[00:00:12] Speaker ?: And we have counsel for Scanda Group of Industries, James Savovitch. [00:00:22] Speaker ?: Is that the way I say that? [00:00:24] Speaker ?: You did. [00:00:25] Speaker ?: Savovitch appearing by video with the court's permission. [00:00:31] Speaker 04: So, Mr. Savovitch, we'll allow you to begin. [00:00:34] Speaker ?: Thank you. [00:00:36] Speaker 04: May I please the court, Jim Savovitch, on behalf of the appellants. [00:00:40] Speaker ?: What we have is a very [00:00:43] Speaker 04: issue that involves the interplay of the summary judgment standard and offensive determination of alter ego meaning that alter ego was decided against a private individual on summary judgment which is not unheard of but is a little unusual this case involved well it's not it's not only unusual that there [00:01:20] Speaker ?: the district court then ruled and then in Wolf there was a summary judgment but they had stipulated facts and at both times the district court's application of alter ego for the bench trial it was clear error for the summary judgment on stipulated facts it was [00:01:47] Speaker 03: It was not de novo review, and you here call for a de novo review. [00:01:52] Speaker 03: How is this different? [00:01:55] Speaker 03: Well, I think the overall summary judgment standard is de novo review. [00:02:01] Speaker 03: Yes, there's no question the overall standard is. [00:02:05] Speaker 03: But in this particular instance, we got Wolf, who had stipulated facts, and they said it wasn't de novo there. [00:02:14] Speaker 03: In fact, they rejected it. [00:02:22] Speaker 04: stipulated facts well there again you have stipulated facts and you're probably going to get a more specific more deferential standard of review you don't have that here and I think our core argument here is that the court is determining disputed facts so that puts us in a different situation so at that point as I understand it there was an action to pierce the corporate veil [00:02:54] Speaker 03: brought by safety. [00:02:57] Speaker 03: Safety at that point demanded a jury trial, is that also true? [00:03:03] Speaker 03: That is true. [00:03:05] Speaker 03: And then they had a summary judgment? [00:03:07] Speaker 03: That is, Director-Honor. [00:03:10] Speaker 03: So you're suggesting in that particular situation we would have de novo review and we would be making that determination [00:03:27] Speaker ?: Yeah, that's effectively our core argument here, Your Honor. [00:04:03] Speaker ?: I can only believe that declaration if it's based on personal knowledge, right? [00:04:09] Speaker 03: It can't be conclusory. [00:04:11] Speaker 03: It can't be vague. [00:04:13] Speaker 03: It's got to have on personal knowledge. [00:04:43] Speaker 03: beyond the person's personal knowledge, it lacks detailed facts. [00:04:49] Speaker ?: That's what that says. [00:04:51] Speaker 04: Now, you tell me why this affidavit doesn't do exactly that. [00:04:55] Speaker 04: Because it is based on personal facts, Your Honor, and it's based on... But facts are those that are personal. [00:05:01] Speaker 04: The facts are that if we break this down, it goes through the specific allegations that they made, and those range from the payment of HBO, [00:05:13] Speaker 04: fees to an explanation of why that is a personal expense to veterinarian things. [00:05:19] Speaker 04: As far as the personal facts that would probably be most key for the district court, it is statements that what plaintiffs allege are improper personal transfer or actually documented loans and that is something that Mr. Carey would have personal knowledge over. [00:05:35] Speaker 04: First, he says it in his declaration and then second, he is the owner and manager [00:05:41] Speaker ?: of those companies and I think what we're really getting to is an amount of detail and I think to require him when really what plaintiffs are doing is they're going through the bank statements and they don't have anything besides the bank statements. [00:05:56] Speaker ?: The reason they did that is because his affidavit was pretty bare. [00:06:01] Speaker 03: There are no invoices, there are no contracts, there's no financial records, there's no nothing. [00:06:07] Speaker 03: All there is is a [00:06:12] Speaker 04: That is somewhat true, Your Honor, but that's also what we're responding to. [00:06:20] Speaker 04: What we're responding to is not something where you have a transaction and then they have deposition testimony over it or something else. [00:06:26] Speaker 04: For example, we're responding to something where there is a supposed transfer to a family maintenance account. [00:06:33] Speaker 04: You're just looking at an entry that says family maintenance account and it turns out in that one the district court was incorrect and we have all of these lumped together. [00:06:42] Speaker 04: So I think the idea that by just throwing out general allegations based on bank statements and really just a party looking at bank statements and speculating about them and then saying that that effectively shifts the burden to come over and disprove every single one of these is the opposite of what a summary judgment stands for. [00:07:12] Speaker 03: So we can't say it's a sham affidavit. [00:07:15] Speaker 03: So we have to look at it in this way, right? [00:07:19] Speaker 04: That's correct, Your Honor. [00:07:20] Speaker 04: It's, I think you could certainly say that it is, I don't think it's necessarily conclusory because conclusory is where you have an unfounded assumption built into it. [00:07:31] Speaker 04: You could say that it doesn't have a great amount of detail. [00:07:35] Speaker 04: which I think would be a fair characterization. [00:07:38] Speaker 04: Certainly, if you're going to trial on this, we would come in with a great deal more evidence. [00:07:42] Speaker 04: But what we're talking about on summary judgment is just disproving what were on their side very general allegations. [00:07:51] Speaker 03: So if they're making general allegations that transfer to... To be fair, their allegations are a lot more specific than are yours. [00:08:00] Speaker 03: I mean, I can go through here and the [00:08:06] Speaker 03: the district court had to look at and how and where and what was happening. [00:08:12] Speaker 03: A lot more facts than there ever were in this affidavit. [00:08:16] Speaker 04: There are in the sense that they have specific numbers, Your Honor, but I think those break down into specific categories of things that can be addressed in a general way. [00:08:27] Speaker ?: It's fairly easy when you're looking at a bank statement to be specific about it. [00:08:31] Speaker ?: That doesn't mean that because you have a specific number, you're being specific. [00:08:36] Speaker ?: about the allegations so you can have many intercompany transfers between related companies. [00:08:42] Speaker ?: But the fact that you have that doesn't mean that you've in any way proven that those transfers are improper. [00:08:50] Speaker 04: And the fact that he is dealing with these as a group saying that these are documented loans or if we give an example of one of them being a payment of an invoice from another related company for advertising. [00:09:12] Speaker 04: great deal more but when we're talking about summary judgment and all we're doing is disproving what is essentially stating looking at a bank record and then [00:09:55] Speaker 00: David's numbers don't really line up. [00:10:33] Speaker ?: was a transaction where my client put in, first there was the $1 million in this transaction, then there's another $1.8 million. [00:10:43] Speaker 04: And it is the case that it does look like, certainly the $3.6 million number rounded up, but a jury could find that given the confusion that is going on at the time, the evidence was that [00:11:01] Speaker 04: So it was very unexpectedly arrested for some dealing with China, which no one expected about. [00:11:07] Speaker 04: Certainly the company's in a bit of chaos. [00:11:10] Speaker 04: My client cancels. [00:11:13] Speaker 04: Safety does not cancel. [00:11:15] Speaker 04: And $3.6 million comes back. [00:11:18] Speaker ?: And to be clear, we never took the position that that $3.6 million didn't include some money that would be part of the other transaction. [00:11:27] Speaker ?: It's just that the vast majority, the bulk of it, [00:11:31] Speaker ?: is from the transaction that did not involve safety. [00:12:19] Speaker 04: and without going into details, we've had fairly limited contact with our client. [00:12:25] Speaker 04: My understanding is that that case is resolved. [00:12:29] Speaker 04: I'm not sure what actually is left. [00:12:31] Speaker 04: I would defer to my friend, as I understand they probably have a better understanding of that case than I would, Your Honor. [00:12:37] Speaker 04: You're talking about opposing counsel your friend? [00:12:39] Speaker ?: Yes. [00:12:40] Speaker ?: Okay. [00:12:41] Speaker ?: All right. [00:12:41] Speaker ?: I'm just trying to make sure you're not talking about that other guy you say, because you're not counsel him. [00:13:01] Speaker 04: The property on Mustang Lane may have been in significant part mooted because of that matter. [00:13:08] Speaker 04: I am not involved in it, so I can't speak to it, Your Honor. [00:13:13] Speaker 03: Do you want to reserve some time? [00:13:17] Speaker 03: Certainly, Your Honor. [00:13:18] Speaker 03: Thank you. [00:14:23] Speaker 02: different claims for [00:14:52] Speaker 02: the defendant. [00:15:48] Speaker 02: Judge Walter made, I think that it's fair to characterize defendants' response [00:16:45] Speaker 02: typical in the typical alter ego case that is what makes it a remedy that is [00:17:25] Speaker 02: came back, that said, by the time you [00:18:05] Speaker 00: of that why shouldn't that be [00:18:36] Speaker 02: established a genuine issue of material fact. [00:18:39] Speaker 02: It cannot absolutely under numerous Ninth Circuit authorities, including Taylor, Nielsen, Eros Aeronautical. [00:18:46] Speaker 02: Taylor and Eros Aeronautical, by the way, were cited by the district court. [00:18:52] Speaker 02: They're not discussed at all in the briefing before this court. [00:18:57] Speaker 02: It's in our brief. [00:18:58] Speaker 02: It was not in the initial brief. [00:19:00] Speaker 02: And that's the critical standard. [00:19:01] Speaker 02: So we have both altered [00:19:57] Speaker 02: of material fact, but it needs to be detailed. [00:20:01] Speaker 02: You can't merely plead the case says that dead on. [00:20:06] Speaker 02: I mean, I read Taylor, but I don't think that's what Taylor says. [00:20:10] Speaker 02: So the case in Taylor, the issue was a request for summary judgment had been granted against an inmate on a 1983 claim, and that inmate had presented an affidavit that said the lieutenant [00:20:37] Speaker 02: legal defense, and the court said it is not enough to plead the conclusion that that individual did that. [00:20:45] Speaker 02: When did they do it? [00:20:46] Speaker 03: All you're arguing is that if it's conclusory or if it's vague, [00:21:07] Speaker 03: with this affidavit is it really conclusory every bit of it is it really without any corroborating evidence I mean there's nothing except the one affidavit and there's nothing except the conclusion if you can say it is but if you read it and it's personal knowledge and it's facts [00:21:48] Speaker 03: was doing is say that's my opinion about what that guy did but he didn't give any [00:22:26] Speaker 02: This is the response, quote, plaintiff questions transfers of approximately 519,000 to Coinbase. [00:22:35] Speaker 02: This was an unsuccessful Scanda investment. [00:22:39] Speaker 02: Had the investment generated return as many people expected crypto investments would do at the time, Scanda would have made a substantial return. [00:23:18] Speaker 00: And I understand that's where you're focused, but it doesn't look like there's been much discovery on your side on the alter ego issue. [00:23:26] Speaker 00: And that's why you're coming to the court with bank records and then asking that all these inferences be drawn in your client's favor really on the bank record transfers, the transfers. [00:23:38] Speaker 00: So am I correct? [00:25:23] Speaker 01: material fact, isn't that a question that our panel has to review de novo because a summary judgment was granted? [00:25:35] Speaker 02: Yes, Your Honor, and I would submit that even reviewed de novo, this declaration would not survive muster under the standards of the Ninth Circuit as far as what is required for a responsive affidavit. [00:25:51] Speaker 02: Okay, thank you. [00:27:26] Speaker 02: is Mr. Kerry made transfers out into millions to these other entities. [00:27:32] Speaker 02: These other entities made transfers to him, and they're completely unexplained. [00:27:37] Speaker 02: But the error Mr. Kerry is limited [00:28:03] Speaker 04: very briefly I think what this comes down to isn't so much [00:28:59] Speaker 03: court that's what the district court thought as well. [00:29:03] Speaker 04: Understood your honor I don't think that these can be fairly characterized as just conclusions and I think the sentence about [00:29:29] Speaker 03: simply like the case he cited, which was this prisoner who had a conclusion about the jailer and what the jailer done, and he said that was enough and put it in the affidavit, and we said that's not enough. [00:29:44] Speaker 04: Understood. [00:29:45] Speaker 04: I think that case is a little different. [00:29:46] Speaker 04: You're talking about, in the prisoner case, essentially close to a legal conclusion, where it's here whether something is an investment or not an investment. [00:29:59] Speaker 04: knowledge of this. [00:29:59] Speaker 04: Now, granted, we can go through, and certainly if it was trial, we would, and put in all the evidence from all the different transactions and whatnot, but I don't think that's required on summary judgment. [00:30:10] Speaker 04: Briefly, for the undercapitalization, I don't think that that was proven. [00:30:15] Speaker 04: Undercapitalization requires more than just a showing of a low balance. [00:30:20] Speaker 04: It requires a showing that the corporation is unable [00:30:29] Speaker ?: do, which was not shown here. [00:30:32] Speaker ?: Ultimately, I think we have an alter ego where there just wasn't discovery done that would support alter ego. [00:30:38] Speaker 03: Let me ask you for the question, which goes along with my colleague's question, and I realize that you said, oh, I'm not the lawyer there, so I can't tell you anything, but it seemed [00:30:56] Speaker ?: I'm wondering why in the devil we have this case. [00:31:01] Speaker ?: Why you're continuing with this kind of a case. [00:31:04] Speaker ?: If we're just gonna, everything they get from this case, they apply here, it's all, I guess I'm wondering. [00:31:38] Speaker 04: a little while and the case proceeded which I'm not involved with below and reached a resolution but I apologize I don't have information on that case your honor. [00:31:48] Speaker 03: I just was having you think about what the situation here is [00:32:05] Speaker 03: and you've heard what the arguments are and that we're looking very carefully at these statements as to whether they're really conclusory or not and maybe this isn't worth your money. [00:32:16] Speaker 03: That's all I'm trying to do is make you look at it. [00:32:20] Speaker 03: I appreciate your honors inside. [00:32:21] Speaker 03: Thank you. [00:32:22] Speaker 03: Thank you. [00:32:23] Speaker 03: All right, this case is then this case of [00:32:43] Speaker 03: before.