Santos vs. Crenshaw Manufacturing Inc.

“The “The authority provided to courts by section section 187 187 includes add a the power to add a judgment debtor where a person or entity is an alter ego of the the original judgment debtor.” debtor.” (Butler America, (Butler LLC v. America, LLC v. Aviation Aviation Assurance Co., LLC Assurance Co., LLC (2020) (2020) 55 Cal.App.5th 55 Cal.App.5th 136, 136, 145.) 145.) “ “‘Amending Amending a a judgment to add add an alter ego of an original original judgment debtor “ “‘is is an an equitable procedure based on on the the theory that the the court is not amending the amending the judgment judgment to add a to add a new new defendant defendant butbut is is merely inserting the correct name of the real defendant.’”’” inserting the defendant.”

Lynn Realty, (Angel Lynn Realty, Inc. v. George (2025) Inc. v. (2025) 114 114 Cal.App.5th Cal.App.5th Realty).) 655, 663 (Angel Lynn Realty).)

Based on Based on due process concerns, concerns, however, however, a default judgment amended to judgment may not be amended add a nonparty alter to add ego. (See Motores de Mexicali, ego. Mexicali, S.A. v. Superior Court S.A. v. (1958) 51 Cal.2d 172, 175-176; Wolf Metals (1958) 51 Cal.2d 172, 175-176; Wolf Metals Inc. Inc. v. v. Rand Pac. Sales, Pac. Sales, Inc. (2016) 44 Cal.App.5th Inc. (2016) Cal.App.5th 698, 698, 703-704, 703-704, 708- 708- 709; NEC 709; NEC Electronics, Electronics, Inc. v. Hurt Inc. v. Hurt (1989) (1989) 208 Cal.App.3d Cal.App.3d 779.) 772, 779.)

“‘“Usually, “ Usually, a disregard disregard of the the corporate entity is sought in fasten liability upon order to fasten individual stockholders. upon individual stockholders. .... .”’” .””” (Toho-Towa Co., Co., Ltd. Ltd. v. v. Morgan Morgan Creek Creek Productions, Productions, Inc. Inc. (2013) 217 (2013) 217 Cal.App.4 Cal.App.4**th 1096, 1096, 1107 1107 (Toho-Towa).) (Toho-Towa).) “In “In California, common California, common principles apply regardlessregardless of whether the alleged alter ego is based on on piercing piercing the corporate veil to attach liability to attach liability to to aa shareholder shareholder or or to to hold hold aa corporation corporation liable as liable as part part of of aa single enterprise.

In single enterprise. In both cases, cases, ‘‘[t]he [t]he law as to whether courts will will pierce the corporate veil veil is easy to state but difficult to apply.’ apply.’ [Citation.] [Citation.] Because it is founded is founded on on equitable equitable principles, principles, application application ofof the the alter alter ego ‘is ‘is not not made made to to depend depend upon upon prior prior decisions decisions involving involving factual situations which appear to be similar. factual . . “It is the similar. .... general rule that the general the conditions under which a corporate entity may entity may bebe disregarded disregarded vary vary according according to to the the circumstances of each each case.”’ case.”” [Citations.] [Citations.]

Whether Whether the the established that the corporate veil evidence has established veil should should be ignored is primarily a ignored a question question of fact which should should not be disturbed when disturbed when supported by substantial substantial evidence. evidence. [Citations.]” [Citations.]” (Toho-Towa, (Toho-Towa, supra, 217 Cal.App.4th supra, 217 Cal.App.4th at at p. 1108.) p. 1108.) To prevail onon aa motion to amend amend a a judgment to add a a nonparty, “‘the “the judgment creditor must show, by a preponderance of the the evidence, evidence, that ““(1) (1) the parties to be added as added as judgment debtors had judgment debtors had control control of of the the underlying underlying litigation and litigation and were virtually represented represented in that proceeding; proceeding; there is such a unity of interest and ownership that the (2) there separate personalities separate personalities of of the the entity entity and and the the owners owners nono longer exist; longer exist; and and (3) (3) an an inequitable inequitable result result will will follow follow if if the the acts are treated as those of the entity alone.”’” alone.”

control depends on the facts of What constitutes sufficient control each individual each individual case. case. For example, example, Control Control was shown shown where the where the nonparty nonparty alter alter ego ego hired hired counsel counsel toto represent represent the the corporation, was corporation, was the the person person with with whom whom the corporate the corporate defendant’s counsel primarily dealt, was kept fully informed defendant’s informed of the suit’s suit’s progress, was familiar with with all all the issues, and the issues, and helped draft helped draft documents documents forfor the the litigation. litigation. (Alexander (Alexander v.v.

Abbey of the Abbey of the Chimes Chimes (1980) (1980) 104 104 Cal.App.3d Cal.App.3d 39, 39, 46.) 46.) But But control was control was not not shown shown where where sole sole owner owner hired hired and and discharged corporation’s discharged corporation’s attorneys, attorneys, appeared appeared at settlement conferences andand financed financed the litigation, litigation, but was not named named individually, knew the individually, corporation was on the corporation on the verge of personal duty to defend dissolution, and had no personal defend the the underlying action. underlying action. (Katzir's Floor Floor && Home Home Design, Design, Inc. v. Inc. v. M-MLS.com (9th Cir. M-MLS.com Cir. 2004) 2004) 394 F.3d F.3d 1143, 1143, 1149-1150.) 1149-1150.)

determining whether there In determining there is a a sufficient unity of interest the many factors the consider include “‘one the courts consider “one individual’s ownership of all stock in a corporation; individual’s corporation; use of the the same office or business location;location; commingling commingling of funds and and other assets of the individual and the individual and the corporation; corporation; an individual holding individual holding out that he is personally liable for debts of the corporation; corporation; identical identical directors and officers; officers; failure to maintain minutes maintain minutes or or adequate adequate corporate corporate records; records; disregard disregard of corporate of corporate formalities; formalities; absence absence of of corporate corporate assets assets and and capitalization; and the use of a inadequate capitalization; a corporation corporation as a a instrumentality or conduit for the business of an mere shell, instrumentality individual.’ [Citation.] individual.’ [Citation.]

Other Other recognized recognized factors factors include include “‘the “ the use use of of the corporate entity the corporate entity toto procure procure labor, labor, services services merchandise for another person or merchandise person or entity’ and ‘‘the entity’ and the diversion of assets from a corporation diversion corporation by or to toaa stockholder or stockholder or other other person person oror entity, entity, to to the the detriment detriment of of creditors.”’ creditors.”” [Citation.]” [Citation.]” (JPV(JPVIL.P.

I L.P. v. v. Koetting Koetting (2023) (2023) Cal.App.5th 172, 88 Cal.App.5th 194-195.) “Critically, 172, 194-195.) “Critically, ““‘“‘[n]o [nJo single determinative, and factor is determinative, and instead instead a a court must examine all the all the circumstances to determine whether to apply apply the the doctrine.’”’ doctrine.’”” [Citation.] [Citation.] ‘ ‘There There isis no no litmus litmus test test to determine to determine when the when the corporate corporate veil veil will will be be pierced; pierced; rather rather the the result result will depend will depend on the circumstances of each each particular case.’ case.’ [Citation.]” (Id. [Citation.]” (Id. at at p. p. 195.) 195.)

An inequitable result An inequitable result is is shown shown as as a a matter matter of of law law where where the the judgment debtor is judgment debtor is insolvent insolvent due due toto the the actions actions of of an an alter alter ego. (Relentless Air Racing, ego. Racing, LLC v. v. Airborne Turbine Ltd. Ltd. Partnership (2013) Partnership (2013) 222 222 Cal.App.4th Cal.App.4th 811, 811, 816.) 816.) “‘“Application “ Application of the alter ego doctrine does not depend depend upon pleading upon pleading or or proof proof ofof fraud.”’ fraud.” [Citations.] [Citations.]

It It is is enough enough that ‘adherence ‘adherence to the fiction fiction of the the separate existence existence of the corporation corporation would would promote injustice or bring about inequitable results.’ results.’ [Citation.]” [Citation.]” (Angel (Ange/ Lynn Lynn Realty, Realty, supra, supra, 114 Cal.App.5th 114 Cal.App.5th atat p. p. 1109, 1109, fn. fn. 5.) 5.)

““Difficulty Difficulty in in enforcing enforcing a a judgment judgment oror collecting collecting a a debt debt does does not satisfy” the inequitable result element. satisfy” the element. (Sonora Corp. v. Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 539.) “The 523, 539.) 523, “The alter ego doctrine does not guard every unsatisfied creditor unsatisfied creditor of of a a corporation corporation but but instead instead affords affords

protection where some conduct amounting protection amounting to bad bad faith faith inequitable for the corporate owner to hide behind makes it inequitable behind the corporate corporate form.” form.” (Ibid.) (Ibid.)

““Alter Alter ego ‘‘is is an an extreme remedy, remedy, sparingly used.’ used.’ [Citation.] ““ [Citation.] ‘“The The standards for the the application application of alter ego principles are high, and the impositionimposition of [alter [alter ego] ego] liability .. .... is iS to exercised reluctantly and to be exercised and cautiously.”’ cautiously.” [Citation.] Still, [Citation.] Still, ‘“[t]he “[t]he greatest liberality is to be encouraged”’ encouraged” in allowing allowing judgments to be amended amended to addadd the ‘real ‘real defendant,’ defendant,’ or alter ego of the the original original judgment debtor, debtor, “ ‘“in in order to see that that justice is done.”’ done.”” [Citations.]” [Citations.]” (Highland Springs Conference Training Springs Conference Training Center Center v.v.

City City of of Banning (2016) 244 Cal.App.4th 267, 281.) Banning (2016) 244 Cal.App.4th 267, 281.)

Here, Santos has failed Here, failed to present sufficient evidence to burden by a preponderance of the evidence. meet her burden evidence. As stated above, stated above, Santos Santos must must establish establish three three elements elements toto meet that meet that burden. burden. The failure on The failure on any any one one of of the the elements elements requires the denied. Santos’s motion to be denied. the motion Santos’s evidence is conclusory and highly conclusory and some of it is inadmissible. inadmissible.

The motion’s motion’s most glaring shortcomings is on the unity of interest element, interest element, especially especially when when viewed viewed inin light light of of the the presents in opposition. evidence Mansour presents opposition. Santos argues this element is this element is met met because because Mansour Mansour owned owned andand controlled controlled Crenshaw, but Crenshaw, but the court finds the court finds more more isis needed needed to to meet meet this this element. For element.

For example, example, there there is is no no showing showing regarding regarding the the capitalization, adherence capitalization, adherence to corporate formalities, formalities, commingling of asset, commingling asset, or any of the other factors identified identified above. Not all above. all of these factors are required required and and no single factor is factor is essential, essential, but but something something moremore than than ownership ownership and and control is control is needed. needed.

If If not, not, every every sole sole shareholder shareholder whowho runs runs a corporation a corporation would would be an alter ego.ego.

Based on Based on the foregoing, the motion is DENIED WITHOUT the foregoing, PREJUDICE. Any PREJUDICE. future motion Any future motion must must provide provide aa much much more detailed more detailed factual factual showing showing onon each each of of the three required the three required elements. Santos also should elements. should more fully address the decision is this case was the equivalent of a argument the decision default judgment, default which would judgment, which would prevent prevent the the amendment amendment of of the the judgment. judgment.

As for Mansour’s Mansour’s evidentiary objections, they are SUSTAINED as to objection objection nos. nos. 1, 1, 3, 3, 4, 4, 5, 5, and and 6 and and OVERRULED as OVERRULED as to all others. to all others.

Santos’s Santos's counsel counsel is ordered ordered to give notice of this ruling. ruling.