Court Opinion

ID: 4687554
Source: CourtListenerOpinion
Date Created: 2021-05-17 19:02:37.225717+00
Date Added: 2024-06-11T08:04:41.783339
License: Public Domain

Filed 5/17/21 Westlake Village Marketplace v. West American Roofing CA2/5

   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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
                         SECOND APPELLATE DISTRICT
                                        DIVISION FIVE

WESTLAKE VILLAGE                                               B306358
MARKETPLACE, LLC,
                                                               (Los Angeles County
          Plaintiff and Respondent,                            Super. Ct. No. LC105475)

          v.

WEST AMERICAN ROOFING,
INC.,

          Defendant and Appellant;

VICTOR ENRIGHT,

        Real Party in Interest and
        Appellant.

      APPEAL from a judgment of the Superior Court of Los
Angeles County, Theresa M. Traber, Judge. Affirmed.
      Richie Litigation, Darren M. Richie and Kathleen Gadalla
for Real Party in Interest and Appellant.
      Martin P. Eramo for Plaintiff and Respondent.

                              __________________________
       Appellant Victor Enright is the president of the defendant,
West American Roofing, Inc. Plaintiff Westlake Village
Marketplace, LLC sued the defendant for performing
substandard roofing repairs on plaintiff’s building. After
prevailing at trial, plaintiff moved to add Enright as an
additional judgment debtor under the alter ego doctrine. The
trial court granted the motion. Enright now appeals.
       Enright argues the trial court’s alter ego findings are not
supported by substantial evidence, and the court erred in
amending the judgment to add him as a defendant. Plaintiff
moves to dismiss the appeal on the ground the notice of appeal
only named the defendant corporation as an appellant. We
conclude the notice of appeal should be liberally construed to
include Enright as an appealing party as it was clear he intended
to participate in the appeal and plaintiff was not prejudiced by
the omission. We further conclude that substantial evidence
supports the trial court’s alter ego findings, and the court acted
within its discretion in amending the judgment. We affirm.
        FACTUAL AND PROCEDURAL BACKGROUND
       In August 2014, defendant corporation contracted with
plaintiff to install a roof coating system. The contract required
defendant corporation to use specified products made by National
Coatings Corporation. Work was completed on the project within
a month, and plaintiff paid the contract sum in full.
       The following year, in mid-2015, plaintiff had the roof
inspected due to continuous leaks. The investigation revealed
that defendant corporation had not used National Coatings
Corporation’s products but had substituted cheaper materials
without informing or reimbursing plaintiff. Negotiations

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between the parties failed, and plaintiff filed this action in March
2017 for breach of contract and action on a contractor’s bond.
       In August 2018, after two days of trial, the court issued a
statement of decision in plaintiff’s favor finding it “was not
contradicted that Plaintiff entered into an agreement for
Defendant to repair a roof using particular materials”; it “was not
contradicted that Defendant used different materials than what
was specified in the agreement”; and “Plaintiff submitted
unrebutted evidence that as a result of Defendant’s failure to use
the specified materials, it sustained damages in the amount of
$59,000.00 to repair the roof.”
       In September 2018, the court entered judgment against
defendant corporation for $59,000, and awarded costs and
attorney fees to plaintiff as the prevailing party. After hearing
plaintiff’s motion for attorney fees, the court entered a first
amended judgment awarding $38,805 in costs and fees in October
2018.
       Over a year later, in November 2019, plaintiff moved to
amend the judgment to add defendant corporation’s president,
Enright, as an alter-ego judgment debtor. In support, plaintiff
filed the declaration of John Condon, the former vice-president of
defendant corporation, in which he stated: defendant corporation
did not conduct any “formal corporate meetings”; defendant
corporation never issued stock although Enright had “promised”
Condon “fifty percent (50%) of the stock in the company”;
“Enright controlled virtually all aspects of the corporation,
including, exercising direct control over the corporate bank
accounts and the withdrawal of money from the accounts”;
“Enright, on a regular basis, used company funds to purchase
items for his personal use”; Enright commonly substituted “a

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cheaper product and did not advise the customer”; and Enright
“handled all aspects of the lawsuit” with plaintiff. Plaintiff also
submitted the declaration of defendant corporation’s former office
manager who confirmed that Enright regularly used corporate
funds to pay for personal expenses.
       The defendant corporation and Enright jointly opposed the
motion. They argued that Condon exercised primary control over
the company from May 2017 through January 2018, and
controlled key decisions in the litigation. Enright and defendant
corporation further argued it would be inequitable to hold
Enright liable because plaintiff had unreasonably delayed in
adding him to the lawsuit, and he sold the defendant corporation
before judgment was entered.
       The trial court granted the motion, finding a unity of
interest between Enright and defendant corporation based on
Enright’s complete control over the corporation, use of corporate
funds to pay for personal expenses, and the company’s failure to
observe corporate formalities. The court further found that
Enright had controlled the underlying litigation, and the equities
tipped in favor of holding him liable for defendant corporation’s
debt in this case.
       On April 17, 2020, the court entered the second amended
judgment adding Enright as a judgment debtor. Two months
later, on June 17, 2020, defendant corporation alone filed a notice
of appeal of the second amended judgment that added Enright as
a judgment debtor. Ten days later, Enright and defendant
corporation jointly filed a notice designating the record on appeal.

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                            DISCUSSION
1.     The Notice of Appeal Was Timely as to Enright
       Although only defendant corporation filed a notice of
appeal, it was Enright who filed an appellate brief as the
purported appellant. Plaintiff now moves to dismiss the appeal
on the ground that Enright did not timely appeal. Enright
acknowledges that the notice of appeal was filed solely on behalf
of defendant corporation but argues that the “e-filing site” did not
provide an option for filing the appeal on his behalf since he was
not a party to the underlying action. Thus, his counsel “was
forced to file on behalf of Enright under the guise of [defendant
corporation].”
       Under California Rules of Court (CRC), rule 8.100(a)(1),
“[t]o appeal from a superior court judgment or an appealable
order of a superior court, . . . an appellant must serve and file a
notice of appeal in that superior court.” “The notice of appeal
must be liberally construed. The notice is sufficient if it identifies
the particular judgment or order being appealed.” (CRC, rule
8.100(a)(2).) The rule of liberal construction applies to “defects in
the notice’s designation of the parties to the appeal.” (K.J. v. Los
Angeles Unified School Dist. (2020) 8 Cal.5th 875, 885 (K.J.).)
       Some “decisions have applied the liberal construction
requirement to construe a notice to include a party who was
omitted from the notice entirely.” (K.J., supra, 8 Cal.5th at
p. 886; see Vibert v. Berger (1966) 64 Cal.2d 65, 68–69 [even if the
notice’s defect was the result of the “appellant’s ignorance” of the
technical requirements of appellate procedure, he “ ‘should not be
precluded from securing a review of what all concerned knew he
was seeking to have reviewed’ ” (italics omitted)].) “While the
timely filing of a notice of appeal is an absolute jurisdictional

                                  5
prerequisite [citation], technical accuracy in the contents of the
notice is not.” (K.J., at pp. 882–883, fn. omitted & p. 885 [holding
that “a reviewing court must construe a notice of appeal from a
sanctions order to include an omitted attorney when it is
reasonably clear that the attorney intended to join in the appeal,
and the respondent was not misled or prejudiced by the
omission”].)
        Here, the notice of appeal clearly challenged the April 17,
2020 amended judgment that added Enright as a judgment
debtor. No other order or ruling, and no other activity, occurred
in the case on that date. Although the notice plainly erred in not
designating Enright as the appellant, there is no evidence
plaintiff was misled or prejudiced by the notice of appeal.
Plaintiff was put on notice of the challenge to the alter ego
determination, and within days of the filing of the notice of
appeal, Enright’s counsel filed documents indicating Enright was
an appellant. (See K.J., supra, 8 Cal.5th at pp. 887-888
[“Whatever benefits might accrue from the formalistic approach
. . . do not justify forfeiture of a party’s right to appeal in cases
where his or her intent to participate in the appeal is reasonably
clear from the record, and the omission has caused no confusion
or prejudice to the opposing party.”].)
        Under the rule of liberal construction and in line with the
strong public policy favoring the hearing of appeals on their
merits, we construe the notice of appeal to include Enright as an
appealing party. (See K.J., supra, 8 Cal.5th at p. 882 [CRC, rule
8.100 “is intended to ‘implement the strong public policy favoring
the hearing of appeals on the merits’ ”].) Accordingly, we deny
plaintiff’s motion to dismiss.

                                  6
2.     The Trial Court Did Not Err in Adding Enright as a
       Judgment Debtor
       A.     Law and Standard of Review
       “Ordinarily, a corporation is regarded as a legal entity,
separate and distinct from its stockholders, officers and directors,
with separate and distinct liabilities and obligations,” but a
“corporate identity may be disregarded—the ‘corporate veil’
pierced—where an abuse of the corporate privilege justifies
holding the equitable ownership of a corporation liable for the
actions of the corporation.” (Sonora Diamond Corp. v. Superior
Court (2000) 83 Cal.App.4th 523, 538; see also Aljabban v.
Fontana Indoor Swap Meet, Inc. (2020) 54 Cal.App.5th 482, 509;
Voris v. Lampert (2019) 7 Cal.5th 1141, 1159 [“ ‘[W]here there is
evidence that officers or directors have abused the corporate
form, a plaintiff may proceed on a theory of alter ego liability.’
[Citation.]”].)
       The trial court has the authority, under Code of Civil
Procedure section 187, “to amend a judgment to add an alter ego
of an original judgment debtor, and thereby make the additional
judgment debtor liable on the judgment. [Citation.] Amending a
judgment to add an alter ego of an original judgment debtor ‘ “is
an equitable procedure based on the theory that the court is not
amending the judgment to add a new defendant but is merely
inserting the correct name of the real defendant.” ’ [Citation.]”
(Highland Springs Conference & Training Center. v. City of
Banning (2016) 244 Cal.App.4th 267, 280 (Highland).)
       Our standard of review is part abuse of discretion and part
substantial evidence. (See Carolina Casualty Ins. Co. v. L.M.
Ross Law Group, LLP (2012) 212 Cal.App.4th 1181, 1189 [“The
trial court’s decision to amend a judgment to add a judgment

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debtor is reviewed for an abuse of discretion. [Citations.]
Factual findings necessary to the court’s decision are reviewed to
determine whether they are supported by substantial
evidence.”].)
       To prevail on a motion to amend the judgment to add an
alter ego defendant, “the judgment creditor must show, by a
preponderance of the evidence, that ‘(1) the parties to be added as
judgment debtors had control of the underlying litigation and
were virtually represented in that proceeding; (2) there is such a
unity of interest and ownership that the separate personalities of
the entity and the owners no longer exist; and (3) an inequitable
result will follow if the acts are treated as those of the entity
alone.’ [Citation.] The decision to grant or deny the motion lies
within the sound discretion of the trial court [citation] and will
not be disturbed on appeal if there is a legal basis for the decision
and substantial evidence supports it. [Citation.]” (Highland,
supra, 244 Cal.App.4th at p. 280.)
       B.    Control of the Underlying Litigation
       Enright first argues that he “did not control the litigation
during the initial suit.” However, he does not address the
evidence supporting the court’s finding that he was in control,
namely the declaration of defendant corporation’s former vice-
president, Condon. Condon stated that Enright “provided all
declarations for the lawsuit,” “made all decisions regarding the
handling of the lawsuit,” signed the verification to discovery
responses, and was deposed pursuant to plaintiff’s person most
knowledgeable deposition notice. Although, Enright denied this
was so and pointed the finger of control at Condon, the trial was
entitled to believe otherwise. (See Consolidated Irrigation Dist.
v. City of Selma (2012) 204 Cal.App.4th 187, 198 [“Appellate

                                  8
courts routinely apply the substantial evidence standard to
findings of fact made by a trial court based on affidavits and
declarations without any oral testimony.”].) Substantial evidence
supports the trial court’s finding that Enright controlled the
litigation such that “he was virtually represented in the lawsuit
and his addition as an additional judgment debtor would not be
unfair.”
       C.    Unity of Interest
       Enright next argues there was no “competent evidence” of a
unity of interest between him and defendant corporation. He
contends that “corporate formalities were met since [defendant
corporation] was incorporated in 1991 and the company
successfully operated as a corporation for many years.” Enright
again does not address plaintiff’s evidence regarding unity of
interest. Instead, he cites only to his declaration in which he
stated that he held “quarterly State of the Union addresses
where” he and Condon “discussed our financials.”
        “In determining whether there is a sufficient unity of
interest and ownership, the court considers many factors,
including ‘the commingling of funds and assets of the two
entities, identical equitable ownership in the two entities, use of
the same offices and employees, disregard of corporate
formalities, identical directors and officers, and use of one as a
mere shell or conduit for the affairs of the other. [Citation.]’
[Citation.] . . . No single factor governs; courts must consider all
of the circumstances of the case in determining whether it would
be equitable to impose alter ego liability. [Citation.]” (Highland,
supra, 244 Cal.App.4th at pp. 280–281.)
       Here, in finding a unity of interest, the trial court cited to
Condon’s declaration testimony that “corporate meetings were

                                  9
never held nor minutes prepared.” The court found that,
although there was disputed evidence as to whether corporate
meetings were held, there was no dispute that “there were no
minutes of any regularly held corporate meetings.” The court
further cited to statements by Condon and the former office
manager that Enright frequently used corporate funds to pay for
personal expenses. Finally, the court relied on Enright’s
admission that he unilaterally “ended” Condon’s involvement in
the company and sold it as an “asset purchase” “without
involving his so-called partner.” Enright does not challenge these
findings which the trial reasonably could have found
demonstrated that defendant corporation did not observe
corporate formalities, and that Enright commingled funds and
exercised total control over corporate decisions. Based on this
record, substantial evidence supports the finding of a unity of
interest.
      D.     An Equitable Result
      Lastly, Enright argues that adding him as a debtor was
inequitable because he sold the company before the judgment
was entered. The trial court reasonably found that this
argument weighed against Enright: “Enright sold the assets of
[defendant corporation] in the summer of 2018 around the same
time he directed that Plaintiff’s claims should go to trial rather
than settling, and then filed a statement of interest for
[defendant corporation] in September 2018 indicating that he
remained the Chief Executive Officer, Chief Financial Officer,
sole Director, and agent for service of process for [defendant
corporation]. This is consistent with Plaintiff’s argument that
Enright stripped [defendant corporation] of any assets it had to
satisfy the judgment.”

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       Enright also argues that plaintiff unreasonably delayed in
seeking to add him as a defendant. He contends that plaintiff
was on notice of his potential alter ego status when discovery
revealed he was president of defendant corporation. However, as
we have explained, status as a corporate officer by itself does not
indicate the potential for alter ego liability. Enright’s very
argument was rejected in no uncertain terms in Greenspan v.
LADT, LLC (2010) 191 Cal.App.4th 486. There the trial court
denied plaintiff’s motion to add an alter ego judgment debtor. In
its ruling, the trial court stated that the alter ego status should
have been litigated in an underlying arbitration. Our colleagues
in Division One reversed. “An arbitration or civil suit is intended
to determine liability and damages on specified causes of action,
not to resolve hypothetical problems the plaintiff might face in
collecting on a judgment. In this case, [the plaintiff] had no
reason to name the [the alter ego] parties as defendants in the
original suit. As a result, the discovery concerning alter ego
issues, in the form of judgment debtor proceedings, occurred after
the judgment was obtained. [Citations.] But under the trial
court’s reasoning, the plaintiff in every corporate contract case
would be encouraged—regardless of the circumstances—to sue
not only the corporation but also its owners and affiliated
companies and then engage in pretrial discovery in an attempt to
establish alter ego liability. This would promote a fishing
expedition into alter ego evidence before the plaintiff obtained a
favorable judgment, if at all. Thus, it may be prudent for a
plaintiff to sue only the corporation. Should problems later arise
in satisfying a judgment against the corporation, the plaintiff
may resort to appropriate postjudgment proceedings [citations],

                                11
including [Code of Civil Procedure] section 187’s procedure for
adding judgment debtors.” (Id. at p. 517.)
       Nor did Enright demonstrate he was prejudiced by the
timing of the alter ego motion. On the contrary, the trial court
found that Enright “failed to identify a single document or
witness to whom he has lost access because of the timing of this
motion.” (See Highland, supra, 244 Cal.App.4th at p. 286 [alter
ego motions are subject to laches, but the defendant must
demonstrate prejudice].)
       Finally, we observe that Enright was solely responsible for
the roofing damage in the underlying litigation as he admitted he
made the decision to substitute cheaper materials, and failed to
disclose that substitution to plaintiff. This record adequately
supports the trial court’s conclusion that it would be inequitable
to treat the defendant corporation’s breach of contract as a
liability of the corporation alone.1

1      In his opening brief, appellant argued that, if we were to
affirm any part of the judgment, we should excise the attorney
fees from the award. Appellant cited to no authority for this
proposition. Counsel repeated the point at oral argument, again
without authority but coupled with the contention that a
reduction in the award would be equitable. We are aware of no
authority that would allow us to modify the judgment based on
the record before us; nor do we find that it would be equitable to
do so.

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                         DISPOSITION
      The second amended judgment is affirmed. Respondent to
recover its costs on appeal.

                                       RUBIN, P. J.
WE CONCUR:

                      MOOR, J.

                      KIM, J.

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