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APPELLATE COURT ALLOWS ATTORNEY’S FEES CLAIM TO PROCEED AGAINST CORPORATE ALTER EGO 4 YEARS AFTER ORIGINAL JUDGMENT


In Highland Springs Conference & Training Center v. City of Banning, 2016 Cal. App. LEXIS 53, the Fourth Appellate District held that a motion to amend a judgement filed four years after the initial award was not automatically time-barred.

In 2008, plaintiffs Highland Springs Conference and Training Center and Banning Bench Community of Interest Association (“Plaintiffs”) prevailed in a CEQA lawsuit against the City of Banning and SCC/Black Bench, LLC and, along with two additional plaintiffs, were awarded over $1 million in attorney fees. Four years later, Plaintiffs had not been paid any part of the award and filed a motion to amend the judgement to include SCC Acquisitions, Inc. (“SCCA”) as the alter ego of SCC/Black Bench. Despite stating that it likely would have found that SCAA was the alter ego of SCC/Black Bench, the trial court denied the motion to amend because the four-year delay was unreasonable and showed a “lack of due diligence.”

The Court of Appeals reversed, holding that the equitable remedy of amending a judgment to add alter ego liability does not have a statute of limitations and SCC/Black Bench’s only recourse in this situation is asserting the equitable affirmative defense of laches. The Court held that a presumption of prejudice from SCCA’s bare assertion of “materially changed circumstances” since 2008 was insufficient to satisfy the burden of production required for the defense.

The Court then remanded to the trial court to determine whether Plaintiffs proved their alter ego claim against SCCA.

Key Point:

Alter ego liability is an equitable remedy that may be brought at any time after judgment through a motion to amend under Code of Civil Procedure section 187. To assert the equitable affirmative defense of laches, the defendant must show both an unreasonable delay by the plaintiff and prejudice to the defendant resulting from the delay (or acquiescence in the act about which the plaintiff complains).



dateFebruary 2nd, 2016byby


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