GLENN HIBLER VS ARLINGTON FORBES, EL AL.,

Tentative Rulings

Case Number: SC100781    Hearing Date: January 31, 2020    Dept: P

Tentative Ruling

Glenn Hibler v. Arlington Forbes, et al. Case No. SC100781

Hearing Date: January 31, 2019

Judgment Creditor Glen Hibler’s Motion to Amend Judgment (CCP 187)

Judgment creditor Hibler obtained a judgment against defendant/judgment debtor Canvas, Inc. on November 16, 2010. Canvas, Inc. (“Inc.”) filed for bankruptcy on November 30, 2010, which closed without a discharge in March 2011. Creditor alleges Canvas Art (“Art”) – a business formed at approximately the same time Canvas, Inc. declared bankruptcy – is Inc.’s successor in interest and/or alter ego. Judgment creditor moves to amend the judgment to add Art as a debtor under Cal. Code of Civ. Proc. §187.

Courts are authorized to amend a judgment to add an additional judgment debtor under §187 if the added entity is the alter ego of the original judgment debtor. Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4^th 1551, 1555. Such a procedure is “an appropriate and complete method by which to bind new . . . defendants where it can be demonstrated that in their capacity as alter ego of the corporation they in fact had control of the previous litigation, and thus were virtually represented in the lawsuit.” Carr v. Barnabey’s Hotel Corp. (1994) 23 Cal.App.4th 14, 22, emphasis added.

Additionally, when a new corporation is “in reality, but a continuation of the old,” a plaintiff may hold the new corporation liable for the old corporation’s debts via a motion to amend a judgment under §187 if plaintiff shows the second corporation purchased or received all of the first corporation’s assets but did not pay the first corporation’s debts. Ortiz v. South Bend Lathe (1975) 46 Cal.App.3d 842, 846, McClellan v. Northridge Park Townhome Owners Ass’n., Inc. (2001) 89 Cal.App.4th 746, 754.

Plaintiff presents evidence that Art is Inc.’s successor or alter ego: Art was incorporated one month after Inc.’s bankruptcy filing; Art operates in the same space as Inc.; Arlington and Jacqueline Forbes were Inc.’s president and treasurer; they are Art’s sole shareholders; and both are high end retailers of clothing, art, and jewelry. Martin Decl. ¶¶4-11.

Judgment debtors argue Inc. and Art are two different businesses with different brand identities and business models. Debtors argue Inc. sold apparel available in other stores, while Art sells designer apparel, including its own fashion line. Opp. at pgs. 5-6. Additionally, defendants argue Art did not acquire Inc.’s assets. Opp. at pg. 6.

Creditor argues the opposition should be disregarded because it was untimely and not served. The opposition was due January 17, 2020 and filed January 22, 2020 and contained no proof of service.

Even if the court ignores the opposition, the motion fails, as it does not establish required elements of alter ego or successor liability. To amend a judgment under a “mere continuation” theory, the judgment creditor must establish the new corporation purchased or received all the original corporation’s assets. See McClellan, supra, 89 Cal.App.4th at 754. Creditor does not allege Art acquired all Inc.’s assets. Additionally, creditor fails to establish Art actually “had control of the previous litigation, and thus [was] virtually represented in the lawsuit.” Absent contemporaneous control during the original litigation, a judgment cannot be amended to add an alter ego. Motion DENIED.