Appellant Friends of Shingle Springs Interchange, Inc. (FSSI), filed a verified petition for writ of mandate (the petition) challenging the certification and approval by the County of El Dorado, through its board of supervisors (County), of a Circle K minimart and gas station complex off Highway 50 in Shingle Springs. At the time FSSI filed its petition, its corporate powers had been suspended for some two and a half years. Real party in interest Convenience Retailers, LLC (CRL), joined by the County (collectively respondents) demurred to the petition, asserting that FSSI did not have the legal capacity to file the petition and that FSSI's corporate powers were not revived until after the applicable statutes of limitations had run. The trial court sustained the demurrer without leave to amend and dismissed the petition.
On appeal, FSSI contends (1) the existence of unresolved factual disputes rendered dismissal of the petition by demurrer improper, (2) it was error to sustain the demurrer because FSSI substantially complied with the corporate suspension and revivor statutes prior to expiration of the relevant statutes of limitations, and (3) the trial court abused its discretion when it denied leave to amend the petition to allege substantial compliance.
We hold that a demurrer was an appropriate vehicle to challenge the petition, that FSSI cannot allege substantial compliance with the suspension and revivor statutes to avoid the short limitations periods in the California Environmental Quality Act (Pub. Resources Code, § 21000 et seq.) and the Planning and Zoning Law (Gov. Code, § 65000 et seq.), and that the trial court did not abuse its discretion in denying leave to amend the petition. We affirm the judgment of dismissal.
This litigation involves the construction of a Circle K convenience store and gas station adjacent to Highway 50 at the Shingle Springs interchange near Placerville (the project). FSSI challenged approval of the project, asserting three causes of action in its petition: the first for violations of the California Environmental Quality Act (CEQA);
At the hearing on the demurrer, FSSI submitted to the trial court the declaration of Kelly Rasco, "secretary, bookkeeper, office assistant" and the custodian of records of FSSI.
FSSI filed its articles of incorporation with the Secretary of State (SOS) on May 14, 2002. The original articles state, among other things, that FSSI is a "nonprofit public benefit corporation ... not organized for the private gain of any person."
According to the Rasco timeline, FSSI received a request from the Franchise Tax Board (FTB) dated February 28, 2006, for past due taxes. Rasco did not specify in her timeline the amount that was past due.
FSSI subsequently received a notice of pending suspension and penalty assessment from the SOS dated November 2, 2006, for failure to file a statement of information. Based on Rasco's statement that the notice related to FSSI's failure to file a statement of information, we assume the notice referenced a pending suspension pursuant to Corporations Code section 2205 or section 5008.6.
On January 5, 2007, FSSI sent a letter to the FTB "requesting additional time to supply various documents previously requested & previously submitted" and advising the FTB that dissolution of the corporation was under consideration. Rasco did not identify the specific documents for which FSSI was requesting time to produce.
FSSI subsequently received a final notice before suspension from the FTB dated December 22, 2006, and reflecting a balance due of $1,362.70. The summary of account balance attached to the notice actually reflected a balance due of $1,404.25, as previously noted.
There are no specific events listed on the Rasco timeline between March 28, 2007, and January 17, 2008. However, Rasco stated that FSSI considered "dissolv[ing]" or "abandoning" the corporation beginning in early 2007 and into early 2008. During this time, FSSI sent various documents to the FTB concerning "abandonment" or "dissolution" of the corporation and, in fact, on January 17, 2008, FSSI sent the FTB a registered letter and form requesting abandonment of the corporation but received no response. Over a period of months following the January 17 letter, FSSI "changed [its] mind[]" about abandoning the corporation and ultimately made a decision to revive the corporation. The Rasco timeline reflects that Rasco spoke with a person at the FTB in early December 2008 regarding "taking necessary steps to revive [FSSI]." However, it was not until January 26, 2009, that FSSI sent to the FTB the form 3557 Application for Certificate of Revivor. According to the Rasco timeline, "several calls" inquiring about the progress of FSSI's application were made to a person at the FTB between February and August of 2009. None of the calls were returned. Rasco did not state how many phone calls were made or the dates on which they were made. On August 13, 2009, a person associated with FSSI (from the timeline, it appears it could have been Rasco) spoke to the person at the FTB that FSSI had been trying to reach and was advised to resend the application material previously submitted. On August 14, 2009, FSSI sent the FTB an account of corporate activities, an FTB form 3500 Exemption Application, and a check for the filing fees. Rasco did not expressly state in either her declaration or the timeline that a request for exemption had been made prior to this date; nor did she state a check for filing fees had been submitted prior to this date.
On September 2, 2009, FSSI filed its petition challenging certification and approval of the project. FSSI alleged that the environmental impact report (EIR) for the project was approved and certified by the County at a public hearing on August 4, 2009, and that a CEQA notice of determination was filed on that same date. As discussed post, this date triggered the applicable statutes of limitations.
According to the Rasco timeline, FSSI submitted another application package to the FTB on September 8, 2009. This package included the "initial and current Statement of Information and Application." While the September 1, 2009 letter from the SOS indicated the application to the FTB must include a copy of that letter, Rasco did not specifically state in her declaration or timeline that a copy of this letter was included.
Also on September 8, 2009, FSSI electronically filed with the SOS "another Statement of Information dated 09/08/09." On September 9, 2009, FSSI faxed a "Relief From Suspension form" to the FTB and on September 10, 2009, FSSI faxed "additional info[rmation]" to the FTB. Rasco did not indicate the nature of the "additional info[rmation]." On September 18, 2009, FSSI faxed the FTB an "[a]pplication package with the Relief From Suspension & Application for Certificate of Revivor forms previously submitted to FTB numerous times, in addition to Statement of Purpose and copy of By Laws." Nowhere in the timeline or the declaration does Rasco state that the statement of purpose and bylaws had previously been submitted to the FTB.
Rasco stated that FSSI faxed articles of incorporation to the FTB on September 22, 2009. On September 28, 2009, FSSI "[r]eceived" a fax from the FTB "requesting missing clause in Articles of Incorporation for an Amendment of Nonprofit, with sample Articles to add."
According to the certificate of status issued by the SOS on November 4, 2009, FSSI's corporate status was still "suspended" as of that date.
In a letter dated November 9, 2009, the FTB informed FSSI that it was "exempt from California franchise or income tax," and that its tax-exempt status was "effective as of 05/14/2002."
A subsequent notice from the FTB dated November 24, 2009, informed FSSI that it had been relieved of suspension or forfeiture and that it was in good standing with the FTB effective November 4, 2009.
Respondents demurred to the petition, arguing FSSI lacked the capacity to sue because its corporate status was suspended in 2007 and remained so as of November 4, 2009. Since FSSI did not have the capacity to sue when it filed its petition on September 2, 2009, each cause of action in the petition failed
FSSI responded that it had substantially complied with corporate suspension and revivor statutes prior to the running of the applicable statutes of limitations. FSSI also argued it was entitled to amend the petition to substitute in its place another petitioner with standing, in which case the amended petition would relate back to the filing date of the original petition.
The trial court found that the dates alleged in the petition showed that the 30-day statute of limitations applicable to the first cause of action ran on September 3, 2009, and the 90-day limitations period applicable to the second and third causes of action ran on November 2, 2009. After taking judicial notice of the fact that FSSI's corporate powers were suspended by the SOS on February 1, 2007, and by the FTB on March 1, 2007, that the FTB's determination of FSSI's tax-exempt status was issued on November 9, 2009, and that the certificate of revivor was not issued until November 24, 2009, with a retroactive effective date of November 4, 2009, the trial court further found there was "no evidence before the court to establish that [FSSI's efforts to substantially comply] were completed prior to the expiration of the 30[-]day statute of limitation[s] applicable to the CEQA issues on September 3, 2009 and prior to the expiration of the 90[-]day statute of limitation[s] applicable to the remaining issues on November 2, 2009." Thus, the trial court concluded that FSSI's petition was barred by the applicable statutes of limitations.
The trial court also concluded that it lacked discretion to allow amendment of the petition to substitute another party with capacity to sue to avoid the statute of limitations defense. The trial court correctly ruled that it could not allow an amendment to substitute a party when the substitution would negate a statute of limitations defense. (Sade Shoe Co. v. Oschin & Snyder (1990) 217 Cal.App.3d 1509,
The trial court sustained the demurrer without leave to amend and entered judgment dismissing the petition. FSSI filed a timely notice of appeal.
FSSI contends a demurrer is improper where there are unresolved factual issues, such as whether or when FSSI filed the SOS and FTB forms required to obtain a certificate of revivor. FSSI further contends that the presence of those disputed factual issues precludes judicial notice from being taken of FSSI's suspension, thereby precluding use of a demurrer as a vehicle for dismissal of the petition on the ground that the applicable statutes of limitations have run. We disagree.
"When any ground for objection to a complaint ... 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." (Code Civ. Proc., § 430.30, subd. (a).)
The causes of action in FSSI's petition allege facts clearly identifying the applicable 30-day and 90-day statutes of limitations. The petition alleges that August 4, 2009, was the date the County approved the project, certified the EIR, and filed the CEQA notice of determination. Thus, both statutes started running on August 4, 2009. The 30-day statute of limitations applicable to the CEQA challenge therefore expired on September 3, 2009. (Pub. Resources Code, § 21167, subd. (c); Deltakeeper v. Oakdale Irrigation Dist. (2001) 94 Cal.App.4th 1092, 1098 [115 Cal.Rptr.2d 244].) The 90-day limitations period applicable to the project challenges expired on November 2, 2009. (Gov. Code, § 65009, subd. (c)(1); Royalty Carpet Mills, Inc. v. City of Irvine (2005) 125 Cal.App.4th 1110, 1119 [23 Cal.Rptr.3d 282] (Royalty Carpet).) The applicable statutes of limitations and the calculation of the running of the two statutes are not in dispute here.
What is in dispute is FSSI's corporate status at all relevant times. Respondents argued in their demurrer that FSSI's corporate powers were suspended at the time FSSI filed the petition and remained suspended thereafter until after the applicable limitations periods expired. Because the petition, on its face, is not completely illuminating in that regard, like the trial court, we must determine whether grounds for respondents' argument appear "from any matter of which the court is required to or may take judicial notice." (Code Civ. Proc., § 430.30, subd. (a).)
Respondents properly requested in their demurrer that the trial court take judicial notice of the SOS's certificate of status issued on November 4, 2009. That document reflects the dates on which FSSI's corporate powers were suspended by the SOS and the FTB, as well as the fact that FSSI's corporate status was "suspended" as of November 4, 2009. In its opposition to the demurrer, FSSI included a request for judicial notice of four documents: FSSI's articles of incorporation filed May 14, 2002; a letter dated September 1, 2009, from the SOS to FSSI acknowledging receipt of a statement of information; the certificate of revivor issued by the FTB on November 24, 2009 (showing an effective date of Nov. 4, 2009); and a letter dated November 9, 2009, from the FTB to FSSI reflecting a determination of FSSI's tax-exempt status "effective as of [May 14, 2002]."
The matters judicially noticed here show that FSSI's corporate status was suspended by the SOS and the FTB in 2007; that, as of September 9, 2009, the SOS would consider the corporation suspended until the FTB issued a certificate of revivor; that, on November 9, 2009, FSSI was declared tax exempt, effective as of May 14, 2002; and that, on November 24, 2009, the FTB determined that FSSI was relieved of suspension and in good standing effective November 4, 2009. FSSI does not and cannot dispute these matters.
The demurrer was not improper and as we will discuss, the trial court's ruling that FSSI's petition was barred by the applicable statutes of limitations was not erroneous.
FSSI contends it can cure the statute of limitations defect by alleging facts that establish substantial compliance. FSSI further contends the trial court
FSSI contends its corporate powers were restored as a result of its substantial compliance with the revivor statutes prior to expiration of the applicable limitations periods. FSSI asserts that the following establish substantial compliance: its filing of statements of information required by the SOS, its filing of FTB form 3557 applications required by the FTB, and the fact that the FTB ultimately "waived" any claim of money owed for back taxes, penalties, and interest. FSSI urges that the FTB and the SOS both received the full measure of protection intended by the Legislature under the statutory scheme; that is, the SOS obtained the information statement prior to expiration of the applicable limitations periods, and the FTB eventually received confirmation that FSSI was tax exempt.
Respondents argue that a statute of limitations defense is substantive rather than procedural and, as such, revival of previously suspended corporate powers does not toll the running of the applicable statutes of limitations.
For reasons we shall explain, we agree that FSSI cannot allege substantial compliance.
"`If the statute of limitations runs out prior to revival of a corporation's powers, the corporation's actions will be time barred even if the complaint would otherwise have been timely. [Citations.]'" (Leasequip, supra, 103 Cal.App.4th at p. 403, quoting Sade Shoe, supra, 217 Cal.App.3d at p. 1513.)
Both parties rely on Sade Shoe, supra, 217 Cal.App.3d 1509 to support their positions. The application of the substantial compliance doctrine in the context of corporate suspension and revivor statutes presented itself as an issue of first impression in Sade Shoe. (Sade Shoe, supra, 217 Cal.App.3d at p. 1514.)
In Sade Shoe, causes of action for interference with prospective business advantage and interference with contractual relations accrued before Sade Shoe's corporate status was suspended. The corporation was thereafter suspended for failure to file tax returns, pay taxes, and file a domestic stock statement. (Sade Shoe, supra, 217 Cal.App.3d at p. 1511.) The corporation subsequently filed its tax return, paid its taxes and filed a domestic stock statement. Later the corporation filed its complaint. However, at the time the complaint was filed, the corporation continued to owe the state $90.85 in penalties and interest, and the applicable statute of limitations expired before Sade Shoe obtained a certificate of revivor. (Ibid.) The trial court granted the defendant's motion for summary judgment on the grounds that the limitations period had expired during Sade Shoe's corporate suspension. (Id. at pp. 1511-1512.)
On appeal, Sade Shoe argued it substantially complied with the requirements of the revivor statutes prior to expiration of the limitations period. The court agreed that "substantial compliance may restore a corporation's powers to sue and defend itself ...." (Sade Shoe, supra, 217 Cal.App.3d at p. 1512.) The court analogized the corporate suspension and revivor statutes to the licensed contractor statute in Business and Professions Code section 7031, subdivision (a) and adopted the reasoning from Latipac, Inc. v. Superior Court (1966) 64 Cal.2d 278 [49 Cal.Rptr. 676, 411 P.2d 564] (Latipac). Our high court in Latipac applied the substantial compliance doctrine to allow Latipac, Incorporated, a suspended corporate contractor, to maintain an action for
The court in Latipac noted that the test for substantial compliance is "whether the contractor's `substantial compliance with the licensing requirements satisfies the policy of the statute.' [Citation.]" (Latipac, supra, 64 Cal.2d at p. 281.) "[T]he statute was intended to enforce the general provisions of the Contractors License Law (Bus. & Prof. Code, § 7000 et seq.) which was created to protect the public against incompetent workmanship." (Sade Shoe, supra, 217 Cal.App.3d at p. 1514.) The high court in Latipac reasoned that Business and Professions Code section 7031 should not be applied to bar an action when the party seeking to avoid his obligations under the contract has received the full protection of the statute. (Latipac, supra, 64 Cal.2d at pp. 279-280.) The key moment of time when the existence of the license becomes determinative is the time when the other party to the agreement decides whether the contractor possesses the requisite responsibility and competence and whether to enter into a contractual relationship. (Id. at p. 282.) The plaintiff had held a valid license for some five years prior to the time the parties entered into the contract and, indeed, held it for 17 months after execution of the contract. (Ibid.) The legislative goal of the statute had been met.
Applying the Latipac reasoning in the context of a corporation suspended for failure to pay penalties and interest, the court in Sade Shoe noted that
The court in Sade Shoe noted an additional reason for applying the substantial compliance doctrine. It reasoned that "the plea of corporate suspension ... is considered a plea of abatement. [Citations.] Pleas of abatement are not favored by law and should be strictly construed. [Citation.] Since the defense of corporate suspension is disfavored, it is logical it should not be strictly applied where the corporate party has substantially complied with the requirements necessary for its revivor." (Sade Shoe, supra, 217 Cal.App.3d at p. 1515.)
While recognizing the potential applicability of the substantial compliance doctrine, the court nevertheless concluded that Sade Shoe had not substantially complied. Given that substantial compliance is a level of compliance that "satisfies the policy of the statute" (Sade Shoe, supra, 217 Cal.App.3d at p. 1515), the court concluded that Sade Shoe's failure to pay the $90.85 for outstanding penalties and interest precluded application of the substantial compliance doctrine. The court reasoned that allowing Sade Shoe to proceed with its lawsuit without paying the entire balance would defeat the legislative goal of pressuring corporations to pay money owed the state. (Id. at p. 1516.) "In sum, when a corporation continues to owe money to the state, either for taxes, interest or penalties, there can be no substantial compliance." (Ibid.)
Relying on Sade Shoe, FSSI would have us find that its efforts to obtain corporate revivor by filing FTB form 3557 applications, statements of information, and other documentation before the applicable limitations periods expired constituted substantial compliance. It contends that we must find substantial compliance because both governmental agencies received the full protection intended by the revivor statutes. That is, the SOS obtained the information statement it required prior to expiration of the 30-day limitations period and the FTB, having waived any right it might have had to money owed for delinquent taxes, received the confirmation it needed that FSSI was indeed tax exempt. We are not persuaded.
At our invitation, the parties filed supplemental briefs on an issue that had not been addressed in their original briefing, but upon which the resolution of the case turns—Should the doctrine of substantial compliance with corporate suspension and revivor statutes apply in CEQA and Planning and Zoning Law challenges to avoid the statutes of limitations for such actions? This is a case of first impression.
Allowing a suspended corporation to find refuge in the substantial compliance doctrine based merely on having filed revivor applications and other documentation would be inconsistent with the policy reasons underlying the short limitations periods associated with CEQA and Planning and Zoning Law challenges. "Courts have often noted the Legislature's clear determination that `"the public interest is not served unless CEQA challenges are promptly filed and diligently prosecuted."'" (Stockton Citizens for Sensible Planning v. City of Stockton (2010) 48 Cal.4th 481, 500 [106 Cal.Rptr.3d 858, 227 P.3d 416] (Sensible Planning); see Citizens for a Megaplex-Free Alameda v. City of Alameda (2007) 149 Cal.App.4th 91, 111 [56 Cal.Rptr.3d 728]; Board of Supervisors v. Superior Court (1994) 23 Cal.App.4th 830, 836 [28 Cal.Rptr.2d 560] (Board of Supervisors); Oceanside Marina Towers Assn. v. Oceanside Community Development Com. (1986) 187 Cal.App.3d 735, 741 [231 Cal.Rptr. 910].)
"To ensure finality and predictability in public land use planning decisions, statutes of limitations governing challenges to such decisions are typically short. [Citations.] The limitations periods set forth in CEQA adhere to this pattern; indeed, as the CEQA Guidelines themselves assert, `CEQA provides unusually short statutes of limitations on filing court challenges to the approval of projects under the act.' (CEQA Guidelines, § 15112, subd. (a),
The policy underlying the Planning and Zoning Law statute of limitations is codified in Government Code section 65009, subdivision (a)(2) and (3): "(2) The Legislature ... finds and declares that a legal action or proceeding challenging a decision of a city, county, or city and county has a chilling effect on the confidence with which property owners and local governments can proceed with projects. Legal actions or proceedings filed to attack, review, set aside, void, or annul a decision of a city, county, or city and county pursuant to this division ... can prevent the completion of needed developments even though the projects have received required governmental approvals. [¶] (3) The purpose of this section is to provide certainty for property owners and local governments regarding decisions made pursuant to this division." Courts have acknowledged this legislative policy. (Hensler v. City of Glendale (1994) 8 Cal.4th 1, 27 [32 Cal.Rptr.2d 244, 876 P.2d 1043] [the shortened limitation periods for land use planning decisions promote sound fiscal planning by state and local governmental entities]; Royalty Carpet, supra, 125 Cal.App.4th at p. 1121 ["[t]he legislative policy behind both Government Code section 65009 and CEQA is the prompt resolution of challenges to the decisions of public agencies regarding land use"].)
In the face of clear legislative policy underlying the CEQA and Planning and Zoning Law statutes of limitations, FSSI asks us to apply the substantial
FSSI's corporate powers were suspended in early 2007. Between 2007 and early 2008, FSSI actually contemplated abandoning its corporate status and made inquiries on how to achieve that end. At some point, a decision was made to revive the corporation, but FSSI did not begin formal efforts to do so until January 2009.
FSSI eventually received notification from the FTB that it was tax exempt effective May 14, 2002, and that it was in good standing and its corporate powers were no longer suspended effective November 4, 2009. However, neither determination was made until after the expiration of the applicable statutes of limitations. And during the process, it was not at all clear that the corporation would be revived.
FSSI argues that the substantial compliance doctrine must apply to CEQA cases because CEQA's "foremost" policy for maximum environmental protection (Laurel Heights Improvement Assn. v. Regents of University of California (1988) 47 Cal.3d 376, 390 [253 Cal.Rptr. 426, 764 P.2d 278])
Indeed, even where competing statutes are at issue, the policy of expedited litigation may prevail. Nacimiento Regional Water Management Advisory Com. v. Monterey County Water Resources Agency (2004) 122 Cal.App.4th 961 [18 Cal.Rptr.3d 921] (Nacimiento)—cited without discussion in FSSI's supplemental brief—supports our conclusion that the substantial compliance doctrine does not apply to CEQA cases. The court in Nacimiento held the mandatory statutory relief from dismissal for inexcusable attorney neglect (Code Civ. Proc., § 473) does not apply to a dismissal for failure to make a timely request for a CEQA hearing under Public Resources Code section 21167.4. The court reasoned that "[a]pplication of section 473(b)'s mandatory relief provision to CEQA dismissals for failing to request a hearing within the prescribed 90-day time period would undermine CEQA's design for expedited litigation." (Nacimiento, supra, 122 Cal.App.4th at p. 968.)
In Wagner v. City of South Pasadena (2000) 78 Cal.App.4th 943 [93 Cal.Rptr.2d 91], a Planning and Zoning Law case, the court, citing Maginn,
Though not relied upon by FSSI, we note Nacimiento, supra, 122 Cal.App.4th at page 966, in dictum, cited case law holding that the discretionary statutory relief from dismissal for excusable mistake (Code Civ. Proc., § 473) applies to CEQA cases. (Miller v. City of Hermosa Beach (1993) 13 Cal.App.4th 1118, 1135-1138 [17 Cal.Rptr.2d 408]; McCormick v. Board of Supervisors (1988) 198 Cal.App.3d 352, 359 [243 Cal.Rptr. 617].) We do not read Miller and McCormick as support for FSSI, because the relief at issue in those cases was based on a statute that allows discretionary relief, whereas here FSSI invokes the judicial doctrine of substantial compliance. As we stated, ante, legislative policy trumps judicial doctrine.
FSSI cites Board of Supervisors, supra, 23 Cal.App.4th at pages 837 to 839, which held that strict compliance with the time requirements for service of a CEQA petition under Public Resources Code section 21167.6 may be excused for good cause, where the statute did not expressly require dismissal for failure to comply. (See also Royalty Carpet, supra, 125 Cal.App.4th at pp. 1121-1124 [same].) However, FSSI acknowledges Board of Supervisors is not on point because it addressed noncompliance with a procedural requirement (service) (Board of Supervisors, supra, at pp. 837-838), whereas the failure timely to file the litigation within the statute of limitations has been held (in the context of corporate suspension) to be a substantive defense that is not prejudiced by subsequent corporate revivor (Benton, supra, 226 Cal.App.3d at pp. 1490-1491; 2 Schwing, Cal. Affirmative Defenses (2011 ed.) § 39:38, p. 971).
FSSI also argues it is unfair to dismiss the lawsuit based on actions not of FSSI's doing, such as respondents filing what FSSI characterizes as a "highly questionable if not completely improper" demurrer and going forward with construction during pendency of the appeal. However, as we have noted, the
Even if the substantial compliance doctrine should apply in the context of CEQA or Planning and Zoning Law actions, FSSI cannot establish that it substantially complied with the revivor statutes. Accordingly, the trial court did not abuse its discretion and, on our independent review, we determine FSSI cannot set forth facts sufficient to establish substantial compliance.
It is undisputed that at the time FSSI filed its petition there was an outstanding bill for taxes, penalties and interest, and that bill remained in effect until after the last applicable limitations period expired on November 2, 2009. Under Sade Shoe, there can be no substantial compliance where any outstanding financial obligations remain unpaid. (Sade Shoe, supra, 217 Cal.App.3d at pp. 1512-1513.) To preclude expiration of the applicable statutes of limitations, FSSI would have to allege payment of these monies. Until it was deemed qualified for exemption, FSSI was obligated to pay the taxes, penalties and interest noticed in 2006. (Rev. & Tax. Code, § 23151,
FSSI contends that the lack of additional demands by the FTB for money owed constituted a waiver of debt. More specifically, FSSI urges that, because the FTB "never pursued" the claim and instead "requested or accepted and processed FSSI's applications for a certificate of revivor (FTB form 3775), and an exemption form (FTB form 3500)," the FTB waived any claim for money owed and, in effect, established "that the debt was invalid and unenforceable." This argument is untenable. FSSI acknowledged receipt of two demands from the FTB for payment of delinquent taxes, penalties, and interest, one dated November 15, 2006, and the other dated December 22, 2006. FSSI acknowledged that it "never ... paid any franchise or income taxes." In an effort to gain compliance, the FTB did what it was statutorily authorized to do—it suspended FSSI. No statute requires repeated demands for payment, and we decline to require such demands. The FTB need only provide the notice required by statute. We reject FSSI's waiver claim.
Indeed, the Rasco declaration and timeline establish that FSSI's documentary submittals were lacking and more was required. In stark contrast with Latipac, FSSI's application was not "routinely" processed "without further examination." (Latipac, supra, 64 Cal.2d at p. 280.)
While it is true that the SOS acknowledged receipt of FSSI's statement of information on September 1, 2009, two days prior to expiration of the CEQA statute of limitations, the SOS made clear that FSSI's corporate status was still suspended given that the FTB had yet to issue a certificate of revivor. There was more that FSSI needed to do before a certificate of revivor could be obtained.
There were many documents FSSI submitted after the CEQA statute of limitations expired on September 3, 2009. FSSI faxed what it called "another" statement of information to the SOS on September 8, 2009. FSSI provided no information to the trial court or to this court explaining why there was a need to send the SOS "another" copy of the statement of information the SOS had acknowledged receiving on September 1, 2009. Of course, there would have been no reason to submit "another" copy, but there would have been a need to submit a "current" statement if information had changed. We note that according to Rasco, FSSI submitted both the "initial" and a "current" statement of information to the FTB on September 8, 2009.
On September 9, 2009, FSSI faxed a "Relief From Suspension form" to the FTB. On September 22, 2009, FSSI faxed articles of incorporation to the FTB. Based on the FTB's September 28, 2009 request for what Rasco called a "missing clause" in the articles of incorporation, it is evident the FTB needed still more to process FSSI's request before it could determine FSSI qualified for tax exemption. FSSI's certificate of amendment of articles of incorporation was not filed with the SOS until October 8, 2009, over one month after the expiration of the CEQA 30-day statute of limitations. FSSI's proffer indicates the amended articles were not delivered to the FTB until October 19, 2009.
The trial court did not abuse its discretion in sustaining the demurrer and denying FSSI leave to amend. The judgment of dismissal is affirmed. FSSI shall pay the costs of appeal of the County of El Dorado and Convenience Retailers, LLC. (See Cal. Rules of Court, rule 8.278(a)(1) & (2).)
Raye, P. J., and Butz, J., concurred.
"(a) A corporation that (1) fails to file a statement pursuant to Section 1502 for an applicable filing period, (2) has not filed a statement pursuant to Section 1502 during the preceding 24 months, and (3) was certified for penalty pursuant to Section 2204 for the same filing period, is subject to suspension pursuant to this section rather than to penalty pursuant to Section 2204.
"(b) When subdivision (a) is applicable, the Secretary of State shall mail a notice to the corporation informing the corporation that its corporate powers, rights, and privileges will be suspended after 60 days if it fails to file a statement pursuant to Section 1502.
"(c) After the expiration of the 60-day period without any statement filed pursuant to Section 1502, the Secretary of State shall notify the Franchise Tax Board of the suspension and mail a notice of the suspension to the corporation, and thereupon, the corporate powers, rights, and privileges of the corporation are suspended, except for the purpose of filing an application for exempt status or amending the articles of incorporation as necessary either to perfect that application or to set forth a new name.
"(d) A statement pursuant to Section 1502 may be filed notwithstanding suspension of the corporate powers, rights, and privileges pursuant to this section or Section 23301, 23301.5, or 23775 of the Revenue and Taxation Code. Upon the filing of a statement pursuant to Section 1502 by a corporation that has suffered suspension pursuant to this section, the Secretary of State shall certify that fact to the Franchise Tax Board and the corporation may thereupon be relieved from suspension unless the corporation is held in suspension by the Franchise Tax Board by reason of Section 23301, 23301.5, or 23775 of the Revenue and Taxation Code." (Italics added.)
Corporations Code section 5008.6 applies to nonprofit corporations. It provides:
"(a) A corporation that (1) fails to file a statement pursuant to Section 6210, 8210, or 9660 for an applicable filing period, (2) has not filed a statement pursuant to Section 6210, 8210, or 9660 during the preceding 24 months, and (3) was certified for penalty pursuant to Section 6810, 8810, or 9690 for the same filing period, shall be subject to suspension pursuant to this section rather than to penalty under Section 6810 or 8810.
"(b) When subdivision (a) is applicable, the Secretary of State shall mail a notice to the corporation informing the corporation that its corporate powers, rights, and privileges will be suspended 60 days from the date of the notice if the corporation does not file the statement required by Section 6210, 8210, or 9660.
"(c) If the 60-day period expires without the delinquent corporation filing the required statement, the Secretary of State shall notify the Franchise Tax Board of the suspension, and mail a notice of the suspension to the corporation. Thereupon, except for the purpose of filing an application for exempt status or amending the articles of incorporation as necessary either to perfect that application or to set forth a new name, the corporate powers, rights, and privileges of the corporation are suspended.
"(d) A statement required by Section 6210, 8210, or 9660 may be filed, notwithstanding suspension of the corporate powers, rights, and privileges under this section or under provisions of the Revenue and Taxation Code. Upon the filing of a statement under Section 6210, 8210, or 9660, by a corporation that has suffered suspension under this section, the Secretary of State shall certify that fact to the Franchise Tax Board and the corporation may thereupon be relieved from suspension, unless the corporation is held in suspension by the Franchise Tax Board because of Section 23301, 23301.5, or 23775 of the Revenue and Taxation Code." (Italics added.)
The photocopy of the amendment provided to this court is poor. As near as we can make out, the certificate of amendment reads as follows:
"3. The foregoing amendment[] of Articles of Incorporation has been duly approved by the board of directors.
"4. The foregoing amendment[] of Articles of Incorporation has been duly approved by the required vote of the members.
"We further declare under penalty of perjury under the laws of the State of California that the matters set forth in this certificate are true and correct of our own knowledge [sic]."
The certificate was dated October 8, 2009, and signed by "James R. Kidder, President" and "Kelly Rasco, Secretary."
Revenue and Taxation Code section 23301.5 provides: "Except for the purposes of filing an application for exempt status or amending the articles of incorporation as necessary either to perfect that application or to set forth a new name, the corporate powers, rights, and privileges of a domestic taxpayer may be suspended, and the exercise of the corporate powers, rights, and privileges of a foreign taxpayer in this state may be forfeited, if a taxpayer fails to file a tax return required by this part."
