Court Opinion

ID: 9556813
Source: CourtListenerOpinion
Date Created: 2023-08-18 18:01:55.020403+00
Date Added: 2024-06-11T09:00:42.706110
License: Public Domain

FILED
                                                                                    AUG 18 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                          NOT FOR PUBLICATION                                   SUSAN M. SPRAUL, CLERK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. NC-22-1235-CFS*
 DANIELA FARINA,
              Debtor.                                Bk. No. 22-10021

 DANIELA FARINA,                                     Adv. No. 22-01011
              Appellant,
 v.                                                  MEMORANDUM**
 JANINA M. HOSKINS, Chapter 7
 Trustee,
              Appellee.

                Appeal from the United States Bankruptcy Court
                    for the Northern District of California
                Roger L. Efremsky, Bankruptcy Judge, Presiding

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

       *
          This appeal was concurrently heard with two others: (1) Farina v. Hoskins (In re
Farina), BAP No. NC-22-1232-FSC (9th Cir. BAP Aug. 14, 2023); and (2) Farina v. Hoskins
(In re Farina), BAP No. NC-22-1233-SCF (9th Cir. BAP Aug. 11, 2023). These companion
appeals are the subject of their own separate written decisions. In addition, this Panel
recently heard and decided another appeal prosecuted by Farina, which also is the
subject of its own written decision. See Farina v. Hoskins (In re Farina), BAP No. NC-22-
1071-TBF, 2022 WL 17484959 (9th Cir. BAP Dec. 7, 2022).
        ** 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.
                                INTRODUCTION

      Appellant and debtor Daniela M. Farina appeals from an order

dismissing her adversary complaint for civil contempt against chapter 7 1

trustee Janina M. Hoskins (“Trustee”) with prejudice. Because the

bankruptcy court correctly applied the law and Farina does not

demonstrate error, we AFFIRM.

                                       FACTS

      The parties are familiar with the facts and procedural history.

Therefore, there is no need to restate them in detail here except as

necessary to the decision.

      Farina co-owned property on First Avenue in Napa, California

(“Property”) with her former business partner and boyfriend, Victor Alam.

When the relationship deteriorated, in or about May 2020, Alam filed an

action for partition in the Napa County Superior Court and a receiver was

appointed. According to the receiver, Farina had “occupied” the Property

from July 31, 2021, to sometime prior to the receiver’s first inspection of the

Property on November 17, 2021. After the inspection, the receiver

concluded the Property was no longer occupied because there was almost

no furniture in the house, no items of daily living, minimal personal items,

missing fixtures and appliances, and a missing thermostat. Additionally, a

      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
continuous live feed camera at the Property showed that Farina visited

periodically but never stayed overnight, never refurnished the property,

and never took any action to suggest that she reestablished occupancy.

      On January 18, 2022, Farina filed a chapter 7 bankruptcy petition.

When Trustee inspected the Property on March 3, 2022, Trustee also

concluded the Property was vacant and uninhabitable. However, when

Trustee’s real estate broker, hired to market and sell the Property,

attempted to enter the Property on March 5th, Farina and her father, Mr.

Nicolosi, had taken possession of the Property and refused the real estate

broker entry.

      Because Farina was occupying the Property to the detriment of the

bankruptcy estate, Trustee sought and obtained an order for judgment of

possession and writ of assistance. The order and writ were posted at the

Property on March 10, 2022, and copies were sent to Farina by regular mail

and email.

      The order provided that the Property was property of the bankruptcy

estate pursuant to § 541(a) and that any action to assert possession of the

Property, by anyone other than Trustee, was a violation of the automatic

stay imposed by § 362(a). The order further provided that if Farina or any

other individuals occupying the Property did not voluntarily vacate the

premises in accordance with the court’s order, Trustee was authorized to

direct the United States Marshals Service to take all lawful action related to

obtaining exclusive possession of the Property. The writ of assistance

                                      3
provided that all occupants of the Property were required to vacate the

Property immediately and turnover exclusive possession of the Property to

Trustee.

      Farina filed a motion to stay the order of possession on March 10,

2022. 2 Attached to her motion, as an exhibit, was the writ of assistance and

the order of possession, evidencing Farina’s knowledge and notice of the

order and writ. However, it was not until March 24, 2022, with the

assistance of the United States Marshals, that Trustee was able to restore

exclusive possession of the Property.

      On April 4, 2022, Trustee filed a motion seeking court authorization

to dispose of any remaining personal property because the Property could

command a higher price if the personal property was removed. Trustee

attached a detailed list of the remaining items (“Personal Property”).3

According to Trustee, Farina had the opportunity to voluntarily remove

her Personal Property, either during her “extended time of illegal

possession” or through a mutually agreed upon time and method that

Trustee had previously attempted to coordinate through Farina’s counsel.

Because Farina had not removed the Personal Property, Trustee argued the

      2
         Farina’s attempt to stay the order of possession “did not succeed,” however it is
unclear whether the court entered an order specifically denying Farina’s motion to stay.
       3 Trustee previously provided the court photos of the vacant house and garage

with some personal property, as exhibits in support of the application for order for
judgment of possession and writ of assistance.
                                            4
bankruptcy court should issue an order pursuant to § 105(a) allowing for

the immediate removal and disposal of the Personal Property.

     Farina opposed the motion, arguing that she had not illegally

occupied the Property and had no other place to store the Personal

Property. On May 10, 2022, following a hearing, the bankruptcy court

entered an order (“Disposal Order”) authorizing Trustee and her agents or

“anyone directed by them . . . to remove and dispose of the Personal

Property (as defined in the Motion), including but not limited to by

delivering the Personal Property to the dump, upon expiration of the stay

imposed by Federal Rule of Bankruptcy Procedure 6004(h).” Farina did not

appeal the Disposal Order. Furthermore, there is no evidence that Farina

attempted to coordinate the voluntary removal of the Personal Property

during the time provided. Upon expiration of the Rule 6004(h) stay,

Trustee disposed of the Personal Property.

     In October 2022 (approximately five months after the court entered

the Disposal Order), Farina initiated an adversary action against Trustee,

seeking an order of civil contempt and compensatory damages (“Civil

Contempt Complaint”). Farina argued that Trustee and her attorney

should be held in contempt, and she should be awarded compensatory

damages in the amount of $150,000 plus attorney’s fees, because Trustee

and Trustee’s attorney willfully violated the Disposal Order which

“preclude[ed] them from requiring Debtor to sign a waiver liability prior to

collecting her personal property at the First Avenue Property.”

                                     5
      In response, Trustee filed a motion to dismiss Farina’s Civil

Contempt Complaint on several bases. First, Farina lacked standing

because the Personal Property was property of the estate and Farina had no

pecuniary interest in its disposition. Second, Trustee was entitled to quasi-

judicial immunity because (1) Trustee was acting within the scope of her

authority; (2) Farina had notice of Trustee’s motion to dispose of the

Personal Property and the Disposal Order; (3) Trustee candidly disclosed

her intent to dispose of the Personal Property to the bankruptcy court; and

(4) the bankruptcy court approved of Trustee’s acts by issuing the Disposal

Order. Third, even if Trustee was not entitled to quasi-judicial immunity,

Farina failed to state facts sufficient to support a claim for civil contempt

because Farina had not pled facts showing by clear and convincing

evidence that Trustee violated a specific and definite order of the court.

Because the defects were incurable, Trustee argued Farina’s Civil

Contempt Complaint should be dismissed with prejudice.

      At the hearing on Trustee’s motion to dismiss, the bankruptcy court

determined that Farina’s Civil Contempt Complaint was “totally frivolous”

and there was “no plausible claim for relief stated.” Accordingly, the

bankruptcy court granted Trustee’s motion to dismiss with prejudice “for

the reasons stated orally on the record” (“Order Dismissing Adversary”).

      Farina timely appealed.

                                       6
                                JURISDICTION

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

157(b)(2)(A). We have jurisdiction under 28 U.S.C. § 158.

                                     ISSUE

      Did the bankruptcy court err in dismissing Farina’s Civil Contempt

Complaint with prejudice?

                         STANDARDS OF REVIEW

      We review de novo the dismissal of Farina’s adversary proceeding

under Civil Rule 12(b)(6). Tracht Gut, LLC v. L.A. Cnty. Treasurer & Tax

Collector (In re Tracht Gut, LLC), 836 F.3d 1146, 1150 (9th Cir. 2016). We

review for abuse of discretion the bankruptcy court’s dismissal of a

complaint with prejudice. Id. 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, 1261-62 (9th Cir. 2009) (en banc).

                                 DISCUSSION

A.    Standard under Civil Rule 12(b)(6)

      Under Civil Rule 12(b)(6), made applicable in bankruptcy adversary

proceedings by Rule 7012, dismissal is proper if a complaint fails to allege

“enough facts to state a claim to relief that is plausible on its face.” Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007). In assessing the adequacy of the

complaint, the court must accept all pleaded facts as true and construe

                                         7
them in the light most favorable to the plaintiff. See Cousins v. Lockyer, 568

F.3d 1063, 1067 (9th Cir. 2009). The court then determines whether the

complaint “allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009). However, “[t]hreadbare recitals of the elements of a cause

of action, supported by mere conclusory statements, do not suffice.” Id.

Accordingly, “for a complaint to survive a motion to dismiss, the non-

conclusory factual content, and reasonable inferences from that content,

must be plausibly suggestive of a claim entitling the plaintiff to relief.”

Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotation marks

omitted).

B.    Civil Contempt

      Bankruptcy courts have civil contempt authority under § 105(a) to

impose civil penalties to remedy violations of specific orders. Knupfer v.

Lindblade (In re Dyer), 322 F.3d 1178, 1192-93, 1197 (9th Cir. 2003). The

moving party has the burden of showing by clear and convincing evidence

that the contemnor violated a specific and definite order of the court.

Renwick v. Bennett (In re Bennett), 298 F.3d 1059, 1069 (9th Cir. 2002). The

standard for imposing civil contempt sanctions turns on a finding of

willfulness, rather than bad faith or subjective intent. In re Dyer, 322 F.3d at

1191. A violation is willful if the contemnors knew of the order and their

actions which violated it were intentional. Id.

                                       8
C.    Farina failed to allege that Trustee violated the Disposal Order.

      When a bankruptcy petition is filed, an “estate” is created, consisting

of all of the debtor’s interests in all property, both tangible and intangible.

§ 541(a); Hillis Motors, Inc. v. Haw. Auto. Dealers' Ass’n, 997 F.2d 581, 585

(9th Cir.1993). One of a trustee’s primary duties is to assemble assets of the

estate, liquidate those assets for the benefit of creditors, and distribute

proceeds of the estate to creditors. § 704(a)(1) (duty to “collect and reduce

to money the property of the estate for which such trustee serves . . . .”).

Likewise, the debtor has a duty to surrender property of the estate to the

trustee. Id. § 521(a)(4); see also § 542(a) (“[A]ny entity, other than a

custodian, in possession, custody or control of property that the trustee

may use, sell, or lease under section 363 of this title . . . shall deliver to the

trustee, and account for, such property or the value of such property . . . .”).

      It is undisputed that the Property was property of the bankruptcy

estate and that Trustee determined there was equity in the Property that

could be administered for the benefit of creditors. It is also undisputed that

Farina refused to willingly turnover possession of the Property to Trustee

and even after she vacated the Property, she left Personal Property in the

garage. The remaining Personal Property interfered with Trustee’s ability

to carry out her duties by interfering with Trustee’s ability to sell the

Property. Consequently, the bankruptcy court granted Trustee’s motion to

dispose of the Personal Property by entering the Disposal Order pursuant

to § 105(a).
                                         9
      On appeal, Farina argues that the bankruptcy court erred in

dismissing her adversary complaint for civil contempt against Trustee

because the Disposal Order precluded Trustee from requiring Farina to

sign a waiver of liability prior to collecting her Personal Property. 4

Contrary to Farina’s assertions, the Disposal Order did not include any

reference to Farina or condition the Trustee’s authority to dispose of the

Personal Property. Rather, the Disposal Order specifically allowed Trustee

and/or her agents to dispose of the Personal Property in any manner,

including taking it to the dump. Thus, when Trustee removed and

disposed of the Personal Property, it was pursuant to a valid order of the

court. Furthermore, Trustee had a legitimate statutory reason for seeking

and enforcing the Disposal Order. Because Farina failed to allege facts

demonstrating that Trustee violated the Disposal Order, Farina failed to

state a claim upon which relief could be granted, and the bankruptcy court

      4
        Although there was discussion at the hearing regarding Farina scheduling a
pickup of the Personal Property, the parties acknowledged that no agreement had been
reached. Trustee explained her concern that the bankruptcy estate could be further
eroded if Farina filed claims for liability in handling or moving the Personal Property.
The bankruptcy court agreed that Trustee’s request for the name and contact
information of any person removing the Personal Property was reasonable. There is no
evidence, and Farina does not plead, that she attempted to provide the required
information and Trustee refused to allow her to remove the Personal Property.
Furthermore, the bankruptcy court indicated that although the parties could attempt to
reach an agreement for the voluntary removal of the Personal Property by Farina, the
court was not going to impose any conditions on Trustee’s removal and disposal of the
Personal Property.
                                           10
did not err in granting Trustee’s motion to dismiss Farina’s adversary

complaint.

D.    Trustee was entitled to quasi-judicial immunity.

      Furthermore, even if Farina properly pled a claim for relief, the

bankruptcy court did not err in dismissing Farina’s Civil Contempt

Complaint because Trustee was immune from suit based on quasi-judicial

immunity. “Bankruptcy trustees are entitled to broad immunity from suit

when acting within the scope of their authority and pursuant to court

order.” Harris v. Wittman (In re Harris), 590 F.3d 730, 742 (9th Cir. 2009). For

quasi-judicial immunity to apply, Trustee must show: (1) Trustee’s acts

were within the scope of her authority; (2) the debtor had notice of

Trustee’s proposed acts; (3) Trustee candidly disclosed her proposed acts to

the bankruptcy court; and (4) the bankruptcy court approved Trustee’s

acts. Id.; see also Lonneker Farms, Inc. v. Klobucher, 804 F.2d 1096, 1097 (9th

Cir. 1986) (“[A] trustee in bankruptcy . . . is entitled to derived judicial

immunity because he is performing an integral part of the judicial

process.”).

      Here, Trustee acted within the scope of her authority pursuant to the

Disposal Order. Additionally, the bankruptcy court was not only aware of

Trustee’s proposed act of disposing of the Personal Property in anticipation

of sale, but also approved of Trustee’s proposed acts as evidenced by the

Disposal Order. Additionally, Farina had notice of Trustee’s proposed acts.

Because Trustee was acting “within the scope of the authority conferred

                                        11
upon [her] by statute or the court,” Trustee was entitled to qualified

immunity. Read v. Duck (In re Jacksen), 105 B.R. 542, 545 (9th Cir. BAP 1989).

E.    Dismissal with prejudice was not an abuse of discretion.

      The bankruptcy court did not abuse its discretion in granting

Trustee’s motion to dismiss with prejudice because Farina has articulated

no facts she could allege that would cure the complaint’s deficiencies. See

Cato v. United States, 70 F.3d 1103, 1105-06 (9th Cir. 1995) (if it is clear that a

complaint cannot be cured by amendment, a court may dismiss without

leave to amend).

                                 CONCLUSION

      Based on our independent review, we conclude that the bankruptcy

court did not err in granting Trustee’s motion to dismiss Farina’s adversary

complaint or abuse its discretion in doing so with prejudice. We AFFIRM.

                                        12