Court Opinion

ID: 9405007
Source: CourtListenerOpinion
Date Created: 2023-06-26 22:01:10.345431+00
Date Added: 2024-06-11T17:20:18.524943
License: Public Domain

FILED
                          NOT FOR PUBLICATION                                     JUN 26 2023
                                                                             SUSAN M. SPRAUL, CLERK
                                                                               U.S. BKCY. APP. PANEL
          UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT
                    OF THE NINTH CIRCUIT

 In re:                                             BAP No. NC-23-1022-CBG
 ARTEM KOSHKALDA,
            Debtor.                                 Bk. No. 18-30016

 ARTEM KOSHKALDA,
              Appellant,
 v.                                                 MEMORANDUM*
 E. LYNN SCHOENMANN, Chapter 7
 Trustee,
              Appellee.

              Appeal from the United States Bankruptcy Court
                   for the Northern District of California
             Hannah L. Blumenstiel, Bankruptcy Judge, Presiding

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

                                 INTRODUCTION

      Chapter 7 1 debtor and appellant, Artem Koshkalda, appeals the

bankruptcy court’s denial of his application for leave to file pleadings.

Previously, the bankruptcy court determined that Mr. Koshkalda was a

      *
        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.
      Unless specified otherwise, all chapter and section references are to the
      1

Bankruptcy Code, 11 U.S.C. §§ 101-1532.
vexatious litigant and entered a pre-filing order as a sanction. The pre-

filing order required that Mr. Koshkalda submit an application before filing

any pleadings demonstrating that the proposed filings were in good faith

and were not for the purpose of harassment. Because the bankruptcy court

did not err in finding that Mr. Koshkalda’s proposed filings repeated

arguments already raised and rejected, the bankruptcy court did not err in

finding that the pleadings were not in good faith and for harassment.

Accordingly, the bankruptcy court did not abuse its discretion in denying

Mr. Koshkalda’s application for leave to file pleadings. Therefore, we

AFFIRM.

                                   FACTS

A.    History

      Because the parties are familiar with the facts and procedural history,

there is no need to restate them in detail here except as necessary to the

decision.

      In September 2016, Seiko Epson sued Mr. Koshkalda and several

other individuals and entities for trademark infringement, trademark

counterfeiting, and related claims in Nevada district court. The Nevada

district court entered orders prohibiting Mr. Koshkalda and the other

defendants from continuing to engage in their wrongful conduct, as well as

orders freezing and/or authorizing the seizure of most of Mr. Koshkalda’s

property, including several parcels of real estate and dozens of bank

accounts. Mr. Koshkalda, however, violated several of the Nevada district

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court orders and engaged in discovery abuses so severe that the district

court imposed case-terminating sanctions and entered a default judgment

in the amount of $12 million in favor of Seiko Epson.

     In January 2018, Mr. Koshkalda filed a chapter 11 petition. On March

8, 2018, the court converted the case to one under chapter 7, after which a

chapter 7 trustee was appointed. The trustee filed an application to employ

Fox Rothschild LLP (“Fox”) as general bankruptcy counsel disclosing that

Fox concurrently represented Seiko Epson in unrelated matters. Mr.

Koshkalda did not file an opposition to the application to employ Fox. The

bankruptcy court approved Fox’s employment after determining that Fox

did not represent any interest adverse to the estate and was a disinterested

person within the meaning of the Bankruptcy Code.

     In June 2018, Seiko Epson obtained an order annulling the automatic

stay. The order retroactively validated the Nevada district court’s entry of

the $12 million default judgment against Mr. Koshkalda and also permitted

Koshkalda to proceed with his appeal from that judgment. The Ninth

Circuit affirmed the district court’s judgment.

     In May 2018, Seiko Epson commenced an adversary proceeding

objecting to Koshkalda’s discharge under § 727 and seeking to except the

judgment debt from discharge under § 523 (“Epson Adversary

Proceeding”). In August 2018, Mr. Koshkalda’s counsel withdrew and

since then, Mr. Koshkalda has represented himself. In September 2019, the

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bankruptcy court granted Epson summary judgment on its claims under

§§ 727(a)(2)(A), (a)(3), and (a)(7).

      During the pendency of the case, the trustee has liquidated over $5

million in estate assets, often over Mr. Koshkalda’s objections. Indeed,

unrestrained by counsel, Mr. Koshkalda mounted continuous and

repetitive challenges to the trustee’s administration of the estate.

Mr. Koshkalda also began to attack the trustee and her counsel by belatedly

challenging their employment and compensation. Mr. Koshkalda’s

unsuccessful challenges included: (1) a motion to disqualify Fox as trustee’s

counsel filed over a year after Fox’s employment was approved, to which

Mr. Koshkalda did not originally object despite notice; (2) objections to the

trustee’s and Fox’s interim fee applications; (3) motions for authority to sue

both the trustee and Fox in state court; (4) motions to vacate as void the

order authorizing Fox’s employment; and (5) various related

reconsideration motions.

      Mr. Koshkalda’s frequent, meritless motions and oppositions caused

the bankruptcy court to grant the trustee’s motion to enter a pre-filing

order against Mr. Koshkalda. The pre-filing order was largely upheld on

appeal, with an order of limited remand to the bankruptcy court to remove

merit screening from the pre-filing order and to narrow the reach of the

pre-filing order to Mr. Koshkalda’s main bankruptcy case and to the parties

involved in the bankruptcy case. Upon remand, the bankruptcy court

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imposed an amended prefiling order consistent with the BAP’s decision.

Mr. Koshkalda did not appeal the amended prefiling order.

      On January 9, 2023, pursuant to the requirements in the amended

pre-filing order, Mr. Koshkalda sought leave to file the following

pleadings: (1) an opposition to the trustee’s application for compensation;

(2) an adversary complaint against the trustee, Fox, and Seiko Epson; and

(3) an opposition to the trustee’s final report.

      The bankruptcy court denied Mr. Koshkalda’s application (“Denial

Order”). The bankruptcy court found that Mr. Koshkalda procedurally

complied with the requirements of the amended pre-filing order. However,

the bankruptcy court found that Mr. Koshkalda’s anticipated issues and

arguments had already been raised and disposed of by the court.

      The bankruptcy court found that Mr. Koshkalda had already, albeit

unsuccessfully, attempted to vacate the bankruptcy court’s order

approving Fox’s employment and attempted to seek orders requiring the

trustee and Fox to disgorge court approved fees. The bankruptcy court also

found that Mr. Koshkala previously attempted to sue the trustee and Fox

based on an “alleged lack of disclosure of an alleged conflict of interest on

the part of Fox.” Because the bankruptcy court found that Mr. Koshkalda’s

proposed filings were duplicitous and based on arguments previously

rejected by the court, the bankruptcy court was unconvinced that Mr.

Koshkalda’s proposed filings were “in good faith and not for the purpose

                                        5
of harassment.” Accordingly, the bankruptcy court denied Mr. Koshkalda’s

application for leave to file the three pleadings.

      Mr. Koshkalda timely appealed the Denial Order.

                               JURISDICTION

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

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

                                     ISSUE

      Did the bankruptcy court abuse its discretion in denying Mr.

Koshkalda’s pre-filing application?

                          STANDARD OF REVIEW

      We review a bankruptcy court’s refusal to accept a pleading in

accordance with a pre-filing order for an abuse of discretion. Haugen v.

Isani (In re Haugen), BAP No. NV-05-1458-MoSMa, 2006 WL 6810994, at *2

(9th Cir. BAP June 15, 2006), aff'd, 243 F. App'x 288 (9th Cir. 2007) (decision

to “strike the pleadings” pursuant to a pre-filing order is reviewed “for

abuse of discretion”); In re Brendan, 683 F. App'x 640, 640 (9th Cir. 2017)

(“We review for an abuse of discretion the application of a vexatious

litigant order.”); Gilbert v. Hardee, 10 F. App'x 599, 599 (9th Cir. 2001)

(same). The bankruptcy court abuses its discretion if it applies the wrong

legal standard, misapplies the correct legal standard, or if its factual

findings are illogical, implausible, or without support in inferences that

may be drawn from the facts in the record. United States v. Hinkson, 585

F.3d 1247, 1262 (9th Cir. 2009) (en banc). A bankruptcy court does not

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abuse its discretion by denying a request for leave to file a proposed

pleading that is “within the scope of the pre-filing order.” Erde v. Bodnar (In

re Westwood Plaza North), 730 F. App'x 547, 548 (9th Cir. 2018) (citing West v.

Procunier, 452 F.2d 645, 646 (9th Cir. 1971) (the refusal to authorize filing of

a complaint was a “proper exercise of the district court's authority to

effectuate compliance with its earlier order”)). A bankruptcy court's factual

findings are reviewed for clear error. Carrillo v. Su (In re Su), 290 F.3d 1140,

1142 (9th Cir. 2002).

                                DISCUSSION

      The record demonstrates that Mr. Koshkalda’s proposed pleadings

would involve the same allegations and the same parties for which the

vexatious litigant pre-filing order was issued. Accordingly, the bankruptcy

court did not commit clear error in finding that Mr. Koshkalda’s proposed

filings were not in good faith and were for the purpose of harassment.

                               CONCLUSION

      Because Mr. Koshkalda did not satisfy the requirements of the pre-

filing order, the bankruptcy court did not abuse its discretion in denying

Mr. Koshkalda’s application for leave to file pleadings. We AFFIRM.

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