Posts by Richard Burt
Assignee of Suspended Corporation Cannot Sue on Assigned Claim
In Cal-Western Business Services, Inc. v. Corning Capital Group, Inc. (2013) 221 Cal. App. 4th 304, a judgment creditor assigned to Pacific West One Corp. the judgment creditor’s interest in a judgment against Corning Capital. Then, at a time when Pacific West One’s corporate powers were suspended for the failure to pay taxes, Pacific West One assigned…
Read MoreFiling Requirements and Suspension of Corporate or LLC Powers
California limited liability companies (LLCs) and California corporations are creatures of statute, and their failure to comply with statutory requirements can lead to their rights, powers, and privileges being suspended by the state. Annual Report to Secretary of State Each California LLC and each California corporation must file an annual statement of information with the…
Read MoreCourt Permits Assets of Business Entity to Be Used to Satisfy Creditors of Related Entity
In Toho-Towa Co., Ltd., v. Morgan Creek Productions (2013) 217 Cal. App. 4th 1096, the court held that the assets of one business entity could be used to satisfy the obligations of a different, but related, business entity. This case deals with the “single enterprise” theory (also known as the “greater enterprise theory) of liability for…
Read MoreExcluding Assets From a Personal Guaranty
The following is the text of an e-bulletin that I prepared that was published by the Corporations Committee of the Business Law Section of the State Bar of California. This was republished (under the title of “Excluding Assets from a Personal Guaranty”) by the following committees: Insolvency Law Committee, Commercial Transactions Committee, Financial Institutions Committee,…
Read MoreThird-Party Liability for Securities Fraud
In some cases, a service provider associated with a business, such as an accountant, banker, broker, or lawyer, can be held liable for untruths or omissions made by the business in connection with the sale of stock (or other securities, such as LLC membership interests), even if the service provider has no ownership interest in…
Read MoreSupreme Court Decides California Law Does Not Apply to Dissolved Out-of-State Corporation That Did Business in California
In Greb v. Diamond International Corporation (Feb. 21, 2013), the Supreme Court of California held that Delaware law governs the time for bringing an action in California against a dissolved Delaware corporation. In December 2008, plaintiffs Walter Greb (now deceased) and his wife Karen Greb filed a complaint for personal injury and loss of consortium against…
Read MoreSuperfluous Text in a Contract Opens Door to Litigation
The recent case of Schron v. Troutman Saunders LLP, from the New York Court of Appeals, New York’s highest court, shows the importance of not including unnecessary verbiage in a contract just because it’s traditional. In this case, an LLC (“Cam Equity”) was granted an option to acquire 99.999% of the membership units of another…
Read MoreBylaw Indemnification and the Statute of Frauds
In a recent post on his blog, Keith Bishop asks the question, Are charter indemnification provisions contracts? Many companies include provisions in their articles and bylaws that mandate indemnification of directors and officers, and they often say that they are contract rights. But, as he points out, saying something is so doesn’t necessarily make it…
Read MoreCalifornia Supreme Court Overrules Prendergrass
In Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Association (January 14, 2013), the California Supreme Court overruled a precedent of over 75 years’ standing (Bank of America etc. Assn. v. Pendergrass (1935) 4 Cal.2d 258) and held that a party sued on a contract will be permitted to show that the contract was induced…
Read MoreHome State Law Applied to Dissolved Corporation
In Robinson v. SSW, Inc. (2012), a California court applied Nebraska law to determine the liability of a dissolved Nebraska corporation for injuries the corporation allegedly caused to a California resident. Douglas G. Robinson died in November 2005 from mesothelioma, a cancer linked to asbestos exposure. A wrongful death action was filed in California alleging that…
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