In California Lawyer’s featured MCLE article, “Adding Judgment Debtors,” Alan Tippie and Jessica L. Vogel discuss the process of adding debtors to a preexisting judgment. When businesses fail, and there are unpaid claims, many principals will declare that there is no more money left for repayment, and lawsuits seeking collection of unpaid claims tend to follow.
After a judgment to impose liability on an individual has been finalized, creditors have the option to add judgment debtors if they can prove that two entities are identical. The process of amending a judgment to add a debtor is grounded in a statute (Section 187) that was added to the California Code of Civil Procedure almost 150 years ago. “The amendment does not constitute the prosecution of a claim against a new party, but rather is a correction of the record to reflect the real name of the judgment debtor,” said Tippie.
Tippie and Vogel also discuss various appellate rulings in the past two decades that have shaped the courts’ willingness to exercise and modify judgments pursuant to Section 187 – with the alter ego doctrine being the most common basis for adding judgment debtors.