Peggy Kirton v. Valley Health System

NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FILED
FOR THE NINTH CIRCUIT
SEP 12 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
In re: VALLEY HEALTH SYSTEM, a No. 15-60023
California Local Health Care District,
BAP No. 11-1100
Debtor,
______________________________
MEMORANDUM*
PEGGY KIRTON; DIANA AGNELLO,

Appellants,

v.

VALLEY HEALTH SYSTEM; VALLEY
HEALTH SYSTEM RETIREMENT
PLAN; JOEL BERGENFELD, Trustee of
the Valley Health System Retirement Plan;
VINAY M. RAO, Trustee of the Valley
Health System Retirement Plan;
MICHELE BIRD, Trustee of the Valley
Health System Retirement Plan;
METROPOLITAN LIFE INSURANCE
COMPANY,

Appellees.

Appeal from the Ninth Circuit
Bankruptcy Appellate Panel

*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
 Pappas, Dunn, and Taylor, Bankruptcy Judges, Presiding

Submitted September 1, 2017**
Pasadena, California

Before: WARDLAW and BYBEE, Circuit Judges, and BARTLE,*** District
Judge.

Peggy Kirton and Diana Agnello are former employees of the Debtor, Valley

Health System (“VHS”). They appeal the Bankruptcy Appellate Panel’s February

25, 2015 decision affirming dismissal of their petition. Our review is de novo. See

In re Tracht Gut LLC, 836 F.3d 1146, 1150 (9th Cir. 2016).

As former VHS employees, Kirton and Agnello are participants in the VHS

Retirement Plan. After VHS declared bankruptcy, the bankruptcy court established

the proof of claims bar date as August 25, 2008. The court then confirmed an

adjustment plan on April 26, 2010 limiting participants such as Kirton and Agnello

to the monies already in the Retirement Plan. Kirton and Agnello, who at all times

had proper notice, neither filed a proof of claim by the claims bar date nor objected

to the adjustment plan.

**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
***
The Honorable Harvey Bartle III, United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.
2
 A creditor may not contest a plan if the creditor failed to object to the plan’s

proposal or confirmation. See Miller v. United States, 363 F.3d 999, 1004 (9th Cir.

2004). Kirton and Agnello’s petition clearly asserts pre-petition claims, which are

precluded by the claims bar date and discharged by the adjustment plan. Thus, the

bankruptcy court did not err in dismissing their petition.

Courts should “freely give leave [to amend a pleading] when justice so

requires,” Fed. R. Civ. P. 15(a)(2),1 but should deny leave where the amendment

would be futile, see Foman v. Davis, 371 U.S. 178, 182 (1962). A motion to

amend should be denied if it is clear the amended pleading would not rectify the

failure to state a claim. See Kelson v. City of Springfield, 767 F.2d 651, 656 (9th

Cir. 1985). In light of the foregoing, the bankruptcy court did not err in dismissing

Kirton and Agnello’s petition without leave to amend.

We have considered appellants’ other arguments and find them to be without

merit. Appellants shall bear the costs of appeal. The order of the Bankruptcy

Appellate Panel is AFFIRMED.

1
See Fed. R. Bankr. P. 7015 (“Rule 15 F.R.Civ.P. applies in adversary
proceedings.”).
3