Judge: William A. Crowfoot, Case: 22AHCV00048, Date: 2023-11-13 Tentative Ruling

Case Number: 22AHCV00048    Hearing Date: November 13, 2023    Dept: 3

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - NORTHEAST DISTRICT

I.            INTRODUCTION

On January 31, 2022, plaintiff Baldwin Arcadia Center, LP (“Plaintiff”) filed this unlawful detainer action against defendant Tong Tak House Seafood Restaurant (“Defendant”). On May 26, 2022, Plaintiff filed a notice of settlement with a request that the Court dismiss the action while retaining jurisdiction to enforce the settlement under Code of Civil Procedure section 664.6.

On June 6, 2023, Plaintiff filed an ex parte application to enforce the terms of the stipulated judgment. On June 12, 2023, the Court entered judgment in favor of Plaintiff and against Defendant for possession of the premises located at 1271 S Baldwin Ave. Arcadia CA 91007, forfeiture of the lease or rental agreement, and for money damages in the sum of $810,435.63.

On October 17, 2023, Plaintiff filed this motion to amend the judgment to include Lily Feng (“Feng”) pursuant to Code of Civil Procedure § 187. 

II.          LEGAL STANDARD

Code of Civil Procedure section 187 grants every court the power and authority to carry its jurisdiction into effect. (NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778.) This includes the authority to amend a judgment to add an alter ego of an original judgment debtor, and thereby make the additional judgment debtor liable on the judgment. (Toho–Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013) 217 Cal.App.4th 1096, 1106.) Amending a judgment by noticed motion to add an alter ego of an original judgment debtor is an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant, but is merely inserting the correct name of the real defendant. (McClellan v. Northridge Park Townhome Owners Assn. (2001) 89 Cal.App.4th 746, 752; (Wells Fargo Bank, N.A. v. Weinberg (2014) 227 Cal.App.4th 1, 9.) The court is not required to hold an evidentiary hearing on a motion to amend a judgment, but may rule on the motion based solely on declarations and other written evidence. (Id.) The motion may be made at any time so that the judgment will properly designate the real defendants. (Highland Springs Conference & Training Ctr. v. City of Banning (2016) 244 Cal. App. 4th 267, 287.)

To prevail on the motion and ad an alter ego of an original judgment debtor, the judgment creditor must show, by a preponderance of the evidence, that: “(1) the parties to be added as judgment debtors had control of the underlying litigation and were virtually represented in that proceeding; (2) there is such a unity of interest and ownership that the separate personalities of the entity and the owners no longer exist; and (3) an inequitable result will follow if the acts are treated as those of the entity alone.” (Relentless Air Racing, LLC v. Airborne Turbine Ltd. Partnership (2013) 222 Cal.App.4th 811, 815–816.) In determining whether there is a sufficient unity of interest and ownership, the court considers many factors, including “the commingling of funds and assets of the two entities, identical equitable ownership in the two entities, use of the same offices and employees, disregard of corporate formalities, identical directors and officers, and use of one as a mere shell or conduit for the affairs of the other.” (Troyk v. Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1342.) Inadequate capitalization of the original judgment debtor is another factor. (Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799, 811–812 [reciting “long list” of inexhaustive factors].) No single factor governs; courts must consider all of the circumstances of the case in determining whether it would be equitable to impose alter ego liability. (Troyk, supra, at p. 1342.)

Alter ego “is an extreme remedy, sparingly used.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 539.) “The standards for the application of alter ego principles are high, and the imposition of [alter ego] liability ... is to be exercised reluctantly and cautiously.” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 306.)  Still, “[t]he greatest liberality is to be encouraged” in allowing judgments to be amended to add the “real defendant,” or alter ego of the original judgment debtor, “in order to see that justice is done.” (Carr v. Barnabey's Hotel Corp. (1994) 23 Cal.App.4th 14, 20; Greenspan v. LADT LLC (2010) 191 Cal.App.4th 486, 508; Wells Fargo, supra, 227 Cal.App.4th at p. 7.)

III.        DISCUSSION

On July 31, 2023, a little over a month after the Court entered the stipulated judgment, Feng filed a certification of election to wind up and dissolve Defendant as a corporate entity. Defendant did not give Plaintiff notice that it was winding up and dissolving, nor has it identified for Plaintiff any shareholders other than Feng. Plaintiff argues that Feng is dissolving Defendant in order to remove its assets and prevent Defendant from having to pay the judgment. Therefore, Plaintiff seeks to add Feng as a judgment debtor on the grounds that she is an alter ego of Defendant.

According to documents filed with the California Secretary of State, Feng is the sole director, chief executive officer, chief financial officer, secretary and agent for service of process for Defendant. (Crawford Decl., Exs. 3-4.) The most recent statement of information, filed on September 6, 2022, shows that Feng shares the same principal address as Defendant located at 1271 S. Baldwin Avenue in Arcadia, California. (Id., Ex. 4.) Feng appears to have controlled the underlying action and had the opportunity to litigate it. Feng participated in the litigation by verifying the answer on behalf of Defendant and by signing the stipulation that resulted in the judgment. The Court notes that while the name printed on the stipulation is “Li Feng” instead of “Lily Feng”, the signature on the stipulation is identical to the signature verifying the answer, in which Feng referred to herself as “Lily Feng.”

In light of the evidence submitted by Plaintiff, it would be inequitable not to add Feng as a judgment debtor when there appears to be a “unity of interest” which ensured that Feng’s interests were represented in this litigation.

IV.         CONCLUSION

Plaintiff’s unopposed motion is GRANTED. The Court will sign the proposed amended judgment filed on October 17, 2023.

Dated this 13th day of November, 2023

Parties who intend to submit on this tentative must send an email to the Court at ALHDEPT3@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.