In petitioning the trial court to amend a judgment to add an alter ego defendant, must the plaintiff proceed by a motion in the original action, or may plaintiff proceed by complaint in an independent action on the judgment? Either procedure will do.
In May 2012 Alice Lopez recovered a judgment for fraud, negligent misrepresentation, and breach of fiduciary duty against Magnolia Home Loans, Inc. (Magnolia) in the amount of $157,370. In May 2018 Lopez brought the instant separate action against Jose Escamilla, alleging the following:
Escamilla incorporated Magnolia. He is the only shareholder, board member, and officer the corporation has ever had. Only one board meeting was ever held. Only Escamilla signed the corporation’s checks. The corporation’s only capitalization was $1,000 supplied by Escamilla. The corporation was suspended and all of its cash was paid to Escamilla. Escamilla continues to do business at the same location. Lopez requested that Escamilla be found to be an alter ego of Magnolia. Escamilla answered and moved for judgment on the pleadings. The motion was based on the theory that the only proper procedure for naming a person an alter ego is by motion in the original action. Escamilla claimed that a request to find a person an alter ego is not a cause of action and that a separate lawsuit is barred by limitations. The trial court granted the motion.
The Californiia Court of Appeal reversed.
The substantive question is whether Escamilla is, in fact, an alter ego. “The law respects form less than substance.” (Civ. Code, § 3528.) Either a complaint or a motion is sufficient. (Highland Springs Conference & Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 288 [“As an alternative to filing a section 187 motion to add a judgment debtor to a judgment, the judgment creditor may file an independent action on the judgment, alleging that the proposed judgment debtor was an alter ego of an original judgment debtor”].) Nor is the complaint barred by the statute of limitations. A money judgment is enforceable for an initial period of 10 years following entry of the judgment (Code Civ. Proc., § 683.020) and may be renewed (Code Civ. Proc., § 683.110 et seq.). By adding an alter ego defendant, the court is not entering a new judgment, but merely inserting the correct name of the real defendant. (NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778.) This may be done at any time. (Wells Fargo Bank, N.A. v. Weinberg (2014) 227 Cal.App.4th 1, 7; see also, Taylor v. Newton (1953) 117 Cal.App.2d 752, 757 [statutes of limitations on substantive causes of action do not apply to proceedings to declare alter ego].)
The judgment was reversed.
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