Leslie v. Chobanian (In re Mihranian)
| Decision Date | 26 June 2017 |
| Docket Number | Adv. No. 2:15-ap-01667-BR,BAP No. CC-16-1380-KuFTa |
| Parties | In re: MARDIROS HAIG MIHRANIAN, Debtor. SAM S. LESLIE, Chapter 7 Trustee, Appellant, v. SUSAN CHOBANIAN, Appellee. |
| Court | U.S. Bankruptcy Appellate Panel, Ninth Circuit |
NOT FOR PUBLICATION
MEMORANDUM*Argued and Submitted on May 18, 2017 at Pasadena, California
Appeal from the United States Bankruptcy Court for the Central District of California
Appearances: Robert Michael Aronson, on brief, for appellant; David B. Golubchik of Levene, Neale, Bender, Yoo & Brill LLP argued for appellee.
Before: KURTZ, FARIS and TAYLOR, Bankruptcy Judges.
Chapter 71 trustee Sam S. Leslie appeals from an order dismissing with prejudice his third amended fraudulent transfer complaint against Susan Chobanian - debtor's former wife and a medical doctor with whom the debtor shared a medical practice.
The central issue in this appeal is whether Leslie adequately alleged that the debtor Mardiros Haig Mihranian had an interest in the funds allegedly transferred to Susan. Unless Leslie alleged sufficient facts that, when taken as true, plausibly demonstrated Mihranian's interest in the transferred funds, Leslie failed to state a claim for relief under either § 544 or § 548.
We agree with the bankruptcy court that Leslie did not allege sufficient facts regarding Mihranian's interest in those funds. The general "story" in Leslie's complaint informs us that Mihranian (and his now ex-wife Susan) diverted funds from Mihranian's wholly-owned incorporated medical practice to the defendants. Leslie has never posited - in the bankruptcy court or on appeal - any viable legal theory why funds diverted from Mihranian's incorporated medical practice plausibly could be identified as belonging to him as opposed to his corporation.
We also agree with the bankruptcy court's decision to dismiss the third amended complaint with prejudice. In total, Leslie availed himself of four attempts - four opportunities - tostate adequate fraudulent transfer claims. In addition, Leslie has admitted that he conducted extensive pre-adversary-proceeding discovery under Rule 2004, which discovery included both depositions and document requests, and has not disputed that he hired professionals who (among other things) were assigned the task of identifying the source of transferred funds. Yet, in all of the versions of his complaint, Leslie never stated a coherent set of facts plausibly identifying Mihranian's pre-transfer interest in the alleged fraudulently transferred funds. Under these circumstances, the bankruptcy court did not err in concluding that Leslie could not or would not plausibly identify Mihranian's pre-transfer interest in the subject funds, and thus the court did not abuse its discretion in dismissing the third amended complaint without leave to amend.
Accordingly, we AFFIRM.
Leslie's adversary proceeding sought to avoid and recover alleged fraudulent transfers under federal and California law based on §§ 544 and 548 and Cal. Civ. Code §§ 3439.04 and 3439.05. This is one of four similarly-pled adversary proceedings. The bankruptcy court dismissed all four with prejudice, and all four are on appeal on identical grounds. Each complaint names a different individual defendant who allegedly received a different series of fraudulently-transferred funds.
The history of complaints and responses informs our analysis. Leslie filed his first amended complaint against Susan, without any prompting from the bankruptcy court, within several weeks of the commencement of the adversary proceeding.Susan responded to the first amended complaint by filing a Civil Rule 12(b)(6) motion to dismiss. Susan pointed out that Leslie's fraudulent transfer allegations did little more than state in conclusory fashion the elements for fraudulent transfer claims and did nothing to advise Susan of the specific transactions Leslie claimed constituted fraudulent transfers.
The bankruptcy court in large part granted the motion to dismiss. The bankruptcy court dismissed without prejudice Leslie's fourth claim for relief seeking an accounting and fifth claim for relief seeking disallowance of any proof of claim filed by Susan. The bankruptcy court also dismissed without prejudice Leslie's first and second claims for relief to the extent they alleged actual fraudulent transfers. To the extent the first and second claims for relief alleged constructive fraudulent transfers, the bankruptcy court's order on the motion to dismiss merely required more specificity, as follows:
On the first and second causes of action in the Complaint for constructive fraud, the claims shall be amended to be pled with more specificity, including, without limitation, the source of the alleged transfer(s), the identity of the alleged transferor(s), the date(s) of the alleged transfer(s), and the amount of the respective transfer(s) . . . .
Order re Motion to Dismiss (Apr. 14, 2016) at p. 2. We do not know the reasons the bankruptcy court offered for its ruling because neither party provided us with the transcript of the March 29, 2016 hearing on the motion to dismiss.2
Leslie's second amended complaint contained more detail. It alleged that Mihranian and his spouse Susan3 engaged in a scheme to divert earnings from their shared medical practice to the various third-party defendants - including Susan - for the purpose of keeping their earnings away from their judgment creditors, two of whom are specifically identified in the complaint.
On one hand, the second amended complaint alleged that Mihranian and Susan practiced medicine through a California professional medical corporation known as Medical Clinic & Surgical Specialties of Glendale, Inc. ("MCSSG"). On the other hand, the complaint perhaps suggested that Mihranian and Susan sometimes provided medical services on their own account and not through MCSSG. The second amended complaint did not specify which funds transferred originally were payments for services provided through MCSSG and which (if any) were payments for services provided by the two doctors individually.
The second amended complaint then sets forth several paragraphs of allegations stating that some $2 million in payments for the two doctors' medical services were shuttled back and forth between Susan and Haig Leo Mihranian - one of her sons. However, none of these allegations clarify who held the medical service payments before Susan began shuttling them back and forth, nor do they clarify who "owned" the right to the payments at the time the medical services were paid for.
The second amended complaint then, in conclusory fashion, identifies the $2 million as money "debtor" allegedly transferred to Susan. But it is impossible to tell from the complaint what portion of this amount originally was payment for services provided through MCSSG and what portion of this amount (if any) originally was payment for services provided by the two doctors individually - or who held these funds before they allegedly were transferred to Susan.
After she received the second amended complaint, Susan contacted Leslie and urged Leslie to provide more specificity regarding the alleged fraudulent transfers. Susan pointed out that the second amended complaint did not specify "the source of the alleged transfer(s), the identity of the alleged transferor(s), the date(s) of the alleged transfer(s), and the amount of the respective transfer(s)" as directed in the bankruptcy court's April 14, 2016 order. In response, Leslie filed his third amended complaint.
There were only two significant differences between the second amended complaint and the third amended complaint. Most notably, the third amended complaint added two exhibits providingsome detailed information regarding each of the alleged fraudulent transfers. Exhibit A was entitled "Detail Of 544 Transfers" and itemized in two columns the "Date" of each alleged transfer and the "Deposit" amount of each alleged transfer. Exhibit A did not identify the source of each alleged transfer or the identity of the alleged transferor. Nor is there any way to tell who provided the services generating these funds. Furthermore, Leslie's third amended complaint never explained the relationship or connection (if any) between the $319,981.58 in transfers identified in Exhibit A and the $2 million in funds allegedly shuttled back and forth between Susan and her son Haig.
Exhibit B was entitled "Detail Of 548 Transfers" and set forth specific information regarding dates and deposit amounts in the same format as Exhibit A.4
The other significant change between the second amended complaint and the third amended complaint concerned the aggregate amount of fraudulent transfers alleged. Whereas the second amended complaint alleged an aggregrate amount of roughly $2 million in alleged fraudulent transfers to Susan, the third amended complaint only alleged an aggregrate amount of $319,981.58 in such transfers.
Susan moved to dismiss the third amended complaint. Susan asserted that the third amended complaint did not satisfy the specificity requirement of the bankruptcy court's April 14, 2016order and also did not satisfy the requirements for pleading claims for relief under Civil Rules 8(a) and 9(b), Ashcroft v. Iqbal, 556 U.S. 662 (2009), and Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
At the hearing on the motion to dismiss the third amended complaint, the bankruptcy court primarily focused on one issue. According to the court, it directed Leslie both at the March 29, 2016 dismissal motion hearing and in its April 14, 2016 order to specifically identify the transferor of each transfer. The court explained that it made a big difference whether the source of the fraudulently transferred funds was Mihranian, his former wife Susan, MCSSG, or some other person or entity. The following statement is...
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