Stuparich v. Harbor Furniture Mfg. - 83 Cal. App. 4th 1268, 100 Cal. Rptr. 2d 313 (2000)

Rule:

Summary judgment is properly granted when the evidence in support of the moving party establishes that there is no material issue of fact to be tried. Cal. Civ. Proc. Code §437c. The trial court must decide if a triable issue of fact exists. If none does, and the sole remaining issue is one of law, it is the duty of the trial court to determine the issue of law. 

Facts:

This is a dispute concerning a closely held family corporation, Harbor Furniture Manufacturing, Inc. Plaintiffs and appellants, Ann Stuparich and Candi Tuttleton, brought an action seeking involuntary dissolution of Harbor. Stuparich and Tuttleton were sisters who were given nonvoting stock as gifts, and their brother held the majority of the voting stock and ran the furniture operation. Stuparich and Tuttleton appealed from judgment entered in favor of Harbor after the trial court granted summary judgment against them.

Issue:

Did Stuparich and Tuttleton raise a triable issue of material fact regarding their claim that dissolution was appropriate under  Corporations Code section 1800, subdivision (b)(5) (section 1800 (b)(5))?

Answer:

No.

Conclusion:

The court held the distribution of voting shares was consistent with California law, and did not present a reasonable necessity for dissolution. The court found that Stuparich and Tuttleton had chosen to not participate in governance of the corporation. The court found no evidence of bad faith. While the furniture operation had been losing money, a mobile home park continued to generate significant profits which were paid to Stuparich and Tuttleton in the form of dividends. Evidence further showed that the furniture business was becoming more successful. The court held that the drastic remedy of liquidation was not reasonably necessary for the protection of Stuparich’s and Tuttleton’s rights or interests in Harbor.