Code of Civil Procedure section 367 and standing to sue in California

Code of Civil Procedure section 367 and standing to sue in California are the topic of this blog post. The term standing to sue means the right to relief in court.  In order for a party to have standing to sue they must be the "real party in interest" with respect to the claims sued upon. The California Supreme Court has held that the issue of lack of standing to sue is not waived and may be raised at any time in a legal proceeding.

The law in California states that a party suing on a claim for relief must be the real party in interest unless a specific exception applies.

Except as otherwise provided by statute, "every action must be prosecuted in the name of the real party in interest . . ." Code of Civil Procedure § 367; see also Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1004.

Generally, the real party in interest is the person who has the right to sue under the substantive law. It is the person who owns or holds title to the claim or property involved, as opposed to others who may be interested or benefitted by the litigation. Gantman v. United Pac. Ins. Co. (1991) 232 Cal.App.3d 1560, 1566.

Plaintiff's lack of standing to sue on the claim is treated as a “jurisdictional” defect and is not waived by defendant's failure to raise it by demurrer or answer. “(C)ontentions based on a lack of standing involve jurisdictional challenges and may be raised at any time in the proceeding.” Common Cause of Calif. v. Board of Supervisors (1989) 49 Cal. 3d 432, 438; see also  Associated Builders & Contractors, Inc. v. San Francisco Airports Comm'n (1999) 21 Cal. 4th 352, 361.

The purpose of the real party in interest requirement is to assure that any judgment rendered will bar the owner of the claim sued upon from relitigating. "It is to save a defendant, against whom a judgment may be obtained, from further harassment or vexation at the hands of some other claimant to the same demand." Giselman v. Starr (1895) 106 Cal. 651, 657; see also Cloud v. Northrop Grumman Corp. supra at 1003.

Any party served with a summons and complaint should consider the issue of standing to sue. This is particularly true if they are the defendant in a collection case. This is due to the fact that in collection cases involving junk debt buyers the issue of lack of standing to sue often comes up.  Many if not most junk debt buyers cannot clearly show standing to sue.  This means that a motion for summary judgment, motion for nonsuit or motion for judgment might be appropriate depending on the circumstances of the case and the trial date.

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DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.
DISCLAIMER:
Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.
The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

Demurring to a complaint in California for lack of standing to sue

This blog post will discuss filing a general demurrer to a complaint in California based on plaintiff's lack of standing to sue. Standing to sue means the right to obtain relief in Court.  In order to have standing to sue, plaintiff must be the "real party in interest" with respect to the claims sued upon.

A general demurrer is made on one of two grounds, failure to state facts sufficient to constitute a cause of action, and the Court lacks subject matter jurisdiction. The grounds for a general demurrer are never waived. See Code of Civil Procedure § 430.80.

Code of Civil Procedure § 430.10 states, in pertinent part: "The party against whom a complaint or cross-complaint has been filed may object, by demurrer or answer as provided in section 430.30, to the pleading on any one or more of the following grounds...(e) the pleading does not state facts sufficient to constitute a cause of action.

The failure of the pleading to state a cause of action results from the fact that the complaint appears deficient on the face of the pleading or from judicially noticed matter. Hall vs. Chamberlin (1948) 31 Cal.2d 673, 679-680.

Section 425 of Code of Civil Procedure states that a complaint must contain "a statement of the facts constituting the cause of action in ordinary and concise language". A complaint must contain facts which are sufficiently clear and specific to inform both the Court and parties of the nature of the claim and the factual basis of the claim. Code of Civil Procedure §430.10.

Except as otherwise provided by statute, "every action must be prosecuted in the name of the real party in interest . . ." Code of Civil Procedure § 367; Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 1004.

Generally, the real party in interest is the person who has the right to sue under the substantive law. It is the person who owns or holds title to the claim or property involved, as opposed to others who may be interested or benefitted by the litigation. Gantman v. United Pac. Ins. Co. (1991) 232 Cal.App.3d 1560, 1566.

The real party in interest requirement goes to the existence of a cause of action; i.e., whether plaintiff has a right to relief. Lack of standing is not waived by failure to object. Pillsbury v. Karmgard (1994) 22 Cal.App.4th 743, 757-758.

The purpose of the real party in interest requirement is to assure that any judgment rendered will bar the owner of the claim sued upon from relitigating. "It is to save a defendant, against whom a judgment may be obtained, from further harassment or vexation at the hands of some other claimant to the same demand." Giselman v. Starr (1895) 106 Cal. 651, 657; see also Cloud v. Northrop Grumman Corp. supra at 1003.

For instance, a plaintiff who unintentionally failed to schedule her prepetition claim for wrongful termination as an asset in her bankruptcy action lacked standing to sue. However, the defect could be cured by substituting the bankruptcy trustee as the real party in interest or obtaining the trustee's abandonment of the claim. Judicial estoppel does not arise absent a finding of bad faith. Cloud v. Northrop Grumman Corp., supra at 1002-1003; see also Kelsey v. Waste Management of Alameda County (1999) 76 Cal.App.4th 590, 599.

When a party lacks standing to sue, the action must be dismissed, unless the complaint can be amended by substituting a party who has standing. Cloud v. Northrop Grumman Corp. supra at 1004-1011.

If a plaintiff clearly does not have standing to sue than a general demurrer on that basis should be filed.

Attorneys or parties in California who wish to purchase a sample demurrer to a complaint for California based on lack of standing can click below.

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The author of this article, Stan Burman, is a freelance paralegal who has worked in California litigation since 1995.

The author of this blog post, Stan Burman, is an entrepreneur and freelance paralegal that has worked in California and Federal litigation since 1995 and has created over 300 sample legal documents for California and Federal litigation.

If you are in need of assistance with any California or Federal litigation matters, Mr. Burman is available on a freelance basis. Mr. Burman may be contacted by e-mail at DivParalgl@yahoo.com for more information. He accepts payments through PayPal which means that you can pay using most credit or debit cards.

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Defending a credit card lawsuit in California

Defending a credit card lawsuit in California is the topic of this blog post. 

There has been a lot of publicity lately about the "produce the note" strategy in foreclosure litigation in the United States. However, the same basic issue is involved in credit card litigation. This blog post will briefly discuss a "produce the assignment" strategy for credit card litigation in California. The main issue discussed will be the issue of whether the collection agency or other assignee is the actual and proper assignee of the credit card company or other creditor, and thus has standing to sue. The author recently worked on a case in Orange County, California where Midland Funding, LLC is the Plaintiff, while they allege in the complaint that they are the assignee of a Chase credit card account and are suing for over $9,000.00, the defendant in the lawsuit received a settlement offer in June 2010 from another collection agency offering to settle the same Chase credit card account for just over $1,800.00.

This situation raises a very important issue in California, and presumably every other state in the United States. In California the plaintiff must be the "real party in interest" with respect to the claim sued upon. Except as otherwise provided by statute, "every action must be prosecuted in the name of the real party in interest." See Code of Civil Procedure § 367; also see Dino v. Pelayo (2006) 145 Cal.App. 4th 347, 353, (citing text); and Cloud v. Northrop Grumman Corp. (1998) 67 Cal. App. 4th 995, 1004, (citing text).

The purpose of the real party in interest requirement is to assure that any judgment rendered will bar the owner of the claim sued upon from relitigating. "It is to save a defendant, against whom a judgment may be obtained, from further harassment or vexation at the hands of some other claimant to the same demand." Giselman v. Starr (1895) 106 Cal. 651, 657; Cloud v. Northrop Grumman Corp. (1998) 67 Cal. App. 4th 995, 1003, (citing text).

Clearly if there are several alleged assignees attempting to collect on the same debt, only one of them is a valid assignee. And as shown previously, in California only a valid assignee can be the "real party in interest". There cannot be more than one "real party in interest".

And the issue of standing to sue is not waived by failing to raise it by either an answer or demurrer and can be raised at any time in a lawsuit, including for the first time on an appeal.

"Contentions based on a lack of standing involve jurisdictional challenges and may be raised at any time in the proceeding." See Common Cause of Calif. v. Board of Supervisors (1989) 49 Cal. 3d 432, 438, lack of standing can be raised for first time on appeal, see Associated Builders & Contractors, Inc. v. San Francisco Airports Comm'n (1999) 21 Cal. 4th 352, 361.

If a plaintiff cannot prove they have standing to sue then the lawsuit must be dismissed. When a party lacks standing to sue, the action must be dismissed, unless the complaint can be amended by substituting a party who has standing. Cloud v. Northrop Grumman Corp. (1998) 67 Cal. App. 4th 995, 1004-1011.

Any party being sued by a collection agency or other assignee should seriously consider the "produce the assignment" strategy. If as is often the case, the credit card company has "assigned" the credit card account balance owing to several different collection agencies this may result in the lawsuit either being dismissed by the plaintiff if they cannot produce an actual assignment, or result in much more favorable settlement terms being offered.

The basic "produce the assignment" strategy in brief is as follows:

The answer to the complaint should include an affirmative defense that the plaintiff is not a valid assignee, and thus lacks standing to sue. However, if the answer has already been filed this is not critical because as previously mentioned, the issue of standing to sue can be raised at any time.

Special interrogatories and requests for production of documents should be used to force the alleged "assignee" to prove that they are in fact the "real party in interest". A demand for a bill of particulars should also be used to force plaintiff to provide the details for each and every charge that is included in their lawsuit.

The author of this article, Stan Burman, is a freelance paralegal with over 15 years of experience in California civil litigation. Visit his website at http://www.legaldocspro.com

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