In re: Mardiros Haig Mihranian, CC-16-1380-KuFTa

Background

Chapter 7 trustee Sam Leslie sued to avoid and recover alleged fraudulent transfers (§§ 544, 548; Cal. Civ. Code) that he alleged were diverted from debtor Mardiros Mihranian’s and his then-wife Susan Chobanian’s shared medical practice to third parties including Susan.
The alleged scheme involved approximately $2 million of shuttled payments in earlier pleadings; the operative (third amended) complaint narrowed the alleged fraudulent transfers to $319,981.58 and attached two exhibits listing dates and deposit amounts but not the transferors or sources.
The bankruptcy court twice ordered Leslie to plead with greater specificity (source, transferor, dates, amounts); Leslie filed four complaints in total and the third amended complaint still did not identify who actually held or transferred the funds (debtor, corporation MCSSG, or others).
The bankruptcy court dismissed the third amended complaint with prejudice for failure to plausibly allege that the debtor had a pre-transfer property interest in the funds and for failure to comply with the court’s specificity order; Leslie appealed.
The BAP affirmed, holding Leslie did not plausibly plead that funds belonged to Mihranian rather than MCSSG (a separate professional corporation), and that Leslie’s alter-ego allegations were insufficient and could not be used to ‘‘reverse-pierce’’ the corporate veil to treat corporate funds as the debtor’s.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did Leslie plead that the debtor had a pre-transfer property interest in the funds?	Leslie argued transfers were diverted from the couple’s shared practice and funds should be treated as debtor’s (including via alter-ego).	Susan argued the funds were corporate (MCSSG) or hers and complaint failed to identify transferor/source.	Held: Complaint failed to plausibly allege Mihranian’s pre-transfer interest; funds plausibly belong to MCSSG absent adequate alter-ego facts.
Pleading sufficiency under Civil Rules 8(a) and 9(b)	Leslie contended he met pleading standards and exhibits supplied dates/amounts.	Susan argued pleadings were conclusory and lacked the who/what/when/where/how required (and court had ordered specificity).	Held: Under 8(a) (and overlapping 9(b) concerns), allegations were conclusory and failed to give fair notice or plausibly show debtor’s property interest.
Did the bankruptcy court improperly require greater specificity than the rules permit?	Leslie claimed the court imposed an unduly heightened specificity requirement.	Susan defended the court’s order as reasonable to determine source/transferor and thus the debtor’s interest.	Held: The specificity requirement was appropriate and reasonably directed to the core deficiency: identifying the source/transferor so the court could infer debtor ownership.
Was dismissal without leave to amend an abuse of discretion?	Leslie sought leave to amend, arguing previous pleading efforts and discovery.	Susan noted Leslie had multiple chances, extensive Rule 2004 discovery, and still failed to plead plausibly.	Held: No abuse of discretion — after four attempts and ample discovery, amendment would be futile; dismissal with prejudice affirmed.

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for pleadings)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must be plausible, not conclusory)
Levitt v. Yelp! Inc., 765 F.3d 1123 (9th Cir.) (de novo review of Rule 12(b)(6) dismissals)
Starr v. Baca, 652 F.3d 1202 (9th Cir.) (clarifying Rule 8(a) fact-pleading requirements)
Gaughan v. Edward Dittlof Revocable Tr. (In re Costas), 555 F.3d 790 (9th Cir.) (fraudulent-transfer property-interest requirement)
Sonora Diamond Corp. v. Superior Court, 83 Cal. App. 4th 523 (2000) (corporate separateness and limited liability)
Postal Instant Press, Inc. v. Kaswa Corp., 162 Cal. App. 4th 1510 (2008) (limitations on reverse/outside veil-piercing)
Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290 (1985) (elements and cautious application of alter-ego doctrine)
Gonzalez v. Planned Parenthood of L.A., 759 F.3d 1112 (9th Cir.) (denial of leave to amend reviewed for abuse of discretion)