Court Opinion

ID: 854361
Source: CourtListenerOpinion
Date Created: 2013-03-06 01:01:15.980716+00
Date Added: 2024-06-11T08:09:37.199108
License: Public Domain

FILED
                                                            MAR 04 2013
                                                         SUSAN M SPRAUL, CLERK
                                                           U.S. BKCY. APP. PANEL
                                                           OF THE NINTH CIRCUIT
 1
 2
 3                   UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                             OF THE NINTH CIRCUIT
 5   In re:                             )   BAP Nos. CC-12-1306-DKiPa and
                                        )            CC-12-1307-DKiPa
 6   M.P. CONSTRUCTION COMPANY, INC.,   )            (Related Appeals)
                                        )
 7                       Debtor.        )   Bk. No.   2:11-bk-40293-BR
     ________________________________   )
 8                                      )
     M.P. CONSTRUCTION COMPANY, INC.;   )
 9   GREGORY M. SALVATO,                )
                                        )
10                        Appellants,   )
                                        )
11   v.                                 )   M E M O R A N D U M1
                                        )
12   SHERMAN WONG; CAROLYN WONG,        )
                                        )
13                       Appellees.     )
     ________________________________   )
14
                    Argued and Submitted on February 22, 2013
15                           at Pasadena, California
16                            Filed - March 4, 2013
17                Appeal from the United States Bankruptcy Court
                      for the Central District of California
18
               Honorable Barry Russell, Bankruptcy Judge, Presiding
19
20   Appearances:    Gregory M. Salvato of Salvato Law Offices appeared
                     and argued for Appellants, M.P. Construction Company,
21                   Inc. and Gregory M. Salvato; Debby L. Watson of
                     Public Agency Law Group appeared and argued for
22                   Appellees, Sherman Wong and Carolyn Wong.
23
     Before:   DUNN, KIRSCHER and PAPPAS, Bankruptcy Judges.
24
25
          1
26             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 8013-1.

                                        1
 1        After finding that a corporate chapter 72 petition was filed
 2   “completely without legal foundation,” the bankruptcy court
 3   dismissed the bankruptcy case pursuant to § 707(a) and imposed
 4   monetary sanctions on the corporation and its attorney.   We AFFIRM.
 5                                 I.   FACTS
 6        Appellant M.P. Construction Company, Inc. (“MP Construction”)
 7   was formed for the purpose of conducting a “family-owned”
 8   construction business.   The shareholders of MP Construction are
 9   Mario Piumetti and his wife, Ana Piumetti.3   The California
10   Contractors State License Board issued contractor’s license number
11   710014 to MP Construction on July 20, 1995.   For purposes of the
12   required contractor’s bond, Mr. Piumetti was designated the
13   “Responsible Managing Officer.”4
14        On November 22, 2005, appellees Sherman and Carolyn Wong
15   contracted with MP Construction to perform a high-end residential
16   remodel of their home.   The Wongs paid MP Construction $1,614,563.84
17   for services which originally were estimated to cost $995,000.
18
19        2
               Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
20
     all rule references are to the Federal Rules of Bankruptcy
21   Procedure, Rules 1001-9037. The Federal Rules of Civil Procedure
     are referred to as Civil Rules.
22
          3
               Although Mrs. Piumetti holds 50% of the shares of
23   MP Construction, she apparently was not involved in the operation of
24   the business.
          4
25             A corporation qualifies for a contractor’s license through
     a responsible managing officer (“RMO”). Cal. Bus. & Prof. Code
26   § 7068(b)(3). Mr. Piumetti was the RMO for MP Construction.

                                        2
 1   MP Construction did not satisfactorily complete the remodel.
 2           After MP Construction sued the Wongs to collect approximately
 3   $75,000 in unpaid invoices, the Wongs counterclaimed for breach of
 4   contract, asserting, inter alia, defective work and excessive
 5   billing.      On August 15, 2009, following a week-long arbitration, a
 6   panel of three arbitrators issued an interim arbitration award
 7   (“Interim Award”) in favor of the Wongs in the amounts of
 8   $308,711.86 for project costs and $218,646.00 for labor overcharges.
 9   Against these amounts, MP Construction was credited $75,909.12 for
10   its unpaid invoices owed by the Wongs.      A final arbitration award
11   (“Arbitration Award”) was issued November 4, 2009, awarding the
12   Wongs an additional $149,873.47 for arbitration costs and attorneys’
13   fees.       On January 7, 2010, the Los Angeles Superior Court granted
14   the Wongs’ petition to confirm the Arbitration Award and entered
15   judgment (“Judgment”) against MP Construction in the amount of
16   $601,322.22.      The Wongs have collected only $12,500 on the judgment;
17   the source of those funds was MP Construction’s surety.5
18           As a result of the Judgment, the contractor’s license held by
19   MP Construction was suspended.6
20
             5
21             A condition precedent to the issuance of a contractor’s
     license is that the applicant or licensee file a contractor’s bond
22   in the amount of $12,500. Cal. Bus. & Prof. Code § 7071.6(a).
23           6
               The failure by a licensee to maintain a sufficient bond,
     including a bond in an amount of any unsatisfied judgment, subjects
24
     the contractor’s license to suspension or revocation. See Cal. Bus.
25   & Prof. Code § 7071.15. Further, § 7071.11(b) precludes the
     renewal, reissuance, or reinstatement of a contractor’s license
26                                                         (continued...)

                                           3
 1        On July 31, 2009, a new entity, Avenue 35 Construction Co.,
 2   Inc. (“Avenue 35"), was incorporated by the three adult children of
 3   Mario and Ana Piumetti - Domenica Piumetti, Mario Piumetti, Jr., and
 4   Pietro Piumetti, each of whom was a one-third shareholder of
 5   Avenue 35.   On August 13, 2009, Avenue 35 entered into a purchase
 6   agreement with MP Construction pursuant to which Avenue 35 acquired
 7   MP Construction’s assets for the price of $120,000.   To facilitate
 8   this transaction, Mr. Piumetti loaned each of his children $40,000.7
 9   The $120,000 purchase price received by MP Construction was used to
10   pay undocumented loans Mr. Piumetti asserted he was owed by
11   MP Construction.   Additionally, Mr. Piumetti thereafter sold all of
12   the transferred assets to third parties, ostensibly on behalf of
13   Avenue 35.   However, none of the funds received from these sales was
14   deposited to the bank accounts of either Avenue 35 or
15   MP Construction.
16        Sometime thereafter, Mr. Piumetti attempted to transfer his
17   contractor’s license from MP Construction to Avenue 35.   Again, his
18
19        6
           (...continued)
     while a judgment in excess of the contractor’s bond remains
20   unsatisfied.
21        7
               For a quick summary and citations to the record relating
22   to the creation of Avenue 35 and the transactions between and among
     Mr. Piumetti, his children, Avenue 35, and MP Construction, see n.3
23   in the Wongs’ response brief filed in CC-12-1307 (the appeal from
     the order granting the motion to dismiss). A number of these facts
24
     were the subject of MP Construction’s evidentiary objections to the
25   declaration of the Wongs’ counsel, many of which were sustained. As
     a result, MP Construction and Mr. Salvato oppose the Wongs’
26   reference to these facts on appeal.

                                       4
 1   efforts were hampered by the California Business and Professions
 2   Code.    In particular, § 7071.17(j) precludes an entity from
 3   receiving a license if the RMO for that entity was affiliated with a
 4   judgment debtor whose license was suspended based on an unsatisfied
 5   judgment.    Section 7071.17(f) contains an exception where the
 6   unsatisfied judgment has been discharged in a bankruptcy proceeding.
 7           On July 15, 2011, MP Construction filed a voluntary chapter 7
 8   petition.    Schedules A and B filed with the petition reflect that
 9   MP Construction had no assets as of the petition date.
10   MP Construction responded to question 1 of the Statement of
11   Financial Affairs by disclosing that the business had been sold on
12   August 12, 2009.    On August 30, 2011, Mr. Piumetti filed a
13   Certificate of Dissolution for MP Construction with the California
14   Secretary of State.    The certificate states that:   (1) “the
15   corporation has been completely wound up and is dissolved,” (2) “the
16   corporation’s known debts and liabilities have been paid as far as
17   its assets permitted,” and (3) “the known assets have been
18   distributed to the persons entitled thereto.”
19           The Wongs utilized the discovery procedures available to them
20   pursuant to Rule 2004 to depose Mr. Piumetti, Mrs. Piumetti,
21   Domenica Piumetti, and Mario Piumetti, Jr.    With the aid of evidence
22   gleaned from these depositions, the Wongs file a motion to dismiss
23   MP Construction’s bankruptcy case on the grounds that the Petition
24   was not filed in good faith where a corporation was not entitled to
25   a chapter 7 discharge and where MP Construction had no assets to
26   distribute to its creditors on the petition date.     The Wongs also

                                         5
 1   filed a motion for sanctions against MP Construction and its
 2   attorney, Appellant Gregory M. Salvato, pursuant to Rule 9011.8
 3        MP Construction opposed the Wongs’ motions, asserting that it
 4   had a valid bankruptcy purpose when it filed the Petition such that
 5   neither dismissal nor sanctions were appropriate.   In his
 6   declaration in support of the opposition, Mr. Piumetti stated that,
 7   as an officer and shareholder of MP Construction, he caused the
 8   Petition to be filed because:
 9        a. [MP Construction] could not pay its debts and
          outstanding obligations at the time of the petition date;
10
          b. to stop the pending judgment collection actions
11        against [MP Construction] where [MP Construction] had
          limited resources and no assets; and
12
          c. to reinstate and transfer [MP Construction’s]
13        California State contractor’s license to [Avenue 35].
14   Decl. of Mario Piumetti at 1:12-18.   Mr. Piumetti further explained
15   that he had been advised by the California Contractors State License
16   Board that because of MP Construction’s inability to satisfy the
17   Wongs’ money judgment against it, MP Construction would have to file
18   a bankruptcy case before MP Construction’s contractor’s license
19   could be transferred to Avenue 35.    Mr. Piumetti stated that after
20   the Petition had been filed, the State of California issued a
21   contractor’s license to Avenue 35 and that he was the qualifying
22
23
24
          8
25             The Wongs also filed a motion for relief from stay (“Stay
     Motion”). Although MP Construction opposed the Stay Motion, it has
26   not appealed the order granting the Stay Motion.

                                      6
 1   individual, the RMO, for purposes of the contractor’s bond.9
 2        Mr. Salvato filed his own declaration to support the opposition
 3   to the sanctions motion in which he identified the reasons he had
 4   filed MP Construction’s Petition:
 5        a. to stay the ongoing and apparently endless state court
          judgment debtor proceedings and to bring all such
 6        proceedings into one forum;
 7        b. to disclose and have the Debtor certify under oath
          that it truly had no assets, which fact the [Wongs] would
 8        not accept or believe;
 9        c. to end the corporate life of [MP Construction] which
          had sold its assets and had no further business, and its
10        principal was retiring and in ill health; and
11        d. most importantly, because Mr. Piumetti had been
          advised by the California Contractors State License Board
12        that because he had not paid on a contractor’s license
          bond, he could not transfer his license to another entity
13        (the company formed by his children, [Avenue 35]) unless
          and until [MP Construction] had filed a bankruptcy
14        proceeding.
15   Decl. of Gregory M. Salvato, Esq. at 1:22-2:6 (emphasis in
16   original).    Mr. Salvato further stated that he had contacted the
17   California Contractors State License Board and was advised that even
18   though MP Construction would not be eligible for a discharge in
19   bankruptcy, a bankruptcy filing nevertheless would be required to
20   effect a transfer of MP Construction’s contractor’s license to
21   another entity.10    Id. at 2:7-11.
22
23        9
               The bankruptcy court sustained the Wongs’ hearsay
24   objection to Mr. Piumetti’s declaration regarding what he had been
     told by the California Contractors State License Board.
25        10
                  The bankruptcy court sustained the Wongs’ hearsay
26                                                            (continued...)

                                           7
 1        The bankruptcy court opened the hearing on the Wongs’ motions
 2   by asking Mr. Salvato whom he was representing, MP Construction or
 3   Mr. and Mrs. Piumetti.   Ultimately, the bankruptcy court ruled that
 4   there was “absolutely . . . no legitimate purpose” for
 5   MP Construction’s Petition.   Instead, the bankruptcy court found
 6   that the Petition was filed to benefit only the Piumettis.
 7   Specifically, the purpose of the Petition was to stop the Wongs’
 8   collection efforts11 and to effectuate the transfer of the
 9   construction license to Avenue 35, which the bankruptcy court found
10   to be “totally outrageous.”   Based upon those findings, the
11   bankruptcy court dismissed MP Construction’s case.   The bankruptcy
12   court also granted the Wongs’ motion for sanctions under Rule 9011,
13   and awarded the Wongs $20,446.00, representing $20,000 of attorneys’
14   fees and $446 in costs the Wongs incurred as a result of the
15   improper bankruptcy filing.   The sanctions award was entered,
16
17        10
           (...continued)
18   objection to Mr. Salvato’s declaration regarding what he had been
     told by the California Contractors State License Board.
19
          11
               Although the Judgment was against MP Construction only,
20   the Piumettis, as officers and shareholders of MP Construction, were
21   the persons to whom the Wongs necessarily looked for information
     about MP Construction’s affairs. Nevertheless, the Piumettis appear
22   to have construed the Wongs’ efforts to trace MP Construction’s
     assets to be harassment of them individually. In their response to
23   the Wongs’ motion for relief from stay, the Piumettis, through their
     corporation, assert: “The [Wongs’] claim has already been reduced
24
     to Judgment in the Superior Court. What the [Wongs] are seeking is
25   the ongoing right to continue harassing [MP Construction’s]
     principals despite the fact that [MP Construction] has disclosed its
26   lack of available assets from which any recovery may be made.”

                                       8
 1   jointly and severally, against MP Construction and Mr. Salvato.
 2           MP Construction timely appealed the dismissal of its bankruptcy
 3   case.    MP Construction and Mr. Salvato’s appeal of the sanctions
 4   order also was timely filed.
 5                                  II.   JURISDICTION
 6           The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
 7   and 157(b)(2)(A).    We have jurisdiction under 28 U.S.C. § 158.
 8                                    III.   ISSUES
 9           Whether the bankruptcy court erred when it determined that
10   cause existed pursuant to § 707(a) to dismiss the chapter 7 case of
11   MP Construction.
12           Whether the bankruptcy court abused its discretion when it
13   dismissed the no asset chapter 7 case of MP Construction.
14           Whether the bankruptcy court abused its discretion when it
15   imposed sanctions on MP Construction and Mr. Salvato for filing the
16   Petition without a legitimate bankruptcy purpose.
17                            IV.    STANDARDS OF REVIEW
18           We review issues of statutory construction and conclusions
19   of law de novo.    Ransom v. MBNA Am. Bank, N.A. (In re Ransom),
20   380 B.R. 799, 802 (9th Cir. BAP 2007), aff’d, 577 F.3d 1026 (9th
21   Cir. 2009), aff’d, 131 S.Ct. 716 (2011).           In the context of a motion
22   to dismiss, first “we review de novo whether a type of misconduct
23   can constitute ‘cause’ under § 707(a).”           Sherman v. SEC
24   (In re Sherman), 491 F.3d 948, 969 (9th Cir. 2007).           Then we review
25   the bankruptcy court’s decision to grant a motion to dismiss for
26   “cause” for an abuse of discretion.         Id.

                                             9
 1        We review all aspects of an award of sanctions for an abuse of
 2   discretion.   Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405
 3   (1990); Price v. Lehtinen (In re Lehtinen), 332 B.R. 404, 411 (9th
 4   Cir. BAP 2005), aff'd, 564 F.3d 1052 (9th Cir. 2009); In re Nguyen,
 5   447 B.R. 268, 276 (9th Cir. BAP 2011)(en banc).
 6        We apply a two-part test to determine whether the bankruptcy
 7   court abused its discretion.       United States v. Hinkson, 585 F.3d
 8   1247, 1261-62 (9th Cir. 2009)(en banc).      First, we consider de novo
 9   whether the bankruptcy court applied the correct legal standard to
10   the relief requested.   Id.    Then, we review the bankruptcy court’s
11   fact findings for clear error.      Id. at 1262 & n.20.   We must affirm
12   the bankruptcy court’s fact findings unless we conclude that they
13   are “(1) ‘illogical,’ (2) ‘implausible,’ or (3) without ‘support in
14   inferences that may be drawn from the facts in the record.’” Id.
15                                 V.    DISCUSSION
16   I.   The Bankruptcy Court Did Not Abuse Its Discretion When It
          Dismissed MP Construction’s Bankruptcy Case
17
18        Section 707(a) authorizes a bankruptcy court to dismiss a
19   chapter 7 case “for cause”:
20        (a) The court may dismiss a case under this chapter only
          after notice and a hearing and only for cause, including –
21
               (1) unreasonable delay by the debtor that is
22             prejudicial to creditors;
23             (2) nonpayment of any fees and charges required under
               chapter 123 of title 28; and
24
               (3) failure of the debtor     in a voluntary case to
25             file, within fifteen days     of such additional time as
               the court may allow after     the filing of the petition
26             commencing such case, the     information required by

                                             10
 1            paragraph (1) of section 521(a), but only on a motion
              by the United States trustee.
 2
 3   It is not disputed that subparagraphs 1, 2 and 3 are not the “cause”
 4   for which the bankruptcy court dismissed MP Construction’s case.
 5        As with many of the Appellants’ arguments in these appeals, we
 6   find troubling Appellants’ apparent suggestion that, inversely, the
 7   mere absence of these reasons entitles them to some inference that
 8   there is not cause for dismissal.    See MP Construction’s Opening
 9   Brief in BAP No. CC-12-1397 at 19:25-20:9; 26:16-25; 30:3-9.   This
10   “suggestion” ignores the word “including” which precedes
11   subparagraphs 1, 2, and 3 of § 707(a), and fails to recognize the
12   body of case law discussing what constitutes cause in the absence of
13   the conditions in subparagraphs 1, 2, and 3.
14        The Ninth Circuit test for determining whether “cause” exists
15   to dismiss pursuant to § 707(a) is well established:
16       If the asserted “cause” is contemplated by a specific Code
         provision, then it does not constitute “cause” under
17       § 707(a) . . . . If, however, the asserted “cause” is not
         contemplated by a specific Code provision, then we must
18       further consider whether the circumstances asserted
         otherwise meet the criteria for “cause” for [dismissal]
19       under § 707(a).
20   In re Sherman, 491 F.3d at 970 (citing Neary v. Padilla
21   (In re Padilla), 222 F.3d 1184, 1193–94 (9th Cir. 2000)).
22        No provision of the Bankruptcy Code provides a remedy for the
23   asserted cause, i.e., that the filing of the Petition was improper
24   in the first instance because it provided no benefit to
25   MP Construction.   Thus, under Ninth Circuit precedent, the
26   bankruptcy court was required to determine whether under the

                                         11
 1   circumstances surrounding the filing of the MP Construction
 2   bankruptcy case there was misconduct sufficient to constitute
 3   “cause” for dismissal.   On appeal, “we review de novo whether a type
 4   of misconduct can constitute ‘cause’ under § 707(a).”    In re
 5   Sherman, 491 F.3d at 969.
 6        As articulated by the bankruptcy court, it is fundamental that
 7   bankruptcy relief is available for two overriding reasons: to
 8   provide the “honest but unfortunate” debtor a fresh start through
 9   the discharge provisions of the Bankruptcy Code, and to provide for
10   the fair and equitable distribution of a debtor’s assets to his
11   creditors.   See Sherwood Partners, Inc. v. Lycos, Inc., 394 F.3d
12   1198, 1203 (9th Cir. 2005).   It is undisputed that MP Construction
13   was not eligible for a bankruptcy discharge.12    Further, the record
14   establishes with absolute certainty that MP Construction had no
15   assets to distribute to its creditors.   Accordingly, the bankruptcy
16   court did not err when it determined that “cause” existed to dismiss
17   MP Construction’s case pursuant to § 707(a).     The bankruptcy case
18   was filed not for the purpose of securing bankruptcy relief for
19   MP Construction, but for the purpose of protecting and benefitting
20   MP Construction’s principals.   On this record, the bankruptcy court
21   did not abuse its discretion when it dismissed MP Construction’s
22   bankruptcy case.
23
24
          12
25             Section 727(a)(1) provides: “The court shall grant the
     debtor a discharge, unless – (1) the debtor is not an individual
26   . . . .”

                                       12
 1   II.   The Bankruptcy Court Did Not Abuse Its Discretion When
           It Awarded Sanctions Against MP Construction and Mr. Salvato
 2
 3         Rule 9011 states in relevant part:
 4         (b) Representation to the court
 5              By presenting to the court . . . a petition,
           pleading, written motion, or other paper, an attorney or
 6         unrepresented party is certifying that to the best of the
           person's knowledge, information, and belief, formed after
 7         an inquiry reasonable under the circumstances,--
 8              (1) it is not being presented for any improper
           purpose, such as to harass or to cause unnecessary delay
 9         or needless increase in the cost of litigation;
10              (2) the claims, defenses, and other legal contentions
           therein are warranted by existing law or by a nonfrivolous
11         argument for the extension, modification, or reversal of
           existing law or the establishment of new law;
12
                (3) the factual contentions have evidentiary support
13         or, if specifically so identified, will likely have
           evidentiary support after a reasonable opportunity for
14         further investigation or discovery; . . . .
15   "The language of Rule 9011 parallels that of [Civil Rule] 11.
16   Therefore, courts analyzing sanctions under Rule 9011 may
17   appropriately rely on cases interpreting [Civil Rule] 11."
18   Winterton v. Humitech of N. Cal., LLC (In re Blue Pine, Inc.),
19   457 B.R. 64, 75 (9th Cir. BAP 2011) (citing Marsch v. Marsch
20   (In re Marsch), 36 F.3d 825, 829 (9th Cir. 1994)).
21         Rule 9011(c)(1)(A) generally provides a “safe harbor” to the
22   filing party; he or she can avoid exposure to a sanctions order by
23   withdrawing the offending pleading.     The “safe harbor” is created by
24   notice (“Safe Harbor Notice”) to the offending party that unless the
25   offending pleading is withdrawn or corrected within 21 days from the
26   date of the Safe Harbor Notice, the noticing party intends to file a

                                       13
 1   motion for sanctions under Rule 9011.   Rule 9011(c)(1)(A) provides
 2   an exception for the filing of a petition.13      Because the Wongs
 3   sought sanctions under Rule 9011 based upon Mr. Salvato’s filing of
 4   MP Construction’s petition the fact that Mr. Salvato was not given a
 5   Safe Harbor Notice does not preclude the bankruptcy court from
 6   imposing Rule 9011 sanctions against either appellant.
 7        Under Rule 9011, a filing is frivolous if it is "both baseless
 8   — lacks factual foundation — and made without a reasonable and
 9   competent inquiry."   In re Blue Pine, Inc., 457 B.R. at 75     (citing
10   Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1362 (9th Cir.
11   1991) (en banc)).   The attorney "has a duty to conduct a reasonable
12   factual investigation as well as to perform adequate legal research
13   that confirms that his position is warranted by existing law (or by
14   a good faith argument for a modification or extension of existing
15   law)."    In re Blue Pine, Inc., 457 B.R. at 75    (citing Christian v.
16   Mattel, Inc., 286 F.3d 1118, 1127 (9th Cir. 2002)).      "Thus, a
17   finding that there was no reasonable inquiry into either the facts
18   or the law is tantamount to a finding of frivolous."      In re Blue
19
20        13
                 Rule 9011(c)(1)(A) provides in relevant part:
21
     “. . . The motion for sanctions may not be filed with or presented
22   to the court unless, within 21 days after the service of the motion
     (or such other period as the court may prescribe), the challenged
23   paper, claim, defense, contention, allegation, or denial is not
     withdrawn or appropriately corrected, except that this limitation
24
     shall not apply if the conduct alleged is the filing of a petition
25   in violation of subdivision (b). . . .”

26   (emphasis added).

                                        14
 1   Pine, Inc., 457 B.R. at 75 (citing Townsend, 929 F.2d at 1362).
 2        The bankruptcy court must apply an objective standard of
 3   reasonableness to determine whether an attorney has violated
 4   Rule 9011.    G.C. & K.B. Invs., Inc. v. Wilson, 326 F.3d 1096, 1109
 5   (9th Cir. 2003) (citing Townsend, 929 F.2d at 1362).     The
 6   reasonableness of attorney conduct is measured against "the conduct
 7   of a competent attorney admitted to practice before the involved
 8   court.”    Valley Nat’l Bank v. Needler (In re Grantham Bros.),
 9   922 F.2d 1438, 1441 (9th Cir. 1991).
10        The bankruptcy court determined that the filing of the
11   MP Construction Petition was improper (1) because MP Construction
12   would not benefit from the bankruptcy case, and (2) filing the case
13   to effect a transfer of the contractor’s license was not a valid
14   purpose.    We agree.   We do not credit Mr. Salvato’s argument on
15   appeal that MP Construction was entitled to utilize a chapter 7
16   bankruptcy case for a “public burial.”    As demonstrated by the
17   Certificate of Dissolution filed postpetition for MP Construction
18   with the California Secretary of State, there is a valid process
19   under state law to end the existence of a corporation, an entity
20   created under state law.
21        “It was never the intent, nor is there any admissible evidence
22   to show that MP Construction filed its bankruptcy to avoid the bond
23   requirement for reinstatement of its California contractor’s
24   license.”    MP Construction’s Opening Brief in BAP No. CC-12-1307 at
25   27:14-16.    We find it disingenuous for Mr. Salvato, as counsel for
26   MP Construction, to make this statement in a brief on appeal.      In

                                         15
 1   directing the filing of MP Construction’s bankruptcy case, it was
 2   expressly the intent of Mr. Piumetti to circumvent the requirements
 3   of the California Business and Professions Code that the Judgment be
 4   paid as a condition to transferring his contractor’s license to
 5   Avenue 35, not only as evidenced by the declarations Mr. Piumetti
 6   and Mr. Salvato filed in opposition to the Wongs’ motions, but also
 7   as stated repeatedly on the record at the hearing on the motion for
 8   sanctions.
 9        Neither do we credit the assertion on appeal that “there is a
10   lack of authority clarifying § 7071.17(f) [of the Cal. Bus. & Prof.
11   Code] and its application in bankruptcy court.”   Section 7071.17(f)
12   merely recognizes the effect of a discharge in bankruptcy.    As no
13   discharge was available to MP Construction, we fail to see how the
14   application of § 7017.17(f) is relevant in this case.
15        On the record before us, it is indisputable that
16   MP Construction’s petition was not filed for any valid bankruptcy
17   purpose.   Accordingly, the bankruptcy court did not abuse its
18   discretion when it entered the sanctions order against Mr. Salvato.
19   By its terms, however, Rule 11 relates to the implicit certification
20   made when an offending document is signed.   Because both
21   MP Construction and Mr. Salvato signed the Petition, the bankruptcy
22   court did not abuse its discretion when it imposed sanctions jointly
23   and severally against both MP Construction and Mr. Salvato.
24        MP Construction and Mr. Salvato appeal only the granting of the
25   sanctions motion, not the amount of sanctions awarded.   Thus, any
26   issue that the bankruptcy court might have abused its discretion in

                                       16
 1   the amount of the sanctions award has been waived for purposes of
 2   this appeal.   Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d
 3   912, 919 (9th Cir. 2001)(issues not specifically argued in opening
 4   brief are waived).
 5                              VI.   CONCLUSION
 6        The bankruptcy court’s determination that “cause” existed to
 7   dismiss MP Construction’s bankruptcy case is supported by the
 8   record.   Accordingly, the bankruptcy court did not abuse its
 9   discretion when it granted the Wongs’ motion to dismiss.   Having
10   determined that the bankruptcy case had been filed for an improper
11   purpose, the bankruptcy court did not abuse its discretion when it
12   granted the Wongs’ motion for sanctions against MP Construction and
13   Mr. Salvato.   We AFFIRM the orders of the bankruptcy court.
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