Court Opinion

ID: 3188372
Source: CourtListenerOpinion
Date Created: 2016-03-23 23:01:07.70128+00
Date Added: 2024-06-11T14:08:35.170080
License: Public Domain

FILED
                                                              MAR 23 2016
                                                          SUSAN M. SPRAUL, CLERK
 1                         NOT FOR PUBLICATION              U.S. BKCY. APP. PANEL
                                                            OF THE NINTH CIRCUIT
 2
 3                   UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                             OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.      CC-15-1020-KiKuF
                                   )
 6   JOHN DOVALIS GANTES and       )      Bk. No.      8:08-bk-18272-TA
     LINDA BRIDGFORD GANTES,       )
 7                                 )      Adv. No.     8:09-ap-01236-TA
                    Debtors.       )
 8                                 )
                                   )
 9   MORRISSEY CONSTRUCTION CO.,   )
                                   )
10                  Appellant,     )
                                   )
11   v.                            )      M E M O R A N D U M1
                                   )
12   JOHN DOVALIS GANTES,          )
                                   )
13                  Appellee.      )
     ______________________________)
14
                    Argued and Submitted on October 22, 2015,
15                          at Los Angeles, California
16                            Filed - March 23, 2016
17             Appeal from the United States Bankruptcy Court
                   for the Central District of California
18
          Honorable Theodor C. Albert, Bankruptcy Judge, Presiding
19
20   Appearances:     Samy S. Henein of Suppa, Trucchi & Henein, LLP
                      argued for appellant Morrissey Construction
21                    Company; William Miles Burd of Burd & Naylor argued
                      for appellee John Dovalis Gantes.
22
23   Before:   KIRSCHER, KURTZ and FARIS, Bankruptcy Judges.
24
25
26
          1
            This disposition is not appropriate for publication.
27   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
28   Cir. BAP Rule 8024-1.
 1        Appellant Morrissey Construction Company (“Morrissey”)
 2   appeals an order dismissing Morrissey’s Third Amended Complaint
 3   (“Complaint”) to Determine Dischargeability of Debt against
 4   Appellee John D. Gantes (“Debtor”) as untimely filed.     We AFFIRM
 5   the dismissal of the Third Amended Complaint, VACATE the dismissal
 6   of the three claims under § 523(a)(2)(A) in the Second Amended
 7   Complaint, and REMAND for further proceedings consistent with this
 8   Memorandum.
 9                           I. PROCEDURAL HISTORY
10        John Dovalis Gantes and Linda Bridgford Gantes filed a
11   chapter 72 petition on December 12, 2008.   Morrissey filed a
12   timely complaint on March 23, 2009, seeking to except the sum of
13   $652,182.24 from Debtor’s discharge pursuant to §§ 523(a)(2)(A)
14   and 523(a)(6).    By stipulation of the parties, the bankruptcy
15   court stayed the adversary proceeding pending the outcome of two
16   § 727 complaints objecting to the Debtor’s discharge.     The court
17   eventually dismissed those complaints in 2010 and 2011.
18        On October 23, 2013, Debtor answered Morrissey’s complaint,
19   raising a Civil Rule 12(b)(6)3 defense that Morrissey’s complaint
20   failed to state a claim.    Morrissey responded by filing a first
21   amended complaint (“FAC”) on November 13, 2013, which sought to
22   except the sum of $1,269,337.48 from Debtor’s discharge pursuant
23   to § 523(a)(2).    Morrissey alleged that it was a general
24
25        2
            Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532 and
26   “Rule” references are to the Federal Rules of Bankruptcy
     Procedure. “Civil Rule” references are to the Federal Rules of
27   Civil Procedure.
28        3
              Rule 7012(b) incorporates Civil Rule 12(b)(6).

                                      -2-
 1   contractor who had built several restaurants for Debtor and was
 2   owed $1,269,337.48.   It further alleged that Debtor had obtained
 3   the labor, materials and other valuable property under false
 4   pretenses, false representations, actual fraud and false
 5   statements, and that Debtor had induced Morrissey into not
 6   recording certain mechanics liens based upon false pretenses,
 7   false representations, actual fraud, and intentionally false
 8   statements.
 9        Debtor moved to dismiss the FAC.   In an order entered
10   March 11, 2014, the bankruptcy court dismissed the FAC and granted
11   Morrissey thirty days to further amend its complaint.
12        On April 10, 2014, Morrissey filed a second amended complaint
13   (“SAC”) seeking to except the sum of $1,269,337.48 from Debtor’s
14   discharge, alleging three claims under § 523(a)(2)(A) for actual
15   fraud and a fourth claim under § 523(a)(2)(A) and (B) for actual
16   fraud and use of a false statement in writing.4   In the first
17   three claims of the SAC, Morrissey alleged that Debtor executed
18   two promissory notes, deeds of trust and personal guarantees on
19   February 5, 2008, that Debtor executed a third promissory note on
20   April 14, 2008, and that Debtor made certain promises in the
21   aforementioned documents, including the promise to pay Morrissey,
22   with no intention or ability to perform the promises.
23        In the first promissory note, Antelope 138 Partners, LP
24   promised to pay $652,182.24.   The first promissory note is signed
25   by Debtor on behalf of Antelope 138 Partners, LP.   Morrissey
26
27        4
            The Fourth Claim for Relief in Morrissey’s Second Amended
     Complaint references both §§ 523(a)(2)(A) and (a)(2)(B), but
28   § 523(a)(2)(B) is not mentioned in Morrissey’s prayer for relief.

                                     -3-
 1   alleged it suffered damages of $252,972.80 as a result of Debtor’s
 2   fraud and deceit relating to the first promissory note and related
 3   deed of trust and personal guaranty.
 4        In the second promissory note, dated February 18, 2008,
 5   TemBreck, LLC promised to pay Morrissey $408,760.23.   Debtor
 6   signed this promissory note as TemBreck, LLC’s managing member.
 7   Morrissey alleged it suffered damages of $169,141.14 stemming from
 8   Debtor’s fraud and deceit relating to the second promissory note
 9   and related deed of trust and personal guaranty.
10        The third claim stemmed from a promissory note in the amount
11   of $513,792.12 dated April 14, 2008.   The third promissory note is
12   not signed by Debtor; Debtor only signed a personal guaranty for
13   the third promissory note.   Morrissey alleged that Debtor’s fraud
14   and deceit in signing the third personal guaranty caused damages
15   to Morrissey of $304,677.17.   As to each of the first three
16   claims, Morrissey also alleged that Debtor “had defaulted on other
17   loans which he had personally guaranteed, that several of the
18   entities he controlled were about to file for bankruptcy, and that
19   the security for the promissory note[s] was worthless.”
20        Debtor again sought dismissal of Morrissey’s SAC for failure
21   to satisfy the plausibility requirements of Civil Rule 8 and
22   failure to allege fraud with particularity as required by Civil
23   Rule 9(b).   Prior to a hearing held June 5, 2015, the bankruptcy
24   court tentatively ruled that, with regard to the three claims
25   under § 523(a)(2)(A), Morrissey’s SAC:
26       [C]ontains some facts, but relies primarily on the
         allegation that promises made in the various financial
27       instruments were fraudulent because they were made
         without a present intention on Mr. Gantes’ part to
28       perform. There is a light sprinkling of supporting

                                     -4-
 1       facts alleged at ¶¶8, 27 suggesting that Mr. Gantes knew
         or should have known of the unlikelihood of performance
 2       given his presumed knowledge that entities he controlled
         were about to file bankruptcy and/or that collateral for
 3       a note was worthless. The question is whether there is
         enough here to survive the motion given the commands of
 4       Iqbal and Twombly, compared with a more relaxed standard
         that allegations concerning defendant intent are
 5       sufficient if averred generally (See e.g. Petersen v.
         Allstate Indemnity Co., 281 F.R.D. 413, 416 (C.D. Cal.
 6       2012). While it is close, construed in the light most
         favorable to the responding party as the court is
 7       obliged to do, the court believes there is enough to
         make out a plausible case, and there is enough (just) to
 8       alert the defendant as to what he must defend. The
         court is persuaded that consequently all salutary
 9       purposes of Rule 12 are satisfied here on this record,
         even under the enhanced Twombly and Iqbal standards.
10
11        At a hearing held June 5, 2015, the bankruptcy court first
12   granted Debtor’s motion as it related to Morrissey’s fourth claim
13   for relief.   The bankruptcy court then turned its focus on the
14   remaining three claims.   The bankruptcy court, after considering
15   counsel’s arguments, indicated that even though the SAC could be
16   more specific, it met the plausibility standard articulated in
17   Iqbal and Twombly.   The court then asked Morrissey’s counsel
18   whether he could add substance to one paragraph (paragraph 8) of
19   the SAC.   While Morrissey’s counsel did not specifically answer
20   the court’s question, the court found its question answered, and
21   changed its tentative ruling:
22            THE COURT: Here’s what I want you to do. I am
         going to change the tentative. I’m going to grant the
23       motion, and I want you to redo it. I want you to give
         us more detail on paragraph eight particularly. And you
24       can dress up any other part that you want to, but I want
         you to list -- and you’ve already mentioned one loan.
25       Be specific.
26            And if you suspect others, but you’re not sure,
         then frame it as I’m informed and believe. And that
27       will be sufficient to get this thing going. And I think
         it does fair service to all the rules in question,
28       Rule 8, Rule 9, Rule 11 and Rule 12(b). So that’s what

                                     -5-
 1       I want you to do. Any questions?
 2            I’m going to grant the motion with leave to amend.
         I’m going to strike the jury trial demand because I
 3       don’t think a jury trial fits here under any theory,
         unless the Supreme Court in the meantime tells me that I
 4       don’t have authority to do anything, which is a
         possibility.
 5
              Anything further?
 6
              MR. BURD:    Time, your Honor, for the --
 7
              MR. HENEIN: Not from the Plaintiff, your Honor.
 8       That’s fine. Thank you.
 9            THE COURT:    I’m sorry, Mr. Burd. I didn’t
         catch –
10
              MR. BURD:    A deadline for them to file the amended
11       complaint?
12            THE COURT:    When can you have the amended complaint
         in, Counsel?
13
              MR. HENEIN:    Can I have 30 days, your Honor?
14
              THE COURT: Thirty days it is. The motion is
15       granted, 30 days leave to amend. And I will allow you
         to amend on all issues except the jury trial, which I
16       don’t think is correct under any theory. So that’s
         without leave to amend. Okay.
17
                                    * * *
18
              MR. HENEIN: Your Honor, could the 30 days run from
19       the entry of the order?
20            THE COURT:    Your 30 days to amend?   Yeah, we can do
         it from there.
21
22        The bankruptcy court followed up its oral ruling with a
23   written order entered June 18, 2014, which reads:
24            The Defendant’s Motion: (1) for Dismissal for
         Failure to State a Claim Upon Which Relief Can Be
25       Granted [Civil Rule 12(b)(6)]; and (2) to Strike Demand
         for Jury Trial came on regularly for hearing . . . .
26
              Upon consideration of all papers, pleadings and
27       files of record and the argument of counsel and good
         cause appearing therefor, it is hereby
28

                                     -6-
 1            ORDERED that the Plaintiff’s demand for a jury
         trial is stricken and the Second Amended Complaint to
 2       Determine Dischargeability of Debt is dismissed with
         leave to amend. It is further
 3
              ORDERED that Plaintiff may file a further amended
 4       complaint within thirty (30) days from the date of entry
         of this order. No demand for a jury trial shall be
 5       included. Defendant shall have thirty (30) days from
         the date of service of an amended complaint to file a
 6       responsive pleading.
 7   The bankruptcy court’s docket shows that the court’s June 18, 2014
 8   order was served via first class mail on Morrissey’s counsel,
 9   Samy S. Henein, on Saturday, June 20, 2014.
10        Morrissey’s counsel filed a Third Amended Complaint
11   (“Complaint”) on July 22, 2014.    This Complaint seeks to except
12   the sums of $252,972.80, $169,141.14, $304,677.17 and $542,546.37
13   from Debtor’s discharge pursuant to § 523(a)(2)(A).    On August 21,
14   2014, Debtor filed a motion to dismiss the Complaint on grounds it
15   was not timely filed.    Debtor argued in paragraph 15 of the motion
16   that “under [Rule] 9006(b)(3) the time for filing a complaint to
17   determine dischargeability can only be enlarged in accordance with
18   Rule 4007(c).”    Morrissey responded that the order entered on
19   June 18, 2014, was never lodged as required by Local
20   Rule 9021-1(b)(3),5 and that the Complaint was timely filed
21
          5
22            Local Rule 9021-1(b)(3) reads:
23        (3) Proposed Order when Opposition to Motion was Filed.
24               (A) Service of Proposed Order on Contesting Party.
                 Pursuant to the Notice of Lodgment Procedures set forth
25               in the Court Manual, the attorney who has the duty to
                 prepare any order required by this rule must serve a
26               copy of the proposed order on counsel, or party if filed
                 without counsel, who filed an opposition or other
27               objection to the relief requested, either before or on
                 the same day that the order is lodged with the court and
28                                                         (continued...)

                                       -7-
 1   because the Order was entered on June 18, 2014, served by mail on
 2   June 20, 2014, and that the Complaint was filed within 33 days
 3   thereafter, on July 22, 2014.     Morrissey requested in its
 4   opposition that the bankruptcy court deny Debtor’s motion.     In the
 5   alternative, Morrissey requested that the bankruptcy court either
 6   allow the Complaint to stand by granting leave to amend nunc pro
 7   tunc, or allow an enlargement of time for Morrissey to refile the
 8   Complaint.
 9        The bankruptcy court, in a tentative ruling, indicated its
10
11
          5
              (...continued)
12                must file a proof of service with the order.
                  Alternatively, the attorney preparing the order may
13                present it to opposing counsel for approval as to form
                  before the order is lodged, in which case opposing
14                counsel must immediately approve or disapprove the form
                  of order and return it to counsel who prepared it.
15
                  (B) Separate Objection to Proposed Order. Opposing
16                counsel may, within 7 days after service of a copy of a
                  proposed order prepared pursuant to this rule, file and
17                serve an objection to the form of the order, setting
                  forth the grounds therefor. Opposing counsel must
18                attach as exhibits to the objection (i) a copy of the
                  order that is the subject of the objection and (ii) a
19                copy of the proposed alternative form of order. The
                  proposed alternative form of order so labeled, must be
20                lodged with the objection. A judge’s copy of the
                  objection and proposed alternative form of order must be
21                served on the judge in chambers in accordance with LBR
                  5005-2(d). The failure to file and serve a timely
22                objection will constitute a waiver of any defects in the
                  form of the order.
23
                  (C) Endorsement of Counsel. Unless the court otherwise
24                directs, a proposed order will not be signed by the
                  judge unless (i) opposing counsel has endorsed thereon
25                an approval as to form; (ii) opposing counsel has
                  stipulated thereto on the record at the hearing, or
26                (iii) the time for objection to a form of order properly
                  served has expired under subsection (b)(3)(B) of this
27                rule. If it finds the ends of justice so requires, the
                  court may conduct a hearing on the proper form of the
28                order or decide any objection thereto without a hearing.

                                       -8-
 1   intent to grant Debtor’s motion, explaining “[p]ursuant to an
 2   order entered 6/18/14, the [SAC] was dismissed with leave to amend
 3   and Plaintiff expressly had 30 days from entry of the order to
 4   file an amended complaint.   Plaintiff did not file the [Complaint]
 5   until 7/22/14, four days late.”    (Emphasis in original).   The
 6   bankruptcy court went on to tentatively hold that: (1) under
 7   Rule 4007(c), the time for filing nondischargeability complaints
 8   may be enlarged by motion, but the motion must be filed before the
 9   time has expired; (2) under Rule 9006(b)(3), once the deadline for
10   filing a complaint has expired, a bankruptcy court does not have
11   the discretion to waive the requirement that enlargements be
12   sought within the initial period; and (3) the three day mail rule
13   in Rule 9006(f) was inapplicable.
14        At a hearing held December 11, 2014, the court explained:
15            THE COURT: The problem that movant has here is
         that the deadlines set by 4007(c) are deliberately made,
16       unambiguous and there’s no room for error. The case law
         in this area is almost uniformly against the late
17       creditor.
18            And I think the answer is because the enactors of
         the rule wanted nondischargeability complaints to be
19       timely adjudicated, and anything that goes outside of it
         is just not gratefully received.
20
              Now, I hear your argument about this should be
21       about notice. I’m not entirely sure it’s about notice
         because what it is also about is timely prosecution. So
22       that’s the purpose of the rule that would not be served
         by giving extensions.
23
              I do not buy   the argument that the period of time
24       should be figured   from the filing of a notice of entry.
         Of course, if you   do take notice of entry, it’s still
25       late, but I don't   buy that.
26            I think when an order says by a certain date, you
         don’t get three days for reason of mailing. That’s not
27       the purpose of the three-day rule.
28            So just anywhere you turn, I think the doors are

                                       -9-
 1        closed on plaintiff in this case. And I don’t say that
          lightly because clearly the Court would rather resolve
 2        things on their merits than on procedure.
 3             But I am aware that in the realm of
          nondischargeability litigation, the deadlines are very
 4        finite and they’re not in fact susceptible even to
          excusable neglect arguments. There’s cases that say
 5        that that doesn’t apply.
 6             The only time I’ve ever seen any wiggle room or
          moving on these deadlines is in the context of where the
 7        Court itself added to the confusion by giving wrong
          deadlines in its notices.
 8
               So that’s bad news, Mr. Henein, I know, but that’s
 9        the way I see it. So the motion is granted as indicated
          in the tentative.
10
                 Movant, you’re to submit a form of order.
11
               MR. BURD: Sure, your Honor.     And may I attach the
12        tentative and that the Court –
13               THE COURT:   Yes, you may.
14   On January 5, 2015, the bankruptcy court entered a written order
15   adopting by reference its December 11, 2014, tentative ruling.
16   Morrissey filed a notice of appeal on January 20, 2015.
17        Morrissey also filed on January 20, 2015, a Rule 9023 motion
18   for reconsideration.6    Morrissey asserted that the Complaint was
19   not time-barred under Rule 4007(c) because such Rule was
20   inapplicable to the facts of this case and because the Complaint
21   related back to the original complaint under Civil Rule 15(c).
22   Debtor opposed the motion, arguing in part that the bankruptcy
23   court had granted Morrissey thirty days to amend its complaint
24   under Civil Rule 15(a)(2), that Morrissey failed to meet the
25   thirty-day filing deadline, and that Civil Rule 15(c), therefore,
26   never came into play.     Debtor went on in his opposition to argue:
27
28        6
              Rule 9023 incorporates Civil Rule 59.

                                       -10-
 1   “Even if [Rule] 4007(c) were not implicated in this case, it was
 2   well within the Court’s discretion to dismiss the [] [C]omplaint
 3   due to [Morrissey]’s failure to file it within the time allowed by
 4   the Court.”   Following a hearing held on February 26, 2015, the
 5   bankruptcy court entered an order on April 9, 2015, denying
 6   Morrissey’s request for reconsideration.     Attached to the
 7   bankruptcy court’s April 9, 2015, order is the court’s
 8   February 25, 2015 tentative ruling which reads, in part:
 9             [Morrissey seeks] reconsideration of the order
          granting a motion to dismiss . . . because their third
10        amended pleading was dismissed by the Court for not
          being filed within the 30 day period the court allowed
11        from the date of entry of the order. The third amended
          complaint was filed four days after the 30 day time
12        period.
13                                  * * *
14        The question here comes down to one of whether clear
          orders of the court having to do with time limits for
15        filing are mere suggestions, or can be ignored with
          impunity. It was well within the court’s discretion to
16        deny the third amended complaint for not being filed
          within the time allowed and to dismiss the complaint.
17        Therefore, no manifest error of law appears which is
          required by [Rule] 59(e) to reconsider the order.
18
19   Morrissey does not appeal the bankruptcy court’s April 9, 2015,
20   order denying Morrissey’s request for reconsideration.
21                             II. JURISDICTION
22        The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
23   and 157(b)(2)(I).   We have jurisdiction under 28 U.S.C. § 158.
24                               III. ISSUES
25        Morrissey raises several issues on appeal which we restate as
26   follows:
27   1.   Whether Rule 4007(c) governs the time to file amended
28        complaints containing relation-back amendments.

                                     -11-
 1   2.   Whether the bankruptcy court abused its discretion in
 2        dismissing the Complaint for being untimely filed.
 3   3.   Whether Debtor’s failure to lodge his order is harmless
 4        error.
 5   4.   Whether the SAC adequately stated a cause of action as to the
 6        first, second and third claims for relief.
 7                          IV. STANDARDS OF REVIEW
 8        Pursuant to Rule 7041, a bankruptcy court may dismiss an
 9   adversary proceeding for failure to comply with any order of the
10   court.    We review for abuse of discretion a bankruptcy court’s
11   dismissal of an action for failure to comply with the court’s
12   order requiring submission of an amended complaint in a timely
13   manner.   Eldridge v. Block, 832 F.2d 1132, 1136 (9th Cir. 1987);
14   Nevijel v. N. Coast Life Ins. Co., 651 F.2d 671, 674 (9th Cir.
15   1981).    The trial court’s dismissal should not be disturbed unless
16   there is “‘a definite and firm conviction that [it] committed a
17   clear error of judgment in the conclusion it reached upon a
18   weighing of the relevant factors.’”     Malone v. United States
19   Postal Serv., 833 F.2d 128, 130 (9th Cir. 1987); Eldridge,
20   832 F.2d at 1136 (quotation omitted).
21        “We may affirm ‘on any ground supported by the record,
22   regardless of whether the [bankruptcy] court relied upon,
23   rejected, or even considered that ground.’”      Fresno Motors, LLC v.
24   Mercedes Benz USA, LLC, 771 F.3d 1119, 1125 (9th Cir. 2014)
25   (citation omitted).
26        We review de novo the bankruptcy court’s Civil Rule 12(b)(6)
27   dismissal.    Barnes v. Belice (In re Belice), 461 B.R. 564, 572
28   (9th Cir. BAP 2011).

                                      -12-
 1                               V. DISCUSSION
 2   A.   Federal Rule of Bankruptcy Procedure 4007(c) does not govern
          the time to amend complaints with relation-back amendments.
 3
 4        We begin by considering Morrissey’s first issue on appeal:
 5   that Rule 4007(c) does not apply to amended complaints so long as
 6   the amendments relate back to the timely-filed original complaint.
 7   We agree.   Rule 4007(c) provides that “a complaint to determine
 8   the dischargeability of a debt . . . shall be filed no later than
 9   60 days after the first date set for the meeting of creditors
10   under § 341(a).”   The first date set for Debtor’s § 341(a) meeting
11   of creditors was January 21, 2009, and the sixtieth day thereafter
12   was March 22, 2009.   Morrissey’s original complaint was timely
13   filed on the next business day, March 23, 2009.   The language of
14   Rule 4007(c) itself omits any reference to amended pleadings, and
15   Rule 9006(b)(3) restricts enlargement of the time period in Rule
16   4007(c) to “only [] the extent . . . stated in [that] rule[].”     If
17   subsequently filed amended pleadings relate back to the original
18   complaint, which was timely filed, Rule 4007(c) does not apply.
19        The Ninth Circuit has considered relation-back amendments of
20   pleadings in the context of bankruptcy proceedings.   Rule 7015,
21   incorporating Civil Rule 15(c), provides that when the amended
22   claim for relief or defense arises out of the “conduct,
23   transaction, or occurrence set forth or attempted to be set forth
24   in the original pleading[,]” it relates back to the date of the
25   original pleading.    See, e.g., Mission Viejo Nat’l Bank v.
26   Englander (In re Englander), 92 B.R. 425, 427-28 (9th Cir. BAP
27   1988).
28        The bankruptcy court did not specifically determine whether

                                      -13-
 1   Morrissey’s second or third amended complaints would relate back
 2   to the date of the original complaint.   However, if the claims for
 3   relief alleged by Morrissey in its second and third amended
 4   complaints arose out of the conduct, transaction or occurrence set
 5   forth or attempted to be set forth in the original complaint, then
 6   Morrissey is correct that Rule 4007(c) would not govern.
 7   Nevertheless, Morrissey’s technical victory is ephemeral after we
 8   consider Morrissey’s next issue on appeal.
 9   B.   The Complaint was untimely filed; the bankruptcy court did
          not abuse its discretion in dismissing it.
10
11        Morrissey’s second issue on appeal is that its Complaint was
12   timely filed.   As noted above, we may affirm on any grounds
13   supported by the record.    The bankruptcy court, in open court on
14   June 5, 2014, gave Morrissey thirty days from the date the order
15   was entered to file a further amended complaint.   The order was
16   entered on June 18, 2014.   Morrissey filed its Complaint on
17   July 22, 2014, four days past the explicit deadline set forth in
18   the order.   The bankruptcy court correctly held that Rule 9006(f)
19   did not grant Morrissey three extra days for mailing.   Rule
20   9006(f) only applies when the prescribed period to act runs from
21   service of a notice by mail, not when, as here, the deadline was
22   conveyed to Morrissey in open court.    J&S Wholesale, Inc. v.
23   Cloninger (In re Cloninger), 197 B.R. 308, 309 (Bankr. E.D. Ark.
24   1996).   The three-day mailing rule is especially inapt when
25   Morrissey itself requested the time to run from entry of the
26   order.
27        Courts may set and enforce deadlines.   In the context of
28   scheduling orders under Rule 7016, incorporating Civil Rule 16,

                                      -14-
 1   our Circuit recognizes the importance of adhering to deadlines set
 2   by the trial court:
 3         In these days of heavy caseloads, trial courts in both
           the federal and state systems routinely set schedules
 4         and establish deadlines to foster the efficient
           treatment and resolution of cases. Those efforts will
 5         be successful only if the deadlines are taken
           seriously by the parties, and the best way to
 6         encourage that is to enforce the deadlines.
 7   Wong v. Regents of the Univ. of Cal., 410 F.3d 1052, 1060 (9th
 8   Cir. 2005).
 9         A bankruptcy court may dismiss an untimely complaint for
10   failure to comply with a court-ordered deadline.   Rule 7041,
11   incorporating Civil Rule 41(b), allows the bankruptcy court to
12   dismiss adversary proceedings where “the plaintiff fails . . .
13   to comply with . . . a court order[.]”
14         In Ferdik v. Bonzalet, 963 F.2d 1258, 1260-61 (9th Cir.
15   1991), the Ninth Circuit articulated five factors that courts
16   should consider when deciding to dismiss a case for a party’s
17   failure to comply with a court order:    (1) the public’s interest
18   in expeditious resolution of litigation; (2) the court’s need to
19   manage its docket; (3) the risk of prejudice to the defendant;
20   (4) the public policy favoring disposition of cases on their
21   merits; and (5) the availability of less drastic alternatives.
22   Id.   At least four, if not all five, factors favor the
23   bankruptcy court’s decision to dismiss Morrissey’s Complaint.
24         The procedural posture of Kleban v. Tedesco, 207 B.R. 876
25   (N.D. Ill. 1997), is instructive.   There, a creditor filed a
26   complaint against the debtor alleging nondischargeability due to
27   fraud under §§ 523(a)(2)(A) and (a)(2)(B).   Id. at 877.   The
28   bankruptcy court entered an order dismissing the complaint for

                                     -15-
 1   failing to plead with particularity the circumstances of the
 2   alleged fraud.   Id.   The creditor was granted leave to amend.
 3   Id.   Like the original complaint, the creditor’s first amended
 4   complaint was also dismissed for failure to plead with
 5   particularity the fraud that allegedly occurred.      Id.   The
 6   creditor was given another chance to amend the complaint; the
 7   bankruptcy court set a deadline of December 6, warning that
 8   failure to meet the deadline would result in dismissal with
 9   prejudice.   When the creditor failed to timely file its second
10   amended complaint, the bankruptcy court dismissed the adversary
11   proceeding under Civil Rule 41(b).      Id.   On appeal, the district
12   court affirmed, finding that the bankruptcy court did not abuse
13   its discretion when the creditor’s “conduct range[d] from
14   untimely responses to failing to follow the bankruptcy court’s
15   directions . . . .”    Id. at 878.   The district court concluded
16   that the creditor’s “failure to file the second amended
17   complaint by December 6 . . . was the straw that broke the
18   camel’s back.”   Id.
19         Like the creditor in Kleban, Morrissey’s failure to timely
20   file its Complaint was “the straw that broke the camel’s back,”
21   and we cannot say that the bankruptcy court abused its
22   discretion in dismissing it.    Court-ordered deadlines “must not
23   be enforced mindlessly,”    Wong, 410 F.3d at 1060.    Here the
24   bankruptcy court generously gave Morrissey three opportunities
25   to amend its complaint and even granted Morrissey an extra
26   month’s time to file its Complaint only for Morrissey to miss
27   the deadline.    As acknowledged by the United States Supreme
28   Court, while “deadlines may lead to unwelcome results, . . .

                                      -16-
 1   they prompt parties to act and they produce finality.”   Taylor
 2   v. Freeland & Kronz, 503 U.S. 638, 644 (1992).
 3        Moreover, Morrissey has provided no explanation for its
 4   untimeliness.   Morrissey has delayed the resolution of this case
 5   on the merits by failing to adhere to the clear directions and
 6   deadlines mandated by the bankruptcy court.   See Kleban,
 7   207 B.R. at 878.    Thus, we hold that the bankruptcy court did
 8   not abuse its discretion in dismissing Morrissey’s Complaint for
 9   failure to comply with the deadline set by the bankruptcy court.
10   C.   Debtor’s failure to lodge the order was harmless error.
11        Morrissey also argues that the order setting the thirty-day
12   deadline for filing the Complaint was never lodged as required
13   by Local Rule 9021-1(b)(3) and, thus, the Complaint should be
14   considered timely.   Morrissey’s contention is without merit.
15        Rule 9005 incorporates Civil Rule 61.    That rule states:
16        Unless justice requires otherwise, no error in admitting or
          excluding evidence - or any other error by the court or a
17        party - is ground for . . . disturbing . . . [an] order.
          At every stage of the proceeding, the court must disregard
18        all errors and defects that do not affect any party’s
          substantial rights.
19
20   (Emphasis added).    In other words, when an error does not affect
21   the substantial rights of a party, the error is harmless and the
22   trial court will not be reversed on appeal.   Citibank v. Arens
23   (In re Arens), 139 B.R. 667, 669 (Bankr. N.D. Ohio 1991).
24        Here, the order entered by the bankruptcy court on June 18,
25   2014, mirrored the bankruptcy court’s oral ruling made June 5,
26   2014, in that it struck Morrissey’s demand for a jury trial,
27   dismissed the SAC, and granted Morrissey “thirty (30) days from
28   the date of entry of [the June 18, 2014] order” to file a

                                      -17-
 1   further amended complaint.    Morrissey fails to identify any part
 2   of that order that would have been objectionable had the order
 3   been lodged prior to its entry.    Moreover, Morrissey does not
 4   explain how Debtor’s failure to lodge the order prejudiced
 5   Morrissey in any way, especially where Morrissey was given
 6   notice at the June 5, 2014 hearing that it would have thirty
 7   days from entry of the order to file a further amended
 8   complaint.   We hold that, since Morrissey fails to show what
 9   substantial right was affected, Debtor’s failure to lodge the
10   order was harmless error.
11   D.   Counts one through three in the SAC adequately state a
          cause of action.
12
13        Finally, Morrissey contends that the SAC adequately stated
14   a cause of action as to the first, second, and third claims for
15   relief and that Morrissey should be allowed to proceed on those
16   claims.   We agree.   The bankruptcy court concluded in its
17   June 5, 2014 tentative ruling that, though a close call, there
18   were just enough facts alleged in those claims for relief to
19   comply with the plausibility standard enunciated in Ashcroft v.
20   Iqbal, 556 U.S. 662 (2009).    However, at the June 5, 2014
21   hearing, the court abandoned its tentative ruling by dismissing
22   the SAC with leave to amend.    At that point, Morrissey could not
23   properly appeal the dismissal of the SAC; the June 18, 2014
24   order operated as an unappealable interlocutory order.    See
25   Lopez v. City of Needles, 95 F.3d 20 (9th Cir. 1996).    We
26   acquired jurisdiction over dismissal of the SAC only after the
27   bankruptcy court entered its order dismissing the entire action
28   under Rule 7041 for being untimely filed.    Civil Rule 41(b)

                                       -18-
 1   operates as an adjudication on the merits.
 2        A claim may be dismissed under Civil Rule 12(b)(6) either
 3   because it asserts a legal theory that is not cognizable as a
 4   matter of law or because it fails to allege sufficient facts to
 5   support an otherwise cognizable legal claim.    SmileCare Dental
 6   Grp. v. Delta Dental Plan of Cal., Inc., 88 F.3d 780, 783 (9th
 7   Cir. 1996).   In addressing a Civil Rule 12(b)(6) challenge, the
 8   Court accepts all factual allegations in the complaint as true
 9   (Hospital Building Co. v. Trustees of the Rex Hospital, 425 U.S.
10   738, 740 (1976)), and construes the pleading in the light most
11   favorable to the nonmoving party.   Tanner v. Heise, 879 F.2d
12   572, 576 (9th Cir. 1989).   “[D]ismissal without leave to amend
13   is improper unless it is clear, upon de novo review, that the
14   complaint could not be saved by any amendment.”   Schneider v.
15   Cal. Dep’t of Corr., 151 F.3d 1194, 1196 (9th Cir. 1998)
16   (quoting Chang v. Chen, 80 F.3d 1293, 1296 (9th Cir. 1996)).     To
17   survive a motion to dismiss under Civil Rule 12(b)(6), a
18   complaint need only set forth a short and plain statement of the
19   claim showing the pleader is entitled to relief; it “does not
20   need detailed factual allegations[.]”   Twombly, 127 S. Ct. at
21   1964.   Nevertheless, a plaintiff must set forth “more than
22   labels and conclusions, and a formulaic recitation of the
23   elements of a cause of action will not do[.]”   Id. at 1965.
24        Section 523(a)(2)(A) excepts from discharge debts incurred
25   through “false pretenses, a false representation, or actual
26   fraud.”   For this exception to discharge to apply, a creditor
27   must prove by a preponderance of the evidence each of the
28   following elements:   “‘(1) misrepresentation, fraudulent

                                     -19-
 1   omission or deceptive conduct by the debtor; (2) knowledge of
 2   the falsity or deceptiveness of his statement or conduct; (3) an
 3   intent to deceive; (4) justifiable reliance by the creditor on
 4   the debtor's statement or conduct; and (5) damage to the
 5   creditor proximately caused by its reliance on the debtor's
 6   statement or conduct.’”   Oney v. Weinberg (In re Weinberg),
 7   410 B.R. 19, 35 (9th Cir. BAP 2009) (quoting Turtle Rock Meadows
 8   Homeowners Ass’n v. Slyman (In re Slyman), 234 F.3d 1081, 1085
 9   (9th Cir. 2000)).   All five elements must be asserted in the
10   creditor's complaint for an exception to discharge; the creditor
11   bears the burden of proving each element by a preponderance of
12   the evidence.   Grogan v. Garner, 498 U.S. 279, 291 (1991);
13   In re Weinberg, 410 B.R. at 35.
14        While the SAC is poorly drafted, the Panel agrees with the
15   bankruptcy court’s tentative ruling that the SAC contained
16   sufficient facts as to the first, second, and third claims to
17   “‘nudge [them] across the line from conceivable to
18   plausible[,]’” Eclectic Props. E., LLC v. Marcus & Millichap
19   Co., 751 F.3d 990, 997 (9th Cir. 2014) (quoting Twombly,
20   550 U.S. at 570), as Civil Rule 8(a) requires.   Likewise, we
21   agree with the bankruptcy court that Morrissey pleaded those
22   claims with just enough particularity to apprise Debtor of what
23   he must defend.   The Ninth Circuit, in Yourish v. California
24   Amplifier, 191 F.3d 983, 993 (9th Cir. 1999), phrased the Civil
25   Rule 9(b) particularity requirement thusly: “[t]he plaintiff
26   must set forth what is misleading about a statement, and why it
27   is false.   In other words, the plaintiff must set forth an
28   explanation as to why the statement or omission complained of

                                       -20-
 1   was false or misleading.”
 2        For each claim, Morrissey sets forth in corresponding,
 3   albeit identical, paragraphs why it believes Debtor
 4   intentionally misrepresented his financial condition to
 5   Morrissey.   Morrissey alleges that, at the time the parties
 6   entered into the loan agreements, Debtor had previously
 7   defaulted on other loans he had personally guaranteed, that
 8   several of the entities he controlled had filed for bankruptcy
 9   and that the security for the various promissory notes was
10   worthless.   Morrissey also alleges Debtor knew of these facts
11   when he entered the written agreements with Morrissey, i.e.,
12   Morrissey alleged generally Debtor’s state of mind.     See Civil
13   Rule 9(b).   Application of Civil Rule 12(b)(6) requires us to
14   hold these factual allegations as true.      Moreover, Morrissey’s
15   alleged facts are just particular enough to put Debtor on notice
16   of what he will have to defend.
17        Because the first, second, and third claims for relief in
18   Morrissey’s SAC met both the plausibility and particularity
19   requirements of Civil Rules 8(a) and 9(b), respectively, it was
20   error for the bankruptcy court to dismiss those claims under
21   Civil Rule 12(b)(6).
22                               VI. CONCLUSION
23        For the foregoing reasons, we AFFIRM the dismissal of the
24   Third Amended Complaint, VACATE the dismissal of the three
25   claims under § 523(a)(2)(A) in the Second Amended Complaint, and
26   REMAND for further proceedings consistent with this Memorandum.
27
28

                                       -21-