Kirby Morgan Dive Systems, Inc. v. Hydrospace, Ltd.

MEMORANDUM

The district court clearly erred in determining that Smith was Hydrospace’s alter ego. Kirby Morgan presented insufficient evidence to support a finding that Hydro-space was undercapitalized during the relevant period, and the fact that Smith was Hydrospace’s sole owner and director “is insufficient to cause the court to disregard the corporate entity.” Leek v. Cooper, 194 Cal.App.4th 399 , 125 Cal.Rptr.3d 56, 68 (Ct.App.2011). Moreover, the district court failed to consider other relevant factors, such as whether Smith commingled his assets with those of Hydrospace, held himself out as liable for Hydrospace’s debts and failed to keep proper corporate records and observe other corporate formalities. See Sonora Diamond Corp. v. Superior Ct., 83 Cal.App.4th 523 , 99 Cal.Rptr.2d 824, 836 (Ct.App.2000). Because Smith was not Hydrospace’s alter ego, the district court erred in concluding that Smith consented to personal jurisdiction in California.

Nor did the district court have jurisdiction under the traditional minimum contacts framework, as Kirby Morgan presented no evidence that Smith “purposefully availed himself of the privilege of conducting activities in the forum”…