Opinion
NOT TO BE PUBLISHED
Super. Ct. No. CV027142
HULL, J.Plaintiffs Alyssa Strong (Strong) and Scott Carmack (Carmack) appeal from an order of the trial court quashing service of the summons and complaint on over 40 subsidiaries of defendant JCM Partners, LLC (JCM). The court concluded the subsidiaries were not properly substituted into the action as fictitious defendants. We agree and affirm the order.
Introduction
The parties make various assertions of fact and procedure in their respective briefs that either are not supported by any citation to the record or are supported by a citation that is so broad as to be of little use. For example, in the procedural history portion of plaintiffs’ brief, they state that, in June 2006, they “filed and served remaining DOE JCM subsidiaries.” However, they cite nothing in the record to support this assertion. In their statement of facts, plaintiffs assert JCM entered into a lease with Carmack on February 1, 2001. They further state that in 2004, Carmack moved into another unit and entered into a new lease. In support of both assertions, plaintiff cites pages 52 through 70 of Appellants’ Appendix. This citation is to the entire declaration of plaintiffs’ counsel and its various attachments. Plaintiffs leave it to this court to search through those pages to find the particular factual references.
Defendants too are guilty of briefing malfeasance. For example, they assert that, at the time plaintiffs sought a temporary restraining order (TRO), plaintiffs had not effected service on any defendant except JCM. However, they cite nothing in the record to support this assertion. Defendants later assert plaintiffs amended the complaint to add 40 subsidiaries of JCM in place of fictitiously-named defendants and served them with the summons, complaint and DOE amendments. Again, defendants provide no citation to the record.
Appellate briefs must state in the record where supporting evidence may be found. (California Rules of Court, rule 8.204(a)(1)(C); Grand v. Griesinger (1958) 160 Cal.App.2d 397, 403.) It is not the obligation of this Court to prepare the parties’ cases for them.
We shall nevertheless attempt to piece this matter together from our independent review of the record and any facts that appear not to be in dispute.
Facts and Proceedings
JCM is a Delaware limited liability company formed in May 2000. It owns and operates 44 real properties in California through wholly-owned subsidiaries that are themselves California limited liability companies. Thirty-nine of JCM’s properties are residential apartment complexes. Two of JCM’s subsidiaries are Meadow Gardens II, LLC (Meadow Gardens) and Driftwood Apartments, LLC (Driftwood). Meadow Gardens owns and operates the Meadow Gardens Apartments in Citrus Heights, California; Driftwood owns and operates the Driftwood Apartments in Tracy, California.
Strong was a tenant of the Meadow Gardens Apartments. The terms of her lease included: (1) a $35 fee for late payment of rent; (2) a $250 fee for early lease cancellation; and (3) assessment of the reasonable cost of cleaning, repairing and repainting the premises upon lease termination.
On January 22, 2005, Strong submitted a 30-day notice of lease cancellation and requested an initial inspection of the premises. She never received notice of an inspection. Instead, she received a “Refund/Forfeiture Statement” charging her $270.34 for cleaning, repairing, and painting the premises, a $35 late fee, a $250 cancellation fee, and $234.73 in additional rent.
Carmack was a tenant of Driftwood Apartments. The terms of his tenancy included provisions for a late fee, lease cancellation fee, and charges for cleaning, repairing and repainting, as in Strong’s lease. On September 6, 2005, Carmack submitted a notice of cancellation of his tenancy and requested an initial inspection. However, he received no notice of inspection or list of items to be cleaned or repaired. Instead, Carmack received a “Refund/Forfeiture Statement” charging him $561 for cleaning, repairing and repainting the premises, a $50 late fee, and $423.33 in additional rent.
Strong initiated this action against JCM, Meadow Gardens, and others, including 50 fictitious defendants, alleging various violations of California landlord-tenant law and unfair business practices regarding the late fee, cancellation fee, and cleaning and repair provisions of JCM’s standard lease. The first paragraph of the complaint alleges the action is being brought on behalf of plaintiff and “all those similarly situated.” The complaint was thereafter amended to add Carmack as a plaintiff and Driftwood as a defendant.
Plaintiffs filed an application for a TRO. In their memorandum in support, plaintiffs asserted they were seeking to prevent JCM and any of its subsidiaries from enforcing the objectionable lease provisions.
The trial court denied the TRO, concluding plaintiffs failed to show either irreparable harm if the TRO is not issued or a likelihood of prevailing on the merits in the underlying action.
Plaintiffs thereafter filed a substitution of defendants, replacing over 40 fictitious defendants with JCM subsidiaries other than Meadow Gardens and Driftwood (hereafter these added subsidiaries shall be referred to as the subsidiaries). Plaintiffs served the summons and complaint on most if not all of the subsidiaries.
Plaintiffs also moved to compel discovery and subpoenaed defense counsel’s deposition. Defendants opposed the motion and moved to quash the deposition subpoena.
On or about July 28, 2006, the subsidiaries moved to quash service of the summons and complaint, arguing they were not properly added as fictitious defendants, because plaintiffs knew their names and their relationship with JCM before filing the original complaint.
On January 8, 2007, the trial court entered an order on the various discovery matters, granting the motion to quash the deposition subpoena and denying plaintiffs’ motion to compel discovery. The court also awarded sanctions against plaintiffs and their attorney.
On January 25, 2007, the court issued a statement of decision on the subsidiaries’ motion to quash service of summons and complaint. The court granted the motion, concluding plaintiffs failed to satisfy the requirements for substitution of fictitious defendants. In particular, the court concluded plaintiffs knew all the facts necessary to state their claim against the subsidiaries before they filed the original complaint.
Plaintiffs appealed both the discovery order and the order quashing service of summons. On December 13, 2007, we granted defendants’ motion to dismiss the appeal on the discovery order.
Discussion
In light of the dismissal of plaintiffs’ appeal of the trial court’s discovery order, we shall not address those portions of plaintiffs’ brief relating to discovery issues.
Plaintiffs contend the trial court abused its discretion in granting the motion to quash service of the summons and complaint on the subsidiaries, arguing “there was no legal justification for finding that plaintiffs had the knowledge of the facts at the time the complaint was filed which led them to serve the DOE summons.” However, what follows this contention is a confusing assertion of legal and factual arguments with little coherence or analysis. On the one hand, plaintiffs argue they are entitled to substitute fictitious defendants if, at the time the complaint was filed, they knew all the facts necessary to assert a claim against those defendants, but did not know the law gave them a cause of action based on those facts. However, plaintiffs follow this argument with a recitation of various “facts” they purportedly did not know at the time the complaint was filed, which facts supposedly give rise to a claim against the subsidiaries. Finally, plaintiffs argue the subsidiaries were added into the action only after defendants took the position in opposition to plaintiffs’ application for a TRO that the subsidiaries must be joined in order to obtain injunctive relief against them. As we shall explain, none of these arguments persuades us the trial court erred in granting the motion to quash.
I
Late Discovery of the Legal Basis for a Claim
The use of fictitious names for defendants is a means by which the bar of the statute of limitations may be avoided. “Today, it is generally understood that when a complaint sets forth a cause of action against a defendant designated by a fictitious name because the plaintiff is genuinely ignorant of his name or identity, and his true name thereafter is discovered and substituted by amendment, he is considered a party to the action from its commencement so that the statute of limitations stops running as of the date the original complaint was filed.” (General Motors Corp. v. Superior Court (1996) 48 Cal.App.4th 580, 589.)
Code of Civil Procedure section 474 (hereafter section 474) governs the substitution of fictitious parties. It reads: “When the plaintiff is ignorant of the name of a defendant, he must state that fact in the complaint, or the affidavit if the action is commenced by affidavit, and such defendant may be designated in any pleading or proceeding by any name, and when his true name is discovered, the pleading or proceeding must be amended accordingly . . . .”
Section 474 is to be liberally construed. (General Motors Corp. v. Superior Court, supra, 48 Cal.App.4th at p. 593.) “In keeping with this liberal interpretation of section 474, it is now well established that even though the plaintiff knows of the existence of the defendant sued by a fictitious name, and even though the plaintiff knows the defendant’s actual identity (that is, his name), the plaintiff is ‘ignorant’ within the meaning of the statute if he lacks knowledge of that person’s connection with the case or with his injuries.” (Id. at pp. 593-594.)
Plaintiffs contend they were entitled to substitute the subsidiaries for fictitious defendants because, at the time the complaint was filed, they knew the names and identities of the subsidiaries, as well as their relationship with JCM, “but were unaware that the law would require separate lawsuits against the DOES to effectively enjoin them, rather than bringing the one lawsuit against their parent JCM.”
Plaintiffs cite as support for the foregoing argument Munoz v. Purdy (1979) 91 Cal.App.3d 942 (Munoz). In Munoz, the plaintiff suffered injuries arising from foot surgery and initiated a medical malpractice action within the limitations period. However, she did not substitute the doctor who performed the surgery as a fictitious defendant until after the statutory period had run. (Id. at p. 945.) The trial court granted the doctor’s motion for summary judgment, concluding the plaintiff could have obtained the facts necessary to give rise to a claim against the doctor through the exercise of reasonable diligence. (Id. at p. 948.)
The Court of Appeal reversed, holding section 474 does not impose upon a plaintiff a duty of reasonable diligence to discover facts that might give rise to a claim against all possible parties. The court explained section 474 is based on the facts actually known to the plaintiff, not those the plaintiff should have known through the exercise of reasonable diligence. (Munoz, supra, 91 Cal.App.3d at pp. 947-948.)
In its discussion of the proper interpretation of section 474, the Munoz court made the following observation: “‘[T]he phrase “when the plaintiff is ignorant of the name of a defendant” in Code of Civil Procedure section 474 has not been interpreted literally. The plaintiff is deemed “ignorant of the name” if he knew the identity of the person but was ignorant of the facts giving him a cause of action against the person [citations], or knew the name and all the facts but was unaware that the law gave him a cause of action against the fictitiously named defendant and discovered that right by reason of decisions rendered after the commencement of the action.”’” (Munoz, supra, 91 Cal.App.3d at p. 946, italics added; quoting from Marasco v. Wadsworth (1978) 21 Cal.3d 82, 88 (Marasco).)
In Marasco, the California Supreme Court reversed the dismissal of a wrongful death action stemming from an automobile accident in which the deceased was a passenger. The plaintiff had substituted the driver of the car in which she was riding as a fictitious defendant after the statute of limitations had run, and the trial court concluded the claim was untimely. However, at the time the complaint was filed, Vehicle Code section 17158, the so-called “automobile guest statute,” precluded a passenger injured in an automobile accident from asserting a claim against the driver unless the injury resulted from the driver’s intoxication or willful misconduct. (Stats. 1961, ch. 1600, § 1, p. 3429.) Several months after the complaint was filed, the Supreme Court issued its opinion in Brown v. Merlo (1973) 8 Cal.3d 855, finding Vehicle Code section 17158 unconstitutional (id. at p. 882) and thereby lifting the restriction on claims against drivers. Under these circumstances, the high court concluded the plaintiff was not time-barred from joining the driver in the action.
The Supreme Court in Marasco relied on the Court of Appeal opinion in Barnes v. Wilson (1974) 40 Cal.App.3d 199 (Barnes). In Barnes, the deceased had been stabbed by an intoxicated bar patron and the heirs initiated a wrongful death action but failed to add the bar as a defendant until after the statute of limitations had run. At the time the complaint was filed, California law did not recognize liability of a vendor of alcoholic beverages for injuries caused by an intoxicated patron. However, eight months after the complaint was filed, the Supreme Court issued its decision in Vesely v. Sager (1971) 5 Cal.3d 153, extending liability to such vendors. In Barnes, the court concluded the bar was properly added as a defendant after the limitations period had expired because of this change in the law. (Barnes, supra, 40 Cal.App.3d at pp. 205-206.)
The foregoing cases do not assist plaintiffs. They are limited to situations where, under the facts known to the plaintiff at the time the complaint was filed, the law did not recognize a claim against a party, but a later change in the law or judicial interpretation made such claim possible. Here, there was no change or reinterpretation of the law. The only thing that changed was plaintiffs’ understanding of the law. According to plaintiffs, at the time the complaint was filed, they did not recognize the need to add the subsidiaries as defendants in order to obtain injunctive relief against them.
“Ignorance of the facts giving rise to a cause of action is the ‘ignorance’ required by section 474, and the pivotal question is, ‘“did plaintiff know facts?” not “did plaintiff know or believe that she had a cause of action based on those facts?”’” (General Motors Corp. v. Superior Court, supra, 48 Cal.App.4th at p. 594.) If plaintiffs knew all the facts necessary to assert a claim against the subsidiaries, their ignorance of the law regarding their right or need to assert such a claim will not afford them relief under section 474.
II
New Facts
Plaintiffs contend they did not know all the relevant facts at the time the complaint was filed. In particular, they assert they were not aware of the following: (1) JCM emerged from the bankruptcy of IRM Corporation (IRM) and took possession of IRM’s assets, with the subsidiaries assuming the role of IRM’s former partnerships; (2) while there was a change in name from IRM to JCM, there was essentially no change in business practices; (3) the majority of IRM’s employees remained with JCM; (4) the IRM partnerships were so commingled and inseparable from IRM that separate bankruptcies of the partnerships were consolidated with IRM’s bankruptcy; (5) Carmack’s lease was with JCM, not Driftwood; and (6) the subsidiaries are all staffed by JCM employees and controlled by JCM. However, as we shall explain, either plaintiffs were aware of these facts before filing suit or the facts do not support a claim against the subsidiaries.
(1) Plaintiffs do not explain the nature of the relationship between JCM’s predecessor, IRM, and IRM’s partnerships. Apparently, IRM had a different partnership for each rental property, just as JCM has a different subsidiary for each rental property. However, while the complaint alleges the subsidiaries are wholly owned by JCM, we are left to guess at the ownership of IRM’s partnerships. Since a partnership by definition has more than one partner, the IRM partnerships could not have been owned by IRM alone. At any rate, the original complaint alleged JCM emerged from the bankruptcy of IRM, and JCM manages 43 apartment complexes through its subsidiaries. Thus, the fact that JCM emerged from the bankruptcy and took possession of IRM’s assets, with the subsidiaries assuming the role of IRM’s partnerships, was already known to plaintiffs before the original complaint was filed. In fact, the role of the subsidiaries was so well known to plaintiffs that, in the original complaint, Strong defined “JCM” to include both JCM Partners, LLC and its subsidiaries.
(2) The fact that there was no change in the business practices when IRM became JCM has no bearing on this dispute. This matter turns on the business practices of JCM, which were known to plaintiffs and were the basis of plaintiffs’ suit against JCM. Whether those practices were also followed by JCM’s predecessor is of no concern.
(3) Likewise, it is irrelevant that the majority of IRM’s employees stayed with JCM after bankruptcy. Again, the issue is whether the business practices of JCM and its employees are unlawful. Whether those employees previously worked for IRM has no bearing on that issue.
(4) Similarly, whether the IRM partnerships were so commingled with IRM that their bankruptcies were consolidated has no bearing on the relationship between JCM and its subsidiaries. Plaintiffs suggest JCM and its subsidiaries should be treated the same as IRM and its partnerships. However, plaintiffs point to no facts supporting such treatment, let alone facts that were first discovered after the complaint was filed.
(5) Even if, as plaintiffs suggest, they were unaware when the original complaint was filed that Carmack’s lease was with JCM rather than Driftwood, plaintiffs do not explain how this has any bearing on whether they knew they had a claim against the subsidiaries. This fact would instead suggest their claim is against JCM.
(6) Plaintiffs assert the subsidiaries are all staffed and controlled by JCM. However, control of the subsidiaries by JCM is not a fact but a legal conclusion. As for staffing, plaintiffs do not explain what this means. Is it that the subsidiaries have no employees of their own and all work for the subsidiaries is done by JCM employees? Or are the people staffing the subsidiary offices employees of both the subsidiary and JCM? Either way, the original complaint already alleged JCM operated the various properties through its subsidiaries. In other words, JCM controlled the operations of the subsidiaries. The fact that JCM employees staffed the subsidiaries, whatever that means, is just further evidence of JCM’s control.
Through most of the foregoing facts, plaintiffs are apparently attempting to establish that JCM and its subsidiaries are effectively alter egos, thereby permitting them to pierce the corporate veil of JCM to get at the subsidiaries. Although not expressly articulated by plaintiffs, the argument would be that plaintiffs learned facts after the original complaint was filed that establish such a close relationship between JCM and its subsidiaries that they should be treated as one in the same.
“The alter ego doctrine arises when a plaintiff comes into court claiming that an opposing party is using the corporate form unjustly and in derogation of the plaintiff’s interests. [Citation.] In certain circumstances the court will disregard the corporate entity and will hold the individual shareholders liable for the actions of the corporation: ‘As the separate personality of the corporation is a statutory privilege, it must be used for legitimate business purposes and must not be perverted. When it is abused it will be disregarded and the corporation looked at as a collection or association of individuals, so that the corporation will be liable for acts of the stockholders or the stockholders liable for acts done in the name of the corporation.’ [Citation.]
“There is no litmus test to determine when the corporate veil will be pierced; rather the result will depend on the circumstances of each particular case. There are, nevertheless, two general requirements: ‘(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow.’ [Citation.] And ‘only a difference in wording is used in stating the same concept where the entity sought to be held liable is another corporation instead of an individual.’” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300.)
Although the present matter involves limited liability companies rather than corporations, there is no reason to believe the foregoing principles would not apply as well to limited liability companies, which rely on limited liability to protect the personal assets of their owners much like corporations do. However, except for the fact that JCM and the subsidiaries share employees, plaintiffs point to no facts to justify piercing the corporate veil of JCM to hold the subsidiaries liable for the acts of JCM or each other. Plaintiffs point to no facts learned after the complaint was filed that would suggest JCM and the subsidiaries have such a unity of interest and ownership that their separate identities no longer exist or that an inequitable result will follow if JCM and the subsidiaries are not treated as alter egos.
At the time the original complaint was filed, Strong was aware her lessor, Meadow Gardens, was a subsidiary of JCM, that JCM had a number of other subsidiaries, one for each of its properties, and that JCM had emerged from the bankruptcy of IRM. Strong initiated her action against both Meadow Gardens and JCM on behalf of herself and all others similarly situated. Later, Driftwood was added as a defendant.
The original complaint does not expressly state the breadth of the class Strong purported to represent. Her allegations regarding JCM’s use of similar lease provisions and procedures upon termination of a tenancy could arguably apply to a class composed of all tenants residing at Meadow Gardens Apartments or a class composed of all tenants at any JCM property. The fact that Strong chose to name Meadow Gardens as a defendant, and later Driftwood, suggests the former. However, the fact plaintiffs later attempted to obtain a TRO against JCM and “any and all” of its subsidiaries and employees suggest the latter.
If plaintiffs originally sought to state a claim on behalf of the more limited class, and their theory is that the subsidiaries are somehow liable for what goes on at Meadow Gardens Apartments and Driftwood Apartments, they do not even attempt to explain how. As explained above, their attempt to establish alter ego liability falls woefully short.
If, on the other hand, plaintiffs sought to represent the more expanded class, then they are confronted with the fact they chose to name Meadow Gardens and Driftwood as defendants but not the other subsidiaries. If plaintiffs were claiming misconduct throughout JCM’s properties and knew enough to name these two subsidiaries as defendants, they also knew enough to name the other subsidiaries.
Finally, in their memorandum in opposition to the subsidiaries’ motion to quash, plaintiffs asserted that after they discovered the other apartment complexes used the same contract terms, they concluded “it may be proper to expand their class to include all of the JCM apartment rental property entities, i.e., the [subsidiaries].” If, as the foregoing suggests, plaintiffs originally intended to pursue a claim on behalf of the more limited class and later chose to expand the scope of the litigation, they run into a different hurdle. “Even if a plaintiff meets the other requirements of Doe pleading, an amended pleading will not relate back unless the original complaint set forth or attempted to set forth some cause of action against fictitiously named defendants. [Citations.] ‘It is not enough, of course, simply to name “Doe” defendants. Rather, the complaint must allege that they were responsible in some way for the acts complained of.’ [Citation.]” (Winding Creek v. McGlashan (1996) 44 Cal.App.4th 933, 941, fn. omitted; accord Marasco v. Wadsworth, supra, 21 Cal.3d at p. 87.) In other words, a new defendant may be substituted for a fictitious defendant only if the new defendant was somehow responsible for the misconduct as alleged in the original complaint. In this case, plaintiffs would not be adding the subsidiaries based on their responsibility for the misconduct alleged in the original complaint, i.e., misconduct at the two apartment complexes, but on their responsibility for the misconduct alleged in a more expanded complaint covering many more properties.
Plaintiffs raise one final point. They argue that “[a]fter the complaint was filed JCM took the position (in opposition to [plaintiffs’ application for a TRO]) that the individual [subsidiaries] had to be joined and served to effectively enjoin them from any activity.” According to plaintiff, “[t]hat position is the instigating factor which led to joining JCM’s [subsidiaries], a position which is questionable since JCM employees run the [subsidiaries].”
Assuming the accuracy of plaintiffs’ assertion regarding JCM’s argument below, the fact that plaintiffs must join the subsidiaries in the action in order to obtain injunctive relief against them should come as no surprise. Until the subsidiaries are brought into the action, the trial court has no personal jurisdiction over them. However, this does not mean that if plaintiffs do not join the subsidiaries as fictitious defendants in this action, they are precluded from obtaining relief with respect to those entities. As suggested by defendants below, plaintiffs are not barred from seeking to add the subsidiaries by way of an amendment to the complaint. Although such amendment would not bring the subsidiaries into the action as if they had been joined all along for purposes of the statute of limitations, it would nevertheless be a way to expand the action if plaintiffs so desire.
Disposition
The judgment (order) quashing service of the summons and complaint on the subsidiaries is affirmed.
We concur: BLEASE, Acting P. J., MORRISON, J.