FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
AHCOM, LTD., No. 09-16020
Plaintiff-Appellant,
v. D.C. No.
3:07-cv-01139-SC
HENDRIK SMEDING; LETTIE SMEDING,
OPINION
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Samuel Conti, District Judge, Presiding
Argued and Submitted
March 8, 2010—San Francisco, California
Filed October 21, 2010
Before: J. Clifford Wallace, Susan P. Graber and
M. Margaret McKeown, Circuit Judges.
Opinion by Judge Wallace
17347
AHCOM, LTD. v. SMEDING 17349
COUNSEL
William H. Parish, Parish & Small, Stockton, California, for
the plaintiff-appellant.
John G. Michael, Baker, Manock & Jensen, Fresno, Califor-
nia, for the defendants-appellees.
17350 AHCOM, LTD. v. SMEDING
OPINION
WALLACE, Senior Circuit Judge:
This case poses the question of whether a creditor of a cor-
poration in bankruptcy has standing to assert a claim against
the corporation’s sole shareholders on an alter ego theory or
whether that claim belongs solely to the corporation’s bank-
ruptcy trustee. The district court had jurisdiction pursuant to
28 U.S.C. § 1332 and concluded that the claim belonged
solely to the trustee. We have jurisdiction over this timely
appeal under 28 U.S.C. § 1291, and we reverse and remand
for further proceedings.
I.
Plaintiff-appellant Ahcom, Ltd. (Ahcom), a United
Kingdom-based corporation, entered into a contract to buy
almonds from Nuttery Farms, Inc. (NFI), a California corpo-
ration. NFI allegedly failed to deliver the contracted-for
almonds. Pursuant to a clause in the contract, Ahcom brought,
and prevailed in, an arbitration action against NFI in the Court
of Arbitration of the Waren-Verein der Hamburger Boerse
e.V. Ahcom then sued in California state court to collect its
arbitration award. However, it did not sue NFI, which had
petitioned for bankruptcy soon after the arbitration. Instead,
Ahcom sued NFI’s sole owners, defendants-appellees Hen-
drik and Lettie Smeding, seeking to pierce NFI’s corporate
veil. The Smedings removed the suit to the Northern District
of California and successfully moved to dismiss the action.
That dismissal is the subject in this appeal.
Ahcom’s first amended complaint (FAC) asserted two sub-
stantive claims, one related to the foreign arbitration award
and one related to a breach of contract. Ahcom also alleged
an alter ego claim whereby they sought to pierce the corporate
veil to hold the Smedings responsible for NFI’s actions. Cru-
cially, both of Ahcom’s substantive claims to recover the arbi-
AHCOM, LTD. v. SMEDING 17351
tration award and the contract-related damages, by their
terms, depend on the success of Ahcom’s alter ego allega-
tions. Without those allegations, Ahcom has no claim against
the Smedings.
In their motion to dismiss, the Smedings attacked Ahcom’s
alter ego theory. They argued that Ahcom is asserting a claim
that harms not just Ahcom but all creditors and thus this claim
is exclusively the property of the trustee. The district court
agreed and dismissed Ahcom’s complaint without leave to
amend, which we interpret as dismissal of the action, giving
us jurisdiction. Gompper v. VISX, Inc., 298 F.3d 893, 898 (9th
Cir. 2002). Ahcom now appeals.
II.
The question in this appeal is whether the claims against
the Smedings can be brought by Ahcom or by the trustee. We
review de novo the district court’s dismissal under Federal
Rule of Civil Procedure 12(b)(6) for failure to state a claim.
Cervantes v. United States, 330 F.3d 1186, 1187 (9th Cir.
2003).
[1] A Chapter 11 bankruptcy trustee has a special role. The
trustee “stands in the shoes of the bankrupt corporation and
has standing to bring any suit that the bankrupt corporation
could have instituted had it not petitioned for bankruptcy.”
Smith v. Arthur Andersen LLP, 421 F.3d 989, 1002 (9th Cir.
2005) (internal quotation marks omitted); 11 U.S.C.
§§ 704(1), 541(a)(1). However, the trustee’s power is limited.
The trustee may assert only claims belonging to the debtor
corporation and “has no standing generally to sue third parties
on behalf of the estate’s creditors.” Smith, 421 F.3d at 1002
(internal quotation marks omitted).
[2] When the trustee does have standing to assert a debt-
or’s claim, that standing is exclusive and divests all creditors
of the power to bring the claim. Estate of Spirtos v. One San
17352 AHCOM, LTD. v. SMEDING
Bernardino Cnty. Superior Court Case, 443 F.3d 1172, 1176
(9th Cir. 2006). Although federal bankruptcy law applies to
this action, state law determines whether a claim belongs to
the trustee or to the creditor. Butner v. United States, 440 U.S.
48, 54-55 (1979); see also St. Paul Fire & Marine Ins. Co. v.
PepsiCo, Inc., 884 F.2d 688, 700 (2d Cir. 1989). The parties
agree that California law applies because NFI is a California
corporation.
The focus of our inquiry is on Ahcom’s FAC, which asserts
two substantive claims: (1) “Confirmation of Foreign Arbitra-
tion Award against all Defendants,” and (2) “Breach of con-
tract against all Defendants.” In an attempt to hold the
Smedings responsible for NFI’s actions, the substantive
claims rely on one procedural claim: “Alter Ego against all
Defendants.” Pursuant to that claim, the FAC alleges that
“Defendants controlled, dominated and operated [NFI] as
their individual business and alter ego”; “Defendants diverted
funds and other assets of [NFI] for other than corporate uses”;
“Defendants treated the assets of [NFI] as their own”; and
“Defendants diverted assets from [NFI] to themselves to the
detriment of creditors, including Plaintiff.”
[3] According to the Smedings, these allegations in gen-
eral, and the last one specifically, are evidence that Ahcom is
improperly trying to sue for general conduct that harmed all
creditors. “The alter ego claim alleged by Ahcom is . . . a gen-
eral claim,” the Smedings argue and,
[i]n effect, it alleges dissipation of corporate assets
to the detriment of all creditors. There is even an
express allegation that the diversion of corporate
assets affected all creditors, including Ahcom.
Ahcom alleges only a general claim, which belongs
exclusively to the trustee and the district court was
correct in dismissing it.
[4] To be sure, Ahcom’s FAC is not a model of clarity and
Ahcom’s attempt to amend the FAC upon receiving the
AHCOM, LTD. v. SMEDING 17353
Smedings’ 12(b)(6) motion is understandable. The FAC has
troubling allegations, including its assertion of a general alter
ego “claim” in which the Smedings allegedly diverted corpo-
rate assets to the detriment of all creditors. However,
although the Smedings prevailed in the district court, there is
a crucial problem with their argument: it assumes the exis-
tence of a general alter ego claim. We therefore examine
whether such a claim exists under California law.
III.
[5] The issue is not so much whether, for all pur-
poses, the corporation is the “alter ego” of its stock-
holders or officers, [or] whether the very purpose of
the organization of the corporation was to defraud
the individual who is now in court complaining, as
it is an issue of whether in the particular case pres-
ented and for the purposes of such case justice and
equity can best be accomplished and fraud and
unfairness defeated by a disregard of the distinct
entity of the corporate form.
Mesler v. Bragg Mgmt. Co., 702 P.2d 601, 606-07 (Cal. 1985)
(internal quotation marks omitted) (emphases added); see also
Communist Party of U.S. v. 522 Valencia, Inc., 41 Cal. Rptr.
2d 618, 627 (Ct. App. 1995) (no California case found in
which “the alter ego doctrine has been employed to establish
a relationship of identity between the defendant corporation
and the plaintiff”). In fact, there is no such thing as a substan-
tive alter ego claim at all: “A claim against a defendant, based
on the alter ego theory, is not itself a claim for substantive
relief, e.g., breach of contract or to set aside a fraudulent con-
veyance, but rather, procedural . . . .” Hennessey’s Tavern,
Inc. v. Am. Air Filter Co., 251 Cal. Rptr. 859, 863 (Ct. App.
1988).
[6] Notwithstanding this precedent, the Smedings argue
that Stodd v. Goldberger created a “general alter ego claim”
17354 AHCOM, LTD. v. SMEDING
that a trustee can assert on behalf of all creditors. 141 Cal.
Rptr. 67 (Ct. App. 1977). In Stodd, a bankruptcy trustee sued
the debtor’s shareholders “on the theory of alter ego [to]
establish defendants’ personal liability for all of [the debtor’s]
debts.” Id. at 70. The trial court dismissed the action and the
California Court of Appeal affirmed, holding that a trustee
“cannot maintain an action against defendants on an alter ego
theory absent some allegation of injury to the corporation
giving rise to a right of action in it against defendants,” with-
out which “the asserted cause of action belongs to each credi-
tor individually, and [the trustee] is not the real party in
interest.” Id. at 71 (emphasis added).
A bankruptcy court and a bankruptcy appellate panel
(BAP) in this circuit have relied on Stodd, in particular the
“absent some allegation of injury to the corporation” passage,
to conclude that California law permits a corporation to bring
a general alter ego claim against its owners. In In re Davey
Roofing, Inc., the United States Bankruptcy Court for the
Central District of California relied on Stodd in holding that,
under California law, a corporation can proceed on an alter
ego claim against its shareholder as long as it alleges some
“injury to the corporation.” 167 B.R. 604, 608 (Bankr. C.D.
Cal. 1994). Davey Roofing explained,
[i]n the case at bar, [a creditor] alleges that Debtor’s
principal misappropriated for his own benefit assets
belonging to the bankrupt corporation, to the detri-
ment of the estate and all of Debtor’s creditors,
rather than any individual creditor. Thus, Debtor is
the proper party to assert alter ego claims, and all of
Debtor’s creditors are bound by the outcome of the
estate’s action.
Id.
A few years later, the Ninth Circuit BAP—whose rulings
are persuasive but not binding authority in this court, Bank of
AHCOM, LTD. v. SMEDING 17355
Maui v. Estate Analysis, Inc., 904 F.2d 470, 472 (9th Cir.
1990)—adopted Davey Roofing’s reasoning. In CBS, Inc. v.
Folks (In re Folks), under facts similar to those in Davey
Roofing, the creditor, CBS, alleged that: “Folks [the owner]
has treated BYCA [the corporation] as his alter ego,” “Folks
used the bank accounts and funds of BYCA for his own per-
sonal expenditures,” and that “Folks failed to observe any of
the corporate formalities with respect to BYCA.” 211 B.R.
378, 387 (B.A.P. 9th Cir. 1997). According to Folks, the court
in Stodd “recognized that the corporate bankruptcy trustee has
standing to assert an alter ego claim if injury to the corpora-
tion is alleged, otherwise each creditor individually has stand-
ing.” Id. at 385. Folks held that CBS was asserting a general
alter ego claim “because all creditors are affected and [there
was] no particularized injury to CBS.” Id. at 387. Therefore,
Folks concluded, only the BYCA trustee, not CBS, had stand-
ing to bring a general alter ego action on behalf of BYCA. Id.
at 388.
[7] Folks and Davey Roofing misread Stodd. Stodd clari-
fied the passage upon which Folks and Davey Roofing rely to
imply a general alter ego claim (that a trustee “cannot main-
tain an action against defendants on an alter ego theory absent
some allegation of injury to the corporation giving rise to a
right of action in it against defendants”) by citing examples
of what constitutes such an injury: “an action by a trustee in
bankruptcy to recover assets of the bankrupt by setting aside
fraudulent and preferential transfers”; “an action by creditors
and a trustee in bankruptcy for conversion by a corporate
stockholder of assets of the bankrupt corporation”; “an action
by the trustee of a bankrupt corporation against the sole share-
holders on an alter ego theory upon allegations that . . . defen-
dants deposited corporation funds into their personal bank
accounts or that corporation funds were received by the
defendants personally.” Stodd, 141 Cal. Rptr. at 71 (internal
quotation marks omitted) (emphases added). These examples
illustrate that Stodd was not, as the Smedings maintain, creat-
ing a “general alter ego claim.” Instead, Stodd was attempting
17356 AHCOM, LTD. v. SMEDING
to distinguish established “right[s] of action” that are properly
brought by the trustee (fraudulent conveyance, conversion,
and theft, to take the examples from the list above) from those
that are not. Under Stodd, the trustee can sue for the former
but not for the latter. Id. This reading is unavoidable when we
consider that no California court has recognized a free-
standing general alter ego claim that would require a share-
holder to be liable for all of a company’s debts and, in fact,
the California Supreme Court stated that such a cause of
action does not exist. Mesler, 702 P.2d at 606-07.
Indeed, if we were to adopt Folks’ and Davey Roofing’s
readings of Stodd, Stodd would contradict itself. Stodd teaches
that a trustee “is not an appropriate general representative of
creditors.” 141 Cal. Rptr. at 72. Yet, that is exactly what Folks
and Davey Roofing have made it out to be by allowing the
trustee to bring a claim for a made-up cause of action “be-
cause all creditors are affected.” Folks, 211 B.R. at 387.
[8] Thus, we conclude that California law does not recog-
nize an alter ego claim or cause of action that will allow a cor-
poration and its shareholders to be treated as alter egos for
purposes of all the corporation’s debts. Just because NFI’s
trustee could not bring such a claim against the Smedings
under California law, there is no reason why Ahcom’s claims
against the Smedings cannot proceed.
IV.
Ahcom argued in the alternative that the district court
abused its discretion in denying Ahcom leave to file a second
amended complaint. Because we hold that Ahcom’s com-
plaint should not have been dismissed, we need not address
the question of whether Ahcom should have been permitted
to amend the complaint. Finally, we deny as moot the Smed-
ings’s motion to strike the appendix which contains the sec-
ond amended complaint.
REVERSED AND REMANDED.