Art Pack, Inc. v. David Gottlieb, 694 F. App'x 504

Art Pack, Inc. filed a contested proof of claim in Georges Marciano’s bankruptcy seeking damages (compensatory and punitive), attorneys’ fees, costs, and pre-judgment interest in an unliquidated amount for Marciano’s allegedly malicious prosecution.
The bankruptcy court liquidated Art Pack’s claim and allowed a proof of claim for $84,918.99; the district court affirmed.
Art Pack argued Marciano’s baseless litigation caused the Mohajeris to sell Art Pack, producing business losses and lost profits.
The trustee and Marciano disputed causation, the amount of damages, and the availability of punitive damages given lack of evidence about Marciano’s financial condition.
The bankruptcy court found no substantial causal link between Marciano’s lawsuit and the sale (crediting evidence that the Mohajeris sold due to health and retirement), and declined to award punitive damages for lack of financial-evidence.
Art Pack appealed; the Ninth Circuit reviewed constitutional and statutory authority to liquidate the claim, factual findings for clear error, and legal conclusions de novo, and affirmed the bankruptcy court’s orders.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Constitutional authority to liquidate claim in bankruptcy court	Bankruptcy court lacked Article III authority to enter final judgment on state-law malicious-prosecution damages	Bankruptcy court had authority because claim "stems from the bankruptcy" and liquidation is part of claims allowance	Bankruptcy court had constitutional authority under Stern and Ninth Circuit precedent to liquidate the claim
Statutory core jurisdiction; whether claim is non-core "personal injury tort"	Malicious prosecution is a personal-injury tort outside core jurisdiction	Even if sometimes a personal-injury tort, Art Pack is a corporation and claims only business (property) damages, falling within core jurisdiction	Claim was not a barred personal-injury tort; bankruptcy court had statutory authority to adjudicate liquidation
Causation — whether Marciano’s lawsuit was a substantial factor in sale and resulting damages	Marciano’s suit caused the Mohajeris to sell Art Pack and thus caused Art Pack’s damages	Sale was driven by Mohajeris’ health and retirement; record shows no substantial causal link to litigation	Bankruptcy court did not clearly err; record plausibly showed no substantial causal role for the lawsuit
Punitive damages availability	Plaintiff sought punitive damages	Plaintiff failed to present actual evidence of defendant’s financial condition as required under California law	Punitive damages not allowed for lack of required evidence

Stern v. Marshall, 564 U.S. 462 (constitutional limits on bankruptcy courts adjudicating state-law counterclaims)
In re Deitz, 760 F.3d 1038 (9th Cir. 2014) (bankruptcy court authority to enter final judgment on claims arising from the bankruptcy)
Roemer v. Comm’r of Internal Revenue, 716 F.2d 693 (9th Cir. 1983) (corporations cannot suffer personal bodily injury; recoverable harms are to business/property)
In re Olshan, 356 F.3d 1078 (9th Cir. 2004) (standard of review: legal conclusions de novo; factual findings for clear error)
Phoenix Eng’g & Supply Inc. v. Universal Elec. Co., 104 F.3d 1137 (9th Cir. 1997) (clearly erroneous standard where trial court adopts proposed findings)
Lundell v. Anchor Constr. Specialists, Inc., 223 F.3d 1035 (9th Cir. 2000) (proof of claim loses prima facie validity as to amount when amount is contested and requires liquidation)
Husain v. Olympic Airways, 316 F.3d 829 (9th Cir. 2002) (appellate court must affirm factual findings that are plausible in light of the record)