Achieve Software Corp. v. Garg Data International, Inc.

MEMORANDUM **

Plaintiff Achieve Software Corporation, an Indiana corporation, and Defendant Garg Data International, Inc., a California *455 corporation, entered into a 1997 “Software License and Service Agreement” in which they promised to settle all contractual disputes through arbitration. Garg filed a demand for arbitration of a contractual dispute in 2003. The arbitrator issued a ruling in favor of Achieve. Garg challenges the validity of the arbitrator’s ruling on the ground that Achieve was ineligible to participate in arbitration because it had failed to pay California franchise taxes in 2000.

A foreign corporation that fails to pay California franchise tax forfeits its right to exercise corporate powers within the state. Cal. Rev. & Tax Code § 23301 . Such forfeiture precludes the corporation from conducing intrastate business in California. See Cal. Corp.Code § 2203(c). But “[maintaining or defending any action or suit or any administrative or arbitration proceeding, or effecting settlement thereof or the settlement of claims or disputes” is not “intrastate business.” See Cal. Corp. Code § 191 (c)(1). Achieve was a corporation in good standing in Indiana at the time of…