This case was last updated from Los Angeles County Superior Courts on 07/09/2019 at 22:36:59 (UTC).

UNIQUE HOMES BY CASPIAN INC VS ERI KROH ET AL

Case Summary

On 12/18/2015 UNIQUE HOMES BY CASPIAN INC filed a Contract - Other Contract lawsuit against ERI KROH. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judge overseeing this case is MICHAEL P. LINFIELD. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****4583

  • Filing Date:

    12/18/2015

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Other Contract

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judge

MICHAEL P. LINFIELD

 

Party Details

Plaintiffs and Petitioners

UNIQUE HOMES BY CASPIAN INC

UNIQUE HOMES BY CASPIAN INC.

MIRDAMEDI BABAK A.

Defendants and Respondents

HANKEY CAPITAL LLC

1440 LLINDA FLORA ASSOC. LLC DOE 1

KROH ERI

DOES 1-100

AMERICAN DREAM HOME BUILDERS INC.DOE 2

STOCK BUILDING SUPPLY WEST LLC DOE 3

1440 LINDA FLORA ASSOC. LLC DOE 1

AMERICAN DREAM HOME BUILDERS INC. DOE 2

Other

MOLINO & BERARDINO LAW OFFICES OF

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

ANELL & WILMER LLP

BAUER BRIAN

BAKER MICHAEL J.

Defendant and Respondent Attorneys

RIBONS MICHAEL P.

BERARDINO STEVEN

 

Court Documents

UNIQUE HOMES BY CASPIAN, INC.'S NOTICE OF MOTION AND MOTION FOR PROTECTIVE ORDER TO LIMIT THE SCOPE OF DISCOVERY OF ERI KROH'S DEPOSITION SUBPOENA FOR PRODUCTION OF BUSINESS RECORDS TO BENCHMARK INSUR

3/22/2018: UNIQUE HOMES BY CASPIAN, INC.'S NOTICE OF MOTION AND MOTION FOR PROTECTIVE ORDER TO LIMIT THE SCOPE OF DISCOVERY OF ERI KROH'S DEPOSITION SUBPOENA FOR PRODUCTION OF BUSINESS RECORDS TO BENCHMARK INSUR

NOTICE RE: CONTINUANCE OF HEARING

4/10/2018: NOTICE RE: CONTINUANCE OF HEARING

NOTICE RE: CONTINUANCE OF HEARING

4/10/2018: NOTICE RE: CONTINUANCE OF HEARING

REQUEST FOR JUDICIAL NOTICE FILED CONCURRENTLY WITH OPPOSITION TO MOTIONS FOR PROTECTIVE ORDERS

5/1/2018: REQUEST FOR JUDICIAL NOTICE FILED CONCURRENTLY WITH OPPOSITION TO MOTIONS FOR PROTECTIVE ORDERS

Minute Order

2/28/2019: Minute Order

Notice

5/29/2019: Notice

Substitution of Attorney

7/9/2019: Substitution of Attorney

Notice of Ruling

7/9/2019: Notice of Ruling

SUMMONS

12/18/2015: SUMMONS

AMENDMENT TO COMPLAINT

1/29/2016: AMENDMENT TO COMPLAINT

Minute Order

2/11/2016: Minute Order

PROOF OF SERVICE SUMMONS

2/16/2016: PROOF OF SERVICE SUMMONS

PROOF OF SERVICE OF SUMMONS ON CROSS-COMPLAINT; CROSS-COMPLAINT ON UNIQUE HOMES BY CASPIAN, INC.

3/2/2016: PROOF OF SERVICE OF SUMMONS ON CROSS-COMPLAINT; CROSS-COMPLAINT ON UNIQUE HOMES BY CASPIAN, INC.

OPPOSITION TO MOTION FOR RECONSIDERATION OF ORDER EXPUNGING MECHANIC'S LIEN; ETC.

5/3/2016: OPPOSITION TO MOTION FOR RECONSIDERATION OF ORDER EXPUNGING MECHANIC'S LIEN; ETC.

REPLY TO OPPOSITION TO MOTION FOR INJUNCTIVE RELIEF TO COMPEL PLAINITFF TO EITHER PAY AND DISCHARGE THE MECHANIC'S LIEN RECORDED BY AMERICAN DREAM HOME BUILDERS AND CAUSE THE SAME TO BE RELEASED OF RE

8/17/2016: REPLY TO OPPOSITION TO MOTION FOR INJUNCTIVE RELIEF TO COMPEL PLAINITFF TO EITHER PAY AND DISCHARGE THE MECHANIC'S LIEN RECORDED BY AMERICAN DREAM HOME BUILDERS AND CAUSE THE SAME TO BE RELEASED OF RE

Minute Order

8/24/2016: Minute Order

STATUS REPORT AND DECLARATION OF MICHAEL J. BAKER RE ORDER TO SHOW CAUSE RE SANCTIONS FOR FAILURE TO APPEAR ETC.

3/8/2017: STATUS REPORT AND DECLARATION OF MICHAEL J. BAKER RE ORDER TO SHOW CAUSE RE SANCTIONS FOR FAILURE TO APPEAR ETC.

NOTICE RE: CONTINUANCE OF HEARING

10/23/2017: NOTICE RE: CONTINUANCE OF HEARING

108 More Documents Available

 

Docket Entries

  • 07/09/2019
  • Substitution of Attorney; Filed by Babak A. Mirdamedi (Plaintiff)

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  • 07/09/2019
  • Notice of Ruling ( ON PETITION TO CONFIRM ARBITRATION AWARD); Filed by Eri Kroh (Defendant); 1440 Linda Flora Assoc. LLC (Doe 1) (Defendant)

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  • 07/08/2019
  • at 08:30 AM in Department 34; Hearing on Motion - Other (Petition to Confirm Arbitration Award) - Held - Motion Granted

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  • 07/08/2019
  • Minute Order ( (Hearing on Motion - Other Petition to Confirm Arbitration Award)); Filed by Clerk

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  • 07/02/2019
  • at 08:30 AM in Department 34; Hearing on Motion - Other (Petition to Confirm Arbitration Award) - Not Held - Rescheduled by Party

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  • 06/28/2019
  • Reply (to Opposition to Petition to Confirm); Filed by Eri Kroh (Defendant); 1440 Linda Flora Assoc. LLC (Doe 1) (Defendant)

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  • 06/28/2019
  • Reply (Evidence in Reply); Filed by Eri Kroh (Defendant); 1440 Linda Flora Assoc. LLC (Doe 1) (Defendant)

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  • 06/25/2019
  • Motion re: (Petition to Vacate Contractual Arbitration Award); Filed by Unique Homes by Caspian, Inc. (Plaintiff)

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  • 06/25/2019
  • Opposition (to Petition to Confirm Arbitration Award); Filed by Unique Homes by Caspian, Inc. (Plaintiff)

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  • 06/25/2019
  • Declaration (of A. Babak Mirdamadi In Support of Unique Homes by Caspian, Inc.'s Opposition to Petition to Confirm Award; or Petition to Vacate Award); Filed by Unique Homes by Caspian, Inc. (Plaintiff)

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219 More Docket Entries
  • 01/05/2016
  • Amendment to Complaint; Filed by Plaintiff/Petitioner

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  • 01/05/2016
  • AMENDMENT TO COMPLAINT

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  • 12/24/2015
  • NOTICE OF LIS PENDENS

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  • 12/24/2015
  • Notice; Filed by Unique Homes by Caspian, Inc. (Plaintiff)

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  • 12/18/2015
  • COMPLAINT: 1) BREACH OF WRITTEN CONTRACT; ETC

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  • 12/18/2015
  • SUMMONS

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  • 12/18/2015
  • Complaint; Filed by Unique Homes by Caspian, Inc. (Plaintiff); Babak A. Mirdamedi (Plaintiff)

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  • 02/03/2015
  • Notice of Conference Date; Filed by Plaintiff/Petitioner

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  • 01/13/2015
  • Proof-Service/Summons; Filed by Plaintiff/Petitioner

    Read MoreRead Less
  • 01/06/2015
  • Proof-Service/Summons; Filed by Plaintiff/Petitioner

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Tentative Rulings

Case Number: BC604583    Hearing Date: February 24, 2020    Dept: 34

SUBJECT: Motion to Amend Judgment

Moving Party: Defendant/Cross-Complainants Eri Kroh and 1400 Linda Flora Associates, LLC

Responding Party: Amir Babak Mirdamadi

Kroh/1400’s motion to amend judgment is DENIED.

BACKGROUND:

On December 18, 2015, Plaintiff Unique Homes by Caspian, Inc. (“Unique”) commenced this action against Defendants Eri Kroh and Hankey Capital, LLC for (1) breach of written contract; (2) common count; (3) open book account; (4) account stated; (5) quantum meruit; and (6) foreclosure of mechanic’s lien.

Unique alleges that on September 10, 2013, it entered into a written contract with Kroh whereby Unique agreed o provide labor, materials, and equipment to construct an improvement on the subject property. (Complaint, ¶ 8.) Kroh agreed to pay Unique the contract price, any additional costs with a 9% markup in the event that there was a change in the approved plans and specifications, and increased costs for insurance due to a change in the scope of work. (Id.) During the construction, material changes were made to the approved plans and specifications, and Unique incurred additional costs. (Id. at ¶ 9.) Kroh agreed to pay for these additional costs and Unique proceeded with the work. (Id.) Unique alleges that Kroh failed to pay the agreed-upon compensation and improperly terminated the contract. (Id. at ¶ 11.) Unique alleges that all defendants were owners or entities claiming legal interest in the subject property. (Id. at ¶ 27.)

On December 24, 2015, Unique filed a notice of lis pendens.

On January 5, 2016, Unique filed an amendment to the complaint to substitute 1400 Linda Flora Associates, LLC (“1400”) for DOE 1.

On January 29, 2016, Unique filed amendments to the complaint, to substitute American Dream Home Builders, Inc. for DOE 2 and Stock Building Supply West, LLC for DOE 3.

On February 25, 2016, Eri Kroh and 1400 Linda Flora Associates, LLC (“Kroh/1400”) filed a cross-complaint against Unique and A. Babak Mirdamedi for (1) breach of contract; (2) negligence; (3) express indemnification; (4) declaratory relief; (5) fraud; (6) conversion; and (7) for money had and received.

On March 3, 2016, dismissal was entered for American Dream Home Builders, Inc. and Stock Building Supply West, LLC as to the first, second, third, fourth, and fifth causes of action of Unique’s complaint.

On March 7, 2016, the Court granted 1400’s motion to expunge the mechanic’s lien and lis pendens.

On May 16, 2016, the Court denied Unique’s motion for reconsideration of the order expunging the lis pendens.

On July 14, 2016, dismissal was entered for Kroh and Hankey Capital LLC as to the sixth cause of action.

On September 7, 2016, the Court denied Kroh/1400’s motion for injunctive relief.

On May 8, 2017, the Court granted in part Unique’s motions for protective order, by limiting the deposition subpoena served on non-party Benchmark Insurance Company to the period from January 1, 2013 to July 31, 2015 and denied Unique’s motion for protective order relating to the State Compensation Insurance Fund.

On July 8, 2019, the Court granted Kroh/1400’s petition to confirm arbitration award.

On July 24, 2019, Kroh/1400 filed a notice of entry of judgment.

On July 24, 2019, the Court’s nunc pro tunc’s order states that the judgment entered on July 24, 2019 is set aside and vacated due to a clerical error. (07/24/19 Minute Order – Nunc Pro Tunc Order).

On October 1, 2019, at the Final Status Conference, Kroh/1400 voluntarily dismissed the cross-complaint against Mirdamadi only without prejudice, advising the Court it would proceed by way of post-judgment motion pursuant to Code of Civil Procedure sections 128, 187. (Motion to Amend Judgment, p. 3:3-5.)

On November 4, 2019, the Court entered judgment in favor of Eri Kroh and 1400 Linda Flora Associates, LLC and against Unique Homes by Caspian, Inc., a California corporation in the principal sum of $1,674,798.11; together with post award, pre-judgment interest to October 23, 2019, in the sum of $66,991.92, and accruing at the daily rate of $458.85 thereafter; court costs in the sum of $2,571.54; and attorneys’ fees incurred in this action to be determined by motion. (11/04/19 Judgment on Confirmed Arbitration Award, p. 2:7-12.)

On January 23, 2020, the Kroh/1400 filed the instant motion to amend judgment to add Babak Amir Mirdamadi as a judgment debtor under an alter ego theory.

ANALYSIS:

A. Request for Judicial Notice

1. Kroh/1400’s Request

Kroh/1400 request that the Court take judicial notice of the following documents:

· Exhibit 4: Unique’s certified records from California Secretary of State.

· Exhibit 15: February 23, 2016 Mirdamadi Declaration.

· Exhibit 16: July 1, 2016 Answer to Cross-Complaint

· Exhibit 17: Notice of Opposition to Motion for Joinder filed February 9, 2018 in the companion arbitration.

· Exhibit 18: Declaration of A. Babak Mirdamadi executed March 14, 2018 filed in the companion arbitration.

· Exhibit 19: May 9, 2018 Declaration of Michael J. Baker in Reply to Opposition for Motion for Protective Orders.

· Exhibit 20: June 25, 2019 Opposition to Motion to Confirm Award.

· Exhibit 21: June 25, 2019 Mirdamadi Declaration in Opposition to Motion to Confirm, without Exhibits 2-4.

· Exhibit 22: Kordlou Certified License History.

· Exhibit 23: Unique Certified License History.

The Court DENIES Kroh/1400’s request as to Exhibits 15, 16, 19, 20, 21 as superfluous. (Cal. Rules of Court, rule 3.110(d).) Any party that wishes to draw the Court’s attention to a matter filed in this action may simply cite directly to the document by execution and filing date. (See Cal. Rules of Court, rule 3.1110(d).)

The Court GRANTS Kroh/1400’s request as to Exhibits 4, 22, and 23. (Evid. Code, § 452, subd. (c).)

The Court GRANTS Kroh/1400’s request as to Exhibits 17 and 18. (Evid. Code, § 452, subd. (h).)

2. Mirdamadi’s Request

Mirdamadi requests that the Court take judicial notice of the following:

· Exhibit A: The Final Arbitration Award issued by the Construction Industry Arbitration Tribunal in the matter Unique Homes by Caspian, Inc. v. Eri Kroh and 1400 Linda Flora Associates, LLC, No. 01-16-0003-8193, on May 30, 2019.

· Exhibit B: The Judgment Confirming Arbitration Award issued by this Court on November 5, 2019, which Judgment expressly adopts the findings of fact and conclusions of law set forth in the Final Arbitration Award.

The Court DENIES as superfluous Mirdamadi’s request as to Exhibit B.

The Court GRANTS Mirdamadi’s request as to Exhibit B.

B. Evidentiary Objections

1. Mirdamadi’s Objections

Mirdamadi submits 34 objections to the Kroh/1400’s evidence in support of their motion to amend judgment. The Court OVERRULES these objections.

2. Kroh/1400’s Objections

Kroh/1400 submit 44 objections to Mirdamadi’s evidence in support of his opposition. The Court SUSTAINS objection numbers 2 and 4. The remaining objections are OVERRULED.

C. Legal Standard

Pursuant to Code of Civil Procedure section 187, the trial court has authority to amend a judgment to add a judgment debtor under the alter ego doctrine. (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1517.) In order to see that justice is done, great liberality is encouraged in the allowance of amendments brought pursuant to Code of Civil Procedure section 187. (Greenspan v. LADT LLC (2010) 191 Cal.App.4th 486, 508; Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1074-1075.)

The court may exercise its authority to impose liability upon an alter ego who had control of the litigation, and was therefore represented in it. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th 1551, 1555.) The addition of a new party as judgment debtor stems from the concept of the alter ego doctrine, which is that an identity exists between the new party and the original party, whose participation in the trial leading to the judgment represented the newly added party. (Oyakawa v. Gillett (1992) 8 Cal.App.4th 628, 631.) Therefore, amending a judgment to add an alter ego does not add a new defendant but instead inserts the correct name of the real defendant. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd., supra, 41 Cal.App.4th at p. 1555; NEC Electronics, Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778.)

The first requirement for disregarding the corporate entity under the alter ego doctrine, whether there is a sufficient unity of interests and ownership such that the separate personalities of the individual and corporation no longer exist, includes a number of non-exhaustive factors which include: “use of the same office or business location; commingling of funds and other assets of the individual and the corporation; an individual holding out that he is personally liable for debts of the corporation; identical directors and officers; failure to maintain minutes or adequate corporate records; disregard of corporate formalities; absence of corporate assets and inadequate capitalization; and the use of a corporation as a mere shell, instrumentality or conduit for the business of an individual.” (Misik, supra, 197 Cal.App.4th at 1073.) No factor is dispositive and the court should consider the particular circumstances of each case in determining whether to apply the alter ego doctrine. (Id.)

The second requirement for application of the alter ego doctrine is a determination that the adherence to the fiction of the separate existence of the corporation would sanction a fraud or promote injustice. (Id. at p. 1073 [the question is if the acts are treated as those of the corporation alone that it would produce an unjust or inequitable result].) It is not necessary for there to be a pleading or proof of fraud to apply the alter ego doctrine. (Id. at 1074 [alter ego doctrine could be applied when the court found an individual defendant was not liable for fraud].)

D. Discussion

Kroh/1400 argues that the Court should amend the judgment to add Mirdamadi as a judgment debtor because Mirdamadi is the alter ego of Unique. Kroh/1400 asserts that Mirdamadi (1) is Unique’s only employee (Ex. 6, RFA 9, p. 389; Ex. 18, ¶ 5, p. 828); (2) was the only witness for Unique at arbitration (Ribons Decl., ¶ 9); and (3) is the only active participant in the day to day activities of [U]nique (RFJN, Ex. 18). (Motion, p. 7:2-4.) Kroh/1400 states that Mirdamadi’s sister, Amireh Mirdamadi, “who purportedly is the Chief Financial Officer, on rare occasions, typically once a year, discusses with [Mirdamadi] major events which occurred during the prior year” and Mirdamadi’s wife, Dr. Linda Mirdamadi, “is purportedly [the] secretary [and] does not keep or maintain the minutes.” (Id. at p. 7:4-8 [citing Ex. 3, Art V, § 9, p. 14; Ex. 2, p. 179; Ex. 13, AM Depo., p. 14:13-15:25].) Kroh/1400 argues that Mirdamadi controlled this litigation and arbitration, especially because he was always represented by the same counsel of Unique. (Id. at p. 7:9-11 [citing Ex. 6, Suppl. Resp. to RFAs 20-21, pp. 393-394].)

Kroh/1400 argue that Mirdamadi “has displayed multiple instances of the [following] relevant circumstances[:] (1) commingling of funds and other assets, (2) failure to segregate funds, (3) unauthorized diversion of corporate funds, (4) the treatment by an individual of the assets of the corporation as his own, (5) confusion of the records of the separate entities, (6) the failure to adequately capitalize a corporation, (7) concealment of personal business activities, (8) the failure to maintain arms-length relationships among related entities, (9) the use of a corporation as a subterfuge of illegal transactions.” (Id. at p. 8:6-12.)

Specifically, Kroh/1400 present evidence that Unique was undercapitalized because “Unique was capitalized with a total of $1,000.00 (Ex. 2, p. 345)” but “the contract in dispute was over $5,000,000.00.” (Id. at p. 3:15-17 [referencing Complaint and Cross-Complaint].) Kroh/1400 assert that Mirdamadi “cashed approximately 80 checks totaling $520,978.21 written by 1400 to Unique.” (Id. at p. 8:14-15 [citing Ex. 1; Ex. 6.A, response to RFA 1, p. 403; Ex. 8.B, p. 471; Engel Decl., Sch. C].) Kroh/1400 state that “these events took place at remote check cashing operations, not the financial institutions were Unique banked, or close to [Mirdamadi’s] home/office in West Los Angeles.” (Id. at p. 8:16-19 [citing Ex. 12, BM Depo., p. 24:5-27:16, pp. 702-705].) Kroh/1400 argue that “Mirdamadi further exhibited his intention, when during testimony under oath at the arbitration Mirdamadi stated that he hoped no one would tell the IRS about his check cashing.” (Id. at p. 8:20-22 [citing Ribons Decl., ¶ 10].) Kroh/1400 also present evidence that Mirdamadi had 2-8 vehicles at the same time during the period of 2006-2008, which Unique paid for. (Id. at p. 8:25-27 [citing Engel Decl., Sch. D; Ex. 2].)

Kroh/1400 provide evidence that Amireh Mirdamadi, the CFO of Unique, “does not keep books, deposit monies, [or] prepare financial records as required by Unique’s by-laws” (Ex. 3, Art V, § 10, p. 363; Ex. 13, AM Depo., 12:25-16:7, pp. 738-742) and “Unique’s ‘books and records’ do not exist” (Ex. 8; Suppl. Resp. to Special Interrogatory No. 10, p. 447). (Id. at p. 9:1-4.) Kroh/1400 present evidence that “from 1997 to 2016[,] Unique failed to file its Statement of Information forms with the Secretary of State of California (Ex. 4, pp. 371-375), as required pursuant to . . .Corp[orations] Code [section] 1502, and Article VII, Section 7 of its own by-laws (Ex. 3, p. 365), and board resolution (Ex. 2, p. 344).” (Id. at p. 3:18-21.) Kroh/1400 assert that Amireh Mirdamadi “has never received a K-1, or corporate tax returns.” (Id. at p. 3:25 [citing Ex. 13, Am Depo., p. 16:8-13, p. 742].) Kroh/1400 maintain that Unique failed to keep and maintain the corporate books and records, which “not only violates Unique’s own by-laws, but also conceals any assets of the corporation and confuse records of the separate entity.” (Id. at p. 9:4-6.)

For the second prong, Kroh/1400 argue that “given [Unique’s] minimal assets (Ex. 12, BM Depo., p. 31:6-37:21, pp. 709-715), together with [Mirdamadi’s] cashing of 1400’s checks, and the inability to determine if he has cashed checks payable to Unique from other projects, make it inequitable and unlikely Kroh and 1400 will ever collect if the Court treats Unique as a separate entity.” (Id. at p. 11:1-5.)

In opposition, Mirdamadi argues that Kroh/1400 “cannot establish the requisite ‘unity of interest’ between Unique and Mirdamadi such that ‘the separate personalities of the entity and the owners no longer exist.’” (Opp., p. 1:8-9.) Mirdamadi maintains that “for over 20 years, Unique has successfully operated a small construction business, paying vendors and debts, observing corporate formalities, and retaining an identity separate and distinct from Mirdamadi.” (id. at p. 1:10-12.) Mirdamadi asserts that Kroh/1440’s “purported ‘evidence’ to the contrary is factually unsupported and pure speculation.” (Id. at p. 1:12-13.)

Mirdamadi argues that “1400’s payments to Unique either were paid to the third-party provider of labor or directly to the third-party laborers themselves” (Mirdamadi Decl., ¶¶ 13-14) and “without any evidence that Mirdamadi actually took any funds paid by 1400 for personal use, there is no basis for a finding of ‘commingling’ or any other ‘indicia’ of alter ego liability.” (Id. at p. 8:16-17, 8:26-27.) Mirdamadi further contends that “Unique maintained voluminous books and records, including Unique’s corporate formation documents, shareholder certificates, minutes, resolutions, and bank statements.” (Id. at p. 9:6-9 [citing Ex. 2, pp. 186-351; Ex. 3, pp. 352-369, Ex. 4, pp. 372-373, Ex. 11, pp. 486-683].) Regardless, Mirdamadi argues that it “is not required either legally or practically to maintain such [financial] reporting records, a very common practice for small corporations.” (Id. at p. 9:10-14 [citing Bergmark Decl., ¶¶ 27-32; Lay Decl., ¶ 3].)

Mirdamadi maintains that Unique was adequately capitalized, and that although its initial cast investment was $1,000.00 when it was first formed in 1997, that cash capital was sufficient for Unique at the time and that throughout its history, it maintained other sources of capitalization and creditor protection such as comprehensive general liability insurance policies for protection against typical construction-related claims and liabilities. (Id. at pp. 9:21-10:1 [citing Mirdamadi Decl., ¶ 3; Bergmark Decl., ¶¶ 41-43].) Mirdamadi argues that “1400's characterization that the ‘contract in this dispute was over $5,000,000.00’ is misleading” because “as the Arbitrators noted, two-thirds of the work was contracted out to subcontractors, which 1400 was obligated to pay directly, leaving Unique ‘on the hook’ for just over $1,400,000.” (Id. at p. 10:4-7 [citing Award, pp. 3, 15].) Mirdamadi asserts that “Unique's sufficient capitalization for the 1400 Project is further established by the completed, contracted-for work itself” and “the Arbitrators found that the workers were paid, and indeed, there have been no claims made, or liens filed, by those workers on the Project. (Id. at p. 10:7-10 [citing Award, pp. 3-4; Mirdamadi Decl., ¶ 14].)

Mirdamadi also argues that Kroh/1400 “cannot establish the indispensable requirement that, absent piercing the corporate veil, ‘an inequitable result will follow.’” (Id. at p. 1:14-15.) Instead, Mirdamadi argues that “a finding of alter ego liability here would compound, not avoid, inequity because this Court has already found, by expressly adopting the Award’s findings of fact and conclusions of law in its Judgment, that the Judgment delivers a ‘harsh’ and ‘inequitable’ result to Unique by strictly applying the licensing law penalty.” (Id. at p. 1:15-18.) Mirdamadi explains that “the Arbitrators found the Award gave 1400 an unjust windfall by (1) allowing 1400 to retain all the benefits of the $1,600,000 retaining wall system built by Unique, and (2) simultaneously ordering Unique’s disgorgement of all sums 1400 paid Unique for that work – all based on conduct that Unique benefitted, not hurt, 1400.” (Id. at p. 1:19-22.) Mirdamadi argues that “because (1) the Award already pronounces itself ‘inequitable’ to Unique, not 1400, and (2) that severe inequity would only be compounded by the application of alter ego against Mirdamadi, the motion must be denied.” (Id. at p. 1:25-27.)

The Court finds that Kroh/1400 have met their burden to add Mirdamadi as a judgment debtor. Mirdamadi presents his own declaration and the declaration of Brian J. Bergmark, a certified public accountant, to assert that the money Mirdamadi cashed from 1400’s checks was used for corporate obligations of Unique; that Unique was not undercapitalized; that the cars bought were not used solely for used for his personal benefit; and that Unique kept adequate corporate records. However, no other evidence is provided by Mirdamadi to demonstrate that he is not the alter ego of Unique.

For example, Kroh/1440 present evidence that the following common accounting and financial records of a corporation were not produced:

· “Financial Statements

· Bank Reconciliation

· Vendor Invoices

· General Ledgers

· Loan Documents

· Sales Records

· Check Registers

· Expense Reports

· Construction Billing

· Journal Entries

· Trial Balances

· Construction Contracts

· Accounts Receivables

· Accounts Payables

· Construction Work in Progress

· Notes Payables

· Notes Receivables

· Deferred Revenues

· Prepare Expenses

· A/R from Shareholder

· A/P from Shareholder

· Payments to Shareholder

· Detail Listing of Assets

· Depreciation Schedules.” (Engel Decl., ¶ 10.)

Mr. Bergmark states that “[b]ased on my review of information which I have been provided, Unique did maintain the corporate and accounting records that it required for its operations.” (Bergmark Decl., ¶ 25.) However, none of the underlying documents – all of which are in Mirdamadi’s possession – have been produced. The Court finds that the lack of accounting books and records supports Kroh/1400’s argument.

Given the lack of supporting data, the Court finds Bergmark’s declaration to be less-than-persuasive; as between the two experts, Mr. Bergmark and Mr. Engel, the Court finds Mr. Engel to be more credible.

Further, the Court finds that there is a lack of evidence to support Mirdamadi’s contention that he did not cash corporate checks for his own personal benefit. Mr. Bergmark declares that “Mirdamadi does not dispute that he, in his capacity as President of Unique, or Hossein Kordlou, as authorized by Mirdamadi in his capacity as President of Unique, cashed the checks identified by Mr. Engel.” (Bergmark Decl., ¶ 17; see also Engel Decl., Schedules C, C-1.) Mr. Bergmark only argues that “there is no evidence that [he] ha[s] seen, or that has been identified or provided by Mr. Engel, that suggests that Mirdamadi used the cash for his personal benefit.” (Bergmark Decl., ¶ 17.) However, Mirdamadi does not provide any documentary evidence such as receipts for the cash payments, pay stubs, workers compensation records, or daily time sheets that demonstrates that Mirdamadi cashed the checks for the Unique’s benefit only. The lack of documentary evidence showing that the money cashed by Mirdamadi was not used for the benefit of Unique also indicates that the separate personalities of Mirdamadi and Unique no longer exist.

The Court finds that that Kroh/1400 present sufficient evidence that Mirdamadi is an alter ego of Unique and that adherence to the fiction of the separate existence of the corporation would sanction a fraud or promote injustice.

Accordingly, the Court GRANTS Kroh/1400’s motion to amend judgment.

Case Number: BC604583    Hearing Date: February 20, 2020    Dept: 34

SUBJECT: Motion to Amend Judgment

Moving Party: Defendant/Cross-Complainants Eri Kroh and 1400 Linda Flora Associates, LLC

Responding Party: Amir Babak Mirdamadi

Kroh/1400’s motion to amend judgment is DENIED.

BACKGROUND:

On December 18, 2015, Plaintiff Unique Homes by Caspian, Inc. (“Unique”) commenced this action against Defendants Eri Kroh and Hankey Capital, LLC for (1) breach of written contract; (2) common count; (3) open book account; (4) account stated; (5) quantum meruit; and (6) foreclosure of mechanic’s lien.

Unique alleges that on September 10, 2013, it entered into a written contract with Kroh whereby Unique agreed o provide labor, materials, and equipment to construct an improvement on the subject property. (Complaint, ¶ 8.) Kroh agreed to pay Unique the contract price, any additional costs with a 9% markup in the event that there was a change in the approved plans and specifications, and increased costs for insurance due to a change in the scope of work. (Id.) During the construction, material changes were made to the approved plans and specifications, and Unique incurred additional costs. (Id. at ¶ 9.) Kroh agreed to pay for these additional costs and Unique proceeded with the work. (Id.) Unique alleges that Kroh failed to pay the agreed-upon compensation and improperly terminated the contract. (Id. at ¶ 11.) Unique alleges that all defendants were owners or entities claiming legal interest in the subject property. (Id. at ¶ 27.)

On December 24, 2015, Unique filed a notice of lis pendens.

On January 5, 2016, Unique filed an amendment to the complaint to substitute 1400 Linda Flora Associates, LLC (“1400”) for DOE 1.

On January 29, 2016, Unique filed amendments to the complaint, to substitute American Dream Home Builders, Inc. for DOE 2 and Stock Building Supply West, LLC for DOE 3.

On February 25, 2016, Eri Kroh and 1400 Linda Flora Associates, LLC (“Kroh/1400”) filed a cross-complaint against Unique and A. Babak Mirdamedi for (1) breach of contract; (2) negligence; (3) express indemnification; (4) declaratory relief; (5) fraud; (6) conversion; and (7) for money had and received.

On March 3, 2016, dismissal was entered for American Dream Home Builders, Inc. and Stock Building Supply West, LLC as to the first, second, third, fourth, and fifth causes of action of Unique’s complaint.

On March 7, 2016, the Court granted 1400’s motion to expunge the mechanic’s lien and lis pendens.

On May 16, 2016, the Court denied Unique’s motion for reconsideration of the order expunging the lis pendens.

On July 14, 2016, dismissal was entered for Kroh and Hankey Capital LLC as to the sixth cause of action.

On September 7, 2016, the Court denied Kroh/1400’s motion for injunctive relief.

On May 8, 2017, the Court granted in part Unique’s motions for protective order, by limiting the deposition subpoena served on non-party Benchmark Insurance Company to the period from January 1, 2013 to July 31, 2015 and denied Unique’s motion for protective order relating to the State Compensation Insurance Fund.

On July 8, 2019, the Court granted Kroh/1400’s petition to confirm arbitration award.

On July 24, 2019, Kroh/1400 filed a notice of entry of judgment.

On July 24, 2019, the Court’s nunc pro tunc’s order states that the judgment entered on July 24, 2019 is set aside and vacated due to a clerical error. (07/24/19 Minute Order – Nunc Pro Tunc Order).

On October 1, 2019, at the Final Status Conference, Kroh/1400 voluntarily dismissed the cross-complaint against Mirdamadi only without prejudice, advising the Court it would proceed by way of post-judgment motion pursuant to Code of Civil Procedure sections 128, 187. (Motion to Amend Judgment, p. 3:3-5.)

On November 4, 2019, the Court entered judgment in favor of Eri Kroh and 1400 Linda Flora Associates, LLC and against Unique Homes by Caspian, Inc., a California corporation in the principal sum of $1,674,798.11; together with post award, pre-judgment interest to October 23, 2019, in the sum of $66,991.92, and accruing at the daily rate of $458.85 thereafter; court costs in the sum of $2,571.54; and attorneys’ fees incurred in this action to be determined by motion. (11/04/19 Judgment on Confirmed Arbitration Award, p. 2:7-12.)

On January 23, 2020, the Kroh/1400 filed the instant motion to amend judgment to add Babak Amir Mirdamadi as a judgment debtor under an alter ego theory.

ANALYSIS:

A. Request for Judicial Notice

1. Kroh/1400’s Request

Kroh/1400 request that the Court take judicial notice of the following documents:

· Exhibit 4: Unique’s certified records from California Secretary of State.

· Exhibit 15: February 23, 2016 Mirdamadi Declaration.

· Exhibit 16: July 1, 2016 Answer to Cross-Complaint

· Exhibit 17: Notice of Opposition to Motion for Joinder filed February 9, 2018 in the companion arbitration.

· Exhibit 18: Declaration of A. Babak Mirdamadi executed March 14, 2018 filed in the companion arbitration.

· Exhibit 19: May 9, 2018 Declaration of Michael J. Baker in Reply to Opposition for Motion for Protective Orders.

· Exhibit 20: June 25, 2019 Opposition to Motion to Confirm Award.

· Exhibit 21: June 25, 2019 Mirdamadi Declaration in Opposition to Motion to Confirm, without Exhibits 2-4.

· Exhibit 22: Kordlou Certified License History.

· Exhibit 23: Unique Certified License History.

The Court DENIES Kroh/1400’s request as to Exhibits 15, 16, 19, 20, 21 as superfluous. (Cal. Rules of Court, rule 3.110(d).) Any party that wishes to draw the Court’s attention to a matter filed in this action may simply cite directly to the document by execution and filing date. (See Cal. Rules of Court, rule 3.1110(d).)

The Court GRANTS Kroh/1400’s request as to Exhibits 4, 22, and 23. (Evid. Code, § 452, subd. (c).)

The Court GRANTS Kroh/1400’s request as to Exhibits 17 and 18. (Evid. Code, § 452, subd. (h).)

2. Mirdamadi’s Request

Mirdamadi requests that the Court take judicial notice of the following:

· Exhibit A: The Final Arbitration Award issued by the Construction Industry Arbitration Tribunal in the matter Unique Homes by Caspian, Inc. v. Eri Kroh and 1400 Linda Flora Associates, LLC, No. 01-16-0003-8193, on May 30, 2019.

· Exhibit B: The Judgment Confirming Arbitration Award issued by this Court on November 5, 2019, which Judgment expressly adopts the findings of fact and conclusions of law set forth in the Final Arbitration Award.

The Court DENIES as superfluous Mirdamadi’s request as to Exhibit B.

The Court GRANTS Mirdamadi’s request as to Exhibit B.

B. Evidentiary Objections

1. Mirdamadi’s Objections

Mirdamadi submits 34 objections to the Kroh/1400’s evidence in support of their motion to amend judgment. The Court OVERRULES these objections.

2. Kroh/1400’s Objections

Kroh/1400 submit 44 objections to Mirdamadi’s evidence in support of his opposition. The Court SUSTAINS objection numbers 2 and 4. The remaining objections are OVERRULED.

C. Legal Standard

Pursuant to Code of Civil Procedure section 187, the trial court has authority to amend a judgment to add a judgment debtor under the alter ego doctrine. (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1517.) In order to see that justice is done, great liberality is encouraged in the allowance of amendments brought pursuant to Code of Civil Procedure section 187. (Greenspan v. LADT LLC (2010) 191 Cal.App.4th 486, 508; Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1074-1075.)

The court may exercise its authority to impose liability upon an alter ego who had control of the litigation, and was therefore represented in it. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th 1551, 1555.) The addition of a new party as judgment debtor stems from the concept of the alter ego doctrine, which is that an identity exists between the new party and the original party, whose participation in the trial leading to the judgment represented the newly added party. (Oyakawa v. Gillett (1992) 8 Cal.App.4th 628, 631.) Therefore, amending a judgment to add an alter ego does not add a new defendant but instead inserts the correct name of the real defendant. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd., supra, 41 Cal.App.4th at p. 1555; NEC Electronics, Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778.)

The first requirement for disregarding the corporate entity under the alter ego doctrine, whether there is a sufficient unity of interests and ownership such that the separate personalities of the individual and corporation no longer exist, includes a number of non-exhaustive factors which include: “use of the same office or business location; commingling of funds and other assets of the individual and the corporation; an individual holding out that he is personally liable for debts of the corporation; identical directors and officers; failure to maintain minutes or adequate corporate records; disregard of corporate formalities; absence of corporate assets and inadequate capitalization; and the use of a corporation as a mere shell, instrumentality or conduit for the business of an individual.” (Misik, supra, 197 Cal.App.4th at 1073.) No factor is dispositive and the court should consider the particular circumstances of each case in determining whether to apply the alter ego doctrine. (Id.)

The second requirement for application of the alter ego doctrine is a determination that the adherence to the fiction of the separate existence of the corporation would sanction a fraud or promote injustice. (Id. at p. 1073 [the question is if the acts are treated as those of the corporation alone that it would produce an unjust or inequitable result].) It is not necessary for there to be a pleading or proof of fraud to apply the alter ego doctrine. (Id. at 1074 [alter ego doctrine could be applied when the court found an individual defendant was not liable for fraud].)

D. Discussion

Kroh/1400 argues that the Court should amend the judgment to add Mirdamadi as a judgment debtor because Mirdamadi is the alter ego of Unique. Kroh/1400 asserts that Mirdamadi (1) is Unique’s only employee (Ex. 6, RFA 9, p. 389; Ex. 18, ¶ 5, p. 828); (2) was the only witness for Unique at arbitration (Ribons Decl., ¶ 9); and (3) is the only active participant in the day to day activities of [U]nique (RFJN, Ex. 18). (Motion, p. 7:2-4.) Kroh/1400 states that Mirdamadi’s sister, Amireh Mirdamadi, “who purportedly is the Chief Financial Officer, on rare occasions, typically once a year, discusses with [Mirdamadi] major events which occurred during the prior year” and Mirdamadi’s wife, Dr. Linda Mirdamadi, “is purportedly [the] secretary [and] does not keep or maintain the minutes.” (Id. at p. 7:4-8 [citing Ex. 3, Art V, § 9, p. 14; Ex. 2, p. 179; Ex. 13, AM Depo., p. 14:13-15:25].) Kroh/1400 argues that Mirdamadi controlled this litigation and arbitration, especially because he was always represented by the same counsel of Unique. (Id. at p. 7:9-11 [citing Ex. 6, Suppl. Resp. to RFAs 20-21, pp. 393-394].)

Kroh/1400 argue that Mirdamadi “has displayed multiple instances of the [following] relevant circumstances[:] (1) commingling of funds and other assets, (2) failure to segregate funds, (3) unauthorized diversion of corporate funds, (4) the treatment by an individual of the assets of the corporation as his own, (5) confusion of the records of the separate entities, (6) the failure to adequately capitalize a corporation, (7) concealment of personal business activities, (8) the failure to maintain arms-length relationships among related entities, (9) the use of a corporation as a subterfuge of illegal transactions.” (Id. at p. 8:6-12.)

Specifically, Kroh/1400 present evidence that Unique was undercapitalized because “Unique was capitalized with a total of $1,000.00 (Ex. 2, p. 345)” but “the contract in dispute was over $5,000,000.00.” (Id. at p. 3:15-17 [referencing Complaint and Cross-Complaint].) Kroh/1400 assert that Mirdamadi “cashed approximately 80 checks totaling $520,978.21 written by 1400 to Unique.” (Id. at p. 8:14-15 [citing Ex. 1; Ex. 6.A, response to RFA 1, p. 403; Ex. 8.B, p. 471; Engel Decl., Sch. C].) Kroh/1400 state that “these events took place at remote check cashing operations, not the financial institutions were Unique banked, or close to [Mirdamadi’s] home/office in West Los Angeles.” (Id. at p. 8:16-19 [citing Ex. 12, BM Depo., p. 24:5-27:16, pp. 702-705].) Kroh/1400 argue that “Mirdamadi further exhibited his intention, when during testimony under oath at the arbitration Mirdamadi stated that he hoped no one would tell the IRS about his check cashing.” (Id. at p. 8:20-22 [citing Ribons Decl., ¶ 10].) Kroh/1400 also present evidence that Mirdamadi had 2-8 vehicles at the same time during the period of 2006-2008, which Unique paid for. (Id. at p. 8:25-27 [citing Engel Decl., Sch. D; Ex. 2].)

Kroh/1400 provide evidence that Amireh Mirdamadi, the CFO of Unique, “does not keep books, deposit monies, [or] prepare financial records as required by Unique’s by-laws” (Ex. 3, Art V, § 10, p. 363; Ex. 13, AM Depo., 12:25-16:7, pp. 738-742) and “Unique’s ‘books and records’ do not exist” (Ex. 8; Suppl. Resp. to Special Interrogatory No. 10, p. 447). (Id. at p. 9:1-4.) Kroh/1400 present evidence that “from 1997 to 2016[,] Unique failed to file its Statement of Information forms with the Secretary of State of California (Ex. 4, pp. 371-375), as required pursuant to . . .Corp[orations] Code [section] 1502, and Article VII, Section 7 of its own by-laws (Ex. 3, p. 365), and board resolution (Ex. 2, p. 344).” (Id. at p. 3:18-21.) Kroh/1400 assert that Amireh Mirdamadi “has never received a K-1, or corporate tax returns.” (Id. at p. 3:25 [citing Ex. 13, Am Depo., p. 16:8-13, p. 742].) Kroh/1400 maintain that Unique failed to keep and maintain the corporate books and records, which “not only violates Unique’s own by-laws, but also conceals any assets of the corporation and confuse records of the separate entity.” (Id. at p. 9:4-6.)

For the second prong, Kroh/1400 argue that “given [Unique’s] minimal assets (Ex. 12, BM Depo., p. 31:6-37:21, pp. 709-715), together with [Mirdamadi’s] cashing of 1400’s checks, and the inability to determine if he has cashed checks payable to Unique from other projects, make it inequitable and unlikely Kroh and 1400 will ever collect if the Court treats Unique as a separate entity.” (Id. at p. 11:1-5.)

In opposition, Mirdamadi argues that Kroh/1400 “cannot establish the requisite ‘unity of interest’ between Unique and Mirdamadi such that ‘the separate personalities of the entity and the owners no longer exist.’” (Opp., p. 1:8-9.) Mirdamadi maintains that “for over 20 years, Unique has successfully operated a small construction business, paying vendors and debts, observing corporate formalities, and retaining an identity separate and distinct from Mirdamadi.” (id. at p. 1:10-12.) Mirdamadi asserts that Kroh/1440’s “purported ‘evidence’ to the contrary is factually unsupported and pure speculation.” (Id. at p. 1:12-13.)

Mirdamadi argues that “1400’s payments to Unique either were paid to the third-party provider of labor or directly to the third-party laborers themselves” (Mirdamadi Decl., ¶¶ 13-14) and “without any evidence that Mirdamadi actually took any funds paid by 1400 for personal use, there is no basis for a finding of ‘commingling’ or any other ‘indicia’ of alter ego liability.” (Id. at p. 8:16-17, 8:26-27.) Mirdamadi further contends that “Unique maintained voluminous books and records, including Unique’s corporate formation documents, shareholder certificates, minutes, resolutions, and bank statements.” (Id. at p. 9:6-9 [citing Ex. 2, pp. 186-351; Ex. 3, pp. 352-369, Ex. 4, pp. 372-373, Ex. 11, pp. 486-683].) Regardless, Mirdamadi argues that it “is not required either legally or practically to maintain such [financial] reporting records, a very common practice for small corporations.” (Id. at p. 9:10-14 [citing Bergmark Decl., ¶¶ 27-32; Lay Decl., ¶ 3].)

Mirdamadi maintains that Unique was adequately capitalized, and that although its initial cast investment was $1,000.00 when it was first formed in 1997, that cash capital was sufficient for Unique at the time and that throughout its history, it maintained other sources of capitalization and creditor protection such as comprehensive general liability insurance policies for protection against typical construction-related claims and liabilities. (Id. at pp. 9:21-10:1 [citing Mirdamadi Decl., ¶ 3; Bergmark Decl., ¶¶ 41-43].) Mirdamadi argues that “1400's characterization that the ‘contract in this dispute was over $5,000,000.00’ is misleading” because “as the Arbitrators noted, two-thirds of the work was contracted out to subcontractors, which 1400 was obligated to pay directly, leaving Unique ‘on the hook’ for just over $1,400,000.” (Id. at p. 10:4-7 [citing Award, pp. 3, 15].) Mirdamadi asserts that “Unique's sufficient capitalization for the 1400 Project is further established by the completed, contracted-for work itself” and “the Arbitrators found that the workers were paid, and indeed, there have been no claims made, or liens filed, by those workers on the Project. (Id. at p. 10:7-10 [citing Award, pp. 3-4; Mirdamadi Decl., ¶ 14].)

Mirdamadi also argues that Kroh/1400 “cannot establish the indispensable requirement that, absent piercing the corporate veil, ‘an inequitable result will follow.’” (Id. at p. 1:14-15.) Instead, Mirdamadi argues that “a finding of alter ego liability here would compound, not avoid, inequity because this Court has already found, by expressly adopting the Award’s findings of fact and conclusions of law in its Judgment, that the Judgment delivers a ‘harsh’ and ‘inequitable’ result to Unique by strictly applying the licensing law penalty.” (Id. at p. 1:15-18.) Mirdamadi explains that “the Arbitrators found the Award gave 1400 an unjust windfall by (1) allowing 1400 to retain all the benefits of the $1,600,000 retaining wall system built by Unique, and (2) simultaneously ordering Unique’s disgorgement of all sums 1400 paid Unique for that work – all based on conduct that Unique benefitted, not hurt, 1400.” (Id. at p. 1:19-22.) Mirdamadi argues that “because (1) the Award already pronounces itself ‘inequitable’ to Unique, not 1400, and (2) that severe inequity would only be compounded by the application of alter ego against Mirdamadi, the motion must be denied.” (Id. at p. 1:25-27.)

The Court finds that Kroh/1400 have not met their burden to add Mirdamadi as a judgment debtor. Mirdamadi has presented admissible evidence to show that the money he cashed from 1400’s checks was used for corporate obligations of Unique, that Unique was not undercapitalized, that the cars bought were not used solely for his personal benefit, and that Unique kept adequate corporate records. The Court finds that that Kroh/1400 does not provide sufficient evidence that Mirdamadi is an alter ego of Unique and that adherence to the fiction of the separate existence of the corporation would sanction a fraud or promote injustice.

The Court DENIES Kroh/1400’s motion to amend judgment.

Case Number: BC604583    Hearing Date: January 24, 2020    Dept: 34

SUBJECT: Motion for Attorney’s Fees

Moving Party: Defendant/Cross-Complainants Eri Kroh and 1400 Linda Flora Associates, LLC

Responding Party:   Plaintiff/Cross-Defendant Unique Homes by Caspian, Inc.

The Court GRANTS Kroh/1400’s motion for attorney’s fees and costs in the amount of $131,159.65, which includes $131,078.50 for attorneys’ fees and $81.15 in costs.

BACKGROUND:

On December 18, 2015, Plaintiff Unique Homes by Caspian, Inc. (“Unique”) commenced this action against Defendants Eri Kroh and Hankey Capital, LLC for (1) breach of written contract; (2) common count; (3) open book account; (4) account stated; (5) quantum meruit; and (6) foreclosure of mechanic’s lien.

Unique alleges that on September 10, 2013, it entered into a written contract with Kroh whereby Unique agreed to provide labor, materials, and equipment to construct an improvement on the subject property. (Complaint, ¶ 8.) Kroh agreed to pay Unique the contract price, any additional costs with a 9% markup in the event that there was a change in the approved plans and specifications, and increased costs for insurance due to a change in the scope of work. (Id.)  During the construction, material changes were made to the approved plans and specifications, and Unique incurred additional costs. (Id. at ¶ 9.) Kroh agreed to pay for these additional costs and Unique proceeded with the work. (Id.) Unique alleges that Kroh failed to pay the agreed-upon compensation and improperly terminated the contract. (Id. at ¶ 11.) Unique alleges that all defendants were owners or entities claiming legal interest in the subject property. (Id. at ¶ 27.)

On December 24, 2015, Unique filed a notice of lis pendens.

On January 5, 2016, Unique filed an amendment to the complaint to substitute 1400 Linda Flora Associates, LLC (“1400”) for DOE 1.

On January 28, 2016, Unique filed a notice of related case for Case Number 16K00667, Stock Building Supply West, LLC v. Unique Homes by Caspian, et al. and Case Number SC125257, Dream Home Builders, Inc. v. Unique Homes by Caspian, Inc., et al.

On January 29, 2016, Unique filed amendments to the complaint, to substitute American Dream Home Builders, Inc. for DOE 2 and Stock Building Supply West, LLC for DOE 3.

On February 8, 2016, Unique filed an amended notice of related case for Case Number 16K00667, Stock Building Supply West, LLC v. Unique Homes by Caspian, et al.; Case Number SC125257, Dream Home Builders, Inc. v. Unique Homes by Caspian, Inc., et al.; and Case Number SC125250, 1400 Linda Flora Associates, LLC v. American Dream Home Builders, Inc.

On February 11, 2016, the Court found that Case Numbers BC604583, 16K00667, and SC125257 are not related.

On February 16, 2016, Unique filed a notice of related case for Case Number SC125250, 1400 Linda Flora Associates, LLC v. American Dream Home Builders, Inc.; Case Number SC125257, Dream Home Builders, Inc. v. Unique Homes by Caspian, Inc., et al.; and Case Number 16K00667, Stock Building Supply West, LLC v. Unique Homes by Caspian, et al.

On February 23, 2016, the Court found that Case Numbers BC604583, 16K00667, SC125257, and SC125250 are not related.

On February 25, 2016, Eri Kroh and 1400 Linda Flora Associates, LLC (“Kroh/1400”) filed a cross-complaint against Unique and A. Babak Mirdamedi for (1) breach of contract; (2) negligence; (3) express indemnification; (4) declaratory relief; (5) fraud; (6) conversion; and (7) for money had and received.

On March 3, 2016, dismissal was entered for American Dream Home Builders, Inc. and Stock Building Supply West, LLC as to the first, second, third, fourth, and fifth causes of action of Unique’s complaint.

On March 7, 2016, the Court granted 1400’s motion to expunge the mechanic’s lien and lis pendens.

On May 16, 2016, the Court denied Unique’s motion for reconsideration of the order expunging the lis pendens.

On July 14, 2016, dismissal was entered for Kroh and Hankey Capital LLC as to the sixth cause of action.

On September 7, 2016, the Court denied Kroh/1400’s motion for injunctive relief.

On May 8, 2017, the Court granted in part Unique’s motions for protective order, by limiting the deposition subpoena served on non-party Benchmark Insurance Company to the period from January 1, 2013 to July 31, 2015 and denied Unique’s motion for protective order relating to the State Compensation Insurance Fund.

On July 8, 2019, the Court granted Kroh/1400’s petition to confirm arbitration award.

On July 24, 2019, Kroh/1400 filed a notice of entry of judgment.

On July 24, 2019, the Court’s nunc pro tunc’s order states that the judgment entered on July 24, 2019 is set aside and vacated due to a clerical error. (07/24/19 Minute Order – Nunc Pro Tunc Order).

On November 4, 2019, the Court entered judgment in favor of Eri Kroh and 1400 Linda Flora Associates, LLC and against Unique Homes by Caspian, Inc., a California corporation in the principal sum of $1,674,798.11; together with post award, pre-judgment interest to October 23, 2019, in the sum of $66,991.92, and accruing at the daily rate of $458.85 thereafter; court costs in the sum of $2,571.54; and attorneys’ fees incurred in this action to be determined by motion. (11/04/19 Judgment on Confirmed Arbitration Award, p. 2:7-12.)

On November 5, 2019, the clerk filed the notice of entry of judgment.

On November 14, 2019, 1400 Linda Flora Associates, LLC filed its memorandum of costs.

On December 24, 2019, Kroh/1400 filed the instant motion for attorney’s fees in the sum of $150,140.15.

ANALYSIS:

A. Legal Standard

Pursuant to Code of Civil Procedure section 1293.2, petitions relating to arbitration are subject to the same cost provisions as civil cases. “The award of costs pursuant to section 1293.2, including attorney fees when authorized by contract, is mandatory.” (Marcus & Millichap Real Estate Investment Brokerage Co. v. Woodman Investment Group (2005) 129 Cal.App.4th 508, 513.) “[T]he superior court [i]s required to award . . . the party prevailing on the contract, reasonable attorney fees and costs for post-arbitration judicial proceedings, pursuant to the statutory scheme governing arbitration.” (Carole Ring & Associates v. Nicastro (2001) 87 Cal.App.4th 253, 260.)

B. Discussion

Kroh/1400 seeks a total of $150,140.15 in attorney’s fees, which does not include attorneys’ fees and costs incurred in the Arbitration, or post entry of judgment. (Motion, p. 2:2-3, fn. 1.)

1. Prevailing Party

In determining the prevailing party, trial courts may consider all factors reasonably indicating success in the litigation, but may not abuse their discretion and deny fees arbitrarily as to a clearly prevailing party. (Sears v. Baccaglio (1998) 60 Cal.App.4th 1136, 1149, 1155, 1158.) A court abuses its discretion by denying fees where the party obtained a “simple, unqualified win,” and the results were not mixed. (Pacific Custom Pools, Inc. v. Turner Construction Co. (2000) 79 Cal.App.4th 1254, 1268-1271 quoting Hsu v. Abbara (1995) 9 Cal.4th 863, 876.) “Courts look to section 1032 to determine which party is the prevailing party in postarbitration proceedings.” (Cohen v. TNP 2008 Participating Notes Program, LLC (2019) 31 Cal.App.5th 840, 840.)

Section 1032, subdivisions (a)(4) and (b), states: “(4) 'Prevailing party' includes the party with a net monetary recovery, a defendant in whose favor a dismissal is entered, a defendant where neither plaintiff nor defendant obtains any relief, and a defendant as against those plaintiffs who do not recover any relief against that defendant. When any party recovers other than monetary relief and in situations other than as specified, the 'prevailing party' shall be as determined by the court, and under those circumstances, the court, in its discretion, may allow costs or not and, if allowed may apportion costs between the parties on the same or adverse sides pursuant to rules adopted under Section 1034. (b) Except as otherwise expressly provided by statute, a prevailing party is entitled as a matter of right to recover costs in any action or proceeding.” (Code Civ. Proc., § 1032, subds. (a)(4), (b).)

Kroh/1400 argues that there is no doubt that they are the prevailing party because (1) “they prevailed on the claims of [Unique] and obtained affirmative relief on their cross-claims[;]” and (2) “the arbitrators deemed Kroh/1440 as the prevailing parties and awarded them attorneys’ fees and costs related to the Arbitration only, which a reservation of rights to seek additional fees and costs from the court for expenses related to the Superior Court action.” (Motion, p. 3:12-17.)

In opposition, Unique argues that “the arbitration award confirmed by the court (now a judgment) clearly states that the Panel did not see Kroh/1400 as the clear prevailing party in that matter.” (Opp., p. 2:18-19.) Unique maintains that Kroh/1400 only recovered on a claim of disgorgement of contract proceeds owed as a statutory penalty under California contractor’s license law, Business and Professions Code section 7031, subdivision (d); however, “the disgorgement claim was never a part of the complaint or cross-complaint and therefore it is not relevant for determining prevailing party here for purposes of the fee award.” (Id. at p. 2:13-15, 2:26-28.) Unique asserts that “the right to disgorgement is a statutory claim which does not provide for attorney fees.” (Id. at pp. 2:28-3:1.) Unique maintains that Kroh/1400 is not the prevailing party because they were “not successful on a single cause of action plead in its Superior Court cross complaint.” (Id. at p. 4:13-14.)

In reply, Kroh/1400 explain “the arbitrators found that Kroh assigned the contract to 1400, with the knowledge of Unique, and thus 1400 became a party to the very contract which provides for the prevailing party.” (Reply, p. 2:21-24.) Kroh/1400 argue that “Mr. Kroh defeated [Unique’s breach of contract] claim in its entirety, and is a prevailing party without question.” (Id. at p. 2:20-21.) Kroh/1400 argue that 1400 is a prevailing party as well because “1400 defeated Unique’s contract claim in its entirety as well, and obtained relief afforded it by law on its cross-claim.” (Id. at p. 2:23-25.) Kroh/1400 maintain that “Unique relies heavily on paraphrased portions of the award in order to sway this Court to reduce the fee award” and “Unique leaves out the following from the Award: ‘there was a prevailing party in the arbitration.’ (Award pg. 5); ‘The Panel determined in the Interim Arbitration Award that Respondents were the prevailing parties in the arbitration. They defeated Claimant's claims and they succeeded on their counter-claim.’ (Award pg. 18); ‘While the Panel agrees that 1400 is the prevailing party . . . .’ (Award pg. 21).” (Id. at p. 3:9-10, fn. 1.)

The final arbitration award states that “claimant’s claims are denied[;] the disgorgement claim of 1400 is granted in the amount of $1,408,266[; and] 1400’s other claims are denied.” (Baker Decl., Ex. 1, Final Arbitration Award, ¶ 6.) The final arbitration award also explains that:

“The Panel determined in the Interim Arbitration Award that Respondents were the prevailing parties in the arbitration. They defeated Claimant's claims and they succeeded on their counter-claim. Respondents are entitled to recover reasonable attorney's fees and costs, as determined by the Panel. This award includes those fees and costs incurred by Respondents in the arbitration. It does not cover any attorney's fees or costs which Respondents may have incurred in any Superior Court proceedings.” (Id. at Ex. 1, Final Arbitration Award, ¶ 7.)

The final arbitration award also concludes that “While the Panel agrees that 1400 is the prevailing party, under the guidance of the cases referenced above we do not see 1400 as the clear prevailing party” and “as such, we think some application of proportionality should be made re costs and attorney fees.” (Id. at Ex. 1, Final Arbitration Award, ¶ 8(1).) After apportioning the attorney fees and costs, the arbitration panel held that “the total amount of the final award in favor of 1400 against Unique is $1,674,798.11.” (Id. at Ex. 1, Final Arbitration Award, ¶ 10.)

Although the arbitration panel stated that it did not see 1400 as the clear prevailing party under California case law, it still found that 1400 is the prevailing party and found in favor of 1400 against Unique in the amount of $1,674,798.11. (See id. at Ex. 1, Final Arbitration Award, ¶¶ 6-10.) The Court finds that Kroh/1400 were ultimately successful in procuring a judgment against Unique; thus, Kroh/1400 are the prevailing party in this action and are entitled to seek reasonable attorney’s fees.

2. Hourly Rate

“‘The reasonable market value of the attorney's services is the measure of a reasonable hourly rate. [Citations.] This standard applies regardless of whether the attorneys claiming fees charge nothing for their services, charge at below-market or discounted rates, represent the client on a straight contingent fee basis, or are in-house counsel. [Citations.]’”  (Center For Biological Diversity v. County of San Bernardino (2010) 188 Cal.App.4th 603, 619.)

Kroh/1400 assert that their “counsel’s hourly rate is $595.00 per hour, $695.00 per hour for trial preparation, trial, summary judgment, and other determinative hearings.” (Motion, p. 5:2-3; Ribons Decl., ¶ 5.) Kroh/1400’s counsel declares that his “hourly rate is reasonable for the Los Angeles area for attorneys with comparable experience.” (Motion, p. 5:3-5; Ribons Decl., ¶ 7.)

Unique does not dispute the reasonableness of Kroh/1400’s counsel’s hourly rate.

The Court finds that the hourly rates requested by Kroh/1400 are reasonable and commensurate with rates charged by attorneys with comparable skill and experience.

3. Reasonable Hours Incurred

Kroh/1400 state that “through the date that this motion was drafted[,] defense counsel expended 237.1 hours on the matter” for a total of $142,919.00. (Motion, p. 5:1-2, 5:5.) Kroh/1400 asserts that their counsel expects to spend an additional 12 hours “to review the opposition, draft a reply, and appear at the hearing on this motion, resulting in another $7,140.00.” (Id. at p. 5:5-7.) Kroh/1400 assert that they incurred the following fees as well: $61.65 for the motion fee; $9.75 for the e-filing costs for the motion; $9.75 for the e-filing costs for the reply. (Id. at p. 5:7-10.)

Kroh/1400’s counsel provides a listing of the billing entries to show that the $150,138.50 “figure accurately reflects the actual reasonable fees incurred and represent the time required to obtain a judgment.” (Id. at p. 5:15-22; Ribons Decl., Ex. 2.)

In opposition, Unique argues that “there is no detail to ascertain if this fee summary provided is an accurate statement given the lack of information and substantive description as to what activities were being pursued.” (Opp., p. 8:23-25.) Unique maintains that “if the court determines fees are owed, then the objectionable amount break down as follows” [sic]:

· $26,001 related to directly arbitration activity and/or duplicative of what already was awarded and therefore objectionable on these grounds (see [Baker Decl., ¶ 4, Table 1])

· $6,961 concerning incomplete/inadequate descriptions and/or failure to apportion to contract claims and therefore objectionable on these grounds (see [Baker Decl., ¶ 5, Table 2]

· $18,207 concerning issues not part of this case or matters that were considered by the court such as arbitration discovery related items which only involved the arbitration proceedings, i.e., subpoenas and motions related thereto that only involved the disgorgement claim made in the arbitration and therefore objectionable on these (see [Baker Decl., ¶ 6, Table 3]

· $59.50, relates to matters already submitted in the arbitration fee motion are is a duplicate recovery here (see [Baker Decl., ¶ 7, Table 4]

· $29.51 related to the alter ego allegation against Mr. Mirdamadi, not Unique and fees incurred after the award was confirmed unrelated to Unique post judgment which did not involve Unique (see [Baker Decl., ¶ 8, Table 5]).” (Id. at pp. 8:25-9:11.)

In reply, Kroh/1400 concedes that they “inadvertently included some charges presented to the Arbitrators” for a “sum total[ing] $3,986.50, and [they] reduce their request accordingly.” (Reply, p. 2:1-2.) Except for those charges, Kroh/1400 argue that they “specifically segregated fees incurred at arbitration preparation, appearances, and the arbitration evidentiary hearings from those incurred for work on this suit, motions, appearances, etc. before this Court” and Kroh/1400 “specifically reserved the right to seek these fees from the court in its application for fees and costs in the arbitration.” (Id. at p. 2:4-8.) Kroh/1400 argue that they “continued to incur fees in this case before arbitration, during arbitration, and following the final award by the arbitrators” especially because “Unique delayed the arbitration on multiple occasions, requiring many appearances before this Court for status conferences.” (Id. at p. 2:9-11.)

For Table 1, Kroh/1400 note that besides the entries of 46122, 46621, 46697, and 49060, which were inadvertently included, “the remaining items were not sought in the arbitration and . . . items related to the court action, court appearances, and motions filed herein were segregated and reserved for award in this action.” (Id. at p. 5:20-27.)

For Table 2, Kroh/1400 assert that these charges were necessary to respond to discovery demands in this action, necessary to oppose the motion for reconsideration, already have adequate descriptions, or would require the disclosure of the privileges of the attorney-client or attorney work product doctrine. (Id. at p. 5:1-17.)

For Table 3, Kroh/1400 state that all of these items “are directly related to the claims brought by Unique or recovery monies wrongfully retained by Unique.” (Id. at p. 5:18-19.)

For Table 4, Kroh/1400 provide that these items were “for follow-up with Unique’s counsel for documents he promised this Court would be delivered” and these “w[ere] not sought in the arbitration.” (Id. at p. 5:20-21.)

For Table 5, Kroh/1400 assert that “judgment was not entered until November 5, 2019” and “the only post judgment fees sought are related to this motion.” (Id. at p. 5:22-23.) Kroh/1400 argue that “almost all of the fees in table 5 objected to are directly related to obtaining entry of judgment.” (Id. at p. 5:24-25.)

Overall, Kroh/1400 argue that they “are entitled to be awarded their adjusted reasonable attorney’s fees int eh sum of no less than $146,153.65 for fees, and the costs incurred for this motion.” (Id. at p. 6:11-13.)

The Court is required to determine a reasonable lodestar. After a review of the billing entries, the Court finds that most of the entries demonstrate that Kroh/1400 incurred attorney’s fees based on reasonable hours relating to the action in front of this Court and not the arbitration proceeding.

However, the Court finds that some of the entries demonstrate that an unreasonable number of hours were spent on certain matters. For example, Kroh/1400’s counsel spent 11 hours drafting a motion for preliminary injunction and 6.6 hours drafting a reply to the motion for preliminary injunction. (See Ribons Decl., Ex. 2, Nos. 46360, 46362, 46371, 46388, 46394, 46405, 46468, 46472, 46554, 46567, 46568.) Further, Kroh/1400’s counsel spent 12.8 hours drafting this motion and anticipates spending another 12 hours on the reply and attending the hearing. (See Ribons Decl., Ex. 2, Nos. 52224, 52231, 52238, 52239, 52243, 52250, 52291, 522305.) The Court also finds that 10.4 hours listed on the billing entries relate to the arbitration proceeding, which Kroh/1400 have already recovered, as stated in the final arbitration award. (See Ribbons Decl., Ex. 2, Nos. 46122, 46621, 46697, 49060, 49804, 51525.)

Having analyzed the motions and pleadings filed, and having reviewed the billing statements provided, the Court determines that a reasonable lodestar in this case is $131,078.50 for 220.3 hours of work.

4. Costs

Allowable costs “shall be reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.” (Code Civ. Proc., § 1033.5, subd. (c)(2).)

Kroh/1400 also seeks costs in the following amounts: (1) $61.65 for the motion fee; (2) $9.75 for the e-filing fee for the motion; and (3) $9.75 for the e-filing fee for the reply for a total of $81.15 in costs.

Unique does not dispute Kroh/1400’s recovery of these costs.

Accordingly, the Court determines that Kroh/1400 is entitled to recover their motion and e-filing fees in the amount of $81.15.

C. Conclusion

The Court GRANTS Kroh/1400’s motion for attorney’s fees and costs in the amount of $131,159.65 – comprised of $131,078.50 for attorneys’ fees and $81.15 in costs.