Corporations Code section 2000, subdivision (c) provides a right to purchase the plaintiff’s shares as an alternative to litigating an involuntary dissolution lawsuit. “Under those circumstances, the purchasing shareholders may avoid the dissolution of the corporation and the appointment of any receiver by buying the plaintiff’s shares. Nothing in section 2000, subdivision (a) provides for a buyout independent of a pending involuntary dissolution suit.” (Kennedy v. Kennedy (2015) 235 Cal.App.4th 1474, 1481.) In short, a party’s right under section 2000 depends entirely on the existence of a cause of action for involuntary dissolution.
Thus, a plaintiff can dismiss the dissolution lawsuit before the section 2000 process begins and avoid the buy-out option. But what if the plaintiff dismisses the suit after the court orders a buy-out following a section 2000 hearing?
In Ontiveros v. Constable, (2018) 27 Cal. App. 5th 259, an aggrieved minority shareholder filed an action for involuntary dissolution under Corporations Code section 1800. The majority shareholders filed a motion under Section 2000 to buy-out Ontiveros’ shares and stay the action pending the appraisal process. The trial court granted the motion. Ontiveros then dismissed her case and filed a motion to terminate the appraisal and buy-out of her shares. Finding that she had the right to dismiss her case, the trial court granted the motion and terminated the buy-out. The appellate court reversed, finding that once the trial court granted the majority shareholder’s motion to invoke the buy-out option, the minority shareholder could not avoid a buy-out by dismissing her dissolution action.
In short, once the section 2000 motion is granted, the buy-out process begins and the dissolution action may no longer be dismissed.