Opinion
NOT FOR PUBLICATION
ORDER ON DEBTOR'S MOTION TO STRIKE PRAYER
PETER W. BOWIE, Chief Judge United States Bankruptcy Court
This case has see-sawed in terms of the respective positions of the parties. There is a separate but related district court litigation pending in the Central District of California. When plaintiffs filed this adversary proceeding, they prayed in the original complaint that this Court allow L-3's claim to be determined by the Central District proceeding. Debtor did not agree, ostensibly because debtor was not ready to go forward in the Central District, and was without counsel.
Then, in April 2011, debtor argued before this Court that this Court should stay or abstain in these proceedings in favor of the Central District proceedings, and L-3 argued otherwise, in part because at least some of the issues in the Central District may be resolved by a settlement between some of the parties, leaving others still to be resolved here. At the conclusion of the hearing, this Court announced its decision to stay this adversary until we had a' clearer picture of what remained to be resolved here.
That left the issue of the language of L-3's prayer, which was inconsistent with L-3's current argument for the prayer it seeks. Over the objection of debtor's counsel, the Court authorized L-3 to amend only the prayer of its complaint. L-3 has done so, and now the debtor seeks to strike L-3's prayer as it was amended because it exceeds the scope of the leave to amend the Court authorized.
The original prayer, set out in full stated:
WHEREFORE, L-3 prays for judgment against the Defendant as follows:
(1) Allowing L-3's claim against the Defendant in the amount determined by the CD. Cal. District Court in case 09-cv-0099; including all statutory, common law, exemplary and /or punitive damages, and all reasonable attorneys' fees and costs, as provided under applicable state law (such as Cal.Civ. Code §§ 3426.1 -3426.11) and under federal law (such as the Lanham Act);
(2) Declaring the Defendant's debt to L-3, as determined by adjudication of the lawsuit to be nondischargeable in its entirety under Sections 523(a)(2)(A), $23(a)(4), and for 523 (a) (6) of the Bankruptcy Code, arid excepting the L-3 debt from discharge; and
(3) Granting L-3 such other and further relief as this Court deems just or appropriate.
The prayer in the first amended complaint, to which the debtor objects, changed the language in paragraph (1) only, with paragraphs (2) and (3) remaining identical. Paragraph (1) was changed to read:
(1) Allowing L-3's claim against the Defendant in an amount to be determined at trial in this adversary proceeding, but no less than one million dollars ($1,000,000), including all statutory, common law, exemplary and or punitive damages, and all reasonable attorneys' fees and costs, as provided under applicable state law (such as Cal. Civ. Code §§ 3426.1 - 3426.11) and under federal law (such as the Lanham Act);
As noted, debtor has objected to the amended prayer and has moved to strike it. Debtor's lone argument is: "The Amended complaint prays for; a specified damage amount to be awarded at trial in the adversary proceeding. That was not what the court permitted."
It appears to the Court that debtor is playing some sort of cat and mouse game, without clearly disclosing what he seeks. Perhaps a glimmer comes from debtor's Reply in support of his motion to strike, where the debtor stated:
In the amended complaint, L3 (sic) sought to moot the ruling staying the bankruptcy case by providing in the new prayer to the complaint that the factual issues would be decided by this court at trial. That text explicitly conflicts with the ruling of this court on the motion to abstain or stay. Consequently, the Motion to strike was filed.
L3 (sic) Now argues that the order granting the Motion makes this court the trial venue. Conrad requested and this court agreed that the Los Angeles district court would be the trial court venue.
The motion to strike can be resolved by a ruling that the prayer to (the complaint state that this court will determine the dischargeability of any claim of L3 (sic) based on final resolution of the Los Angeles case. This is: consistent with the request by Conrad that was granted by this court previously.
Debtor's posture is intriguing, and perhaps oblique, as well. Debtor first said, in effect, "don't make me go and defend myself in the district court in the Central District." Then, he seeks a stay of this proceeding and to have the L.A. proceeding go forward. A good portion of the discussion on the debtor's stay motion was that only some parts of the L.A. case might be resolved by a pending settlement, leaving other portions unresolved that will need to be resolved in finally determining L-3's claim against Mr. Conrad. Now, debtor objects to L-3 putting a minimum damage; number in its prayer, while really arguing over the language in the prayer that would make this Court the trial venue for the monetary claim as well the nondischargeability of any debt.
Without saying much about the possible issue, debtor raises an important issue, whether he intended to or not. L-3's original complaint set out lots of fact-type allegations against Mr. Conrad which L-3 contended supported their claims of nondischargeability under11 U.S.C. § 523(a). In its jurisdictional allegations, L-3 asserted: "Proceedings to i determine the dischargeability of particular debts are core proceedings pursuant to 28 U.S.C § 157(b)(2)(I)." Debtor in his answer admitted that allegation, Nowhere in L-3's original complaint does L-3 ask this Court to determine money damages against debtor if they are warranted. However, in the amended prayer, now L-3 so requests, although it has not sought to discuss or amend any of its jurisdictional allegations.
It has been settled law in the Ninth Circuit that a bankruptcy judge may enter a money judgment against a debtor in the context of a nondischargeability proceeding. In re Sasson, 424 F.3d 864 (9 Cir. 2005); In re Kennedy, 108 F.3d 1015 (9
Cir. 1997). What, if any, impact on those holdings might emerge from an analysis of the Applicability of Stern v. Marshall, __ U.S. __, 131 S.Ct. 2594 (2011) has yet to be discussed by either the parties or the Court.
The Court's authorization to L-3 to amend its prayer - and only its prayer - was to recognize that not all issues were likely to be resolved in the Los Angeles proceedings. The amended prayer filed by L-3 goes beyond what the Court contemplated, and, to the extent it seeks more than a determination of nondischargeability the Court will require L-3 to formally seek leave to- set out more specifically what it proposes, and the debtor will have a full opportunity to object to what L-3 proposes.
Accordingly, the debtor's motion to strike the amended prayer is granted to the extent that it asks this Court to do more than allow L-3's claim, as determined by the district court in the Central District of California, and determine its nondischargeability as set out in paragraph (2) in both the original and amended prayer. If L-3 seeks any more or different relief, they must bring in appropriately noticed motion. The stay of this adversary proceeding will be modified to permit the filing and opposition to any such motion to amend the pleadings in this adversary proceeding.
IT IS SO ORDERED.