Judge Gregory Keosian, Case Number: 19STCV05916, Date: 2023-11-14 Tentative Ruling

Judge: Gregory Keosian, Case: 19STCV05916, Date: 2023-11-14 Tentative Ruling

Case Number: 19STCV05916 Hearing Date: November 14, 2023 Dept: 61

Defendants Nam G. Oh, and Karen Oh’s Motion for Summary Judgment or Adjudication is GRANTED as to the first cause of action for breach of contract alleged against the individual defendants. The motion is otherwise DENIED.

Defendants to provide notice.

I. SUMMARY JUDGMENT

A party may move for summary judgment “if it is contended that the action has no merit or that there is no defense to the action or proceeding.” (Code Civ. Proc. § 437c, subd. (a).) “[I]f all the evidence submitted, and all inferences reasonably deducible from the evidence and uncontradicted by other inferences or evidence, show that there is no triable issue as to any material fact and that the moving party is entitled to judgment as a matter of law,” the moving party will be entitled to summary judgment. (Adler v. Manor Healthcare Corp. (1992) 7 Cal.App.4th 1110, 1119.) A motion for summary adjudication may be made by itself or as an alternative to a motion for summary judgment and shall proceed in all procedural respects as a motion for summary judgment. (Code Civ. Proc. § 437c, subd. (f)(2).)

The moving party bears an initial burden of production to make a prima facie showing of the nonexistence of any triable issue of material fact, and if he does so, the burden shifts to the opposing party to make a prima facie showing of the existence of a triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850; accord Code Civ. Proc. § 437c, subd. (p)(2).)

Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto. (Aguilar, supra, 25 Cal.4th at 850.) The plaintiff may not rely upon the mere allegations or denials of its pleadings to show that a triable issue of material fact exists but, instead, shall set forth the specific facts showing that a triable issue of material fact exists as to that cause of action or a defense thereto. (Ibid.) To establish a triable issue of material fact, the party opposing the motion must produce substantial responsive evidence. (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 166.)

Defendants Nam G. Oh and Karen Oh (Defendants), the individual defendants named in this action, move for summary judgment on all claims alleged against them on the grounds that the basis for seeking liability against them is through the alter ego doctrine, for which no evidence exists warranting its application. (Motion at pp. 11–17.)

There is a fundamental problem with Defendants’ motion. Specifically, only the first cause of action for breach of contract is asserted against them solely in their capacity as alter egos of the company, Defendant KNY Clothing. (See FAC ¶ 41.) All other causes of action are asserted against them, not merely because they are alleged alter egos of KNY, but also because “they directed and participated in the fraudulent and tortious conduct stated in the complaint.” (See FAC ¶¶ 51, 61, 69, 77.) “[D]irectors or officers are liable to third persons who are injured by their own tortious conduct regardless of whether they acted on behalf of the corporation and regardless of whether the corporation is also liable.” (Bonfigli v. Strachan (2011) 192 Cal.App.4th 1302, 1317–1318, internal quotation marks omitted.) Defendants thus present no persuasive argument as to why the motion should be granted on the second through sixth causes of action.

[T]he conditions under which the corporate entity may be disregarded vary according to the circumstances in each case and the matter is particularly within the province of the trial court. [Citations.] This is because the determination of whether a corporation is an alter ego of an individual is ordinarily a question of fact.” (Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 46, 163 Cal.Rptr. 377.) There are two requirements for disregarding the corporate entity: first, that there is a sufficient unity of interest and ownership between the corporation and the individual or organization controlling it that the separate personalities of the individual and the corporation no longer exist and, second, that treating the acts as those of the corporation alone will sanction a fraud, promote injustice, or cause an inequitable result.

(Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1071–1072.)

Defendants here support their argument against Plaintiff’s potential alter ego claims by reference to discovery propounded upon Plaintiff, which sought all documents supporting their alter ego theory — including documents supporting the existence of a unity of interest among the Defendants, intermingling of assets, or failure to observe corporate formalities D — to which Plaintiff responded with statements that it lacked any such documents. (Motion Exhs. D, E.) Defendants also present their own declarations, attesting to the fact that Defendnat Karen Oh is not an officer or owner of Defendant KNY, and that Defendant Nam G. Oh, although the 100% shareholder, sole director and officer of KNY, has always treated the business as a separate entity. (Nam Decl. ¶¶ 8–10; Karen Decl. ¶¶ 8–10.)

Defendants have satisfied their prima facie burden to show the absence of triable issues of fact as to their alter ego relationship to KNY. Plaintiff has filed no opposition to this motion, and has produced no substantial responsive evidence indicating that a triable issue of fact exists as to whether either defendant is the alter ego of Defendant KNY.

The motion is therefore GRANTED as to the first cause of action for breach of contract alleged against the individual defendants. The motion is otherwise DENIED.

Defendants to provide notice.