In Re: Gxp Capital, LLC v. Argonaut Manufacturing Services, Inc.

• Court: Court of Appeals for the Ninth Circuit
• Decided: September 16, 2024
• Docket: 23-60033
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS SEP 16 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

In re: BIOSERV CORPORATION, No. 23-60033

Debtor, BAP No. 22-1213

------------------------------ MEMORANDUM* GPX CAPITAL, LLC,

Appellant,

v.

ARGONAUT MANUFACTURING SERVICES, INC.; et al.,

Appellees.

Appeal from the Ninth Circuit Bankruptcy Appellate Panel Brand, Gan, and Faris, Bankruptcy Judges, Presiding

Argued and Submitted June 7, 2024 Pasadena, California

Before: CLIFTON, COLLINS, and LEE, Circuit Judges.

Plaintiff GXP Capital, LLC sued Argonaut Manufacturing Services, Inc. in an

adversary proceeding before the bankruptcy court for breach of contract,

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. misappropriation of trade secrets, and a variety of other economic torts. GXP

contends that Argonaut’s misconduct interfered with GXP’s bankruptcy and led to

the appointment of an examiner, who allegedly sold its assets for less than market

value. The bankruptcy court dismissed the entire complaint for lack of Article III

standing, and found that GXP’s injuries were caused by GXP’s own actions, not by

Argonaut’s alleged misconduct.

The Bankruptcy Appellate Panel (BAP) affirmed the bankruptcy court’s

dismissal for lack of Article III standing. The BAP held in the alternative that GXP

failed to state a claim under Federal Rule of Civil Procedure 12(b)(6) because its

alleged injuries were not legally cognizable. The BAP also held that, even if such

injuries were legally cognizable, GXP’s claims failed because its damages were not

caused by Argonaut’s misconduct.

We have jurisdiction under 28 U.S.C. § 158(d)(1) and affirm. We review de

novo BAP decisions and apply the same standard of review that the BAP applied to

the bankruptcy court’s decision. Boyajian v. New Falls Corp. (In re Boyajian), 564

F.3d 1088, 1090 (9th Cir. 2009). The bankruptcy court’s determination that GXP

lacks Article III standing is also reviewed de novo. Shulman v. Kaplan, 58 F.4th

404, 407 (9th Cir. 2023). But its “factual findings on all jurisdictional issues must

be accepted unless clearly erroneous.” Scott v. Boos, 215 F.3d 940, 943 (9th Cir.

2000).

2 1. GXP impliedly consented to the bankruptcy court’s jurisdiction.

Relying on its objection in its complaint, GXP argues that it did not consent to the

bankruptcy court’s jurisdiction. But its subsequent litigation conduct constitutes

implied consent. See Wellness Int’l Network Ltd. v. Sharif, 575 U.S. 665, 683–85

(2015). In its opposition to Argonaut’s motion to dismiss the complaint, GXP failed

to raise this jurisdictional objection to the bankruptcy court. In fact, GXP’s filing

begins with an exposition on why the bankruptcy court had jurisdiction over the

case. Further, when GXP had the chance to be heard before a district court, it still

chose to appeal to the BAP, where it again failed to raise this objection. GXP thus

impliedly consented to the jurisdiction of the bankruptcy court to issue a final

judgment.

2. GXP has Article III standing to bring this lawsuit. The core of GXP’s

lawsuit is that Argonaut interfered with its bankruptcy proceedings, resulting in a

loss of potentially millions of dollars. Such economic injury is of the sort that we

have regularly held is sufficient to confer Article III standing. See Isaacson v.

Mayes, 84 F.4th 1089, 1096–97 (9th Cir. 2023) (collecting cases). GXP thus has

standing.

3. GXP nevertheless failed to state a claim for relief. We may affirm on

any basis supported by the record. In re Frontier Props., Inc., 979 F.2d 1358, 1364

(9th Cir. 1992). GXP argues that Argonaut’s actions resulted in the disclosure of

3 confidential business information to GXP’s creditors and the bankruptcy court. The

disclosure of this information, in turn, caused the bankruptcy court to appoint an

examiner who facilitated the sale of GXP’s assets for less than their market value,

according to GXP.

The problem with GXP’s theory of causation is that, in appointing an

examiner, the bankruptcy court orally provided a detailed explanation for that action

and issued a written ruling succinctly explaining those reasons. As GXP concedes

in its opening brief, “none” of the bankruptcy court’s stated “reasons for appointing

the Examiner . . . involved the Hostile Bid” that is the essential link in GXP’s theory

of causation of injury. In attempting to plead proximate causation, GXP thus faced

the daunting task of pleading sufficient, non-speculative facts to establish that

Argonaut’s misconduct concerning a factor that was not even included among the

bankruptcy court’s fully sufficient, stated reasons for its action would have changed

the course of proceedings and would have led the bankruptcy court to enter

completely different orders that would have avoided GXP’s asserted injuries. The

operative complaint falls far short of doing so. GXP has not suggested any potential

amendment that could cure this deficiency, and on this record, we perceive no

conceivable basis for concluding that it could do so. All its claims thus fail. See Vu

v. Cal. Com. Club, Inc., 68 Cal. Rptr. 2d 31, 33 (Cal. Ct. App. 1997) (plaintiffs

alleging breach of contract must show that their damages were proximately caused

4 by the defendant’s misconduct); CytoDyn, Inc. v. Amerimmune Pharm. Inc., 72 Cal.

Rptr. 3d 600, 607 (Cal. Ct. App. 2008) (same for trade secret misappropriation);

Golden Eagle Land Inv., L.P. v. Rancho Santa Fe Ass’n, 227 Cal. Rptr. 3d 903, 927

(Cal. Ct. App. 2018) (same for interference with prospective economic advantage

and business relationships); Stanely v. Richmond, 41 Cal. Rptr. 2d 768, 776 (Cal. Ct.

App. 1995) (same for breach of fiduciary duty).

We thus affirm, for failure to state a claim, the BAP’s affirmance of the

bankruptcy court’s judgment dismissing the adversary complaint in its entirety “with

prejudice.”1

AFFIRMED.

1 We also find that the bankruptcy court did not abuse its discretion in declining GXP’s request for jurisdictional discovery. See Boschetto v. Hansig, 539 F.3d 1011, 1020 (9th Cir. 2008) (noting that a court’s refusal to provide such discovery “will not be reversed except upon the clearest showing that denial of discovery results in actual and substantial prejudice to the complaining litigant”).