Gifford v. J & A Holdings (54 Cal. App. 4th 996, 1997)

Opinion

VOGEL (C. S.), P. J.

Introduction

Plaintiff William Gifford (plaintiff) sold produce on credit to Salad Works. Salad Works sold all its assets to defendant J & A Holdings, a California corporation (J & A). The Bulk Sales Law (Cal. U. Com. Code, § 6101 et seq.) required that, in order to protect creditors of Salad Works, notice of the intended sale be published and recorded at least 12 business days prior to the sale. (§§ 6104, 6105.) Contending that J & A failed to comply with the notice requirements, plaintiff brought this action for damages (§ 6107, subd. (a)) to recover from J & A $72,000 still owed to plaintiff by Salad Works. Following nonjury trial upon stipulated facts and brief testimony, the trial court rendered judgment for J & A. The court concluded J & A complied with the notice requirements or in the alternative made a good faith and commercially reasonable effort to comply. (§ 6107, subd. (c).) We reverse. The notice was recorded less than 12 business days before the date of anticipated sale specified in the notice. We conclude this was defective notice, and the attempt to cure the defect by merely postponing, without notice, the closing of escrow was not a commercially reasonable means of satisfying the statute’s purpose.

Factual, Procedural and Legal Background

Brief Overview of Bulk Sales Law

Section 6104 requires the buyer of a business to “(b) Give notice of the bulk sale in accordance with Section 6105 [and] [D (c) Comply with Section 6106.2 if the bulk sale is within the scope of that section.” Section 6105 sets forth the notice requirements. Section 6106.2 provides a procedure for paying creditors’ claims. If the transaction is through an escrow, section 6106.2 requires the escrow agent to apply the cash consideration for the purchase to pay the debts of the seller for claims due and payable before the date of the bulk sale, if such claims were timely filed on or before the day specified in the notice as the last day for filing claims. Section 6105, subdivision (a) requires the notice to state, among other matters, (par. 4) “the place and the anticipated date of the bulk sale,” and, (par. 5) if section 6106.2 applies, the matters required by section 6106.2, subdivision (f). The latter requires the notice to state “the name and address of the person with whom claims may be filed and the last date for filing claims, which shall be the business day before the date stated in the notice pursuant to paragraph (4) of subdivision (a) of Section 6105.” Section 6105, subdivision (b) requires that “At least 12 business days before the date of the bulk sale, the notice shall be: [<]0 (1) Recorded in the office of the county recorder in the county ... in which the tangible assets are located . . . . [