Judge: Elaine Lu, Case: 19STCV41528, Date: 2024-01-09 Tentative Ruling

Case Number: 19STCV41528    Hearing Date: January 9, 2024    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On November 18, 2019, Plaintiffs Lloyd Joseph Collins (“Collins”) and Repossession Empire, Inc. (jointly “Plaintiffs”) filed the instant action against defendants Kara Imbriani (“Imbriani”), Puente Hills Hyundai, LLC (“PHH”), and Puente Hills Financing, LLC (“PHF”).  On November 8, 2023, Plaintiffs filed the operative Second Amended Complaint (“SAC”) against Defendants Imbriani, PHH, and PHF.  The SAC asserts four causes of action for (1) Torts in Essence- Violation of Cal. Penal Code § 637.7, (2) Intrusion into Private Place or Matter/ Invasion of Privacy, (3) Intentional Infliction of Emotional Distress, and (4) Negligence.

On December 12, 2023, Defendants PHH and PHF (jointly “Moving Defendants”) filed the instant motion to strike portions of the SAC.  On December 12, 2023, the Court granted Moving Defendants ex parte application and advanced the instant motion to January 9, 2024.  (Minute Order 12/12/23.)  On December 19, 2023, Plaintiffs filed an opposition.  On December 28, 2023, Moving Defendants filed a reply.

Allegations of the Operative Complaint

The SAC alleges as follows:

Plaintiff Collins and Imbriani are estranged from one another and have been embroiled in a paternity action, In re the Matter of Lloyd J. Collins v. Kara L. Imbriani, LASC Case No. 17STPT00636 (“the paternity action”), in which they dispute both the legal and physical custody of their two children.  (SAC ¶¶ 11-12.)  From subpoenaed records in the paternity action, Plaintiffs discovered on March 22, 2019 that Imbriani was using illicit electronic means to monitor and conduct surveillance of his movements and whereabouts through a used 2013 Hyundai that Plaintiff Collins had purchased in the name of Plaintiff Repossession Empire, Inc.  (SAC ¶¶ 13-14.)  The used vehicle was originally sold by defendant PHH and leased by defendant PHF.  (SAC ¶ 16.)  Imbriani, using her own personal credit card and her access to defendant PHH’s records database, activated the tracking device on the vehicle in order to surveil Plaintiff Collins, which has caused Plaintiff Collins severe emotional distress. (SAC ¶¶ 17-23.)

Legal Standard

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer (i.e., words, phrases, prayer for damages, etc.).  (See CCP §§ 435-437.)  A party may file a motion to strike in whole or in part within the time allowed to respond to a pleading, however, if a party serves and files a motion to strike without demurring to the complaint, the time to answer is extended.  (CCP §§ 435(b)(1), 435(c).)

A motion to strike lies only where the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws.  (CCP § 436.)  The grounds for moving to strike must appear on the face of the pleadings or by way of judicial notice.  (CCP § 437.)

Meet and Confer Requirement

Code of Civil Procedure section 435.5, subdivision (a) requires that “[b]efore filing a motion to strike pursuant to this chapter, the moving party shall meet and confer¿in person or by telephone¿with the party who filed the pleading that is subject to the motion to strike for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the motion to strike.” The parties are to meet and confer at least five days before the date the responsive pleading is due and if they are unable to meet the demurring party shall be granted an automatic 30-day extension.  (Code Civ. Proc., § 435.5(a)(2).)  The moving party must also file and serve a declaration detailing the meet and confer efforts.  (Id.¿at (a)(3).)¿ If an amended pleading is filed, the parties must meet and confer again before a motion to strike may be filed to the amended pleading.  (Id.¿at (a).) 

Here, Moving Defendants sufficiently met and conferred.  (Johnson Decl. ¶¶ 3-5, Exh. A.)

Discussion

            Moving Defendants seek to strike the alter ego allegations in the SAC.

“To recover on an alter ego theory, a plaintiff need not use the words ‘alter ego,’ but must allege [1] sufficient facts to show a unity of interest and ownership, and [2] an unjust result if the corporation is treated as the sole actor. [Citation.] An allegation that a person owns all of the corporate stock and makes all of the management decisions is insufficient to cause the court to disregard the corporate entity.”  (Leek v. Cooper (2011) 194 Cal.App.4th 399, 415.)  In determining whether these two conditions are met and whether alter ego liability exists, several factors are considered including:

[1] [c]ommingling of funds and other assets, failure to segregate funds of the separate entities, and the unauthorized diversion of corporate funds or assets to other than corporate uses ...; [2] the treatment by an individual of the assets of the corporation as his own ...; [3] the failure to obtain authority to issue stock or to subscribe to or issue the same ...; [4] the holding out by an individual that he is personally liable for the debts of the corporation ...; the failure to maintain minutes or adequate corporate records, and the confusion of the records of the separate entities ...; [5] the identical equitable ownership in the two entities; the identification of the equitable owners thereof with the domination and control of the two entities; identification of the directors and officers of the two entities in the responsible supervision and management; sole ownership of all of the stock in a corporation by one individual or the members of a family ...; [6] the use of the same office or business location; the employment of the same employees and/or attorney ...; [7] the failure to adequately capitalize a corporation; the total absence of corporate assets, and undercapitalization ...; [8] the use of a corporation as a mere shell, instrumentality or conduit for a single venture or the business of an individual or another corporation ...; [9] the concealment and misrepresentation of the identity of the responsible ownership, management and financial interest, or concealment of personal business activities ...; [10] the disregard of legal formalities and the failure to maintain arm's length relationships among related entities ...; [11] the use of the corporate entity to procure labor, services or merchandise for another person or entity ...; [12] the diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, or the manipulation of assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another ...; [13] the contracting with another with intent to avoid performance by use of a corporate entity as a shield against personal liability, or the use of a corporation as a subterfuge of illegal transactions ...; [14] and the formation and use of a corporation to transfer to it the existing liability of another person or entity.

(Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 512–13; see also Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825 [naming 28 factors supporting a finding of alter ego liability.].)  This list is not exhaustive.  Hence, these factors may be considered among others.  However, no single factor is determinative.  (Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 512–13.)  Whether an alter ego relationship exists is generally an issue of fact. (VirtualMagic Asia, Inc. v. Fil-Cartoons, Inc. (2002) 99 Cal.App.4th 228, 245.)

Here, the SAC alleges that PHH and PHJ “are part of a family business and alter egos of each other. The patriarch, Sam Lim, owns 60% of the family business. The other 40% is owned by a family trust in which Sam Lim's son, Newton Lim, is the trustee. Officially, Sam Lim is the president of [PHH]. Newton Lim is the executive vice-president of [PHH]. Neither Sam Lim or Newton Lim hold office titles in [PHF]. During her tenure there, defendant Kara Imbriani held the highest official position in [PHF], as Finance Director. She managed the corporation with relative autonomy, answering only, originally to Sam Lim, and, after Sam Lim promoted his son, Newton, to vice-president of [PHH], to Newton Lim. Imbriani never presided over or attended any formal meetings set up by [PHF], nor were there any held. Originally, Sam Lim interviewed and hired Kara Imbriani. The paperwork for Imbriani's hire was handled by the personnel department of [PHH]. [PHF], does not have a personnel department. [PHH] handled the payroll for [PHF]. The paperwork regarding Imbriani's hire shows that she was hired by [PHH]. Further, as reflected in Imbriani's personnel file, [PHH], represented to the State of California and to its own insurers that Imbriani was an employee of [PHH]. Both [PHH], and [PHF] operated out of the same building. Both signed leases with either Sam Lim himself, or Beach Gale, LLC, a company wholly owned by Sam Lim. When Imbriani would activate tracking devices with CalAmp, the service which provides electronic tracking on sold cars backed by loans, she would use her own credit card and get reimbursed by Sam Lim. When [PHF] was short on cash or couldn't make payroll, Sam Lim would replenish [PHF] accounts to make up the shortfall. During Imbriani’s tenure, Sam Lim would direct her to work on projects within the family business that were unrelated to [PHF]'s purpose of managing the financing of automobiles, including investigating an alleged financial crime within the family businesses, handling the leasing of golf carts on Sam Lim's Champion golf club, and writing leases for other dealerships under the family business umbrella. Ultimately, Newton Lim conducted what he testified and declared was an exhaustive investigation of Imbriani. Thereafter, Sam Lim made the determination to wind down the operations of [PHF] and lay off Imbriani. The loan operations, previously handled by [PHF] were spread around other dealerships in the family business. When Imbriani requested sick leave, she would make the request to Newton Limon [PHH] forms in which she identified [PHF] as a ‘department.’ There, thus, is a unity of interest between [PHF] and [PHH] and that an inequitable result will follow if the corporate veil is not pierced.”  (SAC ¶ 7.5.)  These allegations give the legal minimum of what must be alleged to state a claim for alter ego. 

Here, the allegations are somewhat similar to First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal.App.2d 910, and Rutherford Holdings, LLC v. Plaza Del Rey (2014) 223 Cal.App.4th 221 where the allegations of alter-ego were found to be clearly sufficient for pleading purposes.  For example, in Rutherford the “[plaintiff] Rutherford alleged that [the individual defendant] Caswell dominated and controlled [the entity defendant] PDR; that a unity of interest and ownership existed between Caswell and PDR; that PDR was a mere shell and conduit for Caswell's affairs; that PDR was inadequately capitalized; that PDR failed to abide by the formalities of corporate existence; that Caswell used PDR assets as her own; and that recognizing the separate existence of PDR would promote injustice.”  (Rutherford Holdings, LLC, supra, 223 Cal.App.4th at p.235.)  While these cases had slightly more detailed allegations, these cases did not purport to or actually state the minimum required allegations to state a claim for alter ego.

In contrast, the cases finding otherwise are inapposite to the allegations in the instant action.  In Leek, the Court of Appeal upheld a summary judgment finding that “[b]ecause the alter ego theory was not adequately pleaded, [defendant] had no burden to show that plaintiffs' alter ego claim could not be established.”  (Leek, supra, 194 Cal.App.4th at p.416.)  However, the complaint in that action neither specifically alleged alter-ego nor alleged facts as to either element of alter-ego liability.  Rather, “the pertinent allegations of the complaints were: (1) that the plaintiffs were employed by [corporate defendant] Auburn Honda and [individual defendant] Jay Cooper; (2) that Auburn Honda is a corporation; (3) that ‘Defendant Cooper is the sole owner of AUBURN HONDA, owning all of its stock and making all of its business decisions personally[;]’ and (4) that all defendants were ‘the agents, servants and employees of their co-defendants, and in doing the things hereinafter alleged were acting within the scope and authority as such agents, servants and employees and with the permission and consent of their co-defendants. All of said acts of each of the Defendants were authorized by or ratified by their co-defendants.’”  (Leek, supra, 194 Cal.App.4th at p.415.)  There is no mention of alter-ego in the Leek complaint, there is no allegation that injustice will occur if the defendants were treated as separate entities, no is there an allegation of a unity of interest by defendants as “[a]n allegation that a person owns all of the corporate stock and makes all of the management decisions is insufficient to cause the court to disregard the corporate entity.”  (Leek, supra, 194 Cal.App.4th at p.415.) 

In Vasey, the Court of Appeal found that the allegations in the complaint were insufficient to uphold a default judgment against the alleged alter ego defendants.  (Vasey, supra, 70 Cal.App.3d at pp.748–749.)  However, in Vasey, the allegations only addressed one of the two elements required to establish alter ego liability. (Vasey, supra, 70 Cal.App.3d at p.749.) Specifically, “the complaint alleged that any individuality and separateness of the corporation had ceased and that [the corporate defendant] was the alter ego of the individual defendants.” (Id. at p.745.) The complaint made no mention of the second element—inequity resulting from the recognition of the corporate form. (Id. at p.749.)

Here, numerous factual allegations are made to support a unity of interest and ownership and that an unjust result will occur if the corporate veil is not pierced.  For example, the SAC alleges both a unity of ownership – i.e., that both PHH and PHF are owned by Sam Lim and Newton Lim as trustee of an unspecified family trust – and a unity of interest – i.e., that Imbriani was the highest officer of PHF but was paid by PHH.  (SAC ¶ 7.5.)  The SAC further sufficiently alleges that an unjust result would occur if the corporate veil were not pierced by alleging that the owners of PHF decided to wind down operations of PHF “and that an inequitable result will follow if the corporate veil is not pierced.”  (SAC ¶ 7.5.)

Here, Plaintiffs allegations, while not particularly detailed – as to whether an unjust result would occur – set forth both required elements for alter ego liability.  A complaint is not required to set forth every fact that may ultimately be proved.  (Rutherford Holdings, LLC, supra, 223 Cal.App.4th at p.236, [“Defendants argue that Rutherford failed to allege specific facts to support an alter ego theory, but Rutherford was required to allege only ‘ultimate rather than evidentiary facts.’”].)  “Moreover, the ‘less particularity [of pleading] is required where the defendant may be assumed to possess knowledge of the facts at least equal, if not superior, to that possessed by the plaintiff,’ which certainly is the case here.” (Ibid.)  Rather, the issue is whether the allegations were adequate to apprise [defendant] that he was being held accountable as an alter ego[.]”  (Leek, supra, 194 Cal.App.4th at p.412.)  Here, the allegations clearly put Moving Defendants on notice.

Accordingly, Moving Defendants’ motion to strike is DENIED.

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Conclusion and ORDER

            Based on the foregoing, Defendants Puente Hills Hyundai, LLC and Puente Hills Financing, LLC’s motion to strike portions of the Second Amended Complaint is DENIED.

            Moving Parties are to give notice and file proof of service of such.

DATED: January ___, 2024                                                   ___________________________

                                                                                          Elaine Lu

                                                                                          Judge of the Superior Court