### NOT FOR PU BLICA TION

U NIT E D ST A T E S BA NK RU PT CY A PPE L L A T E PA N E L OF T HE NINT H CIRCU IT In re: JA IR O A LEJA N DR O R O DR IGU EZ ,

Deb to r. JA IR O A LEJA N DR O R O DR IGU EZ ,

A p pellant,

v. DO U GLA S B. R O S S , M.D.,

A p pellee. BA P N o s. N V -19-1081-BHF N V -19-1082-BHF (R elated A ppeals) Bk. N o . 2:18-b

k-14694-MK N A dv. N o . 2:18-ap-01123-MK N

M E M O RA ND U M *

A rgued and Sub

m itted o n N o vem ber 21, 2019 at Las Vegas, N evada Filed – Feb

ruary 7, 2020 A ppeal fro

m the U nited States Bankruptc y C o urt fo r the Distric

t o f N evada 

# FIL ED

F EB 7 2020 S USAN M . SPRAUL, CLERK U. S. BKCY

. A PP. PANEL O F T H E NI NT H CI RCUI T

* Thi s di s posi ti on i s not appropr i ate for publi cati on. Although i t may be ci ted for whatev er

per suasi v e v alue i t may hav e, see Fed. R. App. P. 32.1, i t has no precedenti al v alue, see 9th Ci r . BAP Rule 8024-1.H o

no rab le Mike K

. N akagawa, Bankruptc y Judge, Presiding

A ppearanc

es: A

. J. K ung o

f Law O ffic

es o f A J K u ng, Ltd., argued fo r appellant Jairo A lejandro R o driguez; A m

a nda M. Perac

h o f Mc Do nald C arano LLP argued fo r appellee Do

u glas B. R o ss, M.D.

Befo r e: BR

A N D, HER C H ER * *

and FA R IS, Bankruptc y Judges.

INT ROD U CT I ON Deb to r Jairo R o driguez appeals o

rders (1) granting Do

uglas B. R o

ss, M.D. relief fro

m the auto m atic stay to c o ntinue with a state c

o urt ac tio n against R o

driguez, (2) denying rec o nsideratio

n o f the stay relief o

rder, and (3) denying R o

driguez's m

o t io n to dism iss Dr. R o

ss's adversary c

o m plaint
o r alternatively fo

r sum m ary judgm

ent and sua spo

nte staying the adversary pro

c eeding until reso

lutio n o f the state c

o urt ac tio n. The auto m atic stay term

inated b efo re Dr. R o ss filed his m

o tio n fo r relief; R o driguez rec

eived a disc

harge three weeks prio r. Bec ause the b ankruptc y c o urt had no autho

r ity to grant relief fro

m a no nexistent stay, we R EVER SE the o

rder granting stay relief. R o driguez has no

t satisfied his b

urden to estab lish that we have

* * Hon. Dav i d W. Hercher , Bankr uptcy Judge for the Di str i ct of Or egon, si tti ng by desi gnati on. 2jurisdic

tio n o ver the o r der denying his m

o t io n to dism iss o r alternatively fo r sum m ary judgm

ent and sua spo

nte staying the adversary pro c eeding. Therefo re, we DISMISS the appeal fro m this o rder fo r lac k o f jurisdic tio n. I. FA CT U A L BA C K GROU ND A ND PROCE D U R A LHIST O RY A

. Prepetition ev ents Dr. R o ss is a lic ensed physic

ian in N evada. R o

d r iguez is a physic

ian's assistant, lic

ensed to prac tic e m edic ine under the supervisio n o f a lic ensed physic ian in N evada. In A ugust 2013, R o

driguez fo

rm ed R utishauser, LLC , db a N LV Pain Managem

ent ("LLC " o

r "N LV Pain"), a m

edic al prac t ic e that o ffered pain
m anagem ent, urgent c

are, urine analysis testing, and a pharm a c eutic al dispensary fo

r patients invo

lved in perso

nal injury c

laim s. So o n thereafter, R o driguez and Dr. R o

ss agreed that Dr. R o

ss wo uld serve as Medic

al Direc to r fo r N LV Pain. Dr. R o

ss rec eived a salary and a 15% o wnership interest in the LLC

. In O c t o ber 2014, R o

driguez and Dr. R o

s s agreed to

inc rease Dr. R o

ss's
o wnership interest in the LLC to 33% in exc

hange fo r an additio

nal $60,000 investm ent. 1 Dr. R o

ss also m ade two lo ans to the LLC . In January 2015, he
m ade a $100,000 lo

a n fo r the purpo

s e o f gro wing the b

usiness o

f N LV Pain, and in m id-O c to ber 2015, he m

ade an em

ergenc y loan o f $25,000 to

c o ver payro ll. In N o vem ber 2015, Dr. R o

ss's two lo ans were c

o nso lidated in an

1 The followi ng facts ar e as alleged by Dr . Ross.

3unsec

ured pro m isso ry no te signed b

y R o d r iguez in favo

r o f Dr. R o ss. During this sam

e tim e period , Dr. R o

s s repeatedly requested financ ial info rm atio n ab o ut the LLC . O ther than rec eiving a o

ne-page spreadsheet in Feb

ruary 2015, Dr. R o

ss was denied ac

c ess to the LLC 's financ ial rec o rds until A pril 2015, when R o driguez finally pro

vided him with o nline "view o

nly" ac c ess to the LLC 's o

perating ac

c o unt. U po n review, Dr. R o

ss no tic ed unusually large financ ial transac

tio ns and irregularities. U ltim ately, R o driguez pro

d uc ed the LLC 's financ

ial rec o rds fo r 2014 and 2015. The financ

ials sho wed that R o

driguez was em

bezzling funds, using LLC m

o ney to pay fo r item s no t typic ally paid fo

r with c ash (i.e., rent), and m

aking unexplained c

ash withdrawals. The financ ials also sho wed highly suspic

io us b illing prac

tic es and c o m m ingling of funds with
o ther entities no

t o wned b y Dr. R o ss. Thereafter, Dr. R o

ss dem anded that all im

pro per b illing c ease, that R o driguez repay all em

bezzled funds and unautho rized expenditures o

r distrib utio ns, that R o

driguez pro

vide an explanatio

n fo r m o ney transfers fro m the LLC , and that all patient b illing b e suspended pending an investigatio

n. R o driguez refused Dr. R o ss's dem a nds and no

tified Dr. R o

ss
o f his im m ediate rem

o val as Medic

al Direc to r fo r N LV Pain. In Dec em ber 2015, Dr. R o

ss filed suit against R o

driguez (and o

thers) in state c o urt fo r (1) b r eac h o f c o ntrac t, (2) to rtio us b reac h o f the im plied

4c

o venant o f goo dfaith and fair dealing, (3) fraudulent m isrepresentatio

n, (4) b r eac h o f fiduc iary duty, (5) c

ivil c o nspirac y, (6) em bezzlem ent/theft/
c o nversio n, (7) unjust enric

hm ent, (8) injunc

t ive relief, (9) an ac

c o unting, and (10) c

o nstruc tive trust ("State C o

urt A c tio n"). The State C o

urt A c tio n was pending fo

r 2 1/2 years when R o

driguez filed his petitio n. B. Pos

tpetition ev ents R o driguez filed his c

hapter 7

2 b a nkruptc y c ase o n A ugust 6, 2018. O n that sam e day, he rem

o ved the State C o

urt A c tio n to the bankruptc

y c o urt, whic h the bankruptc

y c o u r t rem anded o n Dr. R o ss's m o tio n. The rem

and
o rder was no

t appealed. Dr. R o

ss filed a tim

ely adversary c

o m plaint against R o

driguez fo

r c laim s under § 523(a)(2) and (4). R o d riguez rec

eived
a c hapter 7 disc

harge o n N o vem ber 14, 2018. 1. D r. Ross ' s motion for relief from s tay (A ppeal No. 19-1081) O n Dec em ber 4, 2018, Dr. R o

ss m o ved fo r relief fro

m the auto m atic stay under § 362(d)(1) to c o ntinue with the State C o urt A c tio n against R o driguez ("Stay R elief Mo tio n"). R o driguez argued that "c

ause" did no

t exist to term

inate the stay, b

ec ause Dr. R o

ss's c laim s in the State C o

urt A c t io n: (1) were disc

harged in the b ankruptc y; (2) were pro

p erty o f the

2 Unless speci fi ed other

wi se, all chapter

and secti on r eferences ar e to the Bankr uptcy Code, 11 U.S

. C. §§ 101-1532, all "Rule" r efer ences ar e to the Feder al Rules of Bankr uptcy Pr ocedure, and all "Civ i l Rule" references ar e to the Feder al Rules of Civ i l Pr ocedure. 5LLC 's b

ankruptc y estate; 3 o r (3) wo uld b e reso lved b y Dr. R o ss's adversary
c o m p laint. Dr. R o

ss agreed that the o

nly c laim s against R o

driguez no

t disc harged were tho

s e fo r fraudulent m

isrepresentatio

n, b reac h o f fiduc iary duty and em

bezzlem ent. A fter a hearing, the b ankruptc y c o urt entered an o

rder granting the Stay R elief Mo

tio n ("Stay R elief O r

der"), finding that Dr. R o ss had estab lished "c ause." R o

driguez m

o ved fo r rec o nsideratio

n o f the Stay R elief O rder, whic

h the bankruptc

y c o urt denied. R o

driguez tim

ely appealed the Stay R elief O rder and the o rder denying rec

o nsideratio

n. 2. D r. Ross ' s adv ers ary c om p laint (A ppeal No. 19-1082) R o driguez m

o ved to dism iss Dr. R o

ss's adversary c

o m plaint under C ivil R ule 12(b

)(6) fo r failure to

state a c laim o r, alternatively, fo

r sum m ary judgm ent under C ivil R ule 56 ("Mo tio n to Dism iss"). Dr. R o

ss o ppo sed the Mo tio n to Dism iss. A fter a hearing, the b ankruptc y c o urt entered an o

rder denying the Mo tio n to Dism iss and staying the adversary pro c eeding until c

o m pletio n
o f the State C o

urt A c tio n ("A dversary O rder"). R o driguez tim

ely appealed. II. JU RISD I CT ION The b ankruptc y c o urt had jurisdic

tio n under 28 U .S.C . §§ 1334 and 157(b )(2)(G) and (I). W

e have appellate jurisdic tio n o ver the Stay R elief

3 Rodri guez caused the LLC to fi le a chapter 7 bankr uptcy case on December 18, 2018. 6O rder under 28 U .S.C . § 158. Ho wever, as we explain b elo w, R o driguez has
no t c arried his b

u r den o f sho wing that we have appellate jurisdic tio n o ver the A dversary O rder. III. ISSU E S 1. Did the b

ankruptc y c o urt ab use its disc

r etio n in granting Dr. R o

ss relief fro m the auto m atic stay to

c o ntinue with the State C o urt A c tio n? 2. Did the b

ankruptc y c o urt ab use its disc

r etio n in denying the m o

tio n to rec o nsider the Stay R elief O rder? 3. Do we have jurisdic

tio n o ver the A dversary O rder? I V . ST A ND A RD S OF RE V IE W W e review a b

ankruptc y c o urt's o rder granting relief fro m the auto m atic stay fo r an ab use o f disc retio n. La k ha ny v. K ha n (In re La

k ha ny) , 538 B.R . 555, 559 (9th C ir. BA P 2015). Denial o f a m o tio n to am end o r alter judgm ent under C ivil R ule 59(e) is reviewed fo r an ab u se o f disc retio n. D ixo n v. W a l lo wa C ty ., 336 F.3d 1013, 1022 (9th C ir. 2003). A b ankruptc y
c o u rt ab uses its disc

r etio n if it applies the wro

ng legal standard, m

isapplies the c o rrec t o ne, o r m akes illo gic al o r im plausib le fac tual findings, o

r findings witho

ut suppo rt fro m the fac ts in the rec

o rd. S ee Tra

fficS cho o l.co m , Inc. v. Edriver Inc. , 653 F.3d 820, 832 (9th C ir. 2011) (c iting U .S . v. H ink

so n , 585 F.3d 1247, 1262 (9th C ir. 2009) (en b anc )). To the extent the Panel m ust determ

ine whether we have jurisdic tio n to grant the relief requested, jurisdic tio n is reviewed de no

vo . La k e v. C a pps

7(In re La

k e) , 202 B.R . 751, 755 (9th C ir. BA P 1996).

V . D ISCU S SION A

. T he bankruptc

y c ourt abus ed its

dis c r etion in g

r anting the Stay Relief M otion. The b ankruptc y c o urt ac kno wledged that R o

driguez had rec

eived a disc harge three weeks prio r to Dr. R o ss filing his Stay R elief Mo tio n, and that the disc

harge o rder disc harged R o

driguez's perso

nal liab ility fo r his prepetitio

n deb ts, exc ept fo r tho se to b e determ ined in the adversary pro c eeding. N o

netheless, the c

o urt entered the Stay R elief O rder granting Dr. R o ss relief fro

m the auto m atic stay to c o ntinue with the State C o urt A c t io n. This was erro

neo us. Sec tio n 362 pro

vides, in relevant part, that the filing o f a b ankruptc y petitio n stays the c o m m enc em ent o r c o nti n u a t io n, inc luding the issuanc

e o r em plo ym ent o f p r o c ess, o f a j udic ial, adm inistrative, o

r o ther ac tio n o r pro c eeding against the deb to r that was or cou ld have been c o m m enc ed befo re the c o m m enc em ent o f the c ase under this title, o r t o rec o ver a c laim against the deb

to r that aro

se befo re t he c o m m enc em ent o f the c ase under this title. § 362(a)(1). But "'inso

far as the auto

m atic stay b ars ac tio ns against the deb to r , the stay auto

m atic ally expires upo

n the grant o

f a disc harge.'" In re La k ha ny , 538 B.R . at 561 (quo

ting R uva

ca lba v. M uno

z (In re M uno

z ) , 287 B.R

. 546, 551 (9th C ir. BA P 2002) (referenc ing § 362(c

)(2)(C )); see a

lso Z iLO G, Inc. v. C o rning (In re Z iLO G, Inc.) , 450 F.3d 996, 1009 n.13 (9th C ir. 2006) ("W e 8do

n't understand why the distric t c o urt disc ussed the auto

m a tic stay. By A ugust 21, 2002, the auto m atic stay had lo

ng sinc e disappeared; it was o nly the disc harge injunc

tio n that was relevant."). The c o urt ab uses its disc

retio n if it grants relief fro

m the auto m atic stay after it is term

inated. In re La

k ha ny , 538 B.R . at 561; In re M uno z , 287 B.R . at 551. The auto m atic stay term

inated o n N o vem b er 14, 2018, when the b ankruptc y c o urt issued R o

d riguez's disc

harge. The c

o urt c o uld no t thereafter grant Dr. R o ss relief fro

m the no nexistent stay, and it ab used its disc retio n when it did so

. 4 A c

c o rdingly, we m

ust R EVER SE the Stay R elief O rder. 5

4 Pr oceedi n g to deter mi ne Rodr

i guez's li a

bi li ty i n the S tate Cour

t Acti on also would not v i olate the di schar ge i nj uncti on. The di schar ge i n j uncti on does not apply to thi s debt, because the debt i s the subj ect of Dr . Ross's adv er sar y proceedi ng seeki ng a determi nati on of i ts di s char geabi li ty. The bankr

uptcy cour

t may ulti m

ately hold that the debt i s

di schar ged, but unti l that happens, the di s char ge i nj uncti on does not apply. See Kvassay v. Kvassay (In re Kvassay) , BAP No. CC-15-1420-Ki TaKu, 2016 WL 5845672, at *7 (9th Ci r . BAP Oct. 6, 2016) ("[U]pon the ti mely fi li ng of a complai nt obj ecti ng to di schar geabi li ty of a debt under § 523, the di schar

ge i nj uncti on does not apply wi th respect to that debt unti l the bankr uptcy cour

t makes a determi nati on as to the di schar geabi li ty of that debt.") (ci ti ng cases). Thi s does not mean, howev er , that Dr . Ross can pr oceed to collecti on should he prev ai l i n the S tate Cour t Acti on. The bankr

uptcy cour

t has exclusi

v e j ur i s di cti on to determi ne di schar

geabi li ty of debts under § 523(a)(2), (4) and (6) and that deter mi nati on must sti ll be made. § 523(c); Aldrich v. Imbrogno (In re Aldrich) , 34 B. R. 776, 781 (9th Ci r . BAP 1983) (explai ni ng that clai ms for nondi schar

geable debts under

§ 523(a)(2), (4) and (6) may not be pur

s ued i n the state cour

t as a result of the exclusiv e j ur i sdi cti on gr anted to bankr u ptcy cour

ts by the Code).

5 For thi s same r

eason, we also REVERS E the or der denyi ng r econsi derati on of

(conti nued...) 9B. W

e lac k juris dic

tion ov er the A dv ers ary Order. The appellant has the b urden o f estab lishing that the appellate c o urt has jurisdic

tio n to hear the c

ase. M elendres v. M a

rico pa C ty. , 815 F.3d 645, 649 (9th C ir. 2016). A s a thresho ld m a tter, we m

ust determ

ine o ur jurisdic tio n o ver the A dversary O rder. S ee S i no chem Int’l C o . v. M a la ysia Int’l S hipping C o

rp ., 549 U

. S. 422, 430-31 (2007) (generally a federal c o urt m ust first determ

ine whether it has jurisdic tio n befo re reac hing the merits o

f a
c ase). A fter R o

driguez filed his no

tic e o f appeal, the C lerk issued an o rder direc ting him to file a written respo

nse explaining ho

w the A dversary O rder was final and im m ediately reviewab

le o r, alternatively, to

file a
m o tio n fo r leave to

appeal. R o

driguez filed his respo

nse. The m

o tio ns panel deferred ruling o n appellate jurisdic

tio n to the m erits panel and
resum ed b riefing. A n o rder denying a m

o tio n to dism

iss a § 523 c

o m plaint is an interlo c uto ry o rder. Tra v ers v. D ra gul (In re Tra

vers) , 202 B.R . 624, 626 (9th C ir. BA P 1996). The sam e is true fo

r an o rder denying a m

o t io n fo r
sum m ary judgm

ent. Jo nes-H a m ilto n C o . v. Bea z er M a teria ls a nd S ervs., Inc. , 973 F.2d 688, 690 (9th C ir. 1992). N o r m ally, suc h o rders are no

t appealab

le
as o f right. W hile R o driguez c

o nc edes that the b

ankruptc y c o urt's dec isio ns to

5 (...conti nued) the S tay Reli ef Or der

. 10deny dism

issal o f the § 523 c

o m plaint and to

deny sum

m ary judgm

ent are
no t final and appealab

le, he argues that the interlo c uto ry o rder is appealab

le as o f right, b ec

a use the c o urt's sua spo

nte stay o

f the adversary pro c eeding is an "injunc

tive o rder" reviewab

le under 28 U .S.C . § 1292(a)(1). W e disagree. Interloc uto ry o rders o f dis tric t c ourts granting injunc

tio ns m ay b e appealed to the c

o urt o f appeals as o

f right. 28 U .S.C . § 1292(a)(1). 6 That statute is inapplic

ab le here. U nlike the C o

urt o f A ppeals, the BA P do

es no t have jurisdic

t io n to hear suc h o rders o f the bankruptc

y c o urt as o f right. S ee M o rga n-Busby v. Gla

dsto ne (In re M o

r ga n-Busby) , 272 B.R . 257, 260 n.5 (9th C ir. BA P 2002); Q uigley C o . , Inc. v. A.C . C o

lem a n (In re Q uigley C o

., Inc.) , 323

6 28 U.S .C. § 1292(a)(1) pr ov i des: (a) Except as pr

ov i d ed i n subsecti ons (c) and (d) of thi s secti on, the cour ts of appeals shall hav e j ur i sdi cti on of appeals fr

om: (1) Inter locutor y or der s of the di str

i ct cour ts of the Uni ted S tates, the Uni ted S tates Di str i ct Cour t for the Di str

i ct of the Canal Zone, the Di str i ct Cour t of Guam, and the Di str i ct Cour t of the Vi r

gi n Islands, or

of the j udges thereof, gr anti ng, conti nui ng, modi fyi ng, refusi ng or

di ssolv i ng i nj uncti ons, or refusi ng to di ssolv e or modi fy i nj uncti ons, except where a di rect r ev i ew may be had i n the S upr eme Cour

t. Rodri guez's reli ance on Young Properties i s mi splaced. See Young Props. Corp. v. Unite d E quity Corp

., 534 F.2d 847, 850 n.1 (9th Ci r. 1976) ("Appellate j ur i sdi cti on by v i r tue of 28 U.S

. C. § 1292 exi sts i n b a n k r u p tc y matter s . . . for the gr anti n

g or denyi n g of i nj uncti ons, under § 1292(a)(1)[.]"). Young Pro p erties was a Bankr

uptcy Act case and was a

n appeal f

rom a di str

i ct cour t exer ci si ng bankr

uptcy j ur i sdi cti on, not fr om a bankr

u ptcy cour

t. 11B.R . 70, 75 n.4 (S.D.N .Y . 2005) (language in 28 U .S.C

. § 1292(a)(1) indic ates that prelim

inary injunc

tive o rders sho

uld b e treated differently fro m o ther interlo c uto ry o rders fo r purpo ses o f analyzing appealab

ility, b u t 28 U .S.C

. § 158(a) dic

tates whic

h o rders o f the bankruptc

y c o u rt are appealab

le as o f right and inc

ludes o nly final o

rders, interlo

c uto r y o rders issued under § 1121(d), and "o

ther interlo c

uto ry o rders and dec

rees," inc luding prelim inary injunc

tio ns, whic h are o nly appealab

le "with leave o

f the
c o u rt"); M irz

a i v. K o lbe F o o d s, Inc. (In re M irz

a i) , 271 B.R . 647, 651 n.4 (C .D. C al. 2001), a

ff'd , 36 F. A p p 'x 619 (9th C ir. 2002) (no ting that while o

rders o f distric t c o urts granting o

r denying injunc

tio ns m ay b e appealed to

the
c o u rt o f appeals as o

f right under 28 U .S.C . § 1292(a)(1), there is no sim ilar pro visio n fo r b ankruptc y c o urt o rders regarding injunc

tio ns). Thus, R o driguez has no

t m et his b u rden o f estab lishing o ur jurisdic

tio n to hear the appeal as o

f right. The o nly way R o

driguez m

ay o b tain review o

f the A d versary O rder is to seek leave to

appeal. The Panel is autho rized to grant leave to

appeal interlo c uto ry o rders under 28 U .S.C . § 158(a)(3). In re Tra vers , 202 B.R . at 626. R o d riguez did no

t file a m o tio n fo r leave to

appeal. Instead, he requested in c

urso ry fashio n in his respo

nse that we grant leave to appeal
so lely o n the basis that it was inequitab le fo r the bankruptc

y c o u rt to sua spo nte stay the adversary pro c eeding pending reso

lutio n o f the State C o

urt A c t io n. Given the lac

k o f a pro per m o tio n and suppo

rted argum

ent

12estab

lishing the fac

to rs nec essary fo r granting leave, R o

driguez has no

t m et his b urden to estab lish that we sho

uld grant leave under 28 U .S.C

. § 158(a)(3). Sinc e R o d riguez did no

t m eet his b urden o f estab lishing o ur jurisdic tio n o ver the A dversary O rder, we DISMISS the appeal fo r lac k o f jurisdic tio n. V I. CONCL U SION Fo r the reaso

ns stated ab

o ve, we R EVER S E the Stay R elief O rder, and we DISMISS fo

r lac k o f jurisdic tio n the appeal o

f the A dversary O rder.

13