Judge: David Sotelo, Case: BC682318, Date: 2022-08-26 Tentative Ruling

Case Number: BC682318    Hearing Date: August 26, 2022    Dept: 40

MOVING PARTY:               Defendant/Cross-Defendant Steven J. Horn (Motion to Amend Judgment; Motion for Attorney’s Fees and Costs); and

Plaintiffs/Cross-Complainants 3123 SMB LLC, Kling Corporation, Anthony N. Kling Individually and as Trustee of the Anthony N. Kling Trust of 1997, Mary Kling, Cliffwood, LLC, and Lincoln One Corporation (Motion to Strike and Tax Costs, On Appeal; Motion to Strike on Tax Costs, Pre-Appeal).

Theses cross-actions and cross-complaint arise from a fee dispute between Plaintiffs/Cross-Complainants Anthony N. Kling (“Kling”) and Mary Kling (for ease of reading, “Mary”) (collectively, “the Klings” or “Plaintiffs”) and their former counsel, Defendant/Cross-Defendant Steven J. Horn (“Horn”).

The motions before the Court:

(1) Horn’s opposed Motion to Amend the March 6, 2020 Judgment to (i) add Plaintiffs/Cross-Complainants 3123 SMB LLC, Lincoln One Corporation and Kling Corporation (the “Kling Entities”) as judgment debtors and (ii) name Horn as the prevailing party entitled to fees and costs in the consolidated actions;

(2) Horn’s opposed Motion for Attorney’s Fees on Appeal pursuant to a contract between the parties, Civil Code section 1717, California Rules of Court, rule 8.278 and ruling of Second Appellate District;

(3) Plaintiffs, the Kling Entities and Cliffwood, LLC’s opposed Motion to Strike and Tax Costs against a February 22, 2022 Memorandum of Costs on Appeal made by Horn; and

(4) Plaintiffs’ opposed Motion to Strike and Tax Costs against a February 22, 2022 Memorandum of Costs, Pre-Appeal made by Horn.

For the following reasons, the Court:

(1)(a) DENIES Horn’s Motion to Amend Judgment to include Lincoln One Corporation and Kling Corporation in the March 6, 2020 Judgment; (b) GRANTS Defendant Horn’s Motion to Amend Judgment to include 3123 SMB LLC in the March 6, 2020 Judgment; (c) DENIES Defendant Horn’s Motion to Amend Judgment as to direct that Horn is the prevailing party in these consolidated actions, entitled to attorney’s fees and costs;

(2) GRANTS, in Part, Horn’s Motion for Attorney’s Fees on Appeal, in the amount of $87,000;

 (3)(a) GRANTS the Plaintiffs’ Motion to Strike and Tax Costs in the Horn Memorandum of Costs on Appeal as to the Anthony Kling Trustee/Mary Kling Trustee/jointly and severally language therein; (b) DENIES the Plaintiffs’ Motion to Strike and Tax Costs on Appeal insofar as the Motion is directed at actual costs presented by Horn on appeal; and

(4) finds that the Plaintiffs’ Motion to Strike and Tax Costs in the Horn Memorandum of Costs Pre-Appeal is MOOT.

Background Facts, Remittiturs on Kling I, II, and III and Papers

On March 14, 2021, Anthony Kling (“ an attorney) and his mother, Mary Kling (for ease of reading, “Mary”) (collectively, “the Klings”), hired attorney Steven J. Horn to represent the Klings in a matter pursuant to a fee Agreement with an arbitration clause (the “March 14, 2011 Retainer Agreement”). Pursuant to this Agreement, Horn represented Kling and Mary as trustees of Kling’s and Mary’s individually named trusts, as well as Kling individually. Horn further represented 3123 SMB LLC, Lincoln One Corporation, and Cliffwood, LLC.

In November 2013, Horn withdrew from representation of the Klings and their companies in lieu of disputes between the Klings and Horn as to Horn’s quality of representation. At the time, the Klings had already paid Horn $603,231 in fees. A subsequent dispute arose between the parties, with Horn demanding payment beyond the already-paid fees and Kling wanting a reimbursement.

In September 2014, Horn filed for AAA arbitration to recover outstanding attorney’s fees from the Klings. Horn added as defendants in that arbitration Plaintiffs/Cross-Complainants 3123 SMB LLC, Lincoln One Corporation, and Cliffwood, LLC, entities claimed to be “successors in interest” to the Klings.

In May 2015, the Klings initiated LACBA arbitration under the Mandatory Fee Dispute Arbitration (“MFAA”) resolution program (proceedings hereafter, the “LACBA Arbitration”).

The LACBA Arbitration resulted in a decision that Horn was entitled to fees but that the reasonable value of services was $217,986 ($603,231 - $380,245 - $5,000 in arbitration costs) (“LACBA Award”). The LACBA Arbitration panel thus ordered Horn to return $217,986 to the Klings.

Despite this favorable decision, on November 3, 2017, the Klings rejected the LACBA Award and instead filed the first of action between the parties, seeking, among other claims, a jury trial as to the fee dispute between the Klings and Horn. (LASC Action No. BC682318.)

In turn, Horn filed for re-initiation of the AAA arbitration. After these proceedings were initiated, the Klings refused to participate in the arbitration on the grounds that the AAA lacked jurisdiction over the parties’ dispute.

Around this time, the Klings filed two malpractice actions against Horn in federal and state court, both of which were dismissed between 2018 and 2019—the federal action because the Klings (through Lincoln One) manufactured diversity to enter district court with a malpractice case and the state action because the limitations window prevented the malpractice action from proceeding.

On September 17, 2018, the AAA Arbitrator held a noticed hearing and issued an award in favor of Horn for $193,921 (the “AAA Award”) as against the Klings and 3123 SMB LLC, Lincoln Corporation (seemingly the Lincoln One Corporation), and Kling Corporation (without mention as to Cliffwood LLC) (collectively, the “Kling Entities”). The Klings appear to have been aware of the proceedings through notice, but nonetheless failed to participate in these proceedings.

On September 18, 2018, Horn filed a new action in the Los Angeles Superior Court to confirm the AAA Award. (LASC Action No. LS030356.)

On October 4, 2018, the Kling Entities and Anthony Kling (individually and as Trustee) responded by filing an action to vacate the AAA Award under Code of Civil Procedure section 1286.2. (LASC Action No. BC724322.)

On October 15, 2018, this Court sustained, without leave to amend, a Demurrer by Horn to the Klings’ First Amended Complaint in LASC Action No. BC682318, specifically as to all claims stated therein except for two causes of action: (1) Request for Return of Client Fees and De Novo Trial [seeking to supersede the AAA arbitration process] and (10) Declaratory Judgment.

On February 21, 2019, this Court consolidated all three related actions: the (1) Horn’s petition to confirm the AAA arbitration award (LASC Action No. LS030356); (2) Klings’ petition to vacate the AAA arbitration award (LASC Action No. BC72432); and (3) the Klings’ earlier action requesting a trial after the LACBA arbitration (LASC Action No. BC682318).

On September 3, 2019, the Plaintiffs filed a request to set a Motion to Set Jury Trial on the petition to vacate the AAA award.

On September 20, 2019, this Court denied the Plaintiffs’ Motion to Set Jury Trial on the ground that CCP 1286.2 did not give a moving party the right to a jury trial

On October 1, 2019, this Court confirmed the AAA Award in favor of Horn and denied the vacatur petition made by the Klings Entities and Anthony Kling against the AAA Award, thus resolving the issues first raised in the LS030356 and BC72432 LASC Actions, and indirectly resolving the BC682318 Complaint in favor of Horn in lieu of confirmation of the AAA Award. The ruling also Court changed the AAA Award by removing the Kling Entities from the Award because they were nonsignatories to the March 14, 2011 Retainer Agreement between Anthony and Mary Kling and Defendant Horn.

On October 10, 2019, Horn filed a Proposed Judgment for the consolidated actions pursuant to the October 1, 2019 Ruling.

On October 16, 2019, the Court entered Judgment for the first time in these proceedings, specifically ordering Judgment in favor of Horn, striking out all passages in the Proposed Judgment related to attorney’s fees and costs in favor of Horn, and ordering that each side would bear the expense for their own fees and costs in these consolidated actions.

However, also on October 16, 2019, Mary Kling objected to the Proposed Judgment filed by Horn on October 10, 2019 because of its references to Mary herself.

On October 17, 2019, the parties appeared on Mary Kling’s Ex Parte Application, at which time the Court separately ordered the parties to submit proposed judgments arising out of the October 1st ruling by November 17, 2019 to consider all corrections the parties were seeking to make to the Court’s Order and eventual final Judgment, with objections thereto due on November 27, 2019. (The Court thus, in effect, rescinded its October 16, 2019 Judgment in lieu of further briefing as to the final language of the Judgment.)

On November 13, 2019, the Plaintiffs filed with the Court a Proposed Judgment.

On November 15, 2019, Horn filed a Proposed Judgment.

On November 27, 2019, the Plaintiffs and Horn objected to the other’s Proposed Judgments.

On March 6, 2020, after considering the parties’ propositions, this Court entered a new Judgment, which, in relevant part, granted judgment in favor of Horn by confirming the AAA Award but again provided that each side would pay for their own fees and costs.

On March 16, 2020, Horn moved to amend the March 6, 2020 Judgment to (1) correct the Judgment as related to Mary J. Kling, (2) add 3123 SMB LLC, Lincoln One Corporation, and Kling Corporation (i.e., the Kling Entities) as judgment debtors, and (3) add a provision holding that Horn is entitled to attorney’s fees and costs because the Retainer Agreement between Horn and the Klings included a clause for such an award.

On March 17, 2020, Mary Kling made an Ex Parte Application to delete the words “Mary Kling individually, and as trustee of the Anthony N. Kling Trust” from the Judgment, which this Court granted on March 20, 2020—thereby addressing the first issue on Horn’s March 16th Motion.

On May 5, 2020, Anthony Kling (without Mary J. Kling) filed a Notice of Appeal from the Judgment. (Appeal No. B305967 or “Kling I.”)

On July 14, 2020, this Court granted Kling’s Motion to Amend Judgment, finding that a lack of undertaking permitted amendment and that the Kling Entities were alter egos of the Klings that previously had the fair opportunity to litigate the matter.

On September 28, 2020, this Court entered an Amended Judgment adding Kling Entities to the AAA Award Judgment and changing the Judgment as to permit an award of attorney’s fees and costs to Horn as the prevailing party.

On October 13, 2020, Horn filed a Memorandum of Costs [Pre-Appeal].

On October 22, 2020, Horn moved for attorney’s fees, including fees incurred confirming the AAA Award and obtaining the March 6, 2020 Judgment against the Klings.

On November 30, 2020, the Kling Entities filed a Notice of Appeal against the Amended Judgment adding them as judgment debtors to the confirmed AAA Award. (Appeal No. B309412 or “Kling II.”)

On January 6, 2021, this Court granted attorney’s fees of $119,010 against Kling and the Kling Entities.

On January 12, 2021, Kling and the Kling Entities appealed this Court’s grant of $119,010 in attorney’s fees and costs. (Appeal No. B310164 or “Kling III.”)

On December 14, 2021, in Kling I, Court of Appeal for the Second Appellate District affirmed the March 6, 2020 Judgment, cutting down all grounds advanced by Anthony Kling (without Mary Kling) as to why the AAA Award was not enforceable.

Also on December 14, 2021, in Kling II, the Court of Appeal reversed the Amended Judgment granted by this Court on July 14, 2020 and entered on September 28, 2020 on the grounds that appeal was perfected as to the March 6, 2020 Judgment (amended March 20, 2020 on clerical issue) by Anthony Kling’s filing of Kling I, after which Superior Court lacked jurisdiction to amend the Judgment.

On February 18, 2022, Remittitur of Kling I and II was returned to this Court.

On February 22, 2022, Horn filed a Memorandum of Costs on Appeal, as well as a Memorandum of Costs Pre-Appeal encompassing the same costs and expenses as the October 13, 2020 Memorandum of Costs (i.e., requesting costs and expenses for filing and motion fees, service of process, court-ordered transcripts, and fees for electronic filing or service) plus additional costs and expenses for further electronic filing or service fees and $38,109.60 in interest beginning October 13, 2020 and ending on February 22, 2022.

On March 1, 2022, Horn made a Motion to Amend the March 6, 2020 Judgment reinstated by Kling I (amended March 20, 2020) to (1) add the Kling Entities as judgment debtors on the AAA Arbitration Award and (2) change the directive that “each party will bear fees and costs” to a directive ordering that Horn, as the prevailing party, is entitled to attorney’s fees and costs pursuant to the parties’ March 14, 2011 Retainer Agreement.

On March 3, 2022, Horn made Motion for Attorney’s Fees on Appeal.

On March 9, 2022, Anthony Kling, Mary Kling, and the Kling Entities separate Motions to Tax Costs in (1) Horn’s February 22, 2022 Memorandum of Costs on Appeal and (2) Horn’s February 22, 2022 Memorandum of Costs Pre-Appeal.

On June 8, 2022, the Court of Appeal reversed the attorney’s fees award in Kling III.

On July 13, 2022, this Court was scheduled to hear the (1) Horn Motion to Amend Judgment, (2) Horn Attorney’s Fees on Appeal, (3) Kling Plaintiffs’ Motion to Tax Costs, Pre-Appeal, and (4) Kling Plaintiffs’ Motion to Tax Costs, On Appeal. On that day, this Court continued all four hearings to August 26, 2022 as to permit sufficient time for Remittitur to return for Kling III before the Court addressed the four pending motions.

On August 19, 2022, this Court received Remittitur for Kling III from the Court of Appeal for the Second Appellate District, completing the return of the final pending appeal in these consolidated actions.

This Court now hears and renders its rulings on the opposed Motions to Amend Judgment and for Attorney’s Fees by Horn and the opposed Motions to Strike and Tax Costs by the Plaintiffs (Kling, Mary, and the Kling Entities, plus Cliffwood, LLC).

Motion to Amend Judgment

Legal Standard: Code of Civil Procedure section 187 provides that “[w]hen 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.”

“The court may exercise its authority to impose liability upon an alter ego who had control of the litigation and was therefore represented in it. [Citation.] The addition of a new party as judgment debtor stems from the concept of the alter ego doctrine, which is that an identity exists between the new party and the original party, whose participation in the trial leading to the judgment represented the newly added party. [Citation.] Therefore, amending a judgment to add an alter ego does not add a new defendant but instead inserts the correct name of the real defendant. [Citation.] In order to see that justice is done, great liberality is encouraged in the allowance of amendments brought pursuant to Code of Civil Procedure section 187.” (Misik v. D’Arco (2011) 197 Cal.App.4th 1065, 1072-73.)

Amend Judgment to Add Judgment Debtors:

1.     DENIED, as to Plaintiffs/Cross-Complainants Lincoln One Corporation and Kling Corporation;

2.     GRANTED, as to Plaintiff/Cross-Complainant 3123 SMB LLC.

Horn’s March 1, 2022 Motion to Amend Judgment requests that the Kling Entities—i.e., (1) 3123 SMB LLC, a Missouri Limited Liability Company; (2) Lincoln One Corporation, a Missouri corporation; and (3) Kling Corporation, a California corporation—be added to the March 6, 2020 Judgment (amended on March 20, 2020). (Amend Judgment Mot., 1:25-2:4.)

In its Order confirming the AAA Award on October 1, 2019, the Court corrected the Award by removing the Kling Entities because they were nonsignatories to the March 14, 2011 Retainer Agreement between Anthony and Mary Kling and Defendant Horn. (See Oct. 1, 2019 Minute Order, pp. 5-6.)

Horn raises two arguments in his moving papers for why the Kling Entities should not have been removed from the AAA Award: the Arbitrator was empowered to find that the Kling Entities were properly included in the AAA Award (Amend Judgment Mot., 5:14-15); and the Kling Entities were agents of the Klings (Amend Judgment Mot., 13:10-15:8).

However, the Court notes that the Motion to Amend Judgment to add the Kling Entities as judgment debtors to the March 6, 2020 Judgment (amended March 20, 2020) is not the appropriate procedural vehicle to raise these claims of legal error. Further, the Court finds that its ruling was correct because an arbitrator has no power to determine the rights and obligations of nonparties. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th 1551, 1555.) The Kling Entities—3123 SMB LLC, Lincoln One Corporation, and Kling Corporation—were nonsignatories to the retainer agreement and thus nonparties to the issues before the AAA Arbitrator. Last, a court may, upon confirming an arbitration award, amend the judgment to add additional judgment debtors pursuant to Code of Civil Procedure section 187. (Id. at pp. 1554-55.)

(Reverse) Alter Ego Discussion: The authority granted by Code of Civil Procedure section 187 to amend a judgment to add a defendant and impose liability on the new defendant without trial, requires both of the following: (1) the new party was an alter ego of the old party; and (2) the new party had controlled the litigation, thereby having had the opportunity to litigate and thus satisfy due process concerns. (Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415, 1421.) The judgment creditor should establish by a preponderance of the evidence that the alter ego controlled the litigation. (Wollersheim v. Church of Scientology Int’l (1999) 69 Cal.App.4th 1012, 1017.)

“Ordinarily, a corporation is regarded as a legal entity, separate and distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations. [Citations.] A corporate identity may be disregarded—the ‘corporate veil’ pierced—where an abuse of the corporate privilege justifies holding the equitable ownership of a corporation liable for the actions of the corporation. [Citation.] Under the alter ego doctrine, then, when the corporate form is used to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, the courts will ignore the corporate entity and deem the corporation’s acts to be those of the persons or organizations actually controlling the corporation, in most instances the equitable owners. [Citations.]” (Sonora Diamond Corp. v. Superior Ct. (2000) 83 Cal.App.4th 523, 538.) “A determination that a person is the alter ego of a corporation does not make the alter ego an employer”; “[r]ather it makes the alter ego liable for the obligations of the corporation.” (Leek v. Cooper (2011) 194 Cal.App.4th 399, 410.) This determine is one of fact. (Id. at p. 418 [citation omitted].)

Two requirements must be met to invoke the alter ego doctrine: (1) “[T]here must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist”; and (2) “there must be an inequitable result if the acts in question are treated as those of the corporation alone.” (Sonora, supra, 83 Cal.App.4th at p. 538.)

Among the factors to be considered in determining whether a unity of interest and ownership exists for alter ego purposes, courts consider the (1) commingling of funds and other assets, (2) the holding out by one entity that it is liable for the debts of the other, (3) identical equitable ownership in the two entities, (4) use of the same offices and employees, (5) use of one entity as a mere shell or conduit for the affairs of the other, (6) inadequate capitalization, (7) disregard of corporate formalities, (8) lack of segregation of corporate records, and (9) identical directors and officers. (Sonora, supra, 83 Cal.App.4th at pp. 538-39.) “No one characteristic governs, but the courts must look at all the circumstances to determine whether the doctrine should be applied.” (Id. at p. 539.)

Here, Horn seeks to use the alter ego doctrine in reverse to hold the Kling Entities liable for the debts of its owners—the Klings—under the March 6, 2020 Judgment (amended on March 20, 2020). (Amend Judgment Mot., 7:27-8:9.)

“Reverse veil piercing is similar to traditional veil piercing in that when the ends of justice so require, a court will disregard the separation between an individual and a business entity. [Citation.] But the two serve unique purposes and are used in different contexts. Rather than seeking to hold an individual responsible for the acts of an entity, reverse veil piercing seeks to satisfy the debt of an individual through the assets of an entity of which the individual is an insider.” (Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, 221 (“Curci”).)

Two veins of case law exist with respect to the question of whether the reverse alter ego doctrine may be asserted by a third-party creditor against a fictional business entity to satisfy the debts of the business entity’s owner or shareholder, etc.

The Court of Appeal for the Fourth Appellate District has explicitly held that “a third party creditor may not pierce the corporate veil to reach corporate assets to satisfy a shareholder’s personal liability.” (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1512-13 (“Postal Instant Press”).) The Fourth Appellate District explained its reasoning by explaining that the “abuse of the corporate form [exhibited in traditional alter ego piercing of the corporate veil] does not exist when the judgment debtor is the shareholder” because “[i]n that situation, the corporate form is not being used to evade a shareholder’s personal liability” insofar as “the shareholder did not incur the debt through the corporate guise and misuse that guise to escape personal liability for the debt.” (Id. at p. 1522.) By contrast, “the issue addressed by outside reverse piercing is the shareholder’s transfer of personal assets to the corporation to shield the assets from collection by a creditor of the shareholder.” (Id. at p. 1523.) Such wrong could be addressed in different ways, explained the Fourth Appellate District, e.g., through “[j]udgment collection procedures [that] offer judgment creditors adequate protection in situations where outside reverse piercing would not harm innocent shareholders and creditors, legal remedies are inadequate, and the traditional requirements of proving alter ego are met.” (Id. at p. 1524.) In such ways, “[t]he judgment creditor can enforce the judgment against the shareholder’s assets, including shares in the corporation,” and, “[u]pon acquiring the shares, the judgment creditor will have whatever rights the shareholder had in the corporation.” (Id. at p. 1522.)

Based on this precedent, the Court finds that the reverse alter ego doctrine is inapplicable to Plaintiffs/Cross-Complainants Lincoln One Corporation and Kling Corporation and thus DENIES the Motion to Amend Judgment as to these parties alone. (Id. at p. 1522 [Reverse alter ego doctrine not applied in California with respect to corporations because, inter alia, “[t]he reasoning of … cases [from other jurisdictions, including rulings from federal and state courts that found that the reverse alter ego doctrine was applicable to corporations] is unpersuasive and flawed”].)

However, a different ruling by the Fourth Appellate District holds that a third-party creditor may pierce the corporate veil of a limited liability company. (Curci, supra, 14 Cal.App.5th at p. 224.) In Curci, the Fourth Appellate District reasoned that the concerns relevant to reverse piercing the veil of a corporation die not lie in questions of reverse piercing the veil of a limited liability company because “the nature of LLC’s[] do not present the concerns identified in Postal Instant Press,” e.g., (1) factually, Curci differed from Postal Instant Press because the judgment debtors in Curci involved two spouses who owned 100% of the LLC in question and who both owned a portion of the debt the third-party creditor sought to collect from the LLC in question; (2) “a creditor does not have the same options against a member of an LLC as it has against a shareholder of a corporation” because, as against a corporation, “the creditor may step straight into the shoes of the debtor” and “acquire the [debtor shareholder’s] shares,” “including the right to dividends, to vote, and to sell the shares,” a but “creditor may only obtain a charging order against distributions made to the member” and not acquire any interest in the LLC itself; (3) the LLC form allows a judgment debtor to exercise full control over the LLC, including whether to exercise distributions from the LLC to a fourth party not the judgment debtor or the third-party creditor, for the benefit of the judgment debtor in avoiding personal liabilities that could be levied from LLC distributions paid directly to the judgment debtor. (Ibid.)

Based on Curci’s instruction, the Court finds that a reverse alter ego finding may stand against an LLC like Plaintiff/Cross-Complainant 3123 SMB LLC.

Per the Fourth Appellate District’s instruction, “[i]n making th[e] determination [as to whether veil piercing should be available with regard to an LLC], the trial court should, at minimum, evaluate the same factors as are employed in a traditional veil piercing case, as well as whether [the judgment creditor] has any plain, speedy, and adequate remedy at law.” (Curci, supra, 14 Cal.App.5th at p. 224.)

Here, the Court finds that sufficient grounds exist to apply the reverse alter ego doctrine to 3123 SMB LLC. Horn’s evidence shows that:

(1) Anthony Kling is the sole member and manager of 3123 SMB LLC (Amend Judgment Mot., Steven Horn Decl., ¶ 18, Ex. 16 [California Secretary of State Statement of Information for 3123 SMB LLC]);

(2) The Kling Entities and the Klings have been represented by the same counsel in different proceedings (Amend Judgment Mot., Steven Horn Decl., ¶ 14, Ex. 12 [Kling Letter to AAA dated May 27, 2015], Ex. 13 [Knieriem Letter to Arbitrator Newman dated March 3, 2016]);

(3) Mary Kling has sought to exercise control over 3123 SMB LLC by filing a Certificate of Cancellation for 3123 SMB LLC on or around October 29, 2019 (Amend Judgment Mot., ¶ 19, Ex. 17 [Certificate of Cancellation]; see also Business Search, 3123 SMB LLC (2022) California Secretary of State [as of Aug. 26, 2022] [showing 3123 SMB LLC is in terminated status]); and

(4) A U.S. District Court ruling finding that “Lincoln One has no meaningful existence separate from [3123 SMB LLC] or the Klings” where Horn argued that “[3123 SMB LLC] and Lincoln One [were] the alter egos of California citizens Anthony and Mary Kling” (Amend Judgment Mot., Steven Horn Decl., ¶ 8, Ex. 7 [District Court Order on remand]).

Further, on Opposition filed June 30, 2022 (and previously on Ex Parte on June 3 and 28, 2022), the Plaintiffs limit their opposition to the alter ego’s injustice prong without discussing the unity of ownership prong. (See Amend Judgment Opp’n, 3:10-4:25 [alter ego arguments], 5:1-9:15 [prevailing party and fees arguments].)

Under these circumstances, the Court finds that Horn has presented legal arguments and supporting evidence establishing the unity of interest prong for a reverse alter ego analysis tying 3123 SMB LLC to the March 6, 2020 Judgment.

The Court also finds that Horn convincingly argues that injustice would result if the reverse alter ego doctrine were not applied as to 3123 SMB LLC. Horn argues that “as long as the Klings are the sole judgment debtors, it is highly unlikely they will ever have assets with which to satisfy the judgment” and that “the Klings … [have] manipulate[d] and control[led] the assets of the[] [Kling] Entities in order to protect the Klings from the [March 6, 2020] [J]udgment.” (Amend Judgment Mot., 12:16-28.) The Court is convinced of this position partly by the above cited evidence (see, e.g., District Court findings on alter ego), and partly by Curci’s instruction that reverse piercing of an LLC’s veil is appropriate where the LLC is wholly owned by the judgment debtors (Anthony Kling) and where the LLC form (3123 SMB LLC) is being used to shield the LLC’s owner from judgment owed to a third party creditor (Kling to Horn under the March 6, 2020 Judgment). (See Curci, supra, 14 Cal.App.5th at p. 224.)

The Plaintiffs’ argument that no injustice can result from denying this Motion to Amend Judgment because Defendant Horn is “sitting on a check for a quarter million dollars” that will satisfy the Judgment is unavailing because (1) the Plaintiffs do not provide a copy of this check, (2) Horn argues that the check is unverified, and (3) case law holds that a judgment debtor’s obligation to pay a judgment creditor is not discharged unless the debtor pays the creditor in cash or unless the debtor pays the creditor with a verified check and the creditor accepts this check. (See Amend Judgment Opp’n, 3:19-26 [Plaintiffs’ argument as to injustice in lieu of pending check for $250,000 with no supporting evidence]; Amend Judgment Mot., 5:10-6:15 [Horn’s arguments for why injustice remains to Horn if 3123 SMB LLC is not added to the March 6, 2020 Judgment]; Conservatorship of McQueen (2014) 59 Cal.4th 602, 615 [case cited by Horn providing that discharge of judgment debtors’ obligations to creditors occurs when creditor is paid in cash or when the creditor is paid certified check and the creditor accepts payment].)

The Court further finds that 3123 SMB LLC had the opportunity to litigate the matters before the AAA Arbitrator resulting in the AAA Award because the Klings used 3123 SMB LLC as an alter ego at relevant times and the Klings had an opportunity to litigate the matters before the AAA Arbitrator, even if the Klings ultimately elected not to participate in the AAA Arbitration proceedings.

The Court last finds that Horn does not have a different “plain, speedy, and adequate remedy at law” other than an order amending the March 6, 2020 Judgment to include 3123 SMB LLC because only reverse veil piercing, with any degree of speed, adds 3123 SMB LLC to the Judgment, under circumstances where Lincoln One Corporation and Kling Corporation are beyond the Judgment (see Postal Instant Press discussion supra) and can only be tied to this action by a prolonged action by Horn to acquire the Klings’ interests in these two corporations to satisfy the Judgment (arguments as to the unverified check from the Klings to Horn aside).

The Court thus GRANTS the Motion to Amend Judgment as to Plaintiff/Cross-Complainant 3123 SMB LLC.

Amend Judgment to Change Prevailing Party Language: DENIED.

Horn also requests that the Court amend the March 6, 2020 Judgment to indicate that Horn was the prevailing party between himself and the Plaintiffs, thus entitling Horn to attorney’s fees and costs in these consolidated actions pursuant to Civil Code section 1717. (Amend Judgment Mot., 15:8-20; see Amend Judgment Mot., Steven Horn Decl., Ex. 3, ¶ 20 [Retainer Agreement, Attorney’s Fees and Costs in Action on Agreement clause providing that “[t]he prevailing party in any action or proceeding arising under or related to this Agreement or any transaction thereto shall be awarded reasonable attorney fees and costs”]; Civ. Code, § 1717 [entitling moving party, upon motion, to determination of prevailing party and fees in an action based on contract containing attorney’s fees clause].)

On Opposition, the Plaintiffs advance several defenses against amending the judgment to add an attorney’s fees provision. The first of these positions—that Remittitur has not yet been returned on Kling III (Amend Judgment Opp’n, 5:5-10)—is unavailing as of August 19, 2022, when the Second Appellate District returned Remittitur on Kling III to this Court.

Plaintiffs’ second Opposition argument is comprised of three overlapping parts arguing that the March 6, 2020 Judgment (amended on March 20, 2020) was: (1) a final judgment after the Court of Appeal affirmed in Kling I, which cannot be amended for any supposed judicial error, i.e., this Court should not, pursuant to Horn’s request, amend the Judgment to name Horn as the prevailing party entitled to fees and costs in lieu of paragraph 20 of the March 14, 2021 Retainer Agreement because a prior failure to do so on March 6, 2020 was judicial error, which is not amendable by motion after final judgment; (2) res judicata on the attorney’s fees sought by Horn; and (3) functions as judicial estoppel against Horn first taking the position that the March 2020 Judgment was correct on appeal in Kling I before the Second Appellate District, only to now come before the Superior Court and argue that the Judgment was in fact incorrect as to prevailing party language for fees and costs. (Amend Judgment Opp’n, 6:5-7:5 [final judgment, judicial error], 7:6-21 [res judicata], 7:22-8:18 [judicial estoppel].)

On Reply, and most relevant to this discussion, Horn argues that while courts may not amend judicial errors in judgments, pursuant to Code of Civil Procedure section 663 and case law interpreting this statute, a court may amend clerical errors, and that this Court committed a mere clerical error when it entered Judgment on March 6, 2020 ordering that each side would pay its own attorney’s fees and costs instead of ordering that Horn was the prevailing party in the action pursuant to a contract between the parties, entitled to fees and costs. (Amend Judgment Reply, 6:19-8:22.)

The Court agrees with the Plaintiffs and against Horn.

“It is not open to question that a court has the inherent power to correct clerical errors in its records so as to make these records reflect the true facts. [Citations.] The power exists independently of statute and may be exercised in criminal as well as in civil cases. [Citation.] The power is unaffected by the pendency of an appeal or a habeas corpus proceeding. [Citation.] The court may correct such errors on its own motion or upon the application of the parties. [Citation.]” (In re Candelario (1970) 3 Cal.3d 702, 705.)

“Clerical error, however, is to be distinguished from judicial error which cannot be corrected by amendment. The distinction between clerical error and judicial error is ‘whether the error was made in rendering the judgment, or in recording the judgment rendered.’ [Citation.] Any attempt by a court, under the guise of correcting clerical error, to ‘revise its deliberately exercised judicial discretion’ is not permitted. [Citation.]” (Ibid.)

“An amendment that substantially modifies the original judgment or materially alters the rights of the parties, may not be made by the court under its authority to correct clerical error, therefore, unless the record clearly demonstrates that the error was not the result of the exercise of judicial discretion. [Citations.]” (Ibid.)

Here, it is clear from the record that a ruling by this Court modifying the March 6, 2020 Judgment to include a clause naming Horn the prevailing party in these consolidated actions would alter the rights of the parties because such a ruling would upend the March 6, 2020 directive that each side bear its own fees and costs in the consolidated actions. (See Mar. 6, 2020 Judgment.) As such, any clerical error must be shown to be “not the result of the exercise of judicial discretion.” (In re Candelario supra, 3 Cal.3d at p. 705.)

Horn argues that the Court, as a mere clerical error, ordered that each side would bear its own fees and costs in these consolidated actions. (See Amend Judgment Mot., 6:5-7:5.) This is incorrect.

The Court points to its October 16, 2019 Judgment. While this Court ultimately invalidated this Judgment on October 17, 2019—at which time the Court requested further briefing from the parties as to a Proposed Judgment memorializing the Court’s October 1, 2019 Ruling—the October 16th Judgment was (1) based on a Proposed Judgment filed by Defendant Horn on October 10, 2019 and signed by Department 40 on October 16, 2019 and (2) clearly shows that this Court struck out all of Horn’s requests for attorney’s fees and costs and replaced this language with wording explicitly ordering each party to bear their own fees and costs. (See Oct. 16, 2019 Judgment, 2:18-20, 3:1-5, 3:12-18.) The Court’s final March 6, 2020 Judgment reflects the same outcome, ordering the Plaintiffs and Horn to bear their own fees and costs. (See Mar. 6, 2020 Judgment, 2:16-17, 2:27, 3:7.) This consistency in Judgment shows that the Court substantively considered whether Horn was entitled to attorney’s fees and costs pursuant to the parties’ March 14, 2011 Retainer Agreement and—however correct or incorrect—ruled against Horn on this question.

This conclusion is reinforced by this Court’s reliance on the March 14, 2011 Retainer Agreement in determining the merits of the parties’ positions leading up to the October 1, 2019 Minute Order that resolved all three consolidated actions before the Court. (See Oct. 1, 2019 Minute Order, pp. 4-7 [multiple references to Retainer Agreement].) For this reason, the Court was aware of the Retainer Agreement and paragraph 20 therein. The Court nevertheless denied Horn his requested prevailing party status in the Judgment entered by Department 40 on March 6, 2020. (See Mar. 6, 2020 Judgment, 2:16-17, 2:27, 3:7.)

Further, the Court’s March 6, 2020 Judgment was affirmed on appeal by the Second Appellate District and returned to this Court on Remittitur on February 18, 2022 without any subsequent appeal by Anthony Kling to the California Supreme Court. (See Feb. 18, 2022 Remittitur on Kling I; see also Docket generally.) As such, the March 6, 2020 Judgment (amended on clerical error March 20, 2020) constituted a final judgment, on the merits, including as to attorney’s fees and costs, as between the Plaintiffs and Horn, finalized after the Plaintiffs failed to appeal the Court of Appeal’s decision on Kling I. (The Inland Oversight Committee v. City of San Bernardino (2018) 27 Cal.App.5th 771, 780 [“Under California law, a judgment ‘is not final for purposes of res judicata during the pendency of and until the resolution of the appeal.’”].)

The Motion to Amend Judgment is therefore DENIED insofar as it seeks to amend the March 6, 2020 Judgment to note that Horn was the prevailing party for the purposes of attorney’s fees and costs. Accordingly, the does not consider the parties’ remaining arguments as to this Motion, including whether res judicata and collateral estoppel bar the amendment of the March 6, 2020 Judgment to direct that Horn is a prevailing party entitled to fees and costs. (See Amend Judgment Opp’n, 7:7-8:26; see also Amend Judgment Reply, 8:23-9:8, 10:6-12:11.)

The Court further DENIES Horn’s Ex Parte request for $177,000 in attorney’s fees and costs for 295 hours of work performed by Defense Counsel during some unspecified period between September 26, 2019 and April 30, 2022. (See May 3, 2022 Horn Ex Parte Application, Valerie Horn Decl., ¶ 5 [requesting $177,000 in attorney’s fees at a rate of $600 per hour for 295 hours of litigation work during an unspecified period of time], Ex. 9 [showing 502.20 total hours expended by Victoria Horn as Defense Counsel between September 26, 2019 and April 30, 2022]; cf. Fees Mot., Victoria Horn Decl., Ex. 3 [using same verified time records to support Motion for Attorney’s Fees on Appeal]; see also Amend Judgment Opp’n, 9:2-14.)

Motion for Attorney’s Fees, On Appeal

Legal Standard: Attorney’s fees are also recoverable as costs when authorized by contract, statute, or law. (Cal. Rules of Court, rule 8.278 [attorney’s fees recoverable as costs on appeal].) Civil Code section 1717 states in pertinent part: “[i]n any action on a contract, where the contract specifically provides that attorney’s fees and costs, which are incurred to enforce¿that contract, shall be awarded either to one of the parties or to the prevailing party, then the party who is determined to be the¿party¿prevailing¿on the contract, whether he or she is the party specified in the contract or not, shall be entitled to reasonable attorney’s fees in addition to¿other¿costs.” (Civ. Code, § 1717, subd. (a).) “The court, upon notice and motion by a party, shall determine who is the party prevailing on the contract for purposes of this section, whether or not the suit proceeds to final judgment. Except as provided in paragraph (2), the party prevailing on the contract shall be the party who recovered a greater relief in the action on the contract. The court may also determine that there is no party prevailing on the contract for purposes of this section.” (Civ. Code, § 1717, subd. (b)(1).) If the action has been voluntarily dismissed or dismissed because of a settlement of the case, there can be no prevailing party. (Civ. Code, § 1717, subd. (b)(1).)

No specific findings reflecting the court’s calculations for attorney’s fees are required; the record need only show that the attorney’s fees were awarded according to the “lodestar” or “touchstone” approach. (Rebney v. Wells Fargo Bank (1991) 232 Cal.App.3d 1344, 1349.) The Court has broad discretion to determine the amount of a reasonable attorney’s fee award, which will not be overturned absent a “manifest abuse of discretion, a prejudicial error of law, or necessary findings not supported by substantial evidence.” (Bernardi v. County of Monterey (2008) 167 Cal.App.4th 1379, 1393-94.)

Horn seeks $206,992.80 for attorney’s fees as costs on appeal pursuant to paragraph 20 of the March 14, 2011 Retainer Agreement, Civil Code section 1717, California Rules of Court, rule 8.278, and the Second Appellate District’s instruction on Remittitur that Horn is entitled to costs on appeal for Kling I. (See Fees Mot., 4:4-6:6; see also Feb. 18, 2022 Remittitur, Kling I, Cover Page [“Horn is to recover his costs on appeal”]; cf. Feb. 18, 2022 Remittitur, Kling II & Oct. 19, 2022 Remittitur, Kling III [“The parties are to bear their costs on appeal”].)

The Klings, Kling Entities, and Cliffwood argue that the March 6, 2020 Judgment bars attorney’s fees on appeal in Kling I—i.e., fees incurred AFTER the March 6th Judgment was entered by this Court—because the March 6th Judgment functioned as res judicata or waiver as to attorney’s fees in the entire action, seemingly including appeals following the March 6, 2020 Judgment. (Fees Opp’n, 3:22-5:7.)

The Court disagrees. An award of appellate costs by the court of appeal constitutes a separate judgment, even though the amount of the award is determined on remand in the trial court. (Lucky United Properties Investment, Inc. v. Lee (2010) 185 Cal.App.4th 125, 138.)

The Plaintiffs further argue that they have a right to jury trial on any attorney’s fees sought by Horn on appeal, citing to Monster, LLC v. Superior Court of L.A. Cnty. and Civil Code section 1717 for this proposition. (Fees Opp’n, 5:8-15.)

The Court again disagrees. In Monster, the Second Appellate District explained that California “courts have consistently ‘distinguish[ed] between’ attorney’s fees that are sought as ‘the allowance … to the prevailing party as an incident to the principal cause of action,’ and those that are sought as ‘part of the cause of action.’ [Citation.] When sought by the ‘prevailing party … as an incident to the judgment’ (ibid.), attorney’s fees may be ‘properly awarded [as a form of cost] after entry of a … judgment.’ [Citation.] However, when ‘fees are part of the relief sought[, they] must be pleaded and proved at trial.’ [Citation.] As explained by our Supreme Court: ‘“[W]here attorney fees are … sought in a proceeding as damages …, then the claim for attorney fees is part of the damage sought in the principal action …. [I]n such circumstances … the attorney fee [would] be required to be pleaded and proven—as any other item of damages—at trial. No similar procedural and evidentiary base is required where ‘the attorney fee was not the cause of action but an incident to it.’ [Citation.]” [Citations.]’” (Monster, LLC v. Superior Court (2017) 12 Cal.App.5th 1214, 1228.)

Here, the Court finds that the circumstances show that the attorney’s fees sought by Horn on appeal are incidental to the issue considered by the Second Appellate District in Kling I—i.e., whether the Court’s October 1, 2019 confirmation of the AAA Award in favor of Horn was judicially correct (see Feb. 18, 2021 Remittitur, Kling I, p. 2 [Introduction])—because the question before the Second Appellate District in Kling I was not whether the $206,992.80 sought by Horn as attorney’s fees costs on appeal were valid damages awarded to Horn through Judgment by the trial court on March 6, 2020.

As such, the Court finds that the nothing prevents Horn from seeking attorney’s fees incurred on appeal as costs pursuant to California Rules of Court 8.278, Civil Code section 1717, and the Second Appellate District’s instruction on Remittitur in Kling I as to costs on appeal.

Fees on Appeal: GRANTED, in Part.

“[T]o collect appellate attorney fees, a party must demonstrate the right to do so under either a statute or a contract, independent of a costs statute.” (Butler-Rupp v. Lourdeaux (2007) 154 Cal.App.4th 918, 927.)

As stated, Horn seeks $206,992.80 for attorney’s fees as costs on appeal pursuant to paragraph 20 of the March 14, 2011 Retainer Agreement, Civil Code section 1717, California Rules of Court, rule 8.278, and the Second Appellate District’s ruling in Kling I that Horn is entitled to costs on appeal for Kling I. (See Fees Mot., 4:4-6:6.)

The Court finds these grounds adequately show that Horn is entitled to attorney’s fees as costs recoverable for his successful defense on the Kling I appeal.

The Court begins this inquiry “with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.”¿ (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.)¿ From there, the “lodestar figure may then be adjusted [according to a multiplier enhancement] based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.”¿ (Ibid.)¿ Relevant multiplier factors include “(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, [and] (4) the contingent nature of the fee award.”¿ (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.)

The $206,992.80 in fees sought by Horn are comprised of fees at a rate of $999 per hour for Defense Counsel Valerie Horn, and 207.2 hours of work expended on Kling I by Ms. Horn, with verified time records failing to clearly differentiate as to hours expended on Kling I (successful Horn defense to this appeal) and Kling II and III (unsuccessful Horn defense to these appeals). (Fees Mot., 6:7-8:12 [rate and hours]; Fees Mot., Valerie Horn Decl., Ex. 3 [verified time records for December 17, 2020 and December 22, 2021]; see May 3, 2022 Horn Ex Parte Application, Valerie Horn Decl., Ex. 9 [same verified records for September 26, 2019 to April 30, 2022].)

Plaintiffs’ Opposition argues that (1) this Motion for Attorney’s Fees on Appeal fails to properly distinguish from fees incurred before and after the Kling I appeal was filed by Anthony Kling, (2) the Motion seeks to recover fees for an unreasonable amount of time expended on the Kling I appeal by Defense Counsel Valerie Horn, and (3) $600 per hour is a more reasonable fee rate for Valerie Horn. (See Fees Opp’n, 3:8-6:6.)

The Court finds that Defense Counsel Valerie Horn’s billed fee rate of $600 per hour (see Fees Mot., 6:20-23) is most reasonable for the purposes of this Motion based on prior experience with these parties and based on the Court’s own experience in setting fee rates for motions such as these.

The Court next notes that it finds merit to the Plaintiffs’ position that Defendant Horn has done a poor job of providing clear verified time records differentiating the time spent by Defense Counsel Valerie Horn on the Kling I appeal from other work because the provided time records show time entries combining work for the appeals or otherwise failing to clarify the nature of the work at issue with sufficient specificity as to a particular trial or appeal proceeding. (See Fees Mot., Valerie Horn Decl., Ex. 3 [verified time records supporting hours allegedly expended by Victoria Horn on Kling I between December 17, 2020 and December 22, 2021].)

Based on the lack of clarity as to hours expended on Kling I by Valerie Horn, the Court finds that a reasonable number of hours spent on Kling I by Valerie Horn was 145 hours. Though Horn claims that Valerie Horn expended 207.2 hours on Kling I (see Fees Reply, 7:19-22), the Court’s review of the verified time records (Fees Reply, Valerie Horn Decl., Ex 3) fails to show from where exactly the 207.2-hour figure was derived. Indeed, the Court’s review of the verified time records filed by Horn in support of this Fees Motion shows 284.2 total hours billed from December 17, 2020 and December 22, 2021, without differentiation as to which hours belonged to work on Kling I, Kling II, Kling III, or matters before the trial court, and without differentiation as to which the entries in Exhibit 3 to the Valerie Horn Declaration support the 207.2 out of 284.2 total hours advanced by Horn in this Motion for Attorney’s Fees on Appeal.

The Court thus GRANTS the Motion for Attorney’s Fees on Appeal in the amount of $87,000, i.e., reasonable hourly rate of $600 per hour for Defense Counsel Valerie Horn, multiplied by the 145 hours reasonably expended by Ms. Horn on legal work associating with the Kling I appeal.

Motion to Tax Costs, On-Appeal

Legal Standard: Code of Civil Procedure section 1033.5 sets forth the costs recoverable by the prevailing party in a legal action. “Prevailing party” includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. (Code Civ. Proc., §¿1032, subd. (a)(4).)

To recover a cost, it must be reasonably necessary to the litigation and reasonable in amount. (Perko’s Enterprises, Inc. v. RRNS Enterprises (1992) 4 Cal.App.4th 238, 244.) A verified memorandum of costs is prima facie evidence that the costs, expenses, and services therein listed were necessarily incurred. (Rappenecker v. Sea-Land Serv., Inc. (1979) 93 Cal.App.3d 256, 266; see Star Motor Imports, Inc. v. Superior Ct. (1979) 88 Cal.App.3d 201, 204 [“verification” is a document signed under penalty of perjury verifying the truth of the matters covered by it]; Frio v. Superior Ct. (1988) 203 Cal.App.3d 1480, 1498, as modified Sep. 22, 1988 [purpose of a verification is to assure good faith in the averments or statements of a party to litigation].) A party seeking to tax costs must provide evidence to rebut this prima facie showing. (Jones v. Dumrichob (1998) 63 Cal.App.4th 1258, 1266, superseded on another ground [expert costs incurred prior to section 998 offers] pursuant to Code Civ. Proc., § 998, subd. (c)(1) as stated in McCain v. County of Lassen (2003) 2003 WL 123065 *1, *12.) Mere statements unsupported by facts are insufficient to rebut the prima facie showing that costs were necessarily incurred.¿ (Ibid.) However, “the mere filing of a motion to tax costs may be a ‘proper objection’ to an item, the necessity of which appears doubtful, or which does not appear to be proper on its face.” (Nelson v. Anderson (1999) 72 Cal.App.4th 111, 131.) If the items are properly objected to, they are put in issue and the burden of proof is on the party claiming them as costs. (Ladas v. Cal. State Auto. Assoc. (1993) 19 Cal.App.4th 761, 773-74.) 

Costs on Appeal: GRANTED, as to Trustee/Liability Language; DENIED, as to Costs.

On February 22, 2022, Horn filed a Memorandum of Costs requesting $2,175 in costs and expenses. (See Feb. 22, 2022 Memo of Costs on Appeal.)

The Court briefly notes that Horn properly seeks attorney’s fees as costs on appeal by separate motion. (Russell v. Trans Pac. Group (1993) 19 Cal.App.4th 1717, 1725-28, superseded on another ground by statute as stated in Lee v. Wells Fargo Bank (2001) 88 Cal.App.4th 1187, 1196 [“Contractual attorney fees are to be claimed ‘only’ by noticed motion, not by the mere filing of a memorandum of costs”].)

Horn’s Memo of Costs on Appeal seeks $775 in filing fees, $1,100 in preparation of clerk’s transcripts or appendices, $100 in printing and copying, and $200 for the transmission or receipt of documents. (See Feb. 22, 2022 Memo of Costs on Appeal.)

In their March 9, 2022 Motion to Strike and Tax Costs, the Plaintiffs (1) seek to strike the words “Anthony N. Kling Trust of 1997,” “Mary J. Kling as Trustee of the Family Trust under the Heywood F and Mary J Kling Recoverable Trust dated July 28, 1987,” and “jointly and severally” from the Memo of Costs on Appeal on the grounds that neither Anthony Kling as Trustee nor Mary Kling as Trustee were parties to the Kling I appeal or the Kling I ruling awarding costs to Horn (see May 5, 2022 Notice of Appeal [showing “Anthony Kling” and no else appealed the March 6, 2020 Judgment]) and (2) seek to Strike and Tax the costs sought in the Memo of Costs on Appeal. (Tax Appeals Costs Mot., 6:5-25 [arguments related to striking out language from the costs memo], 7:1:8-12 [arguments related to striking or taxing costs sought on appeal].)

On Opposition, and without citing authority himself, Horn argues that the Court should not strike out Anthony Kling as Trustee, Mary Kling as Trustee, or the “jointly and severally” language from the Memo of Costs on Appeal because the Plaintiffs failed to cite authority supporting such relief. (Tax Appeals Costs Opp’n, 4:2-9.)

The Court finds Horn’s position unavailing and GRANTS this Motion insofar as the Plaintiffs seek an order that STRIKES the words “Anthony N. Kling Trust of 1997,” “Mary J. Kling as Trustee of the Family Trust under the Heywood F and Mary J Kling Recoverable Trust dated July 28, 1987,” and “jointly and severally” from the Memo of Costs on Appeal, as requested by the Plaintiffs. (See Tax Appeals Costs Mot., 2:5-10.) The Court so rules because California Rules of Court, rule 8.278 provide that “the party prevailing in the Court of Appeal in a civil case other than a juvenile case is entitled to costs on appeal,” which implies that the non-prevailing party on appeal is the party responsible for paying costs on appeal. (See Cal. Rules of Court, rule 8.278, subd. (a).) Further, as a matter of equity, the Court finds that it is proper only to charge Anthony Kling individually for costs related to his individual appeal to the March 6, 2020 Judgment without including his co-plaintiffs in that question.

However, the Court finds that the Plaintiffs’ position is unavailing as to the costs sought by Horn on appeal—$775 in filing fees, $1,100 in preparation of clerk’s transcripts or appendices, $100 in printing and copying, and $200 for the transmission or receipt of documents—because these costs are proper and availing against Anthony Kling in his individual capacity based on the Second Appellate District’s instruction as to costs on appeal in Kling I.

The Court thus DENIES the Motion to Strike and Tax Costs as to the actual costs sought in the March 3, 2022 Memo of Costs on Appeal by Defendant/Cross-Defendant Horn.

Motion to Tax Costs, Pre-Appeal

Costs, Pre-Appeal: MOOT, Without Prejudice.

On February 22, 2022 Horn filed a Memorandum of Costs pre-Kling I appeal, seeking $5,140.65 in costs and expenses and $38,109.60 in interest from March 6, 2020 to February 22, 2022. (See Tax Pre-Appeal Costs Mot., RJN, Ex. 4, MC-010, p. 1, MC-011, p. 3.)

However, on February 22, 2022, the Court Clerk rejected this Memo on the grounds that a prior Memo of Costs dealing with the same subject matter was lodged with the Court on October 13, 2020, and that all future updates to the October 13th Memo should be addressed in Civil Form MC-012 for post-judgment costs and interest. (See Tax Pre-Appeal Costs Opp’n, Valerie Horn Decl., Ex. 1.)

As a result, the Motion to Strike and Tax Costs pre-appeal filed by the Plaintiffs on March 9, 2022 as against the pre-appeal Memo of Costs is MOOT.

However, to dispose of this issue at a future date close in time to this hearing, the Court ORDERS Defendant HORN to FILE an updated Form MC-012 (last MC-012 provided by Horn on November 4, 2021) within ten (10) calendar days. Plaintiffs will be thereafter permitted to file a Motion to Strike and Tax Costs within 15 days of service of the updated MC-012. (See Cal. Rules of Court, 3.1700, subd. (b)(1).) The October 13, 2020 Memo of Costs/associated Form MC-012 will thereafter be resolved at a hearing on the new Motion to Strike or Tax or by Order to Show Cause hearing.

Conclusion

Steven J. Horn’s Motion to Amend the March 6, 2020 Judgment in Case LS030356 is:

(1) DENIED as to amending the Judgment to include Lincoln One Corporation and Kling One Corporation as reverse alter ego of the Klings because precedent in Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510 compels a finding that the reverse alter ego doctrine that Horn seeks to use to add these corporations as judgment debtors to the March 6, 2022 Judgment is unavailing against corporations generally;

(2) GRANTED as to amending the Judgment to include 3123 SMB LLC as a judgment debtor on the March 6, 2020 Judgment because precedent in Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214 permits the application of the reverse alter ego doctrine against LLC’s like 3123 SMB LLC and Horn has provided sufficient grounds to apply this doctrine to 3123 SMB LLC; and

(3) DENIED as to amending the Judgment to name Horn as the prevailing party in these consolidated actions, entitled to attorney’s fees and costs, because the March 6, 2022 Judgment is final and the Court is unable to amend this judgment to correct its substantive denial of this relief against Horn, how correct or incorrect this decision was.

Steven J. Horn’s Motion for Attorney’s Fees on Appeal in Appellate Case B305967 [“Kling I”] from Judgment Debtor Anthony N. Kling Individually is GRANTED, in Part, in the amount of $87,000 because this figure constitutes the reasonable attorney’s fees to which Horn is entitled on appeal in Kling I, i.e., a fee rate of $600 per hour for Ms. Valerie Horn, Esq. times 145 hours expended on Kling I by Ms. Horn.

Plaintiffs 3123 SMB LLC, Kling Corporation, Anthony N. Kling Individually and as Trustee of the Anthony N. Kling Trust of 1997, Mary Kling, Cliffwood, LLC, and Lincoln One Corporation’s Motion to Tax Strike and Tax Costs [On Appeal] is:

(1) GRANTED as to striking the words “Anthony N. Kling Trust of 1997,” “Mary J. Kling as Trustee of the Family Trust under the Heywood F and Mary J Kling Recoverable Trust dated July 28, 1987,” and “jointly and severally” from Horn’s February 22, 2022 Memo of Costs on Appeal because these Plaintiffs/Cross-Complainants were not parties to the Kling I appeal; and

(2) DENIED as to striking or taxing any of the costs included in Horn’s February 22, 2022 Memo of Costs on Appeal because these costs are germane and recoverable with respect to Kling I.

Plaintiffs 3123 SMB LLC, Kling Corporation, Anthony N. Kling Individually and as Trustee of the Anthony N. Kling Trust of 1997, Mary Kling, Cliffwood, LLC, and Lincoln One Corporation’s Motion to Tax Strike and Tax Costs [Pre-Appeal] is MOOT because the Court Clerk has rejected the Memo of Costs against which this Motion was filed.

Horn is ORDERED to FILE an updated Form MC-012 with respect to the October 13, 2020 Memorandum of Costs [Pre-Appeal] within 10 CALENDAR DAYS.

Thereafter, the collective Plaintiffs are PERMITTED 15 CALENDAR DAYS to file a Motion to Strike and Tax Costs thereagainst.