Case Name: SHAMROCK INVESTMENTS, INC., ET AL. v. COASTAL AMERICARE, INC.

Case No.: 1-15-CV-281388

This is a demurrer to Plaintiffs’ original Complaint. As an initial matter the Court in ruling on a demurrer or motion to strike considers only the pleading under attack, any attached exhibits (part of the “face of the pleading”) and any facts or documents for which judicial notice is properly requested and may be granted. The Court cannot consider extrinsic evidence in ruling on a demurrer or motion to strike. Accordingly, the Court has not considered the declaration of Plaintiffs Counsel Ryan Hagan, the exhibit to that declaration, or any arguments in the opposition that are dependent upon such extrinsic evidence.

The Request for Judicial Notice in support of the demurrer by Defendant Coastal Americare, Inc. (“Defendant”) is GRANTED pursuant to Evid. Code §452(c) and (h). The material submitted for notice, a copy of a certified “certificate of status” issued by the California Secretary of State, establishes that the corporate status of Plaintiff Shamrock Investments, Inc. has been suspended since January 2, 2014, long before it (and Plaintiff Shamrock Coleman LLC) filed the Complaint in this action on June 3, 2015. A suspended corporation lacks capacity (not standing) to sue in California courts. Among other things, a suspended corporation cannot prosecute or defend an action, seek a writ of mandate, appeal from an adverse judgment, or renew a judgment obtained before suspension. See Tabarrejo v. Superior Court (2014) 232 Cal App 4th 839, 862-863. Anyone who attempts or purports to exercise the rights and powers of a suspended corporation is guilty of a misdemeanor. See Rev. & Tax. Code §19719. Attorneys who knowingly pursue litigation activities on behalf of a suspended corporation can be sanctioned for acting in bad faith. See Palm Valley Homeowners’ Assn. v. Design MTC (2000) 85 Cal App 4th 553 (law firm sanctioned for pursuing discovery on behalf of suspended client while concealing knowledge of suspension from opposing counsel and trial court).

The Court in ruling on a demurrer treats it “as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” Piccinini v. Cal. Emergency Management Agency (2014) 226 Cal App 4th 685, 688, citing Blank v. Kirwan (1985) 39 Cal.3d 311, 318. Allegations are not accepted as true on demurrer if they contradict or are inconsistent with facts judicially noticed. See Witkin, California Evidence (4th Ed., 2000) 1 Judicial Notice §3(3) (“It has long been established in California that allegations in a pleading contrary to judicially noticed facts will be ineffectual; i.e., judicial notice operates against the pleader.”)

Defendant demurrers to the entire Complaint on the ground that “Shamrock Investments Incorporated aka Shamrock Investments Inc. aka Shamrock Inc., and Shamrock Coleman, LLC, and each of them, lack capacity and/or standing to sue as Shamrock Investments Incorporated aka Shamrock Investments Inc. aka Shamrock Inc., is a suspended corporation and Shamrock Coleman, LLC is its assignee.” Demurrer at 2:4-8.

Where there are several causes of action alleged in a pleading a demurrer to the entire pleading will be overruled if any cause of action therein is properly stated. See Warren v. Atchison, Topeka & Santa Fe Ry. Co. (1971) 19 Cal App 3d 24, 36. Given this authority Defendant’s demurrer must be OVERRULED. It is not apparent from the face of the pleading (the Complaint and its attached exhibits such as exhibit C, a lease agreement between Shamrock Coleman LLC and Defendant) and the material offered for judicial notice that Plaintiff Shamrock Coleman LLC is pursuing all claims alleged solely as an assignee of Shamrock Investments, Inc. or that, if it is, any assignment of rights took place after Shamrock Investments, Inc. had been suspended. See Cal-Western Business Services, Inc. v. Corning Capital Group (2013) 221 Cal App 4th 304, 313 (“The relevant issue was not whether [assignor] had the capacity to contract as a suspended corporation, but whether [assignee] had the capacity to sue on an assignment that was made when its assignor was suspended.”)

The Court notes that the docket for this matter shows that a dismissal without prejudice has been entered on behalf of Shamrock Investments, Inc. Notwithstanding this and the above ruling on the demurrer, Plaintiff Shamrock Coleman LLC is cautioned that it may not prosecute any action based on an assignment from Shamrock Investments, Inc. that occurred on or after January 2, 2014. “[I]f an assignee of a claim by a suspended corporation were not subject to the same incapacity defense as the assignor, then a suspended corporation simply could sell its claim to a third party without ever having to cure the default that caused the suspension. In such a case, the assignment would allow the suspended corporation to circumvent the restrictions imposed by the Revenue and Taxation Code on litigation-related activities and would remove the statutory incentive that is in place to induce the corporation into paying its delinquent taxes.” Cal-Western Business Services, Inc., supra, at 314 (trial court’s order striking assignee’s complaint and dismissing action on court’s own motion not an abuse of discretion).

The Court will prepare the order.