Go v. Pacific Health Services, Inc

In Go v. Pacific Health Services, Inc. (2009) 179 Cal.App.4th 522, Go sued defendants on September 7, 2006, seeking the involuntary dissolution of Pacific Health Services, Inc., pursuant to section 1800, subdivision (b)(3) and (4). Go also sought damages based on claims of breach of fiduciary duty and fraud (1) as a shareholder's derivative action, and (2) as a direct action brought by a shareholder and director. (Go v. Pacific Health Services, Inc. (Super. Ct. L.A. County, No. BC358117).) On December 7, 2006, defendants filed a cross-complaint for breach of contract, misappropriation of corporate opportunities, and breach of the duty of loyalty. On April 5, 2007, defendants filed a motion pursuant to section 2000 for an order to stay the dissolution proceedings. They requested that the court set a valuation date of August 14, 2006, and fix the value of Go's shares. ... On May 11, 2007, the court issued an order staying the dissolution proceedings, and providing for the appointment of three appraisers. The parties were to each choose one appraiser, and the two appraisers would then choose the third appraiser. The court ordered the valuation date to be September 7, 2006--the date Go filed suit--and ordered the appraisal to be concluded by September 14, 2007. (Go, supra, 179 Cal.App.4th at pp. 527-528.) After the appointment process was completed and the appraisals conducted, eventually, the trial court issued what the Court of Appeal characterized as an alternative decree. (Id. at p. 525.) The Court of Appeal described the alternative decree thusly, "On September 19, 2008, the trial court issued an order directing defendants to pay Go $155,484, within 45 days, and stating that 'if this payment is not made within such time the involuntary winding up and dissolution of defendant corporation shall proceed immediately.'" (Id. at p. 529.) On appeal, the Court of Appeal characterized the issue as follows: "Defendants contend on appeal that the alternative decree the court issued on September 19, 2008, should be set aside 'because defendants have not yet had the opportunity to defend themselves against Go's claim for Involuntary Dissolution of PHS,' and that 'Go has not proven that she is entitled to relief under that claim.' Defendants argue, as they did in the trial court, that 'once there has been a determination on the merits that Go is entitled to commence the dissolution of PHS, the entry of a decree with the effect of the Alternative Decree would be appropriate. ... However, now is not the time for such an order, as the interests of equity and the desire for a determination on the merits justify a delay in the imposition of that relief.' They request that we set aside the alternative decree and 'remand this matter with directions to the Trial Court to only enter such a decree after Go has prevailed on her claims for involuntary dissolution.'" (Go, supra, 179 Cal.App.4th at p. 529.)