RONALD S.W. LEW, Senior District Judge.
Currently before the Court is Plaintiffs' Motion to Add Myriad Pictures and Kirk D'Amico as Judgment Debtors [24], filed October 21, 2015. This Action stems from a dispute over an arbitration award between Plaintiff Writers Guild of America West, Inc. ("Guild") and Defendant BTG Productions, LLC ("Defendant"). Currently before the Court is Plaintiffs the Guild, Mark DiStefano ("Stefano"), and Guinevere Turner's ("Turner") (collectively "Plaintiffs") Motion to Add Myriad Pictures and Kirk D'Amico as Judgment Debtors [24] ("Motion").
In the present Motion, the Guild seeks to add judgment debtors so that it can collect on its Judgment against Defendant, which was awarded as a result of default in a prior arbitration proceeding. Upon consideration of all relevant papers before this Court, this Court should DENY Plaintiffs' Motion [24]. For the reasons discussed below, this Court
Plaintiff the Guild is a labor organization within the meaning of 29 U.S.C. § 152(5), with its principal place of business in Los Angeles, California. Compl. ¶ 1. Plaintiffs Stefano and Turner are members of the Guild.
At all relevant times, the Guild and Defendant have been parties to the Writers Guild of America Theatrical and Television Basic Agreement ("MBA"), an industry-wide collective bargaining agreement between the Guild and various employers in the motion picture and television industry.
In 2012, a dispute arose between Plaintiffs and Defendant concerning Defendant's failure to pay compensation owed in connection with the Picture to writers DiStefano and Turner (collectively the "Writers").
On July 25, 2014, Plaintiffs filed a Complaint to confirm an arbitration award against Defendant [1]. On February 3, 2015, this Court confirmed the Award and entered judgment against Defendant [23]. Defendant has since failed to pay on the judgment entered against it. Mot. 3:7-8. The Guild now seeks to add judgment debtors Myriad and D'Amico, pursuant to alter ego and piercing the corporate veil doctrines, to collect on its judgment against Defendant.
On July 25, 2014, Plaintiffs filed a Complaint [1] against Defendant to confirm the arbitration award. On September 2, 2014, this Court issued an Order to Show Cause as to why the case should not be dismissed for lack of prosecution [9]. On September 9, 2014, Plaintiffs filed an application for Clerk to Enter Default [11] against Defendant. On September 12, 2014, Default [14] was entered. On October 30, 2014, Plaintiffs filed a Motion for Default Judgment [17] against Defendant. On February 3, 2015, this Court issued a Judgment [23], granting Plaintiffs' request for default judgment accordingly to the terms set forth in the Award. On October 21, 2015, Plaintiffs filed their Motion to Add Judgment Debtors [24]. D'Amico's Opposition [27], Myriad's Opposition [29], and Plaintiffs' Reply [33] were timely filed.
Federal Rules of Civil Procedure, Rule 69(a) authorizes federal courts to enforce a money judgment by a writ of execution, unless the court directs otherwise. The procedure on execution follows the procedure of the state where the state is located, but a federal statute governs to the extent it applies.
California Code of Civil Procedure section 187 grants courts the authority to amend a judgment to add judgment debtors under the alter ego and veil piercing doctrines.
Both Plaintiffs and third parties D'Amico and Myriad make evidentiary objections, asserting various portions of proffered declarations are inadmissible evidence on the grounds of irrelevance, lack of foundation, the best evidence rule, hearsay, and speculation, amongst other grounds. Judgment Creditors' Evid. Objections, ECF No. 34; Myriad's Evid. Objections, ECF No. 30; Third Party Kirk D'Amico's Evid. Objections, ECF No. 28.
Plaintiffs object to the Declaration of Kevin Forester ("Forester Decl.") and the Declaration of Kirk D'Amico ("D'Amico Decl."), submitted in support of Myriad and D'Amico's Oppositions to the present Motion. This Court finds that "[t]o the extent that the Court relied on objected-to evidence, [the Court] relied only on admissible evidence" and therefore, this Court
Myriad and D'Amico proffered almost identical evidentiary objections in which the parties object to the Declaration of Heather Pearson ("Pearson Decl.") and the Declaration of Valerie Kordisch ("Kordisch Decl."). As to Myriad and D'Amico's objections, this Court finds that the statements objected to are independently evidenced by the accompanying exhibits, and therefore the Court need not rely on the statements proffered. Because the Court need not rely on the statements in the Pearson and Kordisch Declarations to determine the present matter, but can instead refer to the accompanying exhibits, D'Amico and Myriad's objections are denied as
This Court finds that the six-month statute of limitations period derived from the National Labor Relations Act ("NLRA") section 10(b), cited by D'Amico and Myriad in their respective Oppositions, is inapplicable in the present case. Myriad Opp. 10:18-11:3; D'Amico Opp. 2:17-3:8.
The Supreme Court has held that the six-month NLRA § 10(b) statute of limitations applies when the claim at issue "has no close analogy in state law."
In the present case, state law provides the grounds for Plaintiffs' claim, and additionally provides the applicable statute of limitations. Plaintiffs seek to add Myriad and D'Amico as judgment debtors. Pursuant to Federal Rule of Civil Procedure Rule 69(a), a federal court must utilize state procedures regarding the execution of judgments when available.
As discussed above, a motion to add a judgment debtor governed by Rule 69(a) and section 187 must be made "within a reasonable time."
In the present case, Plaintiffs waited eight months after the arbitrator's entry of Judgment before bringing this Motion. This Court entered Judgment against Defendant on February 3, 2015 [23]. In October 2015, when it became clear the moving parties would not receive payment, Plaintiffs filed the present Motion to add Myriad and D'Amico as judgment debtors. Given the facts presented, this Court finds that Plaintiffs' eight month delay in bringing this Motion is "reasonable" under the Ninth Circuit's standard, and is thus timely.
Article 10.A.2 of the Writers Guild of America 2011 Minimum Basic Agreement ("MBA") states, in part: "Proceedings for grievance (or arbitration, to the extent a party is required to initiate arbitration without invoking a grievance proceeding) of a claim . . . shall be commenced no later than eighteen (18) months after the party bringing the grievance or arbitration proceeding . . . has obtained knowledge of the facts upon which the claim is based." Forester Decl. ¶ 10, Ex. A.
The Court, not the arbitrator, has the ability to add judgment debtors.
"Laches is an equitable time limitation on a party's right to bring suit," which is "derived from the maxim that those who sleep on their rights, lose them."
This Court finds that Plaintiffs' Motion is not barred by laches. Based on the evidence proffered by D'Amico and Myriad in their respective Oppositions, it is not apparent to this Court that Plaintiffs engaged in any unreasonable delay in bringing this Motion. As to the matter of any resulting prejudice, Myriad merely contends that requiring it to pay the Judgment, with its accruing interest, would be "highly prejudicial" as "Plaintiffs have not offered any legitimate excuse for their delay in filing suit." Myriad Opp. 11:11-21. The Court finds this argument unconvincing. In fact, Plaintiffs have proffered a legitimate excuse for their eight month delay. As mentioned above, Plaintiffs waited eight months from this Court's entry of Judgment to file the present Motion because only at this time did Plaintiffs learn that Defendant would be unable to fulfill the Judgment against them. Plaintiffs waited until the resolution of the arbitration rather than after the final writing of the credit determination for the Picture because Plaintiffs and Defendant were parties to an arbitration agreement, and thus Plaintiffs were mandated to arbitrate their claim against Defendant only. Further, as discussed above, only courts, not arbitrators can confirm and amend judgments to add additional judgment debtors. Accordingly, the Court finds that Plaintiffs' Motion is not barred by laches.
Under California law, the amendment of a judgment to add additional judgment debtors is an equitable procedure that binds new individual defendants where it can be demonstrated that, in their capacity as alter egos of the corporation, they in fact had control of the previous litigation, and thus were virtually represented in the lawsuit. California Code of Civil Procedure § 187 permits judgments to be amended to add additional judgment debtors if two requirements are met: "(1) [] the new party is the alter ego of the old party and (2) [] the new party had controlled the [earlier] litigation, thereby having had the opportunity to litigate, in order to satisfy due process concerns."
The Ninth Circuit applies a two-step analysis to establish alter ego liability under LMRA § 301.
Among the factors to be considered in determining alter ego liability are: (1) commingling of funds and other assets of the two entities, (2) the holding out by one entity that it is liable for the debts of the other, (3) identical equitable ownership in the two entities, (4) use of the same offices and employees, and (5) use of one as a mere shell or conduit for the affairs of the other.
"No one characteristic governs, but the courts must look at all the circumstances to determine whether the doctrine should be applied."
This Court finds that Plaintiffs have not shown such a "unity of interest" between Myriad and Defendant so as to find that the separate personalities of the corporations no longer exist. Katzir's, 394 F.3d at 1149. First, upon review of the record, Plaintiff has not proffered any evidence to show that there was a commingling of Myriad and Defendant's funds. In fact, Myriad's Chief Financial Officer ("CFO") Kevin Forester ("Forester") contends in his declaration, "Myriad and [Defendant] maintain separate corporate funds, records, and assets. There has never been any commingling of funds or assets between Myriad and [Defendant]." Forester Decl. ¶ 4.
This Court finds Plaintiffs have failed to put forth any evidence showing that Myriad ever held itself out as liable for the obligations of Defendant.
It is apparent from the record that Myriad and Defendant do not have identical equitable ownership. The record shows that D'Amico is the sole shareholder of Defendant. Kordisch Decl. ¶ 4, Exs. 6, 7. However, there is no indication that D'Amico is the sole shareholder of Myriad. D'Amico is however President of Myriad. Further, although Myriad and Defendant share the same mailing address, and some email addresses and phone numbers, Kordisch Decl. Ex. 6, Plaintiffs do not show that Defendant and Myriad share the same employees, besides sharing counsel on certain matters. Finally, Plaintiffs have not adequately shown this Court that Defendant is a shell corporation of Myriad. Plaintiffs merely allege, "Myriad is using [Defendant] to unjustly shield Myriad from having to pay labor costs," without providing convincing factual support for this contention. Mot. 9:27-28. Plaintiffs allege: "Myriad employees negotiated the first three disputes that the Guild brought regarding this movie, and coordinated payment to the Guild on those disputes. However, when they realized that paying the credit bonuses were going to add a significant expense to the project, and D'Amico nor counsel could convince the Guild to withdraw these claims, Myriad abandon[ed] [Defendant]. . . . Myriad's only chance to escape liability was to make the Guild try to collect from the empty shell of [Defendant]."
This Court finds Plaintiffs put forth insufficient evidence to show inequity would result if the corporate separateness of Defendant and Myriad were respected. Plaintiffs simply argue they would be unable to collect their Judgment against Defendant. "The Guild should be able to collect its judgment from Myriad, because the facts above show it is the alter ego of [Defendant]. Mot. 10:11-12.
"California courts generally require some evidence of bad faith conduct on the part of defendants before concluding that an inequitable result justifies an alter ego finding."
Pursuant to California Code of Civil Procedure section 187, this Court must evaluate whether Myriad had sufficient control over the underlying arbitration, with the opportunity to contest the underlying judgment, before it is found to be the alter-ego of Defendant.
As the Judgment against Defendant was entered by default, and as this Court has determined that Myriad does not effectively share the same corporate identity as Defendant, it cannot be argued that Myriad had the opportunity to be heard, to present its defenses to Plaintiffs' claims, or to represent its interests in the underlying arbitration. In fact, considering the different involvement Defendant and Myriad had in producing the Film, it appears that Defendant and Myriad would likely have different interests in the arbitration. Accordingly, it would violate Myriad's due process rights to be added as a judgment debtor at this juncture. Katzir's, 394 F.3d at 1149-50. Plaintiffs have failed to meet their burdens in (1) showing alter ego liability, and (2) showing that Myriad had control over the proceeding arbitration. As such, this Court
LMRA § 301 allows liability to be assessed against a non-signatory under the doctrine of piercing the corporate veil. Under this doctrine, if there has been an abuse of corporate form, shareholders may be held individually liable for the corporate debts.
This Court finds that D'Amico gave sufficient respect to the separate identity of Defendant so as to deny Plaintiffs' request to pierce the corporate veil and reach D'Amico's assets. The record shows that although Defendant was 100% owned by D'Amico, Defendant was not under his complete control. In fact, D'Amico was not the sole officer of Defendant. "Rather, the company had three different individuals acting as officers on its own behalf, in addition to a designated registered agent as indicated above as well as an organizer." D'Amico Decl. ¶ 14. Further, at all relevant times, the record shows that D'Amico personally maintained a separate bank account from Defendant and did not ever personally advance money or fund production expenditures to or on behalf of Defendant.
Plaintiffs argue that D'Amico has not respected the separate corporate identity of Defendant because D'Amico is Defendant's 100% shareholder, D'Amico signed all documents submitted to the Guild relating to the Film, and D'Amico personally tried to talk the Guild into abandoning their case against Defendant. While these allegations are evidenced by Plaintiffs' supporting declarations, they are insufficient to warrant the extreme measure of piercing the corporate veil. These allegations do not support a finding that D'Amico disrespected the separateness of Defendant as a corporate entity.
Plaintiffs have proffered no evidence that suggests D'Amico had fraudulent intent in its dealings with Defendant. Plaintiffs merely argue that D'Amico was the publicly credited producer of the Film, yet he never signed papers agreeing to be bound to the Guild's collective bargaining agreement. Mot. 11:4-10. Plaintiffs maintain, "he created other companies, like Dryad and [Defendant], to be bound by MBA, even when Myriad had control of the literary material. D'Amico himself refused to provide a personal guarantee to the Guild, likely anticipating the company might later seek to evade them." Mot. 11:4-10. While the above facts are evidenced in the record, D'Amico's alleged fraudulent intent is not. Plaintiffs infer from D'Amico's decision to not sign the collective bargaining agreement that he intended to defraud Plaintiffs, if a dispute were to arise with the Guild, by hiding behind the shield of Defendant corporation. Plaintiffs do not support these inferences with fact or evidence. Accordingly, this Court finds the record provides no indication of fraudulent intent on behalf of D'Amico.
While the Court recognizes that Plaintiffs have faced difficulty in collecting on their Judgment against Defendant, it does not follow that this difficulty constitutes an injustice if the Court does not pierce Defendant's corporate veil to reach the assets of D'Amico. As discussed above, the record neither shows that D'Amico disrespected the separate corporate identity of Defendant, nor that D'Amico had fraudulent intent, such as to warrant this extreme measure. Plaintiffs have provided no further examples of injustice they would encounter if this Court were to decline to pierce Defendant's corporate veil.
Upon consideration of the appropriate factors, specifically the amount of respect given to the separate identity of Defendant, D'Amico's fraudulent intent, and injustices Plaintiffs may face, this Court
For the reasons stated above, this Court
