Judge: Alison Mackenzie, Case: 19STCP05045, Date: 2024-08-06 Tentative Ruling
Case Number: 19STCP05045 Hearing Date: August 6, 2024 Dept: 55
NATURE OF PROCEEDINGS:
Defendants’ Motion for Judgment on the Pleadings
BACKGROUND
FELIX ANTONIO RUIZ (“Plaintiff”) filed this case in
2019, and in the operative First Amended Complaint (“FAC”) against PABLO
TORRES, MARCOS TORRES, PEDRO TORRES, PROVIDENCIA LLC (“Defendants”), Plaintiff
alleges that he slipped on a wet floor of a restaurant and grocery store called
Super Tiendas La Tapachulteca owned by Defendants. The causes of action are: 1)
Alter Ego and 2) Fraudulent Conveyance.
Defendants have filed a motion for judgment on the
pleadings, which Plaintiff opposes.
LEGAL STANDARD
The standard for ruling on a motion for judgment on
the pleadings is essentially the same as that applicable to a general demurrer,
that is, under the state of the pleadings, together with matters that may be
judicially noticed, it appears that a party is entitled to judgment as a matter
of law.¿(Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321-322,
citing Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205,
1216.)¿Matters which are subject to mandatory judicial notice may be treated as
part of the complaint and may be considered without notice to the parties.
Matters which are subject to permissive judicial notice must be specified in
the notice of motion, the supporting points and authorities, or as the court
otherwise permits. (Id.)¿The motion may not be supported by extrinsic
evidence. (Barker v. Hull (1987) 191 Cal.App.3d 221, 236.)¿¿
When the moving party is a defendant, he or she must
demonstrate that “The court has no jurisdiction of the subject of the cause of
action alleged in the complaint” or “The complaint does not state facts
sufficient to constitute a cause of action against that defendant.” (Code Civ.
Proc., § 438(c)(1)(B)(i)-(ii).)¿¿¿
MEET AND CONFER
The Court finds that Defendants fulfilled the meet and
confer requirement. (See Ingman Decl. ¶3.)
OBJECTIONS
Defendants’ objections to portions of the Declaration
of Derek Tabone in support of Plaintiff’s Opposition to Motion for Judgment on
the Pleadings are overruled.
REQUEST FOR JUDICIAL NOTICE
Defendants’ request for judicial notice is GRANTED (except
as to the truth of the matters) pursuant to Evidence Code Sections 452(b),
452(d), and 459(a).
Plaintiff’s request for judicial notice is GRANTED
pursuant to Evidence Code Sections 452(d) and 453.
ANALYSIS
Alter Ego Liability
Defendants argue that due process prevents Plaintiff
from imposing alter ego liability against them in this action because Plaintiff
obtained default judgment against Super Tiendas, which does not constitute
litigation on the merits. (Mot. 1:21-23.)
To assert alter ego liability, a plaintiff must
either: 1) sue the alter ego directly; 2) obtain a judgment first, then move to
amend the judgment to add the alter egos as defendants; or 3) after obtaining
judgment against the corporation, file an independent action against the alter
egos. (MSY Trading Inc. v. Saleen Automotive, Inc. (2020) 51 Cal.App.5th
395, 402.)
The FAC alleges that Plaintiff filed a Complaint
against Super Tiendas La Tapachulteca (“Super Tiendas”) and Defendants in Case
No. BC527130 on November 8, 2013. (FAC ¶¶14-18.) The FAC further alleges that Super
Tiendas and Defendants failed to respond. (FAC ¶¶16, 19.) The FAC further
alleges that default judgment was entered against Super Tiendas on December 5,
2016. (FAC ¶19.) As such, Plaintiff’s argument that Motores de Mexicali,
S.A. v. Superior Court of L.A. Cty (1958) 51 Cal.2d 172, is inapposite and
not controlling is unavailing. In Motores de Mexicali, S.A., the court
held that it was a violation of a person’s due process rights to hold a
proceeding to determine whether the individual is an alter ego and thus bound
to a judgment entered strictly by default against a corporation, where the
individual in no way participated in the action. (Motores de Mexicali, S.A.
v. Superior Court of L.A. Cty (1958) 51 Cal.2d 172, 176.) Here, Plaintiff
seeks to bind the Defendants to an already obtained default judgment under the
alter ego theory. Furthermore, it appears on the face of the FAC that
Defendants did not participate in the 2013 case.
Default Judgment is Void
Next, Defendants argue that the underlying default
judgment against Super Tiendas is void because Plaintiff failed to serve the
Statement of Damages prior to the entry od default. Defendants contend that
while the proof of service evidencing the service of the summons and complaint
mentions a statement of damages was also served with the FAC on April 12, 2016,
there was no statement of damages attached.
Pursuant to Code of Civil Procedure Section 425.11, a
statement of damages must be served on defendant in the same manner as a
summons before default may be taken. (Code Civ. Proc., §§ 425.11(c)-(d).) Furthermore,
“Forms adopted by the Judicial Council for mandatory use are forms prescribed
under Government Code section 68511. Wherever applicable, they must be
used by all parties and must be accepted for filing by all courts. In some
areas, alternative mandatory forms have been adopted.” (Cal. Rules of Ct., rule
1.31(a).)
The Statement of Damages attached to the declaration
of Tabone names La Tapachulteca, Inc. as the defendant not Super Tiendas La
Tapachulteca, Inc. dba La Tapachulteca, which is the entity that Plaintiff
entered default judgment against in Case No. BC527130. (Tabone Decl. ¶¶2-3, Ex.
B.) Moreover, the November 13, 2013, Statement of Damages does not appear to
have been filed with the Court. (Id.) Plaintiff therefore has not
established that he properly served a complete Statement of Damages with the FAC
that Plaintiff ultimately used to obtain the default judgment in the underlying
case. Thus, the underlying judgment that Plaintiff relies on to assert alter
ego liability against Defendants is defective.
Fraudulent Conveyance
Finally, Defendants argue that pursuant to Civil Code
Section 3439.09(c), Plaintiff’s second cause of action is barred by the seven
year statute of repose because it is premised on 2003 transfers, which are not
adequately pled in the FAC.
“Notwithstanding any other provision of law, a cause
of action under this chapter with respect to a transfer or obligation is
extinguished if no action is brought or levy made within seven years after the
transfer was made or the obligation was incurred.” (Civ. Code, § 3439(c).)
In opposition, Plaintiff contends that his fraudulent
conveyance claim can still be brought under the common law. However, Section
3439(c) also bars fraudulent transfer claims arising under common law after
seven years. (See In re JMC Telecom LLC (C.D. Cal. 2009) 416 B.R. 738,
743.) In fact, the In re JMC Telecom LLC court held that “an explicit
purpose of § 3439.09(c) is to ‘mitigate the uncertainty and diversity that have
characterized the decisions applying statutes of limitations to actions to
fraudulent transfers and obligations.’” (Id.) As such, “it would
therefore be ‘inordinate to bar CUFTA fraudulent transfer claims after seven
years while allowing common law fraudulent transfer claims to be brought
‘scores of years after the transfer.’” (Id.)
The FAC alleges that Defendant transferred the
business, La Tapachulteca II, to themselves and formed Providencia LLC in 2003.
(FAC ¶26.) The FAC further alleges that stripped the two corporations of their
assets to intentionally hide the actual ownership of the La Tapachulteca store
on Van Nuys Blvd. (FAC ¶¶28-29.) Plaintiff’s claims are past the seven year
statute of repose deadline. Lastly, equitable tolling does not extend the time
for filing a fraudulent transfer claim because it would be inconsistent with
the text of Section 3439(c). (In re JMC Telecom LLC, supra, 416
B.R. at 744.)
CONCLUSION
Based on the foregoing, the Court grants Defendant’s
Motion for Judgment on the Pleadings without leave to amend.