonable attorney fees incurred in defense of the action under the attorney fee clause of the operating agreement. The LLC responded that transfers of membership interest required the approval of the other members of the LLC, and that the successor trustee was not a member under the terms of the operating agreement. A declaration by James C. Thompson, president of the LLC’s managing member, M&J Processing, stated that neither Dutra nor any trustee of the trust was ever admitted as a member of the LLC as required by the operating agreement. Because decedent’s transfer to the trust was never approved, the LLC maintained that the trust owned a specially defined “economic interest” in the LLC which did not entitle it to the rights of a member. The LLC also argued that because the underlying action sought only to stop decedent’s son from trespassing as an individual, it did not fall within the attorney fee provision of the operating agreement.

The trial court issued a tentative decision to award the attorney fees as requested. The court rejected the contention that Dutra was not entitled to attorney fees because he was not a member of the LLC and had only an economic interest. It held that the LLC was estopped from making that argument because it contradicted the company’s position in the initial action, as set forth in the first amended complaint, that it was seeking specific performance to exercise its option “ ‘to purchase the decedent’s membership interest . . . .’ ”

At the hearing on the attorney fee motion, counsel for the LLC argued that the trial court’s tentative decision misinterpreted the operating agreement language by erroneously equating the phrase “ ‘membership interest’ ” with the definition of a “member.” According to the LLC, the operating agreement “clearly distinguishes between a member and his interest. It says that if a member transfers his interest, that member is still a member. And the transferee receives a[n] economic interest.” Dutra responded that the LLC should be judicially estopped from taking inconsistent positions in its litigation against Dutra. Dutra further contended that if decedent’s transfer of interest in fact violated the terms of the operating agreement, he still would have retained his member status, the rights and duties of which then passed to Dutra as the successor in interest.

The trial court adopted its tentative decision. It ruled that based on the facts alleged in the first amended complaint in the initial action, the LLC was “estopped in this action to deny that the trustee of the trust is, in fact, a member of Premiere Raspberries.” The court found that the trespass claim in the underlying action involved a dispute between the LLC and the members, and that Dutra as successor trustee was the prevailing party entitled to contractual attorney fees. The court awarded Dutra, as successor trustee, attorney fees in the amount of $16,612.50.

The LLC timely appealed from the order awarding attorney fees entered after voluntary dismissal of the action.

II. DISCUSSION

To decide whether the award of attorney fees was error, we examine (1) the terms of the LLC operating agreement and California’s LLC statutes to determine whether the successor trustee was a member of the LLC for purposes of the contractual attorney fee provision, (2) the trial court’s application of judicial estoppel under the circumstances presented, and (3) Dutra’s alternate contention that the fee award was proper because the successor trustee, as decedent’s legal representative in proceedings related to the LLC, steps into decedent’s position and succeeds to his rights and powers.

A. Governing Legal Principles and Standard of Review

Code of Civil Procedure section 1032 defines a prevailing party in an action for purposes of cost recovery to include, among others, “a defendant in whose favor a dismissal is entered.” (Code Civ. Proc., § 1032, subd. (a)(4); Santisas v. Goodin (1998) 17 Cal.4th 599, 606 (Santisas).) Attorney fees are “allowable as costs under Section 1032” (Code Civ. Proc., § 1033.5, subd. (a)) when “authorized by” contract, statute, or law. (Id., subd. (a)(10).) Although Civil Code section 1717 bars recovery of attorney fees incurred in defending contract claims where the action has been voluntarily dismissed, the California Supreme Court held in Santisas that neither Civil Code section 1717 nor prior case authority “bars recovery of attorney fees incurred in defending tort or other noncontract claims. Whether attorney fees incurred in defending tort or other noncontract claims are recoverable after a pretrial dismissal depends upon the terms of the contractual attorney fee provision.” (Santisas, supra, at p. 602.)

Here, because the LLC sued in tort over Dutra’s alleged trespass and then voluntarily dismissed the complaint, the action falls outside the scope of Civil Code section 1717 (Santisas, supra, 17 Cal.4th at p. 615), and Dutra is the “prevailing party” within the meaning of Code of Civil Procedure section 1032, subdivision (b). The question remaining is whether the trial court erred in applying the attorney fee provision in the LLC operating agreement to Dutra as successor trustee. Our answer “depends upon the terms of the contractual attorney fee provision.” (Santisas, supra, at p. 602.) “Except as attorney’s fees are specifically provided for by statute, the measure and mode of compensation of attorneys . . . is left to the agreement, express or implied, of the parties . . . .” (Code Civ. Proc., § 1021.)

We must decide whether the language of the contractual attorney fee provision permitted an award of fees to the successor trustee under the circumstances presented. (Xuereb v. Marcus & Millichap, Inc. (1992) 3 Cal.App.4th 1338, 1342.) This requires a determination of whether the claimant was a party to the agreement and subject to the provisions of the attorney fee clause. (Maynard v. BTI Group, Inc. (2013) 216 Cal.App.4th 984, 990 [“[I]t is necessary to determine whether the parties entered an agreement for the payment of attorney fees and, if so, the scope of the attorney fee agreement”].) In making this determination, we apply the ordinary rules of contract interpretation based on the statutory framework. (Santisas, supra, 17 Cal.4th at p. 608.) We try to ascertain the mutual intent of the parties at the time the contract was formed, if possible, from the written provisions of the contract. (Ibid., citing Civ. Code, §§ 1636, 1639.) “ ‘The “clear and explicit” meaning of these provisions, interpreted in their “ordinary and popular sense,” unless “used by the parties in a technical sense or a special meaning is given to them by usage” ([Civ. Code], § 1644), controls judicial interpretation. ([Civ. Code], § 1638.)’ ” (Santisas, supra, at p. 608.)

Our interpretation of the LLC operating agreement and attorney fees clause is de novo. (Culligan v. State Comp. Insurance Fund (2000) 81 Cal.App.4th 429, 434 [“We independently interpret a written contract when no extrinsic evidence and related credibility questions were presented below.”]; see also Olson v. Cohen (2003) 106 Cal.App.4th 1209, 1213 [“The propriety of awarding attorney fees presents a legal question which is reviewed de novo.”]; Jaffe v. Pacelli (2008) 165 Cal.App.4th 927, 934 [noting the question of trial court’s authority to issue attorney fee award is a legal question, distinct from general review of attorney fees award, for which “[t]he usual standard of review . . . is abuse of discretion”].)

B. The Successor Trustee Was Not a Member of the LLC Within the Meaning of the Attorney Fee Clause of the Operating Agreement

Various provisions of the operating agreement are relevant to our analysis. First, by its terms, the attorney fee provision applies only to litigation between the LLC and a member or between two or more members, as follows.

“12.03. Attorneys’ Fees. If any dispute between Company and the Members or among the Members results in litigation or arbitration, the prevailing party in the dispute will be entitled to recover from the other party all reasonable attorneys’ fees, costs, and expenses of enforcing any right of the prevailing party.”

“1.01(j). ‘Company’ means Premier Raspberries, LLC.”

“1.01(r). ‘Member’ means each person . . . who has been admitted to Company as a Member in accordance with the Articles and this Agreement.”

Next, the LLC argues that because decedent transferred his interest in the LLC to the trust without obtaining approval from the LLC and M&J Processing, the successor trustee was never a “member” within the meaning of paragraph 1.01(r) as someone who has been admitted to the LLC in accordance with the operating agreement. The LLC relies on several provisions governing the admission of additional members and transfers or assignments of membership interest.

Paragraph 2.02 provides that “[n]o additional Members” may be admitted to the LLC, other than permitted transferees, “without the unanimous written consent of the then existing Members . . . .” Paragraph 5.03(b)(5) requires a majority in interest of the LLC members to approve, in writing, the transfer of a membership interest and the admission of an assignee as a member. Additional provisions govern transfers of membership interests. Paragraph 8.01 generally prohibits transfers and assignments of membership interests “except with the prior written approval of all Members . . . .” Paragraph 8.02 states that a transferee who receives an interest pursuant to an unapproved transfer has no right to become a member of the LLC. The transferee instead holds an economic interest and is entitled to what would have been the transferor’s share of profits, losses, distributions, and returns. The operating agreement, paragraph 1.01(cc), defines “transfer” in pertinent part as any “assignment, transfer, conveyance, . . . or other disposition . . . (including, without limitation, by way of intestacy, will, gift . . .) of all or any portion of any Membership Interest.”

Finally, the LLC argues that nothing in the operating agreement supports an argument that a deceased member’s legal representative becomes a member. Rather, paragraph 2.08 of the operating agreement states that upon the death of a member, the decedent’s legal representative “may exercise all rights of that Member for the sole purpose of settling the estate or administering that Member’s property.” Further, the operating agreement defines “ ‘Disassociation Event’ ” in paragraph 1.01(l) as, among others, the death of the member “or the occurrence of any other event that terminates the continued membership in the Company.”

Dutra does not dispute the terms of the operating agreement. Instead, he relies on another set of provisions governing “optional purchase events.” Paragraph 10.01 defines “ ‘Optional Purchase Event’ ” to include the death of a member, the member becoming a terminated member, and the “occurrence of any event that is, or would cause, a transfer in contravention” of the operating agreement. Upon the occurrence of an optional purchase event, paragraph 10.02 provides that the LLC and the other members have the option, as “purchasing members,” to purchase the membership interest of the “selling member” (the member subject to the optional purchase event). The operating agreement sets out procedures for the purchasing members to exercise their option. To begin, the purchasing members must initiate an appraisal of the selling member’s interest within a specified time after the optional purchase event. The LLC relied on this provision in its cause of action for specific performance in the initial action, alleging that it “decided it wanted to purchase the decedent’s membership interest within thirty days” after his death but was unable to proceed because the trustee’s office was vacant.

Dutra asserts that the LLC failed to start the appraisal process in time, which under paragraph 10.04 “constitutes an election on the part of the Member not to purchase any of the Selling Member’s Interest.” He claims, based on the strict interpretation applied to option contracts that specify the manner of exercise (see Palo Alto Town & Country Village, Inc. v. BBTC Co. (1974) 11 Cal.3d 494, 498), that the LLC’s belated effort in the initial action to seek specific performance of the purchase option fails to revive the LLC’s purchase option. Consequently, he contends that the successor trustee succeeded to decedent’s membership interest in the LLC as a matter of law and will retain that interest unless the LLC obtains a court decree excusing its nonperformance and permitting it to exercise its purchase option. Simply put, Dutra believes that the successor trustee holds decedent’s membership interest unless or until the LLC prevails in the initial action on its specific performance cause of action.

We find the terms of the operating agreement, as a matter of contract interpretation, are not reasonably subject to dispute. In a nutshell, a member must be admitted to the LLC in accordance with the operating agreement provisions. (LLC op. agreement 1.01(r).) The operating agreement requires the transfer of a membership interest and admission of an assignee as a member to be approved by a majority in interest of the LLC members. (Id., 2.02, 5.03(b)(5), 8.01.) A transfer that violates those terms does not confer the right to become a member to the transferee. Instead, the transferee obtains an economic interest in the LLC, and the transferor continues to be a member with the attendant rights and duties. (Id., 8.02.) The death of a member is a “disassociation event” that terminates the continued membership in the LLC. (Id., 1.01(l).) The deceased member’s legal representative, however, can exercise the rights of the member as required to settle the estate. (Id., 2.08.) Only a member who prevails in a dispute with other members or the LLC is entitled to recover reasonable attorney fees incurred in enforcing a right of the prevailing party. (Id., 12.03.)

We thus agree with the LLC that the operating agreement distinguishes between membership interest and member status. Membership interest refers to rights of ownership including economic interests, voting interests, and information interests. (LLC op. agreement 1.01(o).) The transferee or assignee of an interest in the LLC does not become a member—defined as a person who has been admitted to the LLC under the terms of the operating agreement (id., 1.01(r)), except by the approval terms set out in the agreement. (Id., 2.02, 5.03(b)(5), 8.01.) The rights or categories of interest held by the transferee may depend on factual determinations, like whether the transfer of interest was approved by the other members (id., 8.02) or whether the other members timely exercised their option to purchase the transferred interest (id., 10.02). An unapproved transfer in interest leaves the transferee with an economic interest only. (Id., 8.02.) Even an alleged failure to exercise optional purchase rights under paragraph 10.01 does not invariably result in the successor trustee succeeding to the membership interest as Dutra claims. Instead, paragraph 10.05 of the operating agreement provides that the portion of the selling member’s interest after an optional purchase event that is not purchased “will be an [e]conomic [i]nterest only.”

This interpretation is also consistent with state statutory authority. Two enactments under the Corporation Code are relevant to our inquiry.

The California Revised Uniform Limited Liability Company Act (Revised Act; Corp. Code, § 17701.01 et seq.) applies “to all domestic limited liability companies existing on or after January 1, 2014” (Corp. Code, § 17713.04, subd. (a)) and governs acts or transactions by a limited liability company or its members on or after that date (id., § 17713.04, subd. (b)). Decedent’s transfer of membership interest prior to his death in 2016 and all subsequent acts by the LLC, including the filing of the underlying action in September 2017, are governed by the Revised Act. (See DD Hair Lounge, LLC v. State Farm General Ins. Co. (2018) 20 Cal.App.5th 1238, 1245 [Revised Act applied to acts undertaken by LLC on or after Jan. 1, 2014].)

The Revised Act repealed and replaced the Beverly Killea Limited Liability Company Act (Beverly–Killea) (former Corp. Code, § 17000 et seq.) effective January 1, 2014. (Stats. 2012, ch. 419, §§ 19 20.) Beverly Killea continues to govern acts or transactions by a limited liability company or its members or managers, and any operating agreement or contracts entered into by the company or its members or managers, prior to January 1, 2014. (Corp. Code, § 17713.04, subd. (b); see Kennedy v. Kennedy (2015) 235 Cal.App.4th 1474, 1490 1491 [Revised Act did not apply to complaint filed prior to Jan. 1, 2014]; Western Surety Co. v. La Cumbre Office Partners, LLC (2017) 8 Cal.App.5th 125, 131 [same].) Here, the operating agreement was entered in 2009 and amended in 2010. Accordingly, Beverly Killea governs the terms of the operating agreement. (Corp. Code, §§ 17713.03, 17713.04, subd. (b).)

Under the Revised Act, after formation of the LLC, a person may become a member in relevant part only as provided in the operating agreement or with the consent of all the members. (Corp. Code, § 17704.01, subd. (c)(1), (c)(3).) This is consistent with the limitations set forth in paragraphs 2.02 and 5.03(b)(5) of the operating agreement requiring the other members—here, M&J Processing, to approve a new member. Beverly Killea also restricted membership to a person who has been admitted to the company as a member in accordance with the operating agreement, or to an assignee of an interest who has been admitted as a member by a majority in interest vote of the other members. (Former Corp. Code, §§ 17001, subd. (x)(1), 17303, subd. (a).)

Both statutes also reinforce the notion that unless an assignee or transferee of membership interest is admitted as a member, the assignee obtains a more limited interest, and the transferor retains the rights and obligations of a member. Beverly Killea defined the term “ ‘economic interest’ ” (former Corp. Code, § 17001, subd. (n)) consistent with the limitation in paragraph 8.02 of the operating agreement stating that a transferee who receives an interest pursuant to an unapproved transfer holds an economic interest. Under the Revised Act, a membership interest is a combination of ownership rights including the member’s “transferable interest,” referring to the right to receive distributions from the LLC regardless of whether the person remains a member. (Corp. Code, § 17701.02, subds. (r), (aa).) A transfer of a member’s transferable interest does not cause the member’s disassociation and does not entitle the transferee to vote or participate in the management or conduct of the company. (Id., § 17705.02, subds. (a), (g).)

Finally, though the statutes differ slightly in addressing the death of a member, they are consistent with the LLC operating agreement in specifying rights to the deceased member’s legal representative. Beverly Killea defined the rights of the legal representative broadly. (Former Corp. Code, § 17304, subd. (a) [authorizing legal representative of member who dies to “exercise all of the member’s rights for the purpose of settling the member’s estate or administering the member’s property . . . .”].) The same language is used in paragraph 2.08 of the LLC operating agreement. The Revised Act narrows the rights retained by the deceased member’s personal or legal representative to the “rights of a transferee” (Corp. Code, § 17705.04), referring to distributions from the LLC, and “for the purposes of settling the estate, the rights of a current member under Section 17704.10” (ibid.), referring to informational rights.

We conclude that the LLC’s interpretation of the operating agreement concerning membership and transfers in interest is supported by the contractual language and the relevant statutory framework. In short, the transfer of a member’s interest, without more, does not confer member status on the transferee. Nor does the subsequent death of the member confer a membership interest, though the deceased member’s legal representative may exercise the member’s rights to settle the estate.

As applied here, the transfer of decedent’s interest to the trust did not make Dutra, as successor trustee, a “member” of the LLC within the meaning of the attorney fee clause. Assuming without deciding that M&J Processing never approved the transfer, the trust owns an economic interest under the terms of the LLC operating agreement, or a “transferable interest” as defined in the Revised Act. (Corp. Code, § 17701.02, subds. (r), (aa).) We do not find Dutra’s contentions regarding the LLC’s alleged failure to exercise the option to purchase decedent’s interest helpful to the issue of entitlement to attorney fees (though his arguments will be relevant to determination of the specific performance issue in the initial action). That is, even if Dutra were to demonstrate in the initial action that the LLC elected not to exercise the purchase option under paragraph 10.04 of the operating agreement, neither the operating agreement nor statutory authority supports his assumption that the unpurchased membership interest of the decedent would default to the successor trustee. To the contrary, the operating agreement provides that the unpurchased interest becomes an economic interest. (LLC op. agreement 10.05.) The Revised Act similarly addresses the death of a member by terminating the member’s right to vote or participate in management of the company (Corp. Code, § 17706.03, subd. (a)(1)) and authorizing the deceased member’s legal representative to exercise the members’ transferable and informational rights only (id., § 17705.04).

Our conclusion that the successor trustee was not a member of the LLC within the meaning of the attorney fee clause does not end our inquiry. The question remains whether the LLC was estopped from taking that position based on having filed a specific performance action to enforce its right to purchase decedent’s membership interest.

C. Judicial Estoppel Did Not Preclude the LLC From Challenging the Successor Trustee’s Entitlement to Attorney Fees

The trial court found that the LLC was estopped from disputing that the successor trustee was a member of the company for purposes of an attorney fee award because it contradicted its allegation in the initial action that the trustee owned a membership interest which was subject to the contractual purchase option. The LLC denies that it took inconsistent positions in the initial and underlying actions. We agree.

“ ‘ “Judicial estoppel precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position. [Citations.] The doctrine’s dual goals are to maintain the integrity of the judicial system and to protect parties from opponents’ unfair strategies. . . .” ’ [Citation.] The doctrine applies when ‘(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.’ ” (Aguilar v. Lerner (2004) 32 Cal.4th 974, 986 987.)

As an equitable doctrine, the application of judicial estoppel is discretionary “even where all necessary elements are present . . . .” (MW Erectors, Inc. v. Niederhauser Ornamental & Metal Works Co., Inc. (2005) 36 Cal.4th 412, 422.) Here, the predicate for such discretionary application was missing because the LLC’s positions were not “ ‘totally inconsistent’ ” (Aguilar v. Lerner, supra, 32 Cal.4th at p. 986), and the LCC was not successful in asserting the first position (ibid.).

We recognize how it might be perceived that the LLC took inconsistent positions at variable stages of litigation. To support its contention in the underlying action that Dutra had no right to enter or use LLC property, the LLC relied on an excerpt of paragraph 1.01(s) of the operating agreement, which states that a “[a] Member or assignee of any Economic Interest of a Member has no interest in specific property of Company.” But the LLC’s reliance on this sentence cannot be fairly read as an assertion that the successor trustee was a “member,” because the limitation applies equally to an assignee of economic interest. And the sentence appears in the operating agreement’s definition of “ ‘membership interest’ ” (LLC op. agreement 10.01(s)) as part of an explanation of the associated property interests, not as an assertion of member status.

The LLC also sought a declaration in the underlying action concerning the respective rights and duties of the plaintiff and the defendant under the operating agreement. Dutra complains that the LLC then reversed its position (to avoid the payment of attorney fees after failing to obtain a preliminary injunction and dismissing its complaint) by claiming that it had sued the trustee in his individual capacity only. Dutra contends that this reversal directly contradicted the LLC’s earlier factual assertions, including in the initial action concerning its alleged right to purchase the decedent’s membership interest.

But as just discussed ante (part II.B.), decedent remained a member of the LLC even after his transfer of interest to the trust. His death constituted an optional purchase event under the operating agreement and provided a means for the LLC to purchase his membership interest. Consistent with this history and interpretation of the operating agreement, the LLC alleged in the first amended complaint of the initial action that it sought to exercise its option “ ‘to purchase the decedent’s membership interest . . . .’ ” Although the successor trustee has contractual and statutory authority to exercise the deceased member’s rights to settle the trust estate or administer trust property (see Corp. Code, §§ 17705.04, 17706.03), that does not make the trustee an admitted member of the LLC. The LLC’s allegations seeking specific performance in the first action were therefore not inconsistent with the position taken in the underlying action, in which the LLC disputes whether the successor trustee is a member of the LLC within the meaning of the operating agreement.

We also find that it would be unreasonable to construe the LLC’s pursuit of declaratory relief concerning the respective rights of the parties as a factual assertion of the successor trustee’s member status. Dutra’s claim to use of the property for the pumpkin patch stemmed from the trust’s ownership of decedent’s 49 percent interest in the LLC. The LLC’s effort to dispute any such right required it to seek a declaration of respective rights under the operating agreement. There is nothing incompatible in the LLC having pleaded for declaratory relief in the underlying action by citing the rights and responsibilities of the parties under the operating agreement while disputing the contention that the successor trustee is a member or has obtained membership status.

Applying judicial estoppel was also improper because the LCC was not successful in asserting the first, purportedly inconsistent position. (Cf. Aguilar v. Lerner, supra, 32 Cal.4th at p. 986 [listing among elements of judicial estoppel that “ ‘the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true)’ ”].) Although the trial court in the ruling on the motion for attorney fees relied in part on the allegation in the initial action that the LLC sought to enforce its option to purchase the “membership interest” owned by the trustee, that issue has not yet been tried, and the LLC has gained no advantage by taking that position.

In sum, the LLC’s assertion that it should be able to purchase decedent’s membership interest subject to a contractual option to purchase has not benefitted the LLC or been adjudicated yet by the trial court. Nor do we find its effort to realize the purchase option to be inconsistent with its rejection of the successor trustee’s claim to attorney fees. (See Aguilar v. Lerner, supra, 32 Cal.4th at p. 987 [rejecting application of judicial estoppel where the plaintiff’s “dual positions” were “not ‘totally inconsistent’ ”].) Consequently, we conclude that the doctrine of judicial estoppel did not preclude the LLC from challenging the successor trustee’s entitlement to attorney fees under the terms of the operating agreement.

D. The Successor Trustee Was Authorized to Seek Attorney Fees as the Deceased Member’s Legal Representative in the Underlying Action

We turn to the final question of whether the successor trustee is entitled to attorney fees not as a member of the LLC but as the deceased member’s legal representative and assignee of contractual rights for claims related to the LLC and its operating agreement.

Though this argument was not considered by the trial court, we may consider it as an alternate legal theory that supports the attorney fee award. “ ‘If the decision of a lower court is correct on any theory of law applicable to the case, the judgment or order will be affirmed regardless of the correctness of the grounds upon which the lower court reached its conclusion.’ ” (Estate of Sapp (2019) 36 Cal.App.5th 86, 104; see also Shaw v. County of Santa Cruz (2008) 170 Cal.App.4th 229, 269; Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 329 [“[A] ruling or decision, itself correct in law, will not be disturbed on appeal merely because given for a wrong reason”].) “There can be no prejudicial error from erroneous logic or reasoning if the decision itself is correct.” (Shaw, supra, at p. 269.)

Paragraph 2.08 of the operating agreement states that upon the death of a member, the decedent’s legal representative “may exercise all rights of that Member for the sole purpose of settling the estate or administering that Member’s property.” Dutra interprets that provision as empowering the successor trustee to exercise decedent’s rights in the LLC in the course of his administering the trust, including the right to enforce the attorney fee clause set forth in paragraph 12.03 of the operating agreement. He argues that his defense of the underlying action is encompassed within the successor trustee’s administration duties, because the LLC’s claims relate to the parties’ respective rights and duties under the operating agreement. He contends that paragraph 2.08 may be likened to general principles of trust law, in that a successor trustee “ ‘succeed[s] to all the rights, duties, and responsibilities of his predecessors.’ ” (Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1131.)

Indeed, paragraph 2.08’s provision for a legal representative or successor of a member to “exercise all rights of that Member for the sole purpose of settling the estate or administering that Member’s property” affords broad authorization to the successor trustee in the context of litigation involving the LLC. The LLC questions how the underlying action satisfies the attorney fee provision—which authorizes fees only in a legal action between the LLC and its members (LLC op. agreement 12.03)—when decedent’s death terminated his continued membership. (LLC op. agreement 1.01(l), (bb).) The answer is that while decedent is no longer a member of the LLC under the strict terms of the operating agreement, his legal representative has the authority under the agreement entered by the member to settle the pending dispute over his membership interest. (See Thomas v. Westlake (2012) 204 Cal.App.4th 605, 613, fn. 5 [explaining that a successor trustee is bound by the agreements entered by a predecessor].)

We are not convinced that the LLC merely sought to delineate Dutra’s rights in his capacity as an individual and prevent his use of the property for personal business. As the complaint plainly alleges, decedent transferred his interest in the LLC to the trust prior to his death, Dutra became the successor trustee of the trust in October 2016, and the parties filed a complaint and cross complaint in the first action disputing, among other things, which party holds rights to decedent’s membership interest. The underlying action for injunctive relief and for a judicial determination and declaration of the parties’ respective rights under the LLC operating agreement required consideration of the rights and interest in the LLC conferred by decedent’s transfer of interest to the trust, and of the effect of his subsequent death.

Under these circumstances, in which the LLC engaged the successor trustee of decedent’s membership interest in litigation concerning the respective rights of the parties, we find that the successor trustee could invoke the attorney fee clause of the operating agreement in his defense of the underlying action. We conclude that under this legal theory, the trial court did not err in awarding attorney fees to the successor trustee.

III. DISPOSITION

The trial court’s January 28, 2018 order awarding attorney fees is affirmed. Respondent is entitled to costs on appeal.

Premo, Acting P.J.

WE CONCUR:

Bamattre Manoukian, J.

Mihara, J.

Premier Raspberries, LLC v. Dutra

H045594