Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_09-cv-02931/USCOURTS-casd-3_09-cv-02931-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

JEANNETTE S. CLARK, Civil

No.

09cv2931-CAB (DHB)

Plaintiff,

ORDER REGARDING

DEFENDANTS’ MOTION FOR

SUMMARY JUDGMENT AS TO

VTS [Doc. No. 66] AND

PLAINTIFF’S MOTION FOR

SUMMARY JUDGMENT AS TO

ALTER EGO [Doc. No. 100]

v.

DANA WOODY & ASSOCIATES, INC.,

DANA WOODY BREWER, TRES CHIC

BOUTIQUE, VETERANS TRANSITION

SERVICES, INC. and DOES 1-25,

Defendant.

Before the Court is Defendants’ motion for summary adjudication as to VTS [Doc

No. 66] and Plaintiff’s motion for summary adjudication as to alter ego [Doc. No. 100]. 

On January 29, 2013 the Court held oral argument on the motions. Kathleen M. 1

Hartman, Esq. appeared on behalf of the Plaintiff. Douglas Jaffe, Esq. appeared on

behalf of Defendants. For the reasons set forth below, the Defendants’ motion is

DENIED and the Plaintiff’s motion is DENIED.

I. BACKGROUND

A. Factual Background.

Plaintiff Jeannette Clark was employed at Dana Woody & Associates, Inc.

 The Court also held oral argument with regard to Plaintiff’s motions regarding Defendants’ 1

experts. [Doc. Nos. 67-71.] The Court ruled from the bench as to those motions. [Doc. No. 145.]

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(“DWA”) as a vocational rehabilitation counselor from 1993 until September 30, 2009. 

Defendant Dana Woody Brewer (“Brewer”) owns DWA and is its sole officer. It is

alleged that Brewer also owns two other businesses – Tres Chic Boutique (“Tres Chic”)

and Veterans Transition Services, Inc. (“VTS”). Those entities are sued as alter egos of

Brewer and DWA.

Plaintiff brings this action to recover wages, damages, penalties, interest, costs of

suit, and attorneys’ fees resulting from Defendants’ alleged failure to pay wages, late

payment of wages, payment of wages with dishonored checks, fraud, violations of

ERISA in connection with Plaintiff’s 401(k) account and healthcare account, and unfair

business practices. [Doc. No. 3 at 1-2.]

B. Procedural Background.

On July 13, 2012, this Court granted in part and denied in part Plaintiff’s motion

for summary adjudication. [Doc. No. 74.] Among other things, the Court granted

summary adjudication in favor of Plaintiff as to the eighth, ninth, eleventh and thirteenth

causes of action, but only as to liability and only as to defendant DWA.

On June 25, 2012, Defendants filed a motion for summary judgment/adjudication

that Defendant VTS is entitled to judgment as a matter of law. [Doc. No. 66.] On January

7, 2013, Plaintiff filed an opposition under seal. [Doc. No. 113.] On January 11, 2013,

Plaintiff filed a supplemental opposition under seal. [Doc. No. 121.] On January 18,

2013, Defendants filed a reply to the opposition. [Doc. No. 125.] On January 25, 2013,

Defendants filed an opposition to the supplement under seal. [Doc. No. 144.] 

On December 4, 2012, Plaintiff filed a motion for summary adjudication as to the

alter ego claims under seal. [Doc. No. 100.] On January 11, 2013, Defendants filed an

opposition to Plaintiff’s motion under seal. [Doc. No. 123.] On January 24, 2013,

Plaintiff filed a reply to the opposition under seal. [Doc. No. 142.]

II. DISCUSSION

A. Standard of Review.

Summary judgment/adjudication is proper only upon a the movant’s showing “that

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there is no genuine dispute as to any material fact and the movant is entitled to judgment

as a matter of law.” Fed. R. Civ. Proc. 56(a). “Material,” for purposes of Rule 56, means

that the fact, under governing substantive law, could affect the outcome of the case.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Cline v. Industrial

Maintenance Engineering & Contracting CO., 200 F.3d 1223, 1229 (9th. Cir. 2000). 

For a dispute to be “genuine,” a reasonable jury must be able to return a verdict for the

nonmoving party. Id., citing Anderson, 477 U.S. at 248.

“Where the moving party has the burden–the plaintiff on a claim for relief or the

defendant on an affirmative defense–his showing must be sufficient for the court to hold

that no reasonable trier of fact could find other than for the moving party.” Calderone

v. United States, 799 F.2d 254, 259 (6th Cir. 1986)(emphasis in original), quoting from

Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact,

99 FRD 465, 487-488 (1984).

The opposing party may not rest upon its pleadings. Rather, to avoid summary

judgment, it must affirmatively show a “genuine dispute” as to a “material fact.” Cal.

Practice Guide: Federal Civil Procedure Before Trial § 14:100, at 14–29, quoting Fed. R.

Civ. Proc. 56(c). “Where the nonmoving party will bear the burden of proof at trial on a

dispositive issue, (former) Rule 56(e) requires the non-moving party to go beyond the

pleadings and by her own affidavits, or by the ‘depositions, answers to interrogatories

and admissions on file,’ designate ‘specific facts showing that there is a genuine issue for

trial.’” Cal. Practice Guide: Federal Civil Procedure Before Trial § 14:114, at 14–49,

quoting Celotex Corp. V. Catrett, 477 U.S. 317, 323-324(1986)(parenthesis added).

B. Defendants’ motion for summary judgment as to VTS.

Defendants seek summary judgment as to Defendant VTS, which is sued only as

an alter ego. According to Defendants, VTS should be granted summary judgment

because: 1) the allegations do not meet the legal threshold for alter ego; and 2) this is

“reverse corporate piecing” which is not recognized in California. [Doc. No. 66-1 at 5.]

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The Ninth Circuit applies California law to the alter ego doctrine. Christian and

Porter Aluminum Co. v. Titus, 584 F.2d 326, 337 (9th Cir. 1978). Under California law, 

“There is no litmus test to determine when the corporate veil will be pierced; rather the

result will depend on the circumstances of each particular case.” Mesler v. Bragg Mgmt.

Co., 39 Cal.2d 290, 300 (1985). “[T]he doctrine is essentially an equitable one and for

that reason is particularly within the province of the trial court. Only general rules may

be laid down for guidance.” Assoc. Vendors, Inc. v. Oakland Meat Co., 210 Cal.App.2d

825, 837 (1962). The two general rules established by the California Supreme Court are:

“(1) that there be such unity of interest and ownership that the separate personalities of

the corporation and the individual no longer exist, and (2) that, if the acts are treated as

those of the corporation alone, an inequitable result will follow.” Mesler, 39 Cal.2d. at

300.

When applying these rules to particular cases, California courts have considered a

variety of factors, including: commingling of assets; diversion of corporate assets to

personal use; whether the individual defendants held themselves out as personally liable

for the debts of the corporation; whether the individual defendants acted in bad faith;

whether the individual defendants entered into contracts with the intent to avoid

performance by using the corporate entity as a shield against personal liability; whether

the individuals and corporation used the same office; whether they employed the same

attorney; whether the individuals used the corporation to procure labor, services and

merchandise for another person or entity; whether the individuals failed to adequately

capitalize the corporation; and whether the individuals failed to maintain minutes or

adequate corporate records. Assoc. Vendors, 210 Cal.App.2d at 838–840 (citations

omitted).

According to Defendants, VTS is a government contractor with the Department of

Veterans Affairs (VA) that provides educational and vocational counseling services to

disabled veterans and military personnel transitioning out of service. VTS is “majority

owned and Department of Veterans Affairs certified Service Disabled Veteran Owned

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Small Business (SDVOSB),” which according to Defendants means more than half the

of the Board members must be service disabled veterans. [Doc. No. 66-1 at 3;Doc. No.

66-2 at 2, ¶ 3.] Brewer only owns 1% of the issued shares and is not a disabled veteran. 

[Doc. No. 66-1 at 4; Doc. No. 66-2 at 2, ¶ 4; Doc. No. 66-3 at 3.]

Defendants first argue that VTS is not an alter ego of Brewer or DWA because

there is no “unity of interest.” [Doc. No. 66-1 at 6.] According to Defendants, Brewer

is merely a minority owner and employee of VTS and therefore, as a matter of law, VTS

cannot be her alter ego. However, Plaintiff has provided a plethora of evidence that

suggests (or at least raises a triable issue of fact) that VTS is essentially the successor to

DWA. For example, there is evidence that DWA paid for VTS incorporation and legal

fees [Doc. No. 113 at 8, and evidence cited therein] and that VTS used the same office,

telephone and employees as DWA. [Doc. No. 113 at 11-13, and evidence cited therein]. 

Defendants’ only response to the evidence presented by Plaintiff is to set forth

inadmissible legal conclusions by Mr. Houck and Ms. Brewer that there was no unity of

interest, no commingling of funds, etc., among the defendants. These inadmissible legal

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conclusions are not evidence. Celex Corp., 477 U.S. at 323-324. Defendants also argue

that VTS is not the alter ego of DWA because DWA is not a shareholder. But Plaintiff

has provided evidence that it was DWA, not Brewer, that purchased shares in VTS.

[Doc. No. 113-10 at 100.] Moreover, whether or not DWA is a shareholder does not

determine whether there is a unity of interest between DWA and VTS. Assoc. Vendors,

210 Cal.App.2d at 838–840

Second, Defendants argue that what Plaintiff is trying to do is “reverse corporate

piercing,” which is not recognized in California. According to Defendants, Plaintiff is

trying to pierce the corporate veil to reach VTS’ corporate assets in order to satisfy a

shareholder’s (Brewer’s) debts. Defendants cite to Postal Instant Press v. Kaswa

Corporation, 162 Cal.App.4th 1510 (2008) for the proposition that a third party creditor

 Plaintiff’s objections to Paragraph 5 of both the Houck and Brewer declarations [Doc. Nos. 2

113-13 and 113-14] are sustained. FRE 602, 701. The Court reserves on all other objections until the

time of trial.

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may not pierce the corporate veil to reach corporate assets to satisfy a shareholder’s

personal liability. 

However, this is not a situation of reverse corporate piercing. As of now,

summary adjudication as to liability has been found as to DWA only. Plaintiff is

attempting to show that VTS is the alter ego of DWA because they are two companies

that essentially act as one, and not merely because Brewer is a shareholder of VTS . 

Reverse corporate piecing has nothing to do with alter ego liability between parentsubsidiary or sister companies. See Greenspan v. LADT, LLC, 191 Cal.App.4th 486

(2010); Phillips, Spallas & Angstadt, 197 Cal.App.4th 1132, 1144 (2011). Here,

Plaintiff has set forth sufficient evidence to create a triable issie of fact as to whether

VTS is the alter ego of DWA. Therefore, Defendants’ motion for summary judgment as

to VTS is DENIED.

C. Plaintiff’s motion for summary judgment as to alter ego

Plaintiff seeks summary adjudication that: (1) DWA, Brewer and Tres Chic are

alter egos of each other [Doc. No. 100-1 at 25-26; and 2) DWA and VTS are alter egos

of each other [Doc. No. 100-1 at 27-29].

Plaintiff has provided a plethora of evidence that there may be a unity of interest

between Brewer, Tres Chic, and DWA. However, Defendants have presented enough

admissible evidence to create a triable issue of fact as to whether Tres Chic is now

owned by a third party. [Doc. No. 123-1 at 6, ¶ 14.] There is also a triable issue as to

whether payments made by or on behalf of Brewer with regard to DWA were proper.

[Doc. No. 123-1 at 4, ¶ 7, ¶ 9, ll. 17-22.] With regard to DWA and VTS, there is a triable

issue as to the corporate structure of VTS and whether the involvement of numerous

other owners, who may also have contributed capital and other items to the company,

would make the imposition of alter ego liability inequitable. [Doc. Nos. 123-4 through

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123-20, all at 2, ¶ 5.] Finally, given the equitable nature of alter ego, these issues will

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be addressed separately by the Court at the time of trial. Fed.R.Civ.P 42(b); Siegel v.

Warner Bros. Entertainment, Inc., 581 F.Supp.2d 1067, 1076 (C.D. Cal. 2008). 

Therefore, Plaintiff’s motion for summary judgment as to alter ego is DENIED.

DATED: February 12, 2013

CATHY ANN BENCIVENGO

United States District Judge

 To the extent Plaintiff objects to the evidence cited, the objections are overruled. Otherwise, 3

the Court reserves all rulings on Plaintiff’s objections to the Defendants’ declarations [Doc. Nos. 142-4

through 142-22], and on Defendants’ objections to Plaintiff’s evidence [Doc. No. 123-3], until the time

of trial.

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