TCR SERVICES, INC. VS GREAT AMERICAN INSURANCE COMPANY, ET AL.

Tentative Rulings

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Case Number: 20STLC02864 Hearing Date: August 17, 2021 Dept: 26

TCR Services, Inc. v. Great American Ins. Co.,\r\net al. 20STLC02864

MOTION TO STRIKE

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(CCP §§ 435, et\r\nseq., 92)

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TENTATIVE RULING:

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Defendants AWI Builders, Inc.,\r\nGreat American Insurance Company and The Hanover Insurance Company’s Motion to\r\nStrike the Complaint is DENIED.

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DEFENDANTS ARE TO ANSWER THE\r\nCOMPLAINT WITHIN TEN (10) DAYS’ SERVICE OF THIS ORDER.

ANALYSIS:

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Plaintiff TCR Services, Inc. (“Plaintiff”) filed the instant\r\naction for breach of construction contract and related claims against\r\nDefendants AWI Builders, Inc. (“Defendant AWI”), Great American Insurance\r\nCompany and The Hanover Insurance Company (“Defendants”) on March 30, 2020.\r\nDefendants filed the instant Motion to Strike on June 29, 2020.

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The unopposed Motion initially came for hearing on October\r\n7, 2020 and was granted by the Court. (Minute Order, 10/07/20.) Following a\r\nmotion for reconsideration by Plaintiff, which the Court granted on June 1,\r\n2021, the Motion to Strike was re-set for hearing on August 17, 2021. (Minute\r\nOrder, 06/01/21.) Plaintiff filed an opposition on July 23, 2021 and Defendants\r\nreplied on August 10, 2021.

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Discussion

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The Motion to Strike the Complaint is brought pursuant to\r\nCode of Civil Procedure section 436 on the grounds that Plaintiff was a\r\ndissolved corporation as of the date the contract was allegedly breached and a\r\ndissolved corporation is not permitted to conduct any business after\r\ndissolution.

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California law authorizes a party’s motion to strike matter\r\nfrom an opposing party’s pleading if it is irrelevant, false, or improper.\r\n(Code Civ. Proc., §§ 435; 436, subd. (a).) Motions may also target pleadings or\r\nparts of pleadings which are not filed or drawn in conformity with applicable\r\nlaws, rules or orders. (Code Civ. Proc., § 436, subd. (b).) Motions to strike\r\nin limited jurisdiction courts may only challenge pleadings on the basis that\r\n“the damages or relief sought are not supported by the allegations of the\r\ncomplaint.” (Code Civ. Proc., § 92, subd. (d).)

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Finally, Code Civ. Procedure section 435.5 requires that\r\n“[b]efore filing a motion to strike pursuant to this chapter, the moving party\r\nshall meet and confer in person or by telephone with the party who filed the\r\npleading that is subject to the motion to strike for the purpose of determining\r\nwhether an agreement can be reached that resolves the objections to be raised\r\nin the motion to strike.” (Code Civ. Proc., § 435.5, subd. (a).) The Motion to\r\nStrike is accompanied by a meet and confer declaration as required. (Motion,\r\nSire Decl., ¶7.)

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Pursuant to Cal. Evidence Code section 452, subdivision (d),\r\nthe Court takes judicial notice of Plaintiff’s filings with the California\r\nSecretary of State, which demonstrate that a certificate of dissolution was\r\nfiled for Plaintiff on January 7, 2019. (Motion, Sire Decl., Exhs. A and B.)\r\nAdditionally, Plaintiff’s Contractors State License Board License was suspended\r\non May 15, 2019 due to its dissolution. (Id. at Exh. C.)

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Plaintiff filed the instant action for breach of\r\nconstruction contract and related claims in March 2020. The Complaint alleges\r\non March 23, 2017, Plaintiff entered into an agreement with Defendant AWI\r\npursuant to which “Plaintiff would install/perform rebar and related

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services/materials at Robinson Park Recreation Center in\r\nPasadena” in exchange for payment of $180,000.00. (Compl., ¶8.) During the\r\ncourse of the project, changes were made to the plans requiring extra work and\r\nmaterials of Plaintiff, at Defendants’ request. (Id. at ¶9.) The change\r\norders totaled $23,301.75 and $13,100.63. (Ibid.) Defendants breached\r\nthe agreement by refusing to pay $23,098.75. (Id. at ¶11.) Defendants\r\nbreached the agreement and refused Plaintiff’s demand for payment on August 23,\r\n2019. (Id. at ¶¶12-17.)

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Defendants move to strike the Complaint on the grounds that\r\nthe damages sought in this action are for a time after the dissolution of\r\nPlaintiff’s corporate form, which is not permitted by law. Plaintiff responds\r\nthat the action appropriately seeks to collect a debt owed for work it\r\nperformed prior to December 5, 2018 and that its collection efforts in 2019\r\nwere necessary and proper for the winding up of its affairs.

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“It is settled beyond question that, except as otherwise\r\nprovided by statute, the effect of the dissolution of a corporation is to\r\nterminate its existence as a legal entity, and render it incapable of suing or\r\nbeing sued as a corporate body or in its corporate name.” (Emphasis added.) (J.\r\nC. Peacock, Inc. v. Hasko (1960) 184 Cal.App.2d 142, 150-151.) The only\r\nexception is for a dissolved corporation’s pending claims. (Ibid.) This\r\nexception is set forth at Cal. Corporations Code section 2010: “A corporation\r\nwhich is dissolved nevertheless continues to exist for the purpose of winding\r\nup its affairs, prosecuting and defending actions by or against it and enabling\r\nit to collect and discharge obligations, dispose of and convey its property and\r\ncollect and divide its assets, but not for the purpose of continuing business\r\nexcept so far as necessary for the winding up thereof.” (Cal. Corp. Code, §\r\n2010, subd. (a).)

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Contrary to Defendants’ assertion, the Complaint does not\r\nallege that Defendants breached the agreement on August 23, 2019. (See Compl.,\r\n¶11.) The Complaint only alleges that Plaintiff made demand for payment and\r\nserved a stop payment notice on that date. (Id. at ¶¶17, 32.) Plaintiff also\r\nalleges that it seeks interest on the damages owed from August 23, 2019. But there\r\nis no allegation in the Complaint regarding the date Defendants breached the\r\nagreement, nor is there any allegation regarding when Plaintiff completed its\r\nobligations under the agreement. (Id. at ¶10.) Defendants offer no explanation\r\nas to why these allegations should be construed as dating the breach from\r\nAugust 23, 2019. Nor does Plaintiff’s statement on the Certificate of\r\nDissolution that the corporation was completely wound up create basis to strike\r\nthe Complaint. (See Sire Decl., Exh. B, ¶5.) The truth of Plaintiff’s statement\r\nis not subject to judicial notice and to take it as such would improperly turn\r\nthe Motion to Strike into a contested evidentiary hearing. (Big Valley Band\r\nof Pomo Indians v. Superior Court (2005) 133 Cal.App.4th 1185, 1191.) Defendants,\r\ntherefore, have not shown from the allegations in the Complaint or judicially\r\nnoticeable facts that Plaintiff’s dissolution dated January 7, 2019 bars the\r\nclaims brought against them.

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Conclusion

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Defendants AWI Builders, Inc.,\r\nGreat American Insurance Company and The Hanover Insurance Company’s Motion to\r\nStrike the Complaint is DENIED.

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DEFENDANTS ARE TO ANSWER THE\r\nCOMPLAINT WITHIN TEN (10) DAYS’ SERVICE OF THIS ORDER.

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Plaintiff to give notice.

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Case Number: 20STLC02864    Hearing Date: June 1, 2021    Dept: 26

TCR Services, Inc. v. Great American Ins. Co., et al.

MOTION FOR RECONSIDERATION

(CCP § 1008)

TENTATIVE RULING: Plaintiff TCR Services, Inc.’s Motion for Reconsideration is GRANTED. Due to the confusion over notice of defendants' motion to strike (not filed with the court but presented at the hearing), plaintiff's submission on the court's tentative ruling which merely continued the hearing without addressing the merits of the motion, plaintiff's late filed opposition which did not come to the attention of the court until after the hearing, the court will grant plaintiff's motion for reconsideration.A reconsideration hearing is set for August 17, 2021 at 10:00 am in Department 26.  At least 16 court days prior to that hearing, plaintiff shall file and serve its opposition to defendants' motion to strike and defendant shall file and serve its reply, if any, at least five days before the hearing.Plaintiff to give notice. 

Case Number: 20STLC02864    Hearing Date: October 07, 2020    Dept: 26

TCR Services, Inc. v. Great American Ins. Co., et al.

MOTION TO STRIKE

(CCP §§ 435, et seq., 92)

TENTATIVE RULING:

Defendants AWI Builders, Inc., Great American Insurance Company and The Hanover Insurance Company’s Motion to Strike the Complaint is CONTINUED TO DECEMBER 9, 2020 AT 10:30 AM IN DEPARTMENT 26 IN THE SPRING STREET COURTHOUSE.

ANALYSIS:

Plaintiff TCR Services, Inc. (“Plaintiff”) filed the instant action for breach of construction contract and related claims against Defendants AWI Builders, Inc., Great American Insurance Company and The Hanover Insurance Company (“Defendants”) on March 30, 2020. Defendants filed the instant Motion to Strike on June 29, 2020. To date, no opposition has been filed.

Discussion

As an initial matter, there is no proof of service of the notice of hearing on Plaintiff. The Court set the Motion to Strike for hearing on June 29, 2020 and instructed moving party to give notice. (Minute Order, 6/29/20.) The Court’s minute order was served only on Defendants. (Certificate of Mailing, 6/29/20.) Notice of the hearing must be provided to Plaintiff and proof of service of the same filed with the Court.

Regarding the merits, the Motion to Strike the Complaint is brought pursuant to Code of Civil Procedure section 436 on the grounds that Plaintiff, was a dissolved corporation as of the date the alleged breach of contract and a dissolved corporation is not permitted to conduct any business after dissolution.

California law authorizes a party’s motion to strike matter from an opposing party’s pleading if it is irrelevant, false, or improper. (Code Civ. Proc., §§ 435; 436, subd. (a).) Motions may also target pleadings or parts of pleadings which are not filed or drawn in conformity with applicable laws, rules or orders. (Code Civ. Proc., § 436, subd. (b).) Motions to strike in limited jurisdiction courts may only challenge pleadings on the basis that “the damages or relief sought are not supported by the allegations of the complaint.” (Code Civ. Proc., § 92, subd. (d).)

Finally, Code Civ. Procedure section 435.5 requires that “[b]efore filing a motion to strike pursuant to this chapter, the moving party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to the motion to strike for the purpose of determining whether an agreement can be reached that resolves the objections to be raised in the motion to strike.” (Code Civ. Proc., § 435.5, subd. (a).) The Motion to Strike is accompanied by a meet and confer declaration as required. (Motion, Sire Decl., ¶7.)

Pursuant to Cal. Evidence Code section 452, subdivision (d), the Court takes judicial notice of Plaintiff’s filings with the California Secretary of State, which demonstrate that a certificate of dissolution was filed for Plaintiff on January 7, 2019. (Motion, Sire Decl., Exhs. A and B.) Additionally, Plaintiff’s Contractors State License Board License was suspended on May 15, 2019 due to its dissolution. (Id. at Exh. C.)

Despite having been dissolved effective January 7, 2019, Plaintiff filed the instant action for breach of construction contract and related claims in March 2020. The Complaint appears to improperly allege that Plaintiffs are owed damages under the agreement starting from August 23, 2019. (Compl., ¶¶11, 12, 17 and 32.) The damages sought in this action are allegedly for a time after the dissolution of Plaintiff’s corporate form, which is not permitted by law. “It is settled beyond question that, except as otherwise provided by statute, the effect of the dissolution of a corporation is to terminate its existence as a legal entity, and render it incapable of suing or being sued as a corporate body or in its corporate name.” (Emphasis added.) (J. C. Peacock, Inc. v. Hasko (1960) 184 Cal.App.2d 142, 150-151.) The only exception is for a dissolved corporation’s pending claims. (Ibid.) Therefore, not only do the allegations regarding Plaintiff’s damages fail to support the claims against Defendant, the Complaint itself was apparently filed after Plaintiff’s dissolution.

Conclusion

Defendants AWI Builders, Inc., Great American Insurance Company and The Hanover Insurance Company’s Motion to Strike the Complaint is CONTINUED TO DECEMBER 9, 2020 AT 10:30AM IN DEPARTMENT 26 IN THE SPRING STREET COURTHOUSE. AT LEAST 16 COURT DAYS PRIOR TO THE HEARING DATE, DEFENDANTS ARE TO SERVE NOTICE OF THE NEW HEARING DATE AND FILE PROOF OF SERVICE OF THE SAME.

Moving party to give notice.