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In re Roth Management Corporation

United States District Court, S.D. California

August 26, 2014

In re ROTH MANAGEMENT CORPORATION, Debtor.
v.
FAIRMOUNT L.P. and DEBRA ANN ROTH, Appellees. ANICE M. PLIKAYTIS, Appellant, No. 10-7663-MM11

ORDER AFFIRMING THE BANKRUPTCY COURT

CYNTHIA BASHANT, District Judge.

On December 9, 2014, Appellant Anice Plikaytis appealed a bankruptcy court's determination that a civil judgment against a bankrupt estate was ambiguous on its face. After reviewing the bankruptcy court's factual findings for clear error and the law de novo, the Court affirms the bankruptcy court.

PROCEDURAL BACKGROUND

In a 2009 jury trial in California state court, Appellant Anice Plikaytis sued her former employers James Roth, Roth Construction Corporation ("RCC"), Roth Management Corporation ("RMC"), and Appellee Fairmount, LP (dba Talmadge Canyon Park) (among others; collectively defendants). The jury found in her favor, awarding money damages.

Following this finding, Plikaytis lodged a proposed judgment with the trial court. RA Tab 40, Doc. 381-4. It enumerated, among other awards, a $280, 000 award against defendants RMC, RCC, and Fairmount, jointly and severally. Id.

Then the trial court held a hearing on alter ego liability and determined that RCC and RMC were James Roth's alter egos. RA Tab 40, Doc. 381-6, 150.

Consequently, when the court issued its final judgment, it included James Roth as jointly and severally liable for the $280, 000 award, along with other judgments against James Roth individually. RA Tab 1, Doc. 5-1, 3. At the bottom of the judgment, the court declared, "The Court further finds that JAMES ROTH, ROTH CONSTRUCTION CORPORATION, and ROTH MANAGEMENT CORPORATION are the alter ego of one another and orders the corporate veil to be pierced." RA Tab 1, Doc. 5-1, 3.

Defendants appealed the judgment, including the finding of alter ego liability, and the alter ego liability was affirmed. Plikaytis v. Roth, D056922, 2011 WL 4553127 (Cal.Ct.App. Oct. 4, 2011). The appellate court did not address "reverse veil piercing." See generally id.

RMC filed for Chapter 11 bankruptcy in 2010. Plikaytis filed a claim as a judgment creditor of RMC for $4, 126, 844.86 on the basis of the 2009 civil judgment, including judgments awarded against only Roth individually. RMC's other creditors Debra Roth and Fairmount LP filed objections to Plikaytis' claim.

The bankruptcy court looked beyond the state court judgment because it found the language relating to corporate veil piercing ambiguous. The court found it ambiguous because the "critical language alter ego of one another' is unclear, because the one another' is an inherently complicated and ambiguous term where it includes so many permutations, and what I can't do is say that it specifically includes the relevant permutation here, which is RMC being liable for Roth's debt." RA Tab 37 Transcript, 11:9-15. After looking beyond the four corners of the judgment, the bankruptcy court determined that the trial court did not intend its judgment to be interpreted as authorizing reverse veil piercing. Accordingly, the court sustained the objections and reduced the debt to only the $280, 000 against RMC.

Plikaytis now challenges the bankruptcy court's determination that the judgment was ambiguous, therefore challenging the bankruptcy court's decision to look beyond the four corners of the pleading at the trial record to determine the trial court's intent in its ruling. ECF 8, 4:15-19.

JURISDICTION

The Court has jurisdiction to hear this bankruptcy-court appeal under 28 U.S.C. ยง 158(a) and Federal Rule of ...


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