Philip D. Roberts; Lynn Roberts; Robert T. Mcarthur;denny Delk; Karen Delk; Jack T. Bell; Arthur B.gauss, Plaintiffs-appellees, v. Werner Heim, Defendant and Texoil International Corporation,defendant-appellant, 134 F.3d 378 (9th Cir. 1998)

Annotate this Case
U.S. Court of Appeals for the Ninth Circuit - 134 F.3d 378 (9th Cir. 1998)

Argued and Submitted Jan. 12, 1998. Decided Jan. 28, 1998


Before SCHROEDER, WIGGINS, and NOONAN, C.J.

MEMORANDUM* 

HENDERSON, District Judge.

TexOil appeals the district court's denial of its motion for a new trial, following entry of a default judgment against TexOil in this securities fraud class action.

There is no merit to the contention that the claim against TexOil in the Fifth Amended Complaint is limited to an aiding and abetting theory. The complaint alleges that TexOil was a knowing and active participant in an elaborate, fraudulent scheme from which TexOil and others hoped to profit. TexOil's entry into the lease agreements may be characterized as a "scheme" to defraud or a "course of business" that operates as a fraud. These allegations are sufficient to state a primary claim under Rule 10b-5. See Cooper v. Pickett, 122 F.3d 1186, 1194 (9th Cir. 1997).

The district court did not fail to consider lesser sanctions, nor did it fail to warn TexOil of the possibility of default. The appellant had ample warning that default was probable and in fact filed an improper bankruptcy petition to avoid the consequences of such a judgment. It is clear from the district court's order, describing undisputed conduct of TexOil in this litigation and in the bankruptcy court, that other, lesser sanctions would have been unavailing. See Wanderer v. Johnston, 910 F.2d 652, 656-57 (9th Cir. 1990).

AFFIRMED.

 *

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir. R. 36-3