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CALIFORNIA CORPORATE & SECURITIES LAW

This California Court Held That A Limited Partnership Is No Person

In preceding posts, I commented on the multifarious definitions of “person” in the Securities Act of 1933, the Exchange Act of 1934 and various laws within the California Corporations Code.  As noted, the Corporations Code’s definition of “person” is short but open-ended:

“Person” includes a corporation as well as a natural person.

Cal. Corp. Code § 18.  It turns out that Section 17 of the California Code of Civil Procedure includes an identical definition.  One might expect that a court would have little trouble concluding that this definition of “person” compasses a limited partnership.  However, the Court of Appeal in Diamond View v. Herz, 180 Cal. App. 3d 612 (1986) concluded otherwise.

It turns out that the case began in the plaintiff’s tavern where the defendant allegedly “becomes drunk or otherwise belligerent [sic] and harasses, annoys, and starts fights with Plaintiff’s patrons”.  The plaintiff sought, and obtained, an injunction pursuant to former CCP § 527.6 restraining the defendant from “alarming, annoying or harassing” the plaintiff and its manager.  The defendant appealed arguing that the plaintiff was not a person in whose favor an injunction may be granted under the statute.

After observing that “[t]he notoriously ambiguous term ‘person’ has long plagued the law”, the Court concluded the term must be read in context.  This required a bit of creative reading, as the phrase “unless otherwise apparent from the context” appeared in second paragraph of Section 17 while “person” was defined in the first.  (The statute was subsequently amended so that this qualifying phrase now applies to all of the defined terms in Section 17.)  Having creatively blended the various statutory provisions, the Court then analyzed the legislative intent in enacting CCP § 527.6.  According to the Court, the legislature intended to protect only an individual’s constitutional rights to pursue safety, happiness and privacy under the California Constitution.

Unless one is willing to anthropomorphize limited partnerships, it is difficult to envisage how they might be alarmed, annoyed or harassed.  Nonetheless, it is always distressing to see courts engage in interpretative gymnastics when the legislature could have easily used “individual” or “natural person”.

[Note to readers: Although there is a current CCP § 527.6, the statute at issue in this case was a former version of the statute, which has been amended many times in the ensuing years.]

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