Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. VG07304640
NEEDHAM, J.
Chunlei Leila Guo (Guo) appeals from an order amending a default judgment to include her as a judgment debtor, based on the trial court’s determination that she was the alter ego of the corporation against which the default was entered. Guo complains the entry of the amended judgment violated her right to due process, in part because the trial court had not permitted her, a non-attorney, to represent her corporation in the lawsuit. We affirm.
I. FACTS AND PROCEDURAL HISTORY
Guo was the sole shareholder of Tri-Valley Golden Care, Inc. (TVGC), which owned and operated the Luminary Day Spa in Pleasanton. TVGC entered into a written agreement to sell the spa business and its assets to Svetlana Mazurova and her husband, who formed the corporation Luminary Spa, Inc. (LSI). The sale was financed in part through a promissory note in favor of Guo.
After the sale of the spa business, a dispute arose between the parties regarding, among other things, Guo’s alleged nondisclosure of outstanding coupons issued for free spa services and Mazurova’s alleged failure to make payments under the promissory note. Guo and TVGC filed a civil action for breach of contract and related claims against Mazurova and LSI, who responded by filing a cross-complaint against Guo and TVGC.
TVGC and Guo were represented by counsel until Guo fired their attorney to save money. Guo began representing herself in propria persona, but, as a non-lawyer, was precluded by California law from making appearances on behalf of her corporation. (See Caressa Camille, Inc. v. Alcoholic Beverage Control Appeals Bd. (2002) 99 Cal.App.4th 1094, 1101 (Caressa) [corporation can only appear through counsel].) Consequently, TVGC’s complaint and answer to the cross-complaint were stricken, and a default judgment was entered against it on the cross-complaint in an amount of $161,085.58.
The written judgment indicates that the $161,085.58 figure was calculated as follows: $30,546.96 for the outstanding coupons for free spa services, $149,562.24 for lost profits, and $21,976.38 for the difference between the value of property received from TVGC and its actual value, less a balance of $41,000 on the promissory note to Guo.
Mazurova and LSI amended their cross-complaint to assert a theory of alter ego liability against Guo. They also filed a motion to amend the judgment against TVGC to add Guo as a judgment debtor under an alter ego theory. The evidence accompanying the motion showed that Guo was the sole owner of TVGC stock and exercised exclusive control over the company, that she had purchased the spa in her own name, not the corporation’s, that she had mingled corporate funds with her own, for example, by taking cash directly from the business and by using corporate accounts to pay her personal expenses, that after the lawsuit commenced, Guo had taken TVGC assets for her own use and dissolved the corporation, and that Guo had transferred her personal residence to a Nevada limited liability company she controlled, along with real property on which TVGC had operated a senior care business.
Guo opposed the motion to amend the judgment. She presented no evidence to contradict the showing that she was TVGC’s alter ego, but she argued that it would violate her right to due process to add her as a judgment debtor without allowing her to fully litigate the claims against her.
The trial court granted the motion and ordered that the $161,085.58 judgment against TVGC be amended to include Guo as a judgment debtor who was jointly and severally liable for the full amount. In its written ruling, the court observed that the amendment was necessary to avoid inequity because “Guo has been and is actively moving her personal resources and those of TVGC in new and different forms of ownership. Her evasive, incomplete and contradictory answers at her deposition and at the Debtor’s Exam referred to above, and her mysterious recent business transactions—all part of the record before the Court—suggest strongly that she seeks personally to avoid the effects of a judgment in Cross-Complainants’ favor....”
After judgment was entered on this order, Guo brought a motion to vacate on the grounds of mistake, inadvertence, surprise or excusable neglect under Code of Civil Procedure section 473, subdivision (b). The motion was denied and Guo appealed from the amended judgment.
II. DISCUSSION
Under Code of Civil Procedure section 187, a trial court may amend a judgment to name additional judgment debtors. (NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778 (NEC).) Typically, such amendments are made on the ground that the person or entity added is an alter ego of the original judgment debtor. (Ibid.; Dow Jones Co. v. Avenel (1984) 151 Cal.App.3d 144, 150.) This is an equitable procedure based on the theory that the court is not imposing liability against a new defendant, but is inserting the name of the real defendant, i.e., the alter ego. (McClellan v. Northridge Park Townhome Owners Assn. (2001) 89 Cal.App.4th 746, 752 (McClellan).)
Code of Civil Procedure section 187 provides, “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.” The statute has been judicially construed to give courts the power to “use all means to carry its jurisdiction into effect, even if those means are not set out in the code.” (NEC, supra, 208 Cal.App.3d at p. 778.)
An individual may be treated as a corporation’s alter ego when two criteria are met. First, the individual and the corporation must share such a unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist. Second, the circumstances must be such that treating the corporation as separate from the individual would produce an inequitable result. (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 538.) A determination of alter ego status must be upheld on appeal if supported by substantial evidence. (See McClellan, supra, 89 Cal.App.4th at p. 752.)
Guo does not dispute that she was TVGC’s alter ego, but she argues it would be unfair to add her as a judgment debtor on the cross-complaint when the judgment was taken by default. She complains the amendment to the judgment violated her right to due process because she did not have an adequate opportunity to defend her own interests or those of TVGC against the cross-complaint. We disagree.
A judgment against a corporation may be amended to add an individual as a judgment debtor when that individual is an alter ego whose interests have been effectively represented in the action. (See NEC, supra, 208 Cal.App.3d 778-781, and cases cited therein.) Due process is satisfied when the alter ego “ ‘personally or through a representative, had control of the litigation and occasion to conduct it with a diligence corresponding to the risk of personal liability that was involved.’ ” (Id. at pp. 778-779.) In this case, Guo controlled the underlying litigation on behalf of TVGC and participated directly as a named defendant. Substantial evidence supports the trial court’s determination that she had an opportunity to meaningfully participate in the defense. (See NEC, supra, 208 Cal.App.3d at p. 781 [substantial evidence standard of review].)
Published decisions disallowing the addition of an alter ego as a judgment debtor are distinguishable. In Motores de Mexicali v. Superior Court (1958) 51 Cal.2d 172, 176 (Motores), the court concluded that individuals who were not named as defendants and who were strangers to the litigation could not be added to a default judgment taken against the corporation they owned. In NEC, supra, 208 Cal.App.3d at pp. 780-781, the court followed Motores and held that an individual who was not personally named in the lawsuit and did not control the litigation on the corporation’s behalf could not be added as a judgment debtor. Unlike the individuals in those cases, Guo was both a named party to the lawsuit at issue and the person who controlled the corporation’s participation in the lawsuit.
Guo asserts that because she and TVGC were one and the same under an alter ego theory, the court should have allowed her to represent the corporation’s interests in propria persona as she did her own. She argues that it would be unfair to hold her liable for the default judgment that resulted from TVGC’s lack of representation when she was wrongfully prevented from providing that representation. Again we disagree.
A corporation is not a natural person and cannot appear in propria persona under California law. (Caressa, supra, 99 Cal.App.4th at p. 1101; Merco Construction Engineers, Inc. v. Municipal Court (1978) 21 Cal.3d 724, 729.) TVGC could not, therefore, appear in this action unless it was represented by counsel. Guo is not a licensed attorney and could not appear on TVGC’s behalf without engaging in the unauthorized practice of law. (Bus. & Prof. Code, § 6125.) There is no merit to Guo’s claim that she should have been permitted to appear on TVGC’s behalf.
Nor are we persuaded that it is inequitable to hold Guo responsible for the default judgment that resulted from TVCG’s lack of representation. Guo is liable for the judgment against her alter ego corporation because she effectively is that corporation, and it is not unjust to hold her responsible for the corporation’s actions or bind her to the result of legal proceedings she in fact controlled. As the sole shareholder of TVGC and the person who made all of the decisions regarding the litigation, Guo could have chosen to retain counsel and avoid the default, yet she elected not to do so. TVGC had assets from which it could have hired counsel until the time that Gou dissolved that corporation and retained its assets for herself. Gou may be correct that she was not required to spend her personal funds on legal fees to defend TVGC, but under the circumstances of this case, it is fair to bind her to the consequences of her decision.
Guo argues that the order adding her to the judgment was invalid under the reasoning of Gottlieb v. Kest (2006) 141 Cal.App.4th 110. We are not persuaded. In Gottlieb, the appellate court concluded that a default judgment rendered against an individual’s two development companies did not operate as collateral estoppel entitling the claimant to a judgment against the individual on a fraud claim. (Id. at pp. 120, 147-157.) Although the individual was the sole owner of the companies, his interest in the litigation was not the same and the privity necessary for collateral estoppel to apply was lacking. (Id. at pp. 149-156.) There was no determination in Gottlieb, as there was in this case, that the individual was an alter ego of his companies. (See ibid.)
Guo alternatively contends that that Mazurova and LSI were judicially estopped from arguing that she was liable as TVGC’s alter ego when they had previously taken the position that TVGC was a separate entity not entitled to “self-representation.” (See Aguilar v. Lerner (2004) 32 Cal.4th 974, 986-987.) This claim has been forfeited as it was not raised in the trial court below, but we would also reject it on its merits. Judicial estoppel precludes a party from taking a position that is totally inconsistent with one previously and successfully advanced in the litigation. (Ibid.) There is nothing inconsistent between a claim that Guo is an alter ego of TVGC and the assertion of the legal principle that a corporation may not appear in propria persona.
Guo suggests the trial court should have granted her motion to vacate the amended judgment because the entry of a default against her was a surprise within the meaning of Code of Civil Procedure section 473, subdivision (b). An unexpected ruling on a motion does not amount to surprise under that provision. (Nicholson v. Nicholson (1948) 85 Cal.App.2d 506, 510.)
Finally, we reject Guo’s suggestion that the trial court should have more liberally construed her filings as a pro per litigant. The claim is not supported by references to the record on appeal and Guo has not, in any event, explained how she was prejudiced by the court’s treatment of her papers.
III. MOTION FOR SANCTIONS ON APPEAL
Mazurova and LSI have filed a separate motion requesting sanctions against Guo for filing a frivolous appeal. (Cal. Rules of Ct., rule 8.276.) We decline their request. Although the opening brief contained some irregularities and raised an issue of judicial estoppel that had not been presented in the trial court, the appeal is not so completely without merit as to justify an award of sanctions under the demanding standard of In re Marriage of Flaherty (1982) 31 Cal.3d 637, 649.
IV. DISPOSITION
The amended judgment is affirmed. Mazurova’s and LSI’s motion for sanctions against Guo, filed December 1, 2009, is denied, as is the accompanying request for judicial notice. Ordinary costs on appeal are awarded to Mazurova and LSI.
We concur. JONES, P. J., SIMONS, J.