Wolf Metals Inc. v. Rand Pacific Sales Inc., 4 Cal. App. 5th 698

Wolf Metals obtained a default judgment against Rand Pacific Sales, Inc. (RPS) for unpaid sheet‑metal sales after RPS’s answer was stricken following failure to prosecute; judgment entered July 20, 2012.
RPS filed Chapter 7 bankruptcy in 2010 (corporations cannot receive a discharge in Chapter 7); the bankruptcy closed with a trustee report stating no assets for distribution.
RPS did not satisfy the judgment; Wolf Metals pursued post‑judgment discovery and conducted judgment‑debtor examinations of RPS president Donald Koh (who also ran South Gate Steel, Inc. (SGS)).
Wolf Metals moved under Code of Civil Procedure § 187 to amend the default judgment to add Koh (as RPS’s alter ego) and SGS (as RPS’s successor/mere continuation); the trial court granted the motion and an amended judgment named Koh and SGS as additional judgment debtors.
On appeal, the Court of Appeal affirmed the successor‑corporation finding as to SGS but reversed the addition of Koh on alter‑ego grounds, concluding Motores de Mexicali controls default‑judgment alter‑ego additions.

Issue	Plaintiff's Argument (Wolf Metals)	Defendant's Argument (Koh/SGS)	Held
Whether a default judgment may be amended to add an individual (Koh) as an alter ego of the defaulted corporation	Koh controlled RPS and thus should be liable as alter ego	Addition violates due process because Koh never personally litigated the case and RPS defaulted	Reversed: under Motores, cannot add individual as alter ego to default judgment when individual had no opportunity to litigate
Whether a default judgment may be amended to add SGS as a successor/mere continuation of RPS	SGS continued RPS’s business, location, employees, and assets and thus is liable as successor	SGS lacked opportunity to litigate and the bankruptcy/ trustee findings preclude this relief	Affirmed: SGS is RPS’s mere continuation; successor‑corporation theory permits amendment without violating due process
Whether the bankruptcy closing or trustee report precludes Wolf Metals’s amendment to add SGS or Koh	Bankruptcy closed without discharge for corporations; therefore claims survive and may be enforced against successors or alter egos	Trustee report stating claims scheduled to be discharged without payment precludes relitigation	Rejected: corporations cannot obtain Chapter 7 discharge; trustee report did not preclude state‑court remedies or relitigation of successor/alter‑ego issues

Motores de Mexicali v. Superior Court, 51 Cal.2d 172 (Cal. 1958) (holding due process bars adding individuals as judgment debtors to a prior default judgment against a corporation when those individuals had no opportunity to litigate)
McClellan v. Northridge Park Townhome Owners Assn., 89 Cal.App.4th 746 (Cal. Ct. App. 2001) (Code Civ. Proc. § 187 permits amendment to add successor corporation as judgment debtor where the new entity is the mere continuation)
NEC Electronics, Inc. v. Hurt, 208 Cal.App.3d 772 (Cal. Ct. App. 1989) (applying Motores to reverse addition of an individual where corporation failed to present an evidence‑based defense)
Ray v. Alad Corp., 19 Cal.3d 22 (Cal. 1977) (successor/mere continuation doctrine and typical factors for imposing predecessor liability)
McIntire v. Superior Court, 52 Cal.App.3d 717 (Cal. Ct. App. 1975) (lack of diligence in discovering and naming additional defendants before finality can bar later amendments)
Cleveland v. Johnson, 209 Cal.App.4th 1315 (Cal. Ct. App. 2012) (equitable analysis for successor liability; inadequate consideration not always required)
Auto Equity Sales, Inc. v. Superior Court, 57 Cal.2d 450 (Cal. 1962) (principle that appellate courts follow controlling precedent)