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 c reditor 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 Jos e Escamilla i n her lawsuit for damages against Escamilla based on his alter ego lia bility 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 ; t here are triabl e issues of fact concerning2

.

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 agai nst 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 a lter ego of Magnolia Home Loans, Inc. She sought a judgment against him for $ 157,370 plus interest. Escamilla moved for judgment on the pleadings. H e contended that “a complaint in a separate action is not the proper procedure to obtain” a determinatio n 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 rever sed and hel d alter ego li ability could be dete rmined 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 act ion. Citing Motores De Mexicali v. Superior Court (1958) 51 Cal.2d 172 ( Motores ) , he contend ed to hold him responsible for the corporation’s liability denie d him due process. Lopez claimed that Magnolia Funding

, Inc., the subject of a prior lawsuit that provided the origin al loan

, and Magnolia Home Loans, Inc . “were the same company ” ; and t hat 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, I nc. then went out o f busin ess when it
was sued.” Escamilla received all its rem aining cash assets of $53,000 ; t hat Escamilla’s “ mere $1,000 capital investment [ in the corporation ] cannot serve to shield him” from personal liability as its alter ego; and t hat the corporation Escami lla controlled
default ed , 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 p arty 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 p rovides courts with ‘a mechanism to cut through the parties’ pleadings in order to determine whether, despite their allegations, trial is in fact neces sary 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 correctne ss of the trial court’s ruling r egarding summary judgment

. ( Id. at p. 958.)

“ ‘Our task is to determine whether a triable issue of material
fac t 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 corpo rate 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 veil4

.

should be ignored is primarily a question of fact

. . . .” ( Toho

Towa Co., Ltd. v. Morgan Creek Produc tions, Inc . (2013) 217 Cal.App. 4th 1096, 1108 ( Toho

- Towa Co. ) , italics added. )
C ourts 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 ow n personal
interests. ( Toho

- Towa Co.

, supra , 217 Cal.App.4th at pp. 1108

- 1109. ) Fac tors include “the commingling of fund s and assets

. . . , identical equitable ownership .

. . , use of the same offices and employees, disregard of corporate formalit ies, id entical directors and officers, ” etc. ( I

d

. at p. 1108. ) They also include who is treating “the assets of the corporation as his own.” ( Greenspan v.
LADT LLC (2010) 191 C al.App. 4th 486, 512.)

Triable Issues of Fact on Alter Ego Liability
As we noted i n our prior decision ( Lopez v. Escamilla

, supra , 48 Cal.App. 5th at p. 765 ) , Lopez’s complaint alleged facts
show ing alter ego liability. “ Escamilla does not contest that the complaint states facts sufficient to support a finding that he is the alter ego o f 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 signe d the company’s checks. He was the only shareholder, the only officer

, and the onl y board member the company had. The evidence showed t hat both Magnolia Funding, Inc. and Magnolia Home Loans

, Inc. wer e not “adequately capitalized.” Each had only $1,000 in total capital

reserves. This meager capitalization support s an inference these

en tities were created to avoid the per sonal liability of an alter

ego

. ( Automotriz etc. De California v. Resnik (1957) 47 Cal.2d 792, 796

- 797; Shafford v. Otto Sales Co. (1 957) 149 Cal.App.2d 428, 432.) When Magnolia Funding, Inc. dissolved, Magnolia Home Loans, Inc. received its remaining physical assets. A t the end of fiscal year 2009

, Magnolia Home Loans, Inc. held cash in the amount of $53, 102.92, and all that money wa s paid to Escamilla

. This is a triable issue of fact concerning Escamilla’s alter ego liability. Seeking Alter Ego Liability Post Judgment
P laintiffs often discover that a judgment against a corporation cannot be satisfied because the corporation has be en looted, the corporate identity was a fiction, or alter egos who

contro lled 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.
Ro ney & 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 A lleged 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.
I n Motores

, our Supreme Court held that when plaintiff s

“ summarily add” individuals to a prev iously 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 opportun ity 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.)
B ecause the alleged alter egos could not fairl y 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 post

judgment alter ego liability.
Unlike the fact s in Motores

, Lopez did not move to
summaril y add Escamilla to the judgment. Also, u nlike 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

. ) Escamill a 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.
I n distinguishing Motores

, Lopez correctly notes that a “summ ary 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. T he summary7

.

procedure to “amend a judgment to add a defendant” involves “imposing liability o n the new defendant without trial

. ” ( Triplett
v. Farmers Ins

. Exchange (1994) 24 Cal.App. 4th 1415, 1 421, 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 individuall y controlled all corporate decisions.” But here by contrast only one person ma de
all the decisions

– Escamilla, and

, unlike Motores

, only he controlled the litigation decisions of the corporation. Lopez mad e a suff icient showing in opposition to summary ju dgment to support a reasonable inference that Escamilla was “fully aware of the pr ogress of the legal proceedings ” because of his complete and exclusive control of the corporation. ( Motores

, supra , 5 1 Cal.2d at

p. 175; Toho

- Towa Co.

, supra , 217 Cal.App. 4t h at p. 1110 [the alter ego has control of the defense of the action]. )
W e previously held that Lopez had the right to bring this postjudgment “independent actio n ” aga inst Escamilla on alter ego liabil i ty 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 pleading s that was involved in our prior decision. But to the ex tent its ultimate
conclusion is that Lopez is barred from bring ing this post judg ment action, that ruling is in consistent 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 the8

.

court ruled there was “insufficient evidence to show that [the officer] c ontrolled the defense of the litigation ” that resulted in the judgment against the corporation. ( NEC Electronics

, at

p. 781.)
I n NEC Electronics

, the court noted that the respective interests of the company and the individual subject to alter ego
liabil ity were not the same

. “B ecause the interests of Ph [the company] an d Hurt [the individual] were different

, we cannot say that Hurt had occasion to conduct the li tigation with a di ligence corresponding to the risk of personal liability that was involved

o r that Hurt was virtually represented in the lawsuit.” ( NEC
Electronics

, supra , 208 Cal.App.3d at p. 781 , italics added .)
Here , by contrast, L opez claims the corporation and
Escamilla had the same interests because Escamilla was the corporation

. Because he was the corporation

, only he controlle d 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 de fense 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 C al.App. 5th 698 ( Wolf Metals )

, another distinguishable case

. T here an alleged alter ego did not

pa rticipate in the defense of an action against a corporation

. A default judgment was entered against the cor poration. The plaintiff thereafter filed a summary motion to amend the9

.

judgment (Code Civ. Pro c. § 187) to name the alter ego as an additional judgment debtor

. The court ruled the default judgmen t could not be amende d 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 proced ure 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 cour t erred. Escamilla’s control over that litigation is relevant. ( Minton v. Cavaney (1961) 56 Cal.2d 576, 581.)
T he 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; Alex ander 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 exercis ed to impose liability under a judgment upon the alter ego who ha s had control of the litigation ’ ” ]. ) The
one who con trols 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 s ave himself from spending money on a frivolous defense. B y 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 defau lt , only whether t here
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 cla im 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.) Lope z claimed

, despite Escamilla’s denial, there are facts showing the decision to allow a default judgment against the corporation was strategic

. I t placed liability for fraud on the sh ell company, instead of Escamilla , and that was exclusively for his
benef it. T here 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

. E scamilla took all the ca sh 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 show11

.

Escamilla’s pervasive control over both the entry of judgment and
the a bility to prevent its enforcement. Lopez also claims that there is additional evi dence that Escamilla deliberately calculated all his actions to defeat her rights because i n response to a request for admissions he
admitted that he is still is doing “ busi ness 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 al ter ego liability sanction s a fraud and promotes injustice .” (Capitaliza tion 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 grantin g 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.