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Notice of Appeal Filed by Corporation But Omitting Alter Ego Appellant Held Not Fatal Under the Liberality Rule – But Alter-Ego Finding Still Affirmed

Tim Kowal     May 18, 2021

It is a horrifying thing to find that your appeal has been dismissed. And it can happen very easily. An appeal can be dismissed because the notice of appeal was filed late – even a day late. Or because the notice of appeal had the wrong box checked on it specifying the wrong type of order (even though specifying the type of order is not even required), or because the notice of appeal specified the wrong authority (which is not required, either).

So what about a notice of appeal that omits the name of the appellant? That is what happened in Westlake Village Marketplace, LLC v. West American Roofing, Inc. (D2d5 May 17, 2021) no. B306358 (non-pub.). Miraculously, that appeal, from the alter-ego judgment, survived. (But the judgment was affirmed.)

In Westlake, the plaintiff got a judgment against a roof-repair company for about $100,000 including fees and costs. A year later, the plaintiff moved under Code of Civil Procedure section 187 to add the defendant-company's president as an alter-ego debtor. Both the company and the president opposed the motion. But when the trial court granted the motion, only the company appealed.

Defect in the Notice of Appeal Was Not Fatal:

The Second District Court of Appeal held the failure to name the correct appellant on the notice of appeal was not fatal to the appeal. As Westlake reminds, if you find yourself with an imperfect notice of appeal, have the California Supreme Court's January 2020 opinion in K.J. v. Los Angeles Unified School Dist. (Cal. Jan. 30, 2020) 8 Cal.5th 875 ready to hand (we discussed K.J. previously here). K.J. held that an appeal from an attorney-sanctions order should not be dismissed even though the notice of appeal named the attorney's client only and not the attorney, because the identity of the intended appellant was "reasonably clear" and the respondent "was not misled or prejudiced."

Another good quote from the Supreme Court in K.J.: “While the timely filing of a notice of appeal is an absolute jurisdictional prerequisite [citation], technical accuracy in the contents of the notice is not.” (K.J., at pp. 882–883, fn. omitted.)

Here, the only order challenged was the one that added the alter-ego defendant to the judgment. The alter ego was named on the designation of record a few days later. So the respondent could not have been misled or prejudiced by the defect in the notice of appeal.

Tactical Decisions in Alter Ego Liability:

The court affirmed the trial court's post-judgment order finding alter-ego liability. The alter-ego argued the plaintiff had unduly delayed in seeking to establish alter-ego liability and should have established it at trial. Not so, the court observed. In Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, the Second District Court of Appeal reversed an order denying alter-ego liability on that very ground. Greenspan held alter-ego liability is an issue that more naturally arises during postjudgment enforcement, and that requiring plaintiffs to anticipate alter-ego liability in pre-trial litigation "would promote a fishing expedition into alter ego evidence before the plaintiff obtained a favorable judgment."

This raises a tactical choice for plaintiffs: whether "it may be prudent for a plaintiff to sue only the corporation," leaving the alter egos for postjudgment litigation.

The Fourth District, Division Three suggested the same strategy in Burkhalter Kessler Clement & George LLP v. Hamilton (2018) 19 Cal.App.5th 38, 46 n.2, noting plaintiffs may benefit by avoiding exposure to large prevailing party attorney fee awards in the event pretrial alter-ego litigation should prove unsuccessful:

"This case raises an interesting tactical issue: whether a plaintiff should plead an alter ego defendant in the initial complaint (and risk a dismissal with prejudice and possible payment of attorney fees); or should a plaintiff hold off and later seek to amend a prevailing judgment. (See Misik v. D'Arco (2011) 197 Cal.App.4th 1065, 1074 [the failure to allege an alter ego "does not preclude a motion to amend the judgment"]; Code Civ. Proc., § 187.) We take no position on the tactical choice, though we do recollect Ralph Waldo Emerson's cautionary note that: "When you strike at a king, you must kill him." (Bartlett, Familiar Quotations (16th ed. 1992) p. 433.)"

If alter ego liability is uncertain, it may safely be left to postjudgment motion practice.

Tim Kowal helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at www.CALPodcast.com, and publishes a newsletter of appellate tips for trial attorneys at www.tvalaw.com/articles. Contact Tim at [email protected] or (714) 641-1232.

Tim Kowal is an appellate specialist certified by the California State Bar Board of Legal Specialization. Tim helps trial attorneys and clients win their cases and avoid error on appeal. He co-hosts the Cal. Appellate Law Podcast at CALpodcast.com, and publishes summaries of cases and appellate tips for trial attorneys. Contact Tim at [email protected] or (949) 676-9989.
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