Azure Limited v. I-Flow Corp.

Plaintiff Azure Limited owned nearly 19,000 shares of defendant I-Flow Corporation's stock. Plaintiff alleged defendant wrongly transferred the shares to the State of California as escheated property without notice. The court granted judgment on the pleadings, finding the Unclaimed Property Law (UPL) (Code Civ. Proc., § 1500 et seq.) [1] immunized defendant from any such liability.

(1) We disagree. The UPL immunizes corporations from civil liability only when they transfer escheated shares to the state in compliance with the provisions of the UPL. The UPL does not immunize corporations like defendant who allegedly transfer nonescheated shares to the state without giving the required notice. We reverse.

According to its complaint, plaintiff acquired nearly 95,000 shares of defendant's stock in 1990. It exchanged those shares in 1993 for almost 19,000 new shares pursuant to a reverse stock split. In 2003, plaintiff learned defendant had transferred its shares to the state as escheated property. Plaintiff asked the state to return its shares; the state told plaintiff it would receive any proceeds from the sale of its shares. In November 2004, when defendant's common…