UNITED STATES BANKRUPTCY APPELLATE PANEL OF THE NINTH CIRCUIT
December 14, 2012
IN RE: DANA PAUL FOSTER AND CHERYL DEANN FOSTER, DEBTORS. DANA PAUL FOSTER; CHERYL DEANN FOSTER, APPELLANTS,
WILMA CLARICE SLIGAR, APPELLEE.
Appeal from the United States Bankruptcy Court for the Eastern District of California Honorable W. Richard Lee, Bankruptcy Judge, Presiding Bk. No. 11-17709-WRL Adv. No. 11-1252-WRL
FILED DEC 14 2012
SUSAN M SPRAUL, CLERK U.S. BKCY. APP. PANEL OF THE NINTH CIRCUIT
Submitted Without Oral Argument on October 19, 2012,*fn2
Before: KIRSCHER, DUNN, and JURY, Bankruptcy Judges.
Appellants, chapter 13*fn3 debtors Dana Paul Foster ("Dana") and Cheryl Deann Foster ("Cheryl")(collectively "Fosters"), appeal an order denying their motion to dismiss Wilma Clarise Sligar's ("Sligar") complaint for nondischargeability of debt and denial of discharge based on various tort claims, including fraud and elder abuse. The bankruptcy court further ordered that it was abstaining from hearing Sligar's tort claims against Fosters, that it was granting Sligar relief from the automatic stay to pursue her tort claims in state court, and that it was administratively closing the adversary proceeding. Because the bankruptcy court should have dismissed the complaint without prejudice, we VACATE in part and REMAND.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
A. Events leading to the adversary complaint.
The following facts are as alleged in Sligar's state court complaint and in her adversary complaint against Fosters. Cheryl is the third of three daughters of Sligar; Dana is Cheryl's husband and Sligar's son-in-law. Sligar currently lives with her second daughter, Betty Briscoe ("Briscoe"). Since September 2010, Briscoe has had power of attorney for Sligar under CAL. PROB. CODE § 4401 and is authorized to engage in many transactions on Sligar's behalf, including prosecuting and/or defending claims and litigation. Briscoe is not an attorney at law.
Shortly after Sligar's husband passed away and before Briscoe became Sligar's caretaker, Fosters cared for Sligar and assisted 1 her with her daily needs. Cheryl was named on at least one of 2 Sligar's bank accounts to assist Sligar with payment of her 3 monthly financial obligations. Sligar alleged that between 2007 4 and January 2010, Cheryl and/or Fosters made unauthorized 5 withdrawals from Sligar's bank account, made unauthorized cash 6 advances on Sligar's credit card, forged Sligar's signature on 7 certain checks made payable to Sligar, and failed to pay some of 8 Sligar's bills. Sligar further alleged that Fosters conspired to 9 deceive her into signing a blank quitclaim deed conveying title to 10 real property she owned in Florida to Cheryl, which Cheryl 11 subsequently conveyed to Dana. Sligar asserted in her state court 12 complaint that at no time during this nearly three year period was 13 she physically or mentally unable to sign her own signature due to 14 illness or any other reason. She further asserted that Cheryl did 15 not have power of attorney, or conservatorship, or any legal 16 authorization to sign Sligar's signature. Sligar alleged that 17 Fosters fraudulently acquired from her approximately $660,000 in 18 real and personal property.
19 In January 2010, Sligar contacted Kern County Adult 20 Protection Services and the Kern County Sheriff's Office to 21 investigate the allegations against Fosters. They investigated 22 the matter, but the county ultimately decided not to prosecute any 23 criminal charges against Fosters.
24 Based on the above conduct, in July 2010, Sligar, represented 25 by counsel, sued Fosters civilly in state court alleging claims of 26 financial elder abuse, fraud and conspiracy to defraud, 27 constructive trust, unjust enrichment, and for an accounting. The 28 matter was set for trial on August 8, 2011. However, the trial -3- 1 was stayed once Fosters filed their chapter 13 bankruptcy case on 2 July 7, 2011.
3 B. The adversary complaint and motion to dismiss.
4 Sligar filed a proof of claim in Fosters' bankruptcy case for 5 the alleged debt on August 9, 2011. The proof of claim was signed 6 by Briscoe as attorney-in-fact for Sligar. No objections were 7 filed.
8 Based on the above allegations, on October 4, 2011, Briscoe, 9 as attorney-in-fact for Sligar, filed a complaint seeking to 10 except Sligar's debt from discharge under §§ 523(a)(2)(A), 11 (a)(2)(B), (a)(4) and (a)(6) and to deny Fosters' discharge under 12 727(a)(2), (a)(3)(A), (a)(4)(A), and (a)(4)(B). Although the 13 complaint was signed by Briscoe as attorney-in-fact for Sligar, 14 Sligar did sign the adversary complaint cover sheet. The caption 15 on the adversary complaint shows Sligar as the pro se plaintiff 16 and Fosters as defendants. All claims alleged in the complaint 17 were for injuries to Sligar; Briscoe sought no personal relief in 18 the matter.
19 On November 2, 2011, Fosters moved to dismiss the adversary 20 complaint under Civil Rule 12(b)(1) (the "Motion to Dismiss"), 21 contending the bankruptcy court lacked subject matter jurisdiction 22 because Briscoe lacked standing to bring the adversary complaint 23 on behalf of Sligar. Specifically, Fosters argued that, based on 24 the unpublished case of Lomax v. City of Antioch Police Officers, 25 2011 WL 4345057 (N.D. Cal. Sept. 14, 2011), which Fosters argued 26 was identical to the instant case, Briscoe, a non-attorney, lacked 27 standing to file an action on behalf of Sligar, and her power of 28 attorney for Sligar did not remedy the standing issue. Fosters 1 further argued that Sligar should not be allowed to amend the 2 complaint because the time to file such complaint had passed. 3 Sligar opposed the Motion to Dismiss, contending that she, 4 not Briscoe, had brought the adversary complaint against Fosters, 5 and that Briscoe only signed the complaint as an accommodation to 6 Sligar's physical disabilities. No evidence was provided as to 7 the extent or existence of Sligar's alleged disability.
8 In their reply, Fosters contended that Civil Rule 11 required 9 that either Sligar or her attorney at law sign the adversary 10 complaint, so the complaint signed by Briscoe, her attorney-in- 11 fact, was defective. Fosters also argued that Sligar had not 12 provided any cogent reason for why she failed to sign her own 13 complaint.
14 The bankruptcy court held a status conference and a hearing 15 on the Motion to Dismiss on November 30, 2011. In its very short 16 oral ruling on the Motion to Dismiss, the bankruptcy court denied 17 the motion, finding that the adversary complaint had been filed 18 for the benefit of Sligar. However, the court did inform Briscoe 19 that although she had power of attorney for Sligar, she could not 20 appear in court for Sligar or represent her; Sligar had to 21 represent herself or get an attorney. The bankruptcy court then 22 went on to rule that it was abstaining from hearing Sligar's tort 23 claims against Fosters, that it was granting Sligar relief from 24 the automatic stay to pursue her tort claims in state court, and 25 that it was administratively closing the adversary proceeding 26 pending a final adjudication from the state court. Later that 27 same day, the bankruptcy court entered civil minutes stating that 28 Fosters' Motion to Dismiss was denied for the reasons stated on 1 the record.
2 On December 14, 2011, Fosters filed a premature Notice of 3 Appeal and motion for leave to appeal the bankruptcy court's 4 denial of their Motion to Dismiss. The bankruptcy court then 5 entered a written order with respect to its November 30 decision 6 on December 16, 2011, thereby curing Fosters' Notice of Appeal. 7 Rule 8002(a). That order makes no reference to the Motion to 8 Dismiss or its denial.
9 In their motion for leave to appeal, Fosters contended that 10 the bankruptcy court's order was tantamount to a final order 11 because it effectively precluded them from challenging the 12 bankruptcy court's subject matter jurisdiction over the adversary 13 proceeding until after the state court action was adjudicated. In 14 short, argued Fosters, if the Panel determined Briscoe lacked 15 standing to file the adversary complaint, Sligar would be unable 16 to object to dischargeability of the debt, and therefore the state 17 court action could be avoided.
18 On February 6, 2012, a motions panel granted leave to appeal 19 to the extent the order was interlocutory. 28 U.S.C. § 158(a)(3). 20 However, the motions panel's concern about the finality of the 21 bankruptcy court's order, and the basis for granting leave, 22 centered on the issue of the bankruptcy court's decision to 23 abstain from hearing the tort claims. That is not the issue 24 Fosters are appealing. Their appeal is based entirely on the 25 bankruptcy court's decision to deny their Motion to Dismiss, and 26 that ruling does not appear anywhere in the order on appeal. The 27 motions panel does not appear to have been aware that the order at 28 issue failed to dispose of the Motion to Dismiss. As a result, 1 Fosters' appeal appears to remain interlocutory because we lack 2 any written order from the bankruptcy court expressly addressing 3 it. Nevertheless, we conclude that the bankruptcy court's oral 4 ruling, although interlocutory in nature, "merged" into the 5 written order because that order implicitly denied the Motion to 6 Dismiss based on the court's action in administratively closing 7 the adversary proceeding. Therefore, the order on appeal is 8 final. See Am. Ironworks & Erectors, Inc. v. N. Am. Const. Co., 9 248 F.3d 892, 897-98 (9th Cir. 2001).
10 II. JURISDICTION
11 The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334 12 and 157(b)(2)(I) and (J). We have established our jurisdiction 13 above under 28 U.S.C. § 158.
14 III. ISSUE
15 Did the bankruptcy court err when it denied the Motion to 16 Dismiss?
17 IV. STANDARD OF REVIEW
18 We review the trial court's determination of subject matter 19 jurisdiction de novo. Nurse v. United States, 226 F.3d 996, 1000 20 (9th Cir. 2000).
21 V. DISCUSSION
22 Although the bankruptcy court sua sponte decided to abstain 23 from hearing Sligar's tort claims, granted relief from the 24 automatic stay so she could continue with her claims in state 25 court, and stayed and administratively closed the adversary 26 proceeding, Fosters contend only on appeal that the bankruptcy 27 court erred in not granting their Motion to Dismiss under Civil Rule 12(b)(1). Therefore, we address only this issue.*fn4
A. The bankruptcy court erred when it denied the Motion to Dismiss.
1. Standing and Civil Rule 12(b)(1)
Article III limits a federal court's subject matter jurisdiction by requiring that plaintiffs have standing. Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th Cir. 2010). "Standing addresses whether the plaintiff is the proper party to bring the matter to the court for adjudication." Id. (citations omitted). Regardless of which type of standing is at issue, constitutional or prudential, both turn on whether the plaintiff can allege an "injury-in-fact" he or she suffered as a result of the defendant's alleged misconduct. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); Powers v. Ohio, 499 U.S. 400, 410-11 (1991).
Because standing pertains to a federal court's subject matter jurisdiction, a motion to dismiss for lack of standing is properly brought as a motion to dismiss for lack of subject matter jurisdiction under Civil Rule 12(b)(1). White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000). When faced with a Civil Rule 12(b)(1) motion, the plaintiff bears the burden of proving the existence of 1 the court's subject matter jurisdiction. Thompson v. McCombe, 2 99 F.3d 352, 353 (9th Cir. 1996).
3 A challenge to subject matter jurisdiction may be facial or 4 factual. White, 227 F.3d at 1242. Fosters' attack on the 5 adversary complaint - that Briscoe lacked standing to bring it on 6 Sligar's behalf - is a facial attack. See In re Beach, 447 B.R. 7 313, 317 (Bankr. D. Idaho 2011)(assertion that debtors lack 8 standing to prosecute their claims is a facial subject matter 9 jurisdiction attack); We Are Am./Somos Am., Coal. of Ariz. v. 10 Maricopa Cnty. Bd. of Supervisors, 809 F.Supp.2d 1084, 1089 11 (D. Ariz. 2011)(lack of standing is facial challenge). When the 12 motion constitutes a facial attack, the court must presume the 13 factual allegations of the complaint to be true and construe them 14 in the light most favorable to the plaintiff. Wolfe v. Strankman, 15 392 F.3d 358, 362 (9th Cir. 2004).
16 2. Analysis
17 It is undisputed that Briscoe has power of attorney for 18 Sligar and is authorized to engage in many activities on Sligar's 19 behalf, including prosecuting and/or defending "claims and 20 litigation." See CAL. PROB. CODE §§ 4450(d) and 4459.*fn5
However, these statutes are silent as to whether Briscoe can sign a complaint as attorney-in-fact for Sligar. The bankruptcy court found that even though Briscoe signed the complaint for Sligar, the claims were really brought on Sligar's behalf, and therefore it was essentially Sligar who had filed the complaint. The court cited no authority for its decision. Fosters contend that the bankruptcy court erred in denying the Motion to Dismiss because: (1) Sligar was required to sign the adversary complaint under Civil Rule 11; and (2) Briscoe lacked standing to file it, and her capacity as Sligar's attorney-in-fact did not permit her to sign the complaint on Sligar's behalf.
To be certain, nothing prevents Sligar from pursuing her complaint on her own behalf. Johns v. Cnty. of San Diego, 114 F.3d 874, 876 (9th Cir. 1997)("While a non-attorney may appear pro se on his own behalf, he has no authority to appear as an attorney for others than himself.")(citations and internal quotation marks omitted). The question here is whether Briscoe, as Sligar's attorney-in-fact, can sign a complaint on Sligar's behalf. Case law is rather sparse on the issue of whether an attorney-in-fact can sign a complaint or otherwise appear on 1 behalf of her principal. However, the courts that have addressed 2 the matter have concluded that she cannot.
3 The leading California case on this issue is Drake v. 4 Superior Court, 26 Cal. Rptr. 2d 829 (Cal. Ct. App. 1994). In 5 Drake, petitioner Drake had power of attorney permitting him to 6 act for his principal in matters relating to claims and 7 litigation. Representing himself on the pleading as the 8 attorney-in-fact for the principal, Drake attempted to obtain a 9 temporary restraining order for his principal against her 10 estranged husband. He also attempted to appear in court on the 11 principal's behalf, but the court refused to let Drake make the 12 appearance. On appeal, Drake contended that because the principal 13 could appear in court on her own behalf, and because the statutory 14 form power of attorney authorized him to act as agent for his 15 principal in litigation, he could "step into the shoes" of the 16 principal and appear for her in the litigation without a lawyer. 17 Id. at 831. The California Court of Appeals disagreed, noting 18 that the unlicensed practice of law is categorically prohibited in 19 California, and the Power of Attorney Act did not provide an 20 exception to this rule:
21 Long before passage of the Power of Attorney Act, the law distinguished between an attorney in fact and an attorney 22 at law and emphasized that a power of attorney is not a vehicle which authorizes an attorney in fact to act as an 23 attorney at law. If the rule were otherwise, the State Bar Act could be relegated to contempt by any layman who 24 secured from his principal an ordinary power of attorney, for the purpose of representing him in pending 25 litigation.
26 Id. (internal citations and quotations omitted). Therefore, the 27 court concluded, Drake could not "use the statutory form power of 28 attorney as a device to practice law for his principal." Id. at 1 832-33. See In re Marriage of Caballero, 33 Cal. Rptr. 2d 46, 52 2 (Cal. Ct. App. 1994)("Despite broad statutory language of the 3 power of attorney with respect to claims and litigation, the 4 attorney in fact may not act as an attorney at law on behalf of 5 his principal, even though the principal could appear in propria 6 persona . . . ."). See Ryan v. Hyden, 2012 WL 4793116 (S.D. Cal. 7 Oct. 9, 2012)(non-lawyer son with power of attorney for parents 8 could not draft pleadings and pursue claims on their behalf as it 9 constituted the unauthorized practice of law under California law; 10 complaint dismissed); Lomax, 2011 WL 4345057, at *3-4 (uninjured 11 father acting as attorney-in-fact for injured son lacked standing 12 to bring complaint on behalf of son and other family members for 13 their injuries; power of attorney did not permit father to engage 14 in the unauthorized practice of law; motion to dismiss complaint 15 granted); Hughes v. Laguna Honda Hosp., 2000 U.S. Dist. LEXIS 16 10855 (N.D. Cal. Aug. 1, 2000)(daughter with power of attorney for 17 mother authorizing her to act on mother's behalf regarding "claims 18 and litigation" did not allow daughter to sign and file complaint 19 for mother's claims on her behalf; complaint dismissed without 20 prejudice); 6A Cal. Jur. 3d, Attorneys at Law § 135 (3d ed. 2012) 21 (one may not act as an attorney for another by virtue of a special 22 power of attorney; power of attorney is not a vehicle for acting 23 as an attorney at law).
24 Courts outside of California have reached the same result. 25 Haynes v. Jackson, 744 A.2d 1050, 1053-54 (Me. 2000)(although 26 state power of attorney statute does not prevent principal from 27 granting his attorney-in-fact the power to appear pro se on the 28 principal's behalf, the statute prohibiting the unauthorized 1 practice of law limits its scope; non-lawyer wife with power of 2 attorney for husband could not sign pleadings or file appeals or 3 appear in court for husband; motion to dismiss appeal granted);
4 In re Riebel, 625 N.W.2d 480, 482-83 (Minn. 2001)(non-lawyer 5 daughter with power of attorney for mother authorizing daughter to 6 handle mother's legal matters did not allow daughter to sign 7 pleadings or appear on mother's behalf because such actions 8 constituted the unauthorized practice of law under Minnesota law; 9 motion to dismiss granted); Risbeck v. Bond, 885 S.W.2d 749, 750 10 (Mo. App. Ct. 1994), cert. denied, 514 U.S. 1110 (1995)(reviewing 11 state power of attorney statute and determining that an 12 attorney-in-fact who is not an attorney at law cannot file 13 pleadings for another or otherwise practice law; order dismissing 14 petition affirmed); In re Estate of Friedman, 482 N.Y.S.2d 686, 15 687 (N.Y. Surr. Ct. 1984) (non-lawyer son with power of attorney 16 for mother authorizing son to act for mother with respect to 17 "claims and litigation" could not pursue proceeding to compel 18 production of a will as it constituted the unauthorized practice 19 of law; petition dismissed); Marin v. Kandpal, 2010 WL 3596043 20 (Ohio. App. Ct. Sept. 16, 2010), appeal denied, 940 N.E.2d 987 21 (Ohio 2011) (non-lawyer son with power of attorney for mother could 22 not file complaint for injunctive relief on behalf of mother since 23 it constituted practicing law without a license; dismissal 24 affirmed).
25 Although Sligar argues that Briscoe did nothing more than 26 sign the complaint for her, this is a distinction without a 27 difference. In Hughes, the daughter signed and filed a complaint 28 on her mother's behalf as her attorney-in-fact for injunctive relief against the hospital that was caring for the mother.*fn6
2000 U.S. Dist. LEXIS 10855, at *2. The hospital moved to dismiss because the mother herself failed to sign the complaint. Id. The daughter contended she had the right to file the complaint on her mother's behalf on account of her power of attorney, which authorized her to act for her mother with respect to "claims and litigation." Id. at *2-3. The district court disagreed, holding that California courts have determined that a statutory power of attorney form does not authorize the delegated attorney-in-fact to represent the principal in court. Id. at *4 (citing Drake, supra). Nonetheless, the court dismissed the complaint without prejudice to allow the mother to proceed with her claims either on her own behalf or with the representation of an attorney. Id. at *5.
In Lomax, the father (Thomas) signed and filed a complaint bringing claims on behalf of his son (Timothy) and other family members for injuries the son and other family members allegedly incurred during an incident involving police at Timothy's home. 2011 WL 4345057, at *1. Thomas was not involved in the incident. Defendants moved to dismiss because Thomas lacked standing to bring the action.*fn7 Id. at *2. The district court agreed and 1 dismissed the complaint for lack of standing. Id. at *3.
The 2 fact Thomas had power of attorney for Timothy did not remedy the 3 standing issue. It also did not allow Thomas to bring the action, 4 as the California statutory power of attorney form did not confer 5 authority on Thomas to practice law without a license. Id. at 6 *3-4. See also In re Marriage of Caballero, 33 Cal. Rptr. 2d at 7 47; Risbeck, 885 S.W.2d at 750; In re Estate of Friedman, 8 482 N.Y.S.2d at 687.
9 Lomax and Marin appear to be the only cases where defendants 10 specifically raised the issue of standing. In the other cases, 11 the courts simply determined that the actions of non-lawyer 12 attorneys-in-fact signing complaints and/or appearing for their 13 principals in court constituted the unauthorized practice of law 14 and dismissed the complaints on that basis. Therefore, without 15 even having to address the standing issue, the bottom line is that 16 Briscoe, as Sligar's attorney-in-fact, could not sign the 17 adversary complaint for Sligar. The fact Sligar signed the cover 18 sheet does not change our decision. Accordingly, we conclude the 19 bankruptcy court erred by not dismissing the adversary complaint.
20 We note that an action may be dismissed for lack of 21 subject-matter jurisdiction, without leave to amend, when it is 22 clear that the jurisdictional deficiency cannot be cured by 23 amendment. May Dep't Store v. Graphic Process Co., 637 F.2d 1211, 24 1216 (9th Cir. 1980). However, when the defect can be cured, 25 particularly in the case of a pro se complaint, the court should 26 not dismiss without leave to amend. See Lopez v. Smith, 203 F.3d 27 1122, 1130 (9th Cir. 2000)(en banc). We further note that 28 although Sligar was required to sign the adversary complaint 1 herself, the failure of a pro se litigant to sign the complaint is 2 merely a technical defect and does not subject the complaint to 3 dismissal. Memisevich v. St. Elizabeth's Med. Ctr., 443 F.Supp.2d 4 276, 283 (N.D.N.Y. 2006) (dismissal of pro se pleading for failure 5 to sign is inappropriate due to the great flexibility accorded pro 6 se litigants)(string citation omitted). "A bungled signature on a 7 pleading is merely a technical defect and not a substantive 8 violation of Rule 11, warranting the voiding of the complaint." 9 Edwards v. Groner, 116 F.R.D. 578, 579 (D.V.I. 1987)(citing 10 Covington v. Cole, 528 F.2d 1365, 1369-70 & n.7 (5th Cir. 1976); 11 Grant v. Morgan Guar. Trust Co. of N.Y., 638 F.Supp. 1528, 1531-32 12 n.6 (S.D.N.Y. 1986); Thiem v. Hertz Corp., 732 F.2d 1559, 1562-63 13 (11th Cir. 1984); and Becks v. Turner, 68 F.R.D. 466, 467 14 (E.D.N.Y. 1975)).
15 Despite Fosters' arguments to the contrary, we see no reason 16 why Sligar should not be allowed to amend the adversary complaint 17 with her signature. Alternatively, she could retain an attorney 18 to represent her.
19 VI. CONCLUSION
20 Because the bankruptcy court erred by not granting the Motion 21 to Dismiss, and because Fosters have not appealed any other 22 portions of the order on appeal, we VACATE in part only the 23 court's decision with respect to the Motion to Dismiss and REMAND 24 that matter with instruction that the bankruptcy court give 25 further consideration as to whether Sligar's complaint can be 26 amended, in the event the adversary proceeding is reopened to 27 determine the issue of the nondischargeability of Sligar's debt 28 and/or Fosters' discharge. As for the other matters decided by 1 the bankruptcy court in the order on appeal - abstention, stay 2 relief, and administrative closure of the adversary proceeding - 3 we offer no opinion.