Opinion
G055307
12-05-2018
RONALD J. ALVARADO, Plaintiff and Appellant, v. ROBERT F. FREEDMAN et al., Defendants and Respondents.
Law Office of Foroozandeh and Majid Foroozandeh for Plaintiff and Appellant. Parcells Law Firm and Dayton B. Parcells III for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2014-00736047) OPINION Appeal from a judgment of the Superior Court of Orange County, Walter P. Schwarm, Judge. Affirmed. Law Office of Foroozandeh and Majid Foroozandeh for Plaintiff and Appellant. Parcells Law Firm and Dayton B. Parcells III for Defendants and Respondents.
Ronald J. Alvarado (Alvarado) loaned money to ContentX Technologies, LLC (ContentX), a company created to help businesses in the adult entertainment industry collect money from parties who illegally download content from the Internet. When ContentX failed to repay Alvarado's loan, he sued ContentX, Robert F. Freedman (Freedman), and RFF Family Partnership, LP (RFFFP). He alleged Freedman and RFFFP were the alter egos of ContentX. The case was tried as a bench trial, and the trial court entered judgment in favor of Freedman and RFFFP, concluding neither party was the alter ego of ContentX. On appeal, Alvarado contends the judgment was not supported by substantial evidence. We conclude Alvarado waived the argument by failing to cite or discuss the evidence in the record supporting the judgment, by not explaining why such evidence was insufficient, and by citing and discussing only evidence in his favor. (Rayii v. Gatica (2013) 218 Cal.App.4th 1402, 1408 (Rayii).) This type of showing on appeal does not demonstrate any error. We affirm the judgment.
FACTS & PROCEDURAL BACKGROUND
Alvarado criticizes the respondent's brief as reading "like a book of fiction, itched in self-serving arguments, without citation to the trial record . . . ." We observe that, ironically, Alvarado's opening brief has a four page "Factual History" containing a single record citation and is saturated with hyperbole. Similarly, the first seven paragraphs introducing the "Nature of the Action" sounds much like the ruminations of a fiction novelist having no need for record citations. For example, Alvarado describes the "world of pornography," and the needs of "porno" companies to stop the "world of pirates." He asserts, "the record is replete (brimming over like a cup of coffee) with undisputed trial testimony and supporting documents" to support an alter ego finding.
Our summary of the facts is taken primarily from the trial court's detailed and lengthy statement of decision and the respondent's brief, which contains many record references and does not read "like a book of fiction."
We begin by discussing the parties and their relationships to each other because Alvarado failed to introduce anyone but himself. Without including any supporting record citations, Alvarado claims he is a former marine officer who once flew military helicopters for former President George Bush. He currently works as a commercial pilot for JetBlue Airlines. He states Todd Sanders (Sanders) is his friend.
In Sander's bankruptcy proceedings, Alvarado filed a complaint seeking a determination regarding "dischargeability of debt" due to fraud, but then dismissed it with prejudice.
Freedman is 85 years old and the president of RFF, Inc. RFF, Inc. is the general partner of RFFFP, which is in business of lending money. The parties do not dispute Freedman also controls RFFFP or that RFFFP's liability under an alter ego theory depended entirely on whether Freedman was an alter ego of ContentX.
Also missing from Alvarado's factual summary was any discussion of the past business relationship and legal history between Sanders and Freedman before they both became involved in ContentX. As noted by the trial court, this information is relevant to understanding why Freedman is not ContentX's alter ego.
RFFFP previously loaned money to Sanders for a different business venture. Sanders had a long history of developing startup companies and turning them into valuable businesses. However, in 2009 one of his ventures was unsuccessful and he defaulted on RFFFP's loan. RFFFP filed a lawsuit and obtained a $2,202,739.73 judgment against Sanders (2009 Judgment).
The following year (2010), Sanders acquired and developed software technology that could detect when a party illegally downloaded media content from the Internet without paying for it. The system would alert the copyright owner, who could then seek monetary compensation from the infringer by sending a letter requesting payment to avoid a lawsuit. Sanders initially formed Download Protection Services, LLC, to market and sell this service. In May 2010, he changed the name to ContentX, because he believed it sounded more interesting and better reflected the company's mission to protect "content in the X-rated business." Sanders signed the name-changing documents in his capacity as the manager and owner of SH Equity Partners. He confirmed SH Equity Partners was initially the sole member of ContentX.
RFFFP agreed to loan money to ContentX because Freedman believed that if this new venture was profitable he could recover what Sanders owed on the 2009 Judgment. The court made the following factual findings regarding their dealings: "To facilitate the loaning of money to [ContentX], [Sanders and Freedman] opened an account at Comerica Bank on September 17, 2010. (Exhibit No. 35.) According to . . . Freedman, the purpose of this account was to keep it separate from his other businesses. [Freedman] did not write the words 'member manager' on page 2 of Exhibit No. 35. [He] also testified he did not write the words 'member manager' on Exhibit No. 38. [Freedman's son-in-law, Marc Sidoti] was also a signatory on this Comerica Bank account. (Exhibit No. 36.) The account had a subtitle of 'Management Account.' (Exhibit No. 35, p. 4.)"
The court relied on Sidoti's explanation about the process used to loan money to ContentX. The statement of decision states the following: "This process consisted of . . . Sanders notifying . . . Sidoti that [ContentX's] bills needed payment. [Sidoti] contacted . . . Freedman to obtain approval for loaning money to [ContentX] to pay the bills. [Sidoti] showed the bills to . . . Freedman, and [he] would authorize . . . Sidoti to pay the bills. [Sidoti] kept a general ledger of the transactions involving the loaning of money from RFFFP to [ContentX]. (Exhibit No. 27.) Exhibit No. 71 contained e[-]mails from . . . Sanders to . . . Sidoti requesting payment for various bills. (For example, see pages 23, 44, and 106 of Exhibit No. 71.)"
The court also relied on Freedman's testimony as follows: "Freedman testified [ContentX] could not have paid its bills without his money, and he wanted to control [ContentX's] account for the purpose of determining that the bills were related to [ContentX]. [Freedman] did not intend to operate [ContentX]. He did not select an office for [ContentX], select employees . . . attend business meetings regarding [ContentX], become involved in the operations of [ContentX], or enter into any contracts on behalf of [ContentX]. [Freedman] directed RFFFP to put money into [ContentX] because he had agreed to pay the bills of [ContentX]."
At the beginning of December 2010, Sanders learned of a new business opportunity. He met with Paul Fishbein, the founder of Adult Video Networks (AVN). Fishbein asked if ContentX would like to sponsor the January 2011 trade show in Las Vegas for $55,000.
Sanders described AVN as the equivalent of the Academy of Motion Picture Sciences to the adult film industry.
Sanders asked Freedman for a $75,000 loan to cover the costs of the sponsorship because he believed it was a good business opportunity for ContentX. Sanders thought it would be helpful to receive Fishbein's public endorsement and participation in the trade show would be an excellent way to advertise ContentX's services "to the entire industry at one time." Freedman decided not to loan ContentX the money.
Meanwhile, Sanders had met with Alvarado multiple times (between July and December 2010) regarding ContentX. The court made the following factual findings regarding these meetings: Alvarado recalled Sanders told him Freedman was the primary investor in ContentX and controlled the money for operations. Alvarado was told Freedman invested approximately $300,000.
After Freedman declined Sanders' loan request, Sanders sent an e-mail to Alvarado stating he needed to raise $75,000 to pay for the AVN show's sponsorship. Alvarado agreed to loan ContentX the money.
It is undisputed that on December 7, 2010, Alvarado and ContentX entered into an agreement called, "Secured Original Issue Discount Term Promissory Note" (Promissory Note), where Alvarado agreed to loan ContentX $75,000. ContentX agreed to repay $100,000 to Alvarado on March 7, 2011. Sanders signed the Promissory Note as the "'Chairman & Manager'" of ContentX. Soon thereafter, Alvarado started working as ContentX's "Vice President of Operations" with a starting annual salary of $100,000.
The court made the following factual findings regarding the loan transaction: Alvarado did not ask Sanders or Freedman to guarantee the Promissory Note. Alvarado expected repayment from ContentX. He spoke to Freedman at the AVN awards show, but the conversation consisted of "small talk." Alvarado did not mention the $75,000 loan. This is the only time Alvarado spoke with Freedman, and they did not otherwise communicate by e-mail or in writing. Alvarado did not tell Freedman he was ContentX's operations officer, he signed an employment agreement with ContentX, or he personally guaranteed a lease for office space.
As for Freedman's role in Alvarado's loan, the court found credible his testimony that he was aware there was $75,000 in the account before "he approved" the first check written by ContentX to AVN. (Exhibit No. 13.) Freedman did not instruct Sanders to write the e-mail asking Alvarado for the $75,000 loan (Exhibit No. 5), and did not discuss the matter with Sanders. The court found credible Sanders' testimony that he made the daily decisions regarding ContentX's operations. He conceded ContentX needed money from Freedman to pay his salary, the bills, rent, and supplies. Sanders remembers telling Freedman he found someone willing to invest $75,000 to pay the costs of the AVN Awards show.
On February 25, 2011, Alvarado and ContentX agreed to extend repayment of the Promissory Note to June 7, 2011. Alvarado and Sanders signed a document setting forth the terms of the extension. Sanders signed his name as "Chairman & CEO" of ContentX.
After the AVN show, ContentX experienced some success. It was building its library, sending out notices, and receiving payments. Sanders explained that after detecting "copyright violators" of companies who subscribed to ContentX's system, ContentX sent infringement notices to the internet service providers, such as Comcast and Verizon. ContentX notified those companies their customers were violating copyright laws and requested that the internet carriers forward the infringement notices directly to their customers. The notices provided a link, giving the violator the option of avoiding a lawsuit and settling the matter for a certain sum of money. Sanders said he reasonably believed the business was going to be successful after he saw ContentX was beginning to receive responses and settlements.
RFFFP loaned ContentX an additional $148,838.69, and converted part of ContentX's debt into an equity share of the company. This conversion was achieved by placing RFFFP as an equal member and co-owner of ContentX. In May 2011, Sanders (as "Manager") and Freedman (as "President" of RFF, Inc.) executed an "Amended and Restated Operating Agreement." The agreement's recitals set forth the following facts: In April 2010, the company was originally formed as Download Protection Services as a limited liability company; in May 2010, the name was changed to ContentX; the company was formed by SH Equity Partners as the sole member and manager; RFFFP was "now an equal Member" of the company; and SH Equity Partners and RFFFP were the co-managers of the LLC. The agreement stated each member made a capital contribution of $125,000
In its briefing, Freedman asserts the business failed because the Internet service providers at some point decided to stop cooperating and would no longer forward the infringement notices to copyright violators. Freedman provided no record citations to support this claim, but Alvarado does not dispute this fact or that it was the cause of the company's downfall.
Alvarado maintains that another reason the company folded is because it was undercapitalized, and Freedman stopped loaning money to pay the bills. He points to Sanders' testimony that Freedman stopped loaning money to ContentX in March 2011. The parties do not dispute that ContentX did not repay Alvarado's loan by the June 2011 deadline.
Alvarado asserts ContentX formally dissolved on March 13, 2013. To support this claim, he refers to Exhibit No. 34, which is a "[s]tatement of [i]nformation" filed with California's Secretary of State on that date. However, this document simply reflects there was "no change" since the last statement of information. The document lists Sanders as the sole manager/member as well as the agent for service of process. He described the LLC's business as "software development." From the record provided, it is unclear when the company dissolved. Exhibit No. 32 contains several years of bank statements and the last one was dated June 2013. In their briefing, the parties do not discuss what transpired between May 1, 2011, when RFFFP gained an ownership interest in ContentX, and June 2013 when apparently the company folded.
In 2014, Alvarado filed a complaint against Freedman and ContentX for breach of contract (under an alter ego theory) and for promissory fraud. He amended the complaint several times, and at some point RFFFP was added in place of Doe 1. The operative complaint was the fourth amended complaint. On the first day of trial, Alvarado dismissed ContentX from the lawsuit.
In its statement of decision, the court stated the bench trial started on May 3, 2017, when it considered the parties' opening statements. On May 17, 2017, both parties rested their case and then discussed the admission of exhibits. The court continued the trial to June 6, 2017, to give the parties an opportunity to submit closing trial briefs and for argument. After the court heard closing arguments, it took the matter under submission and issued a statement of decision.
In the statement of decision, the court discussed the necessary elements for breach of contract, promissory fraud, and the alter ego doctrine. The court outlined the undisputed facts and stated there was one "principal controverted issue" to be decided in the bench trial, i.e., whether Freedman was the alter ego of ContentX. It summarized the arguments as follows: Alvarado argues Freedman was the alter ego of ContentX because he controlled the money that went into the company. RFFFP and Freedman maintain Freedman's only involvement in ContentX was to loan it money and Freedman was not involved in the business operations.
After examining the evidence relevant to the alter ego theory of recovery, the court ruled Freedman and RFFFP were not liable under an alter ego theory for the following reasons:
"1. [Freedman] and RFFFP were not members of [ContentX] on December 7, 2010, the date [Sanders signed] the Promissory Note . . . . (Exhibit No. 8.) RFFFP did not have an ownership interest in [ContentX] until May 1, 2011, the effective date of the amended operating agreement. (Exhibit No. 24.) The sole member of [ContentX] on December 7, 2010, was SH Equity Partners, LLC. [Citations.] Through RFF Inc., . . . Freedman was responsible for managing RFFP, and . . . Sanders was responsible for managing [ContentX]. Until May 1, 2011, RFFFP was not identified with [ContentX] in terms of their management.
"2. Based on the procedure by which RFFFP provided money to [ContentX], the court finds that RFFFP commingled its funds with [ContentX] funds when it made deposits into the [ContentX] account. . . . Although there was commingling, Exhibit No. 27, as maintained by . . . Sidoti, minimized the effect of the commingling. These records allowed RFFFP and [ContentX] to accurately identify the source of funds going into and out of the [ContentX] account. Exhibit No. 27 prevented confusion as to source of the funds . . . .
"3. The evidence was insufficient to establish that [Sanders, Freedman, or Sidoti] authorized the diversion of funds from the [ContentX] account for some purpose unrelated to the business of [ContentX]. Further, there was no evidence that . . . Freedman received any funds from [ContentX] in his individual capacity.
"4. [Freedman] and RFFFP did not represent to . . . Alvarado that they were liable for [ContentX's] debt . . . [and] Alvarado testified he only spoke one time with . . . Freedman . . . at the AVN Awards show. . . .
"5. [ContentX] and RFFFP did not use the same employees or business location. [Freedman] and RFFFP did not participate in the selection of [ContentX] employees of [its] business location . . . .
"6. [Sanders] testified that at times [ContentX] had adequate capitalization and at other times had inadequate capitalization. [Freedman] and RFFFP, however, were not responsible for properly capitalizing [ContentX] based . . . Freedman's agreement that RFFFP would pay [ContentX's] bills. Additionally, [ContentX] had its own assets as represented by [ContentX's] intellectual property based on [Sander's testimony].
"7. [Freedman] and RFFFP did not use [ContentX] as a shell to conduct the business of . . . Freedman as an individual or the business of RFFFP as an entity. RFFFP was in the business of lending money. [ContentX] was in the business of providing services to the film industry to identify copyright violators. Thus, [Freedman] and RFFFP were not using [ContentX] for the purpose of advancing their business of lending money. Exhibit Nos. 54, 56, 60, 62, 63, 67, and 70 are contracts between [ContentX] and customers seeking to use [ContentX's] services. These customer contracts demonstrate . . . [ContentX] was pursuing its business of providing services to the film industry . . . [and] show[] . . . Freedman and RFFFP did not play a role in procuring these customer contracts.
"8. The court finds that the evidence is insufficient to demonstrate that [ContentX] concealed or misrepresented the identity of the responsible ownership or management. [Alvarado] testified he was aware . . . Freedman was the primary investor in [ContentX], . . . Freedman controlled the money for the operation of [ContentX], and . . . Sanders had told him that . . . Freedman had invested approximately $300,000 in [ContentX].
"9. The evidence is insufficient to establish . . . Freedman, RFFFP, and [ContentX] failed to maintain an arm's length relationship in their dealings. Exhibit No. 27 shows that RFFFP and [ContentX] maintained records to identify the funds that RFFFP deposited into [ContentX]. The procedure for the transfer of funds . . . required . . . Sanders to make the request, and for . . . Sidoti to obtain approval from . . . Freedman to make the transfer. [Freedman] and RFFFP were pursuing their interest in lending money, and [ContentX], through . . . Sanders, was pursuing its interest in developing its services to identify copyright violators.
"10. The evidence is sufficient to show . . . Freedman or RFFFP used the [ContentX] entity to obtain labor, services, or merchandise for . . . Freedman or RFFFP.
"11. The evidence is insufficient to establish . . . Freedman or RFFFP diverted assets from [ContentX] to avoid paying . . . Alvarado as a creditor. First, the evidence does not sufficiently show . . . Freedman was aware of . . . Alvarado's status as a [ContentX] creditor based on the Promissory Note. [Freedman] and RFFFP did not represent that they would be responsible for repayment of the Promissory Note. Further, . . . Alvarado has not shown that [ContentX] transferred any assets to . . . Freedman or RFFFP to avoid repayment based on the Promissory Note. The evidence supports that [ContentX] did not repay . . . Alvarado because [it] did not have the money to repay him. At the time that . . . Alvarado signed the Promissory Note, . . . Alvarado was aware that [ContentX] did not have an office, . . . Freedman was the primary investor . . . [and he] controlled the money for the operation of [ContentX], and . . . Sanders had told him . . . Freedman invested approximately $300,000 . . . . Despite his awareness of these facts, . . . Alvarado did not request . . . Freedman or RFFFP to guarantee repayment of the Promissory Note.
"12. The evidence is insufficient to demonstrate that . . . Freedman or RFFFP used [ContentX] to contract with . . . Alvarado with the intent to avoid repaying [him] by using [ContentX] as a shield against repayment. First, . . . Sanders signed the Promissory Note with . . . Alvarado. The evidence is inadequate to show that . . . Freedman or RFFFP authorized . . . Sanders to enter into the Promissory Note with the intent to avoid repaying . . . Alvarado. As established by Exhibits Nos. 13 and 14, [ContentX] used $52,500 of the $75,000 loan . . . to pay for [ContentX] expenses associated with the AVN Awards show. There is no evidence suggesting that any of the $75,000 loan . . . went to . . . Freedman in his individual capacity or to RFFFP as an entity.
"13. The evidence is insufficient to establish . . . Freedman or RFFFP formed [ContentX] for the purpose of transferring to it the existing liability of another person or entity. As discussed above, . . . Sanders formed [ContentX]."
The trial court concluded, that based on the above discussion in its statement of decision, Alvarado had not carried his burden of proof to establish there was unity of interest between ContentX, Freedman, and RFFFP to justify finding that their separate personalities no longer exist. In addition, the court reasoned its finding of "separateness" does not produce an inequitable result. "The court does not intend to minimize the loss of $75,000 to . . . Alvarado. The evidence showed, however, that . . . Alvarado entered into a contract with [ContentX] after having multiple discussions with . . . Sanders regarding [ContentX]. . . . [Alvarado] was aware of [all the relevant facts] before entering into the contract [and he] . . . did not ask RFFFP or . . . Freedman to guarantee the Promissory Note." In addition, the court noted there was no evidence RFFFP recovered its investment into ContentX and Alvarado failed to present "a persuasive reason as to why RFFFP should bear its loss as a lender as well as pay for . . . Alvarado's loss as a lender." The court ruled Freedman and RFFFP were not the alter ego of ContentX. It entered judgment in favor of Freedman and RFFFP.
DISCUSSION
Alvarado argues the court relied on "questionable and disputed facts" in its statement of decision. He explains "the most grievous error" is the court's determination Freedman was not a member of ContentX on the day Alvarado signed the Promissory Note. He notes the court erroneously determined Sanders (SH Equity Partners) was the sole member responsible for managing ContentX. Alvarado argues, "Fortunately for [him], the record is replete with undisputed evidence that Freedman was in fact not only a member of ContentX, he was a 50 [percent] owner and 50 [percent] managing member" on the day Alvarado signed the Promissory Note (December 7, 2010). (Underline omitted.)
In essence, this argument is a challenge to the sufficiency of the evidence supporting the judgment. Alvarado maintains that based on the evidence it was unreasonable for the court to conclude Freedmen was not responsible for repaying Alvarado's loan because he was a co-member and alter ego of ContentX. After discussing only favorable evidence, and entirely ignoring the evidence and inferences made by the court, Alvarado suggests this court must reverse the judgment.
This argument attempts to turn the standard of review on its head. "We do not review the evidence to see if there is substantial evidence to support the losing party's version of events, but only to see if substantial evidence exists to support the verdict in favor of the prevailing party. Thus, we only look at the evidence offered in [the winning party's] favor and determine if it was sufficient." (Pope v. Babick (2014) 229 Cal.App.4th 1238, 1245 (Pope).)
"As has been said many times and by many courts, when the 'findings of fact are challenged in a civil appeal, we are bound by the familiar principle that "the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted," to support the findings below. [Citation.]' [Citation.] 'In applying this standard of review, we "view the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor . . . ." [Citation.]' [Citation.] '"Substantial evidence" is evidence of ponderable legal significance, evidence that is reasonable, credible and of solid value.' [Citation.] We do not reweigh evidence or reassess the credibility of witnesses. [Citation.] We are 'not a second trier of fact.' [Citation.] A party 'raising a claim of insufficiency of the evidence assumes a "daunting burden." [Citation.]' [Citation.]" (Pope, supra, 229 Cal.App.4th at pp. 1245-1246.)
"Moreover, when a losing party challenges the verdict for a lack of substantial evidence, they 'must set forth, discuss, and analyze all the evidence on that point, both favorable and unfavorable. [Citation.]' . . . [Citation.] Appellants' 'fundamental obligation to this court, and a prerequisite to our consideration of their challenge' [citation], is to 'set forth the version of events most favorable to [respondent]' [citation]. 'Accordingly, if, as defendants here contend, "some particular issue of fact is not sustained, they are required to set forth in their brief all the material evidence on the point and not merely their own evidence. Unless this is done the error is deemed to be waived."' [Citation.]" (Pope, supra, 229 Cal.App.4th at p. 1246, first italics in original, second italics added.)
Alvarado utterly fails to satisfy this obligation. The facts discussed in the briefing focuses entirely on setting forth Alvarado's theory of the case. For example, Alvarado refers to Exhibit Nos. 71 and 35, which contain documents proving Freedman and Sanders opened a bank account at Comerica Bank in September 17, 2010. The documents show Freedman signed his name next to the words "managing member." Alvarado maintains this evidence conclusively shows Freedman and Sanders were co-managers of the limited liability company ContentX. Alvarado does not mention there was evidence, mentioned in the statement of decision, that Freedman did not write the words managing member next to his name. There was credible testimony supporting the conclusion RFFFP, who was in the business of lending money, opened the account with Sanders for the duel purpose of simplifying the transfer of loan payments and having safeguards in place to make sure the borrowed money was being appropriately used for ContentX. There was evidence Freedman took no part in ContentX's operations. Noticeably missing from Alvarado's discussion is the significance of ContentX's amended operating agreement dated May 2011, expressly stating Freedman was not previously an owner or member of the LLC. He does not suggest this document was untrustworthy or why it did not prove Freedman was not a member when Alvarado signed the Promissory Note in December 2010.
Moreover, Alvarado's reliance on his own self-serving testimony does not assist his case because his recollection of events was contradicted by other testimony. His failure to acknowledge or mention the conflicting testimony and other evidence supporting the judgment, and lack of explanation as to why such evidence was insufficient as a matter of law, is fatal to his sufficiency of the evidence claim. (Rayii, supra, 218 Cal.App.4th at p. 1408 [failure to cite and discuss evidence "supporting the judgment cannot demonstrate that such evidence is insufficient"].) "An appealed judgment is presumed correct, and the appellant must affirmatively demonstrate error. [Citation.]" (Ibid.)
Alvarado also maintained there was insufficient evidence to support the court's finding Sanders was responsible for managing ContentX because the evidence showed Freedman was in charge. Again, Alvarado fails to mention the evidence supporting the trial court's ruling. He claims "Freedman made it perfectly clear during trial that . . . Sanders had no authority to do anything." However, he provides no supporting record citations to support this contention that the lack of authority was "clear."
On direct examination, counsel asked Freedman, "Did you ever specifically tell . . . Sanders that he had no authority to unilaterally conduct any business on behalf of ContentX . . . without your authorization?" Freedman replied, "I don't remember." He clarified that withdrawals from the Comerica Bank account required his authorization because that money represented what was being loaned to ContentX. Freedman made clear he would not approve loans unless he was told what the money was being used for, and was assured it was a legitimate purpose. We conclude Sanders' lack of control over use of the loan proceeds was the only thing that was made "clear" by Freedman's testimony. Alvarado omits from his discussion Sanders' testimony that Freedman was not involved in the business operations. He did not select the office, employees, or investors. He did not attend meetings, solicit other investors, or play any role in deciding the terms of ContentX's Promissory Note with Alvarado. Again, we conclude Alvarado's challenge to the sufficiency of the evidence was waived due to his decision to merely cite his own favorable evidence, and not set forth all the material evidence on this point.
The remainder of Alvarado's briefing is devoted to discussing the evidence supporting other factors relevant to an alter ego determination. However, the arguments are all premised on the anticipated factual finding Freedman was an owner/member of ContentX around the time it borrowed money from Alvarado. It is Alvarado's theory Freedman was ContentX's alter ego at that time. Based on our ruling affirming the trial court's determination Freedman/RFFFP were not members of the limited liability company when it borrowed money from Alvarado, the doctrine has no application in this case. There is no need to discuss alter ego elements if Freedman is not part of a corporate entity and he was not using the protection offered by being a member of a corporate form to avoid liability. (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300 [alter ego only relevant if using the protection of a corporate form "unjustly and in derogation of the plaintiff's interests"].) Piercing the corporate veil only justifies holding the owners of the corporation liable for the actions of the corporation. It appears that Alvarado fails to appreciate his alter ego claim against Freedman is not "'itself a claim for substantive relief . . . but rather, procedural, i.e., to disregard the corporate entity as a distinct defendant and to hold the alter ego individuals liable on the obligations of the corporation where the corporate form is being used by the individuals to escape personal liability, sanction a fraud, or promote injustice.'" (Greenspan v. LADT LLC (2010) 191 Cal.App.4th 486, 516.)
We note the "alter ego" theory also applies to limited liability companies. "'[A] limited liability company is a hybrid business entity formed under the Corporations Code [and] . . . [t]he company has a legal existence separate from its members. While members actively participate in the management and control of the company, they have limited liability for the company's debts and obligations to the same extent enjoyed by corporate shareholders. [Citations.]' [Citation.]" (Capon v. Monopoly Game LLC (2011) 193 Cal.App.4th 344, 356-357, fn. 11.)
We recognize Freedman eventually became a member of ContentX (in May 2011). However, we find our record contains no facts, and Alvarado cites to none, which would support piercing the corporate veil during the brief time Freedman was member of the company. As stated, Alvarado's entire argument is premised on the conclusion Freedman was a member of the LLC when ContentX signed the Promissory Note. Given the lack of evidence regarding this time frame, the issue does not warrant further discussion.
DISPOSITION
The judgment is affirmed. Respondents shall recover their costs on appeal.
O'LEARY, P. J. WE CONCUR: MOORE, J. FYBEL, J.