Filed 6/16/21 Montpelier Nut Co. v. Ditzler CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

MONTPELIER NUT COMPANY, INC.,

Plaintiff and Respondent,

v.

LEE DITZLER, et al.,

Defendants and Appellants.

F079705

(Super. Ct. No. 2020175)

OPINION

APPEAL from a judgment of the Superior Court of Stanislaus County. John D. 

Freeland, Judge.

Law Office of James Martinez and James Martinez for Defendants and Appellants.

Goodin, MacBride, Squeri & Day, Robert A. Goodin and Francine T. Radford for 

Plaintiff and Respondent.

-ooOooIn this breach of contract case tried without a jury, the trial court found in favor of 

plaintiff Montpelier Nut Company, Inc., and against defendants Purotecs, Inc. (Purotecs) 

and Lee Ditzler (together defendants). The asserted breach of contract related to an 

almond pasteurization machine or system sold to plaintiff that did not perform as 

promised. In support of its determination for plaintiff, the trial court issued a Statement 
2.

of Decision containing detailed factual findings, and a judgment awarding damages to 

plaintiff was entered accordingly. Defendants appeal from that judgment. Although the 

appeal by defendants ostensibly challenges the sufficiency of the evidence to support the 

judgment, their brief largely ignores the evidentiary bases for the factual findings made 

by the trial court in its Statement of Decision. Such a selective and incomplete factual 

challenge is inadequate to meet defendants’ burden on appeal. In any event, we conclude 

from our review of the record that substantial evidence supported the trial court’s 

judgment. Therefore, the judgment of the trial court is hereby affirmed.

FACTS AND PROCEDURAL HISTORY

The Contract

In December 2008, plaintiff, an almond rancher and processor located in Denair, 

California, contracted with a company known as Invenx, Inc. (Invenx)1for the purchase 

and installation of a system that would purportedly pasteurize almonds using ozone. As 

summarized in the trial court’s Statement of Decision, plaintiff purchased the 

pasteurizing system because the California Almond Board, pursuant to authority 

promulgated by the Food and Drug Administration (FDA), had recently implemented 

regulations requiring almonds sold in North America to be pasteurized to protect against 

salmonella. To achieve adequate pasteurization as defined by the FDA, a “5-log kill” had 

to be attained, meaning salmonella bacteria had to be reduced by 100,000-fold (i.e., 10 to 

the fifth power) by the treatment. Further, in order to meet regulatory requirements, a 

pasteurization treatment system must be “validated” by the California Almond Board, a 

rigorous process requiring analysis of multiple samples in several processing runs. To be 

validated for a 5-log kill, every sample tested in the system must meet or exceed a 5-log 

reduction of salmonella bacteria. 

1 As will be seen, the trial court held that a subsequently created entity, Purotecs, 

Inc., was the successor to Invenx for purposes of the parties’ contractual obligations.
3.

The contract between Invenx and plaintiff provided for an “operating system to 

treat up to 4000# of almonds per hour in batches of 2000 pounds of almonds.” Invenx 

described the system in the contract as follows: “The Cold Pasteurization process utilizes 

a sealed stainless steel treatment chamber in which the entire process occurs. The 

process incorporates moisture for the surface of the almonds, vacuum decompression, 

injection of ozone, pressurization and injection of the [Invenx] process liquid. The entire 

process is organic as specified under the USDA Organic Rule 2000.” Some of the 

mechanical parts for the system would be provided or built by a third party, referred to as 

EMC or Lemos Enterprises. Importantly, the contract provided certain guarantees to 

plaintiff, including the following: “[Invenx] will guarantee that the processed almonds 

will meet the 5 log reduction for Salmonella bacteria as required by the FDA and the 

California Almond Board. ... [¶] The treatment system will be tested prior to delivery to 

[plaintiff] and re-tested during production after start-up. [Invenx] will perform the pre 

installation tests to confirm the proper operation of the system and a second set for 

production tests to document the biological results for the FDA and the California 

Almond Board. All costs associated with the biological testing are included in the total 

price. Biological testing will be validated by a mutually agreed upon laboratory.” 

Additionally, personal guarantees were provided within the contract by Invenx’s 

two co-owners, namely, Lee Ditzler and Robert Higgins, the president and vice-president 

of Invenx, respectively. As noted by the trial court, Ditzler founded Invenx in 2008, 

while Higgins invested in the company and became a financial partner. The personal 

guarantees by Ditzler and Higgins stated: “[Invenx] understands that this is the first 

installation of the full scale process and that [plaintiff] desires to have a guarantee that the 

process meets the 5 log reduction of Salmonella bacteria as required by the FDA and the 

California Almond Board. [Invenx] agrees to provide the personal guarantee from the 

two principal owners that the process meets the treatment requirements of 5 log reduction 
4.

of Salmonella. The monies paid to [Invenx] for the process equipment will be returned to 

[plaintiff] if the system fails to meet the 5 log reduction of Salmonella.” 

The total price for the system was $695,000. The contract provided an estimated 

delivery date of “120 days ARO and down payment.” The contract was signed by Lee 

Ditzler and Robert Higgins for Invenx on December 3, 2008, and by Ken Alldrin on 

behalf of plaintiff on December 7, 2008. Plaintiff paid a total of $638,000, which 

represented all but a portion of the purchase price due upon the successful operation of 

the system for 30 days. 

Plaintiff’s System Installed

Invenx installed the pasteurization system in 2010. Unbeknownst to plaintiff, 

Invenx was by this time in financial distress. Ditzler testified that he closed Invenx in 

March 2010, and it ceased operations at that time. Without telling plaintiff that Invenx 

had been shut down, Ditzler worked on plaintiff’s system and conducted many tests. The 

system occasionally achieved some 5-log kills, although not consistently, and even when 

the numbers were close to or met the desired mark, the almonds did not emerge from the 

process in a salable fashion – i.e., they were too wet and/or had a bad odor from too much 

ozone. Throughout, Ditzler constantly reassured plaintiff that things were going well, 

that he was on the verge of succeeding, and that he would make the necessary 

adjustments to make the system work and get it ready for validation. 

Purotecs Is Formed

In its Statement of Decision, the trial court summarized the background facts and 

circumstances surrounding the formation of Purotecs. We recite below some of the trial 

court’s descriptions and findings of what happened on that subject, which are helpful to 
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provide a framework for understanding the trial court’s conclusion that Purotecs was 

liable as Invenx’s successor.2

The trial court’s Statement of Decision provided as follows: “[D]uring the course 

of performance of [plaintiff’s] contract, and unbeknownst to [plaintiff], Invenx went out 

of business. Mr. Higgins, Mr. Ditzler’s investor in Invenx, had left and sued Mr. Ditzler 

and Invenx for fraud; Invenx cross-complained against him. After Mr. Higgins left 

Invenx, Mr. Ditzler began talking to potential new investors, one of whom was Ken 

Stevens. Mr. Stevens had no knowledge about ozone or experience with it. He inspected 

Mr. Ditzler’s main project, the [plaintiff’s] pasteurizer on site, on February 8, 2012. An 

investment in Invenx was initially contemplated, but on the advice of Invenx’s lawyer, 

Mr. Stevens and Mr. Ditzler decided to form a new entity instead, which was Purotecs. 

[¶] Before Purotecs was formed, Mr. Ditzler negotiated an employment agreement for 

himself, as his know-how was integral to the enterprise. Mr. Ditzler received almost half 

of Purotecs’ stock, as well as a generous salary and signing bonus. In return, Mr. Ditzler 

gave Purotecs all of Invenx’s assets. Invenx’s tangible assets were minimal. Its true 

assets were its intellectual property: specifically, the ozone system technology and 

Mr. Ditzler’s knowledge.” 

Further, according to the trial court’s Statement of Decision: “Purotecs was 

incorporated on March 30, 2012. Besides being a shareholder, Mr. Ditzler was an officer 

and director of Purotecs. Purotecs was formed to pursue the same business as Invenx. 

Purotecs had no products when it was formed; its first product was the Invenx ozone 

generator. Purotecs was not merely selling generators, but, like Invenx, was selling 

‘ozone solutions’ designed by Mr. Ditzler. [¶] Purotecs’ principals told [plaintiff] that 

Purotecs was taking over the project and would get it completed. ... [¶] Purotecs 

2

In our quotation of the language of the Statement of Decision, some of the trial 

court’s internal references or citations to transcript pages or exhibit numbers are deleted. 
6.

proceeded to work on [plaintiff’s] system.” The remainder of the trial court’s description 

in the Statement of Decision regarding Purotecs’s role emphasized the involvement of 

Stevens and Ditzler in seeking to complete plaintiff’s system on behalf of Purotecs. 

Plaintiff’s System Never Achieved Satisfactory Results

The pasteurizing system sold to plaintiff never performed as promised. As the 

trial court explained, the test results were inconsistent and unsatisfactory: “In June of 

2013, one of the lab test reports showed, for the three samples tested, two five-log kills 

and a six-log kill: a result that (if replicated for each and every one of three samples in at 

least ten runs) would have supported validation at 5 logs. This never happened. The 

single 5-log kill report for three samples was followed nine days later by a test that 

yielded a 3-log kill along with two 5s, and next, in July 2013, by a report on seven 

samples, with four 3s and three 4s. Exhibit 240 (the summary of test results) shows that 

Mr. Ditzler never again achieved a 5-log kill for all samples being tested on any given 

day. Moreover, whatever good results he got were achieved by adding so much steam 

and ozone to the process that the almonds were too wet, and too smelly to be salable.”3 

Procedural History

Plaintiff filed its complaint on May 17, 2016. Plaintiff’s complaint alleged breach 

of contract against Purotecs and breach of guaranty against Ditzler. The parties waived a 

jury trial, and the case was tried to the court, beginning on July 24, 2018, and ending on 

January 11, 2019. 

At trial, the court heard, weighed and considered extensive witness testimony 

along with multiple exhibits. On June 4, 2019, after the close of trial and posttrial 

briefing, the trial court issued its Statement of Decision wherein it explained the legal and 

factual basis for its decision in plaintiff’s favor. In its Statement of Decision, the trial 

court made the following findings and conclusions on the ultimate issues before it: the 

3 See footnote 2, ante.
7.

contract was breached because the cold pasteurization system failed to perform as 

promised; plaintiff’s damages for breach of contract were $899,907.80, plus prejudgment 

interest; Purotecs was liable for the breach of contract as Invenx’s successor; and 

defendant Ditzler was personally liable on his Guarantee in the sum of $638,000. 

Additionally, in regard to certain defenses raised by defendants, the trial court held 

defendants were estopped from asserting the statute of limitations, and no written 

agreement was necessary to impose successor liability on Purotecs. The trial court 

concluded by expressly finding that Ditzler’s testimony lacked credibility, due to his 

many inconsistencies on a number of critical points. These significant inconsistencies 

included, among other things, Ditzler’s testimony “that Purotecs did not tell [plaintiff] it 

was taking over the pasteurization process, and ... that his efforts to complete the project 

after the formation of Purotecs were not made on behalf of Purotecs but were done on his 

own behalf.” 

The trial court filed its final judgment on June 4, 2019, in accordance with its 

Statement of Decision. In the judgment, plaintiff was to recover as damages from 

defendants Purotecs and Ditzler, jointly and severally, the sum of $638,000, plus 

prejudgment interest of $205,383.20; and in addition thereto, plaintiff was to recover a 

further sum of $261,907.80 from Purotecs, plus prejudgment interest in an additional 

amount of $84,312.34. On June 4, 2019, notice of entry of the judgment was filed. 

Defendants’ timely notice of appeal followed.

DISCUSSION

I. Standard of Review

A reviewing court starts with the presumption that the record contains evidence to 

sustain every finding of fact. (Foreman & Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 

881 (Foreman & Clark).) Moreover, the judgment or order of the trial court is presumed 

to be correct on appeal, and an appellant must affirmatively demonstrate error. 

(Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) “In furtherance of this burden, the 
8.

appellant must fairly summarize all the facts in the light most favorable to the judgment.” 

(Burch v. CertainTeed Corp. (2019) 34 Cal.App.5th 341, 349.) That is, an appellant 

challenging the sufficiency of the evidence to support the judgment must cite the 

evidence in the record supporting the judgment and explain why such evidence is 

insufficient as a matter of law. (Rayii v. Gatica (2013) 218 Cal.App.4th 1402, 1408

(Rayii); In re Marriage of Fink (1979) 25 Cal.3d 877, 887 (Fink).) 

Where an appellant contends that some particular finding of fact is not supported, 

he or she is “ ‘required to set forth in their brief all the material evidence on the point and 

not merely their own evidence. Unless this is done the error is deemed to be waived.’ ” 

(Foreman & Clark, supra, 3 Cal.3d at p. 881.) “An appellant who fails to cite and 

discuss the evidence supporting the judgment cannot demonstrate that such evidence is 

insufficient. The fact that there was substantial evidence in the record to support a 

contrary finding does not compel the conclusion that there was no substantial evidence to 

support the judgment. An appellant ... who cites and discusses only evidence in her 

favor fails to demonstrate any error and waives the contention that the evidence is 

insufficient to support the judgment.” (Rayii, supra, 218 Cal.App.4th at p. 1408; Fink, 

supra, 25 Cal.3d at p. 887; Foreman & Clark Corp., supra, 3 Cal.3d at p. 881.) Again, a 

failure to summarize all the material evidence, favorable and unfavorable, and to show 

why it is insufficient amounts to a waiver of the alleged error. (Contra Costa County v. 

Pinole Point Properties, LLC (2015) 235 Cal.App.4th 914, 935; Bell v. H.F. Cox, Inc. 

(2012) 209 Cal.App.4th 62, 80; Schmidlin v. City of Palo Alto (2007) 157 Cal.App.4th

728, 738.)

If defendants’ appeal has adequately raised error concerning the trial court’s 

findings of fact, we review such contention of error under the substantial evidence 

standard. “We review the trial court’s factual findings for substantial evidence. 

[Citation.] ... [A]ppellants...bear the burden of demonstrating there is no substantial 

evidence to support a challenged factual finding. [Citation.] [¶] Our review of the trial 
9.

court’s factual findings presumes that the record contains evidence to sustain every 

finding of fact. [Citation.] We view the evidence in the light most favorable to the 

prevailing party, giving that party the benefit of every reasonable inference and resolving 

all conflicts in the evidence in support of the judgment. [Citation.] We do not reweigh 

the evidence, consider the credibility of the witnesses, or resolve conflicts in the evidence 

or in the reasonable inferences that may be drawn therefrom. [Citation.] If substantial 

evidence exists, it is of no consequence that the trial court [if] believing other evidence or 

drawing other reasonable inferences might have reached a contrary conclusion.” 

(Picerne Construction Corp. v. Castellino Villas (2016) 244 Cal.App.4th 1201, 1208-

1209 (Picerne).) 

II. Substantial Evidence Supported Estoppel to Assert the Statute of Limitations

Defendants argue the evidence at trial established the statute of limitations had 

expired. They point out that the pasteurization system purchased by plaintiff was not 

performing as promised and this failure was apparent during the testing in 2010 and 

2011. The system’s failure at that time would purportedly have caused the breach of 

contract claim to accrue. Plaintiff did not file its action until May 17, 2016. Thus, 

according to defendants, the four-year statute of limitations for breach of a written 

contract as provided at Code of Civil Procedure section 337, subdivision (a), expired 

before the action was filed in 2016, and, consequently, the action was time-barred. As 

explained below, we disagree.

First, defendants’ opening brief omits any mention of the trial court’s finding that 

defendants’ conduct gave rise to an estoppel to assert the statute of limitations, and the 

brief further omits any discussion of the evidence in support of that finding. Having 

failed to discuss the evidence upon which the trial court found an estoppel, and having 

failed to show its insufficiency, defendants’ argument on the statute of limitations issue is 

deemed waived or forfeited. (Rayii, supra, 218 Cal.App.4th at p. 1408; Fink, supra, 

25 Cal.3d at p. 887; Foreman & Clark, supra, 3 Cal.3d at p. 881.)
10.

Second, even had the argument not been waived, we would affirm the trial court’s 

finding, because there was sufficient evidence in the record to support an estoppel as to 

defendants’ assertion of the statute of limitations. As summarized in Shaffer v. Debbas

(1993) 17 Cal.App.4th 33 (Shaffer): “A defendant will be estopped to invoke the statute 

of limitations where there has been ‘some conduct by the defendant, relied on by the 

plaintiff, which induces the belated filing of the action.’ (3 Witkin, Cal. Procedure 

(3d ed. 1985) Actions, § 523, p. 550.) It is not necessary that the defendant acted in bad 

faith or intended to mislead the plaintiff. [Citations.] It is sufficient that the defendant’s 

conduct in fact induced the plaintiff to refrain from instituting legal proceedings. 

[Citation.] ‘[W]hether an estoppel exists – whether the acts, representations or conduct 

lulled a party into a sense of security preventing him from instituting proceedings before 

the running of the statute, and whether the party relied thereon to his prejudice – is a 

question of fact and not of law.’ ” (Shaffer, supra, 17 Cal.App.4th at p. 43.) The 

doctrine is applied under principles of equity: “ ‘One cannot justly or equitably lull his 

adversary into a false sense of security, and thereby cause his adversary to subject his 

claim to the bar of the statute of limitations, and then be permitted to plead the very delay 

caused by his course of conduct as a defense to the action when brought.’ ” (Carruth v. 

Fritch (1950) 36 Cal.2d 426, 433.)

In Shaffer, supra, 17 Cal.App.4th 33, a case involving breach of warranty and 

negligence for defects in the building of a custom home, as well as related emotional 

distress claims, the Court of Appeal held that where the filing of the lawsuit by the 

plaintiffs was delayed as a result of reliance on the defendants’ continuing promises to 

repair or remedy the property damage, a trier of fact could reasonably apply estoppel 

regarding the invocation of the statute of limitations defense. (Id. at pp. 43-44.) 

Similarly, in Gilbert Financial Corp. v. Steelform Contracting Co. (1978) 82 Cal.App.3d 

65, a general contractor’s promises to cure or correct construction-related water leak 

problems, including his actual efforts to do so for approximately three years, were 
11.

referred to by the Court of Appeal as a permissible basis for a trier of fact to potentially 

apply the estoppel doctrine, assuming the trier of fact also concluded such promises were 

reasonably relied upon by the plaintiff in delaying suit. (Id. at pp. 68-69 [reversing 

dismissal premised on statute of limitations of the negligence cause of action].) In so 

holding, the Court of Appeal recited with approval the following language from a legal 

treatise: “ ‘The first tolling situation is where the defendant makes representations to the 

effect he will perform his contractual obligation, and the plaintiff, in reliance thereon, 

forbears to sue in time.’ ” (Ibid., quoting 2 Witkin, Cal. Procedure (2d ed. 1970) Actions, 

§ 395, p. 1227.) 

Here, consistent with the above authorities, the trial court properly concluded that 

defendants were estopped from claiming the action was time-barred because plaintiff 

reasonably relied upon defendants’ ongoing promises, reassurances and attempts to make 

the system work, which continued from approximately 2010 to as late as 2015. The 

record is replete with testimony as to Ditzler’s continuing promises and reassurances to 

the effect that he was working on it, the system is going to work, and just a few more 

adjustments were needed. Ken Alldrin, one of plaintiff’s principals and owners, testified 

that Ditzler was a convincing man who sounded positive, and since “we” (i.e., plaintiff) 

really needed the project to work, Alldrin decided to keep believing him. According to 

Alldrin’s testimony, the reassurances continued when Ditzler told Alldrin in 2012 that 

Purotecs would be taking over the project and had the resources needed to get it done. 

In its Statement of Decision, the trial court explained that defendants were 

estopped from invoking the statute of limitations because Ditzler “continuously assured” 

plaintiff that he would make the system work, he was making progress, and would “ ‘get 

there.’ ” The trial court further found that Alldrin, plaintiff’s co-owner, believed Ditzler. 

And further, Purotecs “taking over and asking to use [plaintiff’s] system to sell to other 

customers gave Mr. Alldrin reason to believe it would work.” Based on our review of the 
12.

record, we conclude the trial court’s findings were supported by substantial evidence, 

which furnished a reasonable basis for concluding that estoppel applied. 

III. Substantial Evidence Supported Purotecs’ Successor Liability

In their brief on appeal, defendants contend there was insufficient evidence that 

Purotecs was the successor corporation to Invenx for purposes of the contractual 

obligations to plaintiff. Defendants argue, among other things, that Purotecs did not 

purchase all or substantially all of Invenx’s assets. There was purportedly some evidence 

in the record that only ordinary office equipment was transferred to Purotecs and that 

Robert Higgins subsequently claimed to have obtained Invenx’s intellectual property 

rights. Further, defendants argue there was evidence in the record that Purotecs could not 

have been a continuation of Invenx because Purotecs’ business model distinctly focused 

on ozone generators, not complete operating systems. 

Once again, defendants have sought to reargue the case by setting forth only 

selective evidence, rather than explaining based on a consideration of all the relevant 

evidence why it is insufficient to support the trial court’s finding on this issue. For that 

reason, defendants’ contention the evidence is insufficient to support a finding of 

successor liability has been waived or forfeited. (Rayii, supra, 218 Cal.App.4th at 

p. 1408; Fink, supra, 25 Cal.3d at p. 887; Foreman & Clark, supra, 3 Cal.3d at p. 881.) 

But even if not waived or forfeited, and as explained more fully below, we conclude there 

was substantial evidence in the record to support the trial court’s finding of Purotecs’ 

successor liability. 

Under the equitable doctrine of successor liability, “ ‘corporations cannot escape 

liability by a mere change of name or a shift of assets when and where it is shown that the 

new corporation is, in reality, but a continuation of the old. Especially is this well settled 

when actual fraud or the rights of creditors are involved, under which circumstances the 

courts uniformly hold the new corporation liable for the debts of the former 

corporation.’ ” (Cleveland v. Johnson (2012) 209 Cal.App.4th 1315, 1327 (Cleveland).) 
13.

The general rule concerning successor liability is that “a corporation purchasing the 

principal assets of another corporation ... does not assume the seller’s liabilities unless

(1) there is an express or implied agreement of assumption, (2) the transaction amounts to 

a consolidation or merger of the two corporations, (3) the purchasing corporation is a 

mere continuation of the seller, or (4) the transfer of assets to the purchaser is for the 

fraudulent purpose of escaping liability for the seller’s debts.” (Ray v. Alad Corp. (1977) 

19 Cal.3d 22, 28 (Ray), italics added; see Daniels v. Select Portfolio Servicing, Inc. 

(2016) 246 Cal.App.4th 1150, 1170; McClellan v. Northridge Park Townhome Owners

Ass’n, Inc. (2001) 89 Cal.App.4th 746, 753-754 (McClellan).) Whether successor 

liability is applicable in a given case involves equitable issues to be examined on their 

own unique facts. (Cleveland, supra, 209 Cal.App.4th at p. 1330.)

Of the four grounds for finding successor liability enumerated in Ray, supra, 

19 Cal.3d at page 28, the mere continuation ground has been recognized only where 

certain indicia are present. “California decisions holding that a corporation acquiring the 

assets of another corporation is the latter’s mere continuation and therefore liable for its 

debts have imposed such liability only upon a showing of one or both of the following 

factual elements: (1) no adequate consideration was given for the predecessor 

corporation’s assets and made available for meeting the claims of its unsecured creditors; 

(2) one or more persons were officers, directors, or stockholders of both corporations.” 

(Ray, supra, 19 Cal.3d at p. 29, italics added; accord, Wolf Metals, Inc. v. Rand Pacific 

Sales, Inc. (2016) 4 Cal.App.5th 698, 705 (Wolf Metals).)

Based on the Statement of Decision, the trial court approached the question of 

successor liability in two basic steps: first, the court foundationally found that Purotecs 

had acquired the principal assets of Invenx; and second, the court determined that 

grounds existed for successor liability against Purotecs because Purotecs (a) impliedly 

agreed to assume Invenx’s liability to complete the contract and (b) was a mere 
14.

continuation of Invenx. As we will explain, each of these findings was supported by 

substantial evidence in the record. 

A. Purotecs Acquired Invenx’s Principal Assets

For successor liability to apply, it must be shown that the successor corporation 

acquired its predecessor’s assets. (Ray, supra, 19 Cal.3d at p. 28; see e.g., McClellan, 

supra, 89 Cal.App.4th at pp. 753-754.) Here, the trial court found that was the case, 

specifically holding “Purotecs acquired all of the property and assets of Invenx.” In 

describing the assets acquired by Purotecs, the trial court noted that Invenx’s tangible 

assets were minimal, whereas Invenx’s “true assets were its intellectual property: 

specifically, the ozone system technology and Mr. Ditzler’s knowledge.” 

We agree with the trial court that there was ample evidence from which to 

reasonably infer that Purotecs acquired Invenx’s principal assets. Based on Invenx’s 

August 2013 bankruptcy filing, by the time Invenx filed for bankruptcy, it no longer had 

any assets. The same filing stated that in March 2012, which we note was the 

approximate date that Purotec was formed, Invenx’s “inventory” or “assets” were 

transferred to Purotecs. Ditzler admitted that when he closed down Invenx, he placed 

Invenx’s assets into storage; whereas, a subsequent bankruptcy filing stated that the 

assets transferred to Purotecs included “all items” in storage, such as “computers ... 

ozone equipment parts and inventory and test equipment.” This later bankruptcy filing 

indicated an effective date of transfer of April 2012, rather than the earlier reported 

March 2012 date. Kenneth Stevens, one of the principals involved in Purotecs’ 

formation, confirmed that as of April 2012, Purotecs purchased all of Invenx’s tangible 

assets. Based on the above, it was reasonable for the trial court to conclude that all of 

Invenx’s tangible assets – including ozone pasteurization equipment and inventory –

were transferred to Purotecs. 

There was also adequate evidence for the trial court to reasonably infer that 

Invenx’s intellectual property was transferred to Purotecs. Invenx filed its bankruptcy 
15.

petition in August 2013, and it was indicated therein that Invenx did not own any 

intellectual property at that time. Moreover, the fact Purotecs had taken over the work on 

plaintiff’s ozone pasteurization system in 2012, and the only knowledge of plaintiff’s 

pasteurization system resided with Ditzler, who began working as an employee for 

Purotecs at its formation, the trial court could reasonably infer that Invenx had transferred 

its intellectual property rights to Purotecs. This inference is further supported by the 

generous employment agreement Ditzler was able to secure for himself shortly before 

Purotecs was formed, which included a large salary, signing bonus, and a right to nearly 

half of Purotecs’ stock. This was because Purotecs needed Ditzler’s ozone expertise. For 

Purotecs to be viable, it was obviously necessary that Ditzler be directly involved, 

because his expertise, know-how and intellectual understanding of the process was 

integral to the enterprise. Finally, the transfer of Invenx’s intellectual property to 

Purotecs was also reasonably indicated by the fact that Purotecs’ principals, i.e., Stevens 

and Ditzler, communicated to plaintiff that Purotecs’ basic plan was to get plaintiff’s 

system validated and then sell it to other clients; and when requested Alldrin gave his 

consent to Purotecs to bring potential future clients out to plaintiff’s facility to look at the 

system. 

Based on the foregoing, we conclude the trial court’s foundational finding that 

Purotecs acquired Invenx’s principal assets was supported by substantial evidence. 

B. Successor Liability Ground: An Express or Implied Agreement to Assume 

 Contract Obligation

One of the grounds stated by the trial court for finding Purotecs liable as Invenx’s 

successor was that Purotecs expressly and/or impliedly agreed to assume Invenx’s 

responsibilities under the contract. As noted above, an express or implied agreement to 

assume the predecessor corporation’s liability is one of the recognized grounds for 

finding successor liability. (Ray, supra, 19 Cal.3d at p. 28.) The basis for the trial 

court’s finding on this matter was explained in its Statement of Decision as follows: 
16.

“[B]oth Mr. Stevens and Mr. Ditzler told [plaintiff’s] principal, Ken Alldrin, that 

Purotecs was taking over the Invenx project and wanted to get the system validated and 

sell it to Purotecs’ other customers. [Plaintiff’s] plant managers Ms. Valdovinos and Mr. 

Camp were also told by Mr. Stevens and Mr. Ditzler that Purotecs was taking over the 

project. Mr. Stevens and Mr. Ditzler’s conduct thereafter, in working on the system with 

other Purotecs employees, and sending letters and emails to [plaintiff] in Purotecs’ name, 

also proves an implied agreement. As further evidence of that agreement, Invenx did not 

give notice or list [plaintiff] as a creditor in the 2013 bankruptcy.”4 

We agree with the trial court that Purotecs’ promises to take over and complete the 

project may reasonably be construed as an agreement on its part to assume and carry out 

Invenx’s contractual responsibilities to plaintiff. Under the circumstances, it may also be 

inferred that Invenx’s failure to list or give notice to plaintiff as a creditor in Invenx’s 

2013 bankruptcy was due to the fact Purotecs had assumed its contractual obligations to 

plaintiff in 2012. On balance, we conclude there was substantial evidence in the record 

to support the trial court’s conclusion that Purotecs expressly or impliedly agreed to 

assume Invenx’s contractual obligations to plaintiff. This provided a sufficient ground 

for establishing Purotecs’ successor liability. 

C. Additional Successor Liability Ground: Purotecs a Mere Continuation of 

 Invenx

The trial court found successor liability existed on the additional ground that 

Purotecs was the mere continuation of Invenx. (Ray, supra, 19 Cal.3d at p. 28 [successor 

liability may be found where “the purchasing corporation is a mere continuation of the 

seller”].) As noted hereinabove, to support a finding that a corporation is a mere 

continuation of its predecessor, one or both of the following factual bases must be shown: 

“(1) no adequate consideration was given for the predecessor corporation’s assets and 

4 See footnote 2, ante.
17.

made available for meeting the claims of its unsecured creditors; (2) one or more persons 

were officers, directors, or stockholders of both corporations.” (Id., at p. 29; accord, Wolf 

Metals, supra, 4 Cal.App.5th at p. 705.)

In its Statement of Decision, the trial court found both factual scenarios were 

present in this case, explaining as follows: “The preponderance of the evidence showed 

that Purotecs is a continuation of Invenx. Mr. Ditzler was an officer, director and 

stockholder of both companies. Further the evidence discussed herein shows that 

Purotecs ‘effectively absorbed’ Invenx’s business franchise without paying adequate cash 

consideration to Invenx. [¶] Lastly, the court finds that Invenx did not receive 

substantial value for the transfer of its assets to Purotecs, and thereafter was left with no 

funds to pay its creditors. According to its bankruptcy filings, Invenx received from 

Purotecs either (a) payment of its outstanding rent on its storage unit in exchange for 

delivering all of its assets to Purotecs, or (b) $20,000. Either sum is insubstantial, 

particularly in light of the fact that following the transfer of its assets, Invenx had no 

assets [but had] liabilities of over $1.2 million, and was not able to pay any of its 

creditors, while Mr. Ditzler received a signing bonus, salary, and stock in Purotecs.”5 

Substantial evidence supported the trial court’s findings of a mere continuation. 

First, there is no dispute that Ditzler was an owner/shareholder, president and founder of 

Invenx, and the record establishes that Ditzler was also an officer, director and 

shareholder in Purotecs. Thus, one supporting basis for holding that Purotecs was a mere 

continuation existed; i.e., “one or more persons were officers, directors, or stockholders 

of both corporations.” (Ray, supra, 19 Cal.3d at p. 29.) 

Second, as further confirmation that Purotecs was a mere continuation of Invenx, 

the record clearly substantiated that no adequate consideration was given for Invenx’s 

corporate assets and made available for meeting the claims of its unsecured creditors. 

5 See footnote 2, ante.
18.

(See, Ray, supra, 19 Cal.3d at p. 29.) Depending on which bankruptcy filing is 

referenced, Invenx received from Purotecs either (a) payment of outstanding rent on its 

storage unit in exchange for delivery of all its assets to Purotecs, or (b) $20,000. As the 

trial court found, either sum is insubstantial, “particularly in light of the fact that 

following transfer of its assets, Invenx had no assets [but had] liabilities of over 

$1.2 million, and was not able to pay any of its creditors, while Mr. Ditzler received a 

signing bonus, salary and stock in Purotecs.” The bankruptcy filings support the trial 

court’s determination on this matter. 

Finally, we recognize that implicit to the mere continuation analysis is that the 

“new corporation is, in reality, but a continuation of the old.” (Cleveland, supra,

209 Cal.App.4th at p. 1327.) Here, the evidence that Purotecs not only continued in the 

ozone equipment business, but also agreed to take over completing plaintiff’s system, 

getting it validated, and using it as an example to show future clients of Purotecs was 

sufficient to substantiate that Purotecs was, in fact, carrying out and continuing the same 

or substantially the same business enterprise. Thus, substantial evidence supported the 

trial court’s finding that Purotecs continued and “‘effectively absorbed’ Invenx’s business 

franchise without paying adequate cash consideration to Invenx.” 

Because successor liability is adequately established by substantial evidence as 

explained above, defendants’ contentions that the record included some evidence to the 

contrary does not demonstrate that error occurred. “The fact that there was substantial 

evidence in the record to support a contrary finding does not compel the conclusion that 

there was no substantial evidence to support the judgment. An appellant...who cites and 

discusses only evidence in her favor fails to demonstrate any error and waives the 

contention that the evidence is insufficient to support the judgment.” (Rayii, supra, 

218 Cal.App.4th at p. 1408.) For this reason, defendants’ assertions that some contrary 

evidence existed in the record on this issue, including (i) Ditzler’s testimony that even 

though Invenx’s bankruptcy filings showed no intellectual property assets existed when 
19.

the bankruptcy was filed, Higgins later purportedly told Ditzler he purchased such assets 

from the bankruptcy, (ii) testimony to the effect that Purotecs’ business focused on ozone 

generators rather than complete systems, and (iii) evidence that only office equipment 

was purchased from Invenx by Purotecs, is insufficient to demonstrate that any error 

occurred. To reiterate, “We do not reweigh the evidence, consider the credibility of the 

witnesses, or resolve conflicts in the evidence or in the reasonable inferences that may be 

drawn therefrom. [Citation.] If substantial evidence exists, it is of no consequence that 

the trial court [if] believing other evidence or drawing other reasonable inferences might 

have reached a contrary conclusion.” (Picerne, supra, 244 Cal.App.4th at pp. 1208-

1209.) 

In conclusion, substantial evidence supported the trial court’s findings on 

successor liability and defendants’ selective evidentiary references have failed to show 

otherwise. 

IV. Statute of Frauds Does Not Preclude Successor Liability

Civil Code section 1624, subdivision (a), provides that “[t]he following contracts 

are invalid, unless they, or some note or memorandum thereof, are in writing and 

subscribed by the party to be charged or by the party’s agent: ... (2) A special promise to 

answer for the debt, default, or miscarriage of another, except in the cases provided for in 

Section 2794.” (Civ. Code, § 1624, subd. (a)(2).) Defendants argue that because 

Purotecs was not itself a signatory to the written contract, but rather Invenx was, Purotecs 

cannot be held liable because it would violate the above provision of the statute of frauds. 

The trial court disagreed, holding the statute of frauds was inapplicable because Purotecs 

was not being found liable as a surety or guarantor of another’s debt, but rather as a 

successor corporation. We agree with the trial court’s holding on this issue.

As has been discussed, Purotecs’ liability was premised on the equitable doctrine 

of successor liability. Under that theory, Purotecs was not being sued to enforce a special 

contractual promise to answer for the debt or default of another, but rather as the 
20.

successor and mere continuation of its predecessor corporation, Invenx. 

“ ‘[C]orporations cannot escape liability by a mere change of name or a shift of assets 

when and where it is shown that the new corporation is, in reality, but a continuation of 

the old. Especially is this well settled when ... the rights of creditors are involved, under 

which circumstances the courts uniformly hold the new corporation liable for the debts of 

the former corporation.’ ” (McClellan, supra, 89 Cal.App.4th at p. 754, quoting Blank v. 

Olcovich Shoe Corp. (1937) 20 Cal.App.2d 456, 461.) A successor corporation’s liability 

under this theory may be determined by various procedural means, including an action 

naming the successor corporation as the actual defendant, such as occurred here. (See 

McClellan, supra, 89 Cal.App.4th at pp. 753-754 [noting means of filing an action 

against former corporation’s successor].) In practical effect, the doctrine of successor 

liability is comparable to how alter-ego or the equitable disregard of the corporate entity 

may be applied. (See, e.g., Wolf Metals, supra, 4 Cal.App.5th at pp. 703-705 [potential 

addition of judgment debtor considered under successor corporation theory and alter 

ego]; Brown Bark III, L.P. v. Haver (2013) 219 Cal.App.4th 809, 823-824 (Brown Bark) 

[successor corporation liability compared to alter-ego].) Thus, successor liability is not 

an attempt to enforce a new obligation or promise, but a recognition by our courts that 

liability on an existing claim or cause of action may be extended to the successor 

corporation as a mere continuation of the old corporation. (Brown Bark, supra, 219 

Cal.App.4th at pp. 822-823 [successor liability “is not a separate claim independent of 

[the plaintiff’s] breach of contract claims”].) 

For these reasons, we conclude the statute of frauds was inapplicable. The claim 

against Purotecs was not to enforce a special contractual promise to answer for the debt 

of another,6 but was on the original contract signed by Invenx – which liability was 

6 Although the trial court did find that Purotecs represented it was taking over or 

assuming the responsibility to complete the contract with plaintiff, such representations 
21.

properly extended to Purotecs, as the purchaser/acquirer of Invenx’s assets, where the 

facts and circumstances showed that Purotecs should be and was legally responsible as 

the successor and mere continuation of Invenx.7

V. Equal Dignities Rule Inapplicable

Defendants argue that Civil Code section 2309, known as the equal dignities rule, 

precludes Purotecs’ successor liability. We disagree. Civil Code section 2309 has to do 

with the form of authority of an agent; i.e., written versus oral. As stated in Estate of 

Stephens (2002) 28 Cal.4th 665, 672: “[T]he ‘equal dignities’ rule of Civil Code 

section 2309 ... provides that a principal’s oral authorization to an agent ‘is sufficient for 

any purpose, except that an authority to enter into a contract required by law to be in 

writing can only be given by an instrument in writing.’ ” (Id. at p. 672, citing Civ. Code,

§ 2309.) The statute has no application here. Defendants have failed to present any 

statutory or other authority for the proposition that successor liability requires a written 

instrument between the predecessor and successor corporations, and we have found none. 

Since no written contract is required, the equal dignities rule does not come into play.

or promises on Purotecs’ part were considered solely as one of the factors or factual 

elements supporting the conclusion that Purotecs was liable as a successor corporation. 

7 Plaintiff argues in its respondent’s brief herein that “even if” the statute of frauds 

did apply, various exceptions stated in Civil Code section 2794 were applicable. (See, 

Civ. Code, § 1624(a)(2).) We find it unnecessary to address plaintiff’s alternative 

arguments. 
22.

DISPOSITION

The judgment is affirmed. Plaintiff is awarded its costs on appeal. 

SNAUFFER, J.

WE CONCUR:

FRANSON, Acting P.J.

SMITH, J.