Judge Michael E. Whitaker, Case Number: 23SMCV00978, Date: 2024-03-19 Tentative Ruling

Judge: Michael E. Whitaker, Case: 23SMCV00978, Date: 2024-03-19 Tentative Ruling

Plaintiff De Park Avenue 1100, LLC (“Plaintiff”) brought suit against Defendant Tavistock Restaurants, LLC (“Defendant”) for breach of lease. Defendant now demurs to the complaint on the grounds that it fails to state facts sufficient to constitute a cause of action, pursuant to Code of Civil Procedure section 430.10, subdivision (e).

Defendant requests judicial notice of (1) the January 26, 2023 Certificate of Cancellation from the Delaware Secretary of State issued to Tavistock and (2) the laws of the State of Delaware cited in Defendant’s demurrer to Plaintiff’s complaint.[1]

Official notices, statements, and certificates made by a Secretary of State are properly the subject of judicial notice as documents reflecting official acts of a state’s executive department, pursuant to Evidence Code section 452, subdivision (c). (See generally Friends of Shingle Springs Interchange, Inc. v. County of El Dorado (2011) 200 Cal.App.4th 1470, 1483–1484.)

However, “materials prepared by private parties and merely on file with the state agencies” may not be properly judicially noticed as an official act of a legislative, executive, or judicial department of the United States or any state of the United States. (People v. Thacker (1985) 175 Cal.App.3d 594, 598.)

Here, the Certificate of Cancellation represents an official act of Delaware’s executive department. As such, the Court takes judicial notice of it.

Moreover, the Court may take judicial notice of “The decisional, constitutional, and statutory law of any state of the United States […]” (Evid., § 452, subd. (a).) Therefore, the Court similarly takes judicial notice of the Delaware laws cited in Defendant’s demurrer.

1. Tavistock Restaurants LLC’s Limited Liability Company Application for Registration, filed with the California Secretary of State on October 24, 2003, File No. 200330010210.

2. Tavistock Restaurants LLC’s Certificate of Cancellation – LLC Termination, filed with the California Secretary of State on January 25, 2023, File No. BA20230139269.

7. Metro Commun. Corp. BVI v. Advanced Mobilecomm Tech. Inc., 854 A.2d 121, 139 (Ch. 2004).

8. Capone v. LDH Mgmt. Holdings LLC, 2018 Del. Ch. LEXIS 131 (Del. Apr. 25, 2018).

11. In re Tex. Eastern Overseas, Inc., 2009 Del. Ch. LEXIS 198 (Del. Nov. 30, 2009).

Regarding the first two requests, “materials prepared by private parties and merely on file with the state agencies” may not be properly judicially noticed as an official act of a legislative, executive, or judicial department of the United States or any state of the United States. (People v. Thacker (1985) 175 Cal.App.3d 594, 598.) However, public corporate filings may be judicially noticed as “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy” pursuant to Evidence Code section 452, subdivision (h). (See, e.g., Apple Inc. v. Superior Court (2017) 18 Cal.App.5th 222, 242.) Therefore, the Court takes judicial notice of the first two documents.

As for the remaining requests, judicial notice may be taken of “[t]he decisional, constitutional, and statutory law of any state of the United States[;]” of “[o]fficial acts of the legislative, executive, and judicial departments of the United States and of any state of the United States[;]” and of “[r]ecords of […] any court of record of the United States or of any state of the United States.” (Evid., § 452, subd. (a), (c), and (d)(2).) Therefore, the Court similarly takes judicial notice of the statutory and decisional case law.

The Court overrules Defendant’s objections to Plaintiff’s Request for Judicial Notice.

“It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) In testing the sufficiency of a cause of action, a court accepts “[a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law. [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 [“in considering the merits of a demurrer, however, “the facts alleged in the pleading are deemed to be true, however improbable they may be”].)

Further, in ruling on a demurrer, a court must “liberally construe” the allegations of the complaint “with a view to substantial justice between the parties.” (See Code Civ. Proc., § 452.) “This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant.” (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

In summary, “[d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that if one consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged.” (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

Defendant, a Delaware Limited Liability Company, argues that it lacks capacity to be sued because it cancelled its LLC registration in late January 2023, a little over a month before Plaintiff brought suit in March of 2023.

Plaintiff argues in opposition that (1) Defendant’s cancellation may have been improper under Delaware law, which requires Defendant to set aside money to pay forthcoming claims; and (2) by virtue of its California registration and the terms of the lease agreement at issue, Defendant is subject to California law, which permits claims to be brought after cancellation (see Corporations Code section 17707.06).

Defendant counters in reply that (1) only Delaware courts have authority to determine whether the wind-up was improper (Colaco v. Cavotec SA (2018) 25 Cal.App.5th 1172, 1189, 1194 [“The internal affairs doctrine is a conflict of laws principle which recognizes that only one State should have the authority to regulate a corporation’s internal affairs” & dissolution matters are “quintessential internal governance issues”]); (2) Defendant’s wind-up was not improper in any event because Defendant did not have money to set aside for Plaintiff’s claims; and (3) California’s survival statutes do not apply to foreign entities, like Defendant (Greb v. Diamond Internat. Corp. (2013) 56 Cal.4th 243, 264-265).

Upon dissolution of a limited liability company and until the filing of a certificate of cancellation as provided in § 18-203 of this title, the persons winding up the limited liability company's affairs may, in the name of, and for and on behalf of, the limited liability company, prosecute and defend suits, whether civil, criminal or administrative, gradually settle and close the limited liability company's business, dispose of and convey the limited liability company's property, discharge or make reasonable provision for the limited liability company's liabilities, and distribute to the members any remaining assets of the limited liability company, all without affecting the liability of members and managers and without imposing liability on a liquidating trustee.

Thus, upon the filing of the Delaware cancellation, Defendant lost the ability to defend against lawsuits. While Plaintiff has provided an argument that Defendant’s dissolution and wind-up may have been improper, unless and until a Delaware court unwinds and reinstates Defendant’s LLC status, Defendant lacks the capacity to be sued. California’s survival statutes cannot revive Defendant’s capacity to be sued once Defendant has been dissolved in Delaware.

A plaintiff has the burden of showing in what manner the complaint could be amended and how the amendment would change the legal effect of the complaint, i.e., state a cause of action. (See The Inland Oversight Committee v. City of San Bernardino (2018) 27 Cal.App.5th 771, 779; PGA West Residential Assn., Inc. v. Hulven Int'l, Inc. (2017) 14 Cal.App.5th 156, 189.) A plaintiff must not only state the legal basis for the amendment, but also the factual allegations sufficient to state a cause of action or claim. (See PGA West Residential Assn., Inc. v. Hulven Int'l, Inc., supra, 14 Cal.App.5th at p. 189.) Moreover, a plaintiff does not meet his or her burden by merely stating in the opposition to a demurrer or motion to strike that “if the Court finds the operative complaint deficient, plaintiff respectfully requests leave to amend.” (See Major Clients Agency v. Diemer (1998) 67 Cal.App.4th 1116, 1133; Graham v. Bank of America (2014) 226 Cal.App.4th 594, 618 [asserting an abstract right to amend does not satisfy the burden].)

Here, Plaintiff argues that leave to amend should be granted to permit Plaintiff to provide additional facts regarding Defendant’s failure to abide by Delaware law in dissolving and winding up. However, this Court lacks authority to nullify Defendant’s Delaware cancellation by virtue of the Internal Affairs Doctrine. As such, Plaintiff has not identified any additional facts it could add to cure the deficiencies identified.

For the reasons stated, the Court sustains Defendant’s Demurrer to the Complaint without leave to amend.

[1] Defendant originally failed to attach the requested out-of-state authorities to the Request for Judicial Notice in contravention of California Rule of Court 5.115, however Defendant corrected this deficiency by attaching them to a supplemental request for judicial notice in connection with the reply brief.

DEPARTMENT	207
HEARING DATE	March 19, 2024
CASE NUMBER	23SMCV00978
MOTION	Demurrer
MOVING PARTY	Defendant Tavistock Restaurants, LLC
OPPOSING PARTY	Plaintiff De Park Avenue 1100, LLC