Five Points Hotel Partnership v. Joe Pinsonneault
697 F. App'x 549
| 9th Cir. | 2017Background
- Five Points obtained a $500,000 judgment in Arizona state court (2010) against Casa Grande Resort Living, LLC (Casa) for breach of contract and breach of the covenant of good faith and fair dealing. Casa had been dissolved in 2006 and could not satisfy the judgment.
- Five Points then sued Casa’s sole member/manager, Joe Pinsonneault, in federal court alleging Pinsonneault was Casa’s alter ego and seeking relief approximately equal to the state judgment.
- The federal complaint pleaded only an alter-ego theory (no underlying substantive claim) and sought a jury trial, compensatory, and punitive damages.
- The district court granted summary judgment for Pinsonneault, concluding alter ego is a theory of liability, not an independent cause of action, and Five Points failed to state a valid claim.
- The Ninth Circuit reviewed de novo, agreed with the district court, and affirmed; it emphasized that enforcement of a state-court judgment must proceed by appropriate state-court procedures rather than by a freestanding federal alter-ego claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether alter ego is an independent cause of action | Alter ego can be pleaded as a standalone claim to hold Pinsonneault liable for Casa’s obligations | Alter ego is only a procedural theory to impose liability and not an independent substantive claim | Alter ego is a theory of liability, not an independent cause of action; summary judgment for defendant affirmed |
| Whether Five Points could enforce its Arizona judgment in federal court via an alter-ego suit | Five Points argued it sought enforcement of the prior judgment through its federal suit | Pinsonneault argued state judgments are executed in the issuing court and enforcement must follow state procedures | Court held Five Points could not enforce the state judgment in federal court by bringing a freestanding alter-ego claim; enforcement belongs in the issuing state court |
| Whether prior decisions (e.g., Van Buren) support a freestanding alter-ego claim | Five Points relied on Van Buren as permitting judgment enforcement via alter-ego | Pinsonneault distinguished Van Buren as involving state-court enforcement, not a new federal action | Court rejected Five Points’ reliance on Van Buren and distinguished its procedural posture |
| Whether Five Points lost the ability to rely on alter-ego by not raising it earlier | Five Points contended it should be allowed to pursue alter-ego now to collect the judgment | Pinsonneault asserted alter-ego must be raised by appropriate procedure in the proper forum | Court allowed that alter-ego may be raised later but must be raised by appropriate procedures (e.g., in the state court that issued the judgment); federal freestanding claim improper |
Key Cases Cited
- Lewis v. Telephone Employees Credit Union, 87 F.3d 1537 (9th Cir.) (alter-ego is a theory of liability, not an independent claim)
- Jones & Trevor Mktg., Inc. v. Lowry, 284 P.3d 630 (Utah 2012) (recognizing alter-ego as procedural/theory rather than standalone claim)
- Labertew v. Langemeier, 846 F.3d 1028 (9th Cir.) (judgments are executed in the courts that issued them; enforcement principles)