Thomas Seaman v. Neil Richardson ( 2021 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS FEB 1 2021
MOLLY C. DWYER, CLERK
FOR THE NINTH CIRCUIT U.S. COURT OF APPEALS
THOMAS A. SEAMAN, No. 19-55670
Plaintiff-Appellee, D.C. No. 8:18-cv-00538-CJC-DFM
v.
MEMORANDUM*
NEIL RICHARDSON,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
Cormac J. Carney, District Judge, Presiding
Submitted July 9, 2020**
Pasadena, California
Before: BERZON, COLLINS, Circuit Judges, and KATZMANN, *** Judge.
Defendant Neil Richardson appeals the district court’s order granting
summary judgment to Plaintiff Thomas Seaman in his capacity as the court-
appointed Receiver for PDC Capital Group, LLC (“PDC”) and certain of its
*
This disposition is not appropriate for publication and is not precedent except as
provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes that this case is suitable for decision without
oral argument. See FED. R. APP. P. 34(a)(2)(C).
***
The Honorable Gary S. Katzmann, Judge for the United States Court of
International Trade, sitting by designation.
subsidiaries and affiliates.1 Specifically, the district court granted summary
judgment to the Receiver on a single cause of action alleging that Richardson’s
acquisition of a lien against the property of a PDC affiliate was a fraudulent
transfer under the California Uniform Voidable Transfers Act, see CAL. CIV. CODE
§ 3439.04(a)(2). Reviewing de novo, see LN Management, LLC v. JPMorgan
Chase Bank, N.A., 957 F.3d 943, 949 (9th Cir. 2020), we affirm.
1. Richardson contends that there is a genuine issue of material fact as to
whether the relevant PDC affiliate “receiv[ed] a reasonably equivalent value in
exchange” for the lien in Richardson’s favor. CAL. CIV. CODE § 3439.04(a)(2); see
also Kirkeby v. Superior Ct., 93 P.3d 395, 399 (Cal. 2004) (creation of a lien
counts as a “transfer” under § 3439.04(a)). We disagree.
a. PDC was a real estate development company that offered investments in
U.S. properties to foreign nationals who sought to participate in the U.S.
“Immigrant Investor Program.” That program, “colloquially referred to as the EB-
5 program, provides legal permanent residency in the United States to foreign
nationals who invest in U.S.-based projects.” SEC v. Hui Feng, 935 F.3d 721, 725
(9th Cir. 2019) (citing 8 U.S.C. § 1153(b)(5)(A)). Two such investment offerings
are at issue here.
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The receivership was imposed in connection with an SEC enforcement action
against PDC and related persons and entities. See SEC v. Francisco, et al., No. 16-
cv-2257 (C.D. Cal.).
2
The first involved the “Westgate Property” in Sacramento, California, which
would be acquired and developed by an affiliate of PDC known as SAL Westgate,
LLC. The plan was for ten foreign investors to participate in this project by
purchasing, for $500,000 each, limited partnership stakes in SAL Westgate, LLC’s
parent entity, SAL Westgate, LP. The general partner of SAL Westgate, LP was
Summerplace Management, LLC (“Summerplace”), a PDC subsidiary that in turn
committed to contributing $3.5 million to SAL Westgate, LP. In March 2014,
SAL Westgate, LLC acquired the Westgate Property for $1.95 million. However,
Summerplace never contributed the $3.5 million it had promised, and PDC
ultimately raised only $4 million of the anticipated $5 million in investor funding.
The second investment involved the “Carmichael Property” in Carmichael,
California. It involved a similar structure, in which (1) Summerplace would be the
general partner of SAL Carmichael, LP, and ten foreign investors would be limited
partners; and (2) SAL Carmichael, LP would have a wholly owned subsidiary,
SAL Carmichael, LLC, which in turn would own the Carmichael Property. But
when SAL Carmichael, LLC purchased the Carmichael Property in July 2015 from
an entity called First Capital Mortgage Loan Corporation (“FCM”), that property
was subject to a lis pendens in Richardson’s favor as a result of a wholly unrelated
lawsuit between Richardson and FCM. Notably, by that time, Richardson worked
for PDC. Richardson agreed to release the lis pendens against the Carmichael
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Property, and in exchange he was granted a $2 million lien against the Westgate
Property. The recording of this lien was not disclosed to SAL Westgate, LP’s
limited partners.
b. As the district court correctly noted, the two projects involved different
PDC affiliates that had different limited partners, and there is no evidence in the
summary judgment record that SAL Westgate, LLC received anything of value
when its primary asset—the Westgate Property—was saddled with a $2 million
lien in favor of a different project. Richardson argues that the Westgate affiliates
tangentially benefited from the removal of the lis pendens on the Carmichael
Property, because, absent such removal, PDC might have lost its investment in the
Carmichael Property, which “would have affected the Westgate project.” But the
only support in the summary judgment record for this theoretical indirect benefit to
the Westgate affiliates is Richardson’s conclusory and unsupported speculation,
and that is not enough to create a genuine issue of material fact. See Nelson v.
Pima Cmty. Coll., 83 F.3d 1075, 1081–82 (9th Cir. 1996) (“mere allegation and
speculation do not create a factual dispute for purposes of summary judgment”).
Moreover, to the extent that Richardson’s theory is that difficulties concerning the
Carmichael Property would have rendered PDC unable to pay its $3.5 million
obligation to the Westgate project, this theory cannot be squared with the fact that,
even with the lis pendens removed from the Carmichael Property, PDC still did not
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pay the $3.5 million. In all events, even assuming arguendo that there was some
non-zero hypothetical indirect benefit to SAL Westgate, LLC, there is no genuine
dispute that, on this record, any such theoretical benefit was not “reasonably
equivalent” to being burdened with a formal $2 million lien. CAL. CIV. CODE
§ 3439.04(a)(2).
2. The district court also correctly held that the undisputed evidence
established that SAL Westgate, LLC’s “remaining assets . . . were unreasonably
small” in relation to its business and that it had no “ability to pay” its debts as they
became due. Richardson argues that the focus should have been on the PDC
“organization as a whole” rather than specifically on SAL Westgate, LLC. But
Richardson cites no authority in support of this contention, which directly
contravenes the statutory mandate to consider the situation of the “debtor” that
“incurred” the “obligation” in question, CAL. CIV. CODE § 3439.04(a)(2). Here,
that is SAL Westgate, LLC.
Finally, Richardson points to the money that had been raised by SAL
Westgate, LP, and the assets that SAL Westgate, LLC had. But Richardson does
not address the district court’s discussion of the record evidence concerning SAL
Westgate, LLC’s countervailing liabilities, and this argument therefore fails.
AFFIRMED.
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