Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Go v. Pacific Health Services

November 19, 2009

VILMA GO, PLAINTIFF, CROSS-DEFENDANT AND APPELLANT,
v.
PACIFIC HEALTH SERVICES, INC., ET AL., DEFENDANTS, CROSS-COMPLAINANTS AND RESPONDENTS.
VILMA GO, PLAINTIFF, CROSS-DEFENDANT AND RESPONDENT,
v.
PACIFIC HEALTH SERVICES, INC., ET AL., DEFENDANTS, CROSS-COMPLAINANTS AND APPELLANTS.



APPEALS from an order of the Superior Court of Los Angeles County, James C. Chalfant, Judge. Affirmed. (Los Angeles County Super. Ct. No. BC358117).

The opinion of the court was delivered by: Willhite, Acting P. J.

CERTIFIED FOR PUBLICATION*fn1

INTRODUCTION

Plaintiff Vilma Go filed a complaint seeking the involuntary dissolution of Pacific Health Services, Inc. (PHS), in which she had been a director and shareholder, pursuant to Corporations Code section 1800,*fn2 naming as defendants PHS, and David Sylvia and Paul Husen, the other directors and shareholders of PHS (sometimes collectively referred to herein as defendants). Defendants sought to avoid dissolution of PHS by purchasing Go's shares under section 2000 which, once invoked, requires the trial court to appoint three disinterested appraisers to assist the court in determining the valuation of the corporation at issue. After considering the reports of the appraisers, in accordance with the requirements of section 2000, the trial court stayed the dissolution proceeding and fixed the fair value of Go's shares, and thereafter entered a decree providing in the alternative for the winding up and dissolution of the corporation unless defendants made payment to Go for her shares, in the specified amount, within the time specified by the decree.

Go appeals from the decree, contending that the court's valuation of PHS was erroneous and undervalued her shares. Defendants also appeal from the decree, contending that the decree awarded Go relief to which she was not legally entitled: that if defendants did not make payment within the specified time, the involuntary winding up and dissolution of PHS would proceed immediately, without defendants being afforded the opportunity to litigate the merits of the action for involuntary dissolution. In the nonpublished portion of this opinion, part I of the discussion, we conclude that the trial court had substantial evidence before it that supported the valuation it reached. In the published portion of this opinion, part II of the discussion, we conclude that the alternative decree issued by the trial court followed the statutory requirements set forth in the plain language of section 2000. Accordingly, we affirm the order/alternative decree in its entirety.

FACTUAL AND PROCEDURAL BACKGROUND

Go is a licensed nurse. In early 2003, Go and David Sylvia formed Pacific Health Services, Inc. (PHS), a California corporation that was eventually licensed and certified to provide Medicare and Medi-Cal home nursing and health care services. Go and Sylvia each owned half of the shares of PHS, and each made an initial investment of $30,000. Originally, Go and Sylvia were both directors and officers of PHS.

In early 2004, Sylvia and Go brought Paul Husen into the corporation as director of nursing. Husen, Go, and Sylvia each became one-third shareholders.

In early 2006, PHS received its certification from Medicare and Medi-Cal and obtained a county license, at which time the company became profitable. Until PHS obtained its licensure and certification, the business was not permitted to bill for its services.

Also in early 2006, Sylvia and Husen began paying themselves salaries of approximately $8,000 per month. Go did not receive a salary; Sylvia told her "there was not enough money."

Go contends that on August 8, 2006, Sylvia and Husen held an unnoticed board meeting at which they amended the bylaws in order to terminate her from the board of directors. Go contends that Sylvia and Husen set the price of Go's shares at $20,000, then issued to themselves company checks ($25,000 to Sylvia and $15,000 to Husen), which they used to fund personal checks which they sent to Go (for $10,000 from each of them). They then purported to transfer Go's shares to themselves.

Sylvia and Husen contend, however, that in February 2006, they learned that Go was breaching her duties to PHS by competing with it, and directing potential customers to competing agencies in return for monetary compensation. They assert that they properly removed her from the board of directors and compensated her for the fair market value of her shares.*fn3

Go sued defendants on September 7, 2006, seeking the involuntary dissolution of PHS pursuant to section 1800, subdivisions (b)(3) and (b)(4).*fn4 Go also sought damages based on claims of breach of fiduciary duty and fraud (1) as a shareholder's derivative action, and (2) as a direct action brought by a shareholder and director. (Vilma Go v. Pacific Health Services, Inc., et al., Los Angeles Super. Court Case No. BC358117.)

On December 7, 2006, defendants filed a cross-complaint for breach of contract, misappropriation of corporate opportunities, and breach of the duty of loyalty.

On April 5, 2007, defendants filed a motion pursuant to section 2000 for an order to stay the dissolution proceedings.*fn5 They requested that the court set a valuation date of August 14, 2006, and fix the value of Go's shares.

Go filed a response to defendants' motion to stay the proceedings and fix the value of the shares. She did not oppose the request that the court determine the value of the corporation, but requested that the valuation date be set for the time of the actual valuation, i.e., sometime in 2007.

Defendants filed a reply.

On May 11, 2007, the court issued an order staying the dissolution proceedings, and providing for the appointment of three appraisers. The parties were to each choose one appraiser, and the two appraisers would then choose the third appraiser. The court ordered the valuation date to be September 7, 2006-the date Go filed suit-and ordered the appraisal to be concluded by September 14, 2007.

Go chose Barbara Luna, defendants chose Jeffrey Freeman, and together Luna and Freeman chose Stanley Deakin.

Defendants filed three unopposed ex parte applications to continue the required reporting date. The court eventually set May 31, 2008, as the date by which the appraisers were required to provide their reports. Go filed an unopposed ex parte application to continue the reporting date for an additional 45 days, but the court denied the application.

The three appraisers each filed a separate report, stating the value of 100 percent of the shares of PHS, including Go's shares.*fn6 Luna set the value of the corporation at ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.