RAYMOND A KLUG ET AL VS DUKE AHN ET AL

Tentative Rulings

Case Number: NC060795    Hearing Date: December 01, 2020    Dept: S27

1. Background Facts

Plaintiffs, Raymond A. Klug and Raymond A. Klug, M.D., Inc. filed this action against Defendants, Duke Ahn, Duke Ahn, M.D., Inc., Edward Green, Edward Green, III, a Medical Corporation, Harry Marinow, Harry Marinow, M.D., Inc., Derek T. Dee, Derek T. Dee, M.D., a professional corporation, and Greater Long Beach Orthopedic Surgical and Medical Group for breach of fiduciary duty and related claims. The crux of Plaintiffs’ complaint was that Klug was not paid all monies he was owed while out on medical disability.

The Court entered summary judgment in favor of Green and Dee in their individual capacities. The Court found the complaint failed to advance any theory of liability against Green or Dee in their individual capacities. The Court also found Green and Dee met their moving burden to show they were not the alter egos of their medical corporations, and Plaintiffs failed to raise a triable issue of material fact regarding alter ego.

The case proceeded to jury trial against Dee and Green’s medical corporations. The jury trial concluded in a judgment in favor of Plaintiff, Raymond A. Klug, M.D., a corporation and against the Dee and Green entities in the total principal amount of $104,998.17.

The Court’s summary judgment rulings in favor of Dee and Green, in their individual capacities, are on appeal.

1. Motion to Quash

On 5/07/20, Plaintiff, Raymond A. Klug propounded subpoenas on the Dee and Green entities’ banks (Wells Fargo), seeking production of their entire account financial records. The purpose of the subpoenas is to show that the defendant entities commingled funds and/or engaged in other inappropriate banking behavior which tends to show alter ego liability on the part of the individual defendants.

On 6/05/20, Defendants filed this motion to quash. Defendants seek an order quashing the subpoenas on the following grounds:

• The subpoenas were issued by Raymond A. Klug in his individual capacity, but Klug is not a judgment creditor;

• The subpoenas are improper in light of the pending appeal;

• The subpoenas are improper in light of the Court’s summary judgment ruling on the alter ego issue.

1. Not a Judgment Creditor

The subpoenas were propounded by Klug in his individual capacity, but Klug is not a judgment creditor. Defendants contend the subpoenas should be quashed, as they were not issued by a judgment creditor. Plaintiffs fail to address this argument in opposition to the motion. The motion to quash on this ground is granted. However, because the entity plaintiff/judgment creditor could simply propound new subpoenas, the Court will reach the remaining issues.

1. Alter Ego

The second and third issues are intertwined. Plaintiffs provide substantial authority for the position that, in the context of judgment collection, it is proper to seek discovery to prove that an individual is the alter ego of the entity judgment creditor, and then to move to amend the judgment to add the individual as a judgment debtor. Defendants, in reply, correctly note that NONE of these cases involved a situation where, as here, the alleged alter ego had successfully moved for summary judgment specifically on the alter ego issue.

The Court finds the fact that there is a dispositive and final ruling on the alter ego issue is conclusive, and Plaintiff cannot, in the future, move to amend the judgment and have the alleged alter ego individuals added as judgment debtors. There would be no point to having a summary judgment ruling on this issue if the issue could simply be re-opened after judgment. Plaintiff had ample opportunity to conduct discovery on the alter ego issue BEFORE the Court entered judgment in the individual defendants’ favor, and cannot re-open the issue now.

Compounding the matter, as Defendants correctly note in their opposition, the issue of the alter ego ruling is up on appeal. Pursuant to CCP §916(a), all issues embraced by the appeal are stayed at the trial court level pending the outcome of the appeal. The Court understands Plaintiff’s position, which is that the issue at the trial court level is potential amendment of the judgment to include the individuals as alter egos, which Plaintiff argues is different from a summary judgment ruling on the alter ego issue. The Court, however, rejects this position. The Court finds the issue of alter ego, once finally adjudicated, cannot be revisited post-judgment.

1. Conclusion

The motion to quash is granted. The subpoenas were issued by a person who is not a judgment creditor. The issue of alter ego has been conclusively adjudicated by way of summary judgment. To the extent the issue is unsettled, it is because the issue is pending on appeal; any further trial court order on the issue would be improper while the appeal is pending.

Moving Defendants are ordered to give notice.

Parties who intend to submit on this tentative must send an email to the court at gdcdepts27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative. If the parties do not submit on the tentative, they should arrange to appear remotely.