In re: Artem Koshkalda, 622 B.R. 749

Background

District court entered a $12 million default judgment and discovery sanctions against debtor Artem Koshkalda in an Epson trademark action; Koshkalda filed chapter 11 on January 5, 2018, and the case was converted to chapter 7.
Chapter 7 trustee E. Lynn Schoenmann was appointed and employed Fox Rothschild; Epson obtained annulment of the automatic stay validating the district-court judgment.
Epson sued in an adversary proceeding to except the judgment from discharge and to deny discharge; the bankruptcy court granted summary judgment in Epson’s favor on multiple §727 grounds and entered final judgment.
After Koshkalda’s counsel withdrew, Koshkalda (pro se) engaged in extensive motion practice and abusive discovery in both the main case and the Epson adversary, leading the trustee and Epson to seek pre-filing restrictions.
On February 18, 2020 the bankruptcy court found Koshkalda a vexatious litigant and entered a Case Pre-filing Order (covering the bankruptcy case) and an Adversary Pre-filing Order (covering the Epson adversary).
On appeal the BAP upheld the vexatious-litigant finding but: vacated/remanded the Case Pre-filing Order to remove merits screening and narrow scope (limit to bankruptcy case, exclude notices of appeal) and reversed the Adversary Pre-filing Order as unnecessary post-judgment.

Issues

Issue	Plaintiff's Argument (Koshkalda)	Defendant's Argument (Schoenmann/Epson)	Held
1. Was notice and opportunity to oppose adequate before entry of pre-filing orders?	He lacked notice that the court would rely on ~44 filings beyond the ~11 cited in the motion; page limit hindered response.	The motion and Epson’s joinder put all bankruptcy and adversary filings at issue; page limit did not prejudice him.	BAP: notice and opportunity were adequate; no due-process violation.
2. Did the court compile an adequate record listing the filings that supported a vexatious-litigant order?	Many relied-on filings were not identified in the moving papers, so the record was inadequate.	The Vexatious Litigant Ruling detailed the filings; joinder and motion language put Koshkalda on notice.	BAP: record was adequate for appellate review.
3. Were the bankruptcy court’s findings of frivolousness/harassment and numerosity clearly erroneous?	Many filings were legitimate objections or defensive filings; adversary conduct as a defendant cannot count.	The court reviewed ~44 filings showing repeated frivolous motions and discovery abuse that exhausted estate resources.	BAP: findings were not clearly erroneous; pattern of frivolous and harassing filings was established.
4. Were pre-filing restrictions necessary and narrowly tailored?	Pre-filing orders were unnecessary, overbroad, and impermissibly authorized merits screening; adversary order especially unwarranted post-judgment.	Court needed last-resort measures after lesser sanctions failed and estate resources were being depleted.	BAP: pre-filing remedy was appropriate as a last resort, but orders were overbroad and impermissibly allowed merits screening. Result: Case order VACATED & REMANDED for narrowing (remove merits review, limit scope to bankruptcy case, exclude notices of appeal); Adversary order REVERSED.

Key Cases Cited

Molski v. Evergreen Dynasty Corp., 500 F.3d 1047 (9th Cir. 2007) (frivolous filings and numerosity inform vexatious-litigant orders)
Ringgold-Lockhart v. County of Los Angeles, 761 F.3d 1057 (9th Cir. 2014) (procedural and substantive requirements for pre-filing orders; merits review prohibited)
Dyer v. Lindblade (In re Dyer), 322 F.3d 1178 (9th Cir. 2003) (bankruptcy court’s inherent authority to sanction bad-faith litigation)
Caldwell v. Unified Capital Corp. (In re Rainbow Magazine, Inc.), 77 F.3d 278 (9th Cir. 1996) (bankruptcy courts may sanction vexatious litigation)
De Long v. Hennessey, 912 F.2d 1144 (9th Cir. 1990) (listing cases/motions required for an adequate record supporting pre-filing orders)
Safir v. U.S. Lines, Inc., 792 F.2d 19 (2d Cir. 1986) (factors to evaluate necessity and tailoring of pre-filing restrictions)
Law v. Siegel, 571 U.S. 415 (2014) (bankruptcy court sanctioning authorities)
United States v. Hinkson, 585 F.3d 1247 (9th Cir. 2009) (abuse of discretion standard)
TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915 (9th Cir. 1987) (case-terminating sanctions and inherent equitable power)
Bullard v. Blue Hills Bank, 575 U.S. 496 (2015) (bankruptcy cases aggregate individual controversies; finality considerations)