Judge: Joseph Lipner, Case: 20STCV10337, Date: 2024-06-18 Tentative Ruling

Case Number: 20STCV10337    Hearing Date: June 18, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Plaintiff Irvin Cervantes (“Plaintiff”) seeks to amend the April 28, 2023 default judgment against Defendants R2B Autobnk Corp. (“R2B”) and Rent 2 Buy Autobk Corp. (“Rent 2 Buy”) (collectively, “Defendants”) to include former defendant Guiyong Park.

The Court DENIES the motion without prejudice.

Background

Plaintiff filed this action against Defendants on March 13, 2020, raising claims for (1) failure to pay wages; (2) failure to pay overtime compensation; (3) failure to provide rest periods; (4) failure to provide itemized wage statements; (5) waiting time penalties; (6) unfair competition; and (7) failure to permit inspection of personnel and payroll records.

Defendants answered on April 23, 2020.

On September 6, 2022, Plaintiff filed a fictitious name amendment to the Complaint to change Defendant DOE 1 to Guiyong Park, aka Parker Park.

On November 2, 2022, the Court ordered that Defendants’ answer be stricken. The Court noted that no proof of service had been filed for Park and set an order to show cause re: dismissal for Plaintiff’s failure to prosecute.

On February 3, 2023, the Court found that Plaintiff had failed to serve Park and dismissed Park from the action on its own motion and without prejudice.

Default was entered against Defendants on February 10, 2023.

Default judgment was entered against Defendants on April 28, 2023 in the amount of $69,519.63.

Plaintiff filed this motion to amend the judgment on May 9, 2024. Plaintiff served the motion on Defendants, but not on Park. No opposition was filed.

Legal Standard

Code of Civil Procedure, section 187 empowers the court to “use all the means necessary” to carry its jurisdiction into effect. This section “authorizes a trial court to amend a judgment to add a judgment debtor who is found to be an alter ego of a corporate defendant.” (Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1069.)  “The decision to grant an amendment in such circumstances lies in the sound discretion of the trial court.” (Carr v. Barnabey's Hotel Corp. (1994) 23 Cal.App.4th 14, 20.) “The greatest liberality is to be encouraged in the allowance of such amendments in order to see that justice is done.” (Carman v. Athearn (1947) 77 Cal.App.2d 585, 594.) 

In order that the alter-ego rule be satisfied, a plaintiff must show: (a) “a sufficient unity of interest and ownership between the corporation and the individual”; and (b) that “treating the acts as those of the corporation alone will sanction a fraud, promote injustice, or cause an inequitable result.” (Misik, supra, 197 Cal.App.4th at p. 1072.) Beyond these requirements, it is proper that the trial court’s criteria for evaluating such an amendment vary with the circumstances, as such determinations are “particularly within the province of the trial Court.” (Id. at pp. 1071-1072.) “The essence of the alter ego doctrine is that justice be done. What the formula comes down to … is that liability is imposed to reach an equitable result.” (Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 505.)

Due process “guarantees that any person against whom a claim is asserted in a judicial proceeding shall have the opportunity to be heard and to present his defenses.” (Motores De Mexicali v. Superior Court (1958) 51 Cal.2d 172, 176.) Therefore, to add alter ego defendants as judgment debtors, a plaintiff must show that, in the defendants’ capacities as alter egos, they controlled the original party and were virtually represented in that proceeding. (Greenspan, supra, 191 Cal.App.4th at p. 508.)

The relief afforded under section 187 is limited to naming ‘new’ defendants to satisfy a prior judgment, but this limitation is specific to a cause of action. (Greenspan, supra, 191 Cal.App.4th at pp. 507-508.) In other words, a plaintiff can name as a judgment debtor a defendant who was party to the same action as where the plaintiff obtained his money judgment, so long as the claim supporting the money judgment was not also brought against the judgment debtor. (Ibid.)

Discussion

Control of Litigation

Plaintiff has provided evidence that Park is the sole owner of R2B, was Defendants’ person most knowledgeable who testified on Defendants’ behalf, and verified all of Defendants’ discovery responses. (Guardado Decl. ¶¶ 5-7, 11-12; Exh. 1-2, 4-5.)

Because Park was able to bind Defendants by verifying their discovery answers, the Court finds that Park had substantial control over the litigation.

Alter Ego Doctrine

Unity of Interest

In determining whether to apply the doctrine, California courts consider a number of factors which include but are not limited to (1) inadequate capitalization, (2) commingling of funds, records, and other assets, (3) disregard of corporate formalities (e.g., stock issuance, holding board meetings, keeping of minutes, election of officers and directors, segregation of corporate records), (4) the same equitable ownership in the two entities, (5) the same directors and officers, (6) confusion about corporate identity, (7) use of the same offices and employees, (8) use of subsidiary as a mere shell or conduit for the affairs of the parent, and (9) lack of segregation of corporate records. (Brooklyn Navy Yard Cogeneration Partners, L.P. v. Superior Court (Parsons Corp.) (1997) 60 Cal.App.4th 248, 258.)

Plaintiff argues that the Court need not analyze the alter ego factors because Labor Code, section 558.1 extends liability to Park.

Section 558.1 states:

“(a) Any employer or other person acting on behalf of an employer, who violates, or causes to be violated, any provision regulating minimum wages or hours and days of work in any order of the Industrial Welfare Commission, or violates, or causes to be violated, Sections 203, 226, 226.7, 1193.6, 1194, or 2802, may be held liable as the employer for such violation.

(b) For purposes of this section, the term ‘other person acting on behalf of an employer’ is limited to a natural person who is an owner, director, officer, or managing agent of the employer, and the term ‘managing agent’ has the same meaning as in subdivision (b) of Section 3294 of the Civil Code.”

(Lab. Code, § 558.1.)

            It is true that Park is the owner of R2B. However, section 558.1 does not facially provide a basis for finding that he is R2B’s alter ego. Section 558.1 may provide a basis for extending liability to Park if Park himself “violated or caused to be violated” the labor laws in question. ((Lab. Code, § 558.1, subd. (a).) However, nothing about that phrasing makes such a person the legal alter ego of the employer, nor does Plaintiff cite authority to that effect. In order to establish liability against Park under section 558.1, Plaintiff would have to litigate the case normally.

            Plaintiff has not made a showing that Park is the alter ego of either Defendant. The Court therefore denies the motion without prejudice.