Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION— Cal. App.: Successor corporation to private investigation franchisor properly added as judgment debtor, (Apr 7, 2014)

By Edward L. Puzzo, J.D.

A trial court properly amended a judgment, confirming an arbitration award against a private investigation franchisor, in order to add a successor corporation of the franchisor as a judgment debtor, the California Court of Appeals in Santa Ana has ruled (Butler v. Lyons & Wolivar, Inc., April 3, 2014, Fybel, R.).

From 2005 to 2009, Stephen Butler was a franchisee of Lyons & Wolivar, Inc., a franchisor of private investigation services. Butler sued Lyons, alleging various misrepresentations and breaches of the franchise agreement, and Lyons counterclaimed for unpaid royalties. Upon the petition of Lyons, the case was heard in arbitration. In September 2011, the arbitrator issued a final award, resulting in a net award of over $512,000 to former franchisee Butler.

The trial court confirmed the arbitration award against franchisor Lyons & Wolivar, Inc, and later granted Butler’s motion to add LWI, Inc. as a judgment debtor. Butler had alleged that Lyons, a California corporation, had merged into LWI, a Nevada corporation.

Additional judgment debtors. The court explained that a judgment can be amended to add additional judgment debtors when that person or entity is the alter ego or successor corporation of the original judgment debtor. The trial court had found that Butler had established by substantial evidenced that LWI was the successor of Lyons, it predecessor corporation

The appellate court noted that LWI’s liability was not adjudged in the arbitration. However, Lyons and LWI had made many admissions that LWI had succeeded to and replaced Lyons, which would be sufficient to prove successor corporation liability in the absence of any other evidence, the appellate court ruled. Corporate filings also supported the trial court’s finding that LWI was properly added as a judgment debtor in the amended judgment. Thus, the appellate court affirmed the lower court’s ruling adding LWI as a judgment debtor.

The case is Civil Action No. G047766.

Attorneys: Daniel J. Koes for Lyons & Wolivar, Inc. and LWI, Inc. Daniel Craig Lapidus (Lapidus & Lapidus) for Steven S. Butler.

Companies: Lyons & Wolivar, Inc.; LWI, Inc.

Cases: FranchisingDistribution CaliforniaNews NevadaNews