Llanos v. Bank of America CA2/1 ( 2015 )

Filed 6/30/15 Llanos v. Bank of America CA2/1
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
BEATRIZ LLANOS,
B248355
Cross-complainant and Appellant,
(Los Angeles County
v. Super. Ct. No. LC094568)
BANK OF AMERICA CORPORATION et
al.,
Cross-defendants and Respondents.
FIA CARD SERVICES, B253264
Plaintiff, Cross-defendant and (Los Angeles County
Respondent, Super. Ct. No. LC094568)
v.
BEATRIZ LLANOS,
Defendant, Cross-complainant and
Appellant.
APPEAL from judgments of the Superior Court of Los Angeles County, Huey E.
Cotton, Jr., Judge. Affirmed.
Pacific Atlantic Law Corporation and Chinye Uwechue for Defendant, Cross-
complainant and Appellant.
Reed Smith, Margaret M. Grignon, Abraham J. Colman, Zareh A. Jaltorossian and
Raagini Shah for Cross-defendants and Respondents Bank of America Corporation and
Bank of America.
Reed Smith, Margaret M. Grignon, Abraham J. Colman, Zareh A. Jaltorossian and
Ilana R. Herscovitz for Plaintiff, Cross-defendant and Respondent FIA Card Services.
——————————
FIA Card Services, N.A. (FIA) filed a complaint on August 16, 2011 against
Beatriz Llanos in Los Angeles Superior Court, alleging that Llanos defaulted on her
credit card debt of $26,062.67.1 Llanos answered on September 21, 2011, and also filed
a cross-complaint alleging that FIA breached its contract with Llanos by failing to give
her notice of fees and charges, or the right to opt out; breached fiduciary duties to Llanos;
committed negligent and intentional misrepresentation in promotional materials; violated
the Business and Professions Code, sections 17500 et seq. and 17200 et seq.; and
breached the implied covenant of good faith and fair dealing. In January 2012, Llanos
added Bank of America Corporation (BAC) and Bank of America, National Association
(BANA) as cross-defendants.
Llanos filed a bankruptcy petition on June 7, 2012, notifying the trial court and the
parties on June 8, 2012. The petition listed Llanos’s FIA credit card debt (and separate
1 A separate limited jurisdiction action filed by FIA against Llanos also resulted in
a cross-complaint by Llanos and was deemed related by the trial court. We granted
judicial notice of a second amended cross-complaint in the limited appeal. We do not
have jurisdiction over an appeal in a limited civil case, and we therefore do not discuss
the limited action, which in any event is not relevant to our reasoning. (Anchor Marine
Repair Co. v. Magnan (2001) 93 Cal.App.4th 525, 528; Code Civ. Proc., § 904.1,
subd. (a).) Llanos has requested judicial notice of what she deems a tentative ruling in
the limited jurisdiction case. We deny the request and deny her motion to submit the
same document as new evidence. Llanos also requests judicial notice of an objection she
filed in the case on appeal, and of the documents in her appellant’s appendix. We also
deny these requests, as all those documents appear in the clerk’s transcript filed by
Llanos.
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credit card debt to each of BAC and BANA) on the schedule identifying creditors holding
unsecured claims, but did not list the cross-complaint’s causes of action against FIA,
BAC, or BANA on the schedule identifying her personal property, which required that
she list “contingent and unliquidated claims of every nature, including . . . counterclaims
of the debtor” and the estimated value of each. The trial court stayed the action, taking
off calendar (as to the cross-complaint) a pending motion for judgment on the pleadings
by FIA and a pending demurrer by BAC and BANA. The bankruptcy court granted
Llanos a discharge on September 17, 2012, eliminating her obligation to pay the debts
existing on the date she filed for bankruptcy.
On December 5, 2012, the trial court held a hearing regarding the status of
Llanos’s bankruptcy. The court lifted the stay and dismissed FIA’s complaint, leaving in
place Llanos’s cross-complaint. On January 15, 2013, FIA filed a motion for judgment
on the pleadings, and BAC and BANA filed a demurrer. All three defendants argued that
because Llanos did not list her causes of action in her bankruptcy schedules, she did not
have standing to pursue them. BANA and BAC also demurred separately to each cause
of action as legally insufficient, and FIA argued that each cause of action failed to state a
claim.
On January 18, 2013, FIA moved to compel Llanos’s responses to discovery that
FIA had propounded in June 2012, before Llanos filed her bankruptcy petition, stating
that Llanos had failed to respond to two meet and confer letters, and requesting sanctions
of $3,141.36. In the meet and confer requests, FIA had written that as a result of the
bankruptcy stay, it understood its last day to file a motion to compel was January 18, and
Llanos’s counsel should contact FIA if Llanos disagreed. Llanos did not respond. In her
opposition to FIA’s motion to compel, however, she argued the motion to compel was
untimely.
After a hearing on March 1, 2013, the court sustained BAC and BANA’s demurrer
without leave to amend, agreeing that Llanos could not pursue her causes of action as
they arose before she filed bankruptcy and thus belonged to the bankruptcy estate. The
trial court also concluded that each cause of action failed to state a viable claim. Notice
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of entry of judgment in favor of BAC and BANA was filed March 11, 2013. Llanos filed
a notice of appeal on April 19, 2013.
On March 6, 2013, the trial court granted FIA’s motion for judgment on the
pleadings with prejudice as to the claims alleging breach of contract, breach of fiduciary
duty, breach of the covenant of good faith and fair dealing, and declaratory relief, noting
that Llanos “conceded in oral argument that no contract exist[s] between [Llanos] and
[FIA] Card Services,” (boldface omitted) and a credit card agreement gave rise to no
fiduciary duty. The court granted leave to amend as to the claims for negligent and
intentional misrepresentation and statutory violations. Although Llanos could not pursue
these claims as they were the property of the bankruptcy estate, the court allowed 30 days
for amendment, to give the trustee the opportunity to substitute into the case or abandon
the claims. No amended cross-complaint was filed within the 30-day period.
FIA’s motion to compel came on for hearing on March 27, 2013. Llanos and her
counsel did not appear. After waiting for 35 minutes, the court adopted its tentative
ruling granting the motion to compel and imposing sanctions of $1,000, finding it
“reasonable that the plaintiff calculated the 45-day period from the date defendant’s
counsel informed the Court and plaintiff’s counsel that the bankruptcy stay was lifted.”
On April 16, 2013, FIA moved for entry of judgment pursuant to Code of Civil
Procedure section 438, subdivision (h)(4)(C), as Llanos had failed to timely amend the
cross-complaint. Llanos’s counsel filed a motion for relief from excusable mistake
stating she had believed the case was under appeal. An attached first amended cross-
complaint alleged, for the first time, that “Llanos has never entered into any credit card
contract with FIA” but had instead acquired credit cards from BANA and BAC, who
used FIA as a front to attempt to extort money from Llanos by having FIA file the lawsuit
against Llanos (and all three had misrepresented in court that “FIA was the same entity as
BOA”), when “[t]he reality is that FIA is a separate legal entity within the [Bank of
America] group.”
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FIA opposed Llanos’s counsel’s motion for relief from excusable mistake. The
court granted the motion, and ordered Llanos’s counsel to pay sanctions of $2,500 in
addition to the $1,000 previously imposed regarding the motion to compel.
FIA then demurred to the first amended cross-complaint on the same grounds as in
the first demurrer, including lack of standing. Llanos opposed the demurrer, arguing that
the bankruptcy trustee had authorized Llanos to pursue the cross-complaint in an email
exchange, a copy of which she had lodged with the court.
After hearing, the trial court sustained the demurrer without leave to amend,
stating that in the absence of a formal abandonment of her claim, Llanos’s claims
belonged to the bankruptcy trustee. The court also concluded that the remaining causes
of action failed because they were not pleaded specifically and were not supported by
facts describing statutory violations. The notice of entry of judgment was filed on
October 16, 2013, and Llanos appealed on December 10, 2013, electing to proceed
without a reporter’s transcript. We consolidated the two appeals.
DISCUSSION
Llanos’s initial cross-complaint alleged that she had a contract with FIA which
FIA violated. Her amended cross-complaint alleged that she did not have a contract with
FIA but instead had acquired credit cards from BANA and BAC who then used FIA as a
“front” to sue her. Llanos did not provide account numbers, and did not describe or
attach any information or documentation to either cross-complaint regarding any
accounts, agreements, or promotional materials. The trial court dismissed the cross-
complaint as to BAC, BANA, and FIA after sustaining demurrers. Llanos’s briefs on
appeal argue that her credit cards were issued in the 1980’s, and were with BANA and
BAC and not with FIA, which she claims did not exist at the time, and that she had no
contract with FIA. Her appellate briefs repeat her cross-complaint’s bare and nonspecific
allegations and do not contain legal analysis explaining why the demurrers should not
have been granted or why the court abused its discretion in not allowing her to amend,
and the record on appeal does not include any transcripts of the hearings after which the
demurrers were sustained. Most importantly, however, once Llanos had obtained a
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discharge in bankruptcy, her debts to FIA, BAC, and BANA were discharged and the
lawsuit was no longer hers to pursue.
“‘As a general matter, upon the filing of a petition for bankruptcy, “all legal or
equitable interests of the debtor in property” become the property of the bankruptcy
estate and will be distributed to the debtor’s creditors. [11 U.S.C. section] 541(a)(1).’
[Citation.]” (M & M Foods, Inc. v. Pacific American Fish Co., Inc. (2011) 196
Cal.App.4th 554, 561 (M & M Foods).) The property of the estate includes causes of
action. (Id. at p. 562.) “‘In the context of bankruptcy proceedings, it is well understood
that “a trustee, as the representative of the bankruptcy estate, is the real party in interest,
and is the only party with standing to prosecute causes of action belonging to the estate
once the bankruptcy petition has been filed.” [Citation.] The commencement of Chapter
7 bankruptcy extinguishes a debtor’s legal rights and interests in any pending litigation,
and transfers those rights to the trustee, acting on behalf of the bankruptcy estate. See 11
U.S.C. § 541(a)(1) (indicating that a bankruptcy estate includes “all legal or equitable
interests of the debtor in property”); id. § 323 (establishing the bankruptcy trustee as the
“representative” of the estate with the “capacity to sue and to be sued” on its behalf).
Thus, “[g]enerally speaking, a pre-petition cause of action is the property of the Chapter
7 bankruptcy estate, and only the trustee in bankruptcy has standing to pursue it.”
[Citations.]’ [Citation.]” (Ibid.) Llanos’s litigation was pending when she filed her
chapter 7 bankruptcy petition. The causes of action in the cross-complaint thus were the
property of the bankruptcy estate, and only the trustee in bankruptcy had standing to
pursue the claims.
It is also true, however, that “‘[a]n outstanding legal claim that is abandoned by
the trustee reverts back to the original debtor-plaintiff.’” (M & M Foods, supra, 196
Cal.App.4th at p. 563.) “‘Whatever interest passed to the trustee when [the debtor] filed
for Chapter 7 bankruptcy [is] extinguished when [the trustee] abandon[s] the cause of
action . . . . [Citation]. In other words, “when property of the bankrupt is abandoned, the
title reverts to the bankrupt nunc pro tunc, so that he is treated as having owned it
continuously.” [Citation].’ [Citation.]” (Ibid.) Nevertheless, “‘“Abandonment requires
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affirmative action or some other evidence of intent by the trustee.” [Citation]. During
the pendency of the case, the notice and hearing requirements of [the federal bankruptcy
statute] must be observed for an “abandonment” to occur. [Citation].’” (Bostanian v.
Liberty Savings Bank (1997) 52 Cal.App.4th 1075, 1086–1087.) Formal notice and a
hearing are required. (11 U.S.C. § 554(a).) Llanos asserts that the bankruptcy trustee
abandoned the claims in the cross-complaint in an email dated February 20, 2013 when,
in response to her counsel’s email suggesting that counsel represent Llanos and the
bankruptcy estate take the money if Llanos prevailed, the trustee stated, “That is how you
should proceed.” This is far from the formal procedure required for abandonment.
In addition, it is undisputed that the bankruptcy petition did not list as an asset the
claims Llanos asserted in the cross-complaint. As the claims in the cross-complaint were
not listed as an asset, any purported abandonment by the trustee would not return the
claims to Llanos. “[P]roperty not formally scheduled in the bankruptcy proceeding is not
abandoned at the close of the bankruptcy proceeding, even if the trustee was aware of the
existence of the property. [Citation.] [¶] . . . In a bankruptcy proceeding, the ‘bankruptcy
code place[s] an affirmative duty on [the debtor] to schedule his assets and liabilities. [11
U.S.C.] § 521(1). If he fail[s] properly to schedule an asset, including a cause of action,
that asset continues to belong to the bankruptcy estate and [does] not revert to [the
debtor].’” (M & M Foods, supra, 196 Cal.App.4th at p. 563.)
Absent proper listing of the claims in the bankruptcy schedules and timely
subsequent formal abandonment by the trustee, neither of which occurred in this case,
Llanos did not have standing to pursue the claims in the cross-complaint. When a
defendant raises on a demurrer that the plaintiff does not possess the substantive right or
standing to prosecute the action, the complaint “‘is vulnerable to a general demurrer on
the ground that it fails to state a cause of action.’” (Schauer v. Mandarin Gems of Cal.,
Inc. (2005) 125 Cal.App.4th 949, 955; Tarr v. Merco Constr. Engineers, Inc. (1978) 84
Cal.App.3d 707, 713.) Llanos’s lack of standing was sufficient grounds for the court to
sustain the demurrers to the cross-complaint without leave to amend. (Jenkins v.
JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497, 538.)
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Llanos also appeals the trial court’s awards of discovery sanctions to FIA. We
review the rulings on discovery sanctions for an abuse of discretion, and “‘[a] court’s
decision to impose a particular sanction is “subject to reversal only for manifest abuse
exceeding the bounds of reason.”’” (Doe v. United States Swimming, Inc. (2011) 200
Cal.App.4th 1424, 1435.)
Regarding the $1,000 sanction related to FIA’s motion to compel, Llanos’s only
argument on appeal is that the motion was untimely and the trial court therefore had no
jurisdiction. The trial court rejected this argument, and we agree. FIA propounded
special interrogatories, form interrogatories, and requests for admission. Llanos did not
respond to the special interrogatories. There is no time limit for filing motions to compel
initial responses. (Code Civ. Proc., § 2030.290, subd. (b).) Llanos filed boilerplate
objections to the form interrogatories and requests for admissions on June 12, 2012, after
the bankruptcy stay was in effect. FIA had 45 days to file a motion to compel additional
responses. (Code Civ. Proc., § 2030.300, subd. (c).) The trial court was correct to
calculate the 45-day period beginning December 5, 2012, when Llanos informed the
court and counsel that the bankruptcy stay was lifted, and FIA’s motion to compel filed
on January 18, 2013 therefore was timely.
As to the $2,500 sanction the court imposed on Llanos when it granted Llanos’s
motion for relief from excusable mistake (and allowed her to file her amended cross-
complaint), Code of Civil Procedure section 473, subdivision (b) provides: “The court
shall, whenever relief is granted based on an attorney’s affidavit of fault, direct the
attorney to pay reasonable compensatory legal fees and costs to opposing counsel or
parties.” The imposition of fees and costs on the attorney whose mistake is excused is
mandatory, and Llanos does not make any argument that the amount was excessive or an
abuse of discretion.
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DISPOSITION
The judgments are affirmed. Costs are awarded to Bank of America Corporation,
Bank of America, N.A., and FIA Card Services, N.A.
NOT TO BE PUBLISHED.
JOHNSON, J.
We concur:
CHANEY, Acting P. J.
BENDIX, J.*
* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant
to article VI, section 6 of the California Constitution.
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