Judge Daniel M. Crowley, Case Number: 23STCP00015, Date: 2024-05-15 Tentative Ruling

Petitioner Ginadan Venture 2, LLC’s motion to amend the judgment to include Albert Bernal is granted. Petitioner is to submit a proposed amended judgment within ten days.

Petitioner Ginadan Venture 2, LLC (“GV2”) (“Petitioner”) moves for this Court to amend the judgment in this matter entered on February 1, 2024, against Respondents Manuel Bernal (“Manuel”), Bernal Capital Group (“BCG”) and 702 Saint Andrews, LLC (“Seller”) (collectively “Respondents”) to include Albert Bernal (“Albert”) as a judgment debtor on the grounds Albert (i) is a general partner of Respondent and judgment debtor BCG; (ii) is the alter ego of Respondent and judgment debtor BCG; (iii) is the alter ego of respondent and judgment debtor Seller; (iv) actively participated in the defense of Respondents and judgment debtors BCG and Seller in the underlying arbitration; (v) actively participated in and was present in the trial in the underlying arbitration; and (vi) was declared by the arbitrator in the arbitration award, and as confirmed by and in the judgment, to be the general partner and alter ego of Respondent and judgment debtor BCG. (Notice Motion, pg. 2; C.C.P. §187.)

Respondents’ 5/2/24 evidentiary objections to the Declaration of David Taran (“Taran”) are overruled as to Nos. 1 and 2.[1]

Respondents’ 5/2/24 evidentiary objection to the Declaration of Daniel Rudyak (“Rudyak”) is overruled.

On December 6, 2023, the court granted Petitioner’s petition to confirm the December 2, 2022, arbitration award (“Award”) by Gordon Eng (“Arbitrator”), and on February 1, 2024, entered judgment (“Judgment”) against Respondents. The underlying issues relevant to this motion were litigated in the arbitration, decided by the Arbitrator in the Award and confirmed in the Judgment: Albert is a “general partner” and “an alter ego of” BCG; Albert’s actions “cannot be separated into actions he has taken on behalf of Seller and on behalf of [BCG] because the 2 companies are intertwined”; and the “claims in this case include fraud and intentional misrepresentations . . . [t]he distinction between [BCG] and Seller has been clouded by the actions of Albert Bernal, Manuel Bernal, and [BCG] . . . the Arbitrator finds that the liabilities of Seller are equally allocable to [BCG].” (See Judgment; Decl. of Taran ¶3, Exh. A at pg. 16, §§11-14.)

Petitioner filed the instant motion on April 19, 2024. Respondents filed their opposition on May 2, 2024. Petitioner filed its reply on May 8, 2024.

“Section 187 grants every court the power and authority to carry its jurisdiction into effect. [Citation.] This includes the authority to amend a judgment to add an alter ego of an original judgment debtor, and thereby make the additional judgment debtor liable on the judgment. [Citation.]” (Highland Springs Conference & Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 280, internal citations omitted.)

“Amending a judgment to add an alter ego of an original judgment debtor ‘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.’ [Citation.]” (Id., internal citations omitted.)

“Section 187 contemplates amending a judgment by noticed motion. [Citations.] The court is not required to hold an evidentiary hearing on a motion to amend a judgment, but may rule on the motion based solely on declarations and other written evidence. [Citation.]” (Id., internal citations omitted.)

“To prevail on the motion, the judgment creditor must show, by a preponderance of the evidence, that: ‘(1) the parties to be added as judgment debtors had control of the underlying litigation and were virtually represented in that proceeding; (2) there is such a unity of interest and ownership that the separate personalities of the entity and the owners no longer exist; and (3) an inequitable result will follow if the acts are treated as those of the entity alone.’ [Citation.] The decision to grant or deny the motion lies within the sound discretion of the trial court [citation] and will not be disturbed on appeal if there is a legal basis for the decision and substantial evidence supports it. [Citation.]” (Id., internal citations omitted.)

“In determining whether there is a sufficient unity of interest and ownership, the court considers many factors, including ‘the commingling of funds and assets of the two entities, identical equitable ownership in the two entities, use of the same offices and employees, disregard of corporate formalities, identical directors and officers, and use of one as a mere shell or conduit for the affairs of the other.’” [Citation.] Inadequate capitalization of the original judgment debtor is another factor. [Citation.] No single factor governs; courts must consider all of the circumstances of the case in determining whether it would be equitable to impose alter ego liability. [Citation.]” (Id. at pgs. 280-281, internal citations omitted.)

Petitioner’s motion to amend the judgment to include Albert is granted. Here, Petitioner demonstrates, by a preponderance of the evidence, that Albert is an alter ego of BCG based on the Arbitrator’s findings:

Based on the evidence discussed above, the Arbitrator finds that there is a sufficient basis to find that Manuel Bernal and Albert Bernal had a general partnership relationship, operated under the [Bernal Capital] name, and that the Property was an asset of [BCG]. They presented themselves on the BCG website as co-owners, they used [BCG] emails indicating they were working on the transaction which is the subject of this case as a [BCG] matter, [BCG] and had a for profit purpose as represented on the [BCG] website as including real estate investment.

“With regard to Seller, the evidence in the case shows that Seller was or is represented by [BCG] and its general partners Manuel Bernal and Albert Bernal as an alter ego of [BCG]. Therefore, they can be responsible under the attorneys’ fee provision of the PSA.” (Judgment, Exh. A at pg. 21, §7.)

Arbitrator finds that the actions of Albert Bernal cannot be separated into actions he has taken on behalf of Seller and on behalf of [BCG] because the 2 companies are intertwined. The [BCG] business includes taking actions with regard to its portfolio properties (which included the Property) and in selling the Property Albert Bernal would have also been taking action for the Seller with regard to the Property. By their own actions Albert Bernal and Manuel Bernal have at a minimum been grossly negligent is allowing the public to believe they operated together under [BCG] or alternatively they intentionally intended to mislead the public with regard to their relationship (and their relationship to the Property).

“The claims in this case include fraud and intentional misrepresentations. The distinction between [BCG] and Seller has been clouded by the actions of Albert Bernal, Manuel Bernal, and [BCG]. Arbitrator finds that the liabilities of Seller are equally allocable to [BCG].” (Judgment, Exh. A at pg. 16, §14.)

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 . . . . Such a procedure is an appropriate and complete method by which to bind new . . . defendants where it can be demonstrated that in their capacity as alter ego of the corporation they in fact had control of the previous litigation, and thus were virtually represented in the lawsuit.” (Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 508, citations omitted.) “The greatest liberality is to be encouraged in the allowance of such amendments in order to see that justice is done.” (Id.)

Here, all issues concerning Respondents’ entity form, members, and alter egos were at issue in the arbitration and were pleaded in Petitioner’s Arbitration Demand. (Decl. of Taran ¶4, Exh. B.) The Arbitrator properly found that Albert is a principal of Seller and BCG, was an alter ego of BCG, and that BCG is an alter ego of Seller. (Judgment, at pg. 4; pg. 16, §14.)

“Collateral estoppel precludes relitigation of issues argued and decided in prior proceedings. [Citation.] Traditionally, we have applied the doctrine only if several threshold requirements are fulfilled. First, the issue sought to be precluded from relitigation must be identical to that decided in a former proceeding. Second, this issue must have been actually litigated in the former proceeding. Third, it must have been necessarily decided in the former proceeding. Fourth, the decision in the former proceeding must be final and on the merits. Finally, the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding.” (JPV I L.P. v. Koetting (2023) 88 Cal.App.5th 172, 191.)

Here, the Arbitration Award meets all of the foregoing criteria. First, the issues decided in the arbitration are identical to those presented in this motion. Second, the issues were actually litigated in the arbitration, as reflected in the Arbitration Award. Third, the issues were necessarily decided in the arbitration. Fourth, the Arbitration Award, and resulting judgment, is a final decision on the merits. Therefore, collateral estoppel precludes relitigating the issue of whether Albert is an alter ego of BCG, which has already been decided by the Arbitrator.

Based on the foregoing, Petitioner’s motion to amend the judgment to include Albert Bernal is granted. Petitioner is to submit a proposed amended judgment within ten days.

[1] Respondents’ evidentiary objections are in violation of CRC, Rule 3.1354(b), which requires, “[e]ach written objection must be numbered consecutively.” (CRC, Rule 3.1354(b).) To avoid confusion, this Court numbered Respondents’ objections for them and refers to them consecutively.