Pacer Construction Holdings Corporation v. Richard Pelletier and Richard Pelletier Holdings, Inc.

At a glance

Parties

Pacer Construction Holdings Corporation (Alberta, Canada) v. Richard Pelletier and Richard Pelletier Holdings, Inc. (RPHI)

Case no.

No. 19cv1263-MMA (BGS)

Court

U.S. District Court, Southern District of California (Judge Michael M. Anello)

Forum and rules

Petition to confirm foreign arbitral awards under the New York Convention and 9 U.S.C. § 207

Treaty

New York Convention (Article V)

Underlying award(s)

Partial final award of 13 March 2019 and corrected interest award of 22 May 2019 (arbitration under the Alberta International Commercial Arbitration Act)

Sector

Construction; oil and gas services; share purchase

Outcome

Motion to dismiss for lack of personal jurisdiction denied (5 February 2020); unopposed petition granted and the awards confirmed (28 February 2020).

Amount

Outstanding under the awards, as claimed: CAD 26,493,322.50. The petitioner was also held entitled to costs under 28 U.S.C. § 1920.

The dispute

In June 2014 MasTec, Inc. and its wholly owned subsidiary bought Pacer and related entities under a share purchase agreement. The sellers were Richard Pelletier, his holding company RPHI, Don Taylor, John Simpson, and their holding companies Resman Holdings Ltd. and 592652 Alberta Ltd. A dispute arose under the agreement. In March 2016 the parties signed an arbitration agreement governed by Alberta's International Commercial Arbitration Act. The tribunal issued a partial final award for Pacer on 13 March 2019 and an interest award on 5 April 2019, corrected on 22 May 2019. Pacer said that Pelletier and RPHI had paid nothing, and it petitioned in San Diego, where Pelletier has a residence, to confirm the awards under the New York Convention. RPHI, an Alberta company, moved to dismiss for lack of personal jurisdiction. Pacer argued that RPHI was Pelletier's alter ego.

Key holdings

1. A court asked to confirm an award under the Convention must still establish personal jurisdiction over the respondent. Orion Shipping does not prevent an alter ego analysis at the jurisdiction stage, because RPHI was itself a party to the arbitration. Order of 5 February 2020, pp. 4–5
2. Following Curci Investments v. Baldwin, the Court held that outside reverse veil piercing may be available under California law. Personal jurisdiction over an individual can therefore be imputed to a corporation that is his alter ego. Order of 5 February 2020, pp. 7–8
3. Pacer made a prima facie showing of unity of interest. Pelletier owned 100% of RPHI's voting shares, and RPHI's director, registered office and shareholder shared one address. Of the roughly CAD 59 million in sale proceeds, CAD 20 million went to a family trust and about CAD 6 million bought a Cayman Islands condominium, and the arbitral tribunal found that RPHI had no assets. Order of 5 February 2020, p. 9
4. Treating the two separately would be unjust. RPHI had been left as a shell, nothing had been paid under the awards, and Pacer had no adequate alternative remedy. The Court found personal jurisdiction over RPHI and denied the motion to dismiss. Order of 5 February 2020, pp. 10–11
5. Pacer met its burden by filing copies of the arbitration agreement and the awards. The respondents raised no Article V defence, and the Court found that none applied. It confirmed the awards, ordered judgment against the respondents as the awards provide, held Pacer entitled to costs, and declined to retain jurisdiction to enforce the awards. Order of 28 February 2020, pp. 5–6

Procedural history

1. June 2014MasTec, Inc. and its subsidiary sign the share purchase agreement for Pacer.
2. March 2016The parties sign an arbitration agreement governed by Alberta law.
3. 13 March 2019The arbitral tribunal issues a partial final award in Pacer's favour.
4. 22 May 2019The tribunal issues a corrected interest award (the original interest award was dated 5 April 2019).
5. 9 July 2019Pacer files its petition to confirm the awards.
6. 16 August 2019Pelletier files an answer, and RPHI moves to dismiss for lack of personal jurisdiction.
7. 5 February 2020The Court denies RPHI's motion to dismiss.
8. 28 February 2020The Court grants the unopposed petition and confirms the awards.

Tribunal, counsel and experts

Decided by

• Michael M. Anello Judge, U.S. District Court, Southern District of California

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Keywords

• New York Convention
• Article V
• 9 U.S.C. § 207
• confirmation of foreign award
• personal jurisdiction
• alter ego
• reverse veil piercing
• outside reverse veil piercing
• Curci Investments
• imputed general jurisdiction
• MasTec
• share purchase agreement
• Alberta International Commercial Arbitration Act
• holding company
• unopposed petition
• oil and gas construction

Summary generated with AI from the published documents — refer to the award for the authoritative text.