Court Opinion

ID: 2684089
Source: CourtListenerOpinion
Date Created: 2014-07-16 21:00:48.479858+00
Date Added: 2024-06-11T13:13:47.724607
License: Public Domain

FILED
                             NOT FOR PUBLICATION                            JUL 16 2014

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                             FOR THE NINTH CIRCUIT

In re: JOSEPH JOHN VIOLA, AKA                    No. 12-60032
Giuseppe Viola,
                                                 BAP No. 11-1173
               Debtor,

                                                 MEMORANDUM*
JANINA M. HOSKINS, Chapter 7
Trustee,

               Appellant,

  v.

CITIGROUP, INC.,

               Appellee.

                          Appeal from the Ninth Circuit
                           Bankruptcy Appellate Panel
            Hollowell, Donovan, and Dunn, Bankruptcy Judges, Presiding

                         Argued and Submitted April 10, 2014
                         Submission Withdrawn April 10, 2014
                             Resubmitted July 14, 2014
                              San Francisco, California

Before: SILVERMAN, W. FLETCHER, and BYBEE, Circuit Judges.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
                                          -2-
      Appellant Janina Hoskins, the chapter 7 trustee of the estate of Joseph John

Viola, seeks partial review of the Bankruptcy Appellate Panel’s (“BAP”) opinion

affirming the bankruptcy court’s order dismissing the trustee’s second amended

complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). The trustee seeks

review only of the lower court’s determination that defendants were not “initial

transferees” under 11 U.S.C. § 550(a).1 We have jurisdiction under 28 U.S.C. §

158(d), and, after de novo review, we affirm. See Dennis v. Hart, 724 F.3d 1249,

1252 (9th Cir. 2013); Boyajian v New Falls Corp. (In re Boyajian), 564 F.3d 1088,

1090 (9th Cir. 2009).2

      In this circuit, a “transferee” is one who has legal title to the funds and the

ability to use them as the recipient sees fit. This is called the “dominion test.”

Universal Serv. Admin. Co. v. Post-Confirmation Comm. of Unsecured Creditors

      1
         The BAP published its opinion affirming the bankruptcy court, and
generally, when it does so, we do as well, unless “publication is unnecessary for
clarifying the panel’s disposition of the case.” See 9th Cir. R. 36-2(e). As we read
the BAP’s decision, it was published in order to provide guidance on whether the
trustee had standing to bring an “aiding and abetting” claim against the defendants
under 11 U.S.C. § 544(a)(2) and California law, an argument the trustee has
abandoned before this court. A published opinion is therefore not necessary to
clarify our decision, which is governed by circuit precedent.
      2
         Following oral argument, we withdrew submission of this appeal pending
issuance of a decision by the United States Supreme Court in Executive Benefits
Ins. Agency v. Arkison, No. 12-1200. The Supreme Court issued its opinion on
June 9, 2014.
                                           -3-
of Incomnet Commc’ns. Corp., (In re Incomnet, Inc.), 463 F.3d 1064, 1071 (9th

Cir. 2006). We decline to apply a different test, as suggested by the trustee,

because she fails to establish that this court’s existing rule is clearly irreconcilable

with subsequent authority. See Rodriguez v. AT&T Mobility Servs, LLC, 728 F.3d

975, 979 (9th Cir. 2013) (citing Miller v. Gammie, 335 F.3d 889, 900 (9th Cir.

2003) (en banc) (holding three-judge panels are bound by prior panel decisions,

unless prior panel’s reasoning or theory is clearly irreconcilable with intervening

authority)).

      In her second amended complaint, the trustee failed to allege that the

defendants had the requisite dominion over the account funds the trustee sought to

recover. Instead, she alleged that the debtor exercised dominion over the accounts

because the debtor fraudulently misappropriated his investors’ funds, and the

defendants allowed the debtor “to open and exclusively control” the trust accounts.

Because the trustee’s allegations on their face are insufficient to satisfy the

dominion test as to the defendants, the bankruptcy court correctly dismissed

Counts One and Two of the trustee’s second amended complaint for failure to state

a claim.

      AFFIRMED.