Court Opinion

ID: 4181358
Source: CourtListenerOpinion
Date Created: 2017-06-27 19:02:08.524809+00
Date Added: 2024-06-11T09:23:52.479860
License: Public Domain

FILED
                                                               JUN 26 2017
 1                         NOT FOR PUBLICATION
                                                         SUSAN M. SPRAUL, CLERK
 2                                                           U.S. BKCY. APP. PANEL
                                                             OF THE NINTH CIRCUIT

 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.    CC-16-1378-KuFTa
                                   )
 6   MARDIROS HAIG MIHRANIAN,      )      Bk. No.    2:13-bk-39026-BR
                                   )
 7                  Debtor.        )      Adv. No.   2:15-ap-01665-BR
     ______________________________)
 8                                 )
     SAM S. LESLIE, Chapter 7      )
 9   Trustee,                      )
                                   )
10                  Appellant,     )
                                   )
11   v.                            )      MEMORANDUM*
                                   )
12   TAKOUHIE BARTAMIAN,           )
                                   )
13                  Appellee.      )
     ______________________________)
14
                      Argued and Submitted on May 18, 2017
15                           at Pasadena, California
16                           Filed – June 29, 2017
17               Appeal from the United States Bankruptcy Court
                     for the Central District of California
18
              Honorable Barry Russell, Bankruptcy Judge, Presiding
19
     Appearances:     Robert Michael Aronson, on brief, for appellant;
20                    David B. Golubchik of Levene, Neale, Bender, Yoo &
                      Brill LLP argued for appellee.
21
22   Before: KURTZ, FARIS and TAYLOR, Bankruptcy Judges.
23
24
25
26        *
           This disposition is not appropriate for publication.
27   Although it may be cited for whatever persuasive value it may
     have (see Fed. R. App. P. 32.1), it has no precedential value.
28   See 9th Cir. BAP Rule 8024-1.
 1                                INTRODUCTION
 2            Chapter 71 trustee Sam S. Leslie appeals from an order
 3   dismissing with prejudice his third amended fraudulent transfer
 4   complaint against Takouhie Bartamian - a nurse, office manager
 5   and employee of the debtor’s medical practice.
 6        The central issue in this appeal is whether Leslie
 7   adequately alleged that the debtor Mardiros Haig Mihranian had an
 8   interest in the funds allegedly transferred to Bartamian.     Unless
 9   Leslie alleged sufficient facts that, when taken as true,
10   plausibly demonstrated Mihranian’s interest in the transferred
11   funds, Leslie failed to state a claim for relief under either
12   § 544 or § 548.
13        We agree with the bankruptcy court that Leslie did not
14   allege sufficient facts regarding Mihranian’s interest in those
15   funds.     The general “story” in Leslie’s complaint informs us that
16   Mihranian (and his now ex-wife Susan) diverted funds from
17   Mihranian’s wholly-owned incorporated medical practice to the
18   defendants.     Leslie has never posited – in the bankruptcy court
19   or on appeal – any viable legal theory why funds diverted from
20   Mihranian’s incorporated medical practice plausibly could be
21   identified as belonging to him as opposed to his corporation.
22        We also agree with the bankruptcy court’s decision to
23   dismiss the third amended complaint with prejudice.     In total,
24   Leslie availed himself of four attempts – four opportunities – to
25
          1
26         Unless specified otherwise, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
27   all "Rule" references are to the Federal Rules of Bankruptcy
     Procedure, Rules 1001-9037. All "Civil Rule" references are to
28   the Federal Rules of Civil Procedure.

                                        2
 1   state adequate fraudulent transfer claims.    In addition, Leslie
 2   has admitted that he conducted extensive pre-adversary-proceeding
 3   discovery under Rule 2004, which discovery included both
 4   depositions and document requests, and has not disputed that he
 5   hired professionals who (among other things) were assigned the
 6   task of identifying the source of transferred funds.    Yet, in all
 7   of the versions of his complaint, Leslie never stated a coherent
 8   set of facts plausibly identifying Mihranian’s pre-transfer
 9   interest in the alleged fraudulently transferred funds.    Under
10   these circumstances, the bankruptcy court did not err in
11   concluding that Leslie could not or would not plausibly identify
12   Mihranian’s pre-transfer interest in the subject funds, and thus
13   the court did not abuse its discretion in dismissing the third
14   amended complaint without leave to amend.
15        Accordingly, we AFFIRM.
16                                   FACTS
17        Leslie’s adversary proceeding sought to avoid and recover
18   alleged fraudulent transfers under federal and California law
19   based on §§ 544 and 548 and Cal. Civ. Code §§ 3439.04 and
20   3439.05.    This is one of four similarly-pled adversary
21   proceedings.    The bankruptcy court dismissed all four with
22   prejudice, and all four are on appeal on identical grounds.     Each
23   complaint names a different individual defendant who allegedly
24   received a different series of fraudulently-transferred funds.
25        The history of complaints and responses informs our
26   analysis.    Leslie filed his first amended complaint against
27   Bartamian, without any prompting from the bankruptcy court,
28   within several weeks of the commencement of the adversary

                                       3
 1   proceeding.   Bartamian responded to the first amended complaint
 2   by filing a Civil Rule 12(b)(6) motion to dismiss.    Bartamian
 3   pointed out that Leslie’s fraudulent transfer allegations did
 4   little more than state in conclusory fashion the elements for
 5   fraudulent transfer claims and did nothing to advise Bartamian of
 6   the specific transactions Leslie claimed constituted fraudulent
 7   transfers.
 8        The bankruptcy court in large part granted the motion to
 9   dismiss.   The bankruptcy court dismissed without prejudice
10   Leslie’s fourth claim for relief seeking an accounting and fifth
11   claim for relief seeking disallowance of any proof of claim filed
12   by Bartamian.   The bankruptcy court also dismissed without
13   prejudice Leslie’s first and second claims for relief to the
14   extent they alleged actual fraudulent transfers.    To the extent
15   the first and second claims for relief alleged constructive
16   fraudulent transfers, the bankruptcy court’s order on the motion
17   to dismiss merely required more specificity, as follows:
18        On the first and second causes of action in the
          Complaint for constructive fraud, the claims shall be
19        amended to be pled with more specificity, including,
          without limitation, the source of the alleged
20        transfer(s), the identity of the alleged transferor(s),
          the date(s) of the alleged transfer(s), and the amount
21        of the respective transfer(s) . . . .
22   Order re Motion to Dismiss (Apr. 14, 2016) at p. 2.    We do not
23   know the reasons the bankruptcy court offered for its ruling
24   because neither party provided us with the transcript of the
25   March 29, 2016 hearing on the motion to dismiss.2
26
          2
27         Bartamian’s motion did not address Leslie’s third claim for
     relief seeking to recover the alleged fraudulent transfers for
28                                                      (continued...)

                                      4
 1        Leslie’s second amended complaint contained more detail.    It
 2   alleged that Mihranian and his spouse Susan3 engaged in a scheme
 3   to divert earnings from their shared medical practice to the
 4   various third-party defendants – including Bartamian – for the
 5   purpose of keeping their earnings away from their judgment
 6   creditors, two of whom are specifically identified in the
 7   complaint.
 8        On one hand, the second amended complaint alleged that
 9   Mihranian and Susan practiced medicine through a California
10   professional medical corporation known as Medical Clinic &
11   Surgical Specialties of Glendale, Inc. (“MCSSG”).   On the other
12   hand, the complaint perhaps suggested that Mihranian and Susan
13   sometimes provided medical services on their own account and not
14   through MCSSG.   The second amended complaint did not specify
15   which funds transferred originally were payments for services
16   provided through MCSSG and which (if any) were payments for
17
          2
           (...continued)
18
     the benefit of the estate under §§ 550 and 551. Nor did the
19   bankruptcy court’s April 14, 2016 order. On its face, this claim
     for recovery of avoided transfers has no independent effect in
20   the absence of a viable claim to avoid the transfers.
21        3
           Bartamian asserts that Mihranian and Susan separated in
     1998, divorced in 2015, and did not accrue any community property
22
     after the 1998 separation date pursuant to Cal. Fam. Code
23   § 771(a). Leslie alleged that Mihranian and Susan did not really
     separate in 1998, that the couple continued to work together and
24   live together after 1998, and that the couple only feigned
     separation for the purpose of furthering their scheme to keep
25   Mihranian’s assets away from his creditors. The bankruptcy court
26   ultimately ruled that Leslie had alleged sufficient facts
     challenging the purported separation, and Bartamian did not
27   cross-appeal this ruling. We further discuss the issue
     concerning the couple’s marital status near the end of this
28   decision.

                                      5
 1   services provided by the two doctors individually.
 2        Instead, the second amended complaint identified an
 3   aggregate amount of money – $1,858,090.00 – that allegedly was
 4   fraudulently transferred to Bartamian: “In all, between 2009 and
 5   2013, the Debtor, either directly, or through Susan and MCSSG
 6   transferred what is estimated by the Trustee to be $1,858,090.00
 7   to Bartamian, either directly, or through Bartamian’s DBA
 8   account.”    Second Amended Complaint (April 18, 2016) at ¶ 22.    It
 9   is impossible to tell from the complaint what portion of this
10   amount originally was payment for services provided through MCSSG
11   and what portion of this amount (if any) originally was payment
12   for services provided by the two doctors individually – or who
13   held these funds before they allegedly were transferred to
14   Bartamian.
15        After he received the second amended complaint, Bartamian
16   contacted Leslie and urged Leslie to provide more specificity
17   regarding the alleged fraudulent transfers.    Bartamian pointed
18   out that the second amended complaint did not specify “the source
19   of the alleged transfer(s), the identity of the alleged
20   transferor(s), the date(s) of the alleged transfer(s), and the
21   amount of the respective transfer(s)” as directed in the
22   bankruptcy court’s April 14, 2016 order.    In response, Leslie
23   filed his third amended complaint.
24        There was only one notable difference between the second
25   amended complaint and the third amended complaint: the third
26   amended complaint added two exhibits providing some detailed
27   information regarding each of the alleged fraudulent transfers.
28   Exhibit A was entitled “Detail Of 544 Transfers” and itemized in

                                       6
 1   two columns the “Date” of each alleged transfer and the “Deposit”
 2   amount of each alleged transfer.       Exhibit A did not identify the
 3   source of each alleged transfer or the identity of the alleged
 4   transferor.   Nor is there any way to tell who provided the
 5   services generating these funds.       Exhibit B was entitled “Detail
 6   Of 548 Transfers” and set forth specific information regarding
 7   dates and deposit amounts in the same format as Exhibit A.4
 8        Bartamian moved to dismiss the third amended complaint.
 9   Bartamian asserted that the third amended complaint did not
10   satisfy the specificity requirement of the bankruptcy court’s
11   April 14, 2016 order and also did not satisfy the requirements
12   for pleading claims for relief under Civil Rules 8(a) and 9(b),
13   Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp.
14   v. Twombly, 550 U.S. 544 (2007).
15        At the hearing on the motion to dismiss the third amended
16   complaint, the bankruptcy court primarily focused on one issue.
17   According to the court, it directed Leslie both at the March 29,
18   2016 dismissal motion hearing and in its April 14, 2016 order to
19   specifically identify the transferor of each transfer.      The court
20   explained that it made a big difference whether the source of the
21   fraudulently transferred funds was Mihranian, his former wife
22   Susan, MCSSG, or some other person or entity.      The following
23   statement is representative of the court’s comments:
24        I was very specific last time we were here.      I wanted
25
          4
26         Bartamian argued that Exhibits A and B incorrectly
     identified the “deposit” dates instead of the transfer dates, but
27   this argument reads the Exhibits in an overly narrow manner. In
     any event, the bankruptcy court did not adopt this argument when
28   it dismissed Leslie’s third amended complaint.

                                        7
 1        you to be specific. Now who actually physically made
          the transfer at that moment? Was it the Debtor, was it
 2        the ex-wife? And that was -- was that -- did you not
          understand that that was the whole purpose of my order?
 3
 4   Hr’g Tr. (Sept. 27, 2016) 10:24-11:3.
 5        Similarly, the court later on made it clear that it was
 6   dismissing the third amended complaint because Leslie did not
 7   provide the specific information regarding who was the
 8   transferor:
 9        THE COURT: But the difference is I have ordered you
          twice, I think,5 to be more specific as to the Debtor,
10        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
11        didn't do it.
12        MR. ARONSON: Your Honor, I thought that I complied with
          the Court's order.
13
          THE COURT: You're a bright guy. Good lord. I can't
14        imagine that you actually -- if you did, it's tunnel
          vision, and you really should have asked somebody else.
15
          I am going to grant the motion. This is, you know, you
16        -- I made it absolutely clear. You didn't do it. And
          I am going to dismiss it.
17
18   Hr’g Tr. (Sept. 27, 2016) 30:24-31:11.
19        On October 17, 2016, the bankruptcy court entered its order
20   dismissing with prejudice Leslie’s third amended complaint, and
21   Leslie timely appealed.
22                             JURISDICTION
23        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
24   §§ 1334 and 157, and we have jurisdiction under 28 U.S.C. § 158.
25
26
          5
27         The record reflects that the court only issued one order
     requiring Leslie to provide more specific information regarding
28   the alleged fraudulent transfers – the April 14, 2016 order.

                                     8
 1                                   ISSUE
 2        Did the bankruptcy court commit reversible error when it
 3   dismissed Leslie’s third amended complaint without leave to
 4   amend?
 5                            STANDARDS OF REVIEW
 6        We review de novo orders dismissing complaints for failure
 7   to state a claim.   See Levitt v. Yelp! Inc., 765 F.3d 1123, 1126
 8   (9th Cir. 2014).
 9        Denial of leave to amend is reviewed for an abuse of
10   discretion.   See Gonzalez v. Planned Parenthood of L.A., 759 F.3d
11   1112, 1114 (9th Cir. 2014).
12        The bankruptcy court abuses its discretion if it applies an
13   incorrect legal standard or its findings of fact are clearly
14   erroneous.    Fear v. U.S. Tr. (In re Ruiz), 541 B.R. 892, 896 (9th
15   Cir. BAP 2015).
16                                 DISCUSSION
17        Leslie contends that the bankruptcy court erred in several
18   different ways when it dismissed his third amended complaint with
19   prejudice.    Leslie asserts that the bankruptcy court erroneously
20   determined that the third amended complaint did not satisfy the
21   requirements of Civil Rules 8(a) and 9(b).     Leslie further
22   maintains that the bankruptcy court erroneously required greater
23   specificity regarding each of the alleged fraudulent transfers
24   than either of those Civil Rules require.      Leslie also contends
25   that the bankruptcy court erroneously denied him leave to amend.
26
27
28

                                       9
 1   We will address each of these asserted errors in turn.6
 2        As a threshold matter, it is important to note Leslie based
 3   all of his fraudulent transfer claims on the theory that
 4   Mihranian and his then-wife Susan improperly diverted funds from
 5   the couple’s shared medical practice.    (3rd Am. Compl. at ¶¶ 7,
 6   14, 18.)   That is what Leslie said in his third amended
 7   complaint, and that is what Leslie repeatedly said in his opening
 8   appellate brief.    (Aplt. Opn. Br. at pp. 10-11, 26-28.)   Leslie
 9   has not advanced on appeal any alternate theories or arguments
10   underlying his fraudulent transfer claims, and we decline to look
11   beyond what Leslie actually has argued.    See Christian Legal
12   Soc'y v. Wu, 626 F.3d 483, 487–88 (9th Cir. 2010) (declining to
13   address matters not specifically and distinctly discussed in the
14   appellant’s opening brief); Brownfield v. City of Yakima,
15   612 F.3d 1140, 1149 n.4 (9th Cir. 2010) (same).    With this
16   limitation on our review in mind, we will turn our attention to
17   the so-called errors Leslie has attributed to the bankruptcy
18   court’s decision.
19   A.   Civil Rule 8(a) and Civil Rule 9(b) Pleading Requirements
20        Civil Rule 8(a) requires pleadings to set forth “a short and
21   plain statement of the claim showing that the pleader is entitled
22   to relief.”   A claim is the “aggregate of operative facts which
23   give rise to a right enforceable in the courts.”    Bautista v. Los
24
          6
           In his opening appellate brief, Leslie purported to
25   identify an additional argument challenging the bankruptcy
26   court’s decision: that the bankruptcy erred in determining that
     his third amended complaint did not satisfy the bankruptcy
27   court’s heightened specificity requirements. Our discussion of
     the first two arguments set forth above addresses and disposes of
28   this additional argument.

                                      10
 1   Angeles Cty., 216 F.3d 837, 840 (9th Cir. 2000) (citing Original
 2   Ballet Russe, Ltd. v. Ballet Theatre, Inc., 133 F.2d 187, 189
 3   (2d Cir. 1943)).
 4        As the Supreme Court has explained:
 5        a complaint must contain sufficient factual matter,
          accepted as true, to state a claim to relief that is
 6        plausible on its face. . . . A claim has facial
          plausibility when the plaintiff pleads factual content
 7        that allows the court to draw the reasonable inference
          that the defendant is liable for the misconduct
 8        alleged. . . . Threadbare recitals of the elements of
          a cause of action, supported by mere conclusory
 9        statements, do not suffice.
10   Iqbal, 556 U.S. at 678 (citations and internal quotation marks
11   omitted).   The Ninth Circuit Court of Appeals has observed that
12   the Supreme Court has not always applied this plausibility
13   standard consistently.   Starr v. Baca, 652 F.3d 1202, 1215–16
14   (9th Cir. 2011).   In light of this perceived inconsistency, the
15   Ninth Circuit has refined the standard for determining when a
16   complaint meets the minimum requirements of Civil Rule 8(a),
17   stating as follows:
18        First, to be entitled to the presumption of truth,
          allegations in a complaint or counterclaim may not
19        simply recite the elements of a cause of action, but
          must contain sufficient allegations of underlying facts
20        to give fair notice and to enable the opposing party to
          defend itself effectively. Second, the factual
21        allegations that are taken as true must plausibly
          suggest an entitlement to relief, such that it is not
22        unfair to require the opposing party to be subjected to
          the expense of discovery and continued litigation.
23
24   Id. at 1216 (emphasis added).   Accord Merritt v. Countrywide Fin.
25   Corp., 759 F.3d 1023, 1032–33 (9th Cir. 2014).   At bottom, the
26   plausibility analysis is context specific and requires the court
27   to draw upon its experience and common sense.    Levitt, 765 F.3d
28   at 1135.

                                     11
 1        One of the fraudulent transfer elements Leslie needed to
 2   allege was that property of the debtor was transferred to the
 3   defendants.   A transfer of the debtor’s property that otherwise
 4   would have been property of the estate is a prerequisite for a
 5   fraudulent transfer action under either § 544 or § 548.   See
 6   Geltzer v. Barish (In re Starr), 502 B.R. 760, 767–68 (Bankr.
 7   S.D.N.Y. 2013) (holding that trustee sufficiently alleged
 8   debtor’s property interest); Serra v. Salven, 2011 WL 4627576, at
 9   *12 (E.D. Cal. Oct. 3, 2011) (holding that trustee failed to
10   prove for summary judgment purposes that debtor had an interest
11   in the property transferred); see also Gaughan v. Edward Dittlof
12   Revocable Tr. (In re Costas), 555 F.3d 790, 792–93 (9th Cir.
13   2009) (generally stating property interest requirement); Wyle v.
14   Rider (In re United Energy Corp.), 944 F.2d 589, 593-94 (9th Cir.
15   1991) (same); Greenspan v. Orrick, Herrington & Sutcliffe LLP
16   (In re Brobeck, Phleger & Harrison LLP), 408 B.R. 318, 337
17   (Bankr. N.D. Cal. 2009) (“both the ‘property’ and ‘transfer’
18   elements apply whether the claim is one for actual or
19   constructive fraudulent transfer”).
20        Leslie alleged that Mihranian and his then-wife Susan
21   diverted to third parties payments for medical services they
22   provided.   If the allegedly diverted medical service fees were
23   owed either to Mihranian or his alleged wife, then Mihranian
24   transferred his interest in those payments by diverting them.
25   See In re Brobeck, Phleger & Harrison LLP, 408 B.R. at 338
26   (holding that debtor law firm’s waiver of potential profits from
27   unfinished legal work constituted a transfer of the law firm’s
28   property within meaning of fraudulent transfer statutes).

                                     12
 1        However, Leslie also alleged that Mihranian and Susan
 2   operated through a shared medical practice – an incorporated
 3   medical practice – MCSSG.   There are no facts alleged in the
 4   complaint from which it would be plausible to infer that the fees
 5   for services earned by the medical practice would belong to
 6   either Mihranian or Susan individually; rather, they would be
 7   property of MCSSG.   To hold otherwise would ignore the legal
 8   separateness of MCSSG.   See generally Sonora Diamond Corp. v.
 9   Superior Court, 83 Cal. App. 4th 523, 538 (2000) (“a corporation
10   is regarded as a legal entity, separate and distinct from its
11   stockholders, officers and directors, with separate and distinct
12   liabilities and obligations.”).
13        Leslie argues on appeal that any fees for services owed to
14   MCSSG actually were owed to Mihranian – MCSSG’s sole owner – and
15   that he alleged sufficient facts in his third amended complaint
16   to justify piercing the corporate veil.   The bankruptcy court
17   disagreed with Leslie’s alter ego argument, and this alter ego
18   argument is the only ground Leslie has advanced in the bankruptcy
19   court or on appeal to explain why MCSSG’s funds should be treated
20   as if they were Mihranian’s property.
21        Generally, to pierce the corporate veil, a plaintiff must
22   allege and prove: (1) “such unity of interest and ownership that
23   the separate personalities of the corporation and the individual
24   no longer exist”; and (2) “if the acts are treated as those of
25   the corporation alone, an inequitable result will follow.”
26   Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290, 300 (1985).   There is
27   no single set of underlying facts that always must be alleged to
28   plausibly demonstrate these two criteria; instead, a variety of

                                       13
 1   case-specific facts must be considered to establish the
 2   principal’s domination and control over the corporation and to
 3   show that immunizing the principal from the corporation’s
 4   liability would work an injustice.    Id.; see also Lebastchi v.
 5   Superior Court, 33 Cal. App. 4th 1465, 1470 (1995).
 6        Alter ego has been described as “an extreme remedy,
 7   sparingly used,” Sonora Diamond Corp., 83 Cal. App. 4th at 539,
 8   and it is to be imposed “cautiously” and “reluctantly.”    Highland
 9   Springs Conference & Training Ctr. v. City of Banning, 244 Cal.
10   App. 4th 267, 281 (2016).   More importantly, when imposed, the
11   separateness of the corporate entity is not disregarded for all
12   purposes but only for the purpose and under the circumstances of
13   the case in which it is asserted.     Lebastchi, 33 Cal. App. 4th at
14   1470; see also Mesler, 39 Cal. 3d at 301 (“under certain
15   circumstances a hole will be drilled in the wall of limited
16   liability erected by the corporate form; for all purposes other
17   than that for which the hole was drilled, the wall still
18   stands”).
19        Ordinarily, the alter ego doctrine only is invoked to enable
20   a plaintiff to impose corporate liability upon the corporation’s
21   principal(s).   See Sonora Diamond Corp., 83 Cal. App. 4th at 538.
22   In fact, at least one California Court of Appeal has held that
23   California law does not permit “outside reverse piercing of the
24   corporate veil” – piercing in order to make the corporation’s
25   assets liable for the debts of the individual shareholder(s).
26   Postal Instant Press, Inc. v. Kaswa Corp. 162 Cal. App. 4th 1510,
27   1522 (2008).    That is precisely what Leslie is attempting to do
28   here: claim the assets of MCSSG as if they belonged to Mihranian

                                      14
 1   individually and his bankruptcy estate.
 2        Postal Instant Press is carefully reasoned and persuasive.
 3   Moreover, we must follow the law of California’s intermediate
 4   appellate courts on this point unless we are convinced that the
 5   California Supreme Court would decide the issue differently.
 6   Goodrich v. Briones (In re Schwarzkopf), 626 F.3d 1032, 1038 (9th
 7   Cir. 2010).   We are not persuaded that the California Supreme
 8   Court would decide this issue differently.    Thus, allegations of
 9   alter ego do not aid Leslie; he cannot establish plausibility
10   through such allegations.   Consistent with this fact, Leslie did
11   not adequately plead alter ego.
12        As mentioned above, alter ego is the only legal ground
13   Leslie has advanced to explain why fees for medical services
14   belonging to MCSSG should have been considered Mihranian’s
15   property for fraudulent transfer purposes.    To the extent Leslie
16   could have advanced other grounds to support this contention,
17   Leslie abandoned them by not raising them in the bankruptcy court
18   or on appeal.   See, e.g., United Student Aid Funds, Inc. v.
19   Espinosa, 559 U.S. 260, 270 n.9 (2010) (“We need not settle that
20   question, however, because the parties did not raise it in the
21   courts below”);   Mayor v. Wolkowitz (In re Cinevision Int'l,
22   Inc.), 2016 WL 638729, *7-8 (Mem. Dec.) (9th Cir. BAP Feb. 16,
23   2016) (declining to consider issue that appellants raised for the
24   first time in their reply brief on appeal).
25        In short, fees for medical services owed to MCSSG did not
26   belong to Mihranian – and were not his property – for fraudulent
27   transfer purposes.
28        Leslie’s third amended complaint arguably suggested that, at

                                       15
 1   least some of the time, Mihranian and Susan accrued earnings on
 2   their own account.   But no factual allegations in the third
 3   amended complaint tie these accrued earnings (if any) to the
 4   specific alleged fraudulent transfers identified in the
 5   complaint.   The bankruptcy court attempted to explain to Leslie
 6   that the complaint should have identified the alleged source of
 7   all fraudulent transfers.   Given the other facts Leslie alleged
 8   regarding the corporate status of Mihranian’s and Susan’s medical
 9   practice, we agree with the bankruptcy court and hold that Leslie
10   did not state plausible fraudulent transfer claims in the absence
11   of alleged facts plausibly demonstrating that either Mihranian or
12   Susan had a property interest in the specific funds allegedly
13   transferred.
14        In sum, under Civil Rule 8(a), Leslie needed to allege facts
15   which, if accepted as true, plausibly could have lead to the
16   following inferences: (1) that the funds transferred to Bartamian
17   were funds in which Mihranian personally had a property interest
18   before they were transferred to Bartamian; and (2) that Mihranian
19   relinquished to Bartamian his property interest in those funds by
20   way of those transfers.   Leslie did not allege facts that
21   plausibly could support these inferences.   Accordingly, the third
22   amended complaint failed to state any viable fraudulent transfer
23   claims.
24        Meanwhile, Civil Rule 9(b) requires fraud to be pled with
25   particularity.   Under Civil Rule 9(b), the plaintiff’s
26   allegations must include “‘the who, what, when, where, and how of
27   the misconduct charged.’”   United States v. United Healthcare
28   Ins. Co., 848 F.3d 1161, 1180 (9th Cir. 2016) (quoting Ebeid ex

                                     16
 1   rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir.
 2   2010)).
 3        A number of bankruptcy courts have acknowledged that Civil
 4   Rule 9(b) does not apply to constructive fraudulent transfers.
 5   See, e.g., Seror v. Stone (In re Automated Fin. Corp.), 2011 WL
 6   10502417, at *4-5 (Bankr. C.D. Cal. Jan. 25, 2011); Angell v. Day
 7   (In re Caremerica, Inc.), 415 B.R. 200, 208 (Bankr. E.D.N.C.
 8   2009); Official Comm. of Unsecured Creditors. v. Am. Tower Corp.
 9   (In re Verestar, Inc.), 343 B.R. 444, 459-60 (Bankr. S.D.N.Y.
10   2006)); see also Sunnyside Dev. Co. LLC v. Cambridge Display
11   Tech. Ltd., 2008 WL 4450328, at *8-9 (N.D. Cal. Sept. 29, 2008)
12   (district court ruling holding same).   These same decisions hold,
13   however, that Civil Rule 9(b) applies to actual fraudulent
14   transfers because such claims sound in fraud.   We question
15   whether all actual fraudulent transfer claims sound in fraud,
16   because the controlling fraudulent transfer statutes state in the
17   disjunctive that an actual fraudulent transfer occurs when the
18   debtor makes a transfer with the actual intent to hinder, delay
19   or defraud.   See § 548(a)(1)(A); Cal. Civ. Code § 3439.04; see
20   also Wolkowitz v. Beverly (In re Beverly), 374 B.R. 221, 232 (9th
21   Cir. BAP 2007), aff'd in part and adopted, 551 F.3d 1092 (9th
22   Cir. 2008).   We do not see why harboring an intent to hinder or
23   delay your creditors would sound in fraud.
24        That being said, it is unnecessary for us to resolve the
25   issue of when, if ever, Civil Rule 9(b) should be applied to
26   actual fraudulent transfer claims.   As a practical matter, under
27   the circumstances of this particular case, what Civil Rule 8(a)
28   requires and what Civil Rule 9(b) would require largely overlap.

                                     17
 1   Put another way, in this instance, the Civil Rule 8(a) standard
 2   articulated in Merritt, 759 F.3d at 1033, and the Civil Rule 9(b)
 3   standard articulated in United Healthcare Insurance Co., 848 F.3d
 4   at 1180, lead to similar pleading requirements.
 5        In any event, we already have held that none of the
 6   fraudulent transfer claims satisfy the Civil Rule 8(a) standard.
 7   Thus, it is unnecessary to determine here whether Civil Rule 9(b)
 8   also applies and has been satisfied.
 9   B.   The Bankruptcy Court’s Requirement That Leslie Plead His
10        Fraudulent Transfer Claims With Greater Specificity
11        Leslie’s next contention concerns the bankruptcy court’s
12   April 14, 2016 order and its direction that Leslie must re-plead
13   his constructive fraudulent transfer claims with more
14   specificity, “including, without limitation, the source of the
15   alleged transfer(s), the identity of the alleged transferor(s),
16   the date(s) of the alleged transfer(s), and the amount of the
17   respective transfer(s).”
18        The April 14, 2016 order only stated this requirement as to
19   the constructive fraudulent transfer claims.   Even so, when the
20   order is read in conjunction with the court’s comments at the
21   final hearing, it becomes reasonably clear that, when the court’s
22   April 14, 2016 order dismissed without prejudice Leslie’s actual
23   fraudulent transfer claims, the court expected any re-pleading of
24   the actual fraudulent transfer claims to include at least the
25   same level of specificity as the constructive fraudulent transfer
26   claims.   Neither party has suggested any other interpretation of
27   the court’s April 14, 2016 order, nor has Leslie argued that he
28   did not realize that the bankruptcy court’s specificity

                                     18
 1   requirement applied to both the actual fraudulent transfer claims
 2   and the constructive fraudulent transfer claims.
 3        As we have already explained, the third amended complaint
 4   did not allege sufficient facts to support a plausible inference
 5   that Mihranian transferred any of his own property interests to
 6   Bartamian.   The bankruptcy court’s required statement of
 7   transfers identifying (among other things) the source of each
 8   transfer reasonably was aimed at rectifying this deficiency.
 9   Typically, identifying the source of the transfer(s) and the
10   identity of the transferor(s) would provide facts from which a
11   court plausibly could infer whether the debtor held a property
12   interest in funds before their transfer.   See, e.g.,
13   In re Geltzer, 502 B.R. at 767–68; In re Caremerica, Inc.,
14   415 B.R. at 208.
15        We acknowledge that Leslie might have employed other methods
16   besides the bankruptcy court’s specificity requirement to satisfy
17   the pleading requirements of Civil Rule 8(a) for purposes of
18   alleging Mihranian’s interest in the alleged fraudulently
19   transferred funds.   Even so, Leslie did not in fact plausibly
20   allege Mihranian’s interest in the transferred funds in any way,
21   and the bankruptcy court’s specificity requirement reasonably was
22   aimed at rectifying this deficiency in Leslie’s pleading.
23   Therefore, we conclude that the bankruptcy court did not commit
24   reversible err when it imposed the specificity requirement on
25   Leslie in the April 14, 2016 order.
26   C.   Dismissal Without Leave To Amend
27        Leslie also contends on appeal that the bankruptcy court
28   should have granted him leave to amend his complaint.   Generally

                                     19
 1   speaking, courts should not deny leave to amend unless the court
 2   determines that amendment would be futile.   See Ebner v. Fresh,
 3   Inc., 838 F.3d 958, 963 (9th Cir. 2016); Lacey v. Maricopa Cty.,
 4   693 F.3d 896, 926 (9th Cir. 2012) (en banc).7
 5       That being said, the trial court has broad discretion in
 6   deciding whether to grant leave to amend, especially when (as
 7   here) the plaintiff already has been given multiple opportunities
 8   to amend its complaint.   See Gonzalez, 759 F.3d at 1116 (citing
 9   Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir.
10   2004)).
11        Gonzalez is instructive.   There, the Ninth Circuit Court of
12   Appeals affirmed the district court’s dismissal of Gonzalez’s
13   third amended complaint without leave to amend.   Id.   In the
14   process of holding that the district court did not abuse its
15   discretion in denying leave to amend, the Court of Appeals relied
16   on two things: (1) Gonzalez’s failed multiple attempts to state
17   viable claims for relief; and (2) the fact that certain
18   attachments to Gonzalez’s complaint “defeated the plausibility of
19   his allegations.”   Id.
20        Similarly, here, Leslie’s focus in his complaint on the
21   alleged diversion of funds from an incorporated medical practice
22
23
          7
           To be clear, different standards (other than futility)
24   apply when the bankruptcy court dismisses with prejudice an
     adversary proceeding as a sanction based on plaintiff’s
25   noncompliant or dilatory conduct. See generally Lee v.
26   Roessler–Lobert (In re Roessler-Lobert), 567 B.R. 560, 568-73
     (9th Cir. BAP 2017) (describing other standards). Here, however,
27   Bartamian did not request dismissal of Leslie’s complaint as a
     sanction, nor did the bankruptcy court consider sanctions as a
28   ground for dismissal without leave to amend.

                                     20
 1   undermined the plausibility of his allegations that Mihranian had
 2   a property interest in the alleged fraudulently transferred
 3   funds.
 4        Furthermore, Leslie, like Gonzalez, had a history of
 5   multiple failed attempts to state viable claims for relief.
 6   Leslie’s third amended complaint was his fourth attempt to state
 7   his fraudulent transfer claims.    Leslie has not disputed that he
 8   filed his first amended complaint and his third amended complaint
 9   after discussions with the defendants regarding the insufficiency
10   of his fraudulent transfer allegations.   Additionally, the
11   bankruptcy court reviewed two of Leslie’s four complaints, and
12   the court correctly determined that neither stated plausible
13   fraudulent transfer claims.   After the first of the bankruptcy
14   court’s two reviews, the court ordered Leslie to allege more
15   specific facts regarding the subject transfers, which order
16   reasonably was aimed at identifying whether Mihranian plausibly
17   had an interest in the alleged fraudulently transferred funds.
18   Nonetheless, Leslie did not comply with the court’s order, nor
19   did Leslie otherwise adequately address the court’s concern
20   regarding identification of Mihranian’s interest in the
21   transferred funds.
22        Leslie’s failure to do so is particularly inexplicable here
23   because he admitted to conducting extensive pre-litigation
24   discovery in the form of Rule 2004 examinations – consisting of
25   both depositions and voluminous document production requests –
26   focusing on the transfers in question.    Nor has Leslie disputed
27   Bartamian’s assertion that Leslie hired professionals who (among
28   other things) were assigned the task of identifying the source of

                                       21
 1   the transferred funds.   Simply put, this is not a situation where
 2   the plaintiff lacked an opportunity to obtain sufficient
 3   information to plead his claims with more specificity.
 4        Under these circumstances, the bankruptcy court did not err
 5   when it determined that Leslie either could not or would not
 6   plausibly allege Mihranian’s interest in the transferred funds.
 7   Accordingly, dismissal without leave to amend was not an abuse of
 8   discretion.
 9   D.   Other Issues: Community Property, Statute of Limitations and
10        Request to Supplement The Record
11        There are a few additional issues we should address.   First,
12   Bartamian claims that Leslie did not sufficiently allege
13   Mihranian’s community interest in any funds Susan received on
14   account of medical services Susan provided on her own account.
15   To the extent Mihranian had a community interest in funds in
16   which Susan held a right to payment, the receipt of those funds
17   by Bartamian could have constituted a transfer of the debtor’s
18   interest in property for fraudulent transfer purposes.   See
19   In re Beverly, 374 B.R. at 233.
20        Ultimately, the bankruptcy court seemed to decide this issue
21   in favor of Leslie, and Bartamian did not cross-appeal from this
22   ruling.   Regardless, under California law, whether Mihranian and
23   Susan actually were separated in and after 1998 as Bartamian
24   claims was a question of fact necessary to determine whether and
25   when they ceased to accrue community property under Cal. Fam.
26   Code § 771(a).   See In re Marriage of Manfer, 144 Cal. App. 4th
27   925, 930 (2006).   Leslie effectively alleged that Mihranian and
28   Susan continued to work together, that they continued to live

                                       22
 1   together in the same residence, and that neither intended a
 2   permanent and final cessation of their marriage; rather,
 3   according to Leslie, the couple feigned separation in 1998 as
 4   part of a scheme to keep Mihranian’s assets away from his
 5   creditors.   These facts were sufficient to allege that Mihranian
 6   and Susan were not, in fact, separated and continued to accrue
 7   community property in and after 1998.   See generally id.
 8        Even so, under the circumstances of this appeal, the issue
 9   of whether the fees for services were Susan’s property or
10   Mihranian’s property largely is a red herring.   The more
11   important questions – questions that Leslie never answered –
12   were: (1) why funds allegedly diverted from the couple’s shared
13   medical practice were property of the debtor as opposed to
14   property of MCSSG; and (2) how the so-called sham separation
15   advanced Mihranian’s and Susan’s diversion scheme when Leslie’s
16   complaint indicated that both Mihranian and Susan were judgment
17   debtors to one or more of the judgment creditors named in
18   Leslie’s complaint.
19        Another issue we should address concerns the statute of
20   limitations applicable to actual fraudulent transfers under
21   California law.   The applicable statute provides in relevant
22   part:
23        (a) Under paragraph (1) of subdivision (a) of Section
          3439.04, not later than four years after the transfer
24        was made or the obligation was incurred or, if later,
          not later than one year after the transfer or
25        obligation was or could reasonably have been discovered
          by the claimant.
26
27   Cal. Civ. Code § 3439.09(a) (emphasis added).
28        The bankruptcy court opined that, to the extent Leslie

                                     23
 1   sought to avail himself of § 3439.09(a)’s “discovery rule,”
 2   Leslie should have alleged that the fraudulent nature of the
 3   transfers reasonably could not have been discovered earlier.
 4        Leslie’s opening appeal brief does not mention let alone
 5   address the statute of limitations issue.   On this basis alone,
 6   we could decline to address this issue.   Christian Legal Soc'y,
 7   626 F.3d at 487–88; Brownfield, 612 F.3d at 1149 n.4.
 8        In any event, for purposes of this appeal, suffice it to say
 9   that Leslie could not have properly invoked this discovery rule
10   unless he alleged facts plausibly tending to demonstrate that the
11   fraudulent nature of the transfers was not discovered earlier and
12   reasonably could not have been discovered earlier.   See Denholm
13   v. Houghton Mifflin Co., 912 F.2d 357, 362 (9th Cir. 1990); Sun
14   'n Sand, Inc. v. United Cal. Bank, 21 Cal. 3d 671, 701-02 (1978);
15   see also Ezra v. Seror (In re Ezra), 537 B.R. 924, 933 (9th Cir.
16   BAP 2015) (“the one-year period under Cal. Civ. Code
17   § 3439.09(a)’s discovery rule does not commence until the
18   plaintiff has reason to discover the fraudulent nature of the
19   transfer.”)
20        The final issue we should address concerns Bartamian’s
21   request to supplement the record on appeal.   In this request,
22   Bartamian asked us to consider on appeal documents that were not
23   part of this adversary proceeding but rather were part of
24   Leslie’s contemporaneous motion to substantively consolidate
25   Mihranian’s bankruptcy estate with MCSSG and the four fraudulent
26   transfer defendants.   Even if we were to assume that these
27   materials were sufficiently “before” the bankruptcy court to be
28   considered part of the adversary proceeding record (which they

                                     24
 1   were not), consideration of their contents as evidence for
 2   purposes of resolving Bartamian’s Civil Rule 12(b)(6) dismissal
 3   motion likely would have converted the defendants’ dismissal
 4   motion into a summary judgment motion.   See Civil Rule 12(d).   We
 5   decline on appeal to consider materials that would have converted
 6   this matter into a summary judgment proceeding when the
 7   bankruptcy court did not do so.
 8        Therefore, Bartamian’s motion seeking to supplement the
 9   record with the materials from the substantive consolidation
10   proceeding is hereby ORDERED DENIED.8
11                              CONCLUSION
12        For the reasons set forth above, the bankruptcy court’s
13   order dismissing with prejudice Leslie’s third amended complaint
14   is AFFIRMED.
15
16
17
18
19
20
21
          8
           On the day of oral argument, this Panel delayed the start
22
     of oral argument in this appeal by roughly 30 minutes because, at
23   the time this appeal first was called for hearing, counsel for
     Leslie was not present. After the 30-minute delay, the Panel
24   proceeded with oral argument. Only counsel for Bartamian
     appeared; no one appeared for Leslie. The Panel effectively
25   submitted Leslie’s position on his appellate briefs and on the
26   record on appeal. Shortly after the completion of oral argument,
     the Panel received from Leslie’s counsel an informal telephonic
27   request to continue oral argument. That request is hereby
     ORDERED DENIED. The request was untimely and was not presented
28   in a procedurally proper format. See Rule 8013(a).

                                       25