Court Opinion

ID: 3199268
Source: CourtListenerOpinion
Date Created: 2016-04-29 20:01:10.605354+00
Date Added: 2024-06-11T12:39:06.132346
License: Public Domain

FILED
                           NOT FOR PUBLICATION                                          APR 29 2016
                                                                                  MOLLY C. DWYER, CL
                                                                                    U.S. COURT OF APPEA
                    UNITED STATES COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: DEMAS WAI YAN,                            14-16937

              Debtor,                            D.C. No. 3:14-cv-00085-RS

DEMAS WAI YAN,
                                                 ORDER AND MEMORANDUM*
             Plaintiff-Appellant,

  v.

TONY FU; et al.,

             Defendants-Appellees.

                    Appeal from the United States District Court
                       for the Northern District of California
                     Richard Seeborg, District Judge, Presiding

                            Submitted April 27, 2016**
                             San Francisco, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
        **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: TALLMAN and RAWLINSON, Circuit Judges, and GARBIS, Senior
District Judge.***

      Demas Yan (“Yan”) appeals from the decision of the district court affirming

the bankruptcy court’s dismissal of his complaint in one of a series of lawsuits

related to his bankruptcy. We have jurisdiction pursuant to 28 U.S.C. § 158(d)(1),

and we affirm.

      The lawsuit at issue was filed by Yan in state court and removed by

Appellees to the bankruptcy court. Yan contends that the alleged causes of action

accrued postpetition and are, therefore, not properly under the jurisdiction of the

bankruptcy court.

      With certain exceptions not applicable here, a bankruptcy estate includes all

legal and equitable interests in property held by the debtor at the time of filing,

including all causes of action the debtor could have brought outside bankruptcy. In

re Jess, 169 F.3d 1204, 1207 (9th Cir. 1999) (citing 11 U.S.C. § 541(a)). A claim

is defined broadly as a “right to payment, whether or not such right is reduced to

judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,

disputed, undisputed, legal, equitable, secured, or unsecured.” 11 U.S.C. §

101(5)(A). All of Yan’s initial substantive allegations, incorporated by reference

        ***
              The Honorable Marvin J. Garbis, Senior United States District Judge
for the District of Maryland, sitting by designation.
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into each of his causes of action, clearly indicate that his claims are based on

wrongdoing that occurred before the time of the bankruptcy filing, even though

other damage was alleged to have occurred postpetition. The bankruptcy court

granted Yan the opportunity to amend the complaint to allege with specificity only

postpetition claims. Yan did not contest removal, did not amend his claims, and

did not request remand to state court.

      Reviewing the district court’s decision de novo, Barriento v. Wells Fargo

Bank, N.A., 633 F.3d 1186, 1188 (9th Cir. 2011), we agree that the claims as

alleged accrued prepetition. The claims were “sufficiently rooted in the

prebankruptcy past,” and are properly included as property of the bankruptcy estate

under § 541. Segal v. Rochelle, 382 U.S. 375, 380 (1966). Accordingly, the

district court’s affirmance of the bankruptcy court was appropriate.

      Although Yan did not raise his argument about subject-matter jurisdiction

until now, a “challenge to a federal court’s subject-matter jurisdiction may be made

at any stage of the proceedings, and the court should raise the question sua

sponte.” Kontrick v. Ryan, 540 U.S. 443, 455 (2004) (relying on Mansfield, C. &

L.M.R. Co. v. Swan, 111 U.S. 379, 382 (1884)). “Bankruptcy courts have subject

matter jurisdiction over proceedings ‘arising under title 11, or arising in or related

to cases under title 11.’” In re Wilshire Courtyard, 729 F.3d 1279, 1285 (9th Cir.
                                           3
2013) (quoting 28 U.S.C. § 1334(b)). Since Yan’s causes of action, as alleged,

arose from prepetition activities, and thus, are “property of the estate” under § 541,

the bankruptcy court had subject matter jurisdiction over the removed lawsuit.

      In their joint answering brief, Appellees requested that pursuant to Federal

Rule of Appellate Procedure 38, we impose sanctions on Yan for filing a frivolous

appeal. Rule 38 provides that “[i]f a court of appeals determines that an appeal is

frivolous, it may, after a separately filed motion or notice from the court and

reasonable opportunity to respond, award just damages and single or double costs

to the appellee.” Fed. R. App. P. 38. “An appeal is considered frivolous if the

result is obvious or the appellant’s arguments are wholly without merit.” Adriana

Int’l Corp. v. Thoeren, 913 F.2d 1406, 1417 (9th Cir. 1990). Because the request

for sanctions in the Appellees’ joint answering brief does not provide Yan

sufficient notice, we will allow him a reasonable opportunity to respond to the

request. See In re George, 322 F.3d 586, 588 (9th Cir. 2003) (per curiam); see also

Gabor v. Frazer, 78 F.3d 459, 459-60 (9th Cir. 1996) (noting that the Advisory

Committee Notes to Federal Rule of Appellate Procedure 38 state that a request

made under Rule 38 in an appellate brief does not provide the opposing party

sufficient notice).

                                           4
      Accordingly, within 14 days after this memorandum disposition is filed, Yan

shall show cause in writing why we should not award attorneys’ fees and double

costs to the Appellees under Rule 38 because the appeal is frivolous. Appellees

may file a reply within 14 days after service of Yan’s response.

      AFFIRMED.

      Appellees’ Request for Judicial Notice in Support of Appellees’ Joint

Answering Brief is GRANTED.

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