Case Number: BS169975 Hearing Date: March 19, 2018 Dept: 47

In re Petition of CHR Herbal Remedies, Inc., et al.

MOTION FOR AN ORDER REINSTATING ACTIVE CORPORATE STATUS

MOVING PARTY: Petitioners CHR Herbal Remedies, Inc. and Laura Aguirre

RESPONDING PARTY(S): Respondent California Herbal Remedies, Inc.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Petitioners seek reinstatement of Petitioner CHR Herbal Remedies, Inc. to active status in the Secretary of State’s records on the ground that Petitioner CHR Herbal Remedies was misrepresented as being the disappearing corporation when California Herbal Remedies, Inc., without Petitioners’ knowledge or consent, filed an Agreement and Plan of Merger.

Petitioners CHR Herbal Remedies, Inc. and Laura Aguirre move for an order reinstating Petition to active corporate status.

TENTATIVE RULING:

Petitioners CHR Herbal Remedies, Inc. and Laura Aguirre’s motion for an order reinstating Petition to active corporate status is GRANTED. The Secretary of State is directed to reinstate to active status on its records CHR Herbal Remedies, Inc., a California non-profit corporation with the corporate entity number C289261.

DISCUSSION:

Petitioners’ Request For Judicial Notice

Petitioners request that the Court take judicial notice of the following:

¿ (1) California Secretary of State records, CHR Herbal Remedies, Inc. C2989261 and (2) California Secretary of State records, California Herbal Remedies, Inc. C3642941 – GRANTED. The Court may take judicial notice of a business’ entity’s corporate status as reflected in the Secretary of State’s records. Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, 1286; Pedus Bldg. Servs. v. Allen (2002) 96 Cal.App.4th 152, 156 n.2.

¿ (3) City of Los Angeles Office of Finance BTRCs, account 2095479, (4) City of Los Angeles City Clerk files related to November 2007 registration, and (5) City of Los Angeles City Clerk files related to February 2011 registration – DENIED as to judicial notice; the Court may not take judicial notice of city records.

Evid. Code § 452 provides: “Judicial notice may be taken of the following matters to the extent that they are not embraced within Section 451: . . . (c) Official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States.” (Bold emphasis added.)

Under Evidence Code section 452, judicial notice may be taken of decisional law and of public and private official acts of any state. This provision is also applicable to counties since they are, of course, legal departments of the state. (Watson v. Los Altos School Dist., 149 Cal.App.2d 768, 772 [308 P.2d 782].) Cities, however, are municipal corporations which are distinct individual entities and are not connected political subdivisions of the states. As such, they do not have the legal status of counties. (Otis v. City of Los Angeles, 52 Cal.App.2d 605, 611-612 [126 P.2d 954].) Therefore, the trial court properly refused to take judicial notice of the records of the city’s board of rights.

Marino v. Los Angeles (1973) 34 Cal.App.3d 461, 465 (bold emphasis added).

However, the Court will consider such records as evidence, subject to evidentiary objections. In this regard, Respondent’ objection to these documents as hearsay is OVERRULED. The documents are being offered for the legal effect of the statements contained within

A well-established exception or departure from the hearsay rule applies to cases in which the very fact in controversy is whether certain things were said and not whether these things were true or false, and in these cases the words are admissible not as hearsay, but as original evidence. (Weathers v. Kaiser Foundation Hospitals (1971) 5 Cal.3d 98, 109 [95 Cal.Rptr. 516, 485 P.2d 1132].) Thus, written or oral utterances, which are acts in themselves constituting legal results in issue in the case, do not come under the hearsay rule. (Bank of America v. Taliaferro (1956) 144 Cal.App.2d 578, 581-582 [301 P.2d 393].)

Zuckerman v. Pac. Sav. Bank (1986) 187 Cal.App.3d 1394, 1404.

¿ (6) Los Angeles Superior Court Case Summary for BC582260 and BC617571 – GRANTED per Evid. Code § 452(d)(court records).

Respondent’s Request For Judicial Notice

Respondent requests that the Court take judicial notice of the following:

¿ (1) Articles of Incorporation of California Herbal Remedies, Inc. filed with the California Secretary of State on May 21, 2007; (2) Articles of Organization of California Herbal Remedies, LLC, filed with the California Secretary of State on May 25, 2007; (4) Articles of Incorporation with Statement of Conversion dated February 5, 2014; (5) Restated Articles of Incorporation for California Herbal Remedies dated May 1, 2014; (7) Conversion of CHR Herbal Remedies, Inc. from a Non-profit public benefit corporation to a Non-profit mutual benefit corporation dated December 29, 2016; and (8) Agreement and Plan of Merger, filed January 25, 2017 – GRANTED. The Court may take judicial notice of a business’ entity’s corporate status as reflected in the Secretary of State’s records. Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, 1286; Pedus Bldg. Servs. v. Allen (2002) 96 Cal.App.4th 152, 156 n.2.

A court may take judicial notice of the acts and records of the Secretary of State and it is not necessary to submit proof that a document has been filed with him to establish such fact. (Citation omitted.)

Gigax v. Ralston Purina Co. (1982) 136 Cal.App.3d 591, 602 n.6.

(3) Resignation of Orlando Yepes filed with the City of Los Angeles Office of Finance – DENIED. There was no document attached as Exh. C.

(6) Statement with the City of Los Angeles Office of Finance by Eric Margerum registering Scott Kawasaki as principal of California Herbal Remedies.- DENIED. There was no document attached as Exh. F.

(9) Statement of Eugene Roberson to LAPD and Declaration of Custodian of Records of LAPD certifying records – DENIED as to judicial notice; the Court may not take judicial notice of city records. However, the Court will consider such records as evidence, subject to evidentiary objections.

In this regard, Petitioners’ objection on the ground of hearsay is SUSTAINED. The document is being offered for the truth of the facts recited by nonparty Eugene Roberson, who is not a party to this action.

Petitioners’ Evidentiary Objections

Declaration of Scott Kawasaki

No. 1: SUSTAINED. Lack of foundation.

No. 2: SUSTAINED. Lack of foundation.

No. 3: SUSTAINED. Lack of foundation.

No. 4: SUSTAINED. Lack of foundation; impermissible lay opinion.

No. 5: SUSTAINED. Lack of foundation.

No. 6: SUSTAINED. Lack of foundation; impermissible lay opinion.

No. 7: SUSTAINED. Lack of foundation; hearsay not subject to any exception.

No. 8: SUSTAINED. Lack of foundation (authentication); hearsay not subject to any exception.

No. 9: OVERRULED Goes to weight; not hearsay.

No. 10: SUSTAINED. Impermissible lay opinion; lack of foundation.

No. 11: SUSTAINED. Lack of foundation.

No. 12: SUSTAINED. Lack of foundation.

No. 13: OVERRULED. Sufficient foundation; goes to weight.

No. 14: SUSTAINED. Hearsay, not subject to any exception; document is being offered for the truth of the matters asserted therein by non-party Erik Margerum.

Motion For An Order Reinstating Corporate Status

Petitioners CHR Herbal Remedies, Inc. and Laura Aguirre move for an order reinstating Petition to active corporate status pursuant to Gov. Code § 12261, which provides:

(a) The Secretary of State shall reinstate to active status on its records, a business entity for which a court finds any of the following:

(1) The factual representations by a shareholder, member, partner, or other person that are contained in the termination document are materially false.

(2) The submission of the termination document to the Secretary of State for filing is fraudulent.

(b) If a court of competent jurisdiction orders reinstatement of a business entity to active status on any of the grounds stated in paragraph (1) or (2) of subdivision (a), the order for reinstatement shall state all of the following:

(1) The specific grounds for reinstatement.

(2) That if there is a conflict with the entity name under subdivision (b) of Section 201, subdivision (b) of Section 5122, subdivision (c) of Section 7122, subdivision (b) of Section 9122, subdivision (b) of Section 12302, subdivision (d) of Section 15901.08, subdivision (b) of Section 17701.08 of the Corporations Code, or related statutes, the reinstatement shall be conditioned upon the business entity concurrently submitting for filing an amendment to change its name to eliminate the conflict along with the certified copy of the order required by Section 12263.

(3) That the business entity shall be reinstated effective from the date of the filing of the court order with the Secretary of State.

(c) The court order for reinstatement may be obtained by submitting a petition to the superior court containing the legal and factual basis for reinstatement or as part of a civil action for damages or equitable relief. The Secretary of State shall not be made a party to the proceeding.

Here, the Petition sets forth at ¶ 21(a)-(g) the following alleged false representations made in the Merger Document filed with the Secretary of State on January 25, 2017 (Petition, ¶ 3; Exh. 1 to Petition), which effectuated Petitioner CHR’s dissolution and inactive status:

¿ “The respective Board of Directors of [CHR] and [CHR-2] have each determined that it is in the best interest of their respective corporations to combine their respective corporations and members.” Petition, ¶ 21.a.

The Petition alleges that, in fact, the Board of Directors of CHR never determined or discussed any merger or combination, and never determined or discussed whether it was in the best interest of CHR to combine with CHR-2. Id.

¿ “In furtherance of such combination, the Board of Directors of both corporations have each adopted this Agreement and approved the merger (hereinafter ‘the Merger’) of [CHR] and [CHR] in accordance with the laws of the State of California and under the terms and conditions set forth herein.” Petition, ¶ 21.b.

The Petition alleges that, in fact, the Board of Directors of CHR never adopted the agreement or approved the merger. Id.

¿ At page 2, the Merger Document states that “the parties hereto have caused this Agreement to be signed by their respective authorized officers as of the day and year first above written,” followed by the signatures of Scott Kawasaki and Shirley Vong as president and secretary, respectively, of CHR and CHR-2. Petition, ¶ 21.c.

The Petition alleges that, in fact, CHR did not cause Scott Kawasaki or Shirley Vong to sign the Merger Document, as Kawasaki was never president of CHR and Vong was never secretary of CHR, nor did these individuals ever have any relationship with CHR, other than their association with CHR’s adversary, CHR-2. Id.

¿ The last page of the Merger Document, entitled “Certificate of Approval of Agreement and Plan of Merger” (“Certificate”), is purportedly signed by CHR to signify its approval of the merger. Petition, ¶ 21.d.

The Petition alleges that this page contains representations that are materially false, such as: the Certificate provides at paragraph 1 that the Certificate is purportedly signed on behalf of CHR by Scott Kawasaki and Shirley Vong as “President” and “Secretary,” respectively, of CHR, even though (1) CHR never authorized or approved the merger; (2) Kawasaki was never president of CHR and Vong was never secretary of CHR; (3) Kawasaki and Vong never had any relationship with CHR and were not authorized to approve the merger on behalf of CHR. Id.

¿ The Certificate falsely represents at paragraph 2: “The principal terms of the Agreement and Plan of Merger in the form attached were duly approved by the board of directors and by the required vote of the members of the corporation.” Petition, ¶ 21.e.

The Petition alleges that, in fact, the Agreement and Plan of Merger was never approved by the board of directors or any vote of the members of CHR. Id.

¿ The Certificate represents falsely at paragraph 3: “There is only one class of members and the total number of members of the corporation entitled to vote on the merger is 1.” Petition, ¶ 21.f.

The Petition alleges that, in fact, Scott Kawasaki and Shirley Vong have never been members of CHR, and have never had any rights with respect to CHR, including, without limitation, voting rights. Id.

¿ The Certificate also represents at paragraph 4: “No other approvals are required.” Petition, ¶ 21.g.

The Petition alleges that this is false because, among other things, neither Scott Kawasaki nor Shirley Vong have ever had any right to approve any actions whatsoever, let alone a merger, on behalf of CHR, a company with which neither has ever been involved as a member or otherwise. Id.

Analysis

With regard to the foregoing alleged false representations alleged in the Petition, the Court has considered the admissible evidence submitted by both parties.

Orlando Yepes states at ¶ 25 of his Declaration that on January 6, 2017, Laura Aguirre and Gabriel Dezio succeeded Yepes as managers and owners of CHR. Laura Aguirre also states in her Declaration that on January 6, 2017, she became a manager and owner of CHR Herbal Remedies, Inc., corporate entity # C2989261. Aguirre Decl., ¶ 3. Aguirre states that the Merger Document was filed without CHR’s knowledge or consent. Aguirre Decl., ¶¶ 6, 9. Based on matters within Aguirre’s own personal knowledge[1], the Aguirre Declaration also states that the Board of Directors of CHR never adopted the agreement or approved the merger (Aguirre Decl., ¶ 11.b); that CHR did not cause Scott Kawasaki and Shirley Vong to sign the Merger Document as president and secretary of CHR (Aguirre Decl., ¶ 11.c); that CHR never authorized or approved the merger and Kawasaki and Vong were not authorized to approve the merger on behalf of CHR as purported president and secretary of CHR, respectively (Aguirre Decl., ¶ 11.d); and the Agreement and Plan of Merger was never approved by the board of directors or any vote of the members of CHR (Aguirre Decl., ¶ 11.e).

Respondent has not submitted admissible evidence sufficient to rebut the foregoing evidence submitted by Petitioner.

Accordingly, the Court finds pursuant to Gov. Code § 12261(b)(1) & (3) that the Agreement and Plan of Merger filed with the Secretary of State on January 25, 2017 made materially false factual representations that: “The respective Board of Directors of [CHR] and [CHR-2] have each determined that it is in the best interest of their respective corporations to combine their respective corporations and members.”; “In furtherance of such combination, the Board of Directors of both corporations have each adopted this Agreement and approved the merger (hereinafter ‘the Merger’) of [CHR] and [CHR] in accordance with the laws of the State of California and under the terms and conditions set forth herein.”; “[T]he parties hereto have caused this Agreement to be signed by their respective authorized officers as of the day and year first above written,” followed by the signatures of Scott Kawasaki and Shirley Vong as president and secretary, respectively, of CHR and CHR-2; the “Certificate of Approval of Agreement and Plan of Merger” (“Certificate”), is purportedly signed by CHR to signify its approval of the merger; the Certificate falsely represents at paragraph 2: “The principal terms of the Agreement and Plan of Merger in the form attached were duly approved by the board of directors and by the required vote of the members of the corporation.”; and the Certificate also represents at paragraph 4: “No other approvals are required.”

Accordingly, the motion to reinstate Petitioner CHR Herbal Remedies, Inc. to active corporate status is GRANTED. The Secretary of State is directed to reinstate to active status on its records CHR Herbal Remedies, Inc., a California non-profit corporation with the corporate entity number C289261.

Petitioners to give notice, unless waived.

IT IS SO ORDERED.

Dated: March 19, 2018 ___________________________________

Randolph M. Hammock

Judge of the Superior Court

[1] The Court does not take into consideration statements by Aguirre in ¶ 11 of her declaration as to matters for which she has not demonstrate personal knowledge, such as whether Kawasaki or Vong were “never” president and secretary of CHR, as she admittedly did not become manager and owner of CHR until January 6, 2017. Aguirre Decl., ¶ 3.