February 18, 2014

Alter Egos No More! Bresky Law Assists with Unique California Appeal

Alter Egos No More! Bresky Law Assists with Unique California Appeal

Bresky Law was retained in 2013 to assist two California attorneys with an appeal in Los Angeles. We researched and drafted portions of the briefs and assisted in editing and polishing the drafts into cohesive products, which were reviewed, finalized, signed, and filed by the California lawyers.

The appeal challenged a California trial court’s order amending a judgment against a company, to add two individuals as judgment debtors even though the individuals had not been sued, did not participate in the litigation, and were not named as judgment debtors in the original judgment of approximately $1.6 million (plus interest, costs, and attorney fees in favor of the plaintiffs).

The case arose from an arbitration award against an insurance brokerage company. The individuals in question were officers and shareholders in the company that was sued for breach of contract. After obtaining a court order confirming the arbitration award, the plaintiffs succeeded in persuading the court to amend the judgment to add the individuals as judgment debtors to be jointly and severally liable for the entire debt on the basis of a theory that the company was merely their alter ego.

We assisted the California attorneys, who represented one of those individuals, in arguing that the trial court erred in piercing the corporate veil because it failed to properly weigh the determining factors in the alter-ego analysis under California law and there was insufficient evidence that the company was their alter ego.

In some phases of the drafting, Bresky Law engaged in a high-tech process of real-time simultaneous drafting and editing, where lawyers in California and Colorado and an attorney in Florida were all drafting and editing the same document at the same moment through a real-time collaboration feature available in recent versions of Microsoft® Word® when connected through SkyDrive® or SharePoint®.

The appellate court in Los Angeles recently held in favor of the individuals, finding insufficient evidence of their being alter egos of the company. The appellate court reversed the judgment against them. They will not be liable on the judgment against the company. The appellate court also awarded the individuals their costs on appeal.  We are pleased to see that our collaboration with the California attorneys resulted in a successful outcome for the individuals.