(Weingarten); § 1510, et seq.) " 'The [Unclaimed Property Law] is not a permanent or
"true" escheat statute. Instead, it gives the state custody and use of unclaimed property
until such time as the owner claims it. Its dual objectives are "to protect unknown owners
by locating them and restoring their property to them and to give the state rather than the
holders of unclaimed property the benefit of the use of it, most of which experience
shows will never be claimed." ' " (Azure Limited v. I-Flow Corp. (2009) 46 Cal.4th 1323,
1328.) Section 1540 sets forth the procedures for the filing and processing of claims for
escheated property.2
C
"A corporation that has had its powers suspended 'lacks the legal capacity to
prosecute or defend a civil action during its suspension.' [Citation.] 'The "corporate
powers, rights and privileges" of any domestic corporate taxpayer may be suspended for
failure to pay certain taxes and penalties. (Rev. & Tax. Code, § 23301.) This means the
2 In Weingarten, supra, 212 Cal.App.4th at page 165, this court concluded an assignee judgment creditor could use section 1540 to recover unclaimed property of a judgment debtor that escheated to the state prior to the assignment. The Legislature amended section 1540 in 2013 to require a claimant of escheated property to have been an owner of the property prior to its escheat. (§ 1540, subd. (d); Stats. 2013, ch. 128, § 1.) The trial court determined the amended statute did not apply retroactively and permitted this case to proceed. The retroactivity issue is not before us in this appeal.
6
suspended corporation cannot sell, transfer or exchange real property in California, and
contracts entered into during the time of suspension are voidable … through legal action.
[Citation.] … Nor, during the period of suspension, may the corporation prosecute or
defend an action, seek a writ of mandate, appeal from an adverse judgment, or renew a
judgment obtained before suspension.' " (City of San Diego, supra, 3 Cal.App.5th at
p. 577.) "The purpose of Revenue and Taxation Code section 23301 'is to "prohibit the
delinquent corporation from enjoying the ordinary privileges of a going concern"
[citation], and to pressure it to pay its taxes [citation].' " (Cal-Western Business Services,
Inc. v. Corning Capital Group (2013) 221 Cal.App.4th 304, 310 (Cal-Western), quoting
Grell v. Laci Le Beau Corp. (1999) 73 Cal.App.4th 1300, 1306.)
III
Application
Casiopea contends it should not be subject to a lack of capacity defense based
upon Financial Title's corporate suspension because it obtained a judicial assignment
pursuant to section 708.510. Casiopea contends a judicial assignment under section
708.510 is distinct from a voluntary assignment under Civil Code section 954 of an
interest arising from "the violation of a right of property" or from an obligation and
should be treated differently. However, other than pointing to the fact the assignments
arise from different statutes, Casiopea has cited no authority suggesting the rights
assigned by judicial order are in any way different or superior to the rights assigned
voluntarily. We are not persuaded the statutory basis for the assignment makes a
difference.
7
When an assignee acquires a claim from a corporation lacking capacity to sue
under Revenue and Taxation Code section 23301, the assignee takes upon itself the same
lack of capacity. Section 368 states, "the action by the assignee is without prejudice to
any set-off, or other defense existing at the time of, or before, notice of the assignment."
An " ' "assignee 'stands in the shoes' of the assignor, taking his rights and remedies,
subject to any defenses which the obligor has against the assignor prior to notice of the
assignment." ' " (Cal-Western, supra, 221 Cal.App.4th at p. 311, italics omitted; id. at
p. 312 [defense based on assignor's lack of capacity to sue for corporate suspension
barred assignee from enforcing assignor's judgment]; Cleveland v. Gore Bros. Inc. (1936)
14 Cal.App.2d 681, 682–683 [assignee of a suspended corporation subject to the same
incapacities with respect to commencement of actions during the period in which
corporate powers and rights are suspended].) Similarly, under section 708.510, a court
can only assign a judgment creditor's "interest in the property or 'right to payment due.' "
(Weingarten, supra, 212 Cal.App.4th at p. 167.) The assignee's "rights are no greater
than those of the assignor." (Road Sprinkler Fitters Local Union No. 669 v. G & G Fire
Sprinklers, Inc. (2002) 102 Cal.App.4th 765, 775; see Truck Ins. Exchange v. Superior
Court (1997) 60 Cal.App.4th 342, 350 ["subrogated insurer stands in the shoes of the
insured and has no greater rights than the insured"].) Therefore, Casiopea cannot do what
Financial Title cannot do. It cannot recover from the state under the Unclaimed Property
Law procedures escheated property held in the name of Financial Title based upon the
assignment.
8
An equitable exception is not available to Casiopea to prevent application of
Revenue and Taxation Code section 23301. Unlike the authorities cited by Casiopea, it is
asserting Financial Title's right to the escheated property; it is not bringing this action
based upon an independent right or harm. (See Performance Plastering v. Richmond
American Homes of California Inc. (2007) 153 Cal.App.4th 659, 668–669 [lack of
capacity of a suspended corporation makes a contract voidable and third party beneficiary
may have standing to enforce the contract]; Biggs v. California Insurance Guarantee
Assn. (1981) 126 Cal.App.3d 641, 645 [California Insurance Guarantee Association has
its own statutory powers and protections and "does not 'stand in the shoes" of the
insolvent insurer for all purposes"]; Reed v. Norman (1957) 48 Cal.2d 338, 343
[stockholder derivative action does not exercise rights of a suspended corporation, but
uses the corporate channel to enhance stockholders' interests in enforcing fiduciary
interests of the directors of the corporation]; Bozzio v. EMI Grp. Ltd. (9th Cir. 2016) 811
F.3d 1144, 1150 [incapacity of a suspended corporation to a contract is not an absolute
bar to a lawsuit by a third party beneficiary of the contract].)
We do not agree this interpretation undermines public policy of the Unclaimed
Property Law, the Enforcement of Judgments Law, or the Revenue and Taxation Code.
Allowing an assignee of a suspended corporation to obtain unclaimed property under the
Unclaimed Property Law procedures would allow the suspended corporation to enjoy the
ordinary privileges of an ongoing concern by resolving its debt without the risk of paying
taxes, undermining the purpose of Revenue and Taxation Code section 23301. (Grell,
supra, 73 Cal.App.4th at p. 1306.) It makes no difference if the assignment is voluntary
9
or through a judicial assignment made in the enforcement of judgment process for a
corporation refusing to pay a judgment or obligation. The result is the same and should
not be permitted. Additionally, allowing an assignee to claim escheated property would
place the Controller in the position of validating third party debt and resolving competing
claims among judgment creditors, which is not typically its role. (See Assem. Com. on
Judiciary, Rep. on Assem. Bill No. 1275 (2013–2014 Reg. Sess.) May 7, 2013, pp. 3–4.)
Finally, the court did not err in denying Casiopea's request for a continuance or
leave to amend its complaint. "The statute of limitations is regarded as a substantive
defense. If an action is commenced while the corporation is suspended, the corporation's
subsequent revival does not prevent the running of the statute of limitations; if the statute
runs prior to revival, the corporation's actions will be time-barred, even if the
complaint would have otherwise been timely." (City of San Diego, supra, 3 Cal.App.5th
at p. 579.) Section 1541 provides a party aggrieved by a decision of the Controller must
bring the action "within 90 days after the decision of the Controller." The 90-day statute
of limitations has long since expired and revival of the corporate status by either
Financial Title or Casiopea cannot revive the instant action.
Whether or not Casiopea may have other avenues of relief either through other
provisions of the Enforcement of Judgments Law or as a result of a dissolution of
Financial Title is not before us at this juncture. Casiopea has not met its burden to
establish how it could amend its complaint to state a cause of action. " 'The assertion of
an abstract right to amend does not satisfy this burden.' [Citation.] The plaintiff[s] must
clearly and specifically state 'the legal basis for amendment, i.e., the elements of the
10
cause of action,' as well as the 'factual allegations that sufficiently state all required
elements of that cause of action.' " (Maxton v. Western States Metals (2012) 203
Cal.App.4th 81, 95.)
DISPOSITION
The judgment is affirmed. Respondent shall recover its costs on appeal.
McCONNELL, P. J.
WE CONCUR:
HALLER, J.
DATO, J.
11
Filed 6/7/17
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
CASIOPEA BOVET, LLC, D070797
Plaintiff and Appellant, (Super. Ct. No. 37-2014-00039731- v. CU-MC-CTL)
JOHN CHIANG, as State Controller, etc., ORDER CERTIFYING OPINION Defendant and Respondent. FOR PUBLICATION
THE COURT: The opinion in this case filed May 17, 2017, was not certified for publication. It
appearing the opinion meets the standards for publication specified in California Rules of
Court, rule 8.1105(c), the request pursuant to rule 8.1120(a) for publication is
GRANTED.
IT IS HEREBY CERTIFIED that the opinion meets the standards for publication
specified in California Rules of Court, rule 8.1105(c); and
ORDERED that the words "Not to Be Published in the Official Reports" appearing
on page 1 of said opinion be deleted and the opinion herein be published in the Official
Reports.
McCONNELL, P. J.
Copies to: All parties
2
AI Brief
AI-generated · verify before citing
Holding. An assignee of a suspended corporation lacks the legal capacity to prosecute an action to recover escheated property because the assignee stands in the shoes of the assignor and is subject to the same incapacity defenses. Furthermore, the court held that the expiration of the 90-day statute of limitations for challenging the Controller's decision barred the action regardless of any potential corporate revival.
Issues
Whether an assignee of a suspended corporation may maintain an action to claim escheated property under the Unclaimed Property Law.
Whether a judicial assignment under the Enforcement of Judgments Law confers greater rights than a voluntary assignment regarding a suspended corporation's incapacity.
Whether the trial court abused its discretion in denying leave to amend the complaint after the statute of limitations had expired.
Disposition. affirmed
Quotations verified verbatim against the opinion
“When an assignee acquires a claim from a corporation lacking capacity to sue under Revenue and Taxation Code section 23301, the assignee takes upon itself the same lack of capacity.”
“The assignee's "rights are no greater than those of the assignor."”
“The 90-day statute of limitations has long since expired and revival of the corporate status by either Financial Title or Casiopea cannot revive the instant action.”