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In re 8Speed8, Inc.

United States Court of Appeals, Ninth Circuit

April 29, 2019

In the Matter of 8Speed8, Inc.
v.
SIG Capital, LLC, Appellee. Vibe Micro, Inc., Appellant,

          Argued and Submitted November 15, 2018 San Francisco, California

          Appeal from the United States District Court for the District of Nevada Richard F. Boulware II, District Judge, Presiding D.C. No. 2:14-cv-01618-RFB

          Torrence E.S. Lewis (argued), Law Offices of Torrence E.S. Lewis, Pittsburgh, Pennsylvania, for Appellant.

          David A. Stephens (argued), Stephens Gourley & Bywater, Las Vegas, Nevada, for Appellee.

          Before: Susan P. Graber, Stephanie Dawn Thacker, [*] and Mark J. Bennett, Circuit Judges.

         SUMMARY[**]

         Bankruptcy

         The panel affirmed the district court's decision affirming the bankruptcy court's denial of a request for statutory damages made by a 50% shareholder in an involuntary debtor following dismissal of the bankruptcy case.

         The panel held that the shareholder lacked standing to seek damages under 11 U.S.C. § 303(i) because it was not the debtor.

         Dissenting, Judge Bennett wrote that Miles v. Okun (In re Miles), 430 F.3d 1083 (9th Cir. 2005), holding that a third party could not seek damages under § 303(i), was not dispositive, and the shareholder did not lack standing to seek damages and attorneys' fees that would be awarded to the debtor, regardless of the debtor's ability to defend itself in the bankruptcy action, and notwithstanding that the shareholder actually obtained a dismissal on behalf of the debtor.

          OPINION

          THACKER, CIRCUIT JUDGE

         This case asks whether a 50% shareholder of an involuntary debtor may seek damages under 11 U.S.C. § 303(i). We hold that it may not. Accordingly, we affirm the decision of the district court.

         In March 2012, 8Speed8, Inc. was incorporated in the state of Nevada. Appellant Vibe Micro, Inc. is a 50% owner of 8Speed8's voting stock. Appellee SIG Capital, Inc. is a creditor of 8Speed8 and owns 20 million contingent shares.

         On December 13, 2013, SIG filed the involuntary bankruptcy petition at the center of this dispute. 8Speed8 never appeared in the bankruptcy action. Instead, on January 10, 2014, Vibe Micro filed a motion to dismiss the bankruptcy. Vibe Micro also asked for costs, fees, and actual and punitive damages under § 303(i). The bankruptcy court held a hearing August 28, 2014. At the hearing, SIG conceded that dismissal was appropriate. The bankruptcy court agreed but denied Vibe Micro's request for statutory attorney's fees and damages.

         The court concluded that Vibe Micro did not have standing under § 301(i). The district court affirmed that decision, and this appeal followed.

         We review the bankruptcy court's interpretation of bankruptcy statutes de novo. See Sofris v. Maple-Whitworth, Inc. (In re Maple-Whitworth, Inc.), 556 F.3d 742, 745 (9th Cir. 2009). No deference is given to the district court's review of that decision. See ...


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