Opinion
D038511. D039311.
7-23-2003
CLEARVIEW EYE & LASER MEDICAL CENTER, et al., Plaintiffs and Respondents, v. TLC NETWORK SERVICES, INC., et al., Defendants and Appellants.
In this case, TLC Network Services, Inc. (TLC Network) appeals a judgment confirming an arbitration award, contending the arbitrator acted in excess of his powers by rewriting the contract of the parties and by awarding damages not supported by the contract. TLC Laser Eye Centers, Inc. (TLC Canada), TLC The Laser Center, Inc. (TLC Delaware), and TLC Laser Eye Care of California LLC (TLC California) (hereafter sometimes referred to as the TLC entities) appeal the amendment of the judgment to add them as judgment debtors. They argue the trial court lacked jurisdiction to amend the judgment because at the time of the amendment, a notice of appeal had been filed. They also contend that there was no substantial evidence to support the trial courts conclusion they were alter egos of TLC Network, that Clearview Eye & Laser Medical Center and Dr. Sandy Feldman (collectively referred to as Clearview where appropriate) did not pursue the motion with reasonable diligence, that they were denied due process, and the trial court erred in granting Clearview additional attorney fees. Clearview contends it is entitled to attorney fees on appeal. We affirm the judgment and the order and remand the matter to the trial court for an award to Clearview of attorney fees on appeal.
Appeals D038511 and D039311 were consolidated by order of this court on January 4, 2002.
FACTS
The facts are largely derived from the arbitrators written award.
TLC Network is a Delaware corporation, with its principal place of business in Bethesda, Maryland. It was created by TLC Canada to provide limited management and administrative services to doctors who provide laser vision correction surgery in their own practices but who do not want access to a full-service laser vision correction surgery site. The full-service sites were referred to as "centers" while other sites, such as the one involved in this case, were referred to as "networks."
In January 1998, TLC Network entered into a Management Services and Equipment Lease Agreement (Agreement) with Clearview, a professional ophthalmology practice in San Diego County wholly owned by Feldman. Feldman is a corneal specialist who maintained a private practice at Clearview and during her relationship with TLC Network continued treating her own corneal patients as well as doing laser corrective surgery. Pursuant to the Agreement, TLC Network agreed to provide some management, administrative and marketing services as well as laser vision corrective equipment (an excimer laser and microkeratome).
The Agreement provided that TLC Network would install an excimer laser at Clearview 30 days after the first month in which Clearview performed a threshold of 50 procedures. Dr. Feldman reached this threshold in September 1998 (by leasing time on a laser at the San Diego Eye Bank) and thus was entitled to delivery of the laser in October 1998. The Regional Director of Center Development for TLC Canada, Duane Morrison, advised Clearview that a new VISX S2 model excimer laser was ready for delivery. Clearview, however, was not ready to accept the laser because its laser room was not yet completed.
TLC Canada is a large buyer of VISX lasers and therefore it always has a number of pending orders that can be directed to its various locations. In December 1998, TLC Canada ordered another VISX S2 laser which was specifically earmarked for Clearview.
In 1999, TLC Canada and TLC Delaware had created TLC California, a joint venture with Dr. Thomas Tooma to open a TLC center facility in Orange County. TLC Delaware contributed the Clearview contract as an asset to the joint venture. TLC Network was not a signatory to this Agreement.
In January 1999, Duane Morrison, of TLC Canada, who was charged with the responsibility of supervising Clearviews performance, raised concerns (based on reports of the clinical director who had been hired by TLC Network to work at Clearview) that Clearview was stalling on the installation of the excimer laser. Morrison believed it was his mandate to convert Clearview from a network facility to a full-service center facility as quickly as possible so that TLC Canada, through TLC California, would have more control. Under this plan, Dr. Feldman would have a minority interest in a larger, higher-volume practice. During an April 1999 convention in Seattle, Morrison and TLC Canadas chief operating officer asked Dr. Feldman to convert her practice. She refused.
On April 19, 1999, construction of Clearviews laser room was completed. By the end of the month, however, the VISX S2 laser, which had been earmarked for Clearview, had been re-allocated to Dr. Tooma who was operating the TLC facility in Orange County. The following month, Dr. Tooma attempted to convince Dr. Feldman to convert her San Diego practice to a center facility. Dr. Feldman again declined.
On July 1, 1999, TLC Network established September 20, 1999, as the delivery date for the VISX S2 laser to Dr. Feldman. In August 1999, Dr. Tooma expressed his opinion that no new VISX S2 laser should be delivered, met with Dr. Feldman, suggested she might become involved in litigation and offered her a three percent interest in a new TLC center to be built in San Diego. Dr. Feldman again declined to change her practice.
The following month, TLC Network commenced litigation challenging the validity of a paragraph in the Clearview agreement prohibiting it from competing against Dr. Feldman in San Diego County.
No new VISX S2 laser was tendered to Clearview on September 20, 1999, and TLC Center did not set a new delivery date. On December 23, 1999, Clearview through its attorney demanded delivery of the VISX S2 laser and on January 4, 2000, gave notice that it would purchase its own laser if TLC Network failed to deliver one.
On February 15, 2000, TLC Network notified Clearview that it would deliver a Summit laser to Clearview on or before March 15, 2000. Clearview stated it would accept delivery of a Summit LADAR laser, but further communications revealed that the laser to be delivered would be a used, refurbished Summit Apex Plus laser. On March 16, Clearview rejected the Summit Apex Plus laser as inadequate and purchased its own excimer laser.
In September 1999, TLC Network had filed an arbitration petition seeking declaratory relief that the Agreement did not prohibit TLC California from operating a laser vision correction center in San Diego County. In February 2000, TLC Network amended the petition to state a total of 12 causes of action, including fraud and deceit actions against Dr. Feldman. In March 2000, Clearview answered the amended petition and asserted counterclaims against TLC Network for breach of contract, including failure to deliver the laser, and intentional interference with contractual relations. The matters proceeded to arbitration.
Earlier in 1999, Clearview had filed a state court complaint seeking to block TLC Network from competing with Clearview in San Diego County by operating its own laser vision correction center but had dismissed this complaint.
On May 12, 2000, the arbitrator ruled on a summary adjudication motion that the noncompetition paragraph in the Agreement was valid under California law.
On June 19, 2000, while arbitration on TLC Networks declaratory relief petition was pending, Clearview filed a complaint for injunctive relief alleging unfair business practices and tortious interference with contractual relations against TLC Network and TLC California based on TLCs marketing its Orange County office to San Diego patients. On July 14, 2000, Clearview amended its complaint seeking to substitute TLC Canada for a Doe defendant, but instead named and served TLC Delaware. TLC Canada moved to quash service.
In August 2000, TLC Network and TLC California answered the complaint and moved to compel arbitration or, in the alternative, to stay the proceedings on Clearviews claim for injunctive relief. The TLC entities sought to compel Clearviews claims to be arbitrated at the same October 2000 arbitration pending on TLC Networks petition for arbitration.
In early October 2000, the superior court quashed service on TLC Canada because the corporation had not been properly served pursuant to Code of Civil Procedure section 416.10, subdivision (b). The court in part granted the TLC entities motion to compel arbitration ruling, inter alia, that TLC California had standing to compel arbitration because it was one of TLC Networks affiliates and therefore fell within the Agreements definition of "Management Company." The court ruled Clearviews claims should be arbitrated but denied TLC Networks request that the claims be arbitrated at the same time as TLC Networks declaratory relief action then scheduled for October 31, 2000. The court granted the request to stay the litigation pending Clearviews application for a preliminary injunction. Clearview on October 31, 2000 applied for a preliminary injunction. The court denied a preliminary injunction, in part, because it was unclear precisely what issues had been submitted to the arbitrator.
The arbitration proceedings began in December 2000. The arbitrator found TLC Network had breached the contract on April 28, 1999, when it reallocated the VISX S2 laser earmarked for Clearview to a different facility. The arbitrator ruled the contract required TLC Network to make commercially reasonable efforts for installation of the laser vision correction equipment and that the tendering of the refurbished Summit Apex Plus for delivery on March 15, 2000, nearly a year after Clearviews laser room had been completed and only after a demand for delivery by Clearviews counsel, was not commercially reasonable. The arbitrator noted that the failure to make deliveries of the VISX S2 laser as promised in April and October 1999 was not caused by any market conditions beyond TLC Centers control or due to a failure by Dr. Feldmans refusal to accept delivery but was a decision made by TLC Canada "for its own policy reasons."
Based on the declarations of Clearviews and TLC Networks experts, the arbitrator awarded Clearview damages relating to a microkeratome, which had not been timely delivered. The arbitrator awarded past and future damages relating to the excimer laser based upon expert declarations submitted by Clearview and TLC Network. Clearviews expert had based his calculation on the number of procedures which Clearview could perform assuming full compliance by TLC Network, and argued, based on historical market penetration by TLC Canada that the calculations should be based on 400 or 500 procedures per month, numbers the arbitrator believed were too high. TLC Networks expert had advocated calculations based on 125 or 175 procedures a month, numbers the arbitrator thought were too low. The arbitrator concluded the average number of procedures that Clearview would have achieved from April 28, 1999, through the term of the contract was 200 procedures a month and used that number to calculate damages. The arbitrator awarded past damages of $ 1,318,508, future damages of $ 527,423, and damages relating to the microkeratome of $ 58,638, for total consequential damages of $ 1,904,569.
There were a number of other claims at issue during the arbitration. The arbitrator rejected TLC Networks arguments that the parties had amended the Agreement in June 1998, that Clearview had breached the Agreement by failing to properly comanage patients, and that TLC Networks attempted termination of the Agreement in February 2000 was effective. The arbitrator rejected Clearviews claims that TLC Network had breached the Agreement by failing to provide adequate marketing services, by targeting San Diego patients for the Orange County facility, interfering with Clearviews and Dr. Feldmans credentialing by Vision Service Plan, and by improperly steering Vision Service Plan patients from Clearview to Orange County.
TLC Network had attempted to terminate the agreement based on a number of alleged breaches by Clearview. The arbitrator found that Clearview had not breached the agreement and therefore the termination was ineffective.
Clearview requested the arbitrator to issue the award against the TLC entities. The arbitrator declined to do so, believing that he lacked the power to add parties. The arbitrator, however, indicated that were he authorized to do so, he would add the TLC entities as additional judgment debtors. He noted that although TLC Network was a signatory to the Agreement, TLC Network "conducts little if any business as a corporate entity" and that the Agreements definition of "Management Company" as including TLC Network and its "affiliates" was broad enough to encompass the TLC entities.
In April 2001, TLC Network and TLC California filed a motion in superior court seeking to vacate the award. Clearview filed a motion to confirm the award. The superior court confirmed the award on May 18, 2001. The court also specifically reserved "jurisdiction to entertain a motion . . . to amend the judgment." This judgment was not entered until July 19, 2001. The written judgment, inter alia, stated, "this court hereby reserves jurisdiction to entertain a motion by CLEARVIEW to amend the judgment to name additional parties as debtors of the judgment."
In June 2001, Clearview filed a motion to amend the judgment to add TLC Canada, TLC Delaware, and TLC California as additional judgment debtors. The hearing was set for July 27, 2001. TLC Network and TLC California filed a joint opposition to the motion on July 17, 2001. On July 25, two days before the scheduled hearing on the motion to amend, TLC Network filed a notice of appeal from the judgment. Apparently, due to the filing of the notice of appeal, the motion was taken off calendar, prompting Clearview to make an ex parte request to have the motion placed back on the calendar. The hearing on the motion to amend was reset and heard in September 2001. The court granted the motion, finding both that it had jurisdiction to amend the judgment and that the TLC entities were alter egos of TLC Network and should be added as judgment debtors. The amended judgment was filed on October 24, 2001. The TLC entities timely appealed.
DISCUSSION
I
Standard for Reviewing an Arbitration Award
A court may correct or vacate a contractual arbitration award if the arbitrator exceeded his power. (Code Civ. Proc., §§ 1286.2, subd. (a)(4), 1286.6, subd. (b); Board of Education v. Round Valley Teachers Assn. (1996) 13 Cal.4th 269, 275, 914 P.2d 193.) "An arbitrator exceeds his powers when he acts without subject matter jurisdiction [citation], decides an issue that was not submitted to arbitration [citations], arbitrarily remakes the contract [citation], upholds an illegal contract [citation], issues an award that violates a well-defined public policy [citation], issues an award that violates a statutory right [citation], fashions a remedy that is not rationally related to the contract [citation], or selects a remedy not authorized by law [citations]. In other words, an arbitrator exceeds his powers when he acts in a manner not authorized by the contract or by law." (Jordan v. Department of Motor Vehicles (2002) 100 Cal.App.4th 431, 443.)
"Arbitrators are not obliged to read contracts literally, and an award may not be vacated merely because the court is unable to find the relief granted was authorized by a specific term of the contract. [Citation.] The remedy awarded, however, must bear some rational relationship to the contract and the breach. The required link may be to the contractual terms as actually interpreted by the arbitrator (if the arbitrator has made that interpretation known), to an interpretation implied in the award itself, or to a plausible theory of the contracts general subject matter, framework or intent." (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 381, 885 P.2d 994.) An arbitrator enjoys broad discretion to fashion a remedy, particularly where the damage is difficult to determine or measure. (Ibid.)
"It is well settled that the scope of judicial review of arbitration awards is extremely narrow." (California Faculty Assn. v. Superior Court (1998) 63 Cal.App.4th 935, 943; Ajida Technologies, Inc. v. Roos Instruments, Inc. (2001) 87 Cal.App.4th 534, 541.) Courts may not review either the merits of the controversy or the sufficiency of the evidence supporting the award. (Southern Cal. Rapid Transit Dist. v. United Transportation Union (1992) 5 Cal.App.4th 416, 422-423, disapproved on other grounds in Advanced Micro Devices, Inc. v. Intel Corp., supra, 9 Cal.4th at p. 377.)
The court should defer to an arbitrators decision on the merits of the controversy and not substitute its own judgment for that of the arbitrators in determining the contractual scope of the arbitrators powers. (Board of Education v. Round Valley Teachers Assn., supra, 13 Cal.4th at p. 275.) "Any doubts as to the meaning or extent of an arbitration agreement are for the arbitrator, not the court to resolve." (Oakland-Alameda County Coliseum Authority v. CC Partners
(2002) 101 Cal.App.4th 635, 642.) We review the trial courts decision as to whether an arbitrator exceeded his powers de novo. (Id. at p. 641; Alexander v. Blue Cross of California (2001) 88 Cal.App.4th 1082, 1087.)
II
The Arbitrator Did Not Rewrite the Contract to Require Delivery
of a VISX S2 Laser
TLC Network contends the arbitrator rewrote the contract to require not merely the delivery of an excimer laser, but the delivery of a particular laser, that is, the VISX S2 laser. The arbitrator did no such thing.
The arbitrator ruled that the contract required TLC Network to act in a commercially reasonable manner. TLC Network does not dispute that the contract required it to act in a commercially reasonable manner. The arbitrator did not find that the Agreement required TLC Network to deliver a VISX S2 laser, but that TLC Networks tender of a refurbished Summit Apex Plus laser was not commercially reasonable under the circumstances. These circumstances included the fact that the parties had multiple discussions indicating that TLC Network would deliver a new VISX S2 laser, that, in fact, new VISX S2 lasers had been earmarked for delivery to Clearview and that TLC Networks conduct in delaying the delivery of any laser was commercially unreasonable given the lack of any market conditions beyond TLC Canadas control or refusal to accept delivery by Clearview to justify the delay. In sum, the arbitrator did not rewrite the parties Agreement to require delivery of a particular laser.
TLC Network asserts because "the VISX S2 laser did not become FDA approved until after the parties entered the Agreement," therefore it was clear "that a `new VISX S2 laser was not contemplated at the time the never-amended Agreement was signed." While this may be true, it does not negate the fact that there were multiple conversations indicating the parties contemplated that a new VISX S2 laser would be delivered to Clearview nor negate a finding that the long delay in delivering any laser and then delivering a used one was not commercially reasonable.
TLC Network also suggests that its attempted delivery of the Summit Apex Plus was permitted by paragraph 4.1(d) of the Agreement. That provision, however, applies to the upgrading of lasers that had already been delivered and does not apply to the situation here, i.e., the initial delivery.
No reversal is merited on this ground.
III
Award of the Cost of a Microkeratome
TLC Network points to a monthly report prepared by Duane Morrison, TLC Centers Regional Director of Center Development for TLC Canada, showing delivery of a microkeratome to Clearview in early November 1998, and argues that despite its compliance "with its contractual obligation to furnish a microkeratome to Clearview, the arbitrator nevertheless awarded Clearview the cost of a microkeratome valued at $ 58,638." TLC Network argues the arbitrator exceeded his powers because: (1) "the contract only required TLC Network to provide one microkeratome to ClearView," and (2) "even if the arbitrator could have found TLC Network breached an obligation to provide ClearView with the use of a second microkeratome . . ., there was simply no contractual mooring for his award to ClearView of the cost of the microkeratome" as the contract provided "that the microkeratome is TLC Networks property `at all times during and after the term of this Agreement. " We find TLC Networks argument to be unpersuasive and based on a faulty premise that the arbitrator necessarily found that the parties Agreement entitled Clearview to two microkeratomes (i.e., the delivery of one and the cost of a second one). As TLC Network admits, the microkeratome was not delivered until November 1998. There was a delay of eight months between when the microkeratome should have been delivered (March 1998) and when it was actually delivered. The damages awarded reasonably could reflect the delay in delivering the microkeratome and therefore were rationally related to the contract breach.
IV
The Arbitrator Did Not Exceed his Powers by Awarding Future Damages
TLC Network contends the arbitrator exceeded his powers by awarding Clearview damages after its March 16, 2001, purchase of a VISX S2 laser since the arbitrator had also declared the contract was still in effect. TLC Network asserts that future damages were improper because the award was based on an assumption that TLC Network would not comply with its contractual obligations in the future. (See Coughlin v. Blair (1953) 41 Cal.2d 587, 598, 262 P.2d 305 ["If the breach is partial only, the injured party may recover damages for nonperformance only to the time of trial and may not recover damages for anticipated future nonperformance."].) As TLC Network points out, Clearview did not claim nor did the arbitrator find a total breach of contract and therefore, TLC Network contends, there was no basis for awarding future damages continuing through the end of the contract term; Clearview was not entitled to both damages for a total breach (future damages) and a ruling that TLC Network was still obliged to perform the Agreement.
Initially, we note that the arbitrators determination the contract was still in effect was made in the context of TLC Networks claim that it had terminated the contract in February 2000. The arbitrator found the termination was ineffective because TLC Network had failed to establish that the claimed breaches of the contract by Clearview had occurred so as to justify termination of the contract.
Second, the future damages awarded by the arbitrator do not necessarily reflect a finding of anticipated future nonperformance by TLC Network. The damages were based on the number of procedures Clearview would likely perform with the excimer laser had the laser been timely delivered. Because the laser was not timely delivered, it was not unreasonable for the arbitrator to determine that Clearview would continue to suffer damages from TLC Networks breach of the Agreement to timely deliver an excimer laser even after Clearview purchased its own laser since there would be a period of time when Clearview would not be performing as many laser surgeries as it would have been doing had the laser been delivered in April 1998. That is, there exists a rational relationship between the breach (late delivery) and an award of future damages based on the period of time after the March 2000 purchase of the excimer laser when Clearview would be getting up to full speed on its laser surgeries. The award of both past and future damages, contrary to TLC Networks suggestion, did not amount to a double recovery nor was it irrational.
V
Prejudgment Interest
TLC Network contends that the prejudgment interest award must be reversed because the arbitral award on the equipment delivery claims was improper. Since we have determined confirmation of the arbitral award on the excimer laser claims was proper, no reversal is merited on this ground.
VI
Amendment of Judgment
The TLC entities contend the court erred in amending the judgment to add them as judgment debtors. They contend the trial court lacked jurisdiction to amend the judgment because TLC Network had already appealed the judgment, there was insufficient evidence to establish to support application of the alter ego doctrine, the motion should have been rejected as untimely, and they were denied due process.
(A)
Applicable Law — Postjudgment Addition of Defendants
And Postjudgment Trial Court Jurisdiction
Under Code of Civil Procedure section 187, a trial court has authority to amend a judgment to add additional judgment debtors. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd. (1996) 41 Cal.App.4th 1551, 1554.) "Judgments may be amended to add additional judgment debtors on the ground that a person or entity is the alter ego of the original judgment debtor. . . . `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."" (Id. at p. 1555; Oyakawa v. Gillett (1992) 8 Cal.App.4th 628, 631 ["The rationale is that the new defendant is really one and the same as the original defendant and, as such, was represented by the original defendants participation in the trial leading to the judgment."].) As we explained in Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415, 1420, the case law has permitted the addition of new parties as additional judgment debtors based on the "`alter ego concept that the original party and the new party were one and the same. Adding the alter ego entity after judgment, therefore, amounted to little more than correcting a misnomer in naming the defendant." (Tokio Marine & Fire Ins. Corp. v. Western Pacific Roofing Corp. (1999) 75 Cal.App.4th 110, 116.) The inclusion of additional alter ego defendants is essentially regarded as a correction of a clerical error "to ensure that the courts records `speak the truth." (Id. at p. 118.) In contrast, if the new defendants are clearly distinct and separate entities and the alter ego doctrine does not apply, generally the court may not insert them as judgment debtors. (See id. at p. 117 [named party was general contractor, postjudgment attempt to name insurance company was improper]; CC-California Plaza Associates v. Paller & Goldstein (1996) 51 Cal.App.4th 1042, 1048-1049 [named party was building owner, postjudgment attempt to name general contractor held improper]; Jines v. Abarbanel (1978) 77 Cal. App. 3d 702, 714-715, 717, 143 Cal. Rptr. 818 [named party was physician, postjudgment attempt to name corporation who employed physician was improper].)
Code of Civil Procedure section 187 states: "When jurisdiction is, by the constitution or this code, or by any other statute, conferred on a court or judicial officer, all the means necessary to carry it into effect are also given; and in the exercise of this jurisdiction, if the course of proceeding be not specifically pointed out by this code or the statute, any suitable process or mode of proceeding may be adopted which may appear most conformable to the spirit of this code."
While, "as a general rule, `a court may amend its judgment at any time so that the judgment will properly designate the real defendants" (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Center Bd., supra, 41 Cal.App.4th 1551, 1555), a partys motion for an amendment of the judgment to add additional debtors may be denied if the party failed to act with reasonable diligence. (See Alexander v. Abbey of the Chimes (1980) 104 Cal. App. 3d 39, 48, 163 Cal. Rptr. 377 [nearly seven year unexplained delay in bringing motion to amend judgment, held motion was properly denied]; Ukegawa Brothers v. Agricultural Labor Relations Bd. (1989) 212 Cal. App. 3d 1314, 1322, 261 Cal. Rptr. 420 [one year delay was not unreasonable to correct error in Agricultural Labor Board decision, held motion to amend error in compliance hearing was properly granted].)
"Two conditions must be met before the alter ego doctrine will be invoked. First, there must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone." (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.) Factors relevant to determining whether the alter ego doctrine should be applied include the commingling of funds and assets of the two entities, the holding out by one entity of liability for the debts of the other, identical equitable ownership, the use of the same offices and employees, the use of one as a mere shell or conduit for the affairs of another, inadequate capitalization, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers. (Id. at pp. 538-539) A finding that a corporation is a "hollow shell without means to satisfy its existing and potential creditors" is "alone . . . more than sufficient for the trier [of fact] to find both unity of interest and ownership as well as an inequitable result if the alter ego doctrine is not applied." (Alexander v. Abbey of the Chimes, supra, 104 Cal. App. 3d at p. 47.)
The determination of whether the alter ego doctrine applies is a matter within the province of the trial court since ordinarily the issue is a question of fact. (Alexander v. Abbey of the Chimes, supra, 104 Cal. App. 3d at p. 46.) Factual resolutions of the trial court are reviewed using the substantial evidence test.
As a general rule, "the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order . . . ." (Code Civ. Proc., § 916, subd. (a); Laidlaw Waste Systems, Inc. v. Bay Cities Services, Inc. (1996) 43 Cal.App.4th 630, 641.) However, there is an exception to this rule for the enforcement of a judgment involving the payment of money. Pursuant to Code of Civil Procedure section 917.1, subdivision (a)(1):
"Unless an undertaking is given, the perfecting of an appeal shall not stay enforcement of the judgment or order in the trial court if the judgment or order is for any of the following:
(1) Money or the payment of money, whether consisting of a special fund or not, and whether payable by the appellant or another party to the action."
It is also true that there can be but one final judgment in a case and the appeal must be from the final determination of the rights of the parties in an action or proceeding. (See Code Civ. Proc., §§ 577, 904.1, subd. (a)(1); 9 Witkin, Calif. Procedure (4th ed. 1997) Appeal, §§ 57-58, pp. 113-114.) "The decisional law has interpreted finality as that situation where the judgment leaves no issue for future consideration [citation], or where it is `finally dispositive of the case." (Civic Western Corp. v. Zila Industries, Inc. (1977) 66 Cal. App. 3d 1, 12, 135 Cal. Rptr. 915.) "`It is not the form of the decree but the substance and effect of the adjudication which is determinative. As a general test, which must be adapted to the particular circumstances of the individual case, it may be said that where no issue is left for future consideration except the fact of compliance or noncompliance with the terms of the first decree, that decree is final, but where anything further in the nature of judicial action on the part of the court is essential to a final determination of the rights of the parties, the decree is interlocutory." (Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 698.)
(B)
Filing the Appeal Did Not Divest the Trial Court of Jurisdiction to Amend the Judgment
Here, at the time the court heard the motion to amend, TLC Network had not filed an undertaking. Thus, pursuant to Code of Civil Procedure section 917.1, subdivision (a)(1), the appeal did not stay enforcement of the judgment and the court had the power to amend the judgment to add judgment debtors, a matter of enforcement. (See dicta in Oyakawa v. Gillett, supra, 8 Cal.App.4th at pp. 630-631, fn. 2.)
Moreover, the court stated in its May 2001 telephonic ruling (confirmed after oral arguments by counsel) that "the Court shall retain jurisdiction to entertain a motion to amend the judgment." In the written judgment filed on July 19, 2001, the court stated: "this court hereby reserves jurisdiction to entertain a motion by CLEARVIEW to amend the judgment to name additional parties as debtors of the judgment." In other words, the initial judgment, filed on July 19, 2001, was by its very terms not intended to be a final judgment since it specifically and expressly stated the court was retaining jurisdiction to consider a motion to add additional defendants. Thus, TLC Networks notice of appeal filed on July 25, 2001, was premature and did not divest the court of jurisdiction to consider the reserved issue of whether additional debtors should be added to the judgment.
Clearview, in passing, suggests that we should "dismiss TLCs purported appeal from the original judgment — for lack of appellate jurisdiction." We, however, treat the notice of appeal as a premature but valid appeal from the judgment. (See Griset v. Fair Political Practices Com., supra, 25 Cal.4th at p. 700.)
The TLC Entities Were Alter Egos of TLC Networks
The TLC entities argue that there was insufficient evidence to establish they were alter egos of TLC Network.
The record shows that TLC Network was a subsidiary of TLC Delaware which, in turn, was a subsidiary of the parent company, TLC Canada. TLC California was a joint venture between TLC Canada, TLC Delaware, and Dr. Tooma. The assets of TLC
Network were transferred to TLC California.
TLC Network did not make any profits or suffer any losses; all that was "done at the parent level." When the joint venture creating TLC California was made between TLC Delaware and Dr. Tooma, the Clearview contract was contributed as an asset but TLC Network was not a signatory to the Agreement. Thereafter, all profits from Clearview technically became the property of TLC California but TLC California did not retain the profits; the money merely flowed through TLC California to another TLC corporate entity. Indeed, when Dr. Tooma, a part owner of TLC California, testified at the arbitration proceeding he initially stated that TLC California did not have an ownership interest in Clearview and that he had not seen any statements or "financials" relating to Clearview.
TLC Network never had any employees. The general counsel of TLC Canada negotiated, drafted, and signed the Agreement with Clearview on behalf of TLC Network. She was an officer of all the subsidiaries in order to sign agreements with doctors made by the subsidiaries. Supervision of Clearviews efforts in San Diego and the preparation of monthly reports as to Clearview were done by Morrison, an employee of TLC Canada. He reported to the chief operations officer who worked at the TLC Canada office. The chief executive officer of TLC Canada testified that he thought that he was an officer of TLC Network but had no idea what office he held in TLC Network. The decision not to deliver the VISX S2 laser to Clearview, a decision which breached the TLC Network/Clearview contract, was made by TLC Canada. The arbitrator found that TLC Network "conducts little if any business as a corporate entity."
The arbitrator found that TLC Canada controlled the arbitration through its counsel and corporate officers. During the arbitration, the witnesses who testified on behalf of TLC Network consisted of employees of TLC Canada and Dr. Tooma of TLC California.
The TLC entities did not present any evidence to dispute the findings of the arbitrator or evidence presented by Clearview.
When a challenge is made to the sufficiency of the evidence, we must review the entire record and view all factual matters in the light most favorable to the prevailing party and the judgment. (Washington v. Farlice (1991) 1 Cal.App.4th 766, 771-772; Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633.) We do not reweigh the evidence or resolve conflicts in the evidence or in the reasonable inferences that may be drawn from the evidence. (White v. Inbound Aviation (1999) 69 Cal.App.4th 910, 927.) "`All of the evidence most favorable to the respondent must be accepted as true, and that unfavorable discarded as not having sufficient verity, to be accepted by the trier of fact." (Buehler v. Sbardellati (1995) 34 Cal.App.4th 1527, 1542.) When the record contains substantial evidence, "no matter how slight it may appear in comparison with the contradictory evidence, the judgment must be upheld." (Howard v. Owens Corning (1999) 72 Cal.App.4th 621, 631.)
Here, there was substantial evidence to support a finding there was such a unity of interest and ownership between TLC Network and the other TLC entities such that TLC Network truly did not have a separate corporate existence. The evidence showed TLC Network was a mere shell of a corporation without assets or employees. Because it was a mere shell of a corporation, without the means to satisfy existing or potential creditors, an unequitable result would occur if the alter ego doctrine were not applied. (See Alexander v. Abbey of the Chimes, supra, 104 Cal. App. 3d at p. 47.)
(D)
Timing of Motion to Amend
The TLC entities contend the motion to add the TLC entities as judgment debtors should have been denied because of Clearviews delay in seeking the amendment.
While it certainly would have been preferable had Clearview sought to add the TLC entities at the same time it sought to confirm the arbitrators award so that the subsequent procedural morass could have been avoided, we do not find that Clearview unreasonably delayed in bringing the motion. Because of the limited discovery permitted prior to the arbitration, the interrelations among the various TLC entities and TLC Network would not necessarily have been clear prior to the arbitration proceedings when those issues could be explored. The record shows that Clearview sought to add the TLC entities as judgment debtors during the arbitration proceeding but that the arbitrator declined because he believed he lacked the power to do so. The record also shows that Clearview had alerted the court that it would be seeking to add the TLC entities as judgment debtors at the time of the May 2001 hearing on the motion to confirm the award since the court at that time specifically reserved "jurisdiction to entertain a motion to amend the judgment." Clearview filed its motion to add the TLC entities as additional judgment debtors in June 2001, more than a month before the written judgment was filed. Finally, we note that the written judgment filed on July 19, 2001, recognized that Clearview had a pending motion to add the TLC entities as judgment debtors and reserved jurisdiction on that issue.
This procedural background supports a finding that Clearviews motion to amend the judgment was pursued with reasonable diligence.
(E)
Due Process Concerns Were Met
As the TLC entities point out, due process concerns are raised when a party added postjudgment as an additional debtor was a separate entity that did not have an opportunity to advocate its position.
We do not find any denial of due process. As we explained in part VI (C), ante, there was substantial evidence showing that the TLC entities participated in the litigation as alter egos of TLC Network and, indeed that TLC Canada controlled the litigation. Additionally, the TLC entities had the opportunity to contest the alter ego status in the hearing on the motion to amend the judgment. They chose not to present any evidence.
VII
Attorney Fees and Costs
TLC Network contends Clearviews motion for additional attorneys fees incurred in connection with confirmation of the arbitral award and entry of the July 19 judgment was untimely because it was filed more than 60 days after July 19. (See Cal. Rules of Court, rule 870.2.) Clearviews motion for additional attorney fees was filed on December 4, 2001. This was timely. The July 19 "judgment" was interlocutory. The operative judgment here was the amended judgment filed on October 24, 2001.
TLC Network also contends Clearview should not have been awarded attorney fees or costs for its efforts to amend the judgment to add additional defendants. TLC Network contends these fees and costs were not reasonably and necessarily incurred since Clearview knew of the additional defendants prior to the arbitration. This argument is premised on a theory that Clearview was not entitled to add additional defendants after the arbitration. We have rejected this argument.
Finally, we note that Clearview has requested and is entitled to its attorney fees on appeal and may pursue a determination of the amount in the trial court.
DISPOSITION
The judgment and the order are affirmed. The matter is remanded to the trial court for its determination of an award to Clearview of attorney fees on appeal. Clearview is awarded costs on appeal.
BENKE, Acting P. J., MCDONALD, J., We Concur.