ACTYON TIRE USA INC VS SANJEET SINGH VEEN ET AL

Tentative Rulings

Case Number: BC668297    Hearing Date: December 20, 2019    Dept: 48

(1) NOTICE OF JOINDER;

(2) MOTION FOR JUDGMENT ON THE PLEADINGS RE: SECOND AMENDED COMPLAINT

MOVING PARTY: (1) Defendant Sanjeet Singh Veen

(2) Defendant Prithpal Kandhari;

RESPONDING PARTY(S): (1) No opposition;

(2) Plaintiff Actyon Tire USA Inc.

PROOF OF SERVICE:

• Correct Address: (1) Yes; (2) Yes.
• 16/21 (CCP § 1005(b)): (1) OK. Served by mail on November 4, 2019; (2) OK. Served by mail on November 4, 2019; continued to this date per December 6, 2019 minute order.

• GRANT notice of joinder;
• GRANT motion for judgment on the pleadings as to the first cause of action without leave to amend;
• DENY motion for judgment on the pleadings as to the third cause of action.

ANALYSIS

Notice of Joinder

Defendant Prithpal Kandhari’s notice of joinder in the motion for judgment on the pleadings is GRANTED as timely.

Motion for Judgment on the Pleadings

Request for Judicial Notice

Defendant’s request that the Court take judicial notice of court documents pertaining to BC638278 and BC668297 is GRANTED per Evid. Code § 452(d).

Meet and Confer

The Declaration of Aaron B. Bloom reflects that the meet and confer requirement set forth in CCP § 439 was satisfied.

Discussion

Defendant Sanjeet Singh Veen moves for judgment on the pleadings as to the entire 2AC on the grounds that: 1) Plaintiff released the claims against Defendants by way of a written settlement agreement and release, 2) Plaintiff’s claims were merged into the judgment entered in BC638278, and 3) alter ego is not a substantive claim and can be asserted in the prior case.

The Court notes that Defendants’ demurrer to the second cause of action was sustained without leave to amend. See October 4, 2019 minute order.

The Court agrees with Plaintiff that the settlement and release did not purport to release a future breach of the very settlement and release agreement itself. Nothing purports to waive all future claims which may arise between the parties arising out of the Settlement Agreement itself. See Opposition at Page 4, citing § 5.1 of the Settlement Agreement. The present action is based upon the breach of the settlement agreement.

However, Defendant’s argument that the first cause of action for breach of contract in this action was merged with the prior judgment is persuasive. This is an argument based in res judicata.

“Under the doctrine of res judicata, a valid, final judgment on the merits is a bar to a subsequent action by parties or their privies on the same cause of action. … In California, a ‘cause of action’ is defined by the  [*576]  ‘primary right’ theory. ‘The most salient characteristic of a primary right is that it is indivisible: the violation of a single primary right gives rise to but a single cause of action.’ … In particular, the primary right theory provides that a cause of action consists of (1) a primary right possessed by the plaintiff, (2) a corresponding duty devolving upon the defendant, and (3) a delict or wrong done by the defendant which consists of a breach of the primary right. … ‘ “If the matter was within the scope of the action, related to the subject matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it … . The reason for this is manifest. A party cannot by negligence or design withhold issues and litigate them in consecutive actions. Hence the rule is that the prior judgment is res judicata on matters which were raised or could have been raised, on matters litigated or litigable. …” ’ ” (Amin v. Khazindar (2003) 112 Cal.App.4th 582, 589–590 [5 Cal. Rptr. 3d 224], citations omitted.)

Villacres v. ABM Industries Inc. (2010) 189 Cal.App.4th 562, 575-76 (italics omitted, bold emphasis and underlining added).

Here, Plaintiff could have named individual Defendants Singh and Kandhar individually in the first lawsuit for breach of settlement agreement, i.e., a claim holding them liable based on contractual promises they made in their individual capacity. See 2AC, ¶¶ 51 – 56. Accordingly, this cause of action is barred by res judicata by virtue of the May 4, 2017 judgment entered in BC638278. See RJN, Exh. D.

However, as to the third cause of action seeking declaratory relief as to alter ego liability against the individual Defendants, assertion of this theory in this separate action is proper. A plaintiff may bring a separate action on an alter ego theory:

A claim based upon an alter ego theory is not itself a claim for substantive relief. (Hennessey's Tavern, Inc. v. American Air Filter Co. (1988)  [*419]  204 Cal.App.3d 1351, 1359 [251 Cal. Rptr. 859].) It is a procedural device by which courts will disregard the corporate entity in order to hold the alter ego individual liable on the obligations of the corporation. (Ibid.) Because it is not a substantive claim that has been decided, we do not necessarily rule out the possibility that plaintiffs could still recover from Cooper individually if they obtain a judgment that the corporation is unable to satisfy. Under some circumstances a judgment against a corporation may be amended to add a nonparty alter ego as a judgment debtor. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th 1551, 1555 [49 Cal. Rptr. 2d 286]; Code Civ. Proc., § 187.) “This is an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant but is merely inserting the correct name of the real defendant.” (NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778 [256 Cal. Rptr. 441].) It is also possible for a party to bring a wholly separate action against the individual to enforce a prior judgment against the corporation on an alter ego theory. (Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc. (1994) 29 Cal.App.4th 1828, 1840 [35 Cal. Rptr. 2d 348].)

Leek v. Cooper (2011) 194 Cal.App.4th 399, 417-19 (bold emphasis added).

Defendant’s argument that Leek is distinguishable and the facts of this case bar a separate action, but not a motion to amend the judgment in the prior action is not persuasive. The Court sees no distinction between seeking to amend the judgment to add alter ego judgment debtors in the prior action and seeking a judgment against those same purported alter ego individuals in a separate action. In any event, the Court notes that if Defendant were truly concerned about proceeding in the prior action, Defendant would have filed a notice of related cases as soon as this action were filed.

Accordingly, the motion for judgment on the pleadings as to the third cause of action is DENIED.

Case Number: BC668297    Hearing Date: December 06, 2019    Dept: 48

(1) NOTICE OF JOINDER;

(2) MOTION FOR JUDGMENT ON THE PLEADINGS RE: SECOND AMENDED COMPLAINT

MOVING PARTY: (1) Defendant Sanjeet Singh Veen

(2) Defendant Prithpal Kandhari;

RESPONDING PARTY(S): (1) No opposition;

(2) Plaintiff Actyon Tire USA Inc.

PROOF OF SERVICE:

• Correct Address: (1) Yes; (2) Yes.
• 16/21 (CCP § 1005(b)): (1) OK. Served by mail on November 4, 2019; (2) OK. Served by mail on November 4, 2019; advanced to this date per November 14, 2019 minute order.

• GRANT notice of joinder;
• GRANT motion for judgment on the pleadings as to the first cause of action without leave to amend;
• DENY motion for judgment on the pleadings as to the third cause of action.

ANALYSIS

Notice of Joinder

Defendant Prithpal Kandhari’s notice of joinder in the motion for judgment on the pleadings is GRANTED as timely.

Motion For Judgment On The Pleadings

Request For Judicial Notice

Defendant’s request that the Court take judicial notice of court documents pertaining to BC638278 and BC668297 is GRANTED per Evid. Code § 452(d).

Discussion

Defendant Sanjeet Singh Veen moves for judgment on the pleadings as to the entire 2AC on the grounds that Plaintiff released the claims against Defendants by way of a written settlement agreement and release, Plaintiff’s claims were merged into the judgment entered in BC638278, and alter ego is not a substantive claim and can be asserted in the prior case.

The Court notes that Defendants’ demurrer to the second cause of action was sustained without leave to amend. See October 4, 2019 minute order.

The Court agrees with Plaintiff that the settlement and release did not purport to release a future breach of the very settlement and release agreement itself. Nothing purports to waive all future claims which may arise between the parties arising out of the Settlement Agreement itself. See Opposition at Page 4, citing § 5.1 of the Settlement Agreement. The present action is based upon the breach of the settlement agreement.

However, Defendant’s argument that the first cause of action for breach of contract in this action was merged with the prior judgment is persuasive. This is an argument based in res judicata.

“Under the doctrine of res judicata, a valid, final judgment on the merits is a bar to a subsequent action by parties or their privies on the same cause of action. … In California, a ‘cause of action’ is defined by the  [*576]  ‘primary right’ theory. ‘The most salient characteristic of a primary right is that it is indivisible: the violation of a single primary right gives rise to but a single cause of action.’ … In particular, the primary right theory provides that a cause of action consists of (1) a primary right possessed by the plaintiff, (2) a corresponding duty devolving upon the defendant, and (3) a delict or wrong done by the defendant which consists of a breach of the primary right. … ‘ “If the matter was within the scope of the action, related to the subject matter and relevant to the issues, so that it could have been raised, the judgment is conclusive on it … . The reason for this is manifest. A party cannot by negligence or design withhold issues and litigate them in consecutive actions. Hence the rule is that the prior judgment is res judicata on matters which were raised or could have been raised, on matters litigated or litigable. …” ’ ” (Amin v. Khazindar (2003) 112 Cal.App.4th 582, 589–590 [5 Cal. Rptr. 3d 224], citations omitted.)

Villacres v. ABM Industries Inc. (2010) 189 Cal.App.4th 562, 575-76 (italics omitted, bold emphasis and underlining added).

Here, Plaintiff could have named individual Defendants Singh and Kandhar individually in the first lawsuit for breach of settlement agreement, i.e., a claim holding them liable based on contractual promises they made in their individual capacity. See 2AC, ¶¶ 51 – 56. Accordingly, this cause of action is barred by res judicata by virtue of the May 4, 2017 judgment entered in BC638278. See RJN, Exh. D.

However, as to the third cause of action seeking declaratory relief as to alter ego liability against the individual Defendants, assertion of this theory in this separate action is proper. A plaintiff may bring a separate action on an alter ego theory:

A claim based upon an alter ego theory is not itself a claim for substantive relief. (Hennessey's Tavern, Inc. v. American Air Filter Co. (1988)  [*419]  204 Cal.App.3d 1351, 1359 [251 Cal. Rptr. 859].) It is a procedural device by which courts will disregard the corporate entity in order to hold the alter ego individual liable on the obligations of the corporation. (Ibid.) Because it is not a substantive claim that has been decided, we do not necessarily rule out the possibility that plaintiffs could still recover from Cooper individually if they obtain a judgment that the corporation is unable to satisfy. Under some circumstances a judgment against a corporation may be amended to add a nonparty alter ego as a judgment debtor. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th 1551, 1555 [49 Cal. Rptr. 2d 286]; Code Civ. Proc., § 187.) “This is an equitable procedure based on the theory that the court is not amending the judgment to add a new defendant but is merely inserting the correct name of the real defendant.” (NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778 [256 Cal. Rptr. 441].) It is also possible for a party to bring a wholly separate action against the individual to enforce a prior judgment against the corporation on an alter ego theory. (Brenelli Amedeo, S.P.A. v. Bakara Furniture, Inc. (1994) 29 Cal.App.4th 1828, 1840 [35 Cal. Rptr. 2d 348].)

Leek v. Cooper (2011) 194 Cal.App.4th 399, 417-19 (bold emphasis added).

Accordingly, the motion for judgment on the pleadings as to the third cause of action is DENIED.