Opinion
NOT TO BE PUBLISHED
Appeal from a judgment of the Superior Court of Los Angeles County, Ct. No. BC371756, Ernest Hiroshige, Judge.
Harris & Ruble, Alan Harris and David Zelenski for Plaintiff and Appellant.
No appearance by Respondent.
CROSKEY, J.
Thirteen plaintiffs have filed suit to have a court adjudge that defendants in this case must satisfy two judgments that plaintiffs have obtained against a corporation that defendants formed. Plaintiffs contend that although the corporation was never funded, plaintiffs were assured by defendants that it was funded and based on that assurance plaintiffs agreed to work on a project that the corporation was advancing. When payment for plaintiffs’ work and reimbursement for their expenses was not forthcoming from the corporation, plaintiffs sued the corporation in two separate suits (the prior actions) and received default judgments in each suit. Now, plaintiffs assert that payment of those judgments by the defendants is warranted under causes of action for fraud, restitution pursuant to unfair business practice statutes, and indemnity, as well as under the equitable remedy of piercing the corporate veil under an alter ego theory. After a lengthy bench trial, the court found in favor of the defendants and plaintiffs appealed.
The judgment in favor of a defendant who failed to respond to the summons and complaint and whose default was taken will be reversed because the trial court improperly required plaintiffs to present evidence of that defendant’s liability. Under well-established law, when the defendant defaulted he admitted the truth of the allegations in the operative complaint and no further proof of his liability on any well pleaded claims supported by those allegations was required.
BACKGROUND OF THE CASE
1. The Parties
The plaintiffs in this case are Pamela Chizema, Sharon Craig, Chris Davis, Jeanne Dupont, Brent Fletcher, Hope Garrison, Jeffery January, Andrea Knaub, Wayne Lindholm, Scott Putman, Steve Schalk, Dennis Hill and Anthony Stabley. The defendants are James Williams, Jon Turtle and Irving “Ving” Rhames.
2. The Operative Complaint
a. The Allegations in the Complaint
Plaintiffs’ second amended complaint (complaint) is the operative complaint. It alleges all of the matters set out in this portion of our opinion.
Plaintiffs were persuaded by the defendants to commence work on a motion picture that defendants were seeking to make through a production company. The production company is the corporation that plaintiffs sued and obtained judgments against in the prior actions. The movie sought to be produced was to be a story of the life of boxer Sonny Liston and was given the tentative names of “Sonny” and “Night Train.”
In the last half of 2003, prior to forming their production company, defendants Williams, Turtle, and Rhames, together with another man, Ron Broadway, entered into a partnership agreement for the purpose of producing the movie. This is the “Sonny Partnership.” Its four partners are the “Sonny partners, ” and the actions of each of the Sonny partners in the conduct of Sonny Partnership business are attributable to each of the other partners. The Sonny Partnership is a Doe defendant in the instant case. Ron Broadway was not named as a defendant in this suit because he filed for bankruptcy protection.
The Sonny partners agreed among themselves that they would share equally in the anticipated profits from the movie venture, that they would each contribute something to the partnership, and that none of the partners would be required to make a contribution of capital. Rhames’ contribution was that he would star in the movie and lower his usual rate of compensation in anticipation of his share of the profits. Turtle would contribute by obtaining a free option from Paramount Pictures, which owned the rights to the Sonny Liston story, and Turtle did succeed in obtaining the option for a limited period of time. Williams and Broadway, along with Turtle, were to assist in the production and obtain financing for the production. Plaintiffs became aware of the Sonny partnership in the course of other litigation.
In late 2003 or early 2004, the Sonny partners agreed to incorporate the above mentioned production company to be the vehicle for producing the movie. They named the production company “Paradisio Media Corporation” (Paradisio). Williams and Turtle, together with Ron Broadway, are the board members and owners or partial owners of Paradisio, and had substantial control over Paradisio’s operations and production of the subject movie. Although Rhames never formally became an officer, director or shareholder of Paradisio, with his knowledge and consent Paradisio was operated as a mere extension of the Sonny Partnership and constituted a shell to shield the assets of the Sonny partners.
Paradisio was incorporated in April of 2004, however prior to that incorporation the Sonny partners made use of the corporate name, they engaged a director and a line producer for the movie project, and they determined that the cost of producing the movie would be somewhere between nine and fifteen million dollars. They agreed that none of them would contribute any capital to Paradisio and that they would engage in pre production of the movie and hire the people necessary for such pre-production. They incorporated Paradisio without adequate funding because they wanted to avoid liability for debts incurred in the production of the movie while at the same time retain the right to receive all or substantially all of the profits gained from the production. They knew that the money necessary for paying Paradisio’s expenses and its employees would have to be raised by borrowing it and/or sale of some of Sonny partnership’s interest in the movie project, they knew that they had no firm commitment from a solvent lender to fund the project, and they knew that if they began the pre-production work without adequate funding to cover the expenses and payroll of such work there was a substantial risk that the people hired by Paradisio for pre-production work would not be paid the wages and salaries promised to them and would not be reimbursed for the expenses they incurred.
In spite of having no secured financing, the Sonny partners represented to the people they caused Paradisio to employ, including the plaintiffs, that financing for the movie was assured. The Sonny partners consented to this misrepresentation of secure financing, and ratified the misrepresentations, in that they knowingly allowed the plaintiffs to continue to work on the production, which gave the Sonny partners an advantage in connection with their efforts to secure funding because they had a film in preproduction. Plaintiffs entered into and signed contracts with Paradisio and began working in mid-May 2004, and although they were given assurances by the Sonny partners that they should continue working because payments would be forthcoming to them, and although plaintiffs did continue providing services to Paradisio, the assurances were false because the Sonny partners knew or should have known that the funds to pay them were not available and would not be available. Plaintiffs stopped working on or about mid-June 2004 and the movie production shut down. Thereafter, plaintiffs obtained judgments against Paradisio in the cases plaintiffs filed in federal court and a California state court. The causes of action in those two suits, respectively, were based on the federal Fair Labor Standards Act and sections of the California Labor Code.
Defendants employed the plaintiffs in the following positions. Plaintiff Chizema was employed as a first assistant accountant. Plaintiff Craig was employed as the production accountant. Plaintiff Davis was employed as a Los Angeles Art Department buyer. Plaintiff Dupont was employed as a costume designer. Plaintiff Fletcher was employed as a script coordinator. Plaintiff Garrison was employed as a second assistant director. Plaintiff Hill was employed as an editor. Plaintiff January was employed as a first assistant director. Plaintiff Knaub was employed as an assistant costume designer. Plaintiff Lindholm was employed as a construction coordinator. Plaintiff Schalk was employed as a property master. Plaintiff Stabley was employed as a production designer. Plaintiff Putman was employed as the unit production manager. All of the plaintiffs entered into written contracts with Paradisio. Many of those contracts were signed by plaintiff Putman in his position as unit production manager. Those contracts state: “APPROVED BY: U.P.M.----------” and are initialed by him. Contracts signed by other plaintiffs appear to be signed by Ron Broadway on behalf of Paradisio.
Besides these employment contracts with Paradisio, three of the plaintiffs were also employed by Paradisio under Directors Guild of America contracts. Second assistant director Garrison had a Directors Guild of America/Unit Production Manager and Assistant Director Deal Memorandum-Film contract. First assistant director January and unit production manager Putman each had a Directors Guild of America/Unit Production Manager and Assistant Director, Associate Director Deal Memorandum.
Plaintiff Putman was formally hired by Paradisio in May 2004 but he had worked for the Sonny Partnership beginning in late 2003. During the last two weeks of November of 2003 he had meetings with Broadway and Turtle to discuss the budget and script for the movie project. The director that was engaged by the Sonny Partnership for the project, Andrzej Sekula, attended several of the meetings. Putman agreed to do the “spec” for no fee, with the understanding he would be hired as the line producer for the movie and for a later project once both films were funded and capitalized. Turtle sent budgets for the films that indicated Putman would be the line producer and unit production manager on them. The Sonny movie’s draft budget was $8,958,225.
Putman and others were working on the Sonny project. Putnam was advised by Broadway that Domain Entertainment would guarantee pay-or-play offers to Rhames and other actors. Turtle and Broadway e-mailed Putman to hire a first assistant director and a production supervisor in Puerto Rico and advised that preproduction would begin on May 3, 2004 and principal photography would begin on June 7, 2004. Broadway and Turtle called Putman on April 20, 2004, and advised him that the Sonny movie was funded and Turtle communicated that the persons who would work on the project would be paid, and his statement was intended to be understood by Putman as a representation that Paradisio had actual possession of funds to meet the costs of production, including compensation for persons employed in production.
Putman called Broadway and Turtle two days later and stated he needed a signed contract for the project and they would have to guarantee that the project was funded before he would leave the project on which he was then working because by leaving the project on which he was currently working before it was completed, he would lose professional goodwill with Regent Entertainment, the company that he was working for, and he would lose $10,000 of his contract fee with Regent. Broadway told Putman the money for the Sonny production was in the bank. That misrepresentation was assented to by Turtle. Putman then contacted the attorney for the Sonny project to tell him he needed a contract for the production.
Putman hired other crew members for the production at defendants’ request and on defendants’ guarantee that the money for production was in the bank. It is standard practice in the film industry to refrain from recruiting crewmembers for a production unless and until sufficient funds are in place to pay them their wages, and thus when Putman offered work to the other plaintiffs he implicitly repeated defendants’ representation that the film was funded and capitalized. Defendants intended that Putman implicitly state to people being hired for the Sonny project that it was funded, and the crewmembers hired for the project relied on that explicit representation from defendants and the implicit representation from Putman. Thereafter, during several phone calls and e-mails between Putman and defendants during which they negotiated Putman’s contract for the production, defendants represented that the project was properly capitalized. On a subsequent date, Broadway assured Putman that Domain Entertainment had guaranteed play-or-pay contracts and was funding the production, and that defendant Williams and officers of Domain had presented financial records to International Creative Management, a talent agency, showing funding of more than $80 million for various projects, including the Sonny film.
On May 12, 2004, defendant Williams, as president of Paradisio, signed a Letter of Adherence with the Directors Guild wherein Paradisio agreed that it was funding the Sonny project 100% with private equity even though defendants knew Paradisio had no equity. On June 12, 2004, defendant Williams sent an e-mail to Putman saying Paradisio had two sources that had contractually guaranteed the budget. Putman and the other plaintiffs relied on defendants’ representations that the project was funded and they signed their contracts and continued to work on the project based on those representations, and their reliance on defendants’ misrepresentations regarding funding was reasonable because industry practice is that persons are not retained to work on movies unless and until the funds to pay them are in hand. The representations made by Williams, Broadway and Turtle on behalf of the defendants and Paradisio that the project was funded and capitalized were knowingly false when made and defendants knew that Putnam relied on those representations and knew that Putman would repeat the representations as he was hiring other crewmembers and such crewmembers, including plaintiffs, would reasonably rely on them in accepting employment with Paradisio, and defendants were guilty of actual fraud.
This letter of adherence, as well as the contracts signed by most of the plaintiffs for their employment on the movie production, were made exhibits to the complaint.
The Sonny partners incorporated Paradisio without adequate funding, indeed no funding, so that they could avoid liability for debts incurred by Paradisio during the production of the movie and thus the corporate veil should be pierced, the false corporate existence and structure of Paradisio should be disregarded by the court, and the Sonny partners should be held jointly and severally liable to plaintiffs for the obligations of Paradisio. Paradisio operated as an extension of the Sonny partnership and was a shell used to shield the assets of the Sonny partners.
b. The Causes of Action
All 13 plaintiffs asserted causes of action against the Sonny partners for fraud and for restitution and attorney’s fees for unfair business practices under Business and Professions Code section 17200 et seq. They also sought to have the court disregard the corporate structure and pierce the corporate veil of Paradisio and impose liability on the Sonny partners and the Sonny partnership for the judgments obtained by plaintiffs in the earlier suits.
Additionally two of the plaintiffs, Putman and Craig, asserted a cause of action for indemnity in which they alleged that Turtle and Broadway, acting on behalf of Paradisio and the Sonny partners, opened a bank account in May 2004 in Paradisio’s name in Puerto Rico, where the pre-production of the movie was being conducted. Checks drawn on the account would require two signatures and Craig and Broadway would have authority to sign checks. No funds were deposited into the account. Nevertheless, Turtle and Broadway represented to Putman and Craig that funds would be put into the account in the very near future and a few days later Broadway, acting on behalf of all of the Sunny partners, instructed Putman and Craig to draw checks on the account in favor of a payroll service, Avalon Hollywood Services, that was engaged on behalf of Paradisio for the movie production. Such checks, in amounts in excess of twenty thousand dollars, were to be a deposit to secure the services of Avalon and to be the source for the first payroll to be issued by Avalon. Broadway instructed Putman and Craig to send the checks, which were signed by Broadway and Craig, to Avalon. When Broadway gave the instruction to send the checks he and the other Sonny partners knew there was no reasonable probability that there were sufficient funds in the Paradisio to cover them and this information was concealed from Putman and Craig by the Sonny partners. Putman and Craig sent the checks to Avalon, the checks were not honored when presented for payment, and Avalon sued Craig and Putman seeking indemnification and to have Craig and Putman hold it harmless for losses and attorney’s fees incurred by the payroll service.
2. The Defendants’ Responses and the Trial Court’s Decision
As already noted, Sonny partner Ron Broadway was not named as a defendant in this case because he filed for bankruptcy. Defendants Turtle and Rhames answered the complaint. Defendant Williams did not answer and his default was taken.
The case was tried to the court over the course of nine days in April and May of 2009, with the court receiving substantial testimony and documentary evidence. The parties submitted closing briefs and the court issued its tentative ruling, received a request for a statement of decision, and issued the statement of decision. Judgment in favor of Turtle, Rhames, and the defaulting Williams was signed and filed on May 24, 2010.
Plaintiffs moved to vacate the judgment as to defendants Williams and Turtle but their motion was denied and this appeal followed. Thereafter, plaintiffs applied to this court for an extension of time to file their opening brief citing, among other things, ongoing settlement negotiations. After receiving the extension, plaintiffs notified us that they were dismissing their appeal as to defendants Turtle and Rhames, and the appeal would focus solely on the judgment entered in favor of the defaulting Williams.
ISSUE ON APPEAL
This appeal presents the question whether the trial court committed reversible error when it ruled that plaintiffs had to prove liability against defendant Williams even though he was in default.
DISCUSSION
1. Reversible Error of Law
When defendant Williams failed to respond to the complaint, plaintiffs took his default under Code of Civil Procedure section 585. By defaulting, Williams admitted the truth of the allegations in the complaint and no further proof of his liability on any well pleaded claims supported by those allegations was required. (Los Angeles v. Los Angeles F. & M. Co. (1907) 150 Cal.647, 649;.) Thus, in Steven M. Garber & Associates v. Eskandarian (2007) 150 Cal.App.4th 813, where the trial court imposed a terminating discovery sanction on the defendants and entered their defaults, the reviewing court refused to consider the substantive challenges the defendants made to the default judgment. The court stated: “Substantively, ‘[t]he judgment by default is said to “confess” the material facts alleged by the plaintiff, i.e., the defendant’s failure to answer has the same effect as an express admission of the matters well pleaded in the complaint. The judgment is, in consequence, res judicata on the issue of the right to the relief awarded.’ (6 Witkin, Cal. Procedure (4th ed. 1997) Proceedings Without Trial, § 153, p. 570.)” (Id. at p. 823, italics and footnote omitted.) Thus, a plaintiff in such a case is only required to present a prima facie case of damages. (Code Civ. Proc., § 585, subd. (b); Johnson v. Stanhiser (1999) 72 Cal.App.4th 357, 361-362 [proof of damages by a preponderance of the evidence not required in a default prove-up.)
Regarding the sufficiency of the deemed admitted allegations in the complaint to constitute at least one well-pleaded cause of action, our own review of the fraud cause of action shows it alleges specific fraudulent acts committed by Williams (and the other defendants) for the purpose of promoting the movie project as being fully funded even though, the complaint alleges, it was not funded at all. The complaint alleges that Williams and the other defendants knew that their representations regarding funding were false when they made them, the representations were made to secure preproduction work, and plaintiffs’ reliance on such fraud, including Williams’ fraud, caused them to suffer damages. Therefore at a minimum, Williams admitted well pleaded allegations against him in the complaint regarding fraud and plaintiffs had the right to present their prima facie case on the issue of damages with respect to that claim. However, the trial court demanded more of plaintiffs.
Regarding the causes of action for restitution under Business and Professions Code section 17200 et seq. and for indemnity, whether those claims are well-pleaded is an issue that can be addressed by the trial court in the first instance on remand of this case. See footnote 5, infra.
A review of the trial court’s October 30, 2009 minute order regarding its tentative ruling and its April 2, 2010 minute order regarding its statement of decision shows that the court required plaintiffs to prove liability with respect to Williams just as it did with respect to defendants Turtle and Rhames, and to do so by a preponderance of the evidence standard of proof, and the court ruled that plaintiffs had not met that burden. In doing so, the trial court made a mistake of law. Moreover, the error was harmful. Stated another way, by the time of trial, Williams’ admission of the truth of the facts alleged in the complaint was an accomplished fact and the trial court had no authority to go behind that admission and effectively render it null and void by requiring plaintiffs to prove Williams’ liability on their causes of action. The trial court ignored a century of law, to wit, Los Angeles v. Los Angeles F. & M. Co., supra, 150 Cal. at p. 649.
Specifically, the court made the following statement in those minute orders: “As to Defendant James David Williams, who is in default, the same reasoning found in the rulings precluding liability as to Defendant Rhames and Defendant Turtle would similarly preclude liability for Defendant Williams as to all allegations against him. The court anticipated that during our trial, evidence as to Williams should have been presented as a prove-up of liability as to that Defendant.”
Whether plaintiffs proved their claims against defendants Turtle and Rhames by the standard of proof applicable to those two defendants, and the court found plaintiffs had not, is simply irrelevant to plaintiffs’ claims against the defaulting Williams. Under well established law regarding defaulting defendants, by the time of trial Williams’ position in the case was markedly different from that of Turtle and Rhames. Therefore, the trial court committed reversible error by examining plaintiffs’ claims against all three defendants with the same scrutiny. The court had no legal cause to anticipate that plaintiffs would present evidence of Williams’ liability and this error requires reversal of the judgment and remand of the case for further proceedings.
In addition to arguing that they were not required to present proof of Williams’ liability, plaintiffs devote a portion of their opening brief to arguing that in any event they did present evidence of such liability for fraud, and evidence for piercing the corporate veil. Because we find that proof of liability was not necessary for plaintiff’s causes of action (fraud, relief under Business and Professions Code section 17200 et seq. and indemnity), we need not address that portion of their appellate presentation. However, if by their presentation plaintiffs are abandoning their claims for indemnity and for relief under Business and Professions Code section 17200 et seq., then those claims need not be addressed on remand.
2. Alter Ego Remedy
Regarding plaintiff’s claim to an alter ego remedy against Williams (and the other defendants) for the purpose of enforcing the judgments that plaintiffs obtained against Paradisio, we note that when defendant Turtle demurred to plaintiffs’ first amended complaint the trial court overruled that demurrer to several of plaintiffs’ causes of action, including the “cause of action” for alter ego. Thus, by the time of trial, plaintiffs had the benefit of the trial court’s positive review of their claim for application of the equitable remedy of piercing Paradisio’s corporate veil. In addressing alter ego in its ruling on the demurrer, the trial court stated: “To allege alter ego liability, the plaintiff must plead that (1) there is such a unity of interest that the separate personalities of the corporations no longer exist; and (2) inequitable results will follow if the corporate separateness is respected. (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1285.) Some facts critical to this inquiry are inadequate capitalization, commingling of assets, and disregard of corporate formalities. (Ibid.) The court in First W[estern] Bank & Trust v. Bookasta (1968) [267] Cal.App.2d 910 recognized that ‘courts have followed a liberal policy of applying the alter ego doctrine where the equities and justice of the situation appear to call for it rather than restricting it to the technical niceties depending upon pleading and procedure.’ (First W[estern] Bank, supra, at 915.) [¶] Although the [first amended complaint] fails to allege a unity of interest and an inequitable result, it is clear from the allegations that there was a unity of interest between Defendants and Paradisio, and that injustice will result if the corporate fiction is maintained. Turtle argues that it is insufficient for Plaintiffs to only allege a single factor to invoke the alter ego doctrine, i.e., that Paradisio was undercapitalized. The primary concern, however, is whether an inequitable result will follow if the corporate fiction is maintained. Taking as true all the material allegations contained in the [first amended complaint, ] Plaintiffs have sufficiently alleged conduct on the part of Defendants that reflect[s] a corporate fiction and that an injustice will result if that fiction is maintained.”
In their appellate presentation on alter ego plaintiffs cite to Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, and to evidence in the appellate record. The Associated Vendors court discussed at length the facts of dozens of published cases that were of interest as the basis for finding alter ego. Of interest here are the lack of adequate corporate records for Paradisio; nearly identical ownership of the Sonny partnership (Williams, Turtle, Broadway and Rhames) and Paradisio (Williams, Turtle and Broadway); possible use of the same office or business location for those two entities; a failure to adequately capitalize the corporation; the absence of corporate assets; and use of a corporation as a shell, instrumentality or conduit for a single venture. Relevant evidence presented at Turtle’s deposition and by Turtle and others at trial includes the following.
Turtle, Paradisio’s treasurer, testified at his deposition to the following. He did not know in what state Paradisio was incorporated, did not know if he had a role in incorporating it, and did not know who took care of incorporating it. He did not know whether he was secretary or treasurer of Paradisio and he did not know what corporate bylaws are. He could not remember if he understood what it meant to be the treasurer of Paradisio or if he talked to anyone about it, and he never thought about what his job duties and responsibilities would be as treasurer. He never had care and custody of Paradisio funds, he did not personally keep full and accurate accounts of any receipts and disbursements and books belonging to Paradisio, and he did not remember if he ever prepared a record involving Paradisio’s financial condition.
Turtle testified at trial that he was Paradisio’s treasurer, he only knew of one bank account for Paradisio, the one in Puerto Rico, and as far as he knew no money was deposited into it. He stated that “money was never put in the bank” because the movie project “never began.” He stated he never had care and custody of corporate funds and never kept accounts of receipts and disbursements. He stated Paradisio was a single purpose corporation. When asked about a telephone call regarding funding for Paradisio, he stated he “had no idea who was given the money. I don’t even know who we worked for at that point.” He also testified that he “ha[d] no idea about any of that paperwork [plaintiff’s attorney] showed me. My job was to find a company that maybe could fund the film. I found a company. I was very hopeful they would do it. Other than that I’m not a lawyer. I’m not an accountant. I make movies. [¶] And during this time I worked for [bankrupt defendant] Ron Broadway. I worked for [defaulting defendant] David Williams. I worked for Paradisio. And I had... my job was not to say yes or to approve anything. My job was just to get paperwork and ask people what they want me to do.” In his trial declaration Turtle stated that Paradisio was formed with the intention of producing the movie and that it was a failed project.
Paradisio’s bankruptcy “statement of financial affairs, ” which was signed by Turtle in June 2005 states the following. Paradisio’s business was a movie production company and it had one project—the Sonny Liston movie beginning in 2003. In 2004 and 2005 it received no income. It was being sued for breach of contract in four separate cases, including the two aforementioned cases brought by the plaintiffs in the instant case. The other two suits were brought by the above-mentioned Avalon Hollywood Services payroll services company and by a payroll services company in Puerto Rico. Paradisio made a payment of $2,709 to attorney Matthew D. Resnik for bankruptcy services. Paradisio’s address is 20530 Northridge Road in Chatsworth. Defaulting defendant Williams is Paradisio’s president/secretary; bankruptcy-filing defendant Broadway is its vice-president, and defendant Turtle is its treasurer, each having a 1/3 interest. Paradisio had no bookkeeper or accountant who kept or supervised the keeping of books of account and records and no firms or individuals were in possession of any books of account or records for Paradisio. Paradisio never issued a financial statement or took an inventory.
Plaintiff Scott Putman stated the following in his trial declaration. Defendants knew that the cost of producing the movie would be at least nine million dollars but they caused Paradisio to be formed and operate without any capital. A first amended complaint was filed, by Paradisio’s bankruptcy trustee, against Turtle, Williams and others in a bankruptcy adversary case that is part of Paradisio’s bankruptcy case. In that first amended complaint the trustee alleged causes of action against Turtle and Williams for accounting and turning over of property of the bankruptcy estate, alter ego and failure to capitalize, and breach of duty of good faith. Turtle filed an answer to that first amended complaint in which he admitted that Paradisio lacked adequate financing to transact the business for which it was formed.
Plaintiffs Scott Putman and Sharon Craig testified at trial that Turtle had his office on Olympic Boulevard in Los Angeles and Craig stated she had her interview with Turtle at that office. Both testified the office did not have the name Paradisio on the door, and they were never given a business card with Paradisio’s name on it.
In light of (1) Williams’ admission of the truth of the allegations in the complaint, (2) the trial court’s determination that the plaintiffs’ alter ego claims were well pled and demonstrate both (a) conduct on the part of the defendants that reflects a corporate fiction and (b) that an injustice will result if the corporate fiction is maintained, and (3) the evidence presented at trial on the issue of alter ego, on remand of this case the trial court should make a finding that the doctrine of alter ego applies to hold Williams liable for the judgments against Paradisio that plaintiffs obtained in the prior cases.
DISPOSITION
The judgment in favor of Williams and against plaintiffs is reversed and the case remanded for further proceedings consistent with the views expressed herein. Costs on appeal to plaintiffs.
We Concur: KLEIN, P. J., ALDRICH, J.