Legal Question in Business Law in California

Re: intereference with contractual relations when the corporation is suspended

A suspended corporation cannot legally appear in court. This means it cannot file a lawsuit nor can it defend against a lawsuit.

Re: intereference with contractual relations when the corporation is suspended

What do you mean "receive damages?" If you are asking whether it can initiate a lawsuit, the answer is no. If by "receive damages" you ask whether it can cash a check from a past judgment debtor, the answer is, well, perhaps not lawfully, but upon receiving the check, the suspended corporation's remaining shareholders, directors and officers, if any, will probably find a way to negotiate the check if the amount is big enough, perhaps even by paying the big back taxes and other penalties to revive the corporation.

Seriously, suspended corporations theoretically can only do two things: apply for exemption from whatever caused its suspension, or apply to change its name. Corporations Code, section 2205. This means it can't sue, it can't own property, it can't conduct business, and it can't cash checks. Note, however, that many suspended corporations continue to operate while suspended, with varying legal and financial consequences depending upon who notices and how soon push comes to shove.

Also, I believe it is a misdemeanor to purport to exercise the powers of a suspended corporation (except for the two permitted purposes) under the Revenue and Taxation Code - see sections 23301 to 23303 - but I'm not up to date on whether these sections are currently in force or ever enforced.

I'm rather surprised that a suspended corporation has somehow managed to continue operating what appears to be a municipal franchise after 11 years of suspension. Normally, the contracting municipality would become aware of the suspension and drop the corporation like a hot potato (or at least demand that they get reinstated).

What breach of contract are you referring to that you're going to reveal? Has the suspended corporation breached a contract term that requires it to remain in good standing? I suppose this could be at least an implied term of any corporation's contracts.

Whether or not you can sue depends upon whether you have "standing." Are you directly injured, or merely a wannabe substitute contractor? You need to see a litigation specialist about this, and explain why you are an affected party.