Judge: Michael E. Whitaker, Case: 23SMCV06064, Date: 2025-05-07 Tentative Ruling

Case Number: 23SMCV06064    Hearing Date: May 7, 2025    Dept: 207

TENTATIVE RULING

BACKGROUND

This case arises from a business investment dispute. 

On December 29, 2023, Plaintiffs Nektarios Zafeiris and Emily Aspiotis (“Plaintiffs”) filed suit against Defendants Aleksandar Sasha Poparic (“Poparic”); Immobilium, Inc. (“Immobilium”); Cali Miners, Inc. (“Cali Miners”); and Helvetia Holdings Group, LLC (“Helvetia”) (together, “Defendants.”)  The Complaint alleges ten causes of action as follows:

(1) Fraud

(2) Breach of Contract

(3) Breach of the Implied Covenant of Good Faith and Fair Dealing

(4) Breach of Fiduciary Duty

(5) Violation of California Corporations Code sections 25102 and 25110

(6) Violation of California Corporations Code sections 25401 and 25501

(7) Common Counts

(8) Breach of Employment Contract

(9) Violation of California Labor Code sections 201, 202, 203, 2800, and 2802

(10) Negligence

Default was requested and entered against all Defendants on March 4, 2024.  On June 17, 2024, the Court set aside the defaults.  (See Minute Order, Jun. 17, 2024.) 

Defendants filed an Answer to the Complaint on June 27, 2024.  On July 9, 2024, Immobilium filed a cross-complaint against Plaintiff alleging three causes of action for (1) breach of oral contract; (2) breach of implied covenant of good faith and fair dealing; and (3) business defamation.

Plaintiffs move to strike Defendants’ answer and the cross-complaint and for judgment on the pleadings as to the complaint on the grounds that the entities were “suspended” or “forfeited” at the time the Answer and Cross-Complaint were filed.

While the motion was pending, Immobilium requested dismissal of its cross-complaint without prejudice, which the Court granted.

Defendants oppose the motion and Plaintiffs reply.

REQUEST FOR JUDICIAL NOTICE

            Plaintiffs request judicial notice of the following:

Exhibit A: Delaware Secretary of State Entity Status Certificate re Immobilium, Inc.

Exhibit B: California Secretary of State Certificate of Status re Cali Miners, Inc.

Exhibit C: California Secretary of State Certificate of Status re Helvetia Holdings Group, LLC.         

            In Elmore v. Oak Valley Hospital Dist. (1988) 204 Cal.App.3d 716, 722, the appellate court explained, “once a statement is filed pursuant to Government Code section 53051, it becomes the duty of the Secretary of State and the county clerk to place the information so filed in a ‘Roster of Public Agencies’” and thus, “a statement filed with the Secretary of State and indexed in the ‘Roster of Public Agencies’ becomes a document of which a court can properly take judicial notice” under Evidence Code section 452, subdivision (c).  (Ibid.; see also Belen v. Ryan Seacrest Productions, LLC (2021) 65 Cal.App.5th 1145, 1160, fn. 2 [taking judicial notice of the statement of information filed with the California Secretary of State identifying the chief executive officer for the entity defendant, pursuant to Evidence Code section 452, subd. (c) as an official act of the executive department of the state of California].)

            Therefore, the Court takes judicial notice of the Certificates of Status and the legal consequences thereof.

LEGAL STANDARD – JUDGMENT ON THE PLEADINGS

A motion for judgment on the pleadings has the same function as a general demurrer, but may be made after the time to demur has expired. (Code Civ. Proc., § 438, subd. (f).)  “Like a demurrer, the grounds for the motion [for judgment on the pleadings] must appear on the face of the challenged pleading or from any matter of which the court is required to take judicial notice.” (Civic Partners Stockton, LLC v. Youssefi (2013) 218 Cal.App.4th 1005, 1013.)  In ruling on a motion for judgment on the pleadings, “[a]ll allegations in the complaint and matters upon which judicial notice may be taken are assumed to be true.” (Rippon v. Bowen (2008) 160 Cal.App.4th 1308, 1313.) 

ANALYSIS

“A corporation that has had its powers suspended lacks the legal capacity to prosecute or defend a civil action during its suspension.”  (City of San Diego v. San Diegans for Open Government (2016) 3 Cal.App.5th 568, 577.)  “Nor, during the period of suspension, may the corporation prosecute or defend an action, seek a writ of mandate, appeal from an adverse judgment, or renew a judgment obtained before suspension.”  (Ibid.)

“However, a plea of lack of capacity of a corporation to maintain an action by reason of a suspension of corporate powers for nonpayment of its taxes “is a plea in abatement which is not favored in law, is to be strictly construed and must be supported by facts warranting the abatement” at the time of the plea.”  (Traub Co. v. Coffee Break Service, Inc. (1967) 66 Cal.2d 368, 370.)  If an entity files an action while in a state of suspension, or its status subsequently becomes suspended for some portion of time during the pendency of the action, the entity can cure the deficiency by reviving its status prior to trial to maintain the action.  (Ibid.)  Thus, because the defect is curable, the suspension of a business entity’s status due to nonpayment of taxes is not a valid grounds for dismissal. (Maryland Casualty Co. v. Superior Court (1928) 91 Cal.App. 356, 363.)

When a business entity’s suspended status comes to light during litigation, “the normal practice is for the trial court to permit a short continuance to enable the suspended corporation to effect reinstatement (by paying back taxes, interest, and penalties)[.]”  (Timberline, Inc. v. Jaisinghani (1997) 54 Cal.App.4th 1361, 1362 (hereafter Timberline).)  In Timberline, the Court simply continued the hearing on the suspended entity’s motion to renew the judgment to allow it to revive its status so the motion could be properly heard.  

The certificates of status for Cali Miners and Helvetia indicate that the status of both entities is “Suspended – FTB” suggesting that the entities are suspended due to an arears of taxes with the Franchise Tax Board (FTB).  (See RJN Exs. B & C.)  Similarly, the certificate of status for Immobilium indicates that entity is no longer in good standing due to a “failure to obtain and designate a registered agent.”  (RJN Ex. A.) 

            In opposition, Defendants have provided the Declaration of Brian Ballo which provides:

3. On March 22, 2025, Immobilium paid the required fees to hire A Registered Agent, Inc. (“New Agent”) as its new registered Agent for Service of Process in the state of Delaware for the one-year period from March 22, 2025 to March 22, 2026 (see proof attached as Exhibit “A” hereto). Immobilium’s failure to pay its prior Agent for Service of Process caused Immobilium to lose good standing status in Delaware.

4. I made inquiries and followed up with the New Agent and with the Delaware Secretary of State to determine when the updated New Agent information would be posted on the Delaware Secretary of State’s Entity Search Website.

5. The Delaware Secretary of State informed me that the New Agent information would not be updated on its website until the annual fees due to the Delaware Secretary of State were also paid.

6. Immobilium has hired accountants: American Tax Value to file an Amendment of Immobilium’s Articles of Incorporation with the State of Delaware to reducing the number of Immobilium’s authorized shares, which, in turn, will reduce the amount of annual fees Immobilium is required to pay to the Delaware Secretary of State.

7. Once American Tax Value makes a filing with the State, then, before the May 7, 2025, hearing on this matter, I intend to provide a Declaration from American Tax Value attaching their submittal of Immobilium’s Amendment of its Articles of Incorporation to the Delaware Secretary of State.

8. Immobilium currently does not have a Certificate of Good Status standing with the State of Delaware, however, I believe in good faith that Immobilium will be able to provide a Certificate of Good Standing prior to the May 7, 2025, hearing.

9. Once Immobilium is in good standing with the Delaware Secretary of State, then the entire basis for Plaintiffs’ Motion for Judgment on the Pleadings will become moot and, the Motion should be denied.

(Ballo Decl. ¶¶ 3-9.)

            In Reply, Plaintiffs point out that Defendants have not opposed the dismissal of Cali Miners or Helvetia.  Notwithstanding, because dismissals on this procedural basis is disfavored and because the Court must continue the hearing for Immobilium, the Court similarly continues the hearing to allow Cali Miners and Helvetia an opportunity to revive their corporate status.

CONCLUSION AND ORDER

Therefore, the Court continues the hearing on Plaintiffs’ motion for judgment on the pleadings to July 21, 2025 at 8:30 A.M. in Department 207.  Defendants shall file and serve supplemental opposition papers regarding their corporate status on or before July 1, 2025.  Plaintiffs shall file supplemental reply papers on or before July 11, 2025. 

Plaintiffs shall provide notice of the Court’s order and file the notice with a proof of service forthwith.

DATED:  May 7, 2025                                                           ___________________________

                                                                                          Michael E. Whitaker

                                                                                          Judge of the Superior Court