Does Failure To Qualify Deprive A Foreign LLC Of Standing Under The SSFMJA?

The U.S. Constitution enjoins each state to accord “full faith and credit” to “the public acts, records, and judicial proceedings of every other State”.  U.S. Const. Art. IV, § 1.  However, a judgment creditor can’t directly enforce a judgment obtained in another state in California.  The other state’s judgment must first be turned into a California judgment.  The statutory mechanism for effecting this is the Sister State and Foreign Money—Judgments Act, aka the SSFMJA, Code Civ. Proc. § 1710.10 et seq.  It should be noted, however, that entry of a sister state judgment under the SSFMJA is not the only way to enforce that judgment in California – the judgment creditor could simply file a lawsuit here.   Code Civ. Proc. § 1710.60.

What if the judgment creditor is a foreign limited liability company that has not qualified to transact intrastate business in California?  Does this failure deprive the foreign LLC of standing to obtain entry of a sister state judgment in California.  The Second District Court of Appeal in an opinion authored by Presiding Justice Robert M. Mallano recently decided that failure to qualify does not bar entry of a sister statement judgment.  Conseco Marketing, LLC v. IFA and Ins. Services, Inc., 2013 Cal. App. LEXIS 946 (Cal. App. 2d Dist. Nov. 22, 2013).  In reaching this conclusion, Justice Mallano noted that under the Beverely-Killea Limited Liability Company Act, an LLC is not considered to be transacting intrastate business solely by reason of “maintaining or defending any action or suit” or “securing or collecting debts”,  Corp. Code, § 17001, subd. (ap)(2)(A) & (H).  Under the soon to be effective California Revised Uniform Limited Liability Company Act, the analagous provisions can be found in Section 17708.03 of the Corporations Code.


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.

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