Filed 9/2/21 Schrage v. Schrage CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

LEONARD SCHRAGE

,

Plaintiff and Respondent

,

v.

MICHAEL SCHRAGE et al.

,

Defendant s and Appellant s

. B 298119

(Los Angeles County Super. Ct. N o

. BC579623 )

APPEAL from orders and a judgment of the Superior Court
of Los Angeles County, Yvette M. Palazuelos and Daniel J. Buckley , Judges

. Affirmed as modified in part and reversed in part

. Randall S. Waier for Defendant s and Appellant s

. Manatt, Phelps & Phillips, Benjamin G. Shatz, Kishan H. Barot; Markun Zusman Freniere Compton and Steven M. Goldberg for Plaintiff and Respondent.2 INTRODUCTION

Michael and Joseph Schrage appeal from the judgment and
several order s entered in an action filed by their brother

, Leonard Schrage

, for involuntary dissolution of the family business and breach of fiduciary duty. After Michael and Joseph invoked their statutory right under the Corporations Code to buy Leonard’s interests in the business pursuant to a court

- ordered appraisal, the parties stipulated to add five limited liability compani es to the eight limited liability companies, five corporations, and one limited partnership that were already subject to the appraisal and buyout proceeding. The trial court confirmed a valuation of
Leonard’s interests determined by appraisers and a court

appointed referee. The court also issued an alternative decree ordering that Michael and Joseph had to pay th e appraised

amount by a certain date and that, if they did not

, the entities
would be wound up and dissolved. Michael and Joseph appealed
from that order

, but voluntarily dismissed the appeal. They did not pay the buyout amount, and the court proceeded to wind up and dissolve the family business , including the five additional
limited liab ility companies. Meanwhile, Leonard proceeded on his cause of action for breach of fiduciary duty against Michael and Joseph . Following a

court trial, the court found in favor of Leonard on that cause of action, awarded Leonard compensatory and punitive damages,
and entered judgment in favor of Leonard and against Michael and Joseph

. The court also denied various postjudgment
motions. Michael and Joseph argue the alternative decree to wind up and dissolve the family business and the “follow

- up judgment s3

and orders” are void as a matter of law because the trial court lacked jurisdiction to dissolve the five limited liability companies the parties stipulated to include in the appraisal and buyout proceeding

. We reject this argument because the trial court had fundamental jurisdiction and Michael and Joseph are estopped from collaterally attacking the alternative decree. Michael and Joseph also argue Leonard lacked standing to assert his cause of action for breach of fiduciary duty

. W e agree with thi s argument because Leonard’s cause of action was derivative

, not individual. Therefore, we affirm the order of dissolution (with a modification)

, reverse the award of damages for breach of fiduciary duty , and dismiss the appeals from nonappealable
orders

.

FACTUAL AND PROCEDURAL BACKGROUND

A. Leonard Sues His Brothers To Dissolve the Family Business and for Breach of Fiduciary Duty We pick up with th e story in this ( the parties’ thir d) appeal where we left off following Michael and Joseph ’ s appeal from an

or der awarding Leonard fees and expenses he incurred in a court

ordered appraisal under Corporations Code section 1800

. 1 (See Schrage v. Schrage (Aug

. 19, 2020, B288478) [nonpub. opn.] ( Schrage I

) ; see also Schrage v. Schrage (May 14, 2021, B307539) [nonpub. opn.] ( Schrage II ) .) But fi r st we repeat some of the basic
facts of the case summarized in Schrage I

.

1 Undesignated statutory references are to the Corporations Code.4 Leonard, Michael, and Joseph each owned a one

- third interest in the Sage Automotive Group, a family

- owned car
dealersh ip business founded by their father. In April 2015 Leonard filed this action against Michael, Joseph, and

14 corporate entities in the Sage Automotive Group to dissolve and wind up those entities. Leonard alleged Michael and Joseph engaged in a pattern o f self

- dealing and mismanaged the business by, among other things, misappropriating company assets to fund a separately owned car dealership and to pay for lavish personal expenses, making business decisions without
Leonard ’ s consent, and denying Leonard a ccess to corporate books and records. Leonard sought to dissolve five corporations under section 1800, eight limited liability companies under section 17707.03, and one limited partnership under section
15908.02. Leonard also sought compensatory and puni tive damages against Michael and Joseph for breach of fiduciary duty. ( Schrage I

, supra , B288478.) In June 2016 Michael and Joseph filed a motion under sections 2000, 15908.02, and 17707.03 (collectively, the buyout statutes) to stay the dissolution causes of action and determine
the value of Leonard ’ s interest in the entity defendants

. On August 23 , 2016 the trial court stayed Leonard ’ s three dissolution causes of action (one for each legal form of business entity ) to allow Michael and Joseph to proceed on their election to purchase
Leonard ’ s interests in the business. The court did not stay
Leonard ’ s breach of fiduciary duty cause of action or Michael and Joseph ’ s causes of action in their cross

- complaint for breach of fiduciary duty, conversion, and recording confidential
communications in violation of Penal Code sections 630 and 632. ( Schrage I

, supra , B288478.) The trial court also denied Michael5

and Joseph ’ s motion for judgment on the pleadings on Leonard ’ s cause of action for breach of fiduciary duty

, ruling Leonard had alleged an individual cause of action against his brothers

, not a derivative cause of action on behalf of the entities in the Sage
Automotive Grou p. O n September 19 , 2016 t he parties entered into a stipula t ion, approved by the court, to appoint retired judge
Louis M. Meisinger as the referee to oversee and adjudicate all aspects of the appraisal process , including selecting the appraisers, determining t he buyout price, and setting a deadline for Michael and Joseph to pay the buyout price

. The order stated
that “ Judge Meisinger ’ s determinations in this regard will be final, and all parties expressly waive any right to contest, challenge, or object to suc h rulings

. . . . ” The parties entered into a nother stipulated order on January 5, 2017 to govern the appraisal and buyout proceeding

. That order provided, among other things, the appraisal and buyout process would include the 14 entity defendants named in the first amended complaint, plus five additional limited liability companies (collectively, the buyout entities). The five limited liability c ompanies that were not named defendants in any of the
three cause s of action for involuntary dissolution

, but that were subject to the appraisal and buyout process by stipulation

, were UCNP 3, UCNP 4, UCNP 5, UCNP 6, and UCNP 8 (collectively,
the UCNP enti ties). To allow the appraisers to value each entity

, the order required the parties to give the appraisers a variety of information, including organizational agreements, historical and projected financial data, and real estate holdings. The stipulati on provided that, a fter the appraisers submitted their written reports to the parties and Judge Meisinger, the parties6

would meet and confer to try to reach agreement on the valuation assigned to each entity and the overall valu e of Leonard ’ s one

third interest in the buyout entities

, “ which shall constitute the buy

- out price to be paid by Michael and Joseph to Leonard

. ” If the parties were unable to agree on a buyout price, Judge Meisinger would set the price following a hearing. On July 25, 201 7, following a contested appraisal process, Judge Meisinger submitted a recommendation and proposed order confirming the value of Leonard ’ s interests in the buyout entities was $40,237,000 and stating that, if Michael and Joseph did not pay L eonard that am ount by September 11, 2017, the buyout entities (including the UCNP entities) would be wound up
and dissolved. Judge Meisinger’s recommendation also stated that, under the September 19, 2016 stipulation and order, his findings were “‘ final ’ and ‘ all parties expressly waive any right to contest, challenge, or object to such rulings before ’” the court. On July 28, 2017 the trial court approved the referee ’ s recommendation and entered it as the court ’ s order and
alternative decree

. Michael and Joseph did not pay Leonard by September 11,
2017 , bu t they did file a notice of appeal from the July 28, 2017
order and alternative decree

. Michael and Joseph subsequently filed requests to dismiss that appeal , and on May 31, 2018 this court granted those requests and dismissed the appeal

. 2 Meanwhile, o n September 27, 2017 the trial court appointed a

2 We take judicial notice of the May 31, 2018 order of dismissal in Schrage v. Schrage (B285049) under Evidence Code sections 452, subdivision (d), and 459. The notice of appeal in this case purports to appeal again from the July 28, 2017 order

. We dismiss the second appeal from that order as untimely.7

receiver to wind up and dissolve the buyout entities. In Schrage I we modified and affirmed an order granting Leonard ’s motion for
attorneys ’ fees and other expenses incurred in the appraisal process and in obtaining certain injunctive relief during that process. ( Schrage I

, supra , B288478.)

B. The Trial Court Enter s a Net Judgment o f Approximately $ 3 1 Million i n Favor o f Leonard a nd Against Michael a nd Joseph
A bifurcated court t rial began in April 2018 on Leonard ’ s cause of action for breach of fiduciary duty and on Michael and Joseph ’ s cross

- complaint. Following almost two months of testimony, the court on October 12, 2018 issued a tentative
decision finding Michael and Joseph breached their fiduciary
duties to Leonard

, awarding Leonard compensatory damages offset by an amount for Leonard’s unclean hands, finding Michael and Joseph acted with malice, oppression, and fr aud, and ruling against Michael and Joseph on their cross

- complaint

. The court began the punitive damages phase of the trial on November 26,
2018.
On March 12, 2019 the court entered judgment in favor of Leonard and against Michael and Joseph in the amount of approximately $31 million . The judgment consisted of $962,903.13 on the first, second, and third causes of action for involuntary dissolution, 3 $24,418,473 in compensatory damages

3 Michael and Joseph appealed from this portion of the judgment in Schrage I , and we modified the amount to strike $561,393.63 in injunction

- related attorneys ’ fees, leaving an8

on Leonard ’ s cause of action for breach of fiduciary duty offset by $3,506,412 for Leonard’s unclean hands, and punitive damages of $5 million against Michael and $5 million against Joseph

. Michael and Joseph filed motions to vacate and amend the judgment and fo r a new trial. Michael and Joseph argued the
trial cour t lacked subject matter jurisdiction and personal jurisdiction over the UCNP entities for the July 28, 2017
alternative decree and the September 27, 2017 order appointing a receiver to wind up and dissolve the buyout entities, which made
those orders void as a matter of law; the “ one judgment rule ” and claim preclusion ( which they referred to as res judicata) bar red
Leonard ’ s cause of action for breach of fiduciary duty because the appraisal and buyout process should have included the value of
that cause of action ; the trial court erred in awarding compensatory and punitive damages on Leonard ’ s cause of action for breach of fiduciary duty; and Michael and Joseph ’ s affirmative
def ense of unclean hands precluded any recovery by Leonard on his cause of action for breach of fiduciary duty. The trial judge was unavailable to hear Michael ’ s and Joseph ’ s postjudgment motions , and another judge heard them

. Following a hearing

, the cour t denied the motions

, and Michael and Joseph timely appealed from the judgment and the postjudgment orders

. 4

award of $401,509.50 for referee fees and appraisal

- related attorneys ’ fees. ( Schrage I

, supra , B 288478 .)

4 Joseph Schrage died after the trial court entered judgment in this action , and the executor of his estate filed the notice of appeal.9 DISCUSSION

Michael and Joseph argue the alternative decree and subsequent orders and judgment are void as a matter of law
because the trial cou rt lacked jurisdiction to order the appraisal
and dissolution of the UCNP entities ; Leonard lacked standing to

assert his cause of action for breach of fiduciary duty because his claims were derivative, not individual ; the trial court exceeded its jurisdiction by failing in the appraisal and buyout process to assess the economic impact of the cause of action for breach of fiduciary duty; the election of remedies doctri ne , the “ one judgment rule, ” and claim preclusion bar red Leonard ’ s cause of action for breach of fiduciary duty; the trial court erred in awarding compensatory and punitive damages for Leonard ’ s cause of action for breach of fiduciary duty; and Michael and Joseph ’ s affirmative defense of unclean hands precluded any recovery by Leonard for his cause of action for breach of fiduciary duty. We conclude the standing argument has merit, the jurisdictional argument does not, and we do not reach the other
issues.

A. The Buyout Statutes
As we explained in Schrage I

, the “ statutory buyout provisions of the Corporations Code provide a defendant in an involuntary dissolution action with a mechanism for avoiding dissolution by purchasing the plaintiff ’ s shares or othe r interests. [Citations.] Section 2000, subdivision (a), which applies to corporations, states that, ‘ [i]n 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 the10

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. ’ If the parties are unable to agree on the fair value of the shares, and the purchasing parties post a bond with sufficient security to pay the moving parties ’ es timated reasonable expenses, ‘ the court upon application of the purchasing parties

. . . 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. ’” ( Schrage I

, su pra , B288478.)

“ Section 2000, subdivision (c), prescribes the procedure for determining the fair value of the shares and the relief available to the moving parties if the shares are not purchased. That provision states in relevant part: ‘ 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 ascertaining the value

. . . . The award of the appr aisers 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 f or the shares within the time specified by the decree. ’ Sections 17707.03 and 15908.02 contain substantively identical buyout provisions for limited liability companies and limited partnerships, respectively. ” ( Schrage I

, supra , B288478.)

“ The statutory buyout procedure is ‘ a special proceeding ’ that, ‘ once initiated, “ supplants ” a cause of action for involuntary11

dissolution. ’ [Citations.] ‘ In such a proceeding, [the] purchasing parties aspire to buy out the moving party, with minimal expenditure of time and money that would otherwise be spent in litigation, in order to preserve the corporation. If they

. . . cannot pay the purchase price, o r decide not to do so, then both sides must walk away, receiving pro rata the proceeds resulting from dissolution of the corporation. On the other hand, if the purchasing parties tender the amount determined by the court, the moving party cannot reject th e share price as being too low. ’ [Citation.] The buyout procedure ‘ does not determine whether the corporation should be dissolved, but instead, provides the plaintiff and defendant with a st atutory remedy without [a] trial’
on the merits. ” ( Schrage I

, s upra , B288478 ; see Ontiveros v.
Constable (2018) 27 Cal.App.5th 259, 277 [ “ A value of the corporation ’ s stock is determined and then the defendant has a period by which it is to pay the plaintiff for its stock. If the defendant does not do so, a judicial decree will dissolve the corporation. ” ]. )

B. Michael and Joseph Cannot Collaterally Attack the
Alternative Decree Michael and Joseph contend the alternative decree and

“ confirming judgments and orders ” are void and unenforceable because the trial court lacked subject matter jurisdiction to order the appraisal and buyout of the five UCNP entities. 5 T he

5 Michael and Joseph do not argue the trial court lacked personal jurisdiction over the UCNP entities

, even though the two brothers claim they made that argument in their motions for a new trial and for an order vacating the judgment

, and even12

alternative decree , however, was an appealable order

. ( S ee § 2000, subd. (c); Cotton v. Expo Power Systems, Inc. (2009)
170 Cal.App.4th 1371, 137 6 ; Dickson v. Rehmke (2008)
164 Cal.App.4th 469, 476

. ) Michael and Joseph had an opportunity to challenge that order in their appeal from the
alternative decree , but they dismissed the appeal , making tha t order final

. ( See Code Civ. Proc., § 913 ; Estate of Sapp (2019)
36 Cal.App.5th 86, 100 ; Patchett v. Bergamot Station, Ltd. (2006)
143 Cal.App.4th 1390, 1396 ; Schrage I

, supra , B288478.) Nevertheless, Michael and Joseph can challenge it in this appeal
i f it is a void order , because a party may collaterally attack a void judgment or order at any time. ( Falahati v. Kondo (2005)
127 Cal.App.4th 823, 830 , fn. 9; accord, Deutsche Bank National Trust Co. v. Pyle (2017) 13 Cal.App.5th 513, 526

- 527; see Code
Civ. Proc.

, § 473, subd. (d) [ “ [t] he court

. . . may, on motion of either party after notice to the other party, set aside any void judgment or order ” ].)
A judgment or order that is not void but “merely” voidable

, however, is generally not subject to collateral attack . (See People v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 661 ( American Contractors ) ; Adoption of Myah M. (2011)
201 Cal.App.4th 1518, 1531 .) “ When a court has fundamental jurisdiction, but acts in excess of its jurisdiction, its act or judgment is merely voidable. [Citations.] That is, its act or judgment is valid until it is set aside, and a party may be precluded from setting it aside by ‘ pr inciples of estoppel, disfavor of collateral attack or res judicata. ’ [Citation.] Errors which are merely in excess of jurisdiction should be challenged directly, for

though their opening brief on appeal cites law that a judgment is void if the trial court lacked personal jurisdiction.13

example by motion to vacate the judgment, or on appeal, and are generally not subject t o collateral attack once the judgment is
final unless ‘ unusual circumstances were present which prevented an earlier and more appropriate attack. ’” ( A merican
Contractors

, at p. 661 ; see Adoption of Myah M. , at p. 1531 [“ A
claim that does not concern the t rial court ’ s fundamental subject matter jurisdiction is waived if not timely asserted. ”] .) We review
de novo the trial court ’ s ruling that neither the alternative decree nor the judgment is void for lack of subject matter jurisdiction

. ( See Mack v. All Counties Trustee Services, Inc. (2018)
26 Cal.App.5th 935, 940; Talley v. Valuation Counselors Group,
Inc. (2010) 191 Cal.App.4th 132, 146 .)

1. Michael and Joseph Cannot Collaterally Attack
the Alternative Decree as a Void Order Because
the Trial Cou rt Had Fundamental Jurisdiction To Adjudicate the Buyout Proceeding

a. Applicable Law

“ A judgment or order is void when there is an absence of fundamental jurisdiction. However, an act in excess of jurisdiction simply renders an order of judgment voida ble

. ‘ Lack of jurisdiction in its most fundamental or strict sense means an entire absence of

. . . authority over the subject matter or the parties

. . . . ’ [Citation.] In contrast, a court acts in excess of jur isdiction in the broader sense ‘ where, though the court has jurisdiction over the subject matter and the parties in the fundamental sense, it has no “ jurisdiction ” (or power) to act except in a particular manner, or to give certain kinds of relief, or
to act without the occurrence of certain procedural prerequisites

. ’14

[Citation.] ‘ Action “ in excess of jurisdiction ” by a cour t that has jurisdiction in the “ fundamental sense ”

. . . is not void, but only
voidable. ’” (

Adoption of Myah M.

, supra , 201 Cal.App.4th at

p. 1531 ; see In re Marriage of Goddard (2004) 33 Cal.4th 49, 56 [ “ A court can lack fundamental authority over the subject matter, question presented, or party, making its judgment void, or it can merely act in excess of its jurisdiction or defined power, rendering the judgment voidable. ” ]; see also American Contractors

, supra , 33 Cal.4th at pp. 660

- 661 ; People v. North River Ins. Co. (2020)
58 Cal.App.5th 300, 311

- 313 ; Torjesen v. Mansdorf (2016)

1 Cal.App.5th 111, 117 ( Torjesen ) .)

“ Subject matter jurisdiction

. . . is the power of the court over a cause of action or to act in a particular way

. ” ( Greener v.
Workers ’ Com

p. Appeals Bd. (1993) 6 Cal.4th 1028, 1035 ; see People v. Superior Court (Mitchell) (2010) 184 Cal.App.4th 451,
458 .) “ [L] ack of subject matter jurisdiction means the entire absence of power to hear or determine a case; i.e., an absence of authority over the subject matter. ” ( Guardianship of Ariana K. (2004) 120 Cal.App.4th 690, 701 ; see Abelleira v. District Court of Appeal (1941) 17 Cal.2d 280, 288 ( Abelleira ) [ “ A court has no jurisdiction to hear or determine a case where the type of proceeding or the amount in controversy is beyond the jurisdiction defined for that particular court by statute or constitutional provision. ” ]; 2 Witkin, Cal

. Proc edure (2020 supp. )
Juris diction

, § 44 [ “ A court without authority to try actions of the type or class to which the action belongs is ‘ not competent, ’ i.e., it has no juri sdiction of the subject matter. ” ].)

“ Subject matter jurisdiction is conferred by c onstitutional or statutory law. ” ( Guardia nship of Ariana K.

, supra , 120 Cal.App.4th at p. 701 .) In general , article VI, section 10 of15

the California Constitution confer s broad authority on the superior courts. ( Donaldson v. National Marine, Inc. (2005)
35 Cal.4th 503, 512; see Cal. Const., art. VI, § 10 [except as otherwise provided, “ [ s ] uperior courts have original jurisdiction
in all other causes ” ]; see also Code Civ. Proc., § 410.10 [ a “ court of this state may exercise jurisdiction on any basis not incon sistent
with the Constitution of this state or of the United States ” ].)

“ A court does not necessarily act without subject matter jurisdiction merely by issuing a judgment going beyond the sphere of action prescribed by law. ‘ Speaking generally, any acts which exceed the defined power of a court in any instance, whether that power be defined by constitutional provision, express statutory declaration, or rules developed by the courts
and followed under the doctrine of stare decisis, are in excess of jurisdi ction

. ’” ( Pajaro Valley Water Management Agency v.
McGrath (2005) 128 Cal.App.4th 1093, 1101 ; see A merican
Contractors

, supra , 33 Cal.4th at p. 661 [ “‘ “ [W]hen a statute authorizes [a] prescribed procedure, and the court acts contrary
to the authority thus conferred, it has exceeded its jurisdiction. ” ’” ] .)

b. The Buyout Statutes Conferred Subject
Matter Jurisdiction for the Buyout
Proce eding Michael and Joseph do not argue the trial court lacked subject matter jurisdiction over Leonard ’ s ca uses of action for involuntary dissolution. Nor do they contend the court lacked subject matter jurisdiction to adjudicate the appraisal and buyout

proce eding for the 14 entity defendants Leonard named in those
causes of action or to dissolve them . They argue only that the16

“ addition of the UCNP entities in the buyout proceedings, when they were not the subjects of a pending judicial dissolution cause of action, rendered the alternative decree

, and ensuing judgments
and orders

, ” void. 6
To determine whether an error is jurisdictional in a
fundamental sense

, courts “ look first to the l anguage of the

statute. ” (

American Contractors, supra , 33 Cal.4th at p. 661; see In re Marriage of Goddard, supra , 33 Cal.4th at p. 54; People v.
North Rive r Ins. Co.

, supra , 58 Cal.App.5th at p. 313.) For

6 We do not address Michael and Joseph ’ s argument the trial court lacked subject mat ter and personal jurisdiction to order

“ post judgment , Sage Vermont

, nunc pro tunc , as a ‘ dissolved entity ’ under the control of the receiver to be wound up. ” There is no indication in the record Michael and Joseph appeal ed from that order , which was issued on August 16, 2019
, after Michael and Joseph filed their notices of appeal in this action

, and which is not i ncluded in the record of this appeal. Even assuming the August 16, 2019 order was appealable, we do not have jurisdiction to re view it in this appeal . ( See In re Baycol Cases I & II (2011) 51 Cal.4th 751, 761, fn. 8 [ “ if an order is appealable, [an] appeal must be taken or the right to appellate review is forfeited ” ]; Williams v. Impax Laboratories, Inc. (2019)
41 Cal.App.5th 1060 , 1071 [same] .) In addition, the vast majority of Michael and Joseph ’ s argument appears in a footnote. ( See Sabi v. Sterling (2010) 183 C al.App. 4th 916, 947 [ “ Footnotes are not the appropriate vehicle for stating contentions on appeal

. ” ]; Evans v. Centerstone Development Co. (2005) 134 Cal.App.4th 151, 160 [ rais ing an issue in a two

- page footnote “ is a violation of court rules that require arguments to be contained in discrete sections with headings summarizing the point ” ] ; see also Holden v. City o f San Diego (2019) 43 Cal.App.5th 404, 419

- 420 [ a n

“ appellant cannot bury a substantive legal argument in a footnote and hope to avoid waiver of that argument ” ]. )17

example, in American Contractors the Supreme Court considered
whether the trial court lacked fundamental jurisdiction when it
declared a bond forfeited without comply ing with two

“ jurisdictional prerequisi te s ” in Penal Code sections 1305 and
1306

. (See generally People v. Safety National Casualty Cor p

. ( 2016) 62 Cal.4th 703, 710 [ describing the jurisdictional prerequisites of Penal Code sections 1305 and 1306 ] .) T he Supreme Court observed that neither statute declar ed the surety
released or the bond exonerated if the court failed to comply with those prerequisites under the circumstances in that case

. ( Ameri can Contractors

, at p. 661 .) “ Based on what sections 1305 and 1306 said and did not say, the Supre me Court [in American
Contractors ] concluded the failure ‘ to follow the procedural requirements to enter judgment pr operly did not affect the court ’ s
statuto ry control and jurisdiction over the bond. ’ [Citation

. ] Accordingly, the court held the trial ‘ court ’ s failure to comply
with section 1306

. . . “ does not effect a fundament al loss of jurisdiction, i.e., ‘ an entire absence of power to hear or determine the case, an absence of authority over the subject matter of the parties

. ’” ’” ( North River Ins. Co. , at p. 314 , quoting American
Contractors , at p p. 662

- 663

. ) The buyout statutes established the court ’ s subject matter jurisdiction to conduct and adjudicate the buyout proceeding and

to dissolve the entities subject to that proceeding

. As discussed,

t he relevant language of s ection 2000 states : “ In any suit for involuntary dissolution

, . . . the holders of 50 percent or more of the voting power o f 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

. . . (the ‘ moving parties ’ ) at their fair value . [ ¶ ]

. . . [¶]18

. . . [T]he 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. [ ¶ ]

. . . 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 f or the shares within the time specified, judgment shall be entered against them and the surety or sureties on the bond for the amount of the expenses (including attorneys ’ fees) of the moving parties. ” ( § 2000,
subd s

. (a)

- (c), italics added; s ee § § 15908. 02
, 17707.03

. ) Thus, i f the purchasing parties follow through on buying out the minority
shareholder (or member or partner) , the buyout proceeding successfully avoids litigation and the dissolution of the corporation. But if the purchasing parties are unable or unwilling to buy out the minority shareholder, the entity subject to the proceeding is wound up and dissolved. In compliance with the buyout statutes

, t he trial court on August 23, 2016 grant ed Michael and Joseph ’ s motion to stay
Leonard ’ s i nvoluntary dissolution causes of action

, thereby establishing subject matter jurisdiction for the buyout proceeding. T he court still had subject matter jurisdiction over the proceeding o n January 5, 2017
, when Michael, Joseph, and Leonard stipulated to in clude the UCNP entities in the proceeding

. And the court had subject matter jurisdiction on July 28, 2017
, when it issued the alternative decree providing that the entity defendants and the UCNP entities would be wound up and dissolved if Michael and Joseph did not pay Leonard by September 11, 2017

.19 The buyout statutes do not address circumstances where, as here, the owners of an entity all agre e to submit th at entity (or, here, several entities) to an existing buyout proceeding over which the trial court undoubtedly ha d authority

. But considering
the statutes ’ silence on this issue , the broad authority conferred on superior courts ( including the power to dissolve companies organized under the laws of California )

, and cases holding that neither the addition of nonparties to an action nor the violation of certain statutory requirements (even where “ jurisdictional ” )
divest s a court of i ts subject matter jurisdiction

, we conclude t he
addition of the UCNP entities to the existing buyout proceeding
did not undermine the court ’ s “ inherent authority to deal with
the case or matter before it

. ” ( Law Offices of Ian Herzog v. Law Offices of Joseph M. Fredrics (1998) 61 Cal.App.4th 672, 6 80; s ee American Contractors, supra , 33 Cal.4th at p. 661; Abelleira

, supra , 17 Cal.2d at p. 288 ; Conservatorship of O ’ Connor (1996)
48 Cal.App.4th 1076, 1087

- 1088

. ) For example, in Serrano v. Stefan Merli Plastering Co., Inc. (2008) 162 Cal.App.4th 1014 the court held the trial court adjudicating a personal injury action had subject matter jurisdiction to adjudicate a fee dispute between the plaintiff and a

non party court reporting company . E ven thou gh the dispute

“ was not within the scope of the pleadings and pertained to a third party ” ( id . at p. 1028 ), the matter involve d a right created by California discovery statute s and the court ’ s authority to
control the cond uct of its ministerial officers, a nd the dispute wa s

“ typical of those commonly adjudicated in California courts ” ( id. at p p. 1029

- 1030 ). Similarly, in Lovett v. Carrasco (1998)
63 Cal.App.4th 48 the court held the trial court had subject matter jurisdiction to adjudicate third parties ’ medical lien20

claims in an underlying personal injury action. ( Id. at p. 54.)
The c ourt in Lovett stated that “ adjudication of claimants ’ medical lien claims is clearly within th e general subject matter jurisdiction of the superior court. ” ( Ibid .) Thus, the

“ jurisdictional issue [was] whether the court acted in excess of its jurisdiction by adjudicating the liens in the [underlying] action

, ”
not whether the court had fundamental jurisdiction

. ( Ibid

. ; see Law Offices of Stanley J. Bell v. Shine, Browne & Diamond (1995) 36 Cal.App.4th 1011, 1021

- 1023 [ trial court in a n underlying personal injury action had subject matter jurisdiction

to issu e an order denying a claim under a n attorney ’ s lien

, even though contractual liens generally are enforced in an independent action by the attorney against the client ].)
Nor did the fact the trial court arguably acted contrary to the authority conferred by the buyout statutes divest the court of subject matter jurisdiction. I n Torjesen the plaintiff judgment
creditor filed a petition under the En forcement of Judgments Law (Code Civ. Proc., § § 680.010 et seq.) to invalidate a third party claim on a deceased judgment debtor ’ s pr operty

. ( Torjesen

, supra , 1 Cal.App.5 th at p. 113.) The Enforcement of Judgments Law, however, prov ides that

, “ [a]fter the death of the judgment debtor, enforcement of a judgment against property in the judgment debtor ’ s estate is governed by the Probate Code, and not by this title. ” (Code Civ. Proc., § 686.020.) The trial cour t nevertheless granted the judgment creditor ’ s petition under the wrong statute

. ( Torjesen , at p. 113.) T he third party claimant
d id not appeal from that ruling, but two years later filed a motion
to vacate the order

, arguing the trial court did not have jurisdiction to proceed under the En forcement of Judgments Law

. ( Ibid. ) The court in Torjesen rejected that argument: “ Without21

q uestion, the superior court has jurisdiction over disputes related to the enforcement of judgments and the validity of claims to property that has been levied upon. [Citations.] The statutory scheme does not deprive the superior court of jurisdiction ove r these matters. It simply limits the manner in which a judgment creditor may enforce a judgment against a deceased judgment
debtor ’ s property. ” ( Id. at p. 118.) The court in Torjesen agreed
that the superior court erred in allowing the judgment credito r to proceed under the Enforcement of Judgments Law, but the court
held “t hat error was an act in excess of jurisdiction ” rendering the order voidable, not void for lack of subject matter jurisdiction. ( Ibid. ; see Barquis v. Merchants Collection Assn. (1972) 7 Cal.3d 94, 97

- 98, 99 [ default judgments erroneously entered in favor of a collection agency that knowingly filed “ s tatutorily inadequate complaints ” in the wrong counties were not void for lack of

“‘ jurisdiction ’ in the fundamental sense ” ]; Law Offices of Ian Herzog v. Law Offices of Joseph M. Fredrics

, supra , 61 Cal.App .4th at p. 680 [ order compelling arbitration in t he absence of an arbitration agreement, in violation of Code of Civil
Procedure section 1281

, was only an act in excess of jurisdiction ] ; In re Marriage of Hinman (1992) 6 Cal.App. 4th 711 , 718 [ “ while
the court ’ s award [ granting joint custody to a non biological parent] may have been beyond its statutory authority, the court did not lack jurisdiction in the fundamental sense ” ] .) Thus, e ven if the trial court erred by including the five UCNP entities in the appraisal and buyout proceeding , the trial

co urt undoubtedly had subject matter jurisdiction over the proceeding. Michael and Joseph do not contest the court’s jurisdiction to hear and determine the case with regard to the

14 entity defendants. N either the voluntary addition of the five22

UCNP entiti es to the buyout proceeding nor the trial court’s purported error in issuing the alternative decree over entities that were not parties to the involuntary dissolution causes of
action disturb ed or eliminate d the court’s subject matter jurisdiction. A t most, the alternative decree was an act in excess of the statutory authority conferred by the buyout s tatutes. (See Barquis v. Merchants Collection Assn.

, supra , 7 Cal.3d at p. 99 ; People v. North River Ins. C o. , supra , 58 Cal.App.5th at p. 314.) The cases cited by Michael and Joseph do not hold
otherwise. In general, th ose cases stand for the proposition that
the court’s power to conduct a s pecial proceeding under the buyout statutes depends on the existence of a cause of action for involuntary dissolution. (See Boschetti v. Pacific Bay Investments, Inc. (2019) 32 Cal.App.5th 1059, 1066 [ “‘ the right of buyout under section 15908.02 is dependent upon a cause of action for judicial dissolution ’” ]; Ontiveros v. Constable

, supra , 27 Cal.App.5th at p. 271 [ “ a party ’ s right under section 2000 depends entirely on the existence of a cause of action for involuntary dissolution of a corporation ” ]; Kennedy v. Kennedy (2015) 235 Cal.App.4th 1474, 1481 [ “ [u] po n dismissal of [a] dissolution cause of action, there is no dissolution to avoid and,
thus , no right to buy out plaintiff ’ s interests ” under section 2000]; Panakosta, Partners, LP v. Hammer Lane Management, LLC (2011) 199 Cal.App.4th 612, 635 [ “ [w] ithout a pending judicial dissolution action, the trial court was without jurisdiction to allow the buyout petition to proceed ” ]; Dabney v. Dabney (2002)
104 Cal.App.4th 379, 383 [ “ no court has inherent authority to decide a matter for which there is no legally re cognized cause of
action ” ]; Housing Group v. United Nat. Ins. Co. ( 2001)
90 Cal.App.4th 1106, 1107

- 1108 [pending litigation is required23

before parties may stipulate to the appointment of a judicial
referee o r temporary judge to secure a settlement enforceable by
the court ].) Unlike those cases, here t here were cause s of action for involuntary dissolution pending at the time Michael and Joseph moved to stay them and initiate the buyout pro ceeding and at the time Michael, Joseph , and Leona rd agreed to add the
five UCNP entities to the pending proceeding. Michael and Joseph also argue the trial court could not have subject matter jurisdiction unless Leonard added the UCNP entities as defendants to a pending ca use of action. B ut third part ies may appear and be bound by a judgment without being named in a complaint. (See People ex rel. Becerra v. Superior
Court (2018) 29 Cal.App.5th 486, 493 ; Fireman ’ s Fund Ins. Co. v. Sparks Construction, Inc. (2 004) 114 Cal.App.4th 1135,
1145

- 114 7 ; In re Marriage of Williams (1985) 163 Cal.App.3d 753

, 759

- 760 .) As stated

, Michael and Joseph do not argue the trial court lacked personal jurisdiction over the five UCNP entities,
and in any event the UCNP entities ’ participation in the appraisal and buyout proceeding without objection (to this day) acknowledged the authority of the court in th at proceeding . (See Rockefelle r Technology Investments (Asia) VII v. Changzhou SinoType Technology Co., Ltd. (2020) 9 Cal.5th 125, 139 [ “‘ a party may voluntaril y submit himself to the jurisdiction of the court, or may, by failing to seasonably object thereto, waive his right to question jurisdiction over him ’ ” ]; Becerra , at p. 493 [ “ a person can become a party to an action, even if not named in the complaint, by appearing and participating without any objection by the other parties ” ] ; Thomson v. Anderson (2003) 113 Cal.App.4th 258,
266 [ “ ‘ b ecause the personal jurisdiction requirement is a waivable right, there are a “ variety of legal arrangements ” by which a24

litigant may give “ express or implied consent to the personal jurisdiction of the court ” ’” ] .) 7

7 We also question whether Michael and Joseph have standing to assert this argument on behalf of the UCNP entities. (See City of Riverside v. Horspool (2014) 223 Cal.App.4th 670, 678 [a party may appeal “ only that portion of the judgment adverse to the appealing party ’ s interest ” ]; In re Marriage of Hinman

, supra , 6 Cal. A pp .4th at p. 719 , fn. 3 [ a n “ appellant may only complain of errors which injuriously affect her ” ]; Nichols v. Nichols (1933) 135 Cal.Ap p. 488, 491 [an appellant cannot “ urge errors which affect only his copart ies who do not appeal, and such

errors can be reviewed only at the instance of the parties affected thereby ” ]; see also Brenner v. Universal Health Services of Rancho Springs, Inc. (2017) 12 Cal.App.5th 589, 605 [ “ As a general rule, a third party does not have standing to bring a claim asserting a violation of someone else ’ s rights

. ” ].) After all, as we will discuss, Michael and Joseph argue Leonard lacked standing to assert his cause of action for breach of fiduciar y duty for the very reason the alleged violations harmed only the entity defendants, not Leonard. Similarly, Michael and Joseph arguably lack standing to argue on behalf of the UCNP entities that the alternative decree and judgment cannot bind the UCNP

en tities. Although the buyout statutes give any shareholder aggrieved by an alternative decree standing to appeal the court ’ s decision ( § 2000, subd. (c); § 17707.03, subd. (c)(3); § 15908.02, subd. (d)), Michael and Joseph dismissed their appeal from the

a lternative decree. And they do not argue on appeal they were injured by the court ’ s exercise of jurisdiction over the UCNP entities.25 2. Michael and Joseph Cannot Collaterally Attack
the Alternative Decree as a Voidable Order
As discussed

, a party generally may not collaterally attack

e rrors in excess of jurisdiction once the judgment or order is final unless there are “unusual circumstances” that prevented the party from making an “ earlier and more appropriate attack. ” ( American Contractor s , supra , 33 Cal.4th at p. 661 ; see People v.
North River Ins. Co.

, supra , 58 Cal.App.5th at p. 311 ; Torjesen

, supra , 1 Cal.App.5th at p. 11 8 .) No unusual circumstances prevented Michael and Joseph from an earlier attack on the
alternative decree

. 8 Indeed, Michael and Joseph could have appealed , and did appeal

, from the alternative decree, but they
dismissed th eir appeal. And the UCNP entitie s never objected to
their inclusion in the buyout proceeding or appeal ed from the alternative decree or judgment. (See Travis v. Brand (2021)
62 Cal.App.5th 240, 254 [nonparties have standing to appeal
where “ the judgment has a ‘ res judicata effect ’” or i s otherwise binding on the nonparty] , review granted June 23, 2021,

8 The January 5, 2017 stipulated order gave Michael and Joseph the right to raise any dispute concerning the proceedings with Judge Meisinger. According to t he alternative decree

, after the appraisal and valuation process was complete Michael and Joseph asked Judge Mei singer for the first time to make discrete findings on the value of the constituent entities comprising the Sage Automotive Group (which included the UCNP entities). Judge Meisinger denied Michael and Joseph’s request “for the reasons stated in the transcr ipt of that hearing

. ” Michael and Joseph do not challenge that aspect of Judge Meisinger’s decision or the alternative decree, nor did they include the transcript of the hearing before Judge Meisinger in the record on appeal

.26

S268480 ; Marsh v. Mountain Zephyr, Inc. (1996) 43 Cal.App.4th 289, 295 [same] .) Moreover, a “party may be precluded from setting aside a
voidable act or judgment made in excess of jurisdiction by ‘“principles of estopp el.”’ [Citation.] ‘When .

. . the court has jurisdiction of the subject, a party who seeks or consents to action beyond the court’s power as defined by statute or decisional rule

ma y be estopped to complain of the ensuing action in excess of jurisdiction. [Citations.] Whether he shall be estopped depends on the importance of the irregularity not only to the parties but to the functioning of the courts and in some instances on other considerations of public policy. A litigant who has stipulated to a procedure in excess of jurisdiction may be estopped to question it when “[t]o hold otherwise would permit the parties to trifle with the courts.”’” ( Mt. Holyoke Homes, LP v. California Coastal Com. (2008) 167 Cal.App.4th 830, 842; see Garibotti v. Hinkle (2015)
243 Cal.App.4th 470, 481 [“‘The doctrine of estoppe l to contest jurisdiction .

. . “provides that when a court has subject matter jurisdiction over an action, ‘a party who seeks o r consents to action beyond the court’s power as defined by statute or decisional rule may be estopped to complain of the ensuing action in excess of jurisdiction.’”’”].) Michael and Joseph agreed to include the five UCNP
entities in the buyout proceeding and did not question the validity of the court ’ s alternative decree for 18 months ( when they first raised the issue on appeal from the award of attorneys ’
fees and costs in Schrage I )

. 9 They are estopped from arguing the

9 In Schrage I we rejected Michael and Joseph ’ s argument the alternative decree was void for lack of jurisdiction because27

trial court acted in excess of its jurisdiction by including the
UCNP entities in the alternative decree

. (See Kristine H. v.
Lisa R. (2005) 37 Cal.4th 156, 166 [ “ Given that the court had subject matter jurisdiction to determine the parentage of the unborn child, and that [the plaintiff] invoked that jurisdiction, stipulated to the issuance of a judgment, and enjoyed the benefits of that judgment for nearly two year s, it would be unfair both to [the defendant] and the child to permit [the plaintiff] to challenge the validity of that judgment. ” ]; Torjesen

, supra , 1 Cal.App.5th at

p. 1 16 [ a court order in excess of jurisdiction “ was not subject to
collateral attack two years after it was entered ” ]; Mt. Holyoke Homes, LP v. California Coastal Com.

, supra , 167 Cal.App.4th at

p. 842 [ applicants could not set aside a voidable judgment where the applicants did not question jurisdiction until three and a half years after the latest date on which it contend ed the Coastal
Commission lost jurisdiction ] .) Michael and Joseph attempt to salvage their collateral
attack on the alternative decree by asserting they “ forewarned the trial court of this jurisdictional impediment ” and agreed only

to include the UNCP entities in the appraisal , not for purposes of the winding up and dissolution that followed their failure to buy
Leonard’s interest in the appraised entities

. This assertion does not persuade. First, Michael and Joseph ’ s so

- called forewarning appeared in their motion to stay the involuntary dissolution
causes of action filed six months before their stipulation to
include the UCNP entities in the appraisal and buyout

they failed to appeal directly from the order, file a motion under Code of Civil Procedure section 473, subdivision (d), or file a collateral action challenging the order. ( Schrage I

, supra , B288478.)28

proceeding

, and it made no mention of the UCNP entities

. Second, the plain language of the stipulated order undermines Michael and Joseph ’ s position

. It is true the stipulated order lists
the UC N P entities as “ Entities to be Valued as Part of the Appraisal Engagement, ” which in turn is defined as “ the engagement and qualifications of the appraisers and the appraisal process. ” But the stipulated order also provides Judge Meisinger was to issue an order stating the cumulative value of
Leonard ’ s one

- third interest in the Sage Automotive Group,

“ which shall constitute the buy

- out price to be paid by Michael and Joseph to Leonard (the ‘ Buy

- Out Value ’ )

, ” and the order defines the Sage Automotive Group to include the UCNP entities. Thus, Michael and Joseph agreed the amount they had to pay to prevent the winding up and dissolution of the Sage Automotive Group included the value of the UCNP entities. If Michael and Joseph intended only to submit the UCNP entities to the appraisal process, they would n ot have agreed to an aggregate buyout value that did not differentiate among individual entities

, or at least among the entity defendants and the UCNP entities

. 10

10 Michael and Joseph recognize their collateral attack on the consent decree is limited to jurisdictional arguments. (See Kabran v. Sharp Memorial Hospital (2017) 2 Cal.5th 330, 339 ; Armstrong v. Armstrong (1976) 15 Cal.3d 942, 950

- 951 .) In a nod to that limitation, Michael and Joseph argue the trial court “exceeded its jurisdiction” by failing to include in the buyout value “the economic impact of Leonard’s derivative allegations and prayer in his verifie d complaint.” This is not a jurisdictional argument ; it is an argument the trial court made a substantive error in determining the value of the buyout entities. A

“ mistaken application of law ” cannot be collaterally attacked

.29 Michael and Joseph are attempting to unwind t he
alternative decree on the basis the trial c ourt erred in doing the very thing Michael and Joseph asked the court to do

. To approve their belated request would invite the very trifling with the
courts the doctrine of estoppel to contest jurisdiction seeks to prevent. ( See Lovett v. Carrasco

, supra , 63 Cal.App.4th at

pp. 54

- 55 [ allowing a litigant to stipulate to a procedure in excess of jurisdiction and then challenge the procedure on appeal

, would permit the parties “ ‘“‘ to trifle with the courts ’ ” ’” ]; Law Offices of Ian Herzog v . Law Offices of Joseph M. Fredrics

, supra , 61 Cal.App.4th at p. 680 [defendant ’ s stipulation the court could
order the parties to arbitration estopped him from attacking arbitration award on that basis]; see also Kristine H. v. Lisa R.

, supra , 37 Cal.4th at p. 166; Mt. Holyoke Homes, LP v. California
Coastal Com.

, supra , 167 Cal.App.4th at p. 842; In re Marriage of
Jackson (2006) 136 Cal.App.4th 980, 989; Conservatorship of
O ’ Connor

, supra , 48 Cal.App.4th at p. 1092 .) 11

( Armstrong , at p p. 950

- 951; see Fireman ’ s Fund Ins. Co. v. Workers ’ Comp. Appeals Bd. (2010) 181 Cal.App.4th 752, 767 [“ Errors of substantive law are within the jurisdiction of a court and are not typically acts beyond the court ’ s fundamental authority to act. ”].)

11 Michael and Jo seph listed in their notices of appeal a “Void Judgment” dated September 27, 2017, which was actually the trial court ’s order appointing a receiver. That order was appealable , and Michael and Joseph did not file a timely notice of appeal . ( See Code Civ

. Proc

. , § 904.1, subd

. (a)(7) ; Wells Far go Financial Leasing, Inc. v. D & M Cabinets (2009) 177 Cal.App.4th 59, 66 .) Because Michael and Joseph do not argue the order was void

, except as a consequence of the court’s lack of jurisdiction to30 C. Leonard Lacked Standing To Assert His Cause of Action for Breach of Fiduciary Duty Michael and Joseph contend Leonard did not have standing to assert an individual cause of action against them for breach of fiduciary duty because Leonard sought and receiv ed an award of damages to the Sage Automotive Group and not to himself.
Leonard contends that he suffered an individual injury and that, in any event , close corporations like those comprising the Sage Automotive Group are not subject to the derivative act ion rule. Michael and Joseph have the better argument : The allegations
in Leonard’s complaint

, the evidence at trial, and the court’s findings show Leonard’s causes of action were derivative

.

enter the alternative decree , we do not have jurisdiction to consider any appeal from the September 27, 2017 order and must dismiss the appeal from that order

. ( See City of Calexico v. Berges on (2021) 64 Cal.App.5th 180, 189

. ) And e ven if we had jurisdiction, Michael and Joseph forfeited the argument by failing to support it in their briefs with any argument or citation to authority

. ( S ee Rios v. Singh (2021 ) 65 Cal.App.5th 871
, 881 ; Cal. Rules of Court, rule 8.204(a)(1)(B) [briefs must support each point by argument and, if possible, by citation of authority ]

. ) And, even if we considered the argument on the merits, it would fail for the same reasons the argument concerning the altern ative decree fails. Michael and Joseph also appeal from the trial court’s postjudgment order denying their motion to set aside the judgment under Code of Civil Procedure s ections 663 and 663a on the same grounds. That order is appealable. (See Ryan v. Rosenfeld (2017) 3 Cal.5th 124, 131

- 135.) We affirm it for the same reasons we affirm the judgment of dissolution.31 1. Applicable Law

“ [M] ajority shareholders, either singly or acting in concert to accomplish a joint purpose, have a fiduciary responsibility to the minority and to the corporation to use their ability to control the corporation in a fair, just, and equitable manner. Majority shareholders may not use their power to control corporate
activities to benefit themselves alone or in a manner detrimental to the minority. Any use to which they put the corporation or their power to control the corporation must benefit all
shareholders proportionately and must not conflict with the proper conduct of the corporation ’ s business. ” ( Jones v. H. F.
Ahmanson & Co. (1969) 1 Cal.3d 93, 108 ( Jones ) ; accord, Sheley v. Harrop (2017) 9 Cal.App.5th 1147, 1171 ; see § 17704.09 [describing the fiduciary duties of members and managers of a limited liability company]; Feresi v. The Livery, LLC (2014)
232 Cal.App.4th 419, 425 [same]; Everest Investors 8 v. McNeil
Partners (2003) 114 Cal.App.4th 411, 424

- 425 [describing the
fiduciar y obligations in a partnership] .) A minority shareholder may bring a c ause of action for breach of fiduciary duty against majority shareholders as an individual claim or as a derivative claim, depending on the circumstances. (See Daly v. Yessne (2005) 131 Cal.App.4th 52,
63 ; Jara v. Suprema Meats, Inc. (2004) 121 Cal.App.4th 1238,
1252

- 1253 , 1257

- 1258 ( Jara ) ; see also Sutter v. General
Petroleum Cor

p. (1946) 28 Cal.2d 525, 530 [ “ a stockholder may sue as an individual where he is directly and individually injured although the corporation may also have a cause of action for the

same wrong ” ]; Goles v. Sawhney (2016) 5 Cal.App.5th 1014, 1018

, fn. 3 [ “ A single cause of action by a shareholder can give rise to derivative claims, individual claims, o r both. ” ]; Denevi v. LGCC,32

LLC (2004) 121 Cal.App.4th 1211, 1222 [same].) But where a cause of action seeks to recover for harms to the corporation, the
shareholders have no direct cause of action “ [b] ecause a corporation exists as a separate legal entity ” ( Grosset v. Wenaas (2008) 42 Cal.4th 1100, 1108 ( Grosset ) ) and “ is the ultimate beneficiary of such a deri vative suit ” ( Patrick v. Alacer Cor p. (2008) 167 Cal.App.4th 995, 100 3 ) . (See Cotton v. Expo Power Systems, Inc.

, supra , 170 Cal.App.4th at p. 1380 [ “ A derivative claim is a property right t hat belongs to the corporation. ” ].)

“ The shareholders may, however, bring a derivative suit to enforce the corporation ’ s rights and redress its injuries when the
board of directors fails or refuses to do so. When a derivative suit is brought to litigate the rights of the corporation, the corporation is an indispensable party and must be joined as a nominal
defendant. ” ( Grosset

, supra , 42 Cal.4th at p. 1108 ; accord, Jones

, supra , 1 Cal.3d at p p. 106

- 107 ; see Patrick v. Alacer Corp.

, supra , 167 Cal.App.4th at p. 1004 [ “ Though the corporation is essentially the plaintiff in a derivative action, ‘ [w]hen a derivative suit is brought to litigate the rights of the corporation, the corporation

. . . must be joined as a nominal defendant. ’” ] .)

“ An action is deemed derivative ‘“ if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock and property without any severance or distribution among individual holders, or it seeks to recover assets for the corporation or to prevent the dissipation of its assets. ” ’ [ Citation.] When a derivative action is successful, the corporation is the only party that benefits from any recovery; the
shareholders derive no benefit ‘“ except the in direct benefit resulting from a realization upon the corporation ’ s assets. ” ’” ( Grosset

, supra , 42 Cal.4th at p. 1108 , fn. omitted ; see Bader v.33

Anderson (2009) 179 Cal.App.4th 775, 793 [ “ a derivative suit is
one in which the shareholder seeks ‘ redress of the wrong to the corporation ’” ] .)

“‘ The stockholder ’ s individual suit, on the other hand, is a suit to enforce a right against the corporation which the stockholder possesses as an individual. ’” ( Jones

, supra , 1 Cal.3d

at p. 107 ; see Bader v. Anderson

, supra , 179 Cal.App.4th at

p. 793 ; Denevi v. LGCC, LLC

, supra , 121 Cal.App.4th at p. 1222 .) For example, “‘ [i] f the injury is one to the plaintiff as a stockholder and to him individually, and not to the corporation,
as where the action is based on a contract to which he is a party, or on a right belonging severally to him, or on a fraud affecting him directly, it is an individual action. ’” ( Sutter v. General Petroleum Corp.

, supra , 28 Cal.2d at p. 530 .) “ The individual wrong necessary to support a suit by a shareholder need not be unique to that plaintiff. The same injury may affect a substantial
number of shareholders. If the injury is not incidental to an injury to the corporation, an individual cause of action exists. ” ( Jones

, supra , 1 Cal.3d at p. 107 ; see Bader , at p. 793 [ “ A direct (as opposed to a derivative) action is maintainable ‘ only if the damages [are] not incidental to an injury to the corporation. ’” ] ; see also Schuster v. Gardner (2005) 127 Cal.App.4th 305, 313 ; Denevi , at p. 1222; Nelson v. Anderson (1999) 72 Cal.App.4th 111, 124 ( Nelson )

. ) The principles governing derivative actions in the context of corporations apply to limited liability companies and limited partnerships. (See Sprengel v. Zbylut ( 2019) 40 Cal.App.5th 1028, 10 40

- 1041 [limited liability company]; Everest Investors 8 v.
McNeil Partners

, supra , 114 Cal.App.4th at pp. 425

- 426 [limited partnership].) We review de novo the trial court ’ s ruling Leonard34

had standing to maintain his cause of action for breach of fiduciary duty as an individual claim, rather than a derivative
claim . (See A.J. Fistes Corp. v. GDL Best Contractors, Inc. (2019)
38 Cal.App.5th 677, 687 [ standing is a question of law to which we apply a de novo standard of review ]; Ci tizens for Amending Proposition L v. City of Pomona (2018) 28 Cal.App.5th 1159, 1174 [same] .)

2. Leonard Sought and Recovered Damages for

Injuries to th e Sage Automotive Group
Leonard alleged Michael and Joseph committed a wide variety of misdeeds, including “ m isappropriat[ing] at least $1.7 million of company funds ” to open, advertise, and operate a Lotus dealership without Leonard ’ s consent or participation ; mismanaging the Sage Automotive Group by engaging in

“ dishonest and manipulative accounting practices ” ; using Sage
Automotive Group assets for personal gain ; un dermining
Leonard ’ s authority with Sage Automotive Group employees ; denying Leonard access to Sage Automotive Group ’ s books, records, and bank accounts ; ceasing payment for directors and officers insurance coverage ; and rebranding the Sage Automotive Group without Leonard ’ s consent. Leonard alleged these acts

“ significantly impeded Leonard ’ s ability to manage or pa rticipate
in the affairs of the [ Sage Automotive Group], ” “ caused damage to
the [ Sage Automotive Group,] and devalued his interest in turn. ”
A t trial, Leonard’s expert witness on damages

, Gordon
Klein , calculated Leonard’s damages as one

- third the difference
between the 2015 court

- approved valuation in the alternative
decree and the value of the Sage Automotive Group at the time of trial, adjust ed for market changes. Klein reviewed the35

dealerships’ financial statements “to ascertain the diminution in value which ha[d] occurred” and concluded they collectively had
declined in value over $65 million since April 2015. Klein
attributed additional losses to a $3.6 million settlement with the Federal Trade Commission that arose from alleged misconduct by Michael and Joseph, “[e]xcess payments” to accountants an d lawyers, and a reserve o f $6 million for the anticipated settlement of a warranty fraud case brought by Nissan Motor Company against Michael and Joseph. Klein opined the total
“loss in v alue” of the Sage Automotive Group was over $75 million, of which one

- third, or approximately $25 million

, was “[s]uffered by [Leonard]” because he owned one

- third of the
businesses . Klein estimated that, depending on the court’s findings, losses due to market forces not attributable to Michael and Joseph’s “alleged mismanagement” could reduce Le onard’s damages to about $18 million. For this reason , Klein determined Leonard’s damages were between $18,311,746 and $2 4 ,418,473.
Klein also testified he did not include in his analysis any amounts for Leonard’s claims against Michael and Joseph for

“ ‘personal misappropriations’” or “personal aggrandizement

, ” which Klein defined as “taking economic benefits or sums that are outside the ordinary course of business and/or were not expenses incurred for the economic benefit of the business or its partners .” Klein also said he did not analyze whether using Sage
Automotive Group funds to seed the Lotus dealership caused specific losses to the Group

. Klein said the scope of his assignment was to focus on , “ at the core, the diminution in the
value of the dealersh ips, plus .

. . avoidable liabilities and payments tha t, but for alleged misconduct .

. . , should not have happened and, therefore, result[ed] in damages.”36 The trial court , in it s statement of decision

, found Michael and Joseph “ pushed [Leonard] out ” of the Sage Automotive Group

, leaving him no “ meaningful control over its operations ” ; engaged in self

- dealing by diverting Sage Automotive Group funds to the separately held Lotus dealership ; expended Sage
Automotive Group assets without authorizatio n ; engaged in false advertising that led to the settlement with the Federal Trade
C ommission and a “ dramatic drop in profit[s] ” ; and left the Sage
Automotive Group in such “ financial turmoil ” that some of its
assets had to be sold to a competitor. T he tri al court credited Klein’s damages analysis and awarded Leonard the upper end of Klein’s range (i.e., $24,418, 472)

, “ given the defense ’ s total failure to substantiate market causes for the precipitous and undisputed
decline ” in the Sage Automotive Group ’ s value , offset by losses
attributable to Leonard ’ s unclean hands

. The allegations in Leonard’s first amended complaint, the
basis and calculation of Leonard’s damages at trial , and the court’s findings show that th e gravamen of Leon ard ’ s action was injury to the Sage Automotive Group and the “ whole body of its stock and property ” and that Leonard sought to, and ultimately did, recover damages for injuries to the entities

. ( Grosset

, supra , 42 Cal.4th at p. 1108 ; see Avikian v. WTC Financial Cor p. (2002)
98 Cal.App.4th 1108, 111 5 ( Avikian ) [plaintiffs’ “core claim” of mismanagement that caused the corporation’s demise
“amount [ ed ] to a claim of injury to [the corporation] itself”] ; Nelson

, supra , 72 Cal.App.4th at p. 127 [“the action must be
derivative” where the defendant’s actions caused the corporation

to los e “ earnings, profits, and opportunities, rendering all the shares valueless”] .) Leonard did not allege , and the trial court did not award, damages for any injury t hat was not “ incidental to37

an injury to the corporation. ” ( Jones

, supra , 1 Cal.3d at p. 107 ;

see ibid. [although the plaintiff alleged “the value of her stock [was] diminished by defendants’ actions,” she did not allege “the
diminished value reflect [ ed ] a n injury to the corporation and resultant depreciation in the value of the stock”]; Avikian

, at

p. 1116 [ the plaintiffs ’ “ own damages, the loss in value of their investments in [the corporation], were merely incidental to the alleged harm inflicted upon [the corporation] and all its
shareholders

, ” italics omitted ].) Indeed, Leonard ’s primary complaint was that his brothers’ mismanagement (including by driving him out of the Sage
Automotive Group) squandered the Sage Automotive Group ’s

ass ets and ultimately led to its demise. Th at is a derivative
claim. “ [W] here conduct, including mismanagement by corporate officers, causes damage to the corporation, it is the entity that must bring suit; the individual shareholder may not bring an
action for indirect personal losses (i.e., decrease in stock value) sustained as a result of the overall harm to the entity. ” ( Bader v.
Anderson

, supra , 179 Cal.App.4th at p. 788 ; see Heshejin v.
Rostami (2020) 54 Cal.App.5th 984, 994, fn. 10 [“‘“a shareholder

cannot bring a direct action for damages against management on the theory their alleged wrongdoing decreased the value of his or her stock (e.g., by reducing corporate assets and net worth)” ’” ; instead, the “ ‘“ corporation itself must b ring such an action, or a derivative suit may be brought on the corporation ’ s behalf”’”]; Oakland Raiders v. National Football League (2005)
131 Cal.App.4th 621, 651 [ plaintiff ’ s breach of fiduciary duty claim for corporate mismanagement and diverting corp orate

assets was derivative] ; PacLink Communications Intern at ., Inc. v. Superior Court (2001) 90 Cal.App.4th 958, 964 [minority38

members’ fraudulent transfer claim was derivative where the “injury was essentially a diminution in the value of thei r membership interest in the [limited liability company] occasioned by the loss of the company’s assets”]; Nelson

, supra , 72 Cal.App.4th at p p. 125

- 126 [minority shareholder ’ s breach of fiduciary duty claim alleging the other shareholder of the corporation n egligently managed the business was derivative] ; Marsh et al., Marsh ’ s Cal. Cor p. Law (20 21 supp. ) Derivative Action, § 15.11[A][1] [ “ The clearest cases [of derivative actions] are those involving situations where the alleged wrongful actions
of the defend ants have reduced the corporate assets and net
worth. ” ] .) Leonard makes two arguments to show his cause of action for breach of fiduciary duty was an individual claim . First, Leonard lists 10 injuries that he says “hurt [him] alone.” None of
the listed injuries, however, caused a discrete injury or damages to Leonard. Five of the listed injuries affected or reduced corporate assets or value without creating any nonincidental injuries to Leonard : ( 1) destruction of a document “related to personal spending using [Sage Automotive Group ] funds”; (2) exclusion of Leonard from operational decisions; (3) falsification of corporate records and decisionmaking without Leonard’s input; (4) fa lsification of Leonard’s signature on an application to purchase a Hyundai dealership; 12 and (5) the purchase of the Hyundai dealership without consulting

12 Leonard presumably could allege an individual injury as a result of identity theft, but he did not, and the court did not award any dama ges for identity theft or similar injury.39

Leonard. 13 Two injuries listed by Leonard

— (6) instruction to Sage Automotive Group’s counsel to file a cross

- complaint against Leonard, requiring Leonard “to ‘pay for a lawsuit against
himself

, ’” and (7) use of the cross

- complaint “as a ‘pretextual
threat to remove Leonard as a board member’”

— were cited by the trial court as evidence of Michael and Joseph’s oppression in support of the award of punitive damages ; they we re not bases
for the compensatory damages award

. Another listed injury

— (8) failure to honor the wish of the
brothers’ father to make L eonard the majority owner of the Sage
Automotive Group

— is conduct ascribed to Sage Automotive Group’s (or their father’s ) lawyer, not to Michael and Joseph; and
another

— (9) issuance of unequal distribution checks

— is contradicted by the court’s statement of decision, which acknowledged that Leonard eventually received the missing distribution check, albeit six weeks after Mi chael and Joseph
received theirs. That leaves (10), Leonard’s claim he suffered
discrete i njuries when Michael and Joseph reneged on their promise “ ‘to “indemnify” Leonard ’ ” for losses related to the Lotus dealership separately held by Michael and Joseph. The promise apparently flowed from the two brothers’ recognition they used Sage Automotive Group funds to seed the new Lotus dealershi p. E ven if Michael and Joseph’s fail ure to indemnify Leonard and

13 In connection with the withholding of books and records, Leonard did not allege his inability to inspect company records precluded him from discharging his fiduciary duty or attempt ing to enforce his inspectio n rights under section 1601 or 1602 . (See generally Wolf v. CDS Devco (2010) 185 Cal.App.4th 903, 916 ; Havlicek v. Coast

- to

- Coast Analytical Services, Inc. (1995) 39 Cal.App.4th 1844, 1856 .)40

make him whole created an individual injury , the court awarded Leonard damages based on the ove rall diminution in value to the Sage Automotive Group, not the amount Michael and Joseph
owed Leonard from funds used to start a sep arately owned

venture

. Second, Leonard argues we should follow the decision in
Jara , which, according to Leonard, “support[ed] the notion that the policy reasons undergirding the rule requiring shareholder lawsuits to proceed derivatively do not apply to actions involving closely held businesses” like the Sage Automotive Grou p. In Jara
the minority shareholder of a corporation alleged the two other shareholders breached their fiduciary obligations by paying themselves excessive executive compensation wit hout the plaintiff’s approval and for the purpose of reducing the amount of profit to be shared with the plaintiff. ( Jara

, supra , 121 Cal.App.4th at p p. 1248, 1258.) The plaintiff did not allege the two majority shareholders mismanaged the corporation; in
fact

, the corporation’s success enabled the majority shareholders to increase their executive compensation. ( Id. at p. 1247.)
The court in Jara held that

, while “the alleged payment of excessive compensation did have the potential of dam aging the business,” the plaintiff stated an individual cause of action against the majority shareholders because he alleged the payment of executive compensation “ was a dev ice to distribute a disproportionate share of the profits to the two officer
shareh olders during a period of business success.” ( Jara

, supra , 121 Cal.App.4th at p. 1258.) The court read the Supreme Court’s
decision in Jones to allow “ a minority shareholder to bring a personal action alleging ‘a majority stockholders’ breach of a
fiduci ary duty to minority stockholders, which resulted in the41

majority stockholders retaining a disproportionate share of the corporation’s ongoing value .’ ” ( Jara , at p p. 1257

- 1258; see Jones

, supra , 1 Cal.3d at p. 107 ; see also Crain v. Electronic Memories & Magnetics Cor

p. (1975) 50 Cal.App.3d 509, 521

- 522 [ breach of fiduciary cause of action against a majority shareholder for self

dealing that enriched the majority shareholder and left minority
shares “valueless and unsalable” was an individual cl aim ] .)
We have some doubt whether Jara was correctly decided

. At a minimum, however, it is distinguishable

. The court in Jara
characterized the plaintiff’s claim as “tantamount to a discriminatory payment of dividends” and cited cases allowing
individu al causes of action to recover the value of disproportionate payments to majority shareholders . ( Jara

, supra , 121 Cal.App.4th at pp. 1256

- 1257 , citing Smith v. Tele

Communication , Inc. (1982) 134 Cal.App.3d 338 , 341

- 342 [majority shareholders retained disproportionate value of tax savings]; Crain v. Electronic Memories & Magnetics Cor p. , supra , 50 Cal.App.3d at p. 521 [majority shareholder “deprived plaintiffs of their ownership interests in an ongoing and potentially

pr ofitable business without any compensation whatsoever”]; Low
v. Wheeler (1962) 207 Cal.App.2d 477, 479 [majority shareholders “refused to declare dividends” to minority shareholder]; De
M artini v. Scavenger’s Protective Assn

. (1935) 3 Cal.App.2d 691

, 698 [ majority shareholders deprived the minority shareholders of their “‘share of the profits of the business’”] .)
The Jara court distinguished the circumstances in these

cases from those in cases “dealing with mismanagement, ” such as
Avikian

, supra , 98 Cal.App.4th 1108 and Nelson

, supra , 72 Cal.App.4th 111

. ( Jara

, supra , 121 Cal.App.4th at p. 1258

. )
In Avikian a group of minority shareholders alleged the majority42

shareholders improperly bought and sold assets of the corporation and, with the corporatio n in financial distress, chose to pursue a “self

- serving arrangement[ ] causing the demise of [the corporation]

, ” rather than accepting an investor who was “willing to rescue” the corporation. ( Avikian , at pp. 1115

- 1116.)
The court in Avikian held that the se alleged acts harmed the corporation rather than merely “affect[ing] the way in which the parties owned it” ( id. at p. 1115) and that, b ecause the plaintiffs’ damages were “the loss in value of their investments in [the corporation],” the ir damages were “merely incidental to the alleged harm inflicted upon [the corporation] and all its
shareholders ” ( i d. at p p

. 1115

- 1116 ). In Nelson a minority shareholder sued the majority shareholder for breach of fiduciary
dut y after the majority shareholder made “improper management decisions,” causing the minority shareholder “to lose her investment and prospective profits.” ( Nelson , at p. 124.) The minority shareholder argued she could bring an individual cause
of action b ecause she “suffered injury to her reputation and emotional distress, and lost her out

- of

- pocket expenses, as well as other employment opportunities.” ( Ibid. ) The court in Nelson disagreed: “ Because all of the acts alleged to have caused [the plaintiff’ s] injury amount to alleged misfeasance or negligence in managing the corporation ’ s business, causing the business to be a total failure, any [fiduciary] obligations so violated were duties owed directly and immediately to the corporation. ” ( Id. at

p. 125 .) Moreover, “[t] he economic damages proven at trial were lost profits to the corporation as the result of rejected opportunities .” ( Id. at p. 126.)
This case is more like Avikian and Nelson than Jara

. Unlike the plaintiff in Jara

, Leonard did not alle ge Michael and43

Joseph retained a disproportionate share of the Sage Automotive Group’s value; he alleged Michael and Joseph destroyed the value
of the businesses for all of the shareholders (and members and partners)

. The court awarded Leonard damages based on the
overall diminution in value of the Sage Automotive Group, not the difference in value between Leonard’s shares in the Group and those of Michael and Joseph. ( Cf. Jara

, supra , 121 Cal.App.4th at p. 1258 [describing the plaintiff’s dama ges as his “fair share of the corporation’s profits”]; see also Jones

, supra , 1 Cal.3d at p. 107 [the diminution in value of the minority
shareh olders’ stock did not “reflect[ ] an injury to the corporation,” but instead resulted from the majority sharehol ders’
self

- serving scheme to increase the value of their shares]; Smith
v. Tel e

- Communication , Inc.

, supra , 134 Cal.App.3d at p. 342 [plaintiff was “deprived of a portion of his distributive share of [the corporation]”]. ) S imilar to the plaintiff s ’ allega tions in
Avikian and Nelson , Leonard alleged that his brothers’ mismanagement diminished the value of the Sage Automotive Group overall and that the value of each of their interests, “in turn,” suffered accordingly. That Klein computed Leonard’s damages b y dividing the Sage Automotive Group’s overall
diminution of value by three confirms the gravamen of Leonard’s complaint was injury to the corporation as a whole

, “ ‘“ without any severance or distribution among individual holders ,” ’” and
not to Leonard individually . ( Grosset

, supra , 42 Cal.4th at

p. 1108 ; see Avikian

, supra , 98 Cal.App.4th at p. 1116.)
The court in Jara also relied on the absence of policy considerations favoring a derivative action in the context of that case, incl uding preventing “‘a multiplicity of actions by each individual shareholder,’” protecting creditors “ ‘ who have first call44

on the corporate assets, ’ ” and complying with procedural prerequisites for bringing a derivative action under section 800. 14 ( Jara

, su

pra , 121 Cal.App.4th at p p. 1258

- 1259.) Section 800 , the court stated, “ shield [s] the corporation from meritless lawsuits by requiring the plaintiffs to have contemporaneous stock ownership and by giving the defendants the right to move the court for an

o rder requiring a bond ” and “ requires the plaintiffs to submit a demand to the board of directors before filing suit ” to encourage
the “ ‘ intracorporate resolution of disputes ’ ” and protect

“ ‘ managerial freedom. ’ ” ( Jara , at p. 1259; see § 800,
subds. (b) & (c) .) The court in Jara observed: “ The objective of preventing a multiplicity of lawsuits and assuring equal treatment for all aggrieved shareholders does not arise at all when there is only one minority shareholder. The objective of

encour aging intracorporate resolution of disputes and protecting managerial freedom is entirely meaningless where the defendants constitute the entire complement of the board of directors and all the corporate officers. And the policy of

14 Section 800 states the procedural prerequisites to bring ing a derivative action against a corporation . In general, section 800, subdivision (b), requires a shareholder to inform the directors about the action and to “ mak e a reasonable effort to induce them to commence suit the mselves or otherwise redress the wrong, unless such efforts would be ‘ useless ’ or ‘ futile .’ ” (Friedman et al., Cal. Practice Guide: Corporations (The Rutter Group 2021 supp. ) ¶ 6:622; see § 800, subd. (b)(2).) Section 800, subdivision (c), gives the corp oration and its directors the right to ask the court to require a bond under certain circumstances. Sections 17709.02 and 15910.02 provide similar procedural requirements for derivative action s on beh al f of limited liability compan ies and limited partnership s , respectively.45

preserving corporate as sets for the benefit of creditors has, at best, a very weak application where the corporation remains a
viable business. ” ( Jara , at p. 1259.)
The court in Nelson also considered whether the policies advanced by the derivative action rule applied in the c ontext of close corporations and reached the opposite conclusion

. The court
stated : “A derivative action may appear to [the plaintiff] to be an empty formality when there are only two shareholders, and one of them is the alleged wrongdoer. However, the law demands certain prerequisites to bringing a derivative action which have not been alleged or proven in this case, such as alleging ‘ in the complaint with particularity[, the] plaintiff’ s efforts to secure from the board such action as plaintiff desires , or the reasons for not making such effort, and

. . . further that plaintiff has either informed the corporation or the board in writing of the ultimate facts of each cause of action against each defendant or delivered to the corporation or the board a tr ue copy of the complaint which plaintiff proposes to file. ’ ” ( Nelson

, supra , 72 Cal.App.4th at

p. 127.)
We acknowledge the policies underlying the derivative action rule do not apply with equal force in actions involving closely held companies. Requiring Leonard to name the entities that comprise the Sage Automotive Group (and the UCNP entities) as nominal defendants in this action will not prevent a multiplicity of lawsuits or assur e equal treatment for all aggrieved shareholders. And t he objective of encouraging intracorporate resolution of disputes and protecting managerial
freedom has less meaning where Michael, Jose ph, and Leonard
constitute the board of directors and corporate officers. ( See
Jara

, supra , 121 Cal.App.4th at p. 1259.) But the plain language46

of sections 800, 15910.02, and 17709.02 does not exclude close corporations or small partnerships or companies from the procedural prerequisites before a shareholder, limited partner, or member may file a derivative action. (See Nelson

, supra , 72 Cal.App.4th at p. 127.) T o allow Leonard to maintain his cause of action for breach of fiduciary duty as an individua l
action would essentially eliminate the derivative action rule in
the context of close corporations and other closely held entities

. California law does not support that result

.

3. Leonard Did Not Allege a Derivative Cause of
Action or Comply with the Statutory Prerequisites To Bring Such an Action Leonard did not allege a derivative cause of action on behalf of the Sage Automotive Group (or any of its constituent entities) or attempt to comply with the requirements of section s 800 , 159 10.02, or 17709.02 to do so. Therefore, Leonard did not have standing to bring such an action, and the judgment on the cause of action for breach of fiduciary duty must be reversed

. ( See Bader v. Anderson

, supra , 179 Cal.App.4th at p. 793 ; Nelson

, supra , 72 Cal.App.4th at p p. 127

- 128 .)47 DISPOSITION

The judgment on the causes of action for involuntary
dissolution is modified , consistent with Schrage I

, to correct the amount in favor of Leonard Schrage to $ 401,509.50 and, as modified, is affirme d

. The order denying Michael and Joseph’s motion to set aside the judgment is affirmed. The appeals from the alternative decree and the order appointing the referee are
dismissed. The judgment on the cause of action for breach of fiduciary duty is rever sed. The parties are to bear their costs on appeal.

SEGAL, J.

We concur:

PERLUSS, P. J.

FEUER, J.