(1) Demurrer to Complaint (2) CMC

Ruling: (1-2) Off Calendar – no hearing will be held. (1) The Demurrer by Defendant John De Marr to the first COA for quiet title is overruled. Plaintiff sufficiently alleges the existence of a cloud on the title to the Montara property involving third parties that must be resolved for the property to be sold, a requirement of the Stipulated Judgment entered by the Family Court in the parties’ dissolution proceeding. The Stipulated Judgment provides that the parties “will cooperate with each other and take the steps necessary to wind up and dissolve [The Montara LLC].” (Stipulated Judgment, p. 3, ¶ B.) Defendant’s RFJN of the Stipulated Judgment is granted. Plaintiff does not oppose the request, and the Stipulated Judgment is part of the records of the Los Angeles Superior Court and Plaintiff refers to and relies upon it in the complaint, but does not attach it. (Evid. Code, § 452(d); Marina Tenants Assn. v. Deauville Marina Development Co. (1986) 181 Cal.App.3d 122.)

Pursuant to the Stipulated Judgment, the Family Court determined the Montara property was an asset of The Montara LLC, an LLC jointly owned by Plaintiff and Defendant, and ordered it to be sold and the proceeds divided by Plaintiff and Defendant. Plaintiff has alleged Defendant refused to allow a quiet title action to be brought in the name of the LLC to effectuate this sale. Defendant argument that Plaintiff has no ability to sue on behalf of the LLC, because its qualification to do business in California was canceled with the Secretary of State, lacks merit. Defendant’s unopposed RFJN of the printout reflecting the cancellation with the Secretary of State is denied as irrelevant. As Plaintiff correctly notes in the opposition, a dissolved LLC may continue to exist to wind up its affairs, including conveying its property. (Corp. Code, § 17707.06.) Further, a corporate entity’s standing with the Secretary of State is not an issue of standing to sue, but rather an issue of capacity, which is not required to be pled in the complaint and must be specifically raised by abatement, which Defendant did not do here. (Color-Vue, Inc. v. Abrams (1996) 44 Cal. App. 4th 1599.) Defendant’s attempt to prevent Plaintiff from quieting title on behalf of the LLC on the basis that the qualification with the Secretary of State was canceled is also disingenuous. The Stipulated Judgment clearly requires the Montara property be sold and the LLC dissolved. Defendant does not cite any authority as to why Plaintiff, a co-owner of the LLC, cannot initiate this quiet title action to effectuate the sale ordered by the Family Court.

The demurrer to the second COA against defendant for breach of fiduciary duty is sustained without leave to amend per the holding in Neal v. Superior Court (2001) 90 Cal. App. 4th 22, that family law matters – no matter how characterized – should be resolved in family court, not civil court. The Family Court retained jurisdiction pursuant to the Stipulated Judgment “to make other orders necessary to carry out this judgment.” The substance of Plaintiff’s second COA, even though carefully crafted as a derivative claim by the LLC against Defendant rather than a claim by Plaintiff against Defendant, clearly stems from the dissolution case and the terms of the Stipulated Judgment. Plaintiff specifically alleges, among other things, that Defendant breached his fiduciary duty by “[f]ailing to cooperate in the dissolution of the [LLC] including inter alia failing to cooperate in the sale of the Property.” Any arguments Plaintiff has that Defendant has breached the Judgment by refusing to cooperate regarding the sale of the property and took assets belonging to the LLC, should be brought before the Family Court, not in a civil action. Similarly, any argument that the release Plaintiff signed as part of the Stipulated Judgment bars her claims in the second COA can be resolved by the Family Court.

(2) CMC is continued to 7-10-14, Dept. C13, at 8:45 am. MP is to give notice.