In re Delta Entertainment Corporation
Filing
22
ORDER REVERSING DECISION OF BANKRUPTCY COURT AND DISMISSING ADVERSARY PROCEEDING: The bankruptcy courts grant of reconsideration and leave to amend are REVERSED. Because the court lacks subject matter jurisdiction over Paciorettis claim, the adversary proceeding is DISMISSED by Judge Dean D. Pregerson, (Made JS-6. Case Terminated.) (lc)
1
2
O
3
4
5
6
7
8
UNITED STATES DISTRICT COURT
9
CENTRAL DISTRICT OF CALIFORNIA
10
11
12
13
IN RE: DELTA ENTERTAINMENT
CORPORATION
THOMAS S. PACCIORETTI as
liquidating trustee for
DELTA ENTERTAINMENT
CORPORATION,
14
Plaintiff,
15
v.
16
17
STARCREST OF CALIFORNIA,
INC.,
18
19
20
Defendants.
___________________________
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Case No. CV 09-06082 DDP
[USBC Number LA07-16302-EC]
ORDER REVERSING DECISION OF
BANKRUPTCY COURT AND DISMISSING
ADVERSARY PROCEEDING
This matter is before the court on an appeal from a decision
21
by the United States Bankruptcy Court.
After reviewing and
22
considering the materials submitted by the parties, the court
23
reverses the bankruptcy court decision and dismisses the adversary
24
proceeding.
25
26
27
28
cc: US Bankruptcy Court and the US Trustee’s Office
1
I.
Background
2
In 2008, after filing a Chapter 11 bankruptcy petition, Delta
3
Entertainment Corporation confirmed a liquidation plan and created
4
a liquidating trust.
ER 338.
Broadway Advisors, LLC (“Broadway”)
5
6
7
was named Liquidating Trustee (“Trustee”).
(Id.)
Thomas S. Paccioretti (“Paccioretti”) is Broadway’s principal
8
and sole shareholder.
9
as liquidating trustee for Delta Entertainment Corporation” brought
10
an adversary proceeding against Defendant Starcrest of California,
11
Inc. (“Starcrest”).
12
Paccioretti named Trustee.
13
(ER 338).
(ER 84).
Plaintiff, “Thomas S. Paccioretti
At no point, however, was
In February 2009, Starcrest moved for judgment on the
14
pleadings, contesting Paccioretti’s standing.
15
bankruptcy court observed that “the correct Trustee is obviously
16
free to file a new action,” and dismissed the adversary proceeding
17
for lack of jurisdiction.1
18
(ER 118).
The
(ER 37, 368).
Broadway, the correct Trustee, did not file a new action, but
19
did file a motion for reconsideration of the bankruptcy court’s
20
order dismissing the adversary proceeding.
21
bankruptcy court granted Broadway’s motion (ER 57-62, 396), and
22
granted Paccioretti’s subsequent motion to amend to substitute
23
Broadway as Plaintiff.
24
reconsideration, (ER 400), which was denied.
25
timely filed two Notices of Appeal regarding the denial of its
(ER 563).
(ER 331).
The
Starcrest filed a motion for
(ER 517).
Starcrest
26
27
1
28
The bankruptcy court also denied Pacciorettie’s motion to
amend to substitute in Broadway as Plaintiff. (ER 361-362.)
2
1
motion for reconsideration and the bankruptcy court’s order
2
granting Paccioretti leave to substitute in Broadway.
3
II.
4
Jurisdiction
This court has the discretion to grant leave to appeal
5
interlocutory orders.
6
a notice of appeal as a motion for leave to appeal.
7
8003(c).
8
looks to 28 U.S.C. 1292(b).
9
Cir. BAP 1994).
28 U.S.C. § 158(a).
This court may consider
Fed.R.Bankr.P.
In considering whether leave should be granted, the court
In re Sperna, 173 B.R. 654, 658 (9th
Because there is a substantial ground for
10
difference of opinion regarding Paccioretti’s standing, and because
11
resolution of the jurisdictional question will materially advance
12
the termination of this litigation, this court construes
13
Starcrest’s Notices of Appeal as motions for leave to appeal,
14
grants the motions, and proceeds to the merits.
15
III.
Standard of Review
16
The bankruptcy court’s conclusions of law are reviewed de
17
novo, while its findings of fact are reviewed for clear error.
18
Blausey v. United States Trustee, 552 F.3d 1124, 1132 (9th Cir.
19
2009)(citing In re Salazar, 430 F.3d 992, 994 (9th Cir. 2005)).
20
This court may affirm on any ground supported by the record.
21
Thrifty Oil Co. v. Bank of America, Nat’l Trust and Sav. Ass’n, 322
22
F.3d 1039, 1046 (9th Cir. 2003).
23
IV.
Discussion
The parties do not dispute that Paccioretti was not, and is
24
25
not, the Trustee.
The issue before the court is whether the
26
bankruptcy court had subject matter jurisdiction over the adversary
27
proceeding filed by Paccioretti.
28
///
3
1
Lack of Article III standing is a jurisdictional defect.
2
Renne v. Duncan, 623 F.3d 787, 796 (9th Cir. 2010).
3
requires that three essential elements be met, the first of which
4
is that “the plaintiff must have suffered an ‘injury in fact.’”
5
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992).
6
Nevertheless, Paccioretti argues that “constitutional standing does
7
not require the injury in fact have actually occurred to the party
8
bringing the suit.”
9
Standing
(Appellee’s Brief at 10).
The court disagrees.
At a constitutional minimum, “the
10
plaintiff himself [must have] suffered some threatened or actual
11
injury . . . .”
12
then, however, a plaintiff must also assert his own rights, not
13
those of third parties.
14
requirement operates in addition, not as an alternative, to the
15
constitutional standing requirement.
16
F.3d 1107, 1112 (9th Cir. 2004).
17
standing may be curable, id., Article III standing is a threshold
18
jurisdictional prerequisite central to subject matter jurisdiction.
19
Bates v. United Parcel Service, Inc., 511 F.3d 974, 985 (9th Cir.
20
2007) (en banc); Gerlinger v. Amazon.com Inc., 526 F.3d 1253, 1255.
21
Warth v. Seldin, 422 U.S. 490, 499 (1975).
Id.
Even
This “prudential standing”
Dunmore v. United States, 358
While defects in jurisdictional
The facts in this case are somewhat similar to those in
22
Dunmore.
In Dunmore, a pro se plaintiff sued for a refund of his
23
alleged tax overpayments following a personal bankruptcy.
24
358 F.3d at 1109.
25
bankruptcy estate, not to Dunmore individually.
26
therefore moved to dismiss Dunmore’s complaint for lack of
27
prudential standing.
28
///
Dunmore,
The overpayments, however, belonged to the
Id. at 1110.
4
Id.
The defendant
1
The Ninth Circuit found that Dunmore did have constitutional
2
standing, for he himself had suffered an injury in fact traceable
3
to the defendant and redressable by the court.
4
The court agreed, however, that Dunmore lacked prudential standing,
5
and that the bankruptcy estate, not Dunmore himself, was the real
6
party in interest.
7
determination whether the defect in prudential standing was
8
curable.
9
Id. at 1112.
The court therefore remanded for a
Id. at 1112-1113.
A plaintiff who is not the real party in interest may,
10
therefore, lack prudential standing while possessing constitutional
11
standing.
12
Paccioretti suffered any injury in fact, nor has he alleged that he
13
himself suffered any injury.
14
Dunmore does not stand for the proposition that a plaintiff has
15
constitutional standing to assert claims based on injuries suffered
16
by third parties.
17
whether prudential standing exists, “Art[icle] III’s requirement
18
remains: the plaintiff still must allege a distinct and palpable
19
injury to himself . . . .”); Elk Grove Unified School Dist. v.
20
Newdow, 542 U.S. 1, 12 (2004) (“The Article III limitations are
21
familiar: The plaintiff must show that conduct of which he
22
complains has caused him to suffer an ‘injury in fact’ that a
23
favorable judgment will redress.”).
24
Here, however, there is no evidence in the record that
Contrary to Paccioretti’s argument,
See also Warth, 422 U.S. at 501 (Regardless
Having concluded that Paccioretti lacks constitutional
25
standing, the court need not address his contention that the
26
bankruptcy court properly allowed him to cure prudential and real
27
party in interest defects.
28
19).
(Appellee’s Opening Brief at 9, 11, 14,
See, e.g. Fed.R.Civ.P. 82 (“These rules do not extend . . .
5
1
the jurisdiction of the district courts . . . .); Miguel v. Country
2
Funding Corp., 309 F.3d 1161, 1165 (9th Cir. 2002) (Rule 15 may not
3
be used to extend jurisdiction); Davis v. Yageo Corp., 481 F.3d
4
661, 678 (“[W]hether or not [plaintiff] was the real-party-in-
5
interest, it does not have standing, and it cannot cure its
6
standing problem through an invocation of Fed.R.Civ.P. 17(a).”).
7
IV.
8
9
Conclusion
For the reasons stated above, the bankruptcy courts grant of
reconsideration and leave to amend are REVERSED.
Because the court
10
lacks subject matter jurisdiction over Pacioretti’s claim, the
11
adversary proceeding is DISMISSED.
12
13
14
IT IS SO ORDERED.
15
16
17
Dated: December 20, 2011
18
DEAN D. PREGERSON
19
United States District Judge
20
21
22
23
24
25
26
27
28
6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?