Second District, Division 7 Also Decides That Alter Ego Should Have Been Added As a Defendant For Purposes of Exposure to Anti-SLAPP Fees.
The next case shows that appellate courts will reinstate fee exposure where they are convinced that a party was part and parcel of a scheme to evade a judgment or was held liable as an alter ego.
Red Hill Enterprises v. Gould, Case No. B193939 (2d Dist., Div. 7 Mar. 18, 2009) (unpublished) arose out of a judgment owing by defunct judgment debtor Learning Tree University (with the judgment containing a contractual fees clause relating to enforcement efforts). Learning Tree affiliates then lost a jury verdict by which they were found to have attempted to make fraudulent conveyances and conspired/aided and abetted in efforts to avoid the prior judgment. In addition, one of the individual affiliates was found to have been Learning Tree’s alter ego.
(Earlier, Learning Tree lost an anti-SLAPP motion for which fees were awarded.) The trial court, however, denied fee motions brought against the affiliates in connection with the fraudulent judgment avoidance verdict and denied a motion to make the individual affiliate liable for satisfaction of the anti-SLAPP fee judgment.
On appeal, the party challenging the fee orders was granted reversal.
With respect to the denial of the fee order on the judgment avoidance claims, the Second District, Division 7 believed that the conspirators were liable for fees under either Code of Civil Procedure section 685.040 (authorizing recovery of fees in an action to enforce a judgment with a fees enforcement clause) or general fraudulent conveyance law. (See, e.g., Filip v. Bucurenciu, 129 Cal.App.4th 825, 839-840 (2005) [fraudulent conveyance law]; Jaffe v. Pacelli, 165 Cal.App.4th 927, 938 (2008) [CCP section 685.040].) The trial court’s improper application of res judicata principles required remand in order to award fees under these statutory schemes.
The erroneous application of res judicata also required reversal of the anti-SLAPP fee denial. Individual affiliate had been found to be an alter ego. This meant, pursuant to Code of Civil Procedure section 187, he should have added to the anti-SLAPP fee order against Learning Tree as an additional judgment debtor. (Hall, Goodhue, Haisley & Barker, Inc. v. Marconi Conf. Centr Bd., 41 Cal.App.4th 1551, 1554-1555 (1996).)
BLOG UNDERVIEW—The appellate court’s conclusion that fees are proper under the fraudulent conveyance scheme appears to be divergent from the Fourth District, Division 3’s view on the subject, as discussed in our December 2, 2008 post on Palacio Del Mar Homeowners Assn. v. McMahon, authored by Justice Ikola.)