Favila v. Pasquarella
B304841
| Cal. Ct. App. | Jun 21, 2021Background
- Richard Corrales (51% owner of Motion Graphix) died; executor Sandra Corrales Favila sued Souther and Get Flipped for wrongful transfer of Motion Graphix assets; trial and appeals resulted in a judgment for the Estate for damages and a constructive trust covering a 51% interest.
- Get Flipped (owned by Souther 90% and Pasquarella 10%) later transferred assets to Moofly Productions (Pasquarella 90%, Souther 10%), a rebrand/transfer the Estate later challenged.
- Pasquarella was added as a defendant in the original suit but won summary judgment in 2009 and was dismissed; the Estate did not appeal that dismissal.
- The Estate sued Moofly in a separate fraudulent-conveyance action and obtained a judgment requiring return of assets and restitution for profits received after the Get Flipped judgment (the Estate waived certain monetary damages in that action).
- Post-Moofly judgment, the Estate moved under Code Civ. Proc. § 187 to amend the Get Flipped judgment to add Moofly (granted) and to further amend to add Pasquarella as a judgment debtor (granted Jan 6, 2020).
- Pasquarella appealed, arguing the amendment exceeded equitable authority, was barred by res judicata/issue preclusion and laches, and lacked evidentiary support; the Court of Appeal affirmed the amendment.
Issues
| Issue | Plaintiff's Argument (Favila) | Defendant's Argument (Pasquarella) | Held |
|---|---|---|---|
| Whether the trial court may amend the Get Flipped judgment under CCP § 187 to add Pasquarella as a judgment debtor | § 187 authorizes equitable amendment to insert the real defendant (alter ego/successor) to prevent injustice | Adding her contradicts the 2009 summary judgment dismissing her and unlawfully expands liability | Court: § 187 authorizes amendment; adding Pasquarella was within discretion to prevent injustice and to recognize successor/alter-ego liability |
| Whether claim or issue preclusion (res judicata / collateral estoppel) bars the amendment | The Moofly judgment and prior summary judgment addressed relevant facts; amendment is not barred because it seeks different relief based on postjudgment conduct | The prior summary judgment and Moofly judgment preclude relitigation and adding liability here | Court: Neither claim nor issue preclusion bars the § 187 amendment — the alter-ego/successor issue and postjudgment conduct are distinct and were not litigable before the Get Flipped judgment |
| Whether evidence supports adding Pasquarella as judgment debtor (alter ego / successor theory) | Evidence showed Moofly was mere continuation of Get Flipped, assets commingled/controlled by Pasquarella, bank accounts tied to her SSN, inadequate capitalization — inequitable to leave judgment unsatisfied | Summary-judgment ruling and lack of direct control during original litigation undermine adding her; record insufficient | Court: Substantial evidence supports alter-ego/successor finding and inequity; even if some formal elements were weak, equities justify amendment |
| Whether laches or unfair delay bars amendment or whether adding damages creates double recovery | Motion was timely after asset transfers and judgment renewal; Moofly judgment did not cover the same damages, so amendment is necessary to avoid injustice | Delay (10 years) and prior judgments render amendment unfair and risk duplicative recovery | Court: Laches does not bar addition; restitution in Moofly and damages in Get Flipped cover different periods so double recovery is not a concern |
Key Cases Cited
- Triyar Hospitality Management, LLC v. WSI (II)-HWP, LLC, 57 Cal.App.5th 636 (Cal. Ct. App. 2020) (trial court may amend judgment under section 187 to add judgment debtors)
- Relentless Air Racing, LLC v. Airborne Turbine Ltd. Partnership, 222 Cal.App.4th 811 (Cal. Ct. App. 2013) (standards for adding alter ego as judgment debtor)
- Carolina Casualty Ins. Co. v. L.M. Ross Law Group, LLP, 212 Cal.App.4th 1181 (Cal. Ct. App. 2013) (equitable amendment to insert real defendant; alter ego and overwhelming-equities standard)
- Danko v. O’Reilly, 232 Cal.App.4th 732 (Cal. Ct. App. 2014) (affirming postjudgment addition of individual who drained corporate assets to defeat collection)
- Wells Fargo Bank, N.A. v. Weinberg, 227 Cal.App.4th 1 (Cal. Ct. App. 2014) (adding individual as judgment debtor for control over corporation that frustrated collection)
- DKN Holdings LLC v. Faerber, 61 Cal.4th 813 (Cal. 2015) (explaining standards for claim and issue preclusion)
- Mycogen Corp. v. Monsanto Co., 28 Cal.4th 888 (Cal. 2002) (res judicata principles)
- Greenspan v. LADT LLC, 191 Cal.App.4th 486 (Cal. Ct. App. 2010) (amendment to add judgment debtor under equitable principles)