Gregory Kelly v. Jody Marie Cuomo

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GREGORY KELLY,
Plaintiff-Appellee,
v.
JODY MARIE CUOMO,
Defendant-Appellant.
and
FRANK SILVER, M.D.,
Respondent,
No. 22-16305
D.C. No.
2:18-cv-00923-JAD-VCF
MEMORANDUM*
Appeal from the United States District Court
for the District of Nevada
Jennifer A. Dorsey, District Judge, Presiding
Submitted May 18, 2023**
Phoenix, Arizona
Before: NGUYEN and COLLINS, Circuit Judges, and KORMAN,*** District
Judge.
Concurrence by Judge COLLINS.
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
*** The Honorable Edward R. Korman, United States District Judge for
the Eastern District of New York, sitting by designation.
FILED
AUG 24 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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Jody Marie Cuomo filed a Federal Rule of Civil Procedure 60(b)(4) motion
seeking to void the Bankruptcy Court’s judgment that she owed Gregory Kelly for
a debt that was nondischargeable under 11 U.S.C. § 523(a)(2)(A) because the loan
was obtained via false pretenses, false representations, or actual fraud. Cuomo
argues that Kelly, as an assignee, lacked standing to pursue the § 523(a)(2)(A)
action because Nevada does not permit the assignment of fraud claims and thereby
contends that the Bankruptcy Court lacked jurisdiction to enter the judgment. The
district court denied Cuomo’s motion. We affirm.
Under Rule 60(b)(4), a judgment is void because of a jurisdictional defect
only in the rare case in which the court that entered it lacked any arguable basis for
exercising jurisdiction. See United Student Aid Funds, Inc. v. Espinosa, 559 U.S.
260, 271 (2010); Hoffmann v. Pulido, 928 F.3d 1147, 1151 (9th Cir. 2019). In this
case, the district court properly denied Cuomo’s Rule 60(b)(4) motion because the
Bankruptcy Court had two arguable bases for exercising jurisdiction over Kelly’s
§ 523(a)(2)(A) action.
First, although Nevada prohibits the assignment of most fraud claims, see
Reynolds v. Tufenkjian, 461 P.3d 147, 152 (Nev. 2020), it is uncertain whether the
Nevada courts would extend that rule to this context because Kelly sought to avoid
discharge in order to recover purely pecuniary losses. Such an action does not
clearly implicate the policy interests that underlie Nevada’s prohibition on the

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assignment of fraud claims. See id. at 152–53. It instead more closely resembles
the types of claims that Nevada courts have held are assignable. See id. at 153–54
(permitting assignment of a negligent-misrepresentation claim because it “is more
akin to a claim seeking recovery for a loss of property”); Superpumper, Inc. v.
Leonard, 495 P.3d 101, 106 n.1 (Nev. 2021) (allowing assignment of a fraudulent-
conveyance claim). Nevada law therefore may not prohibit the assignment at issue
here.
Second, even if Nevada did restrict assignment in this context, it is possible
that federal interests would override such a prohibition. Although the Bankruptcy
Code generally accepts that “[p]roperty interests are created and defined by state
law,” the Supreme Court has recognized that “some federal interest [may] require[]
a different result” in certain cases. Butner v. United States, 440 U.S. 48, 55 (1979).
One interest that animates the Bankruptcy Code, and § 523(a)(2)(A) in particular,
is permitting honest debtors to achieve a fresh start while not allowing perpetrators
of fraud to shirk their obligations. See Ragsdale v. Haller, 780 F.2d 794, 797 (9th
Cir. 1986). Our court recently relied on that federal interest in In re Boyajian, 564
F.3d 1088 (9th Cir. 2009), when holding that the closely related § 523(a)(2)(B)
claims generally are assignable under federal law. Id. at 1092–93. It is possible
that this same federal interest would justify overriding any Nevada restriction on
the assignment of § 523(a)(2)(A) actions because such a restriction would afford

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an undue windfall to perpetrators of fraud whenever a debtor assigns his or her
obligation to a third party.
Because the Bankruptcy Court had an arguable basis for jurisdiction under
either of these theories, the district court was right to deny Cuomo’s motion to set
aside the judgment.
AFFIRMED.

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Kelly v. Cuomo, No. 22-16305
COLLINS, Circuit Judge, concurring in the judgment:
I agree with the majority that the district court properly denied Appellant
Jody Marie Cuomo’s motion for relief under Federal Rule of Civil Procedure
60(b)(4) from the bankruptcy court’s judgment, but I reach that conclusion on
somewhat different grounds. I therefore concur in the judgment.
“Lawsuits by assignees, including assignees for collection only, are ‘cases
and controversies of the sort traditionally amenable to, and resolved by, the judicial
process.’” Sprint Commc’ns Co. v. APCC Servs., Inc., 554 U.S. 269, 285 (2008)
(citation omitted). The theory of Cuomo’s Rule 60(b)(4) motion is that, despite
this general rule, Kelly lacked Article III standing in the bankruptcy court because
he was not a valid assignee under Nevada law. That is true, according to Cuomo,
because the relief sought in Kelly’s adversary complaint in the bankruptcy court
rested on fraud, but Nevada law prohibits assignment of fraud claims. I need not
decide whether every step of this syllogism is correct, because its starting
premise—i.e., that the bankruptcy court adversary complaint asserted a fraud claim
under Nevada law—is questionable. Cuomo therefore has not satisfied the high
standard for setting aside a judgment for lack of jurisdiction under Rule 60(b)(4).
See United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 271 (2010) (holding
that the movant must show that “the court that rendered judgment lacked even an
FILED
AUG 24 2023
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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‘arguable basis’ for jurisdiction” (citation omitted)).
The debt in question—a loan made pursuant to a written agreement that
Cuomo signed with lender Patricia Ritchie—was assigned to Appellee Gregory
Kelly in 2011. The bankruptcy court, in rendering judgment, concluded that
(1) the loan was “due and owing” in the amount of $96,000, plus interest; and
(2) the “amount of the ordered judgment” on the loan “is not dischargeable under
Section 523(a)(2)” of the Bankruptcy Code. Although the judgment does not itself
specify which subparagraph of § 523(a)(2) was invoked by the bankruptcy court, it
is undisputed that the bankruptcy court relied on § 523(a)(2)(A). It is well-settled
that, although the underlying debt sought to be held nondischargeable is governed
by state law, the issue of non-dischargeability for fraud under § 523(a)(2)(A) is
governed by federal common law and not state law. See Field v. Mans, 516 U.S.
59, 69–70 & n.9 (1995). Viewed in this light, the bankruptcy court judgment can
be read as concluding that (1) a contract debt was due and owing (under Nevada
law); and (2) the contract debt was not dischargeable due to fraud as defined under
federal law. Cuomo has not made the extraordinarily high showing that it is not
even “arguable” to read the judgment in this way. And once the judgment is read
this way, Cuomo’s argument falls apart: the question whether federal law chooses
not to discharge, for fraud, a contract debt that was properly assigned under state
law is distinct from whether an underlying fraud claim under state law is

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assignable. These points are at least arguable, and so Cuomo did not carry her very
high burden.
Accordingly, I concur in the judgment affirming the district court’s order
denying relief under Rule 60(b)(4).

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