[Opinion certified for partial publication.
This is an appeal from the dismissal of an action on the date set for trial, granted on the basis of a claim that a corporation's failure to pay its franchise taxes deprived the corporation of standing to sue or defend. The claim was first raised on that date. The corporation also appeals from a default judgment entered against it on the same ground in a
Respondents Michael Abrams and James Leonard are former attorneys for appellant Color-Vue, Inc. On July 11, 1991, Abrams sued Color-Vue and its directors, appellants Joan Webb, Keith Harrison, Douglas LaPlante, and James Burt, in municipal court for unpaid legal fees. On May 14, 1992, Color-Vue sued Abrams and Leonard in superior court for legal malpractice. Leonard cross-claimed for unpaid legal fees. The two cases were consolidated in superior court on November 2, 1992.
Trial of the consolidated actions was set for April 26, 1994. The matter was trailed to May 2, then trailed again until May 9, and finally set for trial on May 11, 1994.
On May 11, after Color-Vue announced that it was ready for trial, Abrams moved to dismiss Color-Vue's action on the ground that Color-Vue had been suspended by the Secretary of State on December 1, 1992, for failure to pay its franchise taxes. Although the certificate of suspension produced by Abrams was dated March 21, 1994, Abrams had not included this motion to dismiss in the April 25, 1994, pretrial conference report as he was required to do by the terms of the report. Color-Vue moved for a continuance so that it could pay its taxes and have its corporate powers revived. The trial court denied Color-Vue's motion and granted Abrams's motion to dismiss Color-Vue's complaint. Leonard then dismissed his cross-complaint in the Color-Vue action. Abrams dismissed Color-Vue's directors from his action. The court then permitted Abrams to prove up his case against Color-Vue as an uncontested matter. The trial court entered judgment against Color-Vue on Abrams's complaint in the amount of $15,877.16 plus interest.
Color-Vue paid its franchise taxes and obtained a certificate of revivor dated May 26, 1994. The trial court's judgment was entered on May 27, 1994. Thus, Color-Vue was in good standing at the time the court entered its judgment.
1. Color-Vue's action
Respondents' arguments are based on their belief that Color-Vue's suspension for failure to pay its taxes deprived Color-Vue of standing to prosecute its action. Respondents are mistaken. Suspension of corporate
The distinction is significant because a plea in abatement such as lack of capacity to sue "must be raised by defendant at the earliest opportunity or it is waived.... The proper time to raise a plea in abatement is in the original answer or by demurrer at the time of the answer. [Citation.] It is a technical objection and must be pleaded specifically. Thus an affirmative defense or demurrer which contains a general assertion that plaintiff has not stated a cause of action does not suffice to raise a plea in abatement. [Citations]." (Vitug v. Griffin (1989) 214 Cal.App.3d 488, 493-494 [262 Cal.Rptr. 588]; Horsemen's Benevolent & Protective Assn. v. Valley Racing Assn. (1992) 4 Cal.App.4th 1538, 1550, fn. 6 [6 Cal.Rptr.2d 698].)
Since lack of capacity to sue was not an element of Color-Vue's action but rather was a plea in abatement, respondents were required to raise the plea at the earliest opportunity. Here, respondents knew on or about March 21, 1994, at the latest, that Color-Vue had been suspended by the Secretary of State. Respondents failed to raise the issue in the April 25, 1994, pretrial conference report which required the parties to list all affirmative defenses which they intended to pursue at trial and all pretrial motions which they intended to make. The trial date, originally set for April 26, 1994, was continued three times before it was finally set for trial on May 11, 1994. Respondents did not raise the issue of Color-Vue's suspension during that period of continuances. Respondents had ample opportunity to raise the issue of Color-Vue's suspension before the commencement of trial. They chose, however, to wait until May 11, 1994, after Color-Vue had announced that it was ready for trial, to make their motion to dismiss on the basis of Color-Vue's suspension. Their only explanation for this delay was that they had no duty to raise the issue before trial. Their unnecessary delay waived the plea.
Once a plea in abatement is waived "`the court will be rarely justified in permitting the defense to be made later.'" (Kelley v. Upshaw (1952) 39 Cal.2d 179, 189 [246 P.2d 23].) In the unusual circumstance where a corporation announces that it does not intend to pay its delinquent taxes, the trial court may properly relieve a defendant from his waiver and permit him to assert the corporation's lack of capacity to sue. (See Gar-Lo, Inc. v. Prudential Sav. & Loan Assn. (1974) 41 Cal.App.3d 242, 244 [116 Cal.Rptr. 389].) Here, however, Color-Vue clearly stated its intention to pay its delinquent taxes. Indeed, Color-Vue obtained a certificate of revivor two weeks after respondents first raised the issue of overdue taxes and was in good standing when the trial court entered its judgment. The trial court simply overlooked the fact that the "main purpose of the statutory suspension is to collect a tax," and that respondents are "only ... incidental beneficiar[ies] of that law." (Ibid.) Given Color-Vue's willingness to pay taxes, the trial court had no basis for relieving respondents from their waiver of the plea.
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The judgments are reversed and this matter is remanded for further proceedings. The appeals of appellants Webb, Harrison, LaPlante, and Burt are dismissed. Respondents to bear costs on appeal.
Turner, P.J., and Godoy Perez, J., concurred.