Court Opinion

ID: 9373986
Source: CourtListenerOpinion
Date Created: 2023-02-22 16:10:58.408748+00
Date Added: 2024-06-11T17:16:49.423771
License: Public Domain

FILED
                                                                                JAN 28 2022
                                                                            SUSAN M. SPRAUL, CLERK
                          NOT FOR PUBLICATION                                 U.S. BKCY. APP. PANEL
                                                                              OF THE NINTH CIRCUIT

          UNITED STATES BANKRUPTCY APPELLATE PANEL
                    OF THE NINTH CIRCUIT

In re:                                              BAP No. NV-21-1093-GTB
ALESSI & KOENIG, LLC,
             Debtor.                                Bk. No. 2:16-bk-16593-ABL

SALMA AGHA-KHAN, M.D.,                  Adv. No. 2:19-ap-01074-GS
                  Appellant,
v.                                      MEMORANDUM*
UNITED STATES OF AMERICA; GLORIA
M. NAVARRO, Chief Judge of Nevada
District Court; CARL W. HOFFMAN,
Magistrate Judge Nevada District Court;
RICHARD F. BOULWARE, Nevada
District Court Judge; PEGGY A. LEEN,
Magistrate Judge of Nevada District
Court; EDWARD LEAVY, Ninth Circuit
Judge; CONSUELO M. CALLAHAN,
Ninth Circuit Judge; CARLOS T. BEA,
Ninth Circuit Judge; ALESSI TRUSTEE
CORPORATION; ALESSI & KOENIG,
LLC; RYAN KOENIG; ROBERT M.
ALESSI; RYAN KERBOW; NAOMI
EDEN; AILEEN RUIZ; TERRA WEST
PROPERTY MANAGEMENT (HOA1);
TERRA WEST COLLECTIONS (HOA2);

      *
        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.
SAN SEVINO WEST AT SHD (HOA3);
SAN SEVINO HOME OWNER’S
ASSOCIATION (HOA4); SAN SEVINO
WEST AT SOUTHERN HIGHLANDS
HOME OWNERS ASSOCIATION
(HOA5); SOUTHERN HIGHLANDS
HOME OWNERS ASSOCIATION
(HOA7); SOUTHERN HIGHLANDS
MASTER (HOA8); SOUTHERN
HIGHLANDS MASTERS HOA (HOA9);
ASSESSMENT MANAGEMENT
SERVICES (HOA10); HONG X. LAM,
Esquire; SHARON TAYLOR; MICHELLE
PETERSEN; ARCH G. NEBRON;
ASSESSMENT MANAGEMENT
SERVICES; HEIDI HAGEN; MONIQUE
D. WASHINGTON; JENNIFER A. EZELL;
JENNIFER L. JONES; DAVID ALESSI;
GERRARD & COX (LEGAL WINGS),
AKA Gerrard Cox & Larsen; SHELDON
HERBERT, Esquire; DOUGLAS D.
GERRARD, Esquire; ESTHER
MEDELLIN, Esquire; CHET J. COX;
KRISTINA C. COX; AKERMAN
SENTERFITT, LLP; NATALIE L
WINSLOW, Esquire; SFR INVESTMENTS
POOL1 LLC; SOUTHERN HIGHLANDS
COMMUNITY ASSOCIATION (HOA6),
               Appellees.

          Appeal from the United States Bankruptcy Court
                    for the District of Nevada
           Gary A. Spraker, Bankruptcy Judge, Presiding

                                2
Before: GAN, TAYLOR, and BRAND, Bankruptcy Judges.

                                 INTRODUCTION

      Dr. Salma Agha-Khan appeals the bankruptcy court’s order

dismissing with prejudice her adversary complaint against approximately

forty defendants, including the United States, several federal judges, and

chapter 71 debtor, Alessi & Koenig, LLC (“Debtor”). Dr. Agha-Khan alleged

obstruction of justice, fraud, conspiracy, and various criminal and

constitutional violations, relating to two Nevada foreclosures and two

federal actions she filed in the United States District Court for the District

of Nevada (“District Court”). She also appeals the denial of her motions to

disqualify Judge Spraker for alleged bias.

      Dr. Agha-Khan offers no plausible argument why the bankruptcy

court erred by dismissing the complaint or denying her motions to

disqualify, and we perceive no error. Accordingly, we AFFIRM.

                                        FACTS2

A.    Dr. Agha-Khan’s Prior Cases And The Adversary Complaint

      Dr. Agha-Khan was the owner of two real properties located in Las

Vegas, Nevada. She claims that Debtor and other defendants forged

      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
Civil Procedure.
        2 We exercise our discretion to take judicial notice of documents electronically

filed in the adversary proceeding. See Atwood v. Chase Manhattan Mortg. Co. (In re
Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
                                            3
documents and fraudulently foreclosed on her properties in 2012. In 2016

and 2017, Dr. Agha-Khan filed in District Court two cases for foreclosure

fraud, naming dozens of defendants, including Debtor. See Agha-Khan v.

Bank of N.Y. Mellon, No 2:16-cv-02651-RFB-PAL; Agha-Khan v. Mortg. Elec.

Registration Sys., Inc., No. 2:17-cv-02739-GMN-DJA. In both cases, the

District Court entered judgment against Dr. Agha-Khan after finding that

she was judicially estopped from pursuing the claims because she failed to

disclose them in her bankruptcy case filed in the Eastern District of

California. The Ninth Circuit summarily affirmed one of the decisions and

remanded the other for limited proceedings.

      In 2019, Dr. Agha-Khan filed the present adversary complaint in

Debtor’s chapter 7 bankruptcy case. She again alleged claims related to the

foreclosures and added new claims against judges that ruled against her in

the prior actions and appeals.

B.    The Motions To Dismiss And The Court’s Ruling

      Defendants Southern Highlands Community Association (“SHCA”),

David Alessi, and SFR Investments Pool 1, LLC (“SFR”) each filed motions

to dismiss under Civil Rule 12(b)(6), made applicable by Rule 7012(b),

which were joined by defendants Ackerman, LLP and Natalie L. Winslow.

After the bankruptcy court granted the United States’ application to appear

as amicus curiae on behalf of the judicial defendants, it filed a motion to

dismiss on behalf of itself and the federal judges (collectively the “Federal

Defendants”).

                                      4
      While the motions were pending, Dr. Agha-Khan filed a motion to

disqualify Judge Spraker under 28 U.S.C. §§ 144 and 455. The bankruptcy

court denied the motion, holding that 28 U.S.C. § 144 did not apply to

bankruptcy judges and determining that the allegations of bias did not

require recusal under 28 U.S.C. § 455.

      After hearings and further briefing, the court considered all pending

motions to dismiss and joinders together and entered a consolidated

memorandum decision. The bankruptcy court first engaged in a claim-by-

claim analysis to determine whether it had jurisdiction. It decided that it

had subject matter jurisdiction over claims against Debtor, because they

were essentially late filed claims against the estate, but it lacked jurisdiction

over all claims against nondebtors because judgment on those claims

would not affect Debtor or the estate and therefore the claims were not

“related to” the bankruptcy case.

      The court also determined that the claims related to the loans and

foreclosures were barred by judicial estoppel and claim preclusion. As for

the claims arising from the District Court actions and appeals, the

bankruptcy court determined that the Federal Defendants were immune

from suit under the doctrines of judicial and sovereign immunity and Dr.

Agha-Khan failed to allege facts to support liability on those claims against

the remaining defendants. The bankruptcy court also concluded that Dr.

Agha-Khan could not show proper service of the summons and complaint

and dismissal was also warranted under Rule 7012(b)(5).

                                        5
     The bankruptcy court issued an order granting the motions to

dismiss without leave to amend because the jurisdictional defects could not

be remedied by amendment. And, because only some of the named

defendants filed or joined the motions to dismiss and the deficiencies in the

complaint appeared to be applicable to all defendants, the court issued an

order to show cause (“OSC”) requiring Dr. Agha-Khan to file a response

and appear at a hearing to explain why the complaint should not be

dismissed as to all defendants.

     Dr. Agha-Khan did not file a written response to the OSC, and she

did not appear at the hearing set by the court. On October 29, 2020, the

court dismissed the remaining defendants without leave to amend and

entered a final judgment in favor of the defendants.

C.   The Motions For Reconsideration And The Amended Ruling

     On November 3, 2020, Dr. Agha-Khan filed a motion for

reconsideration, a response to the OSC, and a second motion to disqualify

Judge Spraker. She generally argued that the court erred in dismissing the

complaint and neither judicial immunity nor judicial estoppel applied.

     In her second motion to disqualify, Dr. Agha-Khan again argued that

Judge Spraker should recuse himself because of his involvement in Dr.

Agha-Khan’s prior BAP appeal and because he “deliberately and

knowingly ignored” the alleged frauds perpetrated by the defendants.

     On March 5, 2021, the bankruptcy court entered an order denying the

second motion to disqualify for the same reasons it denied the first motion.

                                      6
The bankruptcy court also concluded that Dr. Agha-Khan raised the same

issues and arguments that she made in opposition to the motions to

dismiss and determined that she failed to establish a basis for

reconsideration of the dismissal with prejudice as to all nondebtor

defendants. However, because potential claims against Debtor did not

necessarily suffer from the same defects as nondebtor claims, the

bankruptcy court vacated the judgment and amended its prior dismissal

order to be without prejudice to claims against Debtor.

     The court denied all relief against nondebtor defendants and ordered

that any amended complaint be filed by April 5, 2021. The court directed

Dr. Agha-Khan “to review the discussion of general pleading required

under [Civil Rule] 8, made applicable by [Rule] 9008, and pleading with

particularity as to fraud claims required by [Civil Rule] 9(b), made

applicable under [Rule] 7009.” The court further ordered: “Failure to

deliver the amended complaint by the deadline shall result in dismissal of

the complaint as to [Debtor] with prejudice.”

     Dr. Agha-Khan did not file an amended complaint. The bankruptcy

court entered an order dismissing all claims against Debtor with prejudice

and entered a judgment dismissing the case on April 16, 2021. Dr. Agha-

Khan timely appealed.

                              JURISDICTION

     The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and

157(b)(2)(B). The bankruptcy court also had jurisdiction to determine its

                                      7
own jurisdiction. Bigelow v. United States, 267 F.2d 398, 399 (9th Cir. 1959).

We have jurisdiction under 28 U.S.C. § 158.

                                     ISSUES

      Did the bankruptcy court abuse its discretion by denying the motions

to disqualify?

      Did the bankruptcy court err by dismissing Dr. Agha-Khan’s

complaint with prejudice?

                         STANDARDS OF REVIEW

      We review de novo the bankruptcy court’s order granting a motion

to dismiss for failure to state a claim under Civil Rule 12(b)(6). Movsesian v.

Victoria Versicherung AG, 670 F.3d 1067, 1071 (9th Cir. 2012) (en banc).

Under de novo review, we look at the matter anew, giving no deference to

the bankruptcy court’s determinations. Francis v. Wallace (In re Francis), 505

B.R. 914, 917 (9th Cir. BAP 2014).

      We review the bankruptcy court’s decision to dismiss a complaint

with prejudice for abuse of discretion. Tracht Gut, LLC v. L.A. Cnty.

Treasurer & Tax Collector (In re Tracht Gut, LLC), 836 F.3d 1146, 1150 (9th Cir.

2016). We also review the denial of a motion to recuse for abuse of

discretion. Hale v. U.S. Tr. (In re Basham), 208 B.R. 926, 930 (9th Cir. BAP

1997). A bankruptcy court abuses its discretion if it applies an incorrect

legal standard or its factual findings are illogical, implausible, or without

support in the record. TrafficSchool.com v. Edriver, Inc., 653 F.3d 820, 832 (9th

Cir. 2011).

                                        8
                                    DISCUSSION

A.     Scope Of This Appeal

       In her opening brief, Dr. Agha-Khan makes several allegations of

criminal wrongdoing, fraud, and conspiracy against the bankruptcy court

and defendants which are beyond the scope of this appeal. Our jurisdiction

is limited to review of final orders, and with leave, interlocutory orders, of

the bankruptcy court. 28 U.S.C. § 158.

       Dr. Agha-Khan’s arguments which reasonably relate to the

bankruptcy court’s orders generally fall into three categories: (1) the

bankruptcy court was biased and should have recused itself; (2) the

bankruptcy court’s decision that it lacked jurisdiction over the nondebtor

defendants deprived Dr. Agha-Khan of due process and violated her

constitutional rights; and (3) the allegations in the complaint were

sufficient to withstand the motions to dismiss. We construe her appeal to

be from the judgment dismissing all defendants with prejudice, and from

the orders denying her motions to disqualify Judge Spraker. 3

       3
          SHCA argues that Dr. Agha-Khan failed to timely appeal the order dismissing
the nondebtor defendants or the reconsideration order, and it urges us to limit our
review to the order dismissing Debtor and the second judgment. The first order
dismissing all defendants with prejudice and the first judgment were final, but the time
to appeal was tolled by Dr. Agha-Khan’s motion for reconsideration. Fed. R. Bankr. P.
8002(b)(1). When the bankruptcy court granted partial relief in its reconsideration order,
it vacated the judgment and granted leave for Dr. Agha-Khan to amend the complaint
as against Debtor. An order dismissing claims, but granting leave to amend, is not a
final order. WMX Techs., Inc. v. Miller, 104 F.3d 1133, 1136-37 (9th Cir. 1997). And an
order dismissing some, but not all, defendants is similarly not final. Anderson v. Allstate
Ins. Co., 630 F.2d 677, 680 (9th Cir. 1980). Finally, denial of a motion to recuse is not a
                                            9
B.     The Bankruptcy Court Did Not Err By Denying The Motions To
       Disqualify.

       Dr. Agha-Khan argues that the bankruptcy court was biased against

her and took several improper actions to protect the judicial defendants.

She essentially argues that Judge Spraker should have recused himself

because he was a member of the BAP Panel that dismissed her appeal in

her personal bankruptcy case and because Ninth Circuit judges were

named as defendants in the adversary proceeding.

       The bankruptcy court correctly held that 28 U.S.C. § 144 applies only

to district court judges and not bankruptcy judges. Seidel v. Durkin (In re

Goodwin), 194 B.R. 214, 221 (9th Cir. BAP 1996). We evaluate a motion to

disqualify a bankruptcy judge under 28 U.S.C. § 455.

       Pursuant to 28 U.S.C. § 455(a), a judge must “disqualify himself in

any proceeding in which his impartiality might reasonably be questioned.”

This includes situations “[w]here [the judge] has a personal bias or

prejudice concerning a party,” or “[h]e knows that he, individually or as a

fiduciary, or his spouse or minor child residing in his household, has a

financial interest in the subject matter in controversy or in a party to the

proceeding . . . .” 28 U.S.C. § 455(b). We examine whether an appearance of

impropriety exists from an objective standpoint. Blixseth v. Yellowstone

Mountain Club, LLC, 742 F.3d 1215, 1219 (9th Cir. 2014) (“We gauge

final order. Stewart Enters., Inc. v. Horton (In re Horton), 621 F.2d 968, 970 (9th Cir. 1980).
All of these non-final orders merged into the judgment entered on April 16, 2021, and
                                              10
appearance by considering how the conduct would be viewed by a

reasonable person, not someone hypersensitive or unduly suspicious.”

(internal quotation marks omitted)). Opinions formed by a judge based on

facts introduced in a case do not constitute a basis for recusal unless they

display a deep-seated favoritism or antagonism that would make it

impossible for the judge to render a fair judgment. Ortiz v. Stewart, 149 F.3d

923, 940 (9th Cir. 1998) (citing Liteky v. United States, 510 U.S. 540, 555

(1994)). Furthermore, a judge has a strong duty to sit when there is no

legitimate reason to recuse. Clemens v. U.S. Dist. Ct., 428 F.3d 1175, 1179

(9th Cir. 2005).

      We agree with the bankruptcy court that a reasonable person could

not conclude that Judge Spraker’s involvement in Dr. Agha-Khan’s prior

appeal posed a significant risk that he would be influenced by anything

other than the merits of the adversary proceeding. His participation in the

appeal was limited to judicial decision-making based on the record

presented from a different case, on a different subject, and we see no

evidence of extrajudicial bias or prejudice. And the mere fact that Dr.

Agha-Khan named Ninth Circuit judges as defendants is insufficient to

warrant recusal. See Sanzaro v. Vega, No. 2:12-cv-1980-JCM(PAL), 2013 WL

1121501, *1 (D. Nev. Mar. 14, 2013). Finally, the bankruptcy court did not

exhibit bias by permitting the United States to appear on behalf of the

judicial defendants as amicus curiae.

we thus have jurisdiction to consider them.
                                           11
      Dr. Agha-Khan additionally filed a motion to disqualify this Panel,

under 28 U.S.C. §§ 144 & 455, based on allegations of bias stemming from

the dismissal of her prior appeal in her personal bankruptcy case and

allegations of wrongdoing by the Ninth Circuit in her prior appeals.

Section 144 applies only to district court judges; it does not apply to

appellate judges. Bernard v. Coyne (In re Bernard), 31 F.3d 842, 843 n.3 (9th

Cir. 1994) (citing Pilla v. Am. Bar Ass’n, 542 F.2d 56, 58 (8th Cir. 1976)). We

evaluate the motion to recuse this Panel under 28 U.S.C. § 455, and for the

same reasons that we affirm the bankruptcy court’s denial of the motions to

disqualify, the motion is DENIED.

C.    The Bankruptcy Court Did Not Err By Dismissing The Complaint.

      Dr. Agha-Khan contends that the bankruptcy court erred by

determining that it lacked jurisdiction over nondebtor defendants while

maintaining jurisdiction over claims against Debtor. But she does not

make, nor do we find, a cogent argument why the court erred.

      “Bankruptcy courts have subject matter jurisdiction over proceedings

‘arising under title 11, or arising in or related to cases under title 11.’”

Wilshire Courtyard v. Cal. Franchise Tax Bd. (In re Wilshire Courtyard), 729

F.3d 1279, 1285 (9th Cir. 2013) (quoting 28 U.S.C. § 1334(b)). Claims “arise

under” title 11 if they involve a cause of action created or determined by a

statutory provision of the Bankruptcy Code. Id. (citing Harris v. Wittman (In

re Harris), 590 F.3d 730, 737 (9th Cir. 2009)). They “arise in” a bankruptcy

case if they would not exist outside of a bankruptcy case. Id. (citing

                                        12
Maitland v. Mitchell (In re Harris Pine Mills), 44 F.3d 1431, 1435-37 (9th Cir.

1995)). None of the civil or criminal claims alleged by Dr. Agha-Khan arose

under or arose in the bankruptcy case.

      A bankruptcy court may still have subject matter jurisdiction if the

claims are “related to” the bankruptcy case. The test for “related to”

jurisdiction is whether:

      [T]he outcome of the proceeding could conceivably have any
      effect on the estate being administered in bankruptcy. Thus, the
      proceeding need not necessarily be against the debtor or
      against the debtor’s property. An action is related to
      bankruptcy if the outcome could alter the debtor’s rights,
      liabilities, options, or freedom of action (either positively or
      negatively) and which in any way impacts upon the handling
      and administration of the bankrupt estate.

Fietz v. Great W. Sav. (In re Fietz), 852 F.2d 455, 457 (9th Cir. 1988) (cleaned

up). Dr. Agha-Khan offers no argument explaining how her claims against

nondebtor defendants are related to the bankruptcy. We agree with the

bankruptcy court that it lacks jurisdiction over these claims because their

outcome would have no effect on Debtor’s chapter 7 estate.

      The bankruptcy court additionally held that dismissal of the Federal

Defendants was warranted based on the doctrines of judicial and sovereign

immunity. Judges are immune from civil liability for damages and

declaratory, injunctive, or other equitable relief arising from their judicial

acts. See Mireles v. Waco, 502 U.S. 9, 9-12 (1991); Moore v. Brewster, 96 F.3d

1240, 1243 (9th Cir. 1996) (superseded by statute on other grounds). Judicial

                                        13
immunity protects “judicial independence by insulating judges from

vexatious actions prosecuted by disgruntled litigants.” Forrester v. White,

484 U.S. 219, 225 (1988) (superseded by statute on other grounds). A judge

is not deprived of judicial immunity “because the action he took was in

error, was done maliciously, or was in excess of his authority; rather, he

will be subject to liability only when he has acted in the ‘clear absence of all

jurisdiction.’” Mullis v. U.S. Bankr. Ct., 828 F.2d 1385, 1388 (9th Cir. 1987)

(quoting Stump v. Sparkman, 435 U.S. 349, 356-57 (1978)).

      Dr. Agha-Khan argues that judicial immunity does not apply because

the judicial actions were deliberate, criminal, and not discretionary

functions. But the allegations in her complaint are based solely on rulings

in the District Court cases and subsequent appeals. And as the bankruptcy

court concluded, the allegations of criminal actions by the judicial

defendants lack factual support and are merely conclusory, unwarranted

deductions of fact, which need not be accepted as true.

      Finally, “[i]t is well settled that the United States is a sovereign, and,

as such, is immune from suit unless it has expressly waived such immunity

and consented to be sued.” Gilbert v. DaGrossa, 756 F.2d 1455, 1458 (9th Cir.

1985). Dr. Agha-Khan has not shown that her claims against the United

States fall within any waiver of the United States’ sovereign immunity.

      The bankruptcy court reasoned that although it had jurisdiction over

claims against Debtor, the claims based on alleged frauds surrounding the

foreclosure of her properties were previously decided by the District Court.

                                       14
The court further held that the conclusory and threadbare allegations were

insufficient to state a claim for relief, but on reconsideration, permitted Dr.

Agha-Khan to file an amended complaint to cure the deficiencies.

      Dr. Agha-Khan argues that the court erred by ignoring the

allegations in her complaint, but she provides no explanation why she

failed to file an amended complaint. We agree with the bankruptcy court

that the allegations were insufficient to state a claim for relief against

Debtor.

D.    The Bankruptcy Court Did Not Err By Dismissing The Complaint
      With Prejudice.

      Pursuant to Civil Rule 15, made applicable by Rule 7015, leave to

amend a complaint should be freely given when justice so requires. The

bankruptcy court has discretion to deny leave to amend, and this discretion

is “particularly broad” where the plaintiff “has previously been granted

leave to amend and has subsequently failed to add the requisite

particularity to [its] claims.” Curry v. Yelp Inc., 875 F.3d 1219, 1228 (9th Cir.

2017) (cleaned up).

      In determining whether to grant leave to amend, the bankruptcy

court should consider several factors including: (1) undue delay; (2) bad

faith or dilatory motive by the movant; (3) repeated failure to cure

deficiencies by previous amendments; (4) undue prejudice to the opposing

party; and (5) futility of amendment. Brown v. Stored Value Cards, Inc., 953

F.3d 567, 574 (9th Cir. 2020) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).

                                        15
      Here, the bankruptcy court dismissed the claims against nondebtors

with prejudice because it lacked jurisdiction over those claims and, thus,

amendment would be futile. It dismissed claims against Debtor because Dr.

Agha-Khan was given an opportunity to cure deficiencies through an

amended complaint but failed to do so.

      Dr. Agha-Khan contends that the bankruptcy court should have

transferred the case, but she does not identify where the case should have

been transferred or the basis for such a transfer. She does not identify any

error in the court’s decision to dismiss the complaint with prejudice, and

we find no abuse of discretion.

                              CONCLUSION

      Based on the foregoing, we AFFFIRM the bankruptcy court’s orders

and judgment dismissing all defendants with prejudice and the court’s

orders denying Dr. Agha-Khan’s motions to disqualify.

                                      16