Court Opinion

ID: 4569102
Source: CourtListenerOpinion
Date Created: 2020-09-23 20:02:22.230511+00
Date Added: 2024-06-11T08:46:46.625470
License: Public Domain

Filed 9/23/20 Dent Mart Internat. v. Eun Hee Dental etc. CA2/3

 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(a). This
 opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a).

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        SECOND APPELLATE DISTRICT

                                     DIVISION THREE

 DENT MART                                                      B299970
 INTERNATIONAL, INC., et al.,
                                                                Los Angeles County
      Plaintiffs and Appellants,                                Super. Ct. No. BC664308

      v.

 EUN HEE DENTAL
 LABORATORY, INC., et al.,

      Defendants and Respondents.

     APPEAL from a judgment of the Superior Court of Los
Angeles County, Steven J. Kleifield, Judge. Affirmed.
     Lyle R. Mink for Plaintiffs and Appellants.
     Allan Calomino for Defendants and Respondents.
           _______________________________________
                       INTRODUCTION

       Plaintiff and appellant Dent Mart International, Inc. (Dent
Mart) obtained a multi-million-dollar judgment against Hyo Dong
Kim in 2013. When Kim subsequently filed for bankruptcy, Dent
Mart alleged that Kim owned a company known as Neo Milling
Center (Neo Milling). The bankruptcy trustee was unable to
confirm that Kim owned Neo Milling. The trustee stipulated,
however, that Dent Mart could attempt to establish an ownership
interest in state court and distribute any recovered proceeds on a
pro rata basis to itself and the other unsecured creditors.
       Dent Mart filed the present action seeking a declaration
that Kim owned some or all of Neo Milling at the time he filed for
bankruptcy. Dent Mart named Kim, respondent Kwang Ho Cho
(the purported owner of Neo Milling), and respondent Eun Hee
Dental Laboratory, Inc. (the corporation that does business as
Neo Milling) as defendants. The court concluded Dent Mart failed
to establish that Kim had an interest in Neo Milling and Dent
Mart appeals.
       During the multi-day bench trial, multiple witnesses
testified that Kim transferred his interest in Neo Milling to Cho
in 2007 and their testimony was supported by documentary
evidence as well as the opinion of the lead forensic accountant
hired by the bankruptcy trustee. Dent Mart wholly ignores that
evidence on appeal—a strategy that violates the most basic rules
of appellate practice. That defect notwithstanding, we address
the merits of the appeal and conclude substantial evidence
supports the court’s judgment. Accordingly, we affirm.

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       FACTS AND PROCEDURAL BACKGROUND

1.    The Corporate Entities
       Kim formed Chung Hyun Dental Laboratory in 2000. The
company fabricated prosthetic teeth for dentists. At all relevant
times, that company did business as Neo Dental Laboratory (Neo
Dental).
       Kim formed Eun Hee Dental Laboratory in 2003. In 2005,
Eun Hee Dental Laboratory began operating as a milling center,
manufacturing foundations for prosthetic teeth. At all relevant
times, it did business as Neo Milling. Initially, Neo Milling’s only
customer was Neo Dental and the companies operated at the
same location. Neo Dental owned the machine required to
operate the milling business.
       By the fall of 2007, Neo Milling was not yet turning a
profit. Kim considered shuttering the business but ultimately
decided to transfer Neo Milling to Cho, so long as Cho had at
least $10,000 in operating capital. Cho agreed. No money was
exchanged and Kim considered the transfer to be a gift. In
September 2007, Kim told his accountant about the transfer of
Neo Milling to Cho and asked him to file paperwork with the
state reflecting the change in ownership. The company’s
subsequent tax returns, information statements, and business
licenses listed Cho as the sole owner.
2.    The 2014 Judgment Against Kim
      In 2012, Dent Mart filed a lawsuit (the 2012 litigation)
against Kim and others (collectively, the defendants) alleging
that the defendants engaged in unlawful competitive conduct.
The complaint asserted claims for breach of contract, intentional
and negligent interference with prospective economic advantage,

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unfair competition, and unjust enrichment. A jury found in favor
of Dent Mart on the intentional interference claim and, with
respect to Kim, awarded $1,221,547 in compensatory damages,
$1,154,000 in punitive damages, postjudgment interest, and costs
of suit. The court entered the final judgment in Dent Mart’s favor
on January 21, 2014.
3.    Kim’s Bankruptcy; Dent Mart’s Stipulation With The
      Trustee
       Kim filed for bankruptcy in February 2014. Neo Dental was
later sold by the bankruptcy trustee. Although Kim did not
include Neo Milling as an asset in his initial bankruptcy
schedules, he claimed an interest in the company on one of his
amended schedules, stating “Eun Hee Dental Laboratory, Inc.
[While Debtor is not a shareholder, Debtor believes he has an
equitable ownership pursuant to an unwritten agreement
between the Debtor and current sole shareholder that any net
profits will be shared 50/50. However, company has had no
profits since formation in 2003.]” Dent Mart, seeking to secure its
judgment, alleged a unity of interest between Neo Dental and
Neo Milling.
       The bankruptcy trustee hired a forensic accounting firm to
inspect the books and records of Neo Milling and Neo Dental in
order to determine whether Kim had any interest in Neo Milling.
After a lengthy investigation, however, the accountants were
unable to confirm that Kim had any interest in Neo Milling. In
light of that outcome, the trustee was prepared to abandon any
theoretical interest in Neo Milling back to Kim. But Dent Mart’s
counsel represented to the trustee that he was knowledgeable
about Neo Milling and was well situated to investigate and
recover any value from Kim’s alleged interest in Neo Milling.

                                4
With the approval of the bankruptcy court, the trustee then
stipulated to transfer “all of the Estate’s right, title and interest
in [Neo Milling]” to Dent Mart so that Dent Mart could attempt
to recover additional funds on behalf of itself and the other
unsecured creditors.
4.    Proceedings Below And The Appeal
       Dent Mart filed the present action seeking declaratory
relief regarding the ownership of Neo Milling and named Kim,
Cho, and Eun Hee Dental Laboratory as defendants. Kim
defaulted, leaving Cho and Eun Hee Dental Laboratory to defend
the action.
       According to Dent Mart, Kim testified that he owned Neo
Milling during the 2012 litigation but concealed that interest
during the early bankruptcy proceedings in order to protect it.
Kim’s prior testimony conclusively established that he owned Neo
Milling, Dent Mart claimed, and the company therefore became
part of the bankruptcy estate. Dent Mart further alleged that the
stipulation with the trustee “effectively made Dent Mart the sole
shareholder of [Neo Milling].”
       The court conducted a bench trial and heard testimony
from, among others, Kim, Kim’s accountant, Cho, and one of the
forensic accountants hired by the bankruptcy trustee. The court
also received a substantial amount of documentary evidence
concerning the business operations of Neo Dental and Neo
Milling. Ultimately, the court concluded that Dent Mart failed to
establish that Kim had an interest in Neo Milling at the time he
filed his bankruptcy petition.
       Dent Mart timely appeals.

                                  5
                         DISCUSSION

1.    Standard of Review; Appellant’s Burden on Appeal
        Before reaching the merits of this appeal, we consider
several preliminaries.
        Dent Mart suggests that we should review the court’s
decision in this case independently. Well-settled law is to the
contrary. “ ‘ “When a trial court’s factual determination is
attacked on the ground that there is no substantial evidence to
sustain it, the power of an appellate court begins and ends with
the determination as to whether, on the entire record, there is
substantial evidence, contradicted or uncontradicted, which will
support the determination, and when two or more inferences can
reasonably be deduced from the facts, a reviewing court is
without power to substitute its deductions for those of the trial
court. If such substantial evidence be found, it is of no
consequence that the trial court believing other evidence, or
drawing other reasonable inferences, might have reached a
contrary conclusion.” [Citation.] The substantial evidence
standard of review is applicable to appeals from both jury and
nonjury trials. [Citation.]’ [Citation.]” (Whitney v. Montegut
(2014) 222 Cal.App.4th 906, 912, italics omitted.)
        Several foundational principles of appellate law guide our
review. The most fundamental rule of appellate review is that the
judgment or order challenged on appeal is presumed to be correct,
and “it is the appellant’s burden to affirmatively demonstrate
error.” (People v. Sanghera (2006) 139 Cal.App.4th 1567, 1573.)
“ ‘All intendments and presumptions are indulged to support it on
matters as to which the record is silent, and error must be
affirmatively shown.’ ” (Denham v. Superior Court (1970) 2
Cal.3d 557, 564.) To overcome this presumption, an appellant

                                6
must provide a record that allows for meaningful review of the
challenged order. (Ibid.) In addition, “an appellant must present
argument and authorities on each point to which error is asserted
or else the issue is waived.” (Kurinij v. Hanna & Morton (1997)
55 Cal.App.4th 853, 867.) Matters not properly raised or that lack
adequate legal discussion will be deemed forfeited. (Keyes v.
Bowen (2010) 189 Cal.App.4th 647, 655–656.)
       Dent Mart largely fails to apply these well-settled
principles. In addition to applying the incorrect standard of
review, Dent Mart’s legal contentions are barely discernable. We
address below those arguments we were able to identify.
       Finally, and of greatest concern, Dent Mart fails to present
the evidence in the light most favorable to the judgment, as is
required. A party who contends that a particular finding is not
supported by substantial evidence is obligated to set forth in his
or her brief all the material evidence on the point, not merely the
party’s own evidence. (Boeken v. Philip Morris, Inc. (2005) 127
Cal.App.4th 1640, 1657–1659.) Facts must be presented in the
light most favorable to the judgment (id. at pp. 1657–1658), and
the burden on appellant to provide a fair summary of the
evidence “ ‘ “grows with the complexity of the record.
[Citation.]” ’ ” (Myers v. Trendwest Resorts, Inc. (2009) 178
Cal.App.4th 735, 739; see Cal. Rules of Court, rule 8.204(a)(1)(C)
[briefs must support any reference to a matter in the record with
a citation to the record]; rule 8.204(a)(2)(C) [appellant’s opening
brief must “[p]rovide a summary of the significant facts limited to
matters in the record”].) The appellant waives a claim of lack of
substantial evidence to support a finding by failing to set forth,
discuss and analyze all the evidence on that point. (Foreman &

                                7
Clark Corp. v. Fallon (1971) 3 Cal.3d 875, 881 [error is deemed to
be waived]; Myers, at p. 749.)
       Dent Mart mentions little, if any, of the evidence that
supports the court’s judgment—an approach that borders on
deception. We could treat the substantial evidence issue as
forfeited or waived and simply presume the record contains
evidence to sustain every finding of fact. (See Arechiga v. Dolores
Press, Inc. (2011) 192 Cal.App.4th 567, 571–572 [appellant
ignored fundamental rule of appellate practice obligating him to
fairly and completely summarize evidence supporting the
judgment]; Doe v. Roman Catholic Archbishop of Cashel & Emly
(2009) 177 Cal.App.4th 209, 218 [issue forfeited where party did
not fully and fairly discuss conflicting evidence].) But because
Dent Mart’s arguments are easily addressed, we discuss them
briefly.
2.    Dent Mart failed to establish that Kim owned Neo
      Milling at the time he declared bankruptcy.
      As noted ante, Kim, Kim’s accountant, and Cho all testified
that Kim transferred ownership of Neo Milling to Cho in the fall
of 2007. The transfer request was contemporaneously
documented in a facsimile from Kim to his accountant. And the
company’s tax returns, statements of information, and business
licenses uniformly state that Cho was the president and sole
owner of Neo Milling beginning in 2007.
      Notwithstanding this evidence, Dent Mart claims that Kim
owned some, or perhaps all, of Neo Milling at the time he
declared bankruptcy in 2014. Several equitable doctrines exist
that could allow a court to disregard a corporate form or reach
corporate assets where recognizing the corporate form yields
unjust results: constructive trust, equitable estoppel, alter ego,

                                 8
and piercing the corporate veil are the most common theories.
But Dent Mart did not invoke any of these doctrines below1 and
does not do so in this appeal.
       Instead, Dent Mart insists that no transfer of corporate
ownership took place as a matter of law. Dent Mart articulates
its argument as follows: “Here, there is no evidence that Kim
delivered any share certificate in [Neo Milling] to Cho. Indeed, …
the accountant[ ] testified there was no share certificate.
Therefore, there could be no delivery of a certificate to defendant
Cho. Since stock ownership depends on the stock certificate (54
Cal.2d at 676; 93 Cal.App.2d at 702), and since a certificate was
never endorsed and delivered to Cho, Cho never became the
owner of [Neo Milling]. Instead, ownership remained in Hyo Dong
Kim from 2004 until May 11, 2016, when the bankruptcy court
transferred his interest in [Neo Milling] to Dent Mart. Thus, on
May 11, 2016, Dent Mart received a 100% ownership interest in
[Neo Milling].”
       The flaws in this argument are myriad. We address only
three. First, Dent Mart did not pursue this legal theory below. An
appellate court ordinarily will not consider arguments made for
the first time on appeal where it deprives the trial court and the
parties of the opportunity to develop the necessary facts in the
first instance. (Ward v. Taggart (1959) 51 Cal.2d 736, 742.)
Second, and as to the merits of Dent Mart’s argument, a
corporation is not required to issue stock certificates. (Corp. Code,

1 Indeed, the legal basis of Dent Mart’s case was so unclear below that
the judge asked Dent Mart to identify the applicable legal principles at
the outset of the bench trial. In its written response, Dent Mart
suggested the court could apply “any state law that the court might
find useful in deciding the issue.”

                                   9
§ 416, subd. (b).) Rather, if a corporation issues stock certificates,
a corporate shareholder is entitled to a stock certificate upon
request. (Id., § 416, subd. (a).) The cases cited by Dent Mart do
not hold, as it claims, that “stock ownership depends on the stock
certificate.” Instead, the cases cited by Dent Mart explain that
under the former Uniform Stock Transfer Act, if a stock
certificate had been issued for certain shares, a corporation could
not be compelled to issue a second certificate for those same
shares unless and until the first certificate was returned to the
corporation. (See Reynolds v. Reynolds (1960) 54 Cal.2d 669, 680–
682 [explaining that “[t]he theme of the Uniform Stock Transfer
Act, both in its original form and as adopted in California, is
negotiability of the certificates; and this cannot exist unless there
is only one certificate for given shares, carrying with it the
ownership of the shares themselves”].) Third, and in any event,
even if we applied Dent Mart’s suggested rule—that stock
ownership depends on possession of a stock certificate—it would
defeat Dent Mart’s claim because no stock certificates were ever
issued to Kim.
       Alternatively, Dent Mart claims that Kim’s ownership of
Neo Milling is irrefutable as a factual matter. In this regard,
Dent Mart relies on two things: Kim’s testimony in the 2012
litigation and this court’s opinion affirming the judgment in that
case. Again, Dent Mart’s reliance is misplaced. Kim’s prior trial
testimony was offered to impeach Kim’s testimony in this case to
the effect that he transferred ownership of Neo Milling to Cho in
2007. To the extent Kim’s prior testimony impacted the court’s
assessment of Kim’s credibility on that point, we defer to the trial
court. (See, e.g., In re Stephanie M. (1994) 7 Cal.4th 295, 318
[appellate court may not substitute its assessment of the

                                 10
credibility of a witness in place of the credibility assessment of
the trial court].) In any event, and as the court noted, Kim’s prior
trial testimony was not admitted for its truth against Cho or Neo
Milling and Dent Mart has not challenged that evidentiary ruling
in this appeal.
         As noted, Dent Mart also claims that the judgment in the
2012 litigation and this court’s opinion affirming that judgment
conclusively established that Kim owned Neo Milling in 2014. It
is impossible to determine based on the record in this case exactly
what factual issues were litigated and decided in the 2012
litigation. And to the extent Dent Mart implies that principles of
collateral estoppel should govern, it has not developed that legal
argument. It appears, however, that neither Cho nor Neo Milling
was a party to the 2012 litigation and their interests are plainly
not aligned with Kim’s on the issue of corporate ownership. (See
Nein v. HostPro, Inc. (2009) 174 Cal.App.4th 833, 845–846
[“ ‘ “ ‘In the context of collateral estoppel, due process requires
that the party to be estopped must have had an identity or
community of interest with, and adequate representation by, the
losing party in the first action as well as that the circumstances
must have been such that the party to be estopped should
reasonably have expected to be bound by the prior
adjudication’ ” ’ ”].)

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                      DISPOSITION

     The judgment is affirmed. Respondents Eun Hee Dental
Laboratory and Kwang Ho Cho shall recover their costs on
appeal.

 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                LAVIN, J.
WE CONCUR:

     EDMON, P. J.

     EGERTON, J.

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