Pequignot v. Vincent
Filed 6/4/13 Pequignot v. Vincent CA2/6
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE
DISTRICT
DIVISION SIX
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JOHNNY PEQUIGNOT et al., Plaintiffs, Cross-defendants and Respondents, v. MARTHA VINCENT et al., Defendants and Appellants; MARTHA VINCENT, Cross-complainant. | 2d Civil No. B235047 (Super. Ct. No. 56-2010-00386347- CU-BC-SIM) (Ventura County) |
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MARTHA VINCENT, Plaintiff and Appellant, v. JOHNNY PEQUIGNOT et al., Defendants and Respondents. | 2d Civil No. B235672 (Super. Ct. No. 56-2009-00363965- CU-UD-SIM) |
Appellant
Martha Vincent leased her house in Westlake Village,
California (Premises), to respondents Dawn
Christie and Johnny Pequignot for both residential and commercial
purposes. In the ensuing
B235672), Vincent succeeded in evicting respondents from the Premises and
obtained a money judgment for unpaid rent.
Thereafter, respondents filed a civil action (case No. B235047) against
appellants Vincent and her husband Billy Ridge alleging various claims
pertaining to the lease and eviction.
Vincent cross-complained in the civil action.
purposes of appeal.
Appellants
claimed that respondents owned the membership interests in Togetherness
Production LLC (Togetherness), and appeal from post-judgment orders in the
unlawful detainer action denying their motions to add Togetherness as an
additional judgment debtor and to impose a charging order against respondents'
membership interests in Togetherness.
Appellants also appeal from trial court orders in the civil action
granting respondents possession of their personal property left on the Premises
after eviction (Personal Property) and denying appellants' application for
attachment of the Personal Property.
Appellants
contend that the trial court misinterpreted applicable statutes concerning the
charging order, writ of possession, and writ of attachment and that there was
no substantial evidence supporting
any of the orders. We dismiss the portion
of the appeal regarding the attachment order and otherwise affirm.
FACTS
AND PROCEDURAL HISTORY
In
December 2008, appellants leased the Premises to respondents for use as a
residence and for operation of a resort and spa business. On December 15, 2009, appellants filed an
unlawful detainer action to evict respondents for nonpayment of rent. On April 1, 2010, appellants obtained a
judgment for possession of the Premises and a monetary judgment of $115,708.03
representing unpaid rent. Settlement discussions
delayed actual eviction until July 27, 2010.
When
evicted, respondents left the Personal Property on the Premises. The Personal Property consisted of personal
and business items with a value estimated by respondents to be well over a
million dollars, far in excess of the monetary
judgment against them. Shortly after
eviction, respondents demanded return of the Personal Property and engaged in
negotiations with appellants in that regard, including negotiations regarding
payment of storage fees for the period the Personal Property remained on the
Premises. The Personal Property was not
returned to respondents at this time.
On
December 3, 2010, respondents filed a civil
action against appellants. The
complaint alleged numerous causes of action regarding the lease and eviction,
including claims for wrongful eviction, violation of Civil Code section 1965
regarding disposition of the Personal Property, and claims for breach of
contract, bad faith, and fraud. On
December 7, 2010, respondents sought ex-parte relief regarding disposition of
the Personal Property. On December 8,
2010, the trial court issued a temporary restraining order restraining
appellants from selling or transferring any of the Personal Property, but did
not order the return of the Personal Property to respondents. Respondents' application for a writ of
possession of the Personal Property was set for a future hearing and, after
continuances, was heard in June 2011.
On
April 20, 2011, appellants filed a cross-complaint in the civil action. The cross-complaint alleged breach of
contract by respondents and Togetherness which was alleged to be an entity
controlled by respondents. The cross-complaint
sought money damages against respondents and Togetherness. That case was in its pretrial phase at the
time of the instant appeal.
Also,
on April 20, 2011, appellants filed an application in the civil action for a
writ of attachment of the Personal Property and the interests of respondents in
Togetherness. The application also
sought a "charging order" applying respondents' membership interest
in Togetherness toward the unlawful detainer money judgment against
respondents. (See Code. Civ. Proc., §
708.310; Corp. Code, § 17302.) On May
12, 2011, appellants filed a separate motion for the charging order and for an
order adding Togetherness as an additional judgment debtor in the unlawful
detainer. In response to appellants'
application and motion, respondents filed an application for a writ of
possession of the Personal Property.
On
June 6, 2011, the trial court granted respondents' application for writ of
possession, and denied appellants' application for a writ of attachment and
motion for a charging order and addition of Togetherness as a judgment
debtor. The denial of the charging
order/addition of Togetherness as a judgment debtor was without prejudice to a
refiling of that motion in the unlawful detainer action. On June 7, 2011, appellants filed such a
motion in the unlawful detainer action.
At a June 24, 2011, hearing, the trial judge in the unlawful detainer
court denied appellants' motion.
Appellants
filed timely notices of appeal in both the unlawful detainer and civil actions
appealing (1) the orders in the civil action granting respondents' application
for a writ of possession and denying appellants' application for a writ of
attachment, and (2) the orders in the unlawful detainer action denying
appellants' motion for a charging order and addition of Togetherness as a
judgment debtor.
DISCUSSION
Debtor
Appellants contend the trial
court in the unlawful detainer action erred in denying their motion to amend
the judgment to add Togetherness as an additional judgment debtor. We disagree.
A
trial court may order a nonparty to be added as a judgment
debtor when the nonparty is the alter ego of an existing judgment debtor. (Leek v. Cooper (2011) 194 Cal.App.4th 399, 419.)
liability has three
elements. First, it requires a unity of
interest and ownership between the corporation and individuals. Second, it may be invoked only to avoid fraud
or injustice. Third, it requires that
the individuals control the litigation at issue. (Misik
v. D'Arco (2011) 197 Cal.App.4th 1065, 1072; Triplett v. Farmers
Ins. Exchange (1994) 24 Cal.App.4th 1415, 1421.)
Factors considered in
determining unity of ownership and interest and the avoidance of fraud or
injustice include ownership of all the stock in the corporation by the
individuals, commingling funds and other assets by the corporation and
individuals, concealing the
individuals' ownership of the corporation, failure to maintain
corporate records or comply with other corporate formalities, use of the same
business location, inadequate
capitalization of the corporation, and use of the corporation to conduct the
individuals' business. (Zoran Corp. v. Chen
(2010) 185 Cal.App.4th 799, 811–812.) Factors considered in determining control of
the litigation include whether the individuals financed the litigation against
the corporation and directed the litigation on behalf of the corporation. (NEC Electronics Inc. v. Hurt (1989)
208 Cal.App.3d 772, 781.)
Determining whether to
impose alter ego liability is a factual question within the province of the
trial court. (Zoran Corp. v. Chen, supra, 185 Cal.App.4th at pp. 812-813.) The trial
court's ruling will not be disturbed if it is supported by substantial
evidence. (Misik v. D'Arco, supra, 197 Cal.App.4th at pp. 1071-1073.)
We
reject appellants claim that the trial court erred because respondents offered
no evidence in opposition to the motion.
It was appellants' motion and appellants were required to establish a
factual basis for the requested relief.
We presume a superior court's order to be correct and indulge all
intendments and presumptions to support it regarding matters as to which the
record is silent. (Denham v. Superior
Court (1970) 2 Cal.3d 557, 564; Gee v. American Realty &
Construction, Inc. (2002) 99 Cal.App.4th 1412, 1416.)
Here, appellants only
offered evidence that Togetherness is a corporation owned by respondents and
that respondents claimed minimal personal assets in bankruptcy court. As the trial court found, such evidence fails
to justify imposition of alter ego liability.
It does not show a unity of interest, commingling of funds, disregard of
corporate formalities, concealment of the
ownership of the corporation, inadequate capitalization of the corporation, or
the use of the corporation as a conduit for an individual's business. Also, respondents did not control the
unlawful detainer on behalf of Togetherness because Togetherness was not a
party to that action. And, it is
undisputed that Togetherness was represented by separate counsel in the civil
action.
substance, appellants argue that the corporate veil of Togetherness should be
pierced because respondents have not fully satisfied their money judgment
through other means. Alter ego
liability is an extreme remedy that cannot be used simply because a creditor
has an unsatisfied judgment against individuals.
Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 842.)
Appellants contend that the
trial court erred in denying their motion for a charging order by
misinterpreting Corporations Code section 17302 and ignoring the evidence. We disagree and conclude that the findings of
the trial court are supported by substantial evidence. (Phillips,
Spallas & Angstadt, LLP v. Fotouhi (2011) 197 Cal.App.4th 1132,
1138-1139 [substantial evidence standard applies to ruling on charging
order].) Also, the record does not show
that the trial court misinterpreted any statute.
If a money judgment
is rendered against a member of a limited liability company but not the
company, "the judgment debtor's interest in the [company] may be applied
toward the satisfaction of the judgment by an order charging the judgment
debtor's interest pursuant to Section . . . 17302 of the Corporations
Code." (Code Civ. Proc.,
§ 708.310.) Section 17302, subdivision
(a) of the Corporations Code provides that a court "may charge the
assignable membership interest of the judgment debtor [in a limited liability
company] to satisfy the judgment. The
court may appoint a receiver of the share of the distributions due or to become
due to the judgment debtor in respect to the limited liability company and may
make all other orders, directions, accounts, and inquiries . . . that the
circumstances of the case may require."
It is not disputed that a
charging order is a remedy authorized by statute. But, the trial court properly denied the
charging order on equitable principles.
The trial court found that appellants had impeded the ability of
respondents to pay the judgment in the unlawful detainer case by wrongfully
retaining the Personal Property. The
court also concluded that (1) it is an inappropriate remedy in light of
litigation as a whole and would simply create more issues to litigate, (2) a
charging order would apply only to corporate distributions, not its assets, and
have limited value, and (3) appellants failed to properly utilize discovery
procedures and other established enforcement of judgment remedies.
In addition, a charging order
is based on similar factors as alter ego liability generally used when a
corporate entity is a continuation of an individual's prior business, was formed for the
purpose of avoiding the individual's liability, and inadequate
consideration is given for the prior entity's assets to meet the claims of
unsecured creditors. (
Fotouhi, supra, 197 Cal.App.4th at pp. 1134-1135,
1139-1140; see also
206 Cal.App.4th 1292, 1301.)
offered by appellants is insufficient to satisfy the requirements for invoking
alter ego liability and, similarly, insufficient to have required the trial
court to issue a charging order.
No Error in
Granting Writ of Possession to Respondents
Appellants contend that
the trial court erred in granting respondents' writ of possession to regain
possession of the Personal Property left behind when respondents were evicted
from the Premises. We disagree and conclude that
court's ruling.
When a tenancy
terminates, the tenant often leaves personal property behind after vacating the
premises. Several statutes govern the
rights and obligations of the landlord and tenant with respect to that
property. (See Civ. Code, §§ 1965,
1980, 2080; Code Civ. Proc., § 1174; see generally Friedman et al., Cal.
Practice Guide: Landlord–Tenant (The Rutter Group 2012) § 9:570 et seq., p.
9-145 et seq.)
In this case,
respondents sought the return of the Personal Property under the procedures set
forth in Civil Code section 1965. There
is no evidence in the record that appellants or respondents proceeded under any
of the other statutory procedures regarding return of personal property to a
vacating or evicted tenant.
Civil Code section 1965,
subdivision (a)(1) provides that "[a] residential landlord shall not
refuse to surrender, to a residential tenant . . . any personal property not
owned by the landlord which has been left on the premises after the tenant has
vacated the residential premises and the return of which has been requested by
the tenant . . . within 18 days of vacating the premises." If such notice is given, the landlord must
surrender the property if the tenant pays "all reasonable costs associated
with the landlord's removal and storage of the personal property." (Id.
at subd. (a)(3).) The landlord must
deliver a written demand for such costs within five days of the tenant's
request for return and the demand for costs must "itemize all charges,
specifying the nature and amount of each item of cost." (Ibid.) If the tenant fails to comply with its
obligations under Civil Code section 1965, the property will be deemed
abandoned. (Civ. Code, § 1980 et
seq.)
demanding the return of the Personal Property but compliance with subsequent
obligations under the statute were disputed in the trial court and appellants
did not return the Personal Property to respondents. When appellants failed to do so, respondents
filed an application for a writ of possession.
A writ of
possession may be obtained prior to a judgment where the applicant establishes
a right to immediate possession of property held by another. (Code Civ. Proc., § 512.010.) The applicant must establish the probable
validity of his or her claim to possession, and post an undertaking. (Id.
at §§ 512.010, 512.020, 512.060.)
In this case, respondents sought possession of the Personal Property
based on their underlying claim of ownership and appellants' failure to return
the Personal Property as required by Civil Code section 1965.
The trial court granted the
application and issued a writ of possession based on findings that respondents,
but not appellants, had complied with the requirements of Civil Code section
1965. The trial court rejected appellants'
argument that they followed the requirements of the statute by offering to
return the property upon payment of storage costs and that the Personal
Property was deemed abandoned when respondents failed to pay the storage costs.
In its June 6, 2011,
order the trial court found that respondents had made a timely demand for
return of the Personal Property but that appellants had failed to establish a
timely demand on respondents for reasonable costs for the removal and storage
thereof. The court indicated that a
demand for storage fees was referenced in two ex-parte applications to the
court which set forth two different storage fee amounts and claimed "other
vague expenses" had been incurred in connection with the storage of the
Personal Property. Such evidence fails
to show that appellants made a timely demand for reasonable costs in a
specified and itemized amount as required by Civil Code section 1965. The trial court also found that appellants
had failed to establish the value of the Personal Property. In addition, the court concluded that
appellants' retention of the Personal Property was "wrongful" and
that they had resorted to impermissible "self-help" in connection
with their possession and disposition of the Personal Property. These findings are all supported by
substantial evidence.
Denial of
Attachment Order is not Appealable
Appellants contend the trial
court erred in denying their application for issuance of a writ of attachment
in the civil action. Respondents filed a
motion to dismiss the appeal on this issue because denial of a writ of
attachment is not appealable. We agree
and will dismiss the appeal of the attachment order.
Generally, a judgment
or order is appealable only if the right to appeal it is expressly granted by
statute. (Skaff v. Small Claims Court
(1968) 68 Cal.2d 76, 78.) The right to
appeal from orders relating to attachments is limited to orders
"discharging or refusing to discharge" attachments that have already
been issued. (Code Civ. Proc.,
§§ 904.1, subd. (a)(5), 904.2,
subd. (f).) "'[T]here is no statutory right of appeal
from an order denying an application for a writ of attachment.'" (International
Typographical Union Etc. Pension Plan v. Ad Compositors, Inc. (1983) 142
Cal.App.3d 733, 735.)
Appellants argue that the
order is appealable as a post-judgment order.
(Code Civ. Proc., § 904.1, subd. (a)(2).) But, the attachment was requested in the
pending civil action which was still in its pretrial phase, and an attachment
is by its nature a prejudgment remedy.
(Code Civ. Proc., § 483.010, subd. (a); Randone v. Appellate
Department (1971) 5 Cal.3d 536, 543–545.)
We also disagree with
appellants that the attachment ruling is appealable because it was made in
connection with the dissolution of a restraining order issued on December 8,
2010. Although the dissolution of an
injunction is an appealable order (Code Civ. Proc., § 904.1, subd.
(a)(6)), the denial of an attachment order is not the dissolution of an
injunction.
The appeal of the order
denying a writ of attachment is dismissed.
The challenged orders of the trial court are otherwise affirmed. Costs to respondents.
NOT TO BE PUBLISHED.
PERREN,
J.
We
concur:
GILBERT, P. J.
YEGAN, J.
Rebecca Riley, Judge
Rocky Baio, Judge
Superior Court County of Ventura
______________________________
Barry E. Cohen, A
Professional Corporation, and Barry E. Cohen for Appellants Vincent and Ridge
and Cross-complainant Vincent.
Law Office of Patrick Thomas
Santos and Patrick T. Santos for Respondents and Cross-defendants Pequignot and
Christie.
unlawful detainer and sole cross-complainant in the civil action, this opinion
will refer to Vincent and Ridge collectively as the "appellants" for
purposes of convenience.
Property included personal items and property used in respondents' resort spa
business. Because Civil Code section
1965 covers only "residential landlords and tenants," it is arguable
that Civil Code section 1965 does not cover disposition of at least a portion
of the Personal Property. If so,
comparable provisions in Code of Civil Procedure section 1174 regarding
commercial property would apply. The
issue of personal versus commercial property is not raised by either party on
appeal.
