Court Opinion

ID: 3202844
Source: CourtListenerOpinion
Date Created: 2016-05-11 21:02:32.241942+00
Date Added: 2024-06-11T14:28:24.296771
License: Public Domain

Filed 5/11/16 Dell Canon Investments v. Gabai CA2/8
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                 DIVISION EIGHT

DELL CANON INVESTMENTS, LLC,                                            B259752
et al.,
                                                                        (Los Angeles County
                   Plaintiffs and Appellants,                           Super. Ct. No. BC479241)

                   v.

MORAD GABAI et al.,

                   Defendants and Respondents.

         APPEAL from a judgment of the Superior Court of Los Angeles County. Susan
Bryant-Deason, Judge; Bobbi Tillmon, Judge. Affirmed.

         Vakili & Leus, Sa’id Vakili, Robert M. Zabb and John A. Schlaff for Plaintiff and
Appellant Michael Rostami, M.D.

         Caldwell Law Group and Susan L. Caldwell for Plaintiffs and Appellants Dell
Canon Investments, LLC and Mahnaz Rashti.

         Shafron & Kammer, Shelly Jay Shafron, Kevin David Kammer and Douglas G.
Carroll, for Defendants and Respondents.
                                       __________________________
       Plaintiff Dell Canon Investments, LLC, and its two owners – Mahnaz Rashti and
Michael Rostami – appeal from the judgment in favor of four individual defendants in
Dell Canon’s action to enforce a commercial loan guarantee. Appellants contend there
was insufficient evidence to support the judgment, that instructional error occurred, that
jury misconduct occurred, and that the trial court erred by awarding attorney’s fees
against Rashti and Rostami. We reject these contentions and affirm the judgment.

                       FACTS AND PROCEDURAL HISTORY

       In June 2007, Califa Street, LLC, obtained a $2.1 million loan from All Century,
Inc., to fund the purchase and development of land in Van Nuys.1 This action arises from
the purported guarantee of that loan signed by the four members of Califa Street:
defendants Bahman Kianmahd, Kambash Hakimian, Javid Tehranzadeh, and Morad
Gabai.2
       The owner of lender All Century was Joseph Boodaie, a respected and trusted
member of the Persian community, to which defendants belonged. Although Boodaie
wanted defendants to personally guarantee the Califa Street loan, Kianmahd told him that
the defendants would not agree to do so. Boodaie told Kianmahd that he would not
require their personal guarantees, and Kianmahd conveyed this to his partners.
       When the defendants arrived at Boodaie’s office to sign the loan documents, they
were presented with both a note and a guarantee to sign. Because the structure of these
documents is critical to our decision, we describe them in some detail.
       The text of the note refers to an unidentified “maker” (borrower) until the last
page, where it states: “MAKER: [¶] CALIFA STREET, LLC.” Underneath that are
four signature lines, one for each defendant, with the word “BORROWER” directly

1      For ease of reference, we have rounded the various sums at issue in this case.

2      We will refer to the these four parties either individually by their last names or
collectively as “defendants.” We refer to Califa Street, LLC, as “Califa.” Califa was not
a party to the litigation.

                                             2
beneath each line, followed by the defendants’ names. The defendants also initialed each
page of the note.
       The guarantee begins by stating that it is being executed by “Califa Street, LLC,”
and throughout the text refers to the obligations of “the guarantor” without further
identification. As with the note, the defendants initialed each page of the guarantee. On
the last page, there are signature lines for each defendant. Several spaces above each
signature line is the term “Guarantor.”
       The defendants did not read the documents thoroughly, but, based on Boodaie’s
promise that there would be no personal guarantee of the Califa Street loan, believed that
the identification of Califa Street as the guarantor at the start of that document was
consistent with Boodaie’s assurances. Boodaie believed that he had added the defendants
as both borrowers and guarantors in order to have a means of pursuing any deficiency
should he ever foreclose on the property due to default.
       Califa Street never made any payments on the loan because the deal soured during
the 2008 economic downturn. Many of All Century’s loans were funded through
Boodaie’s revolving $5 million line of credit with Comerica Bank. When Boodaie
defaulted on that loan, Comerica took a bundle of loans funded by Boodaie that it held as
collateral, including the Califa Street loan and guarantee. In 2011, Comerica sold that
package of notes to Dell Canon Investments, LLC, for $1.17 million. Dell Canon
foreclosed on the Califa Street property and recovered net proceeds of $870,000, The
owners of Dell Canon are appellants Mahnaz Rashti and her brother, Michael Rostami.3
       One key issue at trial was whether Dell Canon was prevented from recovering a
deficiency judgment. The trial court ruled that Article 9 of the Commercial Code –

3      Dell Canon and Rashti on the one hand and Rostami on the other are represented
by different counsel on appeal and filed separate appellate briefs. Rostami’s brief is
limited to the issue of attorney’s fees, but he has joined in the arguments raised by Dell
Canon and Rashti, which deal with all the issues raised on appeal. Dell Canon and Rashti
have not joined in Rostami’s arguments, however. We will refer to these three parties
collectively as appellants.

                                              3
governing secured transactions – applied, allowing Dell Canon to recover a deficiency
judgment if it prevailed. Even so, questions lingered as to whether Dell Canon’s
recovery remained limited because it held no more than a security interest in the note. As
a result, Rashti and Rostami asked on the eve of trial to be added as plaintiffs in order to
seek recovery of a deficiency judgment as judgment creditors of Boodaie and All
Century. Defendants stipulated to that request, which the trial court granted. Two weeks
later, while the trial was still underway, defendants were granted a nonsuit as to Rashti
and Rostami.4
       Dell Canon’s trial theory was straightforward: Boodaie never promised to excuse
defendants from serving as guarantors of the Califa Street note, and defendants were
bound by the agreement despite their admitted failures to read it in full. The defense
advanced two primary theories: (1) they were fraudulently induced to sign the guarantee
based on Boodaie’s assurances that he would not require their personal guarantees, with
their reliance justified by the guarantee’s page one identification of Califa Street as the
lone guarantor; and (2) based on Boodaie’s testimony that he intended to make
defendants both borrowers and guarantors, the purported guarantee was illusory because
a debtor cannot guarantee his own debt.
       In addition to instructions concerning fraud and contract interpretation, the jury
was instructed that Dell Canon had to prove the essential elements of contract formation:
clear terms; the exchange of something of value (consideration); and that they agreed to
the contract terms. The jury was not given separate instructions on offer and acceptance,
however.
       The special verdict form began by asking the jury to determine whether the
defendants “sign[ed] and enter[ed] into a contract with All Century, Inc., by which they
individually guaranteed payment of the Califa Street [note].” A finding that they had not
would end the case in defendants’ favor. A finding that they had would allow the jury to

4       We do not have to examine the complexities of the Commercial Code in any
detail. It is enough to note that Rashti and Rostami were briefly added as plaintiffs in
order to protect their right to recover a deficiency judgment under an alternate theory.
                                              4
continue on to numerous additional verdict questions concerning performance and breach
of the guarantee, and whether defendants were defrauded into signing the guarantee. The
jury answered the first question no, resulting in a verdict for defendants.
       Dell Canon moved for a new trial, primarily on the ground of juror misconduct.
This contention was supported by the declarations of three jurors that some jurors:
introduced their own supposed knowledge of the law into the deliberations; were biased
against Rashti and Rostami because of their wealth; fed the jury evidence of Boodaie’s
bad character; reached their verdict by way of a compromise, at least in part because the
foreman was supposed to leave on vacation; and misunderstood the law, making the
verdict against the law. Dell Canon also argued that the trial court erred by instructing
the jury on contract formation after finding that contract formation was not at issue, and
by not instructing the jury on offer and acceptance along with the contract formation
instruction.
       Defendants objected to nearly all of Dell Canon’s jury misconduct declarations,
and those objections were sustained. Defendants also submitted a declaration from the
jury foreman and another juror that rebutted the remaining misconduct contentions. After
weighing the evidence, the trial court found that Dell Canon had not carried its burden of
proving that misconduct occurred and therefore denied the new trial motion.
       Defendants moved to recover attorney’s fees of $463,000 and assorted costs of
$29,000 pursuant to the attorney’s fee provision in the guarantee. Defendants also sought
to hold Rashti and Rostami jointly and severally liable for those fees under several
theories, including their alleged status as the alter egos of Dell Canon. Evidence from the
motion and from Rashti’s trial testimony revealed the following: Dell Canon was formed
by Rashti and Rostami for the sole purpose of buying All Century’s bundle of notes from
Comerica; they never had corporate meetings, took minutes, or otherwise observed the
usual corporate formalities; it was unclear whether Dell Canon had its own bank
accounts; in any event, all the funds for operating Dell Canon came from Rostami’s
personal business account; the fees of the lawyer who handled Dell Canon’s daily
operations and who represented appellants in this action until at least sometime in 2013

                                              5
came from Rostami’s business account; Dell Canon paid $1.17 million for the All
Century notes but recouped less than $1.3 million by foreclosing on three of those
properties, leaving it with only one property – a piece of raw land in the Arizona desert
that Rashti testified was worthless. The $800,000 recouped from foreclosing on Califa
Street went to Rostami.
       Dell Canon’s opposition to defendant’s attorney’s fee motion did not address the
alter ego issue. After taxing more than $10,000 in claimed costs, the trial court awarded
defendants’ attorney’s fees and costs of $465,000 dollars, and made that award joint and
several as to Dell Canon, Rashti, and Rostami. The court’s minute order states only that
it did so for the reasons set forth in defendants’ moving papers, and the record does not
include a transcript of that hearing.

                                          DISCUSSION

1.     The Verdict is Supported by Substantial Evidence

       The judgment for defendants was based on the jury’s negative finding in response
to special verdict question No. 1, which asked whether defendants “sign[ed] and enter[ed]
into a contract with All Century, Inc. by which they individually guaranteed payment of
the Califa Street [note].” Appellants characterize this verdict question as targeted to
contract formation issues of offer and acceptance, and contend there was no substantial
evidence to support the jury’s finding because it was undisputed that defendants had
signed and entered the agreement to guarantee the note.
       Appellants’ contention ignores the other contract formation issue as to which the
jury was instructed: whether there was consideration to support the guarantee agreement.
We begin with the “sham guarantee” doctrine: that a borrower cannot guarantee his own
debt, and that such a purported agreement is illusory and therefore lacking consideration.
(Steiner v. Thexton (2010) 48 Cal. 4th 411, 423 [an illusory promise lacks consideration];
Dole Food Co., Inc. v. Superior Court (2015) 242 Cal. App. 4th 894, 911 [doing what one
is already legally bound to do cannot be consideration for a promise]; River Bank

                                             6
America v. Diller (1995) 38 Cal. App. 4th 1400, 1423; Torrey Pines Bank v. Hoffman
(1991) 231 Cal. App. 3d 308, 319-320 [principal loan obligor’s guarantee adds nothing to
the loan obligation].)
       The jury was instructed that defendants claimed Califa Street had guaranteed its
own debt It was also instructed with a form instruction (CACI No. 302) on the elements
of contract formation: (1) that the contract terms had to be clear; (2) “[t]hat the parties
agreed to give each other something of value [a promise to do something or not do
something may have value]”; and (3) that the parties agreed to the contract terms.
       By focusing on a limited portion of special verdict question No. 1 – whether
defendants signed and entered the guarantee agreement – appellants have ignored the
question’s qualifying descriptor: whether defendants signed and entered “a contract . . .
by which they individually guaranteed” the Califa Street note. If the jury concluded that
the guarantee was effective as to Califa Street only, and not defendants, then it could also
find that the guarantee was illusory and lacked consideration. We believe such a finding
is supported by substantial evidence. (Canister v. Emergency Ambulance Service, Inc.
(2008) 160 Cal. App. 4th 388, 394 [under substantial evidence rule we view the evidence
most favorably to the prevailing party, and indulge in all legitimate and reasonable
inferences to resolve any evidentiary conflicts to uphold the verdict].)
       The first line of the guarantee identifies only Califa Street as the guarantor.
Paragraph D. of the contract recitals states that the “Borrower is, concurrently herewith,
executing” certain instruments: the note, deed of trust, the guarantee agreement, and
something called environmental indemnity. (Italics added.) In short, the guarantee
identified Califa Street as the guarantor, while at the same time stating that the borrower
– Califa Street – was executing the guarantee. Based on this the jury could conclude, as
defendants testified, that the guarantee was effective as to only Califa Street and that they
were signing only on behalf of the LLC. As a result, the guarantee would be illusory and
without consideration. (Louisville Title Ins. Co. v. Surety Title & Guar. Co. (1976)
60 Cal. App. 3d 781, 791 [in jury trial, existence of consideration was a question of fact];

                                              7
Walsh v. Parker (1940) 41 Cal. App. 2d 435, 443 [existence of consideration was question
of fact for jury].)
       Alternatively, the verdict question is so broadly worded that it could be seen as
encompassing defendants’ fraud in the inducement theory based on Boodaie’s assurances
that there would be no personal guaranty. The jury might well have concluded that it was
being asked to reach that issue as well, where they were asked whether defendants agreed
to individually guarantee the Califa Street note. If the jury believed defendants’ version
of events, it could have found that Boodaie gave such an assurance, and, combined with
the contract terms just described, misled defendants to reasonably conclude that they
were signing on behalf of Califa Street.

2.     The Verdict Was Not Inconsistent

       Appellants also contend that the verdict was inconsistent because defendants’ sole
defense was fraud in the inducement, which is not a contract formation defense. This
overlooks extensive discussion in the record concerning defendants’ reliance on the sham
guarantee defense, which relates to the contract formation element of consideration.
During argument about how to instruct the jury on the definition of a guarantee, defense
counsel raised the sham guarantee defense, based on the notion that Califa Street had
guaranteed its own debt. Appellants’ trial counsel acknowledged that the defense could
be raised by way of a proper instruction. Defendants argued that theory to the jury
without objection, at one point telling the jury that appellants had taken the risk of
purchasing an illusory contract. As noted, the jury was instructed to determine whether
there was consideration for the guarantee. Finally, during a discussion with the court
concerning how to answer several jury questions, appellants’ trial counsel acknowledged
that special verdict question No. 1 concerned contract formation, stating that if the jury
answered no to that question, then the result would be a defense verdict.
       On this record we have no doubt that the contract formation element of
consideration was squarely put before the jury, and that the verdict was not inconsistent.

                                              8
3.     Any Instructional Error Was Invited by Appellants

       Appellants contend the trial court erred by denying their new trial motion on the
ground that instructional error occurred in three ways: (1) by instructing the jury on
contract formation (CACI No. 302) after declining to instruct on contract formation
principles of offer and agreement/consent (CACI Nos. 307 & 309) because those matters
were not at issue; (2) in response to a jury question asking for the definition of “consent,”
the trial court refused appellants’ request for clarifying instructions, an error that was
exacerbated by the trial court’s refusal to instruct on principles of offer and contractual
consent; and (3) by refusing to eliminate special verdict question No. 1. The appellate
record tells a different story.
       First, both parties requested CACI No. 302 regarding the essential elements of a
contract. Second, it was appellants’ trial counsel who objected to giving CACI Nos. 307
and 309 on offer and consent. Third, both parties prepared the special verdict form and
the record includes no objections to it by appellants. Fourth, appellants’ counsel did not
ask for a clarifying instruction in regard to the jury’s question about the definition of
consent. Instead, she urged the trial court to let the jury work its way through special
verdict question No. 1.
       Appellants contend that an unreported discussion with the trial court reflects their
objections to these matters, but their failure to make a proper record for appellate review
leaves us unable to evaluate their claims. (Bullock v. Philip Morris USA, Inc. (2008)
159 Cal. App. 4th 655, 678-679.) As a result, we are left with a record that shows
appellants either requested or acquiesced without objection to the instructions and special
verdict question, leaving their claims of error barred under the invited error doctrine.
(Transport Ins. Co. v. TIG Ins. Co. (2012) 202 Cal. App. 4th 984, 1000; Linder v. Cooley
(1963) 216 Cal. App. 2d 390, 393-394.)

                                              9
4.     There Was Substantial Evidence that No Jury Misconduct Occurred

       A new trial may be granted on the ground that the jury committed misconduct.
(Code Civ. Proc., § 657, subd. (2).) Appellants moved for a new trial on this ground
based on the declarations of their lawyer Susan Caldwell and three jurors – Umali,
Nadohl, and Macasero – that jury foreman Landau and other jurors introduced extrinsic
evidence and exhibited bias against appellants. Appellants fail to address the trial court’s
order sustaining each of defendants’ 58 written objections to those declarations.5
Because they do not challenge those evidentiary rulings, those issues are waived.
(Mendoza v. City of West Covina (2012) 206 Cal. App. 4th 702, 712, fn. 10. (Mendoza).)
As a result, we need only address the handful of accusations remaining in appellants’
declarations in support of their new trial motion.
       Distilled, the declarations in support of the new trial motion portray the following
events. The jury was originally deadlocked at 6-6 on question No. 1 of the special verdict
form. The next day, three jurors, including Nadohl, switched their votes to a “no” answer
on that question. Juror 5 and foreman Landau said they had vacations scheduled to begin
the following day. Other jurors said a verdict needed to be reached before then in order
to avoid a mistrial.
       Jury foreman Landau supposedly said that based on his experience as a real estate
broker, All Century could not recover a deficiency judgment. Landau also said that
defendants could not consent to a contract that was not legal or invalid. Landau also said
during deliberations that Boodaie, the owner of original lender All Century, had a
portfolio of loans and had defrauded investors through the same unethical practices that
led to the collapse of the housing market in 2007-2008. Landau supposedly said that
Boodaie’s unethical practices should not be rewarded, and that as a result defendants
should not have to pay back the loan. Landau and Juror No. 2 accused Rostami and
Rashti of being greedy, said they could still recover money from the other notes in the

5     Appellants did not include the trial court’s evidentiary rulings in its appellant’s
appendix. Instead, it is contained in respondents’ appendix.
                                             10
bundle of loans they purchased from Comerica, and otherwise expressed bias against
Rashti and Rostami due to their perceived wealth. Juror No. 2 referred to Rashti as a
greedy bottom feeder who could go back to her million-dollar home. Landau and Juror
No. 2 felt that defendants had lost enough through their $600,000 investment in Califa
Street.6
       In opposition to these declarations, defendants submitted the declarations of
foreman Landau and Juror No. 2, named Katzer. Although appellants filed written
objections to these declarations, the appellate record does not include the trial court’s
rulings, if any. Neither do appellants address that issue. As a result, any evidentiary
challenges to the Katzer and Landau declarations are waived. (Mendoza, supra,
206 Cal.App.4th at p. 712, fn. 10.)
       Katzer’s declaration was brief, but denied any bias on her part and contended that
her vote was based solely on the court’s instructions and her evaluation of the evidence.
Landau’s declaration was lengthy and offered a point-by-point rebuttal or innocent
explanation of the comments and conduct attributed to him.
       Landau flatly denied stating that Boodaie had swindled investors, had a portfolio
of loans, and engaged in conduct that caused the housing market to collapse. Landau was
a real estate licensee, not a broker, and never said that, based on his knowledge as a
broker, All Century could not recover a deficiency judgment. Juror Macasero and
another juror accused defendants of perpetrating a scam by not paying back the loan. In
response to that, Landau said any issues regarding the anti-deficiency laws had no
bearing on whether the guarantee bound the defendants, and opined that that might be
why the jury was not instructed on anti-deficiency principles.
       Although Landau was one of two jurors with paid vacations looming, that did not
affect his deliberations and he was at all times willing to continue deliberating if

6      Appellants’ trial counsel, Susan Caldwell, also submitted a declaration attacking
foreman Landau’s conduct, including speculation that he had conducted an internet
search about Boodaie. The trial court’s evidentiary ruling regarding her declaration left
nothing of substance concerning alleged jury misconduct.
                                             11
necessary. There were no discussions about a mistrial, and he told the others that they
should continue deliberating and wait to see what happened if a verdict could not be
reached. The upcoming vacations of Landau and the other juror had no effect on the
deliberations.
       Landau never stated that the note’s waiver of the anti-deficiency laws was illegal.
He merely said that the term applied to the note, not the guarantee. Given the guarantee’s
uncertainty as to whom were the guarantors, Landau said that appellants had not carried
their burden of showing a valid guarantee.
       He did mention that the defendants had lost their $600,000 investment, but only in
response to claims by other jurors that the defendants had lost nothing and should be
penalized.
       Although Juror No. 2 (Katzer) made general comments at the start of deliberations
about the damage done by greedy lenders, her comments during deliberations focused
solely on the evidence in light of the language of the guarantee. No other jurors
expressed agreement with Katzer’s remark. Landau replied that the jury should consider
only the evidence before it, and nobody disagreed.
       Katzer did not say that appellants could recover millions on the other notes they
bought. Instead, she said that Rashti and Rostami must have made a calculation as to
how much they could recover on the entire bundle of notes they bought from Comerica.
Rashti’s and Rostami’s financial status was not a factor in the deliberations, and Landau
did not recall comments to that effect.
       With these competing declarations in mind, we turn to the law governing new trial
motions. Appellants bore the burden of establishing that jury misconduct occurred.
(Donovan v. Poway Unified School Dist. (2008) 167 Cal. App. 4th 567, 625 (Donovan).)
Whether misconduct occurred requires evidence of overt acts or circumstances capable of
corroboration by sight or sound that suggests a likelihood that one or more jurors were
affected by bias or other improper considerations. (Ibid.) Jury misconduct may be
shown by evidence of statements made, or conduct, conditions or events occurring, in or
out of the jury room that are likely to have improperly influenced the verdict. However,

                                             12
no evidence is admissible to show the actual effect of such statements or other matters
upon a juror, or concerning the mental processes by which the verdict was reached.
(Evid. Code, § 1150, subd. (a); Donovan, supra, at p. 625.)
       In determining whether misconduct occurred, we accept the trial court’s credibility
determinations so long as they are supported by substantial evidence. (Donovan, supra,
167 Cal.App.4th at p. 624.)
       Appellants have not adequately addressed the substantial evidence rule or its effect
on the few misconduct allegations that survived the trial court’s evidentiary ruling in light
of the declarations of Landau and Katzer. Apart from general descriptions of the
misconduct accusations, they do nothing more than provide footnoted record citations to
sections of their supporting declarations that include both the few portions that survived
the trial court’s evidentiary rulings and the vast majority that were stricken. In place of
setting forth and analyzing the Landau and Katzer declarations, they provide a table that
purports to describe them, but does so in a manner that is both general and inaccurate.
Because they have failed to provide meaningful and intelligible arguments on these
issues, we deem them waived and affirm the order denying their new trial motion.
(Luckett v. Keylee (2007) 147 Cal. App. 4th 919, 927, fn. 11.)
       We alternatively conclude on the merits that the trial court did not err. As set forth
above, Landau’s declaration effectively denied or rebutted appellants’ remaining
misconduct allegations. We therefore defer to the trial court’s implied finding that it
believed Landau and Katzer and the express finding that no misconduct occurred.7

7       Appellants contend that, pursuant to Weathers v. Kaiser Foundation Hospitals
(1971) 5 Cal. 3d 98, 111, the trial court applied the incorrect standard when evaluating
their declarations. According to appellants, under Weathers, the trial court was supposed
to determine whether potential juror bias could have occurred that could have affected the
verdict. Without parsing the issue too finely, we simply note that even Weathers held
that credibility determinations concerning whether misconduct occurred were for the trial
court to make. (Id. at p. 106.) In accord with that rule, and the holding in Donovan,
supra, 167 Cal.App.4th at pages 924-925, the trial court made the credibility call that no
misconduct occurred, a finding that we conclude was supported by substantial evidence.

                                             13
5.     The Attorney’s Fee Award Was Proper Under the Alter Ego Doctrine

       Defendants’ moved to obtain attorney’s fees against Rashti and Rostami under a
variety of theories, some based on contract principles, and others related to Article 9 of
the Commercial Code. Defendants also claimed that Rashti and Rostami were liable for
fees as the alter ego of Dell Canon. The trial court’s minute order awarding defendants
their attorney’s fees states only that it did so for the reasons set forth in defendants’
moving papers. The appellate record does not include a transcript of that hearing. As a
result, we presume the trial court awarded fees at a minimum under the alter ego theory.
(Foust v. San Jose Construction Co., Inc. (2011) 198 Cal. App. 4th 181, 186-187 [in
absence of reported proceedings, we presume the trial court’s order is correct, and
prejudicial error must be affirmatively shown].)8
       Code of Civil Procedure section 187 grants the courts the power to carry their
jurisdiction into effect, including the amendment of judgments to add an alter ego of the
original judgment debtor. (Highland Springs Conference and Training Center v. City of
Banning (2016) 244 Cal. App. 4th 267, 280 (Highland Springs).) This is an equitable
theory based on the concept that the court is merely inserting the correct name of the real
defendant. (Ibid.)

8       Appellants complain that the defendants did not raise the alter ego theory and that
the trial court did not rest its finding on that theory. The record shows that the issue was
expressly raised in defendants’ attorney’s fee motion as a separately headed argument
section that was supported by discussion and analysis, along with a supporting
declaration by defendants’ counsel and accompanying evidence. At oral argument,
counsel for Rashti and Dell Canon cited People v. White Eagle (1996) 48 Cal. App. 4th
1511, 1521-1523, for the proposition that the trial court’s failure to make express findings
somehow works in their favor. That case concerns the trial court’s discretionary
authority to dismiss allegations in criminal cases, but does cite the general proposition
upon which we rely: that in the face of a silent record, we presume no error occurred.
        Because we conclude that attorney’s fees were properly awarded under the
implied finding of alter ego, we need not reach the several other theories advanced by
defendants, or Rashti and Rostami’s contention that the fee award should have been
allocated based on their brief time in the action as parties.
                                              14
       Although such an amended judgment requires a noticed motion, an evidentiary
hearing is not required and the trial court may rule based on the declarations and other
written evidence. (Highland Springs, supra, 244 Cal.App.4th at p. 280.) The moving
party 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
at trial; (2) the separation between the new parties and the corporate entity no longer
exists because there is a unity of interest and ownership between them; and (3) if the debt
were to be limited to the corporate entity, an inequitable result will occur. (Ibid.)
       We review the trial court’s order under the abuse of discretion standard and will
not reverse so long as there is a legal basis for the ruling and it is supported by substantial
evidence. (Highland Springs, supra, 244 Cal.App.4th at p. 280.) Although alter ego is
considered an extreme remedy to be sparingly used, application of the doctrine is founded
on the notion that justice is to be done. (Id. at p. 281.)
       The trial court considers several factors when determining whether there is a
sufficient unity of interest and ownership. These include the commingling of funds and
assets, use of the same office and employees, disregard of corporate formalities, identical
officers and directors, the use of the corporate entity as a mere shell or conduit for the
others, and inadequate capitalization. No single factor is determinative, and the trial
court must consider all the circumstances of the case. (Highland Springs, supra,
244 Cal.App.4th at pp. 280-281.)
       Appellants’ trial court opposition to the fee motion did not address the alter ego
issues. On appeal, only Rostami has chosen to address the issue. Although Rostami
joined in the appellate arguments of Rashti and Dell Canon, Rashti and Dell Canon have
not joined in Rostami’s appellate arguments. Accordingly, they have waived the issue.
We therefore proceed to consider the issue as to Rostami.
       Rostami’s first challenge to the fee order is a procedural one: defendants brought
their motion to amend before the judgment was entered, and, in the alternative, should
have asserted their alter ego claim before trial because they knew about the issue ahead of
time. As to the former, we see no harm from the trial court’s apparently premature

                                              15
consideration of the motion, which appellants were free to challenge on that basis. Their
failure to do so amounts to a waiver of the supposed procedural defect. (Keener v. Jeld-
Wen, Inc. (2009) 46 Cal. 4th 247, 264-265 [waiver of procedural irregularities by failure
to timely object].) As to the latter, Rostami cites decisions concerning a plaintiff’s
obligation to name a supposed alter ego as a party defendant in a timely manner.
(Greenspan v. LADT LLC (2010) 191 Cal. App. 4th 486; Jines v. Abarbanel (1978)
77 Cal. App. 3d 702.) We fail to see how a defendant can assert an alter ego claim for
attorney’s fees before trial. In any event, the principle is not mandatory, and at best
stands for the proposition that a plaintiff probably should allege an alter ego claim in its
complaint. (Relentless Air Racing, LLC v. Airborne Turbine Ltd. Partnership (2013)
222 Cal. App. 4th 811, 817 (Relentless).)9
       Before turning to Rostami’s evidentiary challenges to the alter ego finding, we
note again that Rostami and Rashti did not contest that issue when opposing defendants’
attorney’s fee motion. We therefore limit our review to the evidence that was before the
trial court. (See In re Zeth S. (2003) 31 Cal. 4th 396, 405 [appellate review is generally
confined to the record that was before the trial court].)
       The evidence showed that Dell Canon was formed for the sole purpose of buying
All Century’s bundle of notes from Comerica and had no other assets. It had no
employees. Rashti and Rostami did not observe any of the usual corporate formalities,
including meetings, taking minutes, or filing documents with the Secretary of State. All
Dell Canon expenses were paid by Rostami, while Rashti actually managed the business.
In return, she was to receive 50 percent of any profits. Rashti could not recall whether
Dell Canon had its own bank accounts, but she did recall that Rostami funded the
purchase of the Comerica note bundle, along with Dell Canon’s other expenses, from his
personal business account. In addition, Rostami paid the legal fees of a man named

9     At oral argument, counsel for Rashti and Dell Canon contended that no section
187 motion had been made. Once more, the record shows otherwise. Although
defendants’ attorney’s fee motion was not entitled a motion under section 187, the motion
expressly raised section 187 as the underlying authority for imposing alter ego liability.
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Beroukim, who served as Dell Canon’s lawyer for day to day operations and who also
represented Dell Canon in this action until sometime in 2013.
       Without expressly saying so Rostami apparently contends that the failure to
observe corporate formalities was irrelevant given the entity’s joint ownership and
limited activities – buying the bundle of notes and then foreclosing on the properties. He
cites no authority, and we are aware of none, that such circumstances excuse compliance
with the normal formalities of corporate business. That the corporate assets were held in
Dell Canon’s name does not in and of itself undermine this conclusion.
       Rostami next contends that Dell Canon was properly capitalized because for $1.1
million it was able to buy notes with a potentially far greater combined value, and the fact
that the investment did not pay off does not mean the business was not properly funded.
We disagree. The evidence showed that the assets were purchased by Rostami with his
separate funds, not from funds belonging to Dell Canon. Given the risky nature of
Rostami and Rashti’s investment, the absence of any operating funds that belonged to
Dell Canon suggests that the business was nothing more than a shell to hold risky assets.
       Rostami also contends that he did not control the litigation, pointing to Rashti’s
statement that she made all the business decisions. We disagree. First, Rostami paid the
legal fees for Dell Canon’s representation before eventual trial counsel Caldwell was
hired, leading to the inference that he continued to do so after that time. Second, Dell
Canon was fully and vigorously represented throughout the action. Third, there was no
showing that anyone other than Rashti and Rostami had the authority to hire lawyers and
pay their expenses, or that anyone else was interested in the outcome of the litigation. On
this record, we conclude there was substantial evidence that Rostami controlled the
litigation. (Toho-Towa Co., Ltd. v. Morgan Creek Productions, Inc. (2013)
217 Cal. App. 4th 1096, 1110.)
       Finally, Rostami contends there is no evidence of wrongdoing or bad faith by Dell
Canon, and that an inequitable result cannot be based solely on defendants’ supposed
difficulty in enforcing the judgment against Dell Canon. He bases this assertion on two
decisions: Sonora Diamond Corp. v. Superior Court (2000) 83 Cal. App. 4th 523, and

                                            17
VirtualMagic Asia, Inc. v. Fil-Cartoons, Inc. (2002) 99 Cal. App. 4th 228, which cited
Sonora for that proposition.
       At issue in Sonora Diamond was the trial court’s order denying a motion to quash
service of process for lack of personal jurisdiction by a parent corporation being sued as
the alter ego of its subsidiary. The plaintiff school district sold a gold mining operation
worth $900,000 to Sonora Mining for $6 million: $2 million up front and the rest as an
endowment over 20 years. The district knew Sonora Mining was a subsidiary of Sonora
Diamond and that approval of the contract was to come from another person. Sonora
Mining eventually defaulted, but by that time, the school district had received several
times the value of the property. On appeal, the Sonora Diamond court held there was no
evidence of wrongdoing by either Sonora Mining or Sonora Diamond, and no evidence of
injustice from recognizing Sonora Mining’s separate corporate identity. (Sonora
Diamond, supra, 83 Cal.App.4th at p. 539.) The court went on to state that “the alter ego
doctrine does not guard every unsatisfied creditor of a corporation but instead affords
protection where some conduct amounting to bad faith makes it inequitable for the
corporate owner to hide behind the corporate form.” (Ibid.) Because it concluded that
there could be no inequitable result, the Sonora Diamond court never analyzed whether
there had been a sufficient unity of interest between the two corporations.
       Based on Sonora Diamond, Rostami contends that defendants’ inability to satisfy
a judgment against Dell Canon alone due to its lack of assets is not an inequitable result
for purposes of the alter ego doctrine. We believe that Sonora Diamond is
distinguishable because the decision in that case rested solely on the defendant’s inability
to satisfy the judgment.
       Here, in addition to evidence showing a nearly complete unity of interest between
Rashti/Rostami and Dell Canon, the evidence also showed that the more than $800,000 in
net proceeds realized from the foreclosure of the Califa Street property went directly to
Rostami. These facts support the inference that Dell Canon was nothing more than an

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empty shell and that immunizing Rostami and Rashti from the judgment would produce
an inequitable result.10

                                     DISPOSITION

       The judgment awarding attorney’s fees and costs to defendants is affirmed.
Defendants shall recover their costs on appeal.

                                                  RUBIN, ACTING P. J.
WE CONCUR:

              FLIER, J.

              GRIMES, J.

10     VirtualMagic Asia, Inc. v. Fil-Cartoons, Inc., supra, 99 Cal. App. 4th 228, did no
more than cite Sonora Diamond without discussion or analysis as part of its general
description of the principles applicable to the alter ego doctrine. (Id. at p. 245.) The
VirtualMagic court did not reach the issue whether an alter ego finding was proper and
instead remanded the matter to the trial court to make the required factual findings. We
therefore conclude that VirtualMagic is also inapplicable.
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