Opinion
NOT FOR PUBLICATION
James W. Meyers, Judge, United States Bankruptcy court.
MEMORANDUM DECISION CONCERNING MOTIONS TO DISMISS AND MOTION TO STRIKE SECOND AMENDED COMPLAINT, AND PROPOSED FINDINGS AND CONCLUSIONS FOR DISTRICT COURT
I
Anibal Mesala Silva ("Plaintiff" or "Debtor") filed a second amended complaint ("Second Amended Complaint") to bring claims in this court as part of the case initiated by his third bankruptcy petition. Several of the defendants filed motions to dismiss the Second Amended Complaint and one also filed a motion to strike various claims and for an award of fees under the California Anti-SLAPP statute, Cal. Code Civ. Pro. § 425.16. ("§ 425.16"). Due to the Plaintiff's unavailability, the Court reviewed the motions and determined that oral argument would not be helpful. The hearings that had been scheduled on the motions were taken off calendar and the motions taken under submission. After review of the motions and the other pleadings in this case, the Court enters this Memorandum as the analysis behind the proposed findings of fact and conclusions of law for consideration by the District Court.
California Code of Civil Procedure § 425.16 contains the Strategic Lawsuits Against Public Participation Statute, or Anit-SLAPP statute, and provides a procedure to respond to a complaint with a special motion to strike.
II ALLEGATIONS AND PROCEDURAL BACKGROUND
This adversary proceeding, and the main bankruptcy case in which it was filed, have a long and complicated history. On July 16, 2007, the Debtor filed a Chapter 13 petition to initiate his third bankruptcy case, No. 07-03740-JM13 ("Third Case"). Shortly thereafter, the Debtor's second bankruptcy case was dismissed because he failed to appear and testify at the First Meeting of Creditors, which had been continued to July 16, 2007. The Debtor filed the balance of schedules in the Third Case on July 31, 2007, and included claims against many of the defendants as personal property on Schedule B.
The Debtor's second case, filed in this district as Bankruptcy No. 07-00324-A7, was dismissed on the motion of the Chapter 7 Trustee by an order entered on July 20, 2007. The Debtor's first case was filed in 2004 in the Western District of Texas, San Antonio Division as Bankruptcy No. 04-55947-LMC13, and was dismissed in July 2005.
On September 21, 2007, while the Third Case was still pending under Chapter 13, the Debtor filed the original complaint to initiate this Adversary Proceeding, No. 07-90588-JM ("Adversary Proceeding"). The Clerk of the Court issued a Summons on September 21, 2007, but there is no indication that the original summons and complaint were ever served on any defendant. An amended summons was issued on November 6, 2007. There is no certificate of service in the file to show that the amended summons dated November 6, 2007, was served. The Debtor filed an Amended Complaint on January 23, 2008, and a further Amended Summons was issued that same day. The Debtor filed the Second Amended Complaint on January 24, 2008. The Proof of Service declarations indicate an Amended Summons and Amended Complaint were served by first class mail on the defendants on January 28, 2008. It is not clear from the Proof of Service declarations whether the Second Amended Complaint was served, but the motions to dismiss were directed at the Second Amended Complaint, so it appears that is the document sent with the Amended Summons to the defendants on January 28, 2008.
However, the ex parte application for an extension of time, which was filed on December 12, 2007, on behalf of the Department of Justice, Assistant U.S. Attorney Gaeta and Judge Lee Yeakel, indicates those defendants were served in mid-November 2007.
Meanwhile, as part of the main bankruptcy case, Judge Hargrove granted the Chapter 13 Trustee's motion to dismiss the Third Case at a hearing on September 25, 2007. Before a written order was entered, the Debtor filed a motion for reconsideration of the Court's oral ruling dismissing the case, as reflected on the Minute Order, and obtained a hearing date of October 30, 2007. At the hearing on October 30, 2007, Judge Hargrove granted the Debtor's motion for reconsideration with several conditions. On November 6, 2007, the Debtor filed a document entitled Notice of Compliance with Minute Order and Amended Minute Order, and also filed a Notice of Conversion to convert the case from a Chapter 13 to a Chapter 7 proceeding. On November 21, 2007, the Debtor filed the balance of schedules to reflect his assets and liabilities on conversion to Chapter 7. He included the Adversary Proceeding as one of the assets on an attachment to Schedule B, as well as another complaint he had filed against many of the defendants in the District Court as Civil No. 07-CV-1931 JAH (JMA).
According to an exhibit filed by the Plaintiff in the Third Case, it appears the District Court case was dismissed, without prejudice, by an Order dated January 2, 2008.
The Second Amended Complaint named as defendants eighteen individuals and two departments of the United States. The individuals include three federal judges, two attorneys for the United States, the Chapter 7 trustee appointed in the Plaintiff's Second Case, several people with whom the Plaintiff or his wife had entered contracts, and attorneys who had represented the parties to those contracts. The Plaintiff introduces the claims in the Second Amended Complaint as follows:
1. This is an amended complaint to redress civil rights violations and to recover damages pursuant to 28 U.S.C. 1343, 42 U.S.C. Sections 1981, 1982, 1983, 1985 and 1986, and California Civil Codes 45, 4 6 and 1714; For declaratory and further relief pursuant to 28 U.S.C. Sections 2201 and 2202; To recover money of the Estate pursuant to 11 U.S.C. 542; and For injunctive and equitable relief.
2. Plaintiff does not consent to entry of final orders or judgment by the bankruptcy judge on non-core matters.
3. Defendants fraudulently and maliciously broke the terms of their contractual obligations causing Plaintiff monetary damages, and to further their fraud, Defendants acted outside the scope of their duties and in violation of the Rules for Civil and Bankruptcy Procedure and the Constitution and Laws of the United States, thus depriving Plaintiff of his Constitutional and Legal rights. Defendants specifically conspired to interfere with Plaintiff's civil rights, neglected to prevent Plaintiff's civil rights violations, intentionally and maliciously made false statements in a Federal complaint and proceeding in detriment to Plaintiff's reputation with the main intention of obtaining a profit by fraudulent means. To consummate their fraud, Defendants intentionally and maliciously filed or caused to be filed a frivolous and unconstitutional Federal complaint in detriment to Plaintiff's well being with the intention of inflicting emotional distress, used the offices of the U.S. Trustee and Chapter 7 Trustee to illegally obtain information and documents to be used in the frivolous, illegal and unconstitutional case with the intention of obtaining a profit by fraudulent means, and finally, after being disqualified as Federal judges, they proceeded to issue rulings and orders with the intention of violating Plaintiff's Constitutional and Legal rights.
4. As a consequence of Defendants' actions, Plaintiff suffered monetary losses; Plaintiff's Chapter 7 Bankruptcy case No 07-00324 was improperly dismissed thus denying Plaintiff his right to Bankruptcy relief, Plaintiff's due process rights to an impartial trial, notification before an adverse action taking place, and opportunity for a hearing to oppose the adverse action were violated in California, thus denying Plaintiff's civil rights and done with the intention of obtaining a profit from Plaintiff by fraudulent means; the private personal information of Plaintiff was released in California to third parties; the personal reputation of Plaintiff was greatly damaged in California and throughout the United States; Plaintiff's real estate properties' equities were lost; Plaintiff's future income was negatively affected in California, and Plaintiff incurred costs and loss of income in California as a result of defending from the frivolous and unconstitutional federal complaint filed in Austin, Texas.
5. Plaintiff seeks declaratory and further relief, injunctive and equitable relief, recovery of money owed to Plaintiff by Defendants, and money damages stemming from the civil rights violations, fraud, libel, slander, and negligence. Plaintiff also seeks recovery of his reasonable fees and costs.
The Second Amended Complaint continues for an additional 43 pages describing pleadings filed, hearings held and orders entered in three different courts: the District Court in Austin Texas, and the Bankruptcy Courts in San Antonio, Texas and San Diego, California. Despite liberally sprinkling the pages with terms such as "illegal, unconstitutional, intentional, willful, and frivolous," the Second Amended Complaint is devoid of any specific factual allegations that could form the basis of the civil rights or tort claims asserted by the Plaintiff.
Four motions to dismiss the Second Amended Complaint were filed on behalf of ten of the defendants ("Motions to Dismiss"). Defendant Gerald Davis also filed an Anti-SLAPP Motion to Strike the Complaint and for an award of attorneys fees under § 425.16 ("Anti-SLAPP Motion"). The motions were scheduled for a hearing on July 10, 2008, but due to the Plaintiff's unavailability, the hearing was vacated and the five motions were taken under submission.
On May 15, 2008, after the Second Amended Complaint, the Motions to Dismiss and the Anti-SLAPP Motion were filed, Chapter 7 Trustee James Kennedy filed a Notice of Proposed Abandonment of Property ("Abandonment Notice"). Included on the Abandonment Notice was the estate's interest in the claims asserted in the Second Amended Complaint. The deadline to object to the proposed abandonment expired on June 18, 2008, and no objections were filed. An Order authorizing the Abandonment Notice was eventually submitted, which was then signed and entered on November 14, 2008 ("Abandonment Order"). In accordance with the Abandonment Order and 11 U.S.C. § 554, the claims asserted in the Complaint are no longer property of the estate under 11 U.S.C. § 541, but have been abandoned to the Debtor.
The Debtor's discharge was entered on June 4, 2008. It appears there are no assets available for the Chapter 7 Trustee to distribute.
III
DISCUSSION
A. Standing
While the case was pending under Chapter 13, the Debtor remained in possession of property of the estate pursuant to 11 U.S.C. § 1306(b), and would have standing to file the Adversary-Proceeding. Upon conversion to Chapter 7 on November 6, 2 007, the Chapter 7 Trustee became the real party in interest with standing to pursue the claims in the Adversary Proceeding. 11 U.S.C. § 348(f)(1); Turner v. Cook, 362 F.3d, 1219, 1225 - 1226 (9th Cir. 2004) .
The Debtor's attempt to pursue the claims when he was not the real party in interest, and the subsequent abandonment of the claims by the Chapter 7 Trustee, results in a conundrum for the Bankruptcy Court. When the Original Complaint was filed in this adversary, the Third Case was still a Chapter 13. When the Second Amended Complaint was filed, and before any summons was served, the Debtor had voluntarily converted the Third Case to one under Chapter 7, and the claims were property of the estate. Turner v. Cook, 362 F.3d at 1225 - 1226. At that time, it was the Chapter 7 Trustee, and not the Debtor who had standing as the real party in interest to assert the claims. I_d. The motions to dismiss the complaint due to the Debtor's lack of standing raised a meritorious position. However, since the Trustee has abandoned the claims to the Debtor, the Debtor now has regained standing to assert the claims. But at this point, there is no bankruptcy purpose to be served by retaining the claims in this Court. None of the claims are core proceedings under 28 U.S.C. § 157, the claims have no relationship to the Third Case, the Debtor has received his discharge, and the creditors will not share in any recovery on the claims through the estate. Furthermore, as claims for civil rights violations, negligence, libel and slander, the causes of action asserted by the Plaintiff all appear to fall within the category of personal injury torts, which are specifically excluded from this Court's core jurisdiction under 28 U.S.C. § 157(b)(2)(0).
As a non-core proceeding which could have been filed in the District Court, the bankruptcy court is precluded from entering a final order over the stated objection of the Plaintiff. As a result, in accordance with F.R. Bankr.P. 9033, this Court is filing proposed findings and conclusions of law for consideration by the District Court.
B. Failure to State Cause of Action
Despite filing three versions of the complaint in this Adversary Proceeding, the Plaintiff has not alleged any specific facts to support the claims. The Second Amended Complaint lacks factual allegations that raise a right to relief above the speculative level and therefore fails to meet the standard enunciated by the Supreme Court in Bell Atlantic Corp. V. Twomblv, 550 U.S. 544, 127 S.Ct. 1955, 1964 - 65 (2007). The Plaintiff did not include facts to support plausible grounds for the relief requested to defeat a motion to dismiss under F.R.Civ.P. 12.
C. Immunity
The arguments by defendants concerning immunity are also well taken. Although different levels of immunity apply to various defendants and actions alleged in the Second Amended Complaint, each is sufficient to support dismissal of the Second Amended Complaint.
Judge Yeakel, Judge Clark and Judge Adler have absolute immunity as to the claims asserted in the Second Amended Complaint. Stump v. Sparkman, 435 U.S. 349, 356 (1978); Forrester v. White, 484 U.S. 221, 225 (1988). Any actions attributed to Judge Yeakel, Judge Clark and Judge Adler were performed by judges and relate to the judicial process.
Department of Justice Attorneys Ms. Hong and Mr. Gaeta are entitled to a quasi-judicial immunity for their discretionary actions in representing the United States. See, Duval1 v. County of Kitsap, 260 F.3d 1124, 1133 - 1134 (9th Cir. 2001); Balser v. Department of Justice, 327 F.3d 903, 909 - 910 (9th Cir. 2003). All actions ascribed to them in the Second Amended Complaint appear to fall within the category of discretionary actions.
Gerald Davis is entitled to quasi-judicial immunity for his role as Trustee in Debtor's Second Chapter 7 case. In re Castillo, 297 F.3d 940, 948 (9th Cir. 2002). The Trustee is also protected by the Barton Doctrine, which requires leave of the appointing court to sue a trustee for actions taken in administration of the estate. Barton v. Barnour, 104 U.S. 126, 129 (1881). There is no indication the Plaintiff obtained leave as part of the Second Case to sue Trustee Davis.
Finally, in addition to their arguments that the Plaintiff lacks standing to pursue the claims, Defendants Davis, Hargadon and Black move to dismiss on grounds that any acts which they are alleged to have performed in the Second Amended Complaint were regarding litigation activity. Such actions are protected through a privilege under Cal.Civ.Code § 47.
D. Anti-SLAPP Motion to Strike and for Sanctions
The facts alleged in the Second Amended Complaint fall within the broad scope of the California Anti-SLAPP statute, § 425.16. Dowling v. Zimmerman, 85 Cal.App.4th 1400 (2001). The Motion to Strike and for Sanctions filed by Gerald Davis is meritorious as to the negligence, libel and slander claims. Although § 425.16 does not apply to federal claims, it is properly applied with respect to pendent state law claims. In re Bah, 321 B.R. 41, 46 (9th Cir. BAP 2005) .
The Court has reviewed and analyzed the pleadings concerning Mr. Davis and engaged in the two-step process applicable to rule on an anti-SLAPP motion to strike as set forth in Equilon Enterprises v. Consumer Cause, Inc., 29 Cal.4th 52, 67 (2002). Each allegation in the Second Amended Complaint concerning Mr. Davis implicates his free speech or petition rights as defined by § 425.16. All conduct attributed to him concerns statements, filing or conduct performed in his position as Chapter 7 Trustee for the Second Case.
Once the Court determines the activities complained of fall within the scope of § 425.16, the burden shifts to the Plaintiff to show that there is a probability that he will prevail on the claims. Shekhter v. Financial Indemnity Co., 89 Cal.App.4th 141, 151 (2001). Despite having an extended period to respond to the Anti-SLAPP Motion, Plaintiff's opposition lacked any support for his claims. Plaintiff has not provided any pleadings or affidavits which state facts to support the allegations in the Second Amended Complaint on the pendent state court claims directed at Mr. Davis. Plaintiff failed to show that the Second Amended Complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to demonstrate the probability that he will prevail in the litigation. The pendent state law claims of negligence, libel and slander should be stricken.
Mr. Davis is entitled to a mandatory award of attorneys fees pursuant to § 425.16, on appropriate motion. Kearney v. Foley and Lardner, 553 F.Supp.2d 1178 (D.S.Cal. 2008).
IV CONCLUSION
The claims in the Second Amended Complaint are non-core proceedings which have no remaining relationship to the underlying bankruptcy case. The Plaintiff objects to the entry by the Bankruptcy Court of final orders on non-core matters. The Bankruptcy Court has prepared proposed findings and conclusions to submit to the District Court in accordance with 28 U.S.C. § 157(c) (1) and F.R.Bankr.P. 9033, so that the District Court, with its broader jurisdiction, can enter a final order on the pending motions, award sanctions under § 425.16, and dismiss the Second Amended Complaint, with prejudice. After the proposed findings and conclusions are filed, the parties will have an opportunity to file objections under Fed.R.Bankr.P. 9033(b).
The Court notes that an Order of Default was entered against some of the defendants in this case, and others did not file a motion to dismiss. The lack of plausible grounds set forth in the Second Amended Complaint may support dismissal of the Second Amended Complaint against all defendants.