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