Whats an alter ego code#
In SCC, Judgment Creditor Western Albuquerque Land Holdings, LLC (Western) made a demand for production of documents on SCC pursuant to California Code of Civil Procedure Section 708.030. Superior Court of Orange (2016 4th Appellate District – G050546) that applies the fundamentals of alter ego in connection with post-judgment collection efforts.
Let’s take a look at a recent case ( SCC Acquisitions v. In order to see that justice is done, great liberality is encouraged in the allowance of amendments brought pursuant to Code of Civil Procedure section 187. For example, California Code of Civil Procedure Section 187 allows a judgment creditor to file a noticed motion to amend the judgment to add a nonparty alter ego or successor as a judgment debtor. In addition, alter ego can be used post-judgment. In a pre-judgment situation, alter ego should be alleged in the complaint from the get go if the facts warrant because there is nothing worse than obtaining a judgment against an entity, only to find that the entity has no assets to collect upon. The question is: How do you find sufficient evidence to get a court to apply alter ego?Īdditionally, the doctrine of alter ego can be used both pre and post judgment. This is an incredibly useful tool for a collection attorney trying to collect your judgment. Oakland Meat Company (1962) 20 Cal.App.2nd 825, pointed out, the doctrine of alter ego is not to protect every unsatisfied creditor, but rather to afford him protection, where some conduct amounting to bad faith makes it inequitable for the owner of a corporation to hide behind its corporate veil.Īlter ego can also be used to find that a corporation lacks a separate identity from its parent company or subsidiary. Arnold v Browne (1972) 27 Cal App 3d 386.
Whats an alter ego trial#
It is within the trial court’s discretion to consider the presence or absence of any of these factors or other relevant circumstances. Hancock (1998) 69 Cal.App.4 th 223, 249-250, which an experienced collection attorney can discuss with you in detail. Thus, while the test is consistently stated, most cases have avoided formulas and tests and relied instead on the discretion of the trial court.Ĭalifornia courts have developed 17 factors they consider when determining whether this two-part test is met. Las Palmas Center Associates (1991) 235 Cal App 3d 1220. The test is easy to state, but courts have found it difficult to apply. Generally, to pierce the corporate veil, the creditor must prove two things: (1) there is a “unity of interest and ownership” between the corporation and its owner, and (2) it would be unfair if the acts in question are treated as those of the corporation alone.
Finding alter ego gives the court cause to pierce the corporate veil and hold individual shareholders personally liable for debts of the corporation. For a creditor with an outstanding judgment, alter ego is where the court finds that a corporation lacks a separate identity from an individual or corporate shareholder, resulting in injustice to the corporation’s creditors.
In legal terms, finding alter ego gives the court cause to pierce the corporate veil and hold individual shareholders personally liable for debts of the corporation. Chances are you have heard the term ‘alter ego’.
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