Q: Does anyone know how to go about adding members of a California LLC to a default judgment against the LLC?
I filed an action in the Orange County California Superior court in July of 2018 and just got a default judgment against a California LLC from that court for over $80,000. The LLC filed its dissolution on November 28, 2018. I believe the members are liable under California Corp code 17707.07(b) to the extent of distributions they received (which were likely around $500,000), or maybe even due to an inappropriate distribution in any event, pursuant to Cal Corp Code 17704.06. Does anyone know how I should go about getting the members added to my judgment?
A:
You can, in some instances, add a person to a judgment as an alterego of the judgment debtor, but this is irregular and not common. The whole point of an LLC (or any corporate form) is Limited Liability. The corporation is liable but the members are, by default, not personally liable for the LLC's debts. This is particularly the case here, where you got a default judgment against a defunct corporation that had no ability to answer the Complaint. Simply moving that liability over to its former members without any hearing or notice would violate due process, and even if you got an alterego amendment to the judgment, and tried to collect it, you would face collateral attack on the judgment.
If you wanted the members as parties to the judgment, you should have named them as defendants in the action, and given them the opportunity to be served and respond to the Complaint. They haven't had that. If you want to seek recovery against them, you will likely have to bring a new suit, and, btw, that suit may be barred by res judicata because you could have joined these individuals in your original suit but chose not to. If you are serious about trying to collect this judgment, the you really should retain counsel.
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