Unreported / Non-Citable
Background
Tower Park Properties, a reorganized debtor, sued Fiduciary Trust International of California over events surrounding a bankruptcy settlement with the Mark Hughes Family Trust. Tower Park alleged breach of contract and breach of the implied covenant, claiming Fiduciary Trust’s objections and conduct caused losses connected to the settlement and a later appeal.
The bankruptcy court dismissed the amended complaint and denied another opportunity to amend. The district court affirmed. Tower Park then asked the Ninth Circuit to revive the action, arguing that Fiduciary Trust had caused Alexander Hughes to oppose and appeal approval of the settlement.
The Court’s Holding
The Ninth Circuit affirmed because the complaint did not plausibly allege causation, an element of both California contract theories. Fiduciary Trust’s objections could not have caused the claimed damage because the bankruptcy court overruled them. Conclusory allegations that the company caused Hughes to appeal were not entitled to a presumption of truth under federal pleading standards.
Worse for Tower Park, the concrete facts pleaded pointed to Hughes himself as the source of the alleged loss. A plaintiff may plead itself out of court by adding factual detail inconsistent with its own causation theory. The panel also declined to consider post-February 2013 conduct because Tower Park had not preserved that theory before the district court.
Denial of further leave to amend was within the bankruptcy court’s broad discretion. Tower Park had already received two opportunities to amend and used one, yet did not explain what additional facts would cure the defect.
Key Takeaways
- California contract and implied-covenant claims require plausible facts connecting the defendant’s conduct to the loss.
- An overruled objection ordinarily cannot be blamed for an outcome that occurred through a separate actor’s appeal.
- Concrete allegations that contradict a legal conclusion can plead a plaintiff out of its own claim.
- Arguments not presented during the intermediate district-court bankruptcy appeal may be forfeited in the Ninth Circuit.
- After prior amendment opportunities, a plaintiff must identify a specific, viable cure to justify another amendment.
Why It Matters
The unpublished decision is a useful pleading lesson for California business and bankruptcy litigators. A complaint should trace the causal chain actor by actor and explain how the defendant’s conduct produced recoverable damage. Grouped accusations and labels such as “caused” will not substitute for facts, especially where the complaint identifies an independent decisionmaker.
Appellate counsel should also preserve every material time period and theory at each level of a bankruptcy appeal. Waiting until the Ninth Circuit to rely on later conduct can leave an otherwise plausible argument unreviewed.