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LLC v. Manchester Financial Bank

United States District Court, S.D. California

June 7, 2017

21ST CENTURY FINANCIAL SERVICES, LLC, Plaintiff,
v.
MANCHESTER FINANCIAL BANK, aka MANCHESTER FINANCIAL BANK IN ORGANIZATION, aka MANCHESTER FINANCIAL BANK PROPOSED, Defendant.

          ORDER DENYING MOTION TO ADD MANCHESTER FINANCIAL GROUP, INC. AS AN ADDITIONAL JUDGMENT DEBTOR [ECF NO. 56]

          BARRY TED MOSKOWITZ, CHIEF JUDGE.

         Before the Court is Plaintiff's motion to add Manchester Financial Group, Inc. (“Manchester, Inc.”), as a judgment debtor. (ECF No. 56.) For the reasons below, Plaintiff's motion will be denied.

         I. BACKGROUND

         This case has a lengthy history that includes an arbitrated contractual dispute, post-arbitration proceedings in Texas federal district court, [1] and an appeal to the United States Court of Appeals for the Fifth Circuit, [2] culminating in these post-judgment collection proceedings. As the case history is both extensive and familiar to the parties, the Court recites here only those aspects relevant to the current motion.

         A group of individuals, including Doug Manchester, Richard Gibbons, and Steve Strauss, sought to charter a bank to be called Manchester Financial Bank, N.A.[3] In February 2008, the Bank[4] entered into an “Agreement for Computer Processing Services” (the “Agreement”) with 21st Century Financial Services, LLC (hereafter “Plaintiff” or “21st Century”).[5] The Agreement included an arbitration provision and was signed by Frederick Mandelbaum, a consultant hired to serve as the Bank's CEO.[6] The Bank was never capitalized.[7] Its pre-formation expenses were funded by Manchester Financial Group, L.P. (“MFG, LP”).[8] In connection with the Agreement, MFG, LP issued two deposit checks to 21st Century.[9] The checks were signed by Gibbons, president of Manchester, Inc., the limited partnership's general partner.[10]

         In October 2008, Mandelbaum advised 21st Century the Bank venture was not going to move forward, apparently as a result of Doug Manchester's decision based on “current economic turmoil.”[11] 21st Century thereafter issued invoices for amounts it claimed were due under the Agreement.[12] In email exchanges between Mandelbaum, Gibbons, and Doug Manchester, Mandelbaum recommended that payment be issued to 21st Century on behalf of the Bank.[13]

         Payment was not forthcoming, and 21st Century, now represented by counsel, sent letters demanding payment and threatening arbitration.[14] Michael Levinson and Steve Strauss, both partners at the law firm Cooley LLP (“Cooley”), the same firm that represents Manchester, Inc. in these proceedings, responded to the letters on behalf of “Manchester Financial Group.”[15] The dispute escalated, and 21st Century initiated arbitration proceedings before the American Arbitration Association in Austin, Texas, pursuant to the Agreement's arbitration venue selection clause.[16] Correspondence and notice regarding the arbitration proceedings were served on MFG, LP, as well as Doug Manchester on behalf of the Bank.[17]

         The arbitration was held in January 2010.[18] Although the Bank did not appear, the arbitrator required 21st Century to present evidence in support of its claims.[19] The arbitrator found in favor of 21st Century and issued an award of $422, 036.39, plus post-judgment interest, attorneys' fees and costs.[20]

         21st Century sued in Texas state court to confirm the award and named as defendants the Bank as well as its individual proposed shareholders and Mandelbaum. The Bank removed the action to federal court. The record shows that Cooley represented the individual shareholders, though not the Bank, in the ensuing proceedings.[21]

         The District Court for the Western District of Texas dismissed the shareholders, confirmed the arbitration award and entered judgment against the Bank.[22] The Fifth Circuit affirmed.[23]

         On April 25, 2014, 21st Century registered the judgment in this Court and initiated enforcement proceedings.[24] Following debtor examinations of Mandelbaum and Gibbons, 21st Century filed a motion to amend the judgment to add MFG, LP, and Manchester, Inc., as judgment debtors. In an order issued May 19, 2016, the Court denied the motion without prejudice on the ground that adding MFG, LP as a judgment debtor would destroy diversity of citizenship, such that it lacked subject matter jurisdiction to grant the motion as to MFG, LP.

         On June 22, 2016, 21st Century filed the instant motion seeking to add Manchester, Inc. as a judgment debtor. Manchester, Inc. opposes the motion.

         II. DISCUSSION

         A. Objections to Evidence

         21st Century has submitted 41 exhibits in support of its motion. Manchester, Inc. objects to Exhibit Nos. 3, 9, 11, 12, and 41. Opp. at 25:21-23. 21st Century has offered no response to the objections, see Reply Br., despite the fact that it is the proponent of the exhibits and bears the burden of proof of their admissibility. See Pfingston v. Ronan Eng'g Co., 284 F.3d 999, 1004 (9th Cir. 2002) (declining to address moving party's argument that statements satisfied Rule 801(d)(2)(D) hearsay exception where the exception was not offered as a ground for admissibility in proceedings before district court) (citing Sana v. Hawaiian Cruises, Ltd., 181 F.3d 1041, 1045 (9th Cir. 1999); Oki Am., Inc. v. Microtech Int'l, Inc., 872 F.2d 312, 314 (9th Cir. 1989)). However, since the Court is denying the motion even with consideration of the allegedly objectionable evidence, ruling on the objections is unnecessary.

         The Court does note that Manchester, Inc. objects to Exhibit 41, a printout from the “Manchester Financial Group” website, on grounds of relevance, foundation and authentication. Because Exhibit 41 was extensively relied upon by Plaintiff, the Court addresses these objections. “In considering internet print-outs, courts have considered the ‘distinctive characteristics' of the website in determining whether a document is sufficiently authenticated.” Haines v. Home Depot U.S.A., Inc., No. 1:10-cv-01763-SKO, 2012 U.S. Dist. LEXIS 47967, at *23 (E.D. Cal. Apr. 4, 2012). “For example, courts have considered website print-outs sufficiently authenticated where the proponent declared that they were true and correct copies of pages on the internet and the print-outs included their webpage URL address and the dates printed.” Id. (citing Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F.Supp.2d 1146, 1154 (C.D. Cal. 2002)). At least one district court has determined that the foundational requirement is met where an internet printout is properly authenticated. Premier Nutrition, Inc. v. Organic Food Bar, Inc., No. SACV 06-0827 AG (RNBx), 2008 U.S. Dist. LEXIS 78353, at *19 (C.D. Cal. Mar. 27, 2008). Here, 21st Century's counsel attests that the exhibit consists of true and correct copies of pages she personally printed from the website. Robberson Decl. ¶ 45. The URL address, www.manchesterfinancialgroup.com, appears at the bottom of each page of the printout, and the date “6/8/2016”, apparently the print date, is on the top of each page. The Court thus finds the authentication and foundational requirements are sufficiently met with regard to Exhibit 41.

         Manchester, Inc.'s relevance objection to Exhibit 41 is not without merit. The website printout is a multi-page document promoting the experience and success of “Manchester Financial Group.” See Ex. 41. Although the website does not mention the Bank, 21st Century relies on it to prove the existence of a so-called “Manchester Financial Group single enterprise.” Other district courts have rejected attempts to prove unity of interest of affiliated companies on the basis that their website presents them as a single entity. Corcoran v. CVS Health Corporation, 169 F.Supp.3d 970, 984 (N.D. Cal. 2016); Payoda, Inc. v. Photon Infotech, Inc., No. 14-cv-04103-BLF, 2015 WL 4593911, at *3 (C.D. Cal. 2015) (calling statements on a company website “marketing puffery” that “carries no weight in establishing whether a parent and its subsidiary are in fact alter egos”). Here, 21st Century is attempting to use Exhibit 41 for precisely that purpose. While the Court finds the reasoning of the Corcoran and Payoda courts persuasive, neither court excluded website printouts from evidence on grounds of relevance. Therefore, rather than exclude Exhibit 41 from evidence, the Court will consider the reasoning of the district courts in Corcoran and Payoda as going to the weight, rather than the admissibility, of Exhibit 41. Accordingly, Manchester, Inc.'s relevance objection to Exhibit 41 is overruled.

         B. Motion to Add Manchester, Inc. as Judgment Debtor

         21st Century moves to amend the judgment to add Manchester, Inc. as a judgment debtor pursuant to California Code of Civil Procedure § 187 (“Section 187”), which provides:

When jurisdiction is, by the Constitution or this Code, or by any other statute, conferred on a Court or judicial officer, all the means necessary to carry it into effect are also given; and in the exercise of this jurisdiction, if the course of proceeding be not specifically pointed out by this Code or the statute, any suitable process or mode of proceeding may be adopted which may appear most conformable to the spirit of this Code.

         Cal. Code Civ. Pro. § 187. Section 187 “has been interpreted to grant courts the authority to amend a judgment to add additional judgment debtors.” Katzir's Floor and Home Design, Inc. v. M-MLS.COM (“Katzir's Floor”), 394 F.3d 1143, 1148 (9th Cir. 2004) (citations and quotation marks omitted). The Ninth Circuit has approved the use of the state procedure pursuant to Federal Rule of Civil Procedure 69(a). Id. (citing In re Levander, 180 F.3d 1114, 1120-21 (9th Cir. 1999)). California law governs the merits of such a motion. In re Levander, 180 F.3d at 1121.

         Modification of a judgment is a matter for the trial court's discretion. Wolf Metals Inc. v. Rand Pacific Sales, Inc., 4 Cal.App. 5th 698');">4 Cal.App. 5th 698, 703 (2016). “The ability under section 187 to amend a judgment to add a defendant, thereby imposing liability on the new defendant without trial, requires both (1) that the new party be the alter ego of the old party and (2) that the new party had controlled the litigation, thereby having had the opportunity to litigate, in order to satisfy due process concerns.” Toho-Towa Co., Ltd. v. Morgan Creek Productions, Inc. (“Toho-Towa”), 217 Cal.App.4th 1096, 1106 (2013) (emphasis in original) (citation omitted); see Katzir's Floor, 394 F.3d at 1148-50 (district court erred in adding individual as judgment debtor where evidence in the record failed to show individual was alter ego of existing debtor, or controlled the litigation); NEC Electronics Inc. v. Hurt (“NEC”) 208 Cal.App.3d 772, 778-81 (1989) (reversing trial court's order amending judgment to add debtor where there was insufficient evidence the debtor controlled underlying litigation). The moving party bears the burden of proof by a preponderance of the evidence. Highland Springs Conference & Training Center v. City of Banning, 244 Cal.App.4th 267, 280 (2016).

         1. Alter Ego

         Imposition of alter ego liability is “an extreme remedy, [to be] sparingly used” and “approached with caution.” Santa Clarita Org. for Planning & Env't v. Castaic Lake Water Agency, 1 Cal.App. 5th 1084, 1105 (2016) (citations and internal quotation marks omitted). Therefore, “the corporate form will be disregarded only in narrowly defined circumstances.” Toho-Towa, 217 Cal.App.4th at 1107 (citations and internal quotation marks omitted).

         Usually, alter ego liability is reserved for parents and their subsidiaries, or corporations and their shareholders. See id Here, however, 21st Century asserts that Manchester, Inc. was part of a “single enterprise” consisting of the Bank, MFG, LP, and Manchester, Inc.[25] Under the “single enterprise” rule, liability can be found between sibling companies. Las Palmas Assocs. v. Las Palmas Center Assocs., 235 Cal.App.3d 1220, 1249 (1992). “The ‘single-business enterprise' theory is an equitable doctrine to reflect partnership-type liability principles when corporations integrate their resources and operations to achieve a common business purpose.” Toho-Towa, 217 Cal.App.4th at 1108 (citations omitted).

         The alter ego doctrine “is not made to depend upon prior decisions involving factual situations which appear to be similar …. It is the general rule that the conditions under which a corporate entity may be disregarded vary according to the circumstances of each case.” Id at 1108 (citations and internal quotation marks omitted). However, “common principles apply regardless of whether the alleged alter ego is based on piercing the corporate veil to attach liability to a shareholder or to hold a corporation liable as part of a single enterprise.” Id. Factors to be considered include inadequate capitalization, commingling of funds and other assets of the two entities, the holding out by one entity that it is liable for the debts of the other, identical equitable ownership in the two entities, use of the same offices and employees, use of one as a mere conduit for the affairs of the other, disregard of corporate formalities, lack of segregation of corporate records, and identical directors and officers. Id. at 1108-09; Greenspan v. LADT LLC, 191 Cal.App.4th 486, 512-13 (2010); Eldorado Stone, LLC v. Renaissance Stone, Inc., No. 04cv2562 JM(CAB), 2009 WL 347005, at *5 (S.D. Cal. Feb. 5, 2009). “No one characteristic governs, but the courts must look at all the circumstances to determine whether the doctrine should be applied.” Sonora Diamond Corp. v. Superior Court of Tuolumne County, 83 Cal.App.4th 523, 539 (2000).

         In sum, to prevail on its motion to add Manchester, Inc. as a judgment debtor under Section 187, 21st Century bears the burden to prove by a preponderance of the evidence that Manchester, Inc. was an alter ego of the Bank. See In re Levander, 180 F.3d at 1121 (a Section 187 motion to add a judgment debtor requires “that the new party be the alter ego of the old party”); Toho-Towa, 217 Cal.App.4th at 1106 (“The ability under section 187 to amend a judgment to add a defendant, thereby imposing liability on the new defendant without trial, requires … that the new party be the alter ego of the old party….”).

         a. 21st Century's Theory of Alter Ego Liability

         21st Century attempts to prove Manchester, Inc.'s alter ego liability under the theory that it was part of a “Manchester Financial Group single enterprise” that consisted of a number of entities, including MFG, LP, Manchester, Inc., and the Bank.[26] It relies on evidence that MFG, LP hired Mandelbaum and advanced the Bank's pre-formation expenses without expectation of repayment (including the deposit checks to 21st Century), responded, through Cooley, to 21st Century's demand letters seeking payment of the Bank's debt, [27] received notices and briefs in connection with the arbitration proceedings against the Bank, and funded the Bank's defense in post-arbitration litigation. Mot. at 19-25. 21st Century also points to the fact that Doug Manchester signed Mandelbaum's consulting agreement, was to be the primary shareholder and source of capital for the Bank, see Ex. 38 (Bank organization certificate), and made the decision not to move forward with the Bank venture. Although the foregoing acts primarily implicate MFG, LP, 21st Century relies on the fact that Manchester, Inc. was the general partner of MFG, LP, and that Gibbons, purportedly in his role as president of Manchester, Inc., [28] ran the day-to-day operations of MFG, LP and signed checks drawn on MFG, LP's account.

         21st Century's theory that Manchester, Inc. should be held liable as part of a “single enterprise” consisting of the Bank, MFG, LP, and Manchester, Inc., has certain flaws that merit comment at the outset. To begin with, it obtains its notion of a “Manchester Financial Group single enterprise” largely from the “Manchester Financial Group” website, which presents the appearance of a single “Manchester Financial Group” entity without distinguishing between Manchester, Inc. and MFG, LP. Id. at 11 (citing Ex. 41 (printouts from Manchester Financial Group website)). However, that a website presents affiliated entities as a single business “carries no weight” in proving alter ego liability. Payoda, 2015 WL 4593911, at *3; Corcoran, 169 F.Supp.3d at 983-84. To the extent 21st Century relies on vague references to “Manchester Financial Group” in other documents or witness testimony, see Pl.'s Mot. at 13:9-11 (corporate minutes said “Manchester Financial Group, ” “no ‘Inc.' or ‘L.P' designation” would pay Bank's pre-opening expenses), the ambiguity is frequently clarified by other evidence in the record, as 21st Century appears to recognize, see id. at 21:9-16 (stating funds used to pay the Bank's pre-opening expenses were those of MFG, LP), or, as in the case of deposition testimony, the ambiguity was invited by 21st Century's counsel, as discussed in detail below. 21st Century's burden is to prove a single enterprise not just on the basis of semantic ambiguity, but based on the conduct of the proposed debtor as measured against the alter ego factors. See Toho-Towa, 217 Cal.App.4th at 1107-08. To regard Manchester, Inc. as lacking a distinct identity solely on the basis of imprecise language reads too much into the imprecision.

         Another difficulty with 21st Century's motion is it relies extensively on evidence implicating MFG, LP, in an effort to establish Manchester, Inc.'s liability. Although it refers to Manchester, Inc.'s status as the general partner of MFG, LP, 21st Century does not clearly explain the theory on which it seeks to hold Manchester, Inc. liable for the conduct of MFG, LP. Manchester, Inc. objects to 21st Century's extensive reliance on evidence and argument implicating MFG, LP, since in the cases cited by 21st Century, “the single enterprise theory was applied to impose alter ego liability on entities that were parties to that case.” Id. at 10:5-7. 21st Century responds that it can rely on MFG, LP's acts to hold Manchester, Inc. liable, because they were partners, not “separate corporate entities.” Reply at 2:4-6. The Court agrees with Manchester, Inc. that 21st Century's theory of liability is flawed.

         First, 21st Century appears to believe that MFG, LP's conduct can simply be imputed to Manchester, Inc., because the two entities are partners and thus, in 21st Century's view, legally indistinguishable. See Reply at 2:4-6 (“Manchester, Inc. and MFG L.P. are partners-not separate corporate entities.”) (emphasis in original). However, MFG, LP is a California limited partnership, a “creature of statute.” Anaheim Gardens v. United States, 118 Fed.Cl. 669, 673 (2014) (citing Evans v. Galardi, 16 Cal.3d 300, 306 (1976)).[29] Under California law, a limited partnership maintains a separate identity from its general partners. United States v. Galletti, 541 U.S. 114, 116 (2004). Thus, to the extent 21st Century appears to believe the partnership relationship of MFG, LP and Manchester, Inc., means any distinction between them can be ignored for purposes of assessing Manchester, Inc.'s alter ego liability, it is incorrect.

         Second, 21st Century relies extensively on the fact that Gibbons, purportedly as president of Manchester, Inc., ran the operations of MFG, LP, and in doing so appears to contend the arrangement shows the two entities lacked a separate existence. Pl.'s Mot. at 12:6-7 (“In his capacity as President of Manchester, Inc., and as admitted by him, Mr. Gibbons runs the day to day operations of and makes the ‘operational decisions' for MFG, LP….”), 21:1-3 (“The [deposit] checks were signed by Mr. Gibbons, President of Manchester, Inc.…”). However, there was nothing improper about Gibbons's conduct. California Corporations Code § 15904.02(a) provides, in pertinent part, that

Each general partner is an agent of the limited partnership for the purposes of its activities. An act of a general partner, including the signing of a record in the partnership's name, for apparently carrying on in the ordinary course the limited partnership's activities or activities of the kind carried on by the limited partnership binds the limited partnership….

Cal. Corp. Code § 15904.02(a). Thus, that Gibbons ran MFG, LP's operations in his capacity as president of Manchester, Inc., and signed checks drawn on the account of MFG, LP, is not evidence of a disregard for their distinct roles. Rather, the expectation inherent in the limited partnership structure is that the general partner (or, as here, the president of the corporate general partner) will manage the partnership's affairs. No inference of wrongdoing is created by such an arrangement. See Ohlweiler v. Bank of Am. Corp., 2016 U.S. Dist. LEXIS 38009, at *8 (Cal.Ct.App. 2016) (unpub. decision) (“it is irrelevant [to an alter ego theory] that the Plaintiff signed checks and made withdrawals from [the corporation] because he did so in his capacity as an officer, director, and stockholder of the company”). Also, to the extent a limited partnership acts through its general partner, under § 15904.02(a), such acts are imputed to, and binding on, the partnership.

         Although 21st Century relies on the partnership relationship of MFG, LP and Manchester, Inc., the Court does not construe it to advance a theory of partnership liability as a basis for holding Manchester, Inc. liable for the allegedly wrongful conduct of MFG, LP, e.g., that MFG, LP was the Bank's alter ego, and that its resulting liability should be imputed to Manchester, Inc., as the general partner. Such a theory of liability, even if it is advanced by 21st Century, appears to run afoul of two provisions of the ULPA.

         First, California Corporations Code § 15904.04(a) provides that “all general partners are liable joint and severally for all obligations of the limited partnership….” Cal. Corp. Code § 15904.04(a). “Obligations” are legally binding duties arising from tort or contract. Cal. Code Civ. Pro. § 26; Avner v. Outpatient Surgical Med. Unit of Santa Monica, No. B248523, 2014 WL 4561129, at *5 (Cal.Ct.App. 2014) (unpub.) (relying on CCP § 26 definition of “obligation” to interpret § 15904.04(a)). 21st Century has never brought a successful alter ego claim against MFG, LP, so there has never been a determination that it has a legally binding duty to pay the Bank's debt, and this Court lacks jurisdiction to make such a determination. The Court agrees with Manchester, Inc. that MFG, LP thus has not acquired an “obligation” for the Bank's debt. See Opp. at 9:9-12.

         Even if MFG, LP's unadjudicated alter ego liability could be construed as an “obligation” within the meaning of § 15904.04(a), holding Manchester, Inc. liable in the first instance based on MFG, LP's misconduct conflicts with a second statutory restriction. California Corporations Code § 15904.05(c) provides that “a judgment creditor of a general partner may not levy execution against the assets of the general partner to satisfy a judgment based on a claim against the limited partnership” unless one of several requirements is met. Cal. Corp. Code § 15904.05(c).[30] The listed requirements “essentially cabin[] the partner's duty to pay” the debts of the limited partnership. Avner, 2014 WL 4561129, at *5. The first restriction is that a creditor cannot pursue assets of the general partner for debts of the limited partnership unless “a judgment based on the same claim has been obtained against the limited partnership and a writ of execution on the judgment has been returned unsatisfied.” Cal. Corp. Code § 15904.05(c)(1). In Avner, the Court of Appeals interpreted §15904.05(c)(1) as effectively precluding a creditor from obtaining a judgment against a general partner based on a claim against the limited partnership unless it obtains a judgment against the limited partnership based on the same claim. Avner, 2014 WL 4561129, at *5. Section 15904.05 is a new provision within the ULPA, and Avner is the only case that has analyzed it. Although Avner is an unpublished decision, its reasoning is consistent with that of other courts addressing similar provisions. See Westlake Mgmt. Co. v. QC Property Holdings LLC, __Fed. Appx.__, 2016 WL 7487719, at *3 (10th Cir. 2016) (unpublished) (describing an identically-worded provision of Oklahoma law as meaning that “before the creditor attempts to satisfy an obligation of the partnership against the assets of the partners, he must first obtain a judgment against the partnership ‘based on the same claim'…”); Ehrenberg v. WSCR, Inc. (In re Hoover WSCR Assocs.), 268 B.R. 227, 235 (C.D. Cal. 2001), aff'd, 2005 Bankr. LEXIS 3267 (9th Cir. B.A.P. 2005) (holding that a similar provision applicable to general partnerships, California Corporations Code § 16307(c), “specifically insulates a partner's assets from the claims of partnership creditors unless the latter has a judgment against the partner on the partnership debt”).

         The Avner court's interpretation of § 15904.05(c) is also consistent with general principles of partnership liability. The Supreme Court has stated that “[u]nder California law, a partnership maintains a separate identity from its general partners, and the partners are only secondarily liable … for any debt of the partnership.” Galletti, 541 U.S. at 116. Secondary liability means “liability that is derived from the original or primary liability.” Id. at 122 n.4. By requiring creditors of a limited partnership to exhaust partnership assets before pursuing assets of the general partner to collect on a claim against the partnership, § 15904.05(c)(1) enforces the principle that the limited partnership bears primary liability for its debts. Here, 21st Century's motion, if successful, would result in a judgment against Manchester, Inc. To the extent any such judgment was based on a putative claim of alter ego liability against MFG, LP, it would violate § 15904.05(c)(1), because 21st Century has not successfully pursued an alter ego claim or obtained a judgment against MFG, LP.

         Even if the foregoing statutes did not bar the Court from imputing MFG, LP's conduct and alter ego liability on Manchester, Inc. in the first instance as a matter of law, equitable considerations weigh against doing so. 21st Century appears to include MFG, LP as part of the “single enterprise, ” in part to fill a gap in the evidence implicating Manchester, Inc. From the record, it appears that during debtor examinations, the two witnesses, Mandelbaum and Gibbons, were never asked about Manchester, Inc. There is no evidence identifying the owners of Manchester, Inc., the employees of each entity, and other factors relevant to establishing Manchester, Inc.'s alter ego liability. The discovery rules that apply to postjudgment execution proceedings “are quite permissive, ” Republic of Argentina v. NML Capital, Ltd, 134 S.Ct. 2250, 2254 (2014), and allow a judgment creditor to “obtain discovery from any person, ” Fed.R.Civ.P. 69(a). There is no discernible reason the record could not have been more fully developed with regard to Manchester, Inc. prior to filing this motion. Under these circumstances, it does not seem equitable to fill the evidentiary gap by simply imputing the acts of MFG, LP to Manchester, Inc.

         The Court also cannot ignore that 21st Century is attempting to impose liability on Manchester, Inc., based on evidence implicating MFG, LP, because it is proceeding in a forum that lacks jurisdiction over MFG, LP. Even if the jurisdictional issue was a problem it did not predict, 21st Century has known that MFG, LP had a role in funding the Bank's expenses since January 2008, when it accepted its first of two checks from “Manchester Financial Group, LP” in payment of its deposit on behalf of Bank. Ex. 5. Despite that knowledge, it appears 21st Century has never tried to pursue MFG, LP as an alter ego in any prior proceeding, even though it included individual Bank shareholders as purported alter egos in arbitration confirmation proceedings in Texas state court, and even though it pursued the same shareholders to collect on the arbitration award in an action filed in October 2012 in San Diego Superior Court. Exs. M, N. Imposing MFG, LP's liability on Manchester, Inc. now, because its options in this forum are limited, is an inequitable solution for what is effectively a problem of 21st Century's own making. Eldorado Stone, LLC, 2009 U.S. Dist. LEXIS 8430, at *12-14 (denying motion to add judgment debtor under Section 187 where moving party failed to explain its delay in proceeding against purported alter egos).

         In sum, 21st Century's theory of single enterprise is flawed to the extent it presupposes the existence of a “Manchester Financial Group single enterprise” based primarily on the “Manchester Financial Group” website. Its theory is also flawed to the extent it relies on their partnership relationship to erroneously characterize MFG, LP, and Manchester, Inc. as legally indistinguishable entities, and to support imputing MFG, LP's conduct and liability to Manchester, Inc. In evaluating 21st Century's motion, the Court therefore focuses on determining whether Manchester, Inc., as the party to be added to the judgment, conducted itself as an alter ego of the Bank. See Toho-Towa, 217 Cal.App.4th at 1106 (“The ability under section 187 to ...


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