Dominguez v. Superior Court

Opinion

BROWN (Gerald), P. J.

Petitioner, Richard M. Dominguez, is the Superintendent of Banks for the State of California. Having come to the conclusion that the contributed capital of real party, Pacific Coast Bank (Bank), was impaired and that Bank was conducting business in an unsafe and unauthorized manner, petitioners took possession of Bank’s property and business on April

[694]

29, 1982, and ordered it liquidated. On the next day, April 30, 1982, petitioners got a court order authorizing the sale of Bank to Commonwealth Bank of Hawthorne and the Federal Deposit Insurance Corporation (FDIC).

Under Financial Code section 3101

1

the takeover of a bank may be challenged if the bank, within 10 days of the taking, files an application in superior court. Here suit was filed on May 10, 1982, by Stephen Forde, a major shareholder and the sole member of Bank’s board of directors. Petitioners filed a motion for summary judgment on the basis the action filed had not been duly authorized by real party’s board of directors. The motion was denied. Bank concedes the action was not properly authorized but suggests the deficiency was cured two weeks later when Forde added members to the board who ratified his action.

There is no dispute about the facts. Bank’s bylaws authorize a seven-member board of directors and provide a quorum should be no less than one-third of the number of authorized directors. On April 29, the date the Bank was taken over, there were four directors: Messrs. Laubscher, Phillips, Rees and Smith. On May 6, 1982, Mr. Smith resigned. At a Bank meeting on May 7, 1982, the remaining three directors appointed Forde to the board and then resigned, leaving Forde as the lone director. It was not until May 25, 1982, that Forde appointed Edward Hopper and Carol Unruh to the board. The new board then ratified Forde’s earlier action. As real party concedes, the filing of the suit here was unauthorized (Corp. Code, §§ 300, 307, subd. (a)(8);

Hotaling

v.

Hotaling

(1922) 193 Cal. 368, 376 [203 P. 745]). Was the later ratification effective?