Opinion
F072481
03-22-2017
CREDITORS ADJUSTMENT BUREAU, INC., Plaintiff and Respondent, v. BIG VALLEY COLD STORAGE, LLC, Defendant and Appellant.
Kane, Ballmer & Berkman and Bruce C. Gridley for Defendant and Appellant. Law Offices of Kenneth J. Freed and Kenneth J. Freed for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. CV282455)
OPINION
APPEAL from an order of the Superior Court of Kern County. Lorna H. Brumfield, Judge. Kane, Ballmer & Berkman and Bruce C. Gridley for Defendant and Appellant. Law Offices of Kenneth J. Freed and Kenneth J. Freed for Plaintiff and Respondent.
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Defendant appealed from the order denying its motion to vacate the default and the default judgment. We conclude defendant lacks capacity to prosecute this appeal because its status as a limited liability company has been suspended. We therefore dismiss the appeal.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff filed its first amended complaint against Big Valley Cold Storage, LLC (Big Valley), and served it on Big Valley's agent for service of process, Amir Sarbaz. Sarbaz attempted to answer the first amended complaint on behalf of Big Valley, but the answer was later rejected for failure to pay the filing fee and filing the answer without an attorney representing the company. After the answer was submitted to the clerk, but before it was rejected and returned to defendant, plaintiff obtained entry of defendant's default. A default judgment was subsequently entered. More than six months after entry of the default, defendant, through an attorney, filed a motion to vacate the default and default judgment. Plaintiff opposed the motion. The trial court denied the motion, and Big Valley appeals.
After plaintiff filed its respondent's brief, it requested leave to file a supplemental brief. We granted the request and gave Big Valley a time period within which to respond to the supplemental brief. Plaintiff's supplemental brief asserted Big Valley's status as a limited liability company has been suspended by the Franchise Tax Board. As a result, plaintiff asserted Big Valley lacked capacity to defend the action or appeal an adverse judgment; it requested we strike or dismiss the appeal. Big Valley did not respond to the supplemental brief.
DISCUSSION
I. Motion to Dismiss
Plaintiff, in its supplemental brief, requested that Big Valley's appeal be stricken or dismissed because it lacks capacity to maintain it. Ordinarily, a request for dismissal of an appeal must be made by formal motion, accompanied by a memorandum of points and authorities, as well as declarations, if it is based on matters outside the appellate record. (Cal. Rules of Court, rule 8.54(a).) The appellant then has 15 days to serve and file opposition. (Cal. Rules of Court, rule 8.54(a)(3).) "A failure to oppose a motion may be deemed a consent to the granting of the motion." (Cal. Rules of Court, rule 8.54(c).)
Here, plaintiff made its request by supplemental brief. The brief set out the authorities supporting its request, and was accompanied by a declaration and the exhibit on which the request was based. Our order permitting the filing of the supplemental brief also allowed Big Valley to file a response to the supplemental brief within 15 days from the date it was filed. Plaintiff's request to file a supplemental brief, our order granting that request, and the supplemental brief itself were all served on respondent's counsel.
Although plaintiff's request was not made in a document labeled "motion," the supplemental brief contained the same information—points and authorities, declaration, and supporting evidence—that would have been presented in a motion. Big Valley was afforded the same time period within which to respond. Big Valley has not challenged the substance of the request for dismissal or the manner in which it was presented. We conclude plaintiff substantially complied with the requirement that its request for dismissal of the appeal be presented by motion.
II. Lack of Capacity to Pursue Appeal
In support of its request for dismissal of the appeal, plaintiff presented a printout from the Secretary of State's Web site, showing that Big Valley is currently suspended by the Franchise Tax Board (the Board) and the Secretary of State. The Board may suspend the powers, rights and privileges of a limited liability company that fails to pay its taxes or fails to file a required tax return. (Rev. & Tax. Code, §§ 23301, 23301.5, 23302, 23305.5, subd. (a)(2).) The Secretary of State may suspend the company's powers, rights and privileges if the company fails to file the required statement of information with the Secretary of State. (Corp. Code, §§ 17702.09, 17713.10.)
A corporation or other entity that has had its powers suspended for failure to pay its taxes lacks the legal capacity to prosecute or defend a civil action, or to appeal from an adverse judgment. (Bourhis v. Lord (2013) 56 Cal.4th 320, 324; Tabarrejo v. Superior Court (2014) 232 Cal.App.4th 849, 861-862.) "The same rule applies when a corporation fails to file the required statement of information." (Friends of Shingle Springs Interchange, Inc. v. County of El Dorado (2011) 200 Cal.App.4th 1470, 1486 (Friends).) The suspended entity may, however, be sued and have a default judgment entered against it. (Grell v. Laci Le Beau Corp. (1999) 73 Cal.App.4th 1300, 1306.)
The policy underlying the statutory provisions regarding failure to comply with the tax statutes is "'to prohibit the delinquent corporation from enjoying the ordinary privileges of a going concern, in order that some pressure will be brought to bear to force the payment of taxes.'" (Peacock Hill Assn. v. Peacock Lagoon Constr. Co. (1972) 8 Cal.3d 369, 371.) The delinquent entity may revive its powers by complying with the applicable statutory requirements and, in the case of the failure to pay taxes or file a tax return, obtaining a certificate of revivor from the Board. (Rev. & Tax Code, § 23305; Corp. Code, § 17713.10, subd. (d).) Once its powers are revived, the corporation or other entity may again sue and defend in court. (Friends, supra, 200 Cal.App.4th at p. 1486.)
Plaintiff presented evidence that Big Valley's status as a limited liability company was suspended by the Board and the Secretary of State. Thus, its powers, rights, and privileges were suspended, including the rights to defend itself and appeal an adverse judgment. Big Valley did not oppose plaintiff's request for dismissal of the appeal. It did not contradict plaintiff's showing or request time to revive its powers. Because Big Valley lacks the capacity to pursue this appeal, and has given no indication it intends to revive its status and its ability to prosecute the appeal, we conclude the appeal must be dismissed.
DISPOSITION
The appeal is dismissed. Plaintiff is entitled to its costs on appeal.
/s/_________
HILL, P.J. WE CONCUR: /s/_________
GOMES, J. /s/_________
FRANSON, J.