On 09/06/2012 SAEID KOHANDARVISH M D filed a Contract - Other Contract lawsuit against JAMSHID ASAF. This case was filed in Los Angeles County Superior Courts, Van Nuys Courthouse East located in Los Angeles, California. The Judges overseeing this case are JOHN FARRELL, RUSSELL STEVEN KUSSMAN, MICHAEL J. CONVEY and THERESA M. TRABER. The case status is Disposed - Judgment Entered.
Disposed - Judgment Entered
Los Angeles County Superior Courts
Van Nuys Courthouse East
Los Angeles, California
RUSSELL STEVEN KUSSMAN
MICHAEL J. CONVEY
THERESA M. TRABER
KOHANDARVISH M.D. SAEID
KOHANDARVISH SAEID M.D. AKA SID KOHAN AN INDIVIDUAL
ASAF DDS JAMES
ENCINO SMILE CENTER INC
ENCINO SMILE CENTER INC. A CALIFORNIA CORPORATION
ASAF JAMSHID AKA JAMES ASAF DDS. AN INDIVIDUAL
SAUER STEVEN R.
RUBIN RUSSELL MARK
LUCERO LINDA D.
SHAFRON MARK HENRY
4/6/2020: Memorandum of Points & Authorities
7/17/2020: Reply - REPLY TO DEFENDANT'S OPPOSITION
10/23/2020: Reply - REPLY TO SUPPLEMENTAL OPPOSITION TO MOTION TO AMEND JUDGEMENT
12/7/2012: Case Management Statement
1/23/2013: Minute Order - MINUTE ORDER ENTERED: 2013-01-23 00:00:00
5/9/2013: Legacy Document - LEGACY DOCUMENT TYPE: STATEMENT-NON-AGREEMENT
12/11/2013: Legacy Document - LEGACY DOCUMENT TYPE: REPLY TO OPPOSITION
1/17/2014: Separate Statement
2/3/2014: Order - ORDER ON PLAINTIFF'S EX-PARTE MOTION TO CONTINUE TRIAL DATE AND TO RE-OPEN DISCOVERY
2/10/2014: Exhibit List
2/27/2014: Legacy Document - LEGACY DOCUMENT TYPE: OBJECTION
3/12/2014: Minute Order - MINUTE ORDER ENTERED: 2014-03-12 00:00:00
3/18/2014: Legacy Document - LEGACY DOCUMENT TYPE: MISCELLANEOUS
3/18/2014: Legacy Document - LEGACY DOCUMENT TYPE: OBJECTION
5/7/2014: Notice of Hearing of Motion for New Trial
5/28/2014: Legacy Document - LEGACY DOCUMENT TYPE: DECLARATION
1/21/2015: Legacy Document - LEGACY DOCUMENT TYPE: EX-PARTE APPLICATION
12/30/2013: NOTICE OF RULING
DocketOrder (On Plaintiff's Motion to Amend Judgment); Filed by SAEID KOHANDARVISH,, M.D. (Plaintiff)Read MoreRead Less
DocketObjection (To Notice of ruling); Filed by JAMSHID ASAF (Defendant)Read MoreRead Less
DocketNotice of Ruling; Filed by SAEID KOHANDARVISH,, M.D. (Plaintiff)Read MoreRead Less
Docketat 08:30 AM in Department U, Theresa M. Traber, Presiding; Hearing on Motion - Other (Amend the Judgment (TR POSTED)) - Held - Motion DeniedRead MoreRead Less
DocketOrder (re: Plaintiff's Motion to Amend Judgment to Include Alter Ego Defendant); Filed by ClerkRead MoreRead Less
DocketMinute Order ( (Hearing on Motion - Other Amend the Judgment)); Filed by ClerkRead MoreRead Less
DocketReply (To Supplemental Opposition to Motion to Amend Judgement); Filed by SAEID KOHANDARVISH,, M.D. (Plaintiff)Read MoreRead Less
DocketProof of Service (not Summons and Complaint); Filed by JAMSHID ASAF (Defendant)Read MoreRead Less
DocketMemorandum of Points & Authorities; Filed by JAMSHID ASAF (Defendant)Read MoreRead Less
Docketat 08:30 AM in Department U, Theresa M. Traber, Presiding; Hearing on Motion - Other (Amend the Judgment) - Held - ContinuedRead MoreRead Less
DocketRequest-Dismissal-Partial; Filed by SAEID KOHANDARVISH,, M.D. (Plaintiff); SID KOHAN (Legacy Party)Read MoreRead Less
DocketNotice-Demurrer; Filed by ENCINO SMILE CENTER INC. a California Corporation (Defendant)Read MoreRead Less
DocketRequest for Judicial Notice; Filed by ENCINO SMILE CENTER INC. a California Corporation (Defendant)Read MoreRead Less
DocketProof of Service of Summons and Complaint; Filed by SAEID KOHANDARVISH,, M.D. (Plaintiff); SID KOHAN (Legacy Party)Read MoreRead Less
DocketAnswer; Filed by JAMSHID ASAF (Defendant); DDS, JAMES ASAF (Legacy Party)Read MoreRead Less
DocketProof of Service of Summons and Complaint; Filed by SAEID KOHANDARVISH,, M.D. (Plaintiff); SID KOHAN (Legacy Party)Read MoreRead Less
DocketNotice of Case Management Conference; Filed by nullRead MoreRead Less
DocketComplaint; Filed by SAEID KOHANDARVISH,, M.D. (Plaintiff)Read MoreRead Less
DocketCivil Case Cover Sheet; Filed by SAEID KOHANDARVISH,, M.D. (Plaintiff)Read MoreRead Less
DocketSummons-Issued; Filed by SAEID KOHANDARVISH,, M.D. (Plaintiff); SID KOHAN (Legacy Party)Read MoreRead Less
Case Number: LC098321 Hearing Date: November 05, 2020 Dept: U
SUPERIOR COURT OF THE STATE OF CALIFORNIA
FOR THE COUNTY OF LOS ANGELES - NORTHWEST DISTRICT
SAEID KOHANDARVISH, M.D., a.k.a SID KOHAN, an individual,
JAMSHID ASAF, a.k.a, JAMES ASAF, DDS, an individual; and DOES 1-10, inclusive,
CASE NO: LC098321
[TENTATIVE] ORDER RE: PLAINTIFF’S MOTION TO AMEND JUDGMENT TO INCLUDE ALTER EGO DEFENDANT
November 5, 2020
On April 22, 2014, after a bench trial, judgment was entered in Saeid Kohandarvish, MD’s (Plaintiff) favor and against James J. Asaf, DDS (Defendant), in the amount of $92,358.27. Plaintiff argues that no part of Defendant’s judgment has been paid and it is now due and owing together with interest at the legal rate accruing from April 22, 2014.
On March 20, 2020, Plaintiff filed this motion to amend the judgment to include The Asaf Family Living Trust (the Trust) as an alter ego defendant of Asaf pursuant to Code of Civil Procedure section 473 on the grounds that Asaf has placed assets in the Trust for the purpose of keeping them out of reach of his creditors.
A. Motion to Amend Judgment
Pursuant to Code of Civil Procedure section 187, a trial court has jurisdiction to modify a judgment to add additional judgment debtors because it grants to every court the power to use all means to carry its jurisdiction into effect, even if those processes are not set out in the code. This provision provides:
When jurisdiction is, by the Constitution or this Code, or by any other statute, conferred on a Court or judicial officer, all the means necessary to carry it into effect are also given; and in the exercise of this jurisdiction, if the course of proceeding be not specifically pointed out by this Code or the statute, any suitable process or mode of proceeding may be adopted which may appear most conformable to the spirit of this code.
(Code Civ. Proc., § 187.) Courts are encouraged to exercise “the greatest liberality” in allowing such amendments to ensure that justice is done. (Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1073
Under section 187, judgments are typically “amended to add additional judgment debtors on the grounds that a person or entity is the alter ego of the original judgment debtor. This is an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant but is merely inserting the correct name of the real defendant. ‘Such a procedure is an appropriate and complete method by which to bind new individual 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.’” (NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778; Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 508.) The general rule is that "a court may amend its judgment at any time so that the judgment will properly designate the real defendants." (Dow Jones Co. v. Avenel (1984) 151 Cal.App.3d 144.)
Three conditions must be met before the alter ego doctrine can be invoked to amend a judgment. First, there must be a showing that the party to be added as a judgment debtor exercised control over the underlying litigation and, thus, was virtually represented in that proceeding. (Relentless Air Racing, LLC v. Airborne Turbine Ltd. Partnership (2013) 222 Cal.App.4th 811, 815-816.) Second, there must be such a unity of interest and ownership between the corporation and its equitable owner such that the separate personalities of the corporation and the shareholder do not in reality exist. Third, it must be shown that an inequitable result will occur if the acts in question are treated as those of the corporation alone. (Id.; Sonora Diamond Corp. v Superior Court (2000) 83 Cal.App.4th 523, 538.)
“Among the factors to be considered in applying the [alter ego] 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, supra, at p. 538.) Other factors which have been described in the case law include inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers. No one characteristic governs, but the courts must look at all the circumstances to determine whether the doctrine should be applied. (Id. at 538-539.)
Plaintiff argues that, under the terms of the Trust, Defendant’s interest in the principal of the Trust is subject to voluntary or involuntary transfer and that Defendant has a vested future interest in full legal title to the real property at 18610 Wells Drive, Tarzana, California (the property). Plaintiff argues that this property is Defendant’s only major asset and that the Trust’s sole purpose is to keep the property out of the reach of Defendant’s creditors.
Plaintiff asserts Defendant created the revocable Trust on May 7, 2008, two years after Plaintiff loaned Defendant money and three years before the final payment was due. In 2008, Defendant transferred all his personal and real property to himself under the Trust. Plaintiff contends property held in a revocable trust is considered property owned by the settlor for as long as the trust is revocable. Thereby, Plaintiff reasons Defendant, as settlor of the revocable Trust, owns the property and it is capable of attack by creditors. Since Defendant is also the grantor, trustee, and beneficiary under the Trust, he has total control over the property in the Trust and can treat the Trust property as his own as if the Trust did not exist.
Defendant makes a serious of arguments in opposition. First, he argues that Plaintiff’s motion is not supported by any factual evidence demonstrating that the Trust is his alter ego. Second, he contends that it would be unfair and improper to add the Trust and presumably the second trustee, Defendant’s wife, Malka Asaf, because they were not involved in the underlying litigation and did not control it. Third, Defendant argues that an alter ego should only be added to the judgment if there is evidence of its misconduct in connection with the underlying matter, and no evidence ties the Trust or Malka Asaf to any of Defendant’s misconduct found in the underlying lawsuit. Fourth, Defendant argues that neither the Trust nor Malka Asaf should be added post-judgment because they did not have a right to defend themselves in the underlying lawsuit. Fifth, Defendant contends that Plaintiff cannot enforce his judgment against Defendant via the Trust assets because a provision of the Trust document bars creditors from accessing Trust assets. Finally, Defendant contends that Plaintiff have pursued the wrong procedure and should be limited to an action under Code of Civil Procedure sections 989 or the Enforcement of Judgments Act. The Court addresses each of these arguments below.
The Court agrees that Plaintiff has not made a traditional argument tying Defendant to the Trust in the same way a party would connect an alter ego to a corporation. Unlike a corporation, however, a trust is not a separate legal entity to be sued as such. Instead, “the trustee is the real party in interest with standing to sue and defend on the trust's behalf.” (Civil Code section §§ 16249, 16010, 16011; Code Civ. Proc., § 369; Wolf v. Mitchell, Silberberg & Knupp (1999) 76 Cal.App.4th 1030, 1035–1036; Pillsbury v. Karmgard (1994) 22 Cal.App.4th 743, 753–754; Saks v. Damon Raike & Co. (1992) 7 Cal.App.4th 419, 427; Estate of Bowles (2008) 169 Cal. App. 4th 684, 691.) Whereas there is a “corporate veil” that insulates a corporation’s liability from that of its owners, there is no such legal barrier as between the settler of a revocable trust and the Trust itself.
In a case like this, where Defendant is alive and the settlor of the revocable Trust, he is considered the owner of the Trust property. (Estate of Giraldin (2012) 55 Cal.4th 1058, 1065-1066.) “There is no distinction in California law between property owned by the revocable trust and property owned by the settlor of such a revocable trust during the lifetime of the settlor.” (Carolina Cas. Ins. Co. v. L.M. Ross Law Grp., LLP (2010) 184 Cal. App. 4th 196, 208 [affirming the trial court’s reasoning].) “Under California law, a revocable inter vivos trust is recognized as simply ‘a probate avoidance device....’ ... Property transferred to, or held in, a revocable inter vivos trust is nonetheless deemed the property of the settlor....” (Zanelli v. McGrath (2008) 166 Cal.App.4th 615, 633; see also Prob.Code § 18200 [property in revocable trust subject to claims of settlor's creditors “to the extent of the power of revocation during the lifetime of the settlor”]; Rev. & Tax.Code, § 62, subd. (d) [transfer by settlor to revocable trust is not a change in ownership].) “[A] settlor with the power to revoke a living trust effectively retains full ownership and control over any property transferred to that trust.” (Arluk Medical Center Industrial Group, Inc. v. Dobler (2004) 116 Cal.App.4th 1324, 1331–1332, 11 Cal.Rptr.3d 194
Probate Code section 18200 provides that “[i]f the settlor retains the power to revoke the trust in whole or in part, the trust property is subject to the claims of creditors of the settlor to the extent of the power of revocation during the lifetime of the settlor.” The Trust document provides that Defendant has the power to revoke the Trust at any time in whole or in part and without or without the agreement of his co-trustee and wife. (Plaintiff’s Exh. A, Section IV, p. 5.) Therefore, as a settlor of the revocable Trust with the unilateral authority to revoke the Trust at any time, Defendant’s interest in the property of the Trust is co-extensive with the Trust property and his control of the Trust assets is limited only by Malka Asaf’s joint interest in that property.
Thus, the Trust document itself establishes a “unity of interest” between Defendant and the Trust. Moreover, given the undeniable financial alignment between Defendant as an individual and Defendant as the trustee of a Trust holding his assets, there is no question that the Trust’s interests were virtually represented in the underlying action based on Defendant’s own defense of that lawsuit. (Dow Jones Co. v. Avenel (1984) 151 Cal.App.3d 144, 151 [where corporation had opportunity to raise triable issue of fact to defeat plaintiff’s motion for summary judgment and was unable to do so, court held that closely connected alter ego’s interests were sufficiently protected in underlying action].) To the extent that it could be shown that that it would inequitable to deny an amendment to add the Trust as a judgment debtor, Plaintiff’s showing here might well justify an amendment to the judgment. (Carolina Cas. Ins. Co. v. L.M. Ross Law Grp., LLP (2012) 212 Cal. App. 4th 1181, 1188–89 [Even if all the formal elements necessary to establish alter ego liability are not present, an unnamed party may be included as a judgment debtor if “the equities overwhelmingly favor” the amendment and it is necessary to prevent an injustice].)
Because of the nature of a revocable trust, Defendant’s argument that Plaintiff needs to prove misconduct by the Trust to add it as an additional judgment debtor makes no sense. As noted above, the Trust is not a separate legal entity like a corporation. Instead, the real parties in interest are the trustees, Defendant and his wife. Whether named as an individual or as the trustee, Defendant is the one whose misconduct led to entry of judgment against him. It is true that there has been no showing of any misconduct by Defendant’s wife, Malka Asaf. But the amendment sought here is for enforcement purposes on a money judgment, not for an injunction or other prospective relief that would have a deleterious impact on her.
Further, because the Trust document declares that all Trust property is considered community property unless otherwise indicated (Plaintiff’s Exh. A, Section I-A, p. 2), Malka Asaf would suffer no injustice by an amendment that would allow enforcement of the money judgment against Defendant to reach the Trust assets. It is established that the separate debts of one spouse may be satisfied by community property assets. (Family Code § 910(a) [“Except as otherwise expressly provided by statute, the community estate is liable for a debt incurred by either spouse before or during marriage, regardless of which spouse has the management and control of the property and regardless of whether one or both spouses are parties to the debt or to a judgment for the debt”].) Thus, a post-judgment amendment to facilitate collection of Defendant’s debt as against community property held by the Trust would not result in an injustice to Malka Asaf.
Defendant relies on the Spendthrift Clause in the Trust document to argue that, as a creditor of a Trust beneficiary, Plaintiff is barred from accessing Trust assets to satisfy Defendant’s debt. Section XII-B of the Trust document provides: “The interests of the Beneficiaries in the principal and/or income of the Trust shall not be subject to the claim or claims of their creditors or other, nor to legal process, and may not be voluntarily or involuntarily alienated or encumbered.” (Plaintiff’s Exh. A, Section XII-B, p. 21.) Under the California Probate Code, this provision properly protects the interests of Trust beneficiaries, like Defendant’s children, but cannot shield Trust property from enforcement actions brought against a settlor like Defendant. (Probate Code §§ 15300, 15304.) Where a “settler is a beneficiary of a trust created by the settlor and the settlor’s interest is subject to a provision restraining the voluntary or involuntary transfer of the settlor interest, the restraint is invalid against transferees or creditors of the settlor.” (Probate Code §15304(a).) Thus, Section XXI-B cannot be used to block Plaintiff’s enforcement of the judgment as against Trust assets.
Finally, Defendant argues that Plaintiff has used the wrong procedure to secure an enforcement path as against the Trust assets. The Court disagrees that Code of Civil Procedure section 989 established a viable, much less an exclusive, procedure for Plaintiff to access Trust assets. As Plaintiff points out in his reply, this is not a situation where a plaintiff is seeking to recover on a judgment against a person who is “jointly indebted upon an obligation” but not originally served with the summons and complaint. (Code of Civil Procedure §989.)
The issue of whether Plaintiff should use the Enforcement of Judgments Law as a vehicle to satisfying the judgment as against Trust assets poses a more difficult question. The Court will hear argument from the parties about whether Plaintiff is facing barriers to enforcement because the judgment does not name the Trust (through its Trustees) as a defendant in this action or, in the alternative, whether it would suffice for the Court to issue an order declaring that the judgment may be satisfied by Trust assets through the pursuit of a writ of attachment or other regular enforcement measures. This argument bears on the open question of whether the Court should exercise its considerable equitable powers under Code of Civil Procedure section 187 to amend the judgment or should simply issue an order declaring that Plaintiff may pursue enforcement of his money judgment as against any and all Trust assets.
DATED: November 4, 2020
Hon. Theresa M. Traber
Judge of the Superior Court