[California Entrepreneurs] My Business Partner Defraud Me, Can I Recover My Attorney's Fees?

California Penal Code Section 496(a) makes receiving a property that has been obtained in any manner constituting theft a criminal offense punishable by imprisonment. Penal Code further provides at Subdivision (c) that any person who has been injured by a violation of section 496(a) may bring an action for three times the amount of actual damages, costs of suit, and reasonable attorney’s fees. Because any fraud to obtain property constitutes larceny by false pretenses, California Penal Code appears to provide a fraud plaintiff extensive rights to punitive damages and attorney's fees.

Additionally, in Bell v. Feibush (2013) 212 Cal.App.4th 1041, the Court said, "a criminal conviction is not a prerequisite to recovery of treble damages." All that is required for civil liability to attach under section 496(c), including entitlement to treble damages, is that a “violation” of subdivision (a) or (b) of section 496 is found to have occurred.

Although California appellate court split over the application of penal code claims in civil cases. The Second Appellate District, in which Los Angeles County, Ventura County, Santa Barbara County, and San Luis Obispo County situate, held that Penal Code section 496 applied to claims of misappropriation of LLC assets. Switzer v. Wood (2019) 35 Cal.App.5th 116