Relentless Air Racing, LLC v. Airborne Turbine Ltd. Partnership

Filed 12/31/13 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SIX

RELENTLESS AIR RACING, LLC, 2d Civil No. B244612 (Super. Ct. No. CV090342) Plaintiff and Appellant, (San Luis Obispo County)

v.

AIRBORNE TURBINE LTD. PARTNERSHIP,

Defendant and Respondent.

Relentless Air Racing, LLC (Relentless) obtained a money judgment against limited partnership, Airborne Turbine Ltd. Partnership (Airborne). Unable to collect the judgment, Relentless moved to add two natural persons and two corporations as judgment debtors. The trial court found that the natural persons and the corporations were the alter egos of Airborne. But the court denied the motion because it found Relentless failed to show that treating Airborne as a separate entity would lead to an inequitable result. We reverse. Relentless cannot collect its judgment because Airborne is insolvent. Under the circumstances here, this is an inequitable result as a matter of law. (Greenspan v. LADT LLC (2010) 191 Cal.App.4th 486, 508 (Greenspan).) An inequitable result does not require a wrongful intent. FACTS Relentless sued Airborne in a contract dispute involving the sale of an airplane. Relentless prevailed and the trial court awarded it $174,374.95 in attorney fees and $6,640.91 in costs.

Relentless has been unable to collect its judgment from Airborne. Relentless moved to amend the judgment to add Wayne and Linda Fulton, Airborne Turbine, Inc. (ATI), and Paradise Aero, Inc. (Paradise) as judgment debtors.1 Relentless claims that Airborne, ATI, and Paradise are alter egos of the Fultons. The motion rested on the post-judgment debtor examinations of the Fultons. The Fultons are Airborne's sole limited partners and they are the sole officers and directors of ATI and Paradise. ATI was Airborne's general partner until 2011, when Paradise became Airborne's general partner. Wayne Fulton testified that he and Linda Fulton decided to change general partners at the end of trial on the underlying action. Linda Fulton testified they made the decision to change general partners because "[w]e just wanted to keep ATI completely separate [from Airborne] and the trial." Linda Fulton stated that Airborne had a good chance to succeed at the beginning of trial. But the jury instructions twisted the law against Airborne. She said, "[I]f I had been on that jury I would have had to vote against myself too." The Fultons and the entities through which they operate are in the business of importing and selling airplanes and airplane parts. The entities operate from an office in the Fultons' house using equipment owned by the Fultons. The Fultons make agreements among the entities. Thus, Linda Fulton testified Airborne pays ATI's utility bills in lieu of rent for the use of ATI's hanger. The Fultons claim they have Airborne partnership meetings, as many as five or six times a day, when they speak to each other about business. They have written minutes, however, of only one meeting a year. When asked if they keep conversations about Airborne separate from conversations about ATI, Linda Fulton replied, "Well, generally it depended on what we're talking about. If it's let's say about the lawsuit, of course that's [Airborne]. If it's about another transaction we're working on, it's for that company. But we don't keep minutes per se of any meeting. Do you keep minutes with your wife about every conversation you have?"