Richards v. Richards (In re Richards)

655 B.R. 782

IN RE: Alicia Marie RICHARDS, Debtor.

Alicia Marie Richards, Appellant, v. Ryal W. Richards; Kevin E. Robinson, Appellees.

BAP No. CC-22-1241-GFL

Bk. No. 8:21-bk-10635-SC

Adv. No. 8:22-ap-01056-SC

United States Bankruptcy Appellate Panel of the Ninth Circuit

December 11, 2023

Appeal from the United States Bankruptcy Court for the Central District of California Scott C. Clarkson, Bankruptcy Judge, Presiding

Appellant Alicia Marie Richards, pro se, on the brief.

Kevin E. Robinson for Appellees Ryal W. Richards and Kevin E. Robinson.

Before: GAN, FARIS, and LAFFERTY, Bankruptcy Judges.

OPINION

GAN, Bankruptcy Judge:

INTRODUCTION

Chapter 7¹ debtor Alicia Marie Richards ("Debtor") appeals the bankruptcy court's order striking her cross-complaint with prejudice. Applying California's "anti-SLAPP" statute, the court granted the special motion to strike filed by cross-defendants and appellees Ryal W. Richards and Kevin E. Robinson (together "Appellees"). Each of Debtor's claims was premised on purported actions by Appellees in a prior state court dissolution proceeding. We find no error in the bankruptcy court's decision to strike the cross-complaint under the anti-SLAPP statute. And contrary to Debtor's argument on appeal, the bankruptcy court had constitutional and statutory authority to enter a final order. Accordingly, we AFFIRM.

We publish to highlight the necessity of clearly objecting to entry of final orders where a party asserts a right to de novo review by an Article III court, and to explain that a party who makes an undisputed assertion that claims are core consents to entry of final orders by the bankruptcy court.

FACTS²

A. Prepetition events

Debtor and Mr. Richards were married and owned, as husband and wife in joint tenancy, a residence in Newport Beach, California (the "Property"). In 2015, Mr. Richards commenced divorce proceedings in state court, and Debtor and Mr. Richards eventually stipulated to entry of a dissolution judgment. The stipulation gave Debtor several weeks to refinance the Property and buy out Mr. Richards's community property interest. If Debtor was unable or unwilling to do so, the stipulation required the Property to be sold with proceeds divided equally. In 2018, the state court entered a final dissolution judgment in accordance with the stipulation.

Debtor was unable to buy out Mr. Richards's interest, and she failed to cooperate with the required sale. Instead, she moved to set aside the stipulation based on fraud and duress. The state court denied her motion, and the California Court of Appeal affirmed. In re Marriage of Richards, Case No. G055927, 2020 WL 104357, at *9-13 (Cal. Ct. App. Jan 9, 2020).

Although she had not appealed the dissolution judgment, Debtor filed several post-judgment motions to stop its enforcement and prevent the sale of the Property. The state court denied each of her motions, and none of her appeals were successful. In disposing of Debtor's fifth appeal, the Court of Appeal noted, "[c]ontrary to [Debtor's] contention on appeal, the former couple's respective rights concerning the Property were determined long ago by the final marital dissolution judgment." In re Marriage of Richards, Case No. G057803, 2020 WL 5902889, at *5 (Cal. Ct. App. Oct. 6, 2020).

B. Debtor's bankruptcy and the present adversary proceeding

In July 2019, the state court entered an order granting Mr. Richards exclusive use, possession, and control of the Property. Mr. Richards sought to evict Debtor, and after an unsuccessful chapter 13 filing and a second eviction attempt, Debtor filed the current chapter 7 case in March 2021.

Debtor scheduled the Property as an asset of her bankruptcy estate and listed it as community property. In May 2021, Mr. Richards sought stay relief to pursue claims in state court, including modification of child support and custody orders, a claim for attorney's fees, and permission to evict Debtor and sell the Property. The bankruptcy court granted stay relief to allow all matters before the state court to proceed, except for those related to the sale of the Property and Debtor's eviction. The chapter 7 trustee then obtained an order from the bankruptcy court authorizing a sale of the Property, free and clear of all liens and interests, to a third-party purchaser for a price substantially higher than the aggregate amount of liens against the Property. Debtor and her father, Lawrence Remsen, each objected and appealed, and we affirmed. Richards v. Marshack (In re Richards), BAP Nos. CC-21-1262-SGL; CC-21-1266-SGL, 2022 WL 16754394, at *1 (9th Cir. BAP Nov. 7, 2022), appeal docketed, Case No. 22-60058 (9th Cir. Dec. 15, 2022).

In September 2022, Mr. Remsen filed the present adversary complaint, alleging breach of contract against Debtor based on an agreement to transfer the Property to the Remsen Family Trust for the benefit of Mr. Remsen's grandchildren.³ He also asserted claims against Appellees for interference with contract and abuse of bankruptcy process. Mr. Remsen sought declaratory relief that his contract with Debtor was valid, the Property belonged to his trust, and the dissolution judgment—which required the Property to be sold—was void. Appellees filed a motion to dismiss, which the court granted with prejudice.

In response to Mr. Remsen's complaint, Debtor filed an answer and a cross-complaint against Appellees. She alleged claims for: (1) declarative relief that the dissolution judgment was void; (2) declarative relief that structural error occurred in the family court; (3) fraudulent transfer based on the dissolution judgment causing the Property to become community property after the stipulation made it her separate property; (4) declaratory relief that the state court's vexatious litigant order was void; (5) breach of fiduciary duty against Mr. Richards based on his financial decisions during the dissolution proceeding and by causing the dissolution judgment to be entered; (6) declaratory relief that the stipulation—and not the dissolution judgment—was binding; (7) breach of contract against Mr. Richards based on the stipulation; (8) breach of oral contract against Mr. Richards based on the stipulation; (9) intentional infliction of emotional distress based on actions in the divorce proceeding; (10) equitable estoppel related to the stipulation; and (11) promissory fraud based on the stipulation.

Debtor asserted that the bankruptcy court had jurisdiction and her claims were "core." However, she also included the statement:

To the extent any claim for relief contained herein is determined not [sic] to be a non-core proceeding or a Stern-claim, Cross Complainant does not give her consents [sic] to the entry of final judgment and orders by the Bankruptcy Court. Cross-Complainant reserves her right to request leave of court to pursue non-core or Stern-claims in the District Court.

Cross-Complaint, Aug. 22, 2022, p.2.

C. Appellees' motion to strike and the court's ruling

Appellees then filed a special motion to strike under the so-called anti-SLAPP provision of California law, Code of Civil Procedure ("CCP") § 425.16.⁴ They argued that all of Debtor's claims pertained to alleged actions and statements made by Appellees in the state court dissolution proceeding, which constituted protected conduct under the anti-SLAPP statute. Appellees further asserted that the alleged statements and conduct were protected by the "litigation privilege" of California Civil Code ("CCC") § 47(b), and Debtor failed to comply with CCC § 1714.10, which requires a court order prior to naming an attorney as a defendant in a conspiracy action based on his representation of a client. Appellees sought an order striking all claims in the cross-complaint and an award of attorney's fees and costs under CCP § 425.16(c).

In opposition, Debtor argued the motion to strike was untimely. She maintained that some of her claims were based solely on federal law and thus, could not be struck under the anti-SLAPP statute. Debtor argued that her allegations did not involve protected conduct under CCP § 425.16, and she had a reasonable probability of prevailing on the merits. She requested an opportunity to conduct discovery, and she sought leave to file an amended complaint to add a cause of action under 42 U.S.C. § 1983 based on her allegation that Appellees conspired with state court judges to prevent the dissolution judgment from being overturned. Debtor stated that she did not consent to entry of final orders on non-core claims.⁵ Although she requested a hearing to determine which causes of action were non-core, she did not assert that any of her claims were non-core.

After a hearing, the bankruptcy court granted Appellees' motion and entered a written order striking Debtor's cross-complaint with prejudice. Pursuant to CCP § 425.16(c), the bankruptcy court awarded Appellees $6,190 for attorney's fees and costs.⁶ Debtor timely appealed.

JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 and 157(b)(1). We have jurisdiction under 28 U.S.C. § 158.

ISSUES

Did the bankruptcy court have authority to enter a final order?

Did the bankruptcy court err by granting Appellees' special motion to strike?

Did the bankruptcy court abuse its discretion by awarding attorney's fees and costs?

STANDARDS OF REVIEW

Whether the bankruptcy court has authority to enter a final order is an issue we review de novo. See Hasse v. Rainsdon (In re Pringle), 495 B.R. 447, 455 (9th Cir. BAP 2013). We also review de novo a bankruptcy court's decision to grant an anti-SLAPP motion. Restaino v. Bah (In re Bah), 321 B.R. 41, 44 (9th Cir. BAP 2005). Under de novo review, we "consider a matter anew, as if no decision had been made previously." Francis v. Wallace (In re Francis), 505 B.R. 914, 917 (9th Cir. BAP 2014).

We review the bankruptcy court's award of attorney's fees and costs under the anti-SLAPP statute for abuse of discretion. Graham-Sult v. Clainos, 756 F.3d 724, 751 (9th Cir. 2014). A...