Monday, July 31, 2017

Pleas in Abatement Are This Disfavored

The Rossdale Grp. v. Walton, No. H043476 (D6 Apr. 15, 2017)

This is a weird and kind of narrow opinion about standing that is mostly shaped by how the issue was raised the superior court. The case is a malicious prosecution action against a Lawyer who was (allegedly) in the business of extorting settlements from meritless claims. 

The complaint in the underlying case—some kind of spam thing against another Legal Business—was dismissed with prejudice. Legal Business sues here in the same name as the defendant in the underling case. That complicates things factually, because at the time of the underlying case and the filing of the complaint here, Legal Business was a DBA of a Florida LLC that is currently dissolved.

Things then get legally complicated because of how Lawyer elected to raise the issue in the malicious prosecution case. An objection about a plaintiff’s formal status to sue is known as a “plea in abatement.” It’s a disfavored defense that needs to be raised as the earliest opportunity or it’s waived. Generally, that means by a special demurrer under Code of Civil Procedure § 430.10(b). Or if the defect isn’t clear from the pleading, in an answer. 

But Lawyer didn’t do that here. True, Lawyer had a decent excuse—Legal Business’s owner didn’t get dissolved until after the complaint was filed. But once Lawyer learned of the dissolution, he could (and likely should) have amended his answer to raise the defense. Instead, he filed a motion based on § 367, which requires a claim to be prosecuted by the real party in interest, arguing that it implicated Legal Business’s “standing” and thus the trial court’s jurisdiction to proceed. The trial court agreed and dismissed the case.

Framed as an issue of standing, however, the trial court was incorrect. California state courts don’t apply the kind of standing analysis that federal courts do. That is a creature of “case or controversy” provision in Article III of the federal Constitution, an analogue of which doesn’t exist in California. So a plaintiff can sue whenever the law permits it to do so, regardless of federal-law concepts like “injury in fact” and “traceability.” For instance, until Proposition 64 came along, pretty much anyone could bring a claim under the Unfair Competition Law for pretty much any violation, regardless of harm. And, under § 526a, California respects an expansive form of taxpayer standing that would never fly in a federal case.

Here, the precedent is settled that a person can bring suit in the name of a DBA. So long as the DBA is a stand in for the underlying business, § 367’s real party requirement is met. There’s no requirement to sue in a “true name.” So there’s no “standing” issue and no defect in jurisdiction. And since Lawyer never properly raised the abatement, that defense was waived and case should have proceeded.

Reversed.

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