The opinion
1
2
3
4
5
6
7
8 UNITED STATES DISTRICT COURT
9 FOR THE EASTERN DISTRICT OF CALIFORNIA
10
11 ALLAN WILLIAMS, No. 1:21-cv-00686-DAD-BAK
12 Plaintiff,
13 v. ORDER DENYING DEFENDANT’S
MOTION TO STAY
14 JP WORLD ENTERPRISES INC.,
(Doc. No. 11)
15 Defendant.
16
17 This matter is before the court on the motion to stay this action field by defendant JP
18 World Enterprises Inc. on July 14, 2021. (Doc. No. 11.) Plaintiff filed an opposition to the
19 pending motion to stay on August 3, 2021, and defendant filed a reply thereto on the following
20 day. (Doc. Nos. 15–17.)
21 Shortly after briefing was completed on the pending motion, on August 31, 2021,
22 defendant filed a notice alerting the court that it “has been suspended by the California Secretary
23 of State due to its failure to pay amounts due to the California Franchise Tax Board,” and
24 attaching a copy of a printout from the California Secretary of State’s website showing that its
25 corporate entity status is “FTB SUSPENDED.” (Doc. No. 19 at 1, 4.) In its notice, defendant
26 states that, consistent with applicable law, it “will be unable to proceed with a defense of this
27 action until a revivor is issued,” and that its counsel would “keep the Court apprised [of]
28 Defendant’s status and notify opposing counsel and the Court when a certificate of revivor is
1 | issued.” (Id. at 1-2.)
2 Since August 31, 2021, when defendant filed its notice regarding its suspended status,
3 | defendant has not filed anything further to notify the court that it has paid the taxes it owes and
4 | revived its rights as a California corporation, including the right to sue and be sued. A
5 || corporation’s capacity to sue or be sued is determined “by the law under which it was organized.”
6 | Fed. R. Civ. P. 17(b). Under California law, a California corporation whose powers have been
7 | suspended for failure to pay taxes lacks the capacity to sue or defend a lawsuit. See Cal. Rev. &
8 | Tax Code § 23301; Grell v. Laci Le Beau Corp., 73 Cal. App. 4th 1300, 1306 (1999). “Capacity
9 | [] refers to ‘a party’s personal right to litigate in a federal court,’” Esposito v. United States, 368
10 | F.3d 1271, 1273 (10th Cir. 2004), “[and] is not only the power to bring an action, but is also the
11 || power to maintain it.” Mather Const. Co. v. United States, 475 F.2d 1152, 1155 (Ct. Cl. 1973)
12 | (dismissing suit by California corporation at trial because it had lost its capacity to sue three
13 | weeks after filing the complaint and never revived its capacity).
14 Accordingly, defendant’s pending motion will be denied because it has lost its capacity to
15 | defend itself in this federal court under Federal Rule of Civil Procedure 17(b)(2) and has failed to
16 | revive that capacity. This denial, however, is without prejudice to defendant seeking
17 | reconsideration of its motion to stay at some future time when its capacity to defend itself in
18 | federal court has been restored. See, e.g., Cuong Nhut Chung v. L & R Fine Fashions, Inc., No.
19 | 8:11-cev-00712-CJC-AN, 2012 WL 12887559, at *1 (C.D. Cal. Feb. 1, 2012) (granting a motion
20 | for reconsideration filed by a California corporation that had its previous motion to dismiss
21 | denied due to lack of capacity to defend itself in litigation under Rule 17(b)).
22 For the forgoing reasons, defendant’s motion to stay (Doc. No. 11) is denied.
23 | IT IS SO ORDERED. me □
Dated: _ March 29, 2022 al, A □□□
25 UNITED STATES DISTRICT JUDGE
26
27
28