Court Opinion

ID: 2655476
Source: CourtListenerOpinion
Date Created: 2014-03-04 22:52:30.274186+00
Date Added: 2024-06-11T09:12:07.213712
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                MAR 04 2014

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

FG HEMISPHERE ASSOCIATES, LLC,                   No. 12-56031

              Plaintiff - Appellee,              D.C. No. 2:04-cv-09816-CBM-
                                                 VBK
    v.

UNOCAL CORPORATION,                              MEMORANDUM*

              Intervenor-Plaintiff -
Appellant.

FG HEMISPHERE ASSOCIATES, LLC,                   No. 12-56110

              Plaintiff - Appellee,              D.C. No. 2:04-cv-09816-CBM-
                                                 VBK
  and

UNOCAL CORPORATION,

              Intervenor-Plaintiff,

  v.

DEMOCRATIC REPUBLIC OF CONGO,
AKA Republic of Zaire,

              Defendant - Appellant.

         *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                 Appeals from the United States District Court
                      for the Central District of California
              Consuelo B. Marshall, Senior District Judge, Presiding

                     Argued and Submitted February 10, 2014
                              Pasadena, California

Before: FARRIS, N.R. SMITH, and WATFORD, Circuit Judges.

      Unocal and the Democratic Republic of Congo (DRC) appeal from the

district court’s judgment that future oil tax revenues owed to the DRC by ODS,

Ltd., a subsidiary of Unocal, were not immune from execution based on an

exception established by the Foreign Sovereign Immunities Act (FSIA) for

property of a foreign sovereign that is located and used for commercial activity in

the United States, 28 U.S.C. §§ 1609-10. We have jurisdiction under the collateral

order doctrine. See Gupta v. Thai Airways Int’l, Ltd., 487 F.3d. 759, 763 (9th Cir.

2007).

      The availability of the alter ego doctrine to determine the location of

intangible property for FSIA purposes is a question of law that is reviewed de

novo. See Fourth Inv. LP v. United States, 720 F.3d 1058, 1066 (9th Cir. 2013).

Questions of exceptions to sovereign immunity under the FSIA are reviewed de

novo. Af-Cap, Inc. v. Chevron Overseas (Congo) Ltd., 475 F.3d 1080, 1085-86 (9th

Cir. 2007).

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      California law determines the location of intangible assets for the purposes

of the FSIA. See Peterson v. Islamic Republic of Iran, 627 F.3d 1117, 1130 (9th

Cir. 2010) (holding that enforcement proceedings “are governed by the law of the

state in which the court sits” unless it conflicts with applicable federal law). Under

California law, a right to payment is located where the debtor (who must pay) is

located. Id. at 1131. Unocal is located in the U.S.; however, ODS, the formal

debtor owing the payment, is a Bermuda corporation. Nonetheless, applying the

alter ego doctrine to ODS, the district court held the right to payment was located

in the U.S., because Unocal was located there.

      Applying the alter ego doctrine to disregard the separate legal status of

Unocal and ODS to find the DRC’s right to payment is located in the United States

would constitute a novel extension of California law. In prior cases, the plaintiff

has been owed substantive relief by the corporate entity. Hennessey's Tavern, Inc.

v. Am. Air Filter Co., 251 Cal. Rptr. 859, 863 (Cal. Ct. App. 1988). (The alter ego

doctrine serves as a procedural mechanism that holds “the alter ego individuals

liable on the obligations of the corporation.”). Here, neither Unocal nor ODS owes

FG anything.

      Moreover, California courts have rejected previous attempts by plaintiffs to

expand the reach of the alter ego doctrine. See Stodd v. Goldberger, 141 Cal. Rptr.

                                          3
67, 71 (Cal. Ct. App. 1977) (rejecting alter ego theory where bankruptcy trustee

failed to allege injury by corporation); Postal Instant Press, Inc. v. Kaswa Corp.,

77 Cal. Rptr. 3d 96, 102-03 (Cal. Ct. App. 2008) (rejecting the creation of an

outsider reverse veil piercing theory of alter ego liability). Absent firmer support

than FG has provided us, we do not think the California Supreme Court would

extend the alter ego doctrine to this context. Thus, we decline to do so. See, e.g.,

Morrell Constr., Inc. v. Home Ins. Co., 920 F.2d 576, 578-79 (9th Cir. 1990).

      REVERSED.

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