The hits keep coming for Lisa Vanderpump and Ken Todd. I’m almost starting to buy Lisa’s “puzzlement” over the recent verdict in the Bustillos case. She seems to be focused on the sexual assault claim and unaware that she has been found liable for wrongful termination, hostile work environment, and I believe gender discrimination. It seems that Ken and Lisa have very limited understanding of the law. I’m not just talking about court room procedure, I’m also talking about all the LLCs they have. It seems they simply hire lawyers to handle such matters and hope for the best. This plan relies heavily on hiring great lawyers, and I’m not so sure they have.
Where to start? I suppose with a brief explanation of the Alter Ego Doctrine. First of all, rich folks like Lisa and Ken tend to create corporations in order to separate liability between their personal and their business finances. This is done primarily to protect personal assets when a business is sued in civil court. In California, even limited liability corporations (LLCs) can be challenged by the alter ego doctrine. Basically, what this means is that the plaintiff can say that the corporation is only a corporation for the purpose of protecting assets and has no other function. In other words, in this case, the corporation is just Ken and Lisa using another name (an alter ego.) If they are found to be acting as an alter ego, then Ken and Lisa can be held personally liable for damages. Are you with me so far?
Most of the time, the alter ego doctrine does not apply. The whole point of incorporation is to insulate against liability and the large majority of the time, that intended result holds up in court. There are some legal things that have to be done, basic corporate formalities must be followed, finance records must be kept, there must be a manager to oversee the corporate affairs, monies cannot be commingled with the personal finances of the members of the corporation. You need a good lawyer and a good accountant.
In order for the alter ego doctrine to apply, the plaintiff has to show essentially that (1) Blanca investments is basically just a corporation in name only and that it’s just another piggy bank for Ken and Lisa (legal term: a Unity of Interest) and (2) that an inequitable result would occur if the corporation alone is held liable. If the court feels that by recognizing the corporation, the ruling would sanction a fraud or result in an unjust settlement then the alter ego doctrine would apply and Ken and Lisa would not be individually and personally liable. Still there? I’m getting to the good part, I promise.
In the Bustillos case, the plaintiff’s lawyers asked the court to apply the alter ego doctrine and hold Ken and Lisa personally accountable for the damages the jury award. At that time, on June 13th, the judge ruled that the alter ego doctrine did not apply. Which was good news for Lisa and Ken, this means that only the monies in the corporation could be applied to the damages. YAY TEAM VANDERPUMP! VICTORY!
But wait. When the plaintiff filed their motion requesting Ken and Lisa to be responsible for all attorneys fees, the judge re-evaluated his decision. And on June 18th, the court, of it’s own volition, reversed his decision on alter ego and found Ken and Lisa personally liable for the damages caused by the actions of Villa Blanca employees (which included Ken specifically).
The judge found that there was unity of interest based on the following:
- Neither Ken or Lisa indicated any understanding of the corporation documents
- Ken did not know whether he or Lisa was the manager of Blanca Investments, LLC.
- The corporate operating agreement didn’t clearly state who the manager was.
- Ken testified that he and Lisa were the sole members of the corporation, but they are not, one of Lisa’s LLCs LJV Investments is also a member of the corporation. (Meaning Ken doesn’t even know who the members are.)
- It was not clear to the court whether the signatures on the documents filed with the Secretary of State were actual signatures of the members. (Meaning the LLC might not even be valid???? is that what this means?)
- Lisa did not make any capital investment in Blanca Investments, LLC.
- Lisa testified that there were no board meeting for Blanca Investments, LLC and that if she needed to discuss corporate business with Ken she would do it “over breakfast, over dinner, or in bed.”
As for the inequitable result findings, in court the defense provided testimony that Blanca Investments LLC is not financially healthy and the net income of Villa Blanca last year was $200,000. Because the case has gone on for 21 months and went to jury trial, the attorney fees will be in the very high six figure range. Therefore, Blanca Investments, LLC does not have the money to pay for all the damages including compensative, punitive, attorney fees and court costs which could approach a million dollars.
Because of this ruling, Blanca Investments LLC will not be held liable. This means that Lisa and Todd are personally responsible for all damages.
That is pretty major. Now Lisa and Todd will most likely have to put up some sort of fight and this will drag on and on as the lawyers continue to get rich.
Will Lisa’s Bravo checks be claimed by the courts to pay off this judgment? Will any of this have an effect on their Investment Visa immigration status? Will Ken and Lisa end up couch surfing at Brandi Glanville’s place? Stay tuned. This ain’t over yet.