FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

AHCOM, LTD., 

No. 09-16020 Plaintiff-Appellant,

D.C. No.

v.  3:07-cv-01139-SC

HENDRIK SMEDING; LETTIE SMEDING,

OPINION Defendants-Appellees. 

Appeal from the United States District Court

for the Northern District of California

Samuel Conti, District Judge, Presiding

Argued and Submitted

March 8, 2010—San Francisco, California

Filed October 21, 2010

Before: J. Clifford Wallace, Susan P. Graber and

M. Margaret McKeown, Circuit Judges.

Opinion by Judge Wallace

17347
COUNSEL

William H. Parish, Parish & Small, Stockton, California, for

the plaintiff-appellant.

John G. Michael, Baker, Manock & Jensen, Fresno, California, for the defendants-appellees.

AHCOM, LTD. v. SMEDING 17349
OPINION

WALLACE, Senior Circuit Judge:

This case poses the question of whether a creditor of a corporation in bankruptcy has standing to assert a claim against

the corporation’s sole shareholders on an alter ego theory or

whether that claim belongs solely to the corporation’s bankruptcy trustee. The district court had jurisdiction pursuant to

28 U.S.C. § 1332 and concluded that the claim belonged

solely to the trustee. We have jurisdiction over this timely

appeal under 28 U.S.C. § 1291, and we reverse and remand

for further proceedings.

I.

Plaintiff-appellant Ahcom, Ltd. (Ahcom), a United

Kingdom-based corporation, entered into a contract to buy

almonds from Nuttery Farms, Inc. (NFI), a California corporation. NFI allegedly failed to deliver the contracted-for

almonds. Pursuant to a clause in the contract, Ahcom brought,

and prevailed in, an arbitration action against NFI in the Court

of Arbitration of the Waren-Verein der Hamburger Boerse

e.V. Ahcom then sued in California state court to collect its

arbitration award. However, it did not sue NFI, which had

petitioned for bankruptcy soon after the arbitration. Instead,

Ahcom sued NFI’s sole owners, defendants-appellees Hendrik and Lettie Smeding, seeking to pierce NFI’s corporate

veil. The Smedings removed the suit to the Northern District

of California and successfully moved to dismiss the action.

That dismissal is the subject in this appeal.

Ahcom’s first amended complaint (FAC) asserted two substantive claims, one related to the foreign arbitration award

and one related to a breach of contract. Ahcom also alleged

an alter ego claim whereby they sought to pierce the corporate

veil to hold the Smedings responsible for NFI’s actions. Crucially, both of Ahcom’s substantive claims to recover the arbi17350 AHCOM, LTD. v. SMEDING
tration award and the contract-related damages, by their

terms, depend on the success of Ahcom’s alter ego allegations. Without those allegations, Ahcom has no claim against

the Smedings.

In their motion to dismiss, the Smedings attacked Ahcom’s

alter ego theory. They argued that Ahcom is asserting a claim

that harms not just Ahcom but all creditors and thus this claim

is exclusively the property of the trustee. The district court

agreed and dismissed Ahcom’s complaint without leave to

amend, which we interpret as dismissal of the action, giving

us jurisdiction. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th

Cir. 2002). Ahcom now appeals.

II.

The question in this appeal is whether the claims against

the Smedings can be brought by Ahcom or by the trustee. We

review de novo the district court’s dismissal under Federal

Rule of Civil Procedure 12(b)(6) for failure to state a claim.

Cervantes v. United States, 330 F.3d 1186, 1187 (9th Cir.

2003). 

[1] A Chapter 11 bankruptcy trustee has a special role. The

trustee “stands in the shoes of the bankrupt corporation and

has standing to bring any suit that the bankrupt corporation

could have instituted had it not petitioned for bankruptcy.”

Smith v. Arthur Andersen LLP, 421 F.3d 989, 1002 (9th Cir.

2005) (internal quotation marks omitted); 11 U.S.C.

§§ 704(1), 541(a)(1). However, the trustee’s power is limited.

The trustee may assert only claims belonging to the debtor

corporation and “has no standing generally to sue third parties

on behalf of the estate’s creditors.” Smith, 421 F.3d at 1002

(internal quotation marks omitted). 

[2] When the trustee does have standing to assert a debtor’s claim, that standing is exclusive and divests all creditors

of the power to bring the claim. Estate of Spirtos v. One San

AHCOM, LTD. v. SMEDING 17351
Bernardino Cnty. Superior Court Case, 443 F.3d 1172, 1176

(9th Cir. 2006). Although federal bankruptcy law applies to

this action, state law determines whether a claim belongs to

the trustee or to the creditor. Butner v. United States, 440 U.S.

48, 54-55 (1979); see also St. Paul Fire & Marine Ins. Co. v.

PepsiCo, Inc., 884 F.2d 688, 700 (2d Cir. 1989). The parties

agree that California law applies because NFI is a California

corporation.

The focus of our inquiry is on Ahcom’s FAC, which asserts

two substantive claims: (1) “Confirmation of Foreign Arbitration Award against all Defendants,” and (2) “Breach of contract against all Defendants.” In an attempt to hold the

Smedings responsible for NFI’s actions, the substantive

claims rely on one procedural claim: “Alter Ego against all

Defendants.” Pursuant to that claim, the FAC alleges that

“Defendants controlled, dominated and operated [NFI] as

their individual business and alter ego”; “Defendants diverted

funds and other assets of [NFI] for other than corporate uses”;

“Defendants treated the assets of [NFI] as their own”; and

“Defendants diverted assets from [NFI] to themselves to the

detriment of creditors, including Plaintiff.”

[3] According to the Smedings, these allegations in general, and the last one specifically, are evidence that Ahcom is

improperly trying to sue for general conduct that harmed all

creditors. “The alter ego claim alleged by Ahcom is . . . a general claim,” the Smedings argue and,

[i]n effect, it alleges dissipation of corporate assets

to the detriment of all creditors. There is even an

express allegation that the diversion of corporate

assets affected all creditors, including Ahcom.

Ahcom alleges only a general claim, which belongs

exclusively to the trustee and the district court was

correct in dismissing it.

[4] To be sure, Ahcom’s FAC is not a model of clarity and

Ahcom’s attempt to amend the FAC upon receiving the

17352 AHCOM, LTD. v. SMEDING
Smedings’ 12(b)(6) motion is understandable. The FAC has

troubling allegations, including its assertion of a general alter

ego “claim” in which the Smedings allegedly diverted corporate assets to the detriment of all creditors. However,

although the Smedings prevailed in the district court, there is

a crucial problem with their argument: it assumes the existence of a general alter ego claim. We therefore examine

whether such a claim exists under California law.

III.

[5] The issue is not so much whether, for all purposes, the corporation is the “alter ego” of its stockholders or officers, [or] whether the very purpose of

the organization of the corporation was to defraud

the individual who is now in court complaining, as

it is an issue of whether in the particular case presented and for the purposes of such case justice and

equity can best be accomplished and fraud and

unfairness defeated by a disregard of the distinct

entity of the corporate form.

Mesler v. Bragg Mgmt. Co., 702 P.2d 601, 606-07 (Cal. 1985)

(internal quotation marks omitted) (emphases added); see also

Communist Party of U.S. v. 522 Valencia, Inc., 41 Cal. Rptr.

2d 618, 627 (Ct. App. 1995) (no California case found in

which “the alter ego doctrine has been employed to establish

a relationship of identity between the defendant corporation

and the plaintiff”). In fact, there is no such thing as a substantive alter ego claim at all: “A claim against a defendant, based

on the alter ego theory, is not itself a claim for substantive

relief, e.g., breach of contract or to set aside a fraudulent conveyance, but rather, procedural . . . .” Hennessey’s Tavern,

Inc. v. Am. Air Filter Co., 251 Cal. Rptr. 859, 863 (Ct. App.

1988).

[6] Notwithstanding this precedent, the Smedings argue

that Stodd v. Goldberger created a “general alter ego claim”

AHCOM, LTD. v. SMEDING 17353
that a trustee can assert on behalf of all creditors. 141 Cal.

Rptr. 67 (Ct. App. 1977). In Stodd, a bankruptcy trustee sued

the debtor’s shareholders “on the theory of alter ego [to]

establish defendants’ personal liability for all of [the debtor’s]

debts.” Id. at 70. The trial court dismissed the action and the

California Court of Appeal affirmed, holding that a trustee

“cannot maintain an action against defendants on an alter ego

theory absent some allegation of injury to the corporation

giving rise to a right of action in it against defendants,” without which “the asserted cause of action belongs to each creditor individually, and [the trustee] is not the real party in

interest.” Id. at 71 (emphasis added).

A bankruptcy court and a bankruptcy appellate panel

(BAP) in this circuit have relied on Stodd, in particular the

“absent some allegation of injury to the corporation” passage,

to conclude that California law permits a corporation to bring

a general alter ego claim against its owners. In In re Davey

Roofing, Inc., the United States Bankruptcy Court for the

Central District of California relied on Stodd in holding that,

under California law, a corporation can proceed on an alter

ego claim against its shareholder as long as it alleges some

“injury to the corporation.” 167 B.R. 604, 608 (Bankr. C.D.

Cal. 1994). Davey Roofing explained,

[i]n the case at bar, [a creditor] alleges that Debtor’s

principal misappropriated for his own benefit assets

belonging to the bankrupt corporation, to the detriment of the estate and all of Debtor’s creditors,

rather than any individual creditor. Thus, Debtor is

the proper party to assert alter ego claims, and all of

Debtor’s creditors are bound by the outcome of the

estate’s action. 

Id.

A few years later, the Ninth Circuit BAP—whose rulings

are persuasive but not binding authority in this court, Bank of

17354 AHCOM, LTD. v. SMEDING
Maui v. Estate Analysis, Inc., 904 F.2d 470, 472 (9th Cir.

1990)—adopted Davey Roofing’s reasoning. In CBS, Inc. v.

Folks (In re Folks), under facts similar to those in Davey

Roofing, the creditor, CBS, alleged that: “Folks [the owner]

has treated BYCA [the corporation] as his alter ego,” “Folks

used the bank accounts and funds of BYCA for his own personal expenditures,” and that “Folks failed to observe any of

the corporate formalities with respect to BYCA.” 211 B.R.

378, 387 (B.A.P. 9th Cir. 1997). According to Folks, the court

in Stodd “recognized that the corporate bankruptcy trustee has

standing to assert an alter ego claim if injury to the corporation is alleged, otherwise each creditor individually has standing.” Id. at 385. Folks held that CBS was asserting a general

alter ego claim “because all creditors are affected and [there

was] no particularized injury to CBS.” Id. at 387. Therefore,

Folks concluded, only the BYCA trustee, not CBS, had standing to bring a general alter ego action on behalf of BYCA. Id.

at 388. 

[7] Folks and Davey Roofing misread Stodd. Stodd clarified the passage upon which Folks and Davey Roofing rely to

imply a general alter ego claim (that a trustee “cannot maintain an action against defendants on an alter ego theory absent

some allegation of injury to the corporation giving rise to a

right of action in it against defendants”) by citing examples

of what constitutes such an injury: “an action by a trustee in

bankruptcy to recover assets of the bankrupt by setting aside

fraudulent and preferential transfers”; “an action by creditors

and a trustee in bankruptcy for conversion by a corporate

stockholder of assets of the bankrupt corporation”; “an action

by the trustee of a bankrupt corporation against the sole shareholders on an alter ego theory upon allegations that . . . defendants deposited corporation funds into their personal bank

accounts or that corporation funds were received by the

defendants personally.” Stodd, 141 Cal. Rptr. at 71 (internal

quotation marks omitted) (emphases added). These examples

illustrate that Stodd was not, as the Smedings maintain, creating a “general alter ego claim.” Instead, Stodd was attempting

AHCOM, LTD. v. SMEDING 17355
to distinguish established “right[s] of action” that are properly

brought by the trustee (fraudulent conveyance, conversion,

and theft, to take the examples from the list above) from those

that are not. Under Stodd, the trustee can sue for the former

but not for the latter. Id. This reading is unavoidable when we

consider that no California court has recognized a freestanding general alter ego claim that would require a shareholder to be liable for all of a company’s debts and, in fact,

the California Supreme Court stated that such a cause of

action does not exist. Mesler, 702 P.2d at 606-07.

Indeed, if we were to adopt Folks’ and Davey Roofing’s

readings of Stodd, Stodd would contradict itself. Stodd teaches

that a trustee “is not an appropriate general representative of

creditors.” 141 Cal. Rptr. at 72. Yet, that is exactly what Folks

and Davey Roofing have made it out to be by allowing the

trustee to bring a claim for a made-up cause of action “because all creditors are affected.” Folks, 211 B.R. at 387.

[8] Thus, we conclude that California law does not recognize an alter ego claim or cause of action that will allow a corporation and its shareholders to be treated as alter egos for

purposes of all the corporation’s debts. Just because NFI’s

trustee could not bring such a claim against the Smedings

under California law, there is no reason why Ahcom’s claims

against the Smedings cannot proceed.

IV.

Ahcom argued in the alternative that the district court

abused its discretion in denying Ahcom leave to file a second

amended complaint. Because we hold that Ahcom’s complaint should not have been dismissed, we need not address

the question of whether Ahcom should have been permitted

to amend the complaint. Finally, we deny as moot the Smedings’s motion to strike the appendix which contains the second amended complaint.

REVERSED AND REMANDED.

17356 AHCOM, LTD. v. SMEDING