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Attorney Fee Award to Person Found Not to Be a Party to Contract (alleged as alter ego) MSY Trading Inc. v. Saleen Automotive, Inc., G057093

On Behalf of | Jul 1, 2020 | Civil Procedure, Debt Collection |

Saleen cars look awesome!  Too bad the one in this case (not as pictured) only drove for 50 miles than died.  Civil Code §1717 has a mutuality component.  The defendant was added as an alter ego of a debtor under a Riverside Superior Court judgment, but was found to NOT be the alter ego.  Therefore, he was entitled to an award of attorney fees although he was not a party to the contract sued upon in the former action which contained an attorney-fee provision.  The case is here: MSY Trading Inc. v. Saleen Automotive, Inc  The logic is if the person sued as an alter ego had been found to be the alter ego, he  would be liable for attorney fees under the contract so, if the person is found not to be an alter ego it’s only fair to grant fees in favor of that defendant.

The appellant MSY Trading Inc. imports and exports vehicles. It obtained a stipulated judgment in Riverside against SMS Retail Corona and SMS Signature Cars, Inc. regarding its purchase of a defective Saleen brand automobile.  Unable to collect on the judgment, MSY filed with the Riverside Court to add the famous business executive and former race car driver Steve Saleen and Saleen Automotive as judgment debtors, arguing that they are alter egos of the defendants. The court declined to add Steve Saleen, however, it added Saleen Signature Cars as a judgment debtor.  (The lesson is don’t through around alter ego without sufficient facts).

The reason Saleen Automotive was added is because a stipulated judgment was agreed to including Saleen Automotive.  The Court stated that whether by inadvertence or otherwise, Saleen Automotive was not a signatory to the settlement agreement.   So that was a pretty easy call for the courts to add the entity.

I find it amazing how lawyers make false arguments.  1st, the appellate court pointed out that the respondent MSY argued that Saleen was late filing his notice of appeal.  The Court pointed out that “Somewhat ironically, if plaintiffs are correct, their own appeal (filed December 3, 2018) is untimely too.”

2nd, the Saleen defendant opposed the award of fees against the Saleen entity.  The court pointed out the glaring floaw.  Saleen Signature Cars was added to a judgment that contains an award of contractual attorney fees. The amended judgment did not eliminate the prior judgment, it simply added a party. Thus Code of Civil Procedure section 685.040 applied which allows post judgment fees for enforcing a judgment!  Moral, sometimes you do not want what you ask for!  Or maybe what is good for the goose is good for the gander.  Or pay your debts!  I also think for the size of the judgment, both sides spent more on attorney’s fees than the ultimate judgment so don’t waste judicial resources.