FG Hemisphere Associates, LLC v. Unocal Corp. , 560 F. App'x 672 ( 2014 )

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NOT FOR PUBLICATION MAR 04 2014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.
367, 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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