Jack Farenbaugh & Son v. Belmont Construction, Inc.

Decision Date15 September 1987
Citation240 Cal.Rptr. 78,194 Cal.App.3d 1023
PartiesJACK FARENBAUGH & SON, Plaintiff and Respondent, v. BELMONT CONSTRUCTION, INC. and Neal B. West, Defendants and Appellants. B022184.
CourtCalifornia Court of Appeals Court of Appeals
Bidna & Keys and Richard D. Keys, Newport Beach, for defendants and appellants

Schneider & Wallerstein and Larry I. Wallerstein, San Jose, for plaintiff and respondent.

ROBERSON, Associate Justice. *

Appellant Neal B. West appeals from an order of the trial court granting plaintiff/respondent's motion to amend a judgment obtained by respondent against a corporate defendant (Belmont Construction, Inc.) to include appellant who was not named in the original complaint nor in the original judgment as a judgment debtor based on an alter ego theory.

Appellant's principal contention is that he was deprived of his due process rights and that the trial court abused its discretion in that: (1) there was no evidence that appellant controlled the litigation on behalf of the corporate defendant in the case in which the judgment was given and (2) there was no showing that appellant was the alter ego of the corporate defendant. Appellant further contends that the trial court abused its discretion in refusing to disqualify itself from hearing the motion to amend the judgment.

I FACTS

In March 1978, plaintiff/respondent Jack Farenbaugh & Son entered into a written contract with Belmont Construction, Inc. (hereinafter referred to as "Belmont") a California Corporation, for grading on a parcel of property on which Belmont was building. A dispute arose between respondent and Belmont concerning, among other things, payment for additional equipment rented by respondent in order to complete its grading work. Because the dispute could not be resolved, respondent stopped work on the project prior to completion of its work, and filed a lawsuit to recover the contract amount along with other claimed costs.

The case was tried as a court trial on January 31, 1983. The court found in favor of respondent against Belmont and on April 13, 1983, judgment was entered in favor of respondent against Belmont, in the amount of $15,069.33, plus interest, together with costs, disbursements and for attorneys fees in the amount of $9,787.00. After discovering that defendant corporation had no income since approximately sometime in 1980, that it had no assets, and that appellant was engaged in the construction business using the name BCI (which are the same initials as defendant corporation's, i.e. Belmont Construction, Inc.) respondent brought a motion to amend the judgment to name appellant, who was not a party to the original action, as an additional judgment debtor on the ground that appellant was the alter ego of Belmont, and that the judgment as rendered contained a misnomer in failing to include the name of appellant as judgment debtor.

On March 2, 1984, respondent's motion was heard without opposition, and was granted by the trial court.

Thereafter, on or about January 1986, appellant caused to be filed a Motion to Vacate and Set Aside the Amended Judgment against him. The court granted appellant's motion to Vacate and Set Aside the Amended Judgment by Default. On or about February 7, 1986, respondent once again brought a Motion to Amend Judgment to add appellant and the matter was set for hearing on March 7, 1986.

Sometime prior to the March 7th hearing, counsel for respondent received a telephone call from an attorney who identified himself as the attorney for appellant and indicated that appellant had not been properly served with respondent's motion; he then inquired as to whether respondent intended to go forward with the March 7th hearing. He was informed by respondent's attorney that he did intend to proceed with the hearing.

On March 7, 1986, appellant's attorney appeared in court initially as a special appearance, however, when appellant's counsel agreed to accept personal [194 Cal.App.3d 1028] service in open court on behalf of appellant the court granted his request for a continuance of the hearing on the Motion to Amend Judgment to April 4, 1986, and without objection from counsel transferred it back to the trial court for the hearing.

Directly after the hearing, counsel for respondent advised appellant's counsel that he intended to pursue collection of the judgment against both appellant and Belmont and that he would not agree to any continuance of the April 4 hearing date. He also suggested to appellant's counsel that if he intended to have an evidentiary hearing with witnesses he should notice same and that he would not waive any objections thereto. No opposing papers to respondent's motion were filed by appellant nor was there any notification of an intention to take oral testimony at the time of the hearing.

On April 4, 1986, no opposition to respondent's motion having been filed, the trial court granted respondent's motion adding appellant to the judgment as a judgment debtor 1 and caused its order thereon to be entered on April 9, 1986.

On April 14, 1986, appellant filed a Motion for Reconsideration (alternately as a Motion for Relief from Default). Thereafter, appellant's Motion for Reconsideration was granted; and on June 20, 1986, after hearing argument from both sides and considering the moving and opposition papers the court ruled that the order entered April 9, 1986, granting respondent's motion to amend judgment and the order amending the judgment, remain in full force and effect.

II THE COURT'S AUTHORITY TO AMEND JUDGMENT TO INCLUDE AN INDIVIDUAL NOT NAMED IN THE ACTION AS A JUDGMENT DEBTOR

Section 187 of the California Code of Civil Procedure 2 grants to every court power to use all means to carry its jurisdiction into effect, even if those means are not specifically pointed out in the code. (Fairfield v. Superior Court (1966) 246 Cal.App.2d 113, 120, 54 Cal.Rptr. 721.) It is now settled that "... the authority of the court will be exercised to impose liability under a judgment upon the alter ego who has had control of the litigation." (Schoenberg v. Romike Properties (1967) 251 Cal.App.2d 154, 168, 59 Cal.Rptr. 359; Alexander v. Abbey of the Chimes (1980) 104 Cal.App.3d 39, 163 Cal.Rptr. 377.)

In contending that the "... trial court abused its discretion in applying the remedy of post judgment motion", in joining appellant as a judgment debtor, appellant does not urge that the court lacks authority to amend judgment after trial to add one not originally a party to the action as a judgment debtor, or that the procedural methodology by which appellant was added to the judgment was not proper, but rather, the thrust of appellant's contention is that the evidence heard by the court was insufficient to support the court's ruling.

Appellant first contends that he was deprived of his due process rights in that there was no showing that appellant in any way controlled the original litigation. We disagree. In reaching its decision the court was not limited to evidence testified to at the trial. In other words, although no It is now settled that "... the authority of the court will be exercised to impose liability under a judgment upon the alter ego who has had control of the litigation." (Schoenberg v. Romike Properties, supra, 251 Cal.App.2d 154, 168, 59 Cal.Rptr. 359; Alexander v. Abbey of the Chimes, supra, 104 Cal.App.3d 39, 163 Cal.Rptr. 377.) In the instant case, there was sufficient evidence that appellant had controlled the litigation between respondents and Belmont. Once the trial court was satisfied that there was substantial evidence to that effect and that appellant acted as alter ego of Belmont, it was empowered to amend the judgment to add appellant as a judgment debtor.

testimony may have been offered in the original action for the purpose of establishing a relationship between defendant corporation (Belmont), and an individual sought to be charged with the liability of the corporation as the alter ego, a court may, on the hearing of a motion to amend judgment, admit extrinsic evidence, on proper notice to the adversary party, to make the judgment speak the truth. (Thomson v. L.C. Roney & Co. (1952) 112 Cal.App.2d 420, 427, 246 P.2d 1017; Scamman v. Bonslett (1897) 118 Cal. 93, 97, 50 P. 272.)

A. Appellant's control of the litigation:

Appellant contends that his declaration states that he was not in control of the litigation and that the only reference to control of the litigation by appellant in respondent's moving papers are respondent's unsupported statement that appellant was. The court had before it the declaration of respondent's attorney in which he stated that he was the attorney in charge of litigation since September 4, 1981, for the plaintiff in the action against Belmont, that he personally did the judgment debtor examination of appellant, that he personally tried the lawsuit against Belmont, that he personally took the deposition of appellant on January 29, 1982, at which time appellant testified that his occupation was that of president of the defendant corporation and that appellant also testified at the trial that he was president of the defendant corporation. While it is true that respondent's attorney was stating his conclusion, or opinion if you will, that appellant "controlled the litigation," in the original action, that conclusion was based on his personal observations during his handling of the plaintiff's case, which were further corroborated by the trial judge's own personal observations made by the court during the trial. At the hearing on appellant's motion for reconsideration, the court stated: "... we have a rather unusual situation here; it is not the norm, in that this court personally tried the original case. And this court had Mr. West as well as ... Mr. Hafer 3 before it. And this court had an opportunity to see how the trial was conducted." The court later stated: "Now, I...

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