Fair or foul?

[kab9]

LF is in fair territory, fly ball in foul. Fielder drops ball while still standing in fair territory. What's the cacll? Placement of ball should take precedent as ball would have been foul regardless of whether the fielder attempted a catch. It might seem like a no brainer (it did to me) but it caused quite a discussion. Opposing team insisted that player's position is what makes the determination. I stuck with my original call of foul. Who is right? I hope I don't come across as sounding stupid, but I had the same occur in a state tournament last year and same argument arose.