Court Opinion

ID: 9898592
Source: CourtListenerOpinion
Date Created: 2023-11-14 20:01:09.539417+00
Date Added: 2024-06-11T09:16:44.003574
License: Public Domain

FILED
                                                                                 NOV 14 2023
                          NOT FOR PUBLICATION
                                                                             SUSAN M. SPRAUL, CLERK
                                                                               U.S. BKCY. APP. PANEL
                                                                               OF THE NINTH CIRCUIT
          UNITED STATES BANKRUPTCY APPELLATE PANEL
                    OF THE NINTH CIRCUIT

 In re:                                             BAP No. EC-23-1055-CFB
 DAVID ANTHONY JACKSON, JR.,
            Debtor.                                 Bk. No. 22-11914

 DAVID ANTHONY JACKSON, JR.,                        Adv. No. 23-01002
              Appellant,
 v.                                                 MEMORANDUM*
 KATHLEEN ALLISON; BRIAN CATES;
 ROB BONTA; BOB DUTTON; SAN
 BERNARDINO COUNTY SUPERIOR
 COURT,
              Appellees.

               Appeal from the United States Bankruptcy Court
                    for the Eastern District of California
                Rene Lastreto, II, Bankruptcy Judge, Presiding

Before: CORBIT, FARIS, and BRAND, Bankruptcy Judges.

                                 INTRODUCTION

      Chapter 71 debtor David Anthony Jackson, Jr. (“Jackson”) appeals the

      *
        This disposition is not appropriate for publication. Although it may be cited for
whatever persuasive value it may have, see Fed. R. App. P. 32.1, it has no precedential
value, see 9th Cir. BAP Rule 8024-1.
      1
       Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
bankruptcy court’s order dismissing his adversary complaint to void his

criminal conviction. The bankruptcy court determined that it did not have

subject-matter jurisdiction to hear Jackson’s complaint. Because the

bankruptcy court did not err, we AFFIRM.

                                        FACTS

A.    History prior to bankruptcy

      In 2010, Jackson was convicted of second-degree murder for killing

his girlfriend’s eighteen-month-old daughter. Jackson v. Long, Case No. ED

CV 12-1293 PSG (MRW), 2018 WL 11353753, at *1 (C.D. Cal. June 4, 2018).

Jackson was sentenced to 25 years to life in state prison. Jackson

unsuccessfully challenged his conviction and sentence through both a

direct appeal and a writ of habeas corpus.

B.    Jackson’s bankruptcy case

      After exhausting his options for appealing his conviction, Jackson

filed a chapter 7 bankruptcy case in a novel but meritless attempt to void

his criminal conviction and sentence. 2

      Jackson filed eight motions in his main bankruptcy case to avoid his

criminal indictment and conviction on grounds that it was an

Civil Procedure.
       2 The California assistant attorney general testified at the hearing to dismiss the

complaint that “there appear[ed] to be considered effort in the California Correctional
Institution, the state prison in Tehachapi where Mr. Jackson is currently incarcerated, to
bring these types of frivolous bankruptcy motions[,]” and that he had just received
three additional, identical petitions filed by other inmates.
                                            2
“unenforceable contract” resulting in an illegal “judicial lien” subject to

avoidance under § 522(f).3

C.    Jackson’s adversary complaint

      Thereafter, Jackson initiated an adversary proceeding seeking the

same relief against Kathleen Allison, Secretary of the California

Department of Corrections & Rehabilitation; Rob Bonta, California

Attorney General; Nancy Eberhardt, San Bernardino County Superior

Court Clerk; Brian Cates, Warden of California Correctional Institution

Tehachapi; and Bob Dutton, San Bernardino County Recorder-Assessor-

Clerk (“Defendants”).

      In his complaint,4 Jackson alleged that his murder indictment and

subsequent conviction in the California Superior Court constituted an

unenforceable and illegal executory contract (“Executory Contract”).

Jackson argued that the Executory Contract was unenforceable, illegal, and

void because (1) it was formed without his knowledge or consent; (2) his

name was written in capital letters; and (3) one of the parties to the

Executory Contract was “The People of the State of California,” which was

not registered with the California Secretary of State as a corporation, and

      3
         Pursuant to Federal Rule of Evidence 201(b), we exercise our discretion to take
judicial notice of materials electronically filed in the underlying cases. See Atwood v.
Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
       4 The bankruptcy court struck Jackson’s second and third amended complaints

because Jackson did not request leave or obtain consent.
                                            3
therefore was not authorized to conduct business including criminal

prosecutions.

      Jackson concluded that because he did not consent to the creation of

the illegal Executory Contract, he was entitled to the following relief:

(1) “recall” of his entire record, sentence, conviction, and all orders arising

from the illegal contract; (2) “eradication of all records, debts, and created

indemnities from all illegal contracts;” (3) return of “ALL proceeds made

from the sale of the Surety Bond(s) and other GSA bonds created from the

illegally formed contract;” (4) a court order for the “U.S. Marshalls [sic] to

retrieve” Jackson from the California Correctional Institute Tehachapi” and

return him to his place of residence; and (5) removal and return of “ALL

mutual bond(s) funds.”

D.    Defendants’ motion to dismiss

      Defendants filed a motion to dismiss Jackson’s complaint for lack of

subject-matter jurisdiction pursuant to Civil Rule 12(b)(1) and failure to

state a claim pursuant to Civil Rule 12(b)(6), both made applicable to

adversary proceedings through Rule 7012.

      Defendants argued that the bankruptcy court did not have subject-

matter jurisdiction to hear a challenge to a valid criminal conviction and

sentence filed by a prisoner held in state custody on state criminal charges.

      For the same reason, Defendants asserted that Jackson failed to plead

a cognizable claim for relief.

                                       4
E.    Dismissal of Jackson’s complaint

      Before the hearing on Jackson’s complaint, the bankruptcy court

issued a tentative ruling granting the Defendants’ motion to dismiss. After

the hearing, at which all parties were given the opportunity to argue

telephonically, the bankruptcy court adopted its tentative ruling and

entered an order dismissing the complaint “without leave to amend but

without prejudice to filing his claims in an appropriate court” (“Dismissal

Order”).

      The bankruptcy court found that Jackson was challenging his

physical imprisonment. Accordingly, the bankruptcy court determined

Jackson’s only remedy was through a writ of habeas corpus. Because

bankruptcy courts cannot grant writs of habeas corpus or invalidate the

results of state criminal proceedings, the bankruptcy court determined that

it did not have subject-matter jurisdiction to hear Jackson’s complaint.

      The bankruptcy court also determined that Jackson’s allegation that

his conviction was a contract that could be avoided by a bankruptcy

discharge was without merit.

      Jackson timely appealed.

                               JURISDICTION

      As discussed below, the bankruptcy court lacked subject-matter

jurisdiction over the complaint under 28 U.S.C. § 1334. However, the panel

has jurisdiction to review the bankruptcy court’s Dismissal Order under

28 U.S.C. § 158.

                                      5
                                    ISSUES

      Did the bankruptcy court err in dismissing the adversary complaint

under Civil Rule 12(b)?

      Did the bankruptcy court abuse it discretion in dismissing the

adversary complaint without leave to amend?

                          STANDARDS OF REVIEW

      We review de novo questions of subject-matter jurisdiction. Montana

v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189, 1193 (9th Cir. 2005); Davis

v. Courington (In re Davis), 177 B.R. 907, 910 (9th Cir. BAP 1995) (dismissal

of a complaint for lack of subject-matter jurisdiction). “De novo review

requires that we consider a matter anew, as if no decision had been made

previously.” Francis v. Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP

2014).

      We review dismissal without leave to amend for abuse of discretion.

Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir. 2010). A

bankruptcy court abuses its discretion if it applies the wrong legal

standard, misapplies the correct legal standard, or makes factual findings

that are illogical, implausible, or without support in inferences that may be

drawn from the facts in the record. United States v. Hinkson, 585 F.3d 1247,

1262 (9th Cir. 2009) (en banc).

                                       6
                                DISCUSSION

A.    Standard applicable to Civil Rule 12(b)(1) dismissal

      Civil Rule 12(b)(1) provides for motions to dismiss for lack of subject-

matter jurisdiction. “[S]ubject matter jurisdiction, because it involves a

court’s power to hear a case, can never be forfeited or waived.” Arbaugh v.

Y & H Corp., 546 U.S. 500, 514 (2006) (citation omitted). “[F]ederal courts

have an independent obligation to ensure that they do not exceed the scope

of their subject-matter jurisdiction.” Henderson v. Shinseki, 562 U.S. 428, 434

(2011). The burden of proof on a Civil Rule 12(b)(1) motion to dismiss is on

the party asserting jurisdiction. Kokkonen v. Guardian Life Ins. Co., 511 U.S.

375, 377 (1994). Hence, Jackson had the burden of establishing that the

bankruptcy court had subject-matter jurisdiction.

B.    The bankruptcy court did not err in dismissing the complaint
      because it lacked subject-matter jurisdiction.

      The bankruptcy court’s jurisdiction, which is granted by statute, is

confined to “civil proceedings arising under [the Bankruptcy Code], or

arising in or related to” the bankruptcy case. 28 U.S.C. § 1334(b). The terms

“arising under” and “arising in” are terms of art which the courts have

defined. Wilshire Courtyard v. Cal. Franchise Tax Bd. (In re Wilshire

Courtyard), 729 F.3d 1279, 1285 (9th Cir. 2013).

      A proceeding “arises under” the Bankruptcy Code if it presents

claims for relief created or controlled by the Bankruptcy Code. Id. In

contrast, claims for relief in a proceeding “arising in” a bankruptcy case are

                                       7
not explicitly created or controlled by the Bankruptcy Code, but such

claims nonetheless would have no existence outside of a bankruptcy case.

Id. “The usual articulation of the test for determining whether a civil

proceeding is related to bankruptcy is whether the outcome of that

proceeding could conceivably have any effect on the estate being

administered in bankruptcy.” Celotex Corp. v. Edwards, 514 U.S. 300, 308 n.6

(1995).

      Bankruptcy courts do not have statutory authority to grant writs of

habeas corpus. Rather, only the Supreme Court and district courts have

such authority. See 28 U.S.C. § 2241(a) (identifying courts which can grant

writs of habeas corpus).

      On appeal, Jackson argues that the bankruptcy court erred in its

determination that it lacked subject-matter jurisdiction. We disagree.

Jackson’s indictment, conviction, and sentence did not “arise under” the

Bankruptcy Code because they did not invoke any bankruptcy right; they

did not “arise in” the bankruptcy case because they existed outside of

Jackson’s bankruptcy; and finally, they are not related to his bankruptcy

case because they are solely issues of criminal law, not bankruptcy law,

and the outcome would have no effect on his bankruptcy estate. See In re

Pegasus Gold Corp., 394 F.3d at 1193. Accordingly, the bankruptcy court

lacked subject-matter jurisdiction over the complaint.

      Furthermore, contrary to Jackson’s assertions, the federal remedy for

challenging a conviction and confinement is a writ of habeas corpus, not a

                                      8
bankruptcy proceeding. Preiser v. Rodriguez, 411 U.S. 475, 488-90 (1973)

(habeas corpus is the exclusive remedy for a prisoner who is challenging

the fact or duration of his confinement and seeking immediate or speedier

release); Gruntz v. Cnty. of L.A. (In re Gruntz), 202 F.3d 1074, 1088 (9th Cir.

2000) (en banc) (“Any post-conviction federal remedy lies in the writ of

habeas corpus.”). This rule reflects a “fundamental policy against federal

interference with state criminal prosecutions.” Younger v. Harris, 401 U.S.

37, 46 (1971); see also Kelly v. Robinson, 479 U.S. 36, 47 (1986) (referencing the

Court’s “deep conviction that federal bankruptcy courts should not

invalidate the results of state criminal proceedings”).

      Accordingly, the adjudication of Jackson’s criminal matters was not

the provenance of a bankruptcy court, and the bankruptcy court properly

determined it lacked subject-matter jurisdiction over Jackson’s complaint.

C.    The bankruptcy court did not abuse its discretion in dismissing the
      complaint without leave to amend.

      The bankruptcy court’s Dismissal Order dismissed Jackson’s

complaint without leave to amend. The bankruptcy court did not abuse its

discretion because Jackson could not plead any set of facts that would cure

the complaint’s deficiencies. See Flowers v. First Hawaiian Bank, 295 F.3d 966

(9th Cir. 2002) (“A pro se litigant must be given leave to amend his or her

complaint unless it is obviously clear that the deficiencies in the complaint

could not be cured by amendment.”). Here, the deficiencies of the

complaint could never be cured.

                                        9
                              CONCLUSION

     Based on our independent review, we conclude that the bankruptcy

court did not err in dismissing Jackson’s complaint or abuse its discretion

in doing so with prejudice. We AFFIRM.

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