Opinion
NOT TO BE PUBLISHED
Appeals from a judgment and postjudgment orders of the Superior Court of Orange County No. 05CC06828, Charles Margines, Judge.
Paul, Hastings, Janofsky & Walker, Paul W. Cane, Jr., Stephen L. Berry and Rishi N. Sharma; Bononi Law Group and William S. Waldo for Defendant and Appellant Automotive Wheels, Inc.
Hart, King & Coldren, Robert S. Coldren, Christopher R. Elliott, and Rhonda H. Mehlman for Plaintiff, Appellant and Respondent Brea Imperial, Inc.
Morris, Polich & Purdy, Richard H. Nakamura, Jr., David J. Vendler and Maureen M. Home for Objector and Appellant Titan International Inc.
OPINION
IKOLA, J.
This case involves several consolidated appeals related to Brea Imperial, Inc. v. Automobile Wheels, Inc. (Nov. 8, 2010, G040674) [nonpub. opn.] (Brea I). In that case, a jury found defendant Automotive Wheels, Inc. (AWI), liable to plaintiff Brea Imperial, Inc. (BII), for breach of contract, trespass, negligence, fraud, and conspiracy. After review, we preserved BII’s contract and negligence damages. But we reversed and remanded for the court to reduce the trespass damages, award no fraud or conspiracy damages, and determine the appropriate amount of punitive damages.
Now, in these consolidated appeals, defendant AWI and its parent corporation, Titan International, Inc. (Titan), each appeal from both a postjudgment order and an “amended judgment” adding Titan as an alter ego judgment debtor.
We grant Titan’s motion to dismiss BII’s “protective” cross-appeals (G042148, G042153) preserving its challenges to (1) an order denying leave to amend the complaint to add Titan as a named defendant, (2) an order declining to award punitive damages against AWI, and (3) an order declining to impose evidentiary or terminating sanctions against AWI. We already decided the latter two issues. (Brea I, supra, G040674 at pp. 15-16.) And BII has stated it would abandon the first issue given our decision here.
We affirm the alter ego order. The court retained jurisdiction after AWI appealed from the Brea I judgment to add Titan as a judgment debtor - neither AWI nor Titan have standing to contend otherwise. And substantial evidence supports the court’s alter ego finding. We reverse the amended judgment with directions for the court to determine the amount of punitive damages to award, if any.
Previously, we reversed the judgment against AWI to allow the court to determine the amount of AWI’s punitive damages liability. (Brea I, supra, G040674 at pp. 15, 17.) We now affirm the order finding Titan is AWI’s alter ego. It follows the “amended judgment” against Titan must be similarly reversed to allow the court on remand to determine what punitive damages, if any, to assess against Titan as well.
AWI also appeals from two postjudgment orders awarding attorney fees to BII. We affirm these, too. The contract between BII and AWI awards attorney fees to the prevailing party in any action “‘founded in tort, contract, or equity’” “‘that in any way relates to’” the contract or is brought “‘because of an alleged dispute... in connection with any’” contract provision. This broad language allows BII to recover attorney fees incurred in prosecuting both its contract and tort claims in this case - including those incurred in proving Titan’s alter ego liability.
FACTS
The Underlying Judgment
We summarize facts set forth in greater detail in Brea I, supra, G040674. BII bought an industrial building in the City of Brea, in March 2004, containing vehicle wheel manufacturing equipment that a former tenant had leased from AWI. BII and AWI ultimately entered into an “Agreement Regarding Storage of AWI Equipment.” The agreement allowed AWI to keep the equipment in BII’s building for three months at a monthly rent of $75,000, plus the lesser of $75,000 or one-third of the net proceeds from the sale of any equipment AWI chose not to remove. The parties later extended the term of the agreement to January 2005.
BII sued AWI for breach of contract and various torts. At the 2007 liability phase of the trial, BII showed AWI had allowed the electricity to be shut off in February 2004, causing the building to be flooded with oil. AWI and Titan allowed a middleman to operate the equipment for a potential buyer. They auctioned off some equipment for $93,000 and moved other equipment to a Titan plant. But when the agreement term expired in January 2005, the building still contained equipment, contamination, and various debris (machinery, oil, sludge, solvents, barrels, pallets, etc.). BII auctioned off the leftover equipment for $2,300 and spent months to remediate the facility and prepare it for leasing.
The jury returned special verdicts for BII on each of its causes of action in October 2007. The jury awarded contract damages of $689,945, trespass damages of $840,000, negligence damages of $300,000, fraudulent inducement damages of $279,970, fraud damages of $279,970, waste damages of $248,690, and conspiracy damages of $1,668,370. The jury also found AWI acted with malice, oppression, or fraud.
The court then tried the bifurcated punitive damages phase, pursuant to the parties’ stipulation. After taking evidence and hearing argument, the court found the agreement barred recovery of punitive damages. The court entered judgment for BII on May 7, 2008. It later entered judgment notwithstanding the verdict for AWI on the waste and fraudulent inducement causes of action.
AWI appealed from the judgment on July 16, 2008, BII cross-appealed, and we reversed. Sufficient evidence showed AWI injured BII by contaminating the building and failing to remove the equipment, contamination, and debris during the agreement’s term. We held the contract and negligence damages, plus a reduced amount of trespass damages, reasonably compensated BII for the rental value of the building and its clean-up costs: a total of $1.14 million. But the fraud and conspiracy damages (and some of the trespass damages) were duplicative of the other damages. We further held the agreement did not bar BII from recovering punitive damages. We remanded the matter for the court to determine the appropriate amount of punitive damages, if any, and enter a new judgment against AWI.
The Alter Ego Proceeding
BII first raised the issue of Titan’s possible liability during the 2007 liability phase. At the close of its case, BII moved for leave to amend its complaint to add Titan as a named defendant. It also filed a “Motion to Pierce the Corporate Veil.” The court denied the motion for leave to amend. It “deferred” the veil-piercing motion. Later during trial, the court granted BII leave to file a first amended complaint. BII alleged in the first amended complaint that “AWI is the alter ego of Titan.” The court granted without prejudice AWI’s motion to strike the alter ego allegations.
After the jury returned its October 2007 verdict, the court set a January 2008 trial date for the punitive damages phase “and possible Alter ego issues.” The court later stated it would hear the punitive damages and alter ego issues separately. Nonetheless, on the first day of the punitive damages phase, BII moved to “set a hearing to determine the alter ego issues in this matter” or add Titan as a defendant or additional judgment debtor. The court reiterated it would complete the punitive damages phase before addressing the alter ego issue. The court completed the punitive damages hearing on January 17, 2008. The parties agreed to submit posthearing briefs in lieu of argument. The court set the alter ego proceeding for March 3, 2008, ordering BII to give notice to Titan.
The court commenced the alter ego proceeding on March 3, 2008. BII, AWI, and Titan appeared through counsel; Titan’s counsel stated he was “specially appearing.” BII, AWI, and Titan stipulated the evidence from the punitive damages phase would be admitted into evidence in the alter ego proceeding, subject to Titan’s objections and BII’s right to recall witnesses if Titan’s objections were sustained. BII called its property manager (Douglas Moorhead) and one of AWI’s counsel (William Manning) as witnesses. The proceeding was continued.
Titan applied ex parte to dismiss the alter ego proceeding. It claimed BII had made an election of remedies by allowing the court to enter judgment on the conspiracy cause of action - in Titan’s view, it could not both conspire with AWI and be AWI’s alter ego. The court heard argument on July 16, 2008, the same day AWI appealed from the judgment. The court denied the application. Titan paid for AWI to post a bond securing the judgment pending appeal.
The court resumed the alter ego proceeding on July 31, 2008. Neither Titan nor AWI contended the court had lost jurisdiction to do so. Pursuant to the parties’ stipulations, the court admitted exhibits and the declaration of Titan’s director of tax and accounting (Todd Shoot). The Titan employee was subjected to cross-examination from BII and redirect examination over two days. The court continued the alter ego proceeding.
In November 2008, the court ruled the parties would submit expert witness declarations, with the expert witnesses subject to live cross-examination. The parties, accordingly, proceeded to file expert witness declarations. The court heard BII’s cross-examination of Titan’s expert witness on December 18, 2008, the last day of the alter ego proceeding. Titan chose not to examine BII’s expert witness. The court also admitted some deposition transcripts from the liability phase of the trial (Maurice Taylor, AWI’s president and Titan’s CEO and chairman; Cheri Holley, AWI’s secretary and general counsel for both AWI and Titan). All three parties later filed written closing arguments.
The court issued an order granting BII’s motion to add Titan as a judgment debtor on February 20, 2009. In its minute order, the court stated it was “particularly swayed by the following evidence: Though AWI had ceased operations long before it entered into the agreement with BII, and there was no effort made to revive it as a going concern, Titan took no steps to wind down AWI’s business and close the books on it. Such inaction makes little or no business sense, leading to an inference that Titan kept AWI alive (at least ‘on paper’) to shift liability from Titan to AWI; AWI had been undercapitalized for years, including the time when it negotiated with BII and signed the agreement which was at issue in the trial; and Titan controlled every aspect of AWI’s ‘operations, ’ so that it can be concluded that the latter was a mere instrumentality of its parent corporation. In fact, although Titan was not a signatory to the agreement between BII and AWI, it is plain that Titan ‘called the shots’ in the negotiations.”
The minute order continued: “In addressing the second prong in the ‘alter ego’ analysis, Titan and AWI raise the argument that there can be no injustice to BII if the court ruled in favor of Titan because an appellate bond has been posted which will ensure that the judgment will be fully satisfied were the jury’s verdict upheld on appeal. Apparently no case addresses the issue to which this argument is directed. And, while this argument is facially compelling, it ultimately fails. Case law on ‘alter ego’ liability reflects California’s policy of holding individuals or business entities liable for actions deemed unjust or fraudulent. To permit them to escape liability and social condemnation for their wrongful conduct by posting a bond would defeat such policy. On a more practical level, the appellate court may reverse the jury’s verdict with directions that this court grant a new trial. If that be the case, the ‘alter ego’ issue will need to be addressed once again; thus, the appellate bond would not necessarily moot this phase of the case. [¶] Finally, in arguing that no inequitable result will occur if Titan were not held liable for the judgment, both Titan and AWI point out that there is no evidence that any creditor of AWI has ever gone unpaid. Thus, Titan should not be heard to complain if this court compels it to do what it has apparently always done anyway - make good on AWI’s debts. [¶] In light of this ruling, the court declines to address the ‘virtual representation’ argument made by BII.”
AWI appealed from the alter ego order (G041803), as did Titan (G041926). The court entered an amended judgment adding Titan as an additional judgment debtor on May 14, 2009. AWI appealed the amended judgment (G042153), as did Titan (G042148).
Titan obtained a rider adding it as a principal to AWI’s appeal bond. AWI and Titan posted additional bonds to account for the amended judgment.
The Attorney Fee Orders
Meanwhile, on June 30, 2008, BII moved to recover its attorney fees. It relied upon the storage agreement’s attorney fees clause, which provided: “ if any legal action or other proceeding (whether founded in tort, contract, or equity... and any appeal of such action or proceeding) is brought by a Party hereto... that in any way relates to the enforcement or interpretation of this Agreement or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the ‘Prevailing Party’ (as hereafter defined) in such action, proceeding or appeal therefrom shall be entitled to recover its reasonable attorneys, fees [sic] and other costs incurred in the action, proceeding, or appeal....” “[T]he term ‘Prevailing Party’ [shall] ‘include, without limitation, a Party who substantially obtains or defeats the relief sought....’”
The court found “the language of the Storage Agreement (at paragraph 12) is sufficiently broad so that fees are recoverable on all [causes of action], and apportionment among the [causes of action] is not required.” The court further found no inconsistency between (1) BII’s claim in the liability phase that it may recover both contract and tort damages (i.e., its contract and tort claims are distinct), and (2) BII’s claim in the attorney fee motion that the agreement allows it to recover fees incurred in prosecuting its tort claims.
The court appointed retired Judge Thomas Thrasher as a referee to review BII’s attorney fee invoices. The court adopted the referee’s recommendation and, on February 20, 2009, awarded $737,857.50 in attorney fees incurred through July 31, 2008 to BII. AWI appealed from this order (G041803, the same case number as AWI’s appeal from the alter ego order).
BII filed a second motion to recover its attorney fees on April 21, 2009. It sought attorney fees incurred after July 31, 2008 - mainly, those incurred in prosecuting the first attorney fees motion and the alter ego proceeding. The court granted the motion on July 8, 2009, awarding $97,010.80 to BII. AWI appealed from this order (G042385).
DISCUSSION
The Court Retained Jurisdiction to Add Titan as Judgment Debtor Despite AWI’s Appeal
Titan and AWI contend the court lost jurisdiction to conduct the alter ego proceeding on July 16, 2008, when AWI appealed from the May 7, 2008 judgment. They assert AWI’s appeal effected a mandatory stay of the alter ego proceeding.
“[T]he perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” (Code Civ. Proc., § 916, subd. (a).) “[S]ection 916, as a matter of logic and policy, divests the trial court of jurisdiction over the subject matter on appeal - i.e., jurisdiction in the fundamental sense.” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 198 (Varian).)
All further statutory references are to the Code of Civil Procedure.
AWI may be not heard on the alter ego issue. Only a “party aggrieved may appeal....” (§ 902.) “‘[A]ny entity that has an interest in the subject matter of a judgment and whose interest is adversely affected by the judgment is an aggrieved party and is entitled to be heard on appeal. However, the aggrieved party’s interest must be immediate, pecuniary and substantial, and not merely a nominal or remote consequence of the judgment.’” (In re FairWageLaw (2009) 176 Cal.App.4th 279, 285.)
AWI has not shown how it is adversely affected by the order and amended judgment adding Titan as a judgment debtor. Contrary to AWI’s concerns, the finding that Titan is its alter ego in this case will not render AWI generally liable for Titan’s debts. Piercing the corporate veil is an equitable remedy that turns on balancing the equities and “circumstances of each particular case.” (Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300 (Mesler).) AWI cites no authority supporting its claim that the alter ego finding here will be res judicata in all future litigation involving AWI or Titan. Moreover, Titan was found to be AWI’s alter ego, not the other way around. Prevailing California case law bars “outside reverse piercing” by which a shareholder’s creditor may pierce the corporate veil to reach corporate assets. (Postal Instant Press, Inc. v. Kaswa Corp. (2008) 162 Cal.App.4th 1510, 1518-1519 (Postal); but see Grotheer v. Meyer Rosenberg, Inc. (1936) 11 Cal.App.2d 268, 271 [affirming writ of attachment levied against corporate assets to satisfy judgment against shareholder].) The alter ego order and amended judgment do not give license to Titan’s creditors to satisfy claims against Titan with AWI’s assets. Thus, AWI fails to show it is aggrieved by the alter ego order or amended judgment. It lacks standing to complain about the court’s jurisdiction to enter that order and judgment.
And even if there were a stay pending appeal, it would not benefit Titan. Only the appealing party is entitled to a stay pending appeal. (See Kentfield v. Kentfield (1935) 4 Cal.2d 585, 587 [nonappealing parties may seek writ of supersedeas because the appeal “does not operate as a statutory supersedeas” to them]; see also Varian, supra, 35 Cal.4th at p. 199 [trial court’s loss of jurisdiction is “the only way to ensure that the appealing party has a remedy on appeal, ” italics added]; 9 Witkin, Cal. Procedure (5th ed. 2008) Appeal, § 222, p. 290 [“a stay obtained by one of several appellants does not prevent enforcement of the judgment or order against the others”].) While AWI appealed from the May 7, 2008 judgment on July 16, 2008, Titan did not. Nor could Titan appeal from that judgment - it was not (yet) a party to it.
This analysis obviates any need to dissect the parties’ other contentions on this issue. These include whether adding Titan as a judgment debtor was an unstayed correction of clerical error, and whether the alter ego proceeding was embraced or affected by AWI’s appeal challenging the May 7, 2008 judgment on the conspiracy cause of action (or BII’s cross-appeal challenging the denial of leave to amend to add Titan as a named defendant). It suffices to note the alter ego proceeding addressed whether, in light of the evidence and the relevant equities, the court should pierce AWI’s corporate veil. (See Mesler, supra, 39 Cal.3d at p. 300.) That answer alone would not determine whether AWI’s corporate form should be disregarded for other purposes, such as conspiracy liability. (See id. at p. 301 [alter ego finding does not imply “there is really only one corporation”; the corporate form “still stands”].) It certainly would not resolve whether Titan should have been added midtrial as a named defendant by way of motion - a dubious claim. (Cf. In re FairWageLaw, supra, 176 Cal.App.4th at pp. 286-287 [reversing judgment against nonparty given no notice or opportunity to be heard].) Besides, we reversed the conspiracy damages (Brea I, supra, G040674, at pp. 13-15) and held BII’s cross-appeal “does no work” in light of the alter ego order and judgment (id. at p. 16).
Substantial Evidence Supports the Alter Ego Order and Judgment
“Section 187 of the Code of Civil Procedure grants to every court the power to use all means to carry its jurisdiction into effect, even if those means are not set out in the code. [Citation.] Under section 187, the court has the authority to amend a judgment to add additional judgment debtors. [Citation.] [¶] Judgments are often amended to add additional judgment debtors on the grounds that a person or entity is the alter ego of the original judgment debtor.” (NEC Electronics Inc. v. Hurt (1989) 208 Cal.App.3d 772, 778 (NEC), fn. omitted.)
An alter ego may be added as a judgment debtor postjudgment if it was “virtually represented” at trial, able to contest the merits of plaintiff’s claims through its shell corporation. “‘Such a procedure is an appropriate and complete method by which to bind new individual defendants where it can be demonstrated that in their capacity as alter ego of the corporation they in fact had control of the previous litigation, and thus were virtually represented in the lawsuit.’ [Citation.] In other words, ‘[i]f the claim of individual liability is made at some later stage in the action, the judgment can be made individually binding on a person associated with the corporation only if the individual to be charged, personally or through a representative, had control of the litigation and occasion to conduct it with a diligence corresponding to the risk of personal liability that was involved.’” (NEC, supra, 208 Cal.App.3d at pp. 778-779.) “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.” (Triplett v. Farmers Ins. Exchange (1994) 24 Cal.App.4th 1415, 1421 (Triplett).)
To affirm the alter ego order and judgment, then, substantial evidence must show both that (1) Titan was AWI’s alter ego, and (2) Titan was virtually represented at the liability phase through its control of AWI’s defense. We turn to these issues.
Titan Was AWI’s Alter Ego: “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....’” (Mesler, supra, 39 Cal.3d at p. 300.)
“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.’” (Mesler, supra, 39 Cal.3d at p. 300.)
“‘[O]nly 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. “A very numerous and growing class of cases wherein the corporate entity is disregarded is that wherein it is so organized and controlled, and its affairs are so conducted, as to make it merely an instrumentality, agency, conduit, or adjunct of another corporation.” [Citations.]’ [Citation.] [¶] Because society recognizes the benefits of allowing persons and organizations to limit their business risks through incorporation, sound public policy dictates that imposition of alter ego liability be approached with caution. [Citation.] Nevertheless, it would be unjust to permit those who control companies to treat them as a single or unitary enterprise and then assert their corporate separateness in order to commit frauds and other misdeeds with impunity.” (Las Palmas Associates v. Las Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1249 (Las Palmas).)
Because the alter ego doctrine is inherently case-specific, any list of applicable factors is necessarily non-exhaustive. Factors may include common ownership, employees, attorneys, and business location between the corporation and alter ego; the failure to maintain separate records, funds, and assets for the corporation and the alter ego; the alter ego’s control of the corporation; the alter ego’s use of the corporation as a shell for conducting a single venture or the alter ego’s affairs; undercapitalization of the corporation; the lack of an arm’s length relationship between the corporation and the alter ego; and the alter ego’s intent to use the corporation to avoid liability. (See Associated Vendors, Inc. v. Oakland Meat Co. (1962) 210 Cal.App.2d 825, 838-840 (Associated Vendors).)
“‘The law as to whether courts will pierce the corporate veil is easy to state but difficult to apply.’ [Citation.] “Because it is founded on equitable principles, application of the alter ego ‘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.”’ [Citations.] Whether the evidence has established that the corporate veil should be ignored is primarily a question of fact which should not be disturbed when supported by substantial evidence.” (Las Palmas, supra, 235 Cal.App.3d at p. 1248.)
Substantial evidence supports the court’s finding Titan is AWI’s alter ego. Titan owns all of AWI’s stock. Titan’s board chairman and CEO, Maurice M. Taylor, Jr., is AWI’s president. Taylor, a Titan finance officer, and Titan’s general counsel are AWI’s only three officers; Taylor and the Titan finance officer are AWI’s only two directors. AWI uses Titan’s accountants and, in this case at least, Titan’s outside counsel. AWI has no employees or other non-officer personnel. AWI has no independent offices; it uses Titan’s offices in Illinois. AWI has no bank account or ability to write checks; it uses Titan’s cash management system. AWI did not provide Titan’s expert with any shareholder meeting minutes, board meeting minutes, or written consents in lieu of board meetings.
Titan’s expert conceded “AWI was financially dependent on Titan” and “Titan controlled AWI.” Titan shut down AWI’s wheel manufacturing operation in 1997 and, as Titan’s expert put it, “Titan was handling [AWI’s] business ever[] since then.” Because AWI was a “nonoperating subsidiary” or “nonoperating entity, ” that business consisted primarily of disposing of AWI’s assets - most notably, the wheel manufacturing “rim lines” that were stored in BII’s facility. Titan had been winding down AWI for 11 years, but never actually wound it down. Titan had been “keeping AWI afloat for 11 years with loans” in “steady drips and drabs” to cover AWI’s expenses. Those loans totaled approximately $14 million by 2007. But Titan did not charge interest, demand security, or obtain a promissory note. Titan made these loans even though AWI had “never been profitable” and had no prospect of becoming profitable “in its current state of operations.” AWI’s net worth as of 2007 was less than negative $9 million.
Taylor told a potential broker for the sale of AWI’s equipment that he kept AWI on the books to insulate Titan from labor unions.
In particular, Titan dominated all dealings with BII. Taylor, introducing himself as Titan’s CEO, initiated the storage negotiations with BII. Taylor told BII’s property manager AWI was “really not in business”: Titan would cover AWI’s obligations and send someone to dispose of any unsold equipment. Titan made all of the payments to BII pursuant to the storage agreement. Taylor sent employees of a Titan subsidiary to the facility to inventory equipment and make recommendations for its disposal. Taylor sent a consultant for another Titan subsidiary to the facility to oversee the equipment’s disposition. Taylor made the final decisions on how to dispose of the equipment. Taylor used Titan letterhead to negotiate with a middleman to sell two rim lines to Chinese buyers and directed the middleman to submit deal documents to Titan’s CFO. Taylor allowed the middleman to operate the rim lines and make several thousand wheels for the buyers. The middleman’s deal fell through. Titan hired an auctioneer to sell some equipment; the auction proceeds went to Titan. Other equipment was moved to a Titan facility in Illinois, where Titan later sold it to the Chinese buyers. Titan funded AWI’s defense in Brea I and paid for AWI’s appeal bond, even before Titan was added as a judgment debtor. AWI, for its part, opposed BII’s efforts to add Titan as a named defendant or judgment debtor.
Taken together, this evidence sufficiently supports the court’s finding that “Titan kept AWI alive (at least ‘on paper’) to shift liability from Titan to AWI; AWI had been undercapitalized for years, including the time when it negotiated with BII and signed the agreement which was at issue in the trial; and Titan controlled every aspect of AWI’s ‘operations, ’ so that it can be concluded that the latter was a mere instrumentality of its parent corporation. The record sufficiently shows Titan and AWI have such a “unity of interest and ownership” that inequity would result unless Titan is held responsible to AWI’s conduct toward BII. (Mesler, supra, 39 Cal.3d at p. 300.)
Titan is not immune from alter ego liability just because AWI is its subsidiary. To be sure, some amount of control and overlap is “to be expected as an incident of the parent’s ownership of the subsidiary.” (Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 542 (Sonora) [discussing agency law]; see also id. at pp. 548-549.) But no bright-line rule exempts a parent corporation from becoming its subsidiary’s alter ego. To the contrary, a parent-subsidiary relationship is typical when one corporation is found to be the alter ego of another - “[g]enerally, alter ego liability is reserved for the parent-subsidiary relationship” when both entities are corporations. (Las Palmas, supra, 235 Cal.App.3d at p. 1249.) Moreover, “[t]here 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.” (Mesler, supra, 39 Cal.3d at p. 300.) “No one characteristic governs, but the courts must look at all the circumstances to determine whether the [alter ego] doctrine should be applied.” (Sonora, at p. 539.) Thus, it is unconvincing for Titan to muster cases in which any one factor, or some similar set of factors, was found insufficient to support alter ego liability. (See id. at pp. 539-540 [holding parent not alter ego of nonoperational mining company, but acknowledging plaintiff claimed “it was not obliged to prove” alter ego allegation to establish personal jurisdiction]; see also In re Hillsborough Holdings Corp. (Bankr. M.D. Fla 1994) 166 B.R. 461, 468, 475-476 [parent not subsidiary’s alter ego under Florida or Delaware law].) When taken together, the factors here - including but not limited to Titan’s control of AWI and their overlapping officers, directors, offices, and cash management system - sufficiently support the court’s determination to pierce AWI’s corporate veil. (See Associated Vendors, supra, 210 Cal.App.2d at pp. 838-840 [listing factors].)
Nor is Titan immunized from alter ego liability by BII’s cause of action for breach of contract. Titan urges us to adopt a bright-line rule against imposing alter ego liability in contract cases, on the theory the plaintiff chose which party with which to contract. California courts routinely apply the alter ego doctrine in contract cases, and have done so for years. (See, e.g., Automotriz etc. De California v. Resnick (1957) 47 Cal.2d 792.) Thus, Titan’s federal cases not applying California law are unpersuasive. Titan’s California case is inapt. In Lynch v. McDonald (1909) 155 Cal. 704, the court declined to allow an attorney to pierce his client’s corporate veil and hold its president and dominant shareholder, whom the attorney also represented, liable under his retention agreement. (Id. at pp. 705-706.) The attorney not only knew of the alleged alter ego’s existence - the attorney had advised him “in all business affairs” as corporate president. (Id. at p. 706.) These extreme facts precluded alter ego liability in that case, but do not foreclose applying alter ego liability in all contract cases - even those in which the plaintiff knew of the alleged alter ego’s existence. (See, e.g., Hiehle v. Torrance Millworks, Inc. (1954) 126 Cal.App.2d 624, 630 [distinguishing Lynch; bookkeeper may pierce his employer’s corporate veil].) At any rate, AWI’s liability to BII is not purely contractual. The jury found AWI committed fraud, negligence, and trespass, and did so with malice, oppression, or fraud. (Brea I, supra, G040674, at p. 5.)
Edwards Co. v. Monogram Industries, Inc. (5th Cir. 1984) 730 F.2d 977, held only that plaintiffs in contract cases must show “fraud or injustice” to pierce their contracting partners’ corporate veil under Texas law. (Id. at p. 984.) This is consistent with California law. Cascade Energy and Metals Corp. v. Banks (10th Cir. 1990) 896 F.2d 1557, held the parties’ “voluntary and contractual” relationship was just one of five reasons to deny alter ego liability. (Id. at p. 1577.) The predominant reason was that the plaintiff relied upon a “‘reverse piercing’” theory rejected by Utah courts. (Ibid.)
In Brea I, we did not disturb the jury’s findings on fraud or the predicates of punitive damages. We reversed the fraud damages only because they were duplicative of the negligence damages. (Brea I, supra, G040674, at p. 13.) And we reversed an order declining to award punitive damages to BII, holding the storage agreement did not bar BII from recovering punitive damages. (Id. at p. 15.)
Titan assails any references to its own misdeeds against BII, asserting the alter ego proceeding must be strictly limited to determining whether it abused AWI’s corporate form. The evidentiary line cannot be drawn so finely. Evidence of Titan’s conduct regarding BII, the storage agreement, and the AWI equipment - e.g., negotiating the storage agreement, making payments pursuant to that agreement, allowing the rim lines to operate, auctioning some equipment, removing and selling other equipment - was relevant to show Titan’s control of AWI, its use of AWI as a mere shell, and its intent to use AWI as a shield against liability. These are relevant factors for the alter ego analysis. (See Associated Vendors, supra, 210 Cal.App.2d at pp. 838-840 [listing factors].)
Titan also asserts AWI’s appeal bond protects Titan against alter ego liability. That seems doubtful as a general proposition, and all the more so when the alter ego paid for the bond. Titan offers no authority foreclosing alter ego liability because the judgment was bonded. Titan’s lone cited authority merely notes the few jurisdictions that allow “outside reverse piercing” require the outside creditor to exhaust the ordinary legal remedies against the alter ego shareholder - such as suing for conversion or fraudulent transfer - before it may reach the corporation’s asserts. (Postal, supra, 162 Cal.App.4th at pp. 1523-1524.) That case does not give a potential alter ego the option of avoiding liability via bond.
Titan Was Virtually Represented At Trial: Even if Titan was AWI’s alter ego, Titan was not a party to the underlying trial against AWI. It had no direct opportunity to defend against BII’s claims. Thus, Titan may be added to the judgment against AWI only if AWI “virtually represented” Titan at trial. (NEC, supra, 208 Cal.App.3d at p. 778; accord Triplett, supra, 24 Cal.App.4th at p. 1421.)
Substantial evidence shows AWI virtually represented Titan at trial. AWI had no independent means to finance the litigation and no independent employees to supervise it. Titan paid the legal fees of AWI’s counsel, who had represented Titan and its subsidiaries in a dozen other matters since about 2000. Titan posted AWI’s appeal bond. And AWI acted in Titan’s defense. AWI’s counsel prepared the Titan tax and accounting director’s declaration for the alter ego proceeding and invoked the attorney-client privilege on behalf of Titan. And as already noted, AWI opposed BII’s motion to add Titan as a named defendant, opposed BII’s effort to show Titan was its alter ego, and separately appealed the alter ego order and judgment.
Titan contends the court expressly declined to determine whether AWI virtually represented Titan. The minute order provided, “In light of this ruling, the court declines to address the ‘virtual representation’ argument made by BII.” In context, the order states the court declined to reach BII’s alternative theory Titan could be added as a judgment debtor without an alter ego finding, through virtual representation alone. This claim was rightly rejected. “The due process considerations [of virtual representation] are in addition to, not in lieu of, the threshold alter ego issues.” (Triplett, supra, 24 Cal.App.4th at p. 1421.) By issuing alter ego order and judgment, the court impliedly found AWI virtually represented Titan at trial - a finding supported by substantial evidence.
Titan’s counterarguments are unavailing. Cases finding no virtual representation generally involve situations in which the dominated corporation offered no defense at all at trial. (See NEC, supra, 208 Cal.App.3d at p. 780 [corporation “did not appear at trial and did not make any attempt to defend the NEC lawsuit”]; see also id. at p. 781 [“There was no defense for [the alter ego] to control”]; Motores De Mexicali v. Superior Court (1958) 51 Cal.2d 172, 176 [declining to add alter ego to default judgment].) Titan contends it had contract defenses that AWI did not assert, but it does not share what they are. To be sure, parent corporations may pay legal fees for subsidiaries without necessarily becoming liable for the resulting judgment. But in this case, sufficient evidence shows AWI virtually represented Titan. Accordingly, and because sufficient evidence also shows Titan is AWI’s alter ego, the court did not err by adding Titan as a judgment debtor to the May 7, 2008 judgment against AWI.
BII May Recover All of Its Attorney Fees
AWI separately appealed from both orders awarding attorney fees to BII. But AWI does not dispute the storage agreement contains an enforceable attorney fees clause, or that BII may recover attorney fees incurred prosecuting its contract claim pursuant to that clause. Nor does AWI dispute the reasonableness of any of BII’s attorney fees.
In G042385, AWI has abandoned its appeal from a June 24, 2009 order granting its motion to tax costs by failing to brief any issue related to that order. (See Mansell v. Board of Administration (1994) 30 Cal.App.4th 539, 545-546 [unbriefed issue waived].)
Rather, AWI contends BII cannot recover attorney fees incurred in prosecuting its tort claims. AWI accuses BII of taking the contradictory position that its contract and tort claims are (1) related for purposes of recovering attorney fees pursuant to contract, but (2) separate for purposes of recovering both contract and tort damages.
AWI also contends BII may not recover fees incurred prosecuting the alter ego proceeding if the alter ego order and judgment are reversed. Titan echoes this contention, though it did not appeal from the second attorney fee order. Affirming the alter ego order and judgment moots the contention.
We rejected AWI’s claim that BII was wrongly trying to “‘tortify’” its contract claim in Brea I - BII’s contract claim did not preclude its tort claims. (Brea I, supra, G040674, at p. 11.) BII could recover all of its negligence damages because “AWI owed an independent, noncontractual duty to BII not to negligently contaminate the facility.” (Ibid.) The trespass and contract damages compensated BII for the same injury, but because the trespass damages exceeded the contract damages, BII could recover the excess. (Id. at pp. 9-10.) And while we held the fraud damages were duplicative of the negligence damages, we rejected AWI’s claim that the fraud damages duplicated the contract damages. (Brea I, at p. 13.)
The Brea I disposition does not require reversal of the attorney fee orders. That would be true in a case of a full reversal. (See Merced County Taxpayers’ Assn. v. Cardella (1990) 218 Cal.App.3d 396, 402 [“An order awarding costs [and fees as costs] falls with a reversal of the judgment on which it is based”].) A partial reversal for retrial on damages would require the court to reconsider, after retrial, the prevailing party issue. (Zagami, Inc. v. James A. Crone, Inc. (2008) 160 Cal.App.4th 1083, 1097.) The Brea I reversal was even more limited - basically, we struck duplicative damage awards. But we directed the court to enter a new judgment awarding $1.14 million in contract and tort damages to BII, plus whatever amount of punitive damages the court found appropriate. (Brea I, supra, G040674, at p. 17; see also id. at p. 14 [BII’s “damages still amount to $1.14 million”].) BII thus “substantially obtain[ed]... the relief sought” and is therefore still the prevailing party, even after Brea I.
But BII’s pursuit of both contract and tort claims is consistent with its recovering attorney fees incurred in prosecuting both sets of claims. The question is what the parties agreed. (§ 1033.5, subd. (a)(10) [party may recover attorney fees as costs when authorized by contract].) “If a contractual attorney fee provision is phrased broadly enough... it may support an award of attorney fees to the prevailing party in an action alleging both contract and tort claims: ‘[P]arties may validly agree that the prevailing party will be awarded attorney fees incurred in any litigation between themselves, whether such litigation sounds in tort or in contract.’” (Santisas v. Goodin (1998) 17 Cal.4th 599, 608.)
The storage agreement’s attorney fee clause is sufficiently broad to support BII’s recovery of attorney fees incurred prosecuting its tort claims. The clause awards attorney fees and costs incurred in “‘any legal action or other proceeding (whether founded in tort, contract, or equity... and any appeal of any action or proceeding)... that in any way relates to the enforcement or interpretation of this Agreement or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement.’” The agreement expressly contemplates awarding attorney fees incurred prosecuting tort claims (1) relating “in any way” to interpreting or enforcing the storage agreement, or (2) arising from any dispute “in connection with” the storage agreement. This language is broad enough to reach BII’s tort claims: in a nutshell, that AWI misrepresented the condition of the facility before entering the storage agreement, damaged and contaminated the facility during the storage term, and held over after the expiration of the storage term. The storage agreement allows BII to recover attorney fees incurred prosecuting its tort claims.
DISPOSITION
The alter ego and attorney fee orders are affirmed. The amended judgment is reversed. The appeals in case numbers G042148 and G042153 are dismissed. Appeal in G042385 dismissed with respect to the appeal from the order on the motion to tax costs. On remand, the court is directed to determine the amount of punitive damages to award, if any.
BII shall recover its costs on appeal.
WE CONCUR: BEDSWORTH, ACTING P. J., FYBEL, J.