Court Opinion

ID: 9899804
Source: CourtListenerOpinion
Date Created: 2023-11-17 18:02:37.281402+00
Date Added: 2024-06-11T09:20:49.951513
License: Public Domain

FILED
                                                                                   NOV 17 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                          NOT FOR PUBLICATION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. CC-23-1067-GLS
 VIEN THI HO,
                      Debtor.                        Bk. No. 2:22-bk-11157-SK

 VIEN THI HO,                                        Adv. No. 2:22-ap-01164-SK
                      Appellant,
 v.                                                  MEMORANDUM*
 MALY OUM; DIN PHO; NEDA
 ROSHANIAN; ROSHANIAN LAW
 FIRM, INC.; HARRY SAFARIAN; THE
 SAFARIAN FIRM, APC,
                Appellees.

               Appeal from the United States Bankruptcy Court
                    for the Central District of California
                Sandra R. Klein, Bankruptcy Judge, Presiding

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

                                 INTRODUCTION

       Chapter 71 debtor Vien Thi Ho (“Debtor”) appeals the bankruptcy

court’s order dismissing with prejudice her adversary complaint against

       *
         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.
       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
her neighbors, Maly Oum and Din Pho, and their lawyers, Neda

Roshanian, Roshanian Law Firm, Inc., Harry Safarian, and The Safarian

Firm, APC (collectively “Appellees”). Debtor asserted numerous claims,

but each count was premised on her central claim that Appellees willfully

violated the automatic stay by filing and maintaining a state court suit

against her.

       The bankruptcy court properly dismissed the complaint because

Debtor failed to allege sufficient facts to state a claim for relief. The court

properly dismissed the complaint with prejudice because amendment

would be futile. We AFFIRM.

                                        FACTS2

A.     Prepetition Events

       In 2017, Debtor filed suit in the United States District Court for the

Central District of California (“District Court”) against her neighbors, Maly

Oum and Din Pho, who were represented by Ms. Roshanian. The suit

involved a property line dispute pertaining to the alley between their

properties in Long Beach, California. The District Court ultimately

dismissed the case for lack of subject matter jurisdiction.

       In 2019, Debtor filed a second suit in District Court against Ms. Oum

and Mr. Pho, and added as defendants, Ms. Roshanian, the City of Long

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

filed in the bankruptcy case and related adversary proceedings. See Atwood v. Chase
Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
                                             2
Beach Public Works Department, the Long Beach Police Department, and

certain city officials and police officers. In the second District Court action,

Mr. Safarian represented Ms. Oum, Mr. Pho, and Ms. Roshanian. Debtor

asserted violations of her civil and constitutional rights, conspiracy, fraud,

violations of the Racketeer Influenced and Corrupt Organizations Act

(“RICO”), quiet title, and other claims, and she sought damages of

$23,250,000. She alleged that city officials, police, Ms. Roshanian, Ms. Oum,

and Mr. Pho conspired to violate her rights, first by determining that the

property in question belonged to Ms. Oum and Mr. Pho, and then by

forcing Debtor to remove her belongings from the area while a wall was

constructed on the property line. The District Court dismissed several of

her claims with prejudice, dismissed her state law claims without

prejudice, and allowed certain civil rights claims to proceed.

      Debtor then filed suit in Los Angeles Superior Court against the

same defendants, asserting claims for unlawful eviction and invasion of

privacy, California constitutional violations, and quiet title by adverse

possession. The state court dismissed the case.

      Ms. Roshanian claims that in 2021, Debtor created a website which

made several defamatory statements about her. On March 3, 2022,

Ms. Roshanian filed a state court suit against Debtor for: (1) Invasion of

Privacy; (2) Libel; (3) Libel Per Se; (4) Intentional Infliction of Emotional

Distress; and (5) Unfair Business Practices (the “Libel Action”).

Mr. Safarian represented Ms. Roshanian in the Libel Action.

                                        3
B.       The bankruptcy and adversary proceedings

         One day prior to commencement of the Libel Action, Debtor filed a

chapter 7 petition. She did not schedule Ms. Roshanian’s claim or include

her in the list of creditors.

         On July 1, 2022, Debtor filed two documents in Libel Action: a motion

to quash service and a separate case management statement. Although the

case management form required Debtor to indicate any matters affecting

jurisdiction, including bankruptcy, she did not do so. On July 5, 2022,

Debtor appeared at a hearing on her motion to quash service, but she did

not inform the state court of her pending bankruptcy. On July 7, 2022, after

the state court denied her motion to quash service, Debtor filed a notice of

stay of proceedings due to the bankruptcy case. 3 Debtor then filed a notice

of removal of the Libel Action to the bankruptcy court. Ms. Roshanian

opposed the removal and sought remand to the state court.

         On August 23, 2022, Debtor filed an adversary complaint against

Appellees, asserting claims for: (1) willful violations of the automatic stay;

(2) fraud; (3) negligent misrepresentation; (4) violations of the Fair Debt

Collection Practices Act (“FDCPA”); (5) quiet title; (6) violations of RICO;

and (7) declaratory relief, seeking damages of $21,275,000. She alleged that

Appellees conspired to willfully violate the automatic stay by filing and

maintaining the Libel Action, which she contended violated her civil and

         3
             On July 7, 2022, Debtor also amended her schedules to include the Roshanian
claim.
                                               4
constitutional rights. She alleged that Appellees committed fraud and

negligent misrepresentation by making a false statement that they could

file and maintain the Libel Action, and she alleged that Ms. Oum and Mr.

Pho misrepresented that they could execute an illegal eviction and

wrongfully keep the property. Debtor maintained she was entitled to quiet

title because of the alleged fraud, and she sought a declaratory judgment

that Appellees’ actions were fraudulent. Finally, she alleged various RICO

claims, all based on the predicate act of fraud in filing and maintaining the

Libel Action.

      On September 20, 2022, Debtor filed in the main bankruptcy case a

motion for contempt against Ms. Roshanian, Mr. Safarian, and The Safarian

Firm. She argued that Ms. Roshanian and Mr. Safarian willfully violated

the stay by filing and maintaining the Libel Action, and by seeking remand

to the state court. Debtor suggested the Libel Action was void, and though

she admitted she did not give notice of the bankruptcy case until July 7,

2022, she argued that Ms. Roshanian was required to dismiss the Libel

Action upon learning of the stay.

      The bankruptcy court denied the motion and found that neither

Ms. Roshanian nor Mr. Safarian had notice of the bankruptcy case until

July 7, 2022. The court stated that the automatic stay did not require

dismissal of the Libel Action so long as Ms. Roshanian took no further

action in the state court. The court specifically found that the only actions

taken by Ms. Roshanian, Mr. Safarian, and The Safarian Firm after July 7,

                                       5
2022, were in the bankruptcy court, and those actions did not constitute

stay violations.

C.    The motion to dismiss and the court’s ruling

      While the contempt motion was pending, Appellees filed a motion to

dismiss the adversary complaint with prejudice. They argued that Debtor

failed to allege facts to support a willful violation of the stay and noted that

Debtor misrepresented the existence of her bankruptcy case to the state

court. Appellees asserted that Debtor failed to plead the fraud and

negligent misrepresentation claims with particularity, and they argued the

remaining claims were fatally defective and devoid of factual allegations.

      Debtor opposed the motion to dismiss and maintained that her

complaint contained sufficient facts. She argued that Appellees failed to

specifically address each claim in detail, and she moved to strike the

motion to dismiss as untimely and non-compliant with bankruptcy rules.

      After a hearing, the bankruptcy court dismissed Debtor’s complaint

with prejudice. The court reasoned that Debtor failed to allege sufficient

facts to state a claim for willful violation of the stay based on its prior

factual findings in denying the motion for contempt, which the court

considered law of the case. Because Debtor failed to allege a

misrepresentation by Appellees, the court dismissed the claims for fraud

and negligent misrepresentation, and it dismissed the RICO and

declaratory judgment claims because they were based either on a willful

stay violation or fraud. The court dismissed the FDCPA claim because

                                        6
Debtor did not allege any debt collection and none of Appellees’ alleged

acts constituted a violation of the FDCPA. Finally, the court reasoned that

Debtor’s quiet title claim was barred by the California statute of limitations

because it was based on fraud.

      The court then considered whether it should grant leave to amend

under Civil Rule 15(a), made applicable by Rule 7015. The court applied

the factors outlined in Foman v. Davis, 371 U.S. 178, 182 (1962), and

determined that leave to amend was not warranted. The court held that,

based on law of the case, Debtor could not allege additional facts to state a

claim for willful violation of the stay, and thus amendment would be futile.

Additionally, the court ruled that amendment would prejudice Appellees

by forcing them to litigate issues that had been litigated for years in state

and District Court and would force Appellees to continue litigating the

willful violation claim despite the court’s prior denial of that claim. The

court entered a written order dismissing the complaint with prejudice, and

Debtor timely appealed.

                               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.

                                   ISSUES

      Did the bankruptcy court abuse its discretion by dismissing Debtor’s

adversary complaint?

                                       7
      Did the bankruptcy court err by denying leave to amend the

adversary complaint?

                         STANDARDS OF REVIEW

      “We review de novo the [trial] court’s grant of a motion to dismiss

under [Civil] Rule 12(b)(6), accepting all factual allegations in the

complaint as true and construing them in the light most favorable to the

nonmoving party.” Narayanan v. Brit. Airways, 747 F.3d 1125, 1127 (9th Cir.

2014) (citing Newdow v. Lefevre, 598 F.3d 638, 642 (9th Cir. 2010)). Under de

novo review we “consider a matter anew, as if no decision had been made

previously.” Francis v. Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP

2014).

      We review a dismissal without leave to amend for abuse of

discretion. Tracht Gut, LLC v. Cnty. of Los Angeles (In re Tracht Gut, LLC), 503

B.R. 804, 810 (9th Cir. BAP 2014), aff’d, 836 F.3d 1146 (9th Cir. 2016) (citing

AE ex rel. Hernandez v. Cnty. of Tulare, 666 F.3d 631, 636 (9th Cir. 2012)).

      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).

                                DISCUSSION

      Debtor argues that the court erred by dismissing her claims for fraud,

declaratory judgment, RICO violations, and quiet title. She does not argue

that the court erred by dismissing her claim for willful violation of the stay,

                                        8
and thus, she has waived the issue. See Smith v. Marsh, 194 F.3d 1045, 1052

(9th Cir. 1999). Debtor also argues the court should have granted leave to

amend the complaint.

A.    The court did not abuse its discretion by granting Appellees’
      motion to dismiss.

      Civil Rule 12(b)(6), made applicable by Rule 7012, provides that

dismissal is appropriate if the 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 as true all allegations and construe them in the light

most favorable to the plaintiff. See Cousins v. Lockyer, 568 F.3d 1063, 1067

(9th Cir. 2009). However, “[t]hreadbare recitals of the elements of a cause of

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

v. Iqbal, 556 U.S. 662, 678 (2009).

      Consequently, “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). A motion to dismiss “may be based on either a ‘lack of a

cognizable legal theory’ or ‘the absence of sufficient facts alleged under a

cognizable legal theory.’” Johnson v. Riverside Healthcare Sys, LP, 534 F.3d

1116, 1121 (9th Cir. 2008) (quoting Balistreri v. Pacifica Police Dep’t, 901 F.2d

696, 699 (9th Cir. 1990)).

                                         9
      Debtor’s complaint is nearly devoid of factual allegations and thus,

dismissal was unquestionably appropriate. While the complaint is replete

with legal conclusions, the only real fact Debtor alleges is that

Ms. Roshanian filed and maintained the Libel Action after the petition date.

Not only does Debtor fail to make any argument relevant to the stay

violation claim, but her own admissions—and the court’s prior findings of

fact—foreclose any possibility of a willful stay violation.

      Section 362(a)(1) prohibits the commencement or continuation of a

judicial action against a debtor to recover a prepetition claim. A creditor

commits a willful violation of the automatic stay if she knows of the stay

and her actions that violate the stay are intentional. Eskanos & Adler, P.C. v.

Leetien, 309 F.3d 1210, 1215 (9th Cir. 2002).

      Filing and maintaining the Libel Action is a clear violation of the stay,

but Debtor did not allege that Appellees had notice of the stay, and the

court specifically found they did not have notice until July 7, 2022. Thus,

Appellees’ actions were not a willful violation of the stay.

      Debtor argues that the court erred by dismissing her claims for fraud,

declaratory judgment, RICO violations, and quiet title, but each of those

claims flows directly from the purported willful stay violation. Debtor’s

claim for fraud is based on the alleged misrepresentation by Mr. Safarian

and Ms. Roshanian that they could file and maintain the Libel Action.4 Not

      4
       Debtor also makes a conclusory allegation that Ms. Oum and Mr. Pho
fraudulently misrepresented that they could illegally evict Debtor and keep the portion
                                          10
only is this purported injury factually indistinguishable from the alleged

willful stay violation, but Debtor fails to allege essential elements of a fraud

claim, including that Appellees knew such representation was false and

made it with intent to defraud, and that Debtor justifiably relied on the

representation. 5 And, as the bankruptcy court held, the allegations in the

complaint lacked the requisite particularity required by Civil Rule 9, made

applicable by Rule 7009.

       Regarding the RICO claim, Debtor failed to include sufficient factual

allegations to establish conduct of an enterprise or a pattern of racketeering

activity, and the only predicate act was “fraud” in filing the Libel Action.6

Similarly, Debtor’s quiet title claim is based on a cloud to title caused by

the fraud claim, and her claim for declaratory judgment merely seeks a

declaration that Appellees committed fraud.

of the alley in question. The documents attached to the complaint demonstrate that the
2019 “eviction” was pursuant to a determination by the Long Beach Public Works
Department that Debtor did not own the disputed portion of the alley. Additionally,
any claim of fraud based on statements made in 2019 is barred by the three-year statute
of limitations. See Cal. Civ. Proc. Code (“CCP”) § 338(d).
        5 The elements of fraud under California law are: (1) misrepresentation (false

representation, concealment, or nondisclosure); (2) knowledge that the representation is
false; (3) intent to defraud; (4) justifiable reliance; and (5) resulting damages. Lazar v.
Sup. Ct., 12 Cal. 4th 631, 638 (1996).
        6 Pursuant to 18 U.S.C. § 1964(c), civil remedies are available to persons injured

by RICO violations described in 18 U.S.C. § 1962. The elements of a RICO offense are:
(1) conduct; (2) of an enterprise; (3) through a pattern of racketeering activity. Salina v.
United States, 522 U.S. 52, 62 (1997). “Pattern of racketeering activity” requires at least
two acts of “racketeering activity,” referred to as predicate acts, and defined in 18 U.S.C.
§ 1961(1). Id.
                                            11
      Regardless of the multiple causes of action asserted by Debtor, her

complaint makes clear that her alleged injury was caused by the purported

willful stay violation. It was not the result of independent acts of fraud or

racketeering. Debtor’s complaint lacks any facts to support claims for

fraud, declaratory judgment, RICO, or quiet title, and it lacks a cognizable

legal theory why filing the Libel Action could support any of these claims.

The bankruptcy court did not err by dismissing the complaint.

B.    The court did not abuse its discretion 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

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.” Lopez v. Smith, 203 F.3d

1122, 1127 (9th Cir. 2000). “This policy is ‘to be applied with extreme

liberality,’” Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d 1048, 1051 (9th

Cir. 2003) (per curiam) (quoting Owens v. Kaiser Foundation Health Plan, Inc.,

244 F.3d 708, 712 (9th Cir. 2001)), and the rule favoring liberal application

“is particularly important for the pro se litigant,” Crowley v. Bannister, 734

F.3d 967, 977-78 (9th Cir. 2013).

      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

                                       12
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, 371 U.S. at 182). The

consideration of prejudice to the opposing party carries the greatest

weight. Eminence Cap., LLC, 316 F.3d at 1052. “Absent prejudice, or a strong

showing of any of the remaining Foman factors, there exists a presumption

under Rule 15(a) in favor of granting leave to amend.” Id. (citation

omitted).

      Debtor does not make any cogent argument why the court abused its

discretion in denying leave to amend. She cites the Foman factors, but she

does not address how the court abused its discretion by determining that

amendment would be futile or that it would prejudice Appellees.

Moreover, we find no abuse of discretion.

      Although Debtor asserts seven causes of action in her complaint, they

all stem from the purported willful stay violation. In denying Debtor’s

motion for contempt, 7 the bankruptcy court made factual findings that:

(1) Appellees did not have notice of the bankruptcy until July 7, 2022, and

(2) Appellees took no further action against Debtor in the Libel Action.

Those factual findings were essential to the court’s ruling and are law of

the case. 8

      7  The motion for contempt was a contested matter, governed by Rule 9014. Civil
Rule 52, made applicable to contested matters by Rules 7052 and 9014(c), requires the
court to provide findings of fact and conclusions of law.
       8 Under the law of the case doctrine, a court is barred from reconsidering an issue

                                           13
       Consequently, Debtor’s claim that Appellees willfully violated the

stay by filing the Libel Action could not be saved by any amendment. And

because the bankruptcy court found that Appellees took no action against

Debtor after learning of the bankruptcy, there are no additional facts which

Debtor could allege to support a willful stay violation based on continuing

or maintaining the Libel Action.9

       Debtor’s remaining claims are all based on the injury caused by the

purported willful stay violation. It is not possible for Debtor to amend her

complaint to allege a completely new injury without contradicting the

allegations in her original complaint. See Ready v. Litton Indus., Inc., 912 F.2d

291, 296-97 (9th Cir. 1990) (“Although leave to amend should be liberally

granted, the amended complaint may only allege other facts consistent

with the challenged pleading.” (cleaned up)). Additionally, Debtor’s quiet

title claim is based on fraud and therefore barred by the statute of

previously decided in the same court or a higher court in the same case. FDIC v.
Kipperman (In re Com. Money Ctr., Inc.), 392 B.R. 814, 832 (9th Cir. BAP 2008) (citing
Milgard Tempering, Inc. v. Selas Corp. of Am., 902 F.2d 703, 715 (9th Cir. 1990)).
        9 Although the parties and court viewed continued actions in the state court as

possible violations of the stay, the automatic stay terminated with respect to actions
against the Debtor upon entry of discharge on June 13, 2022. See § 362(c)(2)(C);
Ruvacalba v. Munoz (In re Munoz), 287 B.R. 546, 551 (9th Cir. BAP 2002). Because
Appellees learned of the bankruptcy case after the stay had terminated, no additional
facts could establish a willful stay violation. However, the decision to grant leave to
amend “is not dependent of whether the amendment will add causes of action or
parties,” DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 186 (9th Cir. 1987), and Debtor
could conceivably allege additional facts to state a violation of the discharge injunction.
But based on the court’s factual findings that Appellees took no action against Debtor
after learning of the bankruptcy, such an amendment would be futile.
                                            14
limitations under CCP § 338(d). Thus, amendment of the complaint would

be futile.

      Furthermore, we agree that amendment would be prejudicial to

Appellees, who have successfully defended against Debtor’s multiple

claims for fraud, conspiracy, RICO, and quiet title based on the underlying

property dispute. Appellees should not be required to repeatedly defend

against these allegations merely because Debtor tethers them to a new

cause of action. The bankruptcy court did not err by dismissing Debtor’s

complaint, and it did not abuse its discretion by denying leave to amend

under Rule 15(a).

                             CONCLUSION

      Based on the foregoing, we AFFIRM the bankruptcy court’s order

dismissing Debtor’s complaint with prejudice.

                                    15