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Calvin Brian International Co. v. Gustto, Inc.

United States District Court, S.D. California

July 17, 2014

CALVIN BRIAN INTERNATIONAL COMPANY, a Hong Kong Corporation Plaintiff,
v.
GUSTTO, INC., a California Corporation Defendant.

ORDER GRANTING PLAINTIFF'S MOTION TO AMEND DEFAULT JUDGMENT (ECF NO. 28)

GONZALO P. CURIEL, District Judge.

INTRODUCTION

Calvin Brian International Company ("Plaintiff") moves the Court, pursuant to Federal Rule of Civil Procedure 69(a), to amend the Default Judgment against defendant Gustto, Inc. ("Gustto") to add, under an alter-ego theory, Agathe Planchon ("Planchon") as a judgment debtor. Having considered Plaintiff's arguments and evidence, and for the reasons that follow, the Court will GRANT Plaintiff's Motion.

BACKGROUND

I. Factual Background

Plaintiff is a Hong Kong corporation. Gustto is a California corporation, of which Planchon is the president, CEO, and 100% shareholder. Planchon is a citizen of France and a resident of California.

From January through October 2011, Plaintiff manufactured and shipped handbags to Gustto pursuant to a manufacturing agreement entered into by Plaintiff and Gustto on February 19, 2011. The handbags were to bear the "Gustto" and "Miss Gustto" trademarks. Gustto failed to pay for most, if not all, of these handbags, incurring over $300, 000 in unpaid invoices. In September 2011, Planchon sent an email to one of Plaintiff's representatives, Calvin Wong ("Wong"), stating that Planchon was arranging for a third party to send Wong a draft letter of credit for his review.

Planchon created the "Gustto" trademark and registered it with herself as the owner in November 2007. Sometime thereafter, Planchon licensed the trademark to Gustto. In 2009, Planchon created the "Miss Gustto" trademark but did not formally register that trademark until around February 2011.

On February 1, 2011, Planchon formed Brand Buzz Management, LLC ("Brand Buzz") (a Delaware limited liability company) to own and license the "Gustto" and "Miss Gustto" trademarks. After forming Brand Buzz, Planchon assigned the "Gustto" trademark to Brand Buzz, which assignment Planchon recorded in the U.S. Patent & Trademark Office. As mentioned above, Planchon also formally registered the "Miss Gustto" trademark around this time, listing Brand Buzz as the owner.

II. Procedural Background

Plaintiff initially sued Gustto, Planchon, and Brand Buzz in the District Court for the Southern District of New York but later voluntarily dismissed that suit in favor of this suit. On January 28, 2013, Plaintiff filed a complaint against Gustto only for breach of contract and common-count claims for goods sold and delivered at agreed price, open book account, and account stated. On April 11, 2013, Gustto filed an answer and a counterclaim, alleging the handbags Plaintiff shipped to Gustto were defective. On May 22, 2013, Magistrate Judge Major held an early neutral evaluation conference, at which Planchon disclosed she was considering filing for bankruptcy protection on behalf of Gustto.

In August 2013, counsel for Gustto moved for, and was granted leave to, withdraw as counsel because of Gustto's inability to pay attorney fees. In granting counsel's motion to withdraw, the Court granted Gustto a period of time to retain counsel in light of the Civil Local Rule precluding business entities from appearing pro se. When Gustto failed to retain counsel, Plaintiff moved for default judgment. On April 3, 2014, the Court entered default judgment against Gustto in the total amount of $377, 712.45, including $75, 542.49 in prejudgment interest. On April 30, 2014, Plaintiff filed the instant request to add Planchon to the Default Judgment as a judgment debtor.

DISCUSSION

I. Legal Standard

Federal Rule of Civil Procedure 69(a) provides, in relevant part, that "[t]he procedure on execution [of judgments]-and in proceedings supplementary to and in aid of judgment or execution-must accord with the procedure of the state where the court is located." Thus, where a state law such as California's allows a judgment creditor to add a judgment debtor to a judgment on an alter ego theory, it is appropriate to do so under Rule 69(a). Cigna Property & Cas. Ins. Co. v. Polaris Pictures Corp. , 159 F.3d 412, 421 (9th Cir.1998).

California Code of Civil Procedure section 187 allows the amendment of a judgment to add a non-party alter ego as a judgment debtor. Toho-Towa Co., Ltd. v. Morgan Creek Prods., Inc. , 217 Cal.App.4th 1096 (2013). The judgment creditor must show that (1) "the party to be added satisfies the alter ego criteria, " and (2) "the new party had control of the litigation and occasion to conduct it with a diligence corresponding to the risk of personal liability involved." Bank of Montreal v. SK Foods, LLC , 476 B.R. 588, 597 (N.D. Cal. 2012) (citing NEC ...


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