Court Opinion

ID: 2658907
Source: CourtListenerOpinion
Date Created: 2014-03-31 17:07:54.836451+00
Date Added: 2024-06-11T12:18:18.166872
License: Public Domain

FILED
                                                           MAR 28 2014
 1                         NO FO PUBL A IO
                             T R     IC T N
                                                       SUSAN M. SPRAUL, CLERK
 2                                                       U.S. BKCY. APP. PANEL
                                                         OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )        BAP No.   SC-13-1206-JuKuPa
                                   )
 6   LIPPUNG AROONSAKOOL and       )        Bk. No.   11-06927-LA7
     VARATHIP AROONSAKOOL,         )
 7                                 )        Adv. No. 11-90299-LA
                    Debtors.       )
 8   ______________________________)
                                   )
 9   LUXURY JEWELS, LLC,           )
                                   )
10                  Appellant,     )
                                   )
11   v.                            )        M E M O R A N D U M*
                                   )
12   GREGORY A. AKERS,             )
                                   )
13                  Appellee.      )
     ______________________________)
14
                     Argued and Submitted on March 20, 2014
15                          at Pasadena, California
16                           Filed - March 28, 2014
17             Appeal from the United States Bankruptcy Court
                   for the Southern District of California
18
       Honorable Louise de Carl Adler, Bankruptcy Judge, Presiding
19                      _________________________
20   Appearances:     Douglas Jaffe, Esq. argued for appellant Luxury
                      Jewels, LLC; William P. Fennel, Esq. argued for
21                    appellee Gregory A. Akers, chapter 7 trustee.
                           _________________________
22
     Before:   JURY, KURTZ, and PAPPAS, Bankruptcy Judges.
23
24
25
26       *
          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.
28 See 9th Cir. BAP Rule 8013-1.

                                      -1-
 1            Chapter 71 trustee Gregory A. Akers filed a motion to
 2   substantively consolidate the estate of debtors, Lippung and
 3   Varathip Aroonsakool, with non-debtor entities Thai Export, LLC
 4   (TE) and Luxury Jewels, LLC (LJ).         The   bankruptcy court found
 5   that the requirements for substantive consolidation articulated
 6   in Alexander v. Compton (In re Bonham), 229 F.3d 750 (9th Cir.
 7   2000) were met and ordered the substantive consolidation nunc
 8   pro tunc to debtors’ petition date.         LJ appeals from this order.
 9   Finding no error, we AFFIRM.
10                                  I.   FACTS
11   A.       Prepetition Facts
12            1.   Debtors’ Jewelry Business
13            For many years, debtors owned and operated a family jewelry
14   business.      Debtors’ sons, Nimit and Nakon, and their daughter,
15   Tarrah, worked at the business as did Loxunipan Pomsavanh (Lox)
16   and her brother, Tanasin “Bo” Panusith (Bo), who were part of
17   the Aroonsakool household.2     In February 2007, debtors entered
18   into a seven-year lease at the Grove Plaza Shopping Center
19   (Grove Plaza) in National City, California, where they operated
20   their jewelry business named TE.
21            In January 2010, Hieu, Inc. filed a complaint against TE
22   alleging breach of contract for debtors’ failure to return
23
24        1
          Unless otherwise indicated, all chapter and section
   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
25 “Rule” references are to the Federal Rules of Bankruptcy
26 Procedure and “Civil Rule” references are to the Federal Rules of
   Civil Procedure.
27
        2
          Both Lox and Bo lived with debtors for many years but were
28 not their biological children.

                                         -2-
 1   jewelry items.    In June 2010, Hieu obtained a judgment against
 2   TE and proceeded to collect its judgment by placing a keeper at
 3   the Grove Plaza store.    In October 2010, Lox accepted service on
 4   behalf of TE for placement of a keeper.    Donald Jaffee, counsel
 5   for LJ in this matter, filed a third party claim in the case on
 6   behalf of TE and submitted the declaration of Varathip in
 7   opposition to the keeper.    The declaration, signed under penalty
 8   of perjury, stated that the market value of the property at the
 9   Grove Plaza store was $1 million and that TE had been denied
10   access to its records.    Ultimately, Jaffee represented TE in a
11   settlement between Hieu and TE.
12        Tax Returns for the year 2010 show that TE had a beginning
13   2010 inventory value of $677,725 and end of year 2010 inventory
14   value of $650,580.    At some point in 2010, TE went out of
15   business.
16        2.     LJ Is Formed And Opened For Business
17        On January 4, 2011, LJ was formed.    Lox is the sole owner
18   and managing member of LJ.
19        Twenty days prior to debtors’ bankruptcy filing, Lox was
20   added as an additional tenant to the Grove Plaza lease based on
21   representations from debtors that she was going to operate the
22   store as her own business.    At that time, Lox submitted an
23   application to the landlord containing information about her
24   financial condition.    Lox stated that she was a current employee
25   of TE, held the position of manager, and that her salary was
26   $24,000 a year.    Lox listed assets valued at $10,000, but at the
27   same time stated that she would spend $250,000 to acquire
28

                                     -3-
 1   inventory for her business.3    Later, in a deposition conducted
 2   in connection with the substantive consolidation motion at issue
 3   in this appeal, Lox explained away these facts by testifying
 4   that she made them up.
 5           Lox then proceeded to open LJ for business.   A few days
 6   before the landlord received notice of debtors’ bankruptcy
 7   filing, the TE store sign was removed and a new sign installed
 8   changing the name of the business to LJ.4    During the pendency
 9   of the bankruptcy, the lease was amended to reflect Lox as the
10   sole tenant and guarantor of the lease as of June 1, 2011.      The
11   record evidence shows LJ used the same computers, database,
12   furniture, fixtures, and equipment that TE had used.      LJ also
13   used the same business forms and invoices that TE had used and,
14   in many cases, the name of TE was crossed out on the form and
15   the name of LJ substituted.     As in the case of TE, workers at LJ
16   included Lox, Nimit, and Nakon.     Nakon and Nimit both testified
17   that they “helped out” at LJ.     Further, another employee who was
18   a jeweler worked at TE and then worked at LJ.
19           Lox admitted that TE left some jewelry at the Grove Plaza
20   store when it closed down, including brass, stainless steel and
21   silver items.     In deposition testimony, Lox claimed that the
22
23
         3
          Lox listed Varathip as a reference in her application,
24 stating that Varathip was her mother.
25       4
          According to the record, Nimit contacted Best Sign Company
26 to create a sign for a “new company” in January 2011. Trustee
   alleges that the “new company” was LJ, but in opposition to
27 trustee’s motion for summary judgment (MSJ) (described in further
   detail below), Nimit allegedly intended to open a company by the
28 name of Coast Gem USA, LLC.

                                      -4-
 1   remaining jewelry located at the Grove Plaza store was hers and
 2   came from an entity called 99 Jewelry owned by her and her
 3   brother Bo which operated between 2001 and 2005.       However, the
 4   record also indicates Varathip owned 50% of 99 Jewelry as
 5   represented in a credit application for Mercedes-Benz.       Lox
 6   testified that when 99 Jewelry shut down in 2006, she stored the
 7   jewelry in a safe deposit box at Union Bank.       The record reveals
 8   that Union Bank was unable to identify a safe deposit box in the
 9   name of LJ or Lox.5
10            Moreover, the record contains no evidence that LJ or Lox
11   paid anything to debtors or TE for the business or the jewelry
12   other than Lox’s testimony that she paid TE for the computer,
13   furniture, safe and fixtures which were at the Grove Plaza
14   store.      Although Lox testified that she never borrowed money
15   from anyone for the purpose of opening or operating LJ, her own
16   testimony shows that she did not have the financial wherewithal
17   to purchase any of TE’s assets.       Contrary to the financial
18   information that she gave Grove Plaza when she was added to the
19   lease, she testified that prior to December 2010, she was not
20   employed anywhere other than as a caretaker for her grandmother
21   since 2000.      Although she received $800-900 a month from the
22   state or federal government to care for her grandmother, Lox
23   testified that she received no other income.
24   B.       Bankruptcy Events:   Procedural History
25            On April 28, 2011, debtors filed a chapter 7 petition.
26
          5
27        Bo also declared that his purchase and storage of jewelry
   from 99 Jewelry was placed with LJ for sale, but trustee did not
28 take his deposition.

                                        -5-
 1   Akers was appointed the trustee.       At the time of their filing,
 2   debtors owed over $1.3 million in unsecured debt.
 3           Debtors stated in their petition that they formerly did
 4   business as TE.     Under personal property in Schedule B, they
 5   listed TE as 70% owned by them jointly and described:
 6           Wife owns 50%, Husband owns 20%, three children each
             own 10%. Consignment based jewelry business. Imports
 7           and exports jewelry from Thailand to USA. Neither Debtors
             nor business have ownership interest in jewelry sold.
 8           Debtors ceased operatio[n] (sic).
 9   Debtors assigned a value of 0.00 to TE.      Debtors listed
10   creditors who held judgments against TE alone or against both TE
11   and debtors in Schedule F.6
12           Prior to the initial meeting of creditors, a listed
13   creditor, Saif Siddiqui of Americans/Gold/Diamonds, contacted
14   trustee advising him that debtors were continuing to operate the
15   jewelry store through their children to “defraud creditors” and
16   that the “new” company existed at the same location (Grove
17   Plaza) with the same employees.     Siddiqui also stated that he
18   spoke to other vendors with smaller debts and that they were
19   being paid with checks issued by LJ to pay debts owed by TE.
20           1.   Trustee’s Lockdown Of The Grove Plaza Store
21           At the § 341(a) meeting of creditors on May 26, 2011,
22   debtors testified that all of the inventory of TE was
23   consignment jewelry of undisclosed wholesale sellers or other
24   jewelry proprietors and, prior to the bankruptcy filing, all
25   jewelry inventory of TE had been returned to the consigning
26
         6
27        We take judicial notice of debtors’ petition and
   schedules. Atwood v. Chase Manhattan Mortg. Co. (In re Atwood),
28 293 B.R. 227, 233 n.9 (9th Cir. BAP 2003).

                                      -6-
 1   parties.      There is no documentation in the record showing that
 2   all the jewelry located at the Grove Plaza store was consigned —
 3   although some of it was — nor is there any documentation showing
 4   that the jewelry was returned to the consigning parties.
 5            On the same day, without the benefit of a court order,
 6   trustee locked down the Grove Plaza store to protect the assets
 7   for the benefit of creditors.
 8            2.   The Adversary Complaint
 9            Less than a month later, on June 20, 2011, trustee filed an
10   adversary complaint against LJ, Lox, and the Aroonsakool
11   children (Nimit, Nakon and Tarrah) seeking declaratory and
12   injunctive relief and alleging claims for turnover and to avoid
13   and recover fraudulent transfers.       Trustee sought a declaration
14   that the jewelry at the Grove Plaza store was property of
15   debtors’ estate.7
16            LJ and Lox filed answers to the complaint and a
17   counterclaim against trustee for damages arising from trustee’s
18   seizure of the business.      In November 2011, LJ and Lox filed an
19   amended counterclaim alleging claims against trustee for
20   violation of duties, conversion, trespass and fraud, and seeking
21   declaratory and injunctive relief.      A year later, in November
22
          7
23          On September 29, 2011, trustee moved to sell the personal
     property at the Grove Plaza store. LJ and Lox opposed,
24   contending that the personal property was not part of the
     bankruptcy estate and that an adversary proceeding was required.
25   In November 2011, the bankruptcy court denied trustee’s motion on
26   the grounds that it could not allow a sale of property as
     “property of the estate” without first determining whether the
27   debtor in fact owned the property, see Moldo v. Clark
     (In re Clark), 266 B.R. 163, 172 (9th Cir. BAP 2001), and noted
28   that trustee had an adversary proceeding pending.

                                       -7-
 1   2012, trustee entered into an agreement with LJ, Lox, Bo and
 2   Grove Plaza, LP, which settled, among other things, the
 3   counterclaim.        In exchange for Grove Plaza, LP withdrawing its
 4   bankruptcy claim, trustee’s insurer paid Grove Plaza, LP $23,500
 5   for unpaid rent and LJ $110,000 in damages.8       In December 2012,
 6   the counterclaim was dismissed.
 7                   a.   Motion For Summary Judgment
 8                   On December 4, 2011, trustee filed a MSJ seeking
 9   judgment on all claims alleged in the complaint as a matter of
10   law.        Trustee argued that debtors and TE were alter egos because
11   debtors did not observe any corporate formalities as shown by
12   the undisputed evidence.        He further maintained that the
13   transfers of TE’s property to LJ were avoidable as fraudulent
14   transfers as a matter of law.
15              In opposition to the MSJ, Nimit submitted a declaration
16   stating that “[n]one of the assets of Thai Export were in any
17   way transferred to Luxury . . . [Lox] was the owner of Luxury
18   and I saw her purchasing inventory for Luxury and I assisted in
19   purchasing inventory for Luxury, using Luxury funds.”        Debtors
20   each submitted declarations stating that at the time of their
21   bankruptcy filing, there was no property owned by them at the
22
23
            8
          It appears that after trustee locked down the premises, he
24 discovered that $10,000 worth of the jewelry actually belonged to
   LJ. Moreover, trustee held jewelry that was on layaway or in for
25 repairs. However, trustee continued to maintain that the total
26 value of jewelry at the store was $150,000. LJ argues in its
   reply brief on appeal that trustee’s settlement is evidence that
27 trustee seized property which did not belong to the bankruptcy
   estate. Therefore, according to LJ, the bankruptcy court should
28 not have ordered substantive consolidation.

                                         -8-
 1   Grove Plaza store.   They further declared that the only jewelry
 2   left was costume brass jewelry that was on consignment from
 3   Micron, a vendor in Thailand.
 4        In January 2013, the bankruptcy court denied the MSJ,
 5   noting that under the holdings in In re Wheeler, 444 B.R. 598,
 6   607-10 (Bankr. D. Idaho 2011) and In re Wardle, 2006 WL 6811026
 7   (9th Cir. BAP 2006), trustee’s request to treat the assets of a
 8   non-debtor entity as the debtor’s assets for purpose of bringing
 9   those assets into the bankruptcy estate, or to obtain standing
10   to assert fraudulent conveyance theories as to transfers of the
11   non-debtor’s assets, is tantamount to a request for substantive
12   consolidation.   The court observed that trustee’s complaint had
13   not pled “reverse veil piercing” or “substantive consolidation”
14   theories, nor had he filed a motion for substantive
15   consolidation.   However, the bankruptcy court noted that the
16   adversary proceeding had not yet gone to trial and, given the
17   strength of trustee’s evidence that TE was operated as a sole
18   proprietorship and that LJ was a sham, the court denied
19   trustee’s MSJ without prejudice.      The court gave trustee thirty
20   days to amend his complaint or take whatever actions he deemed
21   necessary to place the issues properly before the court.
22             b.     Motion For Substantive Consolidation
23             On February 22, 2013, trustee filed a motion to
24   substantively consolidate debtors’ estate with non-debtors, TE
25   and LJ, or, alternatively, for leave to file an amended
26
27
28

                                     -9-
 1   complaint.9    In support, trustee submitted more than a hundred
 2   pages of exhibits and other evidence intended to show that
 3   debtors and TE disregarded corporate formalities and that LJ
 4   used the same premises, furniture, fixtures, and showcases
 5   previously used by TE without paying TE or debtors a dime.      In
 6   addition, trustee included evidence that showed TE and LJ used
 7   the same forms for jewelry consignments and invoices and other
 8   matters, changing only the names on the forms.      Finally, trustee
 9   maintained that creditors of debtors, TE and LJ dealt with the
10   entities as a single economic unit.
11           On March 11, 2013, the date opposition was due, LJ filed an
12   ex parte application for a four-day extension of time to respond
13   to trustee’s motion.     It argued that:   the motion was
14   “voluminous” with more than a hundred pages of exhibits and
15   declarations; the pleading actually contained two motions - the
16   motion for substantive consolidation and a motion to amend; the
17   motion was in breach of the settlement agreement between trustee
18   and LJ on the counterclaim asserted in the complaint; and
19   counsel for LJ was engaged in post-trial proceedings in state
20   court which had a due date of March 8, 2013.      In a supporting
21   declaration, Jaffee declared that he had been seriously ill from
22   March 8, 2013, to the date of the filing of the request for
23   continuance.
24           Trustee filed a limited opposition.   Trustee maintained
25   that the motion for substantive consolidation did not violate
26
         9
27        The motion was filed in the adversary proceeding. Notice
   was given to creditors listed on the creditor’s matrix and also
28 to creditors of TE and LJ.

                                      -10-
 1   the settlement agreement and noted that the exhibits submitted
 2   in support of the motion were the same as those filed in
 3   connection with trustee’s MSJ.    In addition, if the bankruptcy
 4   court granted LJ’s extension of time, trustee requested a
 5   three-day extension to file his reply.
 6        On March 13, 2013, the bankruptcy court denied the
 7   application because LJ’s requested extension of time, followed
 8   by a concomitant request for extension of time by trustee to
 9   reply, left the court with an unacceptably brief period of time
10   to prepare for the motion.
11        Despite the bankruptcy court’s denial order, LJ filed an
12   opposition to trustee’s motion on March 15, 2013.    LJ’s
13   opposition contained no substantive arguments.    In oral argument
14   before this court, Jaffe maintained that he could not assert any
15   substantive arguments because the bankruptcy court had denied
16   his request for a continuance.    Instead, LJ asserted in
17   opposition that a continuance should have been granted and that,
18   by not allowing the extension, it appeared the bankruptcy court
19   was going out of its way to assist trustee.10    LJ further argued
20   that any amendment to the complaint would be prejudicial due to
21   the passage of time.   Finally, LJ complained that trustee had
22   failed to include an amended complaint.
23        On April 9, 2013, the bankruptcy court issued a tentative
24
25       10
          To the extent Jaffe implies that the court’s denial of
26 his motion for a continuance evidences bias, this argument has no
   merit. Adverse rulings by themselves do not constitute the
27 requisite bias necessary to warrant recusal of a judge even if
   the rulings were erroneous. United States v. Nelson, 718 F.2d
28 315, 321 (9th Cir. 1983).

                                      -11-
 1   ruling granting trustee’s motion for substantive consolidation.
 2   In the tentative, the court recited the Bonham factors, applied
 3   them to the facts based on the evidence before it, and found
 4   substantive consolidation was warranted.     At the April 11, 2013
 5   hearing on the matter, the bankruptcy court adopted its
 6   tentative and directed counsel for trustee to file detailed
 7   findings of fact and conclusions of law (FFCL).
 8        On April 25, 2013, LJ filed a notice of appeal.    On May 17,
 9   2013, the bankruptcy court entered the FFCL and on May 23, 2013
10   entered the order granting trustee’s motion.    On May 31, 2013,
11   LJ filed an amended notice of appeal.11
12                           II.   JURISDICTION
13        The bankruptcy court had jurisdiction over this proceeding
14   under 28 U.S.C. § 157(b)(1) and (b)(2)(A).    We now address our
15   jurisdiction over this appeal.
16        Orders denying a motion for a continuance are generally
17   interlocutory.   “Unlike final orders, interlocutory orders
18   decide merely one aspect of the case without disposing of the
19   case in its entirety on the merits.”    See United States v. Real
20   Prop. Located at 475 Martin Ln., Beverly Hills, Cal., 545 F.3d
21   1134, 1141 (9th Cir. 2008).   “A court’s ruling on a motion to
22   continue does not end the litigation.”    Roque v. Ynguez
23   (In re Roque), 2014 WL 351424, at 5* (9th Cir. BAP 2014).
24   Nonetheless, an interlocutory order such as the order denying a
25
         11
26        Subsequently, trustee obtained court orders authorizing
   him to employ an auctioneer and sell the personal property. The
27 jewelry and other personal property was sold at auction for
   $123,306.96. LJ appealed the court’s ruling authorizing the sale
28 of the personal property in BAP No. 13-1539.

                                      -12-
 1   motion to continue merges into the final order deciding the
 2   merits.    Real Prop. Located at 475 Martin Ln., Beverly Hills,
 3   Cal., 545 F.3d at 1141 (interlocutory orders entered prior to
 4   the judgment merge into the judgment and may be challenged on
 5   appeal).    Accordingly, the continuance order merged into the
 6   final order granting trustee’s motion for substantive
 7   consolidation.    As such, it can be challenged on appeal.         See
 8   Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375 F.3d
9   861, 872 n.7 (9th Cir. 2004) (appeal of final judgment draws
10   into question all earlier, non-final orders and rulings which
11   produced the judgment).
12        With respect to the substantive consolidation order, the
13   Clerk’s Office issued an Order re Finality, requiring LJ to file
14   a response regarding the finality of the order.         After LJ
15   responded, although the order appears final, the Panel granted
16   LJ leave to appeal to the extent it was necessary.         Therefore,
17   we are satisfied that we have jurisdiction to decide this appeal
18   under 28 U.S.C. § 158.
19                                III.    ISSUES
20        A.     Whether the bankruptcy court abused its discretion by
21   denying LJ’s ex parte application for an extension of time to
22   file its opposition; and
23        B.     Whether the bankruptcy court erred by granting
24   trustee’s motion to substantively consolidate the estate of
25   debtors with the non-debtor entities TE and LJ nunc pro tunc.
26                         IV.   STANDARDS OF REVIEW
27        The bankruptcy court’s denial of an extension of time is
28   reviewed for abuse of discretion.          Orr v. Bank of Am., 285 F.3d

                                         -13-
 1   764, 783 (9th Cir. 2002).    The court abuses its discretion if it
 2   applied the wrong legal standard or its findings were illogical,
 3   implausible or without support in the record.
 4   TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832 (9th
 5   Cir. 2011).
 6        Application of the factors for substantive consolidation in
 7   Bonham to the underlying facts presents a mixed question of law
 8   and fact, where factual determinations are reviewed under the
 9   clearly erroneous standard, and determinations of law are
10   reviewed de novo.   See Meyer v. Lepe (In re Lepe), 470 B.R. 851,
11   855 (9th Cir. BAP 2012) (citing Andrews v. Loheit
12   (In re Andrews), 155 B.R. 769, 770 (9th Cir. BAP 1993)); see
13   also Murray v. Bammer (In re Bammer), 131 F.3d 788, 792 (9th
14   Cir. 1997).
15        We review for abuse of discretion a bankruptcy court’s
16   entry of a nunc pro tunc approval of a motion.   In re Bonham,
17 229 F.3d at 764.
18                               V.   DISCUSSION
19   A.   The Bankruptcy Court Did Not Err In Denying LJ’s Request
          For An Extension Of Time
20
21        LJ’s main argument on appeal is that the bankruptcy court’s
22   error in denying its request for an extension of time to file
23   opposition to trustee’s motion warrants reversal of the
24   consolidation order.   According to LJ, the bankruptcy court
25   should have granted its request under the holding in Ahanchian
26   v. Xenon Pictures, 624 F.3d 1253 (9th Cir. 2010) which discusses
27   the standards for extension requests under Civil Rule 6(b)(1).
28   There, the Ninth Circuit held that requests for extensions of

                                       -14-
 1   time made before the applicable deadline has passed should
 2   normally be granted in the absence of bad faith or prejudice to
 3   the adverse party.   LJ asserts that there is no evidence it
 4   acted in bad faith nor would there have been prejudice to
 5   trustee had the continuance been granted.
 6        We have previously noted that the standards in Ahanchian
 7   are not applicable to requests for an extension of time:
 8        A careful reading of the Bankruptcy Rules shows that
          Civil Rule 6(b)(1) does not apply in adversary
 9        proceedings. Unlike many other Civil Rules, the Rules
          do not incorporate Civil Rule 6. Instead, portions of
10        Civil Rule 6 are adopted via Rule 9006, which governs,
          generally, “enlargement” of time periods. And while
11        some of the language of Civil Rule 6(b)(1) is similar
          to that in Rule 9006(b), the provisions of Civil
12        Rule 6(b)(1) establishing the “good cause” standard
          for granting extensions of time are not adopted in the
13        Rules.
14   N. Cal. Small Bus. Fin. Dev. Corp. v. Arnold Bellow
15   (In re Bellow), 2011 WL 4502916, at *5 (9th Cir. BAP 2011),
16   aff’d, In re Bellow, 544 Fed.Appx. 732 (9th Cir. 2013).    Because
17   Rule 9006(b) controls all motions for extensions of time in the
18   bankruptcy courts (whether made in an adversary proceeding or
19   not), Civil Rule 6(b)(1) standards for extensions of time do not
20   apply.   Therefore, LJ’s reliance on Ahanachian is misplaced.
21        Rule 9006(b)(1) states that a bankruptcy court may at any
22   time in its discretion enlarge the time period in which an act
23   is required or allowed to be done.    A bankruptcy court has
24   substantial discretion to control its own calendar.    Danjaq LLC
25   v. Sony Corp., 263 F.3d 942, 960–61 (9th Cir. 2001).    Four
26   factors are relevant to our inquiry into whether the court
27   abused its discretion in denying a continuance:    (1) whether the
28   requesting party has been diligent; (2) whether there is a

                                    -15-
 1   genuine need for the continuance; (3) whether the continuance
 2   will inconvenience the Court and the opposing party including
 3   its witnesses; (4) whether the requesting party will suffer
 4   prejudice if the request is denied.    Absent a showing of
 5   prejudice suffered by LJ, we will not disturb the bankruptcy
 6   court’s ruling.   Danjaq, 263 F.3d at 961; see also Berry v. U.S.
 7   Trustee (In re Sustaita), 438 B.R. 198, 210-11 (9th Cir. BAP
 8   2010), aff’d, 460 Fed. Appx. 627 (9th Cir. 2011).
 9        LJ points to no prejudice arising from the denial of its
10   request for an extension of time other than a generalized
11   assertion that had the bankruptcy court allowed the short
12   extension of time, it would have been able to present the court
13   with the facts and arguments against ordering the substantive
14   consolidation of LJ with debtors.     This vague allegation is not
15   adequate to satisfy the prejudice requirement.    See United
16   States v. LaRouche, 896 F.2d 815, 825 (4th Cir. 1990) (observing
17   that “[m]ore than a general allegation of ‘we were not prepared’
18   is necessary to demonstrate prejudice”).    Indeed, on appeal LJ
19   identifies no arguments it would have made had it more time to
20   prepare nor does it rebut trustee’s evidence with its own offer
21   of proof.
22        At oral argument, the Panel questioned counsel for LJ about
23   how its arguments or evidence would differ from that presented
24   in opposition to trustee’s MSJ.   Counsel maintained that the
25   evidence in opposition to substantive consolidation would be
26   “significantly different” from evidence submitted in opposition
27   to the MSJ.   This argument is not persuasive.   Trustee’s MSJ
28   raised the issue of whether debtors and TE were alter egos.

                                    -16-
 1   Alter ego doctrine and substantive consolidation overlap when
 2   the second factor under Bonham is at issue.    “Entanglement can
 3   be shown where there is a unity of interest and common ownership
 4   between the debtor and the target entities, the target entities
 5   were ‘but instrumentalities of the bankrupt with no separate
 6   existence,’ there was commingling of assets and no clear
 7   demarcation between the affairs of the debtor and the target
 8   entities, and adhering to the separate corporate entities theory
 9   would result in an injustice to the bankrupt’s creditors.”
10   Sharp v. Salyer (In re SK Foods, Ltd.), 499 B.R. 809, 833-34
11   (Bankr. E.D. Cal. 2013) (citing In re Bonham, 229 F.3d at 767).
12   Thus, the presence of traditional “alter ego” factors may
13   provide a basis to find that the affairs of the debtor are so
14   entangled such that consolidation will benefit all creditors.
15   In re SK Foods, 499 B.R. at 833 (citing Meruelo Maddux
16   Props.–760 S. Hill Street, LLC v. Bank of Am., N.A.
17   (In re Meruelo Maddux Props., Inc.), 667 F.3d 1072, 1075 n.1
18   (9th Cir. 2012) (“Appellate courts have ratified substantive
19   consolidation orders when, for example, the debtors have abused
20   corporate formalities, or creditors have treated the separate
21   entities as a single unit and the business affairs of the
22   consolidated entities were hopelessly entangled.”).
23        In addition, two of the other three factors in Danjaq weigh
24   against LJ.   The record shows that the requested extension would
25   not have served any legitimate need of LJ.    In opposing
26   trustee’s MSJ, LJ submitted the testimony of Lox to support its
27   ownership claim to the jewelry.   However, in concluding that
28   substantive consolidation was warranted, the bankruptcy court

                                    -17-
 1   relied on trustee’s evidence which impeached Lox’s credibility
 2   as a witness.   There is no indication in the record or in LJ’s
 3   brief on appeal that an extension of time would have assisted LJ
 4   in refuting the trustee’s evidence to support its ownership
 5   claim.   Further, the bankruptcy court specifically found that an
 6   extension of time would be inconvenient for the court as it
 7   would not have adequate time to prepare.    Under these
 8   circumstances, LJ was not prejudiced and we will not disturb the
 9   court’s ruling denying its request for an extension of time.
10   B.   The Bankruptcy Court Did Not Err When It Granted the
          Substantive Consolidation Motion Nunc Pro Tunc
11
12        Substantive consolidation is an uncodified, equitable
13   doctrine allowing the bankruptcy court, for purposes of the
14   bankruptcy, to “combine the assets and liabilities of separate
15   and distinct—but related—legal entities into a single pool and
16   treat them as though they belong to a single entity.”
17   In re Bonham, 229 F.3d at 764.    The doctrine “enables a
18   bankruptcy court to disregard separate corporate entities, to
19   pierce their corporate veils in the usual metaphor, in order to
20   reach assets for the satisfaction of debts of a related
21   corporation.”   Id.   The essential purpose behind the doctrine
22   is one of fairness to all creditors, but it is a doctrine to be
23   used sparingly.   Id. at 764, 768.
24        In Bonham, the Ninth Circuit adopted a disjunctive two-
25   factor test for determining whether application of the
26   substantive consolidation doctrine is warranted.    In applying
27   the test, courts consider whether creditors dealt with the
28   entities as a single economic unit and did not rely on their

                                      -18-
 1   separate identity in extending credit or whether the affairs of
 2   the debtor are so entangled that consolidation will benefit all
 3   creditors. 229 F.3d at 766.   “In either case, the bankruptcy
 4   court must in essence determine that the assets of all of the
 5   consolidated parties are substantially the same.”     Bonham,
 6 229 F.3d at 771.    Ultimately, the decision to apply the
 7   substantive consolidation doctrine stems from a weighing of the
 8   equities and must be tailored to meet the needs of each
 9   particular case.    Id.
10        Trustee, as the moving party, has the initial burden of
11   showing either one of the Bonham factors are met.     Reider v.
12   Fed. Deposit Ins. Corp. (In re Reider ), 31 F.3d 1102, 1107
13   (11th Cir. 1994).    Once trustee establishes a close
14   interrelationship between debtors and the non-debtor entities,
15   there is a presumption that creditors did not rely on their
16   separate credit.    The burden of proof then shifts to the parties
17   opposing substantive consolidation to show otherwise.     Bonham,
18 229 F.3d at 767.
19        We begin by reviewing the evidence regarding the
20   interrelationship between debtors and TE.     At the outset, we
21   observe that there is some question whether TE had a signed and
22   dated operating agreement; there was no agreement in the
23   record.12    Moreover, there is no evidence in the record that TE
24
25       12
          Cal. Corp. Code § 17701.10 entitled “Operating agreement;
26 scope; limitations, variations, and modifications; fiduciary
   duty; indemnification and damages” provides:
27
        (a) Except as otherwise provided in this section, the
28                                                       continue...

                                      -19-
 1   ever held formal meetings, took minutes or conducted an election
 2   of officers.   The record also establishes that TE was never
 3   capitalized by debtors or debtors’ children, who were also
 4   listed as members of TE.   Further, although family members
 5   testified13 that they “helped out” at TE, the evidence shows that
 6   they were not paid as employees.    Even debtors did not receive
 7   any wages, or guaranteed payments from TE, per their 1040 tax
 8   returns.   These facts, which are not contested, show that
 9   debtors operated TE as a sole proprietorship and, with no source
10   of any other income, took money from the business as needed,
11   treating the assets as their own.
12        The line of corporate separateness between TE and LJ is
13   more blurry.   As noted by the bankruptcy court, LJ was formed
14   when debtors/TE were facing litigation and post-judgment
15   collection activities from creditors.   Moreover, as the record
16   indicates, LJ was in reality simply a continuation of TE’s
17
18        12
           ...continue
19       operating agreement governs all of the following:

20       (1) Relations among the members as members and between
         the members and the limited liability company.
21
22       (2) The rights and duties under this title of a person
         in the capacity of manager.
23
         (3) The activities of the limited liability company and
24       the conduct of those activities.
25       (4) The means and conditions for amending the operating
26       agreement.
         13
27        Trustee deposed some of the family members and included
   portions of these depositions as evidence in support of the
28 consolidation motion.

                                    -20-
 1   business.   Family members who worked for TE also worked for LJ.
 2   LJ occupied the same space as TE, engaged in the same business
 3   and used the same equipment and business forms as TE, sometimes
 4   just striking out the name of TE.     Payment for debtors’
 5   bankruptcy attorneys and other personal payments came from LJ
 6   accounts.   Further, Lox admitted that some of the jewelry left
 7   at the Grove Plaza store belonged to debtors/TE.     After months
 8   of discovery, however, the record shows that LJ still did not
 9   accurately identify and segregate the jewelry that belonged to
10   debtors/TE from that of LJ.
11        The commingling of assets, the difficulty in segregating
12   and ascertaining debtors’ assets and liabilities from those of
13   TE and LJ, and the transfer of TE’s assets to LJ without any
14   corporate formality demonstrate the type of close
15   interrelationship between debtors and the non-debtor entities
16   which warrants substantive consolidation.     Accordingly, the
17   bankruptcy court’s decision to apply the substantive
18   consolidation doctrine nunc pro tunc was appropriate.
19        In the end, the bankruptcy court also considered evidence
20   submitted by LJ in opposition to trustee’s MSJ which allegedly
21   showed that LJ owned the jewelry found at the Grove Plaza store.
22   In this regard, Lox testified in opposition to trustee’s MSJ
23   that the jewelry came from 99 Jewelry, a business that she owned
24   with her brother.   Trustee’s evidence shows however that debtor,
25   Varathip Arronsakool, held herself out as a 50% owner of
26   99 Jewelry.   Further, trustee’s expert, Alan Myers, testified
27   that there were no bank statements, cancelled checks, income tax
28   returns or sales tax returns that support or document that Lox

                                    -21-
 1   or 99 Jewelry paid for any of the items.   In addition, there
 2   were no sales records for 99 Jewelry nor was there proof that
 3   Lox had stored the items in a safe deposit box in the National
 4   City Branch of Union Bank or anywhere else despite the fact that
 5   she testified to the same.   Finally, as already noted, Lox’s own
 6   testimony was that she was unemployed and thus did not have the
 7   financial means to purchase any of the jewelry.14
 8        To the extent the bankruptcy court was required to make
 9   credibility determinations or make inferences from these facts,
10   its determination that LJ did not own the jewelry found at the
11   Grove Plaza store is reviewed under the clearly erroneous
12   standard.   We cannot conclude that the bankruptcy court’s
13   findings were clearly erroneous when they are based on a
14   plausible view of the evidence as a whole.   “Where there are two
15   permissible views of the evidence, the factfinder’s choice
16   between them cannot be clearly erroneous.”   Anderson v. City of
17   Bessemer City, N.C., 470 U.S. 564, 574 (1985).   These factual
18   findings, unchallenged by LJ on appeal, lend additional support
19   to the bankruptcy court’s legal conclusion that application of
20   the substantive consolidation doctrine nunc pro tunc15 was
21   warranted because the assets of debtors, TE and LJ are
22
         14
23         There is also no written agreement with debtors/TE that
   shows Lox paid anything to purchase TE. At the continued 341(a)
24 meeting of creditors held on June 29, 2011, debtors testified
   that they had no written agreement with Lox to sell her jewelry.
25
        15
26         LJ makes no argument on appeal that the nunc pro tunc
   aspect of the bankruptcy court’s decision was an abuse of
27 discretion. “[O]n appeal, arguments not raised by a party in its
   opening brief are deemed waived.” Smith v. Marsh, 194 F.3d 1045,
28 1052 (9th Cir. 1999).

                                    -22-
 1   substantially the same.
 2                             VI.   CONCLUSION
 3        For the reasons stated, we AFFIRM.
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