Pacific Scene, Inc. v. Penasquitos, Inc.

Opinion

MOSK, J.

We are called upon in this case to determine whether an action under the equitable “trust fund” theory can be maintained against the former shareholders of a dissolved corporation, to the extent of their distribution of corporate assets, when a defective product manufactured by the corporation causes injury after dissolution. We conclude that the Legislature has barred such an action.

Pacific Scene, Inc. (hereafter Pacific) is a corporation producing tract homes. Prior to its dissolution in 1979, Peñasquitos, Inc., was a California corporation in the business of developing and…