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Cloud v. Northrop Grumman Corp.11/12/1998
l Procedure Before Trial, supra, §§ 2:1; 2:7 [only real party in interest has standing to sue; causes of action are property of bankruptcy estate, trustee is therefore real party in interest unless trustee abandons]; 4 Witkin, Cal. Procedure, supra, § 127.)
b. The effect of lack of standing.
Although the trial Judge and Northrop were therefore correct that plaintiff lacked standing, their apparent assumption that plaintiff's lack of standing was fatal to her complaint was mistaken. It is true that a complaint filed by a party who lacks standing is subject to demurrer. (See, e.g., Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial, supra, § 2:77; 4 Witkin, Cal. Procedure, supra, § 105.) The rationale for such a demurrer is generally stated to be that a complaint by a party lacking standing fails to state a cause of action by the particular named plaintiff, inasmuch as the claim belongs to somebody else. (see, e.g., Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial, supra, § 2:77) A more accurately stated rationale would be that there is a defect in the parties, since the party named as plaintiff is not the real party in interest. (Code of Civ. Proc., § 430.10, subd. (d) [demurrer may be based on ground that there is a "defect . . . of parties."].) In any event, "` suit is sometimes brought by a plaintiff without the right or authority to sue, and the amendment seeks to substitute the real party in interest. Although the original complaint does not state a cause of action in the plaintiff, the amended complaint by the right party restates the identical cause of action, and amendment is freely allowed.'" (Garrison v. Board of Directors (1995) 36 Cal.App.4th 1670, 1678, quoting 5 Witkin, Cal. Procedure (4th ed. 1997) Pleadings, § 1155, emphasis in original.)
The California Supreme Court has held that if the facts of the cause of action against the defendant would not be "wholly different" after amendment, a complaint filed by a party without standing may be amended to substitute in the real party in interest. (Klopstock, supra, 17 Cal.2d 13, 19-22; see also Kaley, supra, 187 Cal.App.3d 1187, 1195 at fn. 7 ["In the case of a trustee in bankruptcy seeking to be substituted in, the trial court lacks discretion not to allow the substitution. (11 U.S.C. §§ 541(a)(1) and 323(a).)"].) In Klopstock, the defendant contended that an amendment substituting "the newly appointed administratrix" as plaintiff "was, in effect, the institution of an entirely new suit on a different cause of action, which cannot be accomplished by an amendment of the complaint." (Klopstock, supra, 17 Cal.2d at p. 16.) The Klopstock court rejected this contention, finding that an amendment substituting the real party in interest as plaintiff did not raise a new cause of action and was permissible pursuant to Code of Civil Procedure section 473. (Id. at p. 21.) The Klopstock court reasoned: "In determining whether a wholly different cause of action is introduced by the amendment technical considerations or ancient formulae are not controlling; nothing more is meant than that the defendant not be required to answer a wholly different legal liability or obligation from that originally stated." (Id. at p. 20.) The court concluded that where the proposed amendment simply substituted the real party in interest in place of a party who lacked standing, and did not constitute the statement of a wholly different factual claim, allowing amendment was "well within the liberal discretion which is granted to the courts by Code of Civil Procedure, section 473." (Id. at p.21.) The court further explained that this Conclusion was supported by the reasoning of cases from California and elsewhere that had a
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