Espinoza et al v. C & C Security Patrol, Inc. et al

Filing 21

ORDER by Judge James Ware granting 16 Motion for Leave to File (jwlc2, COURT STAFF) (Filed on 10/2/2008)

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1 2 3 4 5 6 7 8 9 10 Leonardo Espinoza, et al., v. Plaintiff, IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION NO. C 08-01522 JW ORDER GRANTING DEFENDANT C&C SECURITY PATROL, INC.'S MOTION FOR LEAVE TO FILE ANSWER United United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C & C Security Patrol, Inc., et al., Defendants. / Presently before the Court is Defendant C&C Security Patrol, Inc.'s ("C&C") Motion for Leave to File Answer. (Docket Item No. 16.) C&C moves for leave to file an Answer after it has revived its corporate status.1 Under Cal. Rev. & Tax. Code 23301, the corporate powers, rights and privileges of a domestic tax payer, may be suspended, and the exercise of the corporate powers, rights and privileges of a foreign taxpayer in this state may be forfeited if any of the following conditions occur: (a) If any tax, penalty or interest, or any portion thereof, which is due and payable . . . is not paid . . . or (b) If any tax, penalty or interest, or any portion thereof, due and payable upon notice and demand from the Franchise Tax Board, or due and payable under Section 25936 is not paid . . . . "It is well-settled that a delinquent corporation may not bring suit and may not defend a legal action." United States v. 2.61 Acres of Land, 791 F.2d 666, 668 (9th Cir. 1985) (citing Reed v. Norman, 48 Cal. 2d 338, 343 (1957)). "However, once the corporate powers are reinstated, the 1 motion. Leonardo Espinoza and Sergio Roque ("Plaintiffs") did not file an opposition to this 1 2 3 4 5 6 7 8 9 10 corporation may defend an action." Id. (citing Traub Co. v. Coffee Break Service, Inc., 66 Cal. 2d 368, 371 (1967). Until a suspended corporation has been revived, it may appear before a court for the limited purpose of requesting a continuance to enable its revival. Schwartz v. Magyar House, Inc., 168 Cal. App. 2d 182, 188 (1959). In deciding whether to grant such a continuance a court may consider (1) the moving party's diligence; (2) the usefulness of the continuance in allowing the moving party to revive itself; (3) the inconvenience of a continuance to the court and the parties; and (4) the prejudice to either party of granting a continuance. See 2.61 Acres, 791 F.2d at 671-72. C&C's corporate status was suspended under Cal. Rev. & Tax. Code 23301 because it failed to provide a current Statement of Information and has a "tax issue" with California's Franchise Tax Board. (Declaration of Frank Russow in Support of Defendant C&C Security Patrol, Inc's Motion for Order for Leave to File Answer 2, Docket Item No. 16-2.) Accordingly, C&C is unable to file an Answer to Plaintiff's First Amended Complaint. The Court finds the potential prejudice to C&C to be the critical factor. If leave for C&C to file its Answer at a later date is not granted, C&C will be unable to take action to prevent default proceedings in this matter. In light of the fact that C&C filed its intended Answer with the Court along with this motion, the Court finds that Plaintiffs will not be substantially prejudiced by further delay in receiving C&C's pleading. Accordingly, the Court GRANTS C&C's Motion for Leave to File Answer. C&C shall file its Answer on the earlier of (10) ten days following revival of its corporate status; or (2) November 25, 2008. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: October 2, 2008 JAMES WARE United States District Judge 2 1 2 3 4 5 6 7 8 9 10 THIS IS TO CERTIFY THAT COPIES OF THIS ORDER HAVE BEEN DELIVERED TO: Adam Wang waqw@sbcglobal.net Mark A. Hagopian mhagopian@sh-law.net Sejal Ojha sxo@mmker.com Dated: October 2, 2008 Richard W. Wieking, Clerk By: /s/ JW Chambers Elizabeth Garcia Courtroom Deputy United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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