Ontiveros v. Constable

237 Cal. Rptr. 3d 892, 27 Cal. App. 5th 259
CourtCalifornia Court of Appeal, 5th District
DecidedSeptember 18, 2018
DocketD072437
StatusPublished
Cited by10 cases

This text of 237 Cal. Rptr. 3d 892 (Ontiveros v. Constable) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ontiveros v. Constable, 237 Cal. Rptr. 3d 892, 27 Cal. App. 5th 259 (Cal. Ct. App. 2018).

Opinion

HUFFMAN, Acting P. J.

*263Guadalupe Ontiveros, as the minority shareholder in Omega Electric, Inc. (Omega), sued majority shareholder Kent *264Constable, his wife (Karen Constable), and Omega,1 asserting direct and derivative claims arising from a dispute over management of Omega and its assets. In response to Ontiveros's claim of involuntary dissolution of Omega, Appellants filed a motion to stay proceedings and appoint appraisers to fix the value of Ontiveros's stock under Corporations Code 2 section 2000. The superior court granted the motion, staying the action. Ontiveros then tried to dismiss his claim for involuntary dissolution without prejudice, but the court clerk would not accept his filing because the matter had been stayed. Ontiveros thus filed a motion, asking the court to revoke its order granting Appellants' motion, or in the alternative, to reconsider and then vacate the order. The court treated that motion as a motion for leave to file a dismissal with prejudice under Code of Civil Procedure section 581, subdivision (e). The court granted the motion and allowed Ontiveros to dismiss his cause of action for involuntary dissolution of Omega. Without the existence of that claim, the court found no basis on which to stay the action and order an appraisal of the stock under section 2000. As such, the court lifted the stay, terminating the procedure under section 2000.

Appellants appeal the court's order, contending the court abused its discretion in granting Ontiveros's motion. In addition, Appellants maintain the trial court improperly interpreted section 2000 in granting the motion. Ontiveros counters that the court's order is not appealable. In the alternative, Ontiveros insists that if we find an appealable issue exists, the court did not abuse its discretion.

We agree with Appellants that they have presented an appealable issue. In addition, we are persuaded that the trial court abused its discretion here. In reaching this conclusion, we determine that the special proceeding under section 2000, once initiated, "supplants" the cause of action for involuntary dissolution. (See Go v. Pacific Health Services, Inc. (2009) 179 Cal.App.4th 522, 530, 101 Cal.Rptr.3d 736 ( Go ).) At that point, the parties give up their right to litigate the involuntary dissolution *895action subject to the special proceeding outlined in section 2000. As such, a plaintiff, like Ontiveros, can no longer dismiss the involuntary dissolution claim under Code of Civil Procedure section 581, subdivision (e). As the superior court relied upon that code section as a mechanism to lift the stay and terminate the section 2000 special proceeding, it misapplied the law, and therefore, abused its discretion. (See *265Prigmore v. City of Redding (2012) 211 Cal.App.4th 1322, 1334, 150 Cal.Rptr.3d 647 ["It is an abuse of discretion for a trial court to misinterpret or misapply the law."].) Consequently, we reverse.

FACTUAL AND PROCEDURAL BACKGROUND

On December 19, 2012, Ontiveros filed his initial complaint containing seven causes of action, including involuntary dissolution. Ontiveros's operative complaint is the second amended complaint, which he filed on May 31, 2013. It added several causes of action, but the claim for involuntary dissolution remained. Appellants filed a cross-complaint and subsequently amended it on March 4, 2014. Both operative pleadings allege extensive misconduct by the parties that is not directly pertinent to the issues presented here. As such, we need not discuss the parties' mutual allegations in detail.

The parties have litigated the matter spanning several years, including engaging in discovery and bringing discovery motions. On April 17, 2014, Ontiveros moved to disqualify Defendants' counsel. Defendants' appealed the court's order granting Ontiveros's motion, and this court affirmed in part and reversed in part the order. (See Ontiveros v. Constable (2016) 245 Cal.App.4th 686, 702, 199 Cal.Rptr.3d 836.) The remittitur was issued on April 19, 2016.

Almost seven months later, Appellants moved to stay proceedings and appoint appraisers to fix the value of Ontiveros's shares under section 2000. This procedure would allow Omega to avoid dissolution by having Kent purchase Ontiveros's stock in Omega. (See § 2000, subd. (a).) Appellants asserted that the court should order the procedure under section 2000 because Kent owned more than 50 percent of Omega's stock, Ontiveros was a minority shareholder, and Ontiveros had sued to involuntarily dissolve Omega.

Ontiveros opposed the motion, arguing that the motion was premature, the derivative portions of the lawsuit needed to be litigated first, Appellants were attempting to exclude valuation of certain "illegally obtained fees," and an alternative date for valuation must be set.

After multiple continuances of the hearing date, on March 2, 2017, the court granted Appellants' motion, staying the proceedings pending determination of the fair value of Omega pursuant to the procedure set forth in section 2000. The court required Kent, within seven days of the date of the order, to deposit with the court a bond of $75,000 to secure payment of the reasonable expenses of Ontiveros if Ontiveros's shares were not purchased within the required time provided in section 2000. Within seven days of the posting of the bond, the court required Ontiveros, on the one hand, and Kent and Omega, on the other, to nominate in writing one proposed appraiser to serve *266on the appraiser panel per section 2000. Those two appraisers were then to select a third appraiser within 14 days of their selection.

Four days after the order was entered, Ontiveros attempted to file a request for dismissal, without prejudice, of his cause of action for involuntary dissolution in the second amended complaint. The court clerk did not enter dismissal of the involuntary dissolution cause of action because the March 2, 2017 order stayed the proceeding.

*896Ontiveros then filed a motion to vacate or reconsider the March 2, 2017 order, which was calendared to be heard on April 6, 2017. Because of the time frame set forth in the March 2 order, Ontiveros applied ex parte, on March 9, 2017, to vacate the March 2, 2017 order, or in the alternative, stay that order to allow a motion for reconsideration to be heard.3

The court denied Ontiveros's ex parte application.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Koenig v. Centralia Limited Investors
California Court of Appeal, 2025
Crane v. R. R. Crane Investment Corp., Inc.
California Court of Appeal, 2022
Guttman v. Guttman
California Court of Appeal, 2021
Schrage v. Schrage
California Court of Appeal, 2021
Pourmoradi v. Gabbai CA2/5
California Court of Appeal, 2021
Schrage v. Schrage CA2/7
California Court of Appeal, 2020
Boschetti v. Pacific Bay Investments Inc.
California Court of Appeal, 2019
Boschetti v. Pac. Bay Invs. Inc.
244 Cal. Rptr. 3d 480 (California Court of Appeals, 5th District, 2019)

Cite This Page — Counsel Stack

Bluebook (online)
237 Cal. Rptr. 3d 892, 27 Cal. App. 5th 259, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ontiveros-v-constable-calctapp5d-2018.