Rosen et al v. Cook

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UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
In re
CHRISTOPHER D. COOK,
Debtor.
STEPHANIE ROSEN and MIKE ROSEN,
Plaintiffs,
vs.
CHRISTOPHER D. COOK,
Defendant.
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Case No. 11-30705 TEC
Chapter 7
Adv. Proc. No. 11-3115 TC
MEMORANDUM RE RULE 12(b)(6) MOTION TO DISMISS
On October 21, 2011, the court held a hearing on Defendant’s
Rule 12(b)(6) Motion to Dismiss. 	Lawrence Miller appeared for
Plaintiffs. 	Raymond Miller appeared for Defendant. 	Upon due
consideration, and for the reasons stated on the record at the
hearing, the court hereby resolves the motion as follows:
(1) The motion to dismiss should be denied to the extent that
it is based on the argument that Plaintiffs have failed to timely
file an amended complaint, because Plaintiffs filed the original
-1-	MEMORANDUM RE MOTION TO DISMISS
Signed and Filed: November 04, 2011
________________________________________
THOMAS E. CARLSON
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
November 07, 2011
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 11-03115 Doc# 23 Filed: 11/04/11 Entered: 11/07/11 15:04:01 Page 1 of 4

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complaint within 60 days of the initial section 341 meeting, 1 and
because the filing of the amended complaint one day late is not
material. 	See Fed. R. Bankr. Pro. 4007(c).
(2) The motion to dismiss Plaintiffs’ fifth, sixth, seventh,
and eighth claims for relief under 11 U.S.C. §§ 727(a)(2), (a)(3),
(a)(4) based on Plaintiffs’ lack of standing should be denied,
because a creditor may object to the granting of a discharge under
section 727(a). 	See 11 U.S.C. § 727(c)(1).
(3) The motion to dismiss Plaintiffs’ first claim for relief
under 11 U.S.C. § 523(a)(2)(A) should be denied, because the
complaint alleges: (1) a misrepresentation, a fraudulent omission,
or deceptive conduct by the debtor; (2) knowledge of the falsity or
deceptiveness of debtor’s statement or conduct; (3) intent to
deceive; (4) justifiable reliance by the creditor on the debtor’s
statement or conduct; and (5) damage to the creditor proximately
caused by its reliance on the debtor’s statement or conduct.
Harmon v. Kobrin (In re Harmon), 250 F.3d 1240, 1246 (9th Cir.
2001).
(4) The motion to dismiss Plaintiffs’ fourth claim for relief
under 11 U.S.C. § 523(a)(6) should be denied, because the complaint
alleges that Defendant subjectively intended to injure Plaintiffs
by allegedly: inducing Plaintiffs to stop making payments on a
promissory note; initiating judicial foreclosure proceedings
although Defendant was not entitled to a deficiency judgment; and
causing Plaintiffs to spend $75,000 in attorney fees defending the
1 The first meeting of creditors was scheduled for April 6,
2011. 	Plaintiffs’ filed their nondischageability complaint on June
6, 2011.
-2-	MEMORANDUM RE MOTION TO DISMISS
Case: 11-03115 Doc# 23 Filed: 11/04/11 Entered: 11/07/11 15:04:01 Page 2 of 4

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action. 	Carillo v. Su (In re Su), 290 F.3d 1140, 1143-45 (9th Cir.
2002).
(5) The motion to dismiss Plaintiffs’ fifth claim for relief
under 11 U.S.C. § 727(a)(2)(A) should be denied, because the
complaint alleges: (1) transfers of real property; (2) made by the
debtor; (3) within one year of the petition date; and (4) with the
intent to hinder, delay, or defraud creditors. 	See 11 U.S.C. §
727(a)(2)(A).
(6) The motion to dismiss Plaintiffs’ sixth claim for relief
under 11 U.S.C. § 727(a)(3) should be denied, because the complaint
alleges Defendant failed to keep or preserve any records related to
business entities owed or controlled by Defendant. 	See 11 U.S.C. §
727(a)(3).
(7) The motion to dismiss Plaintiffs’ seventh claim for relief
under 11 U.S.C. § 727(a)(4)(A) should be denied, to the extent
Defendant failed to schedule property or entities in which he
possessed an ownership interest, because the complaint alleges
Defendant: (1) had an ownership interest in specific assets; (2)
failed to list specific assets on his bankruptcy schedules; and (3)
knowingly and fraudulently made such omissions. 	See 11 U.S.C. §
727(a)(4)(A).
(8) The motion to dismiss Plaintiffs’ seventh claim for relief
under 11 U.S.C. § 727(a)(4)(A) should be granted without leave to
amend: (i) to the extent the claim alleges that Defendant failed to
schedule property held by entities he owned, because Defendant had
no duty to schedule the property of third parties; and (ii) to the
extent the claim is based on Defendant’s undervaluation of assets
in his bankruptcy schedules, because the complaint does not
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Case: 11-03115 Doc# 23 Filed: 11/04/11 Entered: 11/07/11 15:04:01 Page 3 of 4

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allege with specificity the assets that were undervalued or the
real value of those assets. 	See Fed. R. Bankr. Pro. 7009; Fed. R.
Civ. Pro. 9(b).
(9) The motion to dismiss Plaintiffs’ eighth claim for relief
under 11 U.S.C. § 727(a)(4)(D) should be denied, because the
complaint alleges that Defendant: (1) had an ownership interest in
specific business entities; (2) failed to keep or preserve any
records related to these business entities; and/or (3) knowingly
and fraudulently withheld these records from the chapter 7 trustee.
See 11 U.S.C. § 727(a)(4)(D).
**END OF MEMORANDUM**
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Case: 11-03115 Doc# 23 Filed: 11/04/11 Entered: 11/07/11 15:04:01 Page 4 of 4