Case Background

Plaintiff City and County of San Francisco loaned $5.5 million to Defendant Fillmore Development Commercial, LLC. The loan, issued through the Mayor’s Office of Community Development, was backed by federal funds from the Department of Housing and Urban Development. Defendant EM Johnson Interest, Inc. guaranteed repayment. Defendant Michael E. Johnson owned and controlled FDC, EJI, and Urban Core Development, LLC. Johnson executed the loan agreement, promissory note, and guaranty on behalf of FDC and EJI. The loan supported construction at the Fillmore Heritage Center, a redevelopment project that included Yoshi’s Japanese Restaurant.

Cause

The dispute arose when Defendants failed to repay the loan and interest. In 2010, the parties signed an amended loan agreement as part of a workout plan. Despite this adjustment, Defendants defaulted again. In 2015, the Mayor’s Office of Housing and Community Development issued notices of default and demanded repayment. Defendants still refused to comply. Plaintiff alleged Johnson used the entities as shells and ignored corporate formalities. Plaintiff claimed Johnson was the alter ego of the entities and personally liable