12 Cal. App. 5th 656
Cal. Ct. App. 5th2017Background
- Casiopea Bovet, LLC obtained a default money judgment (≈ $67,409; now > $125,000 with interest) against Financial Title Company.
- The Franchise Tax Board suspended Financial Title’s corporate powers in Sept. 2013 under Rev. & Tax. Code § 23301.
- A San Mateo County court later ordered a judicial assignment under Code Civ. Proc. § 708.510 assigning Financial Title’s right to certain Controller-held funds to Casiopea, subject to tax liens and proration.
- Casiopea filed claims under the Unclaimed Property Law (Code Civ. Proc. § 1500 et seq., esp. § 1540) seeking escheated funds the Controller held in Financial Title’s name; the Controller denied the claims because Financial Title was suspended and lacked capacity to claim property.
- Casiopea sued under § 1541 within 90 days of denial, but the Controller moved for judgment on the pleadings; the trial court ruled Casiopea, as assignee of a suspended corporation, stood in the shoes of Financial Title and could not pursue the escheated-property claim.
- The trial court also found the 90-day limitations period had run while Financial Title was suspended; the court denied leave to amend and entered judgment for the Controller.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a judicial assignment under § 708.510 lets an assignee assert an escheat claim when assignor is a suspended corporation | Judicial assignment differs from voluntary assignment and should permit Casiopea to pursue escheated property | Assignee takes no greater rights than assignor; suspension under Rev. & Tax. Code § 23301 bars claim and binds assignee | Court held the assignee stands in the assignor’s shoes; suspension bars the claim, regardless of judicial vs. voluntary assignment |
| Whether equitable or third‑party principles allow Casiopea to claim property despite suspension | Casiopea is an innocent third party and equity should permit recovery | Casiopea asserts Financial Title’s right, not an independent right; equitable exceptions do not overcome statutory incapacity | Court rejected equitable exception; Casiopea asserted assignor’s rights and is barred |
| Whether allowing assignee to recover undermines public policy of tax suspension statute | Casiopea argued enforcement of judgments and Unclaimed Property Law favor recovery | Controller argued allowing recovery would let suspended corporation indirectly avoid penalties and frustrate § 23301 | Court agreed with Controller: permitting recovery would undercut the purpose of suspension |
| Whether tolling or revival could save Casiopea given § 1541’s 90‑day limit after administrative denial | Casiopea sought continuance/leave to amend and argued revival or other avenues might save claim | Controller noted § 1541 90‑day limit is substantive; statute ran during suspension and revival does not revive time‑barred claims | Court held statute of limitations expired; denial of continuance/leave to amend was not an abuse of discretion |
Key Cases Cited
- City of San Diego v. San Diegans for Open Government, 3 Cal.App.5th 568 (Cal. Ct. App.) (suspended corporation lacks capacity to prosecute or defend actions)
- Cal‑Western Business Servs., Inc. v. Corning Capital Group, 221 Cal.App.4th 304 (Cal. Ct. App.) (assignee takes assignor’s rights subject to defenses including incapacity)
- Weingarten Realty Investors v. Chiang, 212 Cal.App.4th 163 (Cal. Ct. App.) (assignee judgment creditor may pursue escheated property under § 1540 in prior formulation)
- Azure Limited v. I‑Flow Corp., 46 Cal.4th 1323 (Cal.) (overview of Unclaimed Property Law and escheat principles)
- Road Sprinkler Fitters Local Union No. 669 v. G & G Fire Sprinklers, Inc., 102 Cal.App.4th 765 (Cal. Ct. App.) (assignee’s rights are no greater than assignor’s)
- Cleveland v. Gore Bros. Inc., 14 Cal.App.2d 681 (Cal. Ct. App.) (assignee of suspended corporation is subject to same incapacity)