Filed 4/4/23

CERTIFIED FOR PUBLICATION 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

RELIANT LIFE SHARES, LLC,

Plaintiff, Cross-defendant and

Appellant;

SEAN MICHAELS et al.,

Cross-defendants and

 Appellants;

PB CONSULTING #2, LLC, et al.,

 Appellants,

v.

DANIEL B. COOPER et al.,

Defendants, 

Cross-complainants and

Respondents.

[And four other cases.

*

]

 B305544

 

 Los Angeles County

 Super. Ct. No. BC604858

APPEALS from amended judgments and orders of the 

Superior Court of Los Angeles County. Huey P. Cotton, Judge. 

Affirmed.

Walton & Walton, L. Richard Walton and Javad Navran for 

Plaintiff, Cross-defendant and Appellant Reliant Life Shares, 

LLC.

*

 Reliant Life Shares, LLC v. Cooper (No. B305946); Reliant 

Life Shares, LLC v. Cooper (No. B308884); Reliant Life Shares, 

LLC v. Cooper (No. B309686); Reliant Life Shares, LLC v. Cooper

(No. B313602).
2

Grignon Law Firm, Margaret M. Grignon, Anne M. 

Grignon; Winget Spadafora Schwartzberg, Timothy W. Fredricks 

and Jared M. Ahern for Cross-defendants and Appellants Sean 

Michaels and PB Consulting #1, LLC.

Law Offices of Christopher M. Stevens and Christopher M. 

Stevens for Cross-defendant and Appellant Scott Grady.

Beitchman & Zekian, David P. Beitchman and Paul Tokar 

for Appellants PB Consulting #2, LLC and 18LS Holdings, LLC.

Beitchman & Zekian, David P. Beitchman and Paul Tokar 

for Appellant Romelli Cainong, as Trustee for 2007 Irrevocable 

Octopus Trust, RLM Trust, and 2007 Irrevocable MMA Trust.

California Appellate Law Group and Complex Appellate 

Law Group, Rex S. Heinke and Jessica Weisel for Defendants, 

Cross-complainants and Respondents.

__________________________

SUMMARY

Reliant Life Shares, LLC (Reliant or LLC) was a profitable 

limited liability company owned in equal parts by three members. 

Two of them, Sean Michaels and Daniel Cooper, were longtime

friends and business partners. After Cooper stopped working out 

of the offices of Reliant because of a medical condition, no one at 

Reliant expected him to return to work, but Michaels assured 

Cooper he remained a loyal business partner. Before long,

however, Michaels and the third member of Reliant, Scott Grady,

tried to force out Cooper, splitting the company’s profits and 

other revenues 50/50 and paying Cooper nothing.

This violated the LLC’s operating agreement in multiple

ways. Nonetheless, the LLC sued Cooper, seeking a declaratory 

judgment that he was properly removed as a member of the LLC. 
3

Cooper cross-complained against Michaels, Grady and the LLC, 

alleging breach of contract, fraud, breach of the duty of loyalty 

and several other causes of action, seeking damages, an 

accounting and imposition of a constructive trust over funds 

obtained through violation of fiduciary duties. (We sometimes 

refer to Reliant, Michaels and Grady as the Reliant parties.)

At the behest of the Reliant parties, the equitable issues—

the LLC’s request for declaratory relief and Cooper’s request for 

an accounting and constructive trust—were tried first, at a 12-

day bench trial (phase one). At the close of that trial, the court 

concluded, among other things we relate post, that the efforts to 

remove Cooper were improper. As the court put it, “It’s not even 

a close call.” 

The court found Cooper remained a current one-third 

owner of the LLC and was entitled to receive one-third of all 

monies paid to the other two members since November 2013. The 

court set a January 1, 2019 valuation date, as of which the value 

of Cooper’s equity interest in the LLC would be determined. The 

court also ordered an accounting, and ultimately imposed a 

constructive trust over certain assets to compensate Cooper for 

millions of dollars wrongfully transferred from the LLC to 

Michaels and Grady. The court further found Michaels and 

Grady used the LLC and certain trusts and other entities they 

controlled as extensions of themselves, and concluded the LLC 

and the other entities and trusts were alter egos of Michaels and 

Grady. (The court later observed Michaels and Grady “used the 

corporate coffers of Reliant as their own personal piggy banks.”)

A nine-day jury trial (phase two) ensued on Cooper’s claims 

against Michaels and Grady for breach of contract, fraud, breach 

of the duty of loyalty, aiding and abetting breaches of common 
4

law duty (as to Grady), and fraudulent transfer. The jury was 

instructed that the court’s findings of fact and conclusions of law 

entered in phase one of the bifurcated trial were binding on the 

second phase of the trial, and these were submitted to the jury in 

the second phase. 

The jury awarded Cooper $6,028,786 in damages (as we 

describe further, post), and in an advisory verdict, valued

Cooper’s equity interest in the LLC as of January 1, 2019, at 

$5.7 million. The court ultimately found the value of Cooper’s 

interest in the LLC to be $4.2 million, and awarded that amount 

in damages jointly and severally against Michaels, Grady and 

their respective entities. (The parties refer to this award as 

“buyout damages.”) The jury also awarded punitive damages of 

$500,000 against Grady and $1,001,000 against Michaels. We 

will describe the judgment, which was amended twice to name 

additional judgment debtors, in more detail later.

The LLC, Michaels, Grady, and several of their entities 

appealed. They assert a multitude of arguments for reversal of 

the judgment. Principal among them are that the trial court’s 

findings in phase one exceeded the scope of the equitable issues 

and deprived Michaels and Grady of a jury trial on legal claims; 

the jury instructions and verdict form erroneously made phase 

one findings binding in phase two; the buyout damages were 

legally unauthorized; the alter ego findings were impermissible 

and based on reverse veil piercing; and the punitive damages 

should be reversed for failure to present evidence of Michaels’s 

and Grady’s current net financial condition. There are also 

claims of error in the award of prejudgment interest, and claims 

of error relating to the constructive trust. There are claims that 

a settlement agreement between Michaels and Cooper in another 
5

case barred any tort liability or constructive trust remedy. There 

are claims that the motion to amend the judgment to add the 

trustee of several trusts as an alter ego judgment debtor was an 

improper motion for reconsideration, and a claim of improper 

service on the trustee.

We find no merit in any of the claims and affirm the 

judgment in full.

FACTS

1. The Parties and Others

Reliant is the plaintiff in the declaratory relief action 

against Cooper. Cooper cross-complained against Reliant,

Michaels, Grady, and other cross-defendants, including Andrew 

Murphy, whom Michaels and Grady hired as Reliant’s chief 

executive officer in 2015; Joel Kleinfeld, who held Grady’s 

interest in the LLC for some period of time; and PB Consulting

#1, LLC (later found to be an alter ego of Michaels). Murphy and 

Kleinfeld are not parties to these appeals; the jury found no 

liability on their part.

Cooper’s interest in Reliant is held by a trust of which his 

father, Richard Cooper, is trustee and who is also a party to this 

action. We refer to both of them in the singular as Cooper.

The court found several trusts and other entities to be alter 

egos of Michaels and Grady. The “Michaels entities” are 

PB Consulting #1, LLC; PB Consulting #2, LLC; the 2007 

Irrevocable Octopus Trust; the 2007 Irrevocable MMA Trust; the 

RLM Trust; and 18LS Holdings, LLC. The “Grady entities” are 

LaForce Holdings, LLC; Tristan Capital, Inc.; the RLS Trust; and 

the SLG Trust.

Named as additional judgment debtors in the second

amended judgment in one or more causes of action are the three 
6

Michaels limited liability companies listed above and Grady’s 

LaForce Holdings, LLC. The third amended judgment named

Romelli Cainong, as trustee for the three Michaels trusts listed 

above, as additional judgment debtors.

2. Outline of Significant Facts

We outline pertinent facts that are undisputed or were 

found by the trial court. (Unless otherwise identified, items in 

quotation marks are taken directly from the trial court’s fact 

findings.) No appellant argues on appeal there is not substantial 

evidence to support the trial court’s findings, other than the alter 

ego findings. We will augment this outline as necessary in 

connection with our discussion of the claims of error made on 

appeal.

a. The background

Reliant was formed in 2011. Reliant buys life insurance 

policies from purchasers who can no longer afford to pay the

premiums and then sells these policies in fractional shares to 

investors, who are paid a share of the policy proceeds when the 

insured dies. Reliant describes its business as “brokering 

fractional shares in life settlement policies to qualified 

customers.” 

Michaels and Cooper were longtime friends who had 

multiple business ventures together in the insurance industry. 

Michaels and Cooper joined Reliant in 2011, jointly taking a 

majority interest. As of April 2012, the members of Reliant were 

Monaco Holding Company, Inc. (jointly owned by Michaels and 

Cooper) with 51 percent and Joel Kleinfeld with 49 percent.

Kleinfeld’s ownership interest was held on behalf of Scott Grady; 

Kleinfeld did no work for Reliant while he was an owner. As of 

December 2012, Monaco owned two-thirds and Kleinfeld one-
7

third. Michaels and Cooper “agreed that Sean Michaels would 

focus his efforts on Reliant’s day-to-day business while Daniel 

Cooper would focus his efforts on other shared business 

endeavors.”

b. Events in 2013

“In August 2013, Daniel Cooper stopped working out of the 

offices of Reliant because of a medical condition.” “After Daniel 

Cooper’s August 2013 departure from Reliant, there was no 

expectation by any member or employee of Reliant that Daniel 

Cooper would return to work at Reliant’s offices.” Michaels sent 

Cooper an e-mail in August 2013 saying that “even though we 

have our disagreements, I still am 1000% loyal to you as a 

business partner.” 

Sometime in 2013, Michaels and Cooper negotiated the 

separation of the many business interests they held jointly. One 

of the terms of their separation agreement (about which there is 

more later) was that Monaco would be dissolved, and Cooper and 

Michaels would each have a one-third interest in Reliant, the 

other one-third remaining with Kleinfeld. “Cooper acquired his 

individual one-third interest in Reliant on November 5, 2013.”

Under the terms of the separation agreement, the effective 

date of which was December 31, 2013, “Michaels agreed to run 

the day-to-day business of Reliant while Cooper would maintain a 

one-third ownership interest.” The agreement stated Michaels 

was entitled to a year-end bonus of $50,000 “as compensation for 

his role as Manager of Reliant.” Michaels was appointed 

manager of Reliant as of November 2013. 

The trial court found that Michaels and Grady “began 

conspiring to remove Daniel Cooper from Reliant beginning as 

early as August 2013.” 
8

c. The Reliant operating agreement

Reliant is governed by an operating agreement. The 

operating agreement “did not require Daniel Cooper to spend any 

time working for Reliant in order to maintain his one-third 

ownership interest in Reliant and to receive all of its benefits, 

including one third of Reliant’s profits.” The operating 

agreement had several pertinent provisions.

The agreement required Reliant’s profits and losses to be 

allocated in accordance with each member’s percentage interest. 

It required copies of Reliant’s financial statements, quarterly and 

year-end, to be given to all members. It allowed each member to 

inspect and copy books of account of the company’s business, on 

reasonable notice. (The separation agreement between Michaels 

and Cooper also contained obligations to provide Cooper with 

quarterly accountings of Reliant’s finances and “access to all 

financial information when requested.”) The operating 

agreement provided that company decisions required 

consultations with all members followed by agreement among a 

majority of members, and in the case of formal meetings, 

required notice to members. 

The operating agreement contained provisions governing 

transfers of membership interests. These included a provision 

identifying events with respect to a member that would trigger

an option right in Reliant and the other members to purchase 

that member’s interest. Until February 2015, these triggering

events were events such as death, incapacity, bankruptcy, failure 

to make capital contributions, and the like. 

The operating agreement also provided procedures for

exercise of the option to purchase a member’s interest upon the 

occurrence of a triggering event. These included an attempt to 
9

agree on the valuation (the “fair option price”), failing which 

three appraisers were to be appointed under specified procedures 

and timelines to determine the fair option price. 

d. Events in 2014 and 2015

Before January 2014, Michaels, Grady and Cooper “all 

received equal member monetary distributions from Reliant.” In 

January 2014, Michaels and Grady “agreed, without any notice to 

Cooper, that Reliant would stop paying member distributions to 

Cooper.” Cooper “was not consulted about, nor given notice of, 

the January 2014 decision to stop paying member distributions to 

him.”

In April 2014, Reliant hired Andrew Murphy as its new 

CEO. Murphy replaced Michaels as Reliant’s manager. Cooper 

was not consulted about these decisions either. 

In June 2014, Michaels and Grady “agreed, without notice 

to or consultation with Daniel Cooper, to pay themselves each 

approximately $485,000 in back pay and a 3% commission on all 

of Reliant’s sales, regardless of whether they participated in 

those sales.”

Cooper “was not provided with notice of any Member 

Meetings that took place in 2014 or 2015, as required under 

Reliant’s Operating Agreement.” Nor was he provided with 

quarterly or year-end financial statements, as also required. 

According to Michaels, an offer to buy out Cooper’s interest 

in Reliant was made in the summer of 2014, but Cooper wanted 

to get an appraisal firm to review the books. Cooper hired an 

accounting firm, Hersman Serles, to help him analyze Reliant’s 

financials. “Hersman Serles could not complete its analysis of 

Reliant’s financials because Reliant failed to provide Hersman 
10

Serles with accurate, reliable, and complete financial 

information.” 

“On November 5, 2014, Andrew Murphy, on behalf of 

Reliant, communicated to Cooper an offer to acquire Cooper’s 

one-third membership interest that did not include any cash 

component. The offer also threatened to impose tax liability on 

Cooper if he refused the offer.” In response to Murphy’s offer, 

Cooper requested certain information about Reliant’s finances 

that had not been provided to him, but Reliant did not comply 

with his request. 

In February 2015, Michaels and Grady purported to adopt 

Reliant’s third amended operating agreement. They amended 

the agreement to include as a triggering event a “determination 

by the Majority of Members that another Member should 

surrender his Membership Interest for the best interest of the 

Company.” Cooper was not consulted about this change, and was 

not provided with notice of the attempt to change the operating 

agreement. 

In March 2015, Cooper retained RGL Forensics to conduct 

a forensic accounting of Reliant “because Reliant, Michaels, 

Murphy, and Grady failed to provide Cooper with full and 

complete access to Reliant’s books and records.” Reliant provided 

RGL with two “materially different versions of its QuickBooks 

files, the most recent of which included altered historical data.” 

RGL concluded, among many other points, that Michaels, Grady 

and related entities received total outflows from Reliant of 

approximately $3.7 million between 2012 and August 2015; 

Reliant’s financial statements understated revenues by 

approximately $3.8 million between 2013 and 2015; and Reliant 

was significantly more profitable than reported. 
11

On November 12, 2015, a member meeting took place at 

which Michaels and Grady voted to approve the termination of 

Cooper’s ownership interest in Reliant. This vote constituted a 

triggering event as defined in the third amended operating 

agreement that Michaels and Grady purportedly adopted without 

Cooper. Cooper was not given notice of the November 12, 2015 

meeting. 

On November 19, 2015, Reliant sent Cooper a letter which 

“constituted a Notice of Triggering Event under Reliant’s 

Operating Agreement.” The operating agreement gives the 

parties a maximum period of 105 days to establish the fair option 

price of a member’s interest, a period that would end on March 3, 

2016. (The parties have 40 days from the option date (receipt of 

notice of a triggering event, here November 19, 2015) to appoint 

their appraisers, who then have an additional five days to choose 

a third appraiser, and the three appraisers must determine the 

fair option price within 60 days after the appointment of the third 

appraiser.) 

Reliant filed this lawsuit on December 21, 2015, only 

32 days after its notice of triggering event, alleging among other 

things that Cooper refused to disclose the identity of his 

appraiser, making it impossible for the two to select a third and 

provide the valuation contemplated by the operating agreement. 

“Reliant and its principals never paid anything to acquire 

Cooper’s one-third interest in Reliant.” Cooper “did not engage in 

any behavior that was disruptive to Reliant’s business operations 

at any point in time after August 2013.” 

e. Other pertinent facts and events

In 2016, after the efforts to terminate Cooper’s ownership 

interest, Reliant started paying member distributions to Grady 
12

and Michaels. “Grady regularly used Reliant’s company credit 

card for personal expenses.” “Michaels ensured that he was paid 

whatever Grady was paid. This included receiving payment to 

compensate him equally for personal expenses that Grady 

charged to Reliant’s company credit card.” “When Michaels 

reduced his workload at Reliant, he was still paid the same 

amount of money as Grady.” 

In February 2018, Michaels sold his interest in Reliant to 

Grady for at least $1.5 million. “Michaels also received 

consideration in the form of Reliant writing off a $404,000 loan 

that Michaels had previously received from Reliant. Reliant also 

agreed to pay Michaels’ legal bills in this action.” (In its ruling 

denying judgment notwithstanding the verdict (JNOV), the trial 

court observed that the deal included an indemnity agreement 

“by which Reliant/Grady agreed to indemnify Michaels for all 

damages owed to Cooper,” and referred to this transaction as a 

“sweetheart buyout deal” and a sham.) 

“Reliant did not provide Cooper with access to documents

underlying transfers from Reliant to Michaels and Grady until 

April 2018,” when Reliant’s bookkeeper provided copies of her 

files in response to a deposition subpoena. 

As of December 31, 2018, Michaels and Grady and their 

respective entities “have received at least $11,724,675.94 in 

payments and distributions based on their position as owners of 

Reliant.” Cooper was paid a total of $212,748 by Reliant; the last 

payment he received was for $10,000 on January 29, 2014. 

f. The Friwat policy and the “tails”

Michaels, through PB Consulting #2, LLC, was the owner 

of a $5.4 million policy issued by Lincoln National Life Insurance 

Company (Lincoln National), insuring the life of Salim Friwat. 
13

“PB Consulting 2, LLC was established solely for the purpose of 

investing in the Friwat Policy.” “Money from Reliant was used to 

invest in and pay the premiums on the Friwat Policy.” 

“Tails” are policies that investors have forfeited to Reliant 

by failing to pay the premiums after purchasing the policies from 

Reliant. “18LS [Holdings], LLC, an entity owned by Michaels, 

Grady, and Luke Walker, own[ed] forfeited and unsold portions 

(the ‘Tails’) of life insurance policies sold by Reliant. Grady did 

not pay anything for the tails he received and 18LS [Holdings], 

LLC paid $1,000 for the entirety of Tails it received.” (The tails 

were later valued at $880,225.98.) 

3. The Litigation

a. The pleadings and phase one of the trial

Reliant’s December 2015 complaint for declaratory relief 

asked for a declaration of the rights and obligations of the parties 

under the third amended operating agreement, and specifically 

requested a declaration that Reliant “has acted properly and in a 

legally enforceable manner” regarding Cooper’s membership 

interest, and that the removal of Cooper’s interest “is proper and 

in the best interests of Reliant.” (Reliant also sought damages, 

including punitive damages, for conversion; the trial court 

granted nonsuit on that claim.) 

In July 2016, Cooper filed an answer and a cross-complaint 

against Michaels, Grady, PB Consulting #1, Reliant and others, 

as mentioned above. In addition to breach of contract, fraud and 

other legal claims, Cooper sought an accounting and imposition of 

a constructive trust on Reliant’s assets obtained by crossdefendants in violation of their fiduciary and contractual 

obligations. 
14

In February 2018, the Reliant parties sought bifurcation of 

Reliant’s declaratory relief claim, and pointed out that Cooper’s 

equitable causes of action for constructive trust and an 

accounting “are properly bifurcated.” Cooper opposed bifurcation. 

The trial court granted Reliant’s motion, ordering that the first 

phase of the trial would include Reliant’s declaratory relief cause 

of action and Cooper’s accounting and constructive trust causes of 

action. 

On January 18, 2019, after closing arguments in the 12-day 

phase one trial, the trial court announced its tentative ruling for 

Cooper. “The actions by [Michaels, Grady, and Murphy] in 

withholding information, and yet demanding an appraisal and 

analysis and demanding compliance with the operating 

agreement, or demanding compliance with the partnership law 

and good faith is just absolutely inconsistent positions for those

defendants to take. So no, they did not follow any proper 

procedures concerning [Cooper’s] removal.” 

The court also ruled Cooper was entitled to costs and fees, 

and ordered an accounting, but requested further briefing on the 

constructive trust claim. 

On February 4, 2019, the court ordered Lincoln National to 

hold $3 million of the first proceeds of the Friwat policy pending 

further order of the court. The Reliant parties and their entities 

were enjoined from directly or indirectly distributing those 

proceeds or assigning any portion of the Friwat policy. Reliant 

was ordered to complete an accounting detailing, among other 

things, the amount of monies or assets transferred from Reliant 

to Michaels, Grady, and their respective entities. 

On June 27, 2019, the court granted Cooper’s request for a 

constructive trust. The court ordered Lincoln National to 
15

transfer to Cooper immediately “an ownership and beneficial 

interest totaling $2,500,000” of the Friwat policy, in addition to 

continuing to hold the $3 million of proceeds as previously 

ordered. The court also ordered the Michaels and Grady entities 

to transfer ownership of and beneficial interest in the tails to 

Cooper, with Reliant to pay all premiums associated with the 

tails. 

On August 19, 2019, after Mr. Friwat’s death, the court 

issued an addendum to its earlier orders and ordered distribution 

of the $10 million death benefit of the Friwat policy. This 

included distribution of $5,428,666.65 plus interest to the 

superior court’s trust account. 

On September 6, 2019, the trial court entered its findings of 

fact and conclusions of law in phase one. We have described 

many of the fact findings in part 2, ante. As is apparent from 

those findings, the court concluded Reliant did not act in a legally 

enforceable manner and did not follow the proper procedure for 

removing Cooper as a member. Reliant and its manager failed to 

provide Cooper with sufficient time to appoint an appraiser, 

instead filing this suit eight days before Cooper was required to 

appoint an appraiser, violating the operating agreement. “As a 

result, Daniel Cooper remains a current 1/3 owner of Reliant, and 

is entitled to receive one-third of all monies paid to Michaels and 

Grady from November 2013 through the present.” 

Other conclusions were as follows.

The court found Reliant violated its obligations to provide 

Cooper with accurate and reliable financial information as 

required by the operating agreement. “Based on its willful 

disobedience and violation of the Operating Agreement, Reliant is 

estopped from attempting to enforce the provisions of the 
16

Operating Agreement at the time that it sought to terminate 

Daniel Cooper’s ownership interest.” 

As mentioned earlier, the court set the valuation date “for 

any analysis of Cooper’s interest in Reliant” as January 1, 2019. 

The court awarded attorney fees and costs under the operating 

agreement of $1,021,620.42. 

Because the Reliant parties “actively interfered with the 

efforts of consultants working on Daniel Cooper’s behalf to 

acquire” financial information to which Cooper was entitled 

under the operating agreement, the court stated it had ordered a 

court-appointed third party accountant to provide an accounting 

“detailing the amount of money transferred from Reliant to 

Michaels, Grady, or their respective entities,” as well as other 

specified items, including information on the value of the tails 

and the total amount of personal credit card charges Grady 

processed using Reliant’s corporate credit card. 

The court made alter ego findings (discussed post), and 

imposed a constructive trust as described above “[t]o compensate 

Cooper for monies wrongfully transferred from Reliant to Grady 

and Michaels.” 

On November 13, 2019, the trial court denied a motion by 

Michaels and PB Consulting #1 to vacate the court’s findings on 

the ground the findings violated the right to jury trial.

b. Phase two of the trial and the jury verdict

As mentioned at the outset, a nine-day jury trial began on 

December 10, 2019, on several of Cooper’s legal claims against 

Michaels and Grady. The jury was instructed that the court’s 

findings of fact and conclusions of law in the first phase were 

binding in the second phase, and pertinent findings were also 

contained in the jury verdict form. 
17

On December 20, 2019, the jury found as follows. 

In an advisory verdict, the jury valued Reliant at 

$17.1 million as of January 1, 2019, and found the value of 

Cooper’s equity interest to be $5.7 million. 

The jury awarded Cooper $6,028,786 in damages for breach 

of the operating agreement, and found Grady and Michaels each 

caused 50 percent of the total damages. The jury awarded the 

same amount against Michaels for breach of the separation 

agreement with Cooper.

On the cause of action for fraud, the jury found against 

Michaels and Grady, and awarded $2,743,626 against each of 

them. The jury also found that Michaels acted with malice, 

oppression, or fraud justifying an award of punitive damages. 

On the cause of action for breach of the duty of loyalty, the 

jury found against Michaels and Grady, and awarded damages of 

$3,014,393 against each of them. The jury found both of them 

acted with malice, oppression, or fraud justifying an award of 

punitive damages. 

The jury found against Grady on the cause of action for 

aiding and abetting breaches of common law duty, and awarded 

damages to Cooper of $6,028,786.

On the fraudulent transfer causes of action against Grady 

and Michaels, respectively, the jury found each of them

transferred monies or assets from Reliant to himself and/or his 

respective entities for inadequate consideration, and awarded 

damages of $146,667 against each of them. 

Cooper presented no further evidence on punitive damages, 

relying on the evidence already presented to the jury. The court 

instructed the jury, and the jury then awarded punitive damages 

of $500,000 against Grady and $1,001,000 against Michaels.
18

c. The judgment and amended judgments

At a January 29, 2020 hearing on the proposed judgment, 

the court stated it would set the valuation of Cooper’s one-third 

interest at $4.2 million. The court stated that, “with respect to 

the valuation, I think I’m certainly within my equitable powers 

to—especially given the fraud . . . judgment—to order the buyout 

of Mr. Cooper’s interest at the 4.2 million.” Cooper submitted an 

amended proposed judgment, and on March 6, 2020, the trial 

court entered the “Amended Judgment.” 

The March 6, 2020 amended judgment determined Reliant, 

Michaels and Grady were jointly and severally liable for the 

$4.2 million valuation amount, plus prejudgment interest of 

$494,794.52, in exchange for the transfer of Cooper’s ownership 

interest in Reliant. After eliminating duplicative damages, the 

court awarded monetary damages on Cooper’s legal causes of 

action of $6,028,786, plus prejudgment interest of $1,492,747.98, 

jointly and severally against Michaels, Reliant and Grady. 

The judgment awarded punitive damages (as above) and 

attorney fees, and included alter ego findings and the 

constructive trust provisions previously ordered. The court 

ordered the $5.4 million from the Friwat policy to be disbursed to 

the trust account of Cooper’s counsel, and set the order in which 

the funds were to be applied (various attorney fees, the valuation 

amount, and so on). 

Michaels filed a motion for JNOV and for a new trial on all 

issues tried to the jury. The trial court denied the motion for 

JNOV (except on points not relevant to these appeals), but 

granted Michaels a partial new trial limited to the amount of the 

punitive damages award. 
19

On October 6, 2020, the court entered the second amended 

judgment, adding PB Consulting #1, LLC; PB Consulting #2, 

LLC; 18LS Holdings, LLC; and LaForce Holdings, LLC, as 

additional judgment debtors. 

On May 12, 2021, the court entered a third amended 

judgment, finding the trustees of three Michaels trusts (the 2007 

Irrevocable Octopus Trust, the RLM Trust, and the 2007 

Irrevocable MMA Trust), Romelli Cainong, and any successor 

trustees to be additional judgment debtors.

d. The appeals

There are four sets of appellate briefs in these appeals, all 

of which have been consolidated. Appeals were filed from the 

judgments and various orders by Michaels and PB Consulting #1, 

LLC; by Grady and Reliant; by PB Consulting #2, LLC and 18LS 

Holdings, LLC; and by Romelli Cainong as trustee for the three 

Michaels trusts.

DISCUSSION

1. Claims About the Scope of Phase One Findings

The Reliant parties contend the trial court’s findings of fact 

and conclusions of law in phase one exceeded the scope of the 

equitable issues, depriving them of a fair jury trial on Cooper’s 

legal claims. Relatedly, they contend the jury instructions and 

verdict form erroneously made phase one findings binding on the 

jury, leading to the exclusion of significant evidence and 

requiring a new trial. We disagree with both claims.

a. The law

The applicable principles appear in Darbun Enterprises, 

Inc. v. San Fernando Community Hospital (2015) 

239 Cal.App.4th 399 (Darbun), the case on which Michaels 

primarily relies.
20

“A jury trial is a matter of right in a civil action at law, but 

not in equity. [Citation.] [¶] ‘Complications arise when legal 

and equitable issues (causes of action, requested remedies, or 

defenses) are asserted in a single lawsuit. . . . In most instances, 

separate equitable and legal issues are “kept distinct and 

separate,” with legal issues triable by a jury and equitable issues 

triable by the court. [Citations.]’ [Citation.] The order of trial in 

these mixed actions has ‘great significance because the first fact 

finder may bind the second when determining factual issues 

common to the equitable and legal issues.’ ” (Darbun, supra, 

239 Cal.App.4th at p. 408.)

Darbun continues: “Generally, in mixed actions, the 

equitable issues should be tried first by the court, either with or 

without an advisory jury. [Citations.] Trial courts are 

encouraged to apply this ‘equity first’ rule because it promotes 

judicial economy by potentially obviating the need for a jury 

trial.” (Darbun, supra, 239 Cal.App.4th at pp. 408–409, 

fn. omitted; see Hoopes v. Dolan (2008) 168 Cal.App.4th 146, 158

[allowing first fact finder’s factual determination to bind the 

second “minimizes inconsistencies,” “avoids giving one side two 

bites of the apple,” and “prevents duplication of effort”].)

b. Contentions and conclusions

Contrary to Michaels’s contention, Darbun does not support 

his claim that the court could not determine that Michaels (and 

not just the LLC) breached the operating agreement. We are at a 

loss to understand how that could be so, given the LLC acts 

through its members. Further, the trial court found Reliant and 

Michaels (and Grady, and their entities) were alter egos of each 

other (as to which, more post).
21

It was the Reliant parties, not Cooper, who sought 

bifurcation of the trial. In seeking bifurcation, they argued that 

“[t]his court may decide the equitable issues first, and this 

decision may result in factual and legal findings that effectively 

dispose of the legal claims. This is perfectly acceptable.” As the 

trial court observed in denying Michaels’s new trial motion, “all 

parties agreed this issue [entitlement to ownership and 

distribution] was to be decided by the court in Phase 1, at least 

they agreed until the decision was issued.” 

Michaels insists the court made “myriad factual findings 

exceeding the equitable claims’ scope,” citing the court’s entire 

27-page ruling. These included the findings that Cooper did not 

have to spend any time working for Reliant; that Grady and 

Michaels began conspiring to remove Cooper in August 2013; 

“setting forth the terms of the Separation Agreement” between 

Cooper and Michaels; Reliant’s failure to pay Cooper monies paid 

to Grady and Michaels; the attempt to adopt the third amended 

operating agreement without consulting Cooper; and Grady’s 

obtaining the tails for inadequate consideration. Michaels tells 

us that “[n]one of these factual findings were necessary” to 

adjudicate the equitable claims. 

Similarly, Michaels contends the jury should not have been 

instructed that phase one findings were binding. These included

findings such as that Michaels and Grady did not give notice to or 

consult with Cooper on paying themselves back pay and 

commissions; did not give notice of member meetings; did not 

consult with Cooper on multiple matters; violated the obligation 

to provide Cooper with accurate and reliable financial 

information; and so on. Likewise, Michaels complains that the 

verdict form stated that Reliant had improperly removed Cooper 
22

as a member, itemizing Michaels’s conduct (as just recited), and 

that this “prevented the jury from making any independent 

breach determination.” 

First, as for Michaels’s contention the fact findings were 

not “necessary,” it was the trial court’s prerogative to decide what 

facts had been proven in support of its equitable judgment. As 

the court stated in Orange County Water Dist. v. Alcoa Global 

Fasteners, Inc. (2017) 12 Cal.App.5th 252, 359 (Orange County), 

“All of the trial court’s equitable findings were binding on the 

[plaintiff’s] legal claims, regardless of whether they were 

necessary for the judgment. ‘Issues adjudicated in earlier phases 

of a bifurcated trial are binding in later phases of that trial and 

need not be relitigated. [Citations.] No other rule is possible, or 

bifurcation of trial issues would create duplication, thus 

subverting the procedure’s goal of efficiency. [Citation.] 

“[D]uplication of effort is the very opposite of the purpose of 

bifurcated trials.” ’ ” (Id. at p. 359.)

Second, all the fact findings are relevant either to Reliant’s 

request for a declaration that Michaels and Grady “properly 

determined that [Cooper] must surrender [his] Membership 

Interest in the best interests of the Company” and that Reliant 

“acted properly . . . regarding the membership interests of 

[Cooper],” or to Cooper’s claims for an accounting and a 

constructive trust—the latter of which requires, among other 

things, the “wrongful acquisition or detention” of an interest in 

property by one “who is not entitled to it” (Communist Party v. 

522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 990 (Communist 

Party)). Michaels’s arguments that the court “had no authority to

find wrongdoing by Michaels,” and that Reliant merely sought a 

declaration that it had complied with “technical provisions” in the 
23

operating agreement and “not a finding of breach” have no merit. 

The law does not support the Reliant parties’ claim they were

improperly deprived of a jury trial.

Orange County expressly rejected a contention that it was 

error for the trial court in that case to give preclusive effect to its 

factual findings in connection with the plaintiff’s equitable 

claims. (Orange County, supra, 12 Cal.App.5th at p. 358.) The 

court explained that, while the plaintiff had a right to a jury trial

on legal claims, “this jury trial right is not inconsistent with the 

further principle that any factual findings made following a 

bench trial on the [plaintiff’s] equitable claims may be binding on 

its legal claims, and the right is not infringed by its application.” 

(Id. at p. 359; see also Nwosu v. Uba (2004) 122 Cal.App.4th 

1229, 1244 [“Here, the fact that the trial of the equitable issues 

first resulted in factual findings that implicated the legal claims 

does not mean that [the plaintiff] was improperly denied the 

right to a jury trial.”].)

The Reliant parties’ reliance on Darbun does not help. In 

that case, the court held that, “in cases involving mixed issues of 

equity and law, a trial court may not act as a fact finder on issues 

it specifically reserves for jury determination. Here, in granting 

JNOV, the court improperly transformed its equitable finding of 

unenforceability as to specific performance into a finding of 

unenforceability as to the legal issue of damages.” (Darbun, 

supra, 239 Cal.App.4th at p. 402.) The court further observed: 

“The difficulties presented in this case stem mainly from the trial 

court’s inconsistent and misleading statements, which resulted in 

confusion among the parties and complicated the issues on 
24

appeal.” (Id. at p. 409; see the next footnote.)1 Those 

inconsistent and misleading statements were the basis for 

Darbun’s conclusion that “a trial court may not act as a fact 

finder on issues it specifically reserves for jury determination.” 

(Id. at p. 402.) Nothing like that happened here.

The Orange County court similarly explains Darbun: 

“Darbun found error based on the trial court’s ‘inconsistent and 

misleading statements’ regarding, among other things, which 

issues would be decided during the first-phase bench trial.

[Citation.] ‘The parties proceeded through the first phase of trial, 

then to jury trial, under the court’s assurances that the jury 

would decide the issue of breach.’ [Citation.] The trial court 

subsequently decided the issue of breach, which Darbun held 

deprived the plaintiff of its jury trial right.” (Orange County, 

1 Darbun continued: “The trial court explicitly stated, on 

several occasions, that it did not want to hear the issue of breach 

in the equitable phase of trial—that issue was for the jury to 

decide. The only evidence it was interested in during the 

equitable phase was that which pertained to specific 

performance. Yet, it made statements on the record in ruling on 

nonsuit that Darbun had failed to perform and had breached the 

contract. The court also suggested the jury was an advisory jury 

on breach, but had not treated it as such. Despite a seemingly 

dispositive ruling on Darbun’s failure to perform, the court then 

told Darbun, ‘If you can get your damages, get your damages’ and 

continued with jury trial. During the JNOV hearing, the court 

insisted that its statement pertaining to Darbun’s breach was the 

basis for its decision to grant nonsuit, and that left nothing for 

the jury to decide.” (Darbun, supra, 239 Cal.App.4th at pp. 409–

410, fns. omitted.) 
25

supra, 12 Cal.App.5th at pp. 358–359, quoting Darbun, supra, 

239 Cal.App.4th at pp. 409–410, 411.)

In short, the only pertinent principle from Darbun, 

confirmed in other cases, is that “ ‘the first fact finder may bind 

the second when determining factual issues common to the 

equitable and legal issues.’ ” (Darbun, supra, 239 Cal.App.4th at 

p. 408.) That is exactly what happened here.

We will not burden this opinion with an explanation why 

each of the court’s fact findings is common to the equitable and 

legal issues. We have recited those findings, and the connection 

is apparent. One example will do: Michaels complains that the 

court should not have found Cooper did not have to spend time 

working for Reliant, and Cooper was not expected to return to 

Reliant after August 2013. But the Reliant parties claimed at the 

bench trial that Cooper abandoned Reliant, justifying the 

decision to terminate his interest; in closing argument, counsel 

argued Cooper was equitably estopped from taking the position 

he had membership rights. It was plainly appropriate for the 

court to find Cooper was not required to work for Reliant, based 

on the operating agreement and the separation agreement.

Last, Michaels argues the trial court could not make any

alter ego findings in phase one. For this assertion, he cites King 

v. King (1971) 22 Cal.App.3d 319, which in turn refers to “the 

general rule that the judgment must be confined to the issues 

raised by the pleadings” (and then finding an exception to that 

principle applied). (Id. at p. 324.) King does not discuss alter ego 

principles. The only thing King said about alter ego was in a 

footnote, where the court said the evidence established the 

defendant completely dominated and controlled the affairs of two 
26

business enterprises, and that they were alter egos of the 

defendant. (Id. at p. 328, fn. 5.)

King aside, the court acted well within its discretion when 

it decided alter ego claims in phase one. Cooper’s cross-complaint 

alleged Reliant paid monies to shell business entities associated 

with Michaels and Grady, and that Michaels and Grady funneled 

unauthorized payments and withdrawals into shell business 

entities. These allegations were realleged and incorporated by 

reference in Cooper’s accounting and constructive trust causes of 

action which the Reliant parties agreed should be tried with all 

equitable claims in phase one.

2. The Buyout Damages

As mentioned earlier, the court valued Cooper’s one-third 

interest in Reliant at $4.2 million. The judgment found Michaels, 

Grady and Reliant, as well as additionally named judgment 

debtors PB Consulting #1, LLC; PB Consulting #2, LLC; 18LS 

Holdings, LLC; and LaForce Holdings, LLC, jointly and severally 

liable to pay the valuation amount plus prejudgment interest to 

Cooper in exchange for the transfer of his ownership interest in 

Reliant. 

The Reliant parties and additionally named judgment 

debtors contend the buyout damages were legally unauthorized. 

Their argument is, there was no action for dissolution; an 

equitable buyout is not a remedy for Cooper’s fraud claim; and 

the buyout damages duplicated the jury’s fraud damages. We 

reject these claims.

First, we reject the Reliant parties’ claim that the court had 

no jurisdiction to order a buyout in the absence of a dissolution 

action. They say that under the Revised Uniform Limited 

Liability Company Act (Act; Corp. Code, § 17701.01 et seq.), a 
27

dissolution cause of action is “a mandatory prerequisite to a 

buyout remedy.” For this they cite Kennedy v. Kennedy (2015) 

235 Cal.App.4th 1474, 1485–1487, and the buyout procedure 

described in Corporations Code section 17707.03, 

subdivisions (c)(1) through (5). Since none of the pleadings in 

this case requested a buyout, they say, the trial court could not 

order one. We disagree.

Corporations Code section 17707.03 does indeed allow a 

member to file an action for dissolution, in which case the court 

can decree the dissolution whenever specified events occur. (Id., 

subds. (a) & (b).) If such a suit is filed, other members may avoid 

dissolution by purchasing the interest of the member initiating 

the action, and the statute specifies the procedures for doing so. 

(Id., subd. (c).)

But nothing in Corporations Code section 17707.03, or in 

the Kennedy case, states or suggests that a court has no equitable 

power to order buyout damages under other circumstances not 

involving a member’s decision to seek dissolution. The court did 

not “disregard the Act’s requirements”; those requirements 

simply do not apply here because Cooper did not seek a decree of 

dissolution, and Cooper did not have to seek a decree of 

dissolution to obtain buyout damages in this case.

The Reliant parties cite Marina Tenants Assn. v. Deauville 

Marina Development Co. (1986) 181 Cal.App.3d 122 for the 

proposition the court “did not have the equitable power to 

disregard the Act’s requirements.” Marina Tenants has nothing 

to do with LLC’s or buyouts. The court merely stated the general 

principle that “a court of equity is without power to decree relief 

which the law denies.” (Id. at p. 134.) Nothing in the law forbids 

the court’s action here. 
28

Indeed, as Cooper argues, a buyout of Cooper’s interest is 

consistent with the relief Reliant sought in the first place: a 

declaration that Cooper’s membership had been terminated and 

Reliant’s manager could authorize a valuation for the purpose of 

calculating the fair option price for Cooper’s interest. Of course, 

the results were not what the Reliant parties wanted—but

Reliant’s complaint was filed to do exactly what the court has 

now done, and had the equitable power to do. “A court of equity 

has broad powers and comparatively unlimited discretion to do 

equity without being bound by any strict rules of procedure.” 

(Richmond v. Dofflemyer (1980) 105 Cal.App.3d 745, 766.) 

Next, the Reliant parties criticize the trial court’s 

statement, in its ruling denying JNOV, that “[n]othing in 

Corporations Code Section 17707.03 precludes an equitable 

buyout as a remedy for fraudulent activity.” They say the jury’s 

award of damages for fraud “demonstrates an adequate legal 

remedy existed,” and the trial court “awarded double fraud 

damages in the guise of buyout damages.” We reject this 

assessment.

There were no duplicative damages awarded. The jury 

awarded damages for breach of contract ($6,028,786) and for 

fraud ($2,743,626 against each of Michaels and Grady). The 

court found the damages for fraud were “duplicative of and 

included within” the damages awarded for breach of the 

operating agreement. The court limited the damages award in 

the phase two trial to $6,028,786. The buyout damages are not 

fraud damages. The jury’s award compensated Cooper for the 

monies he should have received as distributions as a one-third 

owner. The court’s award of $4.2 million compensates Cooper for 
29

his equity interest in Reliant, in return for which he gives up his 

ownership interest. There is no duplication anywhere.

Finally, Michaels contends he cannot be liable for buyout 

damages because he was not a Reliant member on the date the 

court set as the valuation date, i.e., the date as of which the value 

of Cooper’s equity interest in the LLC was determined. (The 

reader will recall that Michaels sold his one-third interest in 

Reliant to Grady in February 2018, and the valuation date was 

January 1, 2019.) This argument goes nowhere either. We agree 

with the trial court’s assessment in its ruling denying JNOV on 

Michaels’s claim that he should not be forced to pay the buyout 

damages: “Michaels cannot escape liability to Cooper by arguing 

that he washed his hands of Reliant . . . . Michaels’ sweetheart 

buyout deal between Michaels and Reliant/Grady, that included 

an indemnity agreement by which Reliant/Grady agreed to 

indemnify Michaels for all damages owed to Cooper, is relevant to 

show that the Michaels buyout was a sham. Given the wellestablished pattern of deception and misdirection employed by 

Michaels in using various corporate maneuvers in attempts to 

shield himself from liability to Cooper, it is reasonable to infer 

that the Michaels buy-out was simply another example of the 

same.” 

3. The Alter Ego Issue

The Reliant parties, PB Consulting #1, PB Consulting #2,

and 18LS Holdings, contend the trial court’s alter ego findings 

were improper because they were primarily based on reverse veil 

piercing and were unsupported by the evidence. We see no error.

a. The facts

In its conclusions of law after phase one, the trial court 

stated: “Here, the evidence established that Michaels utilized 
30

Reliant and his entities PB Consulting [1], LLC, PB Consulting 2, 

LLC, the 2007 Irrevocable Octopus Trust, the 2007 MMA Trust, 

the RLM Trust, and 18LS [Holdings], LLC (the ‘Michaels 

Entities’) as an extension of himself by disregarding corporate 

formalities, comingling money, and transferring assets without 

consideration, so much so that Reliant and the Michaels Entities 

are alter egos of Michaels.” The court explained:

“Michaels exerted such a unity of ownership over Reliant 

by dictating when payments would be made and how they would 

be classified without any methodology for doing so, such that 

there was essentially no separation between Michaels and

Reliant. Michaels also made decisions regarding Reliant without 

input from Cooper, despite the fact that Cooper was and is a onethird member of Reliant. Payments to Michaels were casually 

made without the use of a payroll company. Further, Michaels 

artificially manipulated Reliant’s books and records by (among 

other things) reclassifying historical data to negatively impact 

the perceived profitability of Reliant, to the detriment of Cooper. 

Additionally, Michaels authorized transfers from Reliant to 

himself and to some of the Michaels Entities without regard for 

whether Reliant was properly capitalized to conduct business on 

an ongoing basis.” 

The court reached similar conclusions as to Grady. 

“Likewise Grady utilized Reliant and his entities LaForce

Holdings, LLC, Tristan Capital, Inc., the RLS Trust, and the SLG 

Trust (the ‘Grady Entities’) as an extension of himself, by

disregarding corporate formalities, comingling money, and 

transferring assets without consideration; so much so that 

Reliant and the Grady Entities are alter egos of Grady.” The 
31

court recited the same facts supporting this conclusion that we 

have just recited with respect to Michaels and his entities. 

b. Contentions and conclusions

The Reliant parties first contend the trial court’s alter ego 

findings were improper because “outside reverse” piercing of the 

corporate veil “is not permitted in California.” They rely on one 

opinion, Postal Instant Press, Inc. v. Kaswa Corp. (2008) 

162 Cal.App.4th 1510 (Postal Instant Press) to argue that, while 

traditional alter ego doctrine allows an individual shareholder to 

be held liable for claims against a corporation, it does not allow a 

corporation to be held liable for claims against an individual 

shareholder. Postal Instant Press rejected the “variant of the 

alter ego doctrine, called third party or ‘outside’ reverse piercing 

of the corporate veil,” and held that “a third party creditor may 

not pierce the corporate veil to reach corporate assets to satisfy a 

shareholder’s personal liability.” (Id. at pp. 1512–1513.)

The opinion in Postal Instant Press includes a thorough 

analysis of cases from California, federal and other state courts 

discussing “outside reverse piercing of the corporate veil,” both 

cases accepting, and others rejecting that theory of alter ego. 

(Postal Instant Press, supra, 162 Cal.App.4th at pp. 1519–1525.) 

The Postal Instant Press opinion rejected it as “a radical and 

problematic change in standard alter ego law.” (Id. at p. 1521.) 

The opinion explains outside reverse piercing of the corporate veil 

creates unanticipated exposure for innocent investors and 

secured and unsecured creditors who relied on the impregnability 

of the corporate form; and that other remedies are available to 

the creditor of an individual shareholder, such as enforcing the 

judgment against the shareholder’s assets, including his shares 

in the corporation. (Id. at p. 1524.)
32

In Postal Instant Press, the corporation at issue had other 

shareholders, the plaintiff failed to show that innocent creditors

would be adequately protected, and the plaintiff admittedly did 

not pursue other available legal remedies because it was “simply 

more expedient” to add the corporation as a judgment debtor. 

(Postal Instant Press, supra, 162 Cal.App.4th at pp. 1524, 1523.)

In other words, the equities of the case did not justify 

disregarding the corporate form.

The facts and governing law in this case are entirely 

different. We find neither the holding nor the reasoning of Postal 

Instant Press governs the alter ego determination in this case. 

(See Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 

214, 222 [“Postal Instant Press does not preclude application of 

outside reverse veil piercing in this case for several reasons,” 

including that Postal Instant Press “was expressly limited to 

corporations”; “different facts before us, as well as the nature of 

LLCs, do not present the concerns identified in Postal Instant 

Press”; and “[t]here simply is no ‘innocent’ member of [the LLC] 

that could be affected by reverse piercing here”]; see also Blizzard 

Energy, Inc. v. Schaefers (2021) 71 Cal.App.5th 832, 847 [“There 

is no reason to depart from [Curci’s] sound analysis.”].) The same 

is true here, where the entities are closely held and controlled by 

the individual who engaged in the wrongdoing. 

Next, the Reliant parties contend Cooper did not establish

“a unity of interest or equitable right to find any entities alter 

egos of Michaels.” (Grady and Reliant join in Michaels’s 

arguments.) Their arguments, however, do not mention the 

substantial evidence standard of review, or mention substantial 

evidence at all.
33

Instead, the Reliant parties make the unsupported 

assertion that “no liability findings were made against Michaels 

for which a Michaels entity could be an alter ego.” That is clearly 

wrong, as already discussed (see Discussion, at pp. 25–26, ante). 

Then they say that only trustees, not trusts, can be alter egos. 

That is a correct principle of law, but a moot one, given that the 

third amended judgment added the trustees as additional 

judgment debtors. (The issues raised by the trustees are 

discussed in part 9, post.)

After making the legally meaningless claim there was only 

“limited evidence” that 18LS Holdings and PB Consulting #2 

purchased the Friwat policy and tails from Reliant, Michaels

argues that Cooper already received all of the economic interests 

Michaels or his related entities had in the Friwat policy and the 

tails by way of the constructive trust the trial court imposed. 

There is no evidence, Michaels says, that PB Consulting #2 or 

18LS had any other assets, “thus mooting any request to add 

them to the judgment in an alter ego capacity.” He cites no 

authority for this principle. We are unaware of any requirement 

that the fact or amount of an alter ego’s assets must be shown to 

establish alter ego status.

Michaels makes a similar argument about PB Consulting

#1, saying there was no evidence PB Consulting #1 held any of 

Michaels’s assets by the time of the phase one alter ego findings 

in 2019, and therefore Cooper did not prove an injustice would 

result absent an alter ego finding. Again, no relevant authority is 

cited. 

We note, and agree with, the trial court’s denial of 

Michaels’s JNOV motion on this issue: “There was also 

substantial evidence, indeed admissions, that Michaels and 
34

Grady created shell companies such as PB Consulting LLC (for 

Michaels) and LaForce Holdings LLC (for Grady) as conduits 

through which they could funnel money from Reliant to other 

entities, such as the Friwat policy, for their own benefit. These 

shell companies were part of the fraud determined by the jury 

that prevented Cooper from discovering all sums paid to Michaels 

and Grady.” The trial court also stated in its JNOV ruling, that 

“there was ample evidence that an injustice would result, given 

that Cooper demonstrated that Michaels and Grady had used the 

corporate coffers of Reliant as their own personal piggy banks.” 

PB Consulting #2 and 18LS Holdings separately contend 

there was no evidence they were undercapitalized, commingled 

corporate and personal funds, or failed to observe corporate 

formalities. They also say Michaels was not the sole member of 

either of them, and there was “no evidence to support any 

impropriety or funneling of money between Michaels, PB 

Consulting #2, 18LS, and/or Reliant.” That is not accurate. As 

we have already observed, the trial court expressly found that PB 

Consulting #2 “was established for the purpose of investing in the 

Friwat Policy,” and “[m]oney from Reliant was used to invest in 

and pay the premiums on the Friwat Policy.” The court further 

found that 18LS Holdings, “an entity owned by Michaels, Grady, 

and Luke Walker, own[ed] forfeited and unsold portions (the 

‘Tails’) of life insurance policies sold by Reliant”; and 18LS “paid 

$1,000 for the entirety of Tails it received.” The trial court’s alter 

ego findings are supported by the evidence.

4. Punitive Damages

The jury awarded $1,001,000 in punitive damages against 

Michaels and $500,000 in punitive damages against Grady. 

Michaels and Grady both appeal the punitive damages awards.
35

Michaels does not challenge on appeal the trial court’s 

ruling on his JNOV motion except with respect to the court’s

denial of his motion for JNOV on punitive damages. Michaels 

argues the court should have granted JNOV on punitive 

damages, and not just a new trial on the amount of punitive 

damages. Michaels does not contend there is insufficient 

evidence to support the jury’s finding he was liable for punitive 

damages. Instead, he argues only that Cooper failed to present 

evidence of Michaels’s current net financial condition. 

Grady, who did not file a JNOV motion, likewise contends 

the award against him was erroneous for the same reason.

a. The facts

Michaels’s counsel sought bifurcation of the trial on 

punitive damages in the phase two jury trial. Counsel stated 

there would be evidence in the liability phase of trial of assets 

and monies being transferred from Reliant to the individual 

defendants, “[b]ut to the extent that those individual defendants 

have other means or assets, . . . I don’t think those things ought 

to come in.” The court granted the bifurcation motion. It turned 

out that a considerable amount of evidence was admitted about 

specific dollar amounts—in the many millions of dollars—that

Michaels and Grady looted from Reliant and took as their own 

personal assets. That evidence, together with the evidence (not 

challenged on appeal) of their malice, oppression and fraud, was 

sufficient to support the punitive damages award.

During the liability phase of the trial, the jury was 

provided with the court’s findings, including that Michaels and 

Grady and their respective entities had received at least 

$11.7 million in payments and distributions based on their 

position as owners of Reliant as of December 31, 2018. The jury 
36

received considerable evidence of Michaels’s and Grady’s 

financial condition. The jury heard evidence that Michaels and 

his related entities received at least $4.1 million from Reliant in 

distributions and other payments as of December 2018; Michaels

himself so testified. The jury heard evidence Michaels formed a 

new company “to have an empty corporate shell that would be 

ready to go to replace Reliant in the event . . . we couldn’t use it 

as a business anymore.” Michaels was paid an additional 

$1.5 million when Grady purchased his interest in February 2018 

(in a transaction the trial court characterized as a sham). The 

jury saw evidence that Reliant’s annual net income for 2017 and 

2018 was more than $3 million and $3.2 million, respectively, 

with more than $13 million in revenue in each year. The jury 

knew that Michaels was the owner of a $5.4 million insurance 

policy benefit (the Friwat policy). 

Just before closing arguments in the liability stage of the 

jury trial (which included liability for punitive damages), counsel 

for Cooper stated that, “With respect to punitive damages, we 

want to get this done as soon as possible, and so we don’t think 

we need to present additional evidence for punitive damages. I 

don’t want to waste the jury’s time or the court’s time.” 

After closing arguments, the jury rendered its verdict on 

each of the causes of action at issue. Its verdict on Cooper’s cause 

of action for breach of the duty of loyalty included a finding that 

Michaels and Grady acted with malice, oppression, or fraud 

justifying an award of punitive damages. Similarly, the verdict 

on the fraud cause of action included a finding that Michaels

acted with malice, oppression or fraud.

The court then instructed the jury on the factors it should 

consider in determining the amount, if any, of punitive damages, 
37

including that any award could not exceed the defendant’s ability 

to pay. Neither counsel for Michaels nor counsel for Grady 

moved for a directed verdict or objected to the court instructing 

the jury on the amount of punitive damages and submitting the 

question to the jury on the ground that the evidence of their net 

worth was insufficient to permit the court to submit the question 

to the jury.

After a short deliberation, the jury assessed $1,001,000 in 

punitive damages against Michaels, and $500,000 against Grady. 

Michaels sought JNOV, contending the award was not 

supported by evidence of his current financial condition. The 

trial court denied Michaels’s motion. The court rejected the 

argument that Michaels’s liabilities were not considered, stating 

the record showed no objections on that basis. The court said 

there was evidence of certain liabilities, but did not describe that 

evidence. (Michaels says the only evidence of his current 

liabilities was his testimony that Reliant had paid his legal fees, 

about $225,000.) The court observed “[t]here was also evidence of 

Michaels unchanging practice of using shell companies to funnel 

money out of Reliant and withholding of essential accounting 

records of Reliant to reduce any chance of determining Michaels’ 

total income and liabilities.” 

The court ultimately concluded that, “[t]ogether with all 

reasonable inferences to be drawn from the evidence, jury had 

sufficient evidence of Michaels financial condition to make their 

award.” 

b. The law

“A judgment notwithstanding the verdict is proper only 

when no substantial evidence and no reasonable inference 
38

therefrom support the jury’s verdict.” (Hauter v. Zogarts (1975) 

14 Cal.3d 104, 110, italics omitted.)

“[A]n award of punitive damages cannot be sustained on 

appeal unless the trial record contains meaningful evidence of the 

defendant’s financial condition.” (Adams v. Murakami (1991) 

54 Cal.3d 105, 109 (Adams).) “[A] plaintiff who seeks to recover 

punitive damages must bear the burden of establishing the 

defendant’s financial condition.” (Id. at p. 123.) 

The Supreme Court has not “prescribe[d] any rigid 

standard for measuring a defendant’s ability to pay.” (Adams, 

supra, 54 Cal.3d at p. 116, fn. 7.) “Accordingly, there is no one 

particular type of financial evidence a plaintiff must obtain or 

introduce to satisfy its burden of demonstrating the defendant’s 

financial condition. Evidence of the defendant’s net worth is the 

most commonly used, but that metric is too susceptible to 

manipulation to be the sole standard for measuring a defendant’s 

ability to pay.” (Soto v. BorgWarner Morse TEC Inc. (2015) 

239 Cal.App.4th 165, 194 (Soto).) “Yet the ‘net’ concept of the net 

worth metric remains critical.” (Ibid.) “ ‘Thus, there should be 

some evidence of the defendant’s actual wealth’ [citation], but the 

precise character of that evidence may vary with the facts of each 

case [citations].” (Id. at pp. 194–195; see also Baxter v. 

Peterson (2007) 150 Cal.App.4th 673, 680 (Baxter) [“Normally, 

evidence of liabilities should accompany evidence of assets, and 

evidence of expenses should accompany evidence of income.”].) 

“The evidence should reflect the named defendant’s financial 

condition at the time of trial.” (Soto, at p. 195.)
39

c. Contentions and conclusions

As mentioned, Michaels and Grady contend there was no 

meaningful evidence of their personal financial condition at the 

time of trial. We disagree.

As just related, Soto tells us that the “precise character” of 

the evidence of actual wealth “may vary with the facts of each 

case” (Soto, supra, 239 Cal.App.4th at pp. 194–195), and Baxter 

tells us that “[n]ormally,” evidence of liabilities should 

accompany evidence of assets (Baxter, supra, 150 Cal.App.4th at 

p. 680). But there is nothing “normal” about the facts of this 

case. The jury heard evidence of millions of dollars Michaels and 

Grady funneled from Reliant to themselves and the entities they 

owned; evidence of Grady’s extravagant lifestyle, with purchases 

of luxury cars, expensive jewelry, renting a mansion for $20,000 a 

month, and the like; evidence of Reliant’s multimillion dollar net 

income for 2017 and 2018; and evidence of Michaels “withholding 

of essential accounting records of Reliant to reduce any chance of 

determining Michaels’ total income and liabilities.” 

Michaels and Grady cite cases like Baxter, where the court 

held the plaintiff “failed to present meaningful evidence of [the 

defendant’s] liabilities, or other evidence, that would indicate her 

ability to pay a punitive damage award.” (Baxter, supra, 

150 Cal.App.4th at p. 681.) The record in Baxter showed the 

defendant owned substantial assets, but was “silent with respect 

to her liabilities.” (Ibid.) The assets were real properties, but 

there was no evidence whether they were encumbered or whether 

they generated a profit. (Ibid.) In contrast (and as the trial court 

observed), here “the assets that the jury considered were cash 

assets and could not have been encumbered in the way real 

property is.” In Soto, the court, citing Baxter, said the record 
40

showed that the defendant company “earned substantial 

revenues from one of its business lines, but is silent in all other 

respects.” (Soto, supra, 239 Cal.App.4th at p. 196.) Here, the 

record showed Reliant, alter ego of Michaels and Grady, earned 

millions in net income in 2017 and 2018.

Michaels cites other cases as well. He describes Kenly v. 

Ukegawa (1993) 16 Cal.App.4th 49, 56–57 as finding in that case

the “profit defendant reaped from fraud [was] not evidence of 

defendant’s entire financial picture.” That description fails to 

fully capture the court’s discussion. The court observed the 

punitive damages award was “based solely on high paper profit 

from the fraudulent transaction,” and stated further that “[w]e 

know from the facts of this case that the defendants were in 

difficult financial straits, juggling balance sheet items in the 

millions of dollars.” (Id. at p. 58.) There are no such facts here. 

Michaels cites Lara v. Cadag (1993) 13 Cal.App.4th 1061. 

In Lara, the court held that “where, as here, the evidence is 

limited to proof of the defendant’s annual income, there is 

insufficient evidence to support an award of punitive damages.” 

(Id. at p. 1063.) And Michaels cites Farmers & Merchants Trust 

Co. v. Vanetik (2019) 33 Cal.App.5th 638 (Farmers), where the 

court made the general statement that “[w]e may not infer 

sufficient wealth to pay a punitive damages award from a narrow 

set of data points, such as ownership of valuable assets or a 

substantial annual income.” (Id. at p. 648.) These cases are not 

instructive because here, the record is not limited to only a 

narrow set of data points on an individual’s annual income or on

mere ownership rights in valuable assets.

We find more instructive Zaxis Wireless Communications, 

Inc. v. Motor Sound Corp. (2001) 89 Cal.App.4th 577, where the 
41

court found evidence of large revenues and the ability to borrow 

demonstrated a corporate defendant’s ability to pay a $300,000 

punitive damages award, despite reporting a negative net worth 

of $6.3 million. (Id. at pp. 579–580.) The corporation’s net worth 

calculation included accumulated depreciation of approximately 

$4.9 million and a note to the sole shareholder of $6 million. 

(Id. at p. 583.) “Although this represents a loss for accounting 

purposes, it did not impact [the defendant’s] ability to pay a 

damage award as would, for example, salary and wage expenses.” 

(Ibid.) The defendant had $2.2 million cash on hand; a checking 

account balance of over $19 million; and a $50 million line of 

credit. (Id. at pp. 580, 583.) The court affirmed the award 

“[c]onsidering the large volume of [the defendant’s] revenues, the 

ease with which net worth is subject to adjustment . . . , and the 

fact that [the defendant] had the capacity to borrow 

$50 million . . . .” (Id. at p. 583.)

In short, the cases demonstrate the pertinence of Soto’s 

observation that the “precise character” of the evidence of actual 

wealth “may vary with the facts of each case.” (Soto, supra, 

239 Cal.App.4th at pp. 194–195.) Here, there was little evidence 

of the defendants’ personal liabilities, but a lot of evidence of the 

profitability of their alter ego Reliant and the millions of dollars 

of revenues they received (and in Grady’s case, continues to be 

entitled to receive as owner of Reliant). Given their efforts 

throughout to funnel revenues through shell companies and 

withhold accounting records (as the court found and the jury was 

aware, “a constantly evolving method for Michaels, Grady, and 

others to receive cash outflows from Reliant”), we think the jury 

could reasonably infer their ability to pay the relatively modest 
42

awards of punitive damages. Neither Michaels nor Grady was 

entitled to JNOV on the punitive damages award.

5. The Claim of Excluded Evidence

Grady and Reliant contend the trial court improperly 

excluded evidence and argument to the jury that Cooper 

breached his obligation of good faith and fair dealing, and his 

duty of care to Reliant and its members, under Corporations Code 

section 17704.09, subdivisions (c) and (d). This is because, 

according to Grady and Reliant, Cooper “concealed an appraisal 

he was required to exchange during the buy-out process, 

thwarting and obstructing the process and making the 

appointment of the third appraiser . . . impossible,” and the jury 

“was improperly deprived of that information.” The court 

“compounded that error,” they say, by binding the jury to its 

findings that the operating agreement did not require Cooper to 

spend any time working for Reliant to maintain his ownership 

and receive one-third of its profits, and there was no expectation 

Cooper would return to work after August 2013. 

These contentions are without merit. The claim about 

Cooper’s concealing an appraisal is directly contrary to the trial 

court’s conclusion that Reliant initiated this lawsuit “before 

Daniel Cooper was required to appoint an appraiser.” This and 

other objections to the court’s findings of fact are founded on the 

proposition that the trial court’s findings and conclusions should 

not have been binding on the jury—a proposition we have already 

rejected. (See pt. 1 of the Discussion, ante.) 

6. Prejudgment Interest

Civil Code section 3287 authorizes the recovery of 

prejudgment interest. Under subdivision (a), “[a] person who is 

entitled to recover damages certain, or capable of being made 
43

certain by calculation, and the right to recover which is vested in 

the person upon a particular day, is entitled also to recover 

interest thereon from that day . . . .” Under subdivision (b), 

“[e]very person who is entitled under any judgment to receive 

damages based upon a cause of action in contract where the claim 

was unliquidated, may also recover interest thereon from a date 

prior to the entry of judgment as the court may, in its discretion, 

fix, but in no event earlier than the date the action was filed.”

Here, the court awarded prejudgment interest of 

$1,492,747.98 on the damages award of $6,028,786. (There is no 

claim that prejudgment interest on the buyout damages was 

improper.) Interest was calculated based on payments to 

Michaels and Grady beginning in February 2014, when Reliant 

first began excluding Cooper from distributions, and was 

calculated to run from the various dates on which payments were 

made to Michaels and Grady. 

On appeal, the Reliant parties argue that the court 

awarded damages under Civil Code section 3287, subdivision (b), 

“based on Cooper’s unliquidated damages,” and the award was 

erroneous because under subdivision (b), the court cannot award 

interest from a date earlier than the date Cooper filed his crosscomplaint (July 8, 2016). They also contend the court awarded 

prejudgment interest on all payments to Grady and Michaels, 

instead of on Cooper’s one-third share. Neither contention is 

correct.

a. The background

Cooper initially requested, in his proposed judgment,

prejudgment interest on the contract causes of action beginning 

on December 21, 2015 (the date Reliant filed its complaint), 

“pursuant to California Civil Code Section 3287(b).” However, at 
44

a January 29, 2020 hearing on the proposed judgment, the court 

stated interest must be calculated from the date that individual 

payments or transfers were made to Grady and Michaels. 

Michaels’s counsel agreed with the court, stating that 

“I appreciate the court basically buying our argument on only 

getting interest from each date of payment.” 

At the January 29, 2020 hearing, the court requested a 

schedule showing all monies coming out of Reliant to Michaels 

and Grady, plus a calculation of interest from those hundreds of 

dates. The court explained: “[T]he amounts were certain at the 

time of those distributions. So do it in this gross amount. I’ll 

round it down to make it consistent with the jury’s final award. 

Some of it will come from the front end. Some of it will come 

from the back end. But eventually it will round out to a number 

consistent with the jury’s award and consistent with not paying 

an excess amount on the interest.” The court emphasized that 

the schedule had to show “all monies coming out,” not just the 

first $6 million, but then observed, “I may opt for the first 

6 million just to avoid argument.” 

Cooper prepared the requested schedule “tracking these 

transfers and calculating prejudgment interest on said transfers.” 

In his posttrial brief, Cooper requested the court award interest 

“based on the first $6,028,786.00 transferred from Reliant to or 

for the benefit of Michaels, Grady, or their respective entities.” 

In response to Cooper’s posttrial brief and schedule, Reliant 

continued to argue prejudgment interest in any amount was 

“utterly unwarranted.” Quoting Civil Code section 3287, 

subdivision (a), Reliant argued that section 3287 does not 

authorize prejudgment interest where the amount of damage 
45

“depends upon a judicial determination based upon conflicting 

evidence.” 

The Reliant parties did not argue that Civil Code 

section 3287, subdivision (b) applied, or that prejudgment 

interest could not be awarded on payments made before Cooper 

filed his cross-complaint in July 2016. Indeed, without waiving 

the claim that no prejudgment interest was warranted, Reliant 

provided interest calculations that made various changes to 

Cooper’s presentation, but included distributions beginning in 

February 2014, long before this litigation was filed. (Reliant filed 

its complaint in December 2015, and Cooper filed his crosscomplaint in July 2016.) And Michaels once again observed that 

“the Court agreed with Michaels that prejudgment interest could 

only accrue on damages from the date the payments representing 

those damages were paid to Michaels.” 

Cooper’s reply argued to the trial court that Civil Code 

section 3287, subdivision (a) “specifically mandates an award of 

prejudgment interest,” and observed that he submitted “exactly 

what was requested by the Court,” namely, “that all transfers be 

identified so that the Court could determine which would apply.” 

Cooper pointed out that the court found Cooper was entitled to 

receive one-third of all monies paid to Michaels and Grady and 

their entities, and those monies “were—or at the very least 

should have been—recorded in Reliant’s financial books and 

records and thus would have been either known by Reliant, 

Michaels, and Grady or capable of being calculated by them.” 

There was a final hearing on the judgment on March 5, 

2020, the day before it was entered. Cooper argued from his 

spreadsheet that interest calculated from the first $6 million of 

payments to Michaels and Grady totaled $2,980,092.21. Reliant’s 
46

counsel explained that his spreadsheet removed items on 

Cooper’s spreadsheets that were not payments to Michaels or 

Grady, using only “the distributions that were personal to 

Mr. Michaels and Mr. Grady for their entities,” and calculated 

interest “on the first 6 million of distributions from that corrected 

table.” (The excluded payments were those Reliant apparently 

demonstrated at trial “to not be subject to interest calculations,” 

such as payments for policy acquisitions, attorney fees and other 

items that Cooper claimed were transfers for the benefit of 

Michaels and Grady.) Reliant’s calculation of prejudgment 

interest on that basis was $1,114,116.08. 

The court told Cooper’s counsel that his spreadsheets had 

“amounts that clearly didn’t belong there,” and stated that “the 

best numbers available are [Reliant’s counsel’s],” with the proviso 

that several specific entries should not have been removed. 

The court also explained the basis for using the first 

$6 million in distributions for the interest calculation: “Because 

they were so clearly divesting Mr. Cooper of any of that money 

and . . . I asked for at least two demarcations. One, where they 

were just bleeding money because they were petulantly refusing 

to give any of it to Cooper. [¶] Then when they tried to do the 

corporate restructuring to exclude him—and you have that sort of 

argument that the jury didn’t buy that they were somehow 

innocently distributing money 50/50 because they thought Cooper 

was out. [¶] And then the third point is where they—we’re in 

trial and we’re post phase 1. Those are sort of my three markers. 

And that—the easily accounted for money is in that first group. 

[¶] Second group is a little fuzzy, but I think all the money out 

throughout that phase is pretty clear. But I think you might 

have a decent argument that after Michaels left the company 
47

[February 2018], and we’re in litigation, you could debate 

whether Michaels—each of that—any of the money should be 

allocated to that period because Michaels is gone and it’s now 

Grady doing things. [¶] The cleanest period is when they were 

both dipping in the till together. Hence, the front end is where 

I’m starting.” 

The parties recalculated the interest based on Reliant’s 

spreadsheet (and adding payments relating to the tails and the 

Friwat policy that should not have been removed from the 

calculation), resulting in $1,492,747.98 in prejudgment interest. 

In his new trial motion on this issue, Michaels again 

contended “[p]rejudgment interest should not have been awarded 

at all and therefore the interest awarded is excessive.” This was 

because the “amount of compensatory damages based on . . . onethird of all money received by Grady and Michaels [was] subject 

to conflicting evidence [and] complex accountings,” making 

prejudgment interest “not justified in this case under the law.” 

Michaels did not argue that Civil Code section 3287, 

subdivision (b) applied to prevent prejudgment interest on 

transactions before the cross-complaint was filed.

The court denied Michaels’s new trial motion. After 

quoting Civil Code section 3287 in its entirety, the court said only 

this: “As a starting point, prejudgment interest is available on a 

contract-based claim whether or not the claim is capable of 

certainty under subdivision (b) and is left to the court’s 

discretion. Thus, as to Cooper’s first and second causes of action 

for breach of contract . . . , it is within the court’s discretion to 

award prejudgment interest and the court did so.” 
48

b. Contentions and conclusions

Michaels’s opening brief states the trial court awarded 

prejudgment interest under Civil Code section 3287, 

subdivision (b), citing the court’s new trial ruling.2 Michaels then 

states interest was awarded from the dates of hundreds of 

payments made by Reliant before this action was filed, which 

exceed the court’s authority under subdivision (b). That is the 

extent of Michaels’s argument on this point in his opening brief.

Cooper responds that prejudgment interest on the contract 

damages “was based on [Civil Code section 3287,] subdivision (a), 

not (b), because the damages were capable of being made certain 

by calculation.” Cooper says “all one needed to do was calculate 

the amount Michaels and Grady received and divide by three.” 

Further, Cooper contends that Michaels did not argue in the trial 

court that prejudgment interest could not accrue before the date 

the action was filed, and so has forfeited the argument.

In his reply brief, Michaels says Cooper has “fabricated an 

argument” and contends Cooper is not entitled to prejudgment 

interest under Civil Code section 3287, subdivision (a) because he 

did not request it. Neither of those contentions is true, as is 

apparent from the proceedings we have just recited. 

Then Michaels contends Cooper cannot recover interest 

under Civil Code section 3287, subdivision (a) because the 

damages “were not capable of being made certain by calculation,” 

2 Michaels repeatedly cites the trial court’s new trial ruling 

when he contends the court awarded prejudgment interest under 

Civil Code section 3287, subdivision (b). We do not view the trial 

court’s statement to mean that it intended the award to be based 

on subdivision (b). We view it as a statement that its award 

would be within its discretion “whether or not the claim is 

capable of certainty,” and nothing more.
49

and “[d]amages the trier of fact determines based on conflicting 

evidence do not satisfy this requirement of certainty.” Michaels 

relies on Lineman v. Schmid (1948) 32 Cal.2d 204, 212

(Lineman). But Lineman actually held that “[t]he rule appears to 

be uniform, whether the case involved contract price or 

reasonable value, that interest is not allowable when damages 

cannot be computed except on conflicting evidence . . . because of 

the absence of established or reasonably ascertainable market 

prices or values.” (Ibid., italics added; see also County of Los 

Angeles v. Southern California Edison Co. (2003) 112 Cal.App.4th 

1108, 1123 [“Damages that must be determined by the trier of 

fact based on conflicting evidence of the property value do not 

satisfy this [certainty] requirement.”].) This is not such a case.

Here, the amounts and dates of transfers to or on behalf of 

Michaels and Grady are established and certain; the disputes on 

the calculations were over whether certain payments to parties 

other than Michaels and Grady should or should not be included

in the schedule.

The precedents discussing the issue of certainty make it 

clear that this is a proper case for prejudgment interest under 

Civil Code section 3287, subdivision (a). As Watson Bowman 

Acme Corp. v. RGW Construction, Inc. (2016) 2 Cal.App.5th 279 

(Watson) tells us, under subdivision (a), “the trial court has no 

discretion—it must award prejudgment interest from the first 

day there exists both a breach and a liquidated claim.” (Watson,

at p. 293.) 

Watson explains: “From the defendant’s perspective, the 

certainty requirement promotes equity because liability for 

prejudgment interest occurs only when the defendant knows or 

can calculate the amount owed and does not pay. (Chesapeake 
50

[Industries, Inc. v. Togova Enterprises, Inc. (1983)]

149 Cal.App.3d [901,] 906.) In Chesapeake, the court 

acknowledged the tension between compensating the plaintiff’s 

loss and fairness to the defendant, stating: ‘These competing 

policy considerations have led the courts to focus on the 

defendant’s knowledge about the amount of the plaintiff’s claim.

The fact the plaintiff or some omniscient third party knew or 

could calculate the amount is not sufficient. The test we glean 

from prior decisions is: did the defendant actually know the 

amount owed or from reasonably available information could the 

defendant have computed that amount. Only if one of those two 

conditions is met should the court award prejudgment interest.’ 

(Id. at p. 907, italics omitted.)” (Watson, supra, 2 Cal.App.5th at 

pp. 293–294.)

Here, there is no question whether the Reliant parties 

could have computed the amounts they owed Cooper from each of 

the distributions Reliant made to Michaels and Grady, because 

that is exactly what they did in the trial court. 

Michaels makes a second argument: that the trial court 

awarded prejudgment interest “on all payments to Grady and 

Michaels, instead of Cooper’s one-third share,” and this gave 

Cooper a “windfall” because it gave him interest “on amounts he 

had no right to recover yet.” Instead, Michaels claims, Cooper’s 

damages “should have vested incrementally over a five-year

period ending November 2019, as Reliant made payments to 

Michaels and Grady.” 

Again, Michaels did not make this argument to the trial 

court (or at least does not point us to any place in the record 

where he did so), and we may consider it forfeited. In any event, 

there was nothing “arbitrary,” as Michaels claims in his reply 
51

brief, about the trial court’s decision to compute interest based on 

the first $6 million of payments to Michaels and Grady, as 

recounted above (“[t]he cleanest period is when they were both 

dipping in the till together”). Those payments were improper 

when made, and we see nothing inequitable about calculating 

interest based on the entirety of the improper payments, until the 

$6 million in jury-awarded damages is reached. Cooper did not 

obtain a “windfall” in prejudgment interest. 

Finally, we turn to an argument offered by Grady and 

Reliant, who say that Cooper elected a tort remedy (because he 

sought and obtained punitive damages on his causes of action for 

fraud and breach of the duty of loyalty). According to Grady and 

Reliant, any prejudgment interest is therefore available only 

under Civil Code section 3288, which provides that in an action 

for breach of an obligation not arising from contract, “interest 

may be given, in the discretion of the jury” (ibid.), and “that did 

not happen here.” 

Grady and Reliant cite no relevant authority for their claim 

that Cooper elected a tort remedy, and refer us to another section 

of their brief. There, they argue that “contract and tort damages 

cannot both be properly awarded.” By this they apparently refer, 

as the trial court put it, to an argument that “Cooper must elect 

between punitive damages on his fraud claim and attorney fees, 

prejudgment interest and other amounts auxiliary to a breach of 

contract claim.” This argument fails for multiple reasons.

First, Grady and Reliant fail to support their assertions 

with references to the record. They say the court concluded the 

argument was waived because it was not timely raised, and 

assert the court was wrong. They do not cite the court’s ruling. 

They refer to a November 20, 2019 declaration by Grady’s
52

counsel, but do not tell us where that can be found. (We found it 

on our own. The declaration says nothing about election of 

remedies.) They say the election of remedies doctrine was “timely 

raised and vigorously litigated” but refer only to “various filings 

prior to trial” and “the trial transcripts,” citing nothing. The only 

record citation in their argument is to the answer to Cooper’s 

cross-complaint, the 13th affirmative defense of which states 

Cooper’s claims “are barred by laches, waiver or estoppel.” On 

this basis alone, we may consider the argument forfeited.

Second, the trial court rejected a similar claim by Michaels 

(that Cooper cannot elect inconsistent remedies in the judgment) 

when the court denied his JNOV motion. The court pointed out 

the judgment was structured to avoid double recovery; that fraud 

damages and breach of contract damages do not always require 

election; that there was no duplication of regular damages; and 

that “Michaels has not sufficiently demonstrated that the 

attorney fees and the punitive damages arise from the exact same 

facts, and they do not.” 

Third, Grady and Reliant offer no discussion of the 

authorities on election of remedies, citing but not discussing 

Roam v. Koop (1974) 41 Cal.App.3d 1035 (Roam). As pertinent 

here, Roam explained that the doctrine of election of remedies “is 

theorized on the principle of estoppel. ‘Whenever a party entitled 

to enforce two remedies either institutes an action upon one of 

such remedies or performs any act in the pursuit of such remedy, 

whereby he has gained any advantage over the other party, or he 

has occasioned the other party any damage, he will be held to 

have made an election of such remedy, and will not be entitled to 

pursue any other remedy for the enforcement of his right.’ ” (Id. 

at pp. 1039–1040, italics added; see also Glendale Fed. Sav. & 
53

Loan Assn. v. Marina View Heights Dev. Co. (1977) 66 Cal.App.3d 

101, 137, 138 [“the doctrine of election of remedies, bottomed 

upon the equitable principle of estoppel, operates only where 

pursuit of alternative and inconsistent remedies substantially 

prejudices the defendant”; “[e]lection of remedies is a harsh 

doctrine and is currently looked upon with disfavor by courts and 

commentators”].)3

Here, of course, Cooper occasioned no injury to Grady or 

Reliant and gained no advantage over them in the course of the 

litigation. We find no merit in the election of remedies argument, 

either as it relates to prejudgment interest or anything else.

7. The Cooper-Michaels Settlement Agreement

In their briefs on appeal from the third amended judgment,

Michaels, PB Consulting #1, PB Consulting #2 and 18LS 

Holdings contend that a settlement agreement between Michaels 

and Cooper in another litigation barred any tort liability or 

constructive trust remedy imposed against Michaels or his 

related entities in this lawsuit. They say the judgment should be 

reversed and sent back to the trial court to determine whether 

3 The issue in Roam was “whether the trial court erred in 

granting a tort remedy when [the plaintiff], after filing his 

complaint, had levied on certain of defendant’s property under a 

writ of attachment.” (Roam, supra, 41 Cal.App.3d at p. 1037.) 

Levying under the writ “deprived [the defendant] of the use of his 

property and plaintiff obtained an advantage over him.” (Id. at 

p. 1040.) Under those circumstances, “presumptively the 

doctrine of election of remedies is applicable.” (Ibid.) The court 

ultimately affirmed the judgment because the defendant failed to 

raise the election defense at trial and therefore waived it. (Id. at 

p. 1045.) 
54

the settlement agreement bars the tort claims and related 

equitable remedies. We think not.

a. The facts

Cooper and Michaels were parties to a settlement 

agreement effective December 18, 2017, relating to their 

separation agreement, various lawsuits and other disputes. (The 

parties refer to this as the SMDC case (Cooper v. Michaels, 

Super. Ct. L.A. County (2018) No. LC105527).) The parties 

released each other from all claims and liabilities relating to the 

separation agreement, the lawsuits and ancillary disputes, with 

the exception of the claims alleged in this case. As to this “nonreleased matter,” the parties agreed that Cooper would “dismiss 

without prejudice Michaels, in his individual capacity only,” as to 

the tort causes of action (as relevant now, fraud, breach of the 

duty of loyalty, fraudulent transfer, and constructive trust). “In 

exchange for this dismissal without prejudice, Michaels agrees to 

make best efforts, including utilizing his vote as a member of 

Reliant, to secure a distribution from Reliant in the amount of 

$20,000 per month for six months starting immediately.” 

Michaels then sent two e-mails to Grady and one to 

Murphy about the settlement in December 2017, telling them he 

was “open to giving [Cooper] the money as a show of good faith 

but this is something the owners and manager would have to 

discuss.” In March 2018, Cooper’s counsel inquired what steps 

Michaels took to secure the distribution to Cooper. Then in 

October 2018, after the subject of the dismissal came up at 

Cooper’s deposition, Cooper’s counsel wrote to Michaels’s counsel, 

saying he had never received a response to his March 2018 

request. Cooper’s counsel asserted Michaels had confirmed at his 

deposition that he made no efforts, and “[a]s a result, Mr. Cooper 
55

has not and will not dismiss any tort claims alleged against 

Mr. Michaels.” 

On November 13, 2018, Michaels filed an ex parte 

application for (among other things) an order compelling Cooper 

“to dismiss with prejudice the intentional tort claims” pursuant 

to the settlement agreement. 

The trial court held a hearing on the ex parte application 

on November 28, 2018. As to the tort-dismissal issue, the court 

expressed its preliminary thoughts: that the ex parte “doesn’t 

make clear to me that there’s anything for the court to do in this 

case. I do agree that this is not the right vehicle for it. A motion 

to enforce the settlement under the LC105527 case would be the 

more appropriate vehicle for it for any failure by [Cooper] to

dismiss . . . the tort claims against that one individual

[Michaels].” 

The court also wondered “where does that get you” when 

“the most you get is dismissal of those claims without prejudice.” 

“[I]f [Cooper] would simply re-file those same claims, I guess, 

based on everything that’s happened since 2015 or whenever the 

settlement agreement was signed, where does that get you on the 

one hand?” On the other hand, Cooper “didn’t dismiss the claims, 

so they don’t have to pay. . . . [W]here does that go?” The court 

observed that “now you’re on the eve of trial,” and “[h]ow do you 

do any of that without prejudicing [Cooper]? I suspect the 

response and the argument at this point is that you waived.” 

When the court asked for responses to its preliminary 

thoughts, Michaels’s counsel stated: “Your Honor, I’ll take you 

up on the invitation to refile it in the SMDC matter. I think, as a 

practical matter, that may end up in front of you.” Counsel 

agreed with the court that procedurally, the SMDC case would be 
56

the right vehicle, and “We’ll employ that. That being said, I won’t 

get into the balance of it, because there’s not going to be a ruling 

on it.” The court interjected that it was “not stating any firm 

opinion on any of it. These are just observations. It . . . didn’t sit 

right as an ex parte and untethered to a more substantial 

motion.” Michaels’s counsel replied, “Understood.” Later 

comments by the court (“[w]e’ll leave that [a jurisdictional issue] 

for the motion”) make it clear that both the court and counsel

anticipated a further motion being made on the issue. So far as 

the record discloses, none was made. (Cooper requested judicial 

notice of the docket in the SMDC litigation, which we grant.)

b. Contentions and conclusions

Now, Michaels contends “[i]t was error for the trial court 

not to decide the Ex Parte Application to enforce the settlement 

agreement” before the phase one trial. Michaels cites no 

authority for this proposition.

We note that when Michaels sought a new trial, arguing 

the court erred in excluding evidence of the December 2017 

settlement from the phase two jury trial, the court denied the 

motion, stating: “The evidence was irrelevant to the issues to be 

tried. There would have needed to be a mini trial on whether 

Cooper did breach the settlement agreement. The evidence 

would have resulted in wasting trial resources on a tangential 

issue.” We agree with that conclusion. 

Michaels’s argument here is similarly unavailing. The 

facts we have recited show the court chose to wait for a further, 

“more substantial,” motion in the other action on the issue of 

enforcement of the settlement agreement, a conclusion with 

which counsel concurred. That ruling was well within the trial 
57

court’s discretion, and the court did not err in excluding evidence 

of the December 2017 settlement from the phase two jury trial.

8. Constructive Trust Issues

PB Consulting #2 and 18LS Holdings—the two LLC’s found 

to be Michaels’s alter egos—contend it was error to include them 

in the orders imposing a constructive trust over the Friwat policy 

and the tails. The two LLC’s say they were indispensable parties 

who were not made parties to the action; they were deprived of 

due process because their interests were not represented before 

the court’s June 27, 2019 order; and there was insufficient 

evidence to warrant a constructive trust because the amount of 

damages had not been determined by a jury. We see no error.

a. The facts

To recap, both LLC’s were found to be alter egos of 

Michaels, and we have already concluded sufficient evidence 

supported that finding. (See Discussion, pt. 3, ante.) 

PB Consulting #2 was formed for the sole purpose of 

investing in the Friwat policy. Michaels owned 51.83 percent of 

PB Consulting #2, having invested more than $5.1 million in the 

Friwat policy. That money was money from Reliant, and Reliant 

money was also used to pay the premiums on the Friwat policy. 

18LS Holdings was formed by Michaels and Luke Walker 

(a nonparty), and Michaels then transferred unsold policy tails to 

18LS Holdings from Reliant. Michaels paid $1,000 to Reliant for 

the $440,000 in tails transferred to 18LS Holdings. (Grady paid 

nothing for his $440,000 in tails.) Mr. Walker’s testimony 

confirmed 18LS Holdings “exists solely for the purpose of owning 

portions of unsold insurance policies [forfeited positions] that 

belong to Reliant.” 
58

Upon Mr. Friwat’s death, Michaels was to receive 

$5,428,666.65 of the policy proceeds, with the rest of the proceeds 

going to PB Consulting #2’s other members. When Mr. Friwat 

died, the trial court ordered the insurer to distribute the amounts 

due members of PB Consulting #2 (other than Michaels) to 

PB Consulting #2, and ordered PB Consulting #2 to distribute 

those proceeds to those members. Thus, the only amounts from 

the Friwat policy remaining subject to the constructive trust were 

the Michaels proceeds (distributed to Cooper when the judgment 

was entered).

b. Contentions and conclusions

On the facts just recounted, it is hard to see any prejudice 

to PB Consulting #2, whose sole purpose was to invest in and 

distribute proceeds of the Friwat policy to its members. That has 

been done. As for 18LS Holdings, Luke Walker was the only 

nonparty member, and there is no evidence he paid anything for 

the tails, so he cannot have been prejudiced either. The bottom 

line is that both LLC’s were entities controlled by Michaels, and 

found to be his alter egos.

In any event, the two LLC’s fail to establish they were 

indispensable parties. They made no such claim in the trial 

court. Here, they say it is “readily apparent” from the court’s 

February 4, 2019 and June 27, 2019 constructive trust orders 

that they were “in fact indispensable parties necessary to afford 

Cooper the relief he sought and purportedly that which he was 

entitled to.” They do not explain how or why, merely claiming

they were required to be parties “for the trial court to exercise 

jurisdiction over them, and bind them by its orders.” They cite 

Kraus v. Willow Park Public Golf Course (1977) 73 Cal.App.3d 

354, but do not explain how it helps them. Kraus explained, for 
59

example, that “the failure to join an ‘indispensable’ party is not ‘a 

jurisdictional defect’ in the fundamental sense; even in the 

absence of an ‘indispensable’ party, the court still has the power 

to render a decision as to the parties before it which will stand.” 

(Id. at p. 364.) Kraus also quoted with approval the principle 

that “ ‘[t]he only justification for the [indispensable party] rule 

permitting the issue to be raised for the first time on appeal is 

that the absence of a party has precluded the trial court from 

rendering any effective judgment between the parties before it.’ ” 

(Id. at p. 369.) That is not the case here. 

In short, the indispensable party claim has no merit. 

Neither does the claim that the two LLC’s were deprived of due 

process because they received no notice or opportunity to object to 

the orders imposing a constructive trust over their assets. This 

claim fails for the reasons already discussed. Both LLC’s were 

entities controlled by Michaels and found to be his alter egos. PB 

Consulting #2 had no real interest in the proceeds of the Friwat 

policy; it existed only as a vehicle for investing and transferring 

the proceeds to its members.

Michaels likewise controlled 18LS Holdings; when the 

parties discussed how a constructive trust “might be more fairly 

created . . . and reach beyond the Friwat policy alone,” the 

Reliant parties themselves suggested the insurance tails as a 

component of the constructive trust. Counsel stated at the 

subsequent hearing: “We’re willing and know how to put that 

into a trust.” We agree with Cooper that this “not only bolsters 

the trial court’s finding that 18LS was Michaels’s alter ego, but 

establishes that the parties with authority to transfer the tails 

were before the trial court.” 
60

Finally, the two LLC’s argue the constructive trust itself 

was improper, because “[t]here was no determination as to how 

much Cooper was owed,” so the court “could not know how much 

to issue a constructive trust for, or over what.” The two LLC’s 

cite no authority for this proposition, and it is plainly untrue.

The trial court determined that Cooper remained a onethird owner of Reliant and was entitled to receive one-third of all 

monies and assets that had been transferred from Reliant to 

Michaels, Grady and their respective entities, an amount found 

to be at least $11,724,675.94. That suffices for the imposition of a 

constructive trust over Michaels’s interest in the Friwat policy 

and the tails.

Three conditions must be satisfied to impose a constructive 

trust: “(1) the existence of a res (property or some interest in 

property); (2) the right of a complaining party to that res; and 

(3) some wrongful acquisition or detention of the res by another 

party who is not entitled to it.” (Communist Party, supra, 

35 Cal.App.4th at p. 990; see Calistoga Civic Club v. City of 

Calistoga (1983) 143 Cal.App.3d 111, 116 [“All that must be 

shown is that the acquisition of the property was wrongful and 

that the keeping of the property by the defendant would 

constitute unjust enrichment.”].) The facts we have just 

recounted demonstrate there was no abuse of discretion in the 

trial court’s imposition of a constructive trust.

9. The Third Amended Judgment

On March 2, 2021, Cooper filed a motion to amend the 

second amended judgment to add Romelli Cainong, the trustee 

for three of Michaels’s trusts (the 2007 Irrevocable Octopus 

Trust, the RLM Trust, and the 2007 Irrevocable MMA Trust), as 
61

additional judgment debtors. The trial court granted that motion 

on April 28, 2021.

Ms. Cainong appeals, claiming the court had no jurisdiction 

over her because she was not properly served with Cooper’s 

moving papers. Michaels contends the motion was an improper 

motion for reconsideration that should have been denied.

We reject both claims. 

a. The background

On August 17, 2020, Cooper moved to amend the March 6, 

2020 judgment to include the Michaels and Grady entities, 

including Ann-Marissa Cook as trustee for the three Michaels 

trusts, as additional judgment debtors. This was because, despite 

the court’s alter ego findings, the judgment did not allow Cooper 

to take enforcement actions against those entities. 

The court found that PB Consulting #1, LLC; PB 

Consulting #2, LLC; 18LS Holdings, LLC; and LaForce Holdings, 

LLC, were additional judgment debtors. But in its September 29, 

2020 ruling, the court declined to add the trustees of the various 

trusts as additional judgment debtors. Accordingly, the second 

amended judgment was entered on October 6, 2020, adding only 

the LLC entities, not the trustees of the trusts. Five months 

later, the court recognized and corrected its error. 

In March 2021, Cooper moved to amend the second 

amended judgment to add Ms. Cainong, as trustee of the 

three Michaels trusts. His motion stated that evidence was 

produced in connection with Michaels’s debtor examinations (on 

October 6 and November 16, 2020) establishing that Ms. Cainong 

(Michaels’s partner) had replaced his sister (Ms. Cook) as the 

trustee, and that Michaels exerted such control over the trusts 

that the trustees (Ms. Cainong) were a figurehead who complied 
62

with his instructions, and there was no distinction between the 

two. (One of the exhibits to Michaels’s November 16, 2020 

deposition is a January 2, 2020 e-mail from Ann-Marissa Cook 

stating she was resigning as trustee.) 

At the hearing on April 7, 2021, the court “acknowledge[d] 

that the Court made an erroneous ruling in denying the motion 

to amend the judgment to add . . . Ann-Marissa Cook as trustee of 

the various Michaels-related trusts.” “[I]n looking at the analysis 

and the ruling, the Court just flat out got it wrong.” But the 

court believed it had no jurisdiction to correct the error because 

“at the end of the day, it is a motion for reconsideration” with no 

material change in circumstances, citing Code of Civil Procedure 

section 1008.

Counsel for Cooper asserted that the court had made its 

September 29, 2020 ruling without prejudice, and the court 

requested further briefing on whether denial without prejudice 

would allow the court to treat the current motion as an original 

request and proceed accordingly. A hearing was set for April 28, 

2021. The court also stated, in response to assertions that the 

written ruling did not state it was without prejudice, that if the 

transcript reflected a denial without prejudice, the court could 

correct the written decision to reflect what the court intended. 

There was further briefing, not in the record, and at the 

April 28, 2021 hearing, no mention was made questioning the 

court’s jurisdiction, with the parties arguing only the merits of 

the control issue. The court granted the motion to amend the 

judgment, stating it was “satisfied based on the Cooper parties 

moving papers and the arguments set forth this date.” The third 

amended judgment was entered May 12, 2021.
63

b. The trustee’s jurisdictional claim

The trustee of the three trusts, Ms. Cainong, contends her 

due process rights were violated because the trial court had no 

jurisdiction over her. She claims she was not properly served 

with Cooper’s motion to amend the judgment. She is mistaken. 

Cooper served his motion to amend the judgment by 

Federal Express on March 2, 2021, at an address in Las Vegas, 

where Ms. Cainong lived with Michaels (according to Michaels’s

testimony).

4

Ms. Cainong contends that Code of Civil Procedure 

section 415.40 applies. Section 415.40 governs service of a 

summons and complaint on a person outside the state. (Service 

may be done “in any manner provided by this article or by 

sending a copy of the summons and of the complaint to the 

person to be served by first-class mail, postage prepaid, requiring 

a return receipt.” (§ 415.40.)) Ms. Cainong says the various 

methods for service of a summons and complaint do not include 

Federal Express.

As Ms. Cainong necessarily concedes, the service at issue 

here is not the service of a summons and complaint, and she 

offers no authority for her contention that the motion to amend 

the judgment was “akin” to service of a summons and complaint. 

In the absence of any such authority, we see no reason to treat 

Cooper’s motion to amend the judgment as subject to different 

4 Cooper also served the motion by personal service on the 

owner of Postal Annex at 21781 Ventura Blvd., Woodland Hills, 

California, on March 4, 2021. That address had been listed by 

the previous trustee, Ann-Marissa Cook, as her office address, 

and Ms. Cainong’s opening brief states that Ms. Cook “kept an 

office at 21781 Ventura Blvd.” 
64

procedural requirements than any other motion. Particularly is 

this so given the court’s findings in phase one of the trial that the 

evidence established Michaels used the three trusts as extensions 

of himself. 

In her reply brief, Ms. Cainong contends that service of the 

motion was improper under Code of Civil Procedure section 1013 

(cited by Cooper in his respondent’s brief). She makes an 

elaborate argument that service was defective under 

section 1013, subdivision (a), because it did not provide the 

additional 10 days allowed by subdivision (a) for service by mail 

out of state. Ms. Cainong is wrong on this point, too.

Assuming Code of Civil Procedure section 1013 applies, 

subdivision (c), not subdivision (a), would govern service by 

overnight delivery, and that subdivision provides that any period 

of notice after service by overnight delivery “shall be extended by 

two court days.” (Id., subd. (c).) Moreover, section 1005, 

subdivision (a)(13) applies to any proceeding “under this code in 

which notice is required, and no other time or method is 

prescribed by law or by court or judge.” Section 1005 provides 

that, “[u]nless otherwise ordered or specifically provided by law, 

all moving and supporting papers shall be served and filed at 

least 16 court days before the hearing,” and “if the notice is 

served by . . . another method of delivery providing for overnight 

delivery, the required 16-day period of notice before the hearing 

shall be increased by two calendar days. Section 1013, which 

extends the time within which a right may be exercised or an act 

may be done, does not apply to a notice of motion . . . governed by 

this section.” (§ 1005, subd. (b).)

Cooper’s motion was served on March 2, 2021, and the 

hearing was held 36 days later, on April 7, 2021. There is no 
65

merit to the claim that service was defective or that 

Ms. Cainong’s due process rights were violated.

c. Michaels’s appeal

Michaels contends Cooper’s motion to amend the second 

amended judgment was an improper motion for reconsideration

that should have been denied. Michaels argues the motion “did 

not comport with the procedural requirements” of Code of Civil 

Procedure section 1008, citing Even Zohar Construction & 

Remodeling, Inc. v. Bellaire Townhouses, LLC (2015) 61 Cal.4th 

830, 833 (Even Zohar) (section 1008 “imposes special 

requirements on renewed applications for orders a court has 

previously refused. A party filing a renewed application must, 

among other things, submit an affidavit showing what ‘new or 

different facts, circumstances, or law are claimed’ (id., subd. (b)) 

to justify the renewed application, and show diligence with a 

satisfactory explanation for not presenting the new or different 

information earlier.”). 

Here, Michaels argues, the only substantive difference 

between this motion and Cooper’s previous motion to amend—

which the court denied as to the trustees (then Ms. Cook)—is the 

identity of the trustee. He also says the declaration submitted in 

support of the motion “does not explain how Trustee Cainong or 

the trusts acted as alter egos for Michaels,” and so the judgment 

should be reversed. 

Cooper responds that his motion to amend the judgment 

was not a motion for reconsideration; rather, the motion sought 

to add a different trustee, and it was based on evidence from 

Michaels’s later judgment debtor examinations. That evidence

revealed that Ms. Cainong had replaced Ms. Cook in January 

2020, before Cooper’s previous motion; the new evidence also 
66

showed Michaels’s involvement in and control over the trusts. 

Cooper further argues that, even if treated as a motion for 

reconsideration, an exception stated in Even Zohar would apply: 

Code of Civil Procedure section 1008 “ ‘do[es] not limit 

a court’s ability to reconsider its previous interim orders on its 

own motion,’ even while it ‘prohibit[s] a party from making 

renewed motions not based on new facts or law . . . .’ ” (Even 

Zohar, supra, 61 Cal.4th at p. 840, quoting Le Francois v. Goel 

(2005) 35 Cal.4th 1094, 1096–1097 (Le Francois).)

We agree with Cooper. Even if his motion to amend the 

judgment was an improper motion for reconsideration—and it 

was not—under Le Francois, the trial court had the authority to 

change its previous erroneous ruling on its own motion. That is 

effectively what the court did. At the April 7, 2021 hearing, the 

court began the discussion by stating, referring to its ruling 

denying the motion to amend the judgment to add Ms. Cook as 

trustee, that “the Court just flat out got it wrong.” The court was 

concerned about its jurisdiction to correct the error, sought 

further briefing, and held a further hearing before granting the 

motion to amend the judgment.

We acknowledge that it was Cooper, not the court, who 

initiated the motion to amend the judgment. But the court’s 

actions thereafter comport with the principles announced in Le 

Francois, and with precedents after Le Francois.

Le Francois involved successive summary judgment 

motions on the same grounds; the first was denied and the second 

was granted by a second judge. (Le Francois, supra, 35 Cal.4th at 

p. 1097.) Le Francois found the trial court erred in granting the 

motion, but did not order the case to trial, holding only that the 

court erred in granting an impermissible motion. (Id. at p. 1109.) 
67

“On remand, nothing prohibits the court from reconsidering its 

previous ruling on its own motion, a point on which we express no 

opinion.” (Ibid.)

Le Francois construed section 1008 “as limiting the parties’ 

power to file repetitive motions but not the court’s authority to 

reconsider interim rulings on its own motion.” (Le Francois, 

supra, 35 Cal.4th at p. 1107.) The court stated, “If a court 

believes one of its prior interim orders was erroneous, it should 

be able to correct that error no matter how it came to acquire that 

belief.” (Id. at p. 1108.)

In In re Marriage of Barthold (2008) 158 Cal.App.4th 1301, 

the court concluded that “the trial court’s inherent authority to 

correct its errors applies even when the trial court was prompted 

to reconsider its prior ruling by a motion filed in violation of 

section 1008.” (Id. at pp. 1303–1304; id. at p. 1313 [“In our view, 

the California Constitution requires that in any case in which a 

trial judge reconsiders an erroneous order, and enters a new 

order that is substantively correct, the resulting ruling must be 

affirmed regardless of any procedural error committed along the 

way.”].)

Here, even if Cooper’s motion “did not comport with the 

procedural requirements of Code of Civil Procedure section 1008,” 

as Michaels asserts, the trial court had the authority to correct 

its error on its own motion. It did so by acknowledging its error, 

soliciting further briefing, and holding a further hearing. And, 

since there was in any event no error in the court’s substantive 

ruling, no prejudice can be shown.
68

DISPOSITION

The judgment is affirmed. The Cooper parties are to 

recover their costs on appeal.

GRIMES, Acting P. J.

WE CONCUR:

WILEY, J. 

VIRAMONTES, J.