Filed 6/7/22

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

ALICE LOPEZ,

 Plaintiff and Appellant,

v.

JOSE ESCAMILLA,

 Defendant and Respondent.

2d Civ. No. B316800

(Super. Ct. No. 56-2018-

00511082-CU-EN-VTA)

(Ventura County)

The creditor of a corporation obtains a default judgment 

against the corporation for $157,370. The corporation has no 

funds or assets and has been suspended by the Department of 

Corporations. The creditor then sues the sole shareholder of the 

corporation for $157,370. 

Does due process protect the sole shareholder from such an 

action? In some cases it does, but not here. 

Alice Lopez appeals a summary judgment entered in favor 

of defendant Jose Escamilla in her lawsuit for damages against 

Escamilla based on his alter ego liability for a $157,370 judgment 

against a corporation. We conclude, among other things, that 1) 

the trial court erred by granting summary judgment in favor of 

the corporation; there are triable issues of fact concerning 
2.

Escamilla’s alter ego liability; and (2) Lopez’s civil action does not 

violate Escamilla’s right to due process. We reverse.

FACTS

In May 2012, Lopez recovered a judgment for fraud, 

negligent misrepresentation, and breach of fiduciary duty against 

Magnolia Home Loans, Inc. in the amount of $157,370. (Lopez v. 

Escamilla (2020) 48 Cal.App.5th 763, 764.) 

In 2018, Lopez filed a complaint for “alter ego liability” 

against Escamilla. She alleged that he was the alter ego of 

Magnolia Home Loans, Inc. She sought a judgment against him 

for $157,370 plus interest. 

Escamilla moved for judgment on the pleadings. He 

contended that “a complaint in a separate action is not the proper 

procedure to obtain” a determination on alter ego liability. He 

claimed “adding an alter ego defendant is not a cause of action.” 

(Lopez v. Escamilla, supra, 48 Cal.App.4th at p. 765.) The trial 

court granted that motion. On appeal, we reversed and held alter 

ego liability could be determined by Lopez’s independent civil 

action. (Id. at pp. 765-766.)

Lopez moved for summary judgment. Escamilla argued 

that because the judgment against the corporation was by 

default, he did not have the opportunity to defend the action. 

Citing Motores De Mexicali v. Superior Court (1958) 51 Cal.2d 

172 (Motores), he contended to hold him responsible for the 

corporation’s liability denied him due process. 

Lopez claimed that Magnolia Funding, Inc., the subject of a 

prior lawsuit that provided the original loan, and Magnolia Home 

Loans, Inc. “were the same company”; and that Escamilla was 

“the sole owner, officer, and director of each.” “Magnolia Funding 

closed when Magnolia Home Loans got up and running. 
3.

Magnolia Home Loans, Inc. then went out of business when it 

was sued.” Escamilla received all its remaining cash assets of 

$53,000; that Escamilla’s “mere $1,000 capital investment [in the 

corporation] cannot serve to shield him” from personal liability as

its alter ego; and that the corporation Escamilla controlled

defaulted, which is an admission of the allegations of her 

complaint.

The trial court granted summary judgment. It ruled that 

“it would violate Escamilla’s due process rights to hold him liable 

for the prior judgment because he was not a party to that earlier 

case and no ‘evidence-based’ defense was asserted by the 

defendants in that case, plaintiff may not, as a matter of law, 

hold Escamilla liable for that judgment.” 

DISCUSSION

Summary Judgment on Alter Ego Liability

“Summary judgment provides courts with ‘a mechanism to 

cut through the parties’ pleadings in order to determine whether, 

despite their allegations, trial is in fact necessary to resolve their 

dispute.’ ” (San Jose Neurospine v. Aetna Health of California, 

Inc. (2020) 45 Cal.App.5th 953, 957.) On appeal, the reviewing 

court makes an independent assessment of the correctness of the 

trial court’s ruling regarding summary judgment. (Id. at p. 958.) 

“ ‘Our task is to determine whether a triable issue of material 

fact exists.’ ” (Ibid.) “ ‘[A]ny doubts as to the propriety of 

granting a summary judgment motion should be resolved in favor 

of the party opposing the motion.’ ” (Ibid.) 

Under the alter ego doctrine, the corporate veil may be

lifted to show the corporate form is a fiction and determine who 

controls the corporate entity and who is liable for its debts.

“Whether the evidence has established that the corporate veil 
4.

should be ignored is primarily a question of fact . . . .” (TohoTowa Co., Ltd. v. Morgan Creek Productions, Inc. (2013) 217 

Cal.App.4th 1096, 1108 (Toho-Towa Co.), italics added.)

Courts look to the totality of circumstances to determine 

who actually owns or controls the corporate entity and who is 

using it as “a mere shell or conduit” for his or her own personal 

interests. (Toho-Towa Co., supra, 217 Cal.App.4th at pp. 1108-

1109.) Factors include “the commingling of funds and assets . . . , 

identical equitable ownership . . . , use of the same offices and 

employees, disregard of corporate formalities, identical directors 

and officers,” etc. (Id. at p. 1108.) They also include who is 

treating “the assets of the corporation as his own.” (Greenspan v.

LADT LLC (2010) 191 Cal.App.4th 486, 512.)

Triable Issues of Fact on Alter Ego Liability

As we noted in our prior decision (Lopez v. Escamilla,

supra, 48 Cal.App.5th at p. 765), Lopez’s complaint alleged facts 

showing alter ego liability. “Escamilla does not contest that the 

complaint states facts sufficient to support a finding that he is the 

alter ego of the corporation.” (Ibid., italics added.)

In response to requests for admissions, Escamilla admitted 

that he was Magnolia Home Loan, Inc.’s initial director, 

president, secretary, and treasurer. The company had only one 

board meeting. Only he signed the company’s checks. He was 

the only shareholder, officer, and board member. The company is 

a suspended corporation and he still does business at the same 

location.

Lopez claimed that a company called Magnolia Funding, 

Inc. “procured the relevant loan.” It was doing business as 

Magnolia Home Loans, Inc. In requests for admissions,

Escamilla admitted that he incorporated Magnolia Funding, Inc.
5.

He was its initial director. He was the president, vice president, 

secretary, and treasurer. Only he signed the company’s checks. 

He was the only shareholder, the only officer, and the only board 

member the company had. The evidence showed that both 

Magnolia Funding, Inc. and Magnolia Home Loans, Inc. were not 

“adequately capitalized.” Each had only $1,000 in total capital 

reserves. This meager capitalization supports an inference these 

entities were created to avoid the personal liability of an alter 

ego. (Automotriz etc. De California v. Resnik (1957) 47 Cal.2d 

792, 796-797; Shafford v. Otto Sales Co. (1957) 149 Cal.App.2d 

428, 432.)

When Magnolia Funding, Inc. dissolved, Magnolia Home 

Loans, Inc. received its remaining physical assets. At the end of 

fiscal year 2009, Magnolia Home Loans, Inc. held cash in the 

amount of $53,102.92, and all that money was paid to Escamilla.

This is a triable issue of fact concerning Escamilla’s alter ego 

liability. 

Seeking Alter Ego Liability Post Judgment

Plaintiffs often discover that a judgment against a 

corporation cannot be satisfied because the corporation has been 

looted, the corporate identity was a fiction, or alter egos who 

controlled the corporation possess all its assets. In such cases 

courts have long held that alter ego liability applies after the 

judgment has been entered against the corporation. (Misik v. 

D’Arco (2011) 197 Cal.App.4th 1065, 1075; Alexander v. Abbey of 

the Chimes (1980) 104 Cal.App.3d 39, 44-46; Thomson v. L.C. 

Roney & Co. (1952) 112 Cal.App.2d 420, 425-426; Mirabito v. San 

Francisco Dairy Co. (1935) 8 Cal.App.2d 54, 57.) 
6.

Escamilla’s Alleged Due Process Rights

Escamilla relies on Motores, supra, 51 Cal.2d 172, for his 

contention that it violates due process to hold him liable as an 

alter ego.

In Motores, our Supreme Court held that when plaintiffs 

“summarily add” individuals to a previously entered default 

judgment against a corporation, those individuals are denied due 

process. (Motores, supra, 51 Cal.2d at p. 176, italics added.) This 

summary procedure denied defendants “the opportunity to be 

heard and to present [their] defenses.” (Ibid.) The mere filing of 

a petition to add defendants to a judgment denies defendants the 

right to an “evidentiary hearing.” (Wells Fargo Bank, N.A. v.

Weinberg (2014) 227 Cal.App.4th 1, 9.) 

Because the alleged alter egos could not fairly litigate their 

defenses in that summary procedure, Motores, supra, 51 Cal.2d 

172, held there had to be a showing of their connection to that 

prior corporate litigation before they could be subject to such 

summary postjudgment alter ego liability.

Unlike the facts in Motores, Lopez did not move to 

summarily add Escamilla to the judgment. Also, unlike Motores, 

this case involves the beginning of a civil action, not a 

postjudgment summary proceeding. (Lopez v. Escamilla, supra,

48 Cal.App.5th at p. 765.) Escamilla will have the opportunity to

answer the complaint, engage in discovery, and file pre-trial 

motions. Lopez must meet her burden of proof to support her 

theory of alter ego liability claims. 

In distinguishing Motores, Lopez correctly notes that a 

“summary motion to amend a judgment unlike a separate 

lawsuit, may not provide an adequate forum” for a defendant to 

prove “lack of control” over corporate decisions. The summary 
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procedure to “amend a judgment to add a defendant” involves 

“imposing liability on the new defendant without trial.” (Triplett 

v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415, 1421, 

italics added.) That is not what happened here.

Lopez also notes that in Motores “there were three alter 

egos, such that no one of them individually controlled all 

corporate decisions.” But here by contrast only one person made 

all the decisions–Escamilla, and, unlike Motores, only he 

controlled the litigation decisions of the corporation. Lopez made 

a sufficient showing in opposition to summary judgment to 

support a reasonable inference that Escamilla was “fully aware of 

the progress of the legal proceedings” because of his complete and 

exclusive control of the corporation. (Motores, supra, 51 Cal.2d at 

p. 175; Toho-Towa Co., supra, 217 Cal.App.4th at p. 1110 [the 

alter ego has control of the defense of the action].)

We previously held that Lopez had the right to bring this

postjudgment “independent action” against Escamilla on alter 

ego liability grounds. (Lopez v. Escamilla, supra, 48 Cal.App.5th

at p. 764.) Here the trial court ruled on a motion for summary 

judgment, not a motion for judgment on the pleadings that was 

involved in our prior decision. But to the extent its ultimate 

conclusion is that Lopez is barred from bringing this 

postjudgment action, that ruling is inconsistent with our prior 

decision. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 

Cal.2d 450, 455.)

Escamilla reliance on NEC Electronics Inc. v. Hurt (1989)

208 Cal.App.3d 772 (NEC Electronics) is to no avail. Like 

Motores, that case was also a summary “motion to amend” the 

judgment previously entered against a corporation to add an 

officer as an additional judgment debtor. Moreover, there the
8.

court ruled there was “insufficient evidence to show that [the 

officer] controlled the defense of the litigation” that resulted in 

the judgment against the corporation. (NEC Electronics, at 

p. 781.) 

In NEC Electronics, the court noted that the respective 

interests of the company and the individual subject to alter ego 

liability were not the same. “Because the interests of Ph [the 

company] and Hurt [the individual] were different, we cannot say 

that Hurt had occasion to conduct the litigation with a diligence 

corresponding to the risk of personal liability that was involved 

or that Hurt was virtually represented in the lawsuit.” (NEC 

Electronics, supra, 208 Cal.App.3d at p. 781, italics added.)

Here, by contrast, Lopez claims the corporation and 

Escamilla had the same interests because Escamilla was the 

corporation. Because he was the corporation, only he controlled

the company, all its decisions, the litigation, and the decision to 

default. (Toho-Towa Co., supra, 217 Cal.App.4th at p. 1110.)

“ ‘Who else was interested in the fate of the corporation? If not 

[the alter ego], who else?’ ” (Ibid.) “ ‘Manifestly, [the alter ego] 

had control of the defense of the action . . . .’ ” (Ibid.) Unlike 

NEC Electronics, here Lopez made a showing in opposition to 

summary judgment to support a reasonable inference that

because of his exclusive control of the entity, Escamilla 

exclusively controlled the corporate litigation decisions.

Escamilla relies on Wolf Metals Inc. v. Rand Pacific Sales

Inc. (2016) 4 Cal.App.5th 698 (Wolf Metals), another 

distinguishable case. There an alleged alter ego did not 

participate in the defense of an action against a corporation. A

default judgment was entered against the corporation. The 

plaintiff thereafter filed a summary motion to amend the 
9.

judgment (Code Civ. Proc. § 187) to name the alter ego as an 

additional judgment debtor. The court ruled the default 

judgment could not be amended post judgment. It said the 

corporation “offered no defense” to the lawsuit, a default 

judgment was entered, and consequently the trial court erred by 

applying the summary motion procedure to amend the judgment 

to impose alter ego liability. (Wolf Metals, at p. 709.)

Escamilla contends he did not know about the lawsuit 

against his company. But the trial court did not reach that issue 

because it ruled, as a matter of law, “[t]he fact that Escamilla 

may have had actual or constructive notice of the action and that 

he had the opportunity to control whether a defense was advanced 

or not in the prior case are irrelevant.” (Italics added.) In so 

ruling, the trial court erred. Escamilla’s control over that 

litigation is relevant. (Minton v. Cavaney (1961) 56 Cal.2d 576, 

581.) 

The trial court also assumed a dispositive issue was the 

lack of a defense by the corporation in response to the lawsuit 

against it. But the ultimate issue was not how the case was 

defended, but who in the corporation “controlled the litigation 

leading to the judgment” against the corporation. (Minton v. 

Cavaney, supra, 56 Cal.2d 576, 581; Toho-Towa Co., supra, 217 

Cal.App.4th at p. 1110; Alexander v. Abbey of the Chimes, supra, 

104 Cal.App.3d at p. 45 [“[I]t is now settled that ‘. . . the authority 

of the court will be exercised to impose liability under a judgment 

upon the alter ego who has had control of the litigation’ ”].) The 

one who controls the litigation decisions may decide to defend a 

lawsuit or make an “ ‘intentional strategic’ ” decision to default. 

(Jerry’s Shell v. Equilon Enterprises, LLC (2005) 134 Cal.App.4th

1058, 1073.)
10.

The sole alter ego who owns the company and makes all

corporate decisions may decide that, instead of providing a 

defense to a meritorious lawsuit, the corporation should incur a 

default judgment to insulate himself from liability and to save 

himself from spending money on a frivolous defense. By doing so,

he “controlled the litigation leading to the judgment” against the 

corporation and he is liable as an alter ego. (Minton v. Cavaney, 

supra, 56 Cal.2d at p. 581.) At this stage we do not decide 

whether Escamilla directed a tactical default, only whether there 

are triable issues of fact. 

Lopez made a showing to support reasonable inferences

that the above scenario occurred. Escamilla exclusively owned 

and controlled the corporation and made all its decisions, 

including its litigation decisions. His claim of lack of knowledge 

is disputed and may be challenged on credibility grounds.

“Surely every chief executive officer of a corporation is cognizant 

of claims asserted against the corporation.” (NEC Electronics, 

supra, 208 Cal.App.3d at p. 781.) 

Lopez claimed, despite Escamilla’s denial, there are facts 

showing the decision to allow a default judgment against the 

corporation was strategic. It placed liability for fraud on the shell 

company, instead of Escamilla, and that was exclusively for his 

benefit. There was no defense to Lopez’s lawsuit for fraud. The 

company was an under-capitalized shell. It was not a legitimate

independent business; it was a suspended corporation and it went 

out of business when Lopez filed suit. Escamilla took all the cash 

from that business thereby making it judgment proof. The

default of the corporation paved the path for the judgment, 

blocking Lopez’s path to satisfy the judgment. This could show 
11.

Escamilla’s pervasive control over both the entry of judgment and 

the ability to prevent its enforcement.

Lopez also claims that there is additional evidence that 

Escamilla deliberately calculated all his actions to defeat her 

rights because in response to a request for admissions he

admitted that he is still is doing “business at the same location as 

Magnolia Home Loans, Inc. did business.” (Italics added.) (Wells 

Fargo Bank, N.A. v. Weinberg, supra, 227 Cal.App.4th at p. 9.) 

Lopez claimed the facts she presented showed the “failure to 

impose alter ego liability sanctions a fraud and promotes 

injustice.” (Capitalization and underscoring omitted.) Proof of

these facts at trial may lead to alter ego liability. (Alexander v. 

Abbey of the Chimes, supra, 104 Cal.App.3d at p. 45.)

DISPOSITION

The judgment and order granting summary judgment are 

reversed. Costs on appeal are awarded to appellant.

CERTIFIED FOR PUBLICATION.

GILBERT, P. J.

We concur:

YEGAN, J.

TANGEMAN, J.
12.

Mark S. Borrell, Judge

Superior Court County of Ventura

______________________________

Law Offices of Malcolm R. Tator and Malcolm Tator for 

Plaintiff and Appellant.

Richard W. Tentler for Defendant and Respondent.