FILED
DEC 7 2020
SUSAN M. SPRAUL, CLERK
U.S. BKCY. APP. PANEL
ORDERED PUBLISHED OF THE NINTH CIRCUIT
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
In re: BAP No. NC-20-1050-SGB
ARTEM KOSHKALDA, BAP No. NC-20-1051-SGB
Debtor. (Related Appeals)
ARTEM KOSHKALDA, Bk. No. 18-30016
Appellant,
v. Adv. No. 18-03020
E. LYNN SCHOENMANN, Chapter 7
Trustee; SEIKO EPSON CORPORATION; OPINION
EPSON AMERICA, INC.,
Appellees.
Appeal from the United States Bankruptcy Court
for the Northern District of California
Hannah L. Blumenstiel, Bankruptcy Judge, Presiding
APPEARANCES:
Appellant Artem Koshkalda argued pro se; Henry S. David of The David
Firm argued for appellees Seiko Epson Corporation and Epson America,
Inc.; Jack Praetzellis of Fox Rothschild LLP argued for appellee E. Lynn
Schoenmann, Chapter 7 Trustee
Before: SPRAKER, GAN, and BRAND, Bankruptcy Judges.
SPRAKER, Bankruptcy Judge:
INTRODUCTION
Chapter 71 debtor Artem Koshkalda appeals the bankruptcy court’s
orders determining that he is a vexatious litigant and imposing pre-filing
restrictions against him in his main bankruptcy and in an adversary
proceeding challenging his discharge. Though we find no error in the
bankruptcy court’s findings that Koshkalda was a vexatious litigant, we
must vacate the pre-filing order in the main case to address a few defects.
Additionally, we must reverse the vexatious litigant order entered in the
adversary proceeding. By the time the bankruptcy court entered this
vexatious litigant order, it already had disposed of the adversary
proceeding by entering summary judgment against Koshkalda. There was
insufficient postjudgment evidence of an ongoing need for pre-filing
restrictions to control his future filings in the adversary proceeding.
Accordingly, we REVERSE the adversary pre-filing order, VACATE the
case pre-filing order, and REMAND, so the bankruptcy court can make the
necessary changes to the case pre-filing order.
FACTS
A. Pre-bankruptcy litigation.
Prior to his bankruptcy filing, appellee Seiko Epson Corporation and
1
Unless specified otherwise, all chapter and section references are to the
Bankruptcy Code, 11 U.S.C. §§ 101-1532, all “Rule” references are to the Federal Rules
of Bankruptcy Procedure, and all “Civil Rule” references are to the Federal Rules of
Civil Procedure.
2
Epson America, Inc. (jointly, “Epson”) sued Koshkalda and his affiliates in
the United States District Court for the District of Nevada for trademark
infringement, trademark counterfeiting, unfair competition, and false
advertising (“Infringement Action”). The district court eventually entered a
series of injunctions and orders prohibiting Koshkalda and the other
defendants from engaging in wrongful conduct and restricting their ability
to use or transfer assets. As a result of Koshkalda’s noncompliance with
these orders and severe and repeated discovery abuses, the district court
ultimately struck his answer and entered a default judgment for $12
million in favor of Epson on January 16, 2018.
B. Koshkalda’s chapter 11 case filing and conversion to chapter 7.
On January 5, 2018, after the district court entered default against
Koshkalda but before entry of the default judgment, Koshkalda filed a
voluntary chapter 11 petition. Koshkalda was represented by counsel at the
commencement of his bankruptcy.
Within days of the bankruptcy filing, Epson moved to dismiss the
case, asserting that it had been filed in bad faith in furtherance of
Koshkalda’s efforts to thwart the district court litigation. The bankruptcy
court declined to dismiss the case but instead ordered it converted to
chapter 7. Appellee E. Lynn Schoenmann was appointed to serve as
chapter 7 trustee. Schoenmann then employed Fox Rothschild, LLP as
counsel for the chapter 7 estate. In the declaration submitted in support of
3
Fox Rothschild’s employment, the law firm disclosed that Epson was a
current client in unrelated matters. The application to employ Fox
Rothschild and the declaration in support were mailed to Koshkalda and
his counsel. The court approved the estate’s employment of Fox Rothschild
as counsel for the estate without objection.
In June 2018, Epson obtained an order annulling the automatic stay.
This order retroactively validated the district court’s entry of the $12
million default judgment and also permitted Koshkalda to proceed with his
appeal from that judgment. The Ninth Circuit affirmed that judgment in
December 2019.
During the course of the case, Schoenmann liquidated over $5 million
in estate assets, often over Koshkalda’s objections. After the costs of sale,
the payoff of secured claims, and the payment of administrative expenses,
it is unclear to what extent, if any, there will be funds left over for a
distribution to Koshkalda’s unsecured creditors. Much of the
administrative expenses incurred can be attributed to Koshkalda’s
litigation conduct.
C. The Epson Adversary Proceeding.
In May 2018, Epson commenced an adversary proceeding objecting
to Koshkalda’s discharge under § 727 and seeking to except the judgment
debt from discharge under § 523 (“Epson Adversary Proceeding”). The
bankruptcy court later stayed some of the § 523 claims pending resolution
4
of Epson’s § 727(a) claims and its claims under § 523 based on fraud.2
In September 2019, the bankruptcy court granted Epson summary
judgment on its claims under §§ 727(a)(2)(A), (a)(3), and (a)(7). The
bankruptcy court then dismissed as moot the rest of the claims and entered
final judgment in Epson’s favor.
For our purposes, the most salient feature of the Epson Adversary
Proceeding was not the judgment itself. Rather, it was the amount of
motion practice and discovery disputes it generated. As the bankruptcy
court later observed in its order determining Koshkalda to be a vexatious
litigant (“Vexatious Litigant Ruling”):
The court entered orders concerning twelve discovery disputes
initiated through the court’s informal discovery procedures,
every single one of which arose from either Mr. Koshkalda’s
unreasonable demands or his obstinate, baseless refusal to
cooperate with Seiko Epson’s legitimate discovery requests. At
one point, the court found Mr. Koshkalda in contempt and
imposed issue and monetary sanctions against him for abusive
discovery practices.
In addition to the dozen discovery disputes attributable to Mr.
Koshkalda’s belligerence, he also filed eighteen motions in the
AVP, all of which the court denied. All but two of these
motions were entirely lacking in merit. The court ruled on
many of them without oral argument, and a few without even
requiring an opposition.
2
Schoenmann also commenced a denial of discharge adversary proceeding
against Koshkalda. (Adv. No. 18-03059.) This adversary proceeding also was stayed
pending the outcome of the Epson Adversary Proceeding.
5
D. The withdrawal of Koshkalda’s counsel and the resulting matters
filed by Koshalda.
On September 26, 2018, the bankruptcy court granted the motion to
withdraw filed by Koshkalda’s counsel. Unrestrained by counsel,
Koshkalda mounted continuous and repetitive challenges to Schoenmann’s
administration of the estate. Koshkalda filed a series of motions to compel
her to abandon estate property back to him, even though some of the
property was subject to ongoing sale or settlement efforts.
In addition, Koshkalda began a concerted effort to remove
Schoenmann and her counsel for their failure to litigate against Epson and
its claim. As part of these efforts, Koshkalda objected to the continued
employment and compensation of both the trustee and her counsel. On a
number of occasions, his arguments in these objections overlapped with
positions he took in the Epson Adversary Proceeding as part of his motions
and discovery practice. Koshkalda’s actions in the main case and the Epson
Adversary Proceeding largely took place between October 2018 and
January 2020.
E. Schoenmann’s motion for a pre-filing order and Epson’s Joinder.
On December 26, 2019, Koshkalda filed his motion to vacate the
court’s order retaining Fox Rothschild, seeking to set aside the law firm’s
employment by the estate. Koshkalda filed this motion roughly a week
after the court denied his prior motion to disqualify Fox Rothschild as the
6
trustee’s counsel. Together with her opposition to the motion to vacate,
Schoenmann requested that the court enter “a pre-filing order . . . requiring
that he obtain court-permission before being permitted to file any further
papers in this bankruptcy case.” To support her request, Schoenmann
listed eleven separate motions Koshkalda filed in the bankruptcy case. She
urged that each of these motions demonstrated his vexatious conduct, as
well as those he filed in the Epson Adversary Proceeding. She further
pointed out that both the bankruptcy court and the district court already
had imposed other forms of sanctions against Koshkalda but that these
lesser sanctions had not proven successful in curbing Koshkalda’s
vexatious conduct. The next day, the bankruptcy court entered an order
denying the motion to vacate and set the vexatious litigant motion for
hearing in February 2020.
A few days after entry of the court’s scheduling order, Epson joined
Schoenmann’s vexatious litigant motion. But the “joinder” actually sought
additional relief over and above the trustee’s motion. Epson sought to
extend the pre-filing order to adversary proceedings filed in Koshkalda’s
bankruptcy case – including the Epson Adversary Proceeding. In support
of its joinder, Epson maintained that Koshkalda’s frivolous filings and
abusive litigation tactics occurred not only in the bankruptcy case but also
in the district court Infringement Action and in the Epson Adversary
Proceeding. Epson proceeded to discuss numerous specific examples of
7
Koshkalda’s vexatious conduct in the Epson Adversary Proceeding.
Koshkalda opposed both Schoenmann’s motion and Epson’s “joinder
motion.”
The bankruptcy court vacated the hearing and took the matter under
submission. On February 18, 2020, the bankruptcy court entered its
Vexatious Litigant Ruling, in which it granted Schoenmann and Epson the
relief they requested. In its decision, the bankruptcy court detailed the
history of Koshkalda’s actions and examined roughly 44 of Koshkalda’s
filings in the bankruptcy case and the Epson Adversary Proceeding. In
almost every instance, the bankruptcy court found that each specific paper
was frivolous, filed with the intent to harass, or both.
The court then explained that the impetus for its ruling was not the
sheer volume of papers Koshkalda filed, but “[r]ather, it is the lack of merit,
falsity, and duplicative nature of the disputes instigated by Mr. Koshkalda
that forces the court to its conclusion.” The court went on to elaborate:
Each and every time, Mr. Koshkalda raised arguments the court
rejected, sometimes several times over. He made factual
allegations that were half-true or completely untrue. He lied to
the court repeatedly in order to evade Seiko Epson’s efforts to
trace allegedly fraudulent transfers in which Mr. Koshkalda
had involved his parents. In this judge’s seven years on the
bench, no single litigant has soaked up and wasted more
resources than Mr. Koshkalda.
The court further found that, as a result of Koshkalda’s “frivolous
8
and harassing litigation,” estate funds that otherwise could have been used
to pay the estate’s creditors would necessarily be used to compensate
Schoenmann’s counsel. The court therefore determined that entry of a pre-
filing order in the bankruptcy case (“Case Pre-filing Order”) would serve
the best interests of the estate and its creditors. The court observed that
Koshkalda’s “strategy since the withdrawal of his counsel has been to
impose as great a burden as possible on the court, on [Ms.] Schoenmann,
and on Seiko Epson.” The court, therefore, additionally concluded that it
was appropriate to enter a pre-filing order in the Epson Adversary
Proceeding as well (“Adversary Pre-filing Order”).
The bankruptcy court entered both pre-filing orders on February 18,
2020. Koshkalda timely appealed both orders.
JURISDICTION
The bankruptcy court had jurisdiction pursuant to 28 U.S.C. §§ 1334
and 157(b)(2)(A) and (J). We have jurisdiction under 28 U.S.C. § 158, subject
to the finality issue discussed immediately below.
In non-bankruptcy federal civil litigation, pre-filing orders entered
against parties are not final and appealable until a judgment is entered
concluding the ligation. See Molski v. Evergreen Dynasty Corp., 500 F.3d 1047,
1055-56 (9th Cir. 2007). This is a concern for the Case Pre-filing Order
because the bankruptcy case remains open. In contrast, the Adversary
Pre-filing Order is final because the bankruptcy court already entered final
9
judgment in the Epson Adversary Proceeding.
We express no opinion as to whether principles of “pragmatic” or
“flexible” finality applicable in bankruptcy cases render the Case Pre-filing
Order final. See generally Jue v. Liu (In re Liu), 611 B.R. 864, 870-79 (9th Cir.
BAP 2020) (examining the finality of orders denying motions to dismiss
bankruptcy cases). To the extent the appeal from the Case Pre-filing Order
is interlocutory, we grant leave to appeal under Rule 8004(d). Because the
Adversary Pre-filing order is final and immediately appealable as of right,
and because the two appeals present factually-interrelated issues, delaying
the appeal from the Case Pre-filing Order would do nothing but waste the
resources of the courts and the parties. Under these circumstances, we
grant leave to appeal. See Galloway v. Ford (In re Galloway), BAP No.
AZ-13-1085–PaKiTa, 2014 WL 4212621, at *4 n.9 (9th Cir. BAP Aug. 27,
2014) (granting leave to appeal under similar circumstances).
ISSUE
Did the bankruptcy court abuse its discretion when it entered the pre-
filing orders?
STANDARD OF REVIEW
We review pre-filing orders entered against vexatious litigants for an
abuse of discretion. Ringgold-Lockhart v. Cty. of L.A., 761 F.3d 1057, 1062 (9th
Cir. 2014); Molski, 500 F.3d at 1056. The bankruptcy court abuses its
discretion if it applies an incorrect legal rule or its factual findings are
10
illogical, implausible, or without support in the record. United States v.
Hinkson, 585 F.3d 1247, 1262–63 & n.21 (9th Cir. 2009) (en banc).
DISCUSSION
Bankruptcy courts have inherent authority to sanction “bad faith” or
“willful” litigation misconduct. Dyer v. Lindblade (In re Dyer), 322 F.3d 1178,
1196 (9th Cir. 2003) (citing Caldwell v. Unified Capital Corp. (In re Rainbow
Magazine, Inc.), 77 F.3d 278, 284 (9th Cir. 1996)). This includes the power to
sanction vexatious litigation occurring in that court. In re Rainbow Magazine,
Inc., 77 F.3d at 284.3
Before a court can impose pre-filing restrictions against a vexatious
litigant, it must:
(1) give litigants notice and an opportunity to oppose the order
before it is entered; (2) compile an adequate record for appellate
3
There is at least one additional source of authority presumably enabling
bankruptcy courts to restrict the improper litigation tactics of vexatious litigants. Under
the All Writs Act, 28 U.S.C. § 1651(a), “[t]he Supreme Court and all courts established
by Act of Congress may issue all writs necessary or appropriate in aid of their
respective jurisdictions and agreeable to the usages and principles of law.” This statute
permits federal courts to enjoin abusive litigation activity. Ringgold-Lockhart, 761 F.3d at
1061 (citing De Long v. Hennessey, 912 F.2d 1144, 1147 (9th Cir. 1990)). Though the Ninth
Circuit has not specifically held whether bankruptcy courts fall within the scope of the
All Writs Act, we have previously reached this conclusion. See, e.g., Sui v. Marshack (In re
Sui), BAP No. CC-13-1572-TaSpD, 2014 WL 5840246, at *6 (9th Cir. BAP Nov. 10, 2014);
Richardson v. Melcher (In re Melcher), BAP No. NC–13–1168-DJKi. 2014 WL 1410235, at *9
(9th Cir. BAP Apr. 11, 2014); see also Lakusta v. Evans (In re Lakusta), Case No. C 06-6105-
PJH, 2007 WL 2255230, at *3 (N.D. Cal. Aug. 3, 2007), aff'd, 328 F. App’x 385 (9th Cir.
2009) (“Bankruptcy courts have the power to regulate vexatious litigation pursuant to
11 U.S.C. § 105(a) and 28 U.S.C. § 1651(a).”).
11
review, including a listing of all the cases and motions that led
the district court to conclude that a vexatious litigant order was
needed; (3) make substantive findings of frivolousness or
harassment; and (4) tailor the order narrowly so as “to closely
fit the specific vice encountered.
Ringgold-Lockhart, 761 F.3d at 1062 (citations, brackets, and internal
quotation marks omitted). The first two factors are procedural and the
latter two are substantive. Id. (citing Molski, 500 F.3d at 1058). The first
substantive factor assists the court in defining who qualifies as a vexatious
litigant and the second substantive factor assists the court in tailoring an
appropriate remedy. Ringgold-Lockhart, 761 F.3d at 1062.4
A. Koshkalda had adequate notice and opportunity to oppose the
entry of the pre-filing orders.
Koshkalda claims that he was denied adequate notice and a
reasonable opportunity to oppose Schoenmann’s vexatious litigant motion.
As he puts it, the bankruptcy court specifically considered as evidence of
his vexatious litigation no less than 44 of his filings, but Schoenmann’s
motion specifically addressed less than 11 of these filings. Thus, Koshkalda
concludes that he had no way of knowing that his opposition needed to
address the 33 additional papers the bankruptcy court relied on but
4
Ringgold-Lockhart further indicated that Safir v. U.S. Lines, Inc., 792 F.2d 19, 24
(2d Cir. 1986), provides a “helpful framework” for evaluating the two substantive
factors. Ringgold-Lockhart, 761 F.3d at 1062 (quoting Molski, 500 F.3d at 1058 (9th Cir.
2007)). Though the bankruptcy court here did not specifically reference Safir, all of
Safir’s underlying considerations are subsumed within the Vexatious Litigant Ruling.
12
Schoenmann did not address.
Koshkalda frames his argument as a denial of due process. But the
notice aspect of the due process requirement is a relatively minimal
standard. Strickland v. U.S. Tr. (In re Wojcik), 560 B.R. 763, 768 (9th Cir. BAP
2016). It merely requires “notice reasonably calculated, under all the
circumstances, to apprise interested parties of the pendency of the action
and afford them an opportunity to present their objections.” Id. (quoting
Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950)). Koshkalda
completely ignores the filings specifically addressed in Epson’s joinder, as
well as the documents inter-related to those specifically addressed by
Schoenmann and Epson. When these additional filings are accounted for, it
turns out that the vast majority of the documents the bankruptcy court
focused on were well within the focus of the vexatious litigant motion and
the joinder.
More importantly, Schoenmann stated that the basis for her motion
was “Koshkalda’s filings in his bankruptcy case and the adversary
proceedings.” She reiterated her reliance on all of Koshkalda’s filings
elsewhere in her motion. Schoenmann additionally made it clear that,
“Koshkalda’s filings are not limited to the Bankruptcy Case and the
Trustee’s Adversary Proceeding, but also consist of numerous filings in the
Seiko Epson Adversary Proceeding.” Schoenmann’s motion and Espon’s
joinder placed Koshkalda on notice that all of his bankruptcy case filings
13
and adversary proceeding filings were at issue. And it was clearly proper
for the bankruptcy court to consider all of Kohskalda’s filings. See
Ringgold-Lockhart, 761 F.3d at 1063-64 (alleged vexatious litigant’s entire
litigation history can help inform the court’s assessment of the litigant’s
conduct as abusive); Molski, 500 F.3d at 1058 (same). Koshkalda had
sufficient notice that all of his filings in the bankruptcy case and the Epson
Adversary Proceeding were in play when he filed his opposition.
Koshkalda alternately argues that he was denied due process because
the bankruptcy court set a 10-page limit on his legal brief in support of his
opposition. This argument is without merit. Koshkalda devoted just under
four pages in his opposition to specifically and directly challenging
Schoenmann’s vexatious litigant motion. The remainder of his opposition is
devoted to other matters.5 Moreover, he has failed show that the page limit
prevented him from presenting any evidence or arguments. There is
simply no indication that he was prejudiced by the alleged lack of notice
and opportunity to respond. See Rosson v. Fitzgerald (In re Rosson), 545 F.3d
764, 776–77 (9th Cir. 2008).
Accordingly, we reject Koshkalda’s due process arguments. The
record establishes that he was provided adequate notice and a reasonable
5
Furthermore, the bankruptcy court specified that its page limitation did not
apply to declarations and exhibits filed in support of the opposition. In fact, Koshkalda
filed a declaration with exhibits totaling more than 275 pages.
14
opportunity to oppose the entry of the pre-filing orders, and he did so.
B. The bankruptcy court compiled an adequate record for review.
Koshkalda next argues that the bankruptcy court did not compile an
adequate record for review. He contends that, even though the court
specifically cited and discussed 44 of his filings as supporting its findings
of frivolousness and harassment, this did not constitute an adequate record
because Koshkalda was not provided with any opportunity to respond to
most of them. This argument does nothing more than restate Koshkalda’s
due process argument in slightly different terms and does not address the
adequacy of the record.
“An adequate record for review should include a listing of all the
cases and motions that led the district court to conclude that a vexatious
litigant order was needed.” Ringgold-Lockhart, 761 F.3d at 1063 (citing De
Long, 912 F.2d at 1147). The bankruptcy court clearly detailed the filings it
relied on in makings its decision. Its Vexatious Litigant Ruling complied
with the necessary procedural requirements as set forth in Ringgold-Lockart
and other Ninth Circuit precedent.
C. The bankruptcy court’s findings of frivolousness and harassment
were not clearly erroneous.
Koshkalda’s principal argument on appeal challenges the bankruptcy
court’s factual findings that his filings were frivolous and made for the
purpose of harassment. Again we turn to Ringgold-Lockhart, which instructs
15
that before entering a pre-filing order,“it is incumbent on the court to make
‘substantive findings as to the frivolous or harassing nature of the litigant’s
actions.’” Id. at 1064 (quoting De Long, 912 F.2d at 1148).
As for an evaluation of frivolousness for purposes of vexatiousness,
the Ninth Circuit has emphasized that “[f]rivolous litigation is not limited
to cases in which a legal claim is entirely without merit.” Molski, 500 F.3d at
1060. Frivolous filings include those that have “some measure of a
legitimate claim to make false assertions.” Id. at 1060-61. Importantly, a
frivolous filing alone is not enough. Neither is mere litigiousness. Ringgold-
Lockhart, 761 F.3d at 1064. Rather, the frivolous filings must be “inordinate”
in number. Id. Courts must, therefore, “look at ‘both the number and
content of the filings as indicia’ of the frivolousness of the litigant’s claims.”
Id. (quoting De Long, 912 F.2d at 1148).
The Ninth Circuit has explained that a pattern of harassment can be
“an alternative to frivolousness” and can support a vexatious litigant
finding. Id. at 1064. Ringgold-Lockhart cautioned, however, that “courts
must be careful not to conclude that particular types of actions filed
repetitiously are harassing, and must instead . . . discern whether the filing
of several similar types of actions constitutes an intent to harass the
defendant or the court.” Id. (quoting De Long, 912 F.2d at 1148 n.3) (internal
brackets and quotation marks omitted).
The bankruptcy court entered detailed findings that Koshkalda made
16
numerous frivolous filings in a pattern of harassment throughout the
Epson Adversary Proceeding and in the main case. Koshkalda contends
that these findings are erroneous because he is right and the bankruptcy
court was wrong. But Koshkalda has taken little or no concrete steps to
point to meaningful error in the merits determinations of his underlying
filings. Nor are we aware of any. As a result, and because the bankruptcy
court articulated the correct legal standards for finding vexatious conduct,
we focus our review on the court’s findings of frivolousness and
harassment largely to determine whether these findings are illogical,
implausible, or unsupported by the record.
The bankruptcy court examined each of the 44 filings it identified and
concluded that they were frivolous and filed to harass Schoenmann, Epson,
or the court. Koshkalda argues that the court could not consider his actions
in the Epson Adversary Proceeding, and that he was merely preserving his
challenges to Schoenmann and Fox Rothschild while he awaited his
opportunity to appeal the bankruptcy court’s decisions not to remove them
from his case.6 We address the court’s findings and Koshkalda’s arguments
against them within the context of the analysis articulated in Ringgold.
6
At the time the issuance of this Panel's decision, the bankruptcy court’s orders
denying removal of Schoenmann and Fox Rothschild were not yet final and appealable.
17
1. Koshkalda’s actions in the Epson Adversary Proceeding.
We begin with Koshkalda’s actions in the Epson Adversary
Proceeding as they are the first significant batch of activity identified by the
court when considered chronologically. The court entered its first order
resolving an informal discovery dispute on February 14, 2019, and entered
its last order resolving an informal discovery dispute on June 12, 2019. The
court entered ten other orders resolving informal discovery disputes
between those dates.
Though both Epson and Koshkalda liberally invoked the court’s
informal discovery dispute resolution process, the bankruptcy court found
that “all of these disputes arose because Mr. Koshkalda made unreasonable
demands in propounding his own discovery or obstinately refused to
cooperate in good faith with Seiko Epson’s legitimate efforts to conduct
discovery.” In marching through the twelve discovery disputes, the court
found most of them to be obstreperous and baseless efforts by Koshkalda
to evade Epson’s legitimate discovery. The court began its analysis noting
that, though Koshkalda was proceeding pro se by this point, he knew that
serious consequences could result from abusive discovery tactics given the
case ending discovery sanctions imposed against him in Epson’s district
court Infringement Action. The bankruptcy court observed that Epson did
not particularly distinguish itself in handling these disputes, but the court
concluded that “[w]hile Seiko Epson’s conduct was frustrating, it was clear
18
that Mr. Koshkalda was continuing to engage in abusive, harassing
discovery tactics, which supports entry of a pre-filing order.” Given that
the bankruptcy court presided over the Epson Adversary Proceeding and
these discovery disputes, it was uniquely situated to assess Koshkalda’s
actions and intent. Its determination of frivolousness and harassment with
respect to the informal discovery disputes was not clearly erroneous.
Similarly, the bankruptcy court identified fifteen motions Koshkalda
filed in the Epson Adversary Proceeding that supported the pre-filing
orders. Of these, the court found that “[a]ll but two of these motions were
entirely lacking in merit.” Koshkalda filed seven of these motions during a
two-week period between August 20 and September 3, 2019. The timing of
these motions, the relief sought, and the content of the filings all reflected
Koshkalda’s strong desire to derail the resolution of Epson’s motion for
partial summary judgment. Indeed, in the process of evaluating one of
these motions, the bankruptcy court stated: “The court believed then and
believes now that this motion, and those upon which it was based, were
filed for no purpose other than to delay this action, which means they were
frivolous and they justify issuance of a pre-filing order.” The record
supports this finding.
Koshkalda argues that his actions in the Epson Adversary Proceeding
cannot be considered as part of the vexatious litigant assessment because
Epson failed to litigate whether they were frivolous or harassing in the
19
Epson Adversary Proceeding. He contends that issue and claim preclusion
barred both Epson and Schoenmann from using any of his conduct in the
Epson Adversary Proceeding to establish that he is a vexatious litigant.
Issue preclusion does not apply because the vexatious litigant issue was
not necessary to resolve Epson’s discharge claims. See Skilstaf, Inc. v. CVS
Caremark Corp., 669 F.3d 1005, 1022–23 (9th Cir. 2012) (holding that issue
preclusion applied where the first district court “necessarily had to
adjudicate” the same objections the same litigant raised in the second
district court). And claim preclusion does not apply because the vexatious
litigation “claims” did not exist as of the filing of the Epson Adversary
Proceeding. See Media Rights Techs., Inc. v. Microsoft Corp., 922 F.3d 1014,
1024 (9th Cir. 2019) (holding that claim preclusion did not bar claims that
arose after first lawsuit was commenced). Additionally, Schoenmann was
not a party to the Epson Adversary Proceeding. Therefore, she was not
bound by it. See Taylor v. Sturgell, 553 U.S. 880, 892–96 (2008) (recognizing
general rule prohibiting application of claim and issue preclusion against a
person who was not a party in the previous lawsuit).
Kohskalda further argues that there are no cases in which a defendant
has been determined to be a vexatious litigant. The absence of such cases
makes sense. Implicit within the concept of vexatious litigation is volitional
activity, and one does not volitionally undertake to be a serial defendant.
Moreover, courts more commonly control defendants’ abusive litigation
20
conduct by using other sanctions, including monetary and case terminating
sanctions – as the district court employed against Koshkalda in the
Infringement Action and as the bankruptcy court imposed in the Epson
Adversary Proceeding.
In any event, by focusing on his role as the defendant, Koshkalda
ignores the true significance of the bankruptcy court’s assessment of his
litigation conduct. The court relied on his actions to develop a broad
picture of his intent to file frivolous matters for the purpose of harassing
Schoenmann, Epson, and the court. As noted above, the court marched
through 27 distinct examples of Koshkalda’s litigation conduct in the
Epson Adversary Proceeding , all of which, it concluded, evidenced his
unwarranted and illegitimate efforts to frustrate Epson’s discharge claims.
Tellingly, Koshkalda offers no defense of these actions but rather merely
states that they cannot be considered. We find no error with the bankruptcy
court’s use of Koshkalda’s conduct in the Epson Adversary Proceeding to
establish an overall pattern of frivolous and harassing filings.
2. Koshkalda’s conduct in the main bankruptcy case.
After the court entered its judgment against him in the Epson
Adversary Proceeding, Koshkalda shifted his attention to the main case.
The bankruptcy court observed that “[e]leven of [Koshkalda’s motions]
were filed during a frantic four-month period between September 23, 2019
and January 2, 2020, after the court denied Mr. Koshkalda’s discharge.” The
21
filings in the main case identified by the court as supporting the pre-filing
orders reflected repeating patterns of conduct. The bankruptcy court noted
that Koshkalda had filed numerous motions to compel Schoenmann to
abandon estate property even when she was actively administering the
asset or had a sale pending. The court listed two of Koshkalda’s
abandonment motions as the first instances of conduct demonstrating his
specific intent to harass the estate with frivolous filings. At best, the
repetitive nature of the frivolous abandonment motions reflected
Koshkalda’s intolerance for, and impatience with, Schoenmann’s efforts to
administer the estate’s assets. At worst, the motions were part of a
calculated and cynical scorched earth strategy that Koshkalda implemented
with the intent to prevent his creditors – especially Epson – from ever
recovering any significant amount from the liquidation and distribution of
the estate’s assets. The bankruptcy court found the latter. That finding was
supported by the record and, hence, was not clearly erroneous.
After his counsel withdrew, Koshkalda began to attack Schoenmann
and her professionals directly by belatedly challenging their employment
and compensation. One of his first pro se challenges, filed late in 2018,
sought to remove Schoenmann as trustee seven months into the case.
Koshkalda based his request on Schoenmann’s prior actions involving
Epson – actions to which Koshkalda did not originally object.
Though the court identified the motion to remove Schoenmann as an
22
example of Koshkalda’s litigousness, it did not identify it as a frivolous or
harassing filing. Rather, it was the subsequent repetitive challenges that the
court found frivolous and harassing. These challenges included: (1) a
motion to disqualify Fox Rothschild as Schoenmann’s counsel filed roughly
a year after its employment, to which Koshkalda did not originally object
despite notice; (2) objections to the professionals’ interim fee applications;
(3) a motion for authority to sue both Schoenmann and Fox Rothschild in
state court, filed despite the denial of Koshkalda’s prior challenges; (4) a
motion to vacate as void the order authorizing Fox Rothschild’s
employment; and (5) various related reconsideration motions.
At the same time, Koshkalda continued his attempts to impede
Schoenmann’s efforts to administer the estate by opposing Schoenmann’s
compromise and sale motions. Koshkalda also continued to file additional
abandonment motions – particularly those related to Koshkalda’s asserted
claims against Epson allegedly arising from Epson’s prepetition seizure of
Koshkalda’s assets and its prosecution of the district court Infringement
Action.
Additionally, Koshkalda consistently sought reconsideration of
adverse rulings as a matter of course despite the bankruptcy court’s
repeated explanation of the limited grounds available to justify amendment
or modification of court orders. As the court similarly explained in its
review of filings in the Epson Adversary Proceeding, the motions for
23
reconsideration demonstrated “Mr. Koshkalda’s habitual misuse of
motions for reconsideration, which can only be granted on very narrow
grounds. Rather than making any effort whatsoever to establish grounds
for reconsideration, he uses them to rehash the same arguments he
originally made or to raise additional arguments for the first time.” The
court found this to be strong evidence of Koshkalda’s use of frivolous
filings to harass the trustee, Epson, and the court.
In support of its Vexatious Litigant Ruling, the bankruptcy court also
relied on six oppositions Koshkalda filed in the main bankruptcy case. The
court’s reliance on oppositions to support its Vexatious Litigant Ruling
gives us pause and must be carefully examined. In Ringgold-Lockhart, the
Ninth Circuit raised similar concerns when the district court partially based
its determination of vexatiousness on the litigant’s response to a tentative
order. As Ringgold-Lockhart explained:
Most troubling, the district court’s list includes the
Ringgolds’ response to its tentative order finding
them vexatious. As explained, the Ringgolds had a
due process right to be heard on this matter. The
district court faults the Ringgolds for “reiterating
old facts and arguments” in their response to the
court order. As the Ringgolds had to argue that
their filings were not frivolous, such repetition was
inevitable. What’s more, the district court invited
their response, so it is particularly inappropriate to
hold it against them.
Ringgold-Lockhart, 761 F.2d at 1065.
24
Koshkalda similarly had a right to be heard in opposition to
Schoenmann’s motions.7 While it is inappropriate to penalize Koshkalda
for exercising this right, what he said in these oppositions and how he said
it provided meaningful context for the court’s frivolousness and
harassment findings. Of the six oppositions, three of them were objections
to the fee applications filed by Schoenmann and her professionals.
Koshkalda did not challenge the billings, but rather continued to reargue
his disagreement with Schoenmann’s decision not to challenge Epson’s $12
million claim or to actively pursue his asserted claims against Epson. By
the time Koshkalda made these objections, the bankruptcy court already
had considered and rejected as meritless Koshkalda’s underlying positions
a number of times in a number of different matters.
7
Not all chapter 7 debtors have standing to challenge a trustee’s administration
of the bankruptcy estate. A debtor’s standing to object to matters such as claims
objections, allowance of fees, sales of property, and settlements generally depends upon
having a pecuniary interest in the estate. Where the bankruptcy estate cannot pay all
creditors in full and no surplus will be returned to the chapter 7 debtor, that debtor
cannot generally demonstrate injury in fact to object to the trustee’s administration of
the estate and lacks standing. An-Tze Cheng v. K&S Diversified Invs., Inc. (In re Cheng),
308 B.R. 448, 454 (9th Cir. BAP 2004), aff’d, 160 F. App’x 644 (9th Cir. 2005). But where
the estate has a surplus to return to the debtor, or where a debtor’s discharge is denied,
that debtor has a pecuniary interest in the administration of the estate and has standing
to challenge the trustee’s actions. Wellman v. Ziino (In re Wellman), 378 B.R. 416 (table),
2007 WL 4105275, at 1* n.5 (9th Cir. BAP Nov. 9, 2007)(unpublished) (citing Heath v. Am.
Express Travel Related Servs. Co. (In re Heath), 331 B.R. 424, 429 (9th Cir. BAP 2005)). Here,
Koshkalda had a pecuniary interest in the administration of the estate as a result of the
denial of his discharge, and had standing to object to the trustee’s administration of the
estate.
25
The other three oppositions concerned proposed settlements of the
estate’s claims. Like the compensation-related objections, each of these
three oppositions were founded on positions that lacked merit and which
the court already had rejected in prior matters. Thus, even though the
oppositions ordinarily should not be considered as direct evidence of
vexatious conduct, here they provide additional context for the assessment
of Koshkalda’s other filings and for the bankruptcy court’s findings that
they were frivolous and harassing. The bankruptcy court’s discussion of
Koshkalda’s oppositions does not constitute reversible error.
In summary, Koshkalda’s filings run the gamut – from repeated
challenges to Schoenmann’s administration of the estate and continuous
discovery disputes in the Epson Adversary Proceeding – to a never-ending
battle against employment and compensation of Schoenmann and Fox
Rothschild. Underlying the vast majority of Koshkalda’s filings was his
ongoing dispute with Epson. The bankruptcy court cogently described the
interrelationship between his challenges against Schoenmann and Fox
Rothschild, his efforts to thwart estate administration, his animus for
Epson, and his disdain for any court ruling that might have resulted in
Epson actually realizing a recovery on some part of its $12 million
judgment. This is seen in both the Epson Adversary Proceeding and the
main bankruptcy case. We find no error – clear or otherwise – in the
bankruptcy court’s frivolousness and harassment findings.
26
3. The number of Koshkalda’s frivolous and harassing filings
within his bankruptcy was inordinate.
Koshkalda contends that any pre-filing order against him is
inappropriate because he only commenced his bankruptcy and was a
defendant in the Epson Adversary Proceeding. He argues that his
involvement in these proceedings cannot support a vexatious litigant
finding because it lacks the required numerosity.8 In support of his
argument, he cites to Ringgold-Lockhart, where the Ninth Circuit reviewed a
pre-filing order issued by the district court based primarily on the
plaintiffs’ motions practice in two federal lawsuits. Id. at 1064-65. The
Ninth Circuit acknowledged that the two federal lawsuits commenced by
the plaintiffs were “far fewer than what other courts have found
inordinate.” Id. at 1064-65 (citations and internal quotation marks omitted).
Importantly, the Ninth Circuit in Ringgold-Lockhart declined to set a
minimum number of actions a litigant must commence before he or she can
be found to be a vexatious litigant. It remarked, however, that “[s]uch a
situation would at least be extremely unusual, in light of the alternative
8
The Ninth Circuit’s requirement that a litigant’s vexatious claims must be
inordinate arises within its discussion of frivolous filings. In re Ringgold, 761 F.3d at
1064; Molski, 500 F.3d at 1059. While not phrased in the same terms, any consideration
of harassment in support of a pre-filing order also requires evidence of a pattern.
Ringgold-Lockhart, 761 F.3d at 1064 (quoting De Long, 912 F.2d at 1148). Accordingly, our
discussion concerning the numerosity of frivolous filings applies equally to the
establishment of a pattern of harassment.
27
remedies available to district judges to control a litigant’s behavior in
individual cases.” Id. at 1065. Ringgold-Lockhart emphasized that “[i]n light
of the seriousness of restricting litigants’ access to the courts, pre-filing
orders should be a remedy of last resort.” Id. at 1062. As a result, it
considered the question of whether other remedies would be sufficient
under the circumstances to be “particularly important.” Id. This led the
Ninth Circuit to conclude in Ringgold-Lockhart that the district court erred
by failing to consider other remedies to curb the abuse, including sanctions
under Civil Rule 11. Id. at 1065.
In the matter before us, the bankruptcy court attempted to address
Koshkalda’s actions through a series of increasingly severe sanctions.
Initially, the court addressed Koshkalda’s discovery abuses through an
informal discovery dispute resolution process. Unfortunately, Kohskalda’s
abusive conduct in the Epson Adversary Proceeding continued with
frivolous and harassing motions seeking to prevent discovery and forestall
Epson’s summary judgment motion. The court ultimately imposed
monetary and issue terminating sanctions on Koshkalda, finding that he
repeatedly lied to the court and baselessly refused to provide required
contact information for his parents so that they could be deposed in regard
to numerous challenged transfers involving them, Koshkalda and his
affiliated business entities.
After Koshkalda shifted his attention to the main bankruptcy case,
28
the bankruptcy court similarly attempted to dissuade him from filing
frivolous and harassing matters. The court denied a prior request to impose
monetary sanctions against Kohskalda under 28 U.S.C. § 1927 for
vexatiously and in bad faith multiplying the proceedings in the bankruptcy
case. In its decision, the bankruptcy court explained that, at that time, it
wanted to give leeway to Koshkalda as a pro se litigant and that it was not
prepared to conclude at that time that he was motivated by an improper,
bad-faith purpose – like harassment.
Yet, the record demonstrates that Koshkalda continued to press his
complaints against Schoenmann’s administration of the estate and Epson’s
claim despite prior rulings. While the court repeatedly described the
actions undertaken in the identified filings as baseless, it typically made
these determinations only after it had previously considered and rejected
the same arguments in prior rulings. This appears to be why the court did
not include the original motion to remove Schoenmann in its listing of
frivolous and harassing matters. Rather, the court relied on subsequent
filings that continued to relitigate the same underlying issues.
In a similar vein, the bankruptcy court identified as vexatious some
but not all of Koshkalda’s motions seeking to compel Schoenmann to
abandon estate property. In fact, the court’s identification of Koshkalda’s
frivolous abandonment motions begins with Koshkalda’s seventh
abandonment motion. The bankruptcy court did not rely on the prior six
29
abandonment motions (or two subsequently granted motions). After six
prior orders explaining the standards for abandonment, there is no
legitimate doubt that Koshkalda – even as a pro se litigant – was well
aware of what must be shown. Yet, as the bankruptcy court pointed out,
Koshkalda continued to seek abandonment of assets that Schoenmann
actively was administering. This is illustrative of the vast majority of
matters the bankruptcy court relied on to support its Vexatious Litigant
Ruling. More importantly, this history amply demonstrates that the court
considered and applied less severe sanctions in an attempt to control
Koshkalda’s conduct before it entered the pre-filing orders. At bottom, the
lesser sanctions imposed support the conclusion that such sanctions did
not, and would not, work with Koshkalda.
The bankruptcy court imposed the Case Pre-filing Order as a
measure of last resort, and it did so amidst concerns that Koshkalda’s
filings were exhausting the bankruptcy estate. Both Schoenmann and the
court expressed concerns that Koshkalda’s actions were turning a solvent
estate into one that was administratively insolvent without sufficient funds
to pay the costs of administering the chapter 7 case, much less to make a
distribution to unsecured creditors.
The Second Circuit considers whether or not a litigant has caused
needless expense or posed an unnecessary burden when evaluating
whether the challenged filings are frivolous and harassing. Safir, 792 F.2d at
30
24. While the Ninth Circuit did not specifically incorporate this
consideration into its articulation of the vexatious litigant factors, it has
more generally recognized that the Safir factors provide a “helpful
framework” for considering whether filings are frivolous and whether a
pre-filing order is narrowly tailored. Molski, 500 F3d at 1058.
An examination of unnecessary burden is particularly relevant in
bankruptcy cases because vexatious litigation may waste the estate’s
limited resources and deprive creditors of any distribution. See, e.g.,
Tangwall v. Compton (In re Bertan), BAP No. AK–17–1139–LBF, 2018 WL
1704306 at *6 (9th Cir. BAP April 6, 2018) (affirming pre-filing order where
bankruptcy court found that the litigant had “caused needless expense to
other parties” and the trustee and court were concerned that the continued
actions would needlessly “burden the bankruptcy estate’s resources and
the court”); Melcher v. Richardson (In re Melcher), BAP No.
NC–14–1573–TaDJu, 2015 WL 8161915 at *4 (9th Cir. BAP Dec. 7, 2015)
(affirming pre-filing order where “[t]here is no question that a once solvent
estate is now insolvent due to the Debtor’s protracted efforts to stall the
sale of Stonewall and other real properties”); In re Sui, 2014 WL 5840246 at
*8 (vacating pre-filing order as inconsistent with Ninth Circuit authority,
but quoting with approval the bankruptcy court’s concern that repetitive
filings had to stop or “there’s not going to be any money left for anyone”).
In support of his argument that he did not file an inordinate number
31
of frivolous and harassing matters, Koshkalda directs our attention to cases
involving traditional litigation in which the vexatious litigant filed multiple
lawsuits. But his argument ignores the reality of bankruptcy cases. As the
Supreme Court has recognized“[a] bankruptcy case involves an
‘aggregation of individual controversies,’ many of which would exist as
stand-alone lawsuits but for the bankrupt status of the debtor.” Bullard v.
Blue Hills Bank, 575 U.S. 496, 135 S. Ct. 1686, 1692 (2015) (quoting 1 Collier
on Bankruptcy ¶ 5.08[1][b], p. 5-42 (16th ed. 2014)).
Though Koshkalda only commenced a single bankruptcy case, he
initiated numerous disputes within the bankruptcy case and in the Epson
Adversary Proceeding by pressing his unreasonable and baseless positions.
This caused the bankruptcy estate to expend time and incur attorney fees to
address frivolous matters in the main bankruptcy case. At the time the
bankruptcy court imposed its Case Pre-filing Order, it had exhausted less
drastic measures to no effect, and Koshkalda’s pattern of filing frivolous
and harassing matters was depleting the bankruptcy estate to the detriment
of his creditors.
Koshkalda fails to state what effective sanctions the bankruptcy court
could have imposed short of entering the Case Pre-filing Order. In general
civil litigation, the court retains the ability to impose case ending sanctions
against the offending party - as the district court did in the Infringement
Action. See generally Sui v. Marshack, 691 F. App’x 374 (9th Cir. 2017)
32
(recognizing district court’s inherent equitable power to impose case
terminating sanctions (citing TeleVideo Sys. Inc. v. Heidenthal, 826 F.2d 915,
916 (9th Cir. 1987))). Bankruptcy cases, however, generally afford no
similar opportunity. The closest analog to terminating sanctions in a
chapter 7 bankruptcy is dismissal for cause, including a debtor’s refusal to
cooperate with the trustee. See § 707(a). But in some asset cases, dismissal
of the chapter 7 case is exactly what the debtor wants. In this case, for
instance, dismissal would have rewarded Koshkalda for his lack of
cooperation by returning to him assets Schoenmann was in the process of
liquidating for the benefit of the estate.
Denial of the debtor’s discharge often is identified as another
potential remedy for debtor misconduct. See Law v. Siegel, 571 U.S. 415, 427
(2014). But even if we assume that Kohskalda’s litigation conduct could
support denial of his discharge, he already had been denied his discharge
on other grounds. Law also identified the court’s sanctioning authority
under Rule 9011, § 105(a), and the court’s inherent powers as additional
remedies available to the bankruptcy court to discourage debtor
misbehavior. Id. In light of the denial of his discharge, however, Koshkalda
already was saddled with a nondischargeable $12 million judgment debt
despite being in bankruptcy for years. Under such circumstances, the
imposition of monetary sanctions on top of a large nondischargeable debt
typically is likely to have little or no effect in regulating a debtor’s litigation
33
conduct. Even then, the estate would be left to collect from a litigious
debtor with more than $12 million in nondischargeable debts.
As instructed by Ringgold-Lockhart, the bankruptcy court properly
considered whether Koshkalda’s frivolous and harassing filings were
inordinate in number to support the pre-filing orders. It examined the
relevant circumstances as appeared in this case, including: (1) Kohskalda’s
litigation history; (2) his patterns of frivolous and harassing filings; (3) the
ineffectiveness of alternative remedies to control his behavior; and (4) the
need to avoid further depletion of the bankruptcy estate. We acknowledge
that the only action Koshkalda filed was his bankruptcy. Yet, the absence of
multiple lawsuits does not mean that the bankruptcy court must stand by
impotently while the estate’s assets are exhausted to litigate Koshkalda’s
repetitive, frivolous, and harassing filings after other less severe measures
have proven inadequate. The bankruptcy court properly took this into
account when finding that Koshkalda’s filings were inordinate and
imposing the pre-filing orders as a matter of last resort.9
D. Necessity and narrow tailoring of pre-filing restrictions.
Though we agree that Koshkalda qualified as a vexatious litigant,
Ringgold-Lockhart also requires that the pre-filing restrictions “must be
9
Because we are reversing the Adversary Pre-filing Order on other grounds, we
express no opinion whether the number of frivolous and harassing filings was
inordinate for purposes of the Adversary Pre-filing Order.
34
narrowly tailored to the vexatious litigant’s wrongful behavior.” Id. at 1066
(quoting Molski, 500 F.3d at 1061). Therefore, we consider whether the
bankruptcy court’s pre-filing orders were necessary to prevent continuing
vexatious conduct and whether the specific restrictions were narrowly
tailored.
The Case Pre-filing Order required Koshkalda to submit for pre-filing
review any proposed motions or other papers he desired to file that could
impact – or oppose arguments made by – Schoenmann, Epson, their
counsel, or the estate’s professionals. This order further dictated that, as
part of its pre-filing review, the court would determine whether the
proposed motions or other papers had merit “such that they should be
briefed and heard.” The order excluded from the restrictions any notice of
appeal filed from the Case Pre-filing Order or from the Vexatious Litigant
Ruling. But it did not exclude notices of appeal that he might desire to file
from any other court rulings the court might render. As for the Adversary
Pre-filing Order, it contained similar provisions, but applied to proposed
motions and papers impacting Epson, its employees, its agents, its
affiliates, and its counsel.
In Ringgold-Lockhart the pre-filing order at issue was overbroad in
two respects. First, the pre-filing order impermissibly provided for an
assessment of the merits of the proposed new action. As Ringgold-Lockhart
explained, the pre-filing screening process is ill-suited procedurally for a
35
merits determination. Id.
Second, the subject pre-filing order was overbroad because it
restricted the vexatious litigants’ ability to file any action pertaining to
administration of state courts or probate courts. Ringgold-Lockhart reasoned
that this restriction easily could extend to factual scenarios having nothing
to do with the dispute at the heart of the vexatious litigation:
Sometimes a rancorous dispute leaves a person with a bitter
taste that does not fade, no matter how many resources are
expended and no matter how many years pass. From our
review of the case law discussing vexatious litigants, it is not
uncommon for district courts to enjoin litigants from
relitigating a particular case, such as when a litigant refuses to
accept the finality of an adverse judgment. But in such cases,
courts generally tailor the scope of a litigation restriction so as
to restrain litigants from reopening litigation based on the facts
and issues decided in previous lawsuits. The underlying
litigation here attempts to reopen a case that has reached final
judgment. A narrowly tailored injunction would address only
filings in that or related actions.
Id. at 1067 (citations, internal brackets, and quotation marks omitted).
Koshkalda asserts that a pre-filing order was not necessary in either
the bankruptcy case or in the Espon Adversary Proceeding. As the
bankruptcy case remains open, Koshkalda’s pattern of frivolous and
harassing filings warrants the Case Pre-filing order. We agree, however,
with Koshkalda that there was no need for a pre-filing order in the
completed Epson Adversary Proceeding. As Koshkalda has pointed out, by
36
the time the court issued its Adversary Pre-filing Order, a final judgment
already had been entered, he had commenced his appeal from that
judgment, and he already had ceased filing papers in the Epson Adversary
Proceeding.10
We are aware that Koshkalda filed three post-judgment motions in
the Epson Adversary Proceeding: (1) a motion for reconsideration of the
court’s summary judgment ruling; (2) a motion for reconsideration of the
court’s order denying his motion to strike certain bank records produced
by Epson after Epson obtained them from Bank of America; and (3) a
motion to compel additional responses to his document production
requests. The bankruptcy court did not list the summary judgment
reconsideration motion as an example of Koshkalda’s vexatious litigation
conduct. Nor did it make any findings that this filing was frivolous or
intended to harass. But the court did make frivolous and harassment
findings as to the other two post-judgment motions.
Koshkalda filed the two frivolous post-judgment discovery motions
in October 2019. After that, he did not file anything else in the Epson
Adversary Proceeding before entry of the pre-filing orders several months
later. Admittedly, these two motions were no less frivolous or harassing
10
In contrast, for the same reasons we upheld, above, the bankruptcy court’s
frivolousness, harassment, and numerosity findings, we further hold that the Case Pre-
filing Order was necessary.
37
than the court’s other examples from the Epson Adversary Proceeding.
Even so, under the circumstances, these two motions were insufficient to
establish a continuing and ongoing need for the Adversary Pre-filing
Order.
Additionally, Koshkalda argues that both pre-filing orders were
overbroad. We also agree with this point. The pre-filing orders did not
expressly limit their restrictions on filing to Koshkalda’s bankruptcy case
and to the Epson Adversary Proceeding. Since the court made no findings
regarding frivolous or harassing filings outside of these two matters, there
was no demonstrated need for broader restrictions. Indeed, neither
Schoenmann nor Epson ever requested that the bankruptcy court impose
broader restrictions. In addition, the Case Pre-filing Order also potentially
infringed on Koshkalda’s right to appeal from future orders entered in the
bankruptcy case.
Finally, both pre-filing orders contravened Ringgold-Lockhart’s
prohibition against pre-filing procedures that contemplate merits
screening. As discussed above, Ringgold-Lockhart held that merits reviews
should not be part of any narrowly-tailored pre-filing procedures imposed.
Ringgold-Lockhart, 761 F.3d at 1066; see also In re Sui, 2014 WL 5840246, at *8.
CONCLUSION
For the reasons set forth above, we VACATE AND REMAND with
respect to the Case Pre-filing Order. On remand, the bankruptcy court will
38
need to amend the Case Pre-filing Order to remove any provision for a
merits review as part of the pre-filing review process. It also should limit
the scope of this order to cover only papers filed in Koshkalda’s
bankruptcy case and to exclude notices of appeal. As for the Adversary
Pre-filing Order, we REVERSE.11
11
In her responsive brief in NC-20-1051, Schoenmann has asked this Panel to
enter a pre-filing order. She claims that Koshkalda has filed numerous, frivolous
harassing appeals and that a BAP pre-filing order is necessary to prevent additional
litigation misconduct. We disagree and hereby DENY that request. Most of his appeals
have been dismissed as interlocutory. Bankruptcy finality is a complicated issue and
continues to be an unsettled area of law. See generally Bullard, 575 U.S. 496, 135 S. Ct. at
1692–94 (explaining why an order denying confirmation of a chapter 13 plan is
interlocutory); see also In re Liu, 611 B.R. at 872-73 (reiterating the Ninth Circuit’s advice
that “litigants in bankruptcy who are unsure about the finality of an order [should] file
a notice of appeal to preserve their rights whether the matter was final or
interlocutory”). Furthermore, the burden on appellees arising from interlocutory
appeals, especially when we deny leave to appeal and dismiss them as interlocutory, is
minimal.
39