Truebridge v. Thaler

Full title: MARY FRANCES TRUEBRIDGE et al., Plaintiffs and Respondents, v. MICHAEL…

Court: COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO

Date published: Mar 30, 2017

No. A143287 (Cal. Ct. App. Mar. 30, 2017)

Opinion

A143287

03-30-2017

MARY FRANCES TRUEBRIDGE et al., Plaintiffs and Respondents, v. MICHAEL THALER et al., Defendants and Appellants. JANE YOON, Plaintiff and Appellant, v. DENA THALER, Defendant and Respondent. JANE YOON, Plaintiff and Respondent, v. HERB LEIBOWITZ, Defendant and Appellant.

Miller, J.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RG08419996)

The primary issue in this appeal is whether the trial court erred in concluding that the founders of a closely held corporation were subject to alter ego liability for the corporation's activity. Michael Thaler (Michael) and Herb Leibowitz (Herb) founded California Trust Deeds, Inc. (CTD), a non-judicial foreclosure company in 1981.¹ According to the share certificates maintained by CTD, Michael and Herb were the sole CTD shareholders from 1981 onward. As of 1991, Herb was the sole director and officer. Michael remained a customer of CTD personally and through his business, and retained access to CTD's bank accounts personally or through his son, who was his business partner, through 2008.

1 Because the facts of this case involve several people with the surnames "Thaler" and "Leibowitz," we use first names for some individuals. No disrespect is intended.

In 2006, Herb, who controlled the day-to-day operation of CTD, hired Sidney Gladney (Gladney) as Senior Vice President of Operations, and by the end of 2006 he had left Gladney solely in charge of daily operations. Herb gave Gladney full access to CTD bank accounts; Gladney accessed those accounts, opened new ones, and, not long after he was hired, began diverting funds from CTD bank accounts with the result that some of CTD's customers in 2007 and 2008 never received money that CTD collected for them. Among those customers are MaryFrances Truebridge and Joseph Browne (collectively Truebridge), who received none of the money she was owed, and Jane Yoon (Yoon), who received only part of the money she was owed. Michael was not among those customers—money that CTD received for him in that timeframe was paid out promptly.

Truebridge sued CTD in superior court and won a judgment, but was not able to collect. She then filed a new suit to hold Gladney, Michael and Herb liable for that judgment as alter egos of CTD (Truebridge). Separately, Yoon sued CTD and Gladney in superior court, and later added as defendants Michael, Herb and also Dena Thaler (Dena), CTD's retained counsel, in a complaint with multiple causes of action (Yoon).

Truebridge and Yoon were consolidated and proceeded to a bench trial, after which judgment was entered for Truebridge as to Gladney, Herb and Michael and for Yoon as to CTD, Gladney and Herb. Among other things, the court ruled that Michael and Herb were alter egos of CTD, and vice versa. Dena, however, prevailed in the contract and tort claims Yoon asserted against her.

Michael and Herb appeal the judgment in Truebridge, arguing that the trial court improperly found them to be alter egos of CTD. Herb appeals the judgment against him in Yoon, and Yoon appeals the judgment in Dena's favor. We will affirm the judgments.

FACTUAL AND PROCEDURAL BACKGROUND

A. Michael and Herb Form CTD

CTD, apparently now defunct, was a non-judicial foreclosure company founded and incorporated as a closely-held California Corporation in 1981 by Michael and Herb, who were the corporation's shareholders, directors and officers at its inception. Michael and Herb asked Dena, an attorney who was at that time married to Michael, to draft the corporate documents, and Dena served as a retained attorney for CTD from 1981 through January 2009.

Herb testified he believed he made a financial contribution to CTD when it was founded, but he could not recall the amount. Michael could not recall whether he contributed any money to the corporation when it was formed, but said he might have paid a few hundred dollars for "initial startup costs, like paying rent." Signed minutes of the first board meeting of CTD reflect that Michael and Herb each contributed $150 to CTD, and each received 150 shares of stock.

Herb ran the day-to-day operations of CTD from its founding in 1981 through 2006. Unsigned minutes of CTD's annual board meetings in 1991 and 1992 reflect that Michael decided he "did not wish to serve any longer, either as an officer or as a director," and that sometime between those meetings he transferred his shares to his two adult children, Simon Thaler (Simon) and Rebecca Thaler (Rebecca). Herb became the sole director, and elected himself CEO and Secretary-Treasurer.

Unsigned minutes of the 1993 annual board meeting reflect that Herb had transferred his shares to his children Albert Leibowitz (Albert), then about 14 years old, and Tila Leibowitz (Tila), then about 7, and that Simon and Rebecca intended to transfer their shares to Albert and Tila as well. Herb continued as sole director and as CEO and Secretary-Treasurer.

Unsigned minutes of the 1994 annual board meeting reflect that Albert and Tila held all outstanding shares, and that "having communicated their unanimous wishes to the Chairman [i.e., Herb] prior to the meeting, it was announced that Herb Leibowitz will continue to serve as sole director." Herb also continued as CEO and Secretary-Treasurer.

Although these purported share transfers from the early 1990's were mentioned in board meeting minutes, which Dena prepared as CTD's retained counsel, Dena did not record the transfers in the corporate ledger or prepare share certificates to reflect the transactions.

While Herb managed the day-to-day operations of CTD, he also operated his own tax practice rent-free in CTD's office space. He used CTD's fax machine and had CTD employees answer the phone and take messages for his tax service. Herb drew a salary from CTD of at most $1,500 per month. There were no written agreements between CTD and Herb as to these arrangements.

Herb assisted with negotiating a commercial lease for CTD in 2000, and personally guaranteed the lease until 2003, when Herb helped negotiate a lease extension, and the landlord released him from the guaranty. Herb's daughter Tila never worked for CTD or participated in its management. Herb's son Albert, who at some point became a partner with his father in their tax business, was employed at CTD in a non-managerial role as a foreclosure clerk from about 2002 until sometime in 2006. Albert, who purportedly owned shares of CTD from the early 1990's through 2006, testified that he attended a total of two shareholder meetings of CTD, one in May 2006, which is not documented in the record,² and one on August 1, 2006, which we discuss below.

2 Albert does not know of any minutes being prepared for the May meeting, and none appear in the record.

Michael, the other founder of CTD, testified that he "didn't really do any work" at CTD from the beginning. He testified that, "People just knew my name, so once they knew my name was associated with the business, the business came in." Michael testified that although he never received any dividends, he did make money from CTD. Even after he transferred his shares in CTD to his children, in 1991 or 1992, and after his children transferred their shares to Herb's children, Michael remained involved with CTD. He was a customer of CTD through mid-2009, personally and through Thaler Investments, LLC (Thaler Investments) an entity he operated with his son Simon. Until August 2006, CTD banked with Union Bank of California, and Herb was responsible for managing and balancing the books for that account. When CTD received foreclosure proceeds, it would deposit them in a CTD bank account. Michael, though purportedly not involved with CTD except as a customer, as late as 2003 had access to CTD's business account at Union Bank to write checks to himself and others. He wrote and personally signed some checks, and he wrote others that Herb signed.

Lou Rita Butler, who was employed by CTD from 1988 through February 2007 testified that on occasion while Herb was in charge of CTD, CTD's bank account would be overdrawn. She also testified that CTD would occasionally run short of operating capital, and would use money collected for clients to pay operating expenses, and that Herb would sometimes deposit his own money in to CTD's account to cover expenses. The practice of using funds that came in for clients to pay CTD's business expenses involved more than one CTD customer. It made Butler uncomfortable, so she discussed the practice with Herb, who assured her it was okay. B. CTD's Operations from 2006 to 2009

In 2006, Herb had known Gladney for about 15 years from the foreclosure business in general, and decided to involve him in CTD. Minutes of an August 1, 2006 CTD board meeting taken by Dena as retained counsel and signed by Herb as secretary, state that Gladney accepted an offer of employment as Senior Vice President for Operations.³ Yet Herb testified that he "didn't actually hire [Gladney] as an employee. I brought him on with the intention of his taking the business." Asked how he planned to transfer CTD to Gladney if it belonged to his children, Herb testified, "I think back then I had just not remembered that the certificates or the shares had been transferred. I'd always been in control of [CTD] and ran the company and just continued to do so."

3 According to the "Minutes of the Special Meeting of the Board of Directors/Shareholders of [CTD]," [¶] "A special meeting of the Board of Directors of [CTD] was held on August 1, 2006 at the corporate headquarters . . . . Sole Director and officer, Herb Leibowitz, and shareholder, Albert Leibowitz, were present. It was noted that Albert Leibowitz had authority to vote all outstanding shares. [¶] The meeting was called to order by the Chairman at 2:00 PM. The Corporation's retained counsel, and Sidney Gladney were also present. [¶] The only business to come before the meeting of the Director and shareholder was to introduce Sidney Gladney, who has been asked to assume the position of Senior Vice President for Operations, and who has accepted the offer of employment. In connection with his employment, it has been determined that he be authorized to conduct banking business on behalf of the Corporation and to sign on all corporate bank accounts. [¶] On motion duly made, it was unanimously determined that Sidney Gladney be given full authority to conduct the Corporation's banking and to be added as a signatory to all corporate accounts. [¶] There being no further business to come before the Board, the meeting was adjourned."

Herb testified that although it was his decision to involve Gladney with CTD, he consulted with Albert, because Albert "was an interested party, and he was in the office and present during the times I met with [Gladney]." Albert, who is a partner with Herb in their tax business, testified that he gave Gladney his shares at the August 1, 2006 meeting, after knowing him for "maybe a year," because he "wanted to get out of Oakland and just concentrate on doing taxes." Albert had two discussions with Gladney about the transfer of the business, both in the presence of Herb—one in May 2006 at a restaurant, and then the August 1 meeting. Albert purportedly gave Gladney not only his shares but his sister's, though he testified that he did not know what authority he had to vote his sister's shares. Gladney paid nothing as consideration, and apparently Tila received nothing. Albert, when asked what he received in exchange for the shares, responded, "When we [Albert and Herb] left the office at the end of 2006 we took some old office chairs with us. That's what we got."⁴

4 Albert testified that he did not know the value of the CTD shares when he received them or when he transferred them to Gladney, and that he did not know who the chairman of CTD was in August 2006.

The minutes of the August 1 meeting say nothing about a transfer of ownership and shares to Gladney, and there is no documentation of any transfer of shares to him. The share certificates maintained in the CTD corporate records remained in the names of Michael and Herb. The minutes did not reflect any change in CTD's directors, or in CTD's officers, except for the addition of Gladney as a senior vice president. Herb testified that he remained CTD's agent for service of process through 2008. He was not aware of any documents that reflect a transfer of the ownership of CTD to Gladney. Likewise, Dena testified that she had never seen a document memorializing a transfer to Gladney of ownership in CTD.

According to Butler, Gladney had day-to-day operational control of CTD starting in August 2006. The day after the August 1 meeting at which Gladney was given authority to conduct CTD's banking business, Michael opened a bank account for CTD at Wells Fargo Bank. The application form identified Michael, his son Simon, and Gladney as "owners and key individuals" of the business, and as authorized signers on the accounts. Michael certified that the tax reporting information was correct for CTD. Michael and Simon deposited money directly into the account, purportedly to pay CTD for services, and claimed that the account was set up to expedite their collection of money that CTD collected on foreclosures done for Michael and for Thaler Investments. Plaintiffs' expert, however, examined the flow of money through the Wells Fargo account, and opined it was just a general operating account for CTD.

In October 2006, even though ownership and day-to-day operational control had supposedly been transferred to Gladney, Herb filed a Statement of Information with the California Secretary of State and signed it as "president." Herb testified that at the time he signed the statement he was CTD's sole officer and director.

Herb testified that in December 2006 he left CTD's physical office and no longer had any day-to-day operational responsibilities for the company; he said he assumed that Gladney bore those responsibilities starting in December 2006. Yet Herb remained CTD's agent for service of process until 2009, and it was not until March of 2009 that a statement of information was filed with the California Secretary of State that mentioned Gladney. That statement, which Dena prepared at Gladney's request, identified Gladney as CTD's sole officer, sole director, and agent for service of process.⁵

5 Herb testified he was not aware of any statement of information filed on behalf of CTD between October 2006 (when he filed a statement as CTD's president) and March 2009.

Michael's control of CTD continued after he opened the Wells Fargo bank account in August 2006. He phoned CTD's long-time employee Butler with instructions concerning funds deposited in the Wells Fargo account for loans he was associated with. In February 2007, he was involved in Gladney's firing of Butler. Gladney told Butler he was firing her because Michael "yelled at him" when there was a problem with setting a foreclosure sale date for a transaction with which Michael was associated. Money received by CTD for Michael or Thaler Investments was routinely and quickly paid to Michael or Simon or Thaler Investments, generally within a day or two of CTD's receipt of the money. Other CTD customers were not paid as promptly, if at all. C. Truebridge's and Yoon's Transactions with CTD and Subsequent Litigation

In July 2007, Truebridge contracted with CTD to conduct a non-judicial foreclosure to recover funds due to her from a borrower who had defaulted on a loan secured by real property. In response to a Notice of Default sent by CTD, the debtor sent CTD the payoff amount of $66,517.18. which CTD received and deposited in a checking account. Gladney diverted the funds to pay other CTD clients, CTD expenses, and personal expenses, and Truebridge never received the $66,517.18 she was owed.

Truebridge sued CTD in January 2008 in superior court on various grounds, including breach of contract and fraud. In March 2009, judgment was entered in her favor against CTD for $145,398.42, including $66,517.18 in principal, $33,000 in punitive damages, $9,683.74 in interest, and $36,297.50 in attorneys' fees. The judgment became final but was not paid. It appears to be uncollectible from CTD, which has ceased operation, is defunct, and has no assets. In April 2009 Truebridge filed a new lawsuit, Truebridge, against Gladney and CTD's founders, Michael and Herb, to recover the judgment against CTD from them as CTD's alter egos.

Meanwhile, in May 2008, Jane Yoon contracted with CTD to process and conduct non-judicial foreclosures to collect debts owed to her. CTD sent the debtor notices of default, and in response the debtor sent CTD $214,773.16, which CTD deposited in its checking account. Gladney paid only $125,000 of that amount to Yoon, and diverted the rest to himself and to CTD expenses. Accordingly, Yoon was owed an additional $89,773.16. In February 2009, Yoon sued to recover the funds (Yoon), originally naming just CTD and Gladney as defendants. She later added Michael, Herb and Dena as defendants.

Yoon was consolidated with six other cases, including Truebridge. Five of the consolidated cases settled, leaving Truebridge and Yoon to be tried before the superior court judge. Further background on the lawsuits is incorporated in the discussion below.

DISCUSSION

A. Appeals of the Truebridge Judgment Gladney, Michael and Herb were the defendants in Truebridge. A default was entered against Gladney, leaving for trial Truebridge's claim that Michael and Herb were alter egos of CTD and therefore responsible for the earlier judgment Truebridge won against CTD. After a bench trial, the trial court issued a tentative decision. After the parties submitted objections, proposed statements of decision, and further objections, the trial court issued a final statement of decision, concluding that Gladney, Michael and Herb were jointly and severally liable to Truebridge for the underlying judgment against CTD as alter egos of CTD. Judgment was entered, and Michael and Herb appealed, each arguing that the trial court erred in concluding that he was an alter ego of CTD.

1. Overview of the Alter Ego Doctrine

"Ordinarily, a corporation is regarded as a legal entity separate and distinct from its stockholders, officers and directors. Under the alter ego doctrine, however, where a corporation is used by an individual or individuals, or by another corporation, to perpetrate fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose, a court may disregard the corporate entity and treat the corporation's acts as if they were done by the persons actually controlling the corporation. [¶] . . . The doctrine is applicable where some innocent party attacks the corporate form as an injury to that party's interests. The issue is not so much whether the corporate entity should be disregarded for all purposes or whether its very purpose was to defraud the innocent party, as it is whether in the particular case presented, justice and equity can best be accomplished and fraud and unfairness defeated by disregarding the distinct entity of the corporate form." (Communist Party v. 522 Valencia, Inc. (1995) 35 Cal.App.4th 980, 993, citations omitted (Communist Party).)

"Generally speaking, there are two requirements for disregarding the corporate entity: ' . . . (1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow.' (Automotriz etc. De California v. Resnick (1975) 47 Cal.2d 792, 796.)" (Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 46-47 (Alexander).)

To determine whether those requirements are met, courts consider a variety of factors, including " '[1] [c]ommingling of funds and other assets, failure to segregate funds of the separate entities, and the unauthorized diversion of corporate funds or assets to other than corporate uses; . . . [2] the treatment by an individual of the assets of the corporation as his own; . . . [3] the failure to obtain authority to issue stock or to subscribe to or issue the same; . . . [4] the holding out by an individual that he is personally liable for the debts of the corporation; the failure to maintain minutes or adequate corporate records, and the confusion of the records of the separate entities; . . . [5] the identical equitable ownership in the two entities; the identification of the equitable owners thereof with the domination and control of the two entities; identification of the directors and officers of the two entities in the responsible supervision and management; sole ownership of all of the stock in a corporation by one individual or the members of a family; . . . [6] the use of the same office or business location; the employment of the same employees and/or attorney; . . . [7] the failure to adequately capitalize a corporation; the total absence of corporate assets, and undercapitalization; . . . [8] the use of a corporation as a mere shell, instrumentality or conduit for a single venture or the business of an individual or another corporation; . . . [9] the concealment and misrepresentation of the identity of the responsible ownership, management and financial interest, or concealment of personal business activities; . . . [10] the disregard of legal formalities and the failure to maintain arm's length relationships among related entities; . . . [11] the use of the corporate entity to procure labor, services or merchandise for another person or entity; . . . [12] the diversion of assets from a corporation by or to a stockholder or other person or entity, to the detriment of creditors, or the manipulation of assets and liabilities between entities so as to concentrate the assets in one and the liabilities in another; . . . [13] the contracting with another with intent to avoid performance by use of a corporate entity as a shield against personal liability, or the use of a corporation as a subterfuge of illegal transactions; . . . [14] and the formation and use of a corporation to transfer to it the existing liability of another person or entity.' (Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 838-840 [(Associated Vendors)]), numbers added and citations omitted.) [¶] This long list of factors is not exhaustive. The enumerated factors may be considered '[a]mong' others 'under the particular circumstances of each case.' ([Associated Vendors], supra, 210 Cal.App.2d at p. 838.)" (Morrison Knudsen Corp. v. Hancock, Rothert & Bunshoft (1999) 69 Cal.App.4th 223, 249-250 (Morrison Knudsen).)

The alter ego doctrine is applied "when adherence to the fiction of the separate existence of the corporation would promote injustice (Shaoxing County Huayue Import & Export v. Bhaumik (2011) 191 Cal.App.4th 1189, 1198) or bring about inequitable results. (Claremont Press [Pub. Co. v. Barksdale (1960)] 187 Cal.App.2d [813,] 817.)" (Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1074.) Applying the doctrine does not require pleading or proof of fraud. (Ibid.) Nor does it require a showing of acts done with wrongful intent; instead, it requires proof of an inequitable result. (Relentless Air Racing, LLC v. Airborne Turbine Ltd. Partnership (2013) 222 Cal.App.4th 811, 816.) More generally, the "inequity . . . must be that of the party against whom the doctrine is invoked, and such party must have been an actor in the course of conduct constituting the 'abuse of corporate privilege' . . . or must be seeking some inequitable advantage based upon the ' " 'fiction of separate existence.' " ' " (United States Fire Ins. Co. v. National Union Fire Ins. Co. (1980) 107 Cal.App.3d 456, 472.) The doctrine "may not be applied so as to prejudice the rights of an innocent third party who has dealt with the corporation as such." (Id. at p. 469.)

2. Standard of Review

" 'The law as to whether courts will pierce the corporate veil is easy to state but difficult to apply.' [Citation.] Because it is founded on equitable principles, application of the alter ego 'is not made to depend upon prior decisions involving factual situations which appear to be similar. . . . "It is the general rule that the conditions under which a corporate entity may be disregarded vary according to the circumstances of each case." ' [Citations.]" (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1248 (Las Palmas).) Because alter ego liability is an equitable principle that depends upon the factual circumstances of the case, we review the trial court's determination of alter ego liability for substantial evidence. (Ibid.; Alexander, supra, 104 Cal.App.3d at p. 47 ["since this [alter ego] determination is primarily one for the trial court and is not a question of law, the conclusion of the trier of fact will not be disturbed if it is supported by substantial evidence"].) "In general, in reviewing a judgment based upon a statement of decision following a bench trial, 'any conflict in the evidence or reasonable inferences to be drawn from the facts will be resolved in support of the determination of the trial court decision. [Citations.]' [Citation.] In a substantial evidence challenge to a judgment, the appellate court will 'consider all of the evidence in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference, and resolving conflicts in support of the [findings]. [Citations.]' [Citation.] We may not reweigh the evidence and are bound by the trial court's credibility determinations. [Citations.]" (Estate of Young (2008) 160 Cal.App.4th 62, 75-76.)

Despite abundant authority that we must affirm a trial court's determination of alter ego liability if it is supported by substantial evidence, Michael invites us to "review this case de novo for insubstantial evidence of corporate involvement." Yet only one of the cases he cites to support this argument has anything to do with the alter ego doctrine, and in that case, the court applied the substantial evidence standard. (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 539 (Sonora Diamond).)

Herb argues that the issue of alter ego liability here "may be decided as a matter of law [because] the evidence . . . is undisputed." There are three problems with this argument. First, Herb cites no case in which a trial court's determination of alter ego liability is reviewed de novo. Second, the evidence is not undisputed, because the trial court made determinations of credibility. Third, even if the evidence here were undisputed, the inferences that the trial court drew from the evidence are not. (Crawford v. Southern Pacific Co. (1935) 3 Cal.2d 427, 429 ["When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court"].)

Accordingly, we review the trial court's determinations of alter ego liability as to Michael and Herb under the substantial evidence standard.

3. Michael's Appeal

Substantial evidence supports the trial court's conclusion that Michael was CTD's alter ego, and the findings on which the conclusion rests, including the undercapitalization of CTD and Michael's domination and control of CTD. (See Morrison Knudsen, supra, 69 Cal.App.4th at pp. 249-250.)

Substantial evidence supports the finding that CTD was undercapitalized (Morrison Knudson, supra, 69 Cal.App.4th at p. 250), from the time of its founding in 1981, when Michael paid $150 for shares in CTD and contributed a few hundred dollars to its start-up costs, and afterward, when CTD shares were purportedly given over to others for no consideration whatsoever.

The finding that Michael exercised domination and control over CTD even after he purportedly gave his shares to his children in the early 1990's is supported by evidence that he signed and issued checks from CTD's corporate bank account in 2003, even though he was supposedly not an employee, officer or director of CTD. Thus, he treated corporate assets as his own. (Morrison Knudson, supra, 69 Cal.App.4th at p. 249.) The finding of domination and control is also supported by evidence that he opened a corporate bank account for CTD in 2006 as an "owner" or "key individual," and became a signatory on that account, without authorization from CTD's board, thus disregarding legal formalities and concealing and misrepresenting the responsible ownership of the corporation or his own personal business activities. (Id. at p. 250.) He deposited money directly into that account, thus disregarding legal formalities and apparently commingling funds. (Id. at pp. 249-250.) The finding of domination and control is further supported by evidence that his transactions with CTD were not at arm's length (id. at p. 250): he and his affiliates, but not other "customers" of CTD, were uniformly paid promptly. By his own admission, Michael felt entitled to take action "to protect his money": money that was deposited in CTD's accounts, and that he regarded as his own, not as CTD's. Such admissions give further support to the trial court's findings of commingling or, at the very least, of failure to observe corporate formalities, and a unity of interest between Michael and CTD. (Alexander, supra, 104 Cal.App.3d at pp. 46-47.) As the trial court noted, "Michael . . . characterizes his actions with regard to the CTD bank accounts as 'self help' . . . and as 'just [him] dealing with his money' . . . . That is precisely the point. When an individual treats a corporate bank account as his own money or engages in self help with a corporate bank account as [Michael did,] that can lead to a finding that the individual is the alter ego of the corporation and may be held liable for the corporation's debts."

And substantial evidence supports the trial court's finding that it would be inequitable to treat CTD's actions with regard to Truebridge as the actions of CTD alone, rather than as the actions of CTD and Michael. (Alexander, supra, 104 Cal.App.3d at p. 47.) Plaintiffs' expert Michael Sullivan, a certified public accountant, reviewed the records for two CTD bank accounts during the time that CTD was collecting money for Truebridge. One was the Wells Fargo account; the other was an account at Community Bank of the Bay. As of September 14, 2007, the Community Bank of the Bay account had a negative balance of about $2,500. On September 14, 2007, CTD made two deposits totaling $66,661, collected for Truebridge. From September 14 through 30, the money from those deposits went to pay two other CTD clients, to CTD expenses, to the Wells Fargo bank account, and to Gladney and someone named Kyiko Whiteside. Truebridge, of course, never received her money. Yet on September 18, 2007, CTD deposited about $53,000 into the Community Bank of the Bay account, apparently for a non-judicial foreclosure done for Michael or Thaler Investments, and that same day Gladney wrote a check to Michael's son Simon on that account for $53,000. In these circumstances, there is ample support for the trial court's conclusion that Michael "took advantage of the existence of the CTD corporate entity and his relationship to it thereby protecting 'his' money," when Truebridge had no such opportunity.⁶

6 In its statement of decision, the trial court wrote that plaintiffs' expert Sullivan "opined that it appeared that Michael Thaler was involved with management, executive or policy making well after 1991." Michael emphasizes that despite his informing the trial court that no citation to the record supports this characterization of Sullivan's testimony and despite the absence of this opinion from Sullivan's testimony, the trial court included this statement in its decision. We have reviewed Sullivan's testimony, and agree with Michael that Sullivan did not express the quoted opinion, but this is of no consequence because there is ample evidence in the record to support the trial court's alter ego ruling as to Michael.

We are not persuaded by Michael's arguments that the trial court improperly applied the alter ego doctrine. Contrary to Michael's suggestion, the trial court's finding that Gladney controlled and dominated CTD during 2007 and 2008 does not preclude a finding that others, including Michael, also controlled and dominated CTD during that period.

Arguing that he had no involvement in the taking of Truebridge's money, that the Wells Fargo account he opened for CTD "played no part in the theft," and that he only received from CTD the money that was due him, Michael asks us to rule that as a matter of law the alter ego doctrine cannot be invoked against him "absent any evidence of wrongdoing by [him] that caused injustice or harm" to Truebridge. Sonora Diamond, on which Michael relies for his argument, is inapposite. There, the Court of Appeal ruled that the inequity requirement for alter ego liability was not established because there was no evidence of wrongdoing by the alleged alter ego or by the corporation that was sued, nor any evidence of injustice flowing from recognizing the corporation's separate identity. (Sonora Diamond, supra, 83 Cal.App.4th at p. 539.) That is not the case here, where there is a judgment for Truebridge against CTD for fraud and where Michael seeks to hide behind CTD's separate identity to avoid responsibility for the actions of a company that he controlled, as evidenced by his involvement in CTD's banking, and from which he and his affiliates received money at the same time money was being withheld from Truebridge.

Michael's reliance on Riddle v. Leuschner (1959) 51 Cal.2d 574 (Riddle) and Pearl v. Shore (1971) 17 Cal.App.3d 608 (Pearl) in arguing that he cannot be the alter ego of CTD because he did not own CTD shares is misplaced. In Riddle, the plaintiff, a creditor of a corporation, sued that corporation and another and most of their shareholders, officers and directors, claiming that each of the corporations was the alter ego of the individual defendants. (Riddle, supra, 51 Cal.2d at p. 576.) Judgment was rendered against the corporations and three individual defendants who were related and whose family organized the corporations: Leuschner, Sr., who owned no shares in either corporation but was an officer and director of both and active in their management; his wife, who owned just one share in one of the corporations of which she was an officer and who was a director of both corporations; and his son, who owned shares in and was a director and officer of both corporations. (Id. at pp. 576-577.) Our Supreme Court affirmed the judgment against the wife and son, but reversed as to Leuschner, Sr. (id. at p. 582), concluding that because he owned no stock and because there was no evidence that he had any interest as an owner or right to share in the profits of either corporation, under all the circumstances he should be regarded as a managing employee, and therefore there was no showing of the required "unity of interest and ownership [such] that the separate personalities of the corporation and the individuals no longer existed." (Id. at p. 580.) Michael argues that if Leuschner, Sr., cannot be liable as an alter ego in Riddle, he cannot be liable as an alter ego here. Michael says after 1991 he held no shares in CTD, and that when Truebridge's money was stolen Gladney was running the day to day operations of CTD and controlled the company. But even if Michael held no CTD shares after 1991 or 1992, there is substantial evidence that he had significant control of the company beyond that of a mere employee (and he was not, in any case, an employee, but rather a "customer"). Michael wrote checks on CTD bank accounts, he opened a new corporate bank account for CTD, he was involved in the firing of a long-term CTD employee, and he received preferential treatment over other "customers" in being paid by CTD. Under the facts before it, the court in Riddle concluded it would be unfair to impose personal liability on Leuschner, Sr., unless he had an ownership interest in the corporation. (Ibid.) But Riddle does not mean that an individual without a formal legal ownership interest in a company cannot be an alter ego of that company. (See Las Palmas, supra, 235 Cal.App.3d at pp. 1248-1249 [distinguishing Riddle]; see also Minton v. Cavaney (1961) 56 Cal.2d 576, 579 [abuse of corporate privilege can constitute equitable ownership, justifying application of alter ego doctrine]; Communist Party, supra, 35 Cal.App.4th at p. 993 [alter ego doctrine allows court to "treat the corporation's acts as if they were done by the persons actually controlling the corporation"]; Goldsmith v. Tub-O-Wash (1962) 199 Cal.App.2d 132, 139 [defendant who controls corporation liable as alter ego even though not a shareholder]; Sonora Diamond, supra, 83 Cal.App.4th at p. 538 [alter ego doctrine applies to "the persons or organizations actually controlling the corporation, in most instances the equitable owners"].) The trial court found that "from 2003 to 2008, which is 12 to 17 years after he transferred all his shares and said that he had 'left' CTD as an owner, officer, director and or shareholder, [Michael was] still involved with CTD's financial and business affairs and participated in its financial and executive decision making to the extent that [Michael] was at least an 'equitable owner' of CTD." That is, for the purposes of equity Michael benefited from CTD in the way that an owner would, even if he was not a legal owner. We cannot say the trial court erred when it concluded that, under the facts here, it would be unfair to allow Michael to escape liability for CTD's failure to pay its customers when he retained control of CTD to the extent that he saw to it that he was paid what he was owed.

The other case on which Michael relies is also distinguishable. In Pearl, the plaintiff invested unsuccessfully in a limited partnership, the general partner of which was S.K.R., a corporation whose purpose was to convert raw land into apartment buildings and whose "principal and equal shareholders" were the four defendants in the case, including Shore. (Pearl, supra, 17 Cal.App.3d at pp. 611, 616.) Pearl sought to hold Shore accountable for S.K.R.'s debts as an alter ego and to hold Shore personally liable on fraud counts. (Id. at pp. 616.) Shore filed a " 'motion to strike and dismiss,' " which was granted by the trial court after depositions and declarations were filed. (Id. at pp. 611-612, 616.) The Court of Appeal treated the motion as one for summary judgment (id. at pp. 613, 619) and affirmed the judgment for Shore, concluding that Pearl's "attempt to fasten corporate liabilities onto [Shore] must fail because of the complete lack of showing of bad faith, in any form." (Id. at p. 616.) Shore had invested in S.K.R., and as a 25 percent shareholder had the right to vote his shares and no more, even though he had loaned the other shareholders the money they needed to buy shares. (Id. at p. 614.) Shore "had nothing to do with the day to day operation of the corporation. The other shareholders only involved Shore in the corporate business when they needed additional funds for down payments on new properties. He advanced such funds." (Id. at p. 614.) Those shareholders testified that Shore demanded interest on money he loaned to S.K.R., and that he used his status as a creditor to force the corporation to deed property to him to satisfy the corporation's debts to him, but there were no claims that the debts were not due, or that Shore gained any undue financial advantage in his dealing with S.K.R. (Id. at p. 615.) These facts differ greatly from the facts before us, where Michael was involved in and controlled CTD's business, to the extent that he wrote checks on CTD's accounts, identified himself as an owner or key individual of CTD in a bank account application, and received special treatment as a "customer" by being paid promptly and in full when other customers, including Truebridge, were not. Michael's access to CTD's account at Wells Fargo gave him a financial advantage over others in his dealings with CTD. In discussing Pearl, Michael emphasizes that he was a "legal stranger" to Truebridge and had no dealings with her, just as Shore had no dealings with Pearl and was a "legal stranger" to him. (Id. at p. 614.) Michael ignores the significance of these facts in Pearl, where they were not pertinent to the question of alter ego liability, but rather were the basis of the court's conclusion that Shore was not personally liable to Pearl on various fraud counts. (Id. at pp. 618-619.) Truebridge makes no such claims against Michael here; she raises only the issue of alter ego liability.

Finally, Michael argues that the trial court abused its discretion "in putting payment above evidence," as reflected in the trial court's statement, "No evidence was introduced which would support a finding by the court that the losses incurred by Truebridge . . . will in any fashion be compensated other than by imposition of alter ego liability on Michael . . . along with the other Defendants herein." Herb makes a similar argument in discussing his liability to Truebridge, claiming that the trial court improperly reversed the burden of proof. But even if the trial court did misallocate the burden of proof, such misallocation is not reversible error unless it is prejudicial, and there is no prejudice if the trial court has found upon substantial evidence that essential facts have been proved. (Perez v. VAS S.p.A. (2010) 188 Cal.App.4th 658, 679.) Here, there can be no prejudice because substantial evidence supports the trial court's finding that it would be inequitable for Michael, as we discussed above (and for Herb, as we discuss below) to avoid responsibility for CTD's conduct as to Truebridge by hiding behind CTD's corporate veil.

In sum, we conclude that substantial evidence supports the trial court's determination that Michael is liable to Truebridge as CTD's alter ego.

4. Herb's Appeal

Herb challenges several of the trial court's evidentiary rulings as well as its conclusion that he is CTD's alter ego. We begin with the evidentiary issues, some of which also pertain to his appeal of the judgment for Yoon.

a. Evidentiary Challenges

Herb challenges the trial court's refusal to admit Gladney's deposition testimony, its admission of testimony from Lou Rita Butler, and its admission of several trial exhibits. We apply the abuse of discretion standard to the trial court's rulings on the admissibility of evidence. (Christ v. Schwartz (2016) 2 Cal.App.5th 440, 446-447.) We presume the trial court's evidentiary rulings are correct, and it is the appellant's burden to demonstrate error and prejudice. (See id. at p. 447.)

i. Gladney's Deposition Testimony

Herb challenges the trial court's exclusion of Gladney's deposition testimony in both Truebridge and Yoon. Herb's discussions of this issue, however, are entirely devoid of citations to the record, despite the requirement that factual assertions be supported by appropriate references to the record. (See Cal. Rules of Court, rule 8.204(a)(1)(C).) "It is incumbent upon the parties to an appeal to cite the particular portion of the record supporting each assertion made. It should be apparent that a reviewing court has no duty to search through the record to find evidence in support of a party's position." (Williams v. Williams (1971) 14 Cal.App.3d 560, 565.) Herb does not direct us to his purportedly proper request that excerpts of the deposition be admitted pursuant to Code of Civil Procedure section 2025.620, to the objection that was allegedly made—he does not tell us by whom, or to the court's ruling, purportedly "based on [Evidence Code] section 1291 and Gladney's unavailability." An argument that is not supported by citations to the pertinent portions of the record is deemed waived, and is therefore forfeited. (Nwosu v. Uba (2004) 122 Cal.App.4th 1229, 1246 (Nwosu).) We therefore conclude that Herb has forfeited his challenge to the trial court's decision to exclude Gladney's deposition testimony.

ii. Lou Rita Butler's Trial Testimony

Herb challenges the trial court's admission of Lou Rita Butler's trial testimony in Truebridge and Yoon, claiming that he objected to her testimony on the grounds that it lacked foundation and was being admitted for the improper purpose of showing propensity. Specifically, he challenges "[h]er testimony that [Herb] used CTD's customer funds as a 'float' for operational expenses."

We begin with Herb's objections at trial. In arguing that Butler's testimony was erroneously admitted, Herb points to four instances in which he objected to the foundation of Butler's testimony.⁷ He objected that Butler lacked foundation for her testimony that CTD occasionally ran short of operating capital during the time she was working there; that overbid money (that is, money resulting from a foreclosure sale where the sales price exceeds the loan amount and foreclosure costs) was sometimes used to cover shortfalls in CTD's operating expenses, including during the time Herb worked there; and that CTD sometimes had an overdrawn bank account. This testimony was provided in the context of an admonition that Butler should answer questions based on her knowledge, and statements by the witness that she knew an answer or had personal knowledge, and therefore we conclude that the trial court did not abuse its discretion in admitting the testimony.

7 Elsewhere in his opening briefs, Herb mentions that he submitted to the trial court a brief entitled, "Limitation on LouRita Butler Testimony." That document consists of alleged "facts" about Butler, with no citations to evidence; argument that Butler was not present as a witness to the events underlying the Truebridge and Yoon suits and that Herb is "concerned" that Butler's "anticipated testimony . . . will be used by plaintiffs to try to establish [Herb's] 'propensity' to use client funds for CTD expenses"; and a conclusion asking the court to "note the limits on the scope of [Butler's] personal knowledge, and exclude any attempts by plaintiffs to use improper character evidence."

On appeal, in connection with his argument that Butler's testimony lacks foundation, Herb criticizes the trial court for "adopting [Butler's] improper characterization" of money collected by CTD as "customer funds." This is not an evidentiary issue. In any event, the trial court's findings that Herb used "client overbid funds that came into CTD business accounts to pay CTD expenses" and used "customer funds to pay other clients and CTD expenses," employ a characterization that Herb's own testimony supports: he testified that the money CTD received from foreclosure proceeds and payments from borrowers didn't belong to CTD, other than perhaps some fees and expenses.

Herb raised objections of "propensity" and "character evidence" in connection with Butler's testimony that overbid money was sometimes used to cover shortfalls in CTD's operating expenses, including during Herb's time at CTD. He argues that her testimony is "blatantly improper character evidence" under Evidence Code section 1101, subdivision (a), and that the plaintiffs used the evidence "to try to establish [his] 'propensity' to use 'client funds' for CTD expenses," and that this swayed the trial court to conclude that Herb "was involved with Gladney's thefts." The premise and conclusion of this argument are incorrect, because Herb mischaracterizes Butler's testimony and the use to which it was put. First, the evidence here is not character evidence, but evidence of particular conduct. Second, the evidence was used as an example of CTD's business practices before and after 2006. Moreover, Herb points to nothing that supports his contention that the trial court concluded that Herb was "involved with Gladney's thefts."⁸

8 To the contrary, as Herb notes, the trial court found that Herb "failed to train Gladney." Herb mentions a supposed "finding" by the trial court that "Gladney followed [Herb's] practice of withholding funds from clients in order to cover CTD's expenses." Here, Herb takes the trial court's language out of context: the trial court was summarizing the evidence on which it relied in finding that CTD was undercapitalized, which included the fact that "Ms. Butler testified that Gladney followed [Herb's] practice of withholding funds . . . ."
Furthermore, contrary to Herb's assertion, the trial court did not use Butler's testimony on the use of overbid funds "as a basis to find that [Herb] 'commingled' funds . . . and was, therefore, responsible for Gladney's similar conduct." The basis for finding that Herb commingled funds was that Herb "put his own money with CTD's in order to pay CTD expenses."

iii. Exhibits 3 through 11

Herb challenges the trial court's admission into evidence in Truebridge of Trial Exhibits 3 through 11, arguing that they are irrelevant to the allegations of Truebridge's complaint. Herb has forfeited his argument as to Exhibit 11 because he provides no record citation to support his allegation that he objected to that exhibit.⁹ (Nwosu, supra, 122 Cal.App.4th at p. 1246.) Exhibits 3 through 10 concern Truebridge's transaction with CTD, which led to her suit against CTD, and eventually to her suit against Herb. Herb concedes that the exhibits are relevant insofar as they provide factual background about the underlying transaction, but contends that the trial court erroneously "used these exhibits as proof of damages," when the existing judgment "was the relevant evidence of [Truebridge's] damages." Yet Herb fails to mention that the existing judgment was in fact admitted into evidence. We see no error. In any event, any error was harmless because the existing judgment was cited by the trial court as a basis for its award of damages to Truebridge. (See Code Civ. Proc., § 475.) Truebridge was awarded $145,398.42 in her underlying case against CTD, and the trial court here concluded that Truebridge had incurred damages in that precise amount, plus interest from the date the underlying judgment was entered.

9 Moreover, Truebridge directs us to a portion of the Reporter's Transcript in which Herb's counsel states he has no objection to the admission of Exhibit 11. Herb ignores Truebridge's point in his reply brief, maintaining that Exhibit 11 should not have been admitted.

b. Alter Ego Liability

Substantial evidence supports the trial court's conclusion that Herb was CTD's alter ego, and the findings on which the conclusion rests, including its findings that Herb dominated and controlled CTD such that there was identity of interest between him and CTD, that he concealed and misrepresented the identity of the responsible ownership and management, and that he held himself out as personally liable for CTD's debts, commingled his funds with CTD's, failed to observe corporate formalities, and failed to adequately capitalize CTD. (See Morrison Knudsen, supra, 69 Cal.App.4th at pp. 249-250.)

There is ample evidence that Herb dominated and controlled CTD. Herb maintained day-to-day control of CTD from its inception through 2006, more than 10 years after all CTD's shares had purportedly been transferred to his children. Herb testified that in 2006, he "had just not remembered that the certificates or the shares had been transferred. I'd always been in control of [CTD] and ran the company and just continued to do so." Herb testified that as CTD's sole director and officer he decided to involve Gladney with CTD in 2006, and that he left CTD's offices sometime in December 2006 assuming that Gladney had operational responsibility for the company, but without having effectively transferred ownership or officer positions to Gladney.¹⁰ Corporate records and filings with the Secretary of State provide evidence that Herb's domination and control of CTD continued through 2008. From these documents and Herb's testimony, the trial court inferred that Herb remained CTD's president, CFO, secretary and sole director until May 2009, as well as remaining CTD's agent for service of process.

10 The trial court's conclusion that ownership of CTD was not transferred to Gladney in August 2006 is supported by substantial evidence from CTD's web site, corporate records, and filings with the secretary of state. In addition, the trial court determined that Herb's testimony on the purported transfer of ownership lacked credibility.

As CTD's sole director and officer in October 2006, Herb failed to ascertain that there was documentation of the purported transfer of ownership and management to Gladney. This is substantial evidence that Herb concealed or misrepresented the identity of CTD's ownership and management and that he failed to observe corporate formalities. (Morrison Knudsen, supra, 69 Cal.App.4th at p. 250.)

Herb's personal guaranty of CTD's lease is evidence that he held himself out as personally liable for CTD's debts. (Morrison Knudsen, supra, 69 Cal.App.4th at p. 249.) Herb's operation of his tax business from CTD offices rent-free and use of CTD's fax machine and staff for his business, all without any written agreement, and his preparation of CTD's tax returns without compensation are evidence of failure to observe corporate formalities as well as use of the same business location. (Id. at p. 250.) Herb's depositing of his own money in CTD's bank account to pay CTD expenses is evidence of commingling of funds. (Id. at p. 249.)

The trial court found that CTD was undercapitalized from the time of its founding in 1981, when the total capitalization was just $300, and afterward, when CTD's bank account would be overdrawn, when Herb would deposit his own money into CTD's account to cover expenses on occasions when CTD would run short of operating capital, and when CTD would use money collected for clients to pay expenses. (Morrison Knudson, supra, 69 Cal.App.4th at p. 250.) Further evidence of undercapitalization is found in the purported transfer of CTD to Gladney for no consideration other than some old office chairs.

And substantial evidence supports the trial court's finding that it would be inequitable to treat CTD's actions with regard to Truebridge as the actions of CTD alone, rather than as the actions of CTD and Herb. (Alexander, supra, 104 Cal.App.3d at p. 47.) Substantial evidence supports a finding of inequitable conduct, if not bad faith, on Herb's part when, as sole director, and sole officer of CTD in 2006 he considered his own interests and not the interests of CTD as a separate entity by bringing Gladney on board as Senior Vice President for Operations, giving him free rein over the company and its bank accounts even though Gladney had no knowledge of foreclosures other than how to buy property through a foreclosure, and giving him no training, other than having him come to CTD's office to learn the job by observing. Herb then sought to step away from CTD, purporting to transfer the ownership, directorship, and management of CTD to Gladney without any documentation whatsoever. One result of Herb's actions was that CTD failed to pay Truebridge the money she was owed, at a time when, as the trial court found, Herb was CTD's president and sole director and had control of CTD.

As the trial court put it: Herb "seeks to walk away from a liability of a company which he alone managed for 15 years. He seeks to walk away from a company which was so consistently undercapitalized that he received essentially no salary from it and on occasion paid its expenses from his own personal funds, in addition to utilizing client overbid funds that came into CTD business accounts to pay CTD expenses. He seeks to walk away from a company which was so undercapitalized that, even in his view of the facts, he (and his son) were so desperate to rid themselves of it that they were willing to give it away to a third party free of charge. [Herb] seeks to walk away from a company of which he was President, Chief Financial Officer, Secretary and sole Director at the time of the transaction involving Plaintiffs herein . . . . Finally, he seeks to walk away from that company without any documentation at the time of transaction in question indicating that he was doing so. To allow [him] to walk away without finding CTD to be his alter ego and vice vers[a] would be unjust, unfair and sanction fraudulent behavior."

We are not persuaded by Herb's arguments that the trial court erred in concluding that he is liable to Truebridge as CTD's alter ego. Herb contends that in imposing alter ego liability on him the trial court "improperly focused" on alter ego factors that Truebridge did not plead, noting that Truebridge did not seek to amend her complaint after presentation of the evidence to include allegations of inadequate capitalization, commingling of funds, Herb's personal guaranty of CTD's lease, and the concealment and misrepresentation of the identity of responsible ownership and management. We disregard Herb's argument on this point because he has not supported it with any citation to authority.¹¹ (Allen v. City of Sacramento (2015) 234 Cal.App.4th 41, 52 ["[w]hen legal argument with citation to authority is not furnished on a particular point, we may treat the point as forfeited and pass it without consideration"].) In any event, Herb does not argue that he was misled to his prejudice by any discrepancy between the alter ego allegations in Truebridge's complaint and the proof. (Sebring v. Harris (1912) 20 Cal.App. 56, 60; Code Civ. Proc., § 469 ["[n]o variance between the allegation in a pleading and the proof is to be deemed material unless it has actually misled the adverse party to his prejudice in maintaining his action or defense upon the merits"].)

11 In a footnote to the introduction of his opening brief, Herb cites Leibert v. Transworld Systems, Inc. (1995) 32 Cal.App.4th 1693, 1699 (Leibert), for the proposition that "[a] party seeking to rely on unpleaded claims must move to amend." The case is inapposite, because it concerns the procedures for summary judgment and the requirement that a plaintiff seeking to rely on unpleaded theories to defeat summary judgment must move to amend the complaint.

Herb argues that he cannot be liable to Truebridge as an alter ego because she "introduced no evidence of damages other than the unpaid [u]nderlying [j]udgment" against CTD. The unpaid judgment, he argues, is not enough to support the trial court's conclusion that an inequitable result will be produced unless he is found to be an alter ego. (Associated Vendors, supra, 210 Cal.App.2d at p. 842 ["it is not sufficient to merely show that a creditor will remain unsatisfied if the corporate veil is not pierced, and thus set up such an unhappy circumstance as proof of an 'inequitable result' "].) Herb conflates proof of damages with proof of inequitable result. As we have discussed, substantial evidence supports the trial court's conclusion that it would be inequitable to protect Herb in these circumstances. (See Ibid. [purpose of alter ego doctrine is to protect unsatisfied creditor where equitable owner's conduct makes it inequitable to allow him to hide behind corporate veil].)

Herb also argues that he cannot be held liable for Truebridge's damages as CTD's alter ego because he had no opportunity to defend Truebridge's underlying claims against CTD. The invited error doctrine prevents Herb from complaining of this error. (9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 389, p. 447 [party inducing commission of error by his or her conduct is estopped from asserting the error as ground for reversal].) In convincing the trial court to consolidate Truebridge's case with others, over Truebridge's opposition, Herb argued, among other things, that because Truebridge "already has her judgment against" CTD, there would be no need for Truebridge to prove the underlying liability of the corporation at Herb's trial.¹² We will not now allow Herb to argue that Truebridge must prove the liability of CTD, or that he must have the opportunity to defend against that liability.

12 Herb also argued that Truebridge's case against him "will stand or fall on whether or not [she is] able to 'pierce the corporate veil.' "

Herb argues that the trial court abused its discretion by rendering "an inappropriately-biased decision." This argument amounts to an argument that the court disregarded the law and that such disregard can be explained only by impermissible bias. Contrary to Herb's assertion, the trial court did not ignore the principles of corporate law. Rather, the trial court found that in the circumstances, the alter ego doctrine should be applied.¹³

13 Herb makes the same argument in his appeal of the judgment in Yoon, and it is equally without merit.

Because substantial evidence supports the trial court's conclusion that Herb is liable to Truebridge as the alter ego of CTD, we will affirm the judgment. B. Appeals of the Yoon Judgment

1. Additional Background

Yoon filed her original verified complaint in this matter in 2009, naming CTD and Gladney as defendants. The complaint identified Dena as CTD's attorney, who negotiated with Yoon's attorney in connection with Yoon's demands for the $89,773.16 CTD owed her, but asserted no claims against Dena. The operative Fifth Amended Complaint, filed in 2013, names not only CTD and Gladney as defendants, but also Michael, Herb, and Dena, CTD's retained counsel from the time of its founding through January 2009. CTD paid Dena for her services by providing her with office space pursuant to an oral agreement. She shared office space with CTD, but was not a CTD employee and maintained her own law practice. Pursuant to Code of Civil Procedure section 382, Yoon's Fifth Amended Complaint permissively added CTD as a party-plaintiff against Dena for legal malpractice, breach of fiduciary relationship, and breach of contract.¹⁴ Michael was eventually dismissed from the case because Yoon failed to timely serve him.

14 "If the consent of one who should have been joined as a plaintiff cannot be obtained, the party may be made a defendant, and that reason for doing so must be stated in the complaint. (C.C.P. 382.)" (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 209(1), p. 283.) "Although joined as a 'defendant,' the unwilling party is interested as a plaintiff and is, for most purposes, regarded as an involuntary plaintiff." (Id. § 209(2), p. 283, citing Estate of Kuebler v. Superior Court (1978) 81 Cal.App.3d 500, 503.)

Yoon sought judgment for $89,773.16 against CTD and against Gladney, Dena, and Herb based on an alter ego theory of liability. She also sought to hold CTD, Gladney and Dena liable for breach of fiduciary relationship, conversion and breach of contract; against CTD and Gladney for fraud in the inducement; against Gladney for interference with contract; against Gladney and Dena for conspiracy; against Herb for negligent hiring, retention and supervision of Gladney; and against CTD, Gladney, Dena and Herb for violating Penal Code section 496, subdivision (a), which prohibits the knowing buying, selling, receipt or concealment of stolen property.¹⁵

15 Under Penal Code section 496, subdivision (c), a person who has been injured by a violation of subdivision (a), "may bring an action for three times the amount of actual damages, if any, sustained by the plaintiff, costs of suit, and reasonable attorney's fees." The court declined to find that the civil enhancement for receiving stolen property applied to Gladney, Herb, or Dena.

Defaults were entered for Yoon against CTD and Gladney, and the case proceeded to trial against Herb and Dena, consolidated with Truebridge's case against Herb and Michael. The trial court issued a statement of decision concluding that Gladney and CTD were alter egos; and that CTD and Gladney were not liable to Yoon for breach of fiduciary relationship, but were liable to her for conversion, fraudulent inducement, and breach of contract. The trial court also concluded that Gladney was liable to Yoon for interference with contract, conspiracy to commit intentional fraud, and intentional fraud.

Relying on its analysis in connection with Truebridge, the court concluded that Herb and CTD were alter egos. The court also concluded that Herb was liable to CTD and to Yoon for the negligent hiring, retention and supervision of Gladney, and for the negligent entrustment of fiscal responsibility to him.

With respect to Dena, the court found that she "certainly knew of Gladney's misappropriation of funds from other CTD clients," that she made representations to "induce Yoon into believing that CTD was a credible non-judicial foreclosure trustee that Yoon could safely trust," and that she knew that "Yoon's money if received by CTD would be put at risk." But the court concluded there was no alter ego relationship between Dena and CTD, and declined to find any contract or confidential or fiduciary relationship between Dena and Yoon that Dena breached. The court found no liability on Dena's part for conversion, or for the negligent hiring, retention, supervision or entrustment of Gladney.

The court "generally [found] Dena Thaler . . . subject to liability to CTD . . . for legal malpractice, breach of fiduciary relationship and breach of [the oral] contract [between CTD and Dena]." The court found that Dena had no contract with CTD that was intended to benefit Yoon as a third party. The court found that Dena owed a fiduciary duty to CTD and breached it, and that the breach constituted professional negligence/legal malpractice, which was subject to a one-year limitations period that had run by the time CTD's claims against Dena were added to the case. The court concluded that therefore Dena was not liable to CTD for breach of fiduciary relationship or legal malpractice.

Judgment was entered for Yoon against Gladney, Herb and CTD jointly and severally for actual damages of $89,773.16 plus prejudgment interest. The court awarded no damages to Yoon against Dena, who was designated the prevailing party entitled to recover costs and attorneys' fees from Yoon.¹⁶ In addition, the court awarded no damages to CTD as involuntary plaintiff against Dena, and awarded Dena costs and attorneys' fees from CTD.

16 Dena challenges the amount of the trial court's award of attorneys' fees and costs in case A144469, Yoon v. Thaler, in which we filed our opinion on the same day we issued this opinion.

2. Herb's Appeal of Judgment for Yoon

Herb challenges the trial court's ruling that he is liable to Yoon as CTD's alter ego, and that he is liable to Yoon for negligence in hiring, retaining and supervising Gladney.¹⁷

17 In appealing the judgment in Yoon, Herb also challenges the trial court's evidentiary rulings as to the testimony of Gladney and Butler and argues that the trial court was "biased." Our analysis of these issues from Truebridge applies in Yoon.

a. Alter Ego Liability

The trial court determined that the evidence supporting its conclusion that Herb is liable to Truebridge as an alter ego also supported the conclusion that Herb is liable to Yoon as CTD's alter ego. Just as we conclude that substantial evidence supports the court's conclusion as to Truebridge, we conclude that substantial evidence supports its conclusion as to Yoon. To sum up, just as one result of Herb's actions with respect to CTD was that CTD failed to pay Truebridge the money she was owed at a time when Herb was CTD's president and sole director and had control of CTD, another result was that CTD failed to pay Yoon money she was owed during that time.

Herb argues that the trial court erred in concluding that Herb was liable to Yoon as CTD's alter ego, and claims that "Yoon did not sue [Herb] under the 'alter ego' doctrine at all," and that the trial court improperly "dumped liability to Yoon onto [Herb] under Truebridge's alter ego theory." We are not persuaded. The first cause of action in Yoon's operative Fifth Amended Complaint is styled "Imputation of 'Alter Ego' Liability." Yoon pleaded that CTD owed a contractual obligation to her; that she could pierce the corporate veil and "sue CTD's actual or de facto directors and officers," including Herb; that there was a "unity and identity of interest" between Herb and CTD, among others, because after the incorporation of CTD Herb operated CTD as a sole proprietorship; that CTD was undercapitalized and that under the circumstances in would promote injustice to "[a]dhere[ ] to the fiction of the separate corporate existence of CTD." In a footnote in the introduction to his opening brief, Herb argues that Yoon was required to move to amend her complaint in order to recover on her alter ego claims. The only case Herb cites to support his argument is Leibert, supra, 32 Cal.App.4th at p. 1699, which he cites only in that footnote, and which in any event is inapposite.

b. Liability for Negligence

Herb argues that the trial court erred in finding him "liable . . . to Yoon for the negligent hiring, retention and supervision of Gladney and for negligent entrustment of fiscal responsibility and unfettered access to CTD's bank accounts."

To prevail on a claim against Herb for negligence in hiring, retaining or supervising Gladney, which includes entrusting him with CTD's bank accounts, Yoon must prove that Herb hired Gladney, that Gladney was or became unfit for his work, that Herb knew or should have known of Gladney's unfitness and that Gladney's unfitness created a particular risk to others; that the risk caused harm to Yoon, and that Herb's negligence in hiring, retaining or supervising Gladney was a substantial factor in causing Yoon's harm. (Doe v. Capital Cities (1996) 50 Cal.App.4th 1038, 1054; Roman Catholic Bishop v. Superior Court (1996) 42 Cal.App.4th 1556, 1564-1565.; see also CACI No. 426 ["Negligent Hiring, Supervision, or Retention of Employee"].)

Here, substantial evidence supports the trial court's conclusion that Herb is liable to Yoon for negligence. Herb, CTD's president, chief financial officer, secretary and director, hired Gladney as Senior Vice President for Operations in 2006 and left him in charge of CTD's daily operations without adequate training or supervision. Even if Gladney had never embezzled funds or participated in any misconduct before he was hired in 2006, Herb as CTD's sole director, president and chief financial officer should have monitored Gladney's management of CTD, especially in view of Gladney being given full authority to conduct CTD's banking. Accordingly, Herb should have known that Gladney was giving "customers" like Michael and Simon access to CTD funds and that Gladney was himself diverting CTD's funds, and that this posed a risk that CTD would be unable to pay its customers the money it collected for them. Thus even in the absence of evidence that Herb knew or should have known that Gladney was unfit for his position when Gladney was hired, there is substantial evidence to support the conclusion that Herb is liable to Yoon for negligently supervising and retaining Gladney.

We are not persuaded by Herb's argument that "supervisory privilege" protects him from liability to Yoon for negligence.¹⁸ Herb frames the question as, "[W]ho is liable for the bad acts of the negligently hired employee [Gladney]?" and argues that "only the corporation itself, and not the supervisor of a corporate employee who commits a bad act, is 'vicariously liable' to a third party for damages resulting from the bad act." Negligent retention and supervision concerns Herb's direct liability for his own negligence, not his vicarious liability for Gladney's bad acts. (Delfino v. Agilent Technologies, Inc. (2006) 145 Cal.App.4th 790, 815.) In any event, as Herb acknowledges, supervisory privilege is not available when the supervisor "was serving a personal purpose in addition to any purpose of the employer when the tort was committed." In view of the trial court's conclusion that Herb was acting for his own benefit and not CTD's in hiring, retaining and "supervising" Gladney, Herb is not protected by a supervisory privilege.

18 The federal district court case that Herb cites to support his argument that he could be protected by "supervisory privilege" does not contain the language Herb purports to quote from it. (Cf. Crossen v. Foremost-McKesson, Inc. (N.D. Cal. 1982) 537 F.Supp. 1076.)

3. Yoon's Appeal of Judgment for Dena

Yoon argues that the trial court erred by adjudging Dena to be the prevailing party on Yoon's claim for breach of fiduciary duty and on CTD's involuntary claim for legal malpractice.

a. Yoon's Claim Against Dena for Breach of Fiduciary Duty

Yoon argues that the trial court erred by not considering the opinion that was issued in American Master Lease v. Idanta Partners (2014) 225 Cal.App.4th 1451 in May 2014, about three months before the filing of the final statement of decision in this case in August 2014. Yoon contends that Idanta Partners stands for the proposition that "liability attaches to a tortfeasor who is found to have knowingly aided and abetted somebody who, in turn, breaches a fiduciary duty to a [third] party," and argues that Dena is liable to her because the trial court found that Dena aided and abetted Gladney, who was found to have breached his fiduciary duty to Yoon. This argument lacks merit.

Even if we agreed that Yoon's argument was properly raised on appeal for de novo review as pertaining to a question of law applied to undisputed facts (Greenwich S.F., LLC v. Wong (2010) 190 Cal.App.4th 739, 767), the argument would fail because it rests on a false premise. Contrary to Yoon's assertions, the trial court did not find that Gladney breached a fiduciary or confidential duty to Yoon, nor did it find that CTD breached such a duty. Rather, the trial court found that Gladney owed a fiduciary duty to CTD, and that neither Gladney nor CTD had a fiduciary relationship with Yoon.¹⁹ Consequently, Yoon's argument is not persuasive, and we conclude that she has not met her burden on appeal to show that the trial court made any prejudicial error in this regard.

19 Yoon contends on appeal that CTD's fiduciary duty to her was "established by a written 'Substitution of Trustee,' " and refers us to an exhibit attached to her opening brief. The exhibit, apparently a notarized document in which Yoon appointed CTD as trustee in her place under a deed of trust, is not marked as a trial exhibit, nor does Yoon provide us with any information as to whether or how it was presented to the trial court. In any event, Yoon does not address the trial court's ruling that "CTD as a trustee under a deed of trust for purposes of processing and conducting Yoon's non judicial foreclosures did not have a fiduciary relationship with the beneficiary or the trustor," in support of which the trial court cited Monterey S.P. Partnership v. W.L. Bangham, Inc. (1989) 49 Cal.3d 454, 462-463 and Hatch v. Collins (1990) 225 Cal.App.3d 1104, 1111-1112.

b. CTD's Claim Against Dena for Legal Malpractice

Yoon argues that the trial court erred in ruling that CTD's claim for breach of fiduciary relationship was barred by Code of Civil Procedure section 340.6, which establishes a one-year statute of limitations for professional negligence/legal malpractice claims. We will assume, without deciding, that Yoon has standing to appeal the trial court ruling. Conceding that CTD's malpractice claim was filed after the statute had run, Yoon argues that the relation-back doctrine or the doctrine of equitable tolling saves CTD's malpractice claim from being time-barred. We consider the arguments in turn.

Under the relation-back doctrine, a court will ordinarily deem a later-filed pleading to have been filed at the time of an earlier complaint if the amended complaint is based on the same general set of facts. (Austin v. Massachusetts Bonding & Ins. Co. (1961) 56 Cal.2d 596, 601.) But, "[a]n amended pleading that adds a new plaintiff will not relate back to the filing of the original complaint if the new party seeks to enforce an independent right or to impose greater liability against the defendants." (San Diego Gas & Electric Co. v. Superior Court (2007) 146 Cal.App.4th 1545, 1550 (San Diego Gas & Electric).) The question whether the allegations in an amended pleading relate back to an earlier pleading requires us to apply legal doctrine to undisputed facts, and therefore we review the trial court's decision de novo. (Id. at p. 1549.)

Yoon's verified original complaint in this action, filed in February 2009 and alleging facts that occurred in 2008, did not name Dena as a defendant, although it identified her as CTD's attorney. Dena was first named as a defendant in Yoon's verified Third Amended Complaint, filed in May 2010, which alleged that Dena was liable to Yoon for the negligent "Hiring/Retention/Supervision/Training/Entrustment" of Gladney. CTD was first added as a plaintiff in Yoon's verified Fifth Amended Complaint, filed July 2013, which alleges that Dena breached her duty as CTD's attorney by failing to warn CTD of Gladney's known continuing improprieties.²⁰ Yoon argues that the amended Complaint naming CTD as a plaintiff relates back to the original complaint, which, she claims, was filed within the one-year statute of limitations. But because the legal malpractice claim by CTD seeks to enforce an independent right of CTD against Dena in her capacity as attorney, and because liability to CTD for legal malpractice would be in addition to any other liability imposed against Dena, under San Diego Gas & Electric neither the Fourth Amended Complaint nor the Fifth relates back to the filing of the initial complaint or to the Third Amended Complaint, in which Dena was first named as a party.

20 According to the Statement of Decision as cited by Dena, CTD was not included as a party plaintiff until the Fifth Amended Complaint. Yoon asserts in her opening brief on appeal that CTD was added as a party plaintiff in the Fourth Amended Complaint, filed in July 2011, but provides no citation to the record to support that claim. We therefore disregard Yoon's assertion. (Williams v. Williams, supra, 14 Cal.App.3d at p. 565 ["It is incumbent upon the parties to an appeal to cite the particular portion of the record supporting each assertion made. It should be apparent that a reviewing court has no duty to search through the record to find evidence in support of a party's position."]; see also California Rules of Court, rule 8.204(a)(1)(C) [an appellate brief must support any reference to a matter in the record by a citation].) The analysis is the same whether CTD was added as a plaintiff in the Fourth or Fifth Amended Complaint.

Yoon also argues that we should exercise our discretion to relieve CTD from the bar of the statute of limitations by applying the doctrine of equitable tolling. This argument lacks merit. Yoon supports her argument with a single citation, to Addison v. State of California (1978) 21 Cal.3d 313. In Addison, our Supreme Court applied the doctrine to toll the six-month limitation period on suits against public entities while plaintiffs' claims were pending in a federal tribunal, where the federal action was filed in a timely fashion. (Id. at p. 316.) Yoon cites no authority supporting the application of the doctrine in the circumstances here. And our Supreme Court has ruled that the limitations period in Code of Civil Procedure section 340.6 shall not be tolled "under any circumstances not enumerated in the statute." (Laird v. Blacker (1992) 2 Cal.4th 606, 618; see also Gordon v. Law Offices of Aguirre & Meyer (1999) 70 Cal.App.4th 972, 979-980.) Yoon does not argue that any of the tolling provisions in Code of Civil Procedures section 340.6 apply, and therefore we reject her argument.

Accordingly, we will affirm the judgments in Dena's favor as to Yoon and CTD.

DISPOSITION

The judgments are affirmed. Truebridge shall recover her costs on appeal. Yoon shall recover her costs on appeal as to Herb. Dena shall recover her costs on appeal.

/s/_________

Miller, J. We concur: /s/_________
Kline, P.J. /s/_________
Stewart, J.