Palm vs. NB Palmilla LLC

Defendant’s Bankruptcy Discharge

Defendant Johan Frankenberger argues that Plaintiff’s claims allege conduct against Defendant from September 2024 through November 2024. Defendant, however, filed Chapter 7 Bankruptcy on February 26, 2025. (In re Johan Douglas Frankenberger (Case No. 2:25-bk- 11498-BB)). Defendant received a discharge on June 9, 2025. As such, Defendant relies on In re Beezley (9th Cir. 1993) 994 F.2d 1433 for the proposition that all dischargeable debts are discharged in a noasset case even if the debt is not scheduled in the bankruptcy petition. (Id. at 1434). Because all of Plaintiff’s claims against Defendant relate to conduct before February 26, 2025, when Defendant filed bankruptcy, Defendant argues that Plaintiff’s claims against him constitute pre-petition claims that have been discharged.

Plaintiff first opposes by arguing that the court cannot adjudicate an affirmative defense at the pleading stage. However, as Plaintiff acknowledges in its opposition, the question of whether a particular debt is excepted from discharge is a federal question within the exclusive jurisdiction of the Bankruptcy Court. (Grogan v. Garner (1991) 498 U.S. 279, 284.) A state court cannot resolve dischargeability and it lacks jurisdiction to make that determination. (Id.) A demurrer may be made on the grounds that a court lacks jurisdiction of the subject of the causes of action alleged in the pleading. (Civ. Proc. Code § 430.10(a)). As such, Defendant’s demurrer, which challenges whether or not the bankruptcy discharge applies to Plaintiff’s claims appears to be a question as to this court’s jurisdiction and, therefore, a proper ground for demurrer.

Plaintiff then argues that Defendant fails to establish that the discharge applies to Plaintiff’s claims and/or that Plaintiff’s claims are nondischargeable. Defendant argues the opposite—because Plaintiff alleges pre-petition claims, even if Defendant did not schedule Plaintiff’s claims, Defendant’s discharge bars Plaintiff’s claims.

The court finds the concurring opinion in In re Beezley (9th Cir. 1993) 994 F.2d 1433, 1435 to be instructive:

Section 727(b) of the Bankruptcy Code states in part: “Except as provided in section 523 of this title, a discharge under subsection (a) of this section discharges the debtor from all debts that arose before the date of the order for relief under this chapter [i.e., the date of the bankruptcy filing]....” (Id. at 1435).

“The operative word is ‘all’.” (Id. at 1435). “There is nothing in

Section 727 about whether the debt is or is not scheduled.” (Id.) “So far as that section is concerned, a pre-bankruptcy debt is discharged, whether or not it is scheduled.” (Id.). “Thus, unless section 523 [the non-dischargeability statute] dictates otherwise, every prepetition debt becomes discharged under section 727.” (Id.)

“The critical point here is that in most cases filed under Chapter 7 (i.e., no asset, no bar date cases), “the date to file claims is never set and thus § 523(a)(3)(A) is not triggered.” (Id. at 1436). That is, in a no asset, no bar date case, section 523(a)(3)(A) is not implicated “because there can never be a time when it is too late ‘to permit timely filing of a proof of claim.’” (Id.) “In other words, in the typical Chapter 7 case, the debtor's failure to list a creditor does not, in and of itself, make the creditor's claim nondischargeable.” (Id.) “The debt is not discharged.” (Id.) “Scheduling makes no difference to outcome.” (Id.)

Had a debtor listed the debt in the bankruptcy schedules, a creditor would have been required under Bankruptcy Rule 4007(c) to litigate this nondischargeability question “within 60 days following the first date set for the meeting of creditors.” (Id. at 1441). However, where a debtor fails to schedule the debt, Bankruptcy Rule 4007(b) affords the creditor the right to litigate dischargeability outside the normal time limits, again in accordance with section 523(a)(3)(B). (Id.) “In effect, a debtor who fails to list a creditor loses the jurisdictional and time limit protections of Section 523(c) and Rule 4007(c).” (Id.)

In such an instance, after a discharge order has been entered and a bankruptcy proceeding closed, a bankruptcy court could construe a motion to reopen the bankruptcy “as a request under Bankruptcy Rule 4007(b) for a determination of dischargeability—for this, as the court itself recognized, was really what both parties wanted.” (Id. at 1441).

Here, Plaintiff alleges that Defendant, in his individual capacity, made several advances and inappropriate comments to Plaintiff that created a hostile work environment and sexual harassment. (Complaint, ¶ 16- 27). Defendant is alleged to have engaged in this conduct between September 2024 through November 2024. (Id., ¶ 21). Defendant was then transferred to another location where Plaintiff did not work on January 8, 2024. (Id., ¶ 24). Defendant filed bankruptcy on February 26, 2025. On the face of Plaintiff’s complaint, therefore, it appears that Plaintiff’s claims against Defendant revolve around pre-petition acts.

The question, therefore, is whether or not Plaintiff’s claims against Defendant are excepted from discharge under 11 U.S.C. § 523. (See Beezley, supra at p. 1435 (“unless section 523 dictates otherwise, every

prepetition debt becomes discharged under section 727.”)).

Both Defendant and Plaintiff acknowledge that the determination of whether or not a claim is dischargeable is in the exclusive jurisdiction of a bankruptcy court. (Both citing Grogan v. Garner (1991) 498 U.S. 279, 284.) The resolution of whether or not this court has jurisdiction to litigate Plaintiff’s claims, therefore, appears to be within the jurisdiction of the bankruptcy court to decide and not this court.

To the extent that Defendant is right, Defendant may enforce Defendant’s position by filing a motion to reopen the case under 11 USC § 350(b) to enforce the discharge order and enjoin the continuation of this action under 11 U.S.C § 524(a)(2). To the extent that Plaintiff is right, Plaintiff may seek a determination that Plaintiff’s claims against Defendant are non-dischargeable under 11 U.S.C §523 in the bankruptcy court.

This action is, therefore, stayed as against Defendant Johan Frankenberger only, until a determination by a bankruptcy court that this action may proceed in this court, except Plaintiff may obtain discovery from Johan Frankenberger, as a witness, relating to Defendant NB Palmilla, LLC d/b/a Sharkeez’s liability on Plaintiff’s claims.

Within 14 days of this order, the parties are ordered to meet and confer on the logistics of obtaining a bankruptcy court determination on whether or not Defendant’s discharge order covers Plaintiff’s claims and/or whether or not Plaintiff’s claims are nondischargeable.

The court sets a status conference on the status of any bankruptcy rulings for October 20, 2026, at 9:00 a.m. in this Department. The parties shall file a joint status conference statement regarding the status of any bankruptcy proceedings at least 9 court days prior to the status conference.

This action will continue to proceed as against Defendants NB Palmilla, LLC d/b/a Sharkeez.

Moving Defendant to give notice.

4 Sanmina TENTATIVE RULING: Corporation vs. Gemayel Plaintiff/Cross-Defendant Sanmina Corporation’s demurrer to Defendant/Cross-Complainant George Gemayel’s cross-complaint is CONTINUED to August 12, 2026, at 9:00 a.m., in this Department.