(Super. Ct. No. 39201000246580CUPOSTK) APPEAL from a judgment of the Superior Court of San Joaquin County, Barbara A. Kronlund, Judge.
The opinion of the court was delivered by: Robie , J.
CERTIFIED FOR PUBLICATION
Affirmed in part and reversed in part.
In this premises liability case, the trial court denied a motion by plaintiff V & P Trading Co., Inc. (V & P) to compel defendants United Charter, LLC and Raymond Zhang (jointly United Charter) to answer a set of special interrogatories and awarded monetary discovery sanctions to United Charter because V & P was a suspended corporation that lacked the capacity to prosecute the action when the motion to compel was filed. Subsequently, the trial court granted summary judgment to United Charter based on the statute of limitations because the limitations period had run while V & P was suspended.
On appeal, V & P contends the trial court erred in denying the motion to compel and in granting summary judgment because United Charter waived the defense of V & P's lack of capacity to sue by failing to plead that defense in its answer. V & P also contends that, in any event, the trial court abused its discretion in awarding discovery sanctions because United Charter did not raise V & P's lack of capacity to sue until after V & P filed its motion to compel, and based on that fact V & P acted with substantial justification in filing the motion.
We conclude the trial court did not err in granting summary judgment to United Charter, which would make the denial of the motion to compel moot except that the denial of the motion to compel has a bearing on the sanctions issue. Because we conclude the trial court erred in denying the motion to compel, we likewise conclude the trial court erred in awarding sanctions against V & P and its attorney. Accordingly, we will reverse the sanctions award but otherwise affirm.
FACTUAL AND PROCEDURAL BACKGROUND
V & P is a closely-held California corporation, solely owned by Raeef Ohan, who is also the corporation's president. V & P's powers, rights, and privileges as a California corporation were suspended by the Franchise Tax Board on December 3, 2007, because V & P failed to file a tax return and/or failed to pay taxes, penalties, or interest.
On March 5, 2008, goods that V & P was storing in a warehouse owned by United Charter were allegedly damaged and/or destroyed by rain when the roof on the warehouse was removed.
On August 3, 2010, V & P commenced this action against United Charter to recover damages for the loss of its goods. In its answer to the complaint, apparently filed sometime in September 2010, United Charter denied the allegations of the complaint and asserted (among others) the affirmative defense of the statute of limitations. United Charter did not assert as a defense V & P's lack of capacity to prosecute the action because its corporate status had been suspended.
In December 2010, V & P served a set of special interrogatories on United Charter. When United Charter failed to answer those interrogatories, V & P filed a motion to compel in April 2011. United Charter filed its opposition to the motion sometime in the middle of May. The basis of United Charter's opposition was that V & P's corporate status was suspended and therefore V & P was "simply not allowed to proceed with litigation." United Charter sought an award of $1,237.50 in monetary discovery sanctions on the ground that V & P's motion to compel was a misuse of the discovery process and was without substantial justification because of V & P's suspended status.
In reply, V & P's attorney and Ohan attested that they were unaware of the suspended status of the corporation until they received United Charter's opposition to the motion to compel on May 16. V & P argued that United Charter could not use V & P's suspended status as a defense to the motion to compel because United Charter had not pleaded V & P's lack of capacity to sue in the answer to the complaint. V & P also argued that, in any event, an award of sanctions would be improper because United Charter had not raised the issue of V & P's corporate status until United Charter filed its opposition to the motion to compel.
The trial court denied the motion to compel without prejudice and awarded the requested sanctions to United Charter against V & P and its attorney because of V & P's suspended status.
On June 21, 2011, the suspension of V & P's corporate status was lifted. In July 2011, United Charter moved for summary judgment based on the statute of limitations. United Charter argued that the three-year limitations period began to run on March 5, 2008 and the filing of the complaint in August 2010 did not toll the running of the limitations period ...