Mendoza v. Martinez CA2/3

Filed 3/3/23 Mendoza v. Martinez CA2/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION THREE
STEPHANIE MENDOZA, B314778
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. BC620761)
v.
JOEY C. MARTINEZ et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of
Los Angeles County, Terry Green, Judge. Affirmed.
Law Offices of Michael N. Berke and Michael N. Berke;
RCM Legal and Roy C. Manukyan for Plaintiff and Appellant.
Diem Law and Robin L. Diem; Johnson Oakleaf and Wade
C. Johnson for Defendants and Respondents.
‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗
Stephanie Mendoza appeals from an order denying her
motion to amend a judgment to include alleged alter egos.
Mendoza obtained a judgment against RBD Real Estate
Development, LLC (RBD, LLC), and later sought to amend the
judgment to add Renovations Builders & Developers, Inc. (RBD,
Inc.) and Joey Martinez, the principal of both RBD, LLC and
RBD, Inc., as alter ego debtors.
Mendoza primarily contends that the trial court misapplied
the controlling legal principles in denying her motion to amend
the judgment to include Martinez as an alter ego debtor. She
also contends that the trial court failed to consider evidence of
the unity of interest between RBD, LLC and RBD, Inc. For the
reasons described below, we find no reversible error and thus
affirm the trial court’s order.
FACTUAL AND PROCEDURAL BACKGROUND
I. The lawsuit and stipulated judgment
On May 27, 2016, Mendoza filed a complaint against
Martinez and RBD, LLC. The complaint alleged several causes of
action, including breach of contract, breach of fiduciary duty, and
fraud. The complaint alleged that Martinez, on behalf of himself
and RBD, LLC, solicited funds from Mendoza to help develop
parcels of real property. According to the complaint, Martinez
borrowed money from Mendoza to avoid defaulting on payments
owed to contractors and suppliers, and made promises to her,
later broken, to induce her financial assistance.
For example, the complaint alleged that Mendoza loaned
Martinez money in reliance on his promise to make her a partner
in the development projects, to include her name on the title to
the properties being developed, and to execute promissory notes
2
and deeds of trust in her favor to secure repayment of the loans.
The complaint further alleged that Martinez did not follow
through on any of those promises.
On December 7, 2016, Mendoza, Martinez, and RBD, LLC
filed a stipulated judgment in favor of Mendoza and against RBD,
LLC in the amount of $285,923.96. The stipulated judgment also
provided that Martinez “shall be dismissed as to all causes of
action with prejudice.”
Although Mendoza was able to collect $29,095.79 pursuant
to a writ of attachment on RBD, LLC’s bank account, she was
unable to collect the remainder of the judgment. Then, in June
2017, RBD, LLC filed a certificate of dissolution signed by
Martinez with the California Secretary of State. As described
below, Mendoza attempted to collect the remainder of the
judgment by enforcing a writ of attachment against a property
formerly owned by RBD, LLC, but that effort was unsuccessful.
II. Motion to amend the judgment and opposition
A. Mendoza’s motion to amend the judgment
In September 2019, Mendoza conducted a judgment debtor
exam of Martinez. Martinez testified that RBD, LLC was created
at the request of investors who helped finance his development of
properties on Goldenrod Avenue and Isabella Terrace in Corona
Del Mar. RBD, Inc. was Martinez’s general contracting company
which, at least according to Martinez’s deposition testimony, “had
nothing to do with the development of either property.”
Martinez testified that after RBD, LLC dissolved in June
2017, RBD, Inc. repaid investors who had loaned money in
connection with the Goldenrod and Isabella properties. When
asked why Mendoza had not been repaid for her payment to
3
RBD, LLC, Martinez responded, “Because she hasn’t contacted
me.”
Martinez was also questioned about certain payments
involving him, RBD, LLC, and RBD, Inc. For example, Martinez
acknowledged that RBD, LLC had written checks to RBD, Inc.
totaling more than $60,000, but he was unable to explain their
purpose. RBD, LLC also paid for Martinez’s son’s college tuition,
but Martinez could not explain why, other than noting that his
children worked for him. When presented with several checks to
a law firm from RBD, LLC, which included Martinez’s son’s name
on the memo line, Martinez was unable to identify their purpose.
RBD, LLC also paid Martinez’s son to prepare architectural plans
even though his son was unlicensed to do so. Another check
appeared to show that RBD, LLC paid for RBD, Inc.’s contractor’s
license fee.
Martinez also produced RBD, LLC’s bank records, which
showed that its account was often overdrawn or had a low
operating balance.
Based on this information, Mendoza filed a motion to
amend the judgment against RBD, LLC to add Martinez and
RBD, Inc. as alter ego debtors. She included her declaration and
the declaration of her then-counsel, Dana Leigh Cisneros.
Mendoza’s declaration explained that although Martinez
had assured her in text messages in March 2016 that he would
“make good on [his] side” and would “not forget what [Mendoza]
did for [him],” he had not repaid any of what he owed her. She
also explained that, as noted, she was able to collect only
$29,095.79 from the bank account of RBD, LLC pursuant to a
writ of attachment issued at the start of her lawsuit.
4
Cisneros’s declaration explained that a writ of attachment
had issued on the same day that Mendoza filed her lawsuit in
May 2016, which thereafter attached to the Goldenrod property.1
But after the writ was issued, Martinez and RBD, LLC
transferred the Goldenrod property to a third party who brought
an action to remove Mendoza’s lien. That action concluded with a
settlement agreement requiring Mendoza to release her lien on
the Goldenrod property.
Cisneros’s declaration also included the transcript and
exhibits from Martinez’s judgment debtor exam.
Mendoza’s motion argued that amendment of the judgment
was warranted because Martinez owned and controlled both
RBD, LLC and RDB, Inc.; held himself out as liable for RBD,
LLC’s debts and caused RBD, Inc. to pay creditors of RBD, LLC
after it had been dissolved; commingled assets of the two
companies; treated the assets of RBD, LLC as his own; and had
undercapitalized RBD, LLC.
B. Martinez’s and RBD, Inc.’s opposition
Martinez and RBD, Inc. opposed the motion and included a
declaration from Martinez and their counsel, Wade Johnson.
Martinez’s declaration explained that he was the president
and sole shareholder of RBD, Inc., which was a licensed general
building contractor. As he explained at his deposition, Martinez
1 Although not addressed in Cisneros’s declaration, as
discussed herein it appears the Isabella property was foreclosed
upon prior to Mendoza recording her pre-judgment writ of
attachment.
5
formed RBD, LLC at the request of lenders2 for the purpose of
taking title to the Goldenrod and Isabella properties. Martinez
was also a guarantor on the notes for the purchase money for
both properties.
According to Martinez, Mendoza and her business partner
agreed to purchase the Isabella property for $150,000 plus the
balance on the loans for the property, and to take possession of
the property and pay the mortgage as rent until the sale was
closed. Despite their agreement, Mendoza and her partner were
unable to obtain financing for the purchase and stopped paying
rent on the property in January 2016.
Martinez sold the Goldenrod property in July 2016, before
he had knowledge of Mendoza’s lawsuit. The Isabella property
was sold at auction in November 2016. Because Martinez was
personally obligated for the deficiency, he had been making
payments on the deficiency since that time.
When Martinez agreed to the stipulated judgment, he
understood that Mendoza “would be looking solely to the
Goldenrod Property for compensation.” Because there was no
longer any purpose for RBD, LLC, and it had no assets, he
thereafter caused it to be dissolved.
Johnson’s declaration explained that he was counsel for
Martinez and RBD, Inc. According to Johnson, after he was
engaged to represent Martinez he had settlement discussions
with Mendoza’s counsel. During those discussions, Johnson and
Mendoza’s counsel learned the Isabella property had been
foreclosed upon prior to the recording of Mendoza’s writ of
2 Martinez explained that he had mistakenly referred to the
lenders as “investors” during his debtor exam.
6
attachment and that the Goldenrod property had been sold
subject to Mendoza’s attachment lien.
According to Johnson, the parties agreed to the stipulated
judgment with the understanding that Martinez would be
dismissed with prejudice, that Mendoza would have the money
she collected from RBD, LLC’s bank account, and that she would
try to collect the balance of the judgment from her lien on the
Goldenrod property. But after judgment was entered, the new
owners of the Goldenrod property successfully sued to have
Mendoza’s lien equitably subordinated to their title.
Martinez and RBD, Inc. opposed Mendoza’s motion to
include them as judgment debtors on several grounds. Among
other things, they contended that Martinez had been induced not
to defend the lawsuit by Mendoza’s promise to dismiss him and
collect the judgment against RBD, LLC; that RBD, Inc. should
not be included as a judgment debtor because it had no duty to
intervene and defend the allegations in the lawsuit; that it would
be inequitable to allow Mendoza to include Martinez as a
judgment debtor after she had dismissed him with prejudice; and
that Mendoza failed to show that Martinez had improperly
commingled assets or undercapitalized RBD, LLC.
III. Evidentiary hearing
After the parties filed supplemental briefs, the court held a
two-day evidentiary hearing on Mendoza’s motion to amend the
judgment.
A. February 24, 2021 hearing
At the start of the hearing, the court and counsel discussed
the factual background of the case, including the events leading
7
to Mendoza’s inability to enforce her lien on the Goldenrod
property.
During their discussion, the court observed, “Now, I see it,
because when I was reading this, I thought that we’re talking
more of a fraudulent transfer or something more slight [sic.] of
hand, but apparently not.” A short time later, the court asked
the parties, “So what do you see is the issue?” Counsel for
Mendoza replied, “The question is, was the judgment capable of
being enforced at the time it was made? And our position, it’s
not. There was no value in anything. Even the writ of
attachment had no value, so—because there was no equity.”
The court responded, “But isn’t that why we hire lawyers?
. . . . [¶] But, you know, ordinarily, if there was—why would you
enter into a judgment if there’s a stipulated judgment with both
parties agreeing to this, if there was no way it could be fulfilled?
You know, that—you sort of take a risk. [¶] I mean, that tells
me that maybe her case wasn’t as strong as, you know, I might
think. And maybe this was the best deal that counsel at the time
could get, and then you roll the dice and see if you can get
anything out of it.”
Later during the same discussion, counsel for Martinez
emphasized that when the parties were negotiating the
stipulated judgment, Mendoza’s counsel was in communication
with the title company that insured the title on the Goldenrod
property. According to Martinez’s counsel, his “file [was] full of e-
mail correspondence” between Mendoza’s counsel and the title
company “discussing the merits of their claim against [the title
company], that took place prior to the judgment, the stipulated
judgment. There is nothing that wasn’t disclosed.”
8
Mendoza then called Martinez as a witness. Martinez
explained that he was the principal in both RBD, Inc. and RBD,
LLC, and that he formed RBD, LLC to take title to the Goldenrod
and Isabella properties. Mendoza and her partner later agreed to
purchase the Isabella property by refinancing an existing loan on
the property, to pay Martinez $150,000 as a sale profit, and to
pay the mortgage on the property until they could obtain
financing. But the transaction fell apart after Mendoza was
unable to acquire financing. By then, Mendoza had paid
Martinez a total of $250,000, approximately $130,000 of which
was rent. Martinez characterized the remaining $120,000 as
“hard money.”
Martinez also described several other loans he obtained
related to the Isabella and Goldenrod properties, and his efforts
with Mendoza to secure financing for those properties. But in
November 2016 one of his lenders foreclosed on the Isabella
property and acquired title.
At the end of the first day of the hearing, the court noted
that its prior impression of the case was that “Ms. Mendoza went
and gave money to Mr. Martinez to invest in property.” However,
the court observed that Mendoza was “an active participant, and
this just didn’t work out. And, you know, now, . . . the settlement
[makes] a little more sense. But if everybody knew it was going
on, and there were evaluations of the strength and weakness of
the cases, and it just didn’t work out, it’s hard for me to find a
way to say that, as a matter of law, that Mr. Martinez should be
added to the judgment.”
The court further stated that “one of the main reasons for
piercing a business veil and having individual liability is that
injustice will result, if that isn’t—if that isn’t done. [¶] And it’s
9
hard here to say that there’s an injustice, if everybody knew, or
their agents knew, maybe Ms. Mendoza didn’t appreciate the
legalities or maybe her lawyer didn’t tell her or maybe her lawyer
didn’t know. But unless you point to something that is nefarious
here, it could be very hard to say that injustice will result if I
don’t add Mr. Martinez to the judgment.”
The next day, Martinez’s counsel filed a declaration
attaching correspondence between him, Mendoza’s counsel, and
the title company. The correspondence between Mendoza’s
counsel and the title company, occurring prior to the entry of the
stipulated judgment, indicates the title company disputed
Mendoza’s ability to enforce her lien against the Goldenrod
property.
B. April 20, 2021 hearing
At the second day of the hearing, the court stated that it
was “trying to understand where the fraud is.” It likewise
emphasized that it “was wondering what did Mr. Martinez do or
say that was a misrepresentation or fraudulent? . . . Let’s face it.
It is odd to apply alter ego to a settlement.”
Later, the court said to Mendoza’s counsel, “I’m trying to
understand what Mr. Martinez did that was dishonest. What did
he do that fooled the lawyer and fooled your client?” The court
stressed that “if [Martinez] had looted the company the day
before the judgment and then the company was a shell and he
misrepresented the assets of the company, then I agree with you.
I absolutely agree with you, but I’m saying this is the kind of
thing which I look for in an alter ego. [¶] You know, where is the
lying and cheating?”
The court also stated that “what makes this thing so odd, it
appears to be a fully negotiated settlement. I mean, fully
10
negotiated with emails going back and forth between multiple
lawyers involved. [¶] Unless you can show me that Mr. Martinez
engages in sleight of hand, I see no reason to disrupt this
settlement. It’s a bargained-for deal.”
Martinez then continued his testimony. Among other
things, he explained the purpose of the payments from RBD, LLC
to RBD, Inc., which he was asked about during his debtor exam.
He testified that the payments were for construction services
provided by RBD, Inc. to RBD, LLC. He also acknowledged that
RBD, LLC’s tax returns reflected an income of $76,443 in 2016,
and a loss of $3,451 in 2017.
That testimony then prompted the court to observe the
absence of evidence that Martinez misled Mendoza about the
finances of RBD, LLC. The court stated, “So did [counsel for
Mendoza] ask [counsel for Martinez] for the books? I mean, if I
were her counsel and we were negotiating and I had my client in
negotiation—especially cutting loose the principal and instead
having some businesses as the part of the cash cow, I would want
to see what the balance was up to and as close to December of
2015 as humanly possible. [¶] Then, suddenly, if in January
2017, it all vanished, then I might have a fraudulent conveyance
or a fraud. But, I mean, there’s simply no evidence here that I
have seen that [counsel for Mendoza] asked that question or that
[counsel for Martinez] misled [her].”
After some additional discussion, Martinez testified that he
dissolved RBD, LLC because he “wasn’t using it anymore.”
Although he intended to continue developing properties,
Martinez believed that RBD, LLC’s reputation had been
tarnished in connection with the foreclosure of the Isabella
property.
11
At the conclusion of Martinez’s testimony, counsel for
Martinez pointed out that Martinez was a guarantor on the
purchase money loans for the Isabella property, which explains
why RBD, Inc. had been repaying the loans after RBD, LLC
dissolved.
Mendoza testified next. She explained that she and her
business partner invited Martinez to be a partner in their real
estate development firm because Martinez had construction
experience. Mendoza thereafter wrote checks and paid cash to
Martinez to cover outstanding mortgage payments and
construction costs related to the Isabella and Goldenrod
properties. She understood that in exchange for her payments,
once the Isabella and Goldenrod properties sold she would share
in the profit and recoup her investments.
The court then observed that “Ms. Mendoza is a
sophisticated businessperson. She brought a partner into her
firm, it sounds to me like, without doing any due diligence at all,
and the firm is now paying these expenses for a fellow partner on
firm property. [¶] Am I wrong on that?” Mendoza’s counsel
replied, “No.”
Mendoza also described further efforts by her and Martinez
to develop the Isabella property and other properties. But by
April 2016, Mendoza said the communications between her and
Martinez “broke down.” She attempted to meet with Martinez to
discuss repayment of her investments, but she never heard back
from him.
Mendoza then described the circumstances surrounding the
settlement of her lawsuit against Martinez and RBD, LLC. At
that time, she was aware only of RBD, LLC, not RBD, Inc. Her
counsel advised her that Martinez and RBD, LLC would release
12
the funds attached in RBD, LLC’s bank account, and that she
could “go after his development company, RBD, LLC. And I had
no idea that that was not a company that was going to continue
doing what it did in Corona Del Mar.” Regarding the Goldenrod
property, she was advised “that since title blatantly missed my
lien, that that would be one avenue that we could pursue, but it
was not the only avenue. It was never advised that it was the
only avenue.” She also testified that she was unaware that the
Isabella property “had gone under and went into default.” Last,
she explained that following the entry of the stipulated judgment
against RBD, LLC, she was sued by the title company regarding
her lien on the Goldenrod property. The litigation with the title
company lasted two years.
C. Court’s ruling
The court issued an oral ruling at the conclusion of the
second day of hearing. Because the court’s subsequent minute
order does not contain the court’s reasoning, and because
Mendoza’s appeal focuses on the court’s statements during the
evidentiary hearing, we include the court’s pertinent statements
at the conclusion of the hearing:
“It sounds to me, as I said, that [Martinez and Mendoza]
had made an atrocious series of business deals that sank them.
And I don’t see any documentation, partnership agreement, or
any sort of agreement, which would make Mr. Martinez liable for
this. I mean, you bring in partners, and sometimes they work
out, and sometimes they end up being a nightmare. . . .
“But, you know, be that as it may, Mr. Martinez, for
whatever reason, decided to settle. And then the question was
what were the expectations of the parties as to why there was
13
going to be a settlement and why these specific terms, how it was
going to be paid. . . .
“I mean, the deal that the prior counsel had is very clear
when you read the emails with [Martinez’s counsel]. It’s very
clear what the deal was. The expectations were that Ms.
Mendoza apparently had no illusions as to how deep Mr.
Martinez’s pockets were and that the terms of the settlement
reflect the strengths of the case.
“I mean, as I said, I don’t understand the liability Mr.
Martinez had to that firm. The liability would be to the firm. I
don’t understand what that liability would be, which explains
partly why they held out for having him dismissed with
prejudice. . . . .
“And then they go after the property in Corona Del Mar,
Goldenrod. And certainly prior counsel had a theory whereby—
and she was pretty sure of herself, and she may be right. You
think she was right all along. She may have been right, but the
judge didn’t buy it, and that happens. It happens when you get
involved in lawsuits, and there were, you know, title companies
and whatever.
“And everything was known up front. Everything was
known up front. I read through the emails, and I think the day
before the settlement, they had an email from the title company
that told—. . . . [¶] [Mendoza’s counsel]—you know, telling her
to pound sand; they’re referring it to outside counsel for
litigation. And knowing that, the plaintiff went ahead with the
deal. That’s the deal. And, frankly, it’s sort of reflected in the
merits of the underlying case.
“It would not be fair, as I understand it, to add Mr.
Martinez back into the case after there was a negotiated
14
settlement whereby he was dismissed with prejudice, and where I
feel that negotiated settlement reflected the merits of the
underlying case.
“So I’ve never heard of an alter ego case where you bring
someone in who has been dismissed with prejudice, especially
here where it reflects ongoing extensive negotiations.”
Later, counsel for Mendoza asked to address the
relationship between RBD, Inc. and RBD, LLC. The court
responded, “Yeah, but I don’t see—that’s only important if there
was some fraud here. If he emptied these corporations with the
intent to deprive Ms. Mendoza of the ability to satisfy the
judgment, and you know, I don’t see that. There were six months
whereby Ms. Mendoza could have gotten to the entity and tried to
satisfy it, but she didn’t.”
Following further discussion, the court stated: “But, you
know, what makes this case so unusual is that the lead
defendant, the person who has the ability to go out and make
money, was dismissed with prejudice. That’s what makes it so
odd and, frankly, makes it so difficult to bring him back into the
case when the parties reached a negotiated settlement to the
contrary. [¶] You know, I don’t know what more I can say.”
Last, the court stated, “I’ve seen these alter ego cases, and
we see them actually more than you might realize after verdicts.
And the ones that I have are the ones where there’s been, you
know, some degree of lying, cheating, stealing, and equity
demands that we disregard this entity so the victim can be made
whole.
“But, again, what makes this—I hate to say it over and
over again because I’ve never seen it. This a case where the
15
person you want to bring back into the case has been, after
extensive negotiation, dismissed with prejudice.
“I’ve just never seen that. So I mean, it’s an interesting
case, no question about that. But I don’t see it. Frankly, I don’t
think it’s a close case. I just don’t think it’s a close case. He was
dismissed with prejudice, and now I see why. [¶] . . . [¶]
“Okay. Look guys, that’s my decision.”
The court’s minute order dated the same day states, in
relevant part: “The Court will not add Joey Martinez into this
action.”
IV. Motion for reconsideration
Mendoza filed a motion for reconsideration pursuant to
Code of Civil Procedure section 1008, or in the alternative, to
obtain a ruling on her motion to amend. She noted that the
court’s April 20, 2021 minute order addressed her request to add
Martinez as a judgment debtor, but not RBD, Inc.
On June 24, 2021, the court held a hearing on Mendoza’s
motion, but the transcript of the hearing is not part of the record.
That same day, the court issued a minute order denying the
motion for reconsideration and stating that the “Order on
Plaintiff’s [m]otion to amend judgment to add alter egos Joey
Martinez and [RBD, Inc.] to judgment is signed, filed and
incorporated herein.” It also signed and filed the order denying
Mendoza’s motion to add Martinez and RBD, Inc. as judgment
debtors. On June 28, 2021, the court clerk served a copy of the
June 24, 2021 minute order on the parties.
Mendoza filed a notice of appeal on August 13, 2021.
16
DISCUSSION
Mendoza raises several challenges to the trial court’s
decision denying her motion to amend the judgment. First, she
contends the court erred by weighing the merits of her claims
against Martinez and her subsequent dismissal of Martinez with
prejudice. Second, she contends the court erred by requiring her
to show evidence of fraud or wrongful intent by Martinez or RBD,
LLC. Last, she contends the court erred by failing to consider the
evidence of unity of interest between RBD, LLC and RBD, Inc.
Martinez and RBD, Inc. (hereinafter respondents) contend
that Mendoza’s appeal is untimely, that the trial court’s order is
supported by substantial evidence, and that the court did not
commit legal error. They also contend Mendoza forfeited and
waived her appeal.
I. Timeliness of appeal
Because the timeliness of Mendoza’s appeal is a
jurisdictional issue, we address that issue first. (See Drum v.
Superior Court (2006) 139 Cal.App.4th 845, 849.)
Mendoza’s notice of appeal states that she appeals from an
order entered on June 24, 2021. As noted earlier, the court
issued two orders on that date: a minute order denying
Mendoza’s motion for reconsideration and denying her motion to
amend the judgment, and a separate signed order denying her
motion to amend the judgment. According to respondents,
Mendoza’s notice of appeal concerns only the denial of her motion
for reconsideration, because the court’s April 20, 2021 minute
order had already denied Mendoza’s motion to amend the
17
judgment.3 Respondents further contend that Mendoza’s notice
of appeal is untimely under California Rules of Court, rule
8.108(e), which concerns the time to appeal where a party “serves
and files a valid motion to reconsider” an appealable order under
Code of Civil Procedure section 1008, subdivision (a). (Cal. Rules
of Court, rule 8.108(e).)
We conclude that Mendoza’s appeal is timely. If we
construe Mendoza’s notice of appeal as an appeal from the June
24, 2021 order denying her motion to amend the judgment—the
most logical conclusion given the sequence of events in the trial
court—her notice of appeal was timely.4 That is because the
shortest possible deadline for Mendoza to have appealed that
order was 60 days from June 24, 2021, and she filed her notice of
appeal on August 13, 2021. (See Cal. Rules of Court, rule
8.104(a)(1).)
3 Mendoza counters that the April 20, 2021 minute order
denied her request to add Martinez as a judgment debtor, but left
unresolved her request to add RBD, Inc. as a judgment debtor.
She thus contends that her subsequent motion, although styled
in part as a motion for reconsideration, was in effect a motion to
obtain a final ruling. She further argues that the resulting June
24, 2021 order should be treated as the court’s initial order on her
motion to amend the judgment, not an order denying her motion
for reconsideration. We need not address this argument because,
as discussed herein, we find the appeal timely even with respect
to the April 20, 2021 order.
4 The parties do not dispute that an order denying a motion
to amend a judgment to include alter ego judgment debtors is an
appealable order. (See Misik v. D’Arco (2011) 197 Cal.App.4th
1065, 1071 [order denying motion to amend judgment to add alter
ego judgment debtor is appealable].)
18
But even if we assume, as respondents contend, that the
court had already denied Mendoza’s motion to amend the
judgment on April 20, 2021, and that the court’s June 24, 2021
order only concerned her motion for reconsideration, we would
still conclude that her appeal is timely. We take several steps to
reach that conclusion.
The order denying Mendoza’s motion for reconsideration
was not a separately appealable order. (See Code Civ. Proc.,
§ 1008, subd. (g) [“An order denying a motion for reconsideration
made pursuant to subdivision (a) is not separately appealable.”];
Chango Coffee, Inc. v. Applied Underwriters, Inc. (2017) 11
Cal.App.5th 1247, 1254 [“we conclude an order denying a
renewed motion under [Code of Civil Procedure] section 1008,
subdivision (b) is nonappealable”].) Nonetheless, we must
liberally construe a notice of appeal in favor of its sufficiency if
doing so would not prejudice a respondent. (See Walker v. Los
Angeles County Metropolitan Transportation Authority (2005) 35
Cal.4th 15, 20 [construing notice of appeal from nonappealable
post-judgment order as encompassing underlying appealable
judgment].)
We find that respondents would not suffer prejudice if we
construed Mendoza’s notice of appeal as encompassing the court’s
April 20, 2021 minute order denying Mendoza’s motion to amend
the judgment. Indeed, the court’s June 24, 2021 minute order
clearly addressed Mendoza’s motion to amend the judgment,
stating that the “[o]rder on Plaintiff’s [m]otion to amend
judgment to add alter egos Joey Martinez and [RBD, Inc.] to
judgment is signed, filed, and incorporated herein . . . .” Also, the
parties have focused their briefs on the merits of the court’s
ruling denying Mendoza’s motion to amend the judgment.
19
Furthermore, Mendoza’s notice of appeal is timely with
respect to the April 20, 2021 minute order. The record fails to
indicate that either the court clerk or a party served a “Notice of
Entry” of judgment or a filed-endorsed copy of the April 20, 2021
minute order, which would have triggered a 60-day deadline to
file a notice of appeal. (See Cal. Rules of Court, rule
8.104(a)(1)(A)–(B).) Mendoza therefore had 180 days to appeal
the court’s April 20, 2021 order, i.e., until October 18, 2021.5 (See
Cal. Rules of Court, rule 8.104(a)(1)(C).) Hence, her August 13,
2021 notice of appeal was timely.6
II. Applicable law and standard of review
“The trial court is authorized to amend a judgment to add
judgment debtors. [Citation.] The judgment may be amended to
add additional judgment debtors on the ground that a person or
entity is the alter ego of the original judgment debtor. [Citation]
5 180 days from April 20, 2021, was October 17, 2021. That
was a Sunday, so Mendoza had until the following day to appeal.
(See Code Civ. Proc., §§ 10, 12.)
6 Respondents’ reliance on California Rules of Court, rule
8.108(e) is misplaced. That rule extends the time to appeal if
“any party serves and files a valid motion to reconsider an
appealable order” under Code of Civil Procedure section 1008,
subdivision (a). (See Cal. Rules of Court, rule 8.108(e).) But
California Rules of Court, rule 8.108 “operates only to extend the
time to appeal otherwise prescribed in rule 8.104(a); it does not
shorten the time to appeal.” (Cal. Rules of Court, rule 8.108(a).)
Because we have concluded that Mendoza’s appeal is timely
under California Rules of Court, rule 8.104(a), we need not reach
respondents’ argument regarding the timeliness of Mendoza’s
appeal under California Rules of Court, rule 8.108(e).
20
It 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. [Citation.] The
decision to grant an amendment lies in the sound discretion of
the trial court. [Citation.] Great liberality is allowed in granting
such amendments.” (Relentless Air Racing, LLC v. Airborne
Turbine Ltd. Partnership (2013) 222 Cal.App.4th 811, 815
(Relentless).)
To prevail in a motion to add judgment debtors, the moving
party must show that “(1) the parties to be added as judgment
debtors had control of the underlying litigation and were
virtually represented in that proceeding; (2) there is such a unity
of interest and ownership that the separate personalities of the
entity and the owners no longer exist; and (3) an inequitable
result will follow if the acts are treated as those of the entity
alone.” (Relentless, supra, 222 Cal.App.4th at pp. 815–816.)
“Factors for the court to consider include identical equitable
ownership, comingling of funds, use of the same offices, disregard
of formalities, and use of one entity as a mere shell for the affairs
of another.” (Butler America, LLC v. Aviation Assurance Co.,
LLC (2020) 55 Cal.App.5th 136, 146 (Butler).) “An important
factor in determining alter ego liability is that a corporate entity
is so undercapitalized that it is likely to have no sufficient assets
to meet its debts.” (Ibid.) “When considering the application of
the alter ego doctrine to a particular situation, it must be
remembered that it is an equitable doctrine and, though courts
have justified its application through consideration of many
factors, their basic motivation is to assure a just and equitable
result.” (Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d
39, 48.)
21
“The decision to grant an amendment to add additional
judgment debtors is reviewed for an abuse of discretion.” (Butler,
supra, 55 Cal.App.5th at p. 146.) Even that deferential standard
of review, however, requires that we examine whether the court
applied the correct legal principles in exercising its discretion.
(See Sargon Enterprises, Inc. v. University of Southern California
(2012) 55 Cal.4th 747, 773 [“ ‘Action that transgresses the
confines of the applicable principles of law is outside the scope of
discretion and we call such action an “abuse” of discretion.’ ”].)
Respondents contend that we should review the trial
court’s denial of Mendoza’s motion to amend the judgment for
substantial evidence. (See, e.g., Misik v. D’Arco, supra, 197
Cal.App.4th at p. 1072 [noting that existence of alter ego is
“ ‘ordinarily a question of fact’ ” and that “ ‘conclusion of the trier
of fact will not be disturbed if it is supported by substantial
evidence’ ”]; Alexander v. Abbey of the Chimes, supra, 104
Cal.App.3d at p. 47 [because determination of alter ego status “is
primarily one for the trial court and is not a question of law, the
conclusion of the trier of fact will not be disturbed if it is
supported by substantial evidence”].) However, Mendoza does
not contend the trial court’s order lacks adequate factual support.
Rather, she contends the court misapplied the controlling legal
principles for determining whether to amend a judgment to
include an alter ego debtor. Thus, once we are satisfied that the
court applied the correct legal principles, we examine its ultimate
determination for an abuse of discretion. (See Relentless, supra,
222 Cal.App.4th at p. 815.)
Finally, Mendoza’s appeal is governed by familiar
principles of appellate review. “ ‘A judgment or order of the lower
court is presumed correct. All intendments and presumptions are
22
indulged to support it on matters as to which the record is silent,
and error must be affirmatively shown.’ ” (Denham v. Superior
Court (1970) 2 Cal.3d 557, 564, italics omitted.) “We presume the
trial court followed applicable law.” (Cahill v. San Diego Gas &
Electric Co. (2011) 194 Cal.App.4th 939, 956.)
III. The trial court did not misapply the alter ego
doctrine
Mendoza argues that the trial court misapplied the
controlling legal principles for determining whether to include
Martinez as an alter ego judgment debtor. According to
Mendoza, the court erred by weighing the merits of her claims
against Martinez and by relying on her dismissal of Martinez
with prejudice. She further contends the court erred by requiring
her to show evidence of fraud or wrongful intent by Martinez or
RBD, LLC. As discussed below, we reject her arguments.
Regarding her first contention, Mendoza focuses our
attention on statements by the trial court during the evidentiary
hearing suggesting that it believed Mendoza’s underlying claims
against Martinez lacked merit. Mendoza emphasizes that the
trial court did not have all the relevant evidence before it to
evaluate the merits of her claims against Martinez, and that it
should not have looked beyond the terms of the stipulated
judgment to determine if it reflected a “ ‘fair’ resolution of the
case.” As Mendoza puts it, “when a case ends via a stipulated
judgment, the case is over. There is no more inquiry into the
underlying facts.”
Before analyzing her argument, we observe that Mendoza’s
heavy reliance on the trial court’s statements during the
evidentiary hearing is at odds with the settled principle that “oral
remarks or comments made by a trial court may not be used to
23
attack a subsequently entered order or judgment.” (Transport
Ins. Co. v. TIG Ins. Co. (2012) 202 Cal.App.4th 984, 1009; see also
Farwell v. Sunset Mesa Property Owners Assn., Inc. (2008) 163
Cal.App.4th 1545, 1552 [“Opinions voiced by the trial court are to
be distinguished from the trial court’s decision; the opinions
voiced by the trial court do not furnish any basis for an attack on
an otherwise correct decision.”].) Thus, it is the trial court’s final
order, not its statements at the evidentiary hearing, that is the
subject of our review. Nevertheless, in the interests of justice we
consider Mendoza’s arguments.
We agree with Mendoza that Martinez’s lack of personal
liability on the underlying claims would not have been a
sufficient ground to deny Mendoza’s motion to amend the
judgment to include him as an alter ego debtor. (See, e.g., Favila
v. Pasquarella (2021) 65 Cal.App.5th 934, 943–944 [rejecting
argument that it was “unfair” to add defendant as alter ego
judgment debtor after she obtained summary judgment in her
favor]; Danko v. O’Reilly (2014) 232 Cal.App.4th 732, 749–752
[amending judgment to include alter ego debtor “was unrelated to
the liability determinations made at trial,” and thus not barred
by directed verdict in favor of defendant]; Wells Fargo Bank, N.A.
v. Weinberg (2014) 227 Cal.App.4th 1, 6–8 [trial court’s
sustaining of demurrer in favor of defendant did not bar it from
later adding defendant as alter ego judgment debtor].)
But based on our review of the transcript from the
evidentiary hearing, we are not persuaded that this was a basis
for the trial court’s ruling. Rather, we view the court’s ruling as
based primarily on its conclusion that because Mendoza
voluntarily agreed to dismiss Martinez from the lawsuit with
prejudice and to obtain a judgment against only RBD, LLC,
24
denying her the ability to enforce the judgment against Martinez
would not lead to an inequitable result. We are not convinced
that the trial court’s ruling was outside the bounds of its wide
discretion here. (See Zoran Corp. v. Chen (2010) 185 Cal.App.4th
799, 811 [alter ego doctrine “ ‘is essentially an equitable one and
for that reason is particularly within the province of the trial
court’ ”]; Alexander v. Abbey of the Chimes, supra, 104 Cal.App.3d
at p. 46 [“the conditions under which the corporate entity may be
disregarded vary according to the circumstances in each case and
the matter is particularly within the province of the trial court”].)
That is especially so given the evidence that Mendoza was
represented by counsel during the lawsuit, including during
negotiations over the stipulated judgment; the absence of
evidence that Mendoza was prevented from evaluating the
finances and assets of Martinez or RBD, LLC prior to agreeing to
the stipulated judgment; the evidence that Mendoza and
Martinez both understood that she would enforce the stipulated
judgment against the Goldenrod property, not Martinez; and the
evidence that Mendoza understood, prior to dismissing Martinez
with prejudice, that the title company disputed her ability to
enforce the judgment against the Goldenrod property—in other
words, she clearly understood the risks associated with that
strategy.
The cases cited by Mendoza regarding the effect of a
stipulated judgment do not warrant a different conclusion. If
anything, they suggest that Mendoza should be held to the terms
of the stipulated judgment, which provided for Martinez’s
dismissal with prejudice. (See California State Auto. Assn. Inter-
Ins. Bureau v. Superior Court (1990) 50 Cal.3d 658, 663
[“stipulated judgments bear the earmarks both of judgments
25
entered after litigation and contracts derived through mutual
agreement”]; A. J. Industries, Inc. v. Ver Halen (1977) 75
Cal.App.3d 751, 759 [“A settlement contract has the attributes of
a judgment in that it serves to bar reopening of the issues
settled.”].) Mendoza herself appears to recognize as much,
stating that the “policy in California is to uphold settlement
agreements and stipulated judgments, not to systematically
question their validity during judgment enforcement.” Upholding
the stipulated judgment is precisely what the trial court did here:
It disallowed Mendoza’s attempt to add Martinez as a judgment
debtor contrary to her earlier agreement to dismiss him from the
action with prejudice.
Mendoza also discusses Butler in support of her argument,
noting that Butler did not rely on whether the settlement
agreement at issue in that case was “ ‘fully bargained’ ” by the
parties. We find Butler distinguishable. In Butler, the parties
settled a lawsuit by agreeing that the defendant would pay the
plaintiff the greater of a fixed sum or a percentage of defendant’s
“ ‘revenue and income interest’ ” in a contract relating to the
management and leasing of jet engines. (Butler, supra, 55
Cal.App.5th at p. 140.) But the defendant did not disclose during
negotiations over the settlement that a separate corporate entity,
not the defendant, was a party to the contract; that there was no
written agreement regarding the income the defendant would
receive under the contract; and that for a year after the contract
was made it generated no income for the defendant. (Id. at p.
141.) After the defendant ceased making payments pursuant to
the settlement agreement, the trial court entered a stipulated
judgment in favor of the plaintiff as required by the terms of the
settlement agreement. (Id. at p. 140.) The trial court thereafter
26
granted the plaintiff’s motion to amend the judgment to add alter
ego debtors. (Id. at p. 139.)
That neither the trial court nor the Court of Appeal in
Butler relied on the bargained-for nature of the underlying
settlement agreement makes sense in the context of that case. In
affirming the amendment of the judgment to include alter ego
debtors, the Court of Appeal agreed with the trial court’s ruling
that the defendant’s fraudulent concealment relating to the jet
engine contract rendered the settlement agreement’s release
unenforceable. (Butler, supra, 55 Cal.App.5th at pp. 143–145.)
As the Court of Appeal emphasized, the defendant “knew the
facts, but failed to disclose them. The entire transaction reeks of
fraud on [defendant’s] part.” (Id. at p. 144.)
By contrast, nothing in the record here suggests any
similar concealment regarding the parties’ negotiation of the
stipulated judgment. To the contrary, the evidence before the
trial court demonstrated that Mendoza clearly understood the
risks associated with dismissing Martinez with prejudice and
instead seeking to enforce the judgment against RBD, LLC, and
in particular, the Goldenrod property.
For a similar reason, we disagree with Mendoza that the
trial court required her to show fraud or wrongful intent to
prevail in her motion to amend the judgment. In support of her
argument, Mendoza focuses our attention on remarks by the trial
court during the evidentiary hearing noting the absence of
evidence of fraud, concealment, or other bad faith conduct by
Martinez or RBD, LLC aimed at avoiding satisfaction of the
judgment or misleading Mendoza about their finances or assets.
It is correct, as Mendoza points out, that the “inequitable
result” prong of the alter ego test does not require the party
27
seeking to amend a judgment to demonstrate fraud or bad faith.
(See Triyar Hospitality Management, LLC v. WSI (II)–WHP, LLC
(2020) 57 Cal.App.5th 636, 642–643 (Triyar) [rejecting argument
that “there must be some conduct amounting to bad faith that
makes it inequitable to hide behind the corporate form”];
Relentless, supra, 222 Cal.App.4th at p. 816 [“The trial court
erred in requiring Relentless to prove that the Fultons acted with
wrongful intent.”].)
But again, based on our review of the transcript from the
evidentiary hearing we are not persuaded that the trial court
required Mendoza to show fraud or wrongful intent to prevail in
her motion to amend the judgment. Rather, we understand the
trial court’s statements as reflecting its view that because
Mendoza was not misled during her negotiations over the
stipulated judgment, and understood the risks associated with
her strategy of enforcing the judgment against RBD, LLC, and
particularly the Goldenrod property, there was nothing
inequitable about her later inability to enforce the judgment
against RBD, LLC. (See Sonora Diamond Corp. v. Superior
Court (2000) 83 Cal.App.4th 523, 539 [“[d]ifficulty in enforcing a
judgment or collecting a debt does not satisfy” the inequitable
result prong of alter ego test].) Mendoza’s reliance on Triyar and
Relentless is thus misplaced. Neither case involved the unique
circumstances presented here, namely, a plaintiff’s attempt to
amend a judgment to add a party as an alter ego debtor after
having negotiated a stipulated judgment dismissing that very
same party with prejudice.7
7 After oral argument, Mendoza notified us of the decision in
JPV 1 L.P. v. Dan Koetting (Feb. 7, 2023, A163491) __
28
In sum, the trial court did not abuse its discretion in
denying Mendoza’s motion to amend the judgment to include
Martinez as an alter ego debtor.
IV. Reversal is not warranted due to the trial court’s
purported failure to consider unity of interest
Mendoza contends the trial court erred by failing to
consider the evidence of unity of interest between RBD, LLC and
RBD, Inc. She also argues that such evidence showed that RBD,
Inc. “was nothing more than a mere continuation of RBD, LLC.”
We need not reach these arguments. As noted above, a
party seeking to amend a judgment to add an alter ego debtor
must establish three elements, and unity of interest is only one of
those elements. (See Triyar, supra, 57 Cal.App.5th at p. 641;
Relentless, supra, 222 Cal.App.4th at pp. 815–816.) Hence, even
if the trial court erred regarding its determination of the unity of
interest between RBD, LLC and RBD, Inc., Mendoza would still
need to demonstrate that the trial court erred in its
determination of the other alter ego elements as applied to RBD,
Inc. (See Denham, supra, 2 Cal.3d at p. 564 [“order of the lower
court is presumed correct” and “error must be affirmatively
shown”]; Butler, supra, 55 Cal.App.5th at p. 146 [“In addition to
showing a unity of ownership, the moving party must show an
inequitable result will follow if the acts are treated as those of the
entity alone.”].)
Cal.App.5th __ [2023 WL 1791966]. (See Cal. Rules of Court, rule
8.254.) We are not persuaded that it applies here. Like Triyar
and Relentless, it did not involve a plaintiff’s attempt to add a
party as an alter ego judgment debtor after having voluntarily
dismissed that same party with prejudice.
29
Mendoza’s briefs address only the unity of interest prong of
the alter ego test regarding RBD, Inc. Because Mendoza has
failed to identify any error regarding the other prongs, she cannot
demonstrate reversible error regarding the trial court’s decision
to deny amendment of the judgment to include RBD, Inc. as an
alter ego debtor.8 (See Soule v. General Motors Corp. (1994) 8
Cal.4th 548, 574 [error “does not warrant reversal unless there is
a reasonable probability that in the absence of the error, a result
more favorable to the appealing party would have been
reached”].)
V. Sanctions are not warranted
Respondents contend that Mendoza forfeited her appeal by
filing an opening brief that does not describe the evidence
supporting the trial court’s order; by filing appendices that
included the reporter’s transcripts from the evidentiary hearing
but did not include her notice of appeal; and by failing to include
in the record on appeal the transcript from the hearing on her
motion for reconsideration. Respondents further argue that
Mendoza waived her appeal by agreeing in the stipulated
judgment that “[e]ach party hereby expressly waives any and all
appellate rights.” Because we have concluded that Mendoza’s
8 Mendoza’s briefs also fail to identify any error regarding
the trial court’s determination of the first and second prongs of
the alter ego test regarding Martinez. Although we have already
rejected Mendoza’s arguments regarding the trial court’s denial
of her motion to amend the judgment to include Martinez as an
alter ego debtor, we note that this is an additional ground to
affirm the trial court’s order.
30
arguments do not warrant reversal, we need not reach these
contentions.
Citing these same arguments, and the claim that
Mendoza’s appeal was untimely, respondents’ brief also requests
sanctions against Mendoza. We deny the request because
respondents failed to file a separate sanctions motion.9 (See Cal.
Rules of Court, rule 8.276(b)(1); Cowan v. Krayzman (2011) 196
Cal.App.4th 907, 919 [“Sanctions cannot be sought in the
respondent’s brief.”].)
9 Although we deny respondents’ sanctions request, we
remind Mendoza that a notice of appeal is a required component
of an appellant’s appendix. (See Cal. Rules of Court, rule
8.124(b)(1)(A) [requiring appellant’s appendix to include “[a]ll
items required by rule 8.122(b)(1)”]; Cal. Rules of Court, rule
8.122(b)(1)(A) [requiring clerk’s transcript to include notice of
appeal].)
31
DISPOSITION
The trial court’s order denying Mendoza’s motion to amend
the judgment is affirmed. The request of Martinez and RBD, Inc.
for sanctions is denied. Martinez and RBD, Inc. shall recover
their costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL
REPORTS
EDMON, P. J.
We concur:
LAVIN, J.
EGERTON, J.
32