Filed 8/12/22 A-List v. Salus Capital Partners 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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

A-LIST INC. et al.,

Plaintiffs and Appellants,

v.

SALUS CAPITAL PARTNERS, 

LLC,

Defendant and Respondent.

B306617

(Los Angeles County

Super. Ct. No. BC630062)

 

 

APPEAL from a judgment of the Superior Court of 

Los Angeles County, Teresa A. Beaudet, Judge. Affirmed.

Brown, Neri, Smith, & Khan, Amjad M. Khan and Patricia 

E. Tenenbaum for Plaintiffs and Appellants.

Greenberg Traurig, LLP, Scott D. Bertzyk, John F. 

Farraher Jr., Adil M. Khan and Michael E. McCarthy for 

Defendant and Respondent.

___________________________________
2

INTRODUCTION

A-List Inc. and another corporation A-List later acquired, 

H-List Inc. (collectively, A-List), owned a retail brand called 

Kitson. A-List and its founder, Fraser Ross, sued one of A-List’s 

lenders, Salus Partners LLC, alleging Salus took control of and 

mismanaged A-List’s business operations. The trial court 

granted Salus’s motion for summary judgment for one of the two 

reasons Salus argued it was entitled to judgment as a matter of 

law. The court ruled that, because Ross no longer owned shares 

in A-List, he did not have “standing” or “authority” to direct

A-List to file the lawsuit and that therefore neither Ross nor 

A-List had standing to assert the causes of action in the 

complaint. A-List (but not Ross) appeals from the ensuing 

judgment in favor of Salus. We affirm the judgment, but for the 

other reason Salus moved for summary judgment, which the trial 

court did not reach: A-List lacked standing to bring its causes of 

action because it had assigned them to a third party. 

FACTUAL AND PROCEDURAL BACKGROUND

A. A-List Struggles Financially and Enters into an 

Assignment for the Benefit of Creditors

Ross founded the Kitson retail brand in 2000 and formed 

A-List to operate Kitson fashion boutique stores. According to 

Ross and A-List, the company began to suffer financially after 

Ross had a serious illness in 2012. A-List and Salus

subsequently entered into a credit agreement, in which Salus 

agreed to loan A-List up to $15 million, depending on the value of 

A-List’s inventory and intellectual property.
3

Ross eventually transferred his shares in A-List to 

Christopher Lee, who was A-List’s chief executive officer at the 

time. After Lee left A-List (Lee says he resigned; Salus says he 

was fired), A-List hired James Wong as chief financial officer and 

chief restructuring officer and passed a resolution authorizing

Wong to “determine . . . whether it [was] desirable and in the best 

interest” of A-List and its creditors to “commence a sale or 

liquidation process, including . . . entering into an Assignment for 

the Benefit of Creditors with a company of Wong’s choosing . . . .” 

In December 2015 Wong signed, on behalf of A-List, an 

assignment for the benefit of creditors with Winter Harbor LLC. 

As part of the agreement, A-List assigned “in trust for the benefit 

of [A-List’s] creditors generally, all of [A-List’s] property and 

assets of every kind and nature . . ., including but not limited to 

. . . all choses in action (personal or otherwise) that are legally 

assignable together with the proceeds of any existing 

non-assignable choses in action” A-List later received.

B. Ross Files This Action Against Lee; Winter Harbor 

Files a Lawsuit Against Salus 

In August 2016 Ross (but not A-List) filed this action,

initially naming Lee as the only defendant. Ross alleged Lee 

made “false representations to induce [Ross] to forego . . . 

opportunities” that would have been “beneficial to [Ross] and 

Kitson and instead, enter into a series of transactions” that 

benefitted Lee. Ross also alleged Lee mismanaged the Kitson

businesses, causing the value of the companies to decrease.

Two months later Winter Harbor, in its capacity as A-List’s 

assignee, sued Salus in the United States District Court for the 

Central District of California. Winter Harbor alleged Salus 
4

breached a funding agreement that required Salus to pay, using 

proceeds obtained from liquidating A-List’s assets, $2.3 million 

A-List owed the federal taxing authorities. Winter Harbor and 

Salus ultimately settled that action and, as part of the 

settlement, Winter Harbor and Salus released each other from all 

known and unknown claims they had against each other “with 

respect to [A-List] or the Assignment for the Benefit of Creditors 

related thereto . . . .”

C. Ross Adds Salus as a Defendant and Settles With Lee; 

A-List Joins as a Plaintiff

After Winter Harbor and Salus settled their lawsuit, Ross

added Salus as a defendant in this action, along with two entities

related to Salus, HGI Management Holdings, LLC, Salus’s parent 

company, which Ross claimed “directed Salus’s operations,” and 

Spencer Spirit Holdings, Inc., which Ross alleged loaned A-List 

an additional $4 million after A-List obtained the loan from 

Salus.1 Ross alleged Salus and Spencer later “assert[ed] direct 

operational control over Kitson,” “failed to act in a commercially 

reasonable manner,” and ran “the [c]ompany to ruin.” In

particular, Ross claimed that the two lenders engaged in a 

“strategy to pump up Kitson’s inventory before liquidating” the 

company’s assets by ordering “more inventory than Kitson could 

sell” and promising “the vendors that they would be paid upon 

the sale of their merchandise,” but that the lenders instead 

1 Ross later added as a defendant BHK Investments, LLC, 

an alleged alter ego of Spencer created to fund Spencer’s loan to 

A-List. 
5

“closed all Kitson stores, hired liquidation firms to monetize the 

inventory, and never paid the vendors . . . .”

2

In July 2018 Ross and Lee reached a settlement where Lee 

agreed to transfer back to Ross some of the shares Lee claimed he 

still owned in A-List,

3 and Ross agreed to dismiss his causes of 

action against Lee. After the settlement, A-List joined the 

lawsuit as a plaintiff and with Ross filed the operative, third

amended complaint. As relevant to this appeal, A-List asserted 

causes of action for negligence, breach of fiduciary duty, and 

constructive fraud against Salus (as well as the other lenders),

based on the same alleged scheme by Salus and Spencer to 

increase Kitson’s inventory and liquidate the business’s assets. 

2 A-List contends this type of scheme is “common among 

asset-based lenders” and is “known in the retail industry as 

‘pump and dump.’” The more common use of the phrase “pump 

and dump” is a kind of securities fraud where shareholders 

“[m]ake claims that artificially inflate (‘pump up’) the value of 

stock [they] own,” “[g]ullible investors then buy the stock at 

inflated prices,” and the original shareholders “sell high and bug 

out with the inflated difference in value.” (Kruss v. Booth (2010) 

185 Cal.App.4th 699, 703; see United States v. Zolp (9th Cir. 

2007) 479 F.3d 715, 717 fn. 1 [“‘Pump and dump’ schemes ‘involve 

the touting of a company’s stock (typically microcap companies) 

through false and misleading statements to the marketplace. 

After pumping the stock, fraudsters make huge profits by selling 

their cheap stock into the market.’”].) A-List does not use the 

term in this sense.

3 As we will discuss, A-List and Salus dispute whether Lee 

still owned any shares to transfer to Ross.
6

D. The Court Grants Summary Adjudication on A-List’s 

Causes of Action and Later Enters Judgment in Favor 

of Salus

Salus and the other lenders filed a motion for summary 

adjudication on each of A-List’s causes of action, asserting they 

were entitled to judgment as a matter of law for two reasons.

First, they argued A-List did not have standing to assert its

causes of action because it had assigned them to Winter Harbor

as part of the assignment for the benefit of creditors. Second,

they argued A-List did not have standing to assert its causes of 

action because Ross did not own shares in A-List and “therefore 

has no authority to direct Kitson to assert any claims.” The

lenders contended that, when Lee left A-List in 2015, A-List

reacquired all of Lee’s shares pursuant to a stockholders’

agreement between Lee and A-List. Therefore, according to the 

lenders, Lee did not have any A-List shares to transfer to Ross 

when he agreed to do so in his settlement agreement with Ross.

The trial court granted the motion on the second ground. 

The court ruled that A-List reacquired Lee’s shares when his 

employment ended and that Lee had no shares in A-List “to 

transfer to Ross in 2018 . . . .” Therefore, the court ruled, Ross 

did not have “the requisite authority to direct the claims asserted 

by” A-List against the lenders. The court declined to consider the

lenders’ alternative argument that, because A-List had assigned 

its causes of action to Winter Harbor, A-List lacked standing to 

assert those claims in this action.

Meanwhile, Salus had filed a cross-complaint against 

A-List, seeking to recover money A-List allegedly failed to repay 

under their credit agreement. After the court granted summary 

adjudication on A-List’s causes of action, Salus’s cross-complaint
7

remained pending. A-List and Salus, however, agreed to a 

stipulated judgment in favor of Salus and against A-List on the 

cross-complaint. In June 2020 the trial court entered the 

stipulated judgment on the cross-complaint, and in July 2020 the 

court entered judgment in favor of Salus and against A-List on 

the third amended complaint.

4 A-List timely filed a notice of 

appeal from the judgment on the third amended complaint.

5

DISCUSSION

A. Applicable Law and Standard of Review

“Summary judgment is appropriate only where no triable 

issue of material fact exists and the moving party is entitled to 

judgment as a matter of law.’” (Regents of University of 

California v. Superior Court (2018) 4 Cal.5th 607, 618; see Code 

Civ. Proc., § 437c, subd. (c); Valdez v. Seidner-Miller, Inc. (2019) 

33 Cal.App.5th 600, 607.) “A defendant moving for 

summary adjudication of a cause of action must show that one or 

more elements cannot be established or,” as relevant here, “that 

there is a complete defense.” (Clark v. Superior Court (2021) 

62 Cal.App.5th 289, 298; see Regents, at p. 618; Mattei v.

4 We augment the record pursuant to California Rules of 

Court, rule 8.155(a)(1)(A) to include the parties’ stipulation and 

court’s judgment in this action. 

5 Spencer, BHK, and HGI are not parties to this appeal; they 

still have claims pending against A-List, and the trial court has 

not entered a judgment on any of those claims. 
8

Corporate Management Solutions, Inc. (2020) 52 Cal.App.5th 116, 

122.) 

A “‘“defendant moving for summary judgment based upon 

the assertion of an affirmative defense . . . ‘has the initial burden 

to show that undisputed facts support each element of the 

affirmative defense’ . . . .”’” (Shiver v. Laramee (2018) 

24 Cal.App.5th 395, 400; see Severin Mobile Towing, Inc. v. 

JPMorgan Chase Bank, N.A. (2021) 65 Cal.App.5th 292, 302; 

Sumner v. Simpson University (2018) 27 Cal.App.5th 577, 580.)

If “the defendant meets that burden, the burden shifts to the 

plaintiff to show a triable issue of material fact regarding the 

defense.” (Filosa v. Alagappan (2020) 59 Cal.App.5th 772, 778; 

see Shiver, at p. 400.) 

We review a ruling on a motion for summary adjudication 

de novo (Jacks v. City of Santa Barbara (2017) 3 Cal.5th 248, 

273; Michaels v. Greenberg Traurig, LLP (2021) 62 Cal.App.5th 

512, 520) and “decide independently whether the facts not subject 

to triable dispute warrant judgment for the moving party as a 

matter of law” (Mattei v. Corporate Management Solutions, Inc., 

supra, 52 Cal.App.5th at p. 122; see Regents of University of 

California v. Superior Court, supra, 4 Cal.5th at p. 618). We 

consider “‘“‘“all the evidence set forth in the moving and opposing 

papers except that to which objections were made and 

sustained.”’”’” (Hampton v. County of San Diego (2015)
9

62 Cal.4th 340, 347; see Sharufa v. Festival Fun Parks, LLC

(2020) 49 Cal.App.5th 493, 497.)

B. The Trial Court Did Not Err in Granting Salus’s 

Motion for Summary Adjudication

As discussed, the trial court ruled A-List “lacked standing” 

to bring its causes of action because Ross did not own shares in 

A-List and therefore did not have authority to direct A-List to 

bring this action. The trial court’s ruling on this issue was 

flawed. Generally, “[p]ersons have standing to sue when they are 

real parties in interest.” (Amstone v. Peninsular Fire Ins. Co.

(1991) 226 Cal.App.3d 1019, 1023; see Pacific Gas & Electric Co. 

v. Superior Court (2006) 144 Cal.App.4th 19, 23 [“Standing in a 

lawsuit is governed by Code of Civil Procedure section 367, which 

provides: ‘Every action must be prosecuted in the name of the 

real party in interest, except as otherwise provided by statute.’”].) 

Where a cause of action seeks redress for damage to a 

corporation, the corporation is the real party in interest and the 

proper party to assert the cause of action. (See Bader v. 

Anderson (2009) 179 Cal.App.4th 775, 788 [“where conduct, 

including mismanagement by corporate officers, causes damage 

to the corporation, it is the entity that must bring suit”]; PacLink 

Communications Intern., Inc. v. Superior Court (2001) 

90 Cal.App.4th 958, 965 [“‘“a corporation which suffers damages 

through wrongdoing by its officers and directors must itself bring 

the action to recover the losses thereby occasioned’””]; see also 

Schuster v. Gardner (2005) 127 Cal.App.4th 305, 312 [even in a 

shareholder derivative action, the corporation “is the real party

in interest to which any recovery usually belongs”].) Here, 

A-List—the corporate entity—claimed Salus’s mismanagement of 
10

A-List’s operations harmed the corporation. Regardless of 

whether Ross, A-List’s alleged shareholder, is a real party in 

interest and has standing to bring claims under such a theory, 

A-List is and does. 

Salus’s challenge is actually not to A-List’s standing, but to

Ross’s authority to manage A-List’s affairs. Salus, however, cites 

no authority (and, as the trial court observed, Salus cited none in 

its motion) for the proposition a defendant may raise as a defense 

to a cause of action asserted by a corporation (which is the real 

party in interest) that a shareholder or other person “directed” 

the corporation to file the lawsuit without proper authorization. 

Indeed, California law does not allow such a defense. 

Corporations Code section 208, subdivision (a), states: “No 

limitation upon the business, purposes or powers of the 

corporation or upon the powers of the shareholders, officers or 

directors, or the manner of exercise of such powers, contained in 

or implied by the articles or . . . by any shareholders’ agreement 

shall be asserted as between the corporation . . . and any third 

person . . . .” As the California Supreme Court has explained, 

this statute “restricts third parties from questioning the manner 

in which the corporate directors have exercised their powers, 

unless the third parties fall within” one of the exceptions listed in 

the statute, “such as the state when it is seeking to enjoin the 

continuation of unauthorized business, or the corporation is being 

dissolved” (Snukal v. Flightways Mfg., Inc. (2000) 23 Cal.4th 754, 

787, fn. 14), neither of which applies here. Otherwise, “[o]nly a 

shareholder, officer, or director” may “bring suit to challenge a 

corporation’s management or control.” (Korean Philadelphia 

Presbyterian Church v. California Presbytery (2000) 

77 Cal.App.4th 1069, 1083.) No purported shareholder, officer, or 
11

director of A-List has filed a lawsuit, or sought to intervene in 

this one, to prevent A-List from asserting its claims against 

Salus. Salus has no basis to question the authority on which 

A-List brings this action. (See id. at pp. 1082-1083 [religious 

association could not challenge a preliminary injunction 

requested by a church on the ground the church’s pastor “acted in 

excess of [his] authority” in seeking the injunction, where no 

“member of [the] board, nor any other member of the Church who 

oppose[d] [the pastor’s] control of the board [was] a party to [the] 

case”].)

We can affirm the trial court’s order granting summary 

adjudication, however, “‘if it is correct on any ground the parties 

had an adequate opportunity to address in the trial court, 

regardless of the reasons the trial court gave.’” (Wolf v. 

Weber (2020) 52 Cal.App.5th 406, 410; see Levya v. Crockett & 

Co. (2019) 7 Cal.App.5th 1105, 1108-1109 [“‘“we must affirm so 

long as any of the grounds urged by [defendants], either here or 

in the trial court, entitle [them] to summary judgment”’”].) And 

Salus’s second argument entitled it to judgment as a matter of 

law: A-List lacked standing to bring its causes of action against 
12

Salus because A-List previously assigned those causes of action to 

Winter Harbor.

6

1. Salus Met Its Burden To Show A-List Was Not 

the Real Party in Interest Because It Assigned 

Its Causes of Action to Winter Harbor

As stated, Code of Civil Procedure section 367 provides that 

“[e]very action must be prosecuted in the name of the real party 

in interest, except as otherwise provided by statute.” (See Doe v. 

Regents of University of California (2022) 80 Cal.App.5th 282, ___ 

[2022 WL 2286393, p. 8] [a “real party in interest is a ‘person who 

possesses the right to sue under the substantive law’”].) The 

real party in interest may assign to another person a right to 

assert a cause of action. (Civ. Code, § 954; see Casa Eva I 

6 Code of Civil Procedure section 437c, subdivision (m)(2), 

provides that, “[b]efore a reviewing court affirms an order 

granting . . . summary adjudication on a ground not relied upon

by the trial court, the reviewing court shall afford the parties an 

opportunity to present their views on the issue by submitting 

supplemental briefs.” Here, because the parties addressed the 

issue in their appellate briefs, supplemental briefing is not 

required. (See Hooked Media Group, Inc. v. Apple Inc. (2020) 

55 Cal.App.5th 323, 336, fn. 1 [“Because [the appellant] has been 

afforded an opportunity to present its views, no supplemental 

briefing is required.”]; Goddard v. Department of Fish & 

Wildlife (2015) 243 Cal.App.4th 350, 359, fn. 5 [“supplemental 

briefing is not required” because the “plaintiffs directly addressed 

the issue in their briefs, and the [defendant] addressed it in its 

reply brief”]; Bains v. Moores (2009) 172 Cal.App.4th 445, 471, 

fn. 39 [where “defendants directly addressed the issue in their 

briefs, and plaintiffs addressed it in their reply brief,” the 

“purpose of section 437c, subdivision (m)(2)” was “fully met”].) 

Nor has A-List requested supplemental briefing.
13

Homeowners Assn. v. Ani Construction & Tile, Inc. (2005) 

134 Cal.App.4th 771, 782 [causes of action “are assignable when 

they arise out of an obligation or out of the violation of a right of 

property,” italics omitted].) Once the assignor has assigned a 

cause of action, “‘“the assignee is the owner and has the right to 

sue on it,”’” and “‘“the assignor lacks standing to sue on the 

claim.”’” (California Bank & Trust v. Piedmont Operating 

Partnership, L.P. (2013) 218 Cal.App.4th 1322, 1347; accord,

Searles Valley Minerals Operations Inc. v. Ralph M. Parson 

Service Co. (2011) 191 Cal.App.4th 1394, 1402; see Botsford v. 

Haskins & Sells (1978) 81 Cal.App.3d 780, 784 [“‘An assignor 

may not maintain an action upon a claim after making an 

absolute assignment of it to another; his right to demand 

performance is extinguished, the assignee acquiring such 

right.’”]; McCown v. Spencer (1970) 8 Cal.App.3d 216, 225 

[same].) 

Salus presented undisputed evidence A-List transferred its

causes of action to Winter Harbor in December 2015, eight 

months before Ross (initially without A-List) filed this action. In 

the assignment for the benefit of creditors, A-List assigned to 

Winter Harbor “all of [A-List’s] property and assets of every 

kind,” including “all choses in action (personal or otherwise) that 

are legally assignable. . . .” A-List did not join this lawsuit and

assert its causes of action against Salus until nearly three years 

later, well after it assigned its causes of action (and in fact after 

Winter Harbor, pursuant to the assignment, filed and settled a 

lawsuit against Salus).

7 Therefore, Salus met its moving burden 

7 Salus also contends the general release in the Salus-Winter 

Harbor settlement agreement bars the claims asserted by A-List 
14

to show A-List lacked standing. (See Botsford v. Haskins & Sells, 

supra, 81 Cal.App.3d at pp. 783-784 [trial court properly granted 

summary judgment against a corporation where the corporation 

executed an agreement assigning to a trustee “all of its right, title 

and interest in and to all of its assets, of whatsoever nature and 

wheresoever situated,” fn. omitted].)

2. A-List Did Not Create a Triable Issue of 

Material Fact Regarding Whether Its Causes of 

Action Accrued After the Assignment

A-List’s primary argument is that it did not assign its 

causes of action to Winter Harbor (or that there are triable issues 

of fact regarding whether it did) because it assigned only causes 

of action that “existed” as of the date of the assignment and that

its causes of action against Salus did not “accrue” until after it 

executed the assignment for the benefit of creditors. Even 

assuming A-List intended to assign only “existing” causes of 

action, however, each of the causes of action A-List asserted in 

this action existed when A-List entered into the assignment for 

the benefit of creditors.

8 

“A cause of action is a legal obligation the plaintiff seeks to 

enforce against the defendant” that comes “into existence 

in this action. While A-List challenges the validity and scope of 

the assignment, as we discuss, A-List does not dispute that, if the 

assignment was valid, the release covered its claims.

8 As stated, the assignment provided that A-List was 

assigning, among other things, “all choses in action (personal or 

otherwise) that are legally assignable together with the proceeds 

of any existing non-assignable choses in action that be hereafter 
15

or arise[s]” when “all the elements have been established.” (In re 

Marriage of Klug (2005) 130 Cal.App.4th 1389, 1398; see Aryeh v. 

Canon Business Solutions, Inc. (2013) 55 Cal.4th 1185, 1191 

[“Traditionally at common law, a ‘cause of action accrues “when 

[it] is complete with all of its elements”—those elements being

wrongdoing, harm, and causation.’”]; Cline v. Yamaga (1979) 

97 Cal.App.3d 239, 245 [“A cause of action arises when the 

liability or obligation is established and suit may be brought.”].) 

“As a practical matter, a cause of action generally arises for the 

first time when the injury is suffered. [Citation.] Once injury 

occurs, the injured party has a property interest . . . .” (Marriage 

of Klug, at p. 1398.) 

In each of its causes of action, A-List sought redress for

wrongdoing by Salus, and for injury to A-List, that occurred

before the December 2015 assignment. For example, in support 

of each cause of action, A-List alleged that in May 2013 (when 

Salus agreed to loan money to A-List) Salus failed to disclose it 

“lacked the commercial lending license required to lend in 

California,” which caused A-List to agree to borrow money from 

Salus rather than pursue or accept a more lucrative purchase 

offer. A-List also alleged in support of each cause of action that 

Salus’s scheme to pump up Kitson’s inventory began immediately 

after A-List obtained the loan from Spencer in April 2015, which 

“culminated in the Fall of 2015” and caused damage to A-List by 

no later than several weeks before Christmas 2015. 

A-List does not dispute that the elements of its causes of 

action existed when it entered the assignment agreement. A-List

received by [A-List].” Salus did not argue in the trial court, and 

does not argue on appeal, this language covers assignable claims 

that did not yet exist.
16

argues instead that, under the discovery rule, a cause of action 

does not accrue until a plaintiff knows or has reason to know of 

the cause of action and that there are triable issues of material 

fact regarding when A-List’s officers and shareholders discovered 

Salus’s wrongdoing. A-List conflates when a cause of action

“comes into existence or arises,” i.e., when the party in interest 

“has a property interest” (In re Marriage of Klug, supra, 

130 Cal.App.4th at p. 1398), with when the limitations period for 

bringing that cause of action begins to run. “[A]ccrual of a cause 

of action in the sense of creation of an actionable claim is not the 

same as accrual for purposes of the statute of limitations. 

‘[A] cause of action may be viewed in the eyes of the law as 

“accruing” for different purposes on different dates, depending on 

the purpose for which the accrual determination is being sought.’” 

(Vanhooser v. Superior Court (2012) 206 Cal.App.4th 921, 929; 

see Nelson v. Flintkote Co. (1985) 172 Cal.App.3d 727, 733 

[“a statute of limitations is procedural; it affects the remedy only, 

not the substantive right or obligation”]; Piazza Properties, Ltd. v. 

Department of Motor Vehicles (1977) 71 Cal.App.3d 622, 628 

[same].) A-List’s causes of action against Salus existed when 

A-List assigned all “legally assignable” causes of action to Winter 

Harbor, and A-List cites no authority for the proposition that a

corporation may not or did not assign an existing cause of action 

solely because the corporation claims it didn’t know of the cause 

of action’s existence. (See Webb v. Pillsbury (1943) 23 Cal.2d 324, 

327 [“‘assignability of things [in action] is now the rule; 

nonassignability, the exception’”]; Times Out, LLC v. 

Youabian, Inc. (2014) 229 Cal.App.4th 1001, 1011 [same].)

The analogous rules governing causes of action held by a 

trustee in bankruptcy are instructive. “[W]hen a bankruptcy 
17

petition is filed,” an “‘estate’ is created” (Cusano v. Klein (9th Cir. 

2001) 264 F.3d 936, 945), and such an estate is similar to the 

trust created by an assignment for the benefit of creditors. (See 

Sherwood Partners, Inc. v. EOP-Marina Business Center, L.L.C.

(2007) 153 Cal.App.4th 977, 981-982 [“‘[a]n assignment for 

benefit of creditors is a business liquidation device available to an 

insolvent debtor as an alternative to formal bankruptcy 

proceedings,’” where “‘an insolvent debtor transfers his or her 

assets in trust to an assignee’”]; Credit Managers Assn. v. 

National Independent Business Alliance (1984) 162 Cal.App.3d 

1166, 1169 [same].) The “[a]ssets of the estate properly include 

any of the debtor’s existing causes of action” (Cusano, at p. 945), 

including “all causes of action that hypothetically could have been 

brought pre-petition,” “even if the debtor[ ] w[as] unaware of the 

claim.’” (Tyler v. DH Capital Management, Inc. (6th Cir. 2013) 

736 F.3d 455, 462; see March et al., Cal. Practice Guide: 

Bankruptcy (The Rutter Group 2021) ¶ 6:58 [“a cause of action is 

considered estate property even where the debtor is unaware of 

[the] claim during the course of the bankruptcy case”]; cf. Essex 

Ins. Co. v. Five Star Dye House, Inc. (2006) 38 Cal.4th 1252, 1259 

[“Under bankruptcy law, the trustee in bankruptcy receive[s] all 

causes of action that the bankrupt could have assigned.”].) As 

one bankruptcy court has explained, there is a “distinction 

between the claim and substantive rights coming into existence 

(‘acquired’), and the ‘accrual’ for the statute of limitations 

computation . . . . [¶] The application of [California’s] Discovery 

Rule . . . does not determine whether the interest of the [d]ebtor 

(the rights against the third-party) exist, just that the 

(procedural) statute of limitations would not begin to run until 

the [d]ebtor and her [b]ankruptcy [e]state knew of the pre-
18

existing rights. . . .” (In re Carroll (Bankr. E.D.Cal. 2018) 586 

B.R. 775, 789-790.) While a debtor may not “realize[ ] that she 

[has] a valid claim, . . . the claim (the legal interest) exist[s]

nonetheless” and becomes “part of the [e]state.” (Id. at p. 790; see 

Cusano, at p. 947 [“It is important . . . to distinguish principles of 

accrual from principles of discovery and tolling . . . for purposes of 

ownership in a bankruptcy proceeding.”].) Here, too, A-List’s 

causes of action against Salus existed when A-List assigned its 

causes of action to Winter Harbor, even if A-List did not know

about them. 

A-List also argues that Salus’s allegedly wrongful conduct 

“continued” after the assignment and that A-List did not assign 

to Winter Harbor causes of action arising from conduct by Salus 

that occurred after the assignment. A-List cites no authority in 

support of this argument. Nor is it persuasive. Even if Salus’s 

alleged misconduct continued after the assignment, Salus’s 

claims arise from a single course of conduct by Salus that violated 

a single right of A-List; namely, Salus’s scheme to take “direct 

operations control” over A-List “in a way that privileged [Salus’s] 

interests” as a “lender[ ] and liquidator[ ] over the interests” of 

A-List. (See Crowley v. Katleman (1994) 8 Cal.4th 666, 681 [A 

“‘cause of action’ is comprised of a ‘primary right’ of the plaintiff, 

a corresponding ‘primary duty’ of the defendant, and a wrongful 

act by the defendant constituting a breach of that duty. 

[Citation.] The most salient characteristic of a primary right is 

that it is indivisible: the violation of a single primary right gives 

rise to but a single cause of action.”].) Where, as here, “the series 

of injuries claimed . . . all trace to the same underlying conduct 

committed by the same defendant[ ], there is no basis to assign 

a later accrual date” to conduct that occurred after the initial 
19

wrongdoing and injury. (Choi v. Sagemark Consulting (2017) 

18 Cal.App.5th 308, 338.) A-List’s causes of action were complete 

with all of their elements before the assignment; A-List cannot 

split its causes of action to avoid the effect of the assignment. 

(See id. at p. 336 [“that damages accrued in stages, does not 

transform one primary right into many”]; Panakosta Partners, LP 

v. Hammer Lane Management, LLC (2011) 199 Cal.App.4th 612, 

634 [“‘“[a] single cause of action cannot be split either as to relief 

demanded or grounds on which recovery is sought”’”].) 

3. A-List Did Not Create a Triable Issue of 

Material Fact Regarding Validity of the 

Assignment 

Finally, A-List contends the assignment for the benefit of 

creditors was invalid (or at least there were triable issues 

regarding whether it was invalid) on two grounds. First, A-List

argues that the assignment was “approved by a Board of 

Directors comprised of only one director,” in violation of A-List’s 

by-laws, and that the director “was conflicted because he [was]

affiliated with the vendor hired to perform the liquidation sales” 

pursuant to the assignment. A-List cites no authority for the 

proposition that an assignment for the benefit of creditors 

approved by a sole director is “invalid” in either circumstance.9 

9 Under certain conditions, a corporation may set aside 

contracts between the corporation and a third party in which a 

director of the corporation has a material financial interest. (See 

Corp. Code, § 310, subd. (a).) A-List, however, does not contend 

and did not present evidence its director in 2015 had a material 

financial interest in Winter Harbor, the entity to which A-List

assigned its causes of action. Therefore, even if A-List’s director
20

And California law is to the contrary. Corporations Code section 

208, subdivision (b), provides: “Any contract or conveyance made 

in the name of a corporation which is . . . done within the scope of 

the authority, actual or apparent, conferred by the board or 

within the agency power of the officer executing it . . . binds the 

corporation, . . . .” More succinctly, “an officer can bind the 

corporation in dealings with third parties in which the officer has 

actual or apparent authority.” (GAB Business Services, Inc. v. 

Lindsey & Newsom Claim Services, Inc. (2000) 83 Cal.App.4th 

409, 421.) A-List presented no evidence that Wong, acting as 

A-List’s chief financial and restructuring officer under a 

resolution passed by the board, lacked apparent authority when 

he executed the assignment for the benefit of creditors. Nor did 

A-List present evidence Winter Harbor knew any of A-List’s 

directors had a purported conflict or were acting outside the scope 

of his or her authority under A-List’s bylaws. (See Newton v. 

Johnson Organ & Piano Mfg. Co. (1919) 180 Cal. 185, 191 [“bylaws . . . are of no binding force upon third persons having no 

knowledge of them”]; Aitken v. Stewart (1933) 129 Cal.App. 38, 46 

[same]; see Friedman et al., California Practice Guide: 

Corporations (The Rutter Group 2022) ¶¶ 4:342, 4:345 [“bylaw 

limitations generally have no effect on the rights of third parties

dealing with the corporation,” but are “effective in determining 

the liabilities of the officers to the corporation”]) 

Second, A-List argues the assignment for the benefit of 

creditors was invalid because Winter Harbor did not give notice 

was “conflicted” because of his affiliation with a party hired to 

perform the liquidation sales, A-List did not create triable issues

of material fact regarding whether the assignment for the benefit 

of creditors was invalid.
21

of the assignment to some of A-List’s creditors, in violation of 

Code of Civil Procedure section 1802.

10 A-List yet again cites no 

authority for its contention that failure to comply with section 

1802 renders an assignment for the benefit of creditors invalid—

at least as to the corporation.

11 And again California law is to the 

contrary. (See Bumb v. Bennett (1958) 51 Cal.2d 294, 299 

[because assignments for the benefit of creditors “existed at 

common law, . . . it follows that” such assignments are not 

“invalid because they do not conform to the provisions of the Civil 

Code relating to statutory assignments for the benefits of 

creditors”];

12 cf. Smith v. Harris (1954) 127 Cal.App.2d 311, 316 

[“[t]he general rule supported by the weight of authority holds 

10 Code of Civil Procedure section 1802, subdivision (a), 

provides: “In any general assignment for the benefit of 

creditors, . . . the assignee shall, within 30 days after the 

assignment has been accepted in writing, give written notice of 

the assignment to the assignor’s creditors, equity holders, and 

other parties in interest . . . .”

11 A-List cites one case suggesting the assignment “would be 

void as to nonconsenting creditors” who did not receive the 

required notice (Bernstein v. Equitable Discount Corp (1935) 

8 Cal.App.2d 265, 269), but no authority suggesting the 

corporation may invalidate the assignment and recover the 

assigned assets from the assignee.

12 The assignment between A-List and Winter Harbor states: 

“It is understood and agreed that this Assignment is a common 

law assignment for the general benefit of [A-List’s] creditors.”
22

that notice . . . to creditors of the assignor is not essential to 

complete the assignment” of a cause of action].)

DISPOSITION

The judgment is affirmed. Salus is to recover its costs on 

appeal.

SEGAL, J.

We concur:

PERLUSS, P. J.

FEUER, J.