Holistic Supplements, LLC v. StarkAnnotate this Case
Plaintiff alleged that defendant transferred his ownership in the LLC, a medical marijuana dispensary, to her in April 2015. Unbeknownst to plaintiff and despite that alleged transfer, defendant later converted the LLC from a limited liability company to a corporation and then a mutual benefit corporation in his name called Holistic Supplements Inc. (the corporation) and changed the business address. Defendant also claimed rights to a Business Tax Registration Certificate, a city-issued tax document that enabled the dispensary to operate. Plaintiff and the LLC filed suit against defendant and the corporation for conversion, unfair competition, and declaratory relief, among other claims.
The Court of Appeal concluded that nonsuit was erroneous on plaintiff's individual claims because she has standing to sue for conversion of her personal property membership interest in the LLC; nonsuit was erroneous on claims against defendant in his individual capacity, since he can be held liable for personally participating in the tortious conduct of the corporation; nonsuit was erroneous on the unfair competition law claims because the court rejected the only two grounds for nonsuit defendants raise on appeal; and the Business Tax Registration Certificate is property subject to conversion, so the trial court prejudicially erred when it instructed the jury it was not. The court also rejected defendant's contention that plaintiff lacked standing because she failed to file a petition for reinstatement of the LLC pursuant to Government Code section 12261. The court explained that plaintiff and the LLC permissibly sought reinstatement as part of this lawsuit, so they did not need to file a separate petition in the superior court. Accordingly, the court reversed and remanded.