Case Number: BC544643    Hearing Date: July 24, 2014    Dept: 34

Moving Party: Defendant Hatem A. Ibrahim dba Time Structure (“defendant”)

Resp. Party: Plaintiff Enviroenergy Inc. (“plaintiff”)

Defendant’s demurrer to the first amended complaint is OVERRULED.

Defendant’s Request for Judicial Notice if DENIED. Judicial notice of Internet pages of even official entities is improper absent evidentiary foundation showing the following elements: author, date of creation, purpose, reliability, and veracity. (Hartwell Corp. v. Sup. Ct. (2002) 27 Cal.4th 256, 279, fn. 12. See also Zumbrun Law Firm v. Cal. Legis. (2008) 165 Cal.App.4th 1603, 1623 [“The website [of the California Legislature] is not the official, printed Government Code, and makes no promises regarding its accuracy.”].) The Court notes that, when it checked the website of the California Secretary of State, the website contained the following disclaimer: “Although every attempt has been made to ensure that the information contained in the database is accurate, the Secretary of State’s office is not responsible for any loss, consequence, or damage resulting directly or indirectly from reliance on the accuracy, reliability, or timeliness of the information that is provided. All such information is provided ‘as is.’” (See, http://kepler.sos.ca.gov/, accessed on July 21, 2014.)

Plaintiff’s Request for Judicial Notice is DENIED. (See above.)

Plaintiff’s Request for Judicial Notice in Support of its Reply is DENIED. (See above.)

BACKGROUND:

Plaintiff commenced this action on 5/2/14. Plaintiff filed a first amended complaint on 5/9/14 against defendants for: (1) enforce payment of claims stated in 1st stop notice; (2) enforce payment of claims stated in 2nd stop notice; (3) enforcement of bond; (4) breach of contract; and (5) common counts. Plaintiff alleges that it is a Florida corporation engaged in selling products for use by the County of Los Angeles. (FAC ¶ 1.) Plaintiff entered into a contract with defendant to sell products required on government works projects. (Ibid.)

ANALYSIS:

Defendant demurs to the entire complaint on the ground that plaintiff lacks the capacity to sue, and to the first, fourth, and fifth causes of action for uncertainty.

Lack of Capacity to Sue

A demurrer may be based on the ground that the plaintiff “does not have the legal capacity to sue.” (Code Civ. Proc., § 430.10(b).) “Usually, this ground does not appear on the face of the pleading under attack; i.e., plaintiffs rarely allege their own incompetency. Hence, it is very rarely a proper ground for demurrer.” (Weil & Brown, Civ. Proc. Before Trial (The Rutter Group 2014) ¶ 7:71.)

Corporations Code section 2105(a) provides: “A foreign corporation shall not transact intrastate business without having first obtained from the Secretary of State a certificate of qualification.” “A foreign corporation transacting intrastate business which has failed to qualify with the Secretary of State may … commence an action in state court. [Citation.] A foreign corporation transacting intrastate business which has failed to qualify may not, however, maintain an action commenced prior to qualification, except upon the satisfaction of certain conditions.” (United Medical Management Ltd. v. Gatto (1996) 49 Cal.App.4th 1732, 1739 [italics in original] [citing Corp. Code, § 2203].)

The failure of a foreign corporation to qualify to transact business prior to commencing an action is a matter of abatement of the action. [Citation.] Once a nonqualified foreign corporation commences an action regarding intrastate business, the defendant may assert by demurrer or as an affirmative defense in the answer the lack of capacity to maintain an action arising out of intrastate business. [Citation.] This abatement procedure enables the foreign corporation to obtain a judicial determination as to whether it is in fact transacting intrastate business. The defendant bears the burden of proving: (1) the action arises out of the transaction of intrastate business by a foreign corporation; and (2) the action was commenced by the foreign corporation prior to qualifying to transact intrastate business. [Citation.] If the defendant establishes the bar of the statute, then the foreign corporation plaintiff must comply with section 2203, subdivision (c). Ordinarily, the matter should be stayed to permit the foreign corporation to comply. If the foreign corporation plaintiff complies with section 2203, subdivision (c), by qualifying and paying fees, penalties and taxes, it may maintain the action. If the foreign corporation fails to comply, the matter should be dismissed without prejudice.

(Id. at p. 1740.)

For the purposes of section 2105(a), “transact intrastate business” is defined in Corporations Code section 191, which states that “ ‘transact intrastate business’ means entering into repeated and successive transactions of its business in this state, other than interstate or foreign commerce.” (Corp. Code, § 191(a); Mediterranean Exports, Inc. v. Superior Court (1981) 119 Cal.App.3d 605, 616-617.)

There is no dispute that plaintiff is a foreign corporation. (See FAC ¶ 1.) The facts alleged in the complaint do not establish that plaintiff conducts intrastate business within California within the definition of section 191. The allegations in the complaint establish that plaintiff entered into a transaction with defendant to sell materials to it. (See id., ¶¶ 1, 3, Exh. 3.) At most, this establishes a single transaction of interstate, not intrastate, business. It is immaterial that plaintiff sent multiple shipments; these shipments were all part of the single purchase of materials. (See id., Exh. 3.)

Capacity to Submit the First Stop Notice

Defendant also argues that plaintiff was suspended when the first stop notice was submitted, and therefore the claim as to the first stop notice is invalid. Under California law, when a corporation fails to pay certain taxes its powers, rights, and privileges may be suspended and its exercise of corporate powers, rights, and privileges may be forfeited. (Rev. & Tax Code, § 23301.) However, as stated above, it is undisputed that plaintiff is a Florida corporation. “ ‘[T]he continuing legal existence of a corporation depends on the law of the state of incorporation.’ [Citation.] A corporation that lacks the capacity to sue in its home state based on a lack of corporate status, also lacks capacity to sue in California, because ‘it has no greater capacity to sue in California than in its home state.’ [Citation.]” (Capital Gold Group, Inc. v. Nortier (2009) 176 Cal.App.4th 1119, 1127.)

Defendant points to a computer print-out that purportedly shows that plaintiff was a suspended corporation in Florida at the time the first stop notice was submitted. As stated above, the Court declines to take judicial notice of this unauthenticated print-out. Nothing in the complaint establishes that plaintiff was suspended at the time either of the stop notices were submitted. Therefore, the Court rejects this argument.

Uncertainty

Finally, defendant argues that the complaint is uncertain because it is unclear if plaintiff was suspended when it entered into the purported contract. Demurrers for uncertainty are strictly construed, because discovery can be used for clarification, and apply where defendants cannot reasonably determine what issues or claims are stated. (Khoury v. Maly’s of Cal., Inc. (1993) 14 Cal.App.4th 612, 616; Weil & Brown, Civ. Pro. Before Trial (The Rutter Group 2013) ¶ 7:85.) “Demurrer for uncertainty will be sustained only where the complaint is so bad that the defendant cannot reasonably respond; i.e., he or she cannot reasonably determine what issues must be admitted or denied, or what counts or claims are directed against him or her.” (Weil & Brown, ¶ 7:85 [citing Khoury, 14 Cal.App.4th at p. 616].)

The allegations in the FAC are not so unclear that defendant cannot reasonably respond. To the extent that defendant wishes to learn more information about plaintiff’s corporate status or its capacity to enter into agreements or exercise other powers, plaintiff may seek such information during the discovery process.

Defendant’s demurrer is OVERRULED.

Defendant to answer within 10 days.