Annette Leroux v. C.P.A. Insurance Co. ( 2017 )

FILED
NOT FOR PUBLICATION
DEC 22 2017
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ANNETTE M. LEROUX, as Trustee of No. 16-55549
the William James Ross IV Irrevocable
Trust and Edmund William Ross II D.C. No.
Irrevocable Trust, 8:14-cv-01540-JVS-JCG
Plaintiff-Appellant,
MEMORANDUM*
v.
CPA INSURANCE COMPANY, a foreign
corporation; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Central District of California
James V. Selna, District Judge, Presiding
Argued and Submitted December 5, 2017
Pasadena, California
Before: WARDLAW and GOULD, Circuit Judges, and PIERSOL,** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Lawrence L. Piersol, United States District Judge for
the District of South Dakota, sitting by designation.
Annette M. LeRoux appeals the district court’s dismissal of her claims and
denial of her motion for reconsideration. We review dismissal on standing grounds
de novo, but factual issues underlying the standing determination are reviewed for
clear error. In re Palmdale Hills Prop., LLC, 654 F.3d 868, 873 (9th Cir. 2011).
Denial of a motion for reconsideration is reviewed for abuse of discretion, but legal
conclusions on which the denial was based are reviewed de novo. Trader Joe’s
Co. v. Hallatt, 835 F.3d 960, 965 n.3 (9th Cir. 2016). We affirm.
1. LeRoux’s claims were all “sufficiently rooted in [William James Ross
III’s] pre-bankruptcy past” such that even if they arose post-bankruptcy filing, they
were part of the bankruptcy estate.1 Segal v. Rochelle, 382 U.S. 375, 379 (1966).
LeRoux’s breach of contract claim against ICON Reinsurance, Ltd. (“ICON”)
alleges breach at the time when CPA Insurance Company allegedly breached the
compensation agreement, which was in April 2009—well before Ross’s fall-2010
bankruptcy filing. Her declaratory relief claim against ICON, Stephanie H. Shear,
Douglas F. Rubino, and Julie-Ann Eastwood alleges breach of the compensation
agreement in April 2009. The two claims brought pursuant to the Racketeer
1
LeRoux advances many arguments involving the Third Circuit case In re
O’Dowd, 233 F.3d 197 (3d Cir. 2000), which was relied on by the district court.
But we review standing de novo and we see no reason to adopt O’Dowd’s
“conceptually impossible to sever” test.
2
Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962(c) & 1962(d),
expressly allege a pattern of racketeering activity beginning in 2008 or 2009.2 And
all liability alleged in the remaining claims, even if based on post-bankruptcy
actions, is predicated on CPA, ICON, Rubino, Shear, and Eastwood’s conduct
between January and April 2009. For example, the fraudulent conveyance claim
and the unjust enrichment claim allege defendants received assets rightfully
belonging to Ross, but the assets belong to Ross only if the compensation
agreement was breached, which allegedly occurred pre-bankruptcy.
2. Only claims against CPA were abandoned and assigned to LeRoux, so
she cannot bring claims against other defendants. As an initial matter, LeRoux
does not raise substantive arguments against the district court’s abandonment
ruling until her reply brief, and, as such, these arguments are waived. United
States v. Bentson, 947 F.2d 1353, 1356 (9th Cir. 1991). In any event, LeRoux’s
arguments are unavailing. LeRoux’s motion to compel abandonment requests
“that the Trustee be compelled to abandon any and all choses-in-action against
CPA,” the trustee’s notice of abandonment states that the trustee intends to
abandon “a cause of action against CPA Insurance Company,” the bankruptcy
2
LeRoux’s argument that we should disregard allegations that are made on
information and belief is unsupported by law and would unfairly shield her from
the consequences of her own complaint’s allegations.
3
court’s abandonment order references “abandonment of the claim,” and the
bankruptcy court reiterated (on LeRoux’s motion) that “the cause of action against
CPA Insurance company is abandoned.” The inevitable conclusion is that LeRoux
received exactly what she asked for: abandonment of causes of action against
CPA. See Catalano v. C.I.R., 279 F.3d 682, 685 (9th Cir. 2002).
Creditors need not know each and every potential defendant, but it is beyond
belief that LeRoux was unaware of other potential defendants at the time.
Abandonment proceedings occurred in November and December 2013. A few
days later, LeRoux sought and obtained “assignment of rights [including] any right
of action . . . against CPA Insurance Company, or others, arising out of breach[]”
of the compensation agreement. And less than a month later, LeRoux filed this
lawsuit against CPA, Rubino, Eastwood, Shear, McKay, and Rock.
3. The district court did not abuse its discretion in denying LeRoux’s
motion for reconsideration. Rather than correcting a clear mistake and preventing
injustice, the bankruptcy court’s 2015 nunc pro tunc “clarification” that its prior
abandonment orders actually broadly abandoned “any and all claims against any
individual or entity arising out of or related to” the compensation agreement,
altered the substance of what actually transpired. Singh v. Mukasey, 533 F.3d
1103, 1110 (9th Cir. 2008). Furthermore, LeRoux explicitly told the bankruptcy
4
court that such revision was necessary to overturn the district court’s ruling.3 Cf.
id. (stating that the nunc pro tunc power “does not imply the ability . . . to backdate
events to serve some” purpose other than correcting “a clear mistake” and
preventing injustice).
In any event, “[t]he existence of federal jurisdiction ordinarily depends on
the facts as they exist when the complaint is filed.” Newman-Green, Inc. v.
Alfonzo-Larrain, 490 U.S. 826, 830 (1989); see also id. at 830–38 (delineating the
exceptions to that principle, none of which applies here). And we have squarely
held that standing cannot be created retroactively. W. Watersheds Project v.
Kraayenbrink, 632 F.3d 472, 483 n.6 (9th Cir. 2011). Accordingly, the district
court did not abuse its discretion in determining that regardless of the nunc pro
tunc order, as a matter of historical fact, LeRoux’s claims had not been abandoned
when she filed the operative complaint. See United States v. Yepez, 704 F.3d 1087,
1090 (9th Cir. 2012) (en banc); United States v. Alba-Flores, 577 F.3d 1104, 1111
(9th Cir. 2009).
AFFIRMED.
3
Eastwood, ICON, McKay, Rock, and Rubino’s motion to take judicial
notice of the transcript from the bankruptcy court’s hearing regarding the nunc pro
tunc order is granted.
5