Filed 4/29/14 Sahtjian v. Sahtdjian CA5




                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                       FIFTH APPELLATE DISTRICT

MARJORIE SAHATJIAN,
                                                                                           F065113
         Plaintiff and Appellant,
                                                                           (Super. Ct. No. 10CECG03125)
                   v.

VICTOR SAHATDJIAN et al.,                                                               OPINION
         Defendants and Respondents.



         APPEAL from a judgment of the Superior Court of Fresno County. Jeffrey Y.
Hamilton, Jr., Judge.
         Georgeson, Belardinelli and Noyes, Richard A. Belardinelli, C. Russell Georgeson,
and Christopher B. Noyes for Plaintiff and Appellant.
         DLA Piper LLP, Todd M. Noonan and W. Scott Cameron for Defendants and
Respondents.
                                                        -ooOoo-
       At one time, appellant Marjorie Sahatjian and her cousins Victor, William, and
Margaret Sahatdjian1 shared ownership of a raisin-processing business, Victor Packing,
Inc. (VPI.) In 2007, Marjorie, who then owned one-third of the shares of VPI, filed a
complaint in Madera County Superior Court seeking involuntary dissolution of VPI under
Corporations Code section 1800.2 Marjorie alleged, among other things, that the other
shareholders had received enormous cash distributions from VPI to her detriment. In
response, VPI elected to buy Marjorie’s shares and invoked section 2000’s procedure for
ascertaining the fair value of her shares. In 2010, VPI paid Marjorie $3,277,000 in
exchange for all of her shares in the corporation, and Marjorie dismissed the involuntary-
dissolution case.
       About two months after that case was dismissed, Marjorie initiated the present
case by filing a complaint in Fresno County Superior Court against respondents Victor,
William, and Margaret (collectively defendants). She asserted a claim of breach of
fiduciary duty based on defendants’ alleged misconduct as majority shareholders in VPI.
Specifically, Marjorie alleged that VPI distributed cash to defendants, excluding her from
such cash distributions. The trial court agreed to try defendants’ special defenses first and
subsequently found in their favor on the affirmative defenses of “Section 2000 Bar,” “Res
Judicata/Collateral Estoppel,” and “Waiver.” These defenses are all based on defendants’
position that Marjorie’s current claims could have been raised, and were raised, in the
prior involuntary-dissolution case.
       On appeal, Marjorie contends that the prior case, which involved only valuation of
VPI, does not serve to bar her current personal claims against defendants, who were not


       1Because  the parties are related and share the same last name or a substantially
similar last name, we refer to them and their relatives by their first names to avoid
confusion. No disrespect is intended.
       2Subsequent   statutory references are to the Corporations Code unless otherwise
indicated.



                                             2.
parties in the prior case. Under the circumstances of this case, we disagree and affirm the
judgment.




                        FACTS AND PROCEDURAL HISTORY
       Background
       Brothers Sarkis and Haig Sahatdjian started a business processing raisins in
Madera in 1963. VPI was incorporated in 1976, with Sarkis’s son Victor as president,
Haig as secretary, and Sarkis as treasurer. In the 1970’s, Sarkis’s children Margaret and
William began working for VPI. Margaret assumed responsibilities for the office and
William ran a large dehydrator. In the 1980’s, Haig’s children Mary and Steven began
working for VPI, assuming clerical and sales support positions. Haig’s daughter Marjorie
also began working for VPI, most recently working in its business office.
       Over time, Sarkis and Haig transferred all their shares of VPI to their children. As
of 2006, Victor, Margaret, and William each owned one-sixth of VPI’s shares, and Steven
and Marjorie each owned one-fourth of VPI’s shares.3 It appears a great deal of discord
arose between the cousins and, in May 2007, there were four pending lawsuits in Madera
County Superior Court involving VPI, Steven, Marjorie, Victor, Margaret, and William.
On May 8, 2007, the parties mediated their disputes and reached a global settlement,
agreeing to dismiss with prejudice all four lawsuits. As part of the settlement, VPI
purchased all of Steven’s shares, and the shares were canceled. This resulted in Marjorie
owning one-third of the remaining shares of VPI and Victor, Margaret, and William each
owning two-ninths of the shares of VPI.




       3Haig
           had given his half ownership interest in VPI to his three children, Steven,
Mary, and Marjorie. After Mary died, Steven and Marjorie bought her shares.



                                            3.
       Madera County case
       On November 2, 2007, Marjorie filed a complaint in Madera County Superior
Court for involuntary dissolution of VPI under section 1800 (Madera County case). She
alleged the majority shareholders—Victor, Margaret, and William—and members of the
board of directors had stated their intent to use corporate assets for their own benefit
rather than for the benefit of VPI. She alleged that William’s salary from VPI was
increased to $250,000 per year, but his day-to-day management responsibilities were to
manage farming properties and/or operations that benefited persons or entities other than
VPI. She alleged that the salary increase was approved without notice to her and without
taking into consideration the fact that the “managing majority shareholders/employees
have been unable and/or unwilling to generate any profit or dividends payable to the
corporate shareholders for at least eight (8) years.”
       Marjorie further alleged, “The majority shareholders, without Plaintiff’s
knowledge or consent, have received from the corporation extravagant, enormous cash
distributions for some unknown undisclosed financial purposes all to the detriment of
Plaintiff.” Finally, she alleged the majority shareholders and the members of the board of
directors controlled by the majority shareholders “breach[ed] fiduciary obligations owed
to corporation and Plaintiff,” causing a decrease in the value of VPI, and “liquidation is
reasonably necessary to protect the interests of Plaintiff .…”
       In response to the involuntary-dissolution proceeding, VPI elected to purchase
Marjorie’s shares under the buy-out procedure of section 2000. On September 11, 2008,
VPI filed a motion for an order staying involuntary dissolution and appointing appraisers
to ascertain the value of Marjorie’s shares in the Madera County case. On October 29,
2008, the court granted VPI’s motion. The court appointed three appraisers to review the
records of VPI to determine the fair value of Marjorie’s 33 1/3 percent equity interest in
the corporation as of November 2, 2007. The valuation date set by the court—
November 2, 2007—was the date Marjorie filed her involuntary-dissolution complaint.


                                              4.
       On September 14, 2009, Marjorie’s attorney, C. Russell Georgeson, wrote an 11-
page letter to the three court-appointed appraisers outlining issues relevant to the
appraisal from Marjorie’s perspective. Among other things, he asserted the appraisers
must factor in the “going concern value to determine [the] fair value” of the VPI shares.
He also wrote that VPI’s financial statements did not reflect the corporation’s true
profitability because “[e]xisting management has consistently understated actual profits to
minimize corporate tax obligations and enable them to deprive [Marjorie] of her pro-rata
share of the profits.” He urged the appraisers “to consider and include in [their] valuation
work an objective assessment of the Company’s financial statements with a view towards
their normalization and restatement so as to eliminate the effects of the procedures used to
understate the Company’s profits.” One of the “procedures” VPI used to understate
profits, according to Georgeson, was the “[p]ayment of compensation to insiders in
excess of the fair value of their services.” He wrote, “To the extent VPI’s profits have
been paid out in the form of compensation, such payments constitute de facto dividends,
which dividends have not been paid pro rata with stock ownership as required by the
corporation code.”
       Georgeson further argued the appraisers should use either a later valuation date or
some other method to account for the majority shareholders’ ongoing misconduct—which
was causing Marjorie to continue to lose her share in the profits—from the date she filed
the dissolution proceeding until the date VPI actually purchases her shares. He wrote:

               “Valuation Date—Code §2000(f) provides a procedure for setting
       [an] alternative date of valuation. One of the purposes for this alternative
       date procedure is to maximize the return to the shareholder, and to prevent
       any unjust enrichment of the remaining shareholders for profits earned
       subsequent to the filing date of valuation and the actual date of any buyout.

              “Here, the significance of the alternative date is the passage of time
       from the filing of this action to the final appraised value of the minority
       shareholder’s shares. From date of valuation to date of the final report[,]
       what is to be done with the profits/earning of VPI that should have been
       allocated to Marjorie Sahatjian but [were] not because no dividends were


                                             5.
       paid or benefit received by her? This is the primary issue that caused the
       filing of the involuntary dissolution proceeding. Either an updated value is
       necessary or some credit must be given to the minority shareholder for
       VPI’s profits/earnings/increase in value in the interim between any
       valuation date [and] the actual date of a purchase of [Marjorie’s] shares.
       It is your responsibility to consider the subsequent profits when determining
       the value of the minority shares, either by updating your valuation from the
       date of filing or rolling forward the value in some other manner acceptable
       to the court and the parties.” (Italics added.)
       The three appraisers produced an appraisal report, which was sent to the Madera
County Superior Court on February 15, 2010. They used the original valuation date of
November 2, 2007, but in a section of the report titled “Date of Value,” addressed
Marjorie’s position that a subsequent date should have been used to account for her
ongoing interest in VPI following her filing for involuntary dissolution. The appraisers
explained their belief that the use of a different valuation date would require a different
order from the court. The “Date of Value” section of the appraisal reports reads as
follows:

       “Many events both within and outside a business’[s] control can cause
       significant changes in its value. A business’[s] value can vary from one
       date to another due to change in various factors. These changes can occur
       in, but are not limited to, company management and financial performance,
       competitive pressures, industry and economic conditions, and investor
       perceptions. Therefore, the first step in a business appraisal is to determine
       the precise date of value. The date of value used herein is November 2,
       2007, the date stipulated by Court order in this matter, which is the filing
       date of the Complaint to dissolve the corporation.

       “As part of a September 14, 2009 letter (pages 9-10) to the business
       appraisers, Counsel for the moving party [Marjorie] discussed the procedure
       in §2000(f) relative to setting an alternative valuation date [¶] ‘ … to
       prevent any unjust enrichment of the remaining shareholders for profits
       earned subsequent to the filing date of valuation and the actual date of any
       buyout.… It is your responsibility to consider the subsequent profits when
       determining the value of the minority shares, either by updating your
       valuation from the date of filing or rolling forward the value in some other
       manner acceptable to the court and the parties.’



                                              6.
       “Relative to this issue, in a September 17, 2009 initial response (prior to
       September 18, 2009 status conference among the Counsel for the parties
       and the Court) we responded with the following: [¶] ‘We agree that
       §2000(f) allows for the request of an alternate valuation date. However, we
       are not the ones authorized to change the valuation date. That is an issue
       between the parties and the Court. Our job is to value the Company’s stock
       at a point in time. To the extent there is a large lapse in time between the
       valuation date and the final Court decree, that is an issue for the parties and
       the Court to address.’

       “We went on to encourage the parties to address the valuation date issue
       among themselves and the Court.

       “In an October 20, 2009 meeting among the moving party [Marjorie], the
       purchasing parties [VPI], both of their Counsels and the business
       appraisers, the Trahan case [Trahan v. Trahan (2002) 99 Cal.App.4th 62
       (Trahan)] … and its implications were discussed. In the days immediately
       following this meeting, the Trahan case and its implications to the facts in
       this case were addressed in emails among the Counsel for both parties and
       the business appraisers, including the alternate valuation date.

       “Since the October 20, 2009 meeting, the impact of the valuation date,
       particularly related to the valuation of inventory[,] has been discussed on
       numerous occasions among the [attorneys] for … both the moving and
       purchasing parties and the business appraisers.

       “To our knowledge, no change in the valuation date of November 2,
       2009[4] has ever been addressed with the Court.”
       The appraisers analyzed VPI’s financial statements and income tax returns for
2003 through 2007. They addressed Marjorie’s concern that VPI’s financial statements
understated its profits “to deprive [her] of her pro-rata share of the profits” as follows:

       “It is our understanding there have been claims made that the financial
       statements and income tax returns did not properly reflect the complete
       earnings of the business due to significant personal use of corporate assets
       and/or misappropriation of corporate funds. There are also claims that
       related party transactions have not been properly recorded in the accounting

       4This
           is an obvious typographical error, as the appraisers refer to a valuation date
of November 2, 2007, throughout the report.



                                              7.
       records. On an historic basis, it has been impracticable to adjust the
       historical earnings for the alleged misappropriations. In addition, it has
       been impracticable to verify or disprove the claims pertaining to related
       party assets and/or liabilities.

       “It is our understanding that the parties to this case have agreed that the
       magnitude of these issues, if investigated and quantified, would not yield a
       material asset value to the Company and would not have any material
       impact on our valuation analysis.” (Italics added.)
       The appraisers estimated the fair value of Marjorie’s shares of VPI as of
November 2, 2007 to be $3,277,000. Their estimate was premised on an orderly
liquidation, defined as a liquidation assuming “the asset or assets are sold over a
reasonable period of time to maximize proceeds received.”5
       On March 15, 2010, Marjorie filed an objection to the appraisal report with the
court. She objected to the report’s determination of the liquidation value of VPI’s
inventory, which she believed understated the inventory’s value. Marjorie did not object
to the valuation date of November 2, 2007; she did not object to the appraisers’ use of
“Orderly Liquidation Value” rather than “Going Concern Value”; and she did not object
to the failure to adjust earnings for alleged historic misappropriations. Nor did she raise
any objection related to the appraisers’ failure to compensate her for VPI’s profits
generated between the valuation date and the date of buyout. VPI also objected to
portions of the appraisal report.
       On April 2, 2010, the court confirmed the appraisers’ estimate and ordered VPI
“and/or its majority shareholders” to pay Marjorie $3,277,000 for her 33 1/3 percent
equity interest in VPI within 90 days. The court further ordered that, if payment to


       5The appraisers described two other valuation premises in addition to “Orderly
Liquidation Value”: “Forced Liquidation Value” assumes assets are sold as quickly as
possible (such as at an auction), and “Going Concern Value” assumes the business
enterprise will continue to operate and that there is value in intangible elements (e.g., a
trained workforce and necessary licenses).



                                              8.
Marjorie was not made before the 90th day, there would be a winding up and dissolution
of VPI.
       VPI did buy Marjorie’s shares within 90 days of the court’s order. The record
shows that, on June 28, 2010, VPI sent Marjorie a check for $3,277,000, and Marjorie
sent her stock certificates to VPI the next day. Marjorie requested dismissal of her
involuntary-dissolution action without prejudice, and the court entered the dismissal on
July 12, 2010.
       Current case
       On September 7, 2010, Marjorie filed a complaint against defendants in Fresno
County Superior Court. She asserted a claim of breach of fiduciary duty alleging
defendants, as majority shareholders, breached their fiduciary duties to her, the minority
shareholder of VPI. She alleged defendants controlled VPI “for the purpose of
financially enriching themselves at the expense of Plaintiff by engaging in the following
conduct: (1) approving and receiving for themselves personally bonuses during 2008,
2009 and 2010[6] to the exclusion of Plaintiff; (2) receiving from Victor Packing Inc.
cash distributions for unknown undisclosed financial purposes for Defendants[’] benefit
and to the exclusion of Plaintiff; (3) allocating to themselves lucrative salary increases, to
the detriment and exclusion of Plaintiff; (4) using corporate monies for Defendants[’]
personal financial gain instead of paying dividends to shareholders, as well as other
breaches presently unknown to Plaintiff; (5) adopted a dividend policy or lack thereof
designed to serve Defendants[’] own personal financial interest, to the expense, damage
and detriment of Plaintiff.”




       6Marjorie’s complaint alleges wrongdoing “[p]rior to July 2010.” Her reference to
bonuses given 2008 through 2010 suggests she is seeking damages for misconduct that
allegedly occurred after she reached a global settlement with her cousins and VPI in May
2007.



                                              9.
       Defendants filed an answer asserting numerous affirmative defenses. Their 6th,
7th, and 12th affirmative defenses are relevant to this appeal:
       •        The sixth affirmative defense alleged, “Plaintiff’s claims against
Defendants are barred as a result of the involuntary dissolution proceedings instituted by
Plaintiff pursuant to Corporations Code sections 1800 and/or 2000 in or about November
of 2007 and the subsequent purchase of all of Plaintiff’s shares as a result of those
proceedings.”
       •        The seventh affirmative defense alleged, “Plaintiff’s claims against
Defendants are barred by the doctrines of collateral estoppel and/or res judicata based on
the November 2007 dissolution and appraisal proceedings instituted by Plaintiff, and all
rulings and orders stemming from those proceedings.”
       •        The 12th affirmative defense alleged, “Plaintiff’s claims against Defendants
are barred by the doctrine of waiver because, among other things, Plaintiff intentionally
relinquished any rights stemming from her position as a shareholder of Victor Packing,
Inc. by seeking involuntary dissolution under Corporations Code section 1800 in
November of 2007 and accepting payment in full for all of her shares of Victor Packing,
Inc. in the Section 2000 proceeding.”
       Trial was set for March 12, 2012. On March 7, 2012, defendants filed a motion
requesting the court advance the trial of their special defenses under Code of Civil
Procedure section 597.7 Defendants argued that judicial efficiency and economy would
be served if the court tried their 6th, 7th, and 12th affirmative defenses before considering



       7Code  of Civil Procedure section 597 provides, in relevant part: “When the
answer pleads that the action is barred … by a prior judgment, … or sets up any other
defense not involving the merits of the plaintiff’s cause of action but constituting a
bar …, the court may, either upon its own motion or upon the motion of any party,
proceed to the trial of the special defense or defenses before the trial of any other issue in
the case .…”



                                              10.
the merits of Marjorie’s claims. The court agreed to try the special defenses first, set a
briefing schedule, and received the parties’ documents into evidence.
       On March 26, 2012, after hearing arguments from the parties’ attorneys, the trial
court found for defendants on their special defenses. The court stated, “[A]fter a
consideration of all of the arguments and all of the evidence and the other [section] 2000
proceeding, the Court is in agreement with the defendants that the issues were raised[,]
were discussed[,] and were satisfied by the [section] 2000 proceeding.” The court
observed that it made no sense to allow the plaintiff “under different clothing” to seek
damages from defendants for breach of fiduciary duty, “which in a sense is the same
exact money that was being argued over in [the section] 2000 [proceeding].” There is no
indication that anyone requested a statement of decision, and the trial court did not issue
one.
       Judgment for defendants was entered on April 9, 2012. The judgment provides,
“[T]he Court found for Defendants on their Sixth Affirmative Defense (Section 2000
Bar), Seventh Affirmative Defense (Res Judicata/Collateral Estoppel), and Twelfth
Affirmative Defense (Waiver) .…”
       Marjorie filed a notice of appeal on June 4, 2012.
                                       DISCUSSION
I.     Standard of review
       This is an appeal from a judgment following a court trial on defendants’ special
defenses. Marjorie, however, does not dispute the facts relevant to the case. The issues
presented involve questions of law, which we review de novo. (Gavin W. v. YMCA of
Metropolitan Los Angeles (2003) 106 Cal.App.4th 662, 669-670 [reviewing de novo trial
of special defense where there were no disputed factual issues resolved by trial court];
Crosby v. HLC Properties, Ltd. (2014) 223 Cal.App.4th 597, 602 [application of doctrine
of res judicata and statutory construction are questions of law reviewed de novo].)




                                             11.
       Marjorie asserts the trial court’s grant of defendants’ motion to advance trial of
certain special defenses “resulted in a judgment” and was “‘tantamount to a nonsuit,’”
and, therefore, the standard of review for a nonsuit should apply. We disagree. Marjorie
cites Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 27, in which the
lower court granted a motion in limine barring all relevant statements on the grounds of
the litigation privilege and the parol evidence rule. Observing that the lower court’s grant
of the motion in limine was the functional equivalent of a nonsuit, the appellate court
reviewed the decision applying the standard for granting a nonsuit. (Id. at pp. 27-28.)
Here, in contrast, the trial court granted a pretrial motion on the order of trial, not a
motion on the admissibility of evidence. The result of granting the motion was not a
judgment but a court trial on three affirmative defenses. In the resulting trial, the court
did not exclude any evidence relevant to Marjorie’s position; all evidence offered by the
parties was admitted. We see no similarity between the present case and Edwards and,
consequently, reject Marjorie’s assertion that we should review the judgment as though
the trial court had granted a nonsuit.
II.    Involuntary dissolution and buy-out proceedings
       Marjorie contends the trial court erred when it determined that the Madera County
case bars her current claims for breach of fiduciary duty against the majority shareholders
of VPI. This contention rests on the premise that her current personal claims could not
have been adjudicated in the prior proceeding. In order to address Marjorie’s contention,
we begin with an overview of sections 1800 and 2000, the statutes governing the Madera
County case.
       A.      Section 1800
       Section 1800 allows certain shareholders to file a complaint for involuntary
dissolution of a corporation on enumerated grounds. As the owner of one-third of VPI’s
equity, Marjorie was eligible to file a complaint for involuntary dissolution of the
corporation. (§ 1800, subd. (a)(2).) Grounds for involuntary dissolution under


                                              12.
section 1800 include: “[t]hose in control of the corporation have been guilty of or have
knowingly countenanced persistent and pervasive fraud, mismanagement or abuse of
authority or persistent unfairness toward any shareholders or its property is being
misapplied or wasted by its directors or officers” and, “[i]n the case of any corporation
with 35 or fewer shareholders …, liquidation is reasonably necessary for the protection of
the rights or interests of the complaining shareholder or shareholders.” (§ 1800,
subd. (b)(4), (b)(5).)8
       These appear to be the grounds of Marjorie’s complaint in the Madera County case
as she alleged the majority shareholders acted “arbitrarily, fraudulently, and in breach of
their fiduciary obligations,” and liquidation was “reasonably necessary to protect [her]
interests .…”
       The trial court is granted broad statutory authority to order appropriate relief in a
dissolution case. After a hearing on the matter, the trial “court may decree a winding up
and dissolution of the corporation if cause therefor is shown or, with or without winding
up and dissolution, may make such orders and decrees and issue such injunctions in the
case as justice and equity require.” (§ 1804.)
       B.       Section 2000
       Section 2000 provides a procedure for a corporation or its shareholders to avoid
involuntary dissolution by buying out the shareholders seeking dissolution.9 VPI invoked



       8Other grounds for seeking involuntary dissolution include, for example, the
corporation has abandoned its business for more than a year (§ 1800, subd. (b)(1)), or two
or more factions of shareholders are so deadlocked that the corporation’s business cannot
be conducted with advantage to its shareholders (id., subd. (b)(3)).
       9When   shareholders who own 50 percent of a corporation elect to wind up and
dissolve the corporation, this is called a “voluntary” dissolution. (§ 1900.) The buy-out
procedure of section 2000 may be invoked in response to an action for either voluntary or
involuntary dissolution. (§ 2000, subd. (a); see Mart v. Severson (2002) 95 Cal.App.4th
521, 524.)



                                             13.
this statute to stay the involuntary-dissolution proceeding and begin the appraisal process
so that it could buy Marjorie’s interest in the corporation.
       “The objective of section 2000 is to provide an alternative to dissolution through a
buy-out by the [purchasing parties]. The objective of the statutory appraisal process is to
find a fair value for the shares of the parties seeking dissolution and to award the …
shareholders seeking dissolution the liquidation value they would have received had their
dissolution action been allowed to proceed to a successful conclusion.” (Trahan, supra,
99 Cal.App.4th at p. 75.)
       Section 2000 provides, in relevant part:

              “(a) Subject to any contrary provision in the articles, in any suit for
       involuntary dissolution, … the corporation or, if it does not elect to
       purchase, the holders of 50 percent or more of the voting power of the
       corporation (the ‘purchasing parties’) may avoid the dissolution of the
       corporation and the appointment of any receiver by purchasing for cash the
       shares owned by the plaintiffs or by the shareholders so initiating the
       proceeding (the ‘moving parties’) at their fair value. The fair value shall be
       determined on the basis of the liquidation value as of the valuation date but
       taking into account the possibility, if any, of sale of the entire business as a
       going concern in a liquidation. In fixing the value, the amount of any
       damages resulting if the initiation of the dissolution is a breach by any
       moving party or parties of an agreement with the purchasing party or parties
       may be deducted from the amount payable to such moving party or parties,
       unless the ground for dissolution is that specified in paragraph (4) of
       subdivision (b) of Section 1800. The election of the corporation to
       purchase may be made by the approval of the outstanding shares
       (Section 152) excluding shares held by the moving parties.

              “(b) If the purchasing parties (1) elect to purchase the shares owned
       by the moving parties, and (2) are unable to agree with the moving parties
       upon the fair value of such shares, … the court upon application of the
       purchasing parties, … in the pending action …, shall stay the winding up
       and dissolution proceeding and shall proceed to ascertain and fix the fair
       value of the shares owned by the moving parties.

               “(c) The court shall appoint three disinterested appraisers to appraise
       the fair value of the shares owned by the moving parties, and shall make an
       order referring the matter to the appraisers so appointed for the purpose of


                                             14.
       ascertaining such value. The order shall prescribe the time and manner of
       producing evidence, if evidence is required. The award of the appraisers or
       of a majority of them, when confirmed by the court, shall be final and
       conclusive upon all parties. The court shall enter a decree which shall
       provide in the alternative for winding up and dissolution of the corporation
       unless payment is made for the shares within the time specified by the
       decree. If the purchasing parties do not make payment for the shares within
       the time specified, judgment shall be entered against them … for the
       amount of the expenses (including attorneys’ fees) of the moving parties.
       Any shareholder aggrieved by the action of the court may appeal therefrom.

               “(d) If the purchasing parties desire to prevent the winding up and
       dissolution, they shall pay to the moving parties the value of their shares
       ascertained and decreed within the time specified pursuant to this section,
       or, in case of an appeal, as fixed on appeal. On receiving such payment or
       the tender thereof, the moving parties shall transfer their shares to the
       purchasing parties. [¶] … [¶]

              “(f) For the purposes of this section, the valuation date shall be (1) in
       the case of a suit for involuntary dissolution under Section 1800, the date
       upon which that action was commenced .… However, … the court may,
       upon the hearing of a motion by any party, and for good cause shown,
       designate some other date as the valuation date.”
       Both an action for involuntary dissolution of a corporation under section 1800 and
the buy-out procedure under section 2000 have been described as “special proceedings”
rather than civil or ordinary “action[s].” (Go v. Pacific Health Services, Inc. (2009) 179
Cal.App.4th 522, 532 (Go); Esparza v. Kadam, Inc. (1960) 182 Cal.App.2d 802, 807; see
Code Civ. Proc., §§ 22, 23.) “‘Special proceedings being of statutory origin, do not
proceed according to the course of the common law but give new rights and afford new
remedies.’” (Esparza, supra, at p. 807.)
       When a corporation or its majority shareholders (the purchasing parties) choose to
invoke section 2000 to purchase the shares of a shareholder who has initiated an
involuntary-dissolution proceeding (the moving party), the moving party no longer needs
to prove the merits of her involuntary-dissolution complaint. (Go, supra, 179
Cal.App.4th at p. 531.) Instead, the section 2000 procedure is a summary proceeding that


                                             15.
“supplants the action for involuntary dissolution” and inevitably results in either the
purchasing parties buying out the moving party or the dissolution of the corporation. (Go,
supra, at p. 530.)
              1.     Valuation date
       The valuation date for determining liquidation value is defined as the date on
which the involuntary-dissolution action is commenced. (§ 2000, subd. (f).)
“Nevertheless, subdivision (f) provides flexibility by giving the court discretion to
designate some other date as the valuation date, upon motion of a party and for good
cause.” (Trahan, supra, 99 Cal.App.4th at p. 76; § 2000, subd. (f).) In Trahan, for
example, the Court of Appeal recognized that “the discretion given the court by the
express language of subdivision (f) to designate a valuation date other than the date upon
which the dissolution proceeding was initiated encompasses the possibility that the court
may obtain a current appraisal of the fair value of the shares based on a future valuation
date .…” (Trahan, supra, at p. 77, fn. 8, italics added.)
       Trahan involved a corporation engaged in the business of general contracting and
maintenance services. After the moving parties sought voluntary dissolution, the
remaining shareholders elected to purchase the moving parties’ shares, and the trial court
appointed an appraiser to determine the fair value of those shares. The appraiser
determined the liquidation value of the corporation as of the valuation date to be negative
$164,487, and the trial court confirmed the appraiser’s determination. (Trahan, supra, 99
Cal.App.4th at pp. 67-69.) The moving parties appealed, arguing that the determination
of the fair value of their shares was erroneous because “the appraiser refused to include in
her valuation of the corporation certain existing but uncompleted contracts, which
according to the appraiser would bring the corporation estimated future gross profits of
more than $650,000.” (Id. at p. 66, italics added.)
       The Court of Appeal pointed out that the moving parties “never requested that the
trial court exercise its discretion to defer the valuation date to allow the backlog of


                                             16.
construction and maintenance contracts to be completed” and thus could not challenge the
valuation date set by the trial court. (Trahan, supra, 99 Cal.App.4th at p. 71.) The
moving parties argued, however, that an actual dissolution of the corporation would have
allowed for a winding-up period, during which the outstanding contracts could have been
completed. (Id. at p. 72.) The Court of Appeal acknowledged there was a “seeming
contradiction” between the objective of section 2000, which is to award the moving
parties what they would have received had their involuntary-dissolution action been
allowed to proceed, and the language of section 2000, which defines the fair value of the
moving parties’ shares as the liquidation value as of the valuation date. The court
reasoned, however, that this apparent contradiction could be avoided by setting a deferred
valuation date so that the liquidation value determined by the appraisers would take into
account the profits and losses associated with a hypothetical winding-up period prior to
the dissolution of the corporation. (Trahan, supra, at pp. 75-76.) Thus, the moving
parties in Trahan “could have requested the court to set the valuation date to allow for a
hypothetical [winding-up] period, during which the unperformed contracts would be
completed and the profits realized.” (Id. at p. 76.) The court continued, “Such request
would appear particularly appropriate in the case of service corporations, whose main
assets are contracts to be performed in the future.” (Id. at pp. 76-77.)
       The court further observed that the valuation date could have been set at a
hypothetical future date falling after the conclusion of the buy-out:

              “Had the court set a deferred valuation date upon appellants’ request
       and a showing of good cause therefor, the parties still could have engaged
       in and concluded the section 2000 process promptly. The appraisal and the
       actual purchase of appellants’ shares could have occurred in the
       section 2000 proceeding, well before the valuation date. The liquidation
       value of the assets could have been determined based upon the appraiser’s
       projection as to what that value would be on the valuation date, after
       performance of the contracts. Upon court confirmation of the appraisal,
       respondents could immediately purchase appellants’ shares for their
       designated fair value or could choose to allow the dissolution to proceed.”
       (Trahan, supra, 99 Cal.App.4th at p. 77.)

                                             17.
       Since the moving parties in Trahan had not requested a deferred valuation date to
account for completing existing contracts, the Court of Appeal could not grant them relief
from the trial court’s decree. (Trahan, supra, 99 Cal.App.4th at p. 78.)
              2.     Value of pending litigation included in liquidation value
       The fair value of the moving party’s shares are “determined on the basis of the
liquidation value as of the valuation date but taking into account the possibility, if any, of
sale of the entire business as a going concern in a liquidation.” (§ 2000, subd. (a).)
Pending litigation involving the corporation may be included in the appraisers’
determination of liquidation value. For example, in Brown v. Allied Corrugated Box Co.
(1979) 91 Cal.App.3d 477, 482, the appraisers included an evaluation of the corporation’s
potential liability in a pending wrongful-death action. The appraisers reduced the
corporation’s value by $65,000 to account for that potential liability. (Id. at p. 484.)
Similarly, where a derivative claim on behalf of a corporation is pending, the claim is
viewed as an asset of the corporation and may be valued in the appraisal process. (Cotton
v. Expo Power Systems, Inc. (2009) 170 Cal.App.4th 1371, 1380-1381 (Cotton).)
       In Cotton, the minority shareholder of Expo Power Systems, Inc., Ken Cotton,
filed a direct-personal-shareholder complaint for involuntary dissolution of the
corporation alleging breach of fiduciary duty by the majority shareholders. Cotton also
filed a separate derivative action against the majority shareholders alleging breach of
fiduciary duty. In the dissolution proceeding, the majority shareholders elected to buy
Cotton’s shares under section 2000. The appraisers prepared an appraisal report in which
they expressly declined to value Cotton’s derivative claims. (Cotton, supra, 170
Cal.App.4th at p. 1377.) The trial court confirmed the appraisers’ determination of the
fair value of Cotton’s shares, exclusive of the value of the derivative action, and allowed
the derivative action to continue to be litigated by deferring the purchase date to 10 days
after the entry of final judgment in the derivative action. (Id. at p. 1379.)




                                             18.
       On appeal by the majority shareholders, the Court of Appeal reversed the trial
court’s order. The appellate court concluded that the trial court’s order could not be
affirmed “because the appraisal did not take into account the effect of the derivative
action and was therefore incomplete as a matter of law, and the trial court’s attempt to
remedy this defect through a deferral of the buyout date until after the entry of judgment
in the derivative action was contrary to the summary nature of the buyout proceeding.”
(Cotton, supra, 170 Cal.App.4th at p. 1380.) The court noted that the majority
shareholders expected the derivative claims to be appraised and accounted for in the
section 2000 proceeding, and the appraisers had acknowledged that they could assess the
merits and value of the claims. (Cotton, supra, at p. 1381.) On remand, the trial court
was directed to obtain an appraisal taking into account the effect of the pending litigation
on the fair value of the corporation or, in the alternative, to allow the parties to litigate
that issue before the court. (Id. at p. 1383.)
       In sum, claims made against the corporation and claims brought on behalf of the
corporation may be accounted for in the appraisal process.

III.   Marjorie’s current claims are barred because she could have litigated the claims
       in the Madera County case
       The trial court found in favor of defendants on their affirmative defenses of
“Section 2000 Bar,” “Res Judicata/Collateral Estoppel,” and “Waiver.” As we will
explain, we agree that Marjorie’s current claims are barred under the doctrine of res
judicata. We need not decide whether the claims are also barred because of waiver or
“Section 2000 Bar.” (In re Sutter Health Uninsured Pricing Cases (2009) 171
Cal.App.4th 495, 513 [“one good reason is sufficient to sustain the order from which the
appeal was taken”].)
       A.     Overview of doctrine of res judicata
       “‘The doctrine of res judicata rests upon the ground that the party to be affected, or
some other with whom he is in privity, has litigated, or had an opportunity to litigate the



                                                 19.
same matter in a former action in a court of competent jurisdiction, and should not be
permitted to litigate it again to the harassment and vexation of his opponent. Public
policy and the interest of litigants alike require that there be an end to litigation.’
[Citation.]” (Citizens for Open Access etc. Tide, Inc. v. Seadrift Assn. (1998) 60
Cal.App.4th 1053, 1065, italics added.) “A clear and predictable res judicata doctrine
promotes judicial economy. Under this doctrine, all claims based on the same cause of
action must be decided in a single suit; if not brought initially, they may not be raised at a
later date. ‘“Res judicata precludes piecemeal litigation by splitting a single cause of
action or relitigation of the same cause of action on a different legal theory or for
different relief.”’ [Citation.] A predictable doctrine of res judicata benefits both the
parties and the courts because it ‘seeks to curtail multiple litigation causing vexation and
expense to the parties and wasted effort and expense in judicial administration.’
[Citation.]” (Mycogen Corp. v. Monsanto Co. (2002) 28 Cal.4th 888, 897.)
       “Res judicata bars a cause of action that was or could have been litigated in a prior
proceeding if ‘(1) the present action is on the same cause of action as the prior
proceeding; (2) the prior proceeding resulted in a final judgment on the merits; and (3) the
parties in the present action or parties in privity with them were parties to the prior
proceeding. [Citation.]’ [Citation.].” (Federal Home Loan Bank of San Francisco v.
Countrywide Financial Corp. (2013) 214 Cal.App.4th 1520, 1527, italics added.)
       “In California, a ‘cause of action’ is defined by the ‘primary right’ theory. ‘The
most salient characteristic of a primary right is that it is indivisible: the violation of a
single primary right gives rise to but a single cause of action.’ [Citation.]” (Amin v.
Khazindar (2003) 112 Cal.App.4th 582, 589.) “[T]he primary right is simply the
plaintiff’s right to be free from the particular injury suffered. [Citation.] It must therefore
be distinguished from the legal theory on which liability for that injury is premised:
‘Even where there are multiple legal theories upon which recovery might be predicated,
one injury gives rise to only one claim for relief.’ [Citation.] The primary right must also


                                               20.
be distinguished from the remedy sought: ‘The violation of one primary right constitutes
a single cause of action, though it may entitle the injured party to many forms of relief,
and the relief is not to be confounded with the cause of action, one not being
determinative of the other.’ [Citation.]” (Crowley v. Katleman (1994) 8 Cal.4th 666,
681-682.)
       The doctrine of res judicata applies to special proceedings in the same way it
applies to ordinary actions. (Federation of Hillside & Canyon Assns. v. City of Los
Angeles (2004) 126 Cal.App.4th 1180, 1205.)
       B.     Analysis
       In the Madera County case, Marjorie sought involuntary dissolution of VPI based
on alleged shareholder misconduct. She alleged VPI made “extravagant, enormous cash
distributions” to the majority shareholders, causing a decrease in the value of the
corporation and harm to her. After VPI elected to buy her shares and appraisers were
appointed, Marjorie explained to the appraisers that the misconduct at VPI involved
paying excessive salaries to the majority shareholders, and “such payments constitute de
facto dividends, which dividends have not been paid pro rata with stock ownership as
required by the corporation code.” In addition, she asserted that the misconduct was
ongoing and, as a result, she continued to lose out on her share of VPI’s profits.
       Marjorie’s current case asserting breach of fiduciary duty is based on the same
alleged misconduct. Specifically, Marjorie alleges that VPI paid the majority
shareholders bonuses and “lucrative salary increases” and “us[ed] corporate monies for
[the majority shareholders’] personal financial gain instead of paying dividends .…” The
alleged injury to Marjorie is also the same in both cases, which defendants aptly describe
as “deprivation of the full value of [Marjorie’s] VPI share ownership in the form of her
alleged share of its profits.” Accordingly, we conclude the current case involves the same
primary right, and thus the same cause of action, raised in the Madera County case.




                                             21.
       Further, for alleged continuing injury incurred from the time she initiated the
Madera County case until she was bought out, Marjorie could have litigated her current
claims in the Madera County case by requesting that the trial court order a deferred
valuation date. (Trahan, supra, 99 Cal.App.4th at p. 77.) Had she sought a deferred
valuation date from the court, the appraisers could have evaluated her allegations that the
majority shareholders were receiving excessive compensation and wrongful “cash
distributions” on an ongoing basis. To the extent the appraisers found compensation
excessive and other cash distributions wrongful or unauthorized, they could have treated
that amount as an asset of VPI, increasing the liquidation value of Marjorie’s shares in
VPI. Indeed, Marjorie told the appraisers to defer the valuation date to take into account
the majority shareholders’ alleged continuing wrongdoing.
       Alternatively, Marjorie could have brought a derivative action on behalf of VPI
during the appraisal process “to recover assets for the corporation or to prevent the
dissipation of its assets” by seeking the return of alleged excessive compensation,
bonuses, and cash distributions and an end to the alleged practice of distributing VPI
profits to the majority shareholders. (See Sutter v. General Petroleum Corp. (1946) 28
Cal.2d 525, 530.) This derivative action could have been litigated in the appraisal process
(that is, the merit of the claim could have been assessed to determine its value) and
included in the liquidation value of Marjorie’s interest in VPI. (Cotton, supra, 170
Cal.App.4th at p. 1383.)
       Here, the appraisers recognized their obligation to value pending litigation
involving VPI in the appraisal process and cited Cotton, supra, 170 Cal.App.4th 1371, in
their appraisal report. In fact, they viewed Marjorie’s allegations of wrongdoing
contained in her complaint for involuntary dissolution to be a form of derivative action
and potentially subject to appraisal as an asset of VPI. Marjorie, however, indicated to
the appraisers that her involuntary-dissolution complaint need not be appraised as an asset
of the corporation. The appraisers wrote:


                                            22.
       “In an October 20, 2009 meeting among the moving party, the purchasing
       parties, both of their Counsels and the business appraisers, this specific
       issue [valuation of Marjorie’s allegations in the dissolution complaint] was
       discussed. Counsel for the moving party [Marjorie], with no objection from
       Counsel for the purchasing party [VPI], indicated there should be no value
       associated with the underlying §1800 action in this case, as it related to the
       §2000 valuation. This decision was in part the result of a May 8, 2007
       settlement agreement among the parties such that the derivative action
       would have related to only events from May 8, 2007 to November 2, 2007.”
       The appraisers went on to note that they were not aware of any other pending
litigation that would impact the value of the company.
       Moving to the next step of the res judicata analysis, we see that the prior
proceeding resulted in a final judgment on the merits. There was a judgment on the
merits in the Madera County case. The trial court ordered VPI to buy Marjorie’s shares in
the corporation for the sum of $3,277,000. This was the liquidation value of her interest
in VPI, which could have encompassed the value of her current claims if she had asked
the court to defer the valuation date or brought a derivative action during the pendency of
the section 2000 proceeding.
       Finally, we agree with defendants that they are entitled to raise the defense of res
judicata against Marjorie. “The doctrine of res judicata is applicable where the identical
issue was decided in a prior case by a final judgment on the merits and the party against
whom the plea is asserted was a party or in privity with a party to the prior adjudication.”
(French v. Rishell (1953) 40 Cal.2d 477, 479, italics added.) Here, Marjorie was a party
in the Madera County case and is the party against whom res judicata is being asserted in
this case. Also, since defendants were the alleged wrongdoers in the Madera County case
and were the majority shareholders of VPI, there is substantial identity between
defendants and VPI. (See Wilson v. Ostly (1959) 173 Cal.App.2d 78, 82 [applying res
judicata where there is “substantial identity of parties”]; 7 Witkin, Cal. Procedure (5th ed.
2008) Judgment, § 452, p. 1108.)




                                             23.
       For the foregoing reasons, we conclude Marjorie’s current claims are barred under
the doctrine of res judicata. Marjorie’s attempts to avoid this result are not persuasive.
       C.     Marjorie’s challenges to the trial court’s judgment
       Primarily, Marjorie contends she did not and could not litigate her current claims
in the Madera County case. She relies on the section of the appraisal report in which the
appraisers discussed Georgeson’s claim that VPI’s financial statements understated
profits. The appraisers wrote:

       “It is our understanding there have been claims made that the financial
       statements and income tax returns did not properly reflect the complete
       earnings of the business due to significant personal use of corporate assets
       and/or misappropriation of corporate funds. There are also claims that
       related party transactions have not been properly recorded in the accounting
       records. On an historic basis, it has been impracticable to adjust the
       historical earnings for the alleged misappropriations. In addition, it has
       been impracticable to verify or disprove the claims pertaining to related
       party assets and/or liabilities.

       “It is our understanding that the parties to this case have agreed that the
       magnitude of these issues, if investigated and quantified, would not yield a
       material asset value to the Company and would not have any material
       impact on our valuation analysis.”
       Marjorie claims this shows the appraisers “would not consider the
misappropriation issues no matter what valuation date” was used. She also claims the
appraisers determined that her allegations of wrongdoing by the majority shareholders
“were irrelevant to valuing VPI.” We disagree with Marjorie’s reading of the above
passage. The appraisers wrote that it was their understanding the parties agreed that the
issue of misappropriation (by overcompensation, cash distributions, etc.) was not a
material asset to VPI. Specifically, the parties agreed that, if Marjorie’s misappropriation
claim were to be investigated and quantified, it would not yield a material asset to VPI.
As a consequence, there was no reason for the appraisers to expend resources and efforts
to appraise the claim. The appraisers did not suggest they were unwilling to investigate
and quantify Marjorie’s claim; they simply understood that the parties believed valuation


                                             24.
was not necessary. The appraisers also demonstrated a willingness to evaluate Marjorie’s
allegations as a derivative claim with potential value to VPI. Again, however, Marjorie
indicated that an appraisal of her allegations was not necessary. Her counsel “indicated
there should be no value associated with the underlying §1800 action in this case, as it
related to the §2000 valuation.” Marjorie cannot fault the appraisers for relying on the
parties’ representation that her claims “would not yield a material asset value .…”
       With respect to the valuation date, the appraisers explained that they were not
authorized to use a different valuation date without a court order. They were correct.
Section 2000, subdivision (f), provides that the valuation date is the date the action was
commenced, but it also authorizes the court (not the court-appointed appraisers) to
designate some other date as the valuation date for good cause. While Marjorie asked the
appraisers to change the valuation date, she never asked the trial court to defer the
valuation date to account for her alleged ongoing loss of profits. The appraisers did not
suggest that they would not evaluate Marjorie’s allegations if the valuation date were
deferred. To the contrary, the appraisers discussed the implications of Trahan, supra, 99
Cal.App.4th 62, with the parties and encouraged them to address the valuation date with
the court.
       Moreover, even if the appraisers had refused to consider Marjorie’s claim of
ongoing misappropriation, Marjorie should have raised the issue and objected to the
appraisal with the trial court. (Cf. Cotton, supra, 170 Cal.App.4th at p. 1380 [recognizing
that appraisal that did not take into account value of pending derivative action was
incomplete and could not be confirmed by trial court].) As the defendants argue,
Marjorie was aware of section 2000, subdivision (f), and Trahan, but she “nonetheless
elected, for her own tactical reasons, not to challenge the Report when the appraisers
advised her that they could not use a different valuation date .…”
       Marjorie also repeats throughout her appellate brief that her current claims are
direct and personal claims against the majority shareholders, not derivative claims on


                                             25.
behalf of VPI. But this does not change the fact that she could have been compensated
for the same alleged injury in the Madera County case by use of a deferred valuation date.
Furthermore, the allegations in her current case could have supported a derivative action
as well. “A shareholder’s derivative suit seeks to recover for the benefit of the
corporation and its whole body of shareholders when injury is caused to the corporation
that may not otherwise be redressed because of failure of the corporation to act.” (Jones
v. H. F. Ahmanson & Co. (1969) 1 Cal.3d 93, 106 (Jones).) An action is derivative if “‘it
seeks to recover assets for the corporation or to prevent the dissipation of its assets.’”
(Ibid.) Here, Marjorie alleges the majority shareholders used corporate monies for
personal gain. She could have brought a derivative action against defendants for recovery
of corporate monies.
       Marjorie appears to argue that her current claims could not have been raised in a
derivative action. She relies on Jara v. Suprema Meats, Inc. (2004) 121 Cal.App.4th
1238. In that case, the plaintiff owned 30 percent of the shares of a corporation and the
remaining two shareholders each owned 35 percent. (Id. at p. 1245.) Among other
claims, the plaintiff sued the two other shareholders (together they were the majority
shareholders) for breach of fiduciary duty “by paying themselves excessive compensation
and denying [plaintiff] a fair share of the corporate profits.” (Id. at p. 1242.) The trial
court effectively dismissed this claim on the ground that it could only be asserted in a
derivative action, and the plaintiff appealed. (Id. at p. 1252.) The Court of Appeal
reversed, holding that the plaintiff was not barred from bringing an individual action
under the circumstances of the case. The court noted that the policy justifications for
requiring a derivative action rather than an individual-shareholder action are to prevent a
multiplicity of lawsuits by individual shareholders and to prevent preferential treatment
for the more diligent shareholders. Such concerns were not present in Jara because the
plaintiff was the only minority shareholder. (Id. at p. 1259.) We do not read Jara as
holding that allegations of excessive compensation could not be raised in a derivative


                                              26.
action. Rather, we read the case as holding that, where there are no policy justifications
for requiring a derivative action, a claim that would ordinarily be brought as a derivative
action may be raised as an individual shareholder’s direct claim. It has been observed,
“the distinction between direct and derivative actions sometimes blurs, especially in
corporations with only a few shareholders where the acts of one officer/shareholder
directly impacts both the corporation and the other shareholders. Consequently, courts
have permitted a direct shareholder action, or given direct shareholder recovery in a
derivative action, when it was equitable to do so.” (Friedman, Cal. Practice Guide:
Corporations (The Rutter Group 2007) ¶ 6:598.2, p. 6-127, citing Jara, supra; see also,
Friedman, supra, ¶ 6:601b, at p. 6-129 [“Excessive officer compensation is a classic
example of a corporate harm that should ordinarily be remedied through a derivative
action.”].) Accordingly, we reject Marjorie’s position that her current claims could not
have been brought as a derivative action.
       We also reject Marjorie’s contention that her current case does not involve the
same claims or parties that were involved in the Madera County case. In the res judicata
analysis, it is not the legal theory used or remedy sought that matters; it is whether the
primary right is the same in the prior proceeding. (Crowley v. Katleman, supra, 8 Cal.4th
at pp. 681-682.) As we have discussed, the current case involves the same primary right
raised in the Madera County case even if the legal theories and damages sought are
different. The relevant party is Marjorie since she is the one against whom the res
judicata defense is being asserted, and she is the plaintiff in both cases. (French v.
Rishell, supra, 40 Cal.2d at p. 479.) Topanga Corp. v. Gentile (1963) 219 Cal.App.2d
274, cited by Marjorie, is not relevant to her situation. In that case, there was a prior
action brought by shareholders of a corporation against the Gentiles, which resulted in a
judgment. (Id. at p. 277.) When the corporation itself sued the Gentiles, it conceded that
the issues were the same as those decided in the prior action but argued it was not subject
to res judicata because it was neither a party nor in privity with a party in the prior action.


                                              27.
The Court of Appeal agreed. (Id. at pp. 278-279.) This case does not apply to Marjorie,
who is the same party in the Madera County case and the present case.10
       Marjorie makes various arguments about the purpose and limits of section 2000.
She asserts that section 2000 “is not an ‘all inclusive’ procedure enacted for the purpose
of resolving all claims arising in the corporate setting.” She continues, “The statute does
not expressly or impliedly authorize the consideration or adjudication of a shareholder’s
direct, personal causes of action against other shareholders that are not relevant to
corporate valuation issues authorized by the statute.” We need not address the broad
issue of whether a section 2000 proceeding necessarily bars any subsequent claim arising
in the corporate setting. This is because we reject the premise of her next statement—that
the primary right involved in her current claims was not relevant to corporate valuation
issues. As we have explained, Marjorie could have litigated her current claims (the right
not to be deprived of her share of VPI’s profits) in the Madera County case either by
asking for a deferred valuation date or by raising a derivative claim on behalf of VPI. In
either event, the injury for which Marjorie seeks redress in her current case would have

       10Marjorie   also cites Denevi v. LGCC (2004) 121 Cal.App.4th 1211 and misquotes
the court. She writes that the Court of Appeal “held ‘a single cause of action by a
majority shareholder might give rise to derivative claims, individual claims, or both.’”
The court actually wrote, in describing the Supreme Court’s decision in Jones, supra, 1
Cal.3d 93, “The Supreme Court reversed, noting that a single course of action by a
majority shareholder might give rise to derivative claims, individual claims, or both.”
(Denevi, supra, at p. 1222, first italics added.) Marjorie’s misquote of the court’s
language is misleading. A single “course of conduct” may well cause different injuries to
different plaintiffs, leading to different causes of action. A single “cause of action,”
however, may not be brought serially by a single plaintiff under different theories.
Further, the court’s discussion of its understanding of Jones is dicta, as the Denevi
plaintiff’s individual claim against the defendants was for defrauding him into
transferring purchase rights to the corporation. The plaintiff’s claim was not based on his
status as shareholder and was “unique … to him” (i.e., the corporation could not bring the
same claim). (Ibid.) Again, this case does not apply to Marjorie, who had one primary
right involved in her Madera County case (including any derivative action that could have
been appraised) and her current case.



                                            28.
been accounted for in the valuation of the corporation and, thus, would have been
“relevant to corporate valuation issues .…”
       Marjorie also raises arguments based on the language of section 2000 that are
unavailing. Marjorie asserts that the title of section 2000—“Avoidance of dissolution by
purchase of plaintiffs’ shares; valuation; vote required; stay of dissolution proceedings;
appraisal under court order; confirmation by court; appeal” (italics added)—demonstrates
that the statute “is exclusively related to one subject, namely, providing a summary
procedure to avoid dissolution of a corporation and nothing more.” Because we conclude
Marjorie’s current claims could have been relevant to corporation valuation, this
argument does not help Marjorie.
       Next, she cites the language of section 2000, subdivision (a), which provides in
pertinent part:

       “In fixing the [fair] value, the amount of any damages resulting if the
       initiation of the dissolution is a breach by any moving party or parties of an
       agreement with the purchasing party or parties may be deducted from the
       amount payable to such moving party or parties, unless the ground for
       dissolution is that specified in paragraph (4) of subdivision (b) of
       Section 1800.”11 (Italics added.)
The 1975 Legislative Committee Comments—Assembly [Corrected] to section 2000
explain: “The purpose of this provision is to eliminate multiple litigation with respect to
related issues. However, where the ground for involuntary dissolution is any one of the
acts of wrongdoing specified in subdivision (b)(4) of Section 1800, the breach of any
agreement may not be considered in determining the fair value of the shares.”
(Legislative Com. com., 23E West’s Ann. Corp. Code (1990 ed.) foll. § 2000, p. 517.)


       11Section  1800, subdivision (b), lists grounds for involuntary dissolution.
Paragraph (4) provides, “Those in control of the corporation have been guilty of or have
knowingly countenanced persistent and pervasive fraud, mismanagement or abuse of
authority or persistent unfairness toward any shareholders or its property is being
misapplied or wasted by its directors or officers.”



                                              29.
       Marjorie argues:

       “Because the sole grounds for Appellant’s Dissolution Action against VPI
       were those set forth in §1800(b)(4), consideration of such claims as offsets
       is specifically excluded from consideration in a §2000 proceeding.…
       [¶] …[¶] The limitations in this provision reflect the Legislature’s intent to
       prohibit appraisers’ consideration of shareholder damage claims based upon
       conduct described in §1800(b)(4) in any circumstances. There are sound
       reasons for such limitations because addressing such shareholder claims in
       the special proceeding would expand §2000 to include ‘multiple litigation’
       issues between shareholders far beyond the intended purpose of §2000.
       (See Legislative Comment to 2000.)”
       Marjorie misunderstands the statute. The provision allowing for an offset allows
the appraisers and the court to take into account the fact that the moving party’s
dissolution action is a breach of agreement. This means, for example, if a 50 percent
shareholder of a corporation (moving party) initiates a voluntary dissolution proceeding
and the initiation of the proceeding itself is a breach of an agreement with the
corporation or other shareholders, then the purchasing party (either the corporation or the
other 50 percent shareholder or shareholders) may seek an offset for the damages caused
by the moving party’s breach. The purpose of eliminating multiple litigation is served by
allowing an offset because the purchasing party need not initiate a second lawsuit against
the moving party in order to recover damages for the moving party’s breach.
       The limitation on the offset comes into play if a shareholder initiates an
involuntary-dissolution action because of the wrongful conduct of those in control of the
corporation as described in section 1800, subdivision (b)(4). If a moving party seeks
dissolution of a corporation because of pervasive fraud or unfairness, then the purchasing
parties are not entitled to any offset even if they claim the moving party’s initiation of
dissolution proceedings was a breach of agreement.
       The offset and the limitation, however, related only to (1) a claim of breach of
agreement based on the initiation of the dissolution action that is (2) made by the
purchasing party against the moving party. This part of section 2000, subdivision (a),



                                             30.
does not apply to claims other than breach-of-agreement claims and does not apply to any
claims made by the moving party against the purchasing party. Marjorie’s position that
this statutory language means appraisers are prohibited from considering a moving
party’s claims that are based on misconduct described in section 1800, subdivision (b)(4),
is simply incorrect.
       Marjorie notes that a section 2000 appraisal is a special proceeding that is
summary in nature and does not provide for a full evidentiary hearing. (Abrams v.
Abrams-Rubaloff & Associates, Inc. (1980) 114 Cal.App.3d 240, 247-248.) From this
observation, she claims, “Thus, any resolution of Appellant’s personal claims in the
appraisal proceeding was not consistent with due process requirements and in violation of
Constitutional safeguards.” She cites no authority for this assertion, and we are not aware
of any. “The fundamental requirement of due process is the opportunity to be heard ‘at a
meaningful time and in a meaningful manner.’” (Mathews v. Eldridge (1976) 424 U.S.
319, 333.) Here, Marjorie had the opportunity to request a deferred valuation date from
the trial court, but she chose not to do so. She had the opportunity to discuss her position
on valuation with the appraisers as demonstrated by Georgeson’s letter of September 14,
2009, and the appraisers’ response. She had the opportunity to bring a derivative action,
which the court would have been required to consider in setting liquidation value of VPI.
(Cotton, supra, 170 Cal.App.4th at p. 1383.) She had the opportunity to raise objections
to the appraisal report with the trial court. She did, in fact, object to the appraisal report
but not on the ground that it failed to include the value of her lost profits. In sum,
Marjorie had the opportunity to be heard in the Madera County case.
       Marjorie also raises concerns about defendants’ due process rights, pointing out
that they were not parties to the Madera County case, and “consideration of their
wrongdoing in their absence would also constitute a violation of their due process rights
and provide no remedy against [defendants] who would then have a basis to contest the
award of the appraisers on due process grounds.” But if Marjorie’s current claims had


                                              31.
been valued, either by a deferred valuation date or a derivative action, the value of
Marjorie’s share of defendants’ alleged misappropriations would have been reflected in
the fair value of her shares. It would not have resulted in a money judgment against
defendants. (Cf. In re FairWageLaw (2009) 176 Cal.App.4th 279, 286 [where
shareholder was not party to voluntary dissolution proceeding, court violated
shareholder’s right to due process by entering judgment against him in dissolution
proceeding].) Further, VPI, not defendants, would have paid Marjorie the value of her
current claims as reflected in the fair value of her shares.12
                                       DISPOSITION
       The judgment is affirmed. Costs are awarded to respondents.




       12In   the alternative, if VPI declined to pay the court-ordered fair value of
Marjorie’s shares, the alternative decree providing for winding up and dissolution of VPI
would have become the court’s order. (§ 2000, subd. (c).) In that event, the court would
have authority to make orders bringing in new parties “as the court deems proper for the
determination of all questions and matters.” (§ 1806, subds. (c) & (l).) The court could
join defendants in the dissolution proceeding, determine whether they received wrongful
cash distributions from VPI, and if so, enter an order to recover the corporation’s assets
from them. (See Howard v. Data Storage Associates, Inc. (1981) 125 Cal.App.3d 689,
697 [where minority shareholders are unable to proceed on their judgment against asset-
stripped corporation in involuntary-dissolution proceeding and directors are necessary
parties, trial court erred in failing to join them].) Of course, if defendants were parties in
the involuntary-dissolution proceeding, there would be no due process problem.



                                              32.
                                                               _____________________
                                                                           LaPorte, J.*

WE CONCUR:


 _____________________
 Levy, Acting P.J.


 _____________________
 Detjen, J.




      *Judge   of the Superior Court of Kings County, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.



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