4:16-cv-01276
N.D. Cal.Sep 7, 2016Background
- Frontier and AS (Wright)/related Activ entities formed a joint venture (Wright Solar) to develop the Wright Project; Frontier was manager and originally owned 25%, AS (Wright) 75% after a sale.
- Dispute arose after AS (Wright)’s alleged transfer of ASH’s assets (including its interest) to GEC in Dec. 2015 and Activ Solar GmbH later entered insolvency proceedings in early 2016.
- Frontier stopped providing access/updates and contends plaintiffs defaulted (fees unpaid and an ‘Insolvency Event’), asserting it is entitled to possession of AS (Wright)’s 75% interest under contract; plaintiffs allege conversion and civil theft.
- Frontier counterclaimed for fraudulent transfer (UFTA), fraud, and civil conspiracy against plaintiffs and several non‑plaintiff counterclaim defendants (Activ GmbH, Activ UK, Green Evolution, and certain individuals).
- Lower court previously denied plaintiffs’ preliminary injunction but ordered Frontier to provide monthly disclosures; plaintiffs later moved to enforce compliance.
- Court disposition on motions: conversion claim survives as to AS (Wright) vs Frontier but is dismissed as to GEC and ASH and individual defendants; civil theft dismissed without prejudice; non‑plaintiff counterclaim defendants dismissed for lack of personal jurisdiction with leave to amend; certain counterclaims survive dismissal challenges; plaintiffs’ motion to enforce disclosures denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of conversion claim | AS (Wright): Frontier excluded AS (Wright) and assumed control, so conversion pleaded | Frontier: plaintiffs other than AS (Wright) lack standing; individual Ds not properly alleged; damages speculative | Conversion claim: survives vs Frontier for AS (Wright); dismissed with prejudice as to GEC and ASH; dismissed as to individual Ds without prejudice (no plausible individual allegations) |
| Civil theft claim (Penal Code §484/496) | Plaintiffs: defendants acted with felonious intent to deprive | Frontier: position was owner; no specific intent alleged | Dismissed without prejudice for failure to plead specific felonious intent |
| Personal jurisdiction over non‑plaintiff counterclaim defendants | Frontier: defendants are alter egos or committed forum‑directed fraud; EC contacts (emails, meetings, indemnity) suffice | Activ entities & individuals: limited/attenuated contacts; acts were by subsidiaries/officers wearing ‘subsidiary hats’ | Motions to dismiss for lack of personal jurisdiction granted; non‑plaintiff counterclaim defendants dismissed without prejudice with leave to amend (alter ego allegations insufficient; single contacts insufficient) |
| UFTA / fraudulent transfer (counterclaims) | Frontier: December 2015 transfer to insider GEC was actual fraud (multiple indicia pled) | Plaintiffs: bankruptcy in Austria is exclusive forum; merits disputes over value/obligations | UFTA claim (as to ASH) survives: FACC pleads actual fraud with particularity; dismissal denied; UFTA claims insofar as asserted against AS (Wright) and GEC dismissed with prejudice |
| Fraud and civil conspiracy (counterclaims) | Frontier: misrepresentations (emails/meetings) concealed Activ GmbH insolvency and enabled transfer; concerted agreement alleged | Plaintiffs: pleadings fail under Rule 9(b) and economic‑loss/contract preclusion | Fraud claim survives as to insolvency/transfer theory; fraud based on QuickBooks access dismissed with prejudice; civil conspiracy survives (specific agreement and acts alleged) |
| Motion to enforce monthly disclosures (PI order) | Plaintiffs: Frontier’s updates are incomplete and non‑compliant | Frontier: disclosures meet PI Order’s purpose; additional compelled work inequitable without compensation | Motion denied; July/August disclosures deemed sufficient |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (apply Twombly; courts need not accept conclusory allegations)
- Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097 (9th Cir. 2003) (fraud‑based claims must satisfy Rule 9(b) when claim is grounded in fraud)
- Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004) (prima facie showing of personal jurisdiction on written submissions)
- International Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts due process standard)
- Calder v. Jones, 465 U.S. 783 (1984) (effects test for purposeful direction in torts)
- Bestfoods v. United States, 524 U.S. 51 (1998) (officers may ‘change hats’; parent/subsidiary actions analyzed separately)
- Lake v. Lake, 817 F.2d 1416 (9th Cir.) (specific jurisdiction requires purposeful availment or direction, relatedness, and reasonableness)