California Supreme Court Resolves Court Of Appeal Split, Holding That Section 2010 Of The California Corporations Code -- California's 'Survival Statute' -- Does Not Apply To Foreign Corporations

In Greb v. Diamond Int'l Corp., 2013 WL 628328 (Cal. Feb. 21, 2013), the California Supreme Court unequivocally and unanimously laid to rest the assertion that dissolved foreign corporations may be sued in California after the time of the statute of limitations provided by the laws under which the foreign corporations were incorporated. In so holding, the California Supreme Court affirmed the California Court of Appeal for the First District's dismissal of a personal injury claim against a dissolved Delaware corporation, holding that the claim was filed more than three years after dissolution of the corporation in violation of Delaware General Corporation Law Section 278 [blog article here]. In deciding that the California survival statute did not apply to foreign corporations, the Supreme Court resolved a split among California appellate courts on the interpretation of California Corporations Code Section 2010 ("Section 2010"), which governs the winding-up and survival of dissolved corporations.

In December 2008, plaintiffs Walter Greb (now deceased) and his wife Karen Greb filed a complaint for personal injuries and loss of consortium against defendant Diamond International Corporation ("Diamond") and several other entities. Plaintiffs' complaint alleged injuries from exposure to asbestos. Although Diamond had been dissolved for many years, plaintiffs sought recovery from unexhausted liability insurance that covered defendant during the decades when it did business in California. Diamond demurred to plaintiffs' complaint, alleging that more than three years earlier, in July 2005, it had obtained a corporate dissolution pursuant to the laws of Delaware, Diamond's state of incorporation. Accordingly, Diamond argued, pursuant to Delaware's three-year survival statute, when plaintiffs filed their complaint in December 2008 Diamond lacked the capacity to be sued. Plaintiffs opposed the motion, arguing that they were entitled to file a lawsuit in California under Section 2010, which permits lawsuits to be filed against a dissolved corporation irrespective of the date of dissolution, which they asserted took precedence over Delaware law in this setting.

The California Superior Court for the County of San Francisco held Section 2010 did not apply to foreign corporations, and hence that Delaware's corresponding statute applied to Diamond. Accordingly, the trial court sustained the demurrer without leave to amend, and dismissed plaintiffs'...