EDWARD M. CHEN, District Judge.
Appellant, Paul Den Beste, brought causes of action against Appellee, Donald Lewin, John DeMeo and Bradford DeMeo in Bankruptcy Court alleging violations of 11 U.S.C. § 362(a), the automatic stay, and 42 U.S.C. § 1983.
Three years before Appellant Beste filed for bankruptcy, he was sued by Appellee DeMeo over attorney's fees. Demeo v. Beste, No. MCV-178973 (March 27, 2007). During that case, and upon DeMeo's request, in April of 2007, Judge Cox of the Sonoma County Superior Court entered an order declaring Beste a vexatious litigant, finding that "[d]efendants have engaged in a series of actions which repeatedly seek to relitigate the same basic assertion determined against them." Demeo v. Beste, No. MCV-178973 (March 27, 2007). Appellee Lewin, pursuant to his duties as clerk of the Sonoma County Court, subsequently filled out the vexatious litigant prefiling order form and sent a copy to the Judicial Council. (Compl. Ex. A.) On this form, Lewin entered Beste's name under the preprinted section stating "[p]laintiff or cross-complainant subject to this order." (Compl. Ex. A.) This may have been clerical error as Beste was clearly a defendant in this action and there is nothing demonstrating that he was a cross-complainant. There are no allegations in the Complaints or Appellant's Briefs however that Lewin took any other relevant action since 2007.
In September of 2010, Beste filed for Chapter 13 Bankruptcy. (Appellee's Responding Brief 4.) In April of 2011, during this bankruptcy, Beste filed an adversary proceeding in Bankruptcy Court against Lynn Searle, a lawyer for one of Beste's creditors, alleging that Searle violated the automatic stay by sending Beste a settlement letter. In Re Paul and Melody Beste, Memo Re: Sanctions, No. 10-13558, 1. In May of 2011, Searle filed a Motion to Dismiss, attaching a copy of the vexatious litigant list from the Judicial Council which included Beste's name as a result of the Sonoma County ruling. (Appellee's Responding Brief 5.) This list does not indicate whether Beste was a plaintiff or defendant when he was declared a vexatious litigant. (Compl. Ex. A.) Although it is not entirely clear from the record, it appears that attaching this list had no effect on the Bankruptcy Court's decision to dismiss Beste's case against Searle. Nor does Beste allege that the vexatious litigant list had any effect on the Bankruptcy Court's decision to dismiss that case. The Bankruptcy Court converted Searle's motion to a Motion for Summary Judgment and dismissed the case based on Searle's declaration claiming she had no knowledge of the stay and therefore could not have willfully violated it. In Re Paul and Melody Beste, Memo on Mot. To Make Additional Findings, No. 10-13558, 1.
While Searle's Motion to Dismiss was pending, in June of 2011, Beste sent a letter to Appellee Lewin, clerk of the Sonoma County Superior Court, accusing him of erroneously preparing the vexatious litigant prefiling order by intentionally labeling Beste a plaintiff in the action against the DeMeos when he was in fact a defendant. (Appellant's Opening Brief 3-4.) The letter further asked Lewin to correct these errors and remove Beste from the vexatious litigant list. Id.
On January 23 2012, Beste filed a Motion for Further Findings and to amend the order granting the Motion to Dismiss. (P.'s Mot. To Make Further Findings). Beste claims that the Bankruptcy Court's order did not adequately explain why the continued operation of Lewin's falsified vexatious litigant order did not violate the bankruptcy stay. (Appellant's Opening Brief 15.) The Bankruptcy Court denied this motion. Finally, in March of 2012, the Bankruptcy Court denied discharge of Beste's debts thus bringing the automatic stay to an end. (Appellee's Responding Brief 4.)
On May 30, 2012 Beste filed an appeal asking this Court to reverse the Bankruptcy Court's decision to dismiss his Complaint and Amended Complaint and to set aside the vexatious litigant prefiling order entered in 2007 by the Sonoma County Superior Court. (Appellant's Opening Brief 15.)
The scope or applicability of the automatic stay under the Bankruptcy Code is reviewed de novo because it is a question of law. See McCarthy, Johnson & Miller v. N. Bay Plumbing, Inc. (In Re Pettit), 217 F.3d 1072, 1077 (9th Cir.2000). The standard for review of a Bankruptcy Court's decision to grant a motion to dismiss is also de novo. See In Re Warren, 568 F.3d 1113, 1116 (9th Cir.2009).
Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on the failure to state a claim upon which relief may be granted. See Fed. R.Civ.P. 12(b)(6). A motion to dismiss based on Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See Parks Sch. of Bus. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995). In considering such a motion, a court must take all allegations of material fact as true and construe them in the light most favorable to the nonmoving party, although "conclusory allegations of law and unwarranted inferences are insufficient to avoid a Rule 12(b)(6) dismissal." Cousins v. Lockyer, 568 F.3d 1063, 1067 (9th Cir.2009). While "a complaint need not contain detailed factual allegations ... it must plead `enough facts to state a claim to relief that is plausible on its face.'" Id. "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to
After the Bankruptcy Court granted Lewin's Motion to Dismiss, Beste filed a Motion for Further Findings of Fact and Conclusions of Law. (Appellant's Opening Brief 14.) The Bankruptcy Court proceeded to dismiss this motion as well and Beste challenges this dismissal on appeal. (Appellant's Opening Brief 14.) In his Opening Brief, Beste argues that the Bankruptcy Court made no findings of fact or conclusions demonstrating how the continued operation of the pre-filing order does not violate the automatic stay. (Appellant's Opening Brief 15.) At the hearing for the Motion to Dismiss the Complaint, the Bankruptcy Court noted in the record that "I find there is absolutely no authority for the idea that if someone files a bankruptcy, they can undo a pre-bankruptcy finding of vexatious litigation." (Tr. Case No. 10-13558, 4, January 6, 2012.) Under FRCP 52(a)(3), the court is not required to state findings or conclusions when ruling on a motion under Rule 12. Fed. R. Civ. P. 52(a)(3). The Bankruptcy Court therefore provided adequate explanation for dismissing the Complaint and thus properly dismissed the Motion to Make Further Findings of Fact and Conclusions of Law.
Upon initiation of bankruptcy proceedings, an automatic stay goes into effect, pausing litigation against the debtor. See 11 U.S.C. § 362. The automatic stay in a bankruptcy proceeding has two purposes. Dean v. Trans World Airlines, Inc., 72 F.3d 754, 755 (9th Cir.1995). First, it is designed to give debtors breathing space from hungry creditors by stopping all collection efforts so the debtor may attempt some sort of repayment or reorganization plan. Id. Second, the stay protects creditors by ensuring that other creditors are not "racing to various courthouses to pursue independent remedies to drain the debtor's assets." Id. at 755-756.
The automatic stay applies to many categories of litigation involving the debtor and his estate. See 11 U.S.C. § 362. Section 362(a)(1) operates as a stay of
11 U.S.C. § 362(a)(1).
Although it is not entirely clear, it appears that Beste alleges Lewin violated the automatic stay in two ways. First, Beste claims being labeled a vexatious litigant is a "judicial proceeding that continues to operate against him," and thus Lewin violated the stay by entering the order. (Appellant's Opening Brief 8) (quoting 11 U.S.C. § 362(a)(1)). Beste also claims Lewin fraudulently falsified the prefiling
Judge Cox of the Sonoma County Superior Court entered the vexatious litigant order, not Lewin. Lewin merely filled out the paperwork and provided the Judicial Council a copy of the prefiling order form pursuant to his duties as a clerk of the Sonoma County Superior Court and the requirement under 391.7(f).
First, once a decision has been rendered, it is no longer a continuing proceeding for the purposes of section 362(a). In re Pettit, 217 F.3d 1072, 1080 (9th Cir. 2000). This means that the vexatious litigant "proceeding," was over when the order was entered, thus it does not constitute a continuing judicial proceeding for the purposes of violating a bankruptcy stay enacted three years later.
Moreover, any act done by Lewin falls under the Ministerial act exception to an automatic bankruptcy stay. See In re Pettit, 217 F.3d 1072, 1076 (9th Cir. 2000) (adopting the Ministerial Act exception to the automatic stay and finding that although District Court Judge signed an order releasing funds hours before the debtor filed for bankruptcy, clerks subsequent ministerial act of issuing the check did not violate the stay even though it occurred after the bankruptcy petition was filed). See also Rexnord Holdings, Inc. v. Bidermann, 21 F.3d 522, 527 (2nd Cir. 1994) (finding an act of entry of judgment by court clerk was ministerial act that did not violate the stay). "This exception stems from the common sense principle that a judicial proceeding within the meaning of section 362(a) ends once a decision on the merits has been rendered. Ministerial acts or automatic occurrences that entail no deliberation, discretion, or judicial involvement do not constitute continuations of such a proceeding." Pettit, 217 F.3d at 1076. Therefore, Lewin's act would not have violated the stay even if it occurred after Beste filed for bankruptcy.
Beste further alleges that Lewin purposefully and fraudulently called Beste a plaintiff on the 2007 prefiling order Lewin submitted to the Judicial Council. (Appellee Responding Brief 3.) Beste was in fact a defendant when he was labeled a vexatious litigant and contends that Lewin's failure to later correct this paperwork constitutes a violation of the automatic stay. (Appellee Responding Brief 3,4.) This argument has no merit. First, the form where Beste is labeled a plaintiff is a preprinted form that states "[n]ame of Plaintiff or Cross-complainant subject to this order." (Compl. Ex. A.) Second, whether Beste is labeled a plaintiff or a defendant is of no consequence. Beste is not arguing that Lewin entered the vexatious litigant order against the wrong person. Nor could he, as Judge Cox's findings clearly indicate that he was discussing Beste. DeMeo v. Beste, MCV178973, at * 5, (March 27, 2007) ("Defendants have engaged in a series of actions which repeatedly seek to relitigate the same basic assertion determined against them"). Also, there is no mention of "plaintiff" or "defendant" on the vexatious litigant list. (Compl. Ex. b) Judge Cox stated independent reasons for declaring Beste a vexatious litigant and labeling a vexatious litigant
It is not clear whether Beste is challenging enforcement of the prefiling order or just the mere status of being labeled a vexatious litigant. However, there is no evidence in the record that the vexatious litigant order was ever enforced, by Lewin or anyone else, against Beste during his bankruptcy stay.
There is no evidence in the record that the Bankruptcy Court enforced the vexatious litigant prefiling order in Beste v. Searle when it granted summary judgment in favor of Searle. In that case, as mentioned above, Beste claimed Searle violated the automatic stay by sending him a settlement letter. (Memo Re: Sanctions, No. 10-13558, 1.) The court found that Beste engaged in sanctionable conduct when he sued Searle, a creditor's lawyer, without listing her on his schedules or making any attempt to ensure she knew about the automatic stay. (Memo on Mot. To Make Additional Findings, No. 10-13558, 2.) The court dismissed the action, crediting Searle's declaration that she had no knowledge of the automatic stay, and finding that she therefore could not have willfully violated it. Id. at 1. Therefore, although Searle attached the vexatious litigant list to her Motion to Dismiss, the Bankruptcy Court did not rely on this list in dismissing the claim against Searle. There is nothing on the record showing the Bankruptcy Court relied on this list at all.
Lewin also did not enforce the vexatious litigant order pre- or post-petition. Lewin merely provided the Judicial Council a copy of the vexatious litigant profiling order in 2007 pursuant to his job as a clerk of the Sonoma County Superior Court and California Code of Civil Procedure § 391.7(f). The only action Beste alleges that Lewin performed post-bankruptcy is failing to correct the fraudulent prefiling form he entered in 2007. As discussed above, this argument is without merit. Therefore, to the extent that Beste's Complaint alleges Lewin enforced the pre-filing order, that allegation was properly dismissed.
The original Complaint in this matter includes allegations that Lewin falsified the prefiling order form he submitted to the Judicial Council, failed to take action to correct the false and fraudulent prefiling order form and that continued use of this form against Beste is a violation of the automatic stay under section 362. (Compl. 3, 4.) In his Amended Complaint Beste added a claim against Lewin for violation of 42 U.S.C. § 1983. (Amended Compl. 7.)
On appeal, Beste argues that the Amended Complaint should have been liberally construed and there was no grounds to dismiss the Amended Complaint because there was no motion to dismiss pending for that complaint. (Appellant's Opening Brief 13.) However, federal judges may dismiss complaints sua sponte when they fail to state a claim, but must give notice of their intention to invoke Rule 12(b)(6) and afford plaintiff an opportunity to submit a written memorandum in opposition of such motion. Wong v. Bell, 642 F.2d 359, 362 (9th Cir.1981). "[S]uch a dismissal may be made without notice where the claimant cannot possibly win relief." Omar v. Sea-Land Service, Inc., 813 F.2d 986, 991 (9th Cir.1987).
Although the Bankruptcy Court did not specifically address the § 1983 claim when it dismissed the Amended Complaint, this claim still fails. The § 1983 claim involves the same allegations that Lewin conspired to have Beste labeled a vexatious litigant by falsely labeling him a plaintiff in the action against the DeMeos. (Amended Compl. 7.) It is not clear what Constitutional right Beste claims was deprived, although it appears he is making a due process argument. Id. The Amended Complaint states if Beste attempts to defend himself he will be "denied defendant protections of the Constitution," and cites a section from the California Constitution concerning defending life, liberty and property. Id. First, § 1983 claims can only be brought to enforce rights of the United States Constitution and not those of the California Constitution. See Baker v. McCollan, 443 U.S. 137, 146-147, 99 S.Ct. 2689, 61 L.Ed.2d 433 (1979). Second, there is no merit to any claim that Beste was deprived of due process rights. As stated above, Judge Cox of the Sonoma County Superior Court independently declared Beste a vexatious litigant despite being a defendant in the action. DeMeo v. Beste, MCV-178973, at * 5, (March 27, 2007). The vexatious litigant list subsequently published by the Judicial Council was unaffected by Lewin's labeling Beste as plaintiff or cross-complainant. Beste suffered no cognizable deprivation. Lewin therefore could not have deprived Beste of any due process rights.
Lewin argues however that even if he did injure Beste, that he is immune from liability under California Government Code § 821.6. (Appellee's Responding Brief 17.) Section 821.6 provides "[a] public employee is not liable for any injury caused by his instituting or prosecuting any judicial or administrative proceeding within the scope of his employment, even if he acts maliciously and without probable cause." Cal. Gov.Code § 821.6. The principal use of this statute is to immunize prosecutors against claims of malicious prosecution, but it can be used for other things. Kayfetz v. State of California, 156 Cal.App.3d 491, 496, 203 Cal.Rptr. 33 (1984) (Medical Board published a physician's violation in an "action report," as part of the statutory scheme for the enforcement of the Medical Practices Act and court found that the "institution or prosecution of proceedings" cover both charges and disposition and therefore, the
Lewin was similarly acting pursuant to his duties as a clerk and the vexatious litigant statutory requirements under section 391.7(f) which mandate sending a prefiling order to the Judicial Council. While there is no case directly on point, the language of section 821.6 appears to immunize Lewin from liability in this context, and Beste cites no authority to the contrary.
Beste's Amended Complaint also claims there is no provision in California where a plaintiff can bring or be granted a motion to declare a defendant a vexatious litigant. (Amend. Compl. 5.) Beste does not seem to raise this issue on appeal yet it is still without merit. See First Western Development Corp. v. Superior Court, 212 Cal.App.3d 860, 261 Cal.Rptr. 116 (1989) (ordering lower court to grant plaintiff's motion to declare defendant a vexatious litigant). Furthermore, the statutes relied upon by Judge Cox in making the vexatious litigant determination do not distinguish between plaintiff and defendant. See DeMeo v. Beste, MCV-178973, at *4-5.
Beste also asks this Court to set aside the judgment by the Sonoma County Superior Court labeling him a vexatious litigant. (Appellant's Opening Brief 12.) However, the Rooker-Feldman doctrine states that a federal court has no jurisdiction to set aside state court rulings. (Appellee Responding Brief 21.) See also Kougasian v. TMSL, Inc., 359 F.3d 1136, 1139 (9th Cir.2004) (finding a federal court is barred "from exercising subject matter jurisdiction over a suit that is a de facto appeal from a state court judgement"); Bashkin v. Hickman, 411 Fed.Appx. 998 (9th Cir.2011) (finding challenging a vexatious litigant order is barred by the Rooker-Feldman doctrine).
Beste argues that "Rooker-Feldman does not bar a federal suit to set aside a state court judgment obtained through extrinsic fraud." (Appellant's Opening Brief 12) (quoting Kougasian v. TMSL, Inc., 359 F.3d at 1141). As stated above, there is no evidence in the record that the vexatious litigant order was obtained through fraud. Judge Cox held Beste was a vexatious litigant because he "engaged in a series of actions which repeatedly seek to relitigate the same basic assertion." DeMeo v. Beste, MCV-178973, at * 5, (March 27, 2007). Therefore, this Court has no jurisdiction to set aside this ruling.
The Court
The Clerk of the Court is instructed to enter judgment in accordance with this order and close the file in this case.
IT IS SO ORDERED.
In this bankruptcy appeal, Appellant has filed a motion to vacate judgment entered pursuant to this Court's order affirming the order of the Bankruptcy Court and denying Appellant's motion to set aside a state court order. Docket No. 35, 36. Appellant had brought causes of action against Appellees in Bankruptcy Court alleging violations of 11 U.S.C. § 362(a), the automatic stay, and 42 U.S.C. § 1983. The Bankruptcy Court dismissed Appellant's Complaint and Amended Complaint, and denied his Motion for Further Findings of Facts and Conclusions of Law. Appellant filed this appeal, seeking an order reversing the Bankruptcy Court's order, and setting aside a 2007 Sonoma County Superior Court decision labeling him a vexatious litigant.
On November 20, 2012, this Court issued an order affirming the Bankruptcy Court's decisions to dismiss the complaint and amended complaint and denying Appellant's motion to set aside the state court vexatious litigant ruling. Beste v. Lewin, 2-cv-01625; 12-cv-01626 EMC WL 2012 5877483. On November 21, 2012, Appellant filed a letter claiming two errors in the Court's November 20, 2012:(1) that this Court mistakenly ruled on a motion to set aside the Sonoma County Superior Court's vexatious litigant order, since no such motion was before this court and; (2) Beste claims that this court misstated the holding of one of the cases cited in the order. This Court construed the letter as a motion for reconsideration under Local Rule 7-9, and denied the motion. This Court found that Appellant had indeed asked this Court to set aside the Superior Court order, and that though the November 20, 2012 misstated the holding of the case Appellant identified, this error did not change the result reached in the November 20 order. Docket No. 39.
Appellant now files the instant motion to vacate the November 20, 2012 order, arguing that the facts in the appellate record and this Court's own analysis requires the Court to vacate the order and set aside the Superior Court vexatious litigant order. The Court finds this matter suitable for disposition without oral argument and
Appellant's argument in this motion, as it was in his appellate brief and motion for reconsideration, is that the Sonoma County Superior Court order declaring him a vexatious litigant was contrary to state law. Appellant was the defendant in that case, and he argues that California law permits only plaintiffs to be labeled vexatious litigants.
As an initial matter, Appellees argue that Appellant's motion should be construed as a motion for rehearing under Rule 40 of the Federal Rules of Appellate Procedure, because those rules govern bankruptcy appeals in District Court. Neither of the rules they cite for this proposition, however, explicitly so state. See Fed. R.App. P. 6(b)(1) (concerning appeals in bankruptcy cases from district courts or bankruptcy appellate panels); 28 U.S.C. § 158(c)(2) (providing that bankruptcy appeals to the district courts "shall be taken in the same manner as appeals in civil proceedings generally are taken to the courts of appeals from the district courts" but not explicitly providing which procedural rules apply). The Court's local bankruptcy rules provide that
Local Bankruptcy Rule 8007-1(d). Regardless of whether this Court analyzes Appellant's current motion as a motion for rehearing under Fed. R.App. P. 40 or a motion for relief from judgment under Fed.R.Civ.P. 60, Appellant fails to establish that he is entitled to reconsideration of this Court's earlier order.
Petitions for rehearing under Fed. R.App. P. 40 must be made within 14 days after the entry of judgment. The judgment Appellant now challenges was entered on November 20, 2012. The current motion was filed on December 18, 2012. Under this rule, therefore, the motion is untimely.
Motions for relief from judgment under Fed.R.Civ.P. 60 must be filed "within a reasonable time" not to exceed one year. Fed.R.Civ.P. 60(c). Under this rule, Appellant's motion is timely. Appellant requests relief from judgment based on the sections of Rule 60 allow such relief based on "mistake, inadvertence, surprise, or excusable neglect" or "any other reason that justifies relief." Appellant's Mot. at 2 (citing Fed.R.Civ.P. 60(b)(1) & (6)). Specifically, he argues that this Court's reasoning in the order denying reconsideration requires reversal of the November 20, 2012 order. Appellant is incorrect for two reasons.
First, Appellant misconstrues a footnote in this Court's December 3, 2012 order denying reconsideration. In that order, this Court stated:
Docket No. 39 at 4 n. 1. Appellant persists in arguing that these cases preclude entering a vexatious litigant order against a defendant. However, as this Court already noted, the cases Appellant cites merely limit the enforcement of a vexatious litigant order — once one is designated a vexatious litigant, a subsequent enforcement order can be applied only to persons acting in the capacity of a plaintiff, not a defendant (defendants cannot be precluded from defending themselves). There is no limit, however, on the original designation of a party as a vexatious litigant — one can be designated as a result of vexatious conduct occurring while acting as either a plaintiff or defendant. Here, for example, Appellant was designated a vexatious litigant for his conduct in a previous suit in which he was a defendant; but the vexatious litigant order could now be enforced against him in a suit where he is a plaintiff.
Appellant also points to another case which he contends holds that a defendant may not have a vexatious litigant order entered against him. In that case, People v. Harrison, the court held that the district court had erred in entering a pre-filing order against a criminal defendant. 92 Cal.App.4th 780, 787, 112 Cal.Rptr.2d 91
Second, even if Appellant were somehow able to establish that the Superior Court had erred in declaring him a vexatious litigant, he offers no argument that this Court has jurisdiction to set aside that order. As this Court held in the November 20 order, the Rooker-Feldman doctrine provides that federal courts lack jurisdiction to set aside state court rulings. Docket No. 35 at 11 (citing Kougasian v. TMSL, Inc., 359 F.3d 1136, 1139 (9th Cir. 2004) (finding a federal court is barred "from exercising subject matter jurisdiction over a suit that is a de facto appeal from a state court judgement"); Bashkin v. Hickman, 411 Fed.Appx. 998 (9th Cir. 2011) (finding challenging a vexatious litigant order is barred by the Rooker-Feldman doctrine)).
As Appellant has failed to demonstrate that he has met the standard for either a motion to for relief from judgment or a motion for rehearing, his motion is
This order disposes of Docket No. 40.
IT IS SO ORDERED.
Harrison, 92 Cal.App.4th at 787, 112 Cal.Rptr.2d 91.
