Lack Of Capacity Of Limited Partnership & Corporation.

In a California Environmental Quality Act [CEQA] case, plaintiffs, a limited partnership and two corporations voluntarily dismissed the action on May 9, 2013. The trial court awarded the defendant $37,528.14 in costs for preparation of the administrative record. On the appeal of the court’s order to pay costs, there was a motion to dismiss the limited partnership and two corporations.

With regard to #1, a limited partnership, the allegation was that it lacked capacity to bring the appeal because it was a canceled limited partnership. On December 24, 2012, #1 had filed a certificate of cancelation under penalty of perjury stating “the above-named . . . has completed winding up its affairs and is cancelled.” The appellate court took the general partners at their word, and dismissed #1.

As to #2, a corporation, the allegation was that it lacked capacity to bring the appeal because it was a suspended corporation. The California Franchise Tax Board suspended its powers, rights and privileges on September 3, 2013. The appellate court noted that a corporation may not prosecute or defend an action, nor appeal from an adverse judgment in an action while its corporate rights are suspended for failure to pay taxes, and dismissed #2.

And as to #3, an active corporation, the allegation was that it should be dismissed because the three businesses are so intertwined that dismissal of the entire action is necessary to prevent #1 and #2 from benefitting from the appeal. The appellate court declined to dismiss #3, finding a lack of adequate showing by the moving party.

A Pyrrhic victory for #3. It lost the appeal and had to pay the costs. (The Otay Ranch, L.P. v. County of San Diego (Flat Rock Land Company, LLC) (Cal. App. Fourth Dist., Div. 1; September 29, 2014) 230 Cal.App.4th 60, [178 Cal.Rptr.3d 346].)