[580]MALLANO, J., Dissenting. I dissent.
This case involves the duties of a corporation, defendant GTE Corporation, to plaintiffs, minority shareholders of GTE, before the minority shareholders’ GTE stock was delivered to the State of California under California’s Unclaimed Property Law (UPL) (Code Civ. Proc., § 1500 et seq.).1 The trial court sustained GTE’s demurrer on the ground that GTE was afforded immunity under the UPL. But, given the claims asserted in the second amended complaint (complaint), the UPL’s immunity provisions cannot reasonably be interpreted to apply to the circumstances here, where plaintiffs allege that GTE breached a fiduciary duty to give them a fair opportunity to prevent the operation of the UPL in the first instance. Imposing a duty on GTE to honor plaintiffs’ rights as stockholders is consistent with one of the purposes of the UPL—“to reunite owners with unclaimed funds or property.” (Bank of America v. Cory (1985) 164 Cal.App.3d 66, 74 [210 Cal.Rptr. 351].) Accordingly, I conclude that plaintiffs’ claims are not in derogation of any rights of the state or GTE under the UPL and that the demurrer was erroneously sustained because facts are alleged that plaintiffs’ damages arose from conduct which is outside the scope of the immunity provisions of the UPL. And GTE’s argument that the demurrer can be sustained on the alternative ground of the bar of the statute of limitations is also without merit.
I
CALIFORNIA’S UNCLAIMED PROPERTY LAW
“Escheat, at common law in England, formerly terminated a tenancy so that on the death of a tenant without heirs, or as a result of a tenant’s felony that worked a corruption of the blood, the land escheated to the lord of the fee. Title by escheat ‘was one of the fruits of and consequences of feudal tenure.’ ‘But, as the feudal tenures do not exist in this country, there are no private persons who succeed to the inheritance by escheat; and the state steps in the place of the feudal lord, by virtue of its sovereignty, as the original and ultimate proprietor of all the lands within its jurisdiction.’ Escheat of tangible or intangible personal property arises from the same conceptual scheme.” (Taylor v. Westly (9th Cir. 2005) 402 F.3d 924, 926, fns. omitted {Taylor).) “The California statutes distinguish between ‘escheat’ and ‘permanent es-cheat.’ Where the property has not ‘permanently’ escheated to the state, the state’s Unclaimed Property Law sets up a custodial escheat system. The [581]statute explicitly states that ‘property received by the state under this chapter shall not permanently escheat to the state.’ It provides that the Controller must ‘safeguard and conserve’ unclaimed property in a trust fund for the interests of all parties having an interest in the property.” {Id. at p. 930, fns. omitted.)
The court in Fong v. Westly (2004) 117 Cal.App.4th 841 [12 Cal.Rptr.3d 76] {Fong) provided the following summary of the UPL: “The law has two objectives: (1) protect unknown property owners by locating them and restoring their property to them, and (2) give the state, rather than the owners of the unclaimed property, the benefits of holding the property, since experience shows most abandoned property will never be claimed. [Citation.] [f] The statute does not operate a true escheat. The law expressly provides title to property received by the state under its provisions does not pass to the state. (§ 1501.5.) The state holds the property as a custodian until the property’s rightful owner can claim the property. [][] In general, the law declares certain personal property either located in the state or owned by a California resident escheats to the state when its owner fails to take enumerated steps during a period of time indicating continued active ownership, such as increasing or decreasing the amount on deposit, corresponding with the holder of the property, or otherwise indicating a continuing interest in the property. (See, e.g., § 1513.) Holders of such property must give property owners mailed notice of the pending escheat if the holder has the owner’s address in its records. (§ 1513.5.) [][] If the owner fails to claim the property, the statute requires holders to make a verified report to the State Controller, identifying the property owner’s name and last known address and describing the property. (§ 1530.) The holder files the report and, at the same time, transfers the property to the Controller. (§ 1532.)” {Fong, supra, 117 Cal.App.4th at pp. 844-845.)
With respect to stock, section 1516 provides in pertinent part that, as long as other conditions are met, “any intangible interest in a business association, as evidenced by the stock records or membership records of the association, escheats to this state if (1) the interest in the association is owned by a person who for more than three years has neither claimed a dividend or other sum . . . nor corresponded in writing with the association or otherwise indicated an interest as evidenced by a memorandum or other record on file with the association, and (2) the association does not know the location of the owner at the end of the three-year period.” (§ 1516, subd. (b).)
“Within one year after receiving the holder’s report and the property described therein, the Controller must cause a notice to be published in a [582]newspaper of general circulation to inform the property owners of the escheat. (§ 1531.) [1] The Controller in general sells all escheated property to the highest bidder, except that with regards to securities traded on an established exchange, the Controller sells the securities within two years of its receipt on that exchange at the prevailing prices. (§ 1563.) The Controller is required to publish one-week’s prior notice of any sale, except that no notice is required for a sale of securities on a national exchange. {Ibid.) [IQ Any person who claims an interest in property escheated to the state may file a claim ‘to the property or to the net proceeds from its sale.’ (§ 1540, subd. (a).) If the Controller grants the claim, the Controller returns the property or the proceeds from its sale to the claimant, along with a payment of interest at a specified rate. (Former § 1540, subd. (c); Stats. 1998, ch. 1029, § 1.)” {Fong, supra, 117 Cal.App.4th at p. 845.)
“It used to be, until the seventies, that the period of inaction before the property was deemed ‘unclaimed’ was sixteen years. Now it has been shortened to three years. Also, until 1989, the Bureau of Unclaimed Property published the names of shareholders, whose shares were thought to be unclaimed, in newspapers in each county that listed an address for the individual. The Controller also used to maintain a staff, in the 1980’s, to find owners and get their property back to them. [<J[] Now the Controller just publishes advertisements describing their general practices .... ['ll] [I]n a font smaller than the main text, the ad does not claim to comply with the law, but instead admits that it is ‘in lieu of CCP 1531.’ . . . Thus the Controller is admitting right in her ad that she is violating the law!” {Taylor, supra, 402 F.3d at pp. 927-928, fns. omitted.) In 1997, section 1531 of the UPL was amended to no longer require publication of names and requires direct mailing only if the escheated account contains a Social Security number. {Taylor, supra, 402 F.3d at p. 928, fn. 3.)
The allegations of plaintiffs’ complaint are viewed in the context of the foregoing statutory scheme.
n
ALLEGATIONS OF PLAINTIFFS’ COMPLAINT2
Gene Harris is one of five named plaintiffs who bring this action on behalf of themselves and as members of an alleged class of approximately 8,500 [583]minority shareholders of GTE and Verizon Communications, the successor to GTE after a merger in June 2000. Each of the plaintiffs was an employee of GTE whose employment relationship “entitled them to GTE and Verizon’s fringe benefits on a non-discriminatory basis . . . .” Plaintiffs, who worked for GTE during the 1970’s and 1980’s, were entitled to GTE stock “as an incentive to actively participate in the creation and growth of the company.”3
Liberally construed in favor of plaintiffs, the complaint alleged that GTE knew plaintiffs’ identities, location, and vital information, and that GTE’s own records provided information from which their whereabouts could be easily ascertained, but GTE failed to inform plaintiffs of their stock ownership, retained possession of their stock certificates, failed to calculate their dividends and interest, failed to provide them with notices and information required by law, failed to notify them of annual and special shareholders’ meetings, prevented plaintiffs from voting, and “deprived Plaintiffs of knowledge and the ability to take action with respect to their ownership interests in the corporations, including the ability to liquidate their interests, should they have determined that it was in their favor to do so.”
During the 18 months before they filed their action, plaintiffs “learned that they owned stock in GTE that was improperly transferred without their authorization and sold without their knowledge. The proceeds from the sale of Plaintiffs’ stock were deposited in government accounts in the State of California where the stock is listed under their names, as shareholders of GTE and Verizon, and stating the stock is lost and unclaimed property.”4
Plaintiffs asserted claims for breach of fiduciary duty, negligence, conversion, constructive fraud, accounting, and unfair competition under Business and Professions Code section 17200 et seq.
GTE filed a demurrer to the complaint on two grounds: (1) The complaint was barred by the three- or the four-year statutes of limitations governing the [584]various claims because the causes of action allegedly accrued “sometime ‘during the 1970s and 1980s’ ” and the statutes expired “long before Plaintiffs belatedly filed suit in 2001.” (2) GTE was immune from suit pursuant to the provisions of section 1532, subdivision (b), of the UPL.5 In opposition to the demurrer, plaintiffs argued, among other things, that affording immunity to GTE in the instant circumstances would violate principles of due process and would also “render meaningless all law requiring corporate fiduciaries to diligently attempt to inform shareholders of corporate actions regarding their stock, and to obtain authorization before selling or transferring their stock, as well as render meaningless many other statutory provisions governing corporate duties to shareholders.”
After a hearing on September 29, 2004, the court overruled the demurrer on statute of limitations grounds, but sustained the demurrer without leave to amend “on the ground that [GTE] is immune from liability under California’s escheatment statutes. The court finds that in Harris v. Westly, [supra, 116 Cal.App.4th 214], the companion case filed by these plaintiffs against the State Controller, the Court of Appeal acknowledges that GTE delivered duplicate copies of the stock certificates to the State Controller. This finding of fact by the Court of Appeal is the law in this case. Accordingly, pursuant to Code of Civil Procedure section 1532, 1321, and 1560, GTE is absolutely immune from liability to the plaintiffs.”6
Plaintiffs appealed from the order of dismissal. They contend, among other things, that the immunity afforded GTE under the UPL is “subordinate” to the common law and statutory fiduciary duties owed by GTE to its minority [585]shareholders and that the UPL must be construed to be in harmony with those duties and other law. Under the allegations of this complaint, I agree.
IH
DISCUSSION
“We review matters of statutory construction de novo.” (Kim v. Superior Court (2006) 136 Cal.App.4th 937, 940 [39 Cal.Rptr.3d 338].) In construing a statute, we do not consider statutory language in isolation. {People v. Mendoza (2000) 23 Cal.4th 896, 907 [98 Cal.Rptr.2d 431, 4 P.3d 265] {Mendoza).) The Legislature is also presumed to have enacted legislation with existing law in mind. {Fujitsu IT Holdings, Inc. v. Franchise Tax Bd. (2004) 120 Cal.App.4th 459, 485 [15 Cal.Rptr.3d 473].) Courts “look to ‘the entire substance of the statute ... in order to determine the scope and purpose of the provision .... [Citation.]’ ” {Mendoza, supra, 23 Cal.4th at pp. 907-908.) The words of a statute are construed in context and in light of the nature and obvious purpose of the statute. {Id. at p. 908.) “We must also avoid a construction that would produce absurd consequences, which we presume the Legislature did not intend.” {Ibid.) “It is an elementary rule of statutory construction that the Legislature will never be presumed to have intended an unjust result.” {Brennfleck v. Workmen’s Comp. App. Bd. (1970) 3 Cal.App.3d 666, 673 [84 Cal.Rptr. 50].) Decisional authority also directs “that statutes not be construed in a manner leading to an absurdity, if they may be construed to achieve justice and common sense.” {Bank of America v. Cory, supra, 164 Cal.App.3d at p. 75.)
GTE does not challenge plaintiffs’ assertion that GTE owed fiduciary duties to plaintiffs. Rather, GTE maintains, and the trial court agreed, that the UPL affords it immunity for its alleged breach of such duties.
But the language of section 1532, subdivision (b) provides immunity only for losses and damages resulting from “the issuance and delivery to the Controller of the duplicate [stock] certificate.” (See fn. 5, ante.) The complaint asserts, among other things, that GTE’s failure to fulfill its corporate duties to its shareholders prevented them from taking action with respect to their shares, thus impairing their ability to liquidate their interests at a time of their choosing, and not at the time chosen by GTE or the Controller. If plaintiffs suffered damages because GTE’s conduct prevented them from exercising their right to sell their stock before GTE delivered the shares to the Controller on November 1, 1990, then such damages would not have resulted from the issuance and delivery of the duplicate certificates to the Controller. Plaintiffs’ [586]damages would have resulted from conduct which antedated any obligation of GTE under the UPL to deliver plaintiffs’ stock to the Controller. And GTE’s alleged failure denied plaintiffs the opportunity to vote, cash dividend checks, or communicate in writing with GTE, which simple steps would have avoided delivery of their shares to the Controller in the first instance.
There is no language in sections 1532, 1321, or 1560, which purports to provide immunity for holders based on wrongful conduct which caused damage to plaintiffs before duplicate certificates are delivered to the Controller. And there is no language in those sections which purports to abrogate a corporation’s duties to its shareholders under the common law and under statutes other than the UPL. I thus conclude that the foregoing sections do not afford GTE immunity as against the allegations of the complaint, which raises factual issues as to the nature of plaintiffs’ losses or damages and whether such damages resulted from GTE’s conduct other than its delivery of the duplicate certificates to the Controller.
An interpretation of the holder immunity provisions of the UPL so as to deny immunity to GTE with respect to the instant allegations also is consistent with the purposes of the UPL and with common sense and justice. The two purposes of the UPL are “(1) to reunite owners with unclaimed funds or property, and (2) to give the state, rather than the holder, the benefit of the use of unclaimed funds or property.” {Bank of America v. Cory, supra, 164 Cal.App.3d at p. 74.) In this case, the state has had the benefit of the use of plaintiffs’ funds and the state has paid four of the plaintiffs on their claims after the Controller had sold their stock. (See fh. 4, ante.) Thus, plaintiffs’ pursuit of this action against GTE has no impact with respect to the second purpose of the UPL.
But the first purpose of the UPL—to reunite plaintiffs with their unclaimed property—can only be furthered by permitting plaintiffs to pursue their claims against GTE. Affording GTE immunity for the alleged breaches of fiduciary duty here would provide no incentive to GTE ever to honor its duties to its minority shareholders in connection with their stock ownership and attendant rights, an absurd result that cannot be imputed as the Legislature’s intention. And GTE provides no authority to support the proposition that the immunity provisions of the UPL extend so far as to absolve it from the failure to perform its duties to its shareholders at a time before the duplicate stock certificates were delivered to the Controller. For all of the foregoing reasons, I conclude that facts are alleged that preclude application of the immunity defense at this time and that the demurrer was improperly sustained on this ground.
[587]The demurrer also cannot be upheld on the ground of the statute of limitations because the complaint alleges facts sufficient to invoke the doctrines of equitable tolling and equitable estoppel and does not reveal on its face that the action is necessarily barred by the applicable statutes of limitations. (Leasequip, Inc. v. Dapeer (2002) 103 Cal.App.4th 394, 400 [126 Cal.Rptr.2d 782] [demurrer based on statute of limitations will not lie where action may be, but is not necessarily, barred].)
I would reverse the order of dismissal and direct the trial court to overrule GTE’s demurrer.
Unspecified statutory references are to the Code of Civil Procedure.
In opposition to the demurrer, plaintiffs expressly abandoned their cause of action for violation of federal securities laws, so I do not discuss this claim.
Plaintiffs filed this action on October 15, 2001. GTE removed the case to federal court. After proceedings which are not pertinent here, the complaint was remanded to state court in February 2004.
These allegations were omitted from the second amended complaint but appeared in the original complaint.
According to the appellate opinion in Harris v. Westly (2004) 116 Cal.App.4th 214 [10 Cal.Rptr.3d 343], which upheld the trial court’s judgment on the pleadings in favor of the Controller in plaintiffs’ action for injunctive and other relief, “an investigation revealed that GTE had issued duplicate shareholder certificates and delivered them to the California Controller. The Controller’s records show the stock escheated to the State of California on November 1, 1990. The Controller sold the stock, without notice to Harris, and deposited the funds from the sale in the Unclaimed Property Fund. The Controller’s records show that Harris [and three of the other named plaintiffs] filed claims and, on various dates in 1999, received payment for their shares of GTE stock from the State of California.” (Harris v. Westly, supra, 116 Cal.App.4th at p. 218 [holding that the sale of escheated stock without notice to the owner does not violate the due process provisions of the federal or state Constitutions].)
Section 1532, subdivision (b), provides: “The holder of any interest under subdivision (b) of Section 1516 shall deliver a duplicate certificate to the Controller or shall register the securities in uncertificated form in the name of the Controller. Upon delivering a duplicate certificate or providing evidence of registration of the securities in uncertificated form to the Controller, the holder, any transfer agent, registrar, or other person acting for or on behalf of the holder in executing or delivering the duplicate certificate or registering the uncertificated securities, shall be relieved from all liability of every kind to any person including, but not limited to, any person acquiring the original certificate or the duplicate of the certificate issued to the Controller for any losses or damages resulting to that person by the issuance and delivery to the Controller of the duplicate certificate or the registration of the uncertificated securities to the Controller.” (Italics added.)
The version of section 1532, subdivision (b) in effect in November 1990, when Harris’s stock escheated to the state, did not contain provisions for uncertificated securities but in all other respects was substantially similar to the current version of the statute.
Section 1321 provides immunity from suit to holders of “money or other property” delivered to the Controller. Section 1560, subdivision (a) similarly provides immunity from suit to holders who have paid or delivered escheated property to the Controller and that the Controller “shall assume custody and shall be responsible for the safekeeping of the property.”