This case was last updated from Los Angeles County Superior Courts on 09/01/2019 at 06:26:45 (UTC).

SECOND GENERATION INC VS KODY BRANCH OF CALIFORNIA INC ET AL

Case Summary

On 02/05/2016 SECOND GENERATION INC filed a Contract - Other Contract lawsuit against KODY BRANCH OF CALIFORNIA INC. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The case status is Disposed - Judgment Entered.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****9405

  • Filing Date:

    02/05/2016

  • Case Status:

    Disposed - Judgment Entered

  • Case Type:

    Contract - Other Contract

  • County, State:

    Los Angeles, California

 

Party Details

Petitioner and Plaintiff

SECOND GENERATION INC.

Respondents and Defendants

TRINH VUONG GARMENT CO. LTD.

DOES 1 THROUGH 20

TRINH CATHY

KODY BRANCH OF CALIFORNIA INC.

KODY BRAND INC.

SEVEN-BROS ENTERPRISES INC

MKK ENTERPRISE CORP DOE 3

TRINH KEVIN DOE 6

TRINH TONY

BEN LYNN ENTERPRISE INC DOE 5

MELKO LOGISTIC GROUP CORP DOE 1

TRINH TONY DOE 7

BALDWIN SUN INC DOE 8

SIO LLC DOE 4

VIET MY EXPORT GARMENTS COMPANY DOE 2

Not Classified By Court

TEST PARTY FOR TRUST CONVERSION

Attorney/Law Firm Details

Petitioner and Plaintiff Attorneys

VENABLE LLP

ROZANSKY DANIEL ADAM

BOREN DAVID HOWARD

Respondent and Defendant Attorneys

RESCH POLSTER & BERGER LLP

CABANDAY ORLANDO F. ESQ.

LIEBERMAN MARC ANDREW

COULSON DAWN M. ESQ.

TEPPER SCOTT JARED ESQ.

LANZA ANTHONY

KAUFLER PHILIP ESQ.

 

Court Documents

PLAINTIFF SECOND GENERATION, INC.'S OPPOSITION TO CATHY TRINH'S MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PROPER SERVICE

7/6/2016: PLAINTIFF SECOND GENERATION, INC.'S OPPOSITION TO CATHY TRINH'S MOTION TO QUASH SERVICE OF SUMMONS FOR LACK OF PROPER SERVICE

APPLICATION FOR RIGHT TO ATTACH ORDER, TEMPORARY PROTECTIVE ORDER, ETC. (AFTAHMENT)

8/11/2016: APPLICATION FOR RIGHT TO ATTACH ORDER, TEMPORARY PROTECTIVE ORDER, ETC. (AFTAHMENT)

DECLARATION OF MICHAEL WETSBERG IN OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT KODY BRANCH OF CALIFORNIA, INC.'S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT

8/26/2016: DECLARATION OF MICHAEL WETSBERG IN OPPOSITION TO DEFENDANT/CROSS-COMPLAINANT KODY BRANCH OF CALIFORNIA, INC.'S APPLICATION FOR RIGHT TO ATTACH ORDER AND ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT

NOTICE RE: ADVANCE OF HEARING

9/20/2016: NOTICE RE: ADVANCE OF HEARING

AMENDED DECLARATION IN SUPPORT OF ATTORNEYS MOTION TO BE RELIEVED AS COUNSEL?CIVIL

11/2/2016: AMENDED DECLARATION IN SUPPORT OF ATTORNEYS MOTION TO BE RELIEVED AS COUNSEL?CIVIL

PROOF OF SERVICE OF ORDER GRANTING ATTORNEY'S MOTION TO BE RELIEVED AS COUNSEL FOR KODY BRANCH OF CALIFORNIA, INC.

12/1/2016: PROOF OF SERVICE OF ORDER GRANTING ATTORNEY'S MOTION TO BE RELIEVED AS COUNSEL FOR KODY BRANCH OF CALIFORNIA, INC.

STIPULATION RE SERVICE OF SECOND AMENDED COMPLAINT AND ETC

12/22/2016: STIPULATION RE SERVICE OF SECOND AMENDED COMPLAINT AND ETC

DECLARATION OF CAROLINE ROCKY IN SUPPORT OF PLAINTIFF/CROSS-DEFENDANT SECOND GENERATION, INC.'S MOTION FOR SUMMARY ADJUDICATION ON ITS FIRST CAUSE OF ACTION FOR BREACH OF CONTRACT

7/13/2017: DECLARATION OF CAROLINE ROCKY IN SUPPORT OF PLAINTIFF/CROSS-DEFENDANT SECOND GENERATION, INC.'S MOTION FOR SUMMARY ADJUDICATION ON ITS FIRST CAUSE OF ACTION FOR BREACH OF CONTRACT

NOTICE OF CHANGE OF LAW FIRM NAME

7/19/2017: NOTICE OF CHANGE OF LAW FIRM NAME

DECLARATION OF ROBERT D. KULLMAN IN SUPPORT OF PLAINTIFF'S OPPOSITION TO MOTION TO DISQUALIFY DAVID H. BOREN AND THE LAW FIRM OF RITHOLZ LEVY FIELDS LLP

8/31/2017: DECLARATION OF ROBERT D. KULLMAN IN SUPPORT OF PLAINTIFF'S OPPOSITION TO MOTION TO DISQUALIFY DAVID H. BOREN AND THE LAW FIRM OF RITHOLZ LEVY FIELDS LLP

DECLARATION OF MINH TRINH ON BEHALF OF DEFENDANT KODY BRANCH OF CALLFORNIA

9/22/2017: DECLARATION OF MINH TRINH ON BEHALF OF DEFENDANT KODY BRANCH OF CALLFORNIA

APPLICATION FOR - RIGHT TO ATTACH ORDER - ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT- AFTER HEARING

10/11/2017: APPLICATION FOR - RIGHT TO ATTACH ORDER - ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT- AFTER HEARING

APPLICATION FOR RIGHT TO ATTACH ORDER, ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT AFTER HEARING

10/12/2017: APPLICATION FOR RIGHT TO ATTACH ORDER, ORDER FOR ISSUANCE OF WRIT OF ATTACHMENT AFTER HEARING

PROOF OF SERVICE

10/12/2017: PROOF OF SERVICE

REQUEST FOR DISMISSAL

11/1/2017: REQUEST FOR DISMISSAL

Minute Order

11/7/2017: Minute Order

NOTICE OF MOTION AND MOTION FOR RECONSIDERATION OF DEFENDANTS CATHY TRINH, SEVEN-BROS ENTERPRISES, INC., TRINH VUONG, CO. LTD. AND KODY BRAND, INC. RE ORDER GRANTING SUMMARY ADJUDICATION BREACH OF CON

11/13/2017: NOTICE OF MOTION AND MOTION FOR RECONSIDERATION OF DEFENDANTS CATHY TRINH, SEVEN-BROS ENTERPRISES, INC., TRINH VUONG, CO. LTD. AND KODY BRAND, INC. RE ORDER GRANTING SUMMARY ADJUDICATION BREACH OF CON

Minute Order

12/11/2017: Minute Order

561 More Documents Available

 

Docket Entries

  • 10/03/2019
  • Hearingat 08:30 AM in Department 78 at 111 North Hill Street, Los Angeles, CA 90012; Hearing - Other (name extension)

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  • 12/07/2018
  • Docketat 08:30 AM in Department 78; (Status Hearing) - Held - Continued

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  • 12/07/2018
  • DocketMinute Order ((Legacy Event Type : Status Hearing)); Filed by Clerk

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  • 09/11/2018
  • DocketNOTICE OF STATUS HEARING

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  • 09/11/2018
  • DocketNotice of Hearing; Filed by Second Generation, Inc. (Plaintiff)

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  • 09/11/2018
  • DocketNotice; Filed by Tony Trinh (Defendant)

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  • 09/11/2018
  • DocketNOTICE OF WITHDRAWAL OF MOTION PREVIOUSLY CALENDARED FOR HEARING ON OCTOBER 25 2018;REQUEST TO CORRECT ONLINE CALENDAR

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  • 09/06/2018
  • Docketat 08:30 AM in Department 78; Unknown Event Type - Held - Continued

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  • 09/06/2018
  • DocketMinute Order

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  • 09/06/2018
  • DocketMinute order entered: 2018-09-06 00:00:00; Filed by Clerk

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1,152 More Docket Entries
  • 03/11/2016
  • DocketPROOF OF SERVICE OF SUMMONS

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  • 03/11/2016
  • DocketProof-Service/Summons; Filed by Second Generation, Inc. (Plaintiff)

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  • 03/08/2016
  • DocketNOTICE OF CASE MANAGEMENT CONFERENCE

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  • 03/08/2016
  • DocketNotice of Case Management Conference; Filed by Clerk

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  • 02/18/2016
  • DocketPROOF OF SERVICE SUMMONS

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  • 02/18/2016
  • DocketProof-Service/Summons; Filed by Second Generation, Inc. (Plaintiff)

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  • 02/05/2016
  • DocketComplaint; Filed by null

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  • 02/05/2016
  • DocketSUMMONS

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  • 02/05/2016
  • DocketCOMPLAINT FOR: 1. BREACH OF CONTRACT; ETC

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  • 01/01/1900
  • Docketat 08:32 AM in Department Legacy; Unknown event

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Tentative Rulings

Case Number: BC609405    Hearing Date: June 2, 2021    Dept: 78

Superior Court of California

County of Los Angeles

Department 78

SECOND GENERATION, INC.;

Plaintiff,

vs.

KODY BRANCH OF CALIFORNIA, et al.;

Defendants.

AND RELATED CROSS-ACTIONS

Case No.:

BC609405

Hearing Date:

June 2, 2021

[TENTATIVE] RULING RE:

Judgment creditor second generation, inc.’s motion for an order amending Judgment to add individuals and entities as additional Judgment Debtors pursuant to cal. code. civ. proc. § 187

Judgment Creditor Second Generation, Inc.’s Motion for an Order Amending Judgment to Add Individuals and Entities as Additional Judgment Debtors Pursuant to Cal. Code. Civ. Proc. § 187 is DENIED.

PROCEDURAL BACKGROUND

Judgment Creditor Second Generation, Inc. (“SecGen”) is a women’s clothing and apparel design, sale, and wholesale distribution company. On March 12, 2008 SecGen entered into a contract with Kody for the production and sale of clothing.[1] This contract was signed by Judgment Debtor Cathy Trinh on behalf of Kody. The contract had a liquidated damages clause which became operative if clothing ordered pursuant to the contract was delivered late.

On February 5, 2016, after repeated late deliveries and a dispute between the parties regarding whether a “holdback” by SecGen based on these late deliveries was appropriate, SecGen filed the initial complaint in this action. On March 12, 2016 SecGen filed its First Amended Complaint (“FAC”). The FAC named as defendants Judgment Debtor Kody Branch of California, and Judgment Debtor Kody Brand. Inc. (collectively “Kody”). The FAC also named as defendants Judgment Debtors Trinh Vuong Garment Co. Ltd. (“TVG”), Seven Bros Enterprises (“Seven Bros”)” and Cathy Trinh based on the allegation that these entities and Cathy were the alter egos off Kody.

On October 19, 2017, the Court granted SecGen’s Motion for Summary Adjudication of the First Cause of Action for Breach of Contract against Kody, Seven-Bros, TVG, and Cathy Trinh, finding that SecGen was entitled to liquidated damages under the contract and that Seven-Bros, TVG, and Cathy Trinh were the alter egos of Kody. In the Summary Judgment order the Court awarded liquidated damages in the total amount of $2,082,983.36 against the Judgment Debtors.

On October 30, 2017 SecGen filed Doe amendments naming as defendants all of the potential additional judgment debtors (“PAJDs”)SecGen it is now asking the Court to add as Judgment Debtors other than Gia Phu, Corporation, Kevin Voong and Cong Ty TNHH My Chanh Vuong. The next day, however, for reasons that have not been satisfactorily explained, SecGen filed dismissals without prejudice of all of these defendants.

On April 6, 2018, the Court entered Judgment for SecGen awarding damages of $2,082,983.36 along with prejudgment interest of $615,946.88, accruing at the rate of $584.64 per day, plus costs of $16,527.28, interest at 10% per annum, and attorneys’ fees of $752,383.78 along with interest of 10% per annum on those fees for a total Judgment of $3,421,214 02.[2] On May 3, 2018 defendants (now Judgment Debtors) filed a notice of appeal.[3]

On April 19, 2018 SecGen filed a motion to add the PAJDs it is now asking this Court to add as Judgment Debtors. On April 20, 2018 SecGen presented this request to the Court in the form of an ex parte application. This ex parte application was denied without prejudice because the issue was now a post judgment issue over which a different department had jurisdiction. The Motion was thereafter fully briefed and set for hearing on October 25, 2018. On June 27, 2018, however, SecGen withdrew the motion.

On August 9, 2019 the Court of Appeal affirmed the April 6, 2018 Judgment of the Court. On November 19, 2019 the Court of Appeal issued its remittitur.

On October 26, 2020 Sec Gen filed the present Motion to add PAJDs Tony Trinh a.k.a Tai Quoc Trinh (“Tony Trinh”), Melko Logistic Group Corp. (“Melko), MKK Enterprises, Corp. (“MKK”), Ben Lynn Enterprise, Inc. (“Ben Lynn”), Baldwin Sun, Inc. (”Baldwin”), SIO, LLC (“SIO”), Viet MY Export Garments Company Ltd. (“Viet MY”), Gia Phu, Corporation (“GIA Phu”), Kevin Voong and Cong Ty TNHH My Chanh Vuong (“MCV”) as additional Judgment Debtors.

On November 4, 2020, the PAJDS filed an Ex Parte Application for an Order Permitting them to File and Have Heard a Motion Asserting Procedural Challenges to the Previously Withdrawn and Refiled Motion by Plaintiff to Add Additional Judgment Debtors.

On November 9, 2020 the Court granted this application, setting January 19, 2021 as the date for the hearing on the Procedural Challenge and March 22, 2021 as the date for the hearing on the substantive issues raised by the Judgment Debtor’s Motion to Amend Judgment.

On December 17, 2020, the PAJDS filed their procedural challenge by filing a Motion to Dismiss SecGen’s Motion to Amend Judgment.

On December 30, 2020, SecGen filed an Opposition.

On January 8, 2021, the PAJDS filed a Reply.

On January 19, 2021 The Court denied the PAJDs’ procedural motion.

After a series of delays, SecGen’s Motion to add the PAJDs as additional Judgment Debtors was scheduled for hearing on April 22, 2021, with the PAJDs filing their oppositions on April 9, 2021 and SecGen filing its reply on April 15, 2021. In reviewing the papers filed by the parties, however, it became clear to the Court that the Court needed additional time to review the detailed and voluminous documentary evidence, declarations and legal memoranda filed by the parties. The Court therefore took the matter under submission and has been reviewing these materials in detail since that date.

On May 27, 2121 the Court notified the parties that the Court had completed its review and analysis and had posted this Tentative Ruling the hearing on this motion would be on June 2, 2021.

REQUESTS FOR JUDICIAL NOTICE

The Court may take judicial notice of “(c) Official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States. (d) [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 […] (g) Facts and propositions that are of such common knowledge within the territorial jurisdiction of the Court that they cannot reasonably be the subject of dispute. (h) Facts 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.)

SecGen requests judicial notice of Exhibits A through T, which are filed in support of its Motion. These exhibits are either Court orders or documents filed in this Court or the U.S. Bankruptcy Court and they are appropriate for judicial notice as records of any Court of record of the United States or this State. The requests for judicial notice are therefore GRANTED. The Court notes that “Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.” (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.) While Courts take judicial notice of public records, they do not take notice of the truth of matters stated therein.” (Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375, as modified (June 28, 2011).)

Specially Appearing Proposed Additional Judgment Debtors Melko Logistics, Group Corp, and Baldwin Sun, Inc.’s request judicial notice of Exhibits A and B, which are filed in connection with their Opposition to the Motion. Exhibits A and B were filed in this action. These are appropriate for judicial notice as records of any Court of this State. The Court GRANTS these requests.

Proposed Additional Judgment Debtor Tony Trinh requests judicial notice of Exhs. A-F, which are filed in connection with Trinh’s Opposition to SecGen’s Motion. Exhibits A-C are news articles. The Court GRANTS the requests for Exhs. A-C, without assuming the truth of the assertions contained in the new articles, on the grounds that the fact that the news articles were published is not reasonably subject to dispute. (Seelig v. Infinity Broadcasting Corp. (2002) 97 Cal.App.4th 798, 808, fn. 5.) Exhibits D-F are Court filings or rulings in this case and Case No.: 18STCV07677. These are appropriate for judicial notice as a record of any Court of this state. The Court GRANTS the requests as to Exhibits D-F.

Specially appearing defendants Voong and Ben Lynn request judicial notice of Exhibits A-C, which are filed in support of their Opposition to the Motion to Add Additional Judgment Debtors. Exhibits A and B were filed in the U.S. Bankruptcy Court, and are appropriate for judicial notice as records of the any Court of record of the United States. Exhibit C is “The contents of the Docket and file in the within action showing the filing of both Doe amendments to the Complaint and then their dismissal.” While Voong and Ben Lynn do not attach a document for Exhibit C, the Court can take judicial notice of it because it is in the records of this Court. Accordingly, the request for judicial notice is GRANTED as to Exhibits A, B and C.

SecGen requests judicial notice of Exhibits 1, 3, 6, 7, 9, and 10, which are filed in support of its Reply to Oppositions filed by the PAJDS. Exhibits 1, 3, 6, and 7 were filed in the U.S. Bankruptcy Court and/or the U.S. District Court. These are appropriate for judicial notice as records of any Court of record of the United States. Exhibit 9 is a Minute Order entered by Dept. 46 in this case. This is appropriate for judicial notice as a record of any Court of this state. Lastly, Exhibit 10 is a Statement of Information for Kody Branch of California filed with the Office of the Secretary of State of the State of California. This is appropriate for judicial notice as a fact and proposition not reasonably subject to dispute. Accordingly, the request for judicial notice is GRANTED as to Exhibits 1, 3, 6, 7, 9 and 10.

OBJECTIONS

SecGen has filed objections to various declarations filed on April 9, 2021 by the PAJDs. The Court’s ruling on these objections are as follows:

  1. Declaration of Howard Trinh: OVERRULED except the Court SUSTAINS the objections to the testimony referred to in objections 28 through 31 to the extent it is offered as proof of what persons other than Howard Trinh knew or did. The fact that Mr. Trinh has been convicted of a crime is admissible for consideration of his credibility but is not a basis for sustaining an objection to the testimony.

  2. Declaration of Kevin Voong: SUSTAINED on the grounds of hearsay and lack of adequate foundation for the testimony referred to in the first sentence of objection 22 and the entirety of the testimony referred to in Objection 22 beginning “when Tony Trinh approached me. OVERRULED as to the remainder.

  3. Declaration of York Huang: OVERRULED. The witness has provided adequate foundation for the testimony.

  4. Declaration of Stella Havkin: SUSTAINED on relevance grounds.’

  5. Declaration of Anh Hoang: SUSTAINED to the extent the testimony is offered to prove what other members or representatives of SIO did or knew, OVERRULED to the extent the testimony is offered to prove what Ms. Hoang did or knew.

  6. Cathy Trinh: OVERRULED.

  7. Thi Trinh: OVERRULED. The witness has established the foundation for the testimony that he has provided.

  8. Kevin Trinh: OVERRULED. The witness has established the foundation for the testimony and document to which the objection are made.

  9. Phong Nguyen: OVERRULED. The witness has established the foundation for the testimony to which the objections are made.

  10. Linh Nguyen: OVERRULED. The witness has established the foundation for the testimony that he has provided.

  11. Tony Trinh : OVERRULED. The testimony is relevant and material to the issue of whether there was evidence the PJADs could have presented before the motion for summary judgment was granted which could have changed the result. To the extent testimony is offered to establish Kody’s financial position and business activity before the judgment in this action, it is also relevant on the issue of whether Kody was the type of undercapitalized “mere shell” discussed in cases applying the alter ego doctrine or whether it was a successful going concern prior to the 4.63 million dollar judgment.

  12. Allan Miller: Objection Number 1 is OVERRULED on the condition that counsel files an amended declaration from Mr. Miller within 10 days of the date of this order complying with California evidence. California Evidence Code §710. The remaining objections which are not based on Mr. Miller’s failure to sign his declaration under penalty of perjury under the laws of the State of California, including the relevance objection are OVERRULED. Mr. Miller’s testimony is relevant and material on the issue of whether there was evidence the PJADs could have presented before the motion for summary judgment was granted which could have changed the result.

  13. Chris Yau: OVERRULED except that Objection No. 13 is SUSTAINED to the sentence which begins “During my tenure” and ends with “respected the separateness of the company” because there is no foundation for that testimony on any subject other than the financial books and records and accounting of the company

The PAJDs have filed objections and joined in objections filed by other PAJDs to the two Declarations filed by Michael P. Weisberg, the first in support of the Motion and the second in connection with SecGen’s Reply. To the extent that PAJDs make general objections without specific reference to the statements or documents at issue, these objections are OVERRULED. The Court’s rulings on the three sets of objections which refer to specific portions of Mr. Weisberg’s declarations and the joinder in those objections are as follows:

OBJECTIONS TO WEISBERG OCTOBER 26, 2020 DECLARATION

Specific Objections of Ben Lynn Inc. And Kevin Voong (and Joinders)

¶ 22: OVERRULED

OBJECTIONS TO WEISBERG APRIL 15, 2021 DECLARATION

In many ways it would be easier to identify the paragraphs of Mr. Weisberg’s April 15, 2021 declaration that are admissible as sworn testimony rather than those that are not since the latter vastly outnumber the former. As the PAJDs correctly point out, the majority of the statements in that declaration consist of Mr. Weisberg’s arguments with respect to and interpretations of the evidence. The Court SUSTAINS these objections. The Court’s rulings with respect to the specific objections of the PAJD to that declaration to us are set forth below.

Specific Objections of Ben Lynn Inc. and Kevin Voong

¶45: SUSTAINED except for the identification of Exhibit 4 to which the Court has taken Judicial Notice.

¶46: OVERRULED.

¶47: OVERRULED.

¶48: SUSTAINED except for the identification of Exhibit 3.

¶49: SUSTAINED.

Objections of SIO, LLC (and Joinders)

¶ 4, p. 1:16-17: SUSTAINED.

¶5, p. 1:1:21-25: SUSTAINED.

¶15, p. 3:18-20: OVERRULED.

¶16, p. 4:1: SUSTAINED.

¶17, p. 4:5-12: OVERRULED.

¶18, p. 4:16-17: SUSTAINED.

¶28, p. 7:15-17: SUSTAINED.

¶29, p. 7:18-20: SUSTAINED.

¶30, P. 7:26-27: SUSTAINED.

¶30, P. 7:27-8:2: SUSTAINED.

¶31, P. 8:3-10 and Exhibit 3: OVERRULED as to Exhibit 3. Otherwise SUSTAINED.

32, p. 8:11-12: SUSTAINED.

¶32, p. 8;12-17: SUSTAINED.

¶32, p. 8:17-19: SUSTAINED.

¶32, p. 8:19-22: SUSTAINED.

¶34,p. 9:4-11: SUSTAINED.

¶35, p. 9:12-16: SUSTAINED.

¶36, p. 9:17-19: SUSTAINED.

¶37, p. 9:25-10:1: SUSTAINED.

37, P. 10:1-4: SUSTAINED

¶37, fn. 1, p.10:24-25: SUSTAINED

¶38, p. 10:5-11: SUSTAINED

¶39, p. 10:12-15: SUSTAINED.

¶39, p. 10:16-18: SUSTAINED.

¶39, fn. 2, p. 10:26-28.:SUSTAINED

¶40, p. 10:19-22: SUSTAINED.

¶40, p. 11:1-3: SUSTAINED.

¶40, p. 11:4-5 SUSTAINED.

Objections of MKK Enterprises Corp., Viet My Exports Garment Company, Limited, Gia Phu, Corporation, and Cong Ty TNHH My Chang Vuong (and Joinders)

To the extent that these objections are the same as the objections ruled on above, the rulings above are incorporated herein by reference. With respect to the additional objections:

¶1, p. 19-25: SUSTAINED.

¶6, p. 1:26: SUSTAINED.

¶11, p. 2:26-27 P. 3:1-2: SUSTAINED.

¶13, p. 3:5-9: SUSTAINED.

¶17, p. 4:5-13: OVERRULED.

¶18, p. 3:14-21: SUSTAINED.

¶21, p. 5:18-22: SUSTAINED.

¶24, p. 6:15-25 SUSTAINED

¶25, p. 7:1-3: SUSTAINED.

¶26, P. 7:3-8: SUSTAINED.

¶80, p.20:24-26.: SUSTAINED.

¶81, p. 21:1-5: SUSTAINED

¶82, p. 21:6-10: SUSTAINED.

¶83, p. 21:1-18: SUSTAINED

¶84, p. 21:19-23: SUSTAINED.

¶85, p. 21:24-27, 22:1-17: SUSTAINED.

¶86, p. 22:18-20: SUSTAINED.

¶87, p. 22:21-23: SUSTAINED.

¶88, p. P.22:25-27, 23:1-2: SUSTAINED.

¶89, p.23:3-9: SUSTAINED.

¶90, p. 23:10-15: SUSTAINED.

¶91, p. 23:16-18: SUSTAINED.

¶92, p. 23:19-26, 24:1-2: SUSTAINED.

DISCUSSION

There are two related but actually separate questions on this motion. The first is whether, under equitable and legal principles, the PAJDs and the Judgment Debtors are the alter egos of each other. The second is whether the evidence establishes that the PAJDs were “in charge of” and therefore “virtually represented” in the litigation that led to the Order granting the Motion for Summary Adjudication. As will be seen, this second question involves fundamental principles of due process of the law. These questions will be analyzed separately below.

I. Does the Evidence Establish that the PAJDs and the Judgment Debtors Were the Alter Egos of Each Other in Connection With the Activities Which Led to the Filing of the Complaint in this Action?

In Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, a case cited by both parties as setting forth the relevant standards, the Court stated:

“ ‘The alter ego test encompasses a host of factors:([1] ‘[c]omingling of funds and other assets, failure to segregate funds of the separate entities, and the unauthorized diversion of corporate funds or assets to other than corporate uses; [2] the treatment by an individual of the assets of the corporation as his own; [3] the failure to obtain authority to issue stock or to subscribe to or issue the same; [4] the holding out by an individual that he is personally liable for the debts of the corporation ...; the failure to maintain minutes or adequate corporate records, and the confusion of the records of the separate entities ...; [5] the identical equitable ownership in the two entities; the identification of the equitable owners thereof with the domination and control of the two entities; identification of the directors and officers of the two entities in the responsible supervision and management; sole ownership of all of the stock in a corporation by one individual or the members of a family ...; [6] the use of the same office or business location; the employment of the same employees and/or attorney ...; [7] the failure to adequately capitalize a corporation; the total absence of corporate assets, and undercapitalization ...; [8] the use of a corporation as a mere shell, instrumentality or conduit for a single venture or the business of an individual or another corporation ...; [9] the concealment and misrepresentation of the identity of the responsible ownership, management and financial interest, or concealment of personal business activities ...; [10] the disregard of legal formalities and the failure to maintain arm's length relationships among related entities ...; [11] the use of the corporate entity to procure labor, services or merchandise for another person or entity ...; [12] the diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, or the manipulation of assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another ...; [13] the contracting with another with intent to avoid performance by use of a corporate entity as a shield against personal liability, or the use of a corporation as a subterfuge of illegal Transactions ...; [14] and the formation and use of a corporation to Transfer to it the existing liability of another person or entity.’ 191 Cal. App.4th 512-513.

As the Court also noted, however citing (Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799, 811–812, 110 Cal.Rptr.3d 597:

“This long list of factors is not exhaustive. The enumerated factors may be considered ‘[a]mong’ others ‘under the particular circumstances of each case. ’ ... ‘No single factor is determinative, and instead a Court must examine all the circumstances to determine whether to apply the doctrine.” (id.

The Court does not believe that the appropriate analysis here can be based on identifying one or two “factors” for each PAJD SecGen believes is helpful to it in this analysis, identifying the familial relationships between the Judgment Debtors and the PAJDs or their owners or officers, and then finding that since they are all members of the “TFE,” the Court should lump the factors all together and find each PAJD responsible jointly and severally for paying a 4.36 million dollar judgment. Instead the Court believes the analysis must consider the overall purpose of the alter ego doctrine and how that purpose relates to SecGen’s claims here. This analysis must consider each PAJD to determine whether there is a sufficient basis to find that individual or entity liable on alter ego principles for the 4.36 million dollar judgment..

Tony Trinh

Tony Trinh is the owner of Kody and the brother of Cathy Trinh. SecGen has known these facts since well before the complaint in this action was filed and obviously did not consider them sufficient to impose alter ego liability. And they are not.

The ability of an individual to shelter himself or herself from liability by incorporation of his or her business entity is well-recognized as an important right. The most generally recognized and significant situation where the Courts recognize an exception to this right and therefore “pierce the corporate veil” by finding alter ego liability on the part of the individual is when a corporation is not properly capitalized, so that when the corporation incurs debts or liabilities it is unable to pay them. An example is illustrated in Butler America, LLC v. Aviation Assurance Company, LLC (2020) 55 Cal. App. 5th 136, 146. There was the limited liability corporation “but a shell. It had no substantial business activity and no income with which to pay its debts.”

Despite SecGen’s claims, that is clearly not the case here. For over eight years Kody manufactured and shipped over $25 million dollars in merchandise to SecGen.[4] As Mr. Trinh explained, the structure of this business required Kody to advance approximately 90% of the cost of this merchandise before it was ever delivered to the customer. Only when this merchandise was delivered could Kody invoice the customer and ask for payment. Despite what Mr. Trinh identified as very thin margins, SecGen was able to finance and deliver all of the merchandise its customers ordered, including all the merchandise ordered by SecGen, until it was driven out of business by the 4.36 million dollar Judgment in this action.[5]

Another significant fact pattern where the Courts find alter ego liability and “pierce the corporate veil” is when the shareholders unfairly essentially treat the corporation’s assets as their own personal piggy bank, disregarding corporate formalities and leaving their creditors holding the bag. A good example of this situation is Relentless Air Racing, LLC v. Airborne Turbine Ltd. Partnership (2013) 222 Cal. App. 4th 811, cited by SecGen as identical to the situation in this case.

In Relentless the wife and husband in fact treated the company as their piggybank, took out all funds and sent the airplane which was the company’s sole asset to France. In these circumstances the Court held that failing to add the husband and wife as judgment debtors when they had rendered the corporation insolvent so it could not pay the judgment was an inequitable result as a matter of law.

The Court, again, does not believe this is the situation here. SecGen cites financial transactions which it believes raise questions and the Court will address the proper forum and remedies available to SecGen to resolve those questions. The issues raised by SecGen, however, fall well short of the wholesale comingling of funds and assets and disregard of corporate formalities Courts have found sufficient to support an alter ego finding.

SecGen appropriately points out that Tony Trinh’s testimony at his deposition in April 2017 that he was the only employee of Kody is highly inconsistent with his declaration here. But it is also highly inconsistent with the actual facts before the Court. If Mr. Trinh was the only employee of Kody, why is Cathy Trinh in the case? More importantly, Mr. Trinh has submitted the declaration of Chris Yau, one of the few declarations Mr. Weisberg did not criticize or comment upon in his largely inadmissible declaration filed in support of the SecGen Reply. Mr. Yau is a certified public accountant who annually reviews Kody’s books and prepares both its tax returns and its financial statements. Mr. Yau’s testimony, supported by the attached exhibits, conclusively rebuts any claim that Tony Trinh was treating Kody as his “personal piggy bank” or otherwise disregarding the financial separateness of Kody from himself. None of SecGen’s claims justify making Tony Trinh a Judgment Debtor responsible jointly and severally for paying a 4.36 million dollar judgment.

Melko and Baldwin

All of the important facts relating to Melko Logistic Group Corp.(“Melko”) and Baldwin Sun(“Baldwin”), including the facts, where accurate, relied on by SecGen, are contained in the declaration of Kevin Trinh. Kevin Trinh is the Chief Executive Officer and sole owner of Melko. He is also the Chief financial Officer of Baldwin. David Trinh is the owner and Chief Executive Officer of Baldwin. Both are brothers of Cathy Trinh. Kevin Trinh also worked for Judgment Debtor Seven–Bros., packing goods for shipment from 2008 to 2015.

Melko is in the freight forwarding and logistics business. Baldwin manufactures garments. Neither Melko, Baldwin, Kevin Trinh nor David Trinh had any involvement with the commercial relations between Kody and SecGen that are in issue in this litigation before they were served with this Motion. Melko and Baldwin maintain their own separate books, records and bank accounts. For a period of time Melko and Baldwin were both located at the same address but not the same office or space. They are now located at separate addresses. None of SecGen’s claims justify making Melko or Baldwin a Judgment Debtor responsible jointly and severally for paying a 4.36 million dollar judgment.

MKK

MKK Enterprises, Corp. (“MKK”) manufactures garments. There is no allegation that any of those garments were manufactured for or delivered to SecGen. MKK’s CEO and CFO is Victoria Trinh. Victoria Trinh is the niece of Tony Trinh. SecGen claims the address of MKK is also one of the addresses used by Kody and another address is the address used by some of the other PAJDs. SecGen cites to the fact that MKK and Baldwin filed lawsuits that were ”virtually identical” to a lawsuit filed by Seven-Bros. in 2017. While that is true in the sense that both lawsuits were against the same company who had had purchased garments from them, the purchases were separate and in fact the trial Court refused to relate the two cases. None of SecGen’s claims justify making MKK a Judgment Debtor responsible jointly and severally for paying a 4.36 million dollar judgment.

Ben Lynn

As of January 2013 Cathy Trinh was the CEO of Ben Lynn. Her husband, Kevin Voong is the CFO of Ben Lynn. The shares of the Company are held by the two of them although the percentage is in dispute. Although SecGen claims, based on an Internet source, that Ben Lynn’s address is the same 140 No. Orange address as other Judgment Debtors and PAJDs, Kevin Voong denies this, stating that Ben Lynn’s address is in El Monte and in fact that address is listed on the official documents SecGen has filed with the Court.[6]

Ben Lynn is a manufacturer of garments with “specialty fabrics” which are difficult to source. A small portion of the SecGen’s orders from Kody required these fabrics and Ben Lynn manufactured those garments. Kevin Voong states that none of the garments manufactured by Ben Lynn for Kody were delivered late and there is no evidence to the contrary.

Despite Kevin Voong’s declaration stating that Ben Lynn was never the “importer of record” for Kody, paragraph 46 of April 15, 2021 Weisberg declaration, along with the attached exhibits, establish that Ben Lynn was in fact identified as the “importer of record” for the garments SecGen ordered from Kody. What is not explained, however, is what this means. Is this a function typically performed by independent companies or companies that have the specific expertise necessary to perform the function? What is clear is that there is no claim or proof that as “importer record,” Ben Lynn caused any of the delays which were the subject of the lawsuit by SecGen.

Kevin Voong’s declaration, along with the declaration of York Huang, Ben Lynn’s Certified public accountant, establish that all of the appropriate corporate formalities were observed and there was no commingling of any funds between Ben Lynn and the Judgment Debtors. None of SecGen’s claims justify making MKK a Judgment Debtor responsible jointly and severally for paying a 4.36 million dollar judgment.

SIO

SIO, LLC (SIO) owns the building located at 140 North Orange St. in which several of the Judgment Debtors and PAJDs leased space. Owning this building is the only business of SIO. SecGen’s original claim that there must be a basis for finding that SIO should be added as a judgment debtor was the fact that Tony Trinh and two of Tony’s brothers were managers of SIO and there was a suspicious $2,000,000 debt of Kody to SIO shown on Kody’s bankruptcy schedules. As shown by the declaration of Howard Trinh and the exhibits attached thereto, however, this was in fact a valid loan that Kody had made to SIO to purchase the building on which commercially reasonable interest was paid until the loan was paid off in full.

Kody also claimed that the bankruptcy schedules filed by Cathy Trinh in her bankruptcy showed and unexplained debt to her from SIO of $578,412.47. Cathy Trinh’s responding declaration, however, along with the attached exhibit shows that this was an error by bankruptcy counsel which was corrected in revised schedules filed on April 4, 2018.

In the final analysis, SecGen’s claim that a corporation which solely rented premises to some of the Judgment debtors and some of the PAJDs should be added as a Judgment Debtor responsible for paying the $4.36 judgment is based solely on the assertion that “SIO… cannot and does not refute that Howard Trinh is a blood relative of Cathy [Trinh], one of the JDs, that Tony Trinh cannot refute the fact that he is Cathy [Trinh’s] brother and that Kevin Voong cannot refute the facts that he is Cathy [Trinh’s] husband. The list of factors Greenspan lists as relevant, though extensive, does not include any category that would include such “irrefutable” facts and none of SecGen’s claims relating to SIO justify making SIO a Judgment Debtor responsible jointly and severally for paying a 4.36 million dollar judgment.

Viet MY

SecGen’s “showing” with respect to Viet MY Export Garments Company Ltd. (“Viet MY”)’ is based almost entirely on Mr. Weisberg’s speculations as to what inadmissible exhibits mean and statements he makes on “information and belief.” The sole exception is his statement that in a December 2014, on a visit to Ho Chi Minh city, Cathy Trinh told him that “Viet MY is owned and controlled by members of the Trinh family, including Van, the eldest sister of Tony, Kevin, Howard and Cathy.” None of this “evidence” justifies making Viet MY a Judgment Debtor responsible jointly and severally for paying a 4.36 million dollar judgment.

Gia Phu

Gia Phu, Corporation (“Gia Phu”) is a garment factory located in Vietnam. In its motion SecGen contends that Gia Phu is owned by Van Trinh, a sister of Tony Trinh, Howard Trinh and Cathy Trinh. In its Motion SecGen questions why Kody transferred $521,699.60 to Gia Phu shortly before Kody filed for bankruptcy. In response Gia Phu presented the declaration of its Production Director Phong Nguyen. Mr. Nguyen states in that declaration that the transfer was in payment of invoices for goods Gia Phu had sold to Kody and he attaches the invoices.

In response SecGen raises various questions (accompanied by Mr. Weissberg speculation) about these invoices. The speculation is not sufficient to support SecGen’s Motion but it does raise an important issue on this Motion that applies across the board to SecGen’s attempt to add the PAJDs as parties responsible jointly and severally for a $4.36 million dollar judgment. That question is: what is the standard of proof applicable here?

It needs to be remembered that the $4.36 million judgment was obtained by SecGen on a motion for summary judgment. Such motions do not decide factual issues, they evaluate the presentations of the parties to determine whether there is a triable issue of material fact. If there is such a triable issue of material fact, the motion is denied without weighing of the evidence to determine which side should prevail. Judged by this standard none of SecGen’s claims justify making Gia Phu a Judgment Debtor responsible jointly and severally for paying a 4.36 million dollar judgment.

Kevin Voong

Kevin Voong is Cathy Trinh’s husband and an owner of Baldwin. SecGen’s motion as to Kevin Voong is entirely based on two loans Kevin made to Kody when Kody was facing financial difficulty financing production of garments for which it had orders because its credit rating was impaired by this lawsuit. Kevin Voong’s declaration satisfactorily explains these loans as an ultimately unsuccessful attempt to help Kody stay in business and this testimony is not addressed by or rebutted in SecGen’s Reply. None of SecGen’s claims justify making Kevin Voong a Judgment Debtor responsible jointly and severally for paying a 4.36 million dollar judgment.

MCV

The full basis for SecGen’s motion to add MCV as a Judgment Debtor responsible jointly and severally for paying a $4.36 million dollar judgment is contained on page 13 of their memorandum in support of the Motion. SecGen notes that MCV is a Vietnamese garment company formed in September 2017, that Cathy Trinh owns 35% of the business, that a “factory profile” indicates that Quoc Trinh is the principal of the Company, that Cathy Trinh’s bankruptcy schedules show that Quoc Trinh loaned Cathy $135,000, and that the schedules indicate MCV’s address is the same as Judgment Debtor TVG. SecGen then concludes: “Based on having the same address as JD TVG and being part of the sizable loans made to Cathy, is like it is likely that Quoc is a relative or insider of the Trinh Family Enterprise.” To put it mildly, None of SecGen’s evidence justifies making MCV a Judgment Debtor responsible jointly and severally for paying a 4.36 million dollar judgment.

II. Does the Evidence Establish that the PJADs Were “In Charge Of” and Therefore “Virtually Represented” In the Litigation that Led to the Judgment so that their Due Process Rights Would not be Violated if They are Added as Additional Judgment Debtors?

As noted above and pointed out in this Court’s January 18, 2021 order denying the PAJD’s Motion to Dismiss based on Procedural Challenges, there is a separate and independent requirement that must be met when judgment has been entered in an action and then the plaintiff attempts to add additional Judgment Debtors based on an assertion that these additional Judgment Debtors are the alter ego of the named Defendants. And this additional requirement is not added by statute or case law, but by the constitutional mandate that each person or entity is entitled to the due process of law.

As the Court held in Greenspan, “Due process guarantees that any person against whom a claim is asserted in a judicial proceeding shall have the opportunity to be heard and to present his defenses.’” As the Court also held, this requirement is met in the context of a motion to add additional Judgment Debtors only when the moving party shows that the potential additional Judgment Debtors “controlled the [litigation] and were virtually represented in that proceeding” (191 Cal. App.4th supra, at 509).

In Greenspan the Court found this requirement to have been met as to Barry Shy and other potential additional Judgment Debtors. Mr. Shy. controlled all of the corporations and was the Trustee of the Trust which plaintiff was attempting to add. The Court’s decision that it would be constitutionally permissible to add these parties as an additional Judgment Debtor responsible for paying the arbitration award was based on the Court’s finding that Mr. Shy had “directed the defense of the arbitration--and vigorously so-- on behalf of [the entities against whom the judgment was entered] and himself.” Id.

In Farenbaugh & Son v. Belmont Construction (1987) 194 Cal. App, 3rd 1023 the proposed additional judgment debtor was the president and shareholder of the corporation. He had been intimately involved in the defense. In granting the motion the trial Court [who had been the trial judge in the original trial] stated:

“When you say Mr. West was not a party to the original trial, Mr. West figured very, very prominently in the original trial. Mr. West was here. Mr. West testified. Mr. West was cross-examined. Mr. West counseled with Mr. Hafer [the attorney for the Judgment Debtor] in the Court's presence. Mr. West was not a passive participant by any manner of means in that original trial." Id., 1030-1031

Finally, in Mirabito v. San Francisco Dairy Co.(1935) 8 Cal. App.2nd 54, 59 , the third case cited by SecGen on this subject, the Court noted that the proposed additional Judgment Debtor [Dairy Delivery Co, Inc.] had not only paid for the defense of the original action but “[T]he attorneys for one corporation were the attorneys for the other and have at all times acted herein--as was their right--with the view of protecting appellant Dairy Delivery Company, Inc.”

SecGen on this motion has attempted to meet the standards articulated in these cases in two ways. In its opening memorandum SecGen lumped together the Judgment Debtors and the PAJDS, as members of the “TFE,” attributing the knowledge of each to all. As set forth above, the Court does not believe this is a supportable analysis. In fact, the only “evidence” of involvement or knowledge of any of the PAJDs is the fact that Tony Trinh attended the deposition of his sister Cathy Trinh, a fact that is neither surprising nor probative.

In their Reply Memorandum SecGen adopts a different approach. They note that Tony Trinh’s lawyer , Philip Kaufler, previously represented the Judgment Debtors in this litigation and is now concurrently representing Cathy Trinh in her bankruptcy proceedings. They quote from a declaration Mr. Kaufler submitted in support of one of his bankruptcy bills where Mr. Kaufler states that he “coordinated with other counsel brought in to defend the judgment debtors” in this litigation.

It seems apparent that SecGen is attempting to place this case in the same category as Mirabito: SecGen argues that since Mr. Kaufler the Judgment Debtors in this litigation and now is representing at least one of the PAJDs and consulting with the lawyers for the others, it is not unfair to bind the PAJDs with the result of the judgment. The problem is that the facts show exactly the opposite.

The critical event which has caused damage to the Judgment Debtors is the Court’s order granting the Motion for Summary Adjudication. That order was entered on October 19, 2017. As of that date Mr. Kaufler could not have been representing the interests of the PAJDs, or even interests of the Judgment Debtors, because he had had even appeared in the litigation.

As shown by the Court files, of which the Court takes judicial notice, the only lawyer who represented the Judgment Debtors before or as of October 19, 2017 was Orlando Cabanday. Mr. Kaufler did not appear in the litigation until December 13, 2017, when he substituted in for all of the Judgment Debtors and replaced Mr. Cabanday. And there is no evidence at all that before the Motion for Summary Adjudication was granted against the Judgment Debtors, any of the PAJDs played any role in this litigation. Or that they were “in charge of” it.

This raises a second, related, constitutional issue. As the Court noted in Greenspan, where the evidence shows that “the action was fully and fairly tried…; and… Nothing appears in the record to show that [the proposed judgment debtors] could have produced a scintilla of evidence that would have in any way affected the results of the [arbitration],”[7] the due process claim of the proposed additional judgment debtor has less force. But is that the case here?

The declaration of Allan Miller establishes that at the exact time SecGen was complaining of delays in delivery, a Long Beach port strike was paralyzing the industry and preventing foreign shipments from being offloaded. The evidence presented by the PAJDs show that Michael Weisberg, the CEO of SecGen and one of the attorneys for SecGen here, was specifically and contemporaneously notified of this fact.[8] The contract between Kody and SecGen contained a force majeure clause that would have excused Kody’s delay in delivery based on this strike. Yet nowhere in any of the papers filed in connection with the Motion for Summary Adjudication is there a single reference to this fact or this defense.

It should be remembered again that the “judgment” in this case was entered as a result the Court granting a Motion for Summary Adjudication. The standard on such motions is whether there is a triable issue of material fact as to any of the claims made by the proponent of the motion. To describe this defense was supported by more than a “scintilla of evidence” is a gross understatement.

III. Would Denying SecGen’s Motion to Add the PAJDs as Additional Judgment Debtors on the 4.36 Million Dollar Judgment Cause an Inequitable Result?

Any party who receives a large judgment and then it is unable to collect on the judgment because it drives the defendant into bankruptcy by definition believes that result is inequitable. But does SecGen have a remedy in this case which is appropriately related to its claims?

Virtually all of SecGen’s complaints relate to the transfer of funds between Kody and individuals and entities that SecGen refers collectively to as the TFEs . (who include in this case both the Judgment Debtors and the PAJDs). All of those fund transfers were made in close proximity to the date Kody and Cathy Trinh filed for bankruptcy and therefore are subject to adjudication in the bankruptcy proceedings of Kody and Cathy Trinh.[9] In most cases the PAJDs have submitted declarations and supporting documentation here supporting the legitimacy of those transfers. But if there is anything improper in those transfers, SecGen has a perfect forum to pursue those transfers in the bankruptcy court if it has not already done so. Whatever the result of those claims, pursuing them in the bankruptcy court is also a demonstrably more equitable way to resolve the issues.

Assume, for example, that a transfer of $500,000 was inappropriately made to an insider and can be reversed in the bankruptcy proceeding. What would be more equitable: allowing SecGen to seek an order in the bankruptcy court reversing the transfer, or ordering that the transferee is to be added as an additional judgment debtor, responsible, jointly and severally for paying a $.36 million dollar judgment? The Court believes this question is self-answering.

ACCORDINGLY, for all of the reasons set forth above, Judgment Creditor Second Generation, Inc.’s Motion for an Order Amending Judgment to Add Individuals and Entities as Additional Judgment Debtors Pursuant to Cal. Code. Civ. Proc. § 187 is DENIED.

DATED: May 27, 2021.

________________________________

Hon. Robert S. Draper

Judge of the Superior Court


[1] There are two “Kody” corporations involved here, Kody Brand, Inc. and Kody Brand California, Inc..For the purposes of this motion the parties have referred to both as "Kody" as will the Court.

[2] As a result of attorney's fees and costs added after the appeal, the total judgment is now $4,363,388.49.

[3] The causes of action other than the cause of action for breach of contract and the defendant's cross-complaint were dismissed pursuant to stipulation.

[4] Tony Trinh Declaration, ¶13.

[5] Id, ¶¶11-18.

[6] Weissberg April 15, 2021 Declaration, Exhibit 5. Boren Declaration, Exhibit I.

[7] 191 Cal. App,. 4th, supra, at 509.

[8] Tony Trinh Request for Judicial Notice, Ex. F.

[9] See the Order Confirming Modified Fourth Amended Chapter 11 Plan issued in Cathy Trinh's bankruptcy proceedings, Ex. 1 to Ben Lynn and Kevin Voong’s Request for Judicial Notice.

Case Number: BC609405    Hearing Date: January 14, 2021    Dept: 78

Superior Court of California

County of Los Angeles

Department 78

SECOND GENERATION, INC.;

Plaintiff,

vs.

KODY BRANCH OF CALIFORNIA, et al.;

Defendants.

AND RELATED CROSS-ACTIONS

Case No.:

BC609405

Hearing Date:

January 14, 2021

[TENTATIVE] RULING RE:

Specially appearing proposed additional judgment debtors’ (“PAJDS”) motion to dismiss the pajds from the action BASED ON PROCEEDURAL OBJECTIONS

The Specially Appearing Judgment Debtors’ Motion to Dismiss Based on Procedural Objections is DENIED.

FACTUAL BACKGROUND

This is an action for breach of contract. The Complaint alleges as follows. Plaintiff Second Generation, Inc. (“SecGen”) is a women’s clothing and apparel design, sale, and wholesale distribution company who entered into an agreement on March 12, 2008 with Defendants Kody Branch of California, Inc., Kody Brand, Inc., and Trinh Vuong Garment Co. Ltd. (collectively, “Kody”). (Compl. ¶ 3-4.) Beginning 2014, after years of a successful relationship, SecGen placed a large production order with Kody, but Kody repeatedly failed to deliver the goods on time, causing SecGen to suffer monetary penalties, cancelled orders, and broken business relationships with retail customers. (Compl. ¶5-8.)

relevant procedural history

SecGen filed the Complaint on February 5, 2016, alleging five causes of action:

  1. Breach of contract

  2. Tortious interference with contract

  3. Intentional interference with prospective economic advantage

  4. Fraud

  5. Negligent misrepresentation

On June 24, 2016, Kody Branch filed a cross-complaint alleging four causes of action:

  1. Breach of contract

  2. Goods sold and delivered

  3. Open book account

  4. Account stated

On October 19, 2017, the Court granted SecGen’s Motion for Summary Adjudication of the First Cause of Action for breach of contract against Kody Branch of California, Inc., Seven-Bros Enterprises, Inc., Trinh Vuong Garment Co. Ltd., Cathy Trinh, and Kody Branch, Inc., jointly and severally (all Defendants are a single enterprise and/or alter egos of each other). The Court awarded liquidated damages in the total amount of $2,082,983.36.

On February 26, 2018, the Court entered an Order granting the Stipulation entered into between SecGen and Defendants, wherein: (1) SecGen dismissed the second, third, fourth, and fifth causes of action without prejudice; (2) Defendants withdrew their Motion to Dismiss; (3) Defendants withdrew their Motion for Reconsideration of the Court’s Order on the MSA; (4) without admitting liability, and with the Parties expressly agreeing the Defendants are not the prevailing party for purposes of the cross-complaint, SecGen gave Defendants a $30,000 credit for the Cross-Complaint; (5) all parties preserved rights of appeal.

On April 6, 2018, Judge Shaller entered the following judgment in this case: “Judgment granted in favor of SecGen. SecGen was the prevailing party, recovering damages of $2,082,983.36. SecGen also to recover prejudgment interest of $615,946.88, plus $584.64 per day thereafter in interest. SecGen also to recover cost of $16,527.28 plus interest at 10% per annum, and attorneys’ fees of $752,383.78, plus interest at 10% per annum.”

Defendants appealed.

On November 19, 2019, the Court received the remittitur from the Court of Appeal, affirming the judgment of the Court.

On August 3, 2020, the Court granted SecGen’s Motion for Attorneys’ Fees.

On October 26, 2020, SecGen filed the its Motion to Amend Judgment to add additional entities based on an alter ego theory.

On November 4, 2020, the Specially Appearing Proposed Judgment Debtors who SecGen proposed added to the judgment (“PAJDS”) filed an Ex Parte Application for an Order Permitting them to File and Have Heard a Motion Asserting Procedural Challenges to the Previously Withdrawn and Refiled Motion by Plaintiff to Add Additional Judgment Debtors.

On November 5, 2020 and November 9, 2020 the Court granted this application, setting January 14, 2021 as the date for hearing on the Procedural Objections and March 22, 2021 for a hearing on the substantive issues raised by the Judgment Debtor’s Motion to Amend Judgment.

On December 17, 2020, the PAJDS filed the instant Motion to Dismiss SecGen’s Motion to Amend Judgment.

On December 30, 2020, SecGen filed an Opposition.

On January 8, 2021, the PAJDS filed a Reply.

DISCUSSION

  1. REQUEST FOR JUDICIAL NOTICE

The court may take judicial notice of “[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.” (Evid. Code § 452.) SecGen has filed a request for judicial notice of exhibits A through M attached to the request. Each of these documents is appropriate and judicial notice is taken thereof

  1. OBJECTIONS

The PAJDS have filed objections to the declaration of Michael J Weissberg. Those objections are overruled.

  1. MOTION

The PAJDS assert that the exclusive means of adding the PADJS to the judgment is to proceed under Code of Civil Procedure §§ 989- 994. Attempting to add the PAJDS to the judgment by bringing a motion under Code of Civil Procedure §187, according to the PAJDS, is not appropriate. The PAJDS argue that this is because §187 only applies “if the course of proceeding be not specifically pointed out by this code or the statute.” But as the Court of Appeal recently held in Triyar Hospitality Management, LLC v. WSA (II)—HWP, LLC , (2020) 57 Cal. App. 5th 636, 641: “The authority provided to the courts by Code of Civil Procedure section 187 includes the power to add a judgment debtor where a person or entity is the alter ego of the original judgment debtor.” And as the Court explained in Hall, Goodhue, Haisley & Barker, Inc. (1996) 41 Cal. App. 4th 1551, 1554-5:

“Under section 187, the trial court is authorized to amend a judgment to add additional judgment debtors. (NEC Electronics, Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778, 256 Cal.Rptr. 441; Dow Jones Co. v. Avenel (1984) 151 Cal.App.3d 144, 148, 198 Cal.Rptr. 457.) As a general rule, “a court may amend its judgment at any time so that the judgment will properly designate the real defendants.” (Dow Jones Co. v. Avenel, supra, 151 Cal.App.3d at p. 149, 198 Cal.Rptr. 457, quoting Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 45, 163 Cal.Rptr. 377.) Judgments may be amended to add additional judgment debtors on the ground that a person or entity is the alter ego of the original judgment debtor. (Carr v. Barnabey's Hotel Corp. (1994) 23 Cal.App.4th 14, 20–21, 28 Cal.Rptr.2d 127; NEC Electronics, Inc. v. Hurt, supra, 208 Cal.App.3d at p. 778, 256 Cal.Rptr. 441.) “Amendment of a judgment to add an alter ego 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 ... 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., supra, 23 Cal.App.4th at pp. 21–22, 28 Cal.Rptr.2d 127, internal citations and quotations omitted.)”

The PAJDS also assert, without citing any applicable authority, that because SecGen originally named them as Doe defendants and then dismissed them, SecGen is barred from bringing the Motion to Amend. This argument is based on the claim that SecGen only had 3 years to serve the complaint on the PAJDS and, having dismissed them, the 3 years has passed and SecGen is barred from now moving to amend the judgment to include them. [1] But for the same reasons the Court in Lopez v. Escamilla (2020) 48 Cal. App.5th 763, 766 rejected the argument that adding a party to the judgment after the judgment had been entered based on an alter ego finding was barred by the statute of limitations, this claim is without merit here. As the Court stated in Lopez: “By adding an alter ego defendant, the Court is not entering a new judgment, but merely inserting the correct name of the real defendant” and “This may be done at any time” because “Statutes of limitations on substantive causes of action do not apply to proceedings to declare alter ego.”

In all of the procedural arguments the PAJDS make they also ignore the substantive issues the Court must decide in ruling on a Motion to Amend to add parties to the judgment based on an alter ego Claim. As the Court held in Triyar Hospitality Management, LLC v. WSA (II)—HWP, LLC , (2020) 57 Cal. App. 5th 636, 641: “To prevail in a motion to ADD judgment debtors, WSI must show that (1) the parties to be added as judgment debtors had control of the underlying litigation and were virtually represented in that proceeding; (2) there is such a unity of interest and ownership that the separate personalities of the entity and owners no longer exists; and (3) an inequitable result would follow if the acts are treated as those of the entity alone.” By definition, these determinations can only be made after the litigation is concluded and the judgment entered, not when a plaintiff is deciding to add are not at Doe defendants at the earliest stages of the litigation.

Accordingly, the Specially Appearing Judgment Debtor’s Motion to Dismiss Based on Procedural Objections is DENIED.

DATED: January 14, 2021

________________________________

Hon. Robert S. Draper

Judge of the Superior Court


[1] The Weissberg Declaration fully explains the reasons the "delay" between the dismissal of the PAJDS as Doe defendants and the filing of the Motion to Amend and the PAJDS have not established any "prejudice" from the alleged "delay."

Case Number: BC609405    Hearing Date: August 03, 2020    Dept: 78

Superior Court of California

County of Los Angeles

Department 78

SECOND GENERATION, INC.;

Plaintiff,

vs.

KODY BRANCH OF CALIFORNIA, et al.;

Defendants.

AND RELATED CROSS-ACTIONS

Case No.:

BC609405

Hearing Date:

August 3, 2020

[TENTATIVE] RULING RE:

Plaintiff/CROSS-DEFENDANT SECOND GENERATION, INC.’S Motion for Attorneys’ Fees.

Plaintiff Second Generation, Inc.’s Motion for Attorneys’ Fees and Costs is GRANTED in the total amount of $937,732.91 for attorneys’ fees and $4,341.56 for costs.

FACTUAL BACKGROUND

This is an action for breach of contract. The Complaint alleges as follows. Plaintiff Second Generation, Inc. (“SecGen”) is a women’s clothing and apparel design, sale, and wholesale distribution company who entered into an agreement on March 12, 2008 with Defendants Kody Branch of California, Inc., Kody Brand, Inc., and Trinh Vuong Garment Co. Ltd. (collectively, “Kody”). (Compl. ¶ 3-4.) Beginning 2014, after years of a successful relationship, SecGen placed a large production order with Kody, but Kody repeatedly failed to deliver the goods on time, causing SecGen to suffer monetary penalties, cancelled orders, and broken business relationships with retail customers. (Compl. ¶5-8.)

relevant procedural history

SecGen filed the Complaint on February 5, 2016, alleging five causes of action:

  1. Breach of contract

  2. Tortious interference with contract

  3. Intentional interference with prospective economic advantage

  4. Fraud

  5. Negligent misrepresentation

On June 24, 2016, Kody Branch filed a cross-complaint alleging four causes of action:

  1. Breach of contract

  2. Goods sold and delivered

  3. Open book account

  4. Account stated

On October 19, 2017, the Court granted SecGen’s Motion for Summary Adjudication of the First Cause of Action for breach of contract against Kody Branch of California, Inc., Seven-Bros Enterprises, Inc., Trinh Vuong Garment Co. Ltd., Cathy Trinh, and Kody Branch, Inc., jointly and severally (all Defendants are a single enterprise and/or alter egos of each other). The Court awarded liquidated damages in the total amount of $2,082,983.36.

On February 26, 2018, the Court entered an Order granting the Stipulation entered into between SecGen and Defendants, wherein: (1) SecGen dismissed the second, third, fourth, and fifth causes of action without prejudice; (2) Defendants withdrew their Motion to Dismiss; (3) Defendants withdrew their Motion for Reconsideration of the Court’s Order on the MSA; (4) without admitting liability, and with the Parties expressly agreeing the Defendants are not the prevailing party for purposes of the cross-complaint, SecGen gave Defendants a $30,000 credit for the Cross-Complaint; (5) all parties preserved rights of appeal.

On April 6, 2018, Judge Shaller entered judgment in this case: Judgment granted in favor of SecGen. SecGen was the prevailing party, recovering damages of $2,082,983.36. SecGen also to recover prejudgment interest of $615,946.88, plus $584.64 per day thereafter in interest. SecGen also to recover cost of $16,527.28 plus interest at 10% per annum, and attorneys’ fees of $752,383.78, plus interest at 10% per annum.

Defendants appealed.

On November 19, 2019, the Court received the remittitur from the Court of Appeal, affirming the judgment of the trial court. The Court of Appeal specified that SecGen was to recover its costs on appeal.

On January 14, 2020, SecGen filed the present Motion for Attorneys’ Fees.

No Opposition has been filed.

DISCUSSION

  1. REQUEST FOR JUDICIAL NOTICE

The court may take judicial notice of “[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.” (Evid. Code § 452.)

SecGen seeks judicial notice: (1) the Court’s order from October 19, 2017; (2) the Court’s order from March 23, 2018; (3) the Judgment in this matter from April 6, 2018; the Opinion of the Court of Appeal as to this matter, filed August 9, 2019; (3) the Remittitur from the Court of Appeal dated November 19, 2019.

The Court GRANTS these requests.

  1. MOTION FOR ATTORNEYS’ FEES

Parties to litigation must generally bear their own attorney’s fees, unless they otherwise agree. (Code Civ. Proc. § 1021.) “A prevailing party is entitled to recover attorney fees by contract.” (Regency Midland Construction, Inc. v. Legendary Structures Inc. (2019) 41 Cal.App.5th 994, 1000, as modified on denial of reh'g (Nov. 26, 2019), review denied (Feb. 11, 2020).)

Here, as previously found by the Court, the contract on which Plaintiff SecGen prevailed states: “The prevailing party in any litigation related to this contract shall be entitled to this reasonable attorney’s fees and costs.” (RJN, Exh. B., p. 5.) Accordingly, SecGen may recover attorney’s fees for the appeal in this case, because it is “litigation related to this contract” and they are the prevailing party. Further, the Court of Appeal remittitur expressly provides that SecGen may recover costs.

“It is well established that the determination of what constitutes reasonable attorney fees is committed to the discretion of the trial court, whose decision cannot be reversed in the absence of an abuse of discretion.” (Melnyk v. Robledo (1976) 64 Cal.App.3d 618, 623.) In exercising its discretion, the court should consider a number of factors, including the nature of the litigation, its difficulty, the amount involved, the skill required in handling the matter, the attention given, the success or failure, and the resulting judgment. (See id.)

In determining the proper amount of fees to award, courts use the lodestar method. The lodestar figure is calculated by multiplying the total number of reasonable hours expended by the reasonable hourly rate. “Fundamental to its determination . . . [is] a careful compilation of the time spent and reasonable hourly compensation of each attorney . . . in the presentation of the case.” (Serrano v. Priest (1977) 20 Cal.3d 25, 48 (Serrano III).) A reasonable hourly rate must reflect the skill and experience of the attorney. (Id. at p. 49.) “Prevailing parties are compensated for hours reasonably spent on fee-related issues. A fee request that appears unreasonably inflated is a special circumstance permitting the trial court to reduce the award or deny one altogether.” (Serrano v. Unruh (1982) 32 Cal.3d 621, 635 (Serrano IV).) The Court in Serrano IV also stated that fees associated with preparing the motion to recover attorneys’ fees are recoverable. (See id. at p. 624.)

SecGen asks for attorneys’ fees for the appeal in the amount of $197,011.00 plus costs of $4,204.66, for a total of $201,215.66 for the appeal. (Motion at p. 12.) SecGen also asks for $25,065.00 in attorneys’ fees for this fee motion, plus costs of $136.90. (Motion at p. 12.)

Defendants did not file an Opposition. Therefore, these requests are unopposed and the Court accordingly has no reason to deny these requests.

However, SecGen also asks for attorneys’ fees of $718,871.91 plus costs to-be-determined for “Collection.” (Motion at p. 12.) SecGen does not provide much information to the Court on how it arrived at this requested amount, nor what the amount is actually for. SecGen contends that it is entitled to recover its costs in enforcing the judgment pursuant to Code of Civil Procedure section 685.040. (Motion at p. 7.) SecGen argues that from June 2018 to the present it hired a bankruptcy specialist law firm, Smiley Wang-Ekvall (“SWE”) to “oversee collection efforts” while Defendants filed for bankruptcy on February 9, 2018. (Motion at pp. 3-4.) They contend that the bankruptcy filings led to extensive discovery and motion practice in bankruptcy court, and that the bankruptcy filings “were likely made to delay SecGen’s collection efforts, and Defendants took steps to keep assets from SecGen and otherwise minimize SecGen’s recovery on its judgment.” (Motion at p. 4.)

Code of Civil Procedure section 685.040 states:

“The judgment creditor is entitled to the reasonable and necessary costs of enforcing a judgment. Attorney's fees incurred in enforcing a judgment are not included in costs collectible under this title unless otherwise provided by law. Attorney's fees incurred in enforcing a judgment are included as costs collectible under this title if the underlying judgment includes an award of attorney's fees to the judgment creditor pursuant to subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5.”

(Code Civ. Proc., § 685.040.)

Subparagraph (A) of paragraph (10) of subdivision (a) of Section 1033.5 relates to attorneys’ fees whn authorized by contract. A prevailing party’s efforts in bankruptcy court and related proceedings to enforce a superior court judgment are recoverable attorneys’ fees and costs. (Jaffe v. Pacelli (2008) 165 Cal.App.4th 927, 929.) In Jaffe, the prevailing party in the trial action participated in the judgment debtor’s bankruptcy proceeding “that included resisting, and eventually obtaining dismissal of, [judgment debtor’s) bankruptcy petition,” in which the prevailing party contended that “all efforts were reasonable and necessary costs of enforcing the October 7, 1996 judgment.” (Id. at 933.) The court agreed, overturning the trial court’s denial of the bankruptcy fees due to being “an entirely different proceeding.” (Id.) Accordingly, SecGen may recover attorneys fees and costs that derive from defending the trial court judgment in bankruptcy proceedings.

Because this Motion is unopposed, the Court grants this Motion as requested.

Accordingly, SecGen’s Motion for Attorneys’ Fees and Costs is GRANTED in the total amount of $937,732.91 for attorneys’ fees and $4,341.56 for costs.

SecGen to give notice.

DATED: August 3, 2020

________________________________

Hon. Robert S. Draper

Judge of the Superior Court

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