Judge: Colin Leis, Case: 22AHCP00255, Date: 2022-07-27 Tentative Ruling

Case Number: 22AHCP00255    Hearing Date: July 27, 2022    Dept: 3

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES – NORTHEAST DISTRICT

DEPARTMENT 3

MOVING PARTY:                Petitioners Irene de Aquino Villar and Dynamic Therapies, Inc.

RESPONDING PARTY:       Respondent Charmayne Ross

Petition to Stay Dissolution Proceedings, Appoint Appraisers, and Fix Value of Shares Owned by Respondent

The court considered the moving papers, opposition, and reply filed in connection with this motion.

BACKGROUND

On May 19, 2022, voluntary dissolution of Dynamic Therapies, Inc. (“DT”) under Corporations Code section 1900(a) was initiated by a vote of Charmayne Ross (“Ross”), representing 50% of DT’s shareholders. Irene de Aquino Villar (“De Aquino”), the holder of the other 50% of the shares, opposed.  

On May 26, 2022, De Aquino and DT elected to initiate the statutory process for purchasing Ross's shares of stock in DT and provided notice to Ross and the Board of Directors of the election. Ross has not accepted the offers to purchase her shares or set a price at which she will sell her shares.

            De Aquino and DT (“Petitioners”) now petition to stay the voluntary dissolution proceedings, appoint neutral appraisers and fix the value of the shares owned by Ross.

EVIDENTIARY OBJECTIONS

            The court overrules Petitioners’ objections 1-20 to the Declaration of Charmayne Ross.

DISCUSSION

Under Corporations Code section 2000, subdivision (a), a shareholder holding 50% or more of the voting power may “avoid the dissolution of the corporation and the appointment of any receiver by purchasing for cash the shares owned by … the shareholders [seeking dissolution] at their fair value.”

Corporations Code section 2000, subdivision (b) provides as follows: “If the purchasing parties (1) elect to purchase the shares owned by the moving parties, and (2) are unable to agree with the moving parties upon the fair value of those shares, and (3) give bond with sufficient security to pay the estimated reasonable expenses (including attorneys’ fees) of the moving parties if those expenses are recoverable under subdivision (c), the court upon application of the purchasing parties, either in the pending action or in a proceeding initiated in the superior court of the proper county by the purchasing parties in the case of a voluntary election to wind up and dissolve, shall stay the winding up and dissolution proceeding and shall proceed to ascertain and fix the fair value of the shares owned by the moving parties.”

Petitioners contend that all prerequisites of subdivision (b) have been met. Petitioners submit that on May 26, 2022, counsel for Petitioners sent a letter to counsel for Ross formally asserting their right to elect for DT to purchase Ross’s shares in DT. (De Aquino Decl., ¶ 26, Ex. E.) Petitioners assert that Ross has not formally responded to the letter. (De Aquino Decl., ¶ 26.) However, Ross counters that her counsel sent a letter to counsel for De Aquino dated June 21, 2022 regarding the lack of a written offer for the DT shares. (Kersten Decl., ¶ 2, Ex. 6.) On July 5, 2022, counsel again wrote with regard to the lack of a written offer. (Kersten Decl., ¶ 3.) Based on this, Ross takes the position that Petitioners have not satisfied the second element of subdivision (b), namely that the parties are unable to agree upon the fair value of Ross’s shares. The court agrees. While Petitioners are correct in noting that nothing in the statute requires a written offer, a written offer (and a response) would constitute evidence that the parties were unable to agree on the value of the shares. As it stands, there is no evidence that the parties are unable to agree on the value of the shares. The court notes that in Petitioners’ reply, they assert that after the instant motion was filed and before the opposition was served, an email was sent to counsel for Ross with an offer to purchase Ross’s shares to which no response has been received. (Reply, p. 6, fn. 2.) In light of this development, the court finds that a short continuance to be appropriate to give the parties additional time to present supplemental briefing with the most up-to-date information to the court.

Ross separately argues that Petitioners are estopped from staying the dissolution because the parties have been in the process of separating for over two and half years. But the court does not find that Ross has established that De Aquino intended to mislead Ross during the negotiations concerning dissolution.

CONCLUSION

Based on the foregoing, the court continues the hearing on the petition to stay dissolution proceedings to a date to be determined at the hearing.

The court orders the parties to file supplemental declarations no later than 5 court days prior to the date of the continued hearing limited only to the issue of whether the parties were unable to agree upon the fair value of Ross’s shares.

Petitioners are ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  July 27, 2022

_____________________________

Colin Leis

Judge of the Superior Court