Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. CV091217.
ELIA, J.
Balkar Singh brought an action against Western World Insurance Company ("WW Insurance") for breach of an insurance contract and tortious bad faith with regard to an insurance claim for fire-related losses to insured Khalsa, Inc. ("Khalsa") doing business as "99 Cent City." WW Insurance demurred to the second amended complaint on the ground that Singh lacked the legal capacity to sue because Khalsa, which had allegedly assigned its claims to Singh, had lost the corporate capacity to sue due to its suspended status. The superior court sustained the demurrer without leave to amend and entered a judgment in favor of WW Insurance.
On appeal, Singh asserts that the court erred in sustaining that demurrer because he has the capacity to maintain this action as an assignee and respondent WW Insurance cannot raise the defense of incapacity to sue because the corporate suspension occurred after the assignment. He further contends that respondent's delay in settling Khalsa's insurance claim caused the business to fail and "sound public policy" mandates that a defense of corporate incapacity to sue be disallowed where an insurer's bad faith conduct in failing to promptly pay an insured corporation's claim under its policy forces the company out of business.
We affirm.
A. Background
On August 2, 2007, an action was filed against WW Insurance Company and 50 Doe defendants. The named plaintiff was "Balkar Singh dba 99 Cent City." The complaint alleged that plaintiff was an insured under a policy issued by WW Insurance "to cover his business, including but not limited to personal property, commercial property and inventory of [his] business (99 Cent City)...." It further alleged that, during the policy period, on or about February 22, 2005, a fire caused "substantial damages to [his] inventory and to the building in which [he] was conducting his business." According to the complaint, "[t]he fire caused such damage that Plaintiff could not continue his business without a prompt settlement of his damage claims by Insurance Company." It stated that plaintiff "promptly reported the fire and the damages to his business not later than March 3, 2005."
The complaint alleged that WW Insurance misrepresented pertinent facts and policy provisions relating to coverage, failed to act promptly, ignored the terms of the policy "in an effort to force an unfair settlement, " "did not attempt [to act] in good faith to effectuate prompt, fair, and equitable settlement" of the claim, delayed investigation and payment of the claim by requiring submission of a preliminary claim report and formal proof of loss forms, and "failed to provide promptly a reasonable explanation of the basis" for its offer of a compromise settlement. The complaint further averred that, "[a]s a result of Insurance Company's and Defendants' continuous and malicious conduct, Plaintiff's claim was not paid until October, 2006."
The original complaint's first cause of action alleged that the foregoing conduct constituted a breach of the insurance contract and caused him to lose his lease, his bond securing payment of the lease, and his business and also caused him to incur attorney fees. The second cause of action alleged that the same conduct constituted a breach of the duty of good faith and fair dealing, which proximately caused the same damages.
WW Insurance brought a motion for summary judgment. It argued that the insurance contract was with 99 Cent City, the fictitious business name for Khalsa. It also contended that Singh had no standing to sue and no right to seek policy benefits for himself.
Singh then moved for leave to amend the complaint. A declaration in support of the motion, filed on October 28, 2008, offered a proposed first amended complaint. It changed the named plaintiff to "Balkar Singh." It modified the complaint to make clear that Khalsa was the insured, 99 Cent City was Khalsa's business, and Singh was Khalsa's sole shareholder. It stated that "[o]n or about August, 2005, Khalsa, for valuable consideration, assigned any and all claims it might have against Defendants and each of them to Balkar Singh." The court granted permission to file the first amended complaint, which was then filed on December 23, 2008.
"[A]n assignee of a chose in action may bring suit thereon in his own name." (Ralph v. Anderson (1921) 187 Cal. 45, 47.)
WW Insurance demurred to the first amended complaint pursuant to section 430.10, subdivision (b). It asserted that Singh lacked the capacity to prosecute the action. It argued that the first amended complaint "continue[d] Singh's attempt to knowingly circumvent California law prohibiting the prosecution of a lawsuit by a suspended California corporation (Khalsa, Inc.)."
The court granted WW Insurance's request that it take judicial notice of certain documents and facts, including a Fictitious Business Name Statement filed in Santa Clara County, Statements of Information regarding Khalsa filed in the Office of the Secretary of State, and the Certificate of Status, executed by California's Secretary of State on January 16, 2009. The Fictitious Business Name Statement indicated that the corporation Khalsa was doing business as "99 Cents City." The Statements of Information indicated that Khalsa's business was a "99 Cents Store" and Singh was the corporation's chief executive officer, secretary, chief financial officer, and director. The Certificate of Status stated that the Secretary of State suspended Khalsa's "powers, rights and privileges on December 14, 2006" pursuant to the Corporations Code, the Franchise Tax Board suspended its corporate "powers, rights and privileges on February 01, 2007" pursuant to the Revenue and Taxation Code, " and those powers, rights and privileges remained suspended.
The court sustained the demurrer to the first amended complaint with leave to amend. Singh filed a second amended complaint. It added the allegation that at the time of the assignment, "Khalsa, Inc., was a valid California corporation, in good standing with the State of California, with all rights and powers to do business in the State of California."
WW Insurance demurred to the second amended complaint, again pursuant to section 430.10, subdivision (b), on the ground that plaintiff did not have the legal capacity to sue. It again requested the court to take judicial notice of certain facts and documents, including the Fictitious Business Name Statement, the Statements of Information, and the Certificate of Status.
Declarations of Singh and his retained attorney were filed in support of opposition to the demurrer. WW Insurance filed written objection to the declarations.
The superior court granted WW Insurance's request for judicial notice and sustained the demurrer to the second amended complaint without leave to amend. Citing Cleveland v. Gore Bros., Inc. (1936) 14 Cal.App.2d 681, the superior court stated that Singh, as Khalsa's assignee, was " 'subject to the same incapacities with respect to its commencement and prosecution' as the assignor corporation." It did not rule on the insurer's objection to the declarations filed in opposition to the demurrer, stating that the objection was moot.
B. Demurrer
Code of Civil Procedure section 430.30, subdivision (a), provides: "When any ground for objection to a complaint, cross-complaint, or answer appears on the face thereof, or from any matter of which the court is required to or may take judicial notice, the objection on that ground may be taken by a demurrer to the pleading." "As a general rule in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be. (Griffith v. Department of Public Works, 141 Cal.App.2d 376....)" (Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604.)
"When judicial notice is taken of a document, however, the truthfulness and proper interpretation of the document are disputable. (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374....)" (StorMedia Inc. v. Superior Court (1999) 20 Cal.4th 449, 457, fn. 9.) "Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning. (See Middlebrook-Anderson Co. v. Southwest Sav. & Loan Assn. (1971) 18 Cal.App.3d 1023, 1038....)... 'A demurrer is simply not the appropriate procedure for determining the truth of disputed facts.' (Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 879....)" (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.) In this case, however, there is no dispute regarding the contents of the judicially noticed documents.
Code of Civil Procedure section 430.10 states in pertinent part: "The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in Section 430.30, to the pleading on any one or more of the following grounds:... [¶] (b) The person who filed the pleading does not have the legal capacity to sue." "Unless the governing statute states otherwise, a complaint need not allege the plaintiff's capacity to sue." (Hydrotech Systems, Ltd. v. Oasis Waterpark (1991) 52 Cal.3d 988, 994, fn. 4; see Los Angeles Ry. Co. v. Davies (1905) 146 Cal. 179, 180-181.) Ordinarily, "[i]f lack of capacity does not appear on the face of the complaint, it cannot be raised by demurrer, but is a special plea in abatement. (See, e.g., Traub Co. v. Coffee Break Service, Inc. (1967) 66 Cal.2d 368, 370...; Haley & Co. v. McVay (1924) 70 Cal.App. 438, 440...; 5 Witkin, Cal.Procedure (3d ed. 1985) Pleading, §§ 1055-1056, pp. 470-471.)" (Hydrotech Systems, Ltd. v. Oasis Waterpark, supra, 52 Cal.3d at p. 994, fn. 4.)
We examine the complaint de novo. (See McCall v. PacifiCare of Cal., Inc. (2001) 25 Cal.4th 412, 415.) "On appeal from a judgment dismissing an action after sustaining a demurrer without leave to amend, the standard of review is well settled. We give the complaint a reasonable interpretation, reading it as a whole and its parts in their context. (Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126....) Further, we treat the demurrer as admitting all material facts properly pleaded, but do not assume the truth of contentions, deductions or conclusions of law. (Ibid.; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967....)" (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 865.) "A reviewing court may consider facts judicially noticed by the trial court or those which the trial court properly could have noticed. (Evid.Code, § 459.)" (StorMedia Inc. v. Superior Court, supra, 20 Cal.4th at p. 457, fn. 9.) When a demurrer is sustained without leave to amend, "we decide whether there is a reasonable possibility that the defect can be cured by amendment: if it can be, the trial court has abused its discretion and we reverse. (Ibid.)" (City of Dinuba v. County of Tulare, supra, 41 Cal.4th at p. 865.) "If there is a reasonable possibility that the defect in a complaint can be cured by amendment, it is an abuse of discretion to sustain a demurrer without leave to amend. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318....) The burden is on the plaintiff, however, to demonstrate the manner in which the complaint might be amended. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 349....)" (Hendy v. Losse (1991) 54 Cal.3d 723, 742.)
C. Corporate Capacity to Sue
"Incapacity [to sue] is merely a legal disability, such as infancy or insanity, which deprives a party of the right to come into court." (Parker v. Bowron (1953) 40 Cal.2d 344, 351.) Under California law, a corporation ordinarily has the capacity to sue. (See Corp. Code, § 207 [corporation generally has "all of the powers of a natural person in carrying out its business activities"].) Thus, normally, "[a]n allegation by a plaintiff that it is a corporation is sufficient to show that it has the general capacity to sue. (Friendly Village Community Assn., Inc. v. Silva & Hill Constr. Co., supra, 31 Cal.App.3d at p. 224.)" (Color-Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599, 1605; see California Steam Nav. Co. v. Wright (1856) 6 Cal. 258, 261.) Similarly, an allegation of assignment is ordinarily sufficient. (See California Steam Nav. Co. v. Wright, supra, 6 Cal. at p. 261.)
"Suspension of corporate powers results in a lack of capacity to sue, not a lack of standing to sue. (See Hydrotech Systems, Ltd. v. Oasis Waterpark (1991) 52 Cal.3d 988, 994, fn. 4...; Traub Co. v. Coffee Break Service, Inc. (1967) 66 Cal.2d 368, 370....)" (Color-Vue, Inc. v. Abrams, supra, 44 Cal.App.4th at pp. 1603-1604, fn. omitted.) A domestic corporation's powers, rights and privileges may be suspended for failure to pay any franchise tax, penalty, or interest (Rev. & Tax Code, § 23301) or failure to file a tax return (Rev. & Tax Code, § 23301.5). (See Rev. & Tax Code, §§ 23302 [transmission of name of corporate taxpayer subject to suspension to Secretary of State by Franchise Tax Board]; 21020 [notice requirement].) While its corporate rights are suspended for failure to pay taxes, a corporation may not prosecute or defend an action and may not appeal from an adverse judgment in an action. (See Reed v. Norman (1957) 48 Cal.2d 338, 343.) Additionally, under certain specified conditions, a corporation's powers, rights, and privileges may be suspended if a corporation fails to file annual statements of information pursuant to Corporations Code section 1502. (See Corp.Code, § 2205.) "[A] corporation suspended under the Corporations Code, like a corporation suspended under the Revenue and Taxation Code, is also disabled from participating in litigation activities." (Palm Valley Homeowners Ass'n, Inc. v. Design MTC (2000) 85 Cal.App.4th 553, 556.)
Failure to timely raise a lack of capacity to sue may result in waiver of the objection. (See Color-Vue v. Abrams, supra, 44 Cal.App.4th at p. 1605; see also Stewart v. San Fernando Refining Co. (1937) 22 Cal.App.2d 661, 663-664.) "Lack of standing, by contrast, is not waived by failure to timely object. (Parker v. Bowron, supra, 40 Cal.2d at p. 351.) Indeed, lack of standing to sue can be raised at any time, even for the first time on appeal. (See Common Cause v. Board of Supervisors (1989) 49 Cal.3d 432, 438-439....)" (Color-Vue, Inc. v. Abrams, supra, 44 Cal.App.4th at p. 1604.) An assignee of a chose in action has standing to maintain the action. (See Hammell v. Superior Court in and for Los Angeles County (1932) 217 Cal. 5, 8.)
"[A] plea of lack of capacity of a corporation to maintain an action by reason of a suspension of corporate powers for nonpayment of its taxes 'is a plea in abatement which is not favored in law, is to be strictly construed, and must be supported by facts warranting the abatement' at the time of the plea. [Citations.]" (Traub Co. v. Coffee Break Service, Inc., supra, 66 Cal.2d at p. 370.) A corporation may be reinstated once it fulfills the statutory requirements. (See Rev. & Tax Code, § 23305 [application and issuance of certificate of reviver]; Corp. Code, § 2205, subd. (d) [relief from suspension]; see also Rev. & Tax Code, § 23305a ["Upon the issuance of the certificate by the Franchise Tax Board the taxpayer therein named shall become reinstated" and "certificate of revivor shall be prima facie evidence of the reinstatement"].)
D. Assignment of Insured Khalsa's Causes of Action against Insurer WW Insurance
1. Assigned Claims
"Originally codified in 1872, section 954 states: 'A thing in action, arising out of the violation of a right of property, or out of an obligation, may be transferred by the owner.' An assignment is a commonly used method of transferring a cause of action." (Essex Ins. Co. v. Five Star Dye House, Inc. (2006) 38 Cal.4th 1252, 1259.) "Actions for bad faith against an insurer have generally been held to be assignable (Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 661-662....).... Although some damages potentially recoverable in a bad faith action, including damages for emotional distress and punitive damages, are not assignable (Murphy, supra, 17 Cal.3d at p. 942...), the cause of action itself remains freely assignable as to all other damages (id. at p. 946...)." (Id. at p. 1263.) In addition, "[a] breach of contract cause of action is assignable (Civ. Code, §§ 953, 954)...." (Schaffter v. Creative Capital Leasing Group, LLC (2008) 166 Cal.App.4th 745, 756.) The general rule is that "notice to the debtor or to creditors of the assignor is not essential to complete the assignment. [Citations.]" (Smith v. Harris (1954) 127 Cal.App.2d 311, 316.)
In this case, it appears from the face of the second amended complaint that the assignment, which allegedly took place in about August 2005, was valid. Even though respondent now insinuates that appellant backdated the assignment and seemingly disputes its validity by referring to the assignment as "dubious, " "highly questionable, " a "ruse, " and a "pretense, " "[a] demurrer is simply not the appropriate procedure for determining the truth of disputed facts." (Ramsden v. Western Union (1977) 71 Cal.App.3d 873, 879.) "[T]he question of plaintiff's ability to prove [the complaint's] allegations, or the possible difficulty in making such proof does not concern the reviewing court...." (Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496.)
2. Cleveland v. Gore Bros., Inc.
The trial court cited Cleveland v. Gore Bros., Inc., supra, 14 Cal.App.2d 681 ("Cleveland") in support of its order sustaining the demurrer to the second amended complaint. Respondent now inaccurately represents that "Cleveland holds [that] the corporation's rights cannot be prosecuted by either the corporation or its assignee while the corporation is suspended."
In Cleveland, the plaintiff sought to recover damages for the wrongful "eviction of her assignor from leased premises." (Id. at p. 681.) The corporate assignor had been placed in suspended status for failure to pay taxes prior to the commencement of the action. (Id. at p. 682.) An answer asserting a statute of limitations defense was filed almost six months prior to the date of revivor of the corporation, which occurred after the statute of limitations had already run. (Id. at pp. 682-683.) The trial court, following trial, found that the plaintiff assignee " 'was subject to the same incapacities with respect to its commencement and prosecution as Dome Billiard & Bowling Company, during the period of time that its corporate rights, privileges and powers were suspended.' " (Id. at pp. 682-683.) The appellate court upheld the judgment, observing that the statute of limitations defense was asserted during the suspension. (Id. at p. 683.)
The result in Cleveland was consistent with the principles governing a statute of limitations defense against a corporation whose powers have been suspended, which were more fully articulated in cases subsequent to Cleveland. "[W]hen a suspended corporation commences an action during its suspension, the statute of limitations continues to run. (ABA Recovery Services, Inc. v. Konold, supra, 198 Cal.App.3d at p. 725...; Welco Construction, Inc. v. Modulux, Inc. (1975) 47 Cal.App.3d 69, 74....)" (Sade Shoe Co. v. Oschin & Snyder (1990) 217 Cal.App.3d 1509, 1513.) "[T]he statute of limitations is regarded as a substantive defense, not a procedural right. [(Welco Construction, Inc. v. Modulux, Inc. (1975) 47 Cal.App.3d 69, 73.)] Revival cannot be given a retroactive effect so as to permit the filing of an action at a time of incapacity to toll the running of the statute of limitations. In other words, if an action is commenced during the period of suspension and the corporate powers are revived after the limitations period expires, the revival does not toll the running of the limitations period. (See Hall v. Citizens Nat. Tr. & Sav. Bank (1942) 53 Cal.App.2d 625, 630-631....) In such a case, the plea is not one in abatement, but a plea of the statute of limitations-a substantive defense to the action on the merits. (Ibid.; see Welco Construction, Inc. v. Modulux, Inc., supra, 47 Cal.App.3d at p. 73.)" (Benton v. County of Napa (1991) 226 Cal.App.3d 1485, 1491.) The California Supreme Court viewed Cleveland as a case that "presented a statute of limitations problem." (Traub Co. v. Coffee Break Service, Inc., supra, 66 Cal.2d at p. 372.)
The Cleveland opinion does not state that the defendant had notice of the assignment before the lawsuit was filed, by which time the assignor corporation's powers had already been suspended. (Cleveland, supra, 14 Cal.App.2d at p. 682.) There was no issue in Cleveland concerning the timing of any notice of assignment with regard to the defenses available against an assignee. " 'It is axiomatic, of course, that a decision does not stand for a proposition not considered by the court.' [Citation.]" (Agnew v. State Bd. of Equalization (1999) 21 Cal.4th 310, 332.)
In this case, respondent did not file a general demurrer specifying that the action was barred by a statute of limitations. Cleveland is inapposite to this appeal.
If not raised by general demurrer or not pleaded as an affirmative defense in the answer, a statute of limitations defense is forfeited. (See Minton v. Cavaney (1961) 56 Cal.2d 576, 581.)
3. Alter Ego Doctrine
Respondent WW Insurance asserts that alter ego doctrine applies to Singh and he cannot circumvent the requirements of Revenue and Taxation Code section 23301 by the device of assignment. The applicability of alter ego doctrine involves facts beyond those appearing on the face of the complaint and judicially noticed and, therefore, could not be resolved on demurrer.
"Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations. [Citations.]" (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.) "[W]hile a corporation is usually regarded as an entity separate and distinct from its stockholders, both law and equity will, whenever necessary to circumvent fraud or protect the rights of third persons, disregard this distinct existence and treat them as identical. [Citations.]" (Katenkamp v. Superior Court in and for Santa Barbara County (1940) 16 Cal.2d 696, 700-701.) "There are... two general requirements: '(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow.' (Automotriz etc. de California v. Resnick (1957) 47 Cal.2d 792, 796....)" (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300; see Hollywood Cleaning & Pressing Co. v. Hollywood Laundry Service (1932) 217 Cal. 124, 129 (per curiam).) "[T]he corporate form will be disregarded only in narrowly defined circumstances and only when the ends of justice so require." (Mesler v. Bragg Management Co., supra, 39 Cal.3d at p. 301.)
A variety of factors are relevant in determining whether alter ego doctrine applies. (See Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 838-840.) That determination is "a question of fact which necessarily varies according to the circumstances of each case. [Citations.]" (Institute of Veterinary Pathology, Inc. v. California Health Laboratories, Inc. (1981) 116 Cal.App.3d 111, 119; see Glendale Fed. Sav. & Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 101, 155 [whether "individual is the alter ego of a corporation is a question of fact"].)
Respondent's special demurrer raised only the question whether appellant Singh had the legal capacity to sue. (Code Civ. Proc., § 430.10, subd. (b).) Appellant did not concede that he was the alter ego of Khalsa for purposes of demurrer. The allegation that Singh was the sole stockholder, which we must take as true for purposes of demurrer, does not in itself establish that Khalsa is his alter ego. (See Waters v. Superior Court of Los Angeles County (1962) 58 Cal.2d 885, 898.) The factual allegations and judicially noticed facts did not establish that Singh was the alter ego of Khalsa as a matter of law for purposes of determining Singh's capacity to maintain this action as an assignee.
E. Defenses Against Assignee Singh
"As a general rule, the assignee of a chose in action stands in the shoes of his assignor, taking his rights and remedies subject to any right to offset or other defenses existing against the assignor prior to actual notice of the assignment. (Civ. Code, § 1459; Code Civ. Proc., § 368.)" (Salaman v. Bolt (1977) 74 Cal.App.3d 907, 919; see Bliss v. California Co-op. Producers (1947) 30 Cal.2d 240, 250.) Code of Civil Procedure section 368 provides in pertinent part: "In the case of an assignment of a thing in action, 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...." (See Civ. Code, § 18, subd. 1 [actual notice is "express information of a fact"].)
Section 336, subdivision (2), of the Restatement Second of Contracts states: "The right of an assignee is subject to any defense or claim of the obligor which accrues before the obligor receives notification of the assignment, but not to defenses or claims which accrue thereafter except as stated in this Section or as provided by statute."
Citing two appellate cases, Royal Bank Export Finance Co. v. Bestways Distributing Co. (1991) 229 Cal.App.3d 764 and Music Acceptance Corp. v. Lofing (1995) 32 Cal.App.4th 610, appellant Singh contends, that "[o]nce the assignment of claims has been made, the assignee then 'stands in the shoes' of the assignor, and takes all rights and remedies of the assignor, subject to those defenses existing at the time of the assignment." (Emphasis in original.) The cited cases do not support appellant's assertion that the defenses against an assignee are limited to those existing at the time of assignment.
Royal Bank Export Finance Co. v. Bestways Distributing Co., supra, 229 Cal.App.3d 764 is entirely consistent with the general rule that a defendant may avail itself of any defense acquired against an assigned "chose in action" before it is notified of the assignment. In that case, the assignee bank sued for money due under a purchase order and the purchaser defended on the ground that the products delivered by the assignor were not merchantable. (Id. at pp. 765-766.) The appellate court stated: " 'The assignment merely transfers the interest of the assignor. The 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.' (1 Witkin, Summary of Cal. Law (9th ed. 1987) Contracts, § 948, p. 844.)" (Id. at p. at p. 768.)
Music Acceptance Corp. v. Lofing, supra, 32 Cal.App.4th 610, is completely distinguishable from this case. In that case, the defendant and cross-complainant purchased a defective piano from Sherman Clay & Co. (Sherman Clay) and "received financing through Sherman Clay's finance company." (Id. at p. 613.) After the defendant stopped making payments, the finance company sued defendant for breach of contract to recover the unpaid balance. (Id. at pp. 613, 621.) The parties agreed that Sherman Clay and its finance company were to be treated as the same entity. (Id. at p. 613, fn. 1.) In addition, "[t]he sales contract contained a clause providing that '[a]ny holder of this consumer credit contract is subject to all claims and defenses which the debtor could assert against the seller of goods or services obtained pursuant hereto, or with the proceeds hereof.' " (Id. at p. 622.) The appellate court agreed that the plaintiff financing company stood in the shoes of Sherman Clay and was subject to the same claims and defenses that the defendant had against Sherman Clay. (Id. at p. 622.) That was a matter of contract and stipulation.
Here, the second amended complaint alleged facts showing that the assignment occurred before the corporation's powers were suspended but contained no allegation indicating that WW Insurance had actual notice of the assignment before Singh filed the complaint, by which time Khalsa's powers, rights and privileges had already been suspended as indicated by the judicially noticed Certificate of Status. Appellant Singh has not carried his burden of showing the second amended complaint might be amended to show that WW Insurance was notified of the assignment before the assignor corporation Khalsa was suspended. Neither has he shown that the complaint might be amended to show that the corporation has been reinstated and "incapacity to sue" is no longer a viable ground for demurrer. (See Traub Co. v. Coffee Break Service, Inc., supra, 66 Cal.2d at p. 370 [approving several appellate decisions in which corporate plaintiffs were allowed to maintain lawsuits despite their suspension at the time the complaints were filed where corporate powers were revived by payment of delinquent taxes]; see also Peacock Hill Assn. v. Peacock Lagoon Constr. Co. (1972) 8 Cal.3d 369, 374 [corporate appellant whose powers were revived by payment of taxes entitled to proceed with appeal].)
As previously indicated, the accuracy of the certificate is not in dispute. Under California law, the certificate of the Secretary of State is "prima facie evidence of the suspension" by the Franchise Tax Board. (Rev. & Tax Code, § 23302, subd. (c).)
Respondent WW Insurance states in its brief that appellant Singh "first notified" it of the assignment by the filing of the first amended complaint on December 23, 2008. The allegation of assignment was also contained in the proposed first amended complaint attached to the declaration of appellant's attorney, which was filed on October 28, 2008.
F. No Public Policy Exception
Appellant Singh urges this court to recognize a public policy exception to the rule of corporate incapacity to sue where the lawsuit seeks damages for an insurer's misconduct against the corporation and that very misconduct led to the suspension of corporate powers, rights, and privileges. He argues that "public policy concerns dictate an insurance company must not be able to take advantage of it own wrongful conduct, as Respondent is alleged to be doing in this case." This court cannot create such an exception.
"The purpose of Revenue and Taxation Code section 23301 is to ' "prohibit the delinquent corporation from enjoying the ordinary privileges of a going concern, " ' in order to pressure it into paying its taxes. (Peacock Hill Assn. v. Peacock Lagoon Constr. Co. (1972) 8 Cal.3d 369, 371....)" (Center for Self-Improvement and Community Development v. Lennar Corp. (2009) 173 Cal.App.4th 1543, 1552.) Corporations Code section 2205 and Revenue and Taxation Code section 23302 presumably have similar purposes of forcing a corporation to file its annual information statement and to file its tax returns, respectively. Respondent is only an incidental beneficiary of the law. (See Gar-Lo, Inc. v. Prudential Sav. & Loan Assn. (1974) 41 Cal.App.3d 242, 244.)
"The fundamental rule of statutory construction is that the court should ascertain the intent of the Legislature so as to effectuate the purpose of the law. [Citations.]" (Select Base Materials, Inc. v. Board of Equalization (1959) 51 Cal.2d 640, 645.) "If there is no ambiguity in the language of the statute, 'then the Legislature is presumed to have meant what it said, and the plain meaning of the language governs.' " (Lennane v. Franchise Tax Bd. (1994) 9 Cal.4th 263, 268.)
" '[A]s [the Supreme Court] has often recognized, the judicial role in a democratic society is fundamentally to interpret laws, not to write them. The latter power belongs primarily to the people and the political branches of government....' (Kopp v. Fair Pol. Practices Com. (1995) 11 Cal.4th 607, 675... (conc. opn. by Werdegar, J.).) It cannot be too often repeated that due respect for the political branches of our government requires us to interpret the laws in accordance with the expressed intention of the Legislature." (California Teachers Assn. v. Governing Bd. of Rialto Unified School Dist. (1997) 14 Cal.4th 627, 633.) "The judiciary, in reviewing statutes enacted by the Legislature, may not undertake to evaluate the wisdom of the policies embodied in such legislation; absent a constitutional prohibition, the choice among competing policy considerations in enacting laws is a legislative function. (See, e.g., Werner v. Southern Cal. etc. Newspapers (1950) 35 Cal.2d 121, 129-130....)" (Superior Court v. County of Mendocino (1996) 13 Cal.4th 45, 53.)
The judgment is affirmed. Appellant shall bear the costs of appeal.
WE CONCUR: PREMO, Acting P. J., McADAMS, J.