Pacific Gulf Shipping Co. v. Vigorous Shipping & Trading S.A., No. 20-35159 (9th Cir. 2021)
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In this admiralty case, Pacific Gulf, in possession of an arbitral award against Adamastos Shipping, tried to collect from Blue Wall and Vigorous Shipping on the grounds that they are either successors to or alter-egos of Adamastos. The district court dismissed the successor-liability claim and granted summary judgment to Blue Wall and Vigorous on the alter-ego claim.
After determining that Pacific Gulf has standing, the panel applied federal common law and joined other courts in holding that maritime law requires a transfer of all or substantially all of the predecessor's assets to the alleged successor before successor liability will be imposed on that alleged successor. In this case, the panel concluded that Pacific Gulf has failed to plead that Blue Wall and its subsidiaries "comprise successor corporate business entities of" Adamastos. The panel explained that Pacific Gulf alleged no transfer of any assets (let alone all or substantially all) from Adamastos to Blue Wall or its subsidiaries. Therefore, because Pacific Gulf failed to plead a factual prerequisite to corporate successorship, the district court correctly dismissed the claim based on that theory.
The panel also agreed with the district court that Pacific Gulf's discovery revealed nothing to allow a reasonable juror to rule in its favor on the alter-ego theory. Viewing the record as a whole, the panel considered the factors for determining whether a party has pierced the corporate veil and agreed with the district court that Pacific Gulf came away "empty handed" from discovery. Therefore, there is insufficient evidence to support a finding that either Blue Wall or Vigorous was operated as an alter-ego of Adamastos.
Court Description: Admiralty. The panel affirmed the district court’s partial dismissal and partial summary judgment in favor of the defendants in an admiralty action alleging successor and alter-ego liability. Pacific Gulf Shipping Co., in possession of an arbitral award against Adamastos Shipping, sought to collect from Vigorous Shipping & Trading S.A. and Blue Wall Shipping Ltd. on the grounds that they were either successors or alter- egos of Adamastos. The district court dismissed the successor-liability claim and granted summary judgment to Vigorous and Blue Wall on the alter-ego claim. The panel held that Pacific Gulf had Article III standing because, even if Adamastos ultimately owed Pacific Gulf no damages, Pacific Gulf at least suffered a concrete, particularized injury in arbitration costs. The panel affirmed the district court’s dismissal for failure to state a claim of Pacific Gulf’s claim based on successor liability. Applying federal common law, and joining other circuits, the panel held that maritime law requires a transfer of all or substantially all of the predecessor’s assets to the alleged successor before successor liability will be imposed on that alleged successor. Affirming the district court’s summary judgment in favor of the defendants on the alter-ego claim, the panel held 4 PACIFIC GULF SHIPPING V. VIGOROUS SHIPPING & TRADING that to pierce the corporate veil, a party must show that (1) the controlling corporate entity exercises total dominion of the subservient corporation, to the extent that the subservient corporation manifests no separate corporate interests of its own; (2) injustice will result from recognizing the subservient entity as a separate entity; and (3) the controlling entity had a fraudulent intent or an intent to circumvent statutory or contractual obligations. Indicia used to determine whether to pierce the corporate veil include (1) disregarding corporate formalities such as, for example, in issuing stock, electing directors, or keeping corporate records; (2) capitalization that is inadequate to ensure that the business can meet its obligations; (3) putting funds into or taking them out of the corporation for personal, not corporate, purposes; (4) overlap in ownership, directors, officers, and personnel; (5) shared office space, address, or contact information; (6) lack of discretion by the allegedly subservient entity; (7) dealings not at arms-length between the related entities; (8) the holding out by one entity that it is responsible for the debts of another entity; and (9) the use of one entity’s property by another entity as its own. Viewing the record as a whole, the panel agreed with the district court that there was insufficient evidence to support a finding that either Blue Wall or Vigorous was operated as an alter-ego of Adamastos. PACIFIC GULF SHIPPING V. VIGOROUS SHIPPING & TRADING 5
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