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FILED

JUN 26 2017

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NOT FOR PUBLICATION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-16-1380-KuFTa

)

MARDIROS HAIG MIHRANIAN, ) Bk. No. 2:13-bk-39026-BR

)

Debtor. ) Adv. No. 2:15-ap-01667-BR

______________________________)

)

SAM S. LESLIE, Chapter 7 )

Trustee, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

SUSAN CHOBANIAN, )

)

Appellee. )

______________________________)

Argued and Submitted on May 18, 2017

at Pasadena, California

Filed – June 26, 2017

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Barry Russell, Bankruptcy Judge, Presiding

 

Appearances: Robert Michael Aronson, on brief, for appellant;

David B. Golubchik of Levene, Neale, Bender, Yoo &

Brill LLP argued for appellee.

 

Before: KURTZ, FARIS and TAYLOR, Bankruptcy Judges.

*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.
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INTRODUCTION

 Chapter 71 trustee Sam S. Leslie appeals from an order

dismissing with prejudice his third amended fraudulent transfer

complaint against Susan Chobanian - debtor's former wife and a

medical doctor with whom the debtor shared a medical practice.

The central issue in this appeal is whether Leslie

adequately alleged that the debtor Mardiros Haig Mihranian had an

interest in the funds allegedly transferred to Susan. Unless

Leslie alleged sufficient facts that, when taken as true, 

plausibly demonstrated Mihranian’s interest in the transferred

funds, Leslie failed to state a claim for relief under either

§ 544 or § 548.

We agree with the bankruptcy court that Leslie did not

allege sufficient facts regarding Mihranian’s interest in those

funds. The general “story” in Leslie’s complaint informs us that

Mihranian (and his now ex-wife Susan) diverted funds from

Mihranian’s wholly-owned incorporated medical practice to the

defendants. Leslie has never posited – in the bankruptcy court

or on appeal – any viable legal theory why funds diverted from

Mihranian’s incorporated medical practice plausibly could be

identified as belonging to him as opposed to his corporation.

We also agree with the bankruptcy court’s decision to

dismiss the third amended complaint with prejudice. In total,

Leslie availed himself of four attempts – four opportunities – to

1Unless specified otherwise, all chapter and section

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

all "Rule" references are to the Federal Rules of Bankruptcy

Procedure, Rules 1001-9037. All "Civil Rule" references are to

the Federal Rules of Civil Procedure.

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state adequate fraudulent transfer claims. In addition, Leslie

has admitted that he conducted extensive pre-adversary-proceeding

discovery under Rule 2004, which discovery included both

depositions and document requests, and has not disputed that he

hired professionals who (among other things) were assigned the

task of identifying the source of transferred funds. Yet, in all

of the versions of his complaint, Leslie never stated a coherent

set of facts plausibly identifying Mihranian’s pre-transfer

interest in the alleged fraudulently transferred funds. Under

these circumstances, the bankruptcy court did not err in

concluding that Leslie could not or would not plausibly identify

Mihranian’s pre-transfer interest in the subject funds, and thus

the court did not abuse its discretion in dismissing the third

amended complaint without leave to amend.

Accordingly, we AFFIRM.

FACTS

Leslie’s adversary proceeding sought to avoid and recover

alleged fraudulent transfers under federal and California law

based on §§ 544 and 548 and Cal. Civ. Code §§ 3439.04 and

3439.05. This is one of four similarly-pled adversary

proceedings. The bankruptcy court dismissed all four with

prejudice, and all four are on appeal on identical grounds. Each

complaint names a different individual defendant who allegedly

received a different series of fraudulently-transferred funds. 

The history of complaints and responses informs our

analysis. Leslie filed his first amended complaint against

Susan, without any prompting from the bankruptcy court, within

several weeks of the commencement of the adversary proceeding. 

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Susan responded to the first amended complaint by filing a Civil

Rule 12(b)(6) motion to dismiss. Susan pointed out that Leslie’s

fraudulent transfer allegations did little more than state in

conclusory fashion the elements for fraudulent transfer claims

and did nothing to advise Susan of the specific transactions

Leslie claimed constituted fraudulent transfers.

The bankruptcy court in large part granted the motion to

dismiss. The bankruptcy court dismissed without prejudice

Leslie’s fourth claim for relief seeking an accounting and fifth

claim for relief seeking disallowance of any proof of claim filed

by Susan. The bankruptcy court also dismissed without prejudice

Leslie’s first and second claims for relief to the extent they

alleged actual fraudulent transfers. To the extent the first and

second claims for relief alleged constructive fraudulent

transfers, the bankruptcy court’s order on the motion to dismiss

merely required more specificity, as follows:

On the first and second causes of action in the

Complaint for constructive fraud, the claims shall be

amended to be pled with more specificity, including,

without limitation, the source of the alleged

transfer(s), the identity of the alleged transferor(s),

the date(s) of the alleged transfer(s), and the amount

of the respective transfer(s) . . . .

Order re Motion to Dismiss (Apr. 14, 2016) at p. 2. We do not

know the reasons the bankruptcy court offered for its ruling

because neither party provided us with the transcript of the

March 29, 2016 hearing on the motion to dismiss.2

2Susan’s motion did not address Leslie’s third claim for

relief seeking to recover the alleged fraudulent transfers for

the benefit of the estate under §§ 550 and 551. Nor did the

bankruptcy court’s April 14, 2016 order. On its face, this claim

(continued...)

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Leslie’s second amended complaint contained more detail. It

alleged that Mihranian and his spouse Susan3 engaged in a scheme

to divert earnings from their shared medical practice to the

various third-party defendants – including Susan – for the

purpose of keeping their earnings away from their judgment

creditors, two of whom are specifically identified in the

complaint.

On one hand, the second amended complaint alleged that

Mihranian and Susan practiced medicine through a California

professional medical corporation known as Medical Clinic &

Surgical Specialties of Glendale, Inc. (“MCSSG”). On the other

hand, the complaint perhaps suggested that Mihranian and Susan

sometimes provided medical services on their own account and not

through MCSSG. The second amended complaint did not specify

which funds transferred originally were payments for services

provided through MCSSG and which (if any) were payments for

services provided by the two doctors individually.

2(...continued)

for recovery of avoided transfers has no independent effect in

the absence of a viable claim to avoid the transfers.

3Susan asserts that she and Mihranian separated in 1998,

divorced in 2015, and did not accrue any community property after

the 1998 separation date pursuant to Cal. Fam. Code § 771(a). 

Leslie alleged that Mihranian and Susan did not really separate

in 1998, that the couple continued to work together and live

together after 1998, and that the couple only feigned separation

for the purpose of furthering their scheme to keep Mihranian’s

assets away from his creditors. The bankruptcy court ultimately

ruled that Leslie had alleged sufficient facts challenging the

purported separation, and Susan did not cross-appeal this ruling. 

We further discuss the issue concerning the couple’s marital

status near the end of this decision.

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The second amended complaint then sets forth several

paragraphs of allegations stating that some $2 million in

payments for the two doctors’ medical services were shuttled back

and forth between Susan and Haig Leo Mihranian – one of her sons. 

However, none of these allegations clarify who held the medical

service payments before Susan began shuttling them back and

forth, nor do they clarify who “owned” the right to the payments

at the time the medical services were paid for.

The second amended complaint then, in conclusory fashion,

identifies the $2 million as money “debtor” allegedly transferred

to Susan. But it is impossible to tell from the complaint what

portion of this amount originally was payment for services

provided through MCSSG and what portion of this amount (if any)

originally was payment for services provided by the two doctors

individually – or who held these funds before they allegedly were

transferred to Susan.

After she received the second amended complaint, Susan

contacted Leslie and urged Leslie to provide more specificity

regarding the alleged fraudulent transfers. Susan pointed out

that the second amended complaint did not specify “the source of

the alleged transfer(s), the identity of the alleged

transferor(s), the date(s) of the alleged transfer(s), and the

amount of the respective transfer(s)” as directed in the

bankruptcy court’s April 14, 2016 order. In response, Leslie

filed his third amended complaint.

There were only two significant differences between the

second amended complaint and the third amended complaint. Most

notably, the third amended complaint added two exhibits providing

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some detailed information regarding each of the alleged

fraudulent transfers. Exhibit A was entitled “Detail Of 544

Transfers” and itemized in two columns the “Date” of each alleged

transfer and the “Deposit” amount of each alleged transfer. 

Exhibit A did not identify the source of each alleged transfer or

the identity of the alleged transferor. Nor is there any way to

tell who provided the services generating these funds. 

Furthermore, Leslie’s third amended complaint never explained the

relationship or connection (if any) between the $319,981.58 in

transfers identified in Exhibit A and the $2 million in funds

allegedly shuttled back and forth between Susan and her son Haig. 

Exhibit B was entitled “Detail Of 548 Transfers” and set

forth specific information regarding dates and deposit amounts in

the same format as Exhibit A.4

The other significant change between the second amended

complaint and the third amended complaint concerned the aggregate

amount of fraudulent transfers alleged. Whereas the second

amended complaint alleged an aggregrate amount of roughly

$2 million in alleged fraudulent transfers to Susan, the third

amended complaint only alleged an aggregrate amount of 

$319,981.58 in such transfers.

Susan moved to dismiss the third amended complaint. Susan

asserted that the third amended complaint did not satisfy the

specificity requirement of the bankruptcy court’s April 14, 2016

4Susan argued that Exhibits A and B incorrectly identified

the “deposit” dates instead of the transfer dates, but this

argument reads the Exhibits in an overly narrow manner. In any

event, the bankruptcy court did not adopt this argument when it

dismissed Leslie’s third amended complaint.

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order and also did not satisfy the requirements for pleading

claims for relief under Civil Rules 8(a) and 9(b), Ashcroft v.

Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly,

550 U.S. 544 (2007).

At the hearing on the motion to dismiss the third amended

complaint, the bankruptcy court primarily focused on one issue. 

According to the court, it directed Leslie both at the March 29,

2016 dismissal motion hearing and in its April 14, 2016 order to

specifically identify the transferor of each transfer. The court

explained that it made a big difference whether the source of the

fraudulently transferred funds was Mihranian, his former wife

Susan, MCSSG, or some other person or entity. The following

statement is representative of the court’s comments:

I was very specific last time we were here. I wanted

you to be specific. Now who actually physically made

the transfer at that moment? Was it the Debtor, was it

the ex-wife? And that was -- was that -- did you not

understand that that was the whole purpose of my order?

Hr’g Tr. (Sept. 27, 2016) 10:24-11:3.

Similarly, the court later on made it clear that it was

dismissing the third amended complaint because Leslie did not

provide the specific information regarding who was the

transferor:

THE COURT: But the difference is I have ordered you

twice, I think,5 to be more specific as to the Debtor,

the ex-wife, now ex-wife, the business. I ordered you,

and you didn't do it. I can't figure out why, but you

didn't do it.

MR. ARONSON: Your Honor, I thought that I complied with

5The record reflects that the court only issued one order

requiring Leslie to provide more specific information regarding

the alleged fraudulent transfers – the April 14, 2016 order.

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the Court's order.

THE COURT: You're a bright guy. Good lord. I can't

imagine that you actually -- if you did, it's tunnel

vision, and you really should have asked somebody else. 

I am going to grant the motion. This is, you know, you

-- I made it absolutely clear. You didn't do it. And

I am going to dismiss it.

Hr’g Tr. (Sept. 27, 2016) 30:24-31:11.

On October 14, 2016, the bankruptcy court entered its order

dismissing with prejudice Leslie’s third amended complaint, and

Leslie timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157, and we have jurisdiction under 28 U.S.C. § 158.

ISSUE

Did the bankruptcy court commit reversible error when it

dismissed Leslie’s third amended complaint without leave to

amend?

STANDARDS OF REVIEW

We review de novo orders dismissing complaints for failure

to state a claim. See Levitt v. Yelp! Inc., 765 F.3d 1123, 1126

(9th Cir. 2014). 

Denial of leave to amend is reviewed for an abuse of

discretion. See Gonzalez v. Planned Parenthood of L.A., 759 F.3d

1112, 1114 (9th Cir. 2014).

The bankruptcy court abuses its discretion if it applies an

incorrect legal standard or its findings of fact are clearly

erroneous. Fear v. U.S. Tr. (In re Ruiz), 541 B.R. 892, 896 (9th

Cir. BAP 2015).

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DISCUSSION

Leslie contends that the bankruptcy court erred in several

different ways when it dismissed his third amended complaint with

prejudice. Leslie asserts that the bankruptcy court erroneously

determined that the third amended complaint did not satisfy the

requirements of Civil Rules 8(a) and 9(b). Leslie further

maintains that the bankruptcy court erroneously required greater

specificity regarding each of the alleged fraudulent transfers

than either of those Civil Rules require. Leslie also contends

that the bankruptcy court erroneously denied him leave to amend. 

We will address each of these asserted errors in turn.6

As a threshold matter, it is important to note Leslie based

all of his fraudulent transfer claims on the theory that

Mihranian and his then-wife Susan improperly diverted funds from

the couple’s shared medical practice. (3rd Am. Compl. at ¶¶ 7,

14, 18.) That is what Leslie said in his third amended

complaint, and that is what Leslie repeatedly said in his opening

appellate brief. (Aplt. Opn. Br. at pp. 10-11, 26-28.) Leslie

has not advanced on appeal any alternate theories or arguments

underlying his fraudulent transfer claims, and we decline to look

beyond what Leslie actually has argued. See Christian Legal

Soc'y v. Wu, 626 F.3d 483, 487–88 (9th Cir. 2010) (declining to

address matters not specifically and distinctly discussed in the

6In his opening appellate brief, Leslie purported to

identify an additional argument challenging the bankruptcy

court’s decision: that the bankruptcy erred in determining that

his third amended complaint did not satisfy the bankruptcy

court’s heightened specificity requirements. Our discussion of

the first two arguments set forth above addresses and disposes of

this additional argument.

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appellant’s opening brief); Brownfield v. City of Yakima,

612 F.3d 1140, 1149 n.4 (9th Cir. 2010) (same). With this

limitation on our review in mind, we will turn our attention to

the so-called errors Leslie has attributed to the bankruptcy

court’s decision.

A. Civil Rule 8(a) and Civil Rule 9(b) Pleading Requirements

Civil Rule 8(a) requires pleadings to set forth “a short and

plain statement of the claim showing that the pleader is entitled

to relief.” A claim is the “aggregate of operative facts which

give rise to a right enforceable in the courts.” Bautista v. Los

Angeles Cty., 216 F.3d 837, 840 (9th Cir. 2000) (citing Original

Ballet Russe, Ltd. v. Ballet Theatre, Inc., 133 F.2d 187, 189 (2d

Cir. 1943)). 

As the Supreme Court has explained:

a complaint must contain sufficient factual matter,

accepted as true, to state a claim to relief that is

plausible on its face. . . . A claim has facial

plausibility when the plaintiff pleads factual content

that allows the court to draw the reasonable inference

that the defendant is liable for the misconduct

alleged. . . . Threadbare recitals of the elements of

a cause of action, supported by mere conclusory

statements, do not suffice.

Iqbal, 556 U.S. at 678 (citations and internal quotation marks

omitted). The Ninth Circuit Court of Appeals has observed that

the Supreme Court has not always applied this plausibility

standard consistently. Starr v. Baca, 652 F.3d 1202, 1215–16

(9th Cir. 2011). In light of this perceived inconsistency, the

Ninth Circuit has refined the standard for determining when a

complaint meets the minimum requirements of Civil Rule 8(a),

stating as follows:

First, to be entitled to the presumption of truth,

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allegations in a complaint or counterclaim may not

simply recite the elements of a cause of action, but

must contain sufficient allegations of underlying facts

to give fair notice and to enable the opposing party to

defend itself effectively. Second, the factual

allegations that are taken as true must plausibly

suggest an entitlement to relief, such that it is not

unfair to require the opposing party to be subjected to

the expense of discovery and continued litigation.

Id. at 1216 (emphasis added). Accord, Merritt v. Countrywide

Fin. Corp., 759 F.3d 1023, 1032–33 (9th Cir. 2014). At bottom,

the plausibility analysis is context specific and requires the

court to draw upon its experience and common sense. Levitt,

765 F.3d at 1135.

One of the fraudulent transfer elements Leslie needed to

allege was that property of the debtor was transferred to the

defendants. A transfer of the debtor’s property that otherwise

would have been property of the estate is a prerequisite for a

fraudulent transfer action under either § 544 or § 548. See

Geltzer v. Barish (In re Starr), 502 B.R. 760, 767–68 (Bankr.

S.D.N.Y. 2013) (holding that trustee sufficiently alleged

debtor’s property interest); Serra v. Salven, 2011 WL 4627576, at

*12 (E.D. Cal. Oct. 3, 2011) (holding that trustee failed to

prove for summary judgment purposes that debtor had an interest

in the property transferred); see also Gaughan v. Edward Dittlof

Revocable Tr. (In re Costas), 555 F.3d 790, 792–93 (9th Cir.

2009) (generally stating property interest requirement); Wyle v.

Rider (In re United Energy Corp.), 944 F.2d 589, 593-94 (9th Cir.

1991) (same); Greenspan v. Orrick, Herrington & Sutcliffe LLP (In

re Brobeck, Phleger & Harrison LLP), 408 B.R. 318, 337 (Bankr.

N.D. Cal. 2009) (“both the ‘property’ and ‘transfer’ elements

apply whether the claim is one for actual or constructive

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fraudulent transfer”).

Leslie alleged that Mihranian and his then-wife Susan

diverted to third parties payments for medical services they

provided. If the allegedly diverted medical service fees were

owed either to Mihranian or his alleged wife, then Mihranian

transferred his interest in those payments by diverting them. 

See In re Brobeck, Phleger & Harrison LLP, 408 B.R. at 338

(holding that debtor law firm’s waiver of potential profits from

unfinished legal work constituted a transfer of the law firm’s

property within meaning of fraudulent transfer statutes).

However, Leslie also alleged that Mihranian and Susan

operated through a shared medical practice – an incorporated

medical practice – MCSSG. There are no facts alleged in the

complaint from which it would be plausible to infer that the fees

for services earned by the medical practice would belong to

either Mihranian or Susan individually; rather, they would be

property of MCSSG. To hold otherwise would ignore the legal

separateness of MCSSG. See generally Sonora Diamond Corp. v.

Superior Court, 83 Cal. App. 4th 523, 538 (2000) (“a corporation

is regarded as a legal entity, separate and distinct from its

stockholders, officers and directors, with separate and distinct

liabilities and obligations.”).

Leslie argues on appeal that any fees for services owed to

MCSSG actually were owed to Mihranian – MCSSG’s sole owner – and

that he alleged sufficient facts in his third amended complaint

to justify piercing the corporate veil. The bankruptcy court

disagreed with Leslie’s alter ego argument, and this alter ego

argument is the only ground Leslie has advanced in the bankruptcy

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court or on appeal to explain why MCSSG’s funds should be treated

as if they were Mihranian’s property. 

Generally, to pierce the corporate veil, a plaintiff must

allege and prove: (1) “such unity of interest and ownership that

the separate personalities of the corporation and the individual

no longer exist”; and (2) “if the acts are treated as those of

the corporation alone, an inequitable result will follow.” 

Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290, 300 (1985). There is

no single set of underlying facts that always must be alleged to

plausibly demonstrate these two criteria; instead, a variety of

case-specific facts must be considered to establish the

principal’s domination and control over the corporation and to

show that immunizing the principal from the corporation’s

liability would work an injustice. Id.; see also Lebastchi v.

Superior Court, 33 Cal. App. 4th 1465, 1470 (1995). 

Alter ego has been described as “an extreme remedy,

sparingly used,” Sonora Diamond Corp., 83 Cal. App. 4th at 539,

and it is to be imposed “cautiously” and “reluctantly.” Highland

Springs Conference & Training Ctr. v. City of Banning, 244 Cal.

App. 4th 267, 281 (2016). More importantly, when imposed, the

separateness of the corporate entity is not disregarded for all

purposes but only for the purpose and under the circumstances of

the case in which it is asserted. Lebastchi, 33 Cal. App. 4th at

1470; see also Mesler, 39 Cal. 3d at 301 (“under certain

circumstances a hole will be drilled in the wall of limited

liability erected by the corporate form; for all purposes other

than that for which the hole was drilled, the wall still

stands”). 

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Ordinarily, the alter ego doctrine only is invoked to enable

a plaintiff to impose corporate liability upon the corporation’s

principal(s). See Sonora Diamond Corp., 83 Cal. App. 4th at 538. 

In fact, at least one California Court of Appeal has held that

California law does not permit “outside reverse piercing of the

corporate veil” – piercing in order to make the corporation’s

assets liable for the debts of the individual shareholder(s). 

Postal Instant Press, Inc. v. Kaswa Corp. 162 Cal. App. 4th 1510,

1522 (2008). That is precisely what Leslie is attempting to do

here: claim the assets of MCSSG as if they belonged to Mihranian

individually and his bankruptcy estate.

Postal Instant Press is carefully reasoned and persuasive. 

Moreover, we must follow the law of California’s intermediate

appellate courts on this point unless we are convinced that the

California Supreme Court would decide the issue differently. 

Goodrich v. Briones (In re Schwarzkopf), 626 F.3d 1032, 1038 (9th

Cir. 2010). We are not persuaded that the California Supreme

Court would decide this issue differently. Thus, allegations of

alter ego do not aid Leslie; he cannot establish plausibility

through such allegations. Consistent with this fact, Leslie did

not adequately plead alter ego.

As mentioned above, alter ego is the only legal ground

Leslie has advanced to explain why fees for medical services

belonging to MCSSG should have been considered Mihranian’s

property for fraudulent transfer purposes. To the extent Leslie

could have advanced other grounds to support this contention,

Leslie abandoned them by not raising them in the bankruptcy court

or on appeal. See, e.g., United Student Aid Funds, Inc. v.

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Espinosa, 559 U.S. 260, 270 n.9 (2010) (“We need not settle that

question, however, because the parties did not raise it in the

courts below”); Mayor v. Wolkowitz (In re Cinevision Int'l,

Inc.), 2016 WL 638729, *7-8 (Mem. Dec.) (9th Cir. BAP Feb. 16,

2016) (declining to consider issue that appellants raised for the

first time in their reply brief on appeal). 

In short, fees for medical services owed to MCSSG did not

belong to Mihranian – and were not his property – for fraudulent

transfer purposes. 

Leslie’s third amended complaint arguably suggested that, at

least some of the time, Mihranian and Susan accrued earnings on

their own account. But no factual allegations in the third

amended complaint tie these accrued earnings (if any) to the

specific alleged fraudulent transfers identified in the

complaint. The bankruptcy court attempted to explain to Leslie

that the complaint should have identified the alleged source of

all fraudulent transfers. Given the other facts Leslie alleged

regarding the corporate status of Mihranian’s and Susan’s medical

practice, we agree with the bankruptcy court and hold that Leslie

did not state plausible fraudulent transfer claims in the absence

of alleged facts plausibly demonstrating that either Mihranian or

Susan had a property interest in the specific funds allegedly

transferred. 

In sum, under Civil Rule 8(a), Leslie needed to allege facts

which, if accepted as true, plausibly could have lead to the

following inferences: (1) that the funds transferred to Susan

were funds in which Mihranian personally had a property interest

before they were transferred to Susan; and (2) that Mihranian

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relinquished to Susan his property interest in those funds by way

of those transfers. Leslie did not allege facts that plausibly

could support these inferences. Accordingly, the third amended

complaint failed to state any viable fraudulent transfer claims.

Meanwhile, Civil Rule 9(b) requires fraud to be pled with

particularity. Under Civil Rule 9(b), the plaintiff’s

allegations must include “‘the who, what, when, where, and how of

the misconduct charged.’” United States v. United Healthcare

Ins. Co., 848 F.3d 1161, 1180 (9th Cir. 2016) (quoting Ebeid ex

rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir.

2010)).

A number of bankruptcy courts have acknowledged that Civil

Rule 9(b) does not apply to constructive fraudulent transfers. 

See, e.g., Seror v. Stone (In re Automated Fin. Corp.), 2011 WL

10502417, at *4-5 (Bankr. C.D. Cal. Jan. 25, 2011); Angell v. Day

(In re Caremerica, Inc.), 415 B.R. 200, 208 (Bankr. E.D.N.C.

2009); Official Comm. of Unsecured Creditors. v. Am. Tower Corp.

(In re Verestar, Inc.), 343 B.R. 444, 459-60 (Bankr. S.D.N.Y.

2006)); see also Sunnyside Dev. Co. LLC v. Cambridge Display

Tech. Ltd., 2008 WL 4450328, at *8-9 (N.D. Cal. Sept. 29,

2008)(district court ruling holding same). These same decisions

hold, however, that Civil Rule 9(b) applies to actual fraudulent

transfers because such claims sound in fraud. We question

whether all actual fraudulent transfer claims sound in fraud,

because the controlling fraudulent transfer statutes state in the

disjunctive that an actual fraudulent transfer occurs when the

debtor makes a transfer with the actual intent to hinder, delay

or defraud. See § 548(a)(1)(A); Cal. Civ. Code § 3439.04; see

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also Wolkowitz v. Beverly (In re Beverly), 374 B.R. 221, 232 (9th

Cir. BAP 2007), aff'd in part and adopted, 551 F.3d 1092 (9th

Cir. 2008). We do not see why harboring an intent to hinder or

delay your creditors would sound in fraud.

That being said, it is unnecessary for us to resolve the

issue of when, if ever, Civil Rule 9(b) should be applied to

actual fraudulent transfer claims. As a practical matter, under

the circumstances of this particular case, what Civil Rule 8(a)

requires and what Civil Rule 9(b) would require largely overlap. 

Put another way, in this instance, the Civil Rule 8(a) standard

articulated in Merritt, 759 F.3d at 1033, and the Civil Rule 9(b)

standard articulated in United Healthcare Insurance Co., 848 F.3d

at 1180, lead to similar pleading requirements.

In any event, we already have held that none of the

fraudulent transfer claims satisfy the Civil Rule 8(a) standard. 

Thus, it is unnecessary to determine here whether Civil Rule 9(b)

also applies and has been satisfied. 

B. The Bankruptcy Court’s Requirement That Leslie Plead His

Fraudulent Transfer Claims With Greater Specificity

Leslie’s next contention concerns the bankruptcy court’s

April 14, 2016 order and its direction that Leslie must re-plead

his constructive fraudulent transfer claims with more

specificity, “including, without limitation, the source of the

alleged transfer(s), the identity of the alleged transferor(s),

the date(s) of the alleged transfer(s), and the amount of the

respective transfer(s).” 

The April 14, 2016 order only stated this requirement as to

the constructive fraudulent transfer claims. Even so, when the

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order is read in conjunction with the court’s comments at the

final hearing, it becomes reasonably clear that, when the court’s

April 14, 2016 order dismissed without prejudice Leslie’s actual

fraudulent transfer claims, the court expected any re-pleading of

the actual fraudulent transfer claims to include at least the

same level of specificity as the constructive fraudulent transfer

claims. Neither party has suggested any other interpretation of

the court’s April 14, 2016 order, nor has Leslie argued that he

did not realize that the bankruptcy court’s specificity

requirement applied to both the actual fraudulent transfer claims

and the constructive fraudulent transfer claims.

As we have already explained, the third amended complaint

did not allege sufficient facts to support a plausible inference

that Mihranian transferred any of his own property interests to

Susan. The bankruptcy court’s required statement of transfers

identifying (among other things) the source of each transfer

reasonably was aimed at rectifying this deficiency. Typically,

identifying the source of the transfer(s) and the identity of the

transferor(s) would provide facts from which a court plausibly

could infer whether the debtor held a property interest in funds

before their transfer. See, e.g., In re Geltzer, 502 B.R. at

767–68; In re Caremerica, Inc., 415 B.R. at 208.

We acknowledge that Leslie might have employed other methods

besides the bankruptcy court’s specificity requirement to satisfy

the pleading requirements of Civil Rule 8(a) for purposes of

alleging Mihranian’s interest in the alleged fraudulently

transferred funds. Even so, Leslie did not in fact plausibly

allege Mihranian’s interest in the transferred funds in any way,

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and the bankruptcy court’s specificity requirement reasonably was

aimed at rectifying this deficiency in Leslie’s pleading. 

Therefore, we conclude that the bankruptcy court did not commit

reversible err when it imposed the specificity requirement on

Leslie in the April 14, 2016 order. 

C. Dismissal Without Leave To Amend

Leslie also contends on appeal that the bankruptcy court

should have granted him leave to amend his complaint. Generally

speaking, courts should not deny leave to amend unless the court

determines that amendment would be futile. See Ebner v. Fresh,

Inc., 838 F.3d 958, 963 (9th Cir. 2016); Lacey v. Maricopa Cty.,

693 F.3d 896, 926 (9th Cir. 2012) (en banc).7

 That being said, the trial court has broad discretion in

deciding whether to grant leave to amend, especially when (as

here) the plaintiff already has been given multiple opportunities

to amend its complaint. See Gonzalez, 759 F.3d at 1116 (citing

Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir.

2004)). Gonzalez is instructive. There, the Ninth Circuit Court

of Appeals affirmed the district court’s dismissal of Gonzalez’s

third amended complaint without leave to amend. Id. In the

process of holding that the district court did not abuse its

7To be clear, different standards (other than futility) 

apply when the bankruptcy court dismisses with prejudice an

adversary proceeding as a sanction based on plaintiff’s

noncompliant or dilatory conduct. See generally Lee v. 

Roessler–Lobert (In re Roessler-Lobert), 567 B.R. 560, 568-73 

(9th Cir. BAP 2017) (describing other standards). Here, however,

Susan did not request dismissal of Leslie’s complaint as a

sanction, nor did the bankruptcy court consider sanctions as a

ground for dismissal without leave to amend.

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discretion in denying leave to amend, the Court of Appeals relied

on two things: (1) Gonzalez’s failed multiple attempts to state

viable claims for relief; and (2) the fact that certain

attachments to Gonzalez’s complaint “defeated the plausibility of

his allegations.” Id.

Similarly, here, Leslie’s focus in his complaint on the

alleged diversion of funds from an incorporated medical practice

undermined the plausibility of his allegations that Mihranian had

a property interest in the alleged fraudulently transferred

funds. 

Furthermore, Leslie, like Gonzalez, had a history of

multiple failed attempts to state viable claims for relief. 

Leslie’s third amended complaint was his fourth attempt to state

his fraudulent transfer claims. Leslie has not disputed that he

filed his first amended complaint and his third amended complaint

after discussions with the defendants regarding the insufficiency

of his fraudulent transfer allegations. Additionally, the

bankruptcy court reviewed two of Leslie’s four complaints, and

the court correctly determined that neither stated plausible

fraudulent transfer claims. After the first of the bankruptcy

court’s two reviews, the court ordered Leslie to allege more

specific facts regarding the subject transfers, which order

reasonably was aimed at identifying whether Mihranian plausibly

had an interest in the alleged fraudulently transferred funds. 

Nonetheless, Leslie did not comply with the court’s order, nor

did Leslie otherwise adequately address the court’s concern

regarding identification of Mihranian’s interest in the

transferred funds. 

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Leslie’s failure to do so is particularly inexplicable here

because he admitted to conducting extensive pre-litigation

discovery in the form of Rule 2004 examinations – consisting of

both depositions and voluminous document production requests – 

focusing on the transfers in question. Nor has Leslie disputed

Susan’s assertion that Leslie hired professionals who (among

other things) were assigned the task of identifying the source of

the transferred funds. Simply put, this is not a situation where

the plaintiff lacked an opportunity to obtain sufficient

information to plead his claims with more specificity.

Under these circumstances, the bankruptcy court did not err

when it determined that Leslie either could not or would not

plausibly allege Mihranian’s interest in the transferred funds. 

Accordingly, dismissal without leave to amend was not an abuse of

discretion.

D. Other Issues: Community Property, Statute of Limitations 

and Request to Supplement The Record

There are a few additional issues we should address. First,

Susan claims that Leslie did not sufficiently allege 

Mihranian’s community interest in any funds Susan received on

account of medical services Susan provided on her own account. 

To the extent Mihranian had a community interest in funds in

which Susan held a right to payment, the transfer of those funds

could have constituted a transfer of the debtor’s interest in

property for fraudulent transfer purposes. See In re Beverly,

374 B.R. at 233.

Ultimately, the bankruptcy court seemed to decide this issue

in favor of Leslie, and Susan did not cross-appeal from this

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ruling. Regardless, under California law, whether Mihranian and

Susan actually were separated in and after 1998 as Susan claims

was a question of fact necessary to determine whether and when

they ceased to accrue community property under Cal. Fam. Code

§ 771(a). See In re Marriage of Manfer, 144 Cal. App. 4th 925,

930 (2006). Leslie effectively alleged that Mihranian and Susan

continued to work together, that they continued to live together

in the same residence, and that neither intended a permanent and

final cessation of their marriage; rather, according to Leslie,

the couple feigned separation in 1998 as part of a scheme to keep

Mihranian’s assets away from his creditors. These facts were

sufficient to allege that Mihranian and Susan were not, in fact,

separated and continued to accrue community property in and after

1998. See generally id. 

Even so, under the circumstances of this appeal, the issue

of whether the fees for services were Susan’s property or

Mihranian’s property largely is a red herring. The more

important questions – questions that Leslie never answered –

were: (1) why funds allegedly diverted from the couple’s shared

medical practice were property of the debtor as opposed to

property of MCSSG; and (2) how the so-called sham separation

advanced Mihranian’s and Susan’s diversion scheme when Leslie’s

complaint indicated that both Mihranian and Susan were judgment

debtors to one or more of the judgment creditors named in

Leslie’s complaint. 

Another issue we should address concerns the statute of

limitations applicable to actual fraudulent transfers under

California law. The applicable statute provides in relevant

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part: 

(a) Under paragraph (1) of subdivision (a) of

Section 3439.04, not later than four years after the

transfer was made or the obligation was incurred or, if

later, not later than one year after the transfer or

obligation was or could reasonably have been discovered

by the claimant.

Cal. Civ. Code § 3439.09(a) (emphasis added).

The bankruptcy court opined that, to the extent Leslie

sought to avail himself of § 3439.09(a)’s “discovery rule,”

Leslie should have alleged that the fraudulent nature of the

transfers reasonably could not have been discovered earlier. 

Leslie’s opening appeal brief does not mention let alone

address the statute of limitations issue. On this basis alone,

we could decline to address this issue. Christian Legal Soc'y,

626 F.3d at 487–88; Brownfield, 612 F.3d at 1149 n.4.

In any event, for purposes of this appeal, suffice it to say

that Leslie could not have properly invoked this discovery rule

unless he alleged facts plausibly tending to demonstrate that the

fraudulent nature of the transfers was not discovered earlier and

reasonably could not have been discovered earlier. See Denholm

v. Houghton Mifflin Co., 912 F.2d 357, 362 (9th Cir. 1990); Sun

'n Sand, Inc. v. United Cal. Bank, 21 Cal. 3d 671, 701-02 (1978);

see also Ezra v. Seror (In re Ezra), 537 B.R. 924, 933 (9th Cir.

BAP 2015) (“the one-year period under Cal. Civ. Code

§ 3439.09(a)’s discovery rule does not commence until the

plaintiff has reason to discover the fraudulent nature of the

transfer.”)

The final issue we should address concerns Susan’s request

to supplement the record on appeal. In this request, Susan asked

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us to consider on appeal documents that were not part of this

adversary proceeding but rather were part of Leslie’s

contemporaneous motion to substantively consolidate Mihranian’s

bankruptcy estate with MCSSG and the four fraudulent transfer

defendants. Even if we were to assume that these materials were

sufficiently “before” the bankruptcy court to be considered part

of the adversary proceeding record (which they were not),

consideration of their contents as evidence for purposes of

resolving Susan’s Civil Rule 12(b)(6) dismissal motion likely

would have converted the defendants’ dismissal motion into a

summary judgment motion. See Civil Rule 12(d). We decline on

appeal to consider materials that would have converted this

matter into a summary judgment proceeding when the bankruptcy

court did not do so.

Therefore, Susan’s motion seeking to supplement the record

with the materials from the substantive consolidation proceeding

is hereby ORDERED DENIED.8

CONCLUSION

For the reasons set forth above, the bankruptcy court’s

order dismissing with prejudice Leslie’s third amended complaint

8On the day of oral argument, this Panel delayed the start

of oral argument in this appeal by roughly 30 minutes because, at

the time this appeal first was called for hearing, counsel for

Leslie was not present. After the 30-minute delay, the Panel

proceeded with oral argument. Only counsel for Susan appeared;

no one appeared for Leslie. The Panel effectively submitted

Leslie’s position on his appellate briefs and on the record on

appeal. Shortly after the completion of oral argument, the Panel

received from Leslie’s counsel an informal telephonic request to

continue oral argument. That request is hereby ORDERED DENIED. 

The request was untimely and was not presented in a procedurally

proper format. See Rule 8013(a).

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is AFFIRMED.

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