United States District Court, C.D. California
January 28, 2015
SMITH, et al.
VANOWEN CANOGA APARTMENTS, LLC, et al
Attorneys for Plaintiffs: Not Present.
Attorneys for Defendants: Not Present.
Honorable R. GARY
KLAUSNER, UNITED STATES DISTRICT JUDGE.
Proceedings: (IN CHAMBERS) Order re: Plaintiffs' Motion to Strike Portion of Answer (DE 17); Defendants' Motion to Vacate the Court's Order Striking Vanowen Canoga Apartments, LLC's Opposition (DE 21)
I. INTRODUCTION & FACTUAL BACKGROUND
On October 8, 2014, Rosena Smith, William Truehill, and Nicole Truehill (collectively, " Plaintiffs") filed a Complaint for damages and injunctive relief against Vanowen Canoga Apartments, LLC, Mark Kaufman Properties Management Services, LLC, Beverly Lange, and Preston Gamble (collectively, " Defendants"). Plaintiffs allege the following causes of action: (1) Violation of the Fair Housing Act (" FHA"), (2) Violation of the California Fair Employment and Housing Act (" FEHA"), (3) Negligence, (4) Breach of the Implied Warranty of Habitability, (5) Retaliatory Threats of Eviction and Eviction, and (6) Violation of the California Disabled Persons Act. Defendants filed their Answer on November 7, 2014.
On December 1, 2014, Plaintiffs filed the current Motion to Strike Portions of the Answer to remove Vanowen Canoga Apartments, LLC from page 1, line 19 of Defendants' Answer. Defendants' Opposition was filed one week late, and was therefore stricken. Defendants filed a Motion to Vacate the Court's order striking their Opposition on December 19, 2014. For the following reasons, the Court GRANTS Plaintiffs' Motion to Strike and DENIES Defendants' Motion to Vacate as moot.
II. JUDICIAL STANDARD
Pursuant to Federal Rule of Civil Procedure (" Rule") 12(f), a court may strike from a pleading " an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Rule 12(f) functions to avoid expenditures of time and money that arise from litigating spurious issues by dispensing with those issues prior to trial. Whittlestone, Inc. v. Handi-Craft Co., 618 F.3d 970, 973 (9th Cir. 2010) (quoting Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), overruled on other grounds by 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994)). Generally, motions to strike are disfavored. Bureerong v. Uvawas, 922 F.Supp. 1450, 1478 (C.D. Cal. 1996). However, granting a motion to strike lies within the sound discretion of the district court. Fantasy, 984 F.2d at 1528. For a court to grant a motion to strike, " the grounds for the motion must appear either on the face of the complaint or from matters of which the [c]ourt may take judicial notice." In re New Century, 588 F.Supp.2d 1206, 1220 (C.D. Cal. 2008).
Plaintiffs assert that VCA cannot defend itself in the current lawsuit because its powers, rights, and privileges have been suspended by the California Franchise Tax Board. Plaintiffs therefore seek to strike " Vanowen Canoga Apartments, LLC" from the Answer, at page 1, line 19.
Federal Rule of Civil Procedure 17(b)(2) states that a corporation's capacity to sue or be sued is determined " by the law under which it was organized." Fed.R.Civ.P. 17(b)(2). Under California Corporations Code Section 17701.05, a limited liability company has the power to " [s]ue, be sued, complain, and defend any action, arbitration, or proceeding, whether judicial, administrative, or otherwise, in its own name." Cal. Corp. Code § 17701.05(b). However, these " corporate powers, rights and privileges . . . may be suspended" pursuant to California Revenue and Taxation Code Section 23301 for nonpayment of its franchise tax. See Cal. Rev. & Tax. Code § 23301. Therefore, " [u]nder the law of California, a corporation which has been suspended for failure to pay franchise taxes is prohibited from suing, from defending a suit or from appealing from an adverse decision." Mather Constr. Co. v. United States, 475 F.2d 1152, 1154-55, 201 Ct.Cl. 219 (9th Cir. 1973); see Weinstock v. Sinatra, 379 F.Supp. 274, 275 (C.D. Cal. 1974) (" Such suspension or forfeiture brings with it the inability to either sue or be sued within the State of California."). Further, the incapacity of a company to be sued renders it unable " to take any action, in court, in its defense, once suit has been commenced against it." Weinstock, 379 F.Supp. at 277; see, e.g., United States v. Healthwin-Midtown Convalescent Hosp. & Rehab. Ctr., Inc., 511 F.Supp. 416, 418 (C.D. Cal. 1981) (striking a defendant corporation's answer and entering default judgment against that defendant because that corporation had been suspended by the State of California).
Here, VCA is a California limited liability company organized under the laws of the State of California. (Compl. ¶ 6.) This means that VCA would ordinarily have the power to defend itself in a civil suit. However, Plaintiffs' Motion attaches a Certificate of Status from the California Secretary of State, dated November 22, 2014, which states that the California Franchise Tax Board suspended VCA's powers, rights, and privileges on October 1, 2013, pursuant to the provisions of the California Revenue and Taxation Code. ( See Pls.' Mot. to Strike, Ex. A.) In their stricken Opposition, Defendants did not contest the authenticity of this document, and in fact conceded VCA's suspended status. Because the Certificate of Status is not subject to reasonable dispute, the Court takes judicial notice of that document pursuant to Federal Rule of Evidence 201. See Lee v. City of L.A., 250 F.3d 668, 689 (9th Cir. 2001) (" [A] court may take judicial notice of 'matters of public record.'"). Since VCA's powers, rights, and privileges have been suspended, it does not currently have the capacity to defend itself in a lawsuit, and thus cannot answer Plaintiffs' Complaint.
Although Plaintiff does not specify the precise manner in which this renders VCA's name subject to being stricken from the Answer under Rule 12(f), it appears that it renders that name " immaterial" and/or " impertinent." See Fantasy, Inc., 984 F.2d at 1527 (defining " immaterial" as " that which has no essential or important relationship to the claim for relief or the defenses being pleaded, " and defining " impertinent" as consisting of " statements that do not pertain, and are not necessary, to the issues in question."). For these reasons, " Vanowen Canoga Apartments, LLC" will be struck from the Answer at page 1, line 19.
Even if the Court were to consider Defendants' stricken Opposition, that document would not alter the Court's decision. The Opposition does not address the arguments contained in the Motion to Strike, and as discussed, concedes that VCA is currently suspended by the Franchise Tax Board. Defendants simply ask the Court to stay the proceedings for 60 days to allow VCA to remedy its suspended status. However, the Opposition provides no assurance that VCA will be able to successfully reinstate itself within that time period. Thus, even if the Court were to consider Defendants' stricken Opposition, the Court would still grant Plaintiffs' Motion.
For the foregoing reasons, the Court GRANTS Plaintiffs' Motion to Strike, and DENIES Defendants' Motion to Vacate as moot.
IT IS SO ORDERED.