In re Mardiros Haig Mihranian, Debtor.
Haig Leo Mihranian; Michael Mihranian; Susan Chobanian; Takouhie Bartamian; Medical Clinic and Surgical Specialties of Glendale, Inc., Appellees. Sam S. Leslie, Chapter 7 Trustee, Appellant,
and Submitted August 13, 2019 Pasadena, California
from the Ninth Circuit Bankruptcy Appellate Agency No.
17-1048 Panel Kurtz, Spraker, and Alston, Bankruptcy Judges,
M. Aronson (argued), Law Office of Robert M. Aronson APC, Los
Angeles, California, for Appellant.
B. Golubchik (argued) and John-Patrick M. Fritz, Levene Neale
Bender Yoo & Brill LLP, Los Angeles, California, for
Before: Mary M. Schroeder and Susan P. Graber, Circuit
Judges, and Michael H. Watson, [*] District Judge.
panel affirmed a decision of the Bankruptcy Appellate Panel
affirming the bankruptcy court's denial of a Chapter 7
trustee's motion to substantively consolidate a
debtor's estate with the estates of various non-debtors.
panel held that a party moving for substantive consolidation
must give notice of the motion to creditors of a putative
consolidated non-debtor. Because no such notice was given,
the panel affirmed.
WATSON, DISTRICT JUDGE
Leslie, the Chapter 7 Trustee, appeals the decision of the
Bankruptcy Appellate Panel for the Ninth Circuit
("BAP") affirming the bankruptcy court's denial
of a motion to substantively consolidate ("SubCon
Motion") Debtor Mardiros Mihranian's estate with the
estates of various non-debtors. We affirm.
the Debtor, the pertinent parties in this case, whom we
collectively refer to as the "Non-Debtors," include
Debtor's ex-wife, Susan Chobanian; Debtor's and
Susan's two sons, Michael and Haig Mihranian;
Debtor's medical business, Medical Clinic and Surgical
Specialties of Glendale, Inc. ("MCSSG"); and
MCSSG's long-time office manager, Takouhie Bartamian. Two
years after Debtor initiated his bankruptcy case, Trustee
filed separate adversary actions to recover fraudulent
transfers allegedly made to Susan, Haig, Michael, and
Bartamian. Adv. No. 2:15-ap-01667-BR (Susan); Adv. No.
2:15-ap-01668-BR (Haig); Adv. No. 2:15-ap-01666-BR (Michael);
Adv. No. 2:15-ap-01665-BR (Bartamian). While the adversary
actions were pending, Trustee filed the SubCon Motion in the
bankruptcy action, seeking to substantively consolidate
Debtor's estates with the estates of Susan, Haig,
Michael, Bartamian, and MCSSG. Essentially, Trustee sought
the same relief-recovery of Debtor's assets that
allegedly were kept from judgment creditors through
fraudulent transfers-in both the adversary actions and
through the SubCon Motion. After permitting Trustee to amend
the complaints in the adversary actions three times, the
bankruptcy court granted the adversary defendants'
motions to dismiss for failure to establish that Debtor was
the initial transferor of the alleged fraudulent transfers,
and those dismissals were upheld on appeal.
the bankruptcy court denied the SubCon Motion, providing its
reasoning on the record at the hearing. During the hearing,
the bankruptcy court asked Trustee's counsel several
times whether he had given notice of the SubCon Motion to
Non-Debtors' creditors. Additionally, the bankruptcy
court concluded that the information Trustee needed to
disentangle Debtor's assets from MCSSG's or
Susan's assets was likely available through proper
discovery, which Debtor had not sought to obtain until after
the SubCon Motion was filed. Accordingly, the bankruptcy
court concluded that Trustee had not proved that Debtor's
assets were entangled with Non-Debtors' assets to such an
extent as would justify substantive consolidation.
appealed the denial to the BAP, which affirmed because
Trustee failed to serve the SubCon Motion on Non-Debtors'
creditors. Leslie v. Mihranian (In re Mihranian),
No. CC-17-1048-KuSA, 2017 WL 6003345, at *1 (B.A.P. 9th Cir.
Dec. 4, 2017). Trustee appeals to us, arguing that the law
does not require a moving party to give notice of a SubCon
Motion to a putative consolidated ...