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The Rossdale Group, LLC v. Walton

California Court of Appeals, Sixth District

June 15, 2017

THE ROSSDALE GROUP, LLC, Plaintiff and Appellant,
TIMOTHY WALTON, Defendant and Respondent.

         Santa Cruz County Superior Court Superior Court No.: CV179135 Trial Judge The Honorable Paul P. Burdick

          Attorneys for Plaintiff and Appellant David Alan Makman The Rossdale Group, LLC.

          Attorneys for Defendant and Respondent Timothy Walton: Timothy J. Walton in pro per.

          RUSHING, P.J.


         We are asked in this appeal to reverse a dismissal of a malicious prosecution lawsuit. Defendant and respondent Timothy Walton (Walton) asked the trial court to dismiss the case for lack of standing and lack of jurisdiction because the named plaintiff, The Rossdale Group, LLC, was only a fictitious business name and the entity to which that name was registered was a dissolved Florida limited liability company called Miami Legal Resources, LLC. Because no legitimate standing or jurisdictional issue was raised by Walton's motion, we will reverse.

         Factual And Procedural Background

         This lawsuit had its genesis in an earlier action filed in 2010 by Walton against a defendant he called The Rossdale Group, LLC (Rossdale). Walton, who the complaint in this case alleges is a licensed California attorney, “maintained a litigation factory” by “placing dozens of e-mail addresses on the Internet, ” collecting “‘spam'” messages sent to those addresses, and then demanding “compensation” for supposed violations of California law. After Rossdale refused to pay in response to a demand letter for “prohibited forms of e-mail advertising, ” Walton filed suit against Rossdale, claiming, among other things, a violation of the Consumer Legal Remedies Act, Civil Code sections 1750 et seq. Walton's lawsuit against Rossdale was dismissed after the trial court granted a motion for judgment on the pleadings with prejudice, and judgment was entered on May 2, 2012.

         The same day, this action was filed against Walton, stating a single claim for malicious prosecution, based on the allegation that Walton's prior lawsuit was pursued on legal theories Walton knew to be erroneous and discovery tactics meant to prolong a meritless lawsuit. The plaintiff in this lawsuit is identified as “The Rossdale Group, LLC, ” “a Florida Limited Liability Company.” As it turns out, however, Rossdale was merely a fictitious business name registered in Florida to a Florida limited liability company called Miami Legal Resources, LLC (Miami Legal).

         Before we go further, we pause to note the following, given the somewhat convoluted history of the various related entities: the plaintiff in this case always has been Miami Legal (and Miami Legal is also the appellant here). When suit was filed in May 2014, the plaintiff was identified as the “Rossdale Group, LLC.” The records show (and the parties never disputed below) that, at that time, the Rossdale name was duly registered to Miami Legal and Miami Legal was itself in active status as a Florida limited liability company. “Use of a fictitious business name does not create a separate legal entity.” (Pinkerton's, Inc. v. Superior Court (1996) 49 Cal.App.4th 1342, 1348; see also Osmo Tec SACV Co. v. Crane Envtl., Inc. (Fla.Ct.App. 2004) 884 So.2d 324, 327 [a fictitious name has “no independent legal existence”].) No substitution of parties ever occurred so Miami Legal remained the plaintiff below and is, because the notice of appeal was filed by Rossdale, the appellant here as well.[1]

         In January 2016, Walton filed what he called a “motion to dismiss.” Basing his motion on Code of Civil Procedure section 367 and case authority on standing as a jurisdictional defect, Walton argued that the lawsuit had to be dismissed because “[i]n actuality, The Rossdale Group, LLC, is a fictitious business name registered by a company that has now dissolved”-a dissolution that occurred after the lawsuit was filed.[2] With the dissolution of Miami Legal, Walton argued, “the legal entity that is the Plaintiff in this action disappeared.”[3]

         Miami Legal, filing under the Rossdale name, opposed the motion, supported by a declaration from Susan Lunden (Lunden), who identified herself as the “CEO” for the “Rossdale Group, LLC.” The opposition contained no denial that Miami Legal had been dissolved. Instead, Miami Legal argued that all of its assets and liabilities had been transferred to a Delaware entity called Rossdale, CLE, Inc. (Rossdale Delaware). According to Miami Legal, Rossdale Delaware had become its “owner” in April 2013 (apparently Miami Legal was Rossdale Delaware's subsidiary). The process of transferring the assets and liabilities of Miami Legal to Rossdale Delaware had started in 2013 and by September 2014, the “entire business” of Miami Legal had been transferred to Rossdale Delaware, which Miami Legal referred to as its “successor in interest to the causes of action asserted in their [sic] lawsuit.” The opposition also referred to an “amend[ment]” of Rossdale's fictitious business name statement with Florida, which was filed to “to reflect that The Rossdale Group, LLC is now owned by the new successor in interest, [Rossdale Delaware].” (Although there are references to this amendment in the supporting declaration to Miami Legal's opposition, no copy of it is in the record.)

         In his reply, Walton asserted that no documentary evidence was provided by Lunden to support her claim that the assets and liabilities of Miami Legal had in fact been assigned to Rossdale Delaware. He also implied that any such assignment would have been void because it would have been done by the time Miami Legal was dissolved.

         After a hearing on March 3, 2016, the court granted the motion to dismiss. The order states as follows: “The Rossdale Group, LLC, lacks standing to sue. The Rossdale Group, LLC (‘Rossdale') asserts that Defendant Timothy Walton waived any right to complain concerning lack of standing. However, lack of capacity to sue is a jurisdictional defect which may be raised at any time. Common Cause of California v. Board of Supervisors of Los Angeles County (1989) 49 Cal.3d 432, 438 [(Common Cause)] (contentions based on lack of standing involve a jurisdictional challenge and may be raised at any point in the proceeding). [¶] Rossdale was never a corporate entity, it was at all times a fictitious business name, and at no time was it a valid entity, either when sued by Walton or when suing Walton. [¶] Rossdale does not have legal capacity to sue because it is simply a fictitious business name, not a stand-alone legal entity. At the time it filed suit, ... it lacked legal capacity to sue. [¶] There ...

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