Case Number: KC064338    Hearing Date: September 30, 2014    Dept: O

Jin v. Gaju Tofu & BBQ, Corp., et al. (KC064338)
Related to: Jin v. Gaju Tofu & BBQ, Corp., et al. (KC064311)
Jin v. Gaju Tofu & BBQ, Corp., et al. (KC064312)

Plaintiff Jin’s MOTION FOR SUMMARY ADJUDICATION OF AFFIRMATIVE DEFENSE – continued from 8/21/2014.

Respondent: Defendants Gaju Tofu & BBQ, Corp. and Roan (filed LATE – not considered)

TENTATIVE RULING

Plaintiff Jin’s motion for summary adjudication of affirmative defense continued from 8/21/2014 is GRANTED.

A party may move for summary adjudication as to one or more causes of action within an action, one or more affirmative defenses, one or more claims for damages, or one or more issues of duty, if that party contends that the cause of action has no merit or that there is no affirmative defense thereto, or that there is no merit to an affirmative defense as to any cause of action, or both, or that there is no merit to a claim for damages, as specified in Section 3294 of the Civil Code, or that one or more defendants either owed or did not owe a duty to the plaintiff or plaintiffs. A motion for summary adjudication shall be granted only if it completely disposes of a cause of action, an affirmative defense, a claim for damages, or an issue of duty. (CCP 437c(f)(1).)

Defendants’ 26th Affirmative Defense states: “A Defendant whom [sic] is not Plaintiff’s employer is not a proper Defendant because he engaged in no acts, omissions or other conduct that which [sic] could have given rise to any claims by Plaintiffs.”

Plaintiff contends the 26th Affirmative Defense has no merit because Defendants admit Plaintiff was employed by Gaju. (Plaintiff’s Separate Statement (PSS) 2.) Further, Roan is liable because Gaju is the alter ego of Roan.

In order to prevail in a cause of action against individual defendants based upon disregard of the corporate form, the plaintiff must plead and prove such a unity of interest and ownership that the separate personalities of the corporation and the individuals do not exist, and that an inequity will result if the corporate entity is treated as the sole actor. (Vasey v. Cal. Dance Co. (1977) 70 Cal.App.3d 742, 749.) “The alter ego test encompasses a host of factors: “[1] [c]ommingling of funds and other assets, failure to segregate funds of the separate entities, and the unauthorized diversion of corporate funds or assets to other than corporate uses . . .; [2] the treatment by an individual of the assets of the corporation as his own . . .; [3] the failure to obtain authority to issue stock or to subscribe to or issue the same . . .; [4] the holding out by an individual that he is personally liable for the debts of the corporation . . .; the failure to maintain minutes or adequate corporate records, and the confusion of the records of the separate entities . . .; [5] the identical equitable ownership in the two entities; the identification of the equitable owners thereof with the domination and control of the two entities; identification of the directors and officers of the two entities in the responsible supervision and management; sole ownership of all of the stock in a corporation by one individual or the members of a family . . .; [6] the use of the same office or business location; the employment of the same employees and/or attorney . . .; [7] the failure to adequately capitalize a corporation; the total absence of corporate assets, and undercapitalization . . .; [8] the use of a corporation as a mere shell, instrumentality or conduit for a single venture or the business of an individual or another corporation . . .; [9] the concealment and misrepresentation of the identity of the responsible ownership, management and financial interest, or concealment of personal business activities . . .; [10] the disregard of legal formalities and the failure to maintain arm’s length relationships among related entities . . .; [11] the use of the corporate entity to procure labor, services or merchandise for another person or entity . . .; [12] the diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, or the manipulation of assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another . . .; [13] the contracting with another with intent to avoid performance by use of a corporate entity as a shield against personal liability, or the use of a corporation as a subterfuge of illegal transactions . . .; [14] and the formation and use of a corporation to transfer to it the existing liability of another person or entity.” This long list of factors is not exhaustive. The enumerated factors may be considered “[a]mong” others “under the particular circumstances of each case. (Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft (1999) 69 Cal. App. 4th 223, 249-250.)

Plaintiff produces the following evidence: Roan admitted that “there was not much cash” when Gaju was incorporated, nor balance sheets documenting paid-in capital. (PSS 4.) Roan claims he made loans to Gaju (PSS 8), but is unable to produce the loan agreements (PSS 9). Roan was the sole officer, director, and agent for service for Gaju, and testified he considered himself Gaju’s sole owner. (PSS 7, 10.) His wife Irene held all Gaju’s official roles, with daughter Joyce as a fellow director (PSS 5, 12). Gaju was closely held and dominated by Roan: (PSS 2, 15-17, 23, 25.) Roan sold Gaju’s assets and diverted the proceeds to himself. (PSS 14.) Corporate formalities were not adhered to. Gaju has no records of stock issuance or shareholder meetings. (PSS 11, 13, 19-21.) Gaju used the same attorney, WestThemis for both Gaju and Roan, as well as I. Roan and Broadland. (PSS 25.)

The court finds Plaintiff has met his initial burden of demonstrating Roan’s liability as an alter ego of Gaju based on the unauthorized diversion of corporate funds or assets, the failure to maintain minutes or adequate corporate records, equitable owners with domination and control of the entity, sole ownership of all of the stock in a corporation by one individual or the members of a family, the failure to adequately capitalize a corporation; the use of a corporation as a mere shell, instrumentality or conduit for a single venture or the business of an individual, the diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, and the formation and use of a corporation to transfer to it the existing liability of another person or entity.

The burden shifts to Defendants to produce evidence creating a triable issue.

On 8/21/14, at the hearing on this matter, Defendants had failed to submit any evidence in opposition. Defense counsel advised the court at that hearing that it put the wrong case caption on the face of the pleading, and requested a continuance to allow an opposition to be filed. The hearing was continued to 9/30/14.

Any opposition to the motion shall be served and filed not less than 14 days preceding the noticed or continued date of hearing, unless the court for good cause orders otherwise. The opposition, where appropriate, shall consist of affidavits, declarations, admissions, answers to interrogatories, depositions, and matters of which judicial notice shall or may be taken. (CCP 437c(b)(2).). On 9/26/14, Defendants filed their opposition, 4 days prior to the hearing.

Since the hearing is set for 9/30/14, the Opposition is LATE and will not be considered by the court. Defendants were twice given opportunities to file the requisite evidence, but failed to timely do so. The court finds Defendants’ pattern and practice of submitting late documents (as established by prior sanctions in this and the consolidated actions) has prejudiced Plaintiff in this matter by not allowing plaintiff to the opportunity to respond, and a further continuance is not necessary.

Summary adjudication is GRANTED.