On 03/24/2016 ROBERT LEE JOHNSON filed a Contract - Other Contract lawsuit against K-KARS INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is YOLANDA OROZCO. The case status is Other.
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
JOHNSON ROBERT LEE
DDS LEGAL SUPPORT SYSTEMS INC.
DOES 1 THROUGH 75
CALIFORNIA REPUBLIC BANK
SURETEC INSURANCE COMPANY
ROSNER BARRY & BABBITT LLP
ROSNER HALLEN DAVID
LONERGAN MARK DOUGLAS
HUDSON GEOFFREY RALPH
3/8/2018: PROOF OF SERVICE OF NOTICE RE: CONTINUANCE OF HEARJNG - STATUS CONFERENCE
4/23/2018: Minute Order
6/25/2018: PETITION TO CONFIRM, CORRECT, OR VACATE CONTRACTUAL ARBITRATION AWARD (ALTERNATIVE DISPUTE RESOLUTION)
7/27/2018: Minute Order
8/13/2018: Proof of Service
9/28/2018: NOTICE OF RULING ON PLAINTIFF'S PETITION TO CONFIRM CONTRACTUAL ARBITRATION AWARD, ETC
1/8/2019: Notice of Motion
1/10/2019: Request for Judicial Notice
1/10/2019: Declaration re: Attorney's Fees
1/15/2019: Proof of Service by Mail
1/25/2019: Proof of Service by Mail
1/30/2019: Substitution of Attorney
3/24/2016: COMPLAINT I. ACTION OF A WRITTEN CONTRACT; ETC
DocketAppeal Record Delivered; Filed by ClerkRead MoreRead Less
DocketAppeal - Notice Court Reporter to Prepare Appeal Transcript (;B296928;); Filed by ClerkRead MoreRead Less
DocketOrder (Proposed order (Cover Sheer)); Filed by Robert Lee Johnson (Plaintiff)Read MoreRead Less
DocketAppeal - Notice of Filing of Notice of Appeal; Filed by ClerkRead MoreRead Less
DocketAppeal - Reporter Appeal Transcript Process Fee Paid; Filed by Robert Lee Johnson (Plaintiff)Read MoreRead Less
DocketAppeal - Notice of Appeal/Cross Appeal Filed (FILED W/ ATTACHED DESIGNATION OF RECORD AND POS;); Filed by Robert Lee Johnson (Appellant)Read MoreRead Less
DocketAcknowledgment of Satisfaction of Judgment; Filed by California Republic Bank (Defendant)Read MoreRead Less
DocketAcknowledgment of Satisfaction of Judgment; Filed by Robert Lee Johnson (Plaintiff)Read MoreRead Less
DocketOpposition ( to Proposed Additional Judgment); Filed by California Republic Bank (Defendant)Read MoreRead Less
Docketat 08:30 AM in Department 31, Yolanda Orozco, Presiding; Hearing on Motion - Other (Motion to Tax Costs) - Held - Motion GrantedRead MoreRead Less
DocketPROOF OF SERVICE SUMMONSRead MoreRead Less
DocketOSC-Failure to File Proof of Serv; Filed by ClerkRead MoreRead Less
DocketNotice of Case Management Conference; Filed by ClerkRead MoreRead Less
DocketNOTICE OF CASE MANAGEMENT CONFERENCERead MoreRead Less
DocketORDER TO SHOW CAUSE HEARINGRead MoreRead Less
DocketComplaint; Filed by Robert Lee Johnson (Plaintiff)Read MoreRead Less
DocketSUMMONSRead MoreRead Less
DocketPLAINTIFF S STATEMENT OF ACTUAL AND PUNITIVE DAMAGES [CODE OF CIV. PROC, 425.115]Read MoreRead Less
DocketCOMPLAINT I. ACTION OF A WRITTEN CONTRACT; ETCRead MoreRead Less
DocketPLAINTIFF S AFFIDAVIT OF VENUE PURSUANT TO CALIFORNIA CWIL CODE 1780(C)Read MoreRead Less
Case Number: BC614749 Hearing Date: September 01, 2020 Dept: 31
MOTION TO AMEND JUDGMENT IS GRANTED.
The Court, having taken this matter under submission, now hereby issues its final Order.
On March 24, 2016, Plaintiff Robert Lee Johnson brought the instant action against Defendants K-Kars, Inc., California Republic Bank, Suretec Insurance Company, and Does 1 through 75. The Complaint asserts causes of action for:
Action of a Written Contract;
Violation of the Consumers Legal Remedies Act – Equitable Relief Only;
Violation of Business and Professions Code § 17200; and
Violation of Vehicle Code § 11711.
The matter proceeded to arbitration pursuant to a stipulation by the parties entered by the Court on May 31, 2016. On March 14, 2018, the arbitrator issued a Final Arbitration Award against K-Kars, Inc.; Casa MBZ, Inc., and California Republic Bank. On September 24, 2018, the Court granted Plaintiff’s Petition to Confirm Contractual Arbitration Award as to Defendants K-Kars and California Republic and denied Plaintiff’s Petition as to the award against Casa MBZ, Inc. The Court also granted K-Kars’ Petition to Vacate Contractual Arbitration Award as to Casa MBZ.
On November 19, 2018, the Court entered judgment against K-Kars, Inc. in the amount of $178,109.479 and against California Republic Bank in the amount of $148,715.13. The award was joint and several against K-Kars, Inc. and California Republic Bank as to the first $148,715.13. The remainder of the award, $29,394.66, was against K-Kars, Inc.
Plaintiff now seeks to amend the judgment to add Casa MBZ, Inc. (“Casa MBZ” or “Third Party Intervenor”) as a judgment debtor arguing that Casa MBZ is an alter-ego and successor of Defendant K-Kars, Inc. (“K-Kars”).
Pursuant to Code of Civil Procedure section 187, the trial court has authority to amend a judgment to add a judgment debtor under the alter ego doctrine. (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1517.) In order to see that justice is done, great liberality is encouraged in the allowance of amendments brought pursuant to Code of Civil Procedure section 187. (Greenspan v. LADT LLC (2010) 191 Cal.App.4th 486, 508; Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1074-1075.)
Judgments may be amended where “the new corporation is, in reality, but a continuation of the old.” (McClellan v. Northridge Park Townhome Owners Ass’n, Inc. (2001) 89 Cal.App.4th 746, 756.)
Request for Judicial Notice
The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).)
Casa MBZ requests that the Court take judicial notice of a number of documents filed in this case. The request is GRANTED.
Casa MBZ submits a number of evidentiary objections to the Declarations of Hallen D. Rosner and Michelle A. Cook.
Objection nos. 1, 4, 6-7, 14 – OVERRULED. At the hearing on the Motion counsel for Casa MBZ, Inc. argued that the Court was in error in overruling some of these objections. The Court has revisited the objections and explains the basis for its ruling. Objections 4 and 6 relate to testimony given by Arman Gharib at the arbitration proceedings in this case. The arbitrator found that Arman Gharib changed the name of Defendant K-Kars to Casa MBZ, at the same business location and with the same employees. The statements attributed to Arman Gharib in the referenced objections are not hearsay as these are admissions against a party or statements against interest. (Evid. Code sections 1220, 1230.) In similar fashion, the statements of Casa MBZ employee, Mabel Picard, the subject of Objection 7, are properly considered as admissions against a party or statements against interest. (Evid. Code sections 1220, 1230.) In Objection 14, counsel objects to the entirety of the Declaration of Michelle Cook, however, counsel has failed to specify which specific portions of the declaration are subject to objection. The Court finds that the Cook Declaration attached a number of documentary exhibits and sets forth sufficient foundation to establish authentication and admissibility of the documents. The subject objections are overruled.
The remaining objections are immaterial to the Court’s disposition of the motion. Accordingly, the Court declines to rule upon them.
Plaintiff moves for an order amending the Court’s judgment entered on November 18, 2018, to designate the proper defendant, Casa MBZ, based on the fact that it is an alter ego and successor of Defendant K-Kars.
Service of Motion & Jurisdiction
“In order for [a] judgment against [an alter-ego] to be valid, the court must have had jurisdiction over [it]. Normally jurisdiction is acquired by service.” (Milrot v. Stamper Medical Corp. (1996) 44 Cal.App.4th 182, 186.)
“A court acquires personal jurisdiction over a party that makes a general appearance in an action even if no summons is served on that party. [Citation.] Section 1014 lists several acts that constitute an appearance by a defendant (i.e., filing an answer, demurrer, motion to strike, motion to transfer, etc.), but the list is nonexclusive. [Citation.] A party may make a general appearance in an action by “‘various acts which, under all of the circumstances, are deemed to confer jurisdiction of the person. [Citation.] What is determinative is whether defendant takes a part in the particular action which in some manner recognizes the authority of the court to proceed.’ [Citation.]” [Citation.]” (Serrano v. Stefan Merli Plastering Co., Inc. (2008) 162 Cal.App.4th 1014, 1028–1029.)
Casa MBZ first opposes the instant motion arguing that Plaintiff has not effectuated proper service of this motion and supporting documents on it. Casa MBZ asserts that, as provided in the Proof of Service for the moving papers, Casa MBZ was not served with the motion.
In reply, Plaintiff argues that service was proper and Casa MBZ forfeited its right to contend otherwise. Plaintiff asserts that the motion was filed on October 11, 2019, and Casa MBZ was personally served with the moving papers on October 16, 2019. (Cook Reply Decl., Exh. 46.) Plaintiff contends that further, the Court held a hearing on June 30, 2020 wherein counsel appeared on behalf of Casa MBZ requesting a continuance. (Cook Reply Decl. ¶ 31. Plaintiff argues that by appearing at the hearing and opposing the motion, Casa MBZ gave the Court jurisdiction to add it as a judgment debtor irrespective of any defect in service.
The Court finds that it has jurisdiction over Casa MBZ such that a judgment against it as an alter-ego may be validly entered. Attorney Farzad Seyfnia’s appearance on behalf of Casa MBZ at the June 30, 2020 hearing and Casa MBZ’s opposition on the merits constitutes Casa MBZ’s general appearance in the matter. The Court may thus enter a valid judgment against Casa MBZ. The Court thus turns to the parties remaining arguments.
“Laches is an equitable, affirmative defense which requires a showing of both an unreasonable delay by the plaintiff in bringing suit, “‘plus either acquiescence in the act about which plaintiff complains or prejudice to the defendant resulting from the delay.’ [Citation.]” [Citations.] “If, in light of the lapse of time and other relevant circumstances, a court concludes that a party's failure to assert a right has caused prejudice to an adverse party, the court may apply the equitable defense of laches to bar further assertion of the right.” [Citation.]
The party asserting laches bears the burden of production and proof on each element of the defense. [Citation.] It is important to remember that, in determining whether laches applies, “[p]rejudice is never presumed; rather it must be affirmatively demonstrated by the defendant in order to sustain his burdens of proof and the production of evidence on the issue. [Citation.] Generally speaking, the existence of laches is a question of fact to be determined by the trial court in light of all of the applicable circumstances.... [Citations.]” [Citation.]” (Highland Springs Conference & Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 282.)
Casa MBZ next opposes the motion arguing that pursuant to the doctrine of laches, Plaintiff’s unreasonable delay, his acquiescence, and the prejudice to Casa MBZ bars Plaintiff’s request to amend the judgment to add Casa MBZ. Casa MBZ asserts that in August 2017 and during the course of the arbitration proceeding, Plaintiff and his attorneys developed an understanding and/or theory that Defendant K-Kars and Casa MBZ “were the same entity.” Casa MBZ contends that despite this, Plaintiff did not take any action to add Casa MBZ as a defendant by amending his complaint through the course of the arbitration proceeding. Casa MBZ argues that Plaintiff waited over two years until October 11, 2019 to file this motion.
Casa MBZ asserts that Plaintiff acquiesced in the act about which he now complains. Casa MBZ contends that after the arbitration proceeding, Plaintiff took affirmative steps in furtherance of his judgment by enforcing it against Defendant California Republic Bank. (RJN, Exh. B.)
Casa MBZ finally contends that the injustice that would result to Casa MBZ by allowing the amendment is much greater than any prejudice to Plaintiff. Casa MBZ argues that Plaintiff’s delay in bringing this motion and enforcing the judgment against another defendant in this action should not now benefit him by being allowed to include Casa MBZ as a judgment debtor.
In reply, Plaintiff argues that that he acted diligently in seeking to amend the judgment. Plaintiff asserts that he discovered, during the arbitration hearing in August 2017, that K-Kars and Casa MBZ were the same entity and that K-Kars had transferred its assets to Casa MBZ days prior. (Rosner Decl. ¶ 4, 6-7.) Plaintiff contends that he did not sit idly upon this discovery but successfully urged the arbitrator to add Casa MBZ to the final arbitration award, which was issued in March 2018. (Cook Decl., Exh. 4.) Plaintiff argues that all motions filed in this action were decided in February 2019 and that by March 2019, California Republic Bank had already satisfied its share of the judgment. (Cook Reply Decl. ¶ 8, 10.) Plaintiff asserts that he was still owed $29,394.66 from K-Kars, plus $36,049.87 in attorneys’ fees and $1,770.72 in costs, for a total of $67,215.25. (Cook Reply Decl., Exh. 42-44.)
Plaintiff contends that having no transcript of the arbitration proceeding, at that time, all Plaintiff had were the hearsay declarations of his counsel regarding Arman Gharib’s admissions. Plaintiff argues that believing this alone would not support a motion to amend the judgment, Plaintiff spent the next several months investigating the relationship between K-Kars and Casa MBZ, the Gharibs’ various business ventures, and the Gharibs’ potential whereabouts. Plaintiff asserts that the instant motion was then filed in October 2019. Plaintiff contends that the instant motion was filed just eight months after attorneys’ fees and costs were decided.
Plaintiff argues that even if the delay were unreasonable, Casa MBZ has not demonstrated any prejudice from that delay or that Johnson acquiesced to the acts of which he complains. Plaintiff asserts that he did not acquiesce to K-Kars’ fraudulent transfer of assets. Plaintiff contends that the fact that he accepted California Republic Bank’s payment of the share for which it was jointly and severally liable with K-Kars does not constitute acquiescence to anything other than satisfaction of the judgment entered against California Republic Bank. Plaintiff argues that by consistently maintaining Casa MBZ should be held liable for the portion of the judgment solely owed by K-Kars, Plaintiff did not acquiesce to the fraudulent transfer of assets to Casa MBZ that left K-Kars insolvent.
The Court finds that Casa MBZ has failed to carry its burden, establishing each element of the doctrine of laches. As noted above, “prejudice is never presumed; rather it must be affirmatively demonstrated by the defendant in order to sustain his burdens of proof and the production of evidence on the issue.” Here, Casa MBZ has failed to provide evidence of prejudice, rather it merely states that it has been prejudiced. Casa MBZ provides no evidence as to how it was prejudiced by any purported delay or acquiescence by Plaintiff, as Casa MBZ does not assert that “any evidence relevant to its defense to the motion ha[s] been lost or destroyed[,] or that any witnesses [a]re no long available.” (Highland Springs Conference & Training Center, supra, 244 Cal.App.4th at 283.)
Moreover, nothing before the Court indicates that there was unreasonable delay in bringing the instant motion or that Plaintiff acquiesced in any way to the alleged fraudulent transfer of assets from K-Kars to Casa MBZ. Plaintiff’s acceptance of California Republic Bank’s payment does not constitute acquiescence nor does it suggest that Plaintiff acquiesced in K-Kars’ alleged transfer of assets to Casa MBZ.
Based on the foregoing, the Court finds that the doctrine of laches does not apply.
In McClellan v. Northridge Park Townhome Owners Ass’n, Inc. (2001) 89 Cal.App.4th 746, the Court of Appeal affirmed the trial court’s addition of a judgment debtor when it was shown that the new judgment debtor, Northridge Park Townhome Owners Association, Inc., was merely a continuation of the prior judgment debtor, Peppertree North Condominium Association, Inc. The Court noted:
The new entity, Northridge Park, was the homeowners association for the same condominium complex, whose membership consisted of the same unit owners. The same individuals served on the boards of Peppertree and Northridge Park. The same management company remained in place. Both Peppertree and Northridge Park derived their income from the homeowner dues assessed to the membership. There was no evidence that Peppertree had been dissolved or had wound up its affairs. This was compelling evidence presented by McClellan in support of his contention that Northridge Park was merely a continuation of Peppertree.
As stated in Blank v. Olcovich Shoe Corp., supra, 20 Cal.App.2d at page 461, “corporations cannot escape liability by a mere change of name or a shift of assets when and where it is shown that the new corporation is, in reality, but a continuation of the old.” Here, substantial evidence supports the conclusion that Northridge Park was a mere continuation of Peppertree. Therefore, the trial court properly imposed successor liability on Northridge Park for Peppertree's debt to McClellan.
(Id. at 756.)
The Court of Appeal stated the rule thusly:
The general rule is “where one corporation sells or transfers all of its assets to another corporation, the latter is not liable for the debts and liabilities of the former unless (1) the purchaser expressly or impliedly agrees to such assumption, (2) the transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing corporation is merely a continuation of the selling corporation, or (4) the transaction is entered into fraudulently to escape liability for debts. [Citations.]” (Ortiz v. South Bend Lathe (1975) 46 Cal.App.3d 842, 846 [120 Cal.Rptr. 556], italics added; accord, Ray v. Alad Corp. (1977) 19 Cal.3d 22, 28 [136 Cal.Rptr. 574, 560 P.2d 3]; Franklin v. USX Corp., supra, 87 Cal.App.4th at p. 621.)
(Id. at 753-54 [emphasis in original].)
Here, the Court concludes that Plaintiff has provided sufficient evidence to establish that Casa MBZ is merely a continuation of K-Kars, Inc.
Plaintiff presents the following undisputed evidence:
The arbitrator stated in the Final Award: “Arman Gharib admitted he previously owned a dealership called “Kay Cars.” He lost his dealer's license and then opened under another family member's name. K-Kars is now changing its name to Casa MBZ, at the same location and with the same employees. Mr. Gharib unpersuasively tried to distinguish the two entities and claims he did not know who owns Casa MBZ. The evidence established that it is the same business. It has simply changed its name.” (Cook Decl., Exh. 4.)
State filings and occupational licensing records establish connections between the Gharibs and at least five dealerships: (1) K Cars Inc. dba Kay Cars; (2) Kay Kars, Inc.; (3) Kay Cars, Inc; (4) K-Kars, Inc; and (5) Casa MBZ, Inc. (Cook Decl., Exh. 12-19.)
At the arbitration hearing on August 18, 2017, Arman Gharib admitted under penalty of perjury that days before, K-Kars transferred its assets to Casa MBZ. (Rosner Decl. ¶ 6.)
Mike Armstrong incorporated both K-Kars, and Casa MBZ. (Cook Decl., Exh. 15, 17.)
Less than a month after the Court removed Casa MBZ from the arbitration award, purportedly exculpating Casa MBZ from liability, Casa MBZ named Arman Gharib as its sole officer and director. (Cook Decl., Exh. 9, 17.)
K-Kars and Casa MBZ operate at the same location, 615 North Vermont Avenue, Los Angeles, California 90004, and use the same phone number: 877-529-5277 (KAY-KARS). (Cook Decl., Exh. 1, 17, 23.)
K-Kars and Casa MBZ have the same employees. (Rosner Decl. ¶ 7.)
Based on the foregoing, the Court finds that Plaintiff has successfully demonstrated that Casa MBZ is the successor corporation of K-Kars and that it should be subject to the same judgment.
Plaintiff’s motion to amend judgment is GRANTED.
Plaintiff’s motion to amend judgment to add Casa MBZ, Inc. as judgment debtor is GRANTED.
Moving party is to give notice.
The parties are strongly encouraged to attend all scheduled hearings virtually or by audio. Effective July 20, 2020, all matters will be scheduled virtually and/or with audio through the Court’s LACourtConnect technology. The parties are strongly encouraged to use LACourtConnect for all their matters. All social distancing protocols will be observed at the Courthouse and in the courtrooms.
Case Number: BC614749 Hearing Date: June 30, 2020 Dept: 31
MOTION TO AMEND JUDGMENT IS DENIED WITHOUT PREJUDICE
Plaintiff Robert Lee Johnson’s Motion to Amend Judgment is DENIED without prejudice.
Pursuant to Code of Civil Procedure section 684.020, the Motion to Amend Judgment must be served directly on the judgment debtor. Plaintiff’s Proof of Service filed on October 11, 2019 indicates that the Motion was served on Defendants’ counsel rather than on Defendant itself.
The motion may be served upon Defendants’ attorneys if all of the following requirements are satisfied:
The judgment debtor has filed with the court and served on the judgment creditor a request that service on the judgment debtor under this title be made by serving the attorney specified in the request. Service on the judgment creditor of the request shall be made personally or by mail. The request shall include a consent, signed by the attorney, to receive service under this title on behalf of the judgment debtor.
The request has not been revoked by the judgment debtor.
The consent to receive service has not been revoked by the attorney.
The Court is unaware of any such filing by Defendants in this matter. Accordingly, the Motion to Amend Judgment is DENIED without prejudice.
The parties are strongly encouraged to attend all scheduled hearings by telephone or CourtCall. All social distancing protocols will be observed at the Courthouse and in the courtrooms.
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