Ta Chong Bank Ltd v. Hitachi High Technologies Am. Inc
| Decision Date | 07 June 2010 |
| Docket Number | No. 08-17007.,08-17007. |
| Citation | 610 F.3d 1063 |
| Parties | TA CHONG BANK LTD., Plaintiff-Appellant,v.HITACHI HIGH TECHNOLOGIES AMERICA, INC., a Delaware corporation, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
James S. Monroe, Monroe Law Group, San Francisco, CA, for plaintiff-appellant Ta Chong Bank Ltd.
Richard C. Vasquez and Avin P. Sharma, Vasquez, Benisek & Lindgren LLP, Lafayette, CA, for defendant-appellee Hitachi High Technologies America, Inc.
Appeal from the United States District Court for the Northern District of California, Phyllis J. Hamilton, District Judge, Presiding. D.C. No. CV-08-02452-PJH.
Before ALFRED T. GOODWIN and WILLIAM A. FLETCHER, Circuit Judges, and RICHARD MILLS, District Judge.*
Ta Chong Bank (“the Bank”) filed a complaint wherein it asserted several claims against Hitachi High Technologies America, Inc. (“Hitachi”). Those claims were based on the Bank's interest in the accounts receivable of a third party, CyberHome Entertainment, Inc. (“CyberHome”), pursuant to certain factoring agreements entered into by those entities. Although the factoring agreements provided that Hitachi was to pay the Bank, Hitachi made payment directly to CyberHome, several months before CyberHome filed for Chapter 7 bankruptcy.
The district court dismissed the Bank's claims, reasoning that they were based solely on its interest in CyberHome's accounts receivable, which the bankruptcy court had determined to be property of CyberHome's bankruptcy estate.
We affirm.
In August and September of 2005, Hitachi purchased a large number of DVD players from CyberHome for approximately $1.2 million. Since May 2004, the Bank had entered into a series of factoring agreements whereby it agreed to purchase from CyberHome certain of CyberHome's accounts receivable. CyberHome assigned to the Bank all of its right, title and interest in and to all amounts due from Hitachi under the invoices. On or about August 18, 2005, the Bank and CyberHome gave Hitachi notice in writing that effective September 1, 2005, CyberHome's future invoices to Hitachi would bear a notice that such invoices were assigned to the Bank. The notice instructed Hitachi that all payments on those CyberHome invoices must be made directly to the Bank. Despite this assignment, in January 2006, Hitachi paid CyberHome the full amount owed for the DVDs. Neither the Bank nor the CIT Group/Commercial Services, Inc. (“CIT”), which handled the processing of certain accounts receivable factored by the Bank, received any portion of the payment made to CyberHome. The payment was made to CyberHome without the Bank's or CIT's knowledge or consent.
On September 5, 2006, eight months after CyberHome was paid in full by Hitachi, CyberHome filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Northern District of California. The Bank has made demand on Hitachi for payment of the $1,214,852.20 that it paid to CyberHome, but Hitachi has not made any payment to the Bank.
On December 19, 2006, the Chapter 7 Trustee for CyberHome's bankruptcy estate filed an adversary proceeding against the Bank asserting several claims, including a claim to avoid the Bank's security interest in property of the CyberHome bankruptcy estate, including its accounts receivable. The trustee claimed that the accounts receivable constituted a preferential transfer and that the Bank had failed to perfect its security interest prior to 90 days before the bankruptcy petition.
On December 22, 2006, the Bank filed a secured proof of claim in the CyberHome bankruptcy case in the amount of $83,000,000 for amounts due under several credit accounts extended to CyberHome, including the accounts receivable at issue in this case. On February 2, 2007, the Bank filed a counterclaim for (1) fraud, (2) negligence, and (3) breach of contract in the adversary proceeding. The Bank attached its previously filed proof of claim as an exhibit to the counterclaim. The trustee subsequently moved for summary adjudication against the Bank.
On June 13, 2007, the bankruptcy court entered an order which, in part, advised account debtors to disregard any request from the Bank. The order provided that only the trustee was authorized to collect any receivables. The Bank did not oppose the trustee's motion for summary adjudication, and the bankruptcy court granted the motion on August 10, 2007. The Bank did not appeal the bankruptcy court's order.
Seven months after the bankruptcy court's order granting the trustee's motion for summary adjudication, the Bank brought suit in state court against Hitachi. The complaint asserted several causes of action under California law, including (1) goods sold and delivered, (2) open book account, and (3) account stated. The Bank's complaint sought payment from Hitachi of the $1.2 million that Hitachi previously paid to CyberHome. The Bank also attached as exhibits invoices between Hitachi and CyberHome. Hitachi removed the action to federal court.
The district court granted Hitachi's motion to dismiss the case for failure to state a claim and entered a judgment of dismissal. In granting the motion, the court found that by filing the action, the Bank was attempting an “end run around” the bankruptcy process and that the case was “an improper appeal of the bankruptcy court's order.” The district court also found that the bankruptcy court's order was res judicata as to the Bank's interest in CyberHome's accounts receivable. It held that the bankruptcy court implicitly found the $1.2 million at issue to be part of the bankruptcy estate because it had been paid during the pendency of the bankruptcy court's order.
The Bank subsequently filed a motion pursuant to Federal Rule of Civil Procedure 59(e) to alter or amend the previous judgment. The Bank contended that the district court had erred in finding that Hitachi paid $1.2 million to CyberHome during the bankruptcy proceedings. The district court denied the motion to alter or amend the judgment, finding that the error regarding timing in its prior order “did not rise to the level of ‘manifest error’ requiring that the judgment be vacated.”
We have jurisdiction pursuant to 28 U.S.C. § 1291. On appeal, the Bank contends that the district court erred in determining that the $1.2 million that Hitachi paid to CyberHome was part of CyberHome's bankruptcy estate. The Bank also disputes that, by filing its proof of claim in the bankruptcy proceeding, it consented to the exclusive jurisdiction of that forum as to any claim for the $1.2 million paid by Hitachi to CyberHome. The Bank further asserts that the district court abused its discretion in denying the Bank's motion to alter or amend the judgment, after the court erroneously found in its initial order that Hitachi's payment to CyberHome was made during the course of CyberHome's bankruptcy.
A district court's decision to grant a motion to dismiss under Rule 12(b)(6) is reviewed de novo. See Movsesian v. Victoria Versicherung AG, 578 F.3d 1052, 1056 (9th Cir.2009). “All well-pleaded factual allegations are to be construed in the light most favorable to the pleader, and accepted as true.” Id. The denial of a motion under Rule 59(e) to alter or amend the judgment is reviewed for abuse of discretion. See McQuillion v. Duncan, 342 F.3d 1012, 1014 (9th Cir.2003).
(1)
The California Commercial Code is applicable to determine the rights and duties of the parties in this case. Division 9 (Secured Transactions) applies inter alia, to “[a] transaction, regardless of its form, that creates a security interest in personal property or fixtures by contract;” and “[a] sale of accounts, chattel paper, payment intangibles, or promissory notes.” Cal. Com.Code § 9109(a)(1), (3). “Except as otherwise provided ..., while a debtor is located in a jurisdiction, the local law of that jurisdiction governs perfection, the effect of perfection or nonperfection, and the priority of a security interest in collateral.” Cal. Com.Code § 9301(1). CyberHome was located in California at all relevant times. In order to perfect its interest in the CyberHome accounts assigned to the Bank, the Bank was required to file a financing statement. Cal. Com.Code § 9310(a).
The Bank contends that, after receiving notice, Hitachi was required to pay the invoices directly to CIT, on the Bank's behalf. Section 9406(a) provides:
Subject to subdivisions (b) to (i), inclusive, an account debtor on an account, chattel paper, or a payment intangible may discharge its obligation by paying the assignor until, but not after, the account debtor receives a notification, authenticated by the assignor or the assignee, that the amount due or to become due has been assigned and that payment is to be made to the assignee. After receipt of the notification, the account debtor may discharge its obligation by paying the assignee and may not discharge the obligation by paying the assignor.
Cal. Com.Code § 9406(a) (emphasis added). Hitachi elected to ignore the notices and its duties under § 9406 and paid CyberHome instead. The Bank asserts that Hitachi is therefore directly liable for the full amount of the payment that Hitachi made in satisfaction thereof to CyberHome. The Bank argues that this liability is independent of the accounts receivable.
The Bank claims that CyberHome's bankruptcy estate has no property interest in the Bank's claims against Hitachi. A debtor's bankruptcy estate consists of “all legal or equitable interests of the debtor in property” at the time the case is commenced. See 11 U.S.C. § 541(a)(1). The Bank argues that, as of the date of its bankruptcy petition, CyberHome had no conceivable property interest in either the invoices or the Bank's claims against Hitachi. CyberHome had received payment in full on the invoices from Hitachi prior to the...
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