Court Opinion

ID: 9373936
Source: CourtListenerOpinion
Date Created: 2023-02-22 16:10:37.899599+00
Date Added: 2024-06-11T17:16:43.884876
License: Public Domain

FILED
                                                                                JUL 26 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                          NOT FOR PUBLICATION                               SUSAN M. SPRAUL, CLERK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. CC-21-1224-SGF
 ARA ERIC HUNANYAN,
             Debtor.                                Bk. No. 1:21-bk-10079-MT

 ARA ERIC HUNANYAN,                                 Adv. No. 1:21-ap-01036-MT
             Appellant,
 v.                                                 MEMORANDUM*
 LUCY MEGUERIAN; HOVIK
 MEGUERIAN,
             Appellees.

               Appeal from the United States Bankruptcy Court
                    for the Central District of California
               Maureen A. Tighe, Bankruptcy Judge, Presiding**

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

                                 INTRODUCTION

      Chapter 71 debtor Ara Eric Hunanyan appeals from the dismissal of

      *
        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.
      **
        Though Judge Tighe entered the order dismissing Hunanyan’s adversary
proceeding, Judge Geraldine Mund denied Hunanyan’s motion to recuse Judge Tighe.

      1
       Unless specified otherwise, chapter and section references are to the Bankruptcy
Code, 11 U.S.C. §§ 101–1532, “Rule” references are to the Federal Rules of Bankruptcy
Procedure, and “Civil Rule” references are to the Federal Rules of Civil Procedure.
his adversary proceeding against the personal representatives of his

deceased former wife’s probate estate. He also appeals the denial of his

motion to recuse the presiding judge.

       Hunanyan’s adversary proceeding largely raised issues and claims

the bankruptcy court already had disposed of when it overruled his

objection to the probate estate’s proof of claim. But his amended complaint

also included a claim for relief that had not been previously addressed: a

claim to determine that his obligations under a state court dissolution

judgment were dischargeable. The bankruptcy court dismissed all claims

for relief without leave to amend.

       We hold that the dismissal of Hunanyan’s claim to determine the

dischargeability of his debts under the state court dissolution judgment

was error and must be REVERSED and the matter REMANDED for further

proceedings on that surviving claim for relief.

       None of Hunanyan’s other arguments have any merit. Therefore, we

AFFIRM the remainder of both orders on appeal.

                                        FACTS2

A.     The dissolution judgment.

       Prior to his bankruptcy filing, Hunanyan was embroiled in

contentious and lengthy dissolution proceedings with his ex-wife Azniv

       2
          We exercise our discretion to take judicial notice of documents electronically
filed in the underling bankruptcy case and adversary proceeding. See Atwood v. Chase
Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).
                                             2
Kokikian who died during the case. Her probate estate proceeded with the

dissolution, and judgment was entered after trial in August 2020. The

judgment required the sale of three parcels of real property the state court

determined to be community property. One was located on Gault Street in

Van Nuys, California (“Gault Property”). Another was located on East

Tenth Street in Long Beach, California (“Long Beach Property”). The third

was located on Sherman Way in Van Nuys, California (“Sherman Way

Property”) (collectively, “Properties”). As to each of the Properties, the

state court further held that Hunanyan owed his former spouse rent from

January 31, 2006, to the date of sale of each respective property: $2,000 per

month for the Gault Property; $2,700 per month for the Long Beach

Property; and $2,200 per month for the Sherman Way Property. Hunanyan

appealed from the state court judgment.

      Pursuant to the dissolution judgment, the Long Beach Property was

sold in November 2020 for $550,000. The net proceeds from this sale were

$27,526.04. Kokikian’s probate estate applied that amount against

Hunanyan’s rental debt.

B.    The bankruptcy filing, the compromise between the chapter 7
      trustee and the probate estate, and the sale of the Gault Property.

      Hunanyan commenced his bankruptcy case by filing a voluntary

chapter 7 petition in January 2021. In his amended schedules, Hunanyan

listed the Gault Property as if he wholly owned it, with a value of $550,000.

He claimed a $600,000 homestead exemption in that property under Cal.

                                       3
Civ. P. Code § 704.730. He similarly listed the Sherman Way Property as

wholly owned, with a value of $450,000. The only other assets of

significance he listed were $1,884,557 in appeal rights from the dissolution

judgment (“Appeal Rights”) and $1,720,700 in claims for community assets

and reimbursable community expenses purportedly omitted from the

dissolution judgment (“Omitted Assets and Expenses”).

      In April 2021, the probate estate filed a proof of claim in the amount

of $1,066,423.90 for rental income due under the dissolution judgment, plus

$71,736.98 in unpaid attorney’s fees and sanctions the state court awarded

against Hunanyan. The probate estate asserted that the dissolution

judgment debt was fully secured. In the alternative, it contended that the

debt was entitled to priority under “§ 507(a)(15).”3

      Hunanyan’s chapter 7 trustee moved for authority to enter into a

compromise with Kokikian’s probate estate. Under the proposed

settlement, the trustee would arrange for the sale of the Gault Property,

with the net sale proceeds to be split equally between the probate estate

and the bankruptcy estate.4 The trustee agreed to convey the bankruptcy

estate’s interest in the Sherman Way Property to the probate estate. The

      3
         There is no such provision in the Code as § 507(a)(15). Presumably, the probate
estate was referring to § 523(a)(15), which deals with exceptions to discharge for certain
debts arising from family law obligations but has no relevance to priority claims.
       4 This aspect of the compromise was based on the premise that the probate

estate’s rights under the dissolution judgment were not subject to the $600,000
exemption Hunanyan claimed in the Gault Property.
                                            4
trustee, however, would retain all postpetition rents received from that

property up to the date of the trustee’s conveyance.

      With respect to the probate estate’s $1,066,423.90 proof of claim, the

settlement provided for allowance of a general unsecured claim in that

amount, subject to reductions equal to: (1) the value of the probate estate’s

50% share of the net sale proceeds from the Gault Property; and (2) the

value of the probate estate’s equity interest in the Sherman Way Property.

      Additionally, the proposed settlement provided that the trustee

would dismiss with prejudice Hunanyan’s appeal from the dissolution

judgment.

      The United States Trustee (“UST”) opposed the settlement. The UST

posited that the chapter 7 trustee needed to successfully object to

Hunanyan’s exemption claim before seeking approval of the compromise.

The chapter 7 trustee countered in her reply that any exemption claim

simply was not applicable to the state court’s judgment determining and

distributing community assets.

      Hunanyan also opposed the settlement. In addition to raising

concerns similar to the UST, he contended that his Appeal Rights were

quite valuable and that the proposed settlement grossly undervalued them

by treating them as worthless. He also asserted that the dissolution

judgment was void or voidable because it violated the state court’s COVID

protocols restricting the occurrence of trials and other proceedings during

the pandemic. He further maintained that the dissolution judgment

                                      5
erroneously failed to address and account for the Omitted Assets and

Expenses.

      Hunanyan also contended that the settlement was inconsistent with

the dischargeable nature of the debt he owed to the probate estate. He

argued that the debt was not covered by either § 523(a)(5) or § 523(a)(15),

because the probate estate and its personal representatives were neither his

spouse, former spouse, nor his children. Because of this, he believed that

the personal representatives of the probate estate lacked standing to file a

proof of claim or to enter into a settlement with the chapter 7 trustee.

      The bankruptcy court overruled the objections and granted the

compromise motion. It ruled that the dissolution judgment’s requirement

that the Properties be sold and net sale proceeds be used to pay rental

income due the probate estate meant that these property rights already

belonged to the probate estate and that Hunanyan had no interest to

exempt. The bankruptcy court therefore concluded that the state court’s

“division of community property [did] not trigger homestead claims as

against each spouse.”

      As for the trustee’s agreement to settle the state court appeal by

dismissing it with prejudice, the bankruptcy court found that the record

supported the trustee’s assessment that she was unlikely to prevail and

hence there was no value in pursuing it at the estate’s expense.

      Finally, the court held that Hunanyan’s argument concerning the

dischargeability of the judgment debt had no relevance to the compromise

                                       6
or the administration of assets subject to the parties’ settlement. According

to the court, the dischargeability issue only would be relevant in an

adversary proceeding seeking a determination of dischargeability of

Hunanyan’s dissolution judgment obligations.

      Immediately following entry of the order approving the compromise

motion, the trustee moved to sell the Gault Property. This resulted in a

flurry of activity from Hunanyan. He moved to convert his chapter 7 case

to chapter 11, remove the sitting chapter 7 trustee from his case, reconsider

the compromise order, and stay the sale of the Gault Property. The court

denied each of Hunanyan’s motions and granted the trustee’s sale motion

over Hunanyan’s belated objection. Hunanyan then filed a notice of appeal

from the compromise order and the reconsideration order. 5 The Gault

Property sale closed in August 2021.

C.    Hunanyan’s objection to the probate estate’s claim.

      Though the trustee had agreed to allow the probate estate’s

$1,066,423.90 proof of claim as part of the estate’s settlement, Hunanyan

objected to the claim. He asserted that the underlying state court judgment

was invalid because the COVID-related restrictions on the court’s

operations stripped the state court of jurisdiction to hold trial and dispose

of the dissolution proceeding. He also claimed that the probate estate and

      5
        The district court characterized this appeal as both interlocutory and untimely,
and dismissed on that basis. Hunanyan has further appealed the district court’s
decision to the Ninth Circuit.
                                            7
its representatives lacked standing to pursue the claim in bankruptcy

because the debt was owed only to Kokikian, who had passed away. He

further urged that § 502(b)(6)(A) limited the amount of any claim for rent.

He additionally maintained that the state court’s judgment failed to

account for his 50% community interest in the rent, or for his counterclaims

for the Omitted Assets and Expenses.

      The bankruptcy court overruled Hunanyan’s claim objection by order

entered August 25, 2021. The court held that the Rooker-Feldman doctrine

barred his attack on the validity of the state court’s dissolution judgment.

Though the court did not specifically address Hunanyan’s other grounds

for objecting to the proof of claim, he did not appeal the order disposing of

his claim objection.

D.    Hunanyan’s adversary complaint.

      Prior to the court’s ruling on the claim objection, and while the

compromise motion was pending, Hunanyan commenced his adversary

proceeding against the probate estate’s personal representatives. The

original complaint contained three claims for relief. In the first one,

Hunanyan repeated his claim objection to the probate estate’s proof of

claim. In the second one, Hunanyan sought to avoid the prepetition sale of

the Long Beach Property as a preference and fraudulent transfer. In his

third claim for relief, Hunanyan sought avoidance of a lien that his former

spouse allegedly placed on the Sherman Way Property before she passed

away.

                                       8
       Hunanyan filed a first amended complaint, which also stated three

claims for relief. The first and third claims were largely the same in both

versions of the complaint. 6 However, the first amended complaint

contained a completely different second claim for relief. Hunanyan now

sought a determination that the dissolution judgment was dischargeable

and that the probate estate lacked standing to assert any claim in his

bankruptcy.

       The personal representatives moved to dismiss Hunanyan’s first

amended complaint with prejudice. They asserted that he lacked standing

to object to the probate estate’s proof of claim. They also argued that issue

preclusion barred him from seeking to relitigate the same issues already

decided in the dissolution action. According to the personal

representatives, the state court already found the lien on the Sherman Way

Property to be a valid lien, as specified in the dissolution judgment. Even

though the motion to dismiss was filed after Hunanyan filed his first

amended complaint, the motion to dismiss did not address at all

Hunanyan’s dischargeability claim for relief.

       While the dismissal motion was pending, Hunanyan moved to recuse

the presiding bankruptcy judge. The recusal motion was referred to a

different bankruptcy judge for consideration. That judge entered an order

       6
          Though the first amended complaint’s general allegations and its prayer for
relief still talked about avoidance of the prepetition sale of the Long Beach property,
there no longer was a claim for relief in the first amended complaint seeking this relief.
                                             9
denying the recusal motion as meritless.

      Meanwhile, Hunanyan opposed the motion to dismiss. Hunanyan

challenged the dismissal motion on procedural grounds, contending that it

was not timely or properly filed and served. He further contended that he

had standing to object to the probate estate’s claim because the estate was

not insolvent. He also claimed that the dismissal motion should be denied

because the personal representatives addressed the original complaint and

not his first amended complaint. Substantively, he argued that the state

court could not have possibly decided his dischargeability claim for relief

because it lacked jurisdiction to decide issues of nondischargeability and

because that issue did not exist until he filed his bankruptcy.

      The personal representatives filed a reply in support of their

dismissal motion but still did not specifically address the dischargeability

claim for relief.

      The bankruptcy court granted the motion to dismiss. It rejected

Hunanyan’s allegations regarding insufficient service as factually

unsupported. The court also ruled that the dismissal motion was not

invalid as untimely filed. The court noted that Hunanyan never requested

entry of default, so the personal representatives remained free to respond

to his complaint with a motion to dismiss.

      As for the first claim for relief repeating the prior claim objection, the

court noted that it already had overruled Hunanyan’s standalone claim

objection. The court additionally reaffirmed its Rooker-Feldman ruling.

                                       10
       Though the dismissal motion did not specifically address the

dischargeability claim for relief, the court still addressed and disposed of

that claim. The court appears to have accepted that § 523(a)(15) did not

render the dissolution judgment entered in favor of the probate estate

nondischargeable. But it noted that no one was claiming the debt was

excepted from discharge. The court explained that Hunanyan’s

dischargeability claim was based on the mistaken belief that the

dischargeability of the dissolution judgment somehow prevented the

probate estate from asserting a claim or sharing in chapter 7 distributions.

As the court further explained, the issue of dischargeability only affected

whether Hunanyan would still be personally liable after full administration

of his chapter 7 case.

       Finally, concerning the lien avoidance claim for relief, the court held

that it was barred by claim preclusion because it should have been resolved

as part of the dissolution proceedings.

       On October 13, 2021, the bankruptcy court entered its order

dismissing Hunanyan’s first amended complaint.7 Hunanyan timely

appealed from the dismissal order and the denial of the motion to recuse.

       7
          In its written final ruling adopted as of September 29, 2021, the court specified
that it intended to grant the motion to dismiss the first amended complaint without
leave to amend. Though the court did not reiterate this intent in its subsequent
dismissal order, the parties do not dispute that the court fully and finally disposed of
the entire adversary proceeding.
                                             11
                                JURISDICTION

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

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

                                     ISSUES

1.    Did the bankruptcy court abuse its discretion when it denied

      Hunanyan’s recusal motion?

2.    Did the bankruptcy court commit reversible error when it dismissed

      Hunanyan’s complaint?

                          STANDARDS OF REVIEW

      We review for an abuse of discretion the bankruptcy court’s denial of

Hunanyan’s recusal motion. Hale v. U.S. Tr. (In re Basham), 208 B.R. 926, 930

(9th Cir. BAP 1997). The bankruptcy court abused its discretion if it applied

an incorrect legal rule or its factual findings were illogical, implausible, or

without support in the record. TrafficSchool.com v. Edriver, Inc., 653 F.3d 820,

832 (9th Cir. 2011).

      We review de novo the dismissal of Hunanyan’s adversary

proceeding under Civil Rule 12(b)(6). Telesaurus VPC, LLC v. Power, 623

F.3d 998, 1003 (9th Cir. 2010). When we review a matter de novo, 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).

      “We may affirm on any ground fairly supported by the record.”

Jimenez v. ARCPE 1, LLP (In re Jimenez), 613 B.R. 537, 543 (9th Cir. BAP 2020)

(citing Leavitt v. Soto (In re Leavitt), 171 F.3d 1219, 1223 (9th Cir. 1999)).

                                         12
                               DISCUSSION

      Hunanyan challenges the order denying his recusal motion and the

dismissal of his adversary proceeding. We address each challenge in turn.

A.    The bankruptcy court did not abuse its discretion in denying
      recusal.

      In challenging the denial of his recusal motion, Hunanyan argues

that the court showed bias when it denied his motion to remove the

chapter 7 trustee and when it overruled his claim objection.

He also alleges, without offering any proof, that the court engaged in ex

parte contacts with his adversaries.

      1.    Applicable standards—recusal.

      Hunanyan moved for recusal under 28 U.S.C. § 455(a) and Rule

5004(a). Rule 5004(a) specifies that 28 U.S.C. § 455(a) governs whether a

bankruptcy judge should disqualify himself or herself from an adversary

proceeding or contested matter. In turn, 28 U.S.C. § 455(a) requires a judge

to “disqualify [herself] in any proceeding in which [her] impartiality might

reasonably be questioned.” The judge also must recuse herself when she

has a personal bias or prejudice concerning a party. 28 U.S.C. § 455(b)(1).

      On the other hand, when a judge’s impression of the party is formed

exclusively from events that transpired in the judicial proceedings in

question, those impressions “do not constitute a basis for a bias or

partiality motion unless they display a deep-seated favoritism or

antagonism that would make fair judgment impossible.” Liteky v. United

                                       13
States, 510 U.S. 540, 555 (1994). Similarly, the court’s remarks during the

proceedings that are critical of the litigants or their cases typically will not

support a claim for recusal. Id. Moreover, “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) (cleaned up). Only in the rarest of

circumstances can the court’s “rulings, opinions formed or statements

made” in the course of proceedings serve as the basis for disqualification.

United States v. Holland, 519 F.3d 909, 914 (9th Cir. 2008).8

       2.       None of Hunanyan’s allegations justified recusal.

       Hunanyan first criticizes the presiding judge’s decision to assign the

recusal motion to a different judge of the same court. He complains that the

presiding judge, who was the chief judge of that bankruptcy court, could

not be expected to impartially address a motion calling for her own recusal,

so neither could a judge serving under the presiding chief judge. In

essence, he posits that unless a judge from another bankruptcy court was

assigned to hear his recusal motion, there is an appearance of partiality and

       8
           As Holland elaborated:

       We, along with our sister circuits, have identified various matters which will not
       ordinarily require recusal under § 455: (1) rumor, speculation, beliefs and similar
       non-factual matters; (2) the mere fact that a judge has previously expressed an
       opinion on a point of law; (3) prior rulings in the proceeding; (4) mere familiarity
       with the defendant(s) or the type of charge; (5) baseless personal attacks on or
       suits against the judge by a party; (6) reporters’ personal opinions or
       characterizations; and (7) threats or other attempts to intimidate the judge.

519 F.3d at 914 n.5 (cleaned up).
                                            14
bias in denying his recusal motion.

      Hunanyan’s argument lacks merit. Federal judges ordinarily decide

for themselves recusal motions brought before them. See, e.g., Bernard v.

Coyne (In re Bernard), 31 F.3d 842, 843 (9th Cir. 1994); United States v. Sibla,

624 F.2d 864, 868 (9th Cir. 1980). Thus, a judge deciding to personally

dispose of a motion seeking her recusal is not grounds for a partiality or

bias challenge. See Sibla, 624 F.2d at 867-68. It follows that a presiding

judge’s decision to transfer the recusal motion to a different judge of the

same court is not a basis for recusal. Some courts or judges routinely opt to

assign recusal motions to a judge different than the one sought to be

recused. See Jim Slemons Haw., Inc. v. Cont’l Inv. Co. (In re Jim Slemons Haw.,

Inc.), BAP No. HI-11-1464-JuMkTa, 2013 WL 980115, at *3 n.5 (9th Cir. BAP

Mar. 13, 2013), aff'd, 584 F. App’x 671 (9th Cir. 2014). Thus, the presiding

judge’s transfer of the recusal motion to another judge of the same court

was not an abuse of discretion.

      Hunanyan next claims that the judge formed and expressed an

opinion based on an extrajudicial source. According to Hunanyan, the

court suggested that he (Hunanyan) knew the Properties should have been

sold a long time ago. Hunanyan posited that the only way the judge could

have come to that opinion was from an improper ex parte contact with the

chapter 7 trustee. Hunanyan offers mere speculation as to the nature and

source of the court’s comment. Specifically, Hunanyan contends that the

judge made the offending comment at the hearing on the motion to sell the

                                        15
Gault Property, but neither of the parties provided the transcript from that

hearing. At best, Hunanyan’s argument is mere speculation and innuendo

that cannot support recusal. See Holland, 519 F.3d at 914 n.5. Furthermore,

without the transcript we have neither the challenged statement, nor the

surrounding context, to review on appeal. The failure to provide us with a

sufficient record precludes meaningful review of Hunanyan’s argument on

this point. See Kyle v. Dye (In re Kyle), 317 B.R. 390, 393–94 (9th Cir. BAP

2004), aff'd, 170 F. App’x 457 (9th Cir. 2006).

      Hunanyan also claims that some of the judge’s rulings against him

demonstrated bias requiring recusal. Hunanyan is most critical of the

court’s handling of the claim objection proceeding. He contends that the

court erred when it accepted and considered the probate estate’s late-filed

opposition to his claim objection, especially without giving him additional

time to file a written reply. He further argues that the court prejudged the

merits of the claim objection because it issued a tentative ruling before he

had any opportunity to respond to the probate estate’s opposition.

Additionally, Hunanyan complains that he should have prevailed on his

motion to remove the chapter 7 trustee given the evidence he presented.

      As we noted, only in the rarest of circumstances can the court’s

rulings and remarks form a basis for recusal. Holland, 519 F.3d at 914. Here,

Hunanyan merely attempts to show that the court erred in its prior

decisions. This is not a showing of bias and is far from the extraordinary

circumstances needed to support recusal based on prior rulings. Id.

                                       16
Hunanyan’s recourse was to appeal those decisions. He did not. Recusal in

a subsequent proceeding is not a substitute for appeal.

      Accordingly, we reject as baseless Hunanyan’s arguments

challenging the court’s denial of his recusal motion.

B.    The bankruptcy court did not commit reversible error when it
      dismissed Hunanyan’s first and third claims for relief, but it erred
      when it dismissed his second claim for relief.

      1.    Applicable legal standards— Civil Rule 12(b)(6).

      Motions to dismiss under Civil Rule 12(b)(6), made applicable in

adversary proceedings by Rule 7026, challenge the legal sufficiency of the

complaint. They test whether the complaint contains any cognizable legal

theories and whether it includes sufficient factual allegations to support

those legal theories. Johnson v. Riverside Healthcare Sys., 534 F.3d 1116, 1121

(9th Cir. 2008). “[F]or 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)).

      When considering dismissal under Civil Rule 12(b)(6), the court’s

factual investigation generally is limited to the complaint’s allegations.

United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). But the court also

may consider items properly subject to judicial notice. Id. Judicially

noticeable facts include those “not subject to reasonable dispute” because

                                        17
they are either “(1) generally known within the territorial jurisdiction of the

trial court or (2) capable of accurate and ready determination by resort to

sources whose accuracy cannot reasonably be questioned.” Fed. R. Evid.

201(b). When the complaint’s allegations are at odds with matters that are

properly the subject of judicial notice, the court need not accept those

allegations as true when considering a motion to dismiss. Lazy Y Ranch Ltd.

v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).

      2.    Hunanyan’s first and third claims were legally insufficient.

            a.    The first claim for relief sought to relitigate the
                  previously denied claim objection.

      Hunanyan’s first claim for relief is virtually identical to his

standalone claim objection previously denied by the bankruptcy court.

Hunanyan did not appeal that denial. The bankruptcy court held that it

already had overruled Hunanyan’s claim objection in the main case. We

agree. Orders on claim objections are final orders and carry preclusive

effect. As the Ninth Circuit has stated, “the allowance or disallowance of a

claim in bankruptcy is binding and conclusive on all parties or their

privies, and being in the nature of a final judgment, furnishes a basis for a

plea of res judicata.” Bevan v. Socal Commc'ns Sites, LLC (In re Bevan), 327

F.3d 994, 997 (9th Cir. 2003) (internal quotation marks omitted) (quoting

Siegel v. Fed. Home Loan Mortg. Corp., 143 F.3d 525, 529 (9th Cir. 1998)).

      Hunanyan cannot relitigate the bankruptcy court’s denial of his claim

objection simply by recasting it as a claim for relief in a subsequent

                                       18
adversary proceeding. See generally Rein v. Providian Fin. Corp., 270 F.3d 895,

899 (9th Cir. 2001) (citing Owens v. Kaiser Found. Health Plan, 244 F.3d 708,

713 (9th Cir. 2001)); Scott v. Kuhlmann, 746 F.2d 1377, 1378 (9th Cir. 1984).

His recourse was to appeal the claim objection order. He did not. As such,

he may not collaterally attack that decision by pursuing a second action

seeking the exact same relief. See Jue v. Liu (In re Liu), 611 B.R. 864, 881 (9th

Cir. BAP 2020) (listing cases); Heritage Pac. Fin., LLC v. Machuca (In re

Machuca), 483 B.R. 726, 735-36 (9th Cir. BAP 2012).

            b.     The third claim for relief was barred by claim
                   preclusion.

      The third claim for relief sought to avoid a lien against the Sherman

Way Property as an unauthorized conveyance of community property.

Kokikian allegedly granted the lien to her son in 2008 to secure a debt in

the amount of $130,600. The lien was recorded in 2011 in the Los Angeles

County Recorder’s Office as Instrument Number 20110840733. In his

complaint, Hunanyan alleges that the challenge to this lien was raised in

the dissolution proceedings but never decided by the court. This allegation

is contradicted by the dissolution judgment, which is attached to the

complaint as an exhibit. The dissolution judgment states that “[t]he

following Deed of Trust, recordation #20110840733 is declared valid and is

to be paid from the net proceeds of the Sherman Way Property.”

      The bankruptcy court held that claim preclusion applied and justified

dismissal of the third claim for relief. We agree. Federal courts must give

                                        19
full faith and credit to final state court decisions. 28 U.S.C.A. § 1738;

McProud v. Siller (In re CWS Enters., Inc.), 870 F.3d 1106, 1119 (9th Cir. 2017)

(citing Gayden v. Nourbakhsh (In re Nourbakhsh), 67 F.3d 798, 800 (9th Cir.

1995)). Consequently, final state court decisions are entitled to the same

preclusive effect in bankruptcy court as they would be given under state

law. Id.

      California gives claim preclusive effect to state court decisions when

the “second suit involves: (1) the same cause of action (2) between the same

parties or parties in privity with them (3) after a final judgment on the

merits in the first suit.” Furnace v. Giurbino, 838 F.3d 1019, 1023 (9th Cir.

2016) (quoting DKN Holdings LLC v. Faerber, 61 Cal. 4th 813, 824 (2015))

(cleaned up). Hunanyan does not challenge the first or second claim

preclusion elements. Consequently, he has waived any argument he might

have raised with respect to those elements. See Christian Legal Soc'y v. Wu,

626 F.3d 483, 487–88 (9th Cir. 2010); Brownfield v. City of Yakima, 612 F.3d

1140, 1149 n.4 (9th Cir. 2010). Instead, he challenges only the third

element—that the dissolution judgment was a final judgment on the

merits.

      His argument is twofold. First, he claims that the dissolution

judgment is void because the state court’s COVID protocols prohibited the

state court from holding trial. Hunanyan reasons that because the state

court held trial in the dissolution proceedings in violation of the COVID

protocols, the court lacked jurisdiction to enter the dissolution judgment

                                       20
and hence it is void. Though the probate estate insisted that the trial and

dissolution judgment complied with the state court’s COVID protocols, the

bankruptcy court never addressed this question. Instead, the court invoked

the Rooker-Feldman doctrine and held that only the state courts could decide

the issue.

      Even if we were to assume that the state court violated its own

COVID protocols, Hunanyan’s voidness argument fails. As the California

Supreme Court has observed, “[a]n error is jurisdictional only where the

clear purpose of the statute is to restrict or limit the power of the court to

act and where the effective enforcement of such restrictions requires the

use of extraordinary writs of certiorari or prohibition.” In re Marriage of

Goddard, 33 Cal. 4th 49, 57 (2004) (cleaned up). The Goddard court further

noted that “[o]nce a court has established its power to hear a case, it may

make errors with respect to areas of procedure, pleading, evidence, and

substantive law[,]”and such errors typically are not jurisdictional. Id. at 56.

      Nothing suggests that the court’s order establishing COVID protocols

is jurisdictional in nature. In fact, Goddard indicates that the metes and

bounds of jurisdictional limits are set by statute. Id. at 57. Hunanyan has

not pointed to any statute violated but instead relies on the state court’s

general order entered June 11, 2020, establishing COVID protocols. Thus,

Hunanyan has not presented anything to suggest that the resolution of the

dissolution proceedings was statutorily or jurisdictionally prohibited.

      Moreover, Goddard offered a lengthy list of decisions where the

                                       21
subject error was found to be jurisdictional in nature. But even a cursory

review of these cases reveals that the jurisdictional rules implicated therein

have little or nothing in common with the state court’s self-imposed

COVID protocols. See id. at 57 n.4.

      Accordingly, we reject Hunanyan’s argument challenging the

bankruptcy court’s claim preclusion ruling based on the purported

voidness of the dissolution judgment.

      The second part of Hunanyan’s claim preclusion argument concerns

the fact that, at the time he commenced his adversary proceeding, his state

court appeal from the dissolution judgment was still pending. As he

correctly points out, California courts do not give preclusive effect to a

prior judgment when an appeal is pending from that judgment. See Franklin

& Franklin v. 7-Eleven Owners for Fair Franchising, 85 Cal. App. 4th 1168,

1174 (2000). However, once a party’s appeal rights have been exhausted,

California courts permit application of claim preclusion. Kay v. City of

Rancho Palos Verdes, 504 F.3d 803, 808–09 (9th Cir. 2007) (applying

California law).

      This is exactly what happened here. Hunanyan has acknowledged in

his appeal brief that his state court appeal is no longer pending. See Aplt

Opn. Br. at 26, 46. He admits that the chapter 7 trustee dismissed his appeal

(Second District Court of Appeal Case No. B308493) in furtherance of the

compromise between the trustee and the probate estate. Id. at 46. Moreover,

the California Court of Appeal’s docket reflects that this appeal was

                                      22
dismissed and that the Court of Appeal’s remittitur was issued in July

2021—well before the bankruptcy court considered the motion to dismiss

the first amended complaint.

       On these undisputed procedural facts, Hunanyan’s dismissed state

court appeal did not render claim preclusion inapplicable. See Kay, 504 F.3d

at 808–09 (“The issuance of the remittitur indicates that the appellate

process, including a potential petition for review to the California Supreme

Court has been exhausted—and thus that the decision has become final.”).

       Therefore, none of Hunanyan’s arguments persuade us that the

bankruptcy court’s dismissal of his third claim for relief should be

reversed. 9

       3.     Dismissal of second claim for relief—claim asserting
              dischargeability of the dissolution judgment.

       Hunanyan’s second claim asserted that § 523(a)(15) did not apply to

his obligations under the dissolution judgment and that his debts were

       9
         When considering a Civil Rule 12(b)(6) dismissal motion, the bankruptcy court
and this panel are obliged in most instances to address whether leave to amend should
have been granted. Willard v. Lockhart-Johnson (In re Lockhart-Johnson), 631 B.R. 38, 48
(9th Cir. BAP 2021). Here, however, Hunanyan never mentioned leave to amend either
in the bankruptcy court or on appeal. As a result, we could decline to consider it.
Christian Legal Soc'y, 626 F.3d at 487–88; Brownfield, 612 F.3d at 1149 n.4. In any event,
when as here we cannot conceive of any amendment consistent with the plaintiff’s
existing complaint that would cure the legal insufficiency of his claims for relief,
granting leave to amend is not required. See Walsh v. Diamond (In re Century City Drs.
Hosp.), BAP No. CC–09–1235–MkJaD, 2010 WL 6452903, at *13 (9th Cir. BAP Oct. 29,
2010) (citing Reddy v. Litton Indus., Inc., 912 F.2d 291, 296-97 (9th Cir. 1990)). Under these
circumstances, the bankruptcy court did not commit reversible error by not granting
leave to amend.
                                              23
dischargeable. The bankruptcy court did not hold otherwise as it observed

that no one was disputing the dischargeability of the dissolution judgment.

But Hunanyan also argues that because his obligations under the

dissolution judgment are dischargeable, the probate estate could not

enforce his ex-wife’s claims within his bankruptcy case. He believes that his

bankruptcy filing extinguished for all purposes the claims the probate

estate held pre-bankruptcy as a result of the dissolution judgment.

      To support his position, he relies on the text of § 523(a)(15), which

addresses the dischargeability of debts owed to a spouse, former spouse, or

child of the debtor not covered by § 523(a)(5). Hunanyan also relies on

Hisaw v. Hisaw (In re Poppleton), 382 B.R. 455 (Bankr. D. Idaho 2008). But

Poppleton merely held that the representatives of the probate estate of the

debtor’s former spouse lacked standing to bring an exception to discharge

claim under § 523(a)(15). Id. at 457-59.

      We acknowledge that the bankruptcy court was entirely correct when

it noted that Hunanyan was confusing the existence of his debt with the

dischargeability of that debt. The discharge solely concerns the creditor’s

right to enforce its debt personally against the debtor after the

administration of the bankruptcy case. See Johnson v. Home State Bank, 501

U.S. 78, 82–83 (1991). It does not affect creditors’ claims against the

bankruptcy estate. A claim against the bankruptcy estate can be disallowed

only on the grounds set forth in § 502(b). Heath v. Am. Express Travel Related

Servs. Co. (In re Heath), 331 B.R. 424, 426 (9th Cir. BAP 2005).

                                       24
Nondischargeability is not such a ground. In short, the dischargeability of a

debt under § 523(a) has no bearing on or relevance to the allowance or

disallowance of claims against the estate or the chapter 7 distribution

process.

       Nonetheless, we must reverse the dismissal of Hunanyan’s

dischargeability claim for relief. Simply put, he stated a legally cognizable

claim under § 523(a)(15). He alleged that his obligations under the

dissolution judgment were not a debt owed to a “spouse, former spouse, or

child of the debtor,” so § 523(a)(15) did not render them nondischargeable.

Not only must we accept his dischargeability-related allegations as true,

but there evidently is no dispute between the parties regarding their

veracity and legal effect. Indeed, the bankruptcy court cited Ashton v.

Dollaga (In re Dollaga), 260 B.R. 493, 497 (9th Cir. BAP 2001), for the

proposition that a creditor who is not a spouse, or a dependent of debtor,

does not have standing to bring a nondischargeability action under

§ 523(a)(15). In short, the court did not rule that the dissolution judgment in

favor of the probate estate was nondischargeable under § 523(a)(15). 10

       10The parties’ discussion of § 523(a)(15) is confusing and largely conflates the
nondischargeability of the debt with the disallowance of the claim within the
underlying bankruptcy. Focusing on nondischargeability under § 523(a)(15), the cases
cited do not involve a debt arising from a dissolution judgment owed to the probate
estate as the successor in interest to the debtor’s former spouse. Compare Est. of Perteet v.
Jones-Peteet (In re Jones-Peteet), 630 B.R. 61, 68 (Bankr. S.D. Tex. 2021) (“[T]he statute
excepts debts owed to a ‘former spouse’ and does not distinguish between living and
deceased ones.”) with In re Dollaga, 260 B.R. at 497 (holding that a claim for attorney fees
owed by the debtor to his divorce counsel was dischargeable because the debt was not
                                             25
       Under these circumstances, Hunanyan alleged sufficient facts

supported by a good faith legal argument that his debt to the probate estate

was dischargeable under § 523(a)(15) because the creditor was not a

spouse, former spouse, or child of the debtor. Neither the court, nor the

personal representatives, adequately explained why Hunanyan’s claim was

deficient as a matter of law. Nor was the claim procedurally deficient.

Though in most cases creditors seek determinations that a debt is not

dischargeable, the Rules also specifically permit debtors to seek

determinations that a debt is dischargeable. See Rule 4007(a); see also ECMC

v. Coleman (In re Coleman), 560 F.3d 1000, 1011-12 (9th Cir. 2009)

(upholding on ripeness grounds debtor’s right to prosecute her action

seeking a determination that her student loan debt was dischargeable

under § 523(a)(8)).

       The bankruptcy court stated that a judgment that the probate estate’s

debt was dischargeable would not accomplish Hunanyan’s goal to disallow

the claim against his bankruptcy estate. Based on the record and

Hunanyan’s oral argument, disallowance of the claim is his ultimate goal.

owed to a spouse, former spouse or dependent under § 523(a)(15)). Hunanyan relies on
the decision in Poppleton that the ex-spouse’s heirs did not have standing to maintain a
nondischargeability action under § 523(a)(15). 382 B.R. at 457-59. But see Beaupied v.
Chang (In re Chang), 163 F.3d 1138, 1140-42 (9th Cir. 1998) (focusing on the nature of the
debt instead of the identity of the payee); Bendetti v. Gunness (In re Gunness), 505 B.R. 1,
5-6 (9th Cir. BAP 2014) (following Chang). We do not need to reach the merits of
Hunanyan’s nondischargeability claim except to note that the bankruptcy court did not
dismiss his claim as a matter of law.
                                             26
As explained above, we readily agree that the dischargeability of the

probate estate’s claim will not affect the allowance of the claim in the

underlying bankruptcy. But that is not a basis to dismiss a properly stated

claim under Civil Rule 12(b)(6). Because Hunanyan stated a legally viable

claim for relief under § 523(a)(15), the bankruptcy court committed

reversible error when it dismissed Hunanyan’s second claim for relief.11

                                  CONCLUSION

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

order denying Hunanyan’s recusal motion. We also AFFIRM the

bankruptcy court’s dismissal of his first and third claims for relief without

leave to amend. But we REVERSE the court’s dismissal of his second claim

for relief under § 523(a)(15), and we REMAND for further proceedings.

      11
          In his appeal brief, Hunanyan weaved together his discussion of
dischargeability with his assertion that he had a valid homestead exemption in the
Gault Property. But his homestead argument is incomprehensible to us. For purposes of
this appeal, it suffices to say that California judgments providing for property
distributions in dissolution proceedings do not make the former spouses creditors of
each other subject to routine enforcement of judgment concerns like exemption claims.
See In re Marriage of Fithian, 74 Cal. App. 3d 397, 403 (1977). For this reason, former
spouses cannot invoke homestead exemption rights to defeat the state court’s
distribution of community property in the dissolution judgment. See Bonner v. Super.
Ct., 63 Cal. App. 3d 156, 163-164 (1976).
                                          27