Filed 3/1/22 Unified Real Estate Investments v. Thong CA2/1

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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

UNIFIED REAL ESTATE 

INVESTMENTS, LLC,

Plaintiff and Appellant,

v.

PHILLIP T. THONG et al.,

Defendants and Respondents.

 B301162, B302953

 (Los Angeles County

 Super. Ct. No. BC691362)

APPEALS from a judgment and order of the Superior Court 

of Los Angeles County, C. Edward Simpson and 

Susan Bryant-Deason, Judges. Affirmed in part, reversed 

in part, and remanded with directions.

CSReeder, Christopher S. Reeder and Elan Bloch for 

Plaintiff and Appellant.

Wong & Mak and Fred A. Wong for Defendants and

Respondents.

____________________________
2

Plaintiff Unified Real Estate Investments, LLC (landlord) 

appeals from a judgment in favor of defendants Phillip T. Thong, 

Andrea L. Thong, Ly Hua, Wendy Lam, Heng Henry Hua (Henry 

Hua), Newport Seafood Restaurant, Inc., Hua Culinary Group, 

Inc., and Newport Seafood Restaurant, Inc. (collectively, 

defendants).1

The individual defendants were shareholders in a 

restaurant, New Port @ Beverly Hills, Inc. (NPBH), that leased 

premises from landlord for a five-year term. Three years into 

that term, NPBH ceased operations and vacated over landlord’s 

objection. Landlord filed suit against NPBH for breach of the 

lease and conversion, the latter cause of action based on 

allegations that NPBH wrongfully removed equipment, furniture, 

and other items when it vacated. Landlord sought to impose 

liability on defendants based on their status as officers, directors, 

shareholders, and/or alter egos of NPBH. Landlord further 

claimed Phillip Thong was liable under a personal guaranty he 

had provided at the outset of the lease.

NPBH did not appear and default was entered against it. 

The other defendants proceeded to a bench trial. The trial court

ruled in favor of defendants and awarded attorney fees. The trial 

court further orally announced a default judgment against NPBH 

for unpaid rent and the items wrongfully removed from the 

premises. The record indicates the trial court has yet to sign that 

default judgment.

On appeal, landlord raises the following issues: (1) the trial 

court failed to issue a requested statement of decision; (2) the 

1 Because several of the defendants share last names, for 

clarity and consistency we will refer to all individual defendants 

by their first and last names.
3

trial court failed to include the default judgment against NPBH 

in the judgment entered against defendants; (3) the trial court 

wrongly concluded Phillip Thong’s personal guaranty was no 

longer in effect when NPBH breached the lease; (4) the trial court 

erred in finding defendants not liable for conversion; (5) the trial 

court erred in finding defendants were not NPBH’s alter egos; 

(6) the trial court made numerous evidentiary errors; and (7) the 

trial court applied the wrong standard in calculating damages in 

the default judgment.

The only issue before us meriting reversal is the trial 

court’s ruling on the conversion cause of action. Henry Hua 

testified that he directed NPBH’s move-out from the premises 

and admitted to removing a number of items. We hold this 

evidence establishes as a matter of law that Henry Hua is liable 

for conversion. We remand for a determination of damages. We 

affirm, however, the trial court’s judgment in favor of the other 

defendants on the conversion claim.

We reject landlord’s other challenges. We conclude the 

parties failed to request a statement of decision properly, and the 

trial court was not required to issue one. The trial court 

indicated it would enter judgment against NPBH separately from 

defendants, which was within its discretion to do. We agree with 

the trial court that Phillip Thong’s personal guaranty had expired 

on its own terms at the time NPBH vacated the premises. The 

evidence did not establish as a matter of law that defendants 

were NPBH’s alter egos. None of landlord’s evidentiary 

challenges merits reversal. Because the trial court has yet to 

sign the default judgment against NPBH, the issue of damages is 

not properly before us.
4

Accordingly, we reverse the judgment as to Henry Hua and 

remand for a determination of damages on landlord’s conversion 

claim against Henry Hua. Given the change in judgment, we also 

vacate the award of attorney fees and costs. We otherwise affirm 

the judgment.

FACTUAL BACKGROUND

We provide here general background on the case. More 

detailed summaries of facts and proceedings appear in the 

relevant sections of our Discussion, post.

Landlord owned and operated a building at 50 North 

La Cienega in Beverly Hills. The building was a mixed-use 

commercial property, with restaurants on the first floor and 

medical offices on the second and third floors.

NPBH was a corporation formed in February 2014 to 

operate a restaurant. Its officers were Ly Hua, president, 

Wendy Lam, secretary, and Andrea Thong, chief financial officer, 

each of whom was also a shareholder. Later in 2014, Andrea 

Thong transferred her shares to her father, Phillip Thong, who 

was NPBH’s accountant and “advisor.” Henry Hua was the 

restaurant’s manager and executive chef, and later became a 

shareholder. The other shareholders, not named as defendants 

here, were Mimi Hua and Linda Hua. 

In February 2014, landlord leased one of the restaurant 

spaces at 50 North La Cienega to NPBH for a five-year term. 

Phillip Thong was primarily responsible for negotiating the lease 

on behalf of NPBH. Phillip Thong also signed a personal 

guaranty for the performance of the lease. As we explain in more 

detail in our Discussion, post, the guaranty provided that it 

would expire after the first two years of the lease term unless 

NPBH breached the lease within those first two years, in which 
5

case the guaranty would remain in force for the remainder of the 

lease term and any extension thereof. 

Three years into the lease, NPBH’s shareholders decided to 

close the restaurant. On October 3, 2017, NPBH through counsel 

informed landlord of its intention to cease operations and return 

possession of the premises to landlord. Landlord’s counsel 

responded with a letter asserting that NPBH’s obligation to pay 

rent would continue. The letter also asserted that under 

paragraph 12(E) of the lease, NPBH could not remove any of 

NPBH’s property from the premises unless it timely cured its 

breach. 

Although there was great dispute at trial as to what items 

NPBH removed when it left the premises, Henry Hua

acknowledged at trial that he directed the removal of some items. 

We summarize the evidence pertaining to the removed items in 

the section of our Discussion addressing landlord’s conversion 

cause of action.

PROCEDURAL BACKGROUND

1. Complaint and trial

On January 23, 2018, landlord filed a complaint against 

NPBH, Phillip Thong, Andrea Thong, Ly Hua, Wendy Lam, and 

Doe defendants asserting causes of action for breach of contract 

and conversion. The complaint alleged that Andrea Thong, Ly 

Hua, and Wendy Lam were officers of NPBH and Phillip Thong 

both promoted NPBH and had a financial interest in it. The 

complaint further alleged that all defendants, including the Doe 

defendants, were “the agents, servants, employees, principals, 

shareholders, joint venturers, alter egos, co-conspirators and/or 

partners of each other . . . .” 
6

The complaint alleged that NPBH abandoned the premises, 

in the process causing damage and removing 33 items belonging 

to landlord including a television, fire extinguishers, “and an 

assortment of cooking appliances and related items” such as “a 

burner range, convection oven, ice maker, and refrigerator.” 

Phillip Thong, Andrea Thong, Ly Hua, and Wendy Lam 

filed an answer to the complaint on March 7, 2018. NPBH 

did not appear and the clerk entered default against it on 

August 17, 2018. 

On September 12, 2018, landlord amended the complaint to

substitute one individual and three entity defendants in place of 

the Doe defendants: Henry Hua, Newport Seafood Group, Inc.,

Hua Culinary Group, Inc., and Newport Seafood Restaurant, Inc. 

The new defendants answered the complaint on November 13, 

2018. 

At some point in the proceedings, landlord asserted the 

additional contention that Phillip Thong was liable under his 

personal guaranty. 

Defendants unsuccessfully moved for summary judgment 

and the case proceeded to a bench trial. The following witnesses 

testified: Perry Cohan, landlord’s owner and managing director; 

Tagel Mezgebu, landlord’s building manager; Phillip Thong; 

Henry Hua; John Parks Landon, NPBH’s real estate agent; and 

Bobby Lu, a restauranteur who took over the premises after 

NPBH left. To the extent the testimony of these witnesses is 

relevant to the appeal, we describe it in the applicable sections of 

our Discussion, post.

Both parties called expert witnesses on the issues of

NPBH’s capitalization and adherence to corporate formalities, 

factors pertinent to an alter ego analysis. Landlord’s expert,
7

Kevin Henry, opined NPBH was undercapitalized and its 

adherence to corporate formalities insufficient, whereas 

defendants’ expert, Barbara Luna, concluded the opposite. 

2. Announcement of default judgment and tentative 

ruling

Following the close of evidence, the trial court announced

the default judgment against NPBH, the nonappearing 

defendant. The court ruled that NPBH owed landlord 

$302,509.30 in unpaid rent, and an additional $90,000 for items 

NPBH removed from the premises. The court ordered landlord’s 

counsel to prepare a proposed judgment within 10 days. 

Following closing arguments, the trial court provided an 

oral tentative ruling regarding the appearing defendants. The 

trial court found that Phillip Thong was not liable on his 

guaranty, which was no longer in effect when NPBH vacated the 

premises; that landlord failed to prove defendants were NPBH’s 

alter egos; and that although NPBH wrongly removed items from 

the premises, the evidence did not establish that the other 

defendants were involved. The trial court found in favor of 

defendants, and instructed defendants’ counsel to prepare a 

proposed judgment. 

We provide further details on the default judgment and 

tentative ruling in the applicable sections of our Discussion.

3. Judgment and appeal

On August 1, 2019, the trial court signed a judgment in 

favor of defendants and awarded them costs. The judgment 

stated that “[t]he default of [NPBH] was entered prior to trial,” 

but does not reflect the default judgment announced at the end of 

trial. Landlord filed a notice of appeal from the judgment.
8

Defendants then moved for attorney fees. The trial court 

awarded defendants $239,962.50 in fees. Landlord filed a second 

notice of appeal from the fees award, and that appeal was 

consolidated with the first appeal. 

Although the record on appeal contains a proposed default 

judgment against NPBH prepared by landlord, the record does 

not reflect the trial court has signed that judgment. 

DISCUSSION

A. The Trial Court Was Not Required To Issue a

Statement of Decision

Landlord contends the trial court committed reversible 

error by failing to issue a statement of decision following trial. 

We conclude the parties never made a proper request for a 

statement of decision, and therefore the trial court was not 

required to issue one.

1. Applicable law

“[U]pon the request of any party appearing at the trial,” the 

trial court “shall issue a statement of decision explaining the 

factual and legal basis for its decision as to each of the principal 

controverted issues at trial.” (See Code Civ. Proc., § 632.) 

Subject to an exception not applicable here, a request for a 

statement of decision “must be made within 10 days after the 

court announces a tentative decision.” (See ibid.) “After a party 

has requested the statement, any party may make proposals as to 

the content of the statement of decision.” (Ibid.) 

“The request for a statement of decision shall specify those 

controverted issues as to which the party is requesting a 

statement of decision.” (Code Civ. Proc., § 632.) A party’s failure 
9

to specify that the statement of decision should address a 

particular issue “waive[s the] right to object to the failure of the 

statement of decision to do so.” (City of Coachella v. Riverside 

County Airport Land Use Com. (1989) 210 Cal.App.3d 1277, 1292

(City of Coachella).) “[A] general, nonspecific request for a 

statement of decision does not operate to compel a statement 

of decision as to all material, controverted issues.” (Id. at 

pp. 1292–1293; accord, Conservatorship of Hume (2006) 

140 Cal.App.4th 1385, 1394.)

2. Relevant proceedings below

At the conclusion of his closing argument, counsel for 

defendants orally requested “a statement of decision under CCP 

632 and a finding of facts, particularly perhaps to address the 

issues that were raised in the two trial briefs that I filed.” 

Landlord’s counsel then offered his rebuttal argument. 

After concluding that argument, landlord’s counsel asked to make 

a “housekeeping note.” He said, “Since we’re doing a statement of 

decision, there’s two things. One is we’ll have to put the 

judgment in on whatever you decide in the statement of decision 

with the default[,] and the reason being is the one judgment 

rule.” Landlord’s counsel went on to explain his concern that if 

landlord obtained the default judgment against NPBH before 

obtaining a judgment against the other defendants, there would 

be a problem with the “one judgment rule.” The trial court 

replied, “I’ll leave that up to you.” Landlord’s counsel stated, 

“The way to do it is with the final judgment, if we just submit it 

with that, that would be fine. Obviously if the Court is going to 

do a statement of decision, we’d be happy to prepare a closing 

brief or proposed statement of decision if the Court elects.” The 

trial court stated it did not need to receive further briefing. 
10

The trial court then issued its oral tentative in favor of 

defendants. At the conclusion of the tentative decision, the trial 

court stated, “To the extent there is a request for a statement of 

decision, that needs to be submitted in writing, specifying the 

areas and the issues that the Court has not covered by its 

tentative ruling.” The parties said nothing further regarding the 

statement of decision and the proceedings concluded. The record 

does not indicate that any party submitted any further requests 

for a statement of decision.

3. Analysis

The record indicates that the parties never made a request 

for a statement of decision unequivocally specifying the issues the 

parties wished addressed. Defendants’ counsel requested a 

statement of decision but was not definite about the issues to 

address; instead, he said “perhaps” it should address the issues 

raised in his trial briefs. Landlord’s counsel’s request was even 

more ambiguous, but it appears his concern was less about the

content of statement of decision and more that any judgment 

include the default judgment against NPBH. 

Given these ambiguous statements from counsel, it is 

unsurprising that following its tentative decision the trial court 

asked for a written request specifying the issues to be covered in 

the statement of decision. The parties did not respond to this 

request, although they had 10 days following the trial court’s 

tentative decision to do so. (Code Civ. Proc., § 632.) Landlord

therefore has waived any objection to the trial court declining to 

issue a statement of decision. (City of Coachella, supra, 

210 Cal.App.3d at p. 1292.)

Landlord argues defendants’ counsel’s reference to the trial 

briefs adequately specified the issues the parties wished 
11

addressed. Referencing an entire trial brief, without more, is not 

an appropriate method of specifying controverted issues for a 

statement of decision. Regardless, defendants’ counsel’s request 

was preliminary, stating only that the statement of decision 

“perhaps” should address the issues in the trial briefs. At best, 

this indicated defendants’ counsel intent to make a more specific 

request in the future. No such request manifested, even when 

the trial court expressly asked for a more specific request.

Landlord argues a party may orally request a statement of 

decision, and the trial court erred by requiring a written request. 

Be that as it may, a valid request for a statement of decision, 

whether written or oral, must specify the issues to be addressed. 

That specificity was absent here.

Landlord’s cited case, In re Marriage of Ananeh-Firempong

(1990) 219 Cal.App.3d 272 (Ananeh-Firempong), does not hold 

otherwise. In Ananeh-Firempong, just prior to the trial court 

issuing its tentative decision, counsel orally requested a 

statement of decision as to “the calculations used to determine 

the valuation of Husband’s medical practice.”2 (AnanehFirempong, at pp. 282, 284.) The trial court did not issue a 

statement of decision, instructing counsel, “If you wish to have [a 

statement of decision], you may request that in writing.” (Id. at 

2 The precise request was, “ ‘What I want to say is if the 

court in its analysis were to make a finding as to this business 

valuation—accepting one of these practitioners and totally 

rejecting the other—then I have to request that we have a 

staement [sic] of decision showing calculations so that the record 

is clear as to what factors were used in arriving at whatever 

valuation.’ ” (Ananeh-Firempong, supra, 219 Cal.App.3d at 

p. 282.) 
12

p. 283.) The Court of Appeal held the oral request was sufficient 

and directed the trial court to provide a statement of decision on 

the valuation issue. (Id. at pp. 284–285.) Ananeh-Firempong 

is not instructive in the instant case, in which the parties never 

specified, orally or in writing, the issues they wished addressed in 

the statement of decision.

B. The Trial Court Was Not Required To Include the 

Default Judgment Against NPBH in the Signed 

Judgment in Favor of Defendants

Landlord argues the judgment was inconsistent with the 

trial court’s findings because it did not include the default 

judgment against NPBH. We reject this claim of error. 

Trial courts are not required to enter judgment as to all 

defendants simultaneously. (Code Civ. Proc., § 579 [“In an action 

against several defendants, the Court may, in its discretion, 

render judgment against one or more of them, leaving the action 

to proceed against the others, whenever a several judgment is 

proper.”].) Here, the trial court expressly ordered landlord’s 

counsel to prepare a proposed judgment against NPBH, and 

ordered defendants’ counsel to prepare a proposed judgment as to 

the claims against defendants. Thus, the trial court made clear it 

intended to enter two separate judgments, one for the appearing 

defendants and one for the defaulting defendant. 

The record on appeal indicates the trial court has yet to 

sign landlord’s proposed judgment against NPBH. Other than 

submitting the proposed judgment, there is no evidence in the 

record that landlord has taken further action to obtain a 

signature. We therefore decline to hold at this point that the 

trial court has committed any error in regard to the default 

judgment against NPBH.
13

The lack of a signed judgment against NPBH does not 

impede our jurisdiction over the appeal from the judgment 

against defendants. “ ‘[I]t has long been the settled rule that in a 

case involving multiple parties, a judgment is final and 

appealable when it leaves no issues to be determined as to one 

party.’ [Citations.]” (Heshejin v. Rostami (2020) 54 Cal.App.5th 

984, 991.) The judgment in favor of defendants “ ‘leaves no issues 

to be determined’” as to them, and therefore is a final and 

appealable judgment. (Ibid.)

C. The Trial Court Correctly Concluded the Personal 

Guaranty Had Expired

Landlord argues Phillip Thong was liable under his 

personal guaranty, and the trial court erred by concluding 

otherwise. We agree with the trial court that at the time NPBH 

vacated the premises, the guaranty had expired under its own 

terms.

1. Relevant facts and proceedings below

The lease required “Tenant to provide to the Landlord a 

personal guarantee for the performance of the Lease for the 

duration of the five (5) year Lease term.” 

On February 21, 2014, Phillip Thong signed a “Guaranty of 

Lease” (boldface omitted) in which he guaranteed NPBH’s 

payment of rent and performance of the terms of the lease. The 

final paragraph of the guaranty stated, “Notwithstanding 

anything to the contrary contained in this Guaranty of Lease, 

provided there has been no Breach (as that term [is] defined in 

Paragraph 13.1(a) of the Lease) during the first twenty four (24) 

months of the Original Term, Lessor agrees that this Guaranty of 

Lease, effective as of the commencement of the twenty fifth (25th) 
14

month of the Original Term, shall be cancelled and rendered of no 

further force or effect. In the event, however, a Breach occurs 

during the first twenty four (24) months of the Original Term, 

this Guaranty of Lease, notwithstanding the foregoing, shall 

remain in full force and effect throughout the Original Term and 

any extension thereof.” The parties do not dispute that pursuant 

to this language, the personal guaranty would expire after two 

years in the absence of an earlier breach by NPBH. 

At trial, Phillip Thong and Landon, NPBH’s real estate 

agent, testified that Phillip Thong and Cohan, landlord’s 

managing director, negotiated and agreed to the reduction of the 

guaranty’s term from five years to two years. Cohan testified he 

never agreed to the two-year term, and was not aware of the 

reduced term until after NPBH had vacated the premises. Cohan 

acknowledged he never read the signed guaranty after receiving 

it. 

NPBH left the premises in 2017, more than two years into 

the original term of the lease. At issue in the trial court was 

whether the guaranty was still in effect at that time. This 

determination turned on whether NPBH had committed an 

earlier breach during the first two years of the lease, which would 

have extended the duration of the guaranty.

Landlord argued below that the guaranty itself breached 

the lease, because the guaranty had a two-year duration rather 

than the five years required by the lease, and NPBH did not 

provide a new guaranty when the first guaranty expired to cover 

the remaining three years. Landlord further argued NPBH had 

breached a provision of the lease requiring NPBH to clean the 

drain pipes every six months. 
15

The trial court disagreed, concluding there could be no 

breach unless the landlord first notified NPBH of the purported 

noncompliance. In its oral tentative ruling, the trial court cited 

paragraph 19(A) of the lease, which provides, “The occurrence of 

anyone [sic] or more of the following events (‘Events of Default’) 

shall constitute a material default and breach of this Lease by 

Tenant.” Subparagraph (4) lists as one of the “Events of Default,” 

“[t]he failure of Tenant to promptly and faithfully observe or 

perform any of the covenants, conditions or provisions of this 

Lease to be observed or performed by Tenant, where such failure 

shall continue for a period of ten (10) days after written notice 

thereof from Landlord to Tenant . . . .” 

The trial court found no evidence that landlord had 

provided notice within the first two years of the lease term that 

NPBH had failed to provide an adequate guaranty or had failed 

to clean the drain pipes. Accordingly, it found that NPBH had 

not breached the lease within the first two years, and therefore

Phillip Thong was not liable under the guaranty.3

2. Analysis

On appeal, landlord does not dispute the trial court’s 

finding that landlord did not within the first two years of the 

lease term notify NPBH of either the insufficiency of the 

guaranty or the failure to clean the drain pipes. Rather, landlord 

contends the trial court misinterpreted the lease and guaranty to 

3 The trial court rejected defendants’ argument that to the 

extent the guaranty was not compliant with the lease, there was 

no meeting of the minds and thus no valid guaranty. Defendants 

do not reassert this argument on appeal, and we do not address 

it.
16

require notice to establish a breach. This is a question of 

contractual interpretation on undisputed facts, and our review is 

de novo. (Bravo v. RADC Enterprises, Inc. (2019) 33 Cal.App.5th 

920, 922.) 

The guaranty by its language expired in two years absent a 

breach as that term is defined in paragraph 13.1(a) of the lease. 

The guaranty is not a model of clarity, because the lease does not 

in fact contain a paragraph 13.1(a). Paragraph 13(A) of the lease, 

however, entitled “Indemnity” (boldface omitted), refers to 

breach, stating in relevant part, “Tenant shall further indemnify 

and hold Landlord harmless from and against any and all claims, 

costs, expenses and liabilities (including reasonable attorney’s 

fees) arising from, or incurred in connection with, any breach of, 

or default in, the performance of any obligation on Tenant’s part 

to be performed under the terms of this Lease . . . .” 

To understand the meaning of “breach” as used in 

paragraph 13(A), the trial court appropriately looked to 

paragraph 19(A), listing the events that “constitute a material 

default and breach of this Lease.” Subparagraph (4) states that 

one such event is the failure of NPBH to perform the provisions of 

the lease “where such failure shall continue for a period of ten 

(10) days after written notice thereof from Landlord.” This 

language establishes that NPBH’s noncompliance with a 

provision of the lease does not in itself constitute a “material 

default and breach”—rather, breach occurs only after the 

landlord has notified NPBH of the noncompliance, and NPBH 

has failed to cure the issue within 10 days of that notice. In other 
17

words, notice from the landlord is a necessary predicate to a 

breach.4

The trial court found, and landlord does not dispute,that 

landlord did not notify NPBH of any noncompliance within the 

first two years of the lease term. Thus, NPBH did not breach the 

lease within the first two years of the lease term, and the 

guaranty was no longer in effect when NPBH abandoned the 

premises in 2017.

Landlord contends that several provisions of the guaranty 

obviate the need for notice to establish a breach. First, the 

guaranty states, “This Guaranty shall not be released, modified 

or affected by the failure or delay on the part of [landlord] to 

enforce any of the rights or remedies of the [landlord] under said 

Lease, whether pursuant to the terms thereof or at law or in 

equity.” Landlord argues that through this provision, Phillip 

Thong waived any challenge based on landlord failing to make a 

timely demand on NPBH. 

We disagree. The two-year expiration provision applies 

“[n]otwithstanding anything to the contrary contained in this 

Guaranty of Lease.” Thus, to the extent it is in conflict with the 

provision cited by landlord, it supersedes that other provision. 

Landlord also cites provisions in the guaranty stating, “No 

notice of default need be given to Guarantors” and landlord “may 

proceed immediately against [NPBH] and/or against Guarantors 

4 The lease lists certain “Events of Default” not subject to 

the 10-day notice requirement under paragraph 19(A)(4), namely 

abandonment of the premises, failure to make rent or other 

payments, and involuntary assignment of the tenant’s interest in 

the lease. Landlord does not contend any of these events 

occurred in the first two years of the lease term.
18

following any breach or default by [Tenant] or for the 

enforcement of any rights which [landlord] may have as against 

[NPBH] under the terms of the Lease or at law or in equity.” 

Further, “[landlord] shall have the right to proceed against 

Guarantors hereunder following any breach or default by [NPBH] 

without first proceeding against [NPBH] and without previous 

notice to or demand upon either [NPBH] or Guarantors.” 

These provisions establish that in the event of a breach or 

default, landlord may proceed against the guarantors without 

notice to either NPBH or the guarantors. For these provisions to 

apply, however, there must first be a breach or default under the 

lease. As discussed, a breach or default occurs only if the 

landlord has first notified NPBH of NPBH’s noncompliance, and 

NPBH has not cured the issue within 10 days. In other words, 

although the guaranty requires no notice before landlord may 

enforce it following a breach, the lease requires notice to NPBH to 

establish the breach in the first place.

Landlord further argues the provisions of the lease itself 

establish no notice is necessary to trigger a breach as defined in 

the guaranty. Landlord suggests the leases’s “no waiver” clause 

either obviates the notice requirement in paragraph 19(A)(4) or 

bars NPBH or Phillip Thong from asserting it. That provision 

states, in relevant part, that “[n]o delay or omission in the 

exercise of any right or remedy of Landlord with respect to any 

default by Tenant shall impair such right or remedy or be 

construed as a waiver thereof.” 

We reject landlord’s interpretation. As applicable here, the 

“no waiver” clause arguably would entitle landlord to serve notice 

of NPBH’s noncompliance at any time, even long after the 

noncompliance occurred, thus triggering the 10-day clock under 
19

paragraph 19(A)(4). Landlord still would have to serve notice to 

establish breach, however. As discussed, landlord did not serve 

notice of any noncompliance during the first two years of the 

lease term. Thus, NPBH was not in breach during those first 

two years.

Landlord argues the term “breach” as used in the guaranty 

is different from the “Events of Default” under paragraph 19(A) 

of the lease. This argument runs afoul of the express language of 

Paragraph 19(A), which states “[t]he occurrence of anyone [sic] or 

more of the following events (‘Events of Default’) shall constitute 

a material default and breach of this Lease by Tenant.” (Italics 

added.) This language establishes that whatever distinction may 

be drawn between a default and a breach, the events triggering 

them nonetheless are identical, including the notice requirement 

under subparagraph (4).

Landlord cites paragraph 10(A)(5) of the lease, providing “If 

Tenant is served with a Notice for any kind of breach, Landlord 

shall have the right to enter the Premises at any time after which 

such notice is posted.” Landlord argues that “this language 

contemplates a separate existence between what constitutes a 

breach of the Lease Agreement and the notice requirement to 

proceed with any sort of enforcement action or create the 

existence of an Event of Default.” 

Paragraph 10(A)(5) describes the conditions under which 

the landlord may enter the premises, a separate issue from the 

notice required to establish a breach, the latter of which is 

addressed in paragraph 19(A)(4). Paragraph 10(A)(5) is not 

instructive on the interpretation of the term “breach.” Again, 

landlord’s suggestion that breach is something other than the 
20

events described in paragraph 19(A) is belied by the express 

language of that paragraph.

Landlord notes, as have we, that the guaranty in defining 

breach does not cross-reference paragraph 19(A) of the lease, but 

rather paragraph 13, which refers to “any breach of, or default in” 

NPBH’s performance under the lease. Landlord claims “this 

section appears to distinguish between the mere existence of a 

breach in the performance of a condition of the Lease Agreement 

and notice.” 

We see nothing inconsistent between paragraph 13 and 

paragraph 19 of the lease, nor can we conceive how we may 

understand the meaning of “breach” in paragraph 13 without 

looking to paragraph 19, which defines the events constituting 

breach. The guaranty is sufficiently clear that it intends to 

incorporate the definition of breach from the lease, despite not 

explicitly cross-referencing paragraph 19.

Landlord argues it was unaware that Phillip Thong had 

provided a guaranty for a shorter term than the lease required, 

and cannot have been required to provide notice “of a breach that 

was concealed, or upon which [landlord] was unaware.” This 

argument disregards the contrary testimony at trial that landlord 

expressly agreed to the term reduction, which we must assume 

the trial court found credible. (LSREF2 Clover Property 4, LLC v. 

Festival Retail Fund 1, LP (2016) 3 Cal.App.5th 1067, 1076 

(Clover Property) [absent a statement of decision, reviewing court 

“presume[s that] the trial court ‘made all factual findings 

necessary to support the judgment for which substantial evidence 

exists in the record’ ”].) Regardless, the reduction of the 

guaranty’s term was not “concealed,” but was apparent on the 

face of the guaranty. It is no defense that the landlord accepted 
21

the guaranty without reading it. Landlord cites no authority to 

the contrary.

In its reply brief, landlord argues the trial court committed 

reversible error by failing to rule properly on landlord’s motion in 

limine seeking to bar defendants from raising a meeting-of-theminds defense to the guaranty or from arguing that their 

negotiations with landlord shortened the guaranty’s term. Any 

such error was harmless, because our holding does not depend on 

a meeting-of-the-minds argument or the trial court’s findings 

regarding the parties’ negotiations. Rather, we rely on the 

undisputed facts and plain language of the lease and guaranty.

D. The Trial Court Erred by Not Finding Henry Hua 

Liable for Conversion, But the Record Supports the 

Court’s Ruling in Favor of the Other Defendants on 

That Cause of Action

Landlord contends the evidence at trial established that 

defendants, through NPBH, wrongfully removed equipment and 

other items when NPBH vacated the premises, and the trial court 

erred in concluding defendants were not liable for conversion. 

We agree the evidence at trial established as a matter of law that 

Henry Hua, who admitted to removing items from the premises,

was liable for conversion, and the trial court erred by concluding 

otherwise. We, however, conclude that substantial evidence 

supported the trial court’s finding in favor of the other defendants 

on the conversion claim.

We begin with a summary of the proceedings below, 

including the relevant evidence at trial and the trial court’s oral 

ruling.
22

1. Proceedings below

a. Evidence presented

The summary of each witness’ testimony is organized for 

clarity and therefore is not necessarily in the order in which the 

witness provided the testimony.

i. Testimony of Perry Cohan

Cohan, landlord’s managing director, testified that before 

NPBH moved into the premises, landlord had installed $42,000 of 

new kitchen equipment from Alpine Fixtures & Sheet Metal, Inc. 

(Alpine). After NPBH entered into the lease, NPBH began 

modifying the space and installing equipment and furniture. No 

one from NPBH ever told Cohan to remove any of the Alpine 

equipment. 

When NPBH vacated the premises, Cohan entered the 

space and discovered nearly everything had been removed, and 

there was damage to the walls and floors. NPBH never returned 

any equipment to landlord. 

Cohan never personally saw anyone remove the equipment 

NPBH had installed. 

Cohan believed the wrongfully removed equipment fell into 

two categories: the Alpine equipment that was in the space when 

NPBH moved in, and the equipment NPBH installed itself. 

ii. Testimony of Tagel Mezgebu

Mezgebu, landlord’s building manager, testified that 

landlord installed equipment from Alpine before NPBH moved in. 

Mezgebu identified photographs he had taken of the space with 

the Alpine equipment installed, again before NPBH had moved 

in. 
23

NPBH renovated the space before moving in. All of the 

Alpine equipment was removed during the renovation, replaced 

by equipment for preparing Chinese cuisine. Mezgebu initially 

testified no one from NPBH asked him to remove any equipment, 

but later he said he did not remember if anyone had asked him. 

When NPBH was moving out of the space in 2017, Mezgebu 

saw the movers taking out a stainless steel table. Mezgebu told 

Henry Hua, who was present, that the table was part of the bar. 

Henry Hua said he would put it back. Apart from the bar table,

Mezgebu did not witness anyone remove anything else. 

Mezgebu testified that when he entered the space after 

NPBH had left, “about 95 percent of the stuff” was gone. 

Mezgebu took pictures of the space after NPBH vacated, and 

those pictures were entered as exhibits at trial. 

iii. Testimony of Phillip Thong

Phillip Thong testified that the equipment landlord had 

previously installed in the space was unsuitable for NPBH’s 

purposes and had to be taken out. He presented an architect’s 

plan to Cohan that called for gutting the kitchen and replacing 

all the equipment. Cohan approved the plan and agreed to 

remove the existing equipment. Ly Hua and Henry Hua then 

tagged the equipment to be removed with blue tape. Phillip 

Thong asked Mezgebu at least two or three times to remove the 

tagged equipment, but Mezgebu did not do so. 

Phillip Thong testified regarding a general ledger for 

NPBH as of December 31, 2017, with entries for “disposal . . . due 

to close of business” of leasehold improvements, fixed assets, 

furniture and fixtures, and computers. (Capitalization omitted.) 

Phillip Thong explained, “[W]hen a company no longer has assets 

or abandons those assets, you write it off from the books in 
24

closing as the company no longer has any assets.” Phillip Thong 

stated nothing physically had to happen to the assets for the 

write-off to take place. Leasehold improvements would have 

been left at the premises because they could not be removed. 

Their value would be reduced to zero on the financial statement 

because the company cannot take the improvements upon 

vacating the premises. 

Another entry in the ledger indicated that inventory had 

been transferred to “San Gabriel location.” (Some capitalization 

omitted.) Phillip Thong explained that another New Port entity 

had sold inventory to NPBH, and when NPBH shut down it 

returned the goods to the other entity, resulting in a write-off of 

approximately $8,700. 

iv. Testimony of Henry Hua

Henry Hua testified that he was in charge of NPBH moving 

out of the premises, and he identified for the movers what to 

remove. His summarized his instructions as follows: “I told them 

if it was loose to pack it. If it was something we can unplug, pack 

it. If it was something that was, like, an electrical plug, we can 

unplug it and take it with us. Anything that wasn’t bolted to the 

floor, to the wall, don’t take it [sic].[5] Last thing, when they 

moved, don’t damage the building, please.” 

Henry Hua took photographs after the moveout was 

completed. The set of photographs was admitted as an exhibit. 

Looking at the photographs, Henry Hua described some items the 

movers had taken, such as a fish tank, some booth seating, some 

loose shelving, and a timeclock for employees to punch in and out. 

5 We presume Henry Hua meant to say that he instructed 

the movers not to take anything bolted to the floor.
25

NPBH had leased two dishwashers from outside vendors, and at 

NPBH’s request the vendors removed the dishwashers from the 

premises. Henry Hua testified the movers left behind a custom 

built Chinese kitchen including woks, stock pots, a giant cooling 

table, a steam deck station, a three-compartment sink, and a 

prep sink, although he did not identify these items at trial in the 

photographs he took, nor was he asked to do so. 

Henry Hua acknowledged at trial that some items were 

taken to a warehouse in San Gabriel, but he did not specify which 

items. 

After NPBH vacated the premises, landlord’s counsel sent a 

letter to NPBH’s counsel listing 33 items of equipment landlord 

believed NPBH had removed. Henry Hua read the letter and did 

not recognize any of the listed items other than a television and 

four fire extinguishers. NPBH had purchased the fire 

extinguishers for the premises. Through a letter from NPBH’s 

counsel, Henry Hua offered to return the television and fire 

extinguishers to the premises, but he did not recall landlord 

responding. He never went to the premises to return the 

television and fire extinguishers. 

v. Testimony of Bobby Lu

Lu, the restauranteur who took over the space after NPBH 

left, testified that when he took possession, the kitchen contained 

a stove, a shell of refrigeration, a small sink for handwashing, 

and a work counter. 

b. Trial court’s ruling

As discussed, the trial court did not issue a statement of 

decision. It provided an oral tentative decision, which also 

incorporated earlier comments the trial court made the court day 
26

prior. It also orally explained the basis for the default judgment 

against NPBH. We summarize all of these comments below.

In summarizing the trial court’s oral comments, we do not 

suggest they are a substitute for a statement of decision, or 

provide a basis to affirm or reverse any part of the judgment. 

“[A] court’s oral comments may be valuable in illustrating the 

trial judge’s theory, but they may never be used to impeach the 

order or judgment on appeal. [Citation.] This is because a trial 

court retains inherent authority to change its decision, its 

findings of fact, or its conclusions of law at any time before entry 

of judgment and then the judgment supersedes any 

memorandum or tentative decision or any oral comments from 

the bench.” (Shaw v. County of Santa Cruz (2008) 

170 Cal.App.4th 229, 268 (Shaw).)

i. Trial court’s “initial thoughts”

Following the close of evidence, and before closing 

argument, the trial court provided some “initial thoughts.” The 

trial court found Cohan’s testimony “vague,” in that “[h]e didn’t 

know what happened to his equipment. He didn’t know what 

equipment [NPBH] provided.” The trial court also found 

Mezgebu’s testimony “rather limited and not in great detail.” 

Phillip Thong, in contrast, “seemed to have more of a command of 

personal knowledge as to what he testified to,” and “[h]e was 

specific in his testimony on the removal of the landlord’s kitchen 

equipment and why it needed to be removed and what it was 

replaced by.” The court found “Henry Hua’s testimony was 

primarily consistent with that of Mr. Thong.” 

After addressing other issues in the case, the trial court 

stated, “As far as the removal of the equipment by [NPBH] when 

they vacated the premises, that shouldn’t have happened. It was 
27

clearly a violation of the lease. Their right to remove their 

equipment was contingent upon their vacating the premises 

without having breached the lease. Here it is clear that they 

breached the lease by vacating the premises before the term 

expired and as a result did not have the contractual right to 

remove that equipment.” The court found, however, that there 

was weak evidence, if any, as to the value of the missing 

equipment, and no admissible testimony as to what the landlord 

had to spend to restore the premises to a marketable condition. 

ii. Oral explanation of default judgment

The trial court began the next court day by announcing the 

default judgment against NPBH. The court ruled that NPBH 

owed landlord $302,509.30 in unpaid rent. The court continued, 

“There’s testimony and evidence that some equipment and 

furniture was removed,” and “even though there was no direct 

testimony on its value,” the trial court opted to determine its 

value based on an NPBH balance sheet as of year-end 2017, 

which listed figures “for equipment and for furniture and fixtures 

and also the accumulated depreciation.” 

The balance sheet to which the trial court referred, under 

the heading “Fixed Assets,” had line items for “Leasehold 

Improvement,” “Equipment,” “Furniture & Fixtures,” and 

“Computers,” and then a line for accumulated depreciation and 

amortization. The amount attributed to “Equipment” was 

$133,100.80, and the amount attributed to “Furniture &

Fixtures” was $122,622.44. The total depreciation and 

amortization for all fixed assets was listed as –$162,544.00. 

The trial court stated, “I’ve taken the figure for furniture 

and fixtures because the only equipment that I believe the 

testimony supported that was removed was the leased 
28

equipment. I have added an additional $90,000 to the default 

judgment for the removal of the furniture,” for a total judgment of 

$392,590.30. 

iii. Tentative decision

Following closing arguments, the trial court orally 

announced its tentative ruling, beginning by incorporating its 

preliminary thoughts from the previous court day summarized 

above.

On the issue of NPBH’s removal of items from the 

premises, the trial court found “no reliable evidence of the value 

or damage to [landlord]. There’s been no evidence that any of the 

defendants other than [NPBH] actually removed any of the 

equipment.” The court found that the equipment “was removed 

by individuals that were hired by [NPBH].” 

2. Standard of review

Landlord’s argument on appeal primarily consists of listing 

evidence presented at trial and arguing that evidence establishes 

defendants’ liability for conversion.6 “Although we ordinarily 

review evidentiary challenges for substantial evidence, that 

6 Landlord also contends the trial court failed to apply a 

strict liability standard when evaluating landlord’s conversion 

cause of action. Although landlord states this argument is 

supported by the trial court’s tentative ruling and ultimate 

judgment, landlord fails to cite any portions of the tentative 

ruling or judgment indicating the trial court applied the wrong 

standard. Our own review of the record, moreover, gives no 

indication that the parties raised any arguments that turned on 

the proper application of that standard. We therefore reject this 

argument. 
29

standard ‘ “is typically implicated when a defendant contends 

that the plaintiff succeeded at trial in spite of insufficient 

evidence.” ’ [Citations.] ‘ “In the case where the trier of fact has 

expressly or implicitly concluded that the party with 

the burden of proof did not carry the burden” ’ . . . and that party 

appeals, ‘ “the question for a reviewing court becomes whether 

the evidence compels a finding in favor of the appellant as 

a matter of law.” ’ [Citation.]” (Manela v. Stone (2021) 

66 Cal.App.5th 90, 105 (Manela).)

Here, landlord, as plaintiff, had the burden to prove each 

element of its cause of action for conversion. (Evid. Code, § 500 

[“a party has the burden of proof as to each fact the existence or 

nonexistence of which is essential to the claim for relief or 

defense that he is asserting”].) Our inquiry therefore is whether 

the evidence establishes as a matter of law that defendants are 

liable for conversion. In the absence of a statement of decision, 

we apply the doctrine of implied findings, and “presume the trial 

court ‘made all factual findings necessary to support the 

judgment for which substantial evidence exists in the record.’ ” 

(Clover Property, supra, 3 Cal.App.5th at p. 1076.)

3. Analysis

The tort of conversion consists of three elements: 

“(a) plaintiff’s ownership or right to possession of personal 

property, (b) defendant’s disposition of property in a manner 

inconsistent with plaintiff’s property rights, and (c) resulting 

damages.’ [Citations.]” (Voris v. Lampert(2019) 7 Cal.5th 1141, 

1150 (Voris).) To establish the first element, “ ‘[n]either legal 

title nor absolute ownership of the property is necessary. 

[Citation.] A party need only allege it is “entitled to immediate 

possession at the time of conversion. [Citations.]” [Citation.] . . . ’ 
30

[Citation.]” (Plummer v. Day/Eisenberg, LLP (2010) 

184 Cal.App.4th 38, 45, italics omitted.)

“[C]onversion is a strict liability tort. It does not require 

bad faith, knowledge, or even negligence; it requires only that the 

defendant have intentionally done the act depriving the plaintiff 

of his or her rightful possession.” (Voris, supra, 7 Cal.5th at 

p. 1158.) Further, “[a]n agent is guilty of conversion, even if he 

acts in good faith and in accord with his instructions, if his 

principal is guilty of conversion.” (Wells Fargo Bank & Union 

Trust Co. v. Dowd (1956) 139 Cal.App.2d 561, 575 (Wells Fargo

Bank & Union Trust).)

a. The record compels the conclusion that 

Henry Hua is liable for conversion

The trial court in its tentative ruling stated there was “no 

evidence that any of the defendants other than [NPBH] actually 

removed any of the equipment.” This comment is not supported 

by the record, because Henry Hua expressly testified that he was 

in charge of the move-out, and instructed the movers what to 

take. He described a number of the items he ordered removed. 

He acknowledged he read the letter from landlord listing missing 

items, and admitted he removed the television and fire 

extinguishers. Although he offered to return them, he did not 

do so. 

Evidence may compel a finding as a matter of law when it 

is “ ‘ (1) “uncontradicted and unimpeached” and (2) “of such a 

character and weight as to leave no room for a judicial 

determination that it was insufficient to support a finding.” ’ 

[Citation.]” (Sonic Manufacturing Technologies, Inc. v. AAE 

Systems, Inc. (2011) 196 Cal.App.4th 456, 466 (Sonic).) Henry 

Hua’s testimony that he was responsible for the removal of items 
31

from the premises certainly was uncontradicted and 

unimpeached, and in fact was corroborated by other evidence.7 

It is not clear from the record whether the items removed 

by Henry Hua were items originally installed by the landlord, 

items purchased by NPBH, or both. The distinction is immaterial 

to our analysis. It is undisputed that under the terms of the 

lease, upon NPBH’s breach landlord assumed ownership or a 

right to possession of all of NPBH’s property on the premises. 

Paragraph 12(E) of the lease states, in relevant part, “All articles 

of personal property and all business and trade fixtures, 

machinery and equipment, furnishings, furniture and movable 

partitions owned or placed in the Premises by Tenant at Tenant’s 

expense shall be and remain the property of Tenant and may be 

removed by Tenant at any time during the Lease Term provided 

Tenant is not in material default hereunder . . . .” (Italics added.) 

Our Supreme Court has held that an analogous lease 

provision prohibiting a “Lessee . . . in default” from “removing . . . 

trade fixtures, equipment, and other like property which it may 

have installed” is “reasonably susceptible of the construction that 

upon the lessees’ default the trade fixtures shall belong to . . . 

lessors . . . .” (See Goldie v. Bauchet Properties (1975) 15 Cal.3d 

307, 311, fn. 3, 318 (Goldie).)8 

7 Defendants in their respondent’s brief argue the only 

evidence supporting Henry Hua’s direct liability for conversion 

was Mezgebu’s testimony that Henry Hua was at the move-out 

and said he would return a table at Mezgebu’s request. 

Defendants fail to address Henry Hua’s own testimony about the 

move-out. 

8 The full text of the provision at issue in Goldie reads, 

“ ‘All trade fixtures, equipment and other like property which the 

Lessee has installed in or attached to the building or 
32

In Goldie, the Supreme Court could not determine as a 

matter of law that the quoted language served to transfer 

ownership of the lessees’ property to the lessors upon breach, and 

remanded for the trial court to determine the intent of the 

parties. (Goldie, supra, 15 Cal.3d at pp. 318–319.) In the instant 

case, however, defendants did not contest below landlord’s 

assertion that paragraph 12(E) granted landlord a possessory 

interest in NPBH’s property upon breach, nor did they contest it 

in their respondent’s brief. We deem the matter conceded and 

forfeited.

Thus, even if the only items removed by Henry Hua were 

items originally belonging to NPBH, under the terms of the lease 

improvements located upon the demised premises, provided the 

removal of the same shall not structurally injure the building or 

improvements, shall remain the property of the Lessee, subject to 

Lessor’s security interest, and the Lessor agrees that the Lessee 

shall have the option at any time, and from time to time, 

provided the Lessee is not then in default in the performance of 

any of the obligations of the lease on its part to be performed to 

trade in or replace any and all of its trade fixtures, equipment, 

and other like property which it may have installed in the 

building or improvements, and upon the termination of the lease, 

to remove same, provided that upon such trading in, replacing or 

removing the Lessee shall restore and repair any damage 

occasioned thereby to the building and improvements, and 

further provided that if Lessee be in default, it shall not then 

have any right of trading in, replacing or removing of such trade 

fixtures, equipment, and other like property which it may have 

installed. Nothing in this Article shall be deemed to permit the 

removal by the Lessee of any permanent type exterior or interior 

carrying walls, or permanent type floor coverings.’ ” (Goldie,

supra, 15 Cal.3d at p. 311, fn. 3.)
33

landlord assumed possession of those items when NPBH 

abandoned the premises and breached the lease. Henry Hua’s 

removal of those items, therefore, constituted conversion. This 

is so regardless of whether Henry Hua was ignorant of 

paragraph 12(E), or was acting in good faith on instructions from 

someone else. (Voris, supra, 7 Cal.5th at p. 1158; Wells Fargo

Bank & Union Trust, supra, 139 Cal.App.2d at p. 575.) 

Because the trial court did not find Henry Hua liable for 

conversion, the trial court made no findings as to what precisely 

Henry Hua removed or ordered removed and the damages

therefrom. We acknowledge the trial court orally announced a 

default judgment against NPBH that included $90,000 in 

damages for removal of items from the premises. Assuming the 

trial court ultimately signs the judgment containing that award,

it does not compel the conclusion that the trial court necessarily 

found that Henry Hua removed or directed others to remove

property belonging to landlord worth $90,000.9 In the absence of 

a statement of decision, it is unclear whether the $90,000 solely 

reflects the items removed by Henry Hua or at his direction, or 

incorporates items for which Henry Hua is not responsible.

It is necessary, therefore, to remand to the trial court for a 

determination of damages attributable to Henry Hua’s actions. 

We leave it to the trial court to decide in the first instance how 

best to accomplish this. 

9 We express no opinion as to the validity of the damages 

award announced by the trial court.
34

b. The record does not compel the conclusion 

that the other defendants are liable for 

conversion

Whereas the record unequivocally established that Henry 

Hua removed or directed others to remove items from the 

premises, there was no such evidence for any of the other 

defendants. The only other defendant to testify, Phillip Thong, 

did not admit to being involved in the move-out, nor did any of 

the other witnesses or documentary evidence indicate any 

defendant other than Henry Hua was involved in removing 

items. 

It is true that Phillip Thong testified regarding removing 

equipment when NPBH renovated the premises at the outset of 

the lease, but it was not clear from his testimony whether NPBH 

removed the items or landlord did. Phillip Thong further 

testified Cohan approved of the removal of the items. This 

testimony supports the inference that landlord consented to or 

participated in the removal of items at the outset of the tenancy, 

which defeats a claim of conversion. (Chen v. PayPal, Inc. (2021) 

61 Cal.App.5th 559, 576 [“ ‘ there can be no conversion where an 

owner either expressly or impliedly assents to or ratifies the 

taking, use or disposition of his property’ ”].)

Landlord argues that as officers, directors, and/or 

shareholders of NPBH, defendants can be liable for the acts of 

the corporation. Landlord cites case law stating that “[d]irectors 

are jointly liable with the corporation and may be joined as 

defendants if they personally directed or participated in the 

tortious conduct” (Frances T. v. Village Green Owners Assn.

(1986) 42 Cal.3d 490, 504), and shareholders similarly may be 

liable if they “specifically directed or authorized the wrongful 
35

acts” (Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 785). 

Such individuals may also be liable if “they specifically knew or 

reasonably should have known that some hazardous condition or

activity under their control could injure plaintiff,” yet 

“negligently failed to take or order appropriate action to avoid the 

harm.” (Frances T., at p. 508.)

Landlord argues that “the improper removal of these items 

was intended to benefit the entire group of [defendants] and 

therefore all [defendants] should be liable for the converted 

property.” Landlord further argues that defendants are liable 

because they “collectively elected to shut down the operations of 

NPBH” and thus “authorized the conversion of property . . . by 

appointing Henry Hua to remove contents from the Premises.” 

Landlord also contends defendants “ratif[ied]” the wrongful 

removal “by failing to return stolen items following demand for 

their return by Unified,” and “specifically knew and reasonably 

should have known that actions taken within their control 

injured [landlord].”

As an initial matter, landlord’s argument casts too wide a 

net by lumping defendants together as a group. No evidence was 

presented that the entity defendants had any control over or 

owned shares in NPBH. Nor was there any evidence establishing 

that as a matter of law the entity defendants were involved in the 

move-out or received property to which landlord had a right to 

possession. Henry Hua admitted items were taken to a 

warehouse in San Gabriel, but no evidence was introduced as to 

who controlled that warehouse. Phillip Thong testified that when 

NPBH closed, it returned $8,700 of inventory to one of the entity 

defendants, but the evidence did not establish as a matter of law 

that this happened after NPBH had breached the lease by 
36

abandoning the premises. The date listed for that transaction in 

NPBH’s ledger, December 31, 2017, could just as well have 

reflected the date the transaction was entered for recordkeeping 

purposes at the end of the year, rather than the date of the

transaction itself. 

As for the individual defendants other than Henry Hua, 

again, there was no evidence establishing as a matter of law that

they directed, authorized, or participated in the move-out or the 

removal of landlord’s property. Their agreement as a group to 

close the restaurant does not establish that they also agreed as a 

group to remove items from the premises. Although there was 

correspondence between landlord’s counsel and NPBH’s counsel 

about the purportedly removed items, this does not compel the 

conclusion that any of the individual defendants apart from 

Henry Hua were aware of that correspondence—indeed, based on 

Henry Hua’s testimony, it appeared that he handled the matter. 

At bottom, the standard of review defeats landlord’s 

arguments here. Whether or not there was evidence from which 

the trial court might have concluded that some or all of the 

defendants directed, participated in, or otherwise were aware of 

NPBH’s removal of items from the premises, no evidence compels 

this conclusion as a matter of law. Landlord’s argument 

therefore must fail.

E. The Record Does Not Establish as a Matter of Law 

That Defendants Were Alter Egos of NPBH

Landlord contends it “presented overwhelming evidence” 

that defendants were alter egos of NPBH, and the trial court 

erred by ruling otherwise. We reject this challenge.
37

1. Applicable law and standard of review

“Ordinarily, a corporation is regarded as a legal entity, 

separate and distinct from its stockholders, officers and directors, 

with separate and distinct liabilities and obligations. [Citations.]

A corporate identity may be disregarded—the ‘corporate veil’

pierced—where an abuse of the corporate privilege justifies 

holding the equitable ownership of a corporation liable for the 

actions of the corporation.” (Sonora Diamond Corp. v. Superior 

Court (2000) 83 Cal.App.4th 523, 538.)

“ ‘Alter ego is an extreme remedy, sparingly used. 

[Citation.]’ [Citations.]” (Hasso v. Hapke (2014) 227 Cal.App.4th 

107, 155 (Hasso).) A “heavy burden rests on the shoulders of the 

party seeking to pierce the corporate veil.” (Santa Clarita 

Organization for Planning & Environment v. Castaic Lake Water 

Agency (2016) 1 Cal.App.5th 1084, 1105 (Santa Clarita

Organization for Planning & Environment).) “ ‘[T]he corporate 

form will be disregarded only in narrowly defined circumstances 

and only when the ends of justice so require.’ [Citation.]” (Zoran 

Corp. v. Chen (2010) 185 Cal.App.4th 799, 810 (Zoran Corp.).) 

“ ‘[T]wo conditions must be met before the alter ego 

doctrine will be invoked. First, there must be such a unity of 

interest and ownership between the corporation and its equitable 

owner that the separate personalities of the corporation and the 

shareholder do not in reality exist. Second, there must be an 

inequitable result if the acts in question are treated as those of 

the corporation alone.’ [Citations.]” (Hasso, supra, 

227 Cal.App.4th at p. 155.)

Courts consider a number of factors when determining 

whether to apply the alter ego doctrine, including but not limited 

to, “ ‘ “[c]ommingling of funds and other assets, failure to 
38

segregate funds of the separate entities, and the unauthorized 

diversion of corporate funds or assets to other than corporate 

uses . . . ; . . . the treatment by an individual of the assets of the 

corporation as his own . . . ; . . . the failure to obtain authority to 

issue stock or to subscribe to or issue the same . . . ; . . . the 

holding out by an individual that he is personally liable for the 

debts of the corporation . . . ; the failure to maintain minutes or 

adequate corporate records, and the confusion of the records of 

the separate entities . . . ; . . . the identical equitable ownership in 

the two entities; the identification of the equitable owners thereof 

with the domination and control of the two entities; identification 

of the directors and officers of the two entities in the responsible 

supervision and management; sole ownership of all of the stock in 

a corporation by one individual or the members of a family . . . ; 

. . . the use of the same office or business location; the 

employment of the same employees and/or attorney . . . ; . . . the 

failure to adequately capitalize a corporation; the total absence of 

corporate assets, and undercapitalization . . . ; . . . the use of a 

corporation as a mere shell, instrumentality or conduit for a 

single venture or the business of an individual or another 

corporation . . . ; . . . the concealment and misrepresentation of 

the identity of the responsible ownership, management and 

financial interest, or concealment of personal business 

activities . . . ; . . . the disregard of legal formalities and the 

failure to maintain arm’s length relationships among related 

entities . . . ; . . . the use of the corporate entity to procure labor, 

services or merchandise for another person or entity . . . ; . . . the 

diversion of assets from a corporation by or to a stockholder or 

other person or entity, to the detriment of creditors, or the 

manipulation of assets and liabilities between entities so as to 
39

concentrate the assets in one and the liabilities in another . . . ; 

. . . the contracting with another with intent to avoid performance 

by use of a corporate entity as a shield against personal liability, 

or the use of a corporation as a subterfuge of illegal transactions 

. . . ; . . . and the formation and use of a corporation to transfer to 

it the existing liability of another person or entity.” . . . ’ 

[Citations.]” (Zoran Corp., supra, 185 Cal.App.4th at pp. 811–

812.) “ ‘No single factor is determinative, and instead a court 

must examine all the circumstances to determine whether to 

apply the doctrine. [Citation.]’ [Citation.]” (Id. at p. 812.)

“Whether a party is liable under an alter ego theory is 

normally a question of fact. [Citations.] ‘The conditions under 

which the corporate entity may be disregarded, or the corporation 

be regarded as the alter ego of the stockholders, necessarily vary 

according to the circumstances in each case inasmuch as the 

doctrine is essentially an equitable one and for that reason is 

particularly within the province of the trial court.’ [Citation.]” 

(Zoran Corp., supra, 185 Cal.App.4th at p. 811.)

We review a trial court’s findings regarding alter ego for 

substantial evidence. (Santa Clarita Organization for Planning 

& Environment, supra, 1 Cal.App.5th at p. 1095.) Because 

landlord bore the burden at trial of proving alter ego, landlord 

can prevail on this issue only if the evidence establishes as a 

matter of law that defendants were alter egos of NPBH. (Manela,

supra, 66 Cal.App.5th at p. 105.)

2. Trial court’s tentative ruling

For the reader’s information, we briefly summarize the 

trial court’s tentative ruling on the issue of alter ego, although we 

do not rely on that ruling in resolving this appeal. (See Shaw,

supra, 170 Cal.App.4th at p. 268.) 
40

The court found a lack of evidence that defendants 

commingled funds or exercised dominance and control over 

NPBH. The court noted a lack of evidence as to particular 

shareholders’ participation in the business, including Ly Hua and 

Wendy Lam. As for Henry Hua, “[t]here’s been no evidence that 

he commingled any of his funds with the funds of the restaurant 

or that he exercised any control over the restaurant so as to 

benefit himself personally rather than the corporate entity.” As 

for Phillip Thong, “there’s been no testimony or evidence that he 

had any day-to-day responsibility for the restaurant” or “that he 

personally benefited from the operation of the restaurant. 

There’s no evidence of any commingling of funds.” The trial court 

did not specifically discuss defendant Andrea Thong or the entity 

defendants in its tentative ruling.

The trial court found that NPBH sufficiently complied with 

corporate formalities for a small, closely-held business, including 

maintaining adequate minutes of meetings, recording stock 

transfers, making required filings with the Secretary of State, 

and maintaining a corporate bank account. The court found 

NPBH was adequately capitalized, based on it having sufficient 

funds initially for leasehold improvements and then operating for 

almost three years. The court stated that the restaurant 

operated “on a day-to-day cash basis,” and therefore did not need 

as much capitalization as other businesses that might see delays 

in receiving income. 

3. Evidence identified by landlord on appeal

Rather than summarizing all relevant evidence presented 

at trial, we will summarize landlord’s own description of the 

evidence purportedly establishing that defendants are NPBH’s 

alter egos. We explain in our subsequent Analysis section where 
41

we take particular issue with landlord’s characterization of the 

evidence.

10

a. Capitalization

Landlord claims the evidence showed NPBH was 

undercapitalized. Landlord points to evidence indicating NPBH 

had low cash on hand and no initial capital infusion, and what 

sums were contributed to the company were primarily used to 

make leasehold improvements, and were therefore not available 

to pay for operational expenses. Much of the money coming to 

the corporation was characterized as loans from shareholders. 

NPBH reported a substantial net loss every year. 

Landlord’s expert witness calculated that NPBH had 

obligations exceeding $2.5 million, and presented a chart 

indicating that NPBH consistently operated at a negative cash 

balance and gradually depleted its equity until it shut down. 

b. Common ownership and control

Landlord contends NPBH was a “quintessential ‘friends 

and family’ small business.” Landlord points to evidence that 

Phillip Thong and Ly Hua were “longtime friends.” Henry Hua is 

Ly Hua’s son and Andrea Thong is Phillip Thong’s daughter. 

Shares were issued to other family members such as Mimi Hua 

and Linda Hua. Wendy Lam was an officer and shareholder in 

one of the entity defendants along with Ly Hua. Payments were 

10 To the extent we do not expressly take issue with any 

part of landlord’s characterization of the evidence, this should not 

be taken as validation of that characterization, but merely that 

we accept that characterization arguendo for purposes of this 

appeal. 
42

made to family members as “consultants,” although landlord 

contends there was no evidence those individuals provided any 

consulting services. 

Landlord contends the evidence showed the individual 

defendants “routinely hold themselves out as owners of” NPBH 

and the entity defendants. Henry Hua worked for one of the 

other entity defendants before he worked at NPBH. 

c. Others holding themselves out as liable for 

debts of NPBH

Landlord asserts Phillip Thong held himself out as liable 

for the debts of NPBH. This was evidenced by his provision of 

the personal guaranty, the fact that his family trust paid for 

NPBH’s first and last month’s rent and security deposit at the 

beginning of the lease, and Phillip Thong’s statement to the 

designer renovating the premises that Thong’s credit was good 

and he promised the designer would be paid. 

Defendants’ expert identified on a financial exhibit an 

“advance” from a “sister company” to NPBH. 

d. Corporate formalities

Landlord contends the minutes of NPBH’s board meetings 

were a “sham” because they were prepared by Phillip Thong, who 

admitted he was not present, and were signed by Wendy Lam, 

whom Phillip Thong testified had limited ability in English. 

Some minutes stated Henry Hua was present, but Henry Hua 

testified he never attended those meetings. 

Landlord argues the evidence showed company shares 

issued for no value and transferred to family members for no 

consideration, with no correlation to the shareholders’ ownership 

interest or equity investment. NPBH’s records did not explain 
43

why some financial infusions were booked as loans and others as 

capital payments. 

e. Diversion of assets for defendants’ benefit

Landlord contends the evidence showed defendants taking 

assets for their own benefit from NPBH. Landlord points to a 

general ledger from 2014 listing two payments to Dara Thong, 

whom landlord contends is Phillip Thong’s wife. One payment is 

for $1,166, and one for $1,680.54. The ledger also shows multiple 

payments to Mimi Hua and Jasen Lam, identified by Phillip 

Thong as his brother-in-law, as consultants. 

Landlord also points to evidence previously described that 

when NPBH closed, some inventory was transferred to one of the 

entity defendants, some property was stored in a San Gabriel 

warehouse, and NPBH wrote various assets off its books. 

Landlord contends evidence also shows NPBH repaid loans or 

made cash payments to the entity defendants, as well as vendors 

servicing the entity defendants, Phillip Thong’s accounting firm, 

and NPBH’s lawyer.

f. Shared attorney, accountant, bank, and 

address

Landlord notes that all defendants are represented by the 

same counsel that represented NPBH, Phillip Thong’s accounting 

firm provided services to all the entity defendants, and all entity 

defendants used the same bank, of which Phillip Thong was a 

director. When NPBH shut down, its bank account was 

transferred to the same address as two of the other entity 

defendants. 
44

g. Defendants’ confusion of various entities

Landlord claims Phillip Thong’s testimony that defendants’ 

expert was retained by NPBH, the nonappearing defendant, 

suggests Phillip Thong saw no distinction among the various 

defendants. 

4. Analysis

We note at the outset that the applicable law and standard 

of review outlined above make it exceedingly difficult for an 

appellant to obtain reversal of a trial court’s finding that a party 

is not the alter ego of a corporate entity. This is particularly so 

where, as here, there is no statement of decision, and therefore 

we must presume the trial court made all factual findings 

necessary to support its ruling. Even assuming the evidence 

supports the presence of some of the alter ego factors, no factor is 

in and of itself determinative. The trial court therefore could 

have found the absence of other alter ego factors weighed against 

piercing the corporate veil. It is not surprising, therefore, that 

landlord cites no case, nor have we discovered one, in which a 

reviewing court has reversed a trial court’s ruling that a party

has failed to prove alter ego.

With this in mind, we conclude landlord has not shown as a 

matter of law “ ‘such a unity of interest and ownership between 

the corporation and its equitable owner that the separate 

personalities of the corporation and the shareholder do not in 

reality exist.’ ” (Hasso, supra, 227 Cal.App.4th at p. 155.) 

Landlord’s evidence did not establish as a matter of law 

several key alter ego factors. NPBH had multiple shareholders 

and officers; this was not a circumstance in which one person or 

family unquestionably was in control. (See Zoran Corp., supra, 
45

185 Cal.App.4th at p. 811 [one alter ego factor is “ ‘ “sole 

ownership of all of the stock in a corporation by one individual or 

the members of a family” ’ ”].) Although landlord tries to 

characterize the shareholders as a unified group based on 

friendship, familial relationship, or professional relationship, the

record is lacking in evidence as to how the defendants interacted 

with one another and what role they played in NPBH’s 

decisionmaking. Certainly there was no evidence compelling the 

conclusion they were of one mind on key matters or that one 

person or family had particular control. Absent evidence of a

unity of interest among the various shareholders, we cannot 

conclude there was a unity of interest between the shareholders 

as a group and the corporation.

There is a similar lack of evidence in regard to the entity 

defendants. Landlord identifies virtually no evidence 

establishing the ownership structure of those entities. Landlord 

contends the individual defendants “routinely hold themselves 

out as owners of” the entity defendants, but cites no evidence 

supporting this contention. At most, landlord cites a document 

showing that Wendy Lam and Ly Hua are directors and officers 

of one of the entities, but this is insufficient to establish 

“ ‘ “identical equitable ownership” ’ ” with NPBH, much less the 

other entity defendants. (Zoran Corp., supra, 185 Cal.App.4th at 

p. 811.) Although there is evidence the entity defendants

conducted business with NPBH, the evidence does not compel the 

conclusion those transactions were not proper, arm’s-length 

transactions. Indeed, there was little evidence at all as to how 

the entities interacted with one another, and no evidence that 

any entity defendant controlled NPBH. Nor does repayment of 

debts or the transfer of funds upon NPBH’s closure in and of 
46

itself prove “ ‘ “the manipulation of assets and liabilities between 

entities so as to concentrate the assets in one and the liabilities 

in another.” ’ ” (Id. at p. 812.)

These conclusions are reason enough to affirm the trial 

court on the issue of alter ego, even assuming arguendo 

landlord’s evidence proved the presence of some alter ego factors. 

Landlord did not, however, prove its listed factors as a matter of 

law. At least some of the evidence landlord cites as evidence of 

abuse of the corporate privilege supports innocent inferences as 

well.

For example, the fact that NPBH paid consulting fees or 

other monies to shareholders or their family members does not 

prove those individuals did not provide goods or services to 

NPBH in exchange. Phillip Thong’s testimony that he prepared 

the corporate minutes, despite not being at the meetings, does 

not preclude the possibility that Wendy Lam took notes in 

whatever language she preferred, which Phillip Thong then 

translated and converted into official minutes.

We acknowledge that a key area of dispute at trial was 

whether NPBH was adequately capitalized, and landlord devotes 

considerable space in its briefing to this issue. As a matter of 

substantial evidence, we note defendants put forth an expert 

witness who testified NPBH was indeed adequately capitalized, 

testimony we must assume the trial court credited given the 

standard of review.11 Even if the expert’s opinion was invalid, 

11 Landlord notes the trial court stated it did not find 

either party’s expert’s testimony “very helpful.” This does not 

indicate the trial court disbelieved all aspects of that testimony. 

Regardless, we cannot rely on the trial court’s oral comments to 

impeach the judgment. (Shaw, supra, 170 Cal.App.4th at p. 268.)
47

however, “[e]vidence of inadequate capitalization is, at best, 

merely a factor to be considered by the trial court in deciding 

whether or not to pierce the corporate veil.” (Associated Vendors, 

Inc. v. Oakland Meat Co., Inc. (1962) 210 Cal.App.2d 825, 841–

842.) Given the other factors the trial court could have found in 

favor of defendants, NPBH’s undercapitalization would not 

justify reversing the trial court, even were we to accept landlord’s 

analysis of that factor. 

F. Landlord Fails to Show Prejudice From its Claims of 

Evidentiary Error

Landlord claims the trial court made a number of 

evidentiary errors. We review such claims for abuse of discretion. 

(Twenty-Nine Palms Enterprises Corp. v. Bardos (2012) 

210 Cal.App.4th 1435, 1447.) “[A]n erroneous evidentiary ruling 

requires reversal only if ‘there is a reasonable probability that a 

result more favorable to the appealing party would have been 

reached in the absence of the error. [Citation.]’ [Citations.]” 

(Id. at p. 1449.) Under these principles, we conclude none of 

landlord’s challenges merits reversal of the judgment. 

Landlord notes that at the outset of trial, the trial court 

referred to the large number of exhibits and said, “Somebody is 

going to have to boil this case down to the six or eight or ten or 

12 exhibits that are important for me.” Further, throughout the 

trial, the trial court instructed the parties to “move along”—

landlord contends this was directed to landlord’s counsel far more 

often than to defendants’ counsel. Landlord does not explain how 

or why these comments amount to reversible error, and we do not 

address them further. 

Landlord contends the trial court erred by granting 

defendants’ motion in limine to restrict the expert testimony to 
48

the issue of NPBH’s capitalization, and not to allow the experts to 

opine on the lack of corporate formalities or the injustice prong.

Landlord does not explain what specific evidence landlord would 

have introduced but for this ruling and how it might have 

affected the outcome of the trial, and therefore fails to show 

prejudice. We note that landlord’s expert did in fact testify 

regarding corporate formalities, despite the trial court’s ruling 

and without objection from defendants. 

Landlord argues the trial court improperly relied on 

hearsay evidence when assessing the issue of capitalization, 

namely a news article submitted with defendant’s expert report. 

The trial court also sustained objections to landlord’s questions to 

Phillip Thong regarding what Thong believed was a sufficient 

amount of capital to run the restaurant. 

Although the trial court read aloud a portion of the news 

article to which landlord refers when making its initial comments 

after the close of evidence, in the absence of a statement of 

decision we cannot assume the trial court relied on that article in 

rendering judgment. (Shaw, supra, 170 Cal.App.4th at p. 268 

[“a court’s oral comments . . . may never be used to impeach the 

order or judgment on appeal”].) Landlord does not explain what 

testimony Phillip Thong would have provided had the trial court 

not sustained the objections to landlord’s questions, and therefore 

fails to demonstrate prejudice.

Finally, landlord provides a long list of testimony and 

evidence the trial court excluded, with a parenthetical for each 

explaining the topic to which the testimony or evidence 

pertained. Again, landlord does not explain how, had this 

evidence been admitted, there is a reasonable probability of a 

more favorable result for landlord.
49

G. The Issue of Damages Is Not Properly Before Us

Landlord contends the trial court applied the wrong 

measure of damages on the default judgment against NPBH. 

As discussed, the trial court has not yet signed the proposed 

judgment prepared by landlord, and therefore there is no 

damages award from which to appeal. This argument is not 

properly before us and we decline to address it.

We also decline landlord’s invitation to provide guidance to 

the trial court as to how to assess damages against Henry Hua on 

remand. The trial court has yet to address the damages 

attributable to Henry Hua, and should have the opportunity to do 

so in the first instance.

H. The Award of Fees and Costs Must Be Reversed

The parties have not briefed how we should address the 

fees and costs award in the event of a partial reversal. We think 

it best that the trial court should address that issue in the first 

instance. We therefore vacate the awards of attorney fees and 

costs. The parties may seek fees and costs anew in the trial 

court. We express no opinion as to how the trial court should rule 

on those requests. 
50

DISPOSITION

The judgment is reversed as to Heng Henry Hua only. The 

trial court is directed to enter judgment against Heng Henry Hua 

on Unified Real Estate Investments, LLC’s cause of action for 

conversion. The trial court is further directed to determine 

damages consistent with this opinion. The trial court’s award of 

attorney fees and costs is vacated. The judgment otherwise is 

affirmed. The parties shall bear their own costs on appeal.

NOT TO BE PUBLISHED.

BENDIX, J.

We concur:

ROTHSCHILD, P. J.

CRANDALL, J.*

* Judge of the San Luis Obispo County Superior Court, 

assigned by the Chief Justice pursuant to article VI, section 6 of 

the California Constitution.