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FILED

MAY 30 2014

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-13-1418-KiLaPa

)

RICHARD STEPHEN KVASSAY, ) Bk No. 11-11698-PC

)

Debtor. ) Adv. No. 13-01553

 )

)

RICHARD STEPHEN KVASSAY, )

)

Appellant, )

)

v. ) M E M O R A N D U M1

)

ROBERT V. KVASSAY, Trustee of )

the Kvassay Family Trust )

dated 02/26/1993; RUSSAKOW, )

GREENE & TAN LLP, )

)

Appellees. )

______________________________)

Argued and Submitted on May 15, 2014, 

at Pasadena, California

Filed - May 30, 2014

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Peter H. Carroll, Chief Bankruptcy Judge, Presiding

 

Appearances: Troy A. Stewart, Esq. argued for appellant, Richard

Stephen Kvassay; Richard R. Clements, Esq. argued

for appellees, Robert V. Kvassay and Russakow,

Greene & Tan LLP.

 

1 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 8013-1.
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Before: KIRSCHER, LATHAM2 and PAPPAS, Bankruptcy Judges.

 Chapter 73 debtor Richard Kvassay ("Debtor") appeals an order

granting appellees' motion to dismiss Debtor's adversary complaint

with prejudice under Civil Rule 12(b)(6). Appellees are Debtor's

brother, Robert Kvassay ("Robert"), trustee of the Kvassay Family

Trust dated 02/26/1993 ("Trust") and the law firm representing

Robert, Russakow, Greene & Tan LLP ("Law Firm")(collectively,

"Defendants"). We AFFIRM.4

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Events leading to Debtor's adversary proceeding against

Defendants

Debtor and his two brothers, Robert and Peter Kvassay

("Peter"), were to have equal beneficial interests in the

principal of the Trust. The trustors, the brothers' parents, were

deceased by 2006. Until recently, Debtor had lived at his

parents' three and a half-acre estate and residence in Los Angeles

("Trust Property") since the 1960s; Peter had lived there since

the 1980s. Once under Debtor's and Peter's control, the Trust

2 Hon. Christopher Latham, Bankruptcy Judge for the Southern

District of California, sitting by designation.

3 Unless specified otherwise, all chapter, code and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

the Federal Rules of Bankruptcy Procedure, Rules 1001-9037. The

Federal Rules of Civil Procedure are referred to as “Civil Rules.”

4 The parties have asked us to take judicial notice of

certain documents filed in the state court and a docket summary

from the California Court of Appeal. Neither party has objected

to the other's request. It is undisputed that these documents

were not presented to the bankruptcy court. Generally, we will

not consider evidence on appeal that was not before the trial

court when it made its decision. See Oyama v. Sheehan (In re

Sheehan), 253 F.3d 507, 512 n.5 (9th Cir. 2001). Because the

documents have no bearing on our decision, we DENY both requests

for judicial notice.

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Property became uninhabitable, and Robert had to invest hundreds

of thousands of dollars of his own funds to repair it and make it

sellable. He also had to obtain a personal loan to save the Trust

Property from foreclosure after Peter stopped paying on a

$1.5 million loan he obtained against the Trust Property by

misrepresenting himself as the trustee of the Trust. 

In May 2010, Robert, with the Law Firm's assistance, filed a

probate petition in the state court seeking to (1) evict Debtor

and Peter from the Trust Property and (2) offset Debtor's and

Peter's distributive share in the Trust ("Probate Action")(Case

No. BP122477). 

On August 18, 2010, the probate court entered a minute order

evicting Debtor and Peter from the Trust Property (the "Eviction

Order"). Debtor and Peter appealed. On October 7, 2010, a third

party posted a cash deposit of $216,000 made in lieu of an appeal

bond to stay enforcement of the Eviction Order ("Appeal Bond").5

The $216,000 was based on a fair rental market value of the Trust

Property at $12,000 per month, multiplied by 18 months — the

anticipated length of time for Debtor and Peter's appeal to be

completed. Debtor and Peter were allowed to reside at the Trust

Property pending the appeal. 

On January 13, 2011, while the appeal of the Eviction Order

5 Although the funds at issue were a cash deposit made in

lieu of an appeal bond, both the state court and the parties have

referred to it as an "appeal bond." Therefore, we do as well for

consistency. Under CAL. CIV. PROC. § 995.730, bonds and cash

deposits are treated in the same manner:

A deposit given instead of a bond has the same force and

effect, is treated the same, and is subject to the same

conditions, liability, and statutory provisions, including

provisions for increase and decrease of amount, as the bond.

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was pending, Debtor filed a chapter 11 bankruptcy case, which was

later converted to chapter 7. In June 2011, the chapter 7 trustee

filed an application to employ counsel to assist him in, among

other things: (1) determining the nature and extent of Debtor's

beneficial interest in the Trust and the Appeal Bond; and

(2) liquidating Debtor's beneficial interest in the Trust and the

Appeal Bond by resolving the Probate Action.

In September 2011, Robert moved for relief from the automatic

stay to proceed with the Probate Action, Case No. BP122477 ("Stay

Relief Motion"). Robert requested an order allowing him to

proceed to a final judgment in the matter, "provided that the stay

remain[ed] in effect with respect to enforcement of any judgment

against Debtor(s) or estate property." Attached was a copy of the

complaint from the Probate Action. The chapter 7 trustee

initially opposed the Stay Relief Motion, contending that he

needed more time to investigate the pending Trust litigation. He

later withdrew his objection at the related hearing on October 6,

2011. Debtor did not oppose the Stay Relief Motion.

On October 21, 2011, the bankruptcy court entered an order

granting Robert's Stay Relief Motion under § 362(d)(1)("Stay

Relief Order"). It provided that Robert could "proceed in the

non-bankruptcy forum to final judgment (including any appeals) in

accordance with applicable non-bankruptcy law." In Paragraph 6 of

the order — Limitations on Enforcement of Judgment — neither box

is checked, indicating that no limitations were imposed

restricting Robert’s enforcement of any final judgment(s) he

received against Debtor. Litigation in the Probate Action

continued.

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On February 3, 2012, the California Court of Appeal affirmed

the Eviction Order, Kvassay v. Kvassay, 2012 WL 336117 (Cal. Ct.

App. Feb. 3, 2012 (unpublished), review denied (Apr. 18, 2012),

and issued its remittitur on May 9, 2012. Debtor and Peter were

ultimately evicted from the Trust Property on May 21, 2012. 

On April 23, 2012, Robert, represented by the Law Firm, moved

to release the full amount of the Appeal Bond to the Trust "now

that the appeal has been decided in favor of Petitioner." The

probate court denied Robert's first bond motion because it had

been filed before the remittitur was issued. Robert filed a

second motion to release the Appeal Bond to the Trust on June 26,

2012. He contended the Trust was entitled to the full amount

because the appeal process had taken more than 20 months. Debtor

and Peter opposed the release of the Appeal Bond. 

In response to Robert's actions, the chapter 7 trustee filed

a motion for production of documents under Rule 2004, asserting

that because Robert was seeking to have the Appeal Bond released

to the Trust, he wanted access to Debtor's bank records to

evaluate whether the Appeal Bond was a potential asset of the

bankruptcy estate. The bankruptcy court granted the Rule 2004

motion.

After an evidentiary hearing on Robert's second motion to 

release the Appeal Bond, the probate court entered a minute order

on December 12, 2012, which stated: "Judgment is entered in the

amount of $192,660.00, joint and severally against [Debtor and

Peter]. As to the balance of funds, there shall be no further

funds released pending the outcome of the Bankruptcy or further

court order."

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On January 24, 2013, the probate court entered an "Amended

Order re. Release of Bond" in connection with its December 12

minute order, directing that $192,660 be paid from the Appeal Bond

on deposit with the court to Robert, trustee of the Trust

("Amended Bond Order").

On January 29, 2013, Debtor and Peter filed a Petition for

Peremptory Writ of Prohibition and/or Writ of Mandate in the

California Court of Appeal, seeking to vacate the Amended Bond

Order, and on February 6, 2013, filed a notice of appeal. The

writ was denied. Defendants thereafter took possession of

$192,660 of the $216,000 Appeal Bond. The California Court of

Appeal affirmed the Amended Bond Order on May 14, 2014. Kvassay

v. Kvassay, 2014 WL 1913307 (Cal. Ct. App. May 14, 2014)

(unpublished). 

On May 9, 2013, upon request of the chapter 7 trustee, the

bankruptcy court entered an order abandoning any potential

interest of the bankruptcy estate in the Probate Action and the

Appeal Bond due to their inconsequential value to the estate. 

B. Debtor's adversary complaint and Defendants' motion to

dismiss

On May 22, 2013, Debtor filed an adversary complaint

("Complaint"), contending that Defendants had violated the

automatic stay under § 362(a)(1) and (a)(6) by:

(1) filing state court motions to obtain a judgment

against Debtor to enforce against the Appeal Bond without

obtaining relief from stay to file the motions;

(2) obtaining the judgment against Debtor to enforce

against the Appeal Bond without obtaining relief from

stay to pursue the judgment against him;

(3) obtaining the first bond order and Amended Bond Order

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without obtaining relief from the stay to enforce the

judgment against Debtor; and

(4) executing the Amended Bond Order and taking

possession of $192,660.00 of the Appeal Bond without

obtaining relief from the stay to enforce the judgment

against Debtor.

Specifically, Debtor asserted that the Stay Relief Order provided

only that Robert could proceed to final judgment in the Probate

Action as to the "causes of action pleaded in the non-bankruptcy

forum," and those causes of action did not include a claim for a

judgment against Debtor to enforce against the Appeal Bond and

that the claim underlying the judgment Robert obtained against

Debtor on December 12, 2012, was not pending in the state court.

Alternatively, Debtor argued that Defendants had violated the stay

by pursuing a judgment against him that was not "final" due to the

pending appeal. Debtor also alleged that Defendants should be

held in contempt under § 105(a) for their willful violation of the

Stay Relief Order. Debtor sought damages in excess of $70,000

under either § 362(k) or § 105(a).

On July 3, 2013, Defendants electronically filed their

Notice of Motion and Motion to Dismiss the Complaint under Civil

Rule 12(b)(6) ("Motion to Dismiss") under the event code "Notice

of Motion/Application."6 Defendants' Notice and Motion to Dismiss

were labeled accordingly but were combined into one document. The

attached proof of service stated that the Notice and Motion to

Dismiss were served electronically and by mail to Debtor's counsel

6 The entry in the bankruptcy court’s docket no. 9 states: 

"Notice of motion/application Defendants' Notice of Motion and

Motion to Dismiss Complaint; Memorandum of Points and Authorities

Filed by Defendant Kvassay Robert V Trustee of the Kvassay Family

Trust dated February 26, 1993. (Clements, Richard)(Entered:

07/03/2013)[.]"

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on July 3. 

Defendants contended that Debtor was reading the Stay Relief

Order too narrowly. Contrary to Debtor's interpretation, Robert's

actions were not limited to just the causes of action existing at

the time it was entered on October 21, 2011; the order clearly

covered a judgment against Debtor that could be enforced against

the Appeal Bond. Defendants further argued the Complaint was

procedurally improper; damages and injunctive relief under

§ 362(k) had to be sought by motion rather than through an

adversary proceeding. The same was true for contempt relief under

§ 105(a); contempt actions had to be brought by motion per Rule

9020. Alternatively, argued Defendants, because Debtor had no

claim for a willful violation of the stay, they could not be found

in contempt under § 105 in any event. Defendants requested that

the Motion to Dismiss be granted without leave to amend and that

the adversary proceeding be dismissed with prejudice. The Notice

and Motion to Dismiss stated that a hearing was scheduled for

August 8, 2013. 

On July 15, 2013, Defendants received a "Notice to Filer of

Error and/or Deficient Document" from the bankruptcy court clerk

advising Defendants that an incorrect event code was used to file

the Motion to Dismiss. Defendants were instructed "TO RE-FILE THE

DOCUMENT USING THE CORRECT EVENT. THIS DOCUMENT IS A MOTION THE

CORRECT EVENT CODE IS MOTION TO DISMISS." (Emphasis in original). 

Defendants did as instructed, and on July 16, 2013, refiled the

same document under the correct event code. See docket no. 12. 

The refiled Motion to Dismiss was identical to the original Motion

to Dismiss, including the attached proof of service showing

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service on July 3, 2013.

Instead of filing a response to the Motion to Dismiss, Debtor

filed a first amended complaint ("FAC") on July 30, 2013. The FAC

alleged the same stay violation claims under § 362(a)(1) and

(a)(6), added a new claim under § 362(a)(5), and sought relief

under § 362(k)(1). The contempt claim under § 105(a) was omitted. 

C. The bankruptcy court's ruling on the Motion to Dismiss

A hearing on Defendants' Motion to Dismiss was held on

August 8, 2013. At the start, counsel for Debtor informed the

bankruptcy court that the FAC had been filed on July 30, thereby

mooting the Motion to Dismiss. The court was aware of the FAC but

considered it untimely. When Debtor contended that an amended

complaint could be filed as a matter of course under Civil Rule

15(a), the court disagreed, noting that the time allowed in the

rule to file an amended complaint had already expired:

The defendant initially filed the [Motion to Dismiss] on

July 3, 2013 but . . . the defendant used an incorrect

event code. The clerk notified the defendant to correct

the error, which defendant did by re-filing the motion on

July 16, 2013. The proof of service attached to the

re-filed motion reflects that the motion was served by

first-class mail on July 3, 2013. The Court's added

three extra days for service by mail, so the Rule 15(a)

deadline to file the [FAC] based on service of the motion

was July 29, 2013 as July 27th fell on a Saturday. The

[FAC] was filed on July 30th, so it was one day late. 

Hr'g Tr. (Aug. 8, 2013) 4:18-5:5. 

After hearing briefly from the parties and noting that no

opposition had been filed, the bankruptcy court announced its

tentative ruling to strike the FAC as untimely and grant the

Motion to Dismiss without leave to amend, noting that its ruling

would not change even if it considered the FAC a proper

opposition. Debtor's use of an adversary proceeding, as opposed

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to a motion, did not constitute grounds to dismiss the Complaint. 

However, the Complaint failed to state a plausible claim for

relief under § 362(k)(1):

The Court's relief from stay order, which is the basis of

the complaint, included language . . . that all actions

. . . may be taken in the probate action to proceed to

final judgment including any appeals in accordance with

applicable non-bankruptcy law. And the Court's reading

of the complaint filed with the Court does not indicate

that there were any actions taken by the defendant that

was outside of or in violation of the Court's order

entered on October 21, 2011. 

There's no facts [sic] in the complaint that would state

a plausible claim that the defendant took any separate

actions against the plaintiff outside the probate action

to enforce the Probate Court's order personally as to the

debtor. Estate funds were not used to post the appeals

bond of the – funds used to post the appeal bond were

provided by a third party.

Id. at 7:17-8:9. Likewise, the Complaint failed to state a

plausible claim for contempt of the Stay Relief Order under

§ 105(a).

Unpersuaded by Debtor's further arguments, the bankruptcy

court adopted its tentative ruling in favor of Defendants as its

final ruling, and further stated:

When we get down to the rub of this complaint, it

involves a dispute concerning an appeal bond that was

posted in the state court action and steps taken in

conjunction with the appeal to adjudicate the parties'

right to that appeal bond. The appeal bond of $216,000

– it was a deposit in lieu of an appeal bond actually

posted by a third party. It's non-estate funds. The

fact that the trustee in the bankruptcy case investigated

whether any part of that $216,000 could possibly be

property of the estate is part of the trustee's duties

under Section 704 of the Bankruptcy Code . . . . The

trustee made a determination that those funds are not

property of the estate . . . .

The Court in reviewing the four corners of the original

complaint filed in this case and the facts stated in that

complaint cannot find sufficient facts that support or

state a plausible claim for relief for violation of this

Court's order granting relief from the automatic stay

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either under Section 362(k) or for willful contempt of

the order under Section 105. For those reasons, the

motion to dismiss under Rule 12(b)(c) [sic] is granted. 

It's granted without leave to amend, particularly in

light of the fact that no response in opposition to the

motion was filed specifically addressing the issues

raised in the motion.

And the amended complaint that was filed, evidently in

lieu of filing a proper response under our rules to the

motion, was filed without the consent of the defendant

prior to the filing of the motion and it was untimely

under Rule 15(a).

Id. at 15:18-16:3, 16:6-7, 16:12-17:2. 

An order granting Defendants' Motion to Dismiss the Complaint

without leave to amend and dismissing Debtor's adversary

proceeding with prejudice was entered on August 13, 2013. Debtor

timely appealed. 

II. 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.

III. ISSUES

1. Did the bankruptcy court err in determining that the Motion

to Dismiss was filed and served on July 3 rather than on July 16,

and thus Debtor's FAC filed on July 30 was untimely? 

2. Did the bankruptcy court err in dismissing the Complaint 

under Civil Rule 12(b)(6)?

3. Did the bankruptcy court abuse its discretion in denying 

Debtor leave to amend his Complaint? 

IV. STANDARDS OF REVIEW

We review de novo the bankruptcy court's interpretation of

the Federal Rules of Bankruptcy Procedure. Am. Sports Radio

Network, Inc. v. Krause (In re Krause), 546 F.3d 1070, 1073 n.5

(9th Cir. 2008). 

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Whether property is property of the estate is a question of

law reviewed de novo. Mwangi v. Wells Fargo Bank, N.A.

(In re Mwangi), 432 B.R. 812, 818 (9th Cir. BAP 2010)(citing White

v. Brown (In re White), 389 B.R. 693, 698 (9th Cir. BAP 2008)).

The bankruptcy court's dismissal of an adversary proceeding

for failure to state a claim under Civil Rule 12(b)(6) is reviewed

de novo. N.M. State Inv. Council v. Ernst & Young LLP, 641 F.3d

1089, 1094 (9th Cir. 2011); Barnes v. Belice (In re Belice),

461 B.R. 564, 572 (9th Cir. BAP 2011). A denial of leave to amend

is reviewed for abuse of discretion. Ditto v. McCurdy, 510 F.3d

1070, 1079 (9th Cir. 2007). A bankruptcy court abuses its

discretion if it applies an incorrect legal standard or its

factual findings are illogical, implausible or without support

from evidence in the record. TrafficSchool.com v. Edriver Inc.,

653 F.3d 820, 832 (9th Cir. 2011). "Dismissal without leave to

amend is improper unless it is clear, upon de novo review, that

the complaint could not be saved by any amendment." Thinket Ink

Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061

(9th Cir. 2004)(citation omitted). However, it is not error for

the trial court to deny leave to amend where the amendment would

be futile. Id. (citing Saul v. United States, 928 F.2d 829, 843

(9th Cir. 1991)). 

V. DISCUSSION

A. Defendants were not required to serve the refiled Motion to

Dismiss, and therefore the FAC was untimely.

Under Civil Rule 15(a)(1)(B), applicable here by Rule 7015,

"if [a] pleading is one to which a responsive pleading is

required," a "party may amend its pleading once as a matter of

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course within . . . 21 days after service of a motion to dismiss

under [Civil] Rule 12(b) . . . ." Under Civil Rule 5(a)(1)(D) &

(E), applicable here by Rule 7005, a written motion and a written

notice must be served on every party that has appeared in the

action. 

Virtually all of Debtor's arguments stem from his contention

that Defendants failed to serve the refiled Motion to Dismiss

filed on July 16, 2013, as required, which precluded him from

timely filing the FAC within 21 days of service of the refiled

motion. Thus, argues Debtor, the bankruptcy court could not have

found the FAC was untimely under Civil Rule 15(a)(1)(B). 

Defendants argue that Debtor is raising this issue for the first

time on appeal, and therefore we should disregard it. 

Generally, the Panel cannot consider arguments that were not

raised or briefed before the bankruptcy court. Katz v. Pike

(In re Pike), 243 B.R. 66, 69 (9th Cir. BAP 1999)(citing Whittaker

Corp. v. Execuair Corp., 953 F.2d 510, 515 (9th Cir. 1992)). 

However, we have the discretion to consider an argument raised for

the first time on appeal if the "'issue presented is purely one of

law and either does not depend on the factual record developed

below, or the pertinent record has been fully developed.'" Id.

(quoting Boker v. C.I.R., 760 F.2d 1039, 1042 (9th Cir. 1985)). 

We agree that this argument was not expressly raised before the

bankruptcy court. Nonetheless, in reviewing the transcript,

counsel for Debtor appeared surprised when the bankruptcy court

informed him that the FAC filed on July 30, 2013, was untimely

based on the July 3 service date of the Motion to Dismiss. 

Implicit in the court's finding was that the refiled Motion to

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Dismiss filed on July 16, 2013, which the court expressly

referenced, did not have to be served on Debtor, and so the 21-day

time period for Debtor's responsive pleading started to run on

July 3, 2013. See Rule 9006(f). Because of the court's implicit

finding, and because the question before us is purely one of law

and the record is fully developed, we exercise our discretion to

consider the issue. 

If a pleading that requires service to other parties is

electronically filed and served by mail but was filed under the

wrong event code, does Civil Rule 5 require service when the same

pleading is refiled under the correct event code? We think not. 

The bankruptcy court clerk instructed Defendants on July 15,

2013, to refile their Motion to Dismiss under the correct event

code, which they did on July 16, 2013. The clerk did not instruct

Defendants to also serve the refiled motion. Citing to no

authority other than Civil Rule 5(a)(1)(D) & (E), Debtor contends

that because of the refiling, Defendants were required to serve

the refiled Motion to Dismiss and Notice thereto. Section 3.5(h)

of the Court Manual,7 which addresses errors in electronic

7 Court Manual § 3.5(h) entitled "Correcting Documents Filed

in Error" provides:

(1) When a document has been filed electronically, the

official record is the electronic recording of the document

as stored by the court. Only the Clerk’s Office can make

changes to the docket entry.

(2) A document incorrectly filed in a case may be the result

of posting the wrong PDF file to a docket entry, selecting

the wrong document type from the menu, or entering the wrong

case number. If an error is detected after an item is on the

docket, DO NOT ATTEMPT TO RE-FILE THE DOCUMENT.

continue...

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filings, is silent as to whether an incorrectly filed document

must be served again once refiled. Likewise, the "FAQ" for CM/ECF

does not address it.8 Local Rule 5005-4 — Electronic Filing — is

also silent on this matter. Therefore, we must turn to other

authority. 

Neither party has cited, and we could not locate, a case

involving this exact issue. However, we found several cases

involving similar electronic filing errors. In Farzana K. v. Ind.

Dep't of Educ., 473 F.3d 703 (7th Cir. 2007), plaintiff's attorney

had thirty days from which to file a complaint after a final

administrative decision had been issued. On the 30th day, the

attorney electronically filed a complaint, but filed it in the

plaintiff's former case that had been dismissed two years prior. 

The computer rejected the filing with the notation that the case

had been closed. Id. at 704. Two days later, plaintiff's

7...continue

(3) After an error is discovered, contact the CM/ECF Help

Desk at (213) 894-2365 as soon as possible. Be sure to have

the case number and document number for which the correction

is being requested. If appropriate, the court will make an

entry indicating that the document was filed in error. You

will be advised if you need to re-file the document. The

CM/ECF system will not permit you to make changes to a

document or docket entry once the transaction has been

accepted.

(4) If an error regarding a fee occurs, do not pay the fee

until after speaking with someone at the CM/ECF Help Desk.

8 Question no. 31 of the FAQ found at

www.cacb.uscourts.gov/cmecf-frequently-asked-questions (last

visited on May 29, 2014) states: "What happens if a document is

filed in error? Email the ECF Help Desk at

ECF_Support@cacb.uscourts.gov immediately after you discover an

error has occurred. Incorrect entries or PDFs will not be

deleted. Errors may be edited by court personnel only. A

corrective entry by the Court may be required. An e-mail is

generated whenever a corrective entry is made."

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attorney filed a new complaint that was identical to the first

one, except that the space for the docket number was left blank

and the word "amended" had been deleted. The district court held

that the later-filed complaint was untimely and dismissed the

suit. Id. at 705. Relying on the mandate provided in Civil

Rule 5(e),9 now Civil Rule 5(d)(4), that court clerks must accept

filings despite formal defects, and equating the attorney's

mistake to filing paper copies with the wrong docket number

written in, the Seventh Circuit reversed, holding that the

complaint was timely filed despite the electronic filing error.10

Id. at 706-07.

Still, the fact remains that the complaint was tendered

to the clerk's office on the 30th day, and the computer's

reaction does more to show the limits of some

programmer's imagination than to render the suit

untimely. Had a paper copy of the complaint been handed

over the counter on July 6, a deputy clerk would have

crossed out the old docket number, stamped a new one, and

filed the document; there is no reason to throw this suit

out of court just because the e-filing system did not

know how to take an equivalent step.

Id. at 707. 

In Weeks Landing, LLC v. RCMP Enters., LLC, 439 B.R. 897

9 Former Civil Rule 5(e) read, in relevant part: "The clerk

shall not refuse to accept for filing any paper presented for that

purpose solely because it is not presented in proper form as

required by these rules or any local rules of practices." That

rule has now been amended to Civil Rule 5(d)(4), which provides: 

"The clerk must not refuse to file a paper solely because it is

not in the form prescribed by these rules or by a local rule or

practice."

10 The Farzana K court reasoned that the "software that

operates an e-filing system acts for 'the clerk' as far as Rule 5

is concerned; a step forbidden to a person standing at a counter

is equally forbidden to an automated agent that acts on the

court's behalf." 473 F.3d at 707.

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(M.D. Fla. 2010), plaintiff's attorney incorrectly filed an

adversary complaint in the debtor's main bankruptcy case. Two

days later, the clerk issued a form "Order of Conditional

Dismissal" instructing the attorney to refile the complaint in an

adversary proceeding. Id. at 906. The attorney did as

instructed, but not until several days past the filing deadline. 

The second complaint was identical to the first. Id. Defendants

moved to dismiss the complaint with prejudice due to its

untimeliness, and the bankruptcy court granted the motion. Id. at

907-08. Relying on Civil Rule 5(d)(4) and Rule 5005(a)(1),11 the

district court reversed, holding that the adversary complaint was

timely filed despite the electronic filing error. Id. at 909. 

Accord Shuler v. Garrett, 715 F.3d 185, 187 (6th Cir. 2013)

(relying on Civil Rule 5(d)(4) to hold that Civil Rule 59 motion

electronically filed under incorrect docket number was timely

filed notwithstanding counsel's filing mistake, particularly since

defendants were also served paper copies of the motion at the time

it was filed incorrectly). 

Finally, in Vince v. Rock Cnty., Wis., 604 F.3d 391 (7th Cir.

2010), appellant's counsel electronically filed a notice of appeal

on the last day of the appeal period, but used the wrong event

code. The clerk's office discovered the error and notified

counsel of the mistake in an email three days later, directing him

to refile it with the correct event code. Counsel complied, and

11 Rule 5005(a)(1) provides, in relevant part: "The clerk

shall not refuse to accept for filing any petition or other paper

presented for the purpose of filing solely because it is not

presented in proper form as required by these rules or any local

rules or practices."

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the second transmission of the notice of appeal was sent six days

after the appeal time had expired, causing the court staff to

question the timeliness of the appeal. Relying on Civil

Rule 5(d)(4) and its prior holding in Farzana K, the Seventh

Circuit held that the notice of appeal was timely filed, even

though initially filed under the wrong event code. Id. at 393. 

The Vince court observed that filing documents under the wrong

event code is the most common electronic filing error listed in

the manual for the Western District of Wisconsin. Id. 

We are persuaded by Farzana K, Weeks Landing, Shuler and

Vince, and hold that Civil Rule 5 did not require Defendants to

serve the Motion to Dismiss when it was refiled under the correct

event code on July 16, 2013. Undisputedly, if it were not for

electronic case filing, we would not be here. The caption on

Defendants' Motion to Dismiss states that it is a "Notice of

Motion and Motion to Dismiss Complaint; Memorandum of Points and

Authorities." Thus, it is clear to anyone reading the caption

what Defendants filed. Further, if a paper filing had occurred,

the clerk had nothing to correct, which is unlike the

circumstances in Farzana K, Weeks Landing and Shuler. 

Noticeably absent from these cases and particularly Vince,

which involved the use of a wrong event code, is the court's

instruction that the incorrectly filed document had to be served

again once it was properly filed. The error here was due strictly

to a nuance that exists only because of electronic filing. It is

an error of form rather than substance. Thus, we cannot conclude

that Defendants' refiling of the Motion to Dismiss under the

correct event code on July 16, 2013, triggered the service

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requirements under Civil Rule 5(a)(1)(D) & (E). Had the motion

been altered, however, the outcome would be different. 

Debtor argues that the refiled Motion to Dismiss was the

operative motion that set the matter for hearing, not the original

filing, which he argues was rejected by the clerk and is wholly

irrelevant to the bankruptcy court's application of Civil

Rules 15(a)(1)(B) and 5(a)(1)(D). First, we disagree that the

Motion to Dismiss filed on July 3 was "rejected." Under Civil

Rule 5(d)(4) and Rule 5005(a)(1) the clerk was not allowed to

reject it. "An e-filing system likewise must accept every

document tendered for filing; it cannot reject any paper that the

clerk must accept." Farzana K, 473 F.3d at 708. In this case,

the clerk would never have rejected it in the first place because,

on the face of it, no error existed. 

We also disagree with Debtor's contention that the hearing

would not have been set had Defendants not refiled the motion, so

therefore it must be the operative motion. Docket no. 11, which

immediately follows the July 15 error notice and was also entered

on July 15, is an entry by the clerk setting the Motion to Dismiss

for hearing on August 8. Thus, the refiling of the motion on

July 16 was not the prerequisite for the hearing to be set.12

12 Debtor raises for the first time in his reply brief that

the reason Defendants were instructed to refile the Motion to

Dismiss was because they failed to comply with Local Rule 9013-

1(c)(2) and (3) and file the "Notice of Motion"and "Motion" as

separate documents, and until they did so, the matter could not be

set for hearing. Local Bankruptcy Rules 9013-1(c)(2) and (3)

provide:

(c) Form and Content of Motion and Notice.

continue...

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Defendants were not required to serve the Motion to Dismiss

when it was refiled on July 16 due to being filed under a wrong

event code on July 3. Debtor does not dispute receiving notice of

the Motion to Dismiss by mail when it was filed on July 3. 

Therefore, the FAC had to be filed by July 29. It was not filed

until July 30. As such, Debtor was not allowed to file an amended

complaint without consent from Defendants or leave of court,

neither of which he had. Civil Rule 15(a)(1)(B); 6 Wright, Miller

& Kane, Fed. Practice and Proc. § 1480 (3d 2010)(when the 21-day

time period has expired to file an amended complaint as a matter

of course, Civil Rule 15(a)(1) no longer applies and an amendment

falls under Civil Rule 15(a)(2), which requires leave of court or

12...continue

(2) Notice of Motion. Every motion must be accompanied by

written notice of motion specifying briefly the relief

requested in the motion and, if applicable, the date, time,

and place of hearing. Except as set forth in LBR 7056-1 with

regard to motions for summary judgment or partial summary

adjudication, or as otherwise ordered, the notice of motion

must advise the opposing party that LBR 9013-1(f) requires a

written response to be filed and served at least 14 days

before the hearing. If the motion is being heard on shortened

notice pursuant to LBR 9075-1, the notice must specify the

deadline for responses set by the court in the order

approving the shortened notice.

(3) Motion. There must be served and filed with the motion

and as a part thereof:

(A) Duly authenticated copies of all photographs and

documentary evidence that the moving party intends to submit

in support of the motion, in addition to the declarations

required or permitted by FRBP 9006(d); and

(B) A written statement of all reasons in support thereof,

together with a memorandum of the points and authorities upon

which the moving party will rely.

Although we are not really sure how this argument helps Debtor,

nothing in the rules state that the Notice of Motion and Motion

must be filed separately, or that failure to do so will not set a

matter for hearing. As discussed above, the clerk set the Motion

to Dismiss for hearing before Defendants even refiled it.

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written consent of the opposing party). Accordingly, the

bankruptcy court did not err in striking the FAC as untimely.

B. The bankruptcy court did not err in granting the Motion to

Dismiss under Civil Rule 12(b)(6) and dismissing the

Complaint. 

Under Civil Rule 12(b)(6), made applicable in adversary

proceedings through Rule 7012, a bankruptcy court may dismiss a

complaint if it fails to "state a claim upon which relief can be

granted." In reviewing a Civil Rule 12(b)(6) motion, the trial

court must accept as true all facts alleged in the complaint and

draw all reasonable inferences in favor of the plaintiff. Newcal

Indus., Inc. v. Ikon Office Solutions, 513 F.3d 1038, 1043 n.2

(9th Cir. 2008). To avoid dismissal under Civil Rule 12(b)(6), a

plaintiff must aver in the complaint "sufficient factual matter,

accepted as true, to 'state a claim to relief that is plausible on

its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(quoting

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim

has facial plausibility when the pleaded factual content allows

the court to draw a reasonable inference that the defendant is

liable for the misconduct alleged." Iqbal, 556 U.S. at 663

(citation omitted).

A debtor may request and obtain sanctions against a creditor

if it willfully violated the automatic stay. See § 362(k). A

creditor willfully violates the automatic stay if it knew of the

automatic stay and intentionally acted in violation of it. 

Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210, 1215 (9th Cir.

2002)(analyzing automatic stay violation under former § 362(h)). 

Debtor contends that the bankruptcy court erred in granting

the Motion to Dismiss and dismissing the Complaint for two

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reasons. First, the court erred by failing to consider whether or

not the Amended Bond Order was a final judgment. Debtor argues

that the Stay Relief Order authorized Robert to enforce only

"final" judgments and, therefore the Defendants violated the Stay

Relief Order by enforcing the Amended Bond Order, which was still

on appeal and not final.13 Second, Debtor argues Defendants' claim

to enforce the Appeal Bond, which Debtor characterizes as a

personal judgment against him, is a separate and distinct claim

for relief under California law that was not disclosed to the

bankruptcy court or authorized by the Stay Relief Order. Thus,

argues Debtor, the bankruptcy court erred in concluding that

Defendants’ pursuit of the Appeal Bond was merely part and parcel

of the Probate Action. Debtor also argues that no factual basis

existed for the bankruptcy court to determine that the $216,000

Appeal Bond was "non-estate funds," since any potential estate

interest in it was not abandoned until after Defendants took the

violative actions.

In reviewing the Stay Relief Order, the bankruptcy court

determined that Defendants' attempt to recover on the Appeal Bond

was not an action separate from the Probate Action, and therefore

did not violate the automatic stay or provide a basis for

contempt. "We accord substantial deference to the bankruptcy

court's interpretation of its own orders and will not overturn

that interpretation unless we are convinced it amounts to an abuse

of discretion." Rosales v. Wallace (In re Wallace), 490 B.R. 898,

906 (9th Cir. BAP 2013)(citing Marciano v. Fahs (In re Marciano),

13 As noted earlier, the California Court of Appeal affirmed

the Amended Bond Order on May 14, 2014.

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459 B.R. 27, 35 (9th Cir. BAP 2011)). We are not convinced the

bankruptcy court's interpretation of the Stay Relief Order was an

abuse of discretion. We agree that Defendants' pursuit of the

Appeal Bond was not an action taken outside of the authorized

Probate Action, Case No. BP122477.

Debtor is correct that the bankruptcy court did not expressly

address the finality of the Amended Bond Order, which was still on

appeal when Defendants sought to recover on the Appeal Bond, and

whether they violated the Stay Relief Order by pursuing the funds. 

However, this is of no moment, because the Appeal Bond was never

estate property.

In its ruling, the bankruptcy court implied that it was

granting the Motion to Dismiss because the Appeal Bond was

non-estate funds, so, therefore, Defendants could not have

violated the automatic stay in any event. The Appeal Bond at

issue was actually a $216,000 cash deposit in lieu of an appeal

(or supersedeas) bond. It was posted to protect the Trust from

any further damages incurred during Debtor and Peter's appeal of

the Eviction Order issued in the Probate Action. Generally, when

a "debtor puts up his own money as a cash deposit[,] [t]he debtor

continues to have not only a legal interest, but also a residual

interest in the cash deposit. Therefore, the cash deposit is

property of the estate." Canzone v. Hammon (In re Hammon),

180 B.R. 220, 223 (9th Cir. BAP 1995)(prepetition cash deposit

made by general contractor-debtor with state licensing board, as

required by state law to insure payment of claims made against

him, was property of the estate because debtor retained legal and

residual equitable interest in the funds); In re S-Tran Holdings,

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Inc., 414 B.R. 28, 35 (Bankr. D. Del. 2009)(holding same and

citing In re Hammon). Here, however, the cash deposit was made by

a third party. As such, Debtor never had any interest in the

proceeds of it and neither did his bankruptcy estate. This

conclusion is consistent with him not listing it as an asset in

his Schedule B. (See docket no. 10). The beneficiary of the

Appeal Bond was either Robert if he prevailed, or the third party

who posted the funds should Debtor and Peter have prevailed. 

Because the $216,000 cash deposit was never property of the

estate, it was never subject to the automatic stay. Therefore,

Defendants could not have violated the stay or the Stay Relief

Order in trying to recover it. Accordingly, because the Complaint

failed to establish a plausible claim for relief under § 362(k) or

§ 105(a), the bankruptcy court did not err in granting the Motion

to Dismiss. 

C. The bankruptcy court did not abuse its discretion in

dismissing the Complaint without leave to amend.

Under Civil Rule 15(a)(2), Debtor could amend his Complaint

only with Defendants' consent or with the bankruptcy court's

leave. Debtor contends that the bankruptcy court abused its

discretion in denying leave to amend because it did so on the

basis of a clearly erroneous factual finding — that the Motion to

Dismiss was served on July 3 as opposed to July 16. As we have

concluded above, the bankruptcy court did not err in finding that

the Motion to Dismiss was served on July 3. In any event,

amending the Complaint in this case would have been futile because

Debtor could never state a plausible claim for relief under

§ 362(k) or § 105(a) on the basis of Defendants' actions to

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recover on the Appeal Bond. Therefore, the bankruptcy court did

not err in denying leave to amend. Thinket Ink Info. Res., Inc.,

368 F.3d at 1061 (trial court does not err in denying leave to

amend where amendment would be futile).

VI. CONCLUSION

For the foregoing reasons, we AFFIRM.

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