California Appellate Tracker

DD Hair Lounge, LLC v. State Farm General Ins. Co.

March 13, 2018

Corporations Code section 17707.06 was amended in 2016 to permit an LLC to sue and defend actions after filing a certificate of cancellation; the amendment applies retroactively to LLCs that filed certificates of cancellation before its effective date.

Before 2016, Corp. Code 17707.06 provided that upon the filing of a certificate of cancellation all rights and powers of an LLC ceased. The section was amended in 2016 to provide that the LLC retains the power to sue and defend actions after filing the certificate. This case holds that the 2016 amendment applies retroactively to certificates filed before the 2016 amendment became effective. However, it denies plaintiff the benefit of that holding because it concealed the fact it had filed a certificate of cancellation thus prolonging the litigation which otherwise would have terminated before the 2016 amendment was enacted. It would now be unfair to reward plaintiff’s delay by allowing it to take advantage of the 2016 law. So its suit is dismissed.

California Court of Appeal, Second District, Division Eight (Hall, J.); March 2, 2018; 2018 WL 1127877.

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