You have a judgment against a company that's now empty or dissolved. The owners are wealthy but hiding behind the corporate shield. California's alter ego doctrine may let you pierce the corporate veil and collect from the owners personally.
The alter ego doctrine is an equitable remedy that allows courts to disregard the corporate entity and hold shareholders, members, or parent companies personally liable for the entity's debts. It's commonly called "piercing the corporate veil."
Under California law (developed through case law, primarily Mesler v. Bragg Management Co. and its progeny), courts pierce the veil when:
Both prongs must be met. Simply being a single-member LLC isn't enough - there must be abuse of the corporate form.
The LLC owner uses the company bank account like a personal checkbook, never holds meetings, doesn't maintain records, and empties the company when your judgment hits. Now they're driving a new Mercedes while their "company" has $0. This is exactly what alter ego addresses.
Courts examine numerous factors to determine if the entity was a mere shell or instrumentality of the owner:
Courts weigh all factors together. Some cases pierce the veil with strong evidence on a few factors. Others deny relief despite multiple factors present. The key is whether the totality shows the entity was really just the owner in disguise.
You have two main procedural options:
Under CCP 187, you can file a motion in your existing case asking the court to amend the judgment to add the alter ego as a judgment debtor.
File a separate action against the alter ego defendants for a judgment declaring them liable as alter egos.
The alter ego must receive proper notice and opportunity to be heard. You can't just add someone to a judgment without serving them and giving them a chance to respond. Failure to provide due process can void the amended judgment.
Before filing, gather evidence supporting each factor:
The most compelling alter ego evidence comes from the debtor's own records showing commingling, lack of formalities, and undercapitalization. Conduct thorough post-judgment discovery before filing your motion.
Expect the alter ego to argue:
They'll produce meeting minutes, resolutions, and argue the entity operated properly. Look for gaps, missing records, or records created after-the-fact.
They'll claim the company was properly funded. Examine initial capitalization relative to the business risks undertaken.
They'll explain transfers as loans, salary, or legitimate business expenses. Scrutinize whether loans were documented, whether salary was reasonable, whether there's any paper trail.
Even with unity of interest, they'll argue you can collect from the entity itself. Show why that's inadequate - the entity is empty, dissolved, or judgment-proof.
Being a single-member LLC alone isn't enough. But single-member LLCs are often easier to pierce because the owner tends to treat the LLC as themselves - no other members to enforce formalities or question commingling. The analysis is the same: unity of interest plus inequitable result.
For a CCP 187 motion, there's no specific statute of limitations - you can bring it while the judgment is enforceable (10 years, renewable). For a separate lawsuit, the statute of limitations for the underlying claim applies. Don't wait - bring your alter ego claim promptly after discovering the facts supporting it.
Yes. You can pierce "upward" from subsidiary to parent, "downward" from parent to subsidiary, or "horizontally" between sister companies. The same alter ego analysis applies - look for unity of interest and inequitable result in any direction the facts support.
Not necessarily. A court may find alter ego liability exists only as to your particular debt, especially if your claim arose from specific circumstances involving the owner. Other creditors would need to bring their own alter ego claims.
If you have a personal guarantee, you can sue the guarantor directly without proving alter ego. But guarantees may be limited in amount, scope, or time. Alter ego can reach beyond guarantee limits. Also, you might not have a guarantee but still have strong alter ego facts.
I investigate alter ego factors and pursue motions to add owners as judgment debtors when the facts support piercing the corporate veil.