FILED NOV 04 2014 1 NOT FOR PUBLICATION 2 SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT 3 UNITED STATES BANKRUPTCY APPELLATE PANEL 4 OF THE NINTH CIRCUIT 5 In re: ) BAP No. CC-14-1134-DKiTa ) 6 MICHELE RENEE CLARK, ) Bk. No. 10-41323-RN ) 7 Debtor. ) Adv. Proc. No. 10-03035-RN ______________________________) 8 ) ESTATE OF KIMBERLY KEMPTON, ) 9 ) Appellant, ) 10 ) v. ) M E M O R A N D U M1 11 ) MICHELE RENEE CLARK, ) 12 ) Appellee. ) 13 ______________________________) 14 Argued and Submitted on October 23, 2014 at Malibu, CA 15 Filed - November 4, 2014 16 Appeal from the United States Bankruptcy Court 17 for the Central District of California 18 Honorable Richard Neiter, Bankruptcy Judge, Presiding 19 Appearances: Charles G. Kinney argued for the appellant; Eric 20 Chomsky argued for the appellee. 21 Before: DUNN, KIRSCHER, and TAYLOR, Bankruptcy Judges. 22 23 24 25 26 1 This disposition is not appropriate for publication. 27 Although it may be cited for whatever persuasive value it may have (see Fed. R. App. P. 32.1), it has no precedential value. 28 See 9th Cir. BAP Rule 8013-1.
-1- 1 Judith Kempton (“Appellant”), as personal representative of 2 the estate of Kimberly Kempton (“Ms. Kempton”), appeals the 3 bankruptcy court’s order (“Dismissal Order”) reopening and 4 dismissing Ms. Kempton’s adversary proceeding (“Adversary 5 Proceeding”) against chapter 7 debtor Michele R. Clark 6 (“Ms. Clark”), based on the claim preclusive effect of the state 7 court’s dismissal with prejudice of Ms. Kempton’s underlying 8 state law claims.2 As discussed in greater detail infra, we 9 consider this appeal as encompassing certain interlocutory orders 10 entered by the bankruptcy court in the adversary proceeding prior 11 to its entry of the Dismissal Order, but we do not consider 12 orders entered by the bankruptcy court in Ms. Clark’s main 13 chapter 7 case or orders entered in independent state court 14 proceedings. We AFFIRM. 15 I. FACTUAL BACKGROUND 16 Both the Appellant and Ms. Clark have filed excerpts of 17 record in this appeal, but their excerpts fail to include a 18 number of documents filed in the Adversary Proceeding that are 19 material to our disposition of this appeal.3 We have exercised 20 21 2 Unless otherwise indicated, all chapter and section 22 references are to the federal Bankruptcy Code, 11 U.S.C. §§ 101- 1532, and all “Rule” references are to the Federal Rules of 23 Bankruptcy Procedure, Rules 1001-9037. All “Civil Rule” 24 references are to the Federal Rules of Civil Procedure. 3 25 Ms. Clark argues in her answering brief that we should summarily affirm the bankruptcy court based on deficiencies in 26 Appellant’s opening brief and excerpts of record and violations 27 by Appellant of the rules of appellate procedure. Appellant clearly could have done better, but we certainly have seen worse. 28 (continued...)
-2- 1 our discretion to review the bankruptcy court’s Adversary 2 Proceeding and main case dockets and the documents on record 3 therein to assist us in our consideration of this appeal. See 4 O’Rourke v. Seaboard Sur. Co. (In re E.R. Fegert, Inc.), 887 F.2d 5 955, 957-58 (9th Cir. 1989); Atwood v. Chase Manhattan Mortg. Co. 6 (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003). The 7 following factual narrative relies on information gleaned from 8 that review as well as from the parties’ excerpts of record, but 9 the narrative is limited to factual information relevant to this 10 appeal.4 11 A. Pre-Bankruptcy Disputes 12 In 2005, Ms. Kempton and Charles G. Kinney, an attorney who 13 represented Ms. Kempton before the bankruptcy court and is one of 14 the attorneys representing Appellant in this appeal 15 (“Mr. Kinney”), purchased a residence on Fernwood Avenue in Los 16 3 17 (...continued) “It is too late in the day and entirely contrary to the spirit of 18 the [Civil Rules] for decisions on the merits to be avoided on 19 the basis of such mere technicalities.” Foman v. Davis, 371 U.S. 178, 181 (1962). Accordingly, we determine in our discretion to 20 proceed to consider the merits of Appellant’s appeal. 21 4 The parties have filed multiple motions to augment the 22 record and/or for judicial notice of various documents filed in California state court proceedings and supplemental authorities 23 (“Motions for Judicial Notice”). We have considered the supplemental authorities submitted to the extent that they relate 24 to the issues we are deciding in this appeal. As for the 25 documents, primarily orders, from state court proceedings, we have considered such documents to the extent they were presented 26 to the bankruptcy court in the Adversary Proceeding, as discussed 27 in the following factual narrative, but otherwise deny the Motions for Judicial Notice, as not presenting documents relevant 28 for our consideration in this appeal.
-3- 1 Angeles (“Fernwood Property”) from Ms. Clark. Mr. Kinney 2 negotiated the Fernwood Property purchase contract for himself 3 and Ms. Kempton. 4 Ms. Kempton and Mr. Kinney subsequently alleged that 5 Ms. Clark “intentionally, willfully, and maliciously concealed 6 many adverse material facts [about the Fernwood Property] during 7 the negotiations . . . , all of which were required to be 8 disclosed under California law.” Ms. Kempton and Mr. Kinney 9 eventually sued Ms. Clark and her real estate brokers for “fraud, 10 nondisclosure, and rescission” in California state court (the 11 “State Court Litigation”). Actually, Mr. Kinney filed and 12 pursued a number of lawsuits with regard to the purchase of the 13 Fernwood Property, described as follows by the California Court 14 of Appeal: 15 This unusual case involves Charles G. Kinney, a lawyer who was declared a vexatious litigant in 2008 in 16 Los Angeles Superior Court. . . . Despite his status as a vexatious litigant, Kinney has pursued a 17 persistent and obsessive campaign of litigation terror against his neighbors and the City of Los Angeles. 18 Kinney has evaded the effect of the 2008 prefiling order by enlisting a cohort, Kimberly Jean Kempton, to 19 stand in his stead as plaintiff and appellant, because Kinney can no longer represent himself in litigation 20 without prior court approval. . . . With Kinney at the helm, Kempton has pursued six 21 lawsuits in Los Angeles Superior Court over the last five years. All of the lawsuits relate to the 22 [Fernwood Property]. [Ms. Kempton and Mr. Kinney] have continually – and resoundingly – lost their cases in 23 the trial courts. As one trial judge aptly wrote in a statement of decision, Kinney is “a relentless bully” 24 who displays “terrifying arrogance” by filing “baseless litigation against the City and its citizens.” 25 After losing in the trial courts, [Ms. Kempton and Mr. Kinney] have repeatedly appealed. Since 2007, they 26 have lost 13 appeals, had two appeals involuntarily dismissed and had a writ petition summarily denied. We 27 conclude that Attorney Kinney is using [Ms.] Kempton as his proxy or puppet in order to continue his career as 28 a vexatious litigant. This opinion and order will
-4- 1 serve to curb that behavior. 2 In re Finding of Charles G. Kinney, as a Vexatous Litigant, 3 201 Cal.App.4th 951, 953 (2011); Adversary Proceeding Docket 4 No. 12, Exhibit A, at 3.5 5 In part as a result of the litigation barrage from 6 Mr. Kinney and Ms. Kempton, Ms. Clark sought relief in chapter 7 7 on August 6, 2010, in Case No. 2:10–bk–41323–RN (the “Main 8 Case”). 9 B. The Adversary Proceeding 10 On November 8, 2010, Ms. Kempton filed the Adversary 11 Proceeding, Case No. 2:10–ap–03035. In the Adversary Proceeding 12 complaint, Ms. Kempton asserted exception to discharge claims 13 under §§ 523(a)(2)(A) and (6), based on claims made in the stayed 14 15 5 The California Court of Appeal went on to conclude: 16 17 Kinney has brought a multitude of cases – and lost every one of them – in two different counties, all 18 relating to the properties he owns. When authorized, 19 the courts have ordered him to reimburse his opponents’ attorney fees. Despite paying tens of thousands of 20 dollars to his opponents for the attorney fees that they needlessly incurred to fight him off, Kinney is 21 undeterred. He continues to sue and to appeal, wasting 22 vast quantities of judicial resources and taxpayer money to process his absurd and unsupported claims. 23 Kinney’s conduct must be stopped, immediately. 24 Id. at 960; Adversary Proceeding Docket No. 12, Exhibit A, at 5. 25 The Court of Appeal’s Opinion served “as a prefiling order prohibiting Kinney from filing any new litigation – either in his 26 own name or in the name of [Ms. Kempton] – in the courts of 27 [California] without first obtaining leave of the presiding judge.” Id. at 960-61; Adversary Proceeding Docket No. 12, 28 Exhibit A, at 6.
-5- 1 State Court Litigation. Ms. Clark filed an answer to the 2 complaint on December 16, 2010. 3 The bankruptcy court held a case management conference in 4 the Adversary Proceeding on January 20, 2011. We do not know 5 what was discussed at the case management conference because we 6 have not been provided with a transcript. However, the 7 bankruptcy court entered an Order re: Case Management (“Case 8 Management Order”) on March 3, 2011, staying the Adversary 9 Proceeding pending the outcome of the State Court Litigation. 10 The Case Management Order further provided: 11 2. [Ms.] Clark must appear and defend in the [State Court Litigation], which amounts to relief from the 12 bankruptcy automatic stay as to her, subject to the Bankruptcy Court’s review of, and decision regarding, 13 any judgment entered by the State Court against [Ms.] Clark before any enforcement of that State Court 14 judgment can occur. 3. If such a judgment against [Ms.] Clark is entered 15 in the State Court [Litigation], enforcement of said judgment is still subject to the stay of 11 USC 362 and 16 will require a further order of this Court. 17 Over a year later, on April 27, 2012, Ms. Kempton moved to 18 vacate (“Motion to Vacate”) the Case Management Order sending the 19 State Court Litigation back to the California state court, 20 arguing, among other things, that Ms. Clark’s attorneys might 21 succeed in having the State Court Litigation dismissed “using 22 State Court laws.” Ms. Clark opposed the Motion to Vacate, and 23 Ms. Kempton replied to Ms. Clark’s opposition. 24 In fact, on or about May 21, 2012, the California State 25 Court entered an order (“Security Order”) in the State Court 26 Litigation in response to Ms. Clark’s motion as follows: 27 IT IS HEREBY ORDERED . . . that Plaintiff Kempton is declared a Vexatious Litigant in this litigation 28 because she is a strawman for Kinney, and/or Kinney is
-6- 1 using her as his puppet or proxy in this litigation. The Court bases this finding on In re Kinney (2011) 2 201 Cal.App.4th 951, and Kempton’s failure to submit a declaration disputing this finding. In light of the 3 prior findings that Kinney is a vexatious litigant under CCP § 391.1, Kempton is bound by this 4 determination in this case. Kempton shall post security in the sum of $185,000 no later than 6/4, 5 2012, for Clark’s attorneys’ fees and other defense expenses in the event judgment is against Plaintiff. 6 If the bond is not posted by this date, the case shall be dismissed. 7 8 Adversary Proceeding Docket No. 12. 9 On June 13, 2012, Ms. Kempton filed a motion for a temporary 10 restraining order in the Adversary Proceeding, seeking to vacate 11 the Case Management Order (and, from Ms. Kempton’s perspective, 12 hoping to void any intervening orders entered by the California 13 state court in the State Court Litigation) and to set a trial 14 date in the Adversary Proceeding. In her motion, she claimed 15 that irreparable harm would result to her if the State Court 16 Litigation were dismissed based on the requirements of the 17 Security Order. 18 On June 15, 2012, the California state court entered an 19 order (“State Court Litigation Dismissal Order”) dismissing the 20 State Court Litigation with prejudice based upon Ms. Kempton’s 21 failure to satisfy the requirements of the Security Order. There 22 is no evidence in the record before us that Ms. Kempton ever 23 appealed the State Court Litigation Dismissal Order. Ms. Clark 24 has submitted in her excerpts of record a Remittitur and Order 25 from the California Court of Appeal, entered December 31, 2012 26 and September 13, 2012 respectively, that evidence denial of 27 Mr. Kinney’s appeals from “vexatious litigant” and prefiling 28 orders entered against him. On April 29, 2013, the United States
-7- 1 Supreme Court denied Mr. Kinney’s petition for writ of 2 certiorari, which, among other things, denied Mr. Kinney’s 3 request for a trial in federal court of Ms. Kempton’s claims in 4 the Adversary Proceeding. See Adversary Proceeding Docket 5 No. 54, at 6. The State Court Litigation Dismissal Order is 6 final for California state law purposes. 7 The Motion to Vacate was heard by the bankruptcy court on 8 June 19, 2012. Again, we have not been provided with a 9 transcript; so, we do not know what was discussed at the June 19, 10 2012 hearing. However, the bankruptcy court posted a tentative 11 decision in advance of the hearing that was incorporated in and 12 attached to its order denying the Motion to Vacate, entered on 13 July 30, 2012 (the “July 30, 2012 Order”). 14 In its tentative decision, the bankruptcy court indicated 15 that it was inclined to deny the Motion to Vacate for a number of 16 reasons, including the following: 1) If the State Court 17 Litigation were dismissed for failure to post the required 18 security bond, such dismissal “will be by Plaintiff’s 19 [Ms. Kempton’s] own doing” in light of the California state 20 court’s holding, “consistent with the California Court of Appeal 21 and Supreme Court,” that “Mr. Kinney and/or Ms. Kempton are 22 vexatious litigants.” In such circumstances, the bankruptcy 23 court would “give full faith and credit to the [California state 24 court’s] decision to dismiss the case, and the [Adversary 25 Proceeding] will also be dismissed.” 2) If the State Court 26 Litigation were not dismissed, the bankruptcy court had already 27 decided that the State Court Litigation should continue in 28 California state court because the State Court Litigation
-8- 1 involves State law issues and non-debtor parties (such as the Real Estate Broker); the State law claims can be 2 most expeditiously tried in State Court; they can be tried by a jury in that Court but not in Bankruptcy 3 Court . . .; the litigation over the subject real estate transaction has been pending in the State Court 4 since 2006; and this Court sees no reason to vacate the [Case Management Order]. 5 6 On December 6, 2012, the Adversary Proceeding was closed 7 administratively. On December 17, 2012, Ms. Kempton moved to 8 reopen the Adversary Proceeding, asserting, among other reasons, 9 that the “debt” owed by Ms. Clark to Ms. Kempton “was never 10 determined by any court.” In his Declaration filed in support of 11 the motion to reopen, Mr. Kinney advised that he had filed a 12 motion in the California state court to overturn the Security 13 Order. Thereafter, the Adversary Proceeding was reopened, as 14 closed by inadvertent clerical error, by order entered on 15 December 20, 2012. 16 On October 4, 2013, the Adversary Proceeding again was 17 closed administratively, in conjunction with the closing of the 18 Main Case, since “it appears that no further matters are pending 19 that require this [Adversary Proceeding] remain open.” On 20 November 4, 2013, the Appellant [Ms. Kempton apparently was now 21 deceased] moved to reopen the Adversary Proceeding, supported by 22 the Declaration of Mr. Kinney. A hearing (“Hearing”) was set on 23 the motion to reopen for March 13, 2014. Ms. Clark opposed the 24 motion to reopen, supported by the Declaration of her counsel. 25 The Appellant filed a reply on March 6, 2014. 26 The bankruptcy court posted a tentative ruling in advance of 27 the Hearing. At the Hearing, after hearing argument from counsel 28 for the Appellant and Ms. Clark, the bankruptcy court stated that
-9- 1 1) it would reopen the Adversary Proceeding because it was not 2 properly closed on October 4, 2013, and 2) it then would dismiss 3 the Adversary Proceeding “because the underlying fraud action was 4 dismissed in State Court.” Tr. of March 13, 2014 hr’g, 8:14-17; 5 11:7-11. 6 On March 21, 2014, the bankruptcy court entered the 7 Dismissal Order, reopening and dismissing the Adversary 8 Proceeding. In the Dismissal Order, the bankruptcy court 9 incorporated all but the last two sentences of its tentative 10 ruling. In its tentative ruling, the bankruptcy court noted that 11 the October 4, 2013 closing of the Adversary Proceeding was 12 inappropriate procedurally in that none of the reasons stated on 13 the closing docket entry applied. Accordingly, the bankruptcy 14 court would reopen the Adversary Proceeding to correct the 15 clerical error in closing it. However, getting to the substance 16 of the matter, the bankruptcy court noted that, “[t]he dismissal 17 of the [State Court Litigation] is final and no appeal of the 18 dismissal was taken.” Dismissal Order, at 4. “[I]n view of the 19 final non-appealable order in the state court dismissing the 20 [State Court Litigation], there appears to be no basis for the 21 Plaintiff’s nondischargeability claim but an order to that effect 22 needs to be entered in order to dispose of the [Adversary 23 Proceeding] properly.” Dismissal Order, at 6. 24 The Appellant filed a timely Notice of Appeal on March 24, 25 2014.6 26 27 6 In her Answering Brief, Ms. Clark argues that this appeal 28 (continued...)
-10- 1 II. JURISDICTION 2 The bankruptcy court had jurisdiction under 28 U.S.C. 3 §§ 1334 and 157(b)(2)(I). We have jurisdiction under 28 U.S.C. 4 § 158. 5 III. ISSUES 6 In the Statement of Issues filed with the bankruptcy court 7 (Adversary Proceeding Docket No. 73) and in her Opening Brief, 8 Appellant lists eighteen issues for consideration in this appeal. 9 Some of the listed issues relate to proceedings and orders in the 10 Main Case, in California state courts and in federal district 11 court that are not properly before us in this appeal, as 12 discussed more fully infra. Otherwise, we distill the issues 13 before us in this appeal down to the following two: 14 1) Did the bankruptcy court abuse its discretion in staying 15 the Adversary Proceeding pending the outcome of the State Court 16 Litigation and in granting relief from stay so that the State 17 Court Litigation could proceed? 18 2) Did the bankruptcy court err in dismissing the Adversary 19 Proceeding based on its conclusion that no debt was owed by 20 Ms. Clark to Ms. Kempton and the Appellant, as Ms. Kempton’s 21 22 6 (...continued) 23 is untimely for some or all purposes, as no Notice of Appeal was filed within fourteen days following the administrative closing 24 of the Adversary Proceeding on October 4, 2013, pursuant to the 25 requirements of Rule 8002(a). Since we agree with the bankruptcy court that the closing of the Adversary Proceeding on October 4, 26 2013 was the result of clerical error, the operative order was 27 the Dismissal Order, entered on March 21, 2014, and the Notice of Appeal filed in behalf of the Appellant three days later was 28 timely.
-11- 1 successor in interest? 2 IV. STANDARDS OF REVIEW 3 We review a bankruptcy court’s decision to dismiss an 4 adversary proceeding on the pleadings de novo. Henry A. v. 5 Willden, 678 F.3d 991, 998 (9th Cir. 2012). Likewise, we review 6 a bankruptcy court’s summary judgment determinations and its 7 interpretations of bankruptcy and state law de novo. Trunk v. 8 City of San Diego, 629 F.3d 1099, 1105 (9th Cir. 2011) (summary 9 judgment); Hopkins v. Cerchione (In re Cerchione), 414 B.R. 540, 10 545 (9th Cir. BAP 2009) (interpretation of the Bankruptcy Code 11 and state law). De novo means that we consider a matter anew, as 12 if no decision previously had been rendered. Dawson v. Marshall, 13 561 F.3d 930, 933 (9th Cir. 2009). 14 We review a bankruptcy court’s case management decisions for 15 abuse of discretion. GCB Commc’ns, Inc. v. U.S. S. Commc’ns, 16 Inc., 650 F.3d 1257, 1262 (9th Cir. 2011); Rivera v. Orange Cnty 17 Probation Dept. (In re Rivera), 511 B.R. 643, 648 (9th Cir. BAP 18 2014). A bankruptcy court abuses its discretion if it applies an 19 incorrect legal standard or misapplies the correct legal 20 standard, or if its fact findings are illogical, implausible or 21 without support from evidence in the record. TrafficSchool.com 22 v. Edriver Inc., 653 F.3d 820, 832 (9th Cir. 2011). 23 We may affirm a decision of the bankruptcy court on any 24 basis supported by the record. Shanks v. Dressel, 540 F.3d 1082, 25 1086 (9th Cir. 2008). 26 V. DISCUSSION 27 A. Main Case Proceedings and Orders 28 We begin our analysis by discussing some matters that are
-12- 1 not appropriately considered in this appeal. Rule 8001 sets 2 forth the procedure for appealing bankruptcy court orders and 3 judgments. Rule 8001(a), which is adapted from Rule 3(a) of the 4 Federal Rules of Appellate Procedure (“FRAP”), provides that: 5 An appeal from a judgment, order, or decree of a bankruptcy judge to a district court or bankruptcy 6 appellate panel as permitted by 28 U.S.C. § 158(a)(1) or (a)(2) shall be taken by filing a notice of appeal 7 with the clerk within the time allowed by Rule 8002 . . . . The notice of appeal shall (1) conform 8 substantially to the appropriate Official Form, . . . . 9 The appropriate Official Form is Form 17, which provides in its 10 initial paragraph as follows: 11 _____________, the plaintiff [or defendant or other party] appeals under 28 U.S.C. § 158(a) or (b) from the 12 judgment, order, or decree of the bankruptcy judge (describe) entered in this adversary proceeding [or 13 other proceeding, describe type] on the ___ day of (month), (year). 14 15 Accordingly, the appellant is required to designate in the notice 16 of appeal the specific judgment or order appealed from in the 17 particular concerned case. 18 In the Notice of Appeal filed by Appellant herein, Appellant 19 states that she is appealing the Dismissal Order, copies of which 20 are attached to the Notice of Appeal.7 The Notice of Appeal 21 does not identify any other order(s) that the Appellant seeks to 22 appeal. 23 We discuss interlocutory orders in the Adversary Proceeding 24 that merged in the final Dismissal Order infra, but proceedings 25 26 7 The Dismissal Order apparently was docketed both as an 27 order reopening the Adversary Proceeding (see Adversary Proceeding Docket No. 62) and as an order dismissing the 28 Adversary Proceeding (see Adversary Proceeding Docket No. 63).
-13- 1 and orders in the Main Case are fundamentally different in that 2 the Main Case and the Adversary Proceeding are not the same 3 cases. “An adversary proceeding is . . . part of the bankruptcy 4 but it is not the bankruptcy case itself, as illustrated by the 5 fact that the dismissal of an adversary proceeding is an 6 appealable final order even though the bankruptcy [main] case 7 continues.” United States v. Peel, 595 F.3d 763, 768-69 (7th 8 Cir. 2010), cert. denied, Peel v. United States, 131 S.Ct. 994 9 (2011) (citing Marchiando v. Illinois (In re Marchiando), 13 F.3d 10 1111, 1113-14 (7th Cir. 1994)). The Appellant did not designate 11 or identify any order(s) in the Main Case that she sought to 12 appeal in her Notice of Appeal. 13 A mistake in designating an order or judgment that the 14 appellant seeks to appeal in a notice of appeal is not 15 necessarily fatal to an appeal “so long as the intent to appeal a 16 specific judgment can be fairly inferred from the notice and 17 appellee is not misled by the mistake.” Kelly v. United States, 18 789 F.2d 94, 96 n.3 (1st Cir. 1986). See Foman v. Davis, 19 371 U.S. 178 (1962). “[I]f a litigant files papers in a fashion 20 that is technically at variance with the letter of a procedural 21 rule, a court may nonetheless find that the litigant has complied 22 with the rule if the litigant’s action is the functional 23 equivalent of what the rule requires.” Torres v. Oakland 24 Scavenger Co., 487 U.S. 312, 316-17 (1988) (emphasis added). 25 However, that liberal principle of construction is not without 26 limits and does not excuse noncompliance with the rules of 27 appellate procedure. See Smith v. Barry, 502 U.S. 244, 248 28 (1992). “[A]lthough a court may construe [FRAP] liberally in
-14- 1 determining whether they have been complied with, it may not 2 waive the jurisdictional requirements of Rules 3 and 4, even for 3 ‘good cause shown’ under Rule 2, if it finds that they have not 4 been met.” Torres v. Oakland Scavenger Co., 487 U.S. at 317. 5 Nothing in the Notice of Appeal here gives any indication 6 that Appellant sought to appeal any order in the Main Case. 7 Since the Main Case was closed on October 4, 2013, the deadline 8 for filing a notice of appeal with respect to any order in the 9 Main Case under Rule 8002 is long past. Nothing in the record 10 before us tends to establish that the Appellant or her 11 predecessor in interest ever filed a notice of appeal with 12 respect to any order entered in the Main Case. Accordingly, we 13 do not consider any issues raised by Appellant as to the actions 14 of the chapter 7 trustee or Ms. Clark’s attorneys in the Main 15 Case and specifically, any abandonment order(s) entered by the 16 bankruptcy court in the Main Case as encompassed by this appeal. 17 See, e.g., Spookyworld, Inc. v. Town of Berlin 18 (In re Spookyworld, Inc.), 346 F.3d 1, 6 (1st Cir. 2003). 19 B. The Case Management Order 20 Pulling together the threads of Appellant’s wide-ranging 21 arguments in her opening brief presents a challenge, but we 22 interpret one argument submitted by Appellant as follows: Lifting 23 the automatic stay of § 362 in the Case Management Order was 24 procedurally improper because the requirements of § 362(d) were 25 not followed. See Appellant’s Opening Brief, at 17 and 24. In 26 relevant part, § 362(d) provides that in appropriate 27 circumstances, the automatic stay can be lifted “[o]n request of 28 a party in interest and after notice and a hearing.”
-15- 1 Appellant did not designate the Case Management Order in her 2 Notice of Appeal as an order that she was appealing. However, in 3 her Statement of Issues, issue number two is stated as: “Whether 4 the US Bankruptcy Court can transfer KEMPTON’s adversary 5 proceeding to the State Court for a determination by the State 6 Court of any ‘debt’ owed by CLARK to KEMPTON on March 3, 2011, 7 without any motion for relief from stay or similar motion to 8 allow such a transfer to State Court under 11 U.S.C. Sec. 362?” 9 See Adversary Proceeding Docket No. 73, at 3. The Case 10 Management Order was an interlocutory order in the Adversary 11 Proceeding that without leave, could not be appealed until a 12 final judgment, i.e., the Dismissal Order, was entered. See, 13 e.g., 28 U.S.C. § 158(a); Baldwin v. Redwood City, 540 F.2d 1360, 14 1364 (9th Cir. 1976); Adamian v. Jacobsen, 523 F.2d 929, 931 (9th 15 Cir. 1975). Since Appellant manifested a clear intent to appeal 16 the interlocutory Case Management Order in her Statement of 17 Issues and argued that lifting the stay in the Case Management 18 Order was not proper procedurally in her opening brief, to which 19 argument Ms. Clark responded in her answering brief (see 20 Appellee’s Answering Brief, at 11 and 15-18), we conclude that it 21 is appropriate to consider the Case Management Order in this 22 appeal. See Foman v. Davis, 371 U.S. at 181. 23 However, considering the entire record before us (and what 24 is not before us) in this appeal, we conclude that we must affirm 25 the Case Management Order for the following reasons: 26 1. “Where there is a clearly inadequate record on appeal, 27 we have ‘little choice’ but to affirm.” Hardcastle v. Greer 28 (In re Hardcastle), 2013 WL 5944042, at *9 (9th Cir. BAP Nov. 7,
-16- 1 2013) (emphasis in original), citing Morrissey v. Stuteville 2 (In re Morrissey), 349 F.3d 1187, 1191 (9th Cir. 2003). As noted 3 above, while Appellant included the Case Management Order itself 4 in her excerpts of record, we do not have a transcript of the 5 case management conference that generated the order. So, we do 6 not know what was discussed at the case management conference or 7 what rationale the bankruptcy court articulated in determining to 8 issue the Case Management Order. In light of Appellant’s failure 9 to provide us with a transcript of the case management 10 conference, we are entitled to presume that the Appellant does 11 not think that a transcript would be helpful to her in this 12 appeal. See Gionis v. Wayne (In re Gionis), 170 B.R. 675, 681 13 (9th Cir. BAP 1994). 14 2. “As a general rule issues which have not been raised in 15 the trial court will not be reviewed on appeal.” Scott v. 16 Pacific Maritime Ass’n, 695 F.2d 1199, 1203 (9th Cir. 1983). 17 “Ordinarily, if an issue is not raised before the trial court, it 18 will not be considered on appeal and will be deemed waived.” 19 Levesque v. Shapiro (In re Levesque), 473 B.R. 331, 336 (9th Cir. 20 BAP 2012). Beverly Cmty. Hosp. Ass’n v. Belshe, 132 F.3d 1259, 21 1267 (9th Cir. 1997) (“[B]efore an appellate court will consider 22 . . . an issue, ordinarily the argument must have been raised 23 sufficiently for the trial court to rule on it.”). 24 We have reviewed the documents on the Adversary Proceeding 25 docket very carefully, and we do not find that Appellant or 26 Ms. Kempton ever argued to the bankruptcy court that the Case 27 Management Order was improperly entered because the bankruptcy 28 court lifted the § 362 stay sua sponte to allow the State Court
-17- 1 Litigation to proceed. The only reference to this issue that we 2 have been able to find in pleadings by Ms. Kempton or the 3 Appellant in the Adversary Proceeding is the following statement 4 in the “History” section of Appellant’s reply pleading with 5 respect to her motion to reopen the Adversary Proceeding: “This 6 Court at a case management conference for the [Adversary 7 Proceeding] ordered CLARK to ‘appear and defend’ in a 2007 State 8 Court fraud case on March 3, 2011 without any party requesting 9 such relief (e.g. from the automatic stay) under 11 U.S.C. 10 Sec. 362.” See Adversary Proceeding Docket No. 61, at 2 11 (emphasis in original). That document was filed more than two 12 years after the Case Management Order was entered. No argument 13 that the Case Management Order was improper because no party had 14 moved in advance for relief from the automatic stay to allow the 15 State Court Litigation to proceed was made by Appellant’s counsel 16 at the Hearing. 17 3. As to the substance of Appellant’s argument, the Case 18 Management Order documents decisions of the bankruptcy court made 19 at the case management conference in January 2011. As we noted 20 supra, case management decisions are reviewed for abuse of 21 discretion. GCB Commc’ns, Inc. v. U.S. S. Commc’ns, Inc., 22 650 F.3d at 1262; In re Rivera, 511 B.R. at 648. 23 Rule 7016 makes Civil Rule 16 applicable in adversary 24 proceedings in bankruptcy. Civil Rule 16(a) states the purposes 25 for a pretrial or case management conference as follows: 26 In any action, the court may order the attorneys and any unrepresented parties to appear for one or more 27 pretrial conferences for such purposes as: (1) expediting disposition of the action; 28 (2) establishing early and continuing control so
-18- 1 that the case will not be protracted because of lack of management; 2 (3) discouraging wasteful pretrial activities; (4) improving the quality of the trial through 3 more thorough preparation; and (5) facilitating settlement. 4 5 Although our review is hampered by the absence of a transcript of 6 the case management conference, there are indications in the 7 Adversary Proceeding record as to the reasoning behind the 8 bankruptcy court’s decision to stay the Adversary Proceeding 9 until the underlying State Court Litigation was resolved. 10 In the Motion to Vacate, counsel for Ms. Kempton noted that 11 “this Court expected a ‘trial’ to occur in State Court but then 12 come back to this Court for ‘judgment’ with required findings and 13 conclusions [to benefit CLARK so she would not have to go through 14 2 trials in pro per].” See Adversary Proceeding Docket No. 6, at 15 2. In its tentative decision incorporated in the July 30, 2012 16 Order, the bankruptcy court further noted that it already had 17 decided (presumably at the case management conference) that the 18 State Court Litigation should continue to a conclusion in the 19 California state court because the State Court Litigation 20 involves State law issues and non-debtor parties (such as the Real Estate Broker); the State law claims can be 21 most expeditiously tried in State Court; they can be tried to a jury in that Court but not in Bankruptcy 22 Court . . .; the litigation over the subject real estate transaction has been pending in the State Court 23 since 2006 . . . . 24 Contrary to Appellant’s argument, there is authority that a 25 bankruptcy court can lift the automatic stay of § 362 sua sponte 26 in appropriate circumstances. Section 105(a) provides that, 27 The [bankruptcy] court may issue any order, process, or judgment that is necessary or appropriate to carry out 28 the provisions of this title. No provision of this
-19- 1 title providing for the raising of an issue by a party in interest shall be construed to preclude the 2 [bankruptcy] court from, sua sponte, taking any action or making any determination necessary or appropriate to 3 enforce or implement court orders or rules, or to prevent an abuse of process. 4 5 Section 105(a) has been interpreted as allowing a bankruptcy 6 court to lift the automatic stay sua sponte to allow related 7 litigation to proceed in another court. See, e.g., 8 In re Laventhol & Horwath, 139 B.R. 109, 116 and n.6 (Bankr. 9 S.D.N.Y. 1992); Bellucci v. Swift (In re Bellucci), 119 B.R. 763, 10 778-79 (Bankr. E.D. Cal. 1990). See also In re Henderson, 11 395 B.R. 893, 899 (Bankr. D.S.C. 2008); Harris v. Margaretten 12 (In re Harris), 203 B.R. 46, 50 n.1 (Bankr. E.D. Va. 1994). Cf. 13 Case Management Manual for United States Bankruptcy Judges 73 14 (Fed. Judicial Center, 2d ed. 2012) (“From a practical 15 standpoint, an order granting abstention should include a 16 provision granting relief from the automatic stay to permit the 17 matter to proceed in the appropriate forum.”). 18 In these circumstances, we do not perceive an abuse of 19 discretion in the bankruptcy court’s decision to lift the 20 automatic stay of § 362 to allow the State Court Litigation to 21 proceed in the California state courts prior to moving forward 22 with the Adversary Proceeding, and we conclude that the 23 bankruptcy court did not err in entering the Case Management 24 Order.8 25 26 8 In her reply brief, Appellant includes the July 30, 2012 27 Order among the orders to which her Notice of Appeal might relate (see Appellant’s Reply Brief, at 10). However, she does not 28 (continued...)
-20- 1 C. The State Court Litigation 2 In light of our conclusion that the bankruptcy court did not 3 abuse its discretion in lifting the automatic stay to allow the 4 State Court Litigation to proceed, we do not perceive that we 5 have any authority to review, let alone reverse, subsequent 6 orders and decisions of the California state courts in the State 7 Court Litigation. Under the Full Faith and Credit Act, 8 implementing the Constitution’s Full Faith and Credit Clause, we 9 are required to accord the decisions of state courts “the same 10 full faith and credit . . . as they have by law or usage in the 11 courts of such State . . . from which they are taken.” 28 U.S.C. 12 § 1738; Migra v. Warren City Sch. Dist. Bd. of Edu., 465 U.S. 75, 13 80 (1984). In addition, we have no authority to review on appeal 14 the decisions of the California state courts in the State Court 15 Litigation. “[T]he Rooker-Feldman doctrine provides that the 16 United States Supreme Court is the only federal court that may 17 review an issue previously determined or ‘inextricably 18 intertwined’ with the previous action in state court between the 19 20 8 (...continued) 21 assert any argument in her opening brief (or in her reply brief 22 either, for that matter) as to why the bankruptcy court erred in entering the July 30, 2012 Order. “The Court of Appeals will not 23 ordinarily consider matters on appeal that are not specifically and distinctly argued in the appellant’s opening brief.” Miller 24 v. Fairchild Indus., Inc., 797 F.2d 727, 737 (9th Cir. 1986). 25 Christian Legal Soc. v. Wu, 626 F.3d 483, 487-88 (9th Cir. 2010); Jodoin v. Samayoa (In re Jodoin), 209 B.R. 132, 143 (9th Cir. BAP 26 1997). Since Appellant does not make any argument asserting 27 error with respect to the July 30, 2012 Order, any such argument is waived, and we do not consider the July 30, 2012 Order 28 further.
-21- 1 same parties.” Huse v. Huse-Sporsem, A.S. (In re Birting 2 Fisheries, Inc.), 300 B.R. 489, 498 (9th Cir. BAP 2003). See 3 D.C. Court of Appeals v. Feldman, 460 U.S. 462, 486 (1983); and 4 Rooker v. Fid. Trust Co., 263 U.S. 413, 415-16 (1923). 5 Appellant argues that all such orders “are void since 6 [Ms. Kempton’s] adversary proceeding precludes those state court 7 decisions.” Appellant’s Opening Brief, at 23. We disagree. 8 This Panel did conclude in In re Birting Fisheries, Inc., 9 300 B.R. at 498, that, “[w]hen a matter comes within the 10 bankruptcy court’s exclusive jurisdiction . . . general 11 preclusion rules and the Rooker-Feldman doctrine do not apply.” 12 See, e.g., Kalb v. Feuerstein, 308 U.S. 433, 438-39 (1940) 13 (“Congress, because its power over the subject of bankruptcy is 14 plenary, may by specific bankruptcy legislation create an 15 exception . . . and render judicial acts taken with respect to 16 the person or property of a debtor whom the bankruptcy law 17 protects nullities and vulnerable collaterally.”). 18 However, when the bankruptcy court sent the State Court 19 Litigation back to the California state courts for determination, 20 it required Ms. Clark to defend the purely state law claims 21 asserted by Ms. Kempton in her state court complaint for fraud, 22 breach of contract and nondisclosure, nothing less, but nothing 23 more. The bankruptcy court did not send the exception to 24 discharge claims before it to state court, but retained its 25 authority to adjudicate claims under § 523(a)(2) and (6) between 26 the parties, if such claims remained to be decided after the 27 State Court Litigation was concluded. In these circumstances, we 28 simply have no authority to review the decisions reached by the
-22- 1 California state courts in the State Court Litigation in this 2 appeal. We discuss the result in the State Court Litigation and 3 its impact on the Adversary Proceeding in the next section of the 4 Discussion. 5 D. The Dismissal Order 6 Some clarification is in order as to what the Dismissal 7 Order represents procedurally. Appellant characterizes the 8 Dismissal Order as a “defacto” involuntary dismissal under Civil 9 Rule 52(c), applicable in adversary proceedings in bankruptcy 10 under Rule 7052, which applies to a judgment entered by the court 11 in a nonjury trial, finding against a party on a claim after such 12 party has been fully heard on a dispositive issue. See 13 Appellant’s Opening Brief, at 24. Since, as Appellant is 14 painfully aware, no trial was held on her claims in the Adversary 15 Proceeding, we suggest that it is more accurate to characterize 16 the Dismissal Order as dismissing Appellant’s claims on the 17 pleadings under Civil Rule 12(c), applicable in adversary 18 proceedings in bankruptcy under Rule 7012(b), for failure to 19 state a claim upon which relief can be granted. However, since 20 the bankruptcy court considered matters and evidence outside the 21 pleadings from the parties’ legal memoranda and declarations in 22 arriving at its decision to dismiss the Adversary Proceeding, we 23 consider the Dismissal Order as in the nature of a summary 24 judgment under Civil Rule 56, applicable in adversary proceedings 25 in bankruptcy under Rule 7056. Jacobson v. AEG Capital Corp., 26 50 F.3d 1493, 1496 (9th Cir. 1995). In any event, as noted 27 above, however we characterize the Dismissal Order, the 28 applicable standard for our review is de novo.
-23- 1 Appellant argues that we should vacate the Dismissal Order 2 and remand to the bankruptcy court for further proceedings 3 because the Appellant “is entitled to have a trial in her 4 [A]dversary [P]roceeding against [Ms.] Clark.” Appellant’s 5 Opening Brief, at 24. We disagree for the following reasons. 6 We start our analysis by reviewing the statutory provisions 7 on which Appellant relies to state her claims. 8 Sections 523(a)(2)(A) and (a)(6) provide in relevant part as 9 follows: 10 (a) A discharge under section 727 . . . of this title does not discharge an individual debtor from any debt– 11 (2) for money [or] property . . . to the extent obtained, by– 12 (A) false pretenses, a false representation, or actual fraud . . . ; 13 (6) for willful and malicious injury by the debtor to another entity or to the property of another 14 entity . . . . (Emphasis added.) 15 Accordingly, a condition precedent to pursuing a claim under 16 § 523(a)(2)(A) or (a)(6) is that the debtor owe a “debt” to the 17 claimant. 18 The term “debt” is defined in the Bankruptcy Code as a 19 “liability on a claim,” and in turn, a “claim” is defined as: 20 (A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, 21 contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or 22 (B) right to an equitable remedy for breach of performance if such breach gives rise to a right to 23 payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, 24 matured, unmatured, disputed, undisputed, secured, or unsecured. 25 26 Sections 101(12) and 101(5), respectively. 27 Both terms are very broad, and the Supreme Court has held 28 that they are coextensive. See Pennsylvania Dept. of Public
-24- 1 Welfare v. Davenport, 495 U.S. 552, 558 (1990). However, their 2 compass is not limitless. 3 We have said that “claim” has “the broadest available definition,” Johnson v. Home State Bank, 501 U.S. 78, 4 83 . . . (1991), and have held that the “plain meaning of a ‘right to payment’ is nothing more nor less than 5 an enforceable obligation” . . . . 6 FCC v. NextWave Personal Communications Inc., 537 U.S. 293, 302- 7 03 (2003), quoting Pennsylvania Dept. of Public Welfare v. 8 Davenport, 495 U.S. at 559 (emphasis added). Appellant’s 9 fundamental problem in this appeal is that no enforceable 10 obligation underlies the claims for relief she asserts in the 11 Adversary Proceeding. 12 Ms. Kempton’s allegations in the Adversary Proceeding 13 complaint essentially overlay her claims asserted in the State 14 Court Litigation with allegations addressing the elements of 15 § 523(a)(2)(A) and (a)(6) claims. In the Case Management Order, 16 the bankruptcy court stayed the Adversary Proceeding and lifted 17 the automatic stay to allow the State Court Litigation to proceed 18 to establish any debt owed by Ms. Clark to Ms. Kempton. In 19 pleadings before the bankruptcy court in the Adversary Proceeding 20 (see, e.g., Adversary Proceeding Docket No. 25, at 2 and 4; and 21 Adversary Proceeding Docket No. 61, at 2) and in her opening 22 brief in this appeal (see Appellant’s Opening Brief, at 16), 23 Ms. Kempton and Appellant have admitted that the California state 24 court had concurrent jurisdiction with the bankruptcy court to 25 determine the “debt” owed, if any, by Ms. Clark to Ms. Kempton. 26 The California state court ultimately dismissed the State 27 Court Litigation based on Ms. Kempton’s failure to satisfy the 28 terms of the Security Order. The dismissal of the State Court
-25- 1 Litigation resulted from the application of a state law 2 procedural requirement without a trial ever having occurred in 3 California state court. However, the State Court Litigation 4 Dismissal Order dismissed the State Court Litigation with 5 prejudice, and the record reflects that no appeal ever was taken 6 from that dismissal order. Accordingly, the dismissal of the 7 State Court Litigation is final. 8 Under California law, a dismissal with prejudice, whether it 9 is procedural or on the merits, has claim preclusive effect. See 10 Boeken v. Philip Morris USA, Inc., 48 Cal.4th 788, 809-810 (Cal. 11 2010) (“[F]or purposes of applying the doctrine of res judicata 12 . . . a dismissal with prejudice is the equivalent of a final 13 judgment on the merits, barring the entire cause of action.”; 14 Roybal v. Univ. Ford, 207 Cal.App.3d 1080, 1086-87 (1989) (“The 15 statutory term ‘with prejudice’ clearly means the plaintiff’s 16 right of action is terminated and may not be revived. . . . [A] 17 dismissal with prejudice . . . bars any future action on the same 18 subject matter.”). 19 “[A] federal court must give to a state-court judgment the 20 same preclusive effect as would be given that judgment under the 21 law of the State in which the judgment was rendered.” Migra v. 22 Warren City Sch. Dist. Bd. of Edu., 465 U.S. at 896, citing Allen 23 v. McCurry, 449 U.S. 90, 96 (1980). Gayden v. Nourbakhsh 24 (In re Nourbakhsh), 67 F.3d 798, 801 (9th Cir. 1995); 25 In re Birting Fisheries, Inc., 300 B.R. at 497-98 (“Rules of 26 federal and state comity establish that federal courts are 27 required to give prior state court judgments the same preclusive 28 effect as the state court that rendered the judgment.”). The
-26- 1 Supreme Court has held that preclusion principles apply in 2 exception to discharge actions in bankruptcy. See Grogan v. 3 Garner, 498 U.S. 284-85 n.1 (1991); Cal-Micro, Inc. v. Cantrell 4 (In re Cantrell), 329 F.3d 1119, 1123 (9th Cir. 2003). 5 The effect of a final California state court dismissal of 6 the State Court Litigation with prejudice is that no enforceable 7 obligation, i.e., no debt, is owed by Ms. Clark to Ms. Kempton. 8 The condition precedent of such a debt for the Appellant to 9 pursue the exception to discharge claims asserted in the 10 Adversary Proceeding consequently cannot be satisfied, and we 11 conclude as a matter of law, that the bankruptcy court did not 12 err in dismissing the Adversary Proceeding. 13 VI. CONCLUSION 14 For the foregoing reasons, we AFFIRM the orders of the 15 bankruptcy court appropriately before us in this appeal, 16 including the Case Management Order and the Dismissal Order. 17 18 19 20 21 22 23 24 25 26 27 28
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