Case Explained: IN RE: KOI DESIGN LLC, ET AL V. A. MASTROIANNI, ET AL

Court: United States Court of Appeals for the Ninth Circuit Filed: 2026-08-06 Docket: 2:19-cv-07154-TJH The Ninth Circuit affirmed the district court’s entry of a $6,529,950.86 default judgment against attorney A. Douglas Mastroianni following his nearly three-year failure to respond to Koi Design LLC’s adversary proceeding alleging legal malpractice. The court reviewed the jurisdictional question de novo and applied an abuse-of-discretion standard to the district court’s decision to retain jurisdiction after the underlying bankruptcy case was closed, as well as its denial of Mastroianni’s motion to set aside the default under Federal Rule of Civil Procedure 55(c). Regarding subject-matter jurisdiction, the court held that the proceeding was “related to” Koi’s Chapter 11 bankruptcy case because the outcome could conceivably affect the bankruptcy estate, satisfying the standard under 28 U.S.C. § 1334(b). The court further ruled that the district court did not abuse its discretion in retaining jurisdiction after the bankruptcy case closed, finding that the factors of economy, convenience, fairness, and comity favored keeping the case in federal court given the eight years of prior litigation and the risk of inconsistent outcomes. On the merits of the default judgment, the court applied the disjunctive three-factor test from *Franchise Holding II, LLC v. Huntington Restaurants Grp., Inc.*, which considers whether the defendant engaged in culpable conduct, lacked a meritorious defense, or would cause prejudice to the plaintiff if the default were set aside. The court found that Mastroianni was culpable for failing to respond after proper service by mail, which is permitted under Federal Rule of Bankruptcy Procedure 7004(b). Additionally, the court determined Mastroianni lacked a meritorious defense; his proffered defenses were either previously rejected or raised for the first time on appeal and thus waived. The affirmance results in the default judgment standing against Mastroianni, while his pending motions for summary reversal are denied as moot. Do It For The Case Law is a news reporting service. Nothing in this episode constitutes legal advice.