Legal Question in Business Law in California

Corporate election

We filed an action 1-5-07 under Cal. Corp Code 709/7616, requesting the court's intervention with regard to our association election held on Mar. 10, 2006, which the inspectors refused to certify due to forgery and fraud on the proxies. Defendants filed a demurrer, based on the 9 month limitation in Corp Code 7527. We argued that there were issues of fraud and the 9 month limit was inapplicable. The court stated that we didnt prove that there was fraud and granted the demurrer without leave to amend. We still havent had our election from 06, and now the election for March 07 has been postponed (due to no quorum, another issue is do we fall under the Time Share act (bylaws cant set quorum at higher than 33%_ or Davis Stirling ? ) What is the best way to deal with the sustained demurrer - motion to reconsider or appeal? What elements do we have to show to invoke the fraud exception to the 9 months. Also last yrs election was postponed to May 06 then to June 06, but never happened. The only reason this years election was scheduled was to deceive the coiurt into believing that it was being handled. HELP, theres so much more. What can we do to get this fixed ? The Court refused to set a hrg in 5 days as 7616 requires. HELP


Asked on 3/20/07, 11:53 am

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Corporate election

It could be that you are trying to do without a lawyer what many lawyers would not attempt themselves without assistance from a specialist. In particular, (1) you should not have missed the 9-month deadline, and (2) establishing the probability of fraud in a pleading, sufficient to overcome a demurrer, is quite technical and demanding. Did the court provide any reasoning for failing to enter a date within five days for a hearing? Did the person who made the filing on your behalf point out the hearing requirement to the clerk upon filing? Not every clerk is going to handle the initial filing correctly without a request being made at the filing party's initiative.

You don't say whether the demurrer was susteined with or without leave to amend. You also didn't mention whether you opposed the demurrer in timely fashion, with points and authorities. If leave to amend was granted, and amending is still timely, that would be the way to go.

If the demurrer was sustained without leave to amend, it sounds as though the judge didn't think much of your case. Whether it was weak on facts and law, or just presented poorly, may determine your next step. Have a lawyer review your facts and the way you pleaded your case, and the court's rulings, and advise whether to drop the matter, ask for a rehearing, or appeal. Rehearings are rarely useful. An appeal is expensive and you need good advice on your prospects before launching one.

Finally, learn and observe all the deadlines (appeal, rehearing) so that you don't lose an alternative by default before you eliminate it by choice.

You haven't provided enough information for me to comment on the Davis-Stirling and other issues mentioned.

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Answered on 3/20/07, 6:16 pm


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