Legal Question in Business Law in California

Can I sue a corporation whose status is suspended?

I have a breach of contract claim. The statute of limitations is 4 years for breach of contract. It's been 3 years and I intend to now file/sue. The corporation who I have the claim against is Corporation X dba X1. However, Corporation X dba X1 has since sold their business to Corporation Y dba Y1. The sale occurred about 1 1/2 years after the breach of my contract. A recent search on the Secretary of State's website for information on Corporation X (authorized agent, corporate status, filing date, etc.) gave me all the corporate information, but showed the corporation's status as ''suspended''. Can I still sue Corporation X and serve their authorized agent even though their corporate status is listed as ''suspended'' on the Secretary of State's website? Is it legally valid to sue a corporation whose status is suspended? Which corporation should I sue, Corporation X or Corporation Y? The small claims advisor told me that even though Corporation X is no longer in business, I can sue a corporate officer directly. She cited CCP 410.60. However, another advisor said that CCP 410.60 only applies if the action was already pending before the corporation dissolved.


Asked on 8/18/04, 6:18 pm

2 Answers from Attorneys
Larry Rothman Larry Rothman & Associates

Re: Can I sue a corporation whose status is suspended?

You may be able to sue and hold individual sharesholders liable. Please contact my office at 714 363 0220 to set up an appointment. I would like to review your written documentation including any letters, notices, and lawsuits. We handle cases throughout California.

We can review your documentation by fax and speak with you by phone.

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Answered on 8/19/04, 9:34 am
Edward Hoffman Law Offices of Edward A. Hoffman

Re: Can I sue a corporation whose status is suspended?

Suspension of a corporation prevents it from litigating any case -- as plaintiff or defendant -- until it is restored to good standing, but it doesn't present the company from being sued and does not prevent judgments from being entered against it. In other words, it leaves the corporation defenseless unless it is willing to remedy the problems that got it suspended in the first place. You can file suit and then get a default against the company and, after that, a default judgment.

Keep in mind that there is a difference between a corporation being suspended and one being dissolved. Your question uses these terms interchangeably but they mean very different things and have different consequences. Before you proceed you will want to clarify whether the company is suspended, dissolved, or both.

I would need to know more facts before I could say whether you should sue the new company and/or any officers of the suspended corporation.

A suspended and/or dissolvedcorporation is usually one which has no assets with which to pay a judgment, so unless you can make a viable case against an officer or the new company there may not be much point in suing.

You should consult with a lawyer about this, and be prepared to give him a lot more facts than you were able to provide here.

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Answered on 8/18/04, 9:37 pm


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