Court Opinion

ID: 4572139
Source: CourtListenerOpinion
Date Created: 2020-10-01 20:00:50.080099+00
Date Added: 2024-06-11T08:47:07.567649
License: Public Domain

NOT FOR PUBLICATION                            FILED
                    UNITED STATES COURT OF APPEALS                          OCT 1 2020
                                                                       MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS
                            FOR THE NINTH CIRCUIT

JES SOLAR COMPANY LIMITED, a                     No.    19-16748
South Korean Corporation; et al.,
                                                 D.C. No. 4:12-cv-00626-DCB
                Plaintiffs-Appellants,

  v.                                             MEMORANDUM*

MATINEE ENERGY INCORPORATED, a
Nevada Corporation; et al.,

                Defendants-Appellees.

                    Appeal from the United States District Court
                             for the District of Arizona
                     David C. Bury, District Judge, Presiding

                    Argued and Submitted September 15, 2020
                            San Francisco, California

Before: WATFORD, FRIEDLAND, and MILLER, Circuit Judges.

       Jes Solar Co., Ltd., Airpark Co., Ltd., and Hankook Technology, Inc.

(collectively, the contractors) appeal from the district court’s order granting

       *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
summary judgment to S. Chin Kim and Tong Soo Chung on the contractors’

claims for civil conspiracy and personal liability under an alter ego theory for fraud

perpetrated by Matinee Energy, Inc. The contractors also appeal the denial of their

motion for reconsideration under Federal Rule of Civil Procedure 59(e). We have

jurisdiction under 28 U.S.C. § 1291, and we affirm.

      1.     We review the district court’s order granting summary judgment de

novo, Szajer v. City of Los Angeles, 632 F.3d 607, 610 (9th Cir. 2011), and we

view the evidence in the light most favorable to the non-moving party, see Olsen v.

Idaho State Bd. of Med., 363 F.3d 916, 922 (9th Cir. 2004). We discern no error in

the district court’s grant of Kim’s and Chung’s motions for summary judgment on

the civil conspiracy claim.

      We agree with the district court that the contractors bore the burden of

establishing that Kim and Chung knew that the Matinee project was fraudulent. See

Wells Fargo Bank v. Arizona Laborers, Teamsters & Cement Masons Local No.

395 Pension Tr. Fund, 38 P.3d 12, 36–37 (Ariz. 2002). To prevail on a civil

conspiracy claim under Arizona law, “a plaintiff must show by clear and

convincing evidence that the defendant and at least one other person agreed to

accomplish an unlawful purpose or a lawful purpose by unlawful means.”

Dawson v. Withycombe, 163 P.3d 1034, 1053 (Ariz. Ct. App. 2007). Mere

assistance with a tortious act does not prove an agreement to accomplish an

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unlawful purpose; instead, the plaintiff must show that the defendant knew of the

illicit design and agreed to help further it. Id. Thus, once Kim and Chung met their

initial burden at summary judgment to show the lack of evidence on the knowledge

element, the contractors bore the ultimate burden of producing sufficient evidence

for a reasonable jury to conclude, by clear and convincing evidence, that Kim and

Chung had knowledge of the fraudulent nature of the Matinee enterprise. See

Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 (1986); Nissan Fire & Marine Ins.

Co. v. Fritz Cos., 210 F.3d 1099, 1106 (9th Cir. 2000).

      The district court correctly determined that the contractors lacked evidence

that Kim and Chung were knowingly involved in the Matinee scheme rather than

unwittingly relaying the false statements of others. The contractors seek to impute

knowledge to Kim and Chung based on their status as CEOs of Matinee Energy,

but in the absence of specific evidence of knowledge, that status is insufficient to

carry the contractors’ burden. See, e.g., Dawson, 163 P.3d at 1054–55 (finding

insufficient evidence that a board member had knowledge of a corporate

conspiracy). In the case of Kim, the contractors principally rely on a report of a

suspicious dinner conversation that was overheard from behind a closed door and

an ambiguous statement in an otherwise unremarkable email that “no one will

question” Matinee Energy’s affiliate LuxChange. Under a clear-and-convincing

standard, a reasonable jury could not find that evidence sufficient to determine that

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Kim had knowledge of the Matinee fraud. The same is true of Chung, as to whom

the contractors presented even less evidence of knowledge.

      2.     The district court also did not err in granting summary judgment to

Kim and Chung on the alter ego theory of personal liability. Under Arizona law,

shareholders are directly liable for torts committed by a corporation only “when

the corporation is, in fact, the alter ego of one or a few individuals and when the

observance of the corporate form would sanction a fraud or promote injustice.”

Employer’s Liab. Assurance Corp. v. Lunt, 313 P.2d 393, 395 (Ariz. 1957). That is

a demanding standard under which there must be “such unity of interest and

ownership that the separate personalities of the corporation and owners cease to

exist.” Dietel v. Day, 492 P.2d 455, 457 (Ariz. Ct. App. 1972); see also Ize Nantan

Bagowa, Ltd. v. Scalia, 577 P.2d 725, 729 (Ariz. Ct. App. 1978) (requiring “a

complete or almost complete assimilation of the two identities” before imposing

personal liability (internal quotation marks and citation omitted)).

      The evidence here did not satisfy that test. For Kim, the contractors

presented evidence that he was the CEO of Matinee Energy, that he appointed

Kyung Kim as an officer of Matinee Energy and authorized her access to key bank

accounts, and that he may be considered a shareholder of a Matinee affiliate. For

Chung, the contractors pointed to his position as CEO of the Asia Pacific Region,

as well as his use of Matinee funds to pay for his hotel room at a groundbreaking

                                          4
ceremony. But merely exercising the power of a corporate officer and shareholder,

or enjoying the benefits that accompany those positions, is not sufficient to show

an identity of ownership with the corporation. See Ize Nantan Bagowa, 577 P.2d at

729–30.

       3.       We review the court’s denial of the motion for reconsideration for

abuse of discretion. School Dist. No. 1J v. ACandS, Inc., 5 F.3d 1255, 1262 (9th

Cir. 1993). Because the district court did not err in granting summary judgment in

favor of Kim and Chung, it did not abuse its discretion in denying reconsideration

of its order.

       AFFIRMED.

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