FILED
NOT FOR PUBLICATION APR 29 2016
MOLLY C. DWYER, CL
U.S. COURT OF APPEA
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: DEMAS WAI YAN, 14-16937
Debtor, D.C. No. 3:14-cv-00085-RS
DEMAS WAI YAN,
ORDER AND MEMORANDUM*
Plaintiff-Appellant,
v.
TONY FU; et al.,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of California
Richard Seeborg, District Judge, Presiding
Submitted April 27, 2016**
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: TALLMAN and RAWLINSON, Circuit Judges, and GARBIS, Senior
District Judge.***
Demas Yan (“Yan”) appeals from the decision of the district court affirming
the bankruptcy court’s dismissal of his complaint in one of a series of lawsuits
related to his bankruptcy. We have jurisdiction pursuant to 28 U.S.C. § 158(d)(1),
and we affirm.
The lawsuit at issue was filed by Yan in state court and removed by
Appellees to the bankruptcy court. Yan contends that the alleged causes of action
accrued postpetition and are, therefore, not properly under the jurisdiction of the
bankruptcy court.
With certain exceptions not applicable here, a bankruptcy estate includes all
legal and equitable interests in property held by the debtor at the time of filing,
including all causes of action the debtor could have brought outside bankruptcy. In
re Jess, 169 F.3d 1204, 1207 (9th Cir. 1999) (citing 11 U.S.C. § 541(a)). A claim
is defined broadly as a “right to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured.” 11 U.S.C. §
101(5)(A). All of Yan’s initial substantive allegations, incorporated by reference
***
The Honorable Marvin J. Garbis, Senior United States District Judge
for the District of Maryland, sitting by designation.
2
into each of his causes of action, clearly indicate that his claims are based on
wrongdoing that occurred before the time of the bankruptcy filing, even though
other damage was alleged to have occurred postpetition. The bankruptcy court
granted Yan the opportunity to amend the complaint to allege with specificity only
postpetition claims. Yan did not contest removal, did not amend his claims, and
did not request remand to state court.
Reviewing the district court’s decision de novo, Barriento v. Wells Fargo
Bank, N.A., 633 F.3d 1186, 1188 (9th Cir. 2011), we agree that the claims as
alleged accrued prepetition. The claims were “sufficiently rooted in the
prebankruptcy past,” and are properly included as property of the bankruptcy estate
under § 541. Segal v. Rochelle, 382 U.S. 375, 380 (1966). Accordingly, the
district court’s affirmance of the bankruptcy court was appropriate.
Although Yan did not raise his argument about subject-matter jurisdiction
until now, a “challenge to a federal court’s subject-matter jurisdiction may be made
at any stage of the proceedings, and the court should raise the question sua
sponte.” Kontrick v. Ryan, 540 U.S. 443, 455 (2004) (relying on Mansfield, C. &
L.M.R. Co. v. Swan, 111 U.S. 379, 382 (1884)). “Bankruptcy courts have subject
matter jurisdiction over proceedings ‘arising under title 11, or arising in or related
to cases under title 11.’” In re Wilshire Courtyard, 729 F.3d 1279, 1285 (9th Cir.
3
2013) (quoting 28 U.S.C. § 1334(b)). Since Yan’s causes of action, as alleged,
arose from prepetition activities, and thus, are “property of the estate” under § 541,
the bankruptcy court had subject matter jurisdiction over the removed lawsuit.
In their joint answering brief, Appellees requested that pursuant to Federal
Rule of Appellate Procedure 38, we impose sanctions on Yan for filing a frivolous
appeal. Rule 38 provides that “[i]f a court of appeals determines that an appeal is
frivolous, it may, after a separately filed motion or notice from the court and
reasonable opportunity to respond, award just damages and single or double costs
to the appellee.” Fed. R. App. P. 38. “An appeal is considered frivolous if the
result is obvious or the appellant’s arguments are wholly without merit.” Adriana
Int’l Corp. v. Thoeren, 913 F.2d 1406, 1417 (9th Cir. 1990). Because the request
for sanctions in the Appellees’ joint answering brief does not provide Yan
sufficient notice, we will allow him a reasonable opportunity to respond to the
request. See In re George, 322 F.3d 586, 588 (9th Cir. 2003) (per curiam); see also
Gabor v. Frazer, 78 F.3d 459, 459-60 (9th Cir. 1996) (noting that the Advisory
Committee Notes to Federal Rule of Appellate Procedure 38 state that a request
made under Rule 38 in an appellate brief does not provide the opposing party
sufficient notice).
4
Accordingly, within 14 days after this memorandum disposition is filed, Yan
shall show cause in writing why we should not award attorneys’ fees and double
costs to the Appellees under Rule 38 because the appeal is frivolous. Appellees
may file a reply within 14 days after service of Yan’s response.
AFFIRMED.
Appellees’ Request for Judicial Notice in Support of Appellees’ Joint
Answering Brief is GRANTED.
5