In re: Mardiros Haig Mihranian, CC-16-1379-KuFTa

Background

Chapter 7 trustee Sam Leslie sued Michael Mihranian to avoid and recover alleged fraudulent transfers that Leslie asserts were diverted from a medical practice to family/third parties. Leslie pursued claims under § 544 and California fraudulent transfer law.
The debtor, Mardiros Mihranian, practiced medicine through a professional corporation (MCSSG); complaints alleged funds were diverted from the shared medical practice but did not clearly distinguish corporate receipts from individual receipts.
Leslie filed four complaints; the bankruptcy court twice ordered greater specificity about each transfer (source, transferor, date, amount).
The third amended complaint added an exhibit listing dates and deposit amounts but did not identify the source or transferor for each item or adequately allege why corporate funds should be treated as the debtor’s property.
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 denied further leave to amend; Leslie appealed.
The BAP affirmed, concluding Leslie failed to plead facts showing the funds were the debtor’s (not MCSSG’s) and that alter-ego/reverse-piercing theories were not adequately or legally available to convert corporate receipts into the debtor’s property.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether complaint plausibly alleged the debtor had a pre-transfer property interest in the funds	Leslie asserted funds were diverted from the couple’s shared medical practice and thus were the debtor’s	Michael argued the funds belonged to MCSSG (the corporation) or others; complaint lacked identification of transferor/source	Held: Complaint failed to plausibly allege the debtor’s interest; dismissal affirmed
Whether alter-ego / veil-piercing could treat MCSSG funds as debtor’s property	Leslie argued pleadings and facts supported piercing the corporate veil to treat corporate receipts as debtor’s assets	Michael contended veil-piercing was not sufficiently alleged and reverse/outside piercing is disfavored under CA law	Held: Alter-ego was inadequately pleaded and reverse-piercing is not an appropriate theory here; does not save the claims
Whether the bankruptcy court required impermissibly heightened specificity beyond Rules 8/9(b)	Leslie contended the court demanded more than federal pleading rules require	Michael defended the court’s requirement as necessary to identify transferor/source given the corporate context	Held: Court’s specificity instruction was reasonable and appropriate to show debtor’s property interest; no reversible error
Whether dismissal with prejudice (no leave to amend) was an abuse of discretion	Leslie urged another chance to amend	Michael emphasized multiple prior amendments and Leslie’s access to Rule 2004 discovery, arguing futility	Held: Denial of further leave was not an abuse of discretion given repeated failures and available discovery; dismissal with prejudice affirmed

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (2009) (facial plausibility standard for complaints)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility and pleading requirements)
Merritt v. Countrywide Fin. Corp., 759 F.3d 1023 (9th Cir. 2014) (application of Rule 8(a) plausibility standard in Ninth Circuit)
Starr v. Baca, 652 F.3d 1202 (9th Cir. 2011) (limits on presumption of truth and pleading standards)
Gonzalez v. Planned Parenthood of L.A., 759 F.3d 1112 (9th Cir. 2014) (abuse of discretion review for denial of leave to amend)
Sonora Diamond Corp. v. Superior Court, 83 Cal. App. 4th 523 (2000) (corporate entity treated as separate from owners)
Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290 (1985) (elements for piercing the corporate veil)
Postal Instant Press, Inc. v. Kaswa Corp., 162 Cal. App. 4th 1510 (2008) (discussing limits on reverse/outside veil-piercing)
Levitt v. Yelp! Inc., 765 F.3d 1123 (9th Cir. 2014) (de novo review of dismissals for failure to state a claim)