FN Logistics v. The Compliance Firm CA2/1

Filed 5/22/23 FN Logistics v. The Compliance Firm CA2/1
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
FN LOGISTICS, LLC, B321832
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. 22STCV01443)
v.
THE COMPLIANCE FIRM LLC,
Defendant;
BRITTANY A. STILLWELL,
Movant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County, Mel Red Recana, Judge. Affirmed.
Brittany A. Stillwell, in pro. per., for Movant and
Appellant.
Nixon Peabody LLP, Staci Jennifer Trager and Dale A.
Hudson for Plaintiff and Respondent.
____________________
In 2020, clothing distributor and plaintiff FN Logistics,
LLC (FNL) hired defendant The Compliance Firm LLC, doing
business as Compliant Care Staffing (TCF), to provide onsite
COVID-19 testing for FNL’s warehouse employees. Dissatisfied
with TCF’s performance, FNL terminated the parties’
relationship and, in April 2021, sued in United States District
Court to recoup money paid to TCF. (FN Logistics, LLC v. The
Compliance Firm LLC (C.D.Cal. 2021, No. 2:21-cv-3312 GW-
MARx) 2021 WL 1511739 (the First Federal Action).)
In August 2021, TCF’s sole member, appellant Brittany A.
Stillwell, filed a complaint in the same federal court alleging
among other things that the First Federal Action lacked subject
matter jurisdiction. (Stillwell v. Fashion Nova, LLC (C.D.Cal.
2021, No. 2:21-cv-07040-GW-MARx) 2021 WL 6496836 (the
Second Federal Action).) FNL then dismissed the First Federal
Action without prejudice and, in January 2022, refiled its
complaint in the Los Angeles County Superior Court, which is the
action underlying this appeal.
The trial court entered default against TCF after it did not
appear in the action. FNL requested entry of default judgment
against TCF in the amount of $363,842.39, representing breach
of contract damages totaling $363,260.35 and costs of $582.04.
While FNL’s request for a default judgment was pending,
Stillwell sought to intervene in the action pursuant to Code of
Civil Procedure section 387.1 The trial court denied Stillwell’s
motion for leave to file an answer and cross-complaint in
1 All unspecified statutory references are to the Code of
Civil Procedure.
2
intervention and entered default judgment against TCF as
requested.
Stillwell now appeals from the trial court’s order denying
her leave to intervene. She argues she is entitled to intervene as
a matter of right because she is a necessary party and because
disposition of the action without her would impair or impede her
interests. She further argues the trial court abused its discretion
in denying her leave for permissive intervention. At their core,
Stillwell’s arguments for intervention seek to bootstrap her
ownership of TCF into a basis to defend its interests despite
Stillwell not being an attorney. As the law does not permit this,
we reject her arguments and affirm.
BACKGROUND
A. Factual Summary
FNL operates a warehouse in Santa Fe Springs, California,
from which it distributes clothing sold by the retail company
Fashion Nova, LLC (Fashion Nova). In November 2020, FNL
sought to provide COVID-19 testing services for its warehouse
employees. According to FNL’s complaint, TCF purported to
provide healthcare consulting and “affordable and efficient onsite
C[OVID]-19 testing.” FNL contracted with TCF to provide
COVID-19 testing. After some time, FNL determined TCF was
“unqualified and unauthorized to provide C[OVID]-19 testing at
FNL’s facility.” On January 6, 2021, FNL terminated the parties’
relationship.
B. Procedural History
1. The Federal Matters
On April 16, 2021, FNL filed the First Federal Action. The
complaint alleged Stillwell was the sole member of TCF and
3
resided in Nevada, purportedly giving rise to diversity
jurisdiction in the district court. FNL did not name Stillwell as a
defendant and did not otherwise refer to Stillwell by name in its
complaint. FNL asserted 13 claims, including rescission,
conversion, breach of fiduciary duty, violation of Business and
Professions Code section 17200 et seq., misrepresentation,
professional negligence, breach of contract, and breach of the
implied covenant of good faith and fair dealing against TCF. TCF
did not appear in the matter, and on July 15, 2021, the clerk
entered a default judgment against TCF in the amount of
$363,260.35.
On August 31, 2021, Stillwell, appearing in pro per, filed
the Second Federal Action naming as defendants FNL, Fashion
Nova, Richard D. Saghian (FNL’s and Fashion Nova’s chief
executive officer), Erica A. Meierhans (Fashion Nova’s general
counsel and chief compliance officer), Nixon Peabody LLP and
Nixon Peabody partner Staci J. Riordan (FNL’s counsel of record
in the First Federal Action), Intrivo Diagnostics, Inc. (Intrivo),
and two of Intrivo’s individual co-owners.2 Stillwell alleged the
case was a “quasi-whistleblower action,” and, in a 479-page
complaint containing over 1,300 numbered paragraphs, asserted
24 causes of action, including forced labor, trafficking, breach of
contract, breach of fiduciary duty, fraud, civil racketeering,
professional negligence, interference with prospective economic
advantage, infliction of emotional distress, and declaratory relief.
Stillwell’s complaint also alleged that TCF, FNL, and Fashion
Nova entered into several agreements including a nurse staffing
2FNL provided Intrivo with 8,320 unused COVID-19
antigen tests that it purchased from TCF.
4
agreement and an employee leasing agreement, under which
“[Stillwell]’s company, [TCF] leased employees to Fashion Nova
and was eventually hired to provide COVID-19 testing to Fashion
Nova’s nearly 10,000 employees, contractors, and vendors.”
Fashion Nova also paid $392,448 to TCF for 12,800 COVID-19
antigen tests, and “[i]n January 2021, Fashion Nova owed [TCF]
over $500,000.00.” Stillwell further alleged that she had
discovered discrepancies and errors in FNL’s and Fashion Nova’s
classification of employees, reporting of COVID-19 positive cases
among its employees, and reporting of Cal/OSHA recordable
workplace injuries.
On October 1, 2021, FNL, Fashion Nova, Nixon Peabody
LLP, Saghian, Meierhans, and Riordan (collectively, Defendant
Movants) filed a motion to dismiss the Second Federal Action
under Federal Rules of Civil Procedure, rules 8(a)(2), 12(b)(1),
and 12(b)(6), and a special motion to strike under section 425.16.
In its tentative ruling, the district court concluded the 20th and
21st causes of action for declaratory relief relating to whether the
district court in the First Federal Action had diversity
jurisdiction arose directly from the First Federal Action, and thus
were likely protected by the litigation privilege (Civ. Code,
§ 47(b)). It ordered the parties to meet and confer on that issue.
It also indicated it would likely dismiss all other causes of action
in Stillwell’s complaint with leave to amend because the “size and
unwieldiness” of the complaint violated rule 8(a)(2) of the Federal
Rules of Civil Procedure, which requires “a short and plain
statement of the claim.” (Ibid.)
According to FNL, following the meet and confer it agreed
to set aside the default judgment and dismiss TCF without
5
prejudice from the First Federal Action, conditioned on being able
to refile its complaint in state court.
On November 18, 2021, the district court granted in part
the special motion to strike, striking the 20th and 21st causes of
action, and otherwise dismissed the complaint with leave to
amend.
On December 9, 2021, Stillwell filed a first amended
complaint in the Second Federal Action, alleging seven causes of
action for forced labor (first through third causes of action),
trafficking (fourth cause of action), civil racketeering (fifth and
sixth causes of action), and intentional infliction of emotional
distress (seventh cause of action). Defendant Movants filed a
motion to dismiss, a special motion to strike, and a motion for
attorney fees under section 425.16, subdivision (c).
On March 30, 2022, the district court issued an order and
judgment in which it found that Stillwell failed to state a claim
pursuant to Federal Rules of Civil Procedure, rule 12(b)(6) for the
first through sixth causes of action and granted Defendant
Movants’ motion to dismiss those claims with prejudice. It then
declined to exercise supplemental jurisdiction over the seventh
cause of action for intentional infliction of emotional distress, and
dismissed that claim without prejudice. The district court also
granted Defendant Movants’ motion for attorney fees pursuant to
section 425.16, subdivision (c).
Stillwell appealed the judgment in the Second Federal
Action to the Ninth Circuit. On March 22, 2023, one day after
Stillwell filed her reply brief in this appeal, the Ninth Circuit
affirmed the district court’s judgment dismissing and striking
Stillwell’s complaint and amended complaint. (Stillwell v.
6
Fashion Nova, LLC (9th Cir., Mar. 22, 2023, No. 22-55312) 2023
WL 2596823.)3
2. The Superior Court Litigation
On January 12, 2022, FNL filed its complaint in the
superior court. It named only TCF as a defendant. FNL alleged
11 causes of action against TCF, including causes of action for
recission of its agreements with TCF, conversion, declaratory
relief, intentional or negligent misrepresentation, professional
negligence, breach of contract, and breach of the implied
covenant of good faith and fair dealing. Each cause of action
arose out of TCF’s alleged failure to advise that FNL could not
legally store or possess antigen tests and TCF’s efforts to pass off
its costs for building a COVID-19 testing site to FNL. FNL
alleged Stillwell was the only member of TCF and a California
resident. The complaint did not otherwise mention Stillwell by
name, describing the events giving rise to the causes of action as
occurring between Fashion Nova, FNL and TCF, only.
3 The Ninth Circuit held, “In both of the anti-SLAPP
motions, FNL met its initial burden to show that the stricken
allegations and claims attacked allegations it made and positions
it took in earlier-filed litigation, quintessential acts in
furtherance of FNL’s right to petition the courts. [Citation.]
Stillwell could not carry her burden to show a probability of
prevailing on her claims because she could not overcome the
California litigation privilege, which similarly protects
allegations and claims made in court submissions.” (Stillwell v.
Fashion Nova, LLC, supra, 2023 WL 2596823 at p. *1.) The
Ninth Circuit also concluded the district court did not err in
dismissing Stillwell’s claims for forced labor or trafficking as she
failed to allege essential elements relating to such claims. (Id. at
pp. *1-*2.)
7
TCF did not appear in the action, and on March 1, 2022,
the trial court entered default against TCF. On March 30, 2022,
FNL requested that the court enter a default judgment against
TCF in the amount of $363,842.39 for its contractual damages
and costs.4
On May 9, 2022, Stillwell filed a motion for leave to
intervene in the action. She argued she was entitled to intervene
because she had subrogation, property, and liberty interests that
would be affected by the outcome of the action. In particular, she
alleged she had personally guaranteed a loan for TCF in
December 2020 so that it could pay the wages of employees it had
leased to Fashion Nova and FNL; that a judgment against TCF
could impair her ability to keep her nursing license and be
admitted to the California State Bar and attract clients; and that
“FNL’s false allegations implicate[d] Stillwell’s good name [and]
reputation.” She further argued that she was entitled to
permissive intervention. In her motion, Stillwell asserted that
“TCF’s commercial insurer was still evaluating coverage for
defending the [p]resent [a]ction[, and] . . . she was filing a motion
to intervene in this action, because delays in TCF’s insurance
carrier to defend this suit, has adversely affected her interests.”
Stillwell submitted a proposed answer in intervention and
a proposed cross-complaint in intervention against FNL and
Fashion Nova with her motion. Several general and specific
denials in the proposed answer sought to explain why TCF
should not be held liable on FNL’s causes of action against TCF.
The proposed answer also alleged the litigation privilege barred
4 FNL did not seek to prove up or include damages for any
of its non-contractual causes of action.
8
FNL’s claim against TCF, and that “TCF was a covered entity,”
immune under the Public Readiness and Emergency
Preparedness Act (42 U.S.C. §§ 247d-6d, 247d-6e). Stillwell also
alleged she “incurred damages by reason of [FNL’s] conduct, and
[Stillwell] is entitled to a setoff and/or offset of any amount of
monies owed to [FNL] by way of damages.” In the proposed
cross-complaint, Stillwell alleged causes of action for promissory
fraud (inducing her to bind TCF to a joint venture agreement
with Fashion Nova and FNL), breach of an oral “consultancy”
agreement, breach of fiduciary duty, and negligent infliction of
emotional distress. Neither the proposed answer nor the
proposed cross-complaint included any allegations relating to
loans Stillwell paid, made, or guaranteed for TCF’s or FNL’s
benefit.
Stillwell also filed a declaration in support of her motion.
She stated that, inter alia, she owned TCF, acted as TCF’s agent
when she entered into a joint venture agreement with Fashion
Nova and FNL, occasionally worked as a sole proprietor when
consulting for certain clients, and had guaranteed a loan for TCF
in December 2020 to permit it to pay salaries of “[l]eased
[e]mployees because [Fashion Nova and ]FNL refused to pay TCF
pursuant to . . . agreements between Stillwell, TCF, FNL, and
[Fashion Nova].” She also averred she “ha[d] subrogation,
property, and liberty interests . . . related to the COVID-19
testing endeavors at [Fashion Nova and ]FNL.”
On May 18, 2022, FNL opposed Stillwell’s motion. It
argued Stillwell’s only interest in the action was as the owner
and sole member of TCF, which was in default and had not
retained counsel. Thus, Stillwell merely sought to defend the
9
interests of TCF “through the artifice of purporting to represent
herself in pro per.” (Italics omitted.)
On May 24, 2022, Stillwell filed her reply. In addition to
arguing the court should grant intervention, she argued FNL
never served its opposition on her, and therefore, the trial court
should not consider it. She stated the failure of service “affected
and hindered [her] opportunity to research case law to support
some of her arguments in [her r]eply.”
On June 6, 2022, the trial court granted Stillwell leave to
file a supplemental reply brief five days before the hearing on the
motion, which the court continued to June 13, 2022.5 Thus,
Stillwell’s supplemental reply brief was due June 8, 2022.
Also on June 6, 2022, Stillwell filed a UCC Financing
Statement (UCC 1) with the California Secretary of State, listing
herself as the secured party and TCF as the debtor. She did not
identify any document memorializing the purported loan, but
described the collateral securing the loan as, in sum, all of TCF’s
present and future assets and interests, except for intellectual
property, but including proceeds arising from intellectual
property.
On June 7, 2022, Stillwell filed a UCC Financing
Statement Amendment (UCC 3) with the California Secretary of
State. The UCC 3 form stated the “[c]ollateral [was] amended to
add: Effective December 31, 2020, [c]ollateral consists of
5 The trial court’s order indicates the trial court continued
the hearing on Stillwell’s motion to June 20, 2022. However, the
docket states the hearing was continued to June 13, 2022.
Stillwell does not argue she believed the hearing was scheduled
for June 20, 2022, and acknowledged in her supplemental
declaration that the hearing was set for June 13, 2022.
10
[d]ebtor’s right, title, and interests in, created, or arising out of:
commercial tort claims involving FN Logistics, LLC and Fashion
Nova, LLC; contract rights created or arising out [of] all contracts
between FN Logistics, LLC and Fashion Nova, LLC; rights to
payment of money from FN Logistics, LLC and Fashion Nova,
LLC; and accounts receivable from FN Logistics, LLC and
Fashion Nova, LLC.” She then filed a “notice of lien” in the trial
court, attaching the UCC 1 and UCC 3 forms.
On June 9, 2022, Stillwell filed an untimely supplemental
reply brief and a supplemental declaration. She made two new
arguments not raised in her initial motion. First, she argued
that certain of FNL’s tort allegations “warrant[ ] . . . piercing of
the corporate veil,” under the alter ego doctrine. Second, she
argued she was a secured creditor of TCF. In her supplemental
declaration Stillwell stated, “I am a secured creditor of TCF; and
I have a lien on TCF’s assets, which are the subject of the instant
litigation. TCF owes me over $700,000.00 in compensation for
services, and unpaid loans that I provided to TCF to cover the
wages of the [j]oint [e]mployees TCF shared with [Fashion
Nova]/FNL, and unpaid loans I made to TCF pursuant to TCF
and [Fashion Nova]/FNL’s COVID-19 testing endeavors. My lien
could be jeopardized by the instant proceedings due to FNL’s
pending default judgement [sic] against TCF . . . .”
On June 15, 2022, following argument, the trial court
denied Stillwell’s motion for leave to intervene and issued a 16-
page written order describing the reasons for its ruling. The trial
court observed Stillwell’s supplemental reply was untimely as it
was filed on June 9, 2022 at 9:51 p.m. and had been due on
June 8, 2022. Further, Stillwell improperly raised the alter ego
and secured creditor arguments for the first time and submitted
11
new evidence in her supplemental declaration. The trial court
entered default judgment in favor of FNL against TCF in the
amount of $363,842.39.
Stillwell timely appealed.
DISCUSSION
A. Legal Standard for Intervention and Appellate
Standard of Review
Section 387 allows for both mandatory and permissive
intervention. A nonparty is entitled to mandatory intervention
“if either of the following conditions is satisfied: [¶] (A) A
provision of law confers an unconditional right to intervene. [¶]
(B) The person seeking intervention claims an interest relating to
the property or transaction that is the subject of the action and
that person is so situated that the disposition of the action may
impair or impede that person’s ability to protect that interest,
unless that person’s interest is adequately represented by one or
more of the existing parties.” (§ 387, subd. (d)(1).)
A court may allow permissive intervention “if the person
has an interest in the matter in litigation, or in the success of
either of the parties, or an interest against both.” (§ 387, subd.
(d)(2).) For permissive intervention, the nonparty must satisfy
the following factors: “(1) the proper procedures have been
followed; (2) the nonparty has a direct and immediate interest in
the action; (3) the intervention will not enlarge the issues in the
litigation; and (4) the reasons for the intervention outweigh any
opposition by the parties presently in the action.” (Reliance Ins.
Co. v. Superior Court (2000) 84 Cal.App.4th 383, 386, quoting
Truck Ins. Exchange v. Superior Court (1997) 60 Cal.App.4th 342,
346.)
12
A motion to intervene must be accompanied by a proposed
complaint in intervention or a proposed answer in intervention
that “set[s] forth the grounds upon which the intervention rests;
i.e., the facts which show that intervention is a matter of
right . . . , or the basis for permissive intervention . . . .
[Citation.]” (Weil & Brown, Cal. Practice Guide: Civil Procedure
Before Trial (The Rutter Group 2022) § 2:443.) “The [proposed]
intervenor’s pleading (if it supports [the] plaintiff’s claims or
demands anything adverse to both a plaintiff and a defendant) is
captioned ‘Complaint in Intervention.’ [Citations.] [¶] If the
pleading supports [the] defendant in resisting [the] plaintiff’s
claims, it is captioned ‘Answer in Intervention.’ [Citation.]”
(Ibid.)
“[A]n order denying intervention is appealable because ‘it
operates as a final determination against the intervenor and is
appealable as a final judgment against him. [Citations.]’
[Citations.]” (Royal Indemnity Co. v. United Enterprises, Inc.
(2008) 162 Cal.App.4th 194, 202-203, italics omitted.) We review
an order denying leave to permissibly intervene under the abuse
of discretion standard. (City and County of San Francisco v.
State of California (2005) 128 Cal.App.4th 1030, 1036 [“Because
the decision whether to allow intervention is best determined
based on the particular facts in each case, it is generally left to
the sound discretion of the trial court”].) “Under this standard of
review, a reviewing court should not disturb the trial court’s
exercise of discretion unless it has resulted in a miscarriage of
justice.” (Ibid.)
The standard of review for an order denying mandatory
intervention is unsettled, with some courts suggesting de novo
review and others abuse of discretion. (See Turrieta v. Lyft, Inc.
13
(2021) 69 Cal.App.5th 955, 976 [citing cases], review granted
Jan. 5, 2022, S271721.) As explained below, we conclude that the
denial of mandatory intervention was proper under either
standard and, thus, we need not resolve which standard applies.
B. Stillwell May Not Intervene to Advance Arguments
on Behalf of TCF
“[A] corporation, unlike a natural person, cannot represent
itself before courts of record in propria persona, nor can it
represent itself through a corporate officer, director or other
employee who is not an attorney.” (CLD Construction, Inc. v. City
of San Ramon (2004) 120 Cal.App.4th 1141, 1145; see also Merco
Constr. Engineers, Inc. v. Municipal Court (1978) 21 Cal.3d 724,
727 [“the Legislature cannot constitutionally vest in a person not
licensed to practice law the right to appear in a court of record in
behalf of another person, including a corporate entity”].) Limited
liability companies are no different; an individual representing
any artificial entity created by law “ ‘is clearly engaged in the
practice of law in a representative capacity.’ ” (Caressa Camille,
Inc. v. Alcoholic Beverage Control Appeals Bd. (2002) 99
Cal.App.4th 1094, 1102.)
FNL argues Stillwell does not have any direct interests in
the action but instead “is engaging in a transparent subterfuge,
seeking to defend the interests of defendant TCF, whom she
cannot legally represent, through the artifice of purporting to
represent herself in pro per.” (Italics omitted.) This argument is
persuasive. Among other things, Stillwell acknowledges that she
sought leave to intervene because TCF’s insurer purportedly
delayed issuing its coverage decision. Her proposed answer in
intervention includes denials relating to TCF’s liability, and the
proposed cross-complaint in intervention asserts causes of action
14
to recover monies purportedly owed to TCF. Thus, as we
evaluate Stillwell’s arguments, we remain mindful that we must
focus on whether the proffered interests are hers or TCF’s.
C. Mandatory Intervention
Stillwell’s arguments for mandatory intervention claim
that she meets the criteria for compulsory joinder under section
389, and further that she meets the criteria set forth in section
387. We address each argument in turn.
1. Compulsory Joinder
Stillwell first argues she has an unconditional right to
intervene under section 387, subdivision (d)(1)(A) because she
meets the criteria for compulsory joinder provided in section 389,
subdivision (a)(1), (a)(2)(i), and (a)(2)(ii). As relevant here,
section 389, subdivision (a) states a person “shall be joined as a
party in the action if (1) in his absence complete relief cannot be
accorded among those already parties or (2) he claims an interest
relating to the subject of the action and is so situated that the
disposition of the action in his absence may (i) as a practical
matter impair or impede his ability to protect that interest or
(ii) leave any of the persons already parties subject to a
substantial risk of incurring double, multiple, or otherwise
inconsistent obligations by reason of his claimed interest.”
a. Stillwell is not a necessary party under section
389, subdivision (a)(1).
Stillwell argues the parties cannot obtain complete relief
without her because she was “an active participant in the alleged
tort[s] asserted in the instant action” and “the only person [who]
represent[ed] TCF during all COVID-19 related contract
negotiations.” (Italics omitted.)
15
A plaintiff has a right to frame its causes of action, and
choose the defendant(s) it names and does not name, when filing
a lawsuit. “The ‘complete relief’ clause [of section 389,
subdivision (a)(1)] ‘requires joinder when nonjoinder precludes
the court from effecting relief not in some overall sense, but
between extant parties. In other words, joinder is required only
when the absentee’s nonjoinder precludes the court from
rendering complete justice among those already joined. . . . The
“complete relief” clause does not contemplate other potential
defendants, or other possible remedies.’ [Citation.]”
(Countrywide Home Loans, Inc. v. Superior Court (1999) 69
Cal.App.4th 785, 793-794.)
Here, Stillwell has not demonstrated that the parties to the
litigation—FNL and TCF—could not obtain complete relief
between them without Stillwell’s involvement as a party. FNL
alleged TCF entered into agreements and other business
transactions with it, and that TCF breached those agreements.
FNL sought recovery from TCF and not Stillwell based on those
contracts and transactions; FNL did not allege that Stillwell was
a party to any contract or agreement, nor did it allege Stillwell
individually committed any tort against FNL. Thus, FNL could
(and indeed did) obtain complete relief on its claims without
Stillwell’s involvement. By the time of the hearing on the
intervention motion, FNL had made clear it was seeking a
default prove-up only on the contract claims against TCF such
that Stillwell’s self-professed involvement in any alleged torts
was no longer relevant.
As for TCF, it had defaulted and asserted no counterclaims
or affirmative defenses. While this occurred because TCF was
unrepresented, allowing Stillwell to present argument on behalf
16
of TCF would run afoul of the “long-standing common law rule of
procedure [that] a corporation, unlike a natural person, cannot
represent itself before courts of record in propria persona, nor can
it represent itself through a corporate officer, director or other
employee who is not an attorney.” (CLD Construction, Inc. v. City
of San Ramon, supra, 120 Cal.App.4th at p. 1145.)
Stillwell next suggests complete relief cannot be obtained
without her because TCF is her alter ego. She notes she was the
only person who acted as TCF’s agent in its negotiations and
agreements with FNL and, thus, should have been identified as a
joint tortfeasor in the complaint. Stillwell did not raise this
theory until her untimely supplemental reply brief in the trial
court, and has therefore forfeited it. (Reichardt v. Hoffman
(1997) 52 Cal.App.4th 754, 764.) Even if the issue was not
forfeited, we find it meritless. First, it would be a significant
procedural aberration to permit someone allied with an
unrepresented corporate defendant to intervene to attempt
piercing its corporate veil when the plaintiff has made no such
argument and sought no such relief. Second, Stillwell’s alter ego
allegations went only to FNL’s tort claims, and the default prove-
up brief already on file with the court made clear FNL was
seeking recovery solely on its contract claims and not any of its
tort claims. Third, even if the alter ego claims related to causes
of action still at issue, Stillwell’s allegations that she was the only
member of TCF and negotiated on its behalf did not warrant
piercing the corporate veil. (See, e.g., Carlesimo v. Schwebel
(1948) 87 Cal.App.2d 482, 487.)
In sum, the trial court did not err in finding it could afford
complete relief to the parties within the meaning of section 389,
subdivision (a)(1) in Stillwell’s absence.
17
b. Stillwell is not a necessary party under section
389, subdivision (a)(2)(i).
Stillwell claims for the first time on appeal that she has an
interest in the underlying litigation because “[i]f [she] receives a
favorable judgment in the [instant action], it will directly and
materially affect the [Second Federal Action].” Having not made
this argument in the trial court, it is forfeited here. Basic
fairness lies at the heart of this rule—we “are loath to reverse a
judgment on grounds that the opposing party did not have an
opportunity to argue and the trial court did not have an
opportunity to consider.” (JRS Products, Inc. v. Matsushita
Electric Corp. of America (2004) 115 Cal.App.4th 168, 178.) Even
if we considered this argument, intervention in this matter could
not affect the Second Federal Action as that case no longer exists;
it was dismissed and the dismissal affirmed by the Ninth Circuit.
Stillwell also contends that if she “is not joined, then she
will be unjustly precluded . . . from asserting claims against FNL
and will be forced to pay a judgement [sic] for FNL’s attorney fees
that was fraudulently procured [in the Second Federal Action].”
Stillwell does not provide any explanation as to why she,
individually, cannot assert any remaining claims she has against
FNL in a separate action; she remains free to do so. Nor could
intervention in this action affect an entirely separate federal
matter in which Stillwell had the opportunity to participate, and
which now has a final judgment. We perceive no error in denying
intervention on this ground.
c. Stillwell is not a necessary party under section
389, subdivision (a)(2)(ii).
Section 389, subdivision (a)(2)(ii) requires joinder of a party
if nonjoinder would “leave any of the persons already parties
18
subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations by reason of [her] claimed
interest.” (Ibid.) Stillwell does not suggest that adjudication
without her will result in double, multiple, or inconsistent
obligations between TCF and FNL, nor do we see how she could.
Rather, she argues intervention is the more efficient option as
she would otherwise have to file a complaint against FNL in a
separate action and request to have the matters related and
consolidated. Section 389, however, does not mandate
intervention for such claimed efficiency. Thus, Stillwell has not
demonstrated that she is a necessary party pursuant to section
389, subdivision (a)(2)(ii).6
6 Stillwell argues that dismissal of the action under section
389, subdivision (b)—which permits dismissal if the absent
nonparty is indispensable and cannot be joined—would prejudice
her. Because Stillwell has not demonstrated that she is a
necessary party, and the superior court action was not dismissed
but instead resolved by a default judgment, we need not consider
this argument. However, as part of her argument, Stillwell
contends FNL failed to comply with section 474’s requirements of
naming Doe defendants because FNL purported to sue Does 1
through 10, but did not state “Doe allegations” or substitute
Stillwell for a Doe defendant. FNL has not attempted to replace
a Doe defendant with Stillwell, and thus she has no standing to
make this argument. Further, she does not provide any
authority or argument supporting the proposition that FNL had
an obligation to name her as a Doe defendant.
Stillwell also states “the claims raised in [her] [p]roposed
[c]ross-[c]omplaint are compulsory under [section] 426.30,
because they arise out of the same transactions and occurrences
as the causes of action alleged in the FNL [c]omplaint.” Stillwell
does not provide any reasoned analysis or citations
19
2. Stillwell Does Not Have a Sufficient Interest in the
Property or Transaction that Is the Subject of the
Action to Warrant Mandatory Intervention
Stillwell next argues she had a right to intervene pursuant
to section 387, subdivision (d)(1)(B) because she has interest
relating to the property or transaction that is the subject of the
action and that she is so situated that the disposition of the
action may impair or impede her ability to protect that interest.
(§ 387, subd. (d)(1)(B).) She claims to have property, subrogation,
and liberty interests at issue in the action.
“Not every interest in the outcome of litigation gives to its
possessor the right to intervene in the lawsuit. ‘The interest . . .
must be direct and not consequential, and it must be an interest
which is proper to be determined in the action in which the
intervention is sought.’ [Citation.]” (Continental Vinyl Products
Corp. v. Mead Corp. (1972) 27 Cal.App.3d 543, 549 (Continental
Vinyl).) “An interest is consequential and thus insufficient for
intervention when the action in which intervention is sought does
not directly affect it although the results of the action may
indirectly benefit or harm its owner.” (Id. at p. 550; see People ex
rel. Rominger v. County of Trinity (1983) 147 Cal.App.3d 655, 660
[“the interest in the litigation ‘must be . . . of such a direct and
immediate character that the intervener will either gain or lose
by the direct legal operation and effect of the judgment’ ”].)
“Determination that an interest is direct and not consequential
does not of itself establish the right to intervene. The interest
demonstrating this is so, and we consider this argument forfeited.
(Citizens for Positive Growth & Preservation v. City of
Sacramento (2019) 43 Cal.App.5th 609, 636.)
20
must be one ‘which is proper to be determined in the action in
which the intervention is sought.’ [Citation.] The court ruling
upon the motion to intervene must balance the desirability of
intervention to protect a direct interest against the normal right
of the original parties to the litigation to ‘conduct their lawsuit on
their own terms’ and the potential of unduly extending the
litigation. [Citation.]” (Continental Vinyl, supra, at p. 552.)
a. Property Interests
On appeal, Stillwell does not identify her alleged property
interests at issue in the action. To the extent such interests
concern the economic impact of the litigation on her company
TCF, we observe that, “Absent some special circumstance, a
shareholder has a consequential but not direct interest in the
outcome of litigation involving the corporation.” (Continental
Vinyl, supra, 27 Cal.App.3d at p. 553.) Stillwell’s claim of a
property interest therefore does not support intervention.
b. Subrogation Interests
Stillwell claims she is entitled to intervene in this action as
a result of “subrogation interests”7 arising from a loan she made
to TCF to pay wages of TCF and FNL’s joint employees, a loan to
TCF that she guaranteed for the same purpose, and her payment
7 “ ‘Subrogation is defined as the substitution of another
person in place of the creditor or claimant to whose rights he or
she succeeds in relation to the debt or claim. By undertaking to
indemnify or pay the principal debtor’s obligation to the creditor
or claimant, the “subrogee” is equitably subrogated to the
claimant (or “subrogor”), and succeeds to the subrogor’s rights
against the obligor. . . .’ [Citation.]” (Pulte Home Corp. v. CBR
Electric, Inc. (2020) 50 Cal.App.5th 216, 228, italics omitted.)
21
of TCF’s loans made by other creditors. She also claims providing
or guaranteeing such loans “give[s] rise to her intervention under
Labor Code [section] 3852.” We conclude the trial court did not
err in finding Stillwell’s purported subrogation interests were
insufficient to warrant intervention.
First, we observe neither of Stillwell’s proposed
intervention pleadings includes any allegations relating to any
loans. Nor do they allege that TCF, FNL, or Fashion Nova owe
her any obligation as a result of the loans she claims to have
paid, made, or guaranteed; or that she is entitled to
reimbursement from any party for her part in ensuring payment
of the joint employees’ wages. Also, neither of the proposed
pleadings makes any mention that she is a secured creditor of
TCF or includes allegations aimed at protecting her security
interests. Thus, Stillwell failed to “set forth the grounds upon
which the intervention rests; i.e., the facts which show that
intervention is a matter of right . . . , or the basis for permissive
intervention” in her proposed pleadings (Weil & Brown, Cal.
Practice Guide: Civil Procedure Before Trial, supra, § 2:443), and
the trial court did not err in rejecting proposed pleadings that
bore no relation to the arguments in her motion. Nor do
Stillwell’s motion to intervene or her appellate briefing
adequately describe the nexus between any of her claimed
subrogation interests and a property or transaction at issue in
the action.
Second, “an unsecured creditor of a defendant who will be
rendered unable to pay the debt if he loses a lawsuit is held to
have only a consequential interest not justifying intervention in
the litigation.” (Continental Vinyl, supra, 27 Cal.App.3d at
p. 550.) Thus, that Stillwell made loans to TCF, guaranteed
22
loans others made to TCF, or paid off debts on TCF’s behalf does
not justify intervention.
Third, Stillwell belatedly argued in the trial court that she
was a secured creditor of TCF and submitted a supplemental
declaration reiterating this assertion in a conclusory fashion.
The trial court declined to consider this evidence and argument
because it was untimely and deprived FNL of an opportunity to
respond. We also decline to consider this argument because FNL
did not have an adequate opportunity to respond, and whether
Stillwell is a secured creditor would require this court to make a
factual determination in the first instance without a complete
record. (JRS Products, Inc. v. Matsushita Electric Corp. of
America, supra, 115 Cal.App.4th at p. 178.)
Fourth, having failed to raise any argument under Labor
Code section 3852 in the trial court, Stillwell has forfeited it.
(See Perez v. Grajales (2008) 169 Cal.App.4th 580, 591-592
[“arguments raised for the first time on appeal are generally
deemed forfeited”].) Even if we considered Stillwell’s argument,
Labor Code section 3852 is inapposite. Stillwell argues she is
entitled to intervention because “[a]ny employer who pays, or
becomes obligated to pay compensation . . . may likewise make a
claim or bring an action against the third person.” (Lab. Code,
§ 3852.) However, Labor Code section 3852 (found in Division 4
of the Labor Code, which is entitled “Worker’s Compensation and
Insurance”) concerns “an employer’s right to seek reimbursement
from a third party for workers’ compensation benefits that the
employer is legally obligated to provide.” (Barme v. Wood (1984)
37 Cal.3d 174, 180, italics added; see Weil & Brown, Cal. Practice
Guide: Civil Procedure Before Trial, supra, § 2:410 [“An employer
who has paid workers’ compensation benefits to an employee
23
injured on the job has the right to intervene in the employee’s
lawsuit against the person causing such injury. Having paid
such benefits, the employer has a subrogation interest in the
employee’s cause of action, and any judgment rendered in his
absence might impair that interest”].) Here, Stillwell has never
claimed to pay workers’ compensation benefits; nor is this matter
an employee’s lawsuit against Fashion Nova or FNL. Thus,
Labor Code section 3852 has no application here.
Fifth, turning to Stillwell’s guarantee of a loan to TCF, we
agree with the trial court that Stillwell has not demonstrated a
sufficiently direct interest that would warrant intervention.
Stillwell has not alleged anything about the guarantee in her
proposed intervention pleadings. Nor has she articulated how
the guarantee relates to the property or transaction at issue in
the litigation or how disposition of the action would impair or
impede her ability to protect her interests arising out of that
guarantee. To the extent her interest is that she may become
liable on the guarantee because a judgment against TCF would
deplete its assets to a point where it would default on the loan,
such an interest is consequential and not direct. Thus, this
alleged interest does not satisfy the requirements for mandatory
intervention under section 387, subdivision (d)(1)(B).
c. “Liberty” Interests
Stillwell argues FNL’s complaint “implicitly attacks [her]
professional reputation and competence, despite not mentioning
her name.” Stillwell asserts that she “has an interest in her
professional reputation and FNL’s lawsuit sullies that
reputation.” She asserts that interest is “a liberty interest that
triggered due process protections,” and that “intervention is the
process due here.”
24
The trial court observed that Simpson Redwood Co. v. State
of California (1987) 196 Cal.App.3d 1192 holds harm to
reputation may serve as a basis for intervention if there is a
substantial probability the proposed intervenor’s interests will be
affected. (Id. at p. 1201.) In that case, the proposed intervenor
had worked for decades to acquire redwood forests for donation to
state and federal parks. A lumber company then claimed
ownership of some donated parcels and brought a quiet title
action against the state. (Id. at p. 1196.) The appellate court
noted that, “If property acquired by donation in an effort to create
and preserve a park is privately exploited, the impact upon [the
proposed intervenor]’s reputation might well translate into loss of
future support and contributions.” (Id. at p. 1201.) The court
found intervention appropriate because the intervenor “has
demonstrated a cognizable interest in perpetuating its role and
furthering its avowed policies,” including enforcement of a deed
recital that the donated land be used for state park purposes.
(Ibid.)
Stillwell does not demonstrate a similarly concrete
probability of harm justifying intervention. Her appellate
briefing abandons arguments made below that the superior court
action will impact her nursing license or her ability to become
licensed as a California attorney. She now simply states that
FNL’s allegations sully her professional reputation without any
further specifics or description of how this is so. As Stillwell
acknowledges, FNL does not mention her by name in its
complaint other than one line stating she was the only member of
TCF. That she was the sole owner of the LLC does not
demonstrate or even imply that she was the individual that
committed the acts alleged in the complaint; Stillwell asserts
25
TCF had other employees, and nothing in the record
demonstrates that TCF and Stillwell are synonymous.8
Moreover, as explained above, the purpose of intervention is not
for Stillwell to provide a defense for TCF or protect TCF’s
reputation, but to protect her own interests. Any harm to TCF’s
reputation, potentially affecting its ability to attract clients and
thereby impacting Stillwell’s economic interests as an owner or
employee of TCF is too attenuated to mandate intervention.
(Continental Vinyl, supra, 27 Cal.App.3d at p. 550.)
d. Bad Faith
“What would otherwise be a consequential interest not
justifying intervention may become a direct interest permitting it
when bad faith of a party to the litigation . . . render[s] strict
definition of direct interest likely to result in injustice.”
(Continental Vinyl, supra, 27 Cal.App.3d at p. 551.) Stillwell
argues that pursuant to this exception, any consequential
interest she has in the action should be deemed a direct interest
because of FNL’s bad faith. She contends FNL engaged in bad
faith conduct in that it, “(1) fail[ed] to join Stillwell, a necessary
[p]arty; (2) [o]ppos[ed] Stillwell’s intervention knowing she was a
necessary party; (3) fil[ed] this action in federal court, despite
lack of diversity, which led to undue delays and costs to Stillwell;
8 Furthermore, the superior court action was resolved by
default judgment on the contract claims only, so the default
judgment does not establish FNL’s allegations of conversion or
misrepresentation. (Gottlieb v. Kest (2006) 141 Cal.App.4th 110,
149 [default judgment is not conclusive as to any issue
unnecessary to uphold the judgment].) Thus, the tort related
allegations on which Stillwell focuses remain nothing more than
unproven allegations.
26
(4) [r]e-fil[ed] this action in state court despite knowing that all of
FNL’s claims [were] barred, and unsupported by facts, evidence,
or law; (5) [n]egligently and recklessly fil[ed] TCF’s full banking
account information in this action after making the same alleged
mistake in [a prior action and failing to promptly correct the
error]; (6) [f]ail[ed] to serve FNL’s [o]pposition [b]rief and
[attorney]’s [d]eclaration [i]n [s]upport, then subsequently
execut[ed] and fil[ed] two false declarations of service . . . ;
(7) ma[de] material misrepresentations to this [c]ourt in an
attempt to influence this [c]ourt’s decision making.”
A number of these acts are plainly not bad faith. For
example, Stillwell is not a necessary party, and FNL’s decision to
not join her to the action and to oppose her motion for
intervention are permissible and proper. Assuming arguendo
that the above-listed acts constitute bad faith, they are not the
kind of “bad faith” contemplated by case law. The court in
Continental Vinyl summarized examples of bad faith warranting
intervention. Those examples all entail a failure to adequately
defend the lawsuit with the bad faith perpetrated by the
defendant(s) failing to defend, and intervention by someone
permitted to represent the interests of the essentially absent
defendant. (Continental Vinyl, supra, 27 Cal.App.3d at pp. 551-
555; see also Kobernick v. Shaw (1977) 70 Cal.App.3d 914, 918
[“Where a party to a lawsuit fails to exercise good faith in
defending the action, then a party whose interest at the outset
may be only consequential becomes a party with a direct interest
and may therefore intervene”].)
Here, none of FNL’s alleged bad faith acts interfered with
TCF’s ability to defend itself. While TCF did not defend the suit,
Stillwell does not argue (nor could she) that its failure to defend
27
itself resulted from TCF’s bad faith. And, as discussed
previously, Stillwell cannot intervene to provide a defense to TCF
as she is not an attorney authorized to appear on its behalf.
Accordingly, Stillwell failed to demonstrate that she is entitled to
intervene as a result of FNL’s purported bad faith.
D. The Trial Court Did Not Abuse Its Discretion in
Denying Stillwell’s Motion for Permissive
Intervention
The trial court did not abuse its discretion in denying
Stillwell’s motion for permissive intervention. To be entitled to
such intervention, Stillwell had to show that “(1) the proper
procedures have been followed; (2) the nonparty has a direct and
immediate interest in the action; (3) the intervention will not
enlarge the issues in the litigation; and (4) the reasons for the
intervention outweigh any opposition by the parties presently in
the action.” (Reliance Ins. Co. v. Superior Court, supra, 84
Cal.App.4th at p. 386.)
As described above, Stillwell did not identify a sufficient
interest that would support intervention in the action. Her
intervention would in fact enlarge the issues to the litigation;
Stillwell’s proposed complaint in intervention would add a new
party, Fashion Nova, and five new causes of action, including a
tort for negligent infliction of emotional distress, to a matter in
which the court had already entered a default against the only
defendant. Accordingly, the trial court’s decision to not permit
Stillwell to intervene cannot be said to be a miscarriage of justice.
28
DISPOSITION
The trial court’s order is affirmed. FNL is awarded its
costs on appeal.
NOT TO BE PUBLISHED
WEINGART, J.
We concur:
ROTHSCHILD, P. J.
CHANEY, J.
29