Filed 1/18/18 California Alliance Telecard v. Holly Distribution Group CA1/4
NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FOUR


CALIFORNIA ALLIANCE TELECARD, INC.,
Plaintiff and Appellant,
v.
HOLLY DISTRIBUTION GROUP, LLC et al.,
Defendants and Respondents.

A149755

(Alameda County
Super. Ct. No. HG13667658)


I.
INTRODUCTION
Appellants California Alliance Telecard, Inc. (Telecard) and Riyadh Haddad (Haddad) appeal from an award of costs and attorney fees made in favor of defendants and respondents Holly Distribution Group, LLC and Mustapha Kiskou (collectively referred to in the singular as Holly) following a bench trial which ended in a defense verdict. Appellants contend on appeal that the award as to Haddad was improper procedurally because there was no notice to him of the filing of the motion, and the motion was never served on him personally. Alternatively, Haddad asserts that the award was not supported by sufficient evidence to allow the court to “pierce the corporate veil” and make him personally liable for the fees. We affirm.
II.
PROCEDURAL AND FACTUAL BACKGROUNDS
Telecard filed a complaint in 2013 in Alameda County seeking recovery against Holly in the principal amount of $177,756.51, and alleging that Holly breached a contract with Telecard in connection with international phone cards provided to Holly by Telecard. Holly denied the allegations and contended that the phone cards were worthless because they had been cancelled by the issuer.
A bench trial commenced in January 2015, and proceeded intermittently until it ultimately was submitted for decision in October of that year. The court concluded in its notice of intended decision and order that “[w]hether viewed as the Plaintiff’s failure to carry its burden of proof or Defendants having established a defense on the failure of consideration, the net result is the same—plaintiff is not entitled to judgment on any of its claims.”
Included in the court’s decision was a discussion concerning a procedural issue that was first raised in Holly’s closing trial brief. That issue was whether Telecard had standing to maintain the action in light of the admitted fact that Telecard had been dissolved during the course of the trial, and 100 percent of its “debt” assigned to Haddad. Based on these facts, which were confirmed in Telecard’s closing brief, the court also concluded that Telecard had no standing to maintain the action, and was not entitled to relief “even absent the evidentiary deficiencies addressed above.”
A motion for attorney fees and costs was thereafter filed by Holly seeking fees totaling $16,550, and costs of $1,144. In Holly’s supporting points and authorities, mention is made again of Telecard’s dissolution initiated during the trial, and the assignment to Haddad. Reference is also made to the Kassis declaration, which stated that the underlying claim had not been assigned to Haddad. Holly claimed that this evidence showed that Haddad was trying to avoid enforcement of an adverse judgment, and was sufficient to “pierce the corporate veil,” allowing the judgment to be enforced directly against Haddad. Accordingly, Holly asked the court to award the attorney fees and costs sought against Haddad individually.
Telecard filed an opposition to the motion claiming that Holly had produced insufficient evidence to support the attorney fees claim. As to the potential liability of Haddad, the opposition included a paragraph arguing that there was no evidence to support the alter ego claim against Haddad personally, and that no notice had been provided to him of this claimed personal liability.
The court held a hearing on the motion on May 19, 2016. The trial judge issued an order on June 7, 2016, granting in part and continuing in part the motion. The court granted the motion awarding Holly $16,550 in attorney fees and $1,144 in costs under Civil Code section 1717.
As to the request to make Haddad personally liable for the award, the court noted that in its tentative decision the court had been disinclined to make the award directly against him. However, the court became convinced at oral argument that it had the authority to do so upon a showing that Haddad was the alter ego of Telecard. As a result, the court expressed that it now was inclined to award the fees and costs against Haddad, “jointly and severally.” It also referred to the post trial references to the fact that Telecard had been dissolved and 100 percent of the debt being sought in this litigation had been assigned to Haddad. Through judicial notice the court confirmed that Telecard had indeed been dissolved.
However, rather than make the award at that time, the court’s order continued the hearing on the motion as to Haddad’s potential liability to June 24, 2016, thereby allowing plaintiff the opportunity to file a supplemental response addressing the legal authorities cited by Holly at the May 19, 2016 hearing, and the rationale expressed by the court in its June 7, 2016 order indicating its inclination to award the fees and costs directly against Haddad.
No supplemental response was filed, nor did appellants contest the subsequent tentative decision in Holly’s favor.
The court issued a written order on June 24, 2016, affirming its decision to make the award of attorney fees and costs jointly and severally against Haddad and Telecard. In its ruling, the court noted that Telecard has stated in its closing trial brief that Telecard had been dissolved and Holly’s potential “debt” assigned to Haddad who was the sole shareholder of Telecard. Based on the allegations made by Holly concerning the degree of control exercised by Haddad over the details of Telecard’s business, and the failure of Telecard or Haddad to refute the allegations “it appears that [Telecard had] conceded that Mr. Haddad is the real party in interest controlling the litigation brought by [Telecard] and that the equitable principles discussed in [citations] warrant an order awarding the fees and costs against Mr. Haddad jointly and severally.”
Telecard and Haddad filed their notice of appeal on July 28, 2016.
III.
DISCUSSION
A. The Judgment Is Affirmed for Failure by Appellants to Provide an Adequate Record on Appeal
The appellate record consists of a single volume of clerk’s transcript totaling 60 pages. Missing from the record is the transcript of the May 19, 2016 hearing on Holly’s motion for attorney fees and costs. The importance of this transcript was emphasized by the trial court in its June 7, 2016 order in which the court noted that the arguments, along with the legal authorities referenced by counsel, convinced it to change the tentative ruling from an outright denial of the motion to extend any award to Haddad to an inclination to grant the request.
“The California Rules of Court require an appellant who elects to proceed by appendix to include, among other things, any document filed in the trial court which ‘is necessary for proper consideration of the issues, including . . . any item that the appellant should reasonably assume the respondent will rely on.’ (Cal. Rules of Court, rule 8.124(b)(1)(B).) It is also a fundamental rule of appellate review that an appealed judgment or order is presumed correct. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.) ‘ “All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown . . . .” [Citations.]’ (Ibid.) To overcome this presumption, the appellant must provide an adequate appellate record demonstrating error. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295.) ‘ “A necessary corollary to this rule [is] that a record is inadequate . . . if the appellant predicates error only on the part of the record he [or she] provides the trial court, but ignores or does not present to the appellate court portions of the proceedings below which may provide grounds upon which the decision of the trial court could be affirmed.” [Citation.]’ (Osgood v. Landon (2005) 127 Cal.App.4th 425, 435.) Where the appellant fails to provide an adequate record of the challenged proceedings, we must presume that the appealed judgment or order is correct, and on that basis, affirm. (Maria P. v. Riles [(1987) 43 Cal.3d 1281,] 1295–1296; Estrada v. Ramirez (1999) 71 Cal.App.4th 618, 620, fn. 1.)” (Jade Fashion & Co., Inc. v. Harkham Industries, Inc. (2014) 229 Cal.App.4th 635, 643–644.)
This obligation to prepare and present an adequate record includes reporter hearing transcripts. In the absence of a transcript of such an important hearing as that held on May 19, 2016, Haddad has failed in his burden to provide an adequate record, requiring that the issue be resolved on appeal against him. (Foust v. San Jose Construction Co., Inc. (2011) 198 Cal.App.4th 181, 186–187 (Foust).)
In his reply brief, Haddad addresses this point by stating that there was no reporter present at the May 19, 2016 hearing, and thus, no transcript was available. However, Haddad was on notice that normally court reporters are not provided in Alameda County Superior Court for general civil cases, and it was up to him to make arrangements for this hearing to be reported and transcribed. (Super. Ct. Alameda County, Local Rules, rule 3.95, Court reporters.) Alternatively, as Holly points out, in lieu of a reporter’s transcript, Haddad could have submitted an agreed or settled statement. (Foust, supra, 198 Cal.App.4th at p. 186.)
The failure to include this important hearing transcript by Haddad violates these principles and, on that basis, we affirm. While we affirm the lower court’s judgment because of the foregoing procedural deficiency, we have also examined Haddad’s claims of error, and conclude that the judgment should also be affirmed on the merits.
B. No Additional Notice Was Required Before Haddad Was Added as a Judgment Debtor
As noted in the introduction, appellants argue the order was procedurally defective in that Haddad had no notice of the claim that he was personally liable for the fees and costs award, and the motion had never been “served” on him personally.
A judgment against a corporation may be amended to add a nonparty alter ego as a judgment debtor. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th 1551, 1555 (Hall); Code Civ. Proc., § 187.) “Amendment of a judgment to add an alter ego ‘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. [Citations.] “Such a procedure is an appropriate and complete method by which to bind new . . . defendants where it can be demonstrated that in their capacity as alter ego of the corporation they in fact had control of the previous litigation, and thus were virtually represented in the lawsuit.” [Citation.]’ (NEC Electronics Inc. v. Hurt [(1989)] 208 Cal.App.3d [772,] 778.)” (Carr v. Barnabey’s Hotel Corp. (1994) 23 Cal.App.4th 14, 21–22.)
Because the procedure is simply an equitable one substituting the “correct name” of the “real” culpable party for the shell, no separate notice and service of process is required under these authorities, and Haddad has cited us to no such statutes or cases requiring separate notice to him under these circumstances.
C. The Alter Ego Finding Was Supported by Substantial Evidence
Haddad also challenges the court’s order adding him as a judgment debtor as lacking substantial evidence to support it. “When the trial court has resolved a disputed factual issue, the appellate courts review the ruling according to the substantial evidence rule. If the trial court’s resolution of the factual issue is supported by substantial evidence, it must be affirmed. [Citation.]” (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632.)
In applying the substantial evidence standard of review, “ ‘the power of an appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted,’ to support the findings below. [Citation.] We must therefore view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor in accordance with the standard of review so long adhered to by this court. [Citations.]” (Jessup Farms v. Baldwin (1983) 33 Cal.3d 639, 660.)
“ ‘Substantial evidence’ is evidence of ponderable legal significance, evidence that is reasonable, credible and of solid value. [Citations.] ‘Substantial evidence . . . is not synonymous with “any” evidence.’ . . . [Citations.] The focus is on the quality, rather than the quantity, of the evidence.” (Roddenberry v. Roddenberry (1996) 44 Cal.App.4th 634, 651.) “It is not our task to weigh conflicts and disputes in the evidence; that is the province of the trier of fact.” (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 630.)
“Even in cases where the evidence is undisputed or uncontradicted, if two or more different inferences can reasonably be drawn from the evidence this court is without power to substitute its own inferences or deductions for those of the trier of fact, which must resolve such conflicting inferences in the absence of a rule of law specifying the inference to be drawn.” (Howard v. Owens Corning, supra, 72 Cal.App.4th at p. 631.)
The substantial evidence standard applies to both express and implied findings of fact made by the superior court in its statement of decision rendered after a nonjury trial. (See Michael U. v. Jamie B. (1985) 39 Cal.3d 787, 792–793, superseded by statute In re Zacharia D. (1993) 6 Cal.4th 435 [implied findings].) The doctrine of implied findings provides that a “party must state any objection to the statement in order to avoid an implied finding on appeal in favor of the prevailing party . . . . [I]f a party does not bring such deficiencies to the trial court’s attention, that party waives the right to claim on appeal that the statement was deficient . . . and hence the appellate court will imply findings to support the judgment.” (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133–1134, fn. omitted.)
As an initial matter, we note the trial court continued the hearing on the motion for attorney fees and costs to allow Haddad to respond to his potential alter ego liability. Haddad did not file a supplemental response or object to the court’s tentative ruling. Under these circumstances, we could conclude that he has forfeited the issue. (Porterville Citizens for Responsible Hillside Development v. City of Porterville (2007) 157 Cal.App.4th 885, 912 [“[W]hen a trial court announces a tentative decision, a party who failed to bring any deficiencies or omissions therein to the trial court’s attention forfeits the right to raise such defects or omissions on appeal.”].) Even absent a forfeiture, Haddad’s claim fails on the merits.
A court has authority to impose liability under a judgment on an alter ego who has control of the litigation. (Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 45.) The first requirement for a finding of alter ego is whether the individual and the corporate entity share a unity of interest. Among the many factors to be considered in applying the alter ego doctrine are “one individual’s ownership of all stock in a corporation; use of the same office or business location; commingling of funds and other assets of the individual and the corporation; an individual holding out that he is personally liable for debts of the corporation; identical directors and officers; failure to maintain minutes or adequate corporate records; disregard of corporate formalities; absence of corporate assets and inadequate capitalization; and the use of a corporation as a mere shell, instrumentality or conduit for the business of an individual. (Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799, 811–812.) This list of factors is not exhaustive, and these enumerated factors may be considered with others under the particular circumstances of each case. ‘ “ No single factor is determinative, and instead a court must examine all the circumstances to determine whether to apply the doctrine.” ’ (Id. at p. 812.)” (Misik v. D’Arco (2011) 197 Cal.App.4th 1065, 1073.)
The trial court’s alter ego finding is supported by substantial evidence. This evidence, cited by the court in its June 24, 2016 order, included that Haddad was the sole shareholder of Telecard, owning 100 percent of its stock. Furthermore, it was represented by trial counsel in Telecard’s closing brief that the “debt” of Telecard had been assigned to Haddad. The trial court found that Telecard “has conceded that Mr. Haddad is the real party in interest controlling the litigation brought by [Telecard] and that the equitable principles discussed in [the case law] warrant an order awarding the fees and costs against Mr. Haddad jointly and severally.”
On appeal, Haddad challenges the trial court’s reliance on that representation claiming it to be nonbinding on Haddad, and inadmissible as to the issue of alter ego. We disagree. “Similar to a stipulation, a concession by counsel at trial or judicial admission eliminates the need to prove the fact at issue admitted and is binding on the client absent fraud. (Horn v. Atchison, T. & S.F. Ry. Co. (1964) 61 Cal.2d 602, 605–606 [defense counsel’s unequivocal invitation to a plaintiff’s verdict in opening statement was a concession of liability]; Bank of America v. Lamb Finance Co. (1956) 145 Cal.App.2d 702, 708 [no prejudice from jury denial where defense counsel conceded liability on second day of trial]; Scafidi v. Western Loan & Bldg. Co. (1946) 72 Cal.App.2d 550, 561–562 [counsel’s admission at trial eliminated complaint allegation that an accounting had been requested from defendants].)” (Gonzales v. City of Atwater (2016) 6 Cal.App.5th 929, 954, review den. Mar. 29, 2017, S239697.)
“The second requirement for application of the alter ego doctrine is a finding that the facts are such that adherence to the fiction of the separate existence of the corporation would sanction a fraud or promote injustice. (Wood v. Elling Corp. (1977) 20 Cal.3d 353, 365, fn. 9.) The test for this requirement is that if the acts are treated as those of the corporation alone, it will produce an unjust or inequitable result. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300.)” (Misik v. D’Arco, supra, 197 Cal.App.4th at p. 1073.)
As noted earlier, in an apparent attempt to shield himself from any liability exposure arising out of this case, Haddad took steps during the pendency of the case to dissolve Telecard; an action which was confirmed by public records. Thus, after three years of litigation, including intermittent trial proceedings over 10 months, Haddad took unilateral steps to shield himself from any exposure for contractual attorney fees and costs incurred by Holly. To reward him now, by not affirming the trial court’s substitution of Haddad as a judgment debtor for the defunct Telecard, would indeed produce an “unjust or inequitable result.”
IV.
DISPOSITION
The judgment, including the award of attorney fees and costs, is affirmed. Holly is awarded its costs on appeal against Haddad.







_________________________
RUVOLO, P. J.


We concur:


_________________________
RIVERA, J.*


_________________________
STREETER, J.




















* Retired Associate Justice of the Court of Appeal, First Appellate District, Division Four, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.

A149755, California Alliance Telecard, Inc. v. Holly Distribution etc.