Annette Leroux v. C.P.A. Insurance Co.

• Court: Court of Appeals for the Ninth Circuit
• Decided: December 22, 2017
• Docket: 16-55549
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION DEC 22 2017 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

ANNETTE M. LEROUX, as Trustee of No. 16-55549 the William James Ross IV Irrevocable Trust and Edmund William Ross II D.C. No. Irrevocable Trust, 8:14-cv-01540-JVS-JCG

Plaintiff-Appellant, MEMORANDUM* v.

CPA INSURANCE COMPANY, a foreign corporation; et al.,

Defendants-Appellees.

Appeal from the United States District Court for the Central District of California James V. Selna, District Judge, Presiding

Argued and Submitted December 5, 2017 Pasadena, California

Before: WARDLAW and GOULD, Circuit Judges, and PIERSOL,** District Judge.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Lawrence L. Piersol, United States District Judge for the District of South Dakota, sitting by designation. Annette M. LeRoux appeals the district court’s dismissal of her claims and

denial of her motion for reconsideration. We review dismissal on standing grounds

de novo, but factual issues underlying the standing determination are reviewed for

clear error. In re Palmdale Hills Prop., LLC, 654 F.3d 868, 873 (9th Cir. 2011).

Denial of a motion for reconsideration is reviewed for abuse of discretion, but legal

conclusions on which the denial was based are reviewed de novo. Trader Joe’s

Co. v. Hallatt, 835 F.3d 960, 965 n.3 (9th Cir. 2016). We affirm.

1. LeRoux’s claims were all “sufficiently rooted in [William James Ross

III’s] pre-bankruptcy past” such that even if they arose post-bankruptcy filing, they

were part of the bankruptcy estate.1 Segal v. Rochelle, 382 U.S. 375, 379 (1966).

LeRoux’s breach of contract claim against ICON Reinsurance, Ltd. (“ICON”)

alleges breach at the time when CPA Insurance Company allegedly breached the

compensation agreement, which was in April 2009—well before Ross’s fall-2010

bankruptcy filing. Her declaratory relief claim against ICON, Stephanie H. Shear,

Douglas F. Rubino, and Julie-Ann Eastwood alleges breach of the compensation

agreement in April 2009. The two claims brought pursuant to the Racketeer

1 LeRoux advances many arguments involving the Third Circuit case In re O’Dowd, 233 F.3d 197 (3d Cir. 2000), which was relied on by the district court. But we review standing de novo and we see no reason to adopt O’Dowd’s “conceptually impossible to sever” test. 2 Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962(c) & 1962(d),

expressly allege a pattern of racketeering activity beginning in 2008 or 2009.2 And

all liability alleged in the remaining claims, even if based on post-bankruptcy

actions, is predicated on CPA, ICON, Rubino, Shear, and Eastwood’s conduct

between January and April 2009. For example, the fraudulent conveyance claim

and the unjust enrichment claim allege defendants received assets rightfully

belonging to Ross, but the assets belong to Ross only if the compensation

agreement was breached, which allegedly occurred pre-bankruptcy.

2. Only claims against CPA were abandoned and assigned to LeRoux, so

she cannot bring claims against other defendants. As an initial matter, LeRoux

does not raise substantive arguments against the district court’s abandonment

ruling until her reply brief, and, as such, these arguments are waived. United

States v. Bentson, 947 F.2d 1353, 1356 (9th Cir. 1991). In any event, LeRoux’s

arguments are unavailing. LeRoux’s motion to compel abandonment requests

“that the Trustee be compelled to abandon any and all choses-in-action against

CPA,” the trustee’s notice of abandonment states that the trustee intends to

abandon “a cause of action against CPA Insurance Company,” the bankruptcy

2 LeRoux’s argument that we should disregard allegations that are made on information and belief is unsupported by law and would unfairly shield her from the consequences of her own complaint’s allegations. 3 court’s abandonment order references “abandonment of the claim,” and the

bankruptcy court reiterated (on LeRoux’s motion) that “the cause of action against

CPA Insurance company is abandoned.” The inevitable conclusion is that LeRoux

received exactly what she asked for: abandonment of causes of action against

CPA. See Catalano v. C.I.R., 279 F.3d 682, 685 (9th Cir. 2002).

Creditors need not know each and every potential defendant, but it is beyond

belief that LeRoux was unaware of other potential defendants at the time.

Abandonment proceedings occurred in November and December 2013. A few

days later, LeRoux sought and obtained “assignment of rights [including] any right

of action . . . against CPA Insurance Company, or others, arising out of breach[]”

of the compensation agreement. And less than a month later, LeRoux filed this

lawsuit against CPA, Rubino, Eastwood, Shear, McKay, and Rock.

3. The district court did not abuse its discretion in denying LeRoux’s

motion for reconsideration. Rather than correcting a clear mistake and preventing

injustice, the bankruptcy court’s 2015 nunc pro tunc “clarification” that its prior

abandonment orders actually broadly abandoned “any and all claims against any

individual or entity arising out of or related to” the compensation agreement,

altered the substance of what actually transpired. Singh v. Mukasey, 533 F.3d

1103, 1110 (9th Cir. 2008). Furthermore, LeRoux explicitly told the bankruptcy

4 court that such revision was necessary to overturn the district court’s ruling.3 Cf.

id. (stating that the nunc pro tunc power “does not imply the ability . . . to backdate

events to serve some” purpose other than correcting “a clear mistake” and

preventing injustice).

In any event, “[t]he existence of federal jurisdiction ordinarily depends on

the facts as they exist when the complaint is filed.” Newman-Green, Inc. v.

Alfonzo-Larrain, 490 U.S. 826, 830 (1989); see also id. at 830–38 (delineating the

exceptions to that principle, none of which applies here). And we have squarely

held that standing cannot be created retroactively. W. Watersheds Project v.

Kraayenbrink, 632 F.3d 472, 483 n.6 (9th Cir. 2011). Accordingly, the district

court did not abuse its discretion in determining that regardless of the nunc pro

tunc order, as a matter of historical fact, LeRoux’s claims had not been abandoned

when she filed the operative complaint. See United States v. Yepez, 704 F.3d 1087,

1090 (9th Cir. 2012) (en banc); United States v. Alba-Flores, 577 F.3d 1104, 1111

(9th Cir. 2009).

AFFIRMED.

3 Eastwood, ICON, McKay, Rock, and Rubino’s motion to take judicial notice of the transcript from the bankruptcy court’s hearing regarding the nunc pro tunc order is granted. 5