Decker v. Advantage Fund, Ltd., No. 01-17406.

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: Brunetti
• Citation: 362 F.3d 593
• Parties: Suzanne L. DECKER, Trustee, Plaintiff-Appellant, v. ADVANTAGE FUND LTD., fka GFL Advantage Fund Ltd.; Genesee Fund Limited; Nelson Partners; Olympus Securities, Ltd.; RGC International Investors, LDC; Capital Ventures International, Defendants-Appellees. Suzanne L. Decker, Trustee, Plaintiff-Appellant, v. Advantage Fund Ltd., fka GFL Advantage Fund Ltd., Defendant, and Nelson Partners; Olympus Securities, Ltd.; Capital Ventures International, Defendants-Appellees.
• Docket Number: No. 01-17408.,No. 01-17406.
• Decision Date: 29 March 2004

362 F.3d 593 Suzanne L. DECKER, Trustee, Plaintiff-Appellant,
v.
ADVANTAGE FUND LTD., fka GFL Advantage Fund Ltd.; Genesee Fund Limited; Nelson Partners; Olympus Securities, Ltd.; RGC International Investors, LDC; Capital Ventures International, Defendants-Appellees.
Suzanne L. Decker, Trustee, Plaintiff-Appellant,
v.
Advantage Fund Ltd., fka GFL Advantage Fund Ltd., Defendant, and
Nelson Partners; Olympus Securities, Ltd.; Capital Ventures International, Defendants-Appellees. No. 01-17406. No. 01-17408. United States Court of Appeals, Ninth Circuit. Argued and Submitted December 5, 2002. Filed March 29, 2004.

Page 594

Jeffrey C. Wurms, Esq., Oakland, CA, for the appellant.

Harry S. Davis, Esq., New York, NY; Harvey L. Leiderman, and Frederick D. Holden, Esq., San Francisco, CA, for the appellees.

Appeal from the United States District Court for the Northern District of California, Ronald M. Whyte, District Judge, Presiding. D.C. Nos. CV-01-20391-RMW, CV-01-20529-RMW, D.C. No. CV-01-20529-RMW.

Before: BRUNETTI, TASHIMA, Circuit Judges, and EZRA,^* District Judge.

BRUNETTI, Circuit Judge:

Appellant Bankruptcy Trustee Suzanne Decker ("the Trustee") appeals the district

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court's Federal Rule of Civil Procedure 12(b)(6) dismissal of her action. The Trustee asserts two claims against all Appellees: one for avoidance of fraudulent transfers made in violation of California fraudulent transfer law and one for avoidance of fraudulent transfers made in violation of the Bankruptcy Code. The Trustee's third claim, asserted only against Appellees RGC International Investors, LDC, and Advantage Fund Ltd. ("RGC-Advantage Appellees"), is for a violation of section 16(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78p(b). For the reasons stated in this opinion, we affirm.

Before proceeding to the merits of this case, we must address a jurisdictional issue. The notice of appeal in this case was not timely filed in the district court. Due to a mistake by the Trustee's attorney's agent, the notice was filed in the bankruptcy court such that it would have been timely had it been filed in the correct court. Pursuant to 28 U.S.C. § 1631, we have jurisdiction because (1) the bankruptcy court cannot exercise jurisdiction over the appeal from the district court, (2) jurisdiction would have existed in this court at the time the notice was misfiled, and (3) we deem it to be in the interests of justice to exercise jurisdiction in order to avoid a forfeiture of the Trustee's rights due to a mistake by her attorney's agent. See Rodriguez-Roman v. INS, 98 F.3d 416, 424 (9th Cir.1996) ("[W]ere we not to hear [Petitioner's] petition, he would be time-barred from seeking review.... That ... would be sufficient, in itself [to make exercising jurisdiction serve the interests of justice]."); cf. Portland Fed. Employees Credit Union v. Cumis Ins. Soc'y, Inc., 894 F.2d 1101, 1103 (9th Cir.1990) (holding that appellate jurisdiction exists under Fed. R.App. P. 4(a)(1) where notice of appeal was filed "with the wrong court").

I. Background

As this case was dismissed under Federal Rule of Civil Procedure 12(b)(6), all well pleaded facts in the complaint must be taken as true. Gompper v. VISX, Inc., 298 F.3d 893, 894 (9th Cir.2002).

While JTS Corporation ("JTS"), a publicly traded company on the American Stock Exchange, was insolvent, it entered into agreements with Appellees to raise capital. JTS sold Series B and Series C preferred stock to Appellees for a total of $40 million. JTS and Appellees agreed that the preferred stock could later be converted into common stock at the lower of either (1) a fixed price or (2) a floating 15% discount off the average daily low trading price of JTS common stock for the five days preceding such conversion. The agreements also contained, however, an overriding limitation on that conversion right, a "conversion cap," which barred Series B and Series C stockholders from converting any stock if such conversion would cause their beneficial ownership of JTS common stock to exceed 4.9% of JTS's outstanding shares. Appellees eventually made the conversion at the 15% discount, obtaining $47 million worth of common stock in exchange for their $40 million investment....