Azure Limited v. I-Flow Corporation
Court of Appeal of the State of California Fourth Appellate District,
Division of Three
Appeal from Superior Court of Orange County
Cite as 2008 SOS 3122

Claim for Corporate Immunity from Suit and Liability under UPL, Denied

Azure Limited owned nearly 95,000 shares of I-Flow Corporation’s stock in 1990. In 1993, those shares were exchanged by Azure Limited for almost 19,000 new shares pursuant to a reverse stock spit.

In 2003, Azure Limited learned that I-Flow Corporation had transferred its share to the State of California as escheated property. In that wise, Azure Limited asked the State of California to return its shares, the state otherwise told that it would receive any proceeds from the sale of the share.

In November 2004, when I-Flow Corporation’s common stock traded for $ 17.72 per share, Azure Limited learned that the State of California had sold its shares in June 2003 for 4.62 per share.

Upon knowing what had transpired over its share, Azure Limited sued I-Flow Corporation for Breach of Fiduciary Duty before the Superior Court of Orange County. The Azure Limited sought to recover the difference between the sales proceeds and the shares’ fair market value as of November 2004.

In its complaint, Azure Limited made the following allegations:

• I-Flow Corporation knew its location at all times


• I-Flow Corporation wrongly treated the shares as escheated


• I-Flow Corporation transferred the shares to the state without giving any notice

I-Flow Corporation move for judgment on the pleading in the complaint.

After considerations of the matter, the Superior Court of Orange County issued an order granting judgment on the pleadings, finding the Unclaimed Property Law (UPL) (Code Civil Procedure, § 1500 et seq.) granted absolute immunity to I-Flow Corporation from any such liability.

Consequently, the trial court entered judgment for I-Flow Corporation accordingly.

Thus, Azure Limited files this instant appeal before the California Court of Appeal Fourth Appellate District, Division of Three questioning the trial courts order and findings.

In reversing the trial court’s ruling, the appellate court held that where I-Flow Corporation who allegedly transferred non-escheated property to the state without giving notice as required by the Unclaimed Property Law, it was not immune from any liability.

The appellate court further held that the Unclaimed Property Law (UPL) immunizes corporations from civil liability only when they transfer escheated shares to the state in compliance with the provisions of the UPL. The UPL does not immunize corporations like defendant-I-Flow Corporation who allegedly transfer non-escheated shares to the state without giving the required notice.

In full, the matter is remanded with directions to the trial court to vacate its order granting the motion for judgment on the pleadings and to enter a new order denying the motion.