Kline Hawkes California SBIC, L.P. v. Superior Court

Petitioners filed an action against real parties in interest, including Idealab, Inc., for breach of fiduciary duty, removal of directors, inspection of corporate books and records, breach of contract and fraud. In the fourth cause of action of the third amended complaint, petitioners seek the dissolution and liquidation of Idealab. Petitioners allege that they are owners of 7.25 million Series D preferred stock in Idealab, which they purchased for $725 million, and that Series D preferred stock has a liquidation preference of $100. Petitioners contend that this gives them standing under Corporations Code section 1800, subdivision (a)(2)(iii) to file a petition for the involuntary dissolution of Idealab.

The trial court disagreed and found that petitioners did not have standing to file a petition for the dissolution and liquidation of Idealab. The court sustained the demurrer by real parties in interest to the fourth cause of action without leave to amend. Pursuant to the provisions of Code of Civil Procedure section 166.1, the trial court indicated that its ruling on the demurrer to the fourth cause of action involved a controlling question of law as to which there is a…