NOAH'S ARK PROCESSORS LLC VS VALUE MEATS INC

Tentative Rulings

Case Number: VC065433    Hearing Date: February 23, 2021    Dept: C

NOAH’S ARK PROCESSORS LLC v. VALUE MEATS INC.

CASE NO.: VC065433

HEARING: 2/23/21 @ 1:30 PM

#10

TENTATIVE ORDER

Judgment Creditor Noah’s Ark Processors, LLC’s motion to add James Dickman and Robert Dickman as judgment debtors pursuant to CCP § 187 is DENIED.

Moving Party to give NOTICE.

Judgment Creditor Noah’s Ark Processors, LLC moves to amend the judgment pursuant to CCP § 187 to add James Dickman and Robert Dickman (collectively, “Dickman brothers”).

A trial court has the authority to amend a judgment in order to add additional judgment debtors, and CCP § 187 has often served as the basis for such an amendment of a judgment, pursuant to the alter ego doctrine. (Dow Jones Co., Inc. v. Avenal (1984) 151 Cal.App.3d 144, 148-149.) The general rule is that a court may amend its judgment at any time so that the judgment will properly designate the real defendants. (Id.)

In order for the judgment to be amended to include new judgment debtors, the new debtors must have controlled the litigation at the time of trial; and, this requirement is in addition to, not in lieu of, any threshold alter ego analysis. (Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415, 1421; Oyakawa v. Gillett (1992) 8 Cal.App.4th 628, 632; NEC Electronics v. Hurt (1989) 208 Cal.App.3d 772, 778-780; Motores de Mexicali v. Superior Court (1958) 51 Cal.2d 172, 176.) Control of the litigation sufficient to overcome due process objections may consist of a combination of factors, usually including the financing of the litigation, the hiring of attorneys, and control over the course of litigation. (NEC Electronics, Inc. v. Hurt (1989) 208 Cal.App.3d 772, 781.)

The two requirements for a finding of alter ego status are: 1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist; and 2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow. (Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825.)

Among the factors to be considered in applying the doctrine are commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, and use of one as a mere shell or conduit for the affairs of the other. (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal. App. 4th 523, 538-539.) Other factors include inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers. (Id., at 539.) No one characteristic governs. The courts must look at the totality of the circumstances to determine whether the doctrine should be applied. Alter ego is an extreme remedy which is sparingly used. (Id.)

The Court finds that Judgment Creditor failed to present sufficient evidence of the Robert Dickman’s control of the litigation. (See also R. Dickman, ¶¶ 14-16.) Therefore, the motion is DENIED as to Robert Dickman.

As to James Dickman, the court finds Judgment Creditor has presented sufficient evidence of James Dickman’s control of the underlying litigation. James Dickman, in his capacity as President of VMI, signed the settlement agreement and spoke with VMI’s attorney of record regularly about VMI’s litigation strategy. (Ex. C, pp. 34-36.) Although James Dickman contends he did not control litigation “in a personal capacity” (Opposition, 7:14-15), such is not the test upon a motion to amend a judgment. The inquiry is whether the proposed debtor exercised sufficient control of the underlying litigation such that later discovery of his alter ego status warrants amending the judgment to properly designate him as the real defendant.

Judgment Creditor presents the following evidence of alter ego liability:

· In 2016, VMI was insolvent. (Ex. E, p. 57.)

· In 2016, VMI paid Charles Dickman (the Dickman brother’s father) $306,000. (Ex. D, p. 46:4-6; Ex. F, pp. 69-72; Ex. G, p. 85, Ex. G, p. 98.)

· In 2016, VMI paid James Dickman a $257,926 salary and Robert Dickman a $254,696 salary. (Ex. E, p. 55.)

· VMI paid rent of $124,000 to 2959 LLC, an LLC owned by Charles Dickman and Sylvia Dickman. (Ex. G, pp. 99-101, Ex. K, p. 119, Ex. F, p. 67, Ex. I, pp. 105-107.)

· The Dickmans used the same law firm to represent them as well as VMI. (Ex. L, pp. 122-123, 158.)

· In 2016, while VMI was insolvent, the Dickmans made car payments for a Bentley, Porsche, BMW, and a Mercedes. (Ex. G, pp. 78-84, 88, 89, 90-94, 97.)

Based on the above evidence, the court finds that Judgment Creditor failed to establish that alter ego liability should be imposed against James Dickman. The payments to Charles Dickman in 2016 were repayments of short-term loans made by Charles Dickman to VMI in 2016. As of January 1, 2016, VMI owed Charles Dickman $1,189,381.92 in outstanding loan obligations. (Murphy Decl., ¶¶ 3-5.)

Further, the auto expense reimbursement for VMI's officers and directors and complied with all applicable requirements. Pursuant to Section 23.2 of Amendment No. 3 To The Amended And Restated Agreement of Shareholders of Value Meats ("Amendment No. 3"), effective May 28, 2010, officers of the company who are also shareholders are entitled to receive "payment for auto related expenses, including but not limited to purchase, lease, maintenance, gas, oil and insurance" not to exceed $3,000 per month. (See also Mid-Century Ins. Co. v. Gardner (1992) 9 Cal.App.4th 1205, 1215 - a corporate owner's personal use of a vehicle owned and paid for by the company was insufficient evidence to justify piercing the corporate veil.)

Additionally, 2959 LLC owned the building in which VMI’s manufacturing facility was located. 2959 LLC had a valid, written and enforceable lease agreement with VMI for the use and occupation of the Premises requiring monthly rental payments. (Murphy Decl., ¶20).

Finally, the Dickmans’ choice of counsel is not a factor in determining alter ego liability.

Accordingly, the court finds that Judgment Creditor failed to establish alter ego liability. The motion is DENIED.

Case Number: VC065433    Hearing Date: August 25, 2020    Dept: C

NOAH’S ARK PROCESSORS LLC v. VALUE MEATS INC.

CASE NO.: VC065433

HEARING: 8/25/20

JUDGE: OLIVIA ROSALES

[Remote appearances are encouraged and will be given priority.]

#9

TENTATIVE ORDER

I. Third Party James Dickman’s motion to quash civil subpoena duces tecum to Sean Lowe is MOOT.

II. Third Party James Dickman’s motion to quash civil subpoena duces tecum to David Mannion is MOOT.

Moving Party to give NOTICE.

Third Party moves to quash subpoenas issued to Sean Lowe and David Mannion.

In opposition, Plaintiff Noah’s Ark Processors, LLC advises the court that it has excused Sean Lowe, and that it has not served David Mannion with a subpoena.

Movant did not file any Reply, disputing the arguments made in opposition.

Accordingly, the court finds that the motions are MOOT.

Case Number: VC065433    Hearing Date: July 28, 2020    Dept: C

NOAH’S ARK PROCESSORS LLC v. VALUE MEATS INC.

CASE NO.: VC065433

HEARING: 7/28/20

JUDGE: OLIVIA ROSALES

[Remote appearances are encouraged and will be given priority.]

#3

TENTATIVE ORDER

Plaintiff Noah’s Ark Processors, LLC’s motion to enforce subpoena is GRANTED.

Moving Party to give NOTICE.

Plaintiff Noah’s Ark Processors, LLC moves to enforce its subpoena pursuant to CCP §§ 708.130 and 1987 et seq.

On 9/1/16, Plaintiff filed a Stipulated Judgment between Plaintiff and Defendant Value Meats Inc. dba Charlie’s Pride (“VMI”) for $180,000.00, which allowed VMI to make four payments of $42,107.18 in full satisfaction of the judgment. VMI paid the first payment, but failed to make any later payments.

On 10/18/16, VMI entered into an “assignment for the benefit of creditors” with CMBG Advisors, Inc. That Assignment provided that CMBG would act as a fiduciary of the unsecured creditors. Noah’s Ark submitted proof of the claim on 1/12/17, but CMBG refused to give a resolution date.

On 5/28/19, the Court signed Noah’s Ark’s Application for an Order commanding James Dickman to appear on behalf of VMI for a judgment debtor’s exam. (Ex. D, pp. 51-53.) On 11/25/19, Plaintiff personally served James Baer with a subpoena commanding him to bring records of CMBG regarding the Assignment of VMI’s debts.

Baer was personally served on 11/27/19 by Bonita Haller, a registered process server. (Motion, p. 79.) Therefore, Plaintiff is entitled to a presumption of valid service pursuant to Ev. Code 647. In opposition, Baer attests that “I was not served on November 27, 2019 with a subpoena in the Noah’s Ark lawsuit. I have never been served with a subpoena in the Noah’s Ark lawsuit.” (Baer Decl., ¶ 4.)

The court finds that Baer failed to overcome the presumption of valid service. Baer offers no evidence to support his claim.

The court also finds that Baer’s objections lack merit. A judgment creditor may use a subpoena to discover and inspect relevant documents from a third party. (Shrewsbury Management, Inc. v. Superior Court (2019) 32 Cal.App.5^th 1213, 1225.)

Plaintiff has established good cause for the documents. Plaintiff submitted proof of the claim in January 2017, yet has not received any resolution over three years later. Plaintiff is entitled to information about other creditors and whether CMBG properly carried out its fiduciary duties in paying Plaintiff’s claim in its priority order.

The court finds the requests are not overbroad. Courts generally do not sustain this kind of objection unless the question is totally unintelligible. The answering party owes a duty to respond in good faith as best he or she can. (See Deyo v. Kilbourne (1978) 84 CA3d 771, 783.) 

The categories of documents are properly limited in scope. The request seeks documents received in connection with the assignment for the benefit of creditors of Value Meats, any payments that CMBG made to any creditors of VMI, proof of claims and correspondence submitted by any creditors of VMI.

The court further finds that there is nothing burdensome or harassing about the request. It is not enough that the questions will require a lot of work to answer. It must be shown that the burden of answering is so unjust that it amounts to oppression. (West Pico Furn. Co. v. Sup.Ct., supra.)

Accordingly, the motion is GRANTED.

Case Number: VC065433    Hearing Date: March 24, 2020    Dept: SEC

NOAH’S ARK PROCESSORS LLC v. VALUE MEATS INC.

CASE NO.:  VC065433

HEARING:  3/24/20

#9

TENTATIVE ORDER

Due to the directives, from both the Governor and the Presiding Judge, Plaintiff Noah’s Ark Processors, LLC’s motion to enforce subpoena is CONTINUED to July 28, 2020 in Dept. SEC at 1:30 PM.

Case Number: VC065433    Hearing Date: March 12, 2020    Dept: SEC

NOAH’S ARK PROCESSORS LLC v. VALUE MEATS, INC.

CASE NO.: VC065433

HEARING: 03/12/2020

JUDGE: OLIVIA ROSALES

#5

TENTATIVE RULING

I. Third Party JAMES DICKMAN’s Motion to Quash Judgment Creditor NOAH’s ARK PROCESSORS, LLC Application and Order for Appearance and Examination of Third Party JAMES DICKMAN and related Subpoena Duces Tecum is DENIED. The Alternative Motion for Protective Order is DENIED.

II. The Judgment Debtor Examination of Third Party JAMES DICKMAN is CONTINUED to Thursday, April 2, 2020 at 8:30 a.m. in Dept. SE-F.

Opposing Party to give Notice.

Third Party JAMES DICKMAN moves to quash a subpoena duces tecum ordering him to bring specified documents to a debtor’s examination under CCP §1987.1, or alternatively for a protective order. Dickman argues that Plaintiff is seeking a third judgment debtor examination (less than three months after the second examination) for no other purpose other than to harass, annoy, and oppress Mr. Dickman, and to cause Mr. Dickman unwarranted burden and expense.

CCP §1987.1(a) provides, as follows: “If a subpoena requires the attendance of a witness or the production of books, documents, electronically stored information, or other things before a court, or at the trial of an issue therein, or at the taking of a deposition, the court, upon motion reasonably made by any person described in subdivision (b), or upon the court’s own motion after giving counsel notice and an opportunity to be heard, may make an order quashing the subpoena entirely, modifying it, or directing compliance with it upon those terms or conditions as the court shall declare, including protective orders. In addition, the court may make any other order as may be appropriate to protect the person from unreasonable or oppressive demands, including unreasonable violations of the right of privacy of the person.”

The Motion to Quash and alternate Motion for Protective Order are denied. The Court does not find that the subpoena at issue is being used for no other purpose than to harass, annoy, or oppress Mr. Dickman. Rather, based on the evidence presented, the Court finds that Plaintiff has adequately attempted to meet and confer with Mr. Dickman with respect to the scope of the subpoena(s) at issue given Mr. Dickman’s previous objections to the scope of the subpoenas at the first and second debtor’s exams. The Court has reviewed the subpoena duces tecum attached as Exhibit 7 to the Declaration of John R. Bamford and finds that the third subpoenas are limited in scope to documents which may contain information pertaining to Mr. Dickman’s purported disregard of the corporate form.

Sanctions are denied.

Case Number: VC065433    Hearing Date: November 05, 2019    Dept: SEC

NOAH’S ARK PROCESSORS LLC v. VALUE MEATS INC.

CASE NO.: VC065433

HEARING: 11/5/19

JUDGE: RAUL A. SAHAGUN

#6

TENTATIVE ORDER

Pursuant to the stipulation of the parties, Plaintiff Noah’s Ark Processors, LLC’s motion to enforce subpoena is CONTINUED to December 3, 2019, at 1:30 PM in Dept. SEC.

Moving Party to give NOTICE.