Court Opinion

ID: 618316
Source: CourtListenerOpinion
Date Created: 2011-12-06 01:02:22+00
Date Added: 2024-06-11T17:50:44.229093
License: Public Domain

FILED
                            NOT FOR PUBLICATION                              DEC 05 2011

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

                            FOR THE NINTH CIRCUIT

In re: MEGA-C POWER                              No. 10-60036
CORPORATION,
                                                 BAP No. 09-1343
              Debtor,

                                                 MEMORANDUM *
LEWIS CHIP TAYLOR; CHIP TAYLOR,
In Trust; JARED TAYLOR; ELGIN
INVESTMENTS, INC.; SHARON
TAYLOR; NICOLE TAYLOR
PIGNATELLI; PAUL PIGNATELLI;
COLIN TAYLOR; LOUISE TAYLOR;
1407580 ONTARIO LIMITED; 1248136
ONTARIO LIMITED; MEGA C. TECH.,
LTD,

              Appellants,

  v.

AXION POWER INTERNATIONAL,
INC.; AXION POWER CORPORATION;
ROBERT AVERILL; GLENN
PATTERSON; HAP INVESTMENTS,
LLC; IGOR FILIPENKO; THOMAS
GRANVILLE,

              Appellees.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
In re: MEGA-C POWER                       No. 10-60037
CORPORATION,
                                          BAP No. 09-1380
          Debtor,

GLENN PATTERSON; HAP
INVESTMENTS, LLC; IGOR
FILIPENKO; THOMAS GRANVILLE;
AXION POWER CORPORATION;
ROBERT AVERILL; AXION POWER
INTERNATIONAL, INC.,

          Appellants,

 v.

LEWIS CHIP TAYLOR; CHIP TAYLOR,
In Trust; JARED TAYLOR; ELGIN
INVESTMENTS, INC.; SHARON
TAYLOR; NICOLE TAYLOR
PIGNATELLI; PAUL PIGNATELLI;
COLIN TAYLOR; LOUISE TAYLOR;
1407580 ONTARIO LIMITED; 1248136
ONTARIO LIMITED; MEGA C. TECH.,
LTD,

          Appellees.

                      Appeal from the Ninth Circuit
                       Bankruptcy Appellate Panel
        Hollowell, Pappas, and Dunn, Bankruptcy Judges, Presiding
                     Argued and Submitted November 16, 2011
                             San Francisco, California

Before: HAWKINS, McKEOWN, and M. SMITH, Circuit Judges.

      Appellants Lewis Chip Taylor, Chip Taylor In Trust, Jared Taylor, Elgin

Investments, Inc., Sharon Taylor, Nicole Taylor Pignatelli, Paul Pignatelli, Colin

Taylor, Louise Taylor, 1407580 Ontario Limited, 1248136 Ontario Limited, Mega

C Tech., Ltd. (collectively, the Taylor Family Group) appeal the bankruptcy

appellate panel’s (BAP) affirmance of the bankruptcy court’s summary judgment

dismissal of the Taylor Family Group’s claims in an adversary proceeding

concerning ownership of the rights to a lead-acid-carbon battery device, filed by

Axion Power International, Inc., et al, (Axion), in the involuntary bankruptcy action

of Mega-C Power Corp., a Chapter 11 debtor. Axion cross-appeals the BAP’s

affirmance of the Bankruptcy Court’s denial of sanctions and contempt. As the

facts and procedural history are familiar to the parties, we do not recite them here

except as necessary to explain our disposition.

We have jurisdiction under 28 U.S.C. § 158, and we affirm.

      At the outset, we affirm the BAP’s holding and legal analysis that the

bankruptcy court had jurisdiction over the Taylor Family Group. The bankruptcy

court had personal jurisdiction over the Taylor Family Group insofar as they had

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submitted to that personal jurisdiction by appearing and vigorously participating in

the instant litigation. This fact was correctly noted both by the BAP and the

bankruptcy court. The bankruptcy court had subject matter jurisdiction because this

action is a core proceeding under 28 U.S.C. §§ 1334(b) (actions “arising in or

related to” a case under title 11) and 157(b)(2) (matters concerning administration

of a bankruptcy estate, confirmation of a plan, or another proceeding affecting the

parties' legal relationships). Moreover, the bankruptcy court exercised proper

subject matter jurisdiction because of its undisputed right to interpret its own

orders. See generally Beneficial Trust Deeds v. Franklin (In re Franklin), 802 F.2d

324, 326 (9th Cir. 1986); Huse v. Huse–Sporsem, A.S. (In re Birting Fisheries,

Inc.), 300 B.R. 489, 499 (9th Cir. BAP 2003).

      On the merits, the BAP properly affirmed the bankruptcy court’s grant of

summary judgment to the Axion Appellees as to the Taylor Family Group’s claims

by the terms of the Second Amended Plan, which contained a permanent injunction

and release of claims. The Second Amended Plan controls because, regardless of

the existence of the alleged previous Oral Agreement transferring assets to the

Taylor Family Group, the Debtor still would have come into possession of the

assets under the terms of the Letter Agreement. First, as to the direct/derivative

issue, in bankruptcy court and before the BAP, the Taylor Family Group failed to

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proffer evidence showing direct harm, as required to prove a direct claim. Second,

as to the existence of an Oral Agreement, the Taylor Family Group repeatedly failed

to provide credible evidence proving its existence and terms. And now, the Taylor

Family Group points to similarly contradictory and inconsistent evidence to contest

the terms of the Letter Agreement. All of the Taylor Family Group’s arguments are

unavailing because they fail to change the ultimate fact that ownership of the assets

was transferred to the Debtor and thus passed through the Second Amended Plan.

Accordingly, the bankruptcy court properly found, and the BAP properly affirmed,

that regardless of any alleged pre-existing agreements, the Second Amended Plan

controls and bars the Taylor Family Group’s claims.

      Notably, the Taylor Family Group raises some new factual and legal

arguments relating to the ownership rights in the technology, including, but not

limited to contesting the ownership rights of the Technology based upon listing in

the Schedules, an alleged “quitclaim” of ownership rights in the Technology, the

alleged “executory” nature of the Letter Agreement, and an alleged “double

injunction” by the bankruptcy court. These arguments were considered on the

merits and deemed not waived because they related to the underlying claims in the

litigation—namely, whether “the injunction in the Second Amended Plan does not

apply to Taylor v. Tamboril because, in the Oral Agreement, C & T agreed to

                                          5
transfer to the Taylor Family Group (Elgin) all assets of C & T.” In re Mega-C

Power Corp., Nos. NV-09-1343-PADH, NV-09-1380-PaDH, No. 04-50962-GWZ,

No. 07-05017-GWZ, 2010 WL 6467668, at *9 (9th Cir. BAP Jun. 29, 2010); see

generally Yee v. City of Escondido, 503 U.S. 519, 534 (1992). These arguments fail

because they lack support in the record, and therefore do not change the Second

Amended Plan’s control. Accordingly, we affirm the BAP’s affirmance of the

bankruptcy court’s summary judgment dismissal on the merits.

      As to Axion’s cross-appeal for contempt and sanctions, we affirm the BAP

because the bankruptcy court applied the correct legal standard and rendered a

factual finding, based on the record, that there was insufficient evidence to find

“that any violation of the plan injunction by the Taylor Family Group was

intentional, or that contempt sanctions were justified.” In re Mega-C Power Corp.,

2010 WL 6467668, at *14.

      AFFIRMED.

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