Court Opinion

ID: 4541802
Source: CourtListenerOpinion
Date Created: 2020-06-16 20:00:39.459139+00
Date Added: 2024-06-11T12:46:49.987261
License: Public Domain

NOT FOR PUBLICATION                         FILED
                        UNITED STATES COURT OF APPEALS                       JUN 16 2020
                                                                       MOLLY C. DWYER, CLERK
                                                                        U.S. COURT OF APPEALS
                                 FOR THE NINTH CIRCUIT

In re: DARIN DAVIS,                               No.   19-60036

                   Debtor,                        BAP No. 18-1326

------------------------------
                                                  MEMORANDUM*
ASPHALT PROFESSIONALS, INC.,

                   Appellant,

  v.

DARIN DAVIS,

                   Appellee.

                             Appeal from the Ninth Circuit
                               Bankruptcy Appellate Panel
              Faris, Lafferty III, and Kurtz, Bankruptcy Judges, Presiding

                             Argued and Submitted June 1, 2020
                                   Pasadena, California

Before: CALLAHAN and NGUYEN, Circuit Judges, and R. COLLINS,** District
Judge.

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
       **
             The Honorable Raner C. Collins, United States District Judge for the
District of Arizona, sitting by designation.
      Asphalt Professionals, Inc. (“API”) appeals from the Bankruptcy Appellate

Panel’s (“BAP”) judgment affirming the bankruptcy court’s order awarding

attorney’s fees to debtor Darin Davis. Davis prevailed in an adversary proceeding

in which API sought a determination that Davis’s debt arising from state court

litigation was nondischargeable due to fraud. See 11 U.S.C. § 523(a)(2)(A). We

have jurisdiction under 28 U.S.C. § 158(d)(1). We independently review the

bankruptcy court’s decision. In re Hoopai, 581 F.3d 1090, 1095 (9th Cir. 2009).

Reviewing the bankruptcy court’s legal conclusions de novo, its factual findings

for clear error, and its fee award for abuse of discretion, see id., we affirm the

BAP’s judgment.

      1. API contends that Davis cannot rely on the contractual provision for

attorney’s fees because it merged into the state court judgment on API’s contract-

based claims.1 API acknowledges that it did not raise this contention before the

BAP or the bankruptcy court. We “normally decline to entertain such forfeited

arguments,” Kingdomware Techs., Inc. v. United States, 136 S. Ct. 1969, 1978

(2016), and there is no reason to exercise our discretion here. Regardless,

      1
        We assume without deciding that the state court’s interlocutory judgment
following phase one of the trifurcated proceedings and statement of decision
imposing alter ego liability on Davis following phase two are final as to API and
Davis for res judicata purposes. But see API v. Emaron Homes, LLC, No.
B248837, 2014 WL 787024, at *2–3 (Cal. Ct. App. Feb. 27, 2014) (“Appellants
prevailed on the alter ego phase, but that was not the final judgment.”).

                                           2
“[m]erger is an aspect of the doctrine of res judicata,” and only “the particular

cause or causes of action on the contract are merged into the judgment, not the

contract itself,” so merger “does not bar a different cause of action . . . on the same

contract.” Gietzen v. Covenant RE Mgmt., Inc., 253 Cal. Rptr. 3d 97, 100 (Ct.

App. 2019), review denied, No. S258934 (Cal. Jan. 2, 2020).

      2. “As a general rule, [contractual] attorney fees are awarded only when

the lawsuit is between signatories to the contract.” Cargill, Inc. v. Souza, 134 Cal.

Rptr. 3d 39, 42 (Ct. App. 2011). One exception “to redress fraud, protect the rights

of third persons, or prevent a palpable injustice,” is the alter ego doctrine. Brenelli

Amedeo, S.P.A. v. Bakara Furniture, Inc., 35 Cal. Rptr. 2d 348, 355 (Ct. App.

1994). An alter ego finding “makes the alter ego liable for the obligations of the

corporation.” Leek v. Cooper, 125 Cal. Rptr. 3d 56, 63 (Ct. App. 2011). Because

“an alter ego is one who, effectively, is the corporation,” he is “entitled to the

benefit of the [contractual] provisions” as well. Rowe v. Exline, 63 Cal. Rptr. 3d
787, 793–94 (Ct. App. 2007) (quoting Dryer v. L.A. Rams, 709 P.2d 826, 834 (Cal.

1985)); see also Victrola 89, LLC v. Jaman Props. 8 LLC, 260 Cal. Rptr. 3d 1, 13

(Ct. App. 2020) (justifying alter ego’s entitlement to enforce contractual provision

on theory of equitable estoppel). Therefore, the bankruptcy court did not err in

awarding attorney’s fees to Davis even though the nondischargeability proceeding

was not “on a contract.” Cal. Civ. Code § 1717(a).

                                           3
AFFIRMED.

            4