Judge: Michelle C. Kim, Case: 21STCV41091, Date: 2023-08-07 Tentative Ruling
Case Number: 21STCV41091 Hearing Date: August 7, 2023 Dept: 31
TENTATIVE
Defendants’ motion
for summary adjudication is DENIED.
Legal
Standard
The function of a motion for summary
judgment or adjudication is to allow a determination as to whether an opposing
party cannot show evidentiary support for a pleading or claim and to enable an
order of summary dismissal without the need for trial. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843.) CCP
Section 437c(c) “requires the trial judge to grant summary judgment if 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.” (Adler v. Manor Healthcare Corp. (1992) 7
Cal.App.4th 1110, 1119.) “The function
of the pleadings in a motion for summary judgment is to delimit the scope of
the issues; the function of the affidavits or declarations is to disclose
whether there is any triable issue of fact within the issues delimited by the
pleadings.” (Juge v. County of Sacramento (1993) 12 Cal.App.4th 59, 67, citing FPI Development, Inc. v. Nakashima
(1991) 231 Cal. App. 3d 367, 381-382.)
As to each claim as framed by the
complaint, the defendant moving for summary judgment must satisfy the initial
burden of proof by presenting facts to show an element cannot be established,
or to establish a defense. (CCP § 437c(p)(2); Scalf v. D. B. Log Homes, Inc.
(2005) 128 Cal.App.4th 1510, 1520.) Courts “liberally construe the evidence
in support of the party opposing summary judgment and resolve doubts concerning
the evidence in favor of that party.” (Dore
v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389.)
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. 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.)
Another
way for the moving party to meet its initial burden on summary judgment is to
show that the opposing party does not possess, and cannot reasonably obtain,
needed evidence. (See, e.g., Union Bank v. Superior Court (1995) 31 Cal.App.4th
573, 590.)
Evidentiary
Objections
Plaintiff’s
Objections to Defendants’ evidence are OVERRULED.
Discussion
Defendants Special Entertainment
Events, Inc. (SEE), SEE Attractions, Inc. (SAI), and SEE Global Events
Inc. (SGEI), move for summary adjudication as to Plaintiff’s second cause of
action for Successor Liability, third cause of action for Statutory Liability
For Violation of Bulk Sale Statutes; fourth cause of action for Intentional
Voidable Transfer; fifth cause of action for Constructive Voidable Transfer and
sixth cause of action for Constructive Voidable Transfer. Defendants argue that
the second through sixth causes of action are premised on some sort of claim
that Defendants “acquired” the business or assets of Defendant Special
Entertainment Events, Inc. (SEE), but Plaintiff has failed to provide a single
piece of evidence that supports its allegations that these three entities
merged, consolidated or controlled the assets of the other on any basis
whatsoever.
Successor liability concerns the liability flowing from one corporation
to another corporation. (See Cleveland v. Johnson (2012) 209 Cal.App.4th
1315, 1326.) Thus whether a corporation is liable as a successor depends on
whether a corporation purchasing the principal assets of another corporation
assumes the other’s liabilities. (See id. at 1326-27.) The purchaser
corporation does not assume the seller’s liabilities unless “(1) there is an
express or implied agreement of assumption, (2) the transaction amounts to a
consolidation or merger of the two corporations, (3) the purchasing corporation
is a mere continuation of the seller, or (4) the transfer of assets to the
purchaser is for the fraudulent purpose of escaping liability for the seller’s
debts.” (Id. at 1327.)
“[I]t has long been held that ‘corporations cannot escape liability by a
mere change of name or a shift of assets when and where it is shown that the
new corporation is, in reality, but a continuation of the old.” (Id.) In
California, a corporation acquiring the assets of another corporation is a mere
continuation of that corporation if (1) no adequate consideration was given for
the predecessor corporation’s assets and made available for meeting the claims
of its unsecured creditors, and/or (2) one or more persons were officers,
directors, or stockholders of both corporations. (See id.) Whether the
successor corporation is a mere continuation depends on all the facts and
circumstances. (See id. at 1334.) Courts have also looked to various
other indications in finding that the successor corporation was a mere
continuation of the predecessor corporation, such as the fact that the
successor corporation provided the same services to the same members, the same
management company remained in place, both corporations derived their income
from the same membership dues, and there was no evidence the prior corporation
had been dissolved or wound up its affairs. (See McClellan v. Northridge
Park Townhome Owners Association, Inc. (2001) 89 Cal.App.4th 746, 756.)
Defendants
present evidence that in discovery, Plaintiff was requested to
provide “all facts that support such claims” and in response to each and every
question, Plaintiff made the same exact response:
In January of 2022, Defendant’s counsel
wrote to Plaintiff’s counsel and stated that "Special Entertainment Events
is non-operational and has no money.” However, the SAI and/or SGEI website
mention/promote a SEE exhibit - the very exhibit Plaintiff advertised for SEE
.... Mr. Biallas holds every office of each of the entities named in this
action. As such, Plaintiff believes that successor liability (and statutory
liability for violation of bulk sale) lies with SAI and/or SGEI. Also, the SGEI
website touts that, “SEE GLOBAL ENTERTAINMENT INC (SEE a family of companies
representing the finest in themed entertainment specializing in global touring
exhibition...”) [Emphasis added.]
(Defendants’
Separate Statement No. 5.) Defendants also submit the declaration of Martin
Biallas, the President of Defendant SEE, who states that none of these three
entities have ever been owned, sold, transferred, consolidated or merged with
any other entities. Nor has the assets for the different entitles ever been
involved with any other entities. (Biallas Decl., ¶ 11.) Defendants contend that there
must be evidence of a sale or transfer from one entity to the other or at least
something that shows liability can justly be imposed.
The Court finds that Defendants have not met their
burden on summary adjudication to show that there are no triable issues of fact
as to whether Defendants are successors of Defendant SEE under the third “mere
continuation” exception to the general rule. As evidenced by Plaintiff’s
discovery response, Mr. Biallas is an officer of each of the entities.
Moreover, each of the Defendants provide entertainment services. Lastly, as
Defendants admit, SEE is
a fully operational company, and thus, has not
dissolved or wound up its affairs. (See McClellan v. Northridge Park
Townhome Owners Association, Inc. (2001) 89 Cal.App.4th 746, 756.) Further,
in Biallas’ declaration he does not state that Defendant SEE has never been sold,
assigned, transferred, consolidated or merged into SAI or SGEI, or that
Defendant SEE has never transferred, sold, given any of its assets or business
to SAI or SGEI, as Defendants’ state in Nos. 13 and 14 of their separate
statement. Rather, Biallas merely states that none of the three entities have
ever been owned, sold, transferred, consolidated or merged with any other
entities; nor has the assets for the different entitles ever been involved
with any other entities. However, the declaration of Biallas is silent
as to whether the three entities were owned, sold, transferred, consolidated
with one another, or if assets were transferred within these three entities.
Nevertheless,
even if Defendants did meet their initial burden, Plaintiff has presented
evidence sufficient to show there are triable issues as to whether successor
liability should attach.
Plaintiff presents evidence that, as provided above, Mr. Biallas holds
every office of each of the entities named in this action. (Roza Decl., Exh.
A.) Plaintiff argues
that Defendants have failed to establish why, if it is not operating and has no
money, SEE has not dissolved and a reasonable inference can be drawn that the
impetus is to thwart creditors. Moreover, each of these businesses share an
office. (Id.) Further, Plaintiff presents evidence that in a different lawsuit,
21STCV39866, SAI has filed a cross-complaint, alleging that SAI is the producer
of the Chinese Lantern event in Las Vegas Nevada, referred to as “LumiNight
Chinese Lantern Festival,” and the owner of the lanterns and all event
components. (Id., Exh. E.) Essentially, Plaintiff argues, the Cross-Complaint
asserts that SAI is entitled to payment for damages incurred to the LumiNight Chinese
Lantern Festival.
As such, the Court finds there are
triable issues of fact as to whether
successor liability should attach because Biallas holds every office of
each of the entities, which all share the same business location; each of the
defendants are in the same business; SEE has not dissolved; and SAI has alleged
in the cross-complaint of a separate lawsuit that it produced the LumiNight
Chinese Lantern Festival and owns the components of the event, which is the
same event that partly gave rise to the complaint in this matter between
Defendant SEE and Plaintiff. While
Defendants argue there is no evidence of a transfer of assets, a reasonable
inference may be drawn here that there was a transfer of assets based on the
evidence presented by Plaintiff. The Court is to look at all the facts and make a
reasonable determination when there is a question of successor liability. (See Cleveland
v. Johnson (2012) 209 Cal.App.4th 1315.) Defendants’ evidence does not show
that they are entitled to the relief sought on a motion for summary
adjudication – it shows that reasonable minds could determine there should be
successor liability.
Conclusion
Based on the foregoing, Defendants’ motion for summary adjudication is DENIED.
Moving party is
ordered to give notice.