Gugliuzza v. Fed. Trade Comm'n (In re Gugliuzza)

• Decision Date: 24 March 2017
• Docket Number: No. 15-55510,15-55510
• Citation: 852 F.3d 884
• Parties: IN RE Charles Francis GUGLIUZZA, II, Debtor, Charles Francis Gugliuzza, II, Appellant, v. Federal Trade Commission, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

852 F.3d 884

IN RE Charles Francis GUGLIUZZA, II, Debtor,

Charles Francis Gugliuzza, II, Appellant,

v.Federal Trade Commission, Appellee.

No. 15-55510

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 7, 2016, Pasadena, California

Filed March 24, 2017

Michael B. Reynolds (argued) and Todd E. Lundell, Snell & Wilmer LLP, Costa Mesa, California; Blaine H. Evanson, M. Sean Royall, and Theodore J. Boutrous, Jr., Gibson Dunn & Crutcher LLP, Los Angeles, California; for Appellant.

Michele Arington (argued), Kimberly Nelson, and Megan Bartley, Attorneys; Joel Marcus, Director of Litigation; Federal Trade Commission, Washington, D.C., for Appellee.

Before: Consuelo M. Callahan, Carlos T. Bea, and Sandra S. Ikuta, Circuit Judges.

OPINION

IKUTA, Circuit Judge:

Charles Gugliuzza appeals the district court's order reversing a bankruptcy court's grant of summary judgment and remanding for further fact-finding. We conclude that we lack jurisdiction and therefore dismiss the appeal.

I

The Federal Trade Commission (FTC) successfully brought an enforcement action against Charles Gugliuzza and his former company, Commerce Planet, alleging violationsof Section 5 of the FTC Act, 15 U.S.C. § 45(a). See FTC v. Commerce Planet, Inc. , 878 F.Supp.2d 1048 (C.D. Cal. 2012). In assessing Gugliuzza's liability, the district court relied on the test set forth by the FTC in In re Cliffdale Assocs. , 103 F.T.C. 110 (1984), which we have generally adopted, see FTC v. Pantron I Corp. , 33 F.3d 1088, 1095 (9th Cir. 1994). Under this test, "an act or practice [is] deceptive if, first, there is a representation, omission, or practice that, second, is likely to mislead consumers acting reasonably under the circumstances, and third, the representation, omission, or practice is material." Id. (quoting Cliffdale Assocs. , 103 F.T.C. at 164–65 ). Applying this standard, the district court held that Commerce Planet had engaged in deceptive acts and further determined that Gugliuzza could be held individually liable for those violations. See Commerce Planet, Inc. , 878 F.Supp.2d at 1055.¹ In addition to enjoining Gugliuzza from further violations of the FTC Act, the district court awarded the FTC $18.2 million in restitution.² Id. at 1092.

In the wake of this restitution award, Gugliuzza filed a voluntary petition for bankruptcy under Chapter 7 in November 2012. "Generally, a debtor is permitted to discharge all debts that arose before the filing of his bankruptcy petition," Hawkins v. Franchise Tax Bd. , 769 F.3d 662, 666 (9th Cir. 2014) (citing 11 U.S.C. § 727(b) ), but "the Bankruptcy Code provides for certain exceptions to that general rule," id. (citing 11 U.S.C. § 523 ). One such exception is that debts obtained by "false pretenses, a false representation, or actual fraud" are not dischargeable. 11 U.S.C. § 523(a)(2)(A).³ To establish nondischargeability under § 523(a)(2)(A), a creditor must prove five elements: "(1) misrepresentation, fraudulent omission or deceptive conduct by the debtor; (2) knowledge of the falsity or deceptiveness of his statement or conduct; (3) an intent to deceive; (4) justifiable reliance by the creditor on the debtor's statement or conduct; and (5) damage to the creditor proximately caused by its reliance on the debtor's statement or conduct." Turtle Rock Meadows Homeowners Ass'n v. Slyman (In re Slyman) , 234 F.3d 1081, 1085 (9th Cir. 2000).

In bankruptcy court, the FTC commenced an adversary proceeding, which is "essentially [a] full civil lawsuit[ ] carried out under the umbrella of the bankruptcy case," Bullard v. Blue Hills Bank , ––– U.S. ––––, 135 S.Ct. 1686, 1694, 191 L.Ed.2d 621 (2015), seeking a determination that Gugliuzza's restitution debt was nondischargeable under 11 U.S.C. § 523(a)(2)(A). The FTC moved for summary judgment, contending that Commerce Planet 's determination that Gugliuzza had engaged in deceptive practices for purposes of the FTC Act foreclosed him from relitigating the five elements necessary to establish that the debt was obtained by "false pretenses, a false representation, or actual fraud" such that it was not dischargeable under § 523(a)(2)(A). See Sasson v. Sokoloff (In re Sasson) , 424 F.3d 864, 872 (9th Cir. 2005) ("[C]ollateral estoppel principles ... apply in discharge exception proceedings pursuant to § 523(a)." (quoting Grogan v. Garner , 498 U.S. 279, 284 n.11, 111 S.Ct. 654, 112 L.Ed.2d 755 (1991) )). The bankruptcy court granted the FTC's motion and entered judgment in the FTC's favor.

On appeal, the district court affirmed the bankruptcy court in part, reversed in part, and remanded. See FTC v. Gugliuzza (In re Gugliuzza) , 527 B.R. 370, 373 (C.D. Cal. 2015). It held that the bankruptcy court correctly concluded that Gugliuzza was collaterally estopped from relitigating four of the five elements necessary to prove nondischargeability under § 523(a)(2)(A) (specifically, the elements of misrepresentation, knowledge, justifiable reliance, and damages), but had erred in holding that Gugliuzza was collaterally estopped from relitigating the issue of his intent to deceive consumers. Accordingly, the district court remanded the case to the bankruptcy court for further fact-finding on the issue of Gugliuzza's intent to deceive. Gugliuzza timely appealed this order. He contends on appeal that the district court and bankruptcy court erred in holding that collateral estoppel precluded him from litigating the elements of misrepresentation, justifiable reliance, and damages.

II

We must first consider whether we have jurisdiction to entertain Gugliuzza's appeal. See Sahagun v. Landmark Fence Co. (In re Landmark Fence Co.) , 801 F.3d 1099, 1102 (9th Cir. 2015). We have jurisdiction to determine our jurisdiction, Bunyan v. United States (In re Bunyan) , 354 F.3d 1149, 1152 (9th Cir. 2004), and consider the question de novo, Silver Sage Partners, Ltd. v. City of Desert Hot Springs (In re City of Desert Hot Springs) , 339 F.3d 782, 787 (9th Cir. 2003).

A

We have authority to hear appeals in bankruptcy cases under three different jurisdiction-conferring provisions, 28 U.S.C. §§ 1291, 1292, and 158(d)(1).

First, 28 U.S.C. § 1291 provides: "[t]he courts of appeals (other than the United States Court of Appeals for the Federal Circuit) shall have jurisdiction of appeals from all final decisions of the district courts of the United States ..., except where a direct review may be had in the Supreme Court." 28 U.S.C. § 1291. This section gives us "jurisdiction over appeals from ‘final decisions by the district courts' acting in any capacity." Conn. Nat'l Bank v. Germain , 503 U.S. 249, 253, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992).

In the bankruptcy context, we have jurisdiction under § 1291 over appeals from rulings made by a district court when it presides directly over a bankruptcy case. See, e.g. , Klenske v. Goo (In re Manoa Fin. Co.) , 781 F.2d 1370, 1372 (9th Cir. 1986). We also have jurisdiction under § 1291 over appeals taken from "final decisions" made by a district court when it sits in a bankruptcy-appellate capacity. See Germain , 503 U.S. at 253, 112 S.Ct. 1146. While district courts normally do not act as appellate bodies, they may do so in the bankruptcy context. Congress gave district courts original jurisdiction over bankruptcy proceedings, see 28 U.S.C. § 1334, but also authorized them to refer bankruptcy cases to bankruptcy judges in the first instance, see id. § 157. In fact, all districts have adopted "a general order of reference to send all bankruptcy cases to the bankruptcy judges for the district." Schulman v. Cal. State Water Res. Control Bd. (In re Lazar) , 200 B.R. 358, 366 (Bankr. C.D. Cal. 1996). After making such a reference, district courts may hear appeals "from final judgments, orders, and decrees ... of bankruptcy judges entered in cases and proceedings."⁴ 28 U.S.C. § 158(a). Section 158(a) also gives district courts, sitting in an appellate capacity, jurisdiction over "interlocutory orders and decrees."⁵

The scope of our jurisdiction under § 1291 is the same for all district court rulings. See Klestadt & Winters, LLP v. Cangelosi , 672 F.3d 809, 815 (9th Cir. 2012). Regardless of context, in determining whether the district court decision is final under § 1291, "we ask whether the decision presented for review ‘ends the litigation on the merits and leaves nothing for the district court to do but execute the judgment.’ " Congrejo Invs., LLC v. Mann (In re Bender) , 586 F.3d 1159, 1163 (9th Cir. 2009) (quoting Firestone Tire & Rubber Co. v. Risjord , 449 U.S. 368, 373, 101 S.Ct. 669, 66 L.Ed.2d 571 (1981) ).

A second source of jurisdiction is provided by § 1292, which authorizes appellate courts to hear appeals taken from all interlocutory orders of specified types, 28 U.S.C. § 1292(a), as well as appeals of interlocutory orders that are certified by the district court to meet specified criteria, id. § 1292(b). This jurisdiction includes the authority to hear appeals from a district court's interlocutory orders issued in a bankruptcy-appellate capacity. See Germain , 503 U.S. at 254, 112 S.Ct. 1146 ("So long as a party to a proceeding or case in bankruptcy meets the conditions imposed by § 1292, a court of appeals may rely on that statute as a basis for jurisdiction.").

In contrast to the grants of general jurisdiction under 28 U.S.C. § 1291 and § 1292, 28 U.S.C. § 158(d) gives us jurisdiction specific to bankruptcy decisions of district courts and decisions of three-judge bankruptcy appellate panels (or BAPs).⁶ Under § 158(d)(1), "[t]he courts of appeals shall have jurisdiction of appeals from all final decisions, judgments, orders, and decrees entered under subsections (a) [defining the district courts' jurisdiction] and (b) [defining the jurisdiction of the bankruptcy appellate panels] of this section."⁷ This language limits our appellate jurisdiction under § 158(d)(1) to decisions, judgments, orders, and decrees that are "final"; we have no...