Mayra Perez v. Thomas Towing, Inc.

Case Number

24CV00162

Case Type

Hearing Date / Time

Wed, 12/18/2024 - 10:00

Nature of Proceedings

Petition of Thomas Towing, Inc. to Avoid Involuntary Dissolution and Ascertain Value of Moving Parties Shares

Tentative Ruling

For Plaintiff and Respondent Mayra Perez, individually and as the administrator of the estate of Santiago Perez, Jr.: Jordan T. Porter

                                   

For Defendant and Petitioner Thomas Towing, Inc.: Vincent T. Martinez, Blanca E. Mejia

                       

RULING

For the reasons set forth herein:

The hearing on the petition to avoid involuntary dissolution and ascertain the value of moving parties’ shares is continued to February 5, 2025, at 10:00 a.m.

The parties are to meet and confer, in good faith, in an attempt to select mutually acceptable disinterested appraisers and acceptable parameters for the appraisal of the fair value of the shares owned by the moving parties. If the parties reach an agreement, they are to file a stipulation no later than January 22, 2025.

If the parties are unable to reach an agreement as to mutually acceptable disinterested appraisers and acceptable parameters for the appraisal, each party shall submit a list containing the names of at least 3 and no more than 5 proposed appraisers, along with current copies of their curriculum vitae, no later than January 22, 2025.

The February 5, 2025, trial confirmation conference is vacated, and a case management conference is scheduled to take place with the continued hearing of this motion on February 5, 2025, at 10:00 a.m. Each party is to timely file and serve an updated case management conference statement.

Background

This action commenced on January 11, 2024, by the filing of the complaint by Plaintiff Mayra Perez (“Perez”) against Defendant Thomas Towing, Inc. (“Thomas Towing”) for involuntary dissolution of corporation.

By way of the complaint, Perez alleges that she brings the action to dissolve the business of Thomas Towing due to internal dissention between herself and the other 50% shareholder. Perez is the owner of 50% of all outstanding shares of the corporation because she inherited the shares because of the passing of her husband, Santiago Perez, Jr. on December 3, 2018.

On December 5, 2024, Thomas Towing filed the present petition to avoid involuntary dissolution and ascertain the value of moving parties’ shares.

The petition was timely served, and the parties stipulated to shortening time to hear the petition. Perez has not filed any opposition or other responsive document to the petition.

Analysis

Thomas Towing brings the petition pursuant to Corporations Code section 2000, which provides:

“(a) Subject to any contrary provision in the articles, which may include a reference to a separate written agreement between two or more shareholders pertaining to the purchase of shares:

“In any suit for involuntary dissolution, or in any proceeding for voluntary dissolution initiated by the vote of shareholders representing only 50 percent of the voting power, the corporation or, if it does not elect to purchase, the holders of 50 percent or more of the voting power of the corporation (the “ ‘purchasing parties’ ”) may avoid the dissolution of the corporation and the appointment of any receiver by purchasing for cash the shares owned by the Plaintiffs or by the shareholders so initiating the proceeding (the “ ‘moving parties’ ”) at their fair value.

“The fair value shall be determined on the basis of the liquidation value as of the valuation date but taking into account the possibility, if any, of sale of the entire business as a going concern in a liquidation. In fixing the value, the amount of any damages resulting if the initiation of the dissolution is a breach by any moving party or parties of an agreement with the purchasing party or parties may be deducted from the amount payable to the moving party or parties, unless the ground for dissolution is that specified in paragraph (4) of subdivision (b) of Section 1800. The election of the corporation to purchase may be made by the approval of the outstanding shares (Section 152) excluding shares held by the moving parties.

“(b) If the purchasing parties (1) elect to purchase the shares owned by the moving parties, and (2) are unable to agree with the moving parties upon the fair value of those shares, and (3) give bond with sufficient security to pay the estimated reasonable expenses (including attorneys’ fees) of the moving parties if those expenses are recoverable under subdivision (c), the court upon application of the purchasing parties, either in the pending action or in a proceeding initiated in the superior court of the proper county by the purchasing parties in the case of a voluntary election to wind up and dissolve, shall stay the winding up and dissolution proceeding and shall proceed to ascertain and fix the fair value of the shares owned by the moving parties.

“(c) The court shall appoint three disinterested appraisers to appraise the fair value of the shares owned by the moving parties, and shall make an order referring the matter to the appraisers so appointed for the purpose of ascertaining the value. The order shall prescribe the time and manner of producing evidence, if evidence is required. The award of the appraisers or of a majority of them, when confirmed by the court, shall be final and conclusive upon all parties. The court shall enter a decree, which shall provide in the alternative for winding up and dissolution of the corporation unless payment is made for the shares within the time specified by the decree. If the purchasing parties do not make payment for the shares within the time specified, judgment shall be entered against them and the surety or sureties on the bond for the amount of the expenses (including attorneys’ fees) of the moving parties. Any shareholder aggrieved by the action of the court may appeal the court’s decision.

“(d) If the purchasing parties desire to prevent the winding up and dissolution, they shall pay to the moving parties the value of their shares ascertained and decreed within the time specified pursuant to this section, or, in case of an appeal, as fixed on appeal. On receiving payment or the tender thereof, the moving parties shall transfer their shares to the purchasing parties.

“(e) For the purposes of this section, “shareholder” includes a beneficial owner of shares who has entered into an agreement under Section 300 or 706.

“(f) For the purposes of this section, the valuation date shall be (1) in the case of a suit for involuntary dissolution under Section 1800, the date upon which that action was commenced, or (2) in the case of a proceeding for voluntary dissolution initiated by the vote of shareholders representing only 50 percent of the voting power, the date upon which that proceeding was initiated. However, in either case the court may, upon the hearing of a motion by any party, and for good cause shown, designate some other date as the valuation date.”

“A section 2000 shareholder buyout is a special proceeding that supplants an action for involuntary dissolution of a corporation.” (Goles v. Sawhney (2016) 5 Cal.App.5th 1014, 1018.)

“The objective of section 2000 is to provide an alternative to dissolution through a buy-out by the holders of 50 percent or more of the shares of the corporation. The objective of the statutory appraisal process is to find a fair value for the shares of the parties seeking dissolution and to award the 50 percent shareholders seeking dissolution the liquidation value they would have received had their dissolution action been allowed to proceed to a successful conclusion. If the purchasing parties believe the price fixed by the court is too high, they can refuse to purchase the shares at that price and permit the winding up and dissolution of the corporation to proceed. Their only liability would be to pay the expenses (including attorney fees) incurred by the moving parties in the appraisal process.” (Trahan v. Trahan (2002) 99 Cal.App.4th 62, 75.)

The court is inclined to grant the petition. However, the court believes that it would be beneficial to the parties to meet and confer in an attempt to come to an agreement regarding an appraisal. If the parties so choose, they may stipulate to less than three appraisers, but any stipulation must include a provision that the valuation by the appraiser, or a majority of the appraisers, is final and conclusive. The stipulation, if entered into, shall include all other factors identified in Corporations Code section 2000, such as the time and manner of producing evidence and the deadline for payment for the shares.

Should the parties come to an agreement regarding an appraiser or appraisers, and the parameters of the appraisal, the appraiser or appraisers must consider, at a minimum, the factors set forth in Internal Revenue Service (IRS) Revenue Ruling 59-60 and Ronald v. 4-C’S Electronic Packaging, Inc. (1985) 168 Cal.App.3d 290. The valuation date shall be the date Perez’s action commenced (January 11, 2024).

In the event the parties are unable to stipulate, they will be ordered to provide the names of at least three, and no more than five, proposed appraisers, along with current copies of their curriculum vitae, so that the court can choose for them.