International Petroleum Produc v. Black Gold S.A.R.L.

• Court: Court of Appeals for the Ninth Circuit
• Decided: September 16, 2024
• Docket: 22-15109
• Status: Unpublished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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS SEP 16 2024 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

INTERNATIONAL PETROLEUM No. 22-15109 PRODUCTS AND ADDITIVES COMPANY, INC., Judgment Creditor, D.C. No. 4:19-cv-03004-YGR

Plaintiff-Appellee, MEMORANDUM* v.

BLACK GOLD S.A.R.L., Judgment Debtor; LORENZO NAPOLEONI, Shareholder; SOFIA NAPOLEONI, Shareholder,

Defendants-Appellants.

INTERNATIONAL PETROLEUM No. 22-16341 PRODUCTS AND ADDITIVES COMPANY, INC., Judgment Creditor, D.C. No. 4:19-cv-03004-YGR

Plaintiff-Appellee,

v.

BLACK GOLD S.A.R.L., Judgment Debtor,

Defendant,

and

LORENZO NAPOLEONI, Shareholder;

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. SOFIA NAPOLEONI, Shareholder,

Appeal from the United States District Court for the Northern District of California Yvonne Gonzalez Rogers, District Judge, Presiding

Argued and Submitted February 12, 2024 San Francisco, California

Before: BEA, HAMILTON,** and CHRISTEN, Circuit Judges.

Defendants-Appellants Black Gold S.A.R.L., Lorenzo Napoleoni, and Sofia

Napoleoni (Appellants) appeal the district court’s final judgment, which found that

Mr. and Mrs. Napoleoni (the Napoleonis) are Black Gold’s alter ego and are thus

jointly and severally liable for International Petroleum Products and Additives

Company, Inc.’s (IPAC’s) approximately $1 million judgment award against Black

Gold.1 Appellants also appeal the district court’s subsequent order, which granted

IPAC’s motion for attorneys’ fees and costs against the Napoleonis. The parties are

familiar with the facts, which we recount here only where necessary. We have

jurisdiction under 28 U.S.C. § 1291. For the reasons stated below and in the

** The Honorable David F. Hamilton, United States Circuit Judge for the U.S. Court of Appeals for the Seventh Circuit, sitting by designation. 1 While Black Gold is procedurally an “Appellant” in this case, proceedings are stayed as to Black Gold, and they do not advance any arguments on appeal. Where this disposition refers to arguments made by “Appellants,” it is referencing arguments made by the Napoleonis, not Black Gold.

2 published decision filed concurrently with this memorandum, we affirm the district

court’s final judgment and award of attorneys’ fees and costs.

A district court’s conclusions of law are reviewed de novo. Kohler v. Presidio

Int’l, Inc., 782 F.3d 1064, 1068 (9th Cir. 2015). A district court’s order imposing

discovery sanctions or awarding attorneys’ fees and costs is reviewed for abuse of

discretion. See Sali v. Corona Reg’l Med. Ctr., 884 F.3d 1218, 1221 (9th Cir. 2018);

El-Hakem v. BJY Inc., 415 F.3d 1068, 1072 (9th Cir. 2005).

1. We find no error in the district court’s determination that California’s and

Monaco’s standards for alter ego liability are “substantially similar.” Appellants’

only ground for challenging this finding of no conflict is that the BAP later stated in

In re Black Gold S.A.R.L. that Monaco “does not provide for a legal theory of alter

ego.” 635 B.R. 517, 532 (BAP 2022) (emphasis added). We take Appellants’

argument to be that the district court was bound by the BAP’s passing remark, which

it made without further legal analysis, and that we must therefore remand for district

court to redo its alter ego analysis. We reject this position because BAP decisions

generally do not bind district courts. See Bank of Maui v. Est. Analysis, Inc., 904 F.2d

470, 472 (9th Cir. 1990). Thus, even if we did remand, the district court would be

“free to decline to follow” the BAP’s statement. Id.

2. The district court did not abuse its discretion in drawing adverse inferences

against Black Gold as a sanction for Black Gold’s discovery misconduct. See Fed.

3 R. Civ. P. 37(b)(2)(i) (permitting courts to direct that certain “designated facts be

taken as established for purposes of [an] action” if “a party or a party’s officer,

director, or managing agent” “fails to obey an order to provide or permit discovery”).

The district court made all the required findings under Rule 37. The court expressly

found that Black Gold, as a “party” to IPAC’s enforcement-of-judgment action,

refused to respond meaningfully to IPAC’s discovery requests and “fail[ed] to obey

[the court’s] order[s] to provide . . . [this] discovery.” Id. And as Rule 37 permits,

the district court then ordered that certain facts “designated” by IPAC “be taken as

established for purposes of the [underlying] action”—namely, that Mr. Napoleoni,

as Black Gold’s 50% shareholder and sole officer, “diverted” Black Gold’s “funds”

and “business” “to undercapitalize Black Gold [and] . . . to avoid paying [IPAC’s]

judgment” and that the he “continu[es] to profit from the illicit use of IPAC’s trade

secrets by making and selling” products based on those trade secrets. Importantly,

these designated facts tracked the substance of the discovery requests to which Black

Gold refused to respond. Because the district court’s adverse inference order

followed Rule 37 to the letter, we find no error with the district court’s analysis.2

2 Nor do we agree with Appellants that the BAP’s decision in In re Black Gold undermined the district court’s finding that Black Gold’s insolvency proceedings in Monaco were a “sham” designed to obstruct IPAC’s collection efforts. BAP clearly agreed with the bankruptcy court that the Monaco proceedings were “designed to thwart the collection efforts” of IPAC—Black Gold’s “largest creditor.” 635 B.R. at 531. The BAP concluded only that this was an insufficient basis to deny Black Gold’s Chapter 15 petition for recognition of the Monaco proceedings. See id.

4 3. The Napoleonis forfeited their argument that IPAC’s motion for attorneys’

fees and costs was untimely. White v. Martel, 601 F.3d 882, 885 (9th Cir. 2010). As

the Napoleonis concede, they did not raise their timeliness argument below. And

while it is within our discretion to consider forfeited arguments on appeal, we decline

to do so here. United States v. Northrop Corp., 59 F.3d 953, 957 n.2 (9th Cir. 1995).

AFFIRMED.