Steven D. Molasky v. W. Leslie Sully, Jr.

FILED

NOT FOR PUBLICATION SEP 13 2012

MOLLY C. DWYER, CLERK

UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS

FOR THE NINTH CIRCUIT

In the Matter of: STEVEN D. MOLASKY, No. 11-15059

Debtor, D.C. No. 2:10-cv-00779-JCM-

PAL

STEVEN D. MOLASKY,

MEMORANDUM *

Appellant,

v.

W. LESLIE SULLY, JR., CHTD.,

PROFIT SHARING PLAN,

Appellee.

Appeal from the United States District Court for the District of Nevada James C. Mahan, District Judge, Presiding

Argued April 20, 2012 Re-Submitted September 11, 2012 San Francisco, California

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. Before: NOONAN and MURGUIA, Circuit Judges, and TIMLIN, Senior District Judge.**

Steven D. Molasky (“Molasky”) filed a voluntary bankruptcy petition in

which One Cap Holding Corporation (“OneCap”) commenced an adversary

proceeding under 11 U.S.C. § 523. The W. Leslie Sully, Jr., Chtd. Profit Sharing

Plan (“Sully”) intervened in the § 523 complaint. After OneCap was dismissed for

failure to prosecute, the bankruptcy court dismissed Sully.…

Dissenting opinion filed by Circuit Judge MURGUIA.

MEMORANDUM **

Steven D. Molasky (“Molasky”) filed a voluntary bankruptcy petition in which One Cap Holding Corporation (“OneCap”) commenced an adversary proceeding under 11 U.S.C. § 523 . The W. Leslie Sully, Jr., Chtd. Profit Sharing Plan (“Sully”) intervened in the § 523 complaint. After OneCap was dismissed for failure to prosecute, the bankruptcy court dismissed Sully. The district court reversed the bankruptcy court’s dismissal of Sully, finding Sully to be a party plaintiff to the § 523 complaint. We vacate the district court’s order and remand to the bankruptcy court for proceedings consistent with the discussion below.

We proceed assuming that Sully was originally an intervenor and not a party plaintiff to the § 523 complaint. An inter-venor can proceed after dismissal of the original party if 1) there is an independent basis for jurisdiction, and 2) unnecessary delay would otherwise result. See Benavidez v. Eu, 34 F.3d 825, 830 (9th Cir.1994). The bankruptcy court summarily found no independent basis for jurisdiction for Sully *807 because Sully failed to file a timely § 523 complaint. The bankruptcy court erred as a…

dissenting.

I respectfully dissent. Sully failed to file an adversary action before the applicable statute of limitations ran. Rather than seek an extension of the statute of limitations, Sully reached an agreement with the debtor, Molasky, to intervene in OneCap’s case. Following the dismissal of OneCap, the bankruptcy court properly determined that Sully could not proceed, since its claims were time barred. A court can only retain jurisdiction over an intervenor’s claims after dismissal of the original plaintiff if “the court can avoid the senseless delay and expense of a new suit, which at long last will merely bring the parties to the point where they now are.” Benavidez v. Eu, 34 F.3d 825, 830 (9th Cir.1994) (internal quotations omitted). Although Sully intervened by stipulation before another intervenor was dismissed, the stipulation did not explicitly waive the statute of limitations. Sully does not pass the Bena-videz test because dismissing its time-barred claims will not simply postpone a new suit from being brought.

Sully does not claim the bankruptcy court abused its discretion in failing to extend the statute of limitations, nor does it seek the “equitable” remedy…