Monday, June 23, 2014

Holding the Line on Alter Ego

Wells Fargo Bank, NA v. Weinberg, No. E057011 (D4d2 June 18, 2014)

Wells got a judgment against a solo practice law firm. Afterwards, it successfully moved
under Code of Civil Procedure § 187 to add the lawyer to the judgment as an alter ego of the judgment debtor firm. The court here affirms. For good reason. It looks like, post-judgment, the lawyer sucked the firm’s accounts dry and engaged in some dodgy “loan” accounting while continuing his practice under his own name. Unfortunately, the court relies principally on Greenspan v. LADT LLC, 191 Cal. App. 4th 486 (2011), which—as I have previously discussed—contains some unfortunately loose language about the “fraud or injustice” prong of the alter ego analysis. Indeed, here, the court doesn’t really discuss that element at all. It seems clear from the evidence that the standard would have been satisfied anyway by way of the lawyer’s deliberate undercapitalization of the firm in light of the pending judgment. But the failure to cite the element of the test is a little concerning.


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