Filed 11/24/14; pub order 12/18/14 (see end of opn.)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

MANUEL TABARREJO,
Petitioner,

v.
THE S UPERIOR COURT OF SANTA CLARA COUNTY, Respondent.
PRINCESS RETIREMENT HOMES, INC., Real Party in Interest. H040377 (Santa Clara County Super. Ct. No. 1

- 12

- CV

- 237107)

Petitioner Manuel Tabarrejo was employed as a caregiver by real pa rty in interest Princess Retirement Homes, Inc. (PRH). After Tabarrejo left his employment, he filed a claim with the Labor Commissioner for unpaid wages and other wage

- related claims.
T he Labor Commissioner awarded Tabarrejo $131,096.77. PRH appealed the Labor Commissioner’s order to the superior court and posted the undertaking required by Labor Code section 98.2. 1 Tabarrejo moved to dismiss the appeal on the ground that PRH was a suspended corporation that lacked the capacity to

sue . The trial cou rt granted Tabarrejo’s motion to dismiss

. PRH then failed to pay the

1 All further statutory references are to the Labor Code, unless otherwise stated.2

amount due under the Labor Commissioner’s o rder within 10 days , so Tabarrejo asked the court to release the undertaking to him

. But PRH disputed Tabarrejo’s entitlement to
the undertaki ng on a number of grounds, primarily arguing that since PRH’s corporate powers were suspended, the court lacked jurisdiction over the matter ab initio and should
never have acc epted the undertaking. The trial court concluded that PRH did not have standing to file the appeal and ordered the release of the undertaking to PRH’s owners,
James and Judith Morales.
We hold that t he trial court erred as a matter of law when it released the undertaking to the Moraleses b ased on its conclusion that PRH did not ha ve standing to file the appeal. The question presented is one of legal capacity , not standing. A lthough the appeal was invalid when filed because PRH l acked the capacity to sue sinc e its corporate powers had been suspended, PRH could have retroactively v alidated the appeal by reviving its corporate powers. That PRH elected not to revive its corporate powers did not retroactively deprive the court of jurisdiction to accept the appeal and the undertaking for filing or to dismiss the appeal based on PRH’s i ncapacity to sue

. We shall therefore grant Tabarrejo’s request for writ relief and direct the trial court to vacate its order releasing the undertaking to the Moraleses and to enter a new order releasing the undertaking to Tabarrejo

.

F ACTS

PRH, an assist ed living facility, employed Manuel Tabarrej o as a caregiv er from June 3, 2009, through September 30, 2011. Pursuant to an oral agreement, PRH initially paid Tabarrejo $8 per hour. On April 1, 2010, PRH raised Tabarrejo’s rate of pay to $8.25 per hour. Tabarrejo lived at the assisted living facility during his employment with PRH. He worked an average of 15 hours per day, performing caretaking duties for facility “patients.” Tabarrejo quit his job on September 30, 2011.3

California Secretary of Sta te records reveal that PRH: (1) incorporated in 1996; (2) was suspended by the Secretary of State in April 1999 for failing to file a statement of information; and (3) was suspended by the Franchise Tax Board in March 2000 for failing “to meet franchise t ax requirements (e.g. failure to file a return, pay taxes, etc.).” As of November 2013, PRH’s powers, rights, and privileges remained suspended. The
same records list James Morales as the CEO of PRH and Judith Morales as its agent for service of process. James and Judith Morales are the “owners” and “shareholders” of PRH; they did not work at the facility.

P ROCEDURAL H ISTORY
Tabarrejo’s Complaint Before the Labor Commissioner
On November 29, 2011, Tabarrejo filed a complaint with the Labor Commissioner seeking compensation for unpaid regular, overtime, and minimum wages and for failure to provide meal and rest periods ; waiting time penalties (§ 203) ; and interest. Tabarrejo
named PRH and James and Judith Morales as defendants , asserting they were joint employers.

Proceedings Before the Labor Commissioner On November 5, 2012, the Labor Commissioner conducted a hearing. Tabarrejo appeared and was represented by counsel

. James and Judith Morales appeared in their individual capacity and on behalf of PRH

. All defendants were rep resented by the same attorney

. Florence Deloso (a caregiv er), Mary Matias (the business manager) , and the
Moraleses testified on behalf of PRH. At the beginning of the hearing, the hearing officer asked when PRH was incorporated . D efense counsel responded, “It’s not current.” Defense counsel then asked Judith Morales whether PRH had paid its “dues” and “registration fee,” to which she4

responded, “Yes” under oath. After the hearing officer stated that the Secretary of State

rec ords showed a Franchise Tax Board suspension in 2000, defense counsel stated, “Right. And after that, they’ve paid their registration, but they indicate it’s still not listed as current.” The hearing officer stated: “Suspended or not, a corporation is s till subject
to the Reynolds [ v. Bement (2005) 36 Cal.4 th 1075 ] decision [ , ] which requires that the common law elements of alter ego liability be shown for the individuals,” and “[i]f the plaintiff cannot show the common law elements of alter ego liability , I’m just going to

. . . dismiss the individuals.” The hearing officer concluded that PRH’s status as a suspended corporation did not “eliminate[] the corporate entity for the purpose of being the employer , ” and dismissed the individual defendants.
Taba rrejo testified that from July 2009 through September 2011, he worked
205 days at a base rate of $8 an hour and 389 days at a base rate of $8.25 an hour. During that time, he worked 988 overtime hours and 820 double time hours at a base rate of $8 per hou r, and 1,716 overtime hours and 1 , 556 double time hours at a base rate of $8.25 per hour. Tabarrejo claimed he was not relieved of all duties for at least half an hour on any of those days, did not receive rest breaks, and would watch patients while he

at e. PRH did not have time records and did not offer any evidence to contradict Tabarrejo’s testimony. According to the hearing officer, PRH “offered schedules and testimony” about what “might” have happened or what “could” have happened, but “did
not off er evidence about what actually did happen to [Tabarrejo], in terms of hours worked, on any particular day.” “One of [PRH’s] witnesses testified that she was told to take a meal period each day and could get coverage so she did not have to watch a patient while she ate.” “However, that same witness also acknowledged that sometimes she would have to watch a patient while she ate.” There was evidence that Tabarrejo “would leave the facility on personal errands and that there was coverage if a staff member had to leave or take a break.”5

Nine days after the hearing, the Labor Commissioner issued an Order, Decision, or Award (Order) i n favor of Tabarrejo, awarding h im $131,096.77. The award included unpaid wages ($74,741.33), liquidated damages under sectio n 1194.2 ($38,638.00), accrued interest ($12,766.84), and waiting time penalties under section 203 ($4,950.60). The hearing officer dismissed James and Judith Morales as defendants pursuant to Reynolds v. Bement , supra , 36 Cal.4 th 1075, because Tabarrejo had not established the common law elements of alter ego liability against them. Thus, PRH became the sole
defendant subject to the Labor Commissioner’s Order

.

P roceedings in the Trial Court
PRH filed an appeal of the Order in the superior court on Dece mber 4, 2012; 2 the
Mor aleses did not appeal the Order

. As required by section 98.2, subdivision (b), that same day, the Moraleses deposited an undertaking of $131,096.77 with the court on
behalf of PRH 3 so it could appeal the Order. The Moraleses claim t hey posted the undertaking because PRH had no assets

. Since t he Moraleses (who had been dismissed as individual defendants) did not appeal the Order , it is final as to them. In April 2013, Tabarrejo filed a motion to dismiss the appeal on the ground that PRH was a suspended corporation and lacked the capacity to sue

. In his motion,

2 Altho ugh the copy of the notice of appeal in the record is dated November 28, 2012, the notice was not filed that day. On our own motion, we have taken judicial notice of the docket entries for this case in the trial court’s public website, which indicate that the appeal and the undertaking were filed on December 4, 2012. (<http://www.sccaseinfo.org/> [as of Nov. 24, 2014 ].)

3 The record suggests that Judith Morales obtained a cashier’s check to pay for the undertaking. The only document in the record is a copy of a withdrawal slip dated December 4, 2012, which indicates that Judith Morales withdrew funds to pay for the undertaking. The withdrawal slip does not identify the owner of the account from which the money was withdrawn (i.e., whether it belonged to the Moraleses or PRH or some other entity). PRH contends the undertaking was deposited by both Judith and James Morales on behalf of PRH. We adopt that description for this opinion.6

Tabarrejo requested that the undertaking be forfeited to him . He also requested attorney fees. PRH did not file an opposition to the motion. On May 8, 2013, the court grant ed
the motion to dismiss , ordered entry of judgment for Tabarrejo, and ordered that the undertaking be forfeited to Tabarrejo if the judgment was not paid within 10 days (§ 98.2, subd. (b)). On May 16, 2013, PRH filed an ex parte application to set asid e the judgment of
dismissal on the ground that it had never received a copy of the motion to dismiss

. The
court denied PRH’s ex parte application without prejudice to seek the same relief in a
noticed motion. PRH then filed a noticed motion to set aside the dismissal

. Tabarrejo
did not file an opposition to the motion or appear at the hearing . The court granted the motion on June 11, 2013. After Tabarrejo assert ed that he had not been served with the
noticed mot ion to set aside the dismissal, t he court set the matter for rehearing on September 1 9, 2013. In August 2013, PRH obtained new counsel. In its reply papers in support of the
motion to set aside the dismissal , PRH argued that the appeal “should not be dismissed
because of a procedural irregula rity before the Labor Commissioner that was known and accepted by both parties” and that dismissal under the circumstances of this case would “defeat the letter and the spirit of Labor Code § 98” and “work an extreme injustice.”
PRH advised the court that it was seeking administrative relief from the Labor
Commissioner (discussed below) , asked the court to consider the arguments it made to
the Labor Commissioner , and urged the court not to dismiss the appeal before the Labor
Commissioner ruled on its reque st s

.

Post

- Hearing Application for Administrative Relief From the Labor Commissioner

PRH and the Moraleses filed a post hearing application for administrative relief
with the Labor Commissioner, which asked that the Order be amended to (1) delete the
order dismissing the Morales es as defendants; and (2) substitute the Moraleses as the7

employer in place o f PRH. The application asserted that the Moraleses had been dismissed by the Labor Commissioner due to the “mistake and inadvertence” of their
for mer couns el. The Moraleses agreed , if the Order was amended, to “waive the protection under Reynolds v. Bement ” and to stipulate, for the purposes of the application, “to liability as an alter ego” of PRH. They said all they wanted was “to have their day in

court .” According to the application, the Moraleses posted the undertaking because PRH

“ has no assets.” The y argued that their former counsel had “erroneously filed” the notice of appeal from the Labor Commissioner’s decision and facilitated the posting of t h e undertaking. They asserted that defense counsel’s mistakes “should be rectified through [their] administrative application before the damage to the Morales[es] becomes permanent and lega lly unfixable.” The Moraleses asked the Labor Commissioner to stay execution of the judgment in the superior court and to file an amende d order so they
could file a new notice of appeal in the superior court.
The Labo r Commissioner denied PRH’s and the Moraleses’ requests in a letter dated Sep tember 24, 2013. The Lab or Commissioner explained that the Moraleses were
not entitled to relief un der section 98, subdivision (f) because such r elief is only available
when a defendant fails to attend a hearing , and the Moraleses attended the hearing

— both in their individual cap acity and on behalf of PRH

— and were represe nted by counsel.
The Labor Commissioner also denied the Moraleses’ request to amend the Order to modify the legal name of the business (§ 98, subd. (h)(2)) since the hearing officer had
found that PRH was the cor rect defendant and had dismissed the Moraleses because “alter ego liability was unfounded.” Finally, he Labor Commissioner refused to set aside the Order or grant another hearing.

Further P

roceedings in the Trial Court On September 19, 2013, while the a pplication for administrative relief was pending, the trial court conducted a hearing on PRH’s request to set aside the dismissal.8

The court denied the motion to set aside the dismissal and ordered counsel to appear on October 24, 2013, to be heard regard ing forfeiture of th e undertaking. The court also found that the time for PRH to appeal the Order had expired and that judgment may be entered in favor of Tabarrejo for $131,096.77. PRH did not seek appellate review of the order denying its motion to set aside the dismissal.
On October 7, 2013, PRH’s counsel sent a letter to the trial court recounting PRH’s failed application for relief from the Labor Commissioner and arguing that the proper action to restore the parties to the status quo ante was to ret urn the undertaking to
the Moraleses. This time, PRH argued that the “ owners of the cash deposit, Judith and James Morales, are not the e mplo yer ” and that they were not parties to the appeal. PRH argued that the court “never had jurisdiction .

. . and sh ould not have accepted the cash deposit ab initio ” and that the undertaking should therefore be returned t o the Moraleses. Tabarrejo filed an opposition to PRH’s request to return the undertaking to the
Moraleses. Tabarrejo argued , among other things, that under section 98.2,
subdivision (b), forfeiture of the undertaking to Tabarrejo was mandatory since the case had been dismissed and PRH had failed to pay the award within 10 days of t he dismissal

. Tabarrejo also told the court that PRH had not paid t he $8,610 in attorney fees the cour t had previo usly ordered , and he requested $15,985 in additio nal attorney fees under
section 98.2, subdivision (c) and section 1194

. In reply, PRH argued that “if the Court is not disposed to provide [ PRH ] with a
de no vo hearing and a trial on the merits, then it would be fundamentally unfair and a
violatio n of due process to retain their [ sic ] cash deposit for an appeal that was disallowed in the first place, and then disburse that money to [Tabarrejo] without a trial
on the merit s .

. . .” PRH also objected to the amount Tabarrejo requested in attorneys fees, calling it excessive for a “run of the mill wage claim.” On November 4, 2013, t he c ourt ruled in favor of PRH on the forfeiture issue and
ordered the clerk to release the undertaking to the Moraleses. The court found that “ PRH9

was a suspended corporation with no standing to file the appeal, that the appeal was void from the outset, and that an order releasing the bond to [Tabarrejo] would be inconsistent
with that finding . Further, it would be an inequitable result for the person who posted the
bond if the money was released to the [employee ].” T he court nonetheless granted Tabarrejo’s request for attorney fees and awarded the full amount claimed ($15,985 )

. Tabarrejo filed this petition for writ of mandate, p rohibition, or other r eli ef on
November 19 , 2013 , asking this court to direct the trial court to vacate its order.

D ISCUSSION
Tabarrejo argue s that the trial court abused its discretion, acted in excess of its jurisdiction, and erred as a matter of law when it released the undertaking to the
Moraleses

. H e contends the trial court should have disbursed the undertaking to him under section 98.2, subdivision (b) because PRH’s appeal was dismissed in Septemb er 2013 and PRH has failed to pay the amount awarded by th e Labor
Commissioner

. He argues that the trial court had jurisdiction to accept PRH’s appeal and the undertaking, and that PRH’s incapacity to sue or to defend itself based on its status as
a suspe nded corporation was not a jurisdictional defect. He also requests costs and

at torney fees for litigating PRH’s appeal. PRH responds that its appeal was “effectively void and/or moot on the day it was filed,” and that the trial court should not have ac cepted the undertaking and was not authorized to release it to Tabarrejo. PRH argues that since the trial court had no jurisdiction from the start, the undertaking must be returned to the Moraleses. PRH also argues that if it “was not entitled to file an appeal and have a new trial, then it stands to reason that the [trial court] cannot in fairness retain and then disburse what would be [the] appellant’s money. To do so would be an unconstitutional taking .

. . and a violation of due process.” PRH argue s, alternatively, that if the court had jurisdiction, then it had the inherent power to permit the Moraleses to prosecute the appeal. Finally,10

PRH argues that it would be unfair to award Taba rrejo attorney fees because Tabarrejo’s
counsel contributed to t he “procedur al disaster” in this case. Before addressing the parties’ contentions, we examine the Moraleses ’ role in these writ proceedings.

The Moraleses a re n ot p arties to t hese w rit p roceedings
The captions on the preliminary opposition and the retu rn filed with this court state that they were filed by “ Princess Retirement Homes, Inc. , et al., Real Parties in
Interest.” The plural references “et al.” and “Parties” suggest that there is more than one real party in interest. In addition, the prelimin ary opposition asserts that the Moraleses are “the true real parties in interest” and the return alleges they “are also Real Parties In
Interest.” But, as we shall explain, the Moraleses are not parties to the writ proceedings
in this court. Only PRH app ealed the Labor Commissioner’s Order to the superior court. If they had wanted to, the Moraleses could have appealed the Labor Commissioner’s finding that they were not employers, but they elected not to appeal that ruling . Moreover, the 10

- day jurisdict ional time limit for the Moraleses to request a trial de novo of the Order expired long ago. (§ 98.2; Pressler v. Donald L. Bren Co . (1982) 32 Cal.3d 831, 837 ( Pressler ) [t he “ time for filing a notice of appeal from a decision of the Labor Commissioner is mandatory and jurisdictional”].) In writ proceedings, “ ‘ “ real party in interest” has been generally defined as “any person or entity whose interest will be directly affected by the proceedings .

. . .” [Citation.] While the real party in interest is “usually the other party to the lawsuit or proceeding being challenged” [citation], it may be

. . . “anyone having a direct interest in the result” [citation], or “the real adverse party .

. . in whose favor the act complained has been done.” ’ ” ( Connerl y v. State Personnel Bd . (2006) 37 Cal.4th 1169, 1178 ( Connerly ).) Although the Moraleses may have a direct interest in the result of these writ11

proceedings because they allegedly provided the funds for the undertaking, as we shall explain, they are not r eal parties in interest because they were not designated as parties in Tabarrejo’s writ petition. Since a writ proceeding in the Court of Appeal is an original proceeding, and not an appeal, the petition “serves as the complaint,” and “must name all
of th e parties.” ( Tracy Press, Inc. v. Superior Court (2008) 164 Cal.App.4th 1290, 1296

- 1297, citing Cal. Rules of Court, rule 8.490(b)(2).) Tabarrejo’s writ petition names PRH as the real party in interest, but does not name the Moraleses. Since the petitio n does not allege that the Moraleses are real parties in interest, they are not parties to these proceedings. ( Id. at p p

. 1296

- 1297.)

Overview of Berman Hearing Process
The Supreme Court has reviewed the statutory scheme tha t governs employee wage claims o n several occasions, most recently in Sonic

- Calabasas A, Inc. v. Moreno (2013) 57 Cal. 4th 1109, 1127

- 1129 ( Sonic )

. The Sonic court explained that “ ‘ “ If an employer fails to pay wages in the amount, time or manner required by contract or by statute, th e employee has two principal options. The employee may seek judicial relief by fil ing an ordinary civil action against the employer for breach of contra ct and/or for the wages prescribed by statute. (§§ 218, 1194.) Or the employee may seek
administrativ e relief by filing a wage claim with the [Labor Commissioner] pursuant to a special statutory scheme codified in sections 98 to 98.8. The latter option was added by legislation enacted in 1976 .

. . and is commonly known as the ‘Berman’ hearing procedure after the name of its sponsor. ” ’ ” ( Sonic , at pp. 1127

- 1128; italics added.)
After an employee files a complaint with the Labor Commissioner for nonpayment of wages , section 98, subdivision (a) provides for three alternatives . The Labor
Commissioner ma y: (1) accept the matter and conduct an a dministrative hearing; (2) prosecute a civil action for the collection of wages and other money payable to employees; or (3) take no f urther action on the complaint. ( Sonic , supra , 57 Cal.4th at12

p. 1128, citing Mu rphy v. Kenneth Cole Productions, Inc . ( 2007) 40 Cal.4th 1094, 1115 ( Murphy ).) “ ‘The Berman hearing procedure is designed to provide a speedy, informal, and affordable method of resolving wage claims. .

. . “[T]he purpose of the Berman hearing procedur e is to avoid recourse to costly and time

- consuming judicial proceedings in all but the most complex of wage claims.” ’ ” ( Murphy , at p. 1115.) The procedural rules for a Berman hearing underscore its purpose. If the Labor
Commissioner conducts a hear ing, he or she must do so within 90 days. ( Sonic , supra , 57 Cal.4th at p. 1128.) “ ‘ “ [T] he pleadings are limited to a complaint and an answer; the answer may set forth the evidence that the defendant intends to rely on

. . . ; if the
defendant fails to appear or answer no default is taken and the commissioner proceeds to decide the claim, but may grant a new hearing on request. (§ 98.) The commissioner must decide the claim within 15 days after the hearing. (§ 98.1.)” ’ ” ( Sonic , at p. 1128.)

“ ‘ Wit hin 10 days after notice of the decision any party may appeal to the appropriate court, where the claim will be heard de novo; if no ap peal is taken, the commissioner’ s decision will be deemed a judgment, final immediately, and enforceable as a judgment in a civil action. (§ 98.2.) If an employer appeals t he Labor Commissioner’s award, “ [a]s a condition to filing an appeal pursuant to this section, an employer shall first post an undertaking with the reviewing court in the amount of the order, decision, o r award. The undertaking shall consist of an appeal bond issued by a licensed surety or a cash deposit with the court in the amount of the order, decision, or award” (§ 98.2, subd. (b).) ’ ” ( Sonic , supra , 57 Cal.4th at p. 1129.) PRH asserts that the “ s tated purpose of the undertaking is to secure an appellant’s right to a trial de novo .” (Underscoring original.) Contrary to PRH’s assertion, the purpose of the undertaking “ ‘ is to discourage employers from filing frivolous appeals and from hiding asset s in order to avo id enforcement of the judgment.’ ” ( Sonic , supra , 57 Cal.4th at p. 1129 ; see also Palag in v. Paniagua Construction, Inc . (20 1 3)
222 Cal.App.4th 124, 138 ( Palagin ) [the “primary process for deciding wage claims is13

not the trial de novo ref

lected in section 98.2, but the administrative procedure reflected in section 98” ] .) Consistent with this purpose, the undertaking requirement only applies to employers; an employee need not file an undertaking to appeal. (§ 98.2, subd. (b).)

“ ‘The tim ely filing of a notice of appeal forestalls the commissioner’s decision, terminates his or her jurisdiction, and vests jurisdiction to conduct a hearing de novo in the appropriate court.’ [Citations.]” ( Murphy , supra , 40 Cal.4th at p. 1116.) “The trial
court ‘ hears the matter , not as an appellate court, but as a court of original jurisdiction, with full power to hear and determine it as if it had never been before the labor
commissioner. ’ ” ( Id. at pp. 1116

- 1117.) “ ‘The decision of the trial court, af ter de novo hearing, is subject to a conventional appeal to an appropriate appellate court.’ ” ( Id. at
p. 1116.)
The Sonic court summarized relevant aspects of the Berman statutes as follows: “In sum, the Berman statutes provide important benefits to e mployees by reducing the costs and risks of pursuing a wage claim in several ways. First, the Berman hearing itself provides an accessible, informal, and affordable mechanism for laypersons to seek resolution of such claims. [Citation.] Second, section 98.2, subdivision (c) discourages unmeritorious appeals of Berman hearing awards by providing that a party who unsuccessfully appeals an award must pay the other party’s costs and attorney fees. [Citation.]

. . . Fifth, the Berman statutes ensure that a n employee will actually collect a judgment or award by mandating that the Labor Commissioner use her [or his] best efforts to collect a Berman hearing award and by requiring the employer to post an undertaking for the amount of the award if it takes an ap peal. [Citation.]” ( Sonic , supra , 57 Cal.4th at pp. 1129

- 1130 ; italics added .) With this statutory framework in mind, we turn to the principles governi ng corporate capacity to sue or defend an action.14

Corporate Capacity to Sue or Defend
Under Califor nia law, a corporation ordinarily has the capacity to sue. (See Corp. Code, § 207 [corporation generally has “all of the powers of a natural person in carrying

ou t its business activities”]; Color

- Vue, Inc. v. Abrams (1996) 44 Cal.App.4th 1599,
1603

- 1605 ( Color

- Vue ).) But a corporation that has had its powers suspended “lacks legal capacity to prosecute or defend a civil action during its suspension.” ( Sade Shoe Co. v. Oschin & Snyder (1990) 217 Cal.App.3d 1509, 1512 ( Sade ).) On the other hand, a
suspen ded corporation may be sued and a default judgment may be entered upon its failure to respond. ( Grell v. Laci Le Beau Corp . (1999) 73 Cal.App.4th 1300, 1306.) “The ‘ corporat e powers, rights and privileges’ of any domestic corporate taxpayer may be suspen ded for failure to pay certain taxes and penalties. (Rev. & Tax. Code, § 23301.) This means the suspended corporation cannot sell, transfer or exchange real property in California, and contracts entered into during the time of suspension are
voidab le .

. . through legal action. [Citation.]

. . . Nor, during the period of suspension, may the corporation prosecu te or defend an action, seek a writ of mandate, appeal from an adverse judgment, or renew a judgment obtained before suspension. [Citation.] ” ( Center for Self

- Improvement & Community Development v. Lennar Corporation (2009) 173 Cal.App.4th 1543, 1552 ( Center ).) “ The purpose of Revenue and Tax ation Code
section 23301 is to ‘ “ prohibit the delinquent corporation from enjoying the ordinary privileg es of a going concern, ” ’ in order to pressure it into paying its taxes. ( Peacock Hill Assn. v. Peacock Lagoon Constr. Co . (1972) 8 Cal.3d 369, 371 .

. . . [( Peacock Hill )] )
Th at purpose, in turn, ‘ is satisfied by a rule which views a corporation’ s tax de linquencies, after corre ction, as mere irregularities.’ ” ( Center , at p. 1552.) In cases of Franchise Tax Board suspensions, such as PRH’s suspension in 2000, a

“ suspended corporation can regain its corporate powers by filing all required tax returns,
pa ying the necessary taxes, penalties or fees due, and applying to the Franchise Tax
Board for a certificate of revivor. (Rev. & Tax. Code, § 23305.) This reinsta tement or15

revivor generally is ‘ without prejudice to any action, defense or right which has ac crued by reason of the orig inal suspension or forfeiture .

. . . ’ ( Id ., § 23305a.)” ( Center , supra , 173 Cal.App.4th at p. 1553.) Th us, th e revival of corporate powers retroactively validates any procedural steps taken on behalf of the corporation in the prosecution or defense of a lawsuit while the corporation was under suspension. ( Benton v. County of Napa (1991) 226 Cal.App.3d 1485, 1490 ( Benton ).)

“ Most litigation activity has been characterized as procedural for purposes of corporate revival. For example, a judgment obtained during suspension is validated by subsequent revivor. [Citations.] A motion to dismi ss an appeal because of a party’ s suspension may be denied if the party obtains a certificate of revivor. [Citations.]

. . . The corporate defense of an action undertaken during suspension may be validated by later revival of corporate powers. [Citations.].” ( Benton , supra , 226 Cal.App.3d at
pp. 1490

- 1491 , citing Traub Co. v. Coffee Break Service, Inc. (1967) 66 Cal.2d 368, 371 ( Traub ) and other cases .) “ In sum, the revival of corporate powers enables the previously suspended party to proceed with the prosecution or defense of the action and validates a judgment obtained during suspension. [Citations .]” ( Center , supra , 173 Cal.App.4th at p. 1553.) A corporation’s powers, rights, and privileges may also be suspended if a corporation fails to file annual statements of information pursuant to Corporations Code section 1502, as PRH failed to do. (See Corp. Code, § 2205.) “[A] corporation suspended under the Corporations Code, like a corporation suspended under the Revenue and Taxation Code, is also disabled from participating in litigation activities.” ( Palm Valley Homeowners Assn. , Inc. v. Design MTC (2000) 85 Cal.App.4th 553, 556 , 560

. ) The corporation may revive its powers by complying with the requirements of Corporations Code section 2205, subdivision (d). ( Id. at pp. 561

- 562.)16

The trial court had jurisdiction to accept PRH’s appeal
PRH’s corporate incapacity to sue and to defend itself did not deprive the trial court of jurisdiction to accept the appeal. “ Corporate incapacity is nothing more than a legal disability, depriving the party of the right to come into court and represent its own
interests. As such, lack of capacity is not a jurisdictional defect and is waived if not properly raised. [Citation.] .

. . Thus, the suspended status of corporate powers at the time of filing suit does not impede the trial court’ s jurisdiction to proceed, nor does a suspension after suit com mences but before rendition of judgment deprive the court of jurisdiction or render the judgment void. ” ( Center , supra , 173 Cal.App.4th at pp. 1552

- 1553 , citing Traub , supra , 66 Cal.2d at p. 371 .) Courts have distinguished “ between procedural steps taken on behalf of the suspended corporation while under suspension, which can be resuscitated by revival, and substantive defenses that accrue during the ti me of suspension, which cannot.” ( Center , supra , 173 Cal.App.4th at p. 1554, citing Benton , supra , 226 Cal.App.3d at pp. 1490

- 1491.) The statut e of limitations is regarded as a substantive defense. If an action is commenced while the corporation is suspended, the corporation’s s ubsequent revival does not prevent the running of the statute of limitati ons ; if the statute runs prior to revival, the corporation’s action will be time

- barred , even if the complaint would otherwise have been timely

. ( Center , at p. 1554; Sade , supra , 217 Cal.App.3d at
p. 1513 .) It appears the trial court relied on this rule , in part, when it ruled on PRH’s motion to set aside the dismissal and the parties’ competing claims to the undertaking

. In its October 4, 2013 order on the motion to set aside the dismissal, the court stated, “ The time for [PRH] to appeal from the Labor Com missioner’s Order .

. . has expired and therefore judgment may be entered in accordance with [section] 98.2(d) in favor of [Tabarrejo].” And in its November 4, 2013 order regarding release of the undertaking, the court found17

“that the appeal was void from the outset.” As we shall explain, the trial court erred to
the extent that its rulings were based on the conclusion that the appeal was not timely
filed because of PRH’s incapacity to sue or to defend itself

. We begin with the rule that timely filing of the notice of appeal and the undertaking is both mandatory and jurisdictional. ( Pressler , supra , 32 Cal.3d 831, 837; Palagin , supra , 222 Cal.App.4th 124, 140.) If the appeal and the undertaking are not filed within the time set forth in section 98.2, th e trial court is without jurisdiction to hear the case. ( Pressler , at p. 837; Palagin , at p. 140

. ) But the appeal and the undertaking in
this case were filed within the time set forth in the statute. Section 98.2, subdivision (a) provides that an appeal of a Labor Commissioner order must be filed “[w]ithin 10 days
after se rvice of notice” of the order and that “[f]or the purposes of computing the 10

- day period after service, Section 1013 of the Code of Civil Procedure” a pplies. Since the
Order was serve d by regular mail, under Code of Civil Procedure section 1013 , PRH was entitled to five additional days, or a total of 15 days, to file its appeal. The Order was

serv ed on November 19, 2012, and PRH’s appeal and the undertaking were filed on December 4, 2 012, 15 days later

. PRH’s appeal was therefore timely. But the trial cour t concluded that the time to appeal had expired , presumably because PRH was suspended at the time the notice of appeal was filed. Although the trial court did not explain its

reaso ning behind its timeliness ruling, it appears the court treated the section 98.2 deadline for filing a notice of appeal as a statute of limitations and held that even though the appeal was timely under section 98.2, the action was barred because PRH was

su spended when it filed its appeal.
In Bourhis v. Lord (2013) 56 Cal.4th 320 ( Bourhis ), t he California Supreme Court reviewed the question of a court’s jurisdiction when a notice of appeal is timely filed by a suspended corporation. A plaintiff corporati on and others filed a civil action against multiple defendants. ( Id. at p. 323.) Before trial, the defendants learned that the plaintiff corporation had been suspended and filed a motion to preclude it from offering any18

evidence at trial. The trial cour t denied the motion, contingent on the corporation reviving its corporate powers. The defendants prevailed at trial and the plaintiffs, including the suspended corporation, filed timely notices of appeal of both the judgment and a postjudgment order award ing costs and attorney fees. ( Ibid. ) The defendants filed motions in the Court of Appeal to dismiss the corporation’s appeal s on the ground that its corporate powers were still suspended. The corporation opposed the motions with evidence that its corpor ate powers had been revived seven days after the motions were filed. The Court of Appeal denied the motions and the Supreme Court granted review of the question whether the revival of the corporation’s powers validated its earlier notice of appeal. ( Id. at pp. 323

- 324.)
The Bourhis court stated: “ If revival of corporate powers occurs while a valid appeal can still be taken, the question appears easy; the revival would validate a prior notice of appeal and permit the appeal to proceed. The appeal would be timely, and little purpose would be served by requiring the corporation to file another, essentially identical, notice of appeal. But appeals are subject to juris dictional time limits. A notice of appeal must be filed within 60 days after service of t he notice of entry of judgment. (Cal. Rules of Court, rule 8.104(a).) ‘The time to file notice of appeal, both in civil and criminal cases, has always been hel d jurisdictional in California.’ [Citation.] As to both appeals at issue here, this time had expired before [the plaintiff corporation’s] corporate powers were revived. Should the later revival validate the earlier invalid notice of appeal in this
circumstance? ” ( Bourhis , supra , 56 Cal.4th at pp. 325

- 326.) The court held that it did. The Supre me Court reviewed two prior cases in which it had held that the revival of corporate powers after an appeal had been filed did not prevent the appellant from proceeding with the appeal , and it declined to overrule those cases. ( Id. at pp. 325

- 328.)
The Bourhis court observed that a number of Court of Appeal cases have held that the running of a statute of limitations is a substantive defense that may not be prejudiced by the corporation’s later revival of its corporate powers. ( Bourhis , supra , 56 Cal.4 th at19

p. 328.) The Supreme Court acknowledge d the tension between the ru le articulated in the

statute of limitations cases (no retroactive revival) and the rule for notices of appeal (retroactive revival) , and concluded that “ the two approaches can be rec onciled. ” ( Id. at
p. 329.) The court explained that Revenue and Taxation Code section 23305a provides that revival “ ‘ shall be without prejudice to any action, defense or right which has accrued by reason of the origin al suspension or forfeiture,’ ” and that the statute of limitations
cases “ explain that those statutes provide a substantive defense that later revival of corporate powers cannot prejudice. ” ( Ibid. ) The notice of appeal cases, on the other
hand , “ implicitly concluded that the expiration of the time to file a valid notice of appeal does not provide an ‘action, defense or right’ within the meaning of [Revenue and Taxation Code] section 23305a.

. . . Similarly, being in a position to move to dismiss an untimely appeal is not a ‘right’ under that statute. Thus interpreted, the two rules

— one concerning appeals, the other concerning statutes of limitations

— can coexist. ” ( Ibid. , citing Rooney v. Vermont Investment Corp . (1973) 10 Cal.3d 351 ( Rooney ) , and Peacock
Hill , supra , 8 Cal.3d 369 .) The court stated that while “ filing a timely notice of appeal is a jurisdictional requirement, .

. . what is jurisdictionally required is that the notice of appeal be timely, not that it be filed by an active corporation. ” ( Bourhis , at p. 329

. )
Since the no tices of appeal in Bourhis “ were timely even if invalid when filed ,” the “corporation’ s later reinstatement made the earlier, invalid but timely , notices of appeal valid and still timely. ” ( Ibid. , original italics.) Section 98.2, subdivision (a) provides : “Within 10 days after service of notice of an order, decision, or award [of the Labor Commissioner] the parties may seek review by filing an appeal to the superior court, where the appeal shall be heard de novo.” (Italics added.) Based on its plain la nguage, section 98.2, subdivision (a) sets forth the time for “filing an appeal.” It is not a statute of limitations. Therefore, the rule regarding appeals, not statutes of limitations, applies in this case. That the notice of appeal is filed in the
sup erior court for de novo review do es not alter our conclusion. ( Pressler , supra ,20

32 Cal.3d at p. 836 [ the rules governing conventional appeals apply to appeals in which a trial de novo is required ].) Since PRH’s notice of appeal was “timely, even if inval id when filed,” the superior court had jurisdiction to accept the appeal and the undertaking, notwithstanding PRH’s lack of capacity as a suspended corporation. ( Bourhis , supra , 56 Cal.4th at p. 329.)
In Bourhis and the cases it relied on, the revival of corporate powers retroactively validated a previously invalid notice of appeal and the parties were allowed to proceed
with the ir appeal s . ( Bourhis , supra , 56 Cal.4th at p. 323 [corporation that revived its powers seven days after motion to dismiss its appeal allowed to proceed with appeal];
Peacock Hill , supra , 8 Cal.3d at pp. 370

- 371 [the respondent moved to dismiss the appeal on the ground that the appellant was a suspended corporation; the appellant had just
revived it s powers and later filed a cert ificate of revivor; motion to dismiss properly
denied ]; Rooney , supra , 10 Cal.3d at pp. 356, 359 [ “The revival of corporate powers validated the procedural steps taken on behalf of the corporation while it was under suspension and permitted it to proceed with the appeal”].) Unlike the corporations in Bourhis , Peacock Hill , and Rooney , PRH has not taken any action to revive its corporate powers and its counsel’s statements at oral argument suggest PRH has no intention of reviving its powers . Does a differ ent rule apply here, where the corporation has not made any attempt to revive its corporate powers? In our view, the answer is no. That the notice of appeal was invalid when filed and has never been validated by the revival of PRH’s corporate powers does not mean the trial court was without jurisdiction to accept the appeal and the undertaking for filing in December
2012. As plainly stated in Traub , “ t he suspended status of corporate powers at the time of filing the action by a corporation does not affec t the jurisdiction of the court to proceed.” ( Traub , supra , 66 Cal.2d at p. 371.) When PRH filed its appeal in the trial court, there was always a possibility that it would cure its incapacity by reviving its corporate powers. Like the corporations in21

Bourhis and Peacock Hill , PRH could have revived its corporate powers while Tabarrejo’s motion to dismiss was pending. Indeed, it is an abuse of discretion to deny a corporation’s request for a continuance to pay its taxes and obtain a certificate of rev ivor. ( Color

- Vue , supra , 44 Cal.App.4th at p. 1606.) That PRH elected not to revive its powers and retroactively validate its prior litigation activity did not retroactively divest the court of jurisdiction to hear the appeal. The court had jurisdiction over the parties and the subject matter when the appeal and the undertaking were filed; it also had jurisdiction months later to dismiss the action based on PRH’s incapacity. PRH’s decision not to cure its incapacity affected PRH’s right to proceed with the litigation, but it did not divest the trial court of ju risdiction. To the extent the trial court’s order was based on the erroneous belief that it did not have jurisdiction to accept PRH’s notice of appeal and the undertaking, that was error.
I t was always within PRH’s powers to cure the “procedural quandary” it found itself in and obtain a trial de novo on the merits of Tabarrejo’s wage claims. All it had to do was revive its corporate powers by paying its taxes and filing a statement of
information . PRH’s co ntentions that Tabarrejo and his counsel and the Labor
Commissioner contributed to t his alleged “procedural disaster ” are without merit.

The trial court erred when it held that PRH did not have standing to appeal

The trial court ruled in favor of PRH on the forfeiture issue, “finding that [PRH] was a suspended corporation with no standing to file the appeal, that the appeal was void
from the outset , and that an order releasing the bond to the plaintiff would be inconsistent with that finding. ” The court also found that “it would be an inequitable result for the individual who posted the bond if the money was released to the plaintiff” and directed the clerk to release the undertaking to the Moraleses. But the “[s]uspension of corporate

powers results in a lack of capacity to sue, not a lack of standing to sue. ” ( Color

- Vue ,22

supra , 44 Cal.App.4th at pp. 1603

- 1604, fn s

. o mitted , original italics , citing Traub , supra , 66 Cal.2d at p. 370 .)

“ ‘ There is a difference between the capacity to sue, whi ch is the ri ght to come into court, and the standing to sue, which i s the right to relief in court.’ [Citation.]

‘ Incapacity is merely a legal disability, such as infancy or insanity, which deprives a party of the right to come into court. The right to relief, on the other hand, goes to the
existence of a cause of action. It is not a plea in abatement, as is lack of capacity to sue. [Citation.]’ ” ( Id. at p. 1604; original italics.) And as we have noted, a corporation’s lack of capacity to sue “ at th e time of filing the action .

. . does not affect the jurisdiction of the court to proceed.” ( Traub , supra , 66 Cal.2d at p. 371.) Since a suspended corporation ( like PRH ) lack s the capacity to sue and to defend itself , but does not lack standing , we conc lude that the trial court erred when it ordered the undertaking released
to the Moraleses to the extent it reasoned that PRH lacked standing to sue

. Tabarrejo

—

n ot the Moraleses

— w as e ntitled to the u ndertaking

Section 98.2, subdivision (b) provides , in rel evant part: “The undertaking shall be on the condition that, if any judgment is entered in favor of the employee, the employer shall pay the amount owed pursuant to the judgment, and if the appeal is withdrawn or dismissed without entry of judgment, the e mployer shall pay the amount owed pursuant to the order, decision, or award of the Labor Commissioner unless the parties have executed a settlement agreement for payment of some other amount, in which case the employer shall pay the amount that the employe r is obligated to pay under the terms of the settlement agreement. If the employer fails to pay the amount owed within 10 days of entry of the judgment, dismissal, or withdrawal of the appeal , or the execution of a settlement agreement, a portion of the u ndertaking equal to the amount owed , or the entire undertaking if the amount owed exceeds the undertaking, is forfeited to the employee .” (Italics added.)23

Contrary to PRH’s assertions , section 98.2, subdivision (b) does not require or guarantee a new tri al. The statute recognizes th at appeals of Labor Commissioner
decision s may be resolved in a variety of ways, including a trial de novo, withdraw al of the appeal, dismissal, or settlement. S ection 98.2, subdivision (b) does not li mit the grounds for dism issal of an appeal. F urthermore, when the appeal is dismissed without a
settlement , and the employer fails to pay the amount awarded by the Labor Commissioner within 10 days of dismissal , section 98.2, subdivision (b) expressly provides for forfeiture of the undertaking to the employee; it does not provide for the release of funds to individuals who posted the undertaking on behalf of the employer. PRH’s appeal was dismissed without entry of judgment in May 2013 ; PRH’s
motion to set aside the dismissal w as denied in October 2013. There was no settlement and PRH did not pay the amount of the Labor Commissioner’s Order within 10 days of the order of dismissal. Under the plain language of section 98.2, subdivision (b), the entire undertaking, which equals the amount awarded by the Labor Commissioner, “is
forfeited to the employee, ” Tabarrejo. The trial court therefore erred when it ordered the undertaking released to the Moraleses.

Costs and Attorney Fees
Tabarrejo has requested (1) costs under California Rules of Court, 4 rules 8.485

- 8.493; and (2) costs and attorney fees under section 98.2, subdivision (c). Rules 8.485 through 8.493 apply to writ proceedings within the original jurisdiction of the Court of Appeal and the California Supreme Court, includi ng this writ. (Rule 8.485(a).) Rule 8.493 provides that the prevailing party is entitled to costs if we resolve the writ proceeding by written opinion, but that this court has the discretion to award or deny costs in the interests of justice. Since Taba rrejo is the prevailing party and

4 All further rules citations are to the California Rules of Cour t.24

we have resolved this writ proceeding by written opinion, we shall exercise our discretion
to award him costs in this proceeding.
S ection 98.2 , subdivision (c) , provides: “If the party seeking review by filing an

appea l to the superior court is unsuccessful in the appeal, the court shall determine the costs and reasonable attorney’s fees incurred by the other parties to the appeal , and assess that amount as a cost upon the party filing the appeal. An employee is succes sful if the court awards an amount greater than zero.” (Italics added.) Generally, the amount of statutory or contractual attorney fees to be awarded is a matter within the trial court’s discretion, which we review for an abuse of discretion. But
the de termination of the legal basis for an attorney fee s award is a question of law, which we review de novo. ( Connerly , supra , 37 Cal.4th at p. 1175.) Upon our de novo revie w, we conclude that Tabarrejo i s entitled to an award of attorney fees and costs unde r section 98.2, subdivision (c). PRH appealed the Labor Commissioner’s Order to the trial court. PRH’s appeal was dismissed for lack of corporate capacity. Thus, PRH was unsuccessful in its appeal. Upon dismissal of the appeal, PRH became liable for th e full amount awarded by the Labor Commissioner, which was $ 131,096.77 (§ 98.2, subd. (b)) . Since PRH was unsuccessful in its appeal and Tabarrejo recovered m ore than zero , the court i s required to “ determine the costs and reasonable attorney’s fees incur red by the other parties to the appeal [(Tabarrejo)] , and assess that amount as a cost upon the party filing the appeal [(PRH)].” (§ 98.2, subd. (c).) For these reasons, we conclude that Tabarrejo is entitled to costs and attorney fees under
section 98.2 , subdivision (c) for these writ proceedings.

D ISPOSITION
Let a p er emptory writ of mandate issue directing the trial court to: (1) vacate its
November 4 , 2013 order granting PRH’s request for return of cash deposit and releasing

t he undertaking to the Mo raleses; and (2) enter a new order denying PRH’s request for25

return of cash deposit, granting Tabarrejo’s request to disburse the undertaking to him , and directing the clerk of the court to release the undertaking to Manuel Tabarrejo. Tabarrejo is entitle d to his costs for this writ proceeding , in an amount to be determined by the trial court , including any costs and attorney fees that may be assessed as costs pursuant to section 98.2, subdivisio n (c)._______________________________ Márqu ez, J.

WE CONCUR:

_____________________________________________ Bamattre

- Manoukian , Acting P.J.

______________________________ Grover , J.FILED 12/23/14 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT
MANUEL TABARREJO,
Petitioner,

v.
THE SUPERIOR COURT OF SANTA CLARA COUNTY, Respondent.
PRINCESS RETIREMENT HOMES, INC.,

R eal Party in Interest. H040377 (Santa Clara County Super. Ct. No. 1

- 12

- CV

- 237107)

BY THE COURT: The requests for publication of the opinion in the abo ve entitled action filed by (1) the Labor Commissioner of the State of Ca lifornia on behalf of appellant Manuel Tabarrejo on December 11, 2014

— in which respondent Princess Retirement Homes, Inc. has joined ; and (2) the Katharine and George Alexander Community Law Center on behalf of appellant Manuel Tabarrejo on December 15, 20 14 , are granted.

The opinion which was filed on November 24, 2014 , is certified for publication. (Grover, J. would deny the request for publication.)

Date: _________________________

_______________________ __________ Márquez, J. Bamattre

- Manoukian , Acting P. J.2

The written opinion which was filed on November 24, 2014 , has now been certified for publication pursuant to rule 8.1105(b) of the California Rules of Court, and it is therefore ordered that the opi nion be published in the official reports.

Date:

_____________________________ ______ Bamattre

- Manoukian, Acting P.J

.3

Trial Court: Santa Clara County Superior Court Superior Court No. CV237107

Trial Judge: The Honorable Peter H. Kirwan

Attorneys for Petitioner Manuel Tabarrejo : Jessica Fry State of California

- Department of Industrial Relations
Margaret P rado Alvarez Alexander Community Law Center

Attorneys for Real P arty in Interest Robert Peter Weiss Princess Retirement Homes, Inc. : Narvid Scott L LP

Tabarrejo v. Superior Court (Princess Retirement Homes, et al. ) H0 40377