Margaret Miyasaki v. Beatrice Lui

FILED
NOT FOR PUBLICATION MAR 29 2016
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: BEATRICE LUI, No. 14-60025
Debtor, BAP No. 13-1037
MARGARET EVE-LYNNE MIYASAKI, MEMORANDUM*
Appellant,
v.
BEATRICE LUI,
Appellee.
Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Kirscher, Dunn, and Jury, Bankruptcy Judges, Presiding
Submitted March 14, 2016**
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: BYBEE and N.R. SMITH, Circuit Judges and KORMAN,*** Senior
District Judge.
Margaret Miyasaki appeals the bankruptcy court’s order, which dismissed
her untimely adversary complaint in Beatrice Lui’s bankruptcy proceedings. The
bankruptcy court rejected Miyasaki’s argument that her adversary complaint
should be deemed timely because it related back to a document she filed on time
(her objection to Lui’s debtor’s plan). An untimely complaint can only relate back
to a document that was at least substantially-compliant with the Federal Rules of
Civil Procedure’s requirements for a valid complaint. And the bankruptcy court
held that Miyasaki’s objection did not contain enough information to substantially
comply with Federal Rules of Civil Procedure 8 and 9.
The bankruptcy appellate panel affirmed. We also affirm. Miyasaki’s
objection was never intended to be a complaint, and it does not contain enough
information to substantially comply with the federal pleading rules—so her
untimely adversarial complaint cannot relate back to it.
We review the bankruptcy court’s decision independent of the BAP’s
decision. Allred v. Kennerley (In re Kennerley), 995 F.2d 145, 146 (9th Cir. 1993).
***
The Honorable Edward R. Korman, Senior District Judge for the U.S.
District Court for the Eastern District of New York, sitting by designation.
2
We review de novo the bankruptcy court’s dismissal of an untimely complaint. See
Markus v. Gschwend (In re Markus), 313 F.3d 1146, 1149 n.2 (9th Cir. 2002).
In the bankruptcy context, where a party files a timely document that
substantially complies with the federal pleading rules for an adversarial complaint
(but is technically deficient for some reason), and then files an untimely adversarial
complaint correcting these deficiencies, the untimely complaint may be deemed as
timely. See In re Markus, 313 F.3d at 1149. The adversarial complaints must
substantially comply with Federal Rules of Civil Procedure 8 and 9. See Fed. R.
Bankr. P. 7008, 7009; In re Markus, 313 F.3d at 1150.
Rule 9(b) demands that allegations of fraud “be specific enough to give
defendants notice of the particular misconduct . . . so that they can defend against
the charge and not just deny that they have done anything wrong.” Bly–Magee v.
California, 236 F.3d 1014, 1019 (9th Cir. 2001) (quotation marks omitted). Rule 8
requires that “the complaint's factual allegations, together with all reasonable
inferences, state a plausible claim for relief.” Cafasso, U.S. ex rel. v. Gen.
Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 (9th Cir. 2011) (holding that
complaints for fraud must comply both with Rule 9's particularity requirement and
Rule 8's plausibility requirement). We ignore any conclusory factual or legal
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statements and look only to the specific facts alleged. Ashcroft v. Iqbal, 556 U.S.
662, 678–79 (2009).
We have emphasized that the touchstone of Rule 8, in the bankruptcy
context, is whether the timely document gave the debtor fair notice of the claim in
question. In re Markus, 313 F.3d at 1150. To this end, we have looked at whether
the earlier document was “clearly aimed” at requesting the same relief that the
untimely adversarial complaint asks for. In re Markus, 313 F.3d at 1150 (holding
that a timely document did not substantially comply where it was “clearly aimed at
converting [the debtor’s] case from Chapter 7 to Chapter 13,” and the untimely
complaint was primarily concerned with bringing a fraud claim).
Miyasaki’s objection was not merely in technical violation of the federal
pleading requirements for an adversarial complaint; it left out crucial parts. First,
the objection did not contain facts stating a plausible claim for relief. Once we
eliminate the conclusory allegations from the complaint, such as that Lui “made it
clear” she never intended to pay back the debt, we are left with the mere allegation
that Lui signed a promissory note and went into default. See Iqbal, 556 U.S. at
681–82 (ignoring allegations that the defendant had knowledge where there were
no specific facts supporting an inference of knowledge). The allegation that
someone signed a note and did not pay it cannot be enough to plausibly allege
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fraud. Id. (holding that the alleged facts must do more than create the bare
possibility of liability).
More importantly, Miyasaki’s objection was “clearly aimed” at defeating
Lui's plan confirmation, not contesting whether her claim could be discharged.
Miyasaki alleged in her objection that the plan (1) did not provide her with
distributions of a value equal to the allowed amount of her claim and (2) did “not
provide for arrears and/or on-going payments to junior lienholders” on the
property. She also challenged plan valuations and the incompleteness of, and
inaccuracies in, the plan information. These challenges relate to the plan's fairness.
Just because Miyasaki asserts at the end of the objection that she intends to file an
adversary proceeding for fraud, the objection cannot be said to have given fair
notice of the claims in the untimely complaint. Indeed, that Miyasaki’s objection
states that she planned to file an adversarial complaint in the future shows she
understood that the objection could not stand in for an adversarial complaint and
that it would not fairly put Lui on notice that the objection was operating as an
adversarial complaint.
AFFIRMED.
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