Case Number: GC049363 Hearing Date: May 16, 2014 Dept: B

21. GC049363
HUA NAI DAI v EIGHT CAGE
Motion to Amend Judgment

This case was filed so that the Plaintiff could request that the Court enter a judgment based on the final order, decision, and award of the Labor Commissioner. The Plaintiff had filed a claim against Eight Cafe on the ground that she had not been paid overtime or compensated for meal periods and rest periods during her period of employment from October 26, 2006 through October 18, 2009. After a hearing, the Labor Commissioner awarded $100,862.92 to the Plaintiff on December 1, 2010.

The Plaintiff filed her civil complaint on April 30, 2012. The Court clerk entered a judgment for $110,896.95 on April 30, 2012. The additional amount includes post hearing interest and the filing fee.

This hearing concerns the Plaintiff’s request that the Court amend this judgment to add three new parties, Philip Wu, Dan Liu, and DanDan’s Guilin Rice. CCP section 187 grants the Court the power to use all means to carry its jurisdiction into effect. This includes the power to amend a judgment to add additional judgment debtors. McClellan v. Northridge Park Townhome Owners Association (2001) 89 Cal. App. 4th 746, 752 (permitting a plaintiff to add the individual who was the alter ego of a judgment debtor corporation). 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. Id. This procedure permits the Court to make the judgment “speak the truth” as to the true names of the defendant. Jack Farenbaugh & Son v. Belmont Construction (1987) 194 Cal. App. 3d 1023, 1029.

The alter ego doctrine applies when the corporate form is used to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or unequitable purpose. Sonora Diamond Corp. v. Superior Court (2000) 83 Cal. App. 4th 523, 538. The alter ego doctrine prevents individuals from misusing the corporate laws by the device of a sham corporate entity formed for the purpose of committing fraud or other misdeeds. Id. Courts liberally apply the alter ego doctrine when the equities and justice of the situation call for it rather than restricting it to technical requirements of pleading and procedure. First Western Bank & Trust Co. v. Bookasta (1968) 267 Cal. App. 2d 910, 915. It is essential principally that a showing be made that there is a unity of interest and that permitting the fiction of corporate separate existence is unjust. Id.

1. Philip Wu

The Plaintiff argues that Philip Wu should be added as a named Defendant because he was using the original Defendant, Eight Cafe, as an alter ego.

The Plaintiff provides the Statement of Information for Eight Cafe from the California Secretary of State in untabbed exhibit B. The Statement of Information indicates that Philip Wu is the chief executive officer, secretary, chief financial officer, director, and agent for service of process for Eight Cafe. The address for Eight Cafe is 140 W. Valley Blvd., #203, San Gabriel.

The Plaintiff provides the Certificate of Election to Wind up and Dissolve for Eight Cafe (see untabbed exhibit C). The certificate indicates that Philip Wu elected to dissolve Eight Cafe on July 21, 2011.
Further, the second page of the certificate indicates the corporation never incurred any known debts or liabilities. The certificate was signed by Philip Wu under penalty of perjury. Since the Labor Commissioner had issued an award of $100,862.92 to the Plaintiff on December 1, 2010, this statement by Philip Wu under penalty of perjury was knowingly not accurate.

In addition, a review of the copy of the Labor Commissioner’s order reveals that Philip Wu appeared and offered testimony in opposition to the Plaintiff’s claim that she was not paid wages and compensation.

This evidence indicates that there was a unity of interest between Philip Wu and Eight Cafe because Philip Wu was the chief executive officer, secretary, chief financial officer, director, and agent for service of process for Eight Cafe. Further, Philip Wu testified at the hearing before the Labor Commissioner on behalf of Eight Cafe.

In addition, this evidence indicates that Philip Wu was misusing the corporate form to avoid liability. Philip Wu filed a Certificate of Election to Wind up and Dissolve the corporation, Eight Cafe, and falsely stated that there were no debts or liability. Since Philip Wu did not disclose the Labor Commission award in the Plaintiff’s favor, he was attempting to avoid liability by dissolving the corporation against which the Plaintiff had obtained the award.

Accordingly, the Court finds that Philip Wu was using Eight Cafe as an alter ego. Since it would be unjust to permit Philip Wu to use Eight Cafe as an alter ego to avoid liability for the Plaintiff’s award, the Court adds him as a Defendant to the judgment in this case.

Accordingly, the Court grants the request to add Philip Wu as a Defendant.

2. DanDan’s Guilin Rice Noodles and Dan Liu

The Plaintiff argues that DanDan’s Guilin Rice Noodles is the successor to Eight Cafe and that Dan Liu is the owner of DanDan’s Guilin Rice Noodles. The Plaintiff offers no evidence that tends to demonstrate that these third parties should be added as Defendants.

Plaintiff’s counsel, Jacqueline Lee offers facts in her declaration. A review, however, review of the evidence Ms. Lee cites reveals that it does not support her facts. For example, in paragraph 8d, Ms. Lee states that after Philip Wu dissolved Eight Cafe, DanDan’s Guilin Rice Noodles began operating in the same location with a suspended license. Ms. Lee then directs the Court to untabbed exhibit G. A review of exhibit G reveals it is a certificate of status that indicates that DanDan’s Guilin Rice Noodles is suspended. It does not prove that DanDan’s Guilin Rice Noodles was doing business or that DanDan’s Guilin Rice Noodles was doing business at the same location.

In addition, Ms. Lee’s declaration is wholly lacking in foundation for critical facts. For example, in paragraph 23, Ms. Lee states that DanDan’s Guilin Rice Noodles Inc. is “substantially” the same business entity as Eight Cafe and that it has “essentially” the same owners, managers, business, and assets. Ms. Lee does not direct the Court to evidence to establish these facts. Further, the lack of any supporting facts coupled with Ms. Lee’s use of the words “substantially” and “essentially” in her declaration to describe the two companies reduces the weight that should be given to her statements because she appears to be using them to obscure the differences between DanDan’s Guilin Rice Noodles and Eight Cafe.

Instead, the Plaintiff offers bits and pieces of evidence in her effort to persuade the Court that DanDan’s Guilin Rice Noodles and Dan Liu should be added as Defendants. For example, the Plaintiff notes that the Articles of Incorporation and Statement of Information for DanDan’s Guilin Rice Noodles indicate that it uses the same address as Eight Cafe, i.e., 140 W. Valley Blvd., #203, San Gabriel. Or, the Plaintiff offers facts in her declaration that Dan Liu was a manager at Eight Cafe and that he wrote a check for a coworker in 2007.

As noted above, the procedure that the Plaintiff is seeking to use 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. Jack Farenbaugh & Son v. Belmont Construction (1987) 194 Cal. App. 3d 1023, 1029 (it permits the Court to make the judgment “speak the truth” as to the true names of the defendant). There is insufficient evidence to establish that DanDan’s Guilin Rice Noodles or Dan Liu should be substituted as a defendant. Instead, as noted above, the evidence indicates that Charles Wu is the correct name of the Defendant because he was using Eight Cafe as an alter ego to avoid liability.

Further, the Plaintiff has not established that the alter ego theory applies to Dan Liu. The Plaintiff argues that Dan Liu was using Eight Cafe as an alter ego. The Plaintiff does not offer any evidence of a unity of interest between Dan Liu and Eight Cafe or that Dan Liu commingled her assets with the assets of Eight Cafe. Instead, as noted above, the Statement of Information filed with the California Secretary of State indicates that Philip Wu is the chief executive officer, secretary, chief financial officer, director, and agent for service of process for Eight Cafe and that Philip Wu filed the certificate of dissolution. The evidence that Charles Wu was exercising sole control over Eight Cafe tends to disprove the Plaintiff’s claim that Dan Liu was using Eight Cafe as an alter ego.

In addition, in the opposition papers, Dan Liu provides facts in her own declaration to demonstrate that she does not have any ownership interest in the business at the location and that she sold her shares of Eight Cafe to Philip Wu on January 3, 2008. Further, Ms. Liu states that she had no involvement and was not the corporate officer, director, or shareholder of Eight Cafe. Ms. Liu states that she issued checks in March 2009 at the request of Philip Wu. This evidence indicates that there was not a unity of interest between Dan Liu and Eight Cafe because she was not using the corporate form for her own purposes or commingling her assets with the assets of Eight Cafe.

Finally, the Plaintiff argues that DanDan’s Guilin Rice Noodles is a successor to Eight Cafe. The Plaintiff offers no evidence to establish that DanDan’s Guilin Rice Noodles succeeded to any of the debts or liability of Eight Cafe. Instead, as noted above, Charles Wu dissolved the corporate form of Eight Cafe. Although the Plaintiff claims that DanDan’s Guilin Rice Noodles is operating at the same location, the Plaintiff does not offer evidence that Charles Wu is managing and operating the business.

Accordingly, there is insufficient evidence to establish that Dan Liu and DanDan’s Guilin Rice Noodles should be added as Defendants to the judgment.

Accordingly, the Court denies the request to add Dan Liu and DanDan’s Guilin Rice Noodles as Defendants.