18-CIV-00840 HOMMA, INC. VS. O’KEEFFE-MIKUMO CO., INC.

HOMMA, INC O’KEEFFE-MIKUMO CO., INC.
WILLIAM J. TAYLOR ERROL J. ZSHORNACK

PLAINTIFF HOMMA, INC.’S MOTION TO AMEND JUDGMENT TENTATIVE RULING:

Plaintiff/Judgment Creditor Homma, Inc.’s Motion to Amend Judgment to Add Mr. Yoshiro Mikumo as an additional Judgment Debtor is GRANTED. Code Civ. Proc. § 187. Based the evidence submitted and the parties’ briefing/argument, the Court finds a unity of interest between Judgment debtor O’Keefe-Mikumo Co., Inc. (OKM) and Mr. Mikumo such that the separate personality of the corporation no longer exists, and that an inequitable result would follow if the corporate separateness were recognized. Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538-9. The Court finds the following facts/factors to be relevant and persuasive.

First, the evidence suggests a unity of interest between OKM and Mr. Mikumo, which resulted in his controlling the underlying arbitration. Chan Decl., ¶¶2-3, 5. There appears to be no dispute Mr. Mikumo has, at all relevant times, been OKM’s CEO and its sole shareholder/owner. He appears to have fired and then re-hired OKM’s only counsel during the arbitration, and he personally participated in the arbitration. Id. By all indications, he completely controlled OKM at all relevant times.

OKM has been undercapitalized during the relevant time period. Chan Decl., ¶¶21-24. The arbitrator concluded OKM wrongfully withheld over $160k that Plaintiff paid to OKM in 2016, yet since Nov. 2016 when the parties rescinded their contract, OKM never maintained an account balance of over $50k, nor an account balance exceeding about $9k since 2018 after the arbitrator issued the award in favor of Plaintiff. Id.

OKM appears to have followed virtually no corporate formalities. Chan Decl., ¶¶19-20. Despite being requested in post-Judgment discovery, OKM produced no corporate Minutes, stock certificates, shareholder or Board meeting documents, or any other corporate records demonstrating proper corporate formalities were followed. Id.

Mr. Mikumo admits to having commingled corporate and personal funds for years. Chan Decl., ¶¶8-18. He testified to having used a corporate bank account (ending in 8515) from 2015 to 2018 to pay his personal expenses, including his water, garbage collection, and PG&E bills at his residence. Id. It also appears he used corporate accounts to pay his personal credit card bills. Id. The fact that OKM had another bank account (ending in 5112) which was not used to pay his personal bills, which OKM notes in its Opposition brief, does not change the analysis.

In other respects, Mr. Mikumo appears to have used OKM as a conduit for his personal affairs. At the recent debtor’s examination, he testified that due to his recent health issues, he converted the business into an internet sales platform for his personal coins, thus fundamentally changing the nature of the business without changing the corporate Articles or otherwise following any corporate formalities. Chan Decl., ¶¶25-26.

Inequity would result if the corporate separateness were recognized here. Mr. Mikumo accepted payments from Plaintiff of over $170k, did not repay it once the parties cancelled the contract, left OKM with virtually no assets to pursue, and yet appears to have continued opening new businesses under new names doing the same work. Chan Dec., ¶¶ 2-3, 5, 25-30. These allegations are supported by the evidence and for the most part are unrebutted. Taken together, the Court finds the evidence sufficient to grant the motion and add Mr. Mikumo as an additional Judgment debtor.

Plaintiff may submit a proposed amended Judgment for the Court’s review and signature. If the tentative ruling is uncontested, it shall become the order of the Court, pursuant to CRC Rule 3.1308(a)(1), adopted by Local Rule 3.10. If the tentative ruling is uncontested, moving party is directed to prepare, circulate, and submit a written order reflecting this Court’s ruling verbatim for the Court’s signature, consistent with the requirements of CRC Rule 3.1312. The proposed order is to be submitted directly to Judge Susan L. Greenberg, Department 3.