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  • Alvarez, David vs. Ciboeureka, LLC et alCivil-Roseville document preview
  • Alvarez, David vs. Ciboeureka, LLC et alCivil-Roseville document preview
  • Alvarez, David vs. Ciboeureka, LLC et alCivil-Roseville document preview
  • Alvarez, David vs. Ciboeureka, LLC et alCivil-Roseville document preview
  • Alvarez, David vs. Ciboeureka, LLC et alCivil-Roseville document preview
  • Alvarez, David vs. Ciboeureka, LLC et alCivil-Roseville document preview
  • Alvarez, David vs. Ciboeureka, LLC et alCivil-Roseville document preview
  • Alvarez, David vs. Ciboeureka, LLC et alCivil-Roseville document preview
						
                                

Preview

ELECTRONICALLY FILED Superior Court of California, Count of Placer ELLEN C. ARABIAN-LEE (SBN 151615) 06/17/2020 at 12:20:00 PM ARABIAN-LEE LAW CORPORATION jy: Marina Olivarez Fuentes, Deputy Clert 1731 East Roseville Parkway, Suite 150 Roseville, California 95661 Telephone (916) 242-8662 Facsimile (916) 797-7404 Attomeys for Plaintiff, DAVID ALVAREZ SUPERIOR COURT OF CALIFORNIA COUNTY OF PLACER DAVID ALVAREZ, an individual, Case No.: SCV0041128 10 Plaintiff, PLAINTIFF’S REPLY BRIEF IN 11 SUPPORT OF PLAINTIFF’S MOTION TO 12 Vv STRIKE AND/OR TAX COSTS [CRC Rule 3.1700] 13 CIBOEUREKA, LLC dba Cibo 7 Ristorante Wine & Spirits; JOHN MACKEY, an 14 individual; RAY SILVA, an individual; Date: June 25, 2020 (continued date) 15 CHAD LANZA, an Individual; ALAN Time: 8:30 a.m. STEVENS, an Individual; and DOES 1 — 20, ) Dept.: 42 16 inclusive. Complaint Filed: 5/3/18 17 Defendants. 18 ---- ) Trial Date: TBD 19 Plaintiff, DAVID ALVAREZ, hereby replies to Defendants LANZA and STEVENS’ 20 Opposition to Plaintiff's Motion to Strike and/or Tax Costs as follows: 21 A. Plaintiff’s Claims Against LANZA and STEVENS Were Not Frivolous. 22 1. LANZA and STEVENS were Sued Under an Alter Ego Theory. 23 Defendants LANZA and STEVENS fail to acknowledge, mention, or address in their 24 opposition brief the fact that during the pendency of this litigation, and up until approximately 25 January 2020, their Limited Liability Company, Defendant CIBOEUREKA, LLC was in “FTB” 26 27 28 PLAINTIFF’S REPLY BRIEF IN SUPPORT OF PLAINTIFF’S MOTION TO STRIKE AND/OR TAX COsTS 1 (Franchise Tax Board) suspended status (Supp. Dec. of Ellen A rabian-Lee, Ex. A)! — or that Plaintiff sued LANZA, the majority (90%) member of the LLC, and STEVENS, the minority (10%) member of the LLC, based on an alter ego theory. (See, Plaintiff's Req. for Jud. Notice, Ex. A, 410-12.) Accordingly, Plaintiff sued LANZA and STEVENS as his employer (i.e., owners of the restaurant where he worked) under FEHA and pursuant to an alter ego liability theory, and LANZA and STEVENS’ argument that they faced no liability in the situation at hand is frivolous and has no merit. California Revenue & Taxation Code §23301 provides for suspension of a corporation's "rights, powers, and privileges" for nonpayment of taxes. Once it is suspended, a corporation is 10 prohibited from exercising corporate powers or taking any actions; it can neither prosecute nor 11 defend lawsuits. (Gar-Lo, Inc. v. Prudential Sav. & Loan Assn. (1974) 41 Cal. App.3d 242.) Alter 12 ego liability exists when there is “such a unity of interest and ownership that the separate 13 personalities of the corporation no longer exist”. (Watson v. Commonwealth Ins. Co. (1936) 8 Cal.2d 14 61, 68.) Before a court can hold that a corporation or limited liability company is the mere alter ego 15 of its owners or members, it must determine that there is such unity of interest and ownership that 16 the separate personalities of the corporation and the individual no longer exist (e.g. co-mingling 17 assets), and that adherence to the fiction of separate existence would, under the circumstances, 18 promote fraud or injustice. (Id.) A corporation's failure to pay its franchise tax may be evidence 19 that the shareholders do not view the corporation as having a separate existence and that the 20 corporation should possibly be regarded as the alter ego of its shareholders. Similarly, a 21 corporation’s failure to issue shares of stock may impose alter ego liability on individual 22 shareholders. (Automotriz Del Golfo De California S.A. v. Resnick (1957) 47 Cal.2d 792; 23 Communist Party of the U.S. v. 552 Valencia, Inc. (1995) 35 Cal.App.4" 980, 993.) In both 24 25 1 The Declaration of Ellen C. Arabian-Lee filed with the Court on February 19, 2020 is missing pages 2-4, 26 paragraphs 2-18. Plaintiff is filing herewith a Supplemental Declaration with the missing pages/paragraphs 27 and apologizes to the Court for this copying error. 28 PLAINTIFF’S REPLY BRIEF IN SUPPORT OF PLAINTIFF’S MOTION TO STRIKE AND/OR TAX COsTS 2 situations, normal corporate requirements were ignored and the individual owners may be found liable under an alter ego theory. Although discovery was not complete at the time LANZA and STEVENS were dismissed from the case, discovery to date has revealed that minority LLC member STEVENS contributed no money to the LLC — inadequate capitalization is often evidence of alter ego liability, since the capital is illusory or trifling compared with the business to be done and the risks of loss. (Shafford v. Otto Sales, Inc. (1957) 149 Cal.App.2d 428, 432-433.) LANZA testified at his deposition that “he (STEVENS) contributed zero financially” but was a “co-owner” who handled payroll. (Arabian- Lee Suppl. Dec. Ex. B, 12:17-13:16.) Plaintiff also asserted during the litigation that LANZA co- 10 mingled personal assets with LLC assets in managing the restaurant. 11 It should also be noted that LANZA and STEVENS are currently being sued as individuals 12 together with CIBOEUREKA, LLC in two related cases filed by other restaurant employees for 13 FEHA sexual harassment, discrimination, harassment, negligent supervision, retaliation, failure to 14 prevent discrimination, harassment and retaliation, constructive termination, intentional infliction of 15 emotional distress, and wage and hour violations. LANZA and STEVENS, as individuals, are sued 16 as managing agents and owners under an alter ego liability theory in these cases as well. (Xochitl 17 Campos v. Ciboeureka, LLC, et al., Placer County Sup. Ct., Case No. SCV0041410; Darren 18 Thompson v. Ciboeureka, LLC, et al., Placer County Sup. Ct., Case No. SCV0041482; Exhibits C 19 & D, attached to Arabian-Lee Supp. Dec.) 20 Whether the corporate veil should be pierced depends on the innumerable individual equities 21 of each case. “Only general rules may be laid down for guidance.” (Stark v. Coker (1942) 20 Cal.2d 22 839, 846.) In the situation at hand, in a six (6) page opposition brief, LANZA and STEVENS urge 23 the court to issue a finding that Plaintiff's claims against LANZA and STEVENS were “frivolous”. 24 Such a serious assertion by LANZA and STEVENS cannot and should not be decided by the court 25 in this context, and such a finding would be unjust, unfair and a miscarriage of justice in a situation 26 where it was Defendants herein who have acted in bad faith during this litigation. 27 28 PLAINTIFF’S REPLY BRIEF IN SUPPORT OF PLAINTIFF’S MOTION TO STRIKE AND/OR TAX COsTS 3 2. LANZA and STEVENS’ Bad Faith Litigation Tactics Should Not be Rewarded. LANZA and STEVENS evaded service of process for many months at the beginning of the case and failed to maintain a current business address with the Secretary of State’s office, causing unnecessary expense to Plaintiffs counsel herein. Once LANZA and STEVENS were served, they failed to appear and thereafter were in default until insurance defense counsel appeared in the case and Plaintiff's counsel agreed to set aside their defaults. (Supp. Arabian-Lee Dec. 93, 4, 20.) During the litigation, LANZA and STEVENS were repeatedly delinquent in answering discovery in a timely fashion and failed to answer (at all) the pre-trial discovery served upon them in January 2020, after their insurance defense attorneys substituted out of the case. STEVENS did 10 not appear at the scheduled (and expensive) mediation session with David Perrault and LANZA 11 walked out of the mediation after a short period of time. After a settlement was reached at the 12 mediation with the other parties and insurer, and after LANZA and STEVENS’ prior counsel 13 finalized a settlement agreement for signing after several months of additional delay, LANZA 14 refused to consent to the settlement. Then, after allowing their LLC to remain in suspended status 15 during the pendency of the litigation, and after Plaintiff tried to finalize the settlement with a default 16 judgment against the suspended LLC, LANZA and STEVENS decided to revive CIBOEUREKA, 17 LLC and defend the case — almost two (2) years after the case was filed. (Supp. Arabian-Lee Dec. 18 918 — 14, 21.) 19 Of particular interest, Defendant CIBOEUREKA, LLC, which was recently permitted by the 20 court to appear and file an Answer to the Complaint, represented in its recent Case Management 21 Conference Statement filed with the Court that it needs until March 2021 to complete discovery — 22 even though CIBOEUREKA, LLC’s owners/members (LANZA and STEVENS) already engaged 23 in discovery. Defendants’ delay tactics are continuing. (Supp. Arabian-Lee Dec. 22.) 24 Surprisingly, LANZA and STEVENS should be relieved that they are no longer individually 25 named in the present lawsuit. Instead, even after Plaintiff has endured Defendants’ delay tactics and 26 experienced exorbitant expense in having to prosecute this matter, as well as participate in a 27 28 PLAINTIFF’S REPLY BRIEF IN SUPPORT OF PLAINTIFF’S MOTION TO STRIKE AND/OR TAX COsTS 4 mediation with LANZA and STEVENS’ insurance carrier which was extended over several months due to LANZA’s refusal to consent to the settlement, LANZA and STEVENS want Plaintiff to reimburse their insurance company over $7,000 in costs paid for by their insurance company and incurred on behalf of multiple defendants. This is certainly contrary to the spirit of prosecuting a FEHA action and the mandate against cost-shifting by Defendants to an aggrieved Plaintiff who is trying to seek justice after working for an employer who he asserts violated several provisions of FEHA. This case is not over and, thanks to Defendants’ litigation tactics, there will be future significant expense for all parties involved. Defendants LANZA and STEVENS should not be rewarded at this stage of the litigation. 10 Plaintiff respectfully requests that LANZA and STEVENS’ Memorandum of Costs be 11 stricken in its entirety. 12 13 14 Dated: June 16, 2020 ARABIAN-LEE LAW CORPORATION 15 16 Can Arabsan-Loe a 17 ELLEN C. ARABIAN-LEE 18 Attorneys for Plaintiff DAVID ALVAREZ 19 20 21 22 23 24 25 26 27 28 PLAINTIFF’S REPLY BRIEF IN SUPPORT OF PLAINTIFF’S MOTION TO STRIKE AND/OR TAX COsTS 5 PROOF OF SERVICE | am a citizen of the United States. My business address is 1731 East Roseville Parkway, Suite 150, Roseville, California 95661. | am employed in the County of Placer where this mailing occurs. | am over the age of 18 years, and not a party to the within cause. | am readily familiar with my employer's normal business practice for collection and processing of correspondence for mailing with the U.S. Postal Service, and that practice is that correspondence is deposited with the U.S. Postal Service the same day as the day of collection in the ordinary course of business. On the date set forth below, following ordinary business practice, | served the foregoing document(s) described as PLAINTIFF’S REPLY BRIEF IN SUPPORT OF PLAINTIFF’S MOTION TO STRIKE AND/OR TAX COSTS on said date at my place of business, a true copy thereof enclosed in a sealed envelope prepaid for first-class mail for collection and mailing that same day in the ordinary course of business, 10 addressed to the parties as follows: 11 Counsel for Defendant CIBOEUREKA, LLC: Gary R. Basham 12 BASHAM LAW GROUP 8801 Folsom Blvd., Suite 280 13 Sacramento, CA 95826 14 gary@ bashamlawgroup.com 15 ] (BY MAIL) | caused such envelope(s) with postage thereon fully prepaid to be placed in the United States mail at Roseville, California. 16 ] (BY PERSONAL SERVICE) | caused such envelope(s) to be delivered by hand this date to 17 the person(s) named above. 18 ] (BY FACSIMILE) | forwarded a facsimile copy to the attorneys as noted above on this date. 19 x] (BY ELECTRONIC TRANSMISSION — By Agreement of Parties) | caused such document(s) to be sent electronically to the above named at the e-mail addresses 20 indicated. 21 ] (BY OVERNIGHT DELIVERY) | caused such envelope(s) to be delivered to an overnight delivery carrier with delivery fees provided for, addressed to whom it is to be served. 22 23 IX] (STATE) | declare under penalty of perjury under the laws of the State of California that the above is true and correct. 24 Executed on J une 17, 2020, at Roseville, California. 25 Can Arabsan-Loe 26 Ellen C. Arabian-Lee 27 28