Asbestos Alert: Corporations Formed Other than in California Which Have Dissolved May Be Able to Win Summary Judgment in California Asbestos Cases

by Low, Ball & Lynch
Contact

[author: Guy W. Stilson]

Robinson v. SSW, Inc.
California Court of Appeal, First District
(September 21, 2012)

Douglas Robinson died from mesothelioma and his family filed a wrongful death action. SSW, Inc., a Nebraska corporation, sought summary judgment on the ground that it had dissolved in accordance with Nebraska law more than five years before it was named as a defendant in the lawsuit, and under Nebraska law, a dissolved corporation cannot be sued more than five years after its dissolution. The plaintiffs resisted on the ground that the action was venued in San Francisco, California, SSW had qualified and registered to do business in California, and California law does not include a corporate survival limitation on bringing suit. Judge Harold Kahn granted summary judgment and the Court of Appeal affirmed.

Many states include in their corporate laws a corporate survival statute of limitations. Such statutes basically say that after a certain number of years after the dissolution of a corporation formed under the laws of that state, the corporation is no longer subject to suit. These statutes operate regardless of the availability of insurance for the dissolved corporation. In Nebraska, the corporate survival statute of limitations is five years. However, corporations organized under California law do not enjoy the advantage of a corporate survival statute of limitations – in fact, California law includes a statute to the opposite effect: California Corporations Code section 2010(a) states, “[a] corporation which is dissolved nevertheless continues to exist for the purpose of winding up its affairs, prosecuting and defending actions by or against it …,” and section 2010(b) states even more directly, “No action or proceeding to which a corporation is a party abates by the dissolution of the corporation or by reason of proceedings for winding up and dissolution thereof.” Thus, a California corporation can be sued any number of years after it has dissolved, and if it has insurance applicable to the claimed loss, the insurer will probably have to defend the company and pay any loss covered by the policy.

In Robinson, the Court of Appeal noted that there is a split in California authority on the subject of whether a non-California corporation is entitled to the protection of its home-state corporate survival statute of limitations, and that the issue is currently before the California Supreme Court, which has not yet issued a decision. In North American Asbestos Corp. v. Superior Court (1986) 180 Cal.App.3d 902 (“North American II”), the First District applied a conflict-of-laws analysis and determined that because California policy is to protect and compensate injured persons, that policy would prevail over a foreign-state policy that was different. But a few months earlier, in Riley v. Fitzgerald (1986) 178 Cal.App.3d 871 (“Riley”), the Second District had decided the issue on a statutory construction basis, finding that California’s statute which effectively dispenses with the possibility of a California corporate survival statute of limitations (Corporations Code section 2010) did not apply to a corporation formed under Texas law, where there is a corporate survival statute of limitations. The Robinson court found no need for a conflict-of-laws analysis and proceeded under a statutory construction analysis, coming to the same result as the Riley court.

The Robinson court’s statutory construction analysis turned on the fact that Corporations Code section 2010 applies to corporations “organized” under California’s corporation law. Interpreting the term “organized” in its traditional fashion, the court determined that a corporation is organized under the law of the state where it is created. The court further determined that qualifying to do business and registering to do business under California law are distinct from being organized under California law. Since SSW was not organized under California law, Corporations Code section 2010 did not apply to it, leaving Nebraska’s corporate survival statute of limitations in effect for purposes of the case, and ultimately entitling SSW to entry of summary judgment.

COMMENT AND EVALUATION:

Many states’ corporate laws contain a corporate survival statute of limitations, including the law of Delaware, the most popular state for corporate formation (primarily because Delaware offers so many protections for corporations organized under its laws). If you have a client that is a dissolved corporation organized under the law of a state other than California, it would pay to educate yourself regarding any corporate survival statute of limitations that may exist under the law of the state of the corporation’s formation.

While a split of authority technically still exists on this issue in California, the district that had previously found this issue to be one for conflict-of-laws analysis is the First District, which has now issued this opinion explicitly disagreeing with its prior opinion and offering a well-reasoned statutory construction analysis. The weight of authority in California therefore currently favors enforcing a foreign state’s corporate statute of limitations. Of course, the issue remains pending before the California Supreme Court, which could render a different (and controlling) opinion. Watch this space for updates!

For the full decision see:

http://www.courts.ca.gov/opinions/documents/A130174.PDF


 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Low, Ball & Lynch | Attorney Advertising

Written by:

Low, Ball & Lynch
Contact
more
less

Low, Ball & Lynch on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!