A recent Law 360 by Rose Krebs, “Warner Bros. Discovery Defends Fee Bid in Motor Trend Case,” reports that Warner Bros. Discovery Inc. has rejected arguments from the minority owner of Motor Trend Group LLC that it doesn't have to pay Discovery's costs of defending litigation over an appraisal dispute, urging the Delaware Chancery Court to rule that the fees are justified.  In a filing made public, Warner Bros. Discovery and two subsidiaries assert that they have shown that they are entitled to reasonable attorney fees per an agreement with Global Automotive Holdings LLC.

The Discovery companies say in the filing that they have "prevailed on every issue that was actually litigated to a judgment," and thus, Global Automotive is obligated to pay its fees.  The amount being sought to pay for services for the Discovery defendants has been redacted in court filings.

"Global Automotive does not contest the reasonableness of the rates defense counsel charged or the hours they recorded," the Discovery companies assert.  "Instead, Global Automotive contends that the agreement does not provide for fees in actions seeking only equitable relief; defendants did not prevail; and that Global Automotive should get a discount because it did not lose even more decisively. None of those arguments has merit."

In a fee-shifting motion made public last month, Warner Bros. Discovery, Discovery Communications LLC and Discovery Extreme Holdings LLC asserted that per a "controlling agreement," Global Automotive, which owns 32.5% of Motor Trend, is obligated to pay their attorney fees because they are the prevailing parties.  This is based on a ruling in January in which Chancellor Kathaleen St. J. McCormick found against Global Automotive on most of its claims against Discovery Extreme Holdings, which owns 67.5% of Motor Trend.

New York-based Global Automotive sued the Discovery companies in August to preserve its rights under a 2017 joint venture operating agreement, which gives the company a put right to cash out its minority share of Motor Trend at its fair market value.  Under the agreement, if the parties can't agree on the fair market value, a third-party appraiser would make a determination.

Global Automotive alleged that after it requested more information to help it decide whether to exercise its put right, Discovery Extreme and its affiliates engaged in "bad faith conduct" to corrupt the appraisal process and drive down the joint venture's valuation.  The principal disputes in the case were related to long-range plans, synergies, and damages from alleged violations of the agreement.

Global Automotive argued that all of it was essential for the appraiser to determine Motor Trend's fair market value and alleged that the Discovery companies tried to interfere and prevent the appraiser from seeing or considering the information.  It said Discovery Extreme revised the long-range plans for Motor Trend to reflect lower financial forecasts and then tried to prevent the appraiser from seeing earlier long-range plans that reflected better prospects.  Discovery Extreme denied the allegations and argued that the earlier plans were outdated, and were irrelevant anyway since the board never approved them.

In her ruling on cross-motions for summary judgment, Chancellor McCormick found mostly in favor of the Discovery companies.  She handed down a mixed decision on one count, ruling that each side could present whatever material and arguments they wanted to the appraiser, and it would be up to the appraiser to decide how much weight to give to the information.

In their original fees motion, the Discovery companies argue that the court granting "judgment in Global Automotive's favor on an issue does not alter the equation or change the conclusion that defendants won the overall dispute and, thus, are the prevailing parties."  The motion also asserted that "Global Automotive should be held to its contractual obligations and must pay defendants' fees as the prevailing parties."

Global Automotive asked the court to rule that the Discovery companies "are not entitled to attorneys' fees, or, in the alternative, should award defendants only an equitable portion of their fees that reflects their limited success."

"Taken as a whole," a certain provision of the agreement "clearly provides for fee-shifting in any action under the agreement, regardless of the remedy," their filing said.  Also, the Discovery companies asked the Chancery Court to reject Global Automotive's suggestion "that the court should use its discretion to reduce the award to defendants because of their 'partial success.'"  They argued that they "prevailed on all of the contested issues" and "are thus entitled to 'all' the legal fees and expenses they incurred."