Rossdale Grp., LLC v. Walton

FACTUAL AND PROCEDURAL BACKGROUND

This lawsuit had its genesis in an earlier action filed in 2010 by Walton against a defendant he called The Rossdale Group, LLC (Rossdale). Walton, who the complaint in this case alleges is a licensed California attorney, "maintained a litigation factory" by "placing dozens of e-mail addresses on the Internet," collecting " 'spam' " messages sent to those addresses, and then demanding "compensation" for supposed violations of California law. After Rossdale refused to pay in response to a demand letter for "prohibited forms of e-mail advertising," Walton filed suit against Rossdale, claiming, among other things, a violation of the Consumer Legal Remedies Act, Civil Code sections 1750 et seq. Walton's lawsuit against Rossdale was dismissed after the trial court granted a motion for judgment on the pleadings with prejudice, and judgment was entered on May 2, 2012.

Miami Legal, filing under the Rossdale name, opposed the motion, supported by a declaration from Susan Lunden (Lunden), who identified herself as the "CEO" for the "Rossdale Group, LLC." The opposition contained no denial that Miami Legal had been dissolved. Instead, Miami Legal argued that all of its assets and liabilities had been transferred to a Delaware entity called Rossdale, CLE, Inc. (Rossdale Delaware). According to Miami Legal, Rossdale Delaware had become its "owner" in April 2013 (apparently Miami Legal was Rossdale Delaware's subsidiary). The process of transferring the assets and liabilities of Miami Legal to Rossdale Delaware had started in 2013 and by September 2014, the "entire business" of Miami Legal had been transferred to Rossdale Delaware, which Miami Legal referred to as its "successor in interest to the causes of action asserted in their [ sic ] lawsuit." The opposition also referred to an "amend[ment]" of Rossdale's fictitious business name statement with Florida, which was filed to "to reflect that The Rossdale Group, LLC is now owned by the new successor in interest, [Rossdale Delaware]." (Although there are references to this amendment in the supporting declaration to Miami Legal's opposition, no copy of it is in the record.)

In his reply, Walton asserted that no documentary evidence was provided by Lunden to support her claim that the assets and liabilities of Miami Legal had in fact been assigned to Rossdale Delaware. He also implied that any such assignment would have been void because it would have been done by the time Miami Legal was dissolved.

After a hearing on March 3, 2016, the court granted the motion to dismiss. The order states as follows: "The Rossdale Group, LLC, lacks standing to sue. The Rossdale Group, LLC ('Rossdale') asserts that Defendant Timothy Walton waived any right to complain concerning lack of standing. However, lack of capacity to sue is a jurisdictional defect which may be raised at any time. Common Cause of California v. Board of Supervisors of Los Angeles County (1989) 49 Cal.3d 432 , 438 [ 261 Cal.Rptr. 574 , 777 P.2d 610 ] [ ( Common Cause ) ] (contentions based on lack of standing involve a jurisdictional challenge and

risdiction of those courts. (See id. at p. 9 ['The threshold requirements are attributed to the "case" and "controversy" terms that define the federal judicial power in Article III. Absent constitutional standing, the courts believe they lack power to entertain the proceeding .' (italics added) ]; see 13 Wright et al., supra , § 3522, pp. 103-104 [presumption that federal court lacks subject matter jurisdiction].) But as our Supreme Court has written, no such wariness surrounds the subject matter jurisdiction of California courts: 'Article III of the federal Constitution imposes a "case-or-controversy limitation on federal court jurisdiction," requiring " 'the party requesting standing [to allege] "such a personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues." ' " [Citation.] There is no similar requirement in our state Constitution. [Citation.]' ( Grosset v. Wenaas (2008) 42 Cal.4th 1100 , 1117, fn. 13 [ 72 Cal.Rptr.3d 129 , 175 P.3d 1184 ] [citation]; [Citations.]" ( Jasmine Networks, supra, 180 Cal.App.4th at p. 990, 103 Cal.Rptr.3d 426 .) (See also Cal. Const., art. VI, § 10 [empowering superior court to adjudicate any "cause" brought before it].)

Whatever the exact contours of the concept of standing as it is used in California, the fact that a corporate entity's status has been suspended does not implicate it. "Defects or errors in relation to parties do not affect subject matter jurisdiction." (2 Witkin, Cal. Procedure (5th Ed. 2008) Jurisdiction, § 99, p. 672.) " 'There is a difference between the capacity to sue, which is the right to come into court, and the standing to sue, which is the right to relief in

Supreme Court noted over a century ago, "a person may adopt any name in which to prosecute business, and may sue or be sued in such a name." ( Emery v. Kipp (1908) 154 Cal. 83 , 86, 97 P. 17 .) In addition, the argument that a "plaintiff has no standing to sue under a fictitious name" was more recently rejected in Doe v. Lincoln Unified School Dist. (2010) 188 Cal.App.4th 758 , 765-766, 115 Cal.Rptr.3d 191 ( Lincoln Unified ). In that case, a school teacher brought an action against her school district (among other defendants), seeking a writ of mandate to compel the district to initiate certain proceedings under the Education Code to determine her mental fitness. ( Id. at p. 762, 115 Cal.Rptr.3d 191 .) The teacher brought suit under a fictitious name to protect her privacy and the school district objected, arguing that plaintiff's remedy was to file her documents under seal pursuant to California Rules of Court, rule 2.551. ( Id. at p. 765, 115 Cal.Rptr.3d 191 .)

The district's arguments were rejected: "The question here is not one of standing." ( Lincoln Unified, supra, 188 Cal.App.4th at p. 765, 115 Cal.Rptr.3d 191 .) "The

INTRODUCTION

We are asked in this appeal to reverse a dismissal of a malicious prosecution lawsuit. Defendant and respondent Timothy Walton (Walton) asked the trial court to dismiss the case for lack of standing and lack of jurisdiction because the named plaintiff, The Rossdale Group, LLC, was only a fictitious business name and the entity to which that name was registered was a dissolved Florida limited liability company called Miami Legal Resources, LLC. Because no legitimate standing or jurisdictional issue was raised by Walton's motion, we will reverse.

may be raised at any point in the proceeding). [¶] Rossdale was never a corporate entity, it was at all times a fictitious business name, and at no time was it a valid entity, either when sued by Walton

"[A] plea in abatement such as lack of capacity to sue 'must be raised by defendant at the earliest opportunity or it is waived.... The proper time to raise a plea in abatement is in the original answer or by demurrer at the time of the answer.' " ( Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599 , 1604, 52 Cal.Rptr.2d 443 ( Color-Vue ).) "This principle derives from the governing provisions in the Code of Civil Procedure. Under those provisions, a defendant may object to a complaint by demurrer or answer on the ground that '[t]he person who filed the pleading does not have the legal capacity to sue.' (Code Civ. Proc., § 430.10, subd. (b).) The objection may be raised by demurrer when the ground for objection appears on the face of the complaint or from any matter that is

Walton's

motion was based on his apparent belief that Code of Civil Procedure section 367 (section 367 ) provides a sort of baseline standing requirement for California courts. As we mentioned, the text of that statute provides that "[e]very action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute." (Code Civ. Proc., § 367.) Its purpose is to "protect a defendant from harassment from other claimants on the same demand." ( Redevelopment Agency of San Diego v. San Diego Gas & Electric Co . (2003) 111 Cal.App.4th 912 , 921, 4 Cal.Rptr.3d 317 .)

Section 367"is not the equivalent of, and provides no occasion to import, federal-style 'standing' requirements." ( Jasmine Networks, Inc. v. Superior Court (2009) 180 Cal.App.4th 980 , 991, 103 Cal.Rptr.3d 426 ( Jasmine Networks ).) "Properly understood, the concept of 'standing' contemplates a requirement that the plaintiff 'establish an entitlement to judicial action, separate from proof of the substantive merits of the claim advanced.' (13A Wright et al., Fed. Practice and Procedure (3d ed. 2008) § 3531, p. 6, italics added.) This concept 'has been largely a creature of twentieth century decisions of the federal courts.' ( Ibid ., fn. omitted.) It is rooted in the constitutionally limited subject matter ju

court.' " ( Color-Vue [supra] , 44 Cal.App.4th [at p.] 1604 [ 52 Cal.Rptr.2d 443 ] [citation].) 'A plaintiff lacks standing to sue if, for example, it [is] not ... a real party in interest.' ( Id . at p. 1604, fn. 4 [ 52 Cal.Rptr.2d 443 ].) Incapacity, on the other hand, is merely a legal disability, such as minority or incompetency, that can be cured during the pendency of the litigation. ( Id . at p. 1604 [ 52 Cal.Rptr.2d 443 ].) 'Suspension of corporate powers results in a lack of capacity to sue, not a lack of standing to sue.' ( Id . at pp. 1603-1604 [ 52 Cal.Rptr.2d 443 ].)" ( Washington Mutual Bank v. Blechman (2007) 157 Cal.App.4th 662 , 669-670, 69 Cal.Rptr.3d 87 .) Any claim, therefore, that Miami Legal's dissolved status prohibited further prosecution of its lawsuit does not raise matters of jurisdiction or standing.

Further, the Common Cause case, relied upon by Walton in his motion (and cited by the trial court in its order of dismissal), is inapposite. (See Common Cause, supra, 49 Cal.3d at pp. 438-441, 261 Cal.Rptr. 574 , 777 P.2d 610 .) The question presented in that case was whether taxpayer plaintiffs had standing to require a county to implement what was, in essence, a kind of voter outreach program, without which, plaintiffs claimed, provisions of California's Elections Code and the equal protection guarantees of the United States and California Constitutions would be violated. ( Id. at pp. 437-439, 261 Cal.Rptr. 574 , 777 P.2d 610 .) Our Supreme Court held that the taxpayers did have standing because they were seeking, by a writ of mandamus, to procure the enforcement of a public duty. ( Id. at pp. 439-440, 261 Cal.Rptr. 574 , 777 P.2d 610 .) These facts are far afield from what Walton argued in his motion. This case involves simply a corporate capacity issue. We are not being asked to discern here whether members of the taxpaying public might have standing nor to discern the dividing line between a generalized grievance and particularized injury.

We also reject the notion that either section 367 or the concept of standing prohibited Miami Legal from pursuing its case under a fictitious name. As our

question for purposes of standing is not the name used by the party suing but whether the party suing is the party possessing the right sued upon. In this matter, there is no question plaintiff is the party injured by virtue of defendants' actions and, therefore, she is the party possessing the right sued upon. Thus, the question is not whether plaintiff has standing to sue but whether she may do so using a fictitious name." ( Ibid. ) The Lincoln Unified court then examined a long line of cases allowing plaintiffs to proceed under a fictitious name. ( Id. at pp. 766-767, 115 Cal.Rptr.3d 191 .)

The Lincoln Unified court also rejected the assertion that section 367"requires that a party sue in his or her own name. It does not. Notwithstanding its wording, this provision requires that an action be brought by the real party in interest. [Citation.] ' "A real party in interest ordinarily is defined as the person possessing the right sued upon by reason of the substantive law." [Citation.] A complaint filed by someone other than the real party in interest is subject to general demurrer on the ground that it fails to state a cause of action. [Citation.]' " ( Lincoln Unified, supra, 188 Cal.App.4th at p. 765, 115 Cal.Rptr.3d 191 .)

Of course, this case does not involve an individual seeking to sue under a fictitious name to protect his or her identity nor does this case invoke the same kind of privacy concerns at issue in Lincoln Unified . Nor did Walton's motion in fact raise any supposed violation of any fictitious name statute. Both this case and Lincoln Unified , however, stand for the proposition that, whatever other complications might arise from the use of fictitious names, doing so does not, in and of itself, raise a question of standing or jurisdiction.

DISPOSITION

The judgment is reversed. The trial court is instructed to enter an order denying Walton's motion to dismiss. Costs on appeal are awarded to the appellant, Miami Legal.

WE CONCUR:

PREMO, J.

ELIA, J.