Hoopes winery civil trial in Napa County wraps after 11 days, ruling could take months

Whether Napa Valley vintner Lindsay Hoopes has been using company structures as a shield against liability was the focus Wednesday of the 11th and final day of trial in a county lawsuit over alleged winery permit violations.

Three hours of testimony in Napa County Superior Court saw the county’s legal team quizzing the accountants for the partnership that owns the winery property, at 6204 Washington St. just south of Yountville, and the company that operates the winery facility.

At issue were journal entries for transactions between the organizations.

The goal, as put forward in the original complaint filed in November 2022, is to show that winery operator Hoopes Vineyard LLC is an “alter ego” — “a mere shell limited liability company” — for Hoopes herself, a former San Francisco prosecutor.

Such a legal effort, often called “piercing the corporate veil,” seeks to show that officers’ personal dealings are too intertwined with those of the company to be considered separate legal “persons,” allowing liability for judgments and fines to flow to the officers directly.

Geoff Spellberg, of Renne Public Law Group, on Thursday focused on $39,000 monthly rent payments — amounting to $468,000 annually — between Hoopes Vineyard LLC and the property owner, Hoopes Family Winery Partners LP.

He called Lisa Brooks, accountant for the company and partnership, as a witness and asked her to describe how separate the bank and credit card accounts are for Lindsay Hoopes, the operating company and the land partnership.

The company, with Lindsay Hoopes as managing member and her father, Spencer, as a member, has a bank account, but the partnership doesn’t, so the company pays any expenses of the partnership, such as tax payments.

The company has no credit cards, but it pays Hoopes’ credit card bills after, Brooks testified, personal transactions are excluded.

Contributions that Lindsay or Spencer Hoopes make to the business are reflected as contribution or reimbursement entries in the company and partnership journals.

Spellberg zeroed in on Brooks’ comment that the rent payments and contributions from company members were “paper transactions,” and he pressed her on the lack of legal obligations for the company to repay any contributions.

Brooks noted that a common feature of partnerships and LLCs are that profits and losses flow to partners’ and members’ tax returns as income or losses.

Hoopes’ attorney, Katharine Falace, of Buchalter law firm, asked Brooks whether such “intercompany transactions” are generally accepted accounting principles, and Brooks agreed.

“Counsel seems to be, you know, focusing on actual money moving back and forth, but that’s not always the case,” Brooks said.

Another important journal entry for businesses that doesn’t involve the movement of money is depreciation, she said, which is a way to reflect the decreasing value of assets over time.

Spellberg tried several times to establish Hoopes’ net worth, something that would be important for determining the size of penalties if the alter-ego allegation were proven, but was unsuccessful.

After overruling repeated objections from Falace over privacy issues, Napa County Superior Court Judge Mark Boessenecker eventually stopped Spellberg in his line of questioning.

Boessenecker will consider closing arguments and replies submitted in writing over the next four months prior to issuing a ruling.

Jeff Quackenbush covers wine, construction and real estate. Reach him at jquackenbush@busjrnl.com or 707-521-4256.