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KIM V. CHANG: Reverse Corporate Veil Piercing

What good are judgment awards if the plaintiff cannot collect them?  In Kim v. Chang, filed in Los Angeles superior court, my office was able to get justice for Ms. Kim, who was unable to collect on a six-figure judgment she was awarded against Mr. Chang over ten years ago.  Mr. Chang had stopped making payments on his debt to Ms. Kim and began hiding his assets in a corporation he formed years later.  However, because the corporation was not a party to the original judgment, Ms. Kim could not legally seize the corporation’s assets—that is, until my law firm got involved.  I successfully argued that the outside reverse corporate veil piercing doctrine should apply to single shareholder corporations, a case of first impression in California.  This allows a corporation to be held liable for the debts of its shareholders.  

Relying on Curci Investments, LLC v. Baldwin, 14 Cal. App. 5th 214 (2017), I successfully argued that the outside reverse corporate veil piercing doctrine should apply to single shareholder corporations, a case of first impression in California.  The doctrine, borrowed from other jurisdictions, allows a corporation to be held liable for the debts of its shareholders if: (1) normal judgment collection procedures do not apply; (2) innocent shareholders are not involved; and (3) legal remedies are not available to the judgment creditor.  Id. at 220-24.  Retroactively adding the corporation to the judgment does not violate the Due Process Clause of the U.S. Constitution because the plaintiff is simply substituting the name of the proper defendant.  Misik v. D’Arco, 197 Cal. App. 4th 1065, 1074 (2011).

I am not afraid to go above-and-beyond for my clients, and once I overcame that legal hurdle, I was able to meet the high burden of proving Mr. Chang and his corporation were really one and the same under California’s alter ego doctrine because Mr. Chang was effectively using his corporation as his personal piggybank.  Accordingly, our office was able to seize Mr. Chang’s corporation’s assets on behalf of Ms. Kim to help satisfy Mr. Chang’s debt and help her get the justice she deserves.

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