When a Buyout Procedure is in Motion, a Plaintiff Can No Longer Dismiss Dissolution Action

Guttman v. Guttman (2021) 72 Cal.App.5th 396

In Guttman, the Plaintiff general partner sued his two co-equal general partners for dissolution of their limited partnership, the Guttman Family Limited Partnership, which owns Los Angeles County real estate. The Defendants initiated a statutory procedure to buy out out the Plaintiff's partnership interest, Corp. Code § 15908.02. The trial court granted the motion to commence the buyout process, and three court-appointed appraisers submitted valuations of the partnerships' properties. The Plaintiff stated that the appraisals were undervalued and dismissed his entire action without prejudice.

Although the trial court initially granted, they later vacated the dismissal, stating that the Plaintiff's dissatisfaction with the valuations was not grounds for dismissal. The Court of Appeal granted writ review and affirmed the order vacating the dismissal. The Court noted that, while a plaintiff suing for dissolution may dismiss his action before a motion to commence the statutory buyout process is granted, once the motion is granted and the buyout procedure begins, the Plaintiff no longer has the ability to dismiss the action under Code of Civil Procedure section 581. The Court likened the commencement of the buyout procedure to the commencement of trial under section 581(b)(1); therefore, it held that to allow dissolution after that point would frustrate the statutory buyout scheme, and serve to prolong, rather than terminate, litigation.

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