Paclink Communications International, Inc. v. Superior Court
Opinion
Opinion
Vogel, J.
Introduction
In this mandate proceeding, we conclude that three causes of action alleged by members of a limited liability company against two defendants can only be brought as a derivative action on behalf of the company. We therefore issue a writ compelling the superior court to sustain without leave to amend the demurrer filed on that basis.
Factual and Procedural Background
Because the function of a demurrer is to test the legal sufficiency of a complaint, we assume the truth of all facts properly pled. (See, e.g., Blank v. Kirwan (1985) 39 Cal.3d 311, 318 [ 216 Cal.Rptr. 718 , 703 P.2d 58 ].)
Insofar as is relevant to this proceeding, the first amended complaint alleges the following facts.
PacLink Communications (PacLink-1) was created in March 1996 as a limited liability company (LLC). It was an Internet service provider. Plaintiffs Henry Chow, John Mok, and Ivan Yeung were members of that eight-person LLC. Based upon plaintiffs’ initial capital contributions to PacLink-1 and its operating agreement, they had a “membership” or “ownership” interest equal to approximately 38 percent of PacLink-l’s business and assets.