Court Opinion

ID: 9373907
Source: CourtListenerOpinion
Date Created: 2023-02-22 16:10:26.515883+00
Date Added: 2024-06-11T17:16:49.305292
License: Public Domain

FILED
                                                                                 DEC 12 2022
                          NOT FOR PUBLICATION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-22-1115-SGB
 THEOS FEDRO HOLDINGS, LLC,
               Debtor.                              Bk. No. 21-30202
 MALINKA TACUMA WADE MOYE,
               Appellant,                           Adv. No. 22-03001
 v.
 PENDER CAPITAL, INC.; PENDER                       MEMORANDUM*
 CAPITAL ASSET LENDING FUND, I,
 LP; LABOR COMMISSIONER OF THE
 STATE OF CALIFORNIA,
               Appellees.

               Appeal from the United States Bankruptcy Court
                   for the Northern District of California
                Dennis Montali, Bankruptcy Judge, Presiding

Before: SPRAKER, GAN, and BRAND, Bankruptcy Judges.

                                 INTRODUCTION

      Malinka Tacuma Wade Moye appeals from an order granting the

motions to dismiss his adversary proceeding against defendants Pender

Capital, Inc., Pender Capital Asset Lending, Fund 1, LP, (jointly, “Pender

      *
        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.
Capital”), and the Labor Commissioner for the State of California. Moye’s

complaint failed to state any cognizable claim for relief. Accordingly, we

AFFIRM.

                                       FACTS

      In January 2022, Moye commenced his adversary proceeding in the

chapter 11 1 bankruptcy of debtor Theos Fedro Holdings, LLC. His

complaint is factually incomprehensible. It alleges that the debtor is a

limited liability company with its principal place of business in San

Francisco, while defendant Pender Capital is a “loan lending company” in

Sacramento. Moye stated that he was a creditor “violated by defendants.,

with principal place of business in Sf & Sacramen, California under

extortion. Assault. Attempted murder.” Moye also states that “Labor

Commissioner attorneys have prior record of obstructing creditor.” The

complaint includes numerous other statements and allegations of crimes by

others dating back years.

      The relationship of any of these defendants to the debtor and its

bankruptcy is unclear. His caption identifies as defendants Pender Capital,

Labor Commissioner for the State of California, and Craft & Layne. There

are scattered references in the five-page complaint to Pender Capital but no

      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
mention of it in the prayer for relief. Craft & Layne is not mentioned in the

complaint except its name was handwritten onto the caption as a

defendant. 2 There are roughly three references to the Labor Commissioner

but no explanation of what the Labor Commissioner allegedly did to harm

Moye, or how it relates to the underlying bankruptcy.

      Moye alleged in his prayer for relief that the debtor “transferred &

removed funds from United States of America to Greece, or permitted

transfer & removal, of property of estate with the intent to delay, hinder, or

defraud a creditor in violation of provisions of 11 USC 727(a)(2)(b) . . . .”

Moye also references an alleged violation of § 727(a)(2)(A) in the title of his

complaint and in passing within the body of the complaint. There are

similar references to fraudulent transfers allegedly involving the debtor, its

managing member Philip Achilles, and Pender Capital. At one point, Moye

states: “2020: Pender Capital knowingly loan $3,000,000 unto Phillip

[sic]Achilles who previously changed title on 819 Ellis St SF, ca 94109

[“Ellis Property”] to deter transfer unto creditor [Moye] filed claim in lower

and northern district courts.”

      This is the closest Moye gets to stating a coherent claim for relief that

might have some link to debtor or its bankruptcy. There are no additional

factual allegations stated to support Moye’s barebones accusations. There

are only the above-referenced conclusory statements. The remainder of the

      2
       No entity known as Craft & Layne participated in the underlying adversary
proceeding. Nor was Craft & Layne named as a party to this appeal.
                                         3
complaint is a mélange of seemingly unconnected complaints and

grievances against a host of third parties. Many of these same matters are

referenced in the litigation he has unsuccessfully pursued in the state

courts and in the federal district court. See In Re Moye, Case No. C-14-2533

EMC (PR), 2014 WL 3750055, at *1-2 (N.D. Cal. July 28, 2014).

      Both Pender Capital and the Labor Commissioner moved to dismiss

the adversary proceeding with prejudice. Both pointed out the defects in

the complaint described above. The Labor Commissioner further pointed

out that the bankruptcy court would lack jurisdiction over many of the

grievances Moye attempted to raise because they appeared wholly

unconnected to debtor’s bankruptcy case. Similarly, Pender Capital noted

that most of the matters referenced in Moye’s complaint concerned alleged

criminal conduct under California law that appears to have occurred years

ago with no connection to debtor’s bankruptcy. Moye responded to the

dismissal motions. But his response was largely incoherent. To the extent

any sense can be made of it, it fails to address the critical issues raised in

the motions to dismiss.

      On May 24, 2022, the bankruptcy court entered an order granting the

defendants’ motions to dismiss for the reasons they stated. The bankruptcy

court additionally observed: “Plaintiff cannot obtain relief from this court

regarding criminal law matters or disputes in other state judicial or

administrative proceedings. What limited relief he might be entitled to

under the bankruptcy laws [does] not reach the moving parties or any

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other named defendant.” Moye timely appealed. 3

                                 JURISDICTION

      The bankruptcy court has jurisdiction over Moye’s § 727 claim

pursuant to 28 U.S.C. §§ 1334 and 157(b)(2)(J). We have jurisdiction under

28 U.S.C. § 158.

                                       ISSUE

      Did the bankruptcy court commit reversible error when it dismissed

Moye’s complaint without leave to amend?

                           STANDARD OF REVIEW

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

defendants’ Civil Rule 12(b)(6) motions. Barnes v. Belice (In re Belice), 461

B.R. 564, 572 (9th Cir. BAP 2011). De novo review means we give no

deference to the bankruptcy court’s decision. Francis v. Wallace (In re

Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014).

                                   DISCUSSION

A.    Civil Rule 12(b)(6) standards.

      When we review an order granting a Civil Rule 12(b)(6) motion,

made applicable in adversary proceedings by Rule 7012, we consider the

legal sufficiency of the plaintiff’s complaint. See Johnson v. Riverside

Healthcare Sys., LP, 534 F.3d 1116, 1121–22 (9th Cir. 2008). This means that

      3  After the appeal was submitted on the briefs, Moye filed a document with two
attachments from the California Department of Real Estate. This document was not part
of the record before the bankruptcy court and shall not be considered on appeal. Castro
v. Terhune, 712 F.3d 1304, 1316 n.5 (9th Cir. 2013).
                                           5
we must assess whether the complaint presents a cognizable legal theory

and whether it contains sufficient factual allegations to support that theory.

Id. Thus, “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) (citing Ashcroft v.

Iqbal, 556 U.S. 662, 677-78 (2009)).

       A claim is facially plausible when it contains factual allegations that,

if taken as true, would allow the court to reasonably infer that the

defendant is liable to the plaintiff. Iqbal, 556 U.S. at 678. “Threadbare

recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.” Id. Additionally, we do not accept as true mere

legal conclusions; they cannot by themselves establish a plausible claim for

relief. Id.

       Determining whether a claim for relief is plausible is “a context-

specific task that requires the reviewing court to draw on its judicial

experience and common sense.” Id. at 679. Plausibility “asks for more than

a sheer possibility that a defendant has acted unlawfully.” Id. at 678. If a

complaint contains factual allegations “that are merely consistent with a

defendant’s liability, it stops short of the line between possibility and

plausibility of entitlement to relief.” Id. (quoting Bell Atl. Corp. v. Twombly,

550 U.S. 544, 557 (2007)) (internal quotation marks omitted).

       In considering the defendants’ motions to dismiss, the court can take

                                        6
into account matters subject to judicial notice, including the other papers

filed in the adversary proceeding and the underlying bankruptcy case. See

Est. of Blue v. Cnty. of Los Angeles, 120 F.3d 982, 984 (9th Cir. 1997); Barron v.

Reich, 13 F.3d 1370, 1377 (9th Cir. 1994).

B.    The bankruptcy court did not err in concluding that Moye failed to
      state a claim.

      Moye’s appeal brief reads similarly to the adversary complaint he

filed in the bankruptcy court; it is impossible to follow. Having reviewed

his complaint and his appeal brief, we agree that the complaint fails to state

any legally cognizable claims for relief. Most of the matters referenced in

the complaint are alleged to have happened long ago. Many of these

matters were the subject of Moye’s unsuccessful litigation in the state court

and in the federal district court—litigation claims he restated so often that

both the state court and the federal district court declared him a vexatious

litigant.

      The complaint designated a single cause of action stating that

“defendant’s debts are not dischargeable Pursuant to 11 USC. 727(a)(b)(2)

[sic],” and the “Uniform Fraudulent Transfer Act.” Notably, any challenge

to the debtor’s discharge needed to be directed against the debtor. But

Moye failed to name the debtor as a defendant. Moye cannot state a viable

objection to discharge claim against the named defendants because they are

not the debtor. Only the debtor in a bankruptcy case is potentially subject

                                        7
to the Bankruptcy Code’s discharge provisions. See §§ 727(a), 1141(d).4

       Moye also references a fraudulent transfer claim against Pender

Capital. The only factual reference to Pender Capital is that it loaned debtor

several million dollars and received in exchange a note and security

interest in the Ellis Property. This does not state a legally viable fraudulent

transfer claim. In the parlance of Iqbal, Moye’s allegations against Pender

Capital are “threadbare” and “conclusory.” They are not entitled to any

presumption of truth even in the context of a motion to dismiss under Civil

Rule 12(b)(6). See Iqbal, 556 U.S. at 678. These allegations come nowhere

close to permitting the bankruptcy court to infer that Moye plausibly might

be entitled to any relief from Pender Capital. Twombly, 550 U.S. at 557.

       Equally significant, it is the bankruptcy estate, not individual

creditors, that have standing to pursue the debtor’s fraudulent transfer

claims. Est. of Spirtos v. One San Bernardino Cnty. Super. Ct. Case Numbered

SPR 02211, 443 F.3d 1172, 1176 (9th Cir. 2006). In chapter 11 cases, it is the

debtor-in-possession, or the chapter 11 trustee in this instance, that has

standing to bring fraudulent transfer claims, unless other parties have been

granted derivative standing to pursue such claims. See Liberty Mut. Ins. Co.

       4
        Moye references § 727 in his complaint. Section 727 governs the denial of
discharge in chapter 7 cases. The debtor remains in chapter 11, where discharge is
governed by § 1141. The discharge of an entity such as the debtor is specifically
controlled by § 1141(d)(3). See generally 8 Collier on Bankruptcy at 1141.05[4] (16th ed.
2022). Moye’s complaint did not reference § 1141 or the requirements to deny a
discharge to an entity under § 1141(d)(3).
                                             8
v. Off. Unsecured Creditors' Comm. of Spaulding Composites Co. (In re

Spaulding Composites Co.), 207 B.R. 899, 903 (9th Cir. BAP 1997) (citing

Hansen v. Finn (In re Curry & Sorensen, Inc.), 57 B.R. 824, 827–29 (9th Cir.

BAP 1986)). Nothing in the record, Moye’s complaint, or his appeal brief

indicates that Moye obtained, or is capable of obtaining, the bankruptcy

court’s authorization to pursue any fraudulent transfer claims on behalf of

the debtor’s bankruptcy estate. Thus, as a matter of law, Moye lacked

standing to assert a claim for fraudulent transfer.

C.    Denial of leave to amend.

      Under Civil Rule 15, made applicable in adversary proceedings by

Rule 7015, “[i]n dismissing for failure to state a claim, a [bankruptcy] court

should grant leave to amend even if no request to amend the pleading was

made, unless it determines that the pleading could not possibly be cured

by the allegation of other facts.” Ebner v. Fresh, Inc., 838 F.3d 958, 963 (9th

Cir. 2016) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)). A

bankruptcy court generally must grant leave to amend “unless it

determines that the pleading could not possibly be cured by the allegation

of other facts.” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000). This is

true even if leave to amend was not requested. Id. at 1127; Cook, Perkiss and

Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 247 (9th Cir. 1990).

      Dismissal of a complaint without leave to amend is proper if

amendment would be futile. Intri-Plex Techs., Inc. v. Crest Grp., Inc., 499 F.3d

1048, 1056 (9th Cir. 2007) (citing Ascon Props., Inc. v. Mobil Oil Co., 866 F.2d

                                          9
1149, 1160 (9th Cir. 1989)); Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th

Cir. 1990). Amendment is considered futile when allegation of other facts

consistent with the existing pleading could not cure the deficiency. See

Garmon v. Cnty. of Los Angeles, 828 F.3d 837, 846 (9th Cir. 2016) (citing

Reddy, 912 F.2d at 296–97); Schreiber Distrib. Co. v. Serv–Well Furniture Co.,

Inc., 806 F.2d 1393, 1401 (9th Cir. 1986).

      Here, Moye never sought leave to amend, nor has he raised this issue

on appeal. Arguably, he has forfeited this argument by not raising it on

appeal. See Okwu v. McKim, 682 F.3d 841, 846 n.4 (9th Cir. 2012) (“Okwu

has waived the argument that she should be allowed to amend her

complaint to re-style some of her § 1983 claims . . . under the Ex Parte

Young exception . . . . She did not make that argument to the district court

or in either of her briefs on appeal.” (citations omitted and emphasis

added)); quoted with approval in City of San Juan Capistrano v. Cal. Pub. Utils.

Comm'n, 937 F.3d 1278, 1282 (9th Cir. 2019).

      But even if we were to consider the issue on appeal, Moye cannot

allege any set of facts to support a nondischargeability claim against

defendants who are not debtors in the underlying bankruptcy case. Nor

can we conceive of any set of alleged facts consistent with Moye’s existing

complaint that would justify the bankruptcy court granting him authority

to act as the estate’s representative in pursuing any fraudulent transfer

claims. The remainder of Moye’s grievances, including those intimating at

criminal conduct of others and raising prior nonbankruptcy proceedings,

                                        10
have nothing to do with the debtor’s bankruptcy or with claims within the

jurisdiction of the bankruptcy court. We, therefore, agree with the

bankruptcy court that dismissal with prejudice was warranted as granting

leave to amend would have been futile.

                              CONCLUSION

     For the reasons set forth above, we AFFIRM the bankruptcy court’s

dismissal with prejudice of Moye’s adversary proceeding.

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