Judge: Anne Richardson, Case: BC722638, Date: 2023-10-31 Tentative Ruling

Case Number: BC722638    Hearing Date: January 10, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Plaintiff Shama Enterprises, LLC filed a motion for an order amending the judgment in this action to add non-parties as judgment debtors. The motion is unopposed.

After review, the Court GRANTS IN PART Plaintiff’s Motion to Amend the Judgment and Add Non-Parties as Judgment Debtors.

Background

This action arises from the breach of a lease agreement as to commercial property. On September 20, 2018, Plaintiff Shama Enterprises, LLC (“Plaintiff”) filed a Complaint against Defendants Clinica Medica San Miguel I.P.A. Medical Group and Does 1 to 100, alleging a single cause of action for Breach of Contract.

On February 6, 2019, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendants Clinica Medical San Miguel I.P.A. Medical Group, Mahfouz M. Michael (collectively, “Defendants”), and Does 1 to 15, alleging causes of action for: (1) Breach of Contract and (2) Alter Ego.

On March 7, 2019, Defendants filed an Answer to the Complaint.

On June 30, 2020, the Court held a final status conference, mandatory settlement conference, and jury trial in this action, which only Plaintiff’s counsel attended. Plaintiff’s counsel represented that the parties had settled the case. The Court therefore vacated its hearings, ordered the FAC dismissed without prejudice, and stated that it “[retained] jurisdiction to make orders to enforce any and all terms of settlement, including judgment, pursuant to Code of Civil Procedure Section 664.6.” (06/30/20 Minute Order.)

On October 5, 2023, Plaintiff filed a motion to enforce the settlement agreement, i.e., seeking to enforce the settlement insofar as Defendants defaulted on the settlement in April 2023. (10/31/23 Minute Order at pp. 1-2.)

On October 31, 2023, after hearing, the Court granted in part Plaintiff’s motion to enforce settlement. The Court granted the motion as to the order enforcing the settlement and entry of judgment against Defendants pursuant to the terms of the February 18, 2020, settlement agreement. (10/31/23 Minute Order, p. 4.) The Court, however, denied the motion as to Guarantors MSP Properties, LLC, MSP Properties V, LLC, and MSP Properties VIII, LLC because “Guarantors are not parties to this action, and though they have agreed to the jurisdiction of this Court . . . there must first be a judgment in this action, after which Guarantors can be added to the action pursuant to Code of Civil Procedure section 187.” (10/31/23 Minute Order, p. 4.)

On December 1, 2023, judgment in this action was entered against Defendants in the amount of $97,668.90. The Court entered judgment “pursuant to the terms of the [s]ettlement agreement of February 18, 2020.” (Judgment, 1:19-23.)

The Instant Motion

On December 8, 2023, Plaintiff filed and served the instant unopposed motion (the “Motion”) for an order amending the judgment to name the following non-parties as additional judgment debtors: (1) MSP Properties, LLC; (2) MSP Properties V, LLC; and (3) MSP Properties VIII, LLC (collectively, “Guarantors”). Plaintiff also seeks to amend the judgment to add Donna Michael as a judgment debtor. The Motion is unopposed. Any opposition to the Motion was required to have been filed and served at least nine court days prior to the hearing. (Code Civ. Proc., § 1005, subd. (b).) A facially valid proof of service was filed on December 8, 2023.

The Motion is made on the grounds that the addition of Guarantors, as well as Donna Michael, to the judgment is necessary to carry out the parties’ intent and the judgment of December 1, 2023. Plaintiff contends that the equities overwhelmingly favor amending the judgment to prevent injustice to Plaintiff.

Motion to Amend Judgment and Add Non-Parties as Judgment Debtors: GRANTED IN PART.

Legal Standard:

“When jurisdiction is, by the Constitution or this Code, or by any other statute, conferred on a Court or judicial officer, all the means necessary to carry it into effect are also given; and in the exercise of this jurisdiction, if the course of proceeding be not specifically pointed out by this Code or the statute, any suitable process or mode of proceeding may be adopted which may appear most conformable to the spirit of this Code.” (Code Civ. Proc., § 187.)

“Under section 187, the trial court is authorized to amend a judgment to add additional judgment debtors.” (Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 508.) “[A] court may amend its judgment at any time so that the judgment will properly designate the real defendants.” (Ibid. [quotations omitted].) “The greatest liberality is to be encouraged in the allowance of such amendments in order to see that justice is done.” (Ibid. [quotations omitted, citation omitted].) “Amendment of a judgment to add an alter ego is an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant but is merely inserting the correct name of the real defendant.” (Carolina Casualty Ins. Co. v. L.M. Ross Law Group (2012) 212 Cal.App.4th 1181, 1188 [quotations omitted, citations omitted].) “[E]ven if all the formal elements necessary to establish alter ego liability are not present, an unnamed party may be included as a judgment debtor if the equities overwhelmingly favor the amendment and it is necessary to prevent an injustice.” (Id. at p. 1188-89 [quotations omitted, citations omitted].)  

Analysis:

I.  Appropriateness of Amending the Judgment to include Guarantors

According to the declaration of Plaintiff’s counsel, Margaret M. Kame (“Kame”), in support of the Motion, on February 18, 2020, Plaintiff entered into a settlement agreement with Defendants. (Kame Decl., ¶ 7; Exhibit 1.) On February 18, 2020, Guarantors signed a guarantee agreement, agreeing to guarantee Defendants’ obligations under the settlement agreement. (Kame Decl., ¶ 8; Exhibit 2.) Based on the settlement agreement and guarantee agreement, Plaintiff dismissed its complaint against Defendants and the Court issued an order retaining jurisdiction to make orders to enforce the terms of settlement including judgment. (Id., ¶ 10; Exhibit 3.) Guarantors are legal entities owned by Defendant Mahfouz M. Michael. (Id., ¶ 9.) Plaintiff’s motion to enforce settlement was granted on October 31, 2023, and judgment was entered thereon on December 1, 2023. (Id., ¶ 11; Exhibits 4 and 5.) Guarantors have been managed and controlled by Defendant and Judgment Debtor Mahfouz M. Michael. (Id., ¶ 12; Exhibits 6-8.)

According to the guarantee agreement, the Guarantors assumed liability for Defendants’ debts and obligations pursuant to the settlement agreement, as well as submitted to this Court’s jurisdiction. (Kame Decl.; Exhibit 2 at ¶ 1(b), 1(c), and 5(r).) Guarantors have therefore assumed liability for any breach of the settlement agreement and grounds exist to amend the judgment to include Guarantors. The Court finds that injustice would result if Guarantors were not held liable for their obligations.

II.  Amending the Judgment to Include Donna Michael

Plaintiff contends that members of a dissolved LLC may be sued in the name of the LLC and, because Donna Michael was a former co-member of Guarantor MSP Properties, LLC, Donna Michael should be named individually in the name of MSP Properties, LLC.

“As a matter of procedure only, and not for purposes of determining liability, members of the dissolved limited liability company may be sued in the name of the limited liability company upon any cause of action against the limited liability company.” (Corp. Code, § 17707.07, subd. (a)(3) [emphasis added].) A cause of action against a dissolved limited liability company may be enforced against members of the dissolved limited liability company “[i]f any of the assets of the dissolved limited liability company have been distributed to members . . . to the extent of the limited liability company assets distributed to [such member] upon dissolution of the limited liability company.” (Corp. Code, § 17707.07, subd. (a)(1)(B).)  

While Plaintiff has submitted evidence that Donna Michael was a manager or member of MSP Properties, LLC (Kame Decl.; Exhibit 6), the Court finds that Plaintiff has failed to provide a legally sufficient reason for amending the judgment to add Donna Michael. Plaintiff argues that MSP Properties, LLC filed a Certificate of Cancellation on June 27, 2022; however, Plaintiff presents no evidence to support such fact. Moreover, while Mark Aprahamian declares that he did not learn of the termination of MSP Properties, LLC until June 27, 2022 (Aprhamian Decl., ¶ 7), such fact does not warrant a finding that Donna Michael should be added as a judgment debtor to an amended judgment.

Plaintiff’s reliance on Corporations Code section 17707.07, subd. (a)(3) is not persuasive because such section only allows a member of a limited liability company to be sued in the name of the limited liability company. Also, Donna Michael was not a signatory to the guarantee agreement. Moreover, Plaintiff presents no evidence that any assets of MSP Properties, LLC have been distributed to Donna Michael to warrant enforcement of a cause of action under Corp. Code § 17707.07(a)(1)(B). Thus, the Court finds that amending the judgment to add Donna Michael is not appropriate.

III.  Attorneys’ Fees, Filing Fees, and Service Fees

Plaintiff contends that attorneys’ fees, filing fees, and service fees for the Motion should be added to the judgment.

Section 5(o) of the guarantee agreement provides that “[i]n the event it is necessary for either to retain the services of an attorney . . . to enforce this [a]greement . . .  the prevailing party agrees to pay to the non-prevailing party as a result thereof. If the Beneficiary is the prevailing party, then such costs, fees and expenses shall be included in Costs.” (Kame Decl.; Exhibit 2 at ¶ 5(o).) Plaintiff is defined as the Beneficiary under the guarantee agreement. Counsel for Plaintiff declares that: (1) she has spent four hours preparing the motion at an hourly rate of $325.00 per hour (Kame Decl., ¶ 13); (2) her hourly rate for attending hearings is $425.00 per hour (Id.); (3) the cost of filing the motion was $61.65 (Id., ¶ 14); and (4) the cost of overnight delivery, the method of delivery, per section 5(l) of the guarantee agreement, is expected to be approximately $120.00 (Id., ¶ 15.) Plaintiff seeks attorneys’ fees, filing fees, and service fees in the amount of $1, 725.00. (Id., ¶ 13.)

Plaintiff’s request for attorneys’ fees, filing fees, and service fees cannot be granted as it is procedurally improper. “A notice of motion must state in the opening paragraph the nature of the order being sought and the grounds for issuance of the order.” (Cal. Rules of Court, Rule 3.110, subd. (a).) Here, the notice of motion is void of any request for attorneys’ fees, filing fees, and service fees. (See Motion at 1:25-2:15.) Nor is this request in the caption of the motion, or anywhere in the first six pages of the memorandum of points and authorities. Due process requires adequate notice. (Fenn v. Sherriff (2003) 109 Cal.App.4th 1466, 1481.)

The Court therefore DENIES Plaintiff’s request for attorneys’ fees, filing fees, and service fees related to the Motion.

Accordingly, the Motion is GRANTED IN PART.

Plaintiff’s request to amend the judgment to add MSP Properties, LLC, MSP Properties V, LLC, and MSP Properties, VIII, LLC as judgment debtors is GRANTED.

The Court DENIES Plaintiff’s request to amend the judgment to add Donna Michael as a judgment debtor.

The Court DENIES Plaintiff’s request to amend the Judgment to add attorneys’ fees, filing fees, and service fees.

Conclusion

Plaintiff’s Motion to Amend the Judgment to Add Non-Parties as Additional Judgment Debtors is GRANTED IN PART.  

Plaintiff’s request to amend the judgment to add MSP Properties, LLC, MSP Properties V, LLC, and MSP Properties, VIII, LLC as judgment debtors is GRANTED.

The Court DENIES Plaintiff’s request to amend the judgment to add Donna Michael as a judgment debtor.

The Court DENIES Plaintiff’s request for attorneys’ fees, filing fees, and service fees.