Interface Financial Group v. Assoc. Constr. Gen. Contractors

Filed 3/15/06 Interface Financial Group v. Assoc. Constr. Gen. Contractors CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from a judgment of the Superior Court of Los Angeles County.

Richard Alder, Judge. Affirmed.

Michael H. Wesner for Appellant.

Blakeley & Blakeley, Scott E. Blakeley, Bradley D. Blakeley, Sandy W. Soo for Plaintiff and Respondent.

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Appellant Christina M. Prosser appeals from an amended judgment in favor of respondent The Interface Financial Group, a division of Penmar Holdings, LLC. Appellant contends that the trial court erred in amending the judgment to include her as the alter ego of defendant Associated Construction General Contractors, Inc. (Associated), since the facts alleged in support of the amendment were inconclusive and should have been determined by a trier of fact. We find that since the truncated clerk's transcript on appeal contains none of the declarations or factual support for appellant's claim, she has failed to provide an adequate record to challenge the amended judgment, which we must presume is correct.

FACTUAL AND PROCEDURAL SUMMARY

On March 25, 2005, the trial court entered an order granting respondent's motion to amend the judgment to include appellant as the alter ego of judgment debtor Associated, in a judgment obtained by the creditor respondent against Oren Prosser and Associated. The trial court noted case law permitting a creditor, who discovers after judgment is entered that the judgment debtor corporation is controlled by an alter ego, to move to amend the judgment to add the alter ego as a named judgment debtor, and the court outlined the prerequisites that must be satisfied to invoke the alter ego doctrine.

The court's order also referred to approximately a dozen exhibits (not in the record on appeal) submitted by respondent to show that appellant controlled the underlying litigation and that there was a commonality of interests between the corporation and the alter ego. The court concluded that respondent had established by a preponderance of the evidence appellant's control of the underlying litigation and a commonality of interests between the corporation and the alter ego. The court's conclusion was based on the following factors: appellant and Oren Prosser were the sole shareholders of Associated; appellant was Associated's chief financial officer and secretary, both before and during the litigation; appellant and Oren Prosser were the only two members of the board of directors; appellant signed the checks from Associated to its counsel; appellant received a salary equal to her husband, Oren Prosser; and she received from Associated $210,618.29 the year before bankruptcy.

The court also explained in its order that based on the various exhibits before it (again, items not in the record on appeal), that a preponderance of the evidence established that Associated was not adequately capitalized. The court's order recited the following factors supporting that conclusion: within seven months of incorporating, Associated defaulted on the agreement with respondent; within 16 months of incorporating, Associated filed for bankruptcy and had assets of $57,000 and debts of $1,022,463.77; at no time did Associated pay its debts as they became due; Oren Prosser stated in his deposition that he did not know what funds were used to capitalize Associated; appellant lent Associated $100,000, although no evidence was produced confirming this; Associated's bankruptcy schedule indicated a loan for $25,000 to June Slayton, but Slayton indicated that it was a loan from appellant; Associated admitted transferring $216,618.29 to appellant the year before the bankruptcy; and on December 11, 2003, appellant identified Associated as a sole proprietorship. Furthermore, the court found that respondent had established by a preponderance of the evidence that Associated had failed to observe corporate formalities, since Associated produced only six pages of corporate minutes and did not file tax returns.

Based upon the above cited factors, the trial court found that there was a unity of interest and ownership, and that the separate personalities of the corporation and the shareholder did not in reality exist. As also indicated in its order, the court concluded it would be inequitable to allow appellant to avoid judgment by treating Associated as a separate and distinct entity, and it thus deemed appellant the alter ego of Associated.

Accordingly, the court granted respondent's motion, and filed an amended judgment decreeing that respondent â€