Judge: Michael P. Linfield, Case: 23STCV24634, Date: 2024-05-13 Tentative Ruling
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Case Number: 23STCV24634 Hearing Date: May 13, 2024 Dept: 34
SUBJECT: Motion
to Dismiss
Moving Party: Defendant
Sherri LaZelle
Resp. Party: Plaintiff BAG Fund, Inc.
BACKGROUND:
This is an action against a former employee
for conversion and breach of fiduciary duty. Plaintiff BAG Fund, Inc.
(“Plaintiff”) commenced this action on October 10, 2023. On March 26, 2024,
Plaintiff filed the operative First Amended Complaint (“FAC”) alleging five
causes of action for 1) Conversion, 2) Breach of Fiduciary Duty, 3) California
Penal Code 496(c), 4) Electronic Funds Transfer Act, and 5) Quiet Title. The
first, second, third, and fifth causes of action are asserted against defendant
Sherri LaZelle (“Defendant”).
According to the FAC, Defendant worked as
Plaintiff’s bookkeeper/accountant for a period of less than two years.
Plaintiff was initially satisfied with Defendant’s work, but later discovered
that Defendant had stolen over $47,000 from Plaintiff.
On April 19, 2024, Defendant filed the
instant motion to dismiss Plaintiff’s case. On April 30, 2024, Plaintiff’s
attorney filed a declaration regarding the motion to dismiss. As of May 8,
2024, no reply has been filed.
ANALYSIS:
A.
Legal
Standard
“An action may be . .
. [w]ith or without prejudice, upon written request of the plaintiff to the
clerk, filed with papers in the case, or by oral or written request to the
court at any time before the actual commencement of trial, upon payment of the
costs, if any.” CCP § 581(b)(1). Courts may also assert their inherent judicial
power to dismiss cases, as the grounds for dismissals stated in section 581 are
not “an exclusive enumeration of the court’s power to dismiss an action.”
CCP § 581(m).
B.
Discussion
Defendant seeks to
dismiss Plaintiff’s claims against her because Plaintiff’s corporate powers
have been suspended for nonpayment of taxes and therefore lacks capacity to
maintain the action.
Revenue and Taxation
Code § 23301 provides for the suspension of a corporation’s “powers, rights and
privileges” if it fails to pay any tax, penalty or interest that is due and
payable at the end of the taxable year. “[A] suspended corporation may not
prosecute or defend an action in a California court. Timberline, Inc. v.
Jaisinghani (1997) 54 Cal. App. 4th 1361, 1365–66, citing Ransome–Crummey
Co. v. Superior Court (1922) 188 Cal. 393, 396–397 and Alhambra–Shumway
Mines, Inc. v. Alhambra Gold Mine Corp. (1957) 155 Cal.App.2d 46, 50–51.
Defendant contends
that Plaintiff has not filed taxes in the city or county of Los Angeles since
it was founded in 2008. Defendant attached a copy of a page from the CA
Secretary of State website showing that “B.A.G. FUND, INC. (3172055)” is
suspended. (Motion, Appendix 1.)
Plaintiff has not
filed an opposition to this motion. However,
Plaintiff’s counsel concedes Plaintiff’s “failure to file taxes for a few
years.” (Fannan Decl., ¶ 3.) Plaintiff’s counsel further states “According
to BAG's principal, the new accounting person was just hired, should prepare
and file taxes within 2-3 weeks so BAG's good status would be reinstalled.” (Id.,
¶ 4.) However, this is a hearsay statement. There is no evidentiary basis on
which the Court can infer how long it would take Plaintiff to regain capacity.
Defendant Sherri
LaZelle’s motion to dismiss is granted. The action is dismissed without prejudice. Plaintiff may refile its action if/when it is
restored as a corporation.