Judge: Christian R. Gullon, Case: 22PSCV02540, Date: 2023-10-11 Tentative Ruling

Case Number: 22PSCV02540    Hearing Date: October 11, 2023    Dept: O

Tentative Ruling

Plaintiff’s APPLICATION FOR DEFAULT JUDGMENT is DENIED without prejudice as

Defendant Li has not been dismissed. If judgment is sought against individual defendant, the

application is denied WITH prejudice for failure to sufficiently allege alter ego.

Background

This is a contracts case. Plaintiff YCT LOGISTICS, INC (“Plaintiff”) alleges the following

against SHOE REPUBLIC LA, INC. and DAVID LI (“Defendants”):[1] Defendants hired Plaintiff as the freight forwarder agent to ship 8 containers shipments, but Defendants have not paid any of the invoices for a total of $178,421.01.

On December 7, 2022, Plaintiff filed suit for 1. Alter Ego – Piercing The Corporate Veil 2. Breach Of Written Contract 3. Breach Of Oral Contract 4. Common Counts - Services Renders 5. Common Counts – Open Book Account 6. Common Counts – Account Stated 7. Breach Of The Implied Covenant Of Good Faith And Fair Dealing 8. Unjust Enrichment 9. Promissory Estoppel 10. Fraud 11. Negligent Misrepresentation 12. Unfair Competition In Violation Of Business & Professions Code §§ 17200, Et Seq.

On January 27, 2023, default was entered against Defendants.

On February 15, 2023, Plaintiff filed an application for entry of default judgment.

On May 23, 2023, Defendants filed a Notice of Stay of Proceedings.

On June 13, 2023, the court continued the hearing on this default judgment application due to bankruptcy proceedings.

On June 26, 2023, Plaintiff filed a NOTICE OF LIFTING BANKRUPTCY STAY PURSUANT TO 11 U.S.C. § 362(c) and 11 U.S.C. § 727(a), indicating that on February 1, 2023 the Bankruptcy case was closed. That same day, the instant application for default judgment was filed.

Discussion

Plaintiff seeks default judgment against Defendant SHOE REPUBLIC LA, INC in the total amount of $188,840.66. (See JUD-100 form and CIV-100 form.) For clarity, default judgment is not sought against the individual Defendant Li. However, David Li, has not been dismissed. (See CCP section 585; see also Cal. Rules of Court, Rule 3.1800.) (Only Does 1 through 10 were dismissed on 2/15/2023.) For that reason, the application is denied without prejudice, pending his dismissal.

To the extent that Plaintiff seeks default judgment against the corporate and individual Defendant—considering that the declaration filed in support of the default judgment application makes reference to alter ego allegations (Tsang Decl., p. 1) and David Li has not been dismissed—the application would be denied with prejudice as the complaint does not allege sufficient facts to support piercing the corporate veil. The allegations (Complaint ¶33) are merely a recitation of all the factors used to assert alter ego. (See Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 512-513 [alter ego test host of factors].) Thus, as the test for a default judgment is that there be a well-pled complaint, but here, alter ego is merely conclusory, the complaint is not well-pled. application. (See Kim v. Westmoore Partners, Inc. (2011) 201 Cal.App.4th 267, 272-286; see also Vasey v. California Dance Co. (1977) 70 Cal.App.3d 742, 749 [“In order to prevail in a cause of action against individual defendants based upon disregard of the corporate form, the plaintiff must plead and prove such a unity of interest and ownership that the separate personalities of the corporation and the individuals do not exist, and that an inequity will result if the corporate entity is treated as the sole actor. [Citations]. Respondent's pleadings and the evidence he presented at the default hearing fell far short of meeting these requirements.”].)

Conclusion

Based on the foregoing, should Plaintiff seek default solely against the corporate defendant, the application is denied without prejudice as Defendant David Li is to be dismissed. Should Plaintiff seek default judgment against both the corporate and individual defendant, the application is denied with prejudice as the complaint is not well-pled.