Saba v. Cory (In Re Flamingo 55, Inc.)

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT JUN 29 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
In re: FLAMINGO 55, INC., No. 13-15576
Debtor, D.C. No. 2:12-cv-00671-KJD-
CWH
JOHN SABA, individually and as
Manager of Broadway-Acacia, LLC; et al., MEMORANDUM*
Plaintiffs - Appellants,
v.
TIMOTHY S. CORY, Chapter 7 Trustee;
et al.,
Defendants - Appellees.
Appeal from the United States District Court
for the District of Nevada
Kent J. Dawson, Senior District Judge, Presiding
Argued and Submitted June 9, 2015
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: CHRISTEN and WATFORD, Circuit Judges and RAKOFF,** Senior
District Judge.
John Saba and Gregory Grantham appeal the district court order affirming
the bankruptcy court decision dismissing Saba and Grantham’s complaint for
dissolution of partnership for failure to state a claim. We have jurisdiction
pursuant to 28 U.S.C. § 158(d). We affirm.
In 2007, the bankruptcy court ruled that Saba and Grantham, who are
successors in interest to Broadway–Acacia, LLC, were not entitled to subrogate to
Datacom Investment Company’s position as a secured creditor in the Flamingo 55,
Inc. bankruptcy proceeding. In re Flamingo 55, Inc., 378 B.R. 893, 919–21
(Bankr. D. Nev. 2007).1 In 2011, this court affirmed the bankruptcy court’s ruling.
In re Flamingo 55, Inc., 646 F.3d 1253 (9th Cir. 2011). We explained that the
bankruptcy court found that Broadway–Acacia and Flamingo 55 “were partners or
coventurers in a venture to develop certain property,” and the Datacom loan “was
to them for the purpose of pursuing that venture.” Id. at 1254. We concluded the
bankruptcy court’s finding was not clearly erroneous, and as a result of
**
The Honorable Jed S. Rakoff, Senior District Judge for the U.S.
District Court for the Southern District of New York, sitting by designation.
1
Because the parties are familiar with the facts, we recount only an
abbreviated version of them here.
2
Broadway–Acacia’s status as a partner or coventurer in the development
enterprise, Saba and Grantham were not entitled to subrogation. Id. at 1254–55 &
n.6.
Following this court’s decision, Saba and Grantham filed a complaint for
dissolution of partnership, which asserted claims premised on the allegation that
the bankruptcy court and this court determined that the property in Nevada “sold
by the Trustee in 2005 for $1,700,000 was a partnership asset.”
The bankruptcy court properly dismissed the complaint for failure to state a
claim. In 2005, the bankruptcy court determined that the Flamingo 55 bankruptcy
estate owned the Nevada property “free and clear of any ownership interest,
equitable lien, or constructive trust in favor of . . . Gregory Grantham and John
Saba.” Contrary to Saba and Grantham’s argument on appeal, neither the
bankruptcy court’s nor this court’s subrogation decision altered this determination.
Those decisions held that Broadway–Acacia and Flamingo 55 were partners or
coventurers in a venture to develop certain property, not that a “partnership”
owned the property. See id. at 1254–55. The bankruptcy court correctly dismissed
the complaint based on the doctrine of collateral estoppel because it had previously
determined that the Nevada property belonged to the Flamingo 55 bankruptcy
estate. See United States v. Bhatia, 545 F.3d 757, 759 (9th Cir. 2008).
3
The bankruptcy court also did not abuse its discretion by denying Saba and
Grantham an opportunity to amend their complaint to assert a claim based on the
theory that the Datacom loan was a “partnership debt.” Saba and Grantham failed
to alert the bankruptcy court to their alternative theory or to request leave to
amend.2 Under these circumstances, it was not an abuse of discretion for the
bankruptcy court to deny leave to amend on the ground that amendment would be
futile. See AmerisourceBergen Corp. v. Dialysist W., Inc., 465 F.3d 946, 951 (9th
Cir. 2006) (holding although leave to amend should be freely given, courts need
not grant leave where amendment would be futile).
AFFIRMED.
2
Saba and Grantham argue they did not have an opportunity to request
leave to amend. But they do not explain why they could not have made such a
request in their response to the motion to dismiss or when the bankruptcy court
gave Saba an opportunity to speak at the hearing. Saba and Grantham are both
lawyers.
4