Judge: Holly J. Fujie, Case: 22STCV15323, Date: 2022-08-25 Tentative Ruling

Case Number: 22STCV15323    Hearing Date: August 25, 2022    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY: Defendant Currency Exchange One, LLC (“Moving Defendant”)

RESPONDING PARTY: Plaintiff Prime South Lake, LLC (“Plaintiff” or “Prime South Lake”)

The Court has considered the moving, opposition and reply papers.

BACKGROUND

            This action arises out of a commercial landlord/tenant relationship.  Plaintiff’s complaint (the “Complaint”) alleges breach of contract.

The relevant allegations of the Complaint are as follows: On or about August 1, 2017, Plaintiff and Moving Defendant entered into a lease agreement (the “Lease”) pursuant to which Defendant rented a property (the “Property”) from Plaintiff for a five-year term.  (Complaint ¶ 7.)  In August 2020, Moving Defendant defaulted on its rental obligations.  (Complaint ¶ 11.)  Moving Defendant thereafter vacated the Property without paying the outstanding amounts it owed Plaintiff.  (Complaint ¶ 12.)

Moving Defendant filed a demurrer (the “Demurrer”) to the Complaint on the grounds that: (1) the Complaint fails to allege sufficient facts to state a cause of action; (2) there is a misjoinder of parties; and (3) the allegations are uncertain.

REQUEST FOR JUDICIAL NOTICE

            Moving Defendant’s Request for Judicial Notice is GRANTED.

DISCUSSION

Meet and Confer

The meet and confer requirement has been met.

Legal Standard

A demurrer tests the sufficiency of a complaint as a matter of law.  (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.)  The court accepts as true all material factual allegations and affords them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.  (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.)  With respect to a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.  (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.)  A demurrer will be sustained without leave to amend if there exists no reasonable possibility that the defect can be cured by amendment.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) 

Moving Defendant’s Capacity to Be Sued

Corporations Code section 17707.08, subdivision (c) provides: Upon filing a certificate of cancellation pursuant to subdivision (b), a limited liability company shall be canceled and its powers, rights, and privileges shall cease.  (Corp. Code § 17707.08, subd. (c).)  Corporations Code section 17707.06, subdivision (a) provides: A limited liability company that has filed a certificate of cancellation nevertheless continues to exist for the purpose of winding up its affairs, prosecuting and defending actions by or against it in order to collect and discharge obligations, disposing of and conveying its property, and collecting and dividing its assets.   (Corp. Code § 17707.06, subd. (a).)  A limited liability company shall not continue business except so far as necessary for its winding up.  (Id.)

The Legislature amended section 17706.06, effective 2016, to allow for an LLC that has filed a certificate of cancellation to continue to exist for the aforementioned purposes, whereas previously only a dissolved LLC which had not yet filed a certificate of cancellation could continue for those purposes. (DD Hair Lounge, LLC v. State Farm General Ins. Co. (2018) 20 Cal.App.5th 1238, 1243.)

Moving Defendant argues that because Plaintiff’s LLC status was canceled on August 24, 2020, Plaintiff lacks capacity to prosecute this action pursuant to Corporations Code section 7707.08, subdivision (c).  (See RJN, Exhibit 1.)  Moving Defendant argues that Corporations Code section 17707.06, subdivision (a) should be construed as authorizing a canceled LLC to prosecute or defend actions solely related to its winding up.  

The Court declines to adopt Moving Defendant’s interpretation of Corporations Code sections 17707.06.  Viewed in the context of the overall statutory scheme, Corporations Code section 17707.06, subdivision (a) can be understood as an enumeration of exceptions to the general rule articulated in section 17707.08, subdivision (c).^[1]  The Court therefore declines to sustain the Demurrer on this basis.

Plaintiff’s Standing to Prosecute

            Only a real party in interest has standing to prosecute an action, except as otherwise provided by statute.  (Redevelopment Agency of San Diego v. San Diego Gas & Electric Co. (2003) 111 Cal.App.4th 912, 920.)  A party who is not the real party in interest lacks standing to sue.  (Id.)  A complaint filed by someone other than the real party in interest is subject to general demurrer on the ground that it fails to state a cause of action.  (Id.)

            Prime South Lake is named as the Plaintiff in the caption of the Complaint and is the entity who is a party to the Lease which forms the basis for this action.  (See Complaint, Exhibit 1.)  The Complaint is signed by counsel for “Plaintiff Valley View – Santa Fe Springs, LLC” (“Valley View”), rather than Prime South Lake.  The Complaint does not otherwise reference Valley View.

            The Court finds the Complaint does not allege facts to show why Valley View has standing to prosecute this action.  The Court therefore SUSTAINS the Demurrer on this ground with 20 days leave to amend.

Moving party is ordered to give notice of this ruling. 

In consideration of the current COVID-19 pandemic situation, the Court¿strongly¿encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative.¿¿If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to¿SMC_DEPT56@lacourt.org¿stating your intention to appear in person.¿ The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date.¿ This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar. 

  Dated this 26th day of August 2022