FILED NOV 17 2023 NOT FOR PUBLICATION SUSAN M. SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT
In re: BAP No. CC-23-1067-GLS VIEN THI HO, Debtor. Bk. No. 2:22-bk-11157-SK
VIEN THI HO, Adv. No. 2:22-ap-01164-SK Appellant, v. MEMORANDUM* MALY OUM; DIN PHO; NEDA ROSHANIAN; ROSHANIAN LAW FIRM, INC.; HARRY SAFARIAN; THE SAFARIAN FIRM, APC, Appellees.
Appeal from the United States Bankruptcy Court for the Central District of California Sandra R. Klein, Bankruptcy Judge, Presiding
Before: GAN, LAFFERTY, and SPRAKER, Bankruptcy Judges.
INTRODUCTION
Chapter 71 debtor Vien Thi Ho (“Debtor”) appeals the bankruptcy
court’s order dismissing with prejudice her adversary complaint against
* This disposition is not appropriate for publication. Although it may be cited for whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential value, see 9th Cir. BAP Rule 8024-1. 1 Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101–1532, all “Rule” references are to the Federal Rules of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of her neighbors, Maly Oum and Din Pho, and their lawyers, Neda
Roshanian, Roshanian Law Firm, Inc., Harry Safarian, and The Safarian
Firm, APC (collectively “Appellees”). Debtor asserted numerous claims,
but each count was premised on her central claim that Appellees willfully
violated the automatic stay by filing and maintaining a state court suit
against her.
The bankruptcy court properly dismissed the complaint because
Debtor failed to allege sufficient facts to state a claim for relief. The court
properly dismissed the complaint with prejudice because amendment
would be futile. We AFFIRM.
FACTS2
A. Prepetition Events
In 2017, Debtor filed suit in the United States District Court for the
Central District of California (“District Court”) against her neighbors, Maly
Oum and Din Pho, who were represented by Ms. Roshanian. The suit
involved a property line dispute pertaining to the alley between their
properties in Long Beach, California. The District Court ultimately
dismissed the case for lack of subject matter jurisdiction.
In 2019, Debtor filed a second suit in District Court against Ms. Oum
and Mr. Pho, and added as defendants, Ms. Roshanian, the City of Long
Civil Procedure. 2 We exercise our discretion to take judicial notice of documents electronically
filed in the bankruptcy case and related adversary proceedings. See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003). 2 Beach Public Works Department, the Long Beach Police Department, and
certain city officials and police officers. In the second District Court action,
Mr. Safarian represented Ms. Oum, Mr. Pho, and Ms. Roshanian. Debtor
asserted violations of her civil and constitutional rights, conspiracy, fraud,
violations of the Racketeer Influenced and Corrupt Organizations Act
(“RICO”), quiet title, and other claims, and she sought damages of
$23,250,000. She alleged that city officials, police, Ms. Roshanian, Ms. Oum,
and Mr. Pho conspired to violate her rights, first by determining that the
property in question belonged to Ms. Oum and Mr. Pho, and then by
forcing Debtor to remove her belongings from the area while a wall was
constructed on the property line. The District Court dismissed several of
her claims with prejudice, dismissed her state law claims without
prejudice, and allowed certain civil rights claims to proceed.
Debtor then filed suit in Los Angeles Superior Court against the
same defendants, asserting claims for unlawful eviction and invasion of
privacy, California constitutional violations, and quiet title by adverse
possession. The state court dismissed the case.
Ms. Roshanian claims that in 2021, Debtor created a website which
made several defamatory statements about her. On March 3, 2022,
Ms. Roshanian filed a state court suit against Debtor for: (1) Invasion of
Privacy; (2) Libel; (3) Libel Per Se; (4) Intentional Infliction of Emotional
Distress; and (5) Unfair Business Practices (the “Libel Action”).
Mr. Safarian represented Ms. Roshanian in the Libel Action.
3 B. The bankruptcy and adversary proceedings
One day prior to commencement of the Libel Action, Debtor filed a
chapter 7 petition. She did not schedule Ms. Roshanian’s claim or include
her in the list of creditors.
On July 1, 2022, Debtor filed two documents in Libel Action: a motion
to quash service and a separate case management statement. Although the
case management form required Debtor to indicate any matters affecting
jurisdiction, including bankruptcy, she did not do so. On July 5, 2022,
Debtor appeared at a hearing on her motion to quash service, but she did
not inform the state court of her pending bankruptcy. On July 7, 2022, after
the state court denied her motion to quash service, Debtor filed a notice of
stay of proceedings due to the bankruptcy case. 3 Debtor then filed a notice
of removal of the Libel Action to the bankruptcy court. Ms. Roshanian
opposed the removal and sought remand to the state court.
On August 23, 2022, Debtor filed an adversary complaint against
Appellees, asserting claims for: (1) willful violations of the automatic stay;
(2) fraud; (3) negligent misrepresentation; (4) violations of the Fair Debt
Collection Practices Act (“FDCPA”); (5) quiet title; (6) violations of RICO;
and (7) declaratory relief, seeking damages of $21,275,000. She alleged that
Appellees conspired to willfully violate the automatic stay by filing and
maintaining the Libel Action, which she contended violated her civil and
3 On July 7, 2022, Debtor also amended her schedules to include the Roshanian claim. 4 constitutional rights. She alleged that Appellees committed fraud and
negligent misrepresentation by making a false statement that they could
file and maintain the Libel Action, and she alleged that Ms. Oum and Mr.
Pho misrepresented that they could execute an illegal eviction and
wrongfully keep the property. Debtor maintained she was entitled to quiet
title because of the alleged fraud, and she sought a declaratory judgment
that Appellees’ actions were fraudulent. Finally, she alleged various RICO
claims, all based on the predicate act of fraud in filing and maintaining the
Libel Action.
On September 20, 2022, Debtor filed in the main bankruptcy case a
motion for contempt against Ms. Roshanian, Mr. Safarian, and The Safarian
Firm. She argued that Ms. Roshanian and Mr. Safarian willfully violated
the stay by filing and maintaining the Libel Action, and by seeking remand
to the state court. Debtor suggested the Libel Action was void, and though
she admitted she did not give notice of the bankruptcy case until July 7,
2022, she argued that Ms. Roshanian was required to dismiss the Libel
Action upon learning of the stay.
The bankruptcy court denied the motion and found that neither
Ms. Roshanian nor Mr. Safarian had notice of the bankruptcy case until
July 7, 2022. The court stated that the automatic stay did not require
dismissal of the Libel Action so long as Ms. Roshanian took no further
action in the state court. The court specifically found that the only actions
taken by Ms. Roshanian, Mr. Safarian, and The Safarian Firm after July 7,
5 2022, were in the bankruptcy court, and those actions did not constitute
stay violations.
C. The motion to dismiss and the court’s ruling
While the contempt motion was pending, Appellees filed a motion to
dismiss the adversary complaint with prejudice. They argued that Debtor
failed to allege facts to support a willful violation of the stay and noted that
Debtor misrepresented the existence of her bankruptcy case to the state
court. Appellees asserted that Debtor failed to plead the fraud and
negligent misrepresentation claims with particularity, and they argued the
remaining claims were fatally defective and devoid of factual allegations.
Debtor opposed the motion to dismiss and maintained that her
complaint contained sufficient facts. She argued that Appellees failed to
specifically address each claim in detail, and she moved to strike the
motion to dismiss as untimely and non-compliant with bankruptcy rules.
After a hearing, the bankruptcy court dismissed Debtor’s complaint
with prejudice. The court reasoned that Debtor failed to allege sufficient
facts to state a claim for willful violation of the stay based on its prior
factual findings in denying the motion for contempt, which the court
considered law of the case. Because Debtor failed to allege a
misrepresentation by Appellees, the court dismissed the claims for fraud
and negligent misrepresentation, and it dismissed the RICO and
declaratory judgment claims because they were based either on a willful
stay violation or fraud. The court dismissed the FDCPA claim because
6 Debtor did not allege any debt collection and none of Appellees’ alleged
acts constituted a violation of the FDCPA. Finally, the court reasoned that
Debtor’s quiet title claim was barred by the California statute of limitations
because it was based on fraud.
The court then considered whether it should grant leave to amend
under Civil Rule 15(a), made applicable by Rule 7015. The court applied
the factors outlined in Foman v. Davis, 371 U.S. 178, 182 (1962), and
determined that leave to amend was not warranted. The court held that,
based on law of the case, Debtor could not allege additional facts to state a
claim for willful violation of the stay, and thus amendment would be futile.
Additionally, the court ruled that amendment would prejudice Appellees
by forcing them to litigate issues that had been litigated for years in state
and District Court and would force Appellees to continue litigating the
willful violation claim despite the court’s prior denial of that claim. The
court entered a written order dismissing the complaint with prejudice, and
Debtor timely appealed.
JURISDICTION
The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and
157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.
ISSUES
Did the bankruptcy court abuse its discretion by dismissing Debtor’s
adversary complaint?
7 Did the bankruptcy court err by denying leave to amend the
STANDARDS OF REVIEW
“We review de novo the [trial] court’s grant of a motion to dismiss
under [Civil] Rule 12(b)(6), accepting all factual allegations in the
complaint as true and construing them in the light most favorable to the
nonmoving party.” Narayanan v. Brit. Airways, 747 F.3d 1125, 1127 (9th Cir.
2014) (citing Newdow v. Lefevre, 598 F.3d 638, 642 (9th Cir. 2010)). Under de
novo review we “consider a matter anew, as if no decision had been made
previously.” Francis v. Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP
2014).
We review a dismissal without leave to amend for abuse of
discretion. Tracht Gut, LLC v. Cnty. of Los Angeles (In re Tracht Gut, LLC), 503
B.R. 804, 810 (9th Cir. BAP 2014), aff’d, 836 F.3d 1146 (9th Cir. 2016) (citing
AE ex rel. Hernandez v. Cnty. of Tulare, 666 F.3d 631, 636 (9th Cir. 2012)).
A bankruptcy court abuses its discretion if it applies an incorrect
legal standard or its factual findings are illogical, implausible, or without
support in the record. TrafficSchool.com v. Edriver, Inc., 653 F.3d 820, 832 (9th
Cir. 2011).
DISCUSSION
Debtor argues that the court erred by dismissing her claims for fraud,
declaratory judgment, RICO violations, and quiet title. She does not argue
that the court erred by dismissing her claim for willful violation of the stay,
8 and thus, she has waived the issue. See Smith v. Marsh, 194 F.3d 1045, 1052
(9th Cir. 1999). Debtor also argues the court should have granted leave to
amend the complaint.
A. The court did not abuse its discretion by granting Appellees’ motion to dismiss.
Civil Rule 12(b)(6), made applicable by Rule 7012, provides that
dismissal is appropriate if the complaint fails to allege “enough facts to
state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly,
550 U.S. 544, 570 (2007). In assessing the adequacy of the complaint, the
court must accept as true all allegations and construe them in the light
most favorable to the plaintiff. See Cousins v. Lockyer, 568 F.3d 1063, 1067
(9th Cir. 2009). However, “[t]hreadbare recitals of the elements of a cause of
action, supported by mere conclusory statements, do not suffice.” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009).
Consequently, “for a complaint to survive a motion to dismiss, the
non-conclusory factual content, and reasonable inferences from that
content, must be plausibly suggestive of a claim entitling the plaintiff to
relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotation
marks omitted). A motion to dismiss “may be based on either a ‘lack of a
cognizable legal theory’ or ‘the absence of sufficient facts alleged under a
cognizable legal theory.’” Johnson v. Riverside Healthcare Sys, LP, 534 F.3d
1116, 1121 (9th Cir. 2008) (quoting Balistreri v. Pacifica Police Dep’t, 901 F.2d
696, 699 (9th Cir. 1990)).
9 Debtor’s complaint is nearly devoid of factual allegations and thus,
dismissal was unquestionably appropriate. While the complaint is replete
with legal conclusions, the only real fact Debtor alleges is that
Ms. Roshanian filed and maintained the Libel Action after the petition date.
Not only does Debtor fail to make any argument relevant to the stay
violation claim, but her own admissions—and the court’s prior findings of
fact—foreclose any possibility of a willful stay violation.
Section 362(a)(1) prohibits the commencement or continuation of a
judicial action against a debtor to recover a prepetition claim. A creditor
commits a willful violation of the automatic stay if she knows of the stay
and her actions that violate the stay are intentional. Eskanos & Adler, P.C. v.
Leetien, 309 F.3d 1210, 1215 (9th Cir. 2002).
Filing and maintaining the Libel Action is a clear violation of the stay,
but Debtor did not allege that Appellees had notice of the stay, and the
court specifically found they did not have notice until July 7, 2022. Thus,
Appellees’ actions were not a willful violation of the stay.
Debtor argues that the court erred by dismissing her claims for fraud,
declaratory judgment, RICO violations, and quiet title, but each of those
claims flows directly from the purported willful stay violation. Debtor’s
claim for fraud is based on the alleged misrepresentation by Mr. Safarian
and Ms. Roshanian that they could file and maintain the Libel Action.4 Not
4 Debtor also makes a conclusory allegation that Ms. Oum and Mr. Pho fraudulently misrepresented that they could illegally evict Debtor and keep the portion 10 only is this purported injury factually indistinguishable from the alleged
willful stay violation, but Debtor fails to allege essential elements of a fraud
claim, including that Appellees knew such representation was false and
made it with intent to defraud, and that Debtor justifiably relied on the
representation. 5 And, as the bankruptcy court held, the allegations in the
complaint lacked the requisite particularity required by Civil Rule 9, made
applicable by Rule 7009.
Regarding the RICO claim, Debtor failed to include sufficient factual
allegations to establish conduct of an enterprise or a pattern of racketeering
activity, and the only predicate act was “fraud” in filing the Libel Action.6
Similarly, Debtor’s quiet title claim is based on a cloud to title caused by
the fraud claim, and her claim for declaratory judgment merely seeks a
declaration that Appellees committed fraud.
of the alley in question. The documents attached to the complaint demonstrate that the 2019 “eviction” was pursuant to a determination by the Long Beach Public Works Department that Debtor did not own the disputed portion of the alley. Additionally, any claim of fraud based on statements made in 2019 is barred by the three-year statute of limitations. See Cal. Civ. Proc. Code (“CCP”) § 338(d). 5 The elements of fraud under California law are: (1) misrepresentation (false
representation, concealment, or nondisclosure); (2) knowledge that the representation is false; (3) intent to defraud; (4) justifiable reliance; and (5) resulting damages. Lazar v. Sup. Ct., 12 Cal. 4th 631, 638 (1996). 6 Pursuant to 18 U.S.C. § 1964(c), civil remedies are available to persons injured
by RICO violations described in 18 U.S.C. § 1962. The elements of a RICO offense are: (1) conduct; (2) of an enterprise; (3) through a pattern of racketeering activity. Salina v. United States, 522 U.S. 52, 62 (1997). “Pattern of racketeering activity” requires at least two acts of “racketeering activity,” referred to as predicate acts, and defined in 18 U.S.C. § 1961(1). Id. 11 Regardless of the multiple causes of action asserted by Debtor, her
complaint makes clear that her alleged injury was caused by the purported
willful stay violation. It was not the result of independent acts of fraud or
racketeering. Debtor’s complaint lacks any facts to support claims for
fraud, declaratory judgment, RICO, or quiet title, and it lacks a cognizable
legal theory why filing the Libel Action could support any of these claims.
The bankruptcy court did not err by dismissing the complaint.
B. The court did not abuse its discretion by dismissing the complaint with prejudice.
Pursuant to Civil Rule 15, made applicable by Rule 7015, leave to
amend a complaint should be freely given when justice so requires. The
court “should grant leave to amend even if no request to amend the
pleading was made, unless it determines that the pleading could not
possibly be cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d
1122, 1127 (9th Cir. 2000). “This policy is ‘to be applied with extreme
liberality,’” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th
Cir. 2003) (per curiam) (quoting Owens v. Kaiser Foundation Health Plan, Inc.,
244 F.3d 708, 712 (9th Cir. 2001)), and the rule favoring liberal application
“is particularly important for the pro se litigant,” Crowley v. Bannister, 734
F.3d 967, 977-78 (9th Cir. 2013).
In determining whether to grant leave to amend, the bankruptcy
court should consider several factors including: (1) undue delay; (2) bad
faith or dilatory motive by the movant; (3) repeated failure to cure
12 deficiencies by previous amendments; (4) undue prejudice to the opposing
party; and (5) futility of amendment. Brown v. Stored Value Cards, Inc., 953
F.3d 567, 574 (9th Cir. 2020) (citing Foman, 371 U.S. at 182). The
consideration of prejudice to the opposing party carries the greatest
weight. Eminence Cap., LLC, 316 F.3d at 1052. “Absent prejudice, or a strong
showing of any of the remaining Foman factors, there exists a presumption
under Rule 15(a) in favor of granting leave to amend.” Id. (citation
omitted).
Debtor does not make any cogent argument why the court abused its
discretion in denying leave to amend. She cites the Foman factors, but she
does not address how the court abused its discretion by determining that
amendment would be futile or that it would prejudice Appellees.
Moreover, we find no abuse of discretion.
Although Debtor asserts seven causes of action in her complaint, they
all stem from the purported willful stay violation. In denying Debtor’s
motion for contempt, 7 the bankruptcy court made factual findings that:
(1) Appellees did not have notice of the bankruptcy until July 7, 2022, and
(2) Appellees took no further action against Debtor in the Libel Action.
Those factual findings were essential to the court’s ruling and are law of
the case. 8
7 The motion for contempt was a contested matter, governed by Rule 9014. Civil Rule 52, made applicable to contested matters by Rules 7052 and 9014(c), requires the court to provide findings of fact and conclusions of law. 8 Under the law of the case doctrine, a court is barred from reconsidering an issue
13 Consequently, Debtor’s claim that Appellees willfully violated the
stay by filing the Libel Action could not be saved by any amendment. And
because the bankruptcy court found that Appellees took no action against
Debtor after learning of the bankruptcy, there are no additional facts which
Debtor could allege to support a willful stay violation based on continuing
or maintaining the Libel Action.9
Debtor’s remaining claims are all based on the injury caused by the
purported willful stay violation. It is not possible for Debtor to amend her
complaint to allege a completely new injury without contradicting the
allegations in her original complaint. See Ready v. Litton Indus., Inc., 912 F.2d
291, 296-97 (9th Cir. 1990) (“Although leave to amend should be liberally
granted, the amended complaint may only allege other facts consistent
with the challenged pleading.” (cleaned up)). Additionally, Debtor’s quiet
title claim is based on fraud and therefore barred by the statute of
previously decided in the same court or a higher court in the same case. FDIC v. Kipperman (In re Com. Money Ctr., Inc.), 392 B.R. 814, 832 (9th Cir. BAP 2008) (citing Milgard Tempering, Inc. v. Selas Corp. of Am., 902 F.2d 703, 715 (9th Cir. 1990)). 9 Although the parties and court viewed continued actions in the state court as
possible violations of the stay, the automatic stay terminated with respect to actions against the Debtor upon entry of discharge on June 13, 2022. See § 362(c)(2)(C); Ruvacalba v. Munoz (In re Munoz), 287 B.R. 546, 551 (9th Cir. BAP 2002). Because Appellees learned of the bankruptcy case after the stay had terminated, no additional facts could establish a willful stay violation. However, the decision to grant leave to amend “is not dependent of whether the amendment will add causes of action or parties,” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987), and Debtor could conceivably allege additional facts to state a violation of the discharge injunction. But based on the court’s factual findings that Appellees took no action against Debtor after learning of the bankruptcy, such an amendment would be futile. 14 limitations under CCP § 338(d). Thus, amendment of the complaint would
be futile.
Furthermore, we agree that amendment would be prejudicial to
Appellees, who have successfully defended against Debtor’s multiple
claims for fraud, conspiracy, RICO, and quiet title based on the underlying
property dispute. Appellees should not be required to repeatedly defend
against these allegations merely because Debtor tethers them to a new
cause of action. The bankruptcy court did not err by dismissing Debtor’s
complaint, and it did not abuse its discretion by denying leave to amend
under Rule 15(a).
CONCLUSION
Based on the foregoing, we AFFIRM the bankruptcy court’s order
dismissing Debtor’s complaint with prejudice.