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Court of Appeal of California, Second Appellate District, Division Five
October 16, 1996, Decided
[*1736] [**601] GRIGNON, Acting P. J.
Without qualifying to transact intrastate business pursuant to Corporations Code section 2105, 1 a foreign corporation enters into a contract with a California corporation to transact intrastate business. The California corporation breaches the contract. The foreign corporation thereafter qualifies to transact intrastate business and brings an action for breach of contract. The question presented is whether the foreign corporation may maintain the breach of contract action without complying with section 2203, subdivision (c), which requires the foreign corporation to provide proof of payment of state taxes. We conclude that a foreign corporation which qualifies to transact intrastate business after [***2] transacting, but prior to commencing an action on, intrastate business may maintain the action without complying with section 2203, subdivision (c). Accordingly, we reverse the judgment of dismissal entered on the ground of noncompliance with section 2203, subdivision (c).
Because the statutory background is necessary for an understanding of the facts and procedure in this case, we begin with the [**602] relevant statutes. ] A foreign corporation is prohibited from transacting intrastate business without first obtaining from the Secretary of State a certificate of qualification. (§ 2105, subd. (a).) In order to obtain the certificate, the foreign corporation [*1737] must file a statement including its name, state of incorporation, address of its principal executive office, address of its principal office within the state, agent for service of process in the state and consent to service of process. [***3] (Ibid.) It must also file a statement from its state of incorporation that it is an existing corporation in good standing. (Id., subd. (b).)
If a foreign corporation transacts intrastate business without qualifying, it is subject to a number of penalties. It is subject to a penalty of $ 20 for each day it transacts unauthorized intrastate business. (§ 2203, subd. (a).) 2 It is deemed to have consented to California's jurisdiction. (Id., subd. (a).) The foreign corporation and its agents may also be guilty of misdemeanors. (§§ 2258, 2259.)
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49 Cal. App. 4th 1732 *; 57 Cal. Rptr. 2d 600 **; 1996 Cal. App. LEXIS 980 ***; 96 Cal. Daily Op. Service 7692; 96 Daily Journal DAR 12609
UNITED MEDICAL MANAGEMENT LIMITED, Plaintiff and Appellant, v. LUCIANO R. GATTO et al., Defendants and Respondents.
Subsequent History: Rehearing Denied November 13, 1996. Respondent's Review by the Supreme Court was denied January 28, 1997, Reported at: 1997 Cal. LEXIS 561.
Subsequent History Amended December 31, 1997.
Prior History: [***1] Appeal from a judgment of the Superior Court of Los Angeles County. Super. Ct. No. BC117254. Hon. Loren Miller, Judge.
Disposition: The judgment of dismissal is reversed. The sanctions award is vacated. UMML is awarded its costs on appeal.
foreign corporation, intrastate business, transact, qualify, taxes, qualification, certificate, commencement of the action, trial court, abatement, forfeited, corporate powers, fail to qualify, failure to pay, state tax, Franchise, complying
Business & Corporate Law, Foreign Corporations, Qualifications, Civil Procedure, Service of Process, Methods of Service, Foreign Service, General Overview, Service on Agents, Governments, Legislation, Interpretation, Judgments, Preclusion of Judgments, Res Judicata, Statute of Limitations, Business & Corporate Compliance, State & Local Taxes, Franchise Taxes, Failure to File & Pay, Tax Law, Administration & Procedure, Failure to Pay, International Taxes, Americans Operating Abroad, Income Taxes, Corporations & Unincorporated Associations