Court Opinion

ID: 799808
Source: CourtListenerOpinion
Date Created: 2012-05-14 19:57:28+00
Date Added: 2024-06-11T17:59:51.224347
License: Public Domain

FILED
                            NOT FOR PUBLICATION                             MAY 14 2012

                                                                       MOLLY C. DWYER, CLERK
                   UNITED STATES COURT OF APPEALS                        U .S. C O U R T OF APPE ALS

                            FOR THE NINTH CIRCUIT

KIRBY MORGAN DIVE SYSTEMS,                      No. 10-55210
INC., a California corporation,
                                                D.C. No. 2:09-cv-04934-PSG-FFM
              Petitioner - Appellee,

    v.                                          MEMORANDUM *

HYDROSPACE, LTD., a Scottish
limited liability company,

              Respondent,

  and

DAVID SMITH, an individual resident
of Scotland,

              Respondent - Appellant.

                    Appeal from the United States District Court
                        for the Central District of California
                    Philip S. Gutierrez, District Judge, Presiding

                        Argued and Submitted June 9, 2011
                              Pasadena, California

Before:       KOZINSKI, Chief Judge, IKUTA, Circuit Judge, and PIERSOL,

          *
         This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                                                                                 Page 2

             Senior District Judge.**

      The district court clearly erred in determining that Smith was Hydrospace’s

alter ego. Kirby Morgan presented insufficient evidence to support a finding that

Hydrospace was undercapitalized during the relevant period, and the fact that

Smith was Hydrospace’s sole owner and director “is insufficient to cause the court

to disregard the corporate entity.” Leek v. Cooper, 125 Cal. Rptr. 3d 56, 68 (Ct.

App. 2011). Moreover, the district court failed to consider other relevant factors,

such as whether Smith commingled his assets with those of Hydrospace, held

himself out as liable for Hydrospace’s debts and failed to keep proper corporate

records and observe other corporate formalities. See Sonora Diamond Corp. v.

Superior Ct., 99 Cal. Rptr. 2d 824, 836 (Ct. App. 2000). Because Smith was not

Hydrospace’s alter ego, the district court erred in concluding that Smith consented

to personal jurisdiction in California.

      Nor did the district court have jurisdiction under the traditional minimum

contacts framework, as Kirby Morgan presented no evidence that Smith

“purposefully availed himself of the privilege of conducting activities in the

forum” or “purposefully directed his activities toward the forum.” Pebble Beach

       **
         The Honorable Lawrence L. Piersol, Senior United States District Judge
for the District of South Dakota, sitting by designation.
                                                                                   Page 3

Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006) (internal quotation marks

omitted); see id. at 1155–56 (holding that “actions . . . not aimed at California . . . ,

regardless of foreseeable effect, are insufficient to establish jurisdiction”). We

need not address whether Kirby Morgan’s service of the petition for confirmation

on Smith complied with 9 U.S.C. § 9, because, in any event, the district court’s

exercise of personal jurisdiction over Smith violated due process.

      REVERSED, VACATED and REMANDED with instructions to dismiss

for lack of personal jurisdiction.