Court Opinion

ID: 2802426
Source: CourtListenerOpinion
Date Created: 2015-05-20 21:03:05.522031+00
Date Added: 2024-06-11T11:27:36.283195
License: Public Domain

Filed 5/20/15 Poppin v. Cresson CA1/5
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                       FIRST APPELLATE DISTRICT

                                                    DIVISION FIVE

JOHN POPPIN,
         Plaintiff and Respondent,
                                                                     A139918
v.
GEORGE V. CRESSON,                                                   (San Francisco City and County
                                                                     Super. Ct. No. CGC-10-501077)
         Defendant and Appellant.

         John Poppin provided legal services to Infill Community Partners, LP (Infill) in a
bankruptcy proceeding. George V. Cresson signed a payment guaranty for Poppin’s fees
as “president” of Cresson Development Company (CDC), a corporation. At the time of
the guaranty, unknown to Poppin, CDC’s corporate powers had long been suspended.
When Poppin’s fees went unpaid, he sued Cresson individually on the guaranty, alleging
Cresson was liable as CDC’s alter ego. After a bench trial, the trial court ruled in
Poppin’s favor and awarded judgment against Cresson.1 We affirm.
                                               I.       BACKGROUND
         Infill, a real estate investment firm, retained Poppin to represent it in a Chapter 11
bankruptcy proceeding in March 2003. The sole general partner of Infill was
Winterspring Structures LLC (Winterspring), and the managers of Winterspring were
CDC and a trust controlled by Peter M. Radin, Jr. Cresson was the president of CDC.

         1
       Cresson represented himself in the trial court and continues to represent himself
on appeal.

                                                             1
Poppin drafted a fee agreement, as well as an “Agreement of Winterspring, Radin and
Cresson to Pay Attorneys and Experts and Consultants” in relation to Poppin’s
representation of Infill (Guaranty). The Guaranty called for Cresson’s signature (as
president of CDC on behalf of both Winterspring and CDC) and for Radin’s signature.
Poppin asked Cresson to personally guarantee payment of his fees (including costs), but
Cresson refused and told Poppin, “ ‘[D]on’t worry about it. [CDC] is good for it.’ ”
Poppin accepted Cresson’s representation and made no personal investigation into CDC.
In fact, CDC, an Oregon corporation, had been “administratively dissolved” in Oregon in
2000 for failure to file its annual report or pay its annual fee, and it was still inactive as of
2013.2 CDC had also forfeited its right to do business in California in 2002, and those
rights were still forfeited as of 2013.
       Poppin testified that “[Radin] was primarily in charge of the monetary aspects of
this case, and [Cresson was] in charge of the development of the land rights, the water
rights, the CEQA problems and all of that.” Radin negotiated the terms of the fee
agreement and Guaranty, delivered the signed agreements to Poppin, and paid the retainer
and subsequent legal bills on behalf of Infill (through his trust). Radin and Cresson
expressed satisfaction with the quality of Poppin’s legal representation. Infill, however,
was unable to reorganize in the bankruptcy proceeding. Poppin was not paid after
December 2007. He was granted permission by the bankruptcy court to withdraw as
Infill’s counsel in April 2008. The outstanding balance on Poppin’s final invoice was
$70,634.30, an amount still owed at the time of trial.
A.     Lawsuit
       In June 2010, Poppin sued Cresson, Radin and Infill for breach of contract.3 In the
operative third amended complaint, Poppin asserted causes of action for breach of

       2
        CDC was formed as an Oregon corporation on October 4, 1995, administratively
dissolved in Oregon on November 25, 1999, reinstated on January 5, 2000, and again
administratively dissolved on November 30, 2000.
       3
          Because only Cresson is party to this appeal, Poppin’s claims against Radin and
Infill are not discussed.

                                               2
contract and “Common Counts,” which included claims for open book account, account
stated, and quantum meruit. Poppin alleged that Cresson was personally liable under the
Guaranty as the alter ego of CDC. Under the heading, “Piercing the Corporate Veil,” he
alleged that CDC failed to observe corporate formalities, issue shares, hold director or
shareholder meetings, or keep minutes; Cresson commingled personal assets with
corporate assets; CDC was insolvent; and Cresson made several intentional and negligent
misrepresentations. Specifically, it was alleged that “[e]xecution of the written guaranty
by [Cresson] on behalf of [CDC] constituted a misrepresentation that [CDC] was a
corporation in good standing, and had capital and other assets adequate to meet the
obligation that [Cresson] was taking on in its name. [¶] . . . When [Cresson] executed the
[Guaranty], . . . he knew that [CDC] had forfeited its right to do business in California
and Oregon, and had been involuntarily dissolved by the State of Oregon, but failed to
disclose these material matters to [Poppin]. . . . [¶] . . . [Cresson also] knew that [CDC]
was insolvent and lacked assets with which to pay the obligations he was assuming on
behalf of [CDC], but failed to disclose these material matters to [Poppin]. Had [Poppin]
known . . . , he would never have accepted a guaranty purportedly made on behalf of
[CDC], and would not have provided the services which are the subject of this
Complaint.”
B.     Discovery
       Poppin conducted discovery on the alter ego issue. Records obtained from the
California Secretary of State showed that Cresson identified himself as CDC’s chief
executive officer and agent for service of process as of 1995, 1996, and 2000. A 1996
filing identified David Cresson (Cresson’s brother) as CDC’s corporate secretary and
Robert Kulda as its chief financial officer. Cresson listed an address on Purissima Street
in Half Moon Bay for each of the officers and for the corporation. Records obtained
from the Oregon Secretary of State showed that as of November 30, 2000, Cresson was
identified as president and David Cresson was listed as secretary of the corporation, with
both officers sharing an address on Main Street in Half Moon Bay.

                                              3
       In requests for admissions, Poppin asked Cresson to admit that CDC held no board
of director or shareholder meetings, kept no minutes, issued no shares, failed to make
required filings and fee or tax payments to state governments, and commingled its assets
with Cresson’s personal assets. Cresson denied all of the requests. Through form
interrogatories, Poppin asked Cresson to explain his denials to the requests for admission.
Cresson wrote that, at the time he signed the Guaranty, CDC “was not grossly
undercapitalized,” its liabilities did not exceed its assets, and it was able to meet the
obligations it incurred; all required corporate formalities were observed; and CDC and
Cresson did not commingle personal and corporate assets. He did not recall when CDC
ceased doing business. The form interrogatories asked Cresson to identify persons with
knowledge of facts related to the denials and documents that supported the denials.
Cresson identified no such persons or documents.
       Poppin asked Cresson to bring to his deposition CDC’s articles of incorporation,
bylaws, corporate minutes, bank account statements, financial statements, tax returns,
stock records, and notices received from government agencies. Cresson brought none of
these documents. He testified, “First, let me object based on the privacy of these
documents. [CDC] is not a named defendant. And having said that, I don’t have any of
these documents. [¶] . . . [¶] . . . I’m sure most of them are quite old and date back from
years and years and years ago. I don’t have them, if I ever did have them.” He testified
that he made a diligent search of the offices he controlled and did not find any CDC
documents. “I did not check any sources other than what I control.” He did not ask his
brother, David Cresson, where the documents were because “I didn’t even recall that he
was the secretary,” and “[h]e may not have been the secretary by the time this business
stopped doing business.”
       Cresson testified at the deposition that he was CDC’s president at some point, but
he could not recall whether he was president when CDC was first formed. He did not
recall whether he ever received notices from the States of Oregon and California that
CDC’s corporate status was administratively dissolved or that its right to do business had
been forfeited. He did not recall whether CDC paid any or all of its taxes. He did not

                                               4
know whether CDC issued stock and did not believe he ever owned CDC stock. He did
not know where CDC’s financial statements were or whether they still existed. He
acknowledged that the Cresson name was used in CDC because various members of his
family were involved with the company. The discovery requests and responses were
admitted in evidence at trial.
C.     Motions in Limine and Bench Trial
       Poppin filed motions in limine asking the court to exclude evidence of CDC’s
separate existence as a discovery sanction and asking the court to rule as a matter of law
that Cresson was CDC’s alter ego. The court heard pretrial argument on these issues, but
made no rulings until after trial. Cresson argued pretrial that the action against him
should be dismissed because CDC was an indispensable party and had not been named as
a defendant. The court rejected this argument.
       The case, initially slated for jury trial, ultimately was tried to the court. On the
alter ego issue, Cresson testified that he was president of CDC, but never served in any
other office, “never [was] the responsible managing officer,” and “never held a majority
position.”4 He presented a printout from the Contractors State License Board showing
that CDC was a licensed general contractor, Robert Kulda was the responsible managing
officer of CDC, and CDC had no record of discipline.5 “[H]aving been in business for
many years, . . . [CDC] never was sued, never had a lawsuit resulting in a judgment,
always paid its bills.”
       Cresson further testified, “[W]ith respect to the guaranty, I never should have
signed that. That was a mistake to have ever signed it, given the corporate status of
[CDC]. Very embarrassing. . . . It was not done in bad faith. I was not trying to trick
anybody.” He was “[c]ompletely unaware” at that time that CDC was not in good
corporate standing. “I don’t have a great explanation for it other than carelessness. But I

       4
        The court allowed Cresson to testify in narrative form and to combine his factual
testimony with his legal arguments.
       5
        In his 1996 “Statement by Foreign Corporation,” filed with the California
Secretary of State, Cresson identified the business of CDC as “Real Estate Investments.”

                                              5
don’t think . . . there’s any other fact that would stand for the proposition that [CDC] was
. . . a mere shell or instrumentality.” At the time Cresson signed the Guaranty, CDC was
in a position to cover the $75,000 legal bill that had been projected by Poppin in his
discussions with Cresson, and in an even better position to cover half of that bill, which
was its contemplated obligation. However, the total fees far exceeded the original
projection.
       Cresson testified that he ceased being actively involved in CDC in 2004 or early
2005. “Although I did not formally disassociate from [CDC], Robert Kulda took over
[CDC]— . . . took all of its contracts and took over the banking. . . . [¶] . . . [¶] . . . I
handed off that company to Robert Kulda.”
       In June 2005, a controversy apparently arose about Cresson’s liability under the
Guaranty. Cresson did not remember signing the Guaranty until he reviewed a copy of it
and saw his signature on behalf of CDC. Cresson promptly informed Poppin by email
(with a copy to Radin): “We need to alter the engagement letter to reflect that [CDC] is a
now [a] defunct entity.” Poppin replied, “How do you suggest that we change the
Agreement?” Cresson did not respond. Radin replied to Cresson, “[A]lter it how . . . to
add you as an individual?” Cresson responded (with a copy to Poppin): “Sorry. No can
do. [I] don’t have the dollars to make that kind of guarantee.” Poppin did not reply to
this second email, investigate the status of CDC, or take other action with respect to the
Guaranty. Cresson testified, “I certainly don’t believe that I did deal with him unjustly.
When I had bad news to convey, I did not sugarcoat it. I was very straight.” He argued
Poppin could have sought to withdraw as Infill’s counsel at that point, thereby limiting
his fee exposure. Poppin testified that he first learned that CDC had been suspended only
after he had withdrawn as counsel for Infill in 2008, and that if he had learned about the
suspension earlier he would have tried to extricate himself from the case. Regarding
Cresson’s 2005 email, Poppin testified, “[Cresson] wrote to me in an email, ‘We’re
broke.’ Do you know how many debtors have written, ‘We’re broke and can’t pay,’ and
they’re lying?”

                                                 6
D.     Closing Argument
       On the alter ego issue, Poppin argued, “There’s no evidence to suggest that . . .
Cresson ever conducted . . . his corporation in any way which would allow there to be a
separation between individual and the corporation. We’ve asked him to produce . . .
separate bank accounts, some minutes, all the things that the law requires you to do to
separate yourself from a corporate entity and there were none of those,” even though
Cresson was in a position to produce the records. “I don’t know what else we can do in
terms of proof except to send interrogatories and ask to please produce the documents
which show . . . validity of the corporation. [¶] . . . [¶] [W]e have to assume, since they
couldn’t produce them, they didn’t know where they were or . . . that none exist.”
       Cresson responded that Poppin bore the burden of proof on the alter ego issue and
“there’s a factual vacuum[.] . . . [A]s long as I have discharged honestly and diligently
my discovery obligations, I am not responsible for that factual vacuum.” Had discovery
been propounded directly on CDC, Cresson argued, “Kulda would have come in here
with all these documents, all the banking records and my brother would have found . . .
the old corporate records to the extent he had them. I don’t have them. If I had them, I
would have brought them.” “I use my brother’s office . . . as a mailing address. . . .
[¶] . . . I’m working mainly out of a pizza-and-Kinko’s.” He argued, “I have offered
testimony [of CDC’s separate corporate existence] and that testimony is not contradicted
by any evidence. And of the 20 factors [in Associated Vendors, Inc. v. Oakland Meat Co.
(1962) 210 Cal. App. 2d 825] . . . [¶] I think the one fact that has been offered . . . is . . . I
executed a document on behalf of a defunct entity. But I don’t believe that there’s any
evidence to support any of the other factors.”
       “Even putting that aside,” Poppin argued, “it is quite sufficient [to establish alter
ego liability] . . . to show that the corporation was defunct and not allowed to do business
long before they entered into the contract.” He expressly argued that the case turned on
the fact that CDC was unable to do business in 2003 when Cresson signed the Guaranty.
He argued Cresson was “lying” in 2003. “Cresson knew very, very well that his
company was defunct. He knew it because he controlled it. He was the president of it.”

                                                7
Cresson maintained, “I don’t believe that someone is entitled to just accept that I am the
one and only authority for [CDC]. I never suggested that, and Robert Kulda was actually
involved in [the Infill] project.” He argued further, “[CDC] was a bit player in this
guarantee. No bills went to [CDC]. When there were dunning calls, they didn’t go to
[CDC]. When [Poppin] learned of the disability of [CDC], contrary to his stated view
that he would immediately withdraw, he didn’t do that. It was years later that he
withdr[e]w. His motion to withdraw had nothing to do with [CDC’s] disability. [¶] . . .
[H]e saw an error, a very embarrassing error on my part, in the formulation of that
document and pounced on it for collection purposes. That’s what people do when they
are owed money. But I don’t believe that . . . it was ever really relied upon to begin with.
And I don’t believe that it was handled in the proper way once the disability of [CDC]
was learned.”
       Cresson further argued that once there had been a late payment or at least once he
told Poppin in 2005 that CDC was defunct, Poppin should have addressed the issue and
demanded a replacement guaranty or withdrawn as counsel.
E.     Oral Statement of Decision
       The trial court rendered an oral statement of decision on the alter ego issue.
“Poppin testified with no contradiction that he asked for a personal guaranty . . . for
[Cresson] to sign personally. But you made it clear you were not going to sign and put
yourself personally on the hook. . . . [¶] . . . [But] you said, ‘My company’s good for it.’
. . . [W]as it reasonable for him to rely on a referred contract with a corporate president to
sign on the bottom line? Yes. [¶] It’s not a fraud case . . . where . . . the jury evaluates
whether it was reasonable reliance and so forth. This was the negotiated deal, and . . .
this is not an impermissible risk. It was a risk of saying, I’d like your personal guaranty.
Answer: I’m not going to give it. Well, then how about your corporation? It’s good for
it. [¶] . . . Cresson said, I really had in mind that my company had at least $37,500. We
could have been good for that. But somehow then, some years later when we got behind
in and made it clear that my company was defunct, . . . [¶] . . . that somehow from that
moment forward, . . . Poppin probably should have—well, and that’s where the argument

                                               8
breaks down, because it’s not a legal argument; it’s something about justice and fair play.
[¶] . . . [¶] . . . Cresson, . . . as the president of the company, having elected to do business
in the form of a corporation that offers substantial protections exactly of the kind you’re
describing, that it’s a matter of the corporation maintaining the distinction between an
individual and the corporate entity and causing meetings to occur and causing minutes to
be prepared and to maintain a minute book, and to have share certificates and to make
regular filings and pay the money to the state for the privilege of doing business. [¶] And
I think the history in Oregon with two sets of suspensions and revivors and notices to you
as president and the history in California of that, it makes it difficult. It tells me that,
without saying anything bad, something is happening in your life but you are charged
with the responsibility for keeping alert to those developments if you want the protection
of the form of a corporation of doing business. [¶] And as it relates to the discovery
process, well, it’s my brother, this address, or it’s just an office drop or things going on, I
think you, as president of the corporation, were in a far superior position to quickly,
efficiently scoop up a paper bag with whatever papers there were and answer questions
under oath at a deposition. And it’s not an obligation of . . . Poppin . . . to go through the
shell of the corporation to you under these circumstances that he has to do all that.
       “[T]he document from the State of California showed you were not authorized to
sign the document. You call it an embarrassing mistake. It was contrary to the privilege
of doing business as a corporation when you signed as guarantor and when, in addition,
you told . . . Poppin undisputedly that ‘I’m good for it,’ and you had in mind at least
[$]37,000 in the bank. For two years or three you hadn’t been authorized to do business
anyway. [¶] So I do find that there’s ample reason in justice and in equity to disregard the
corporate entity in this case.”
F.     Judgment
       The court entered judgment against Cresson (and Radin) for $70,634.30 in fees
and $35,317.15 in interest, for a total of $105,951.45.

                                                9
                                      II.    DISCUSSION
       Cresson argues the trial court’s finding that he was liable as CDC’s alter ego was
unsupported by substantial evidence. We conclude the trial court’s statement of decision
cites substantial evidence supporting a finding of unity of interest between Cresson and
CDC and a conclusion that recognizing the separate identity of CDC would lead to an
inequitable result.6
A.     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.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal. App. 4th 523,
538.) “Whether a party is liable under an alter ego theory is normally a question of fact.
[Citations.] ‘The conditions under which the corporate entity may be disregarded, or the
corporation be regarded as the alter ego of the stockholders, necessarily vary according to
the circumstances in each case inasmuch as the doctrine is essentially an equitable one
and for that reason is particularly within the province of the trial court.’ [Citation.]
Nevertheless, it is generally stated that in order to prevail on an alter ego theory, the
plaintiff must show that ‘(1) there is such a unity of interest that the separate personalities
of the corporations no longer exist; and (2) inequitable results will follow if the corporate
separateness is respected.’ ” (Zoran Corp. v. Chen (2010) 185 Cal. App. 4th 799, 811
(Zoran).)
       “ ‘The alter ego test encompasses a host of factors: “. . . [c]ommingling of funds
and other assets, failure to segregate funds of the separate entities, and the unauthorized
diversion of corporate funds or assets to other than corporate uses[;] . . . the treatment by
an individual of the assets of the corporation as his own[;] . . . the failure to maintain
minutes or adequate corporate records, and the confusion of the records of the separate
entities[;] . . . the failure to adequately capitalize a corporation; the total absence of
corporate assets, and undercapitalization[;] . . . the use of a corporation as a mere shell,

       6
        Because we affirm the judgment based on a finding of alter ego liability, we need
not address Poppin’s argument regarding the second cause of action (common counts).

                                               10
instrumentality or conduit for a single venture or the business of an individual or another
corporation . . . . This long list of factors is not exhaustive. The enumerated factors may
be considered “[a]mong” others “under the particular circumstances of each case.” ’
[Citations.] ‘No single factor is determinative, and instead a court must examine all the
circumstances to determine whether to apply the doctrine.’ ” (Zoran, supra,
185 Cal.App.4th at pp. 811–812; see Associated Vendors, Inc. v. Oakland Meat Co.,
supra, 210 Cal.App.2d at pp. 838–840.)
        We review the trial court’s alter ego ruling for substantial evidence, with “all
conflicts in the evidence . . . resolved in favor of the respondent, and . . . all legitimate
and reasonable inferences . . . indulged in to uphold the findings of the trial court.”
(Associated Vendors, Inc. v. Oakland Meat Co., supra, 210 Cal.App.2d at p. 835.)
“ ‘Whether the evidence has established that the corporate veil should be ignored is
primarily a question of fact which should not be disturbed when supported by substantial
evidence.’ ” (Toho-Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013)
217 Cal. App. 4th 1096, 1108.)
B.      CDC’s Direct Liability
        As a preliminary legal matter, Cresson argues on appeal that a prerequisite to
imposing alter ego liability on an individual is a finding that corporation itself was liable
under the contract. He argues his signature on the Guaranty as CDC’s president was
insufficient alone to bind CDC, and therefore the prerequisite was not satisfied in this
case.
        This argument is forfeited because Cresson did not raise it in the trial court until
after entry of judgment. Cresson claims he argued during the trial “that CDC only
partially executed the [Guaranty] . . . and that CDC was not bound by it.” In the passage
of the reporter’s transcript that Cresson cites in support of this claim, however, he
testified, “I should never have even partially had [CDC] partially execute a document
when its corporate status was as it was at that time. I don’t dispute that.” Cresson
acknowledged his negligence in signing the Guaranty on behalf of CDC when CDC’s
corporate status had been suspended and argued, “I don’t believe, other than that fact—

                                               11
and it’s a terrible one, I admit it— . . . there’s any other fact that would stand for the
proposition that [CDC] was . . . a mere shell or instrumentality.” (Italics added.) Cresson
was acknowledging that his execution of the Guaranty while CDC was suspended tended
to support imposition of alter ego liability. He never argued that his sole signature on the
Guaranty was insufficient to bind CDC and thus there was no corporate liability for
which he could be held personally responsible. Cresson seems to fail to appreciate the
irony in his argument that the Guaranty is invalid due to failure of the corporation to
observe corporate formalities to ratify and approve his signature. The argument is in any
event forfeited. (See Ward v. Taggart (1959) 51 Cal. 2d 736, 742.)
C.     Discovery Documents
       As a preliminary procedural matter, Cresson contests Poppin’s reliance on
Cresson’s deposition testimony and responses to discovery demands (Exhibits 8 & 10).7
Cresson raises numerous challenges to the trial court’s and this court’s consideration of
these exhibits, none of which we find persuasive.
       Cresson argues “the trial court was not entitled to rely upon and this court must
disregard these trial exhibits because each of them was lodged with the trial court with
the express representation by Poppin’s attorney that they were being lodged with the trial
court, ‘not for purposes of this trial.’ ” This is a mischaracterization of the record. In
relation to the disputed exhibits, Poppin’s attorney first commented, “We offer Exhibits—
not for the purposes of this trial, but just to make sure the record is clear—Exhibits 7
and 8. I think 7 I don’t have in front of me. 7 are the documents that we asked you to
take judicial notice of. [¶] . . . [¶] . . . And I just wanted to make sure the record was clear
on that and that they were lodged with the court in their original form.” The court
acknowledged that it would “take judicial notice of those.” Exhibit 7, which is included
in the appellant’s appendix, consists of the notices from Oregon and California
concerning CDC’s suspended status and related state records. Poppin had previously

       7
        Cresson complains that he could not locate Exhibits 8 or 10 in respondent’s
appendix. Both exhibits, however, are clearly indentified in the appendix and listed in
the index.

                                               12
filed a request for judicial notice of those records in support of his motions in limine on
the alter ego issue, and the court apparently had deferred ruling on that request. Poppin’s
attorney thereafter offered Exhibits 8 and 10 to “be admitted into evidence,” and the court
said, “They’re admitted.” Taken in context, the record does not support Cresson’s
contention that Exhibits 8 and 10 were simply subjects of judicial notice and were not
received in evidence for purposes of trial.
       Cresson next contends Poppin lodged Exhibits 8 and 10 with the trial court
“without first showing any of them to defendants,” and “at no point during the balance of
the trial did Poppin show Cresson any part of these trial exhibits” or give him an
opportunity to explain or respond to them. Poppin’s attorney, however, expressly
described the exhibits to the court as “some discovery that was involved [sic] to
Mr. Cresson” and as “discovery documents” and expressly asked that they “be admitted
into evidence.” Cresson did not object. Poppin previously described and extensively
quoted from the documents in his motions in limine—citing them for the same purpose
pretrial as at trial and on appeal. Cresson never protested in the trial court that he had not
been given an opportunity to explain his discovery responses. On the contrary, he
defended his discovery responses as reasonable and argued that Poppin had failed to meet
his burden of producing evidence by failing to propound discovery directly on CDC. We
see no procedural unfairness or error.
       Cresson next argues the exhibits were improperly admitted because they were
incomplete and not properly authenticated or verified; the deposition passages were not
read into the record; and the court never ruled on objections that Cresson made in his
written discovery responses and during the deposition. Because Cresson did not
challenge admission of the evidence on these grounds in the trial court, the arguments are
forfeited. (See Ward v. Taggart, supra, 51 Cal.2d at p. 742.) Even though Cresson
represented himself in the trial court, he is held to the same rules as a represented party.
(See McComber v. Wells (1999) 72 Cal. App. 4th 512, 522–523.)
       In any event, we take into account Cresson’s explanations of his discovery
responses post when we consider whether the trial court’s alter ego finding was supported

                                              13
by substantial evidence. We reject his arguments that the exhibits failed to support the
court’s ruling.
D.     Significance of CDC’s Dissolved and Forfeited Status in 2003
       Cresson argues the trial court applied the wrong legal standard in imposing alter
ego liability. He contends the court pierced the corporate veil solely because CDC was a
suspended corporation in 2003 when Cresson signed the Guaranty on the corporation’s
behalf and not by applying the two-prong alter ego test described in Zoran, supra,
185 Cal.App.4th at page 811.8 Cresson cites a Ninth Circuit opinion expressing its view
that California law does not impose personal liability based solely on a corporation’s
suspended corporate status. (United States v. Standard Beauty Supply Stores, Inc. (1977)
561 F.2d 774, 776–777.) That same opinion, however, acknowledged that a
corporation’s inactive status remains a relevant factor in the alter ego analysis: “[A]
corporation’s failure to pay its franchise tax may be evidence that the shareholders do not
view the corporation as having a separate existence . . . [and] this failure must be treated
and weighed like any other failure to observe the normal requirements for a corporation.”
(Id. at p. 777, italics added.)
       Cresson cites certain comments by the trial court in colloquy during his testimony
as evidence the court expressly disclaimed any reliance on evidence that CDC failed to
observe corporate formalities or on similar alter ego factors. Even if the comments could
be interpreted as Cresson suggest, he takes the remarks out of context, and we conclude
that the court made clear in its oral statement of decision that it did not rely solely on
CDC’s delinquent status to make its alter ego finding.
E.     Unity of Interest Between CDC and Cresson
       As noted ante, the first prong of the alter ego test is whether “ ‘there is such a
unity of interest that the separate personalit[y] of the corporation[] no longer exist[s].’ ”
(Zoran, supra, 185 Cal.App.4th at p. 811.) Cresson complains that the trial court drew a

       8
        We acknowledge that Poppin argued in the trial court that alter ego liability
could be imposed simply because of the corporation’s inactive status at the time Cresson
signed the Guaranty.

                                              14
negative inference from his failure to produce corporate records that would demonstrate
that CDC observed corporate formalities, issued stock, held director and shareholder
meetings, and was adequately capitalized. In other words, the court erred by implicitly
finding that CDC failed to do those things. We find that the court was entitled to draw
such inferences, and that those inferences are more than adequate to support the alter ego
finding.
       Essentially, Cresson argues that the court, in drawing negative inferences from his
failure to produce CDC’s corporate records in discovery, shifted the burden of proof on
the alter ego issue and required him to prove CDC’s separate corporate existence. (See
Mid-Century Ins. Co. v. Gardner (1992) 9 Cal. App. 4th 1205, 1212 [“[i]t is the plaintiff’s
burden to overcome the presumption of the separate existence of the corporate entity”].)
He notes that he testified in deposition that he did not have possession of CDC’s
corporate records, not that those records did not exist; and he testified that he did not
recall whether CDC ever issued stock or paid taxes (and thus presumably had stock or
tax records), not that CDC never had such records. However, the trial court ruled that
Cresson, “as president of the corporation, w[as] in a far superior position to quickly,
efficiently scoop up a paper bag with whatever papers there were and answer questions
under oath at a deposition. And it’s not an obligation of . . . Poppin . . . to go through the
shell of the corporation to you under these circumstances that he has to do all that.” The
court was not required to accept Cresson’s self-serving explanations. Documents
produced from Oregon and California public records showed that Cresson was at least
aware of his obligation to make public filings on behalf of the corporation, and to pay
fees and taxes to keep its corporate powers intact.9 Cresson identified himself in those
filings as the corporation’s president or chief executive officer. The court could
reasonably view Cresson’s disclaimer of knowledge as to the conduct of corporate affairs
and location of relevant records as suspect at best. “If weaker and less satisfactory

       9
        These documents also render suspect Cresson’s denial of knowledge of the
corporate suspensions at the time he executed the Guaranty in 2003.

                                              15
evidence is offered when it was within the power of the party to produce stronger and
more satisfactory evidence, the evidence offered should be viewed with distrust.” (Evid.
Code, § 412; see CACI No. 203.) The trial court here was entitled to view Cresson’s
testimony that CDC observed all corporate formalities with distrust in light of his failure
to produce any corporate records to demonstrate that fact. (See Largey v. Intrastate
Radiotelephone, Inc. (1982) 136 Cal. App. 3d 660, 664, 672 [Evid. Code, § 412 held to
apply where company officer testified from memory about the date of a company board
meeting rather than producing corporate records to establish when the meeting occurred])
       Cresson notes that he was deposed as an individual, not as a representative of
CDC, and that Poppin never claimed Cresson’s responses were inadequate or filed a
motion to compel further discovery responses from him. He cites no authority, however,
for the proposition that failure to seek court intervention or sanctions is necessary before
the trial court could properly draw negative inferences from the discovery responses he
chose to provide.
       There was substantial evidence of CDC’s failure to maintain minutes or adequate
corporate records, disregard of corporate formalities, and use of the corporation, since at
least 2000, as a mere shell, instrumentality or conduit for Cresson’s business. (Zoran,
supra, 185 Cal.App.4th at pp. 811–812.) We conclude the trial court’s finding of unity of
interest and ownership was supported by substantial evidence.
F.     Inequitable Result
       “The second requirement for application of the alter ego doctrine is a finding that
the facts are such that adherence to the fiction of the separate existence of the corporation
would sanction a fraud or promote injustice. [Citation.] The test for this requirement is
that if the acts are treated as those of the corporation alone, it will produce an unjust or
inequitable result.” (Misik v. D’Arco (2011) 197 Cal. App. 4th 1065, 1073; Zoran, supra,
185 Cal.App.4th at p. 811 [“ ‘inequitable results will follow if the corporate separateness
is respected’ ”].) “Certainly, it is not sufficient to merely show that a creditor will remain
unsatisfied if the corporate veil is not pierced . . . . The purpose of the doctrine is not to
protect every unsatisfied creditor, but rather to afford him protection, where some

                                              16
conduct amounting to bad faith makes it inequitable . . . .” (Associated Vendors, Inc. v.
Oakland Meat Co., supra, 210 Cal.App.2d at p. 842.) Nevertheless, neither actual fraud
nor wrongful intent need be shown to establish this inequitable results prong of the alter
ego test. (Claremont Press Pub. Co. v. Barksdale (1960) 187 Cal. App. 2d 813, 817;
Relentless Air Racing, LLC v. Airborne Turbine Ltd. Partnership (2013) 222 Cal. App. 4th
811, 816.) Rather, the second prong is satisfied when the alleged alter ego seeks the
benefits of the corporate form (limited liability) but shirks the corresponding burdens of
the corporate form in a manner that unfairly prejudices the interests of third parties.
(Mesler v. Bragg Management Co. (1985) 39 Cal. 3d 290, 300; Aladdin Oil Corp. v.
Perluss (1964) 230 Cal. App. 2d 603, 614.)
       In its oral statement of decision, the trial court ruled “there’s ample reason in
justice and in equity to disregard the corporate entity in this case” because Cresson signed
the Guaranty on behalf of CDC and expressly assured Poppin that CDC was “good for it”
at a time when Cresson should have known the corporation was defunct.10 Cresson
argues his actions were not inequitable because CDC could have paid Infill’s legal bills at
the time the Guaranty was signed. Although Cresson testified CDC could have paid
Infill’s anticipated bills, the court was free to draw a contrary inference from CDC’s then
dissolved and forfeited status (resulting from CDC’s failure to pay its tax obligations in
both Oregon and California), from Cresson’s inability to produce corporate records that
would corroborate CDC’s financial status in 2003, and from the fact that many of Infill’s
bills ultimately were unpaid.
       Cresson further appears to fault Poppin for failure to withdraw from representation
of Infill after advising Poppin in June 2005 that CDC was defunct. Cresson fails to

       10
          Cresson faults the court for misquoting Poppin’s testimony on this point.
Poppin testified that, when Cresson refused to sign the Guaranty in his individual
capacity, he told Poppin, “ ‘But don’t worry about it. [CDC] is good for it.’ ” The court
quoted Cresson’s statement as “ ‘My company’s good for it.’ ” The court, however, did
not rely on Cresson’s alleged representation that CDC was his company to find an
inequitable result; rather, it relied on Cresson’s representation that CDC was good for it.
The misquotation, therefore, is immaterial.

                                             17
explain how his notice to Poppin would void the obligations of the previously executed
Guaranty, or how Poppin could ethically seek to withdraw from representing his client at
a time when his bills were still being paid. To the extent Cresson contends that Poppin’s
equitable position was compromised by not abandoning his client, we disagree.
       Cresson notes that the trial court stated, “It’s not a fraud case.” However, as noted
ante, actual fraud need not be proven to establish an inequitable result. The court’s point
was that Poppin was not required to prove that he justifiably relied on Cresson’s
statement in order to obtain the relief he sought in the case. The court found that
Poppin’s reliance on the representation of CDC’s president (Cresson) that CDC was
“good for” the Guaranty was reasonable in the alter ego context in the sense that, under
the circumstances, it would be inequitable to not pierce the corporate veil and thereby
deny Poppin recovery. The trial court’s inequitable result finding is supported by
substantial evidence.
G.     Conclusion
       In sum, we find no error in the imposition of alter ego liability on Cresson. “ ‘As
the separate personality of the corporation is a statutory privilege, it must be used for
legitimate business purposes and must not be perverted. When it is abused it will be
disregarded and the corporation looked at as a collection or association of individuals, so
that the corporation will be liable for acts of the stockholders or the stockholders liable
for acts done in the name of the corporation.’ ” (Mesler v. Bragg Management Co.,
supra, 39 Cal.3d at p. 300.) “ ‘Parties who determine to avail themselves of the right to
do business by means of the establishment of a corporate entity must assume the burdens
thereof as well as the privileges.’ ” (Shapoff v. Scull (1990) 222 Cal. App. 3d 1457, 1470,
disapproved on another ground by Applied Equipment Corp. v. Litton Saudi Arabia Ltd.
(1994) 7 Cal. 4th 503, 521, fn. 10.)
                                      III.   DISPOSITION
       The judgment is affirmed. Poppin shall recover his costs on appeal.

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                                 _________________________
                                 BRUINIERS, J.

WE CONCUR:

_________________________
JONES, P. J.

_________________________
SIMONS, J.

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