FAVILA V. KATTEN MUCHIN ROSENMAN LLP Part-II 09:21:2010
FAVILA V
FAVILA V. KATTEN MUCHIN ROSENMAN LLP
Filed 9/3/10
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
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SANDRA CORRALES FAVILA, as Executor, etc.,
Plaintiff and Appellant,
v.
KATTEN MUCHIN ROSENMAN LLP et al.
Defendants and Respondents.
B215096
(Los Angeles County
Super. Ct. No. BC379462)
SANDRA CORRALES FAVILA, as Executor, etc.,
Plaintiff and Appellant,
v.
KATTEN MUCHIN ROSENMAN LLP et al.
Defendants and Respondents.
B216822
(Los Angeles County
Super. Ct. No. BC399377)
STORY CONTINUE FROM PART I….
The Derivative Action
1. >The Estate Has Standing To Maintain a Derivative Action on Behalf of Motion Graphix
Pursuant to Corporations Code section 2010, subdivision (a), although dissolved in April 2007, Motion Graphix continues to exist for the purpose of winding up its affairs, including prosecuting lawsuits to recover sums due or owing to it or to recover any of its property. (See Peñasquitos, Inc. v. Superior Court (1991) 53 Cal.3d 1180, 1185 (Peñasquitos).) As a shareholder of the dissolved corporation the Estate is entitled to pursue a derivative action on its behalf, provided the other requirements for such an action have been satisfied. (See Corp. Code, § 800.)
a. >The law of corporate dissolutions
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Description
The assets of Motion Graphix, Inc. were sold to Get Flipped, Inc. after the death of Motion Graphix's founder and shareholder, Richard Corrales. The Estate of Richard Corrales (Estate) through its executor Sandra Corrales Favila, Corrales's sister, sued Get Flipped and its founder, Raleigh Souther, who was Motion Graphix's only other shareholder, for claims including conversion, breach of fiduciary duty and fraud (the individual action). The Estate appeals from the trial court's order denying its petition and motion for leave to amend the complaint in the individual action to allege a conspiracy claim against Motion Graphix's corporate counsel, Katten Muchin Rosenman LLP (Katten Muchin), and two attorneys at the Katten Muchin firm, Gavin Galimi and James Thompson (collectively attorneys).
The Estate also filed a separate derivative action against the attorneys, Souther and Get Flipped on behalf of Motion Graphix asserting claims for professional negligence, breach of fiduciary duty and unjust enrichment arising from the asset sale transaction (the derivative action). That action was dismissed as to the attorneys after the trial court sustained their demurrer and the Estate elected not to amend its complaint. The Estate appeals from that order, as well.
We reverse the order denying the Estate's petition and motion in the individual action and remand with direction to permit the Estate to file a revised first amended complaint, alleging a cause of action against the attorneys for conspiracy to commit fraud. We reverse the order dismissing the derivative action as to the attorneys and remand with directions to redetermine whether the lawyer-client privilege prevents the attorneys from meaningfully defending the action or whether, because of the crime-fraud exception or waiver by the privilege holder, the privilege is no bar to the derivative action.
