Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-canb-5_16-ap-05071/USCOURTS-canb-5_16-ap-05071-0/pdf.json

Parties Involved:
First Korean Christian Church of San Jose
Plaintiff
Dong Wuk Kim
Defendant
Myung Il Youm
Defendant
Korean Evangelical Church of America
Defendant

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UNITED STATES BANKRUPTCY COURT

NORTHERN DISTRICT OF CALIFORNIA

In re ) Bankruptcy Case

 ) No. 15-52857 DM

FIRST KOREAN CHRISTIAN CHURCH OF )

SAN JOSE(“FKCC”), ) Chapter 11

)

Debtor. ) 

___________________________________) 

FIRST KOREAN CHRISTIAN CHURCH OF ) Adversary Proceeding

SAN JOSE, ) No. 16-5071

 )

 Plaintiff, )

v. )

)

DONG WUK KIM, MYUNG IL YOUM, and )

KOREAN EVANGELICAL CHURCH OF AMER. )

 )

 Defendants. )

__________________________________ )

FIRST EVANGELICAL CHURCH OF )

AMERICA, )

)

 Counter-Plaintiff, )

)

v. )

)

DONG WUK KIM, MYUNG IL YOUM, and )

FKCC, )

_______________Counter-Defendants ) 

MEMORANDUM DECISION ON PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND

DEFENDANTS’ MOTION TO DISMISS

On January 25, 2017, this court held a hearing on the motion

for summary judgment (“MSJ”) filed by debtor and plaintiff First

Korean Christian Church of San Jose (“FKCC” or “Debtor”), a nonprofit religious California corporation, and the motions of the

individual defendants Dong Wuk Kim (“DW Kim”) and Myung Il Youm

Signed and Filed: February 21, 2017

________________________________________

DENNIS MONTALI

U.S. Bankruptcy Judge

Entered on Docket 

February 21, 2017

EDWARD J. EMMONS, CLERK 

U.S. BANKRUPTCY COURT 

NORTHERN DISTRICT OF CALIFORNIA

Case: 16-05071 Doc# 50 Filed: 02/21/17 Entered: 02/21/17 15:32:56 Page 1 of 14
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(collectively, “the Kim Defendants”) to dismiss this adversary

proceeding (“MTD AP”) and to dismiss the counterclaim filed by

Korean Evangelical Church of American (“KECA”) against them (“MTD

CC”) and Debtor.1 For the reasons set forth below, the court will

grant the MSJ and deny the MTD AP and the MTD CC.2

I. BACKGROUND

FKCC filed the underlying chapter 11 bankruptcy case (the

“Main Case”) on September 3, 2015, and continues as debtor in

possession. FKCC and KECA were co-borrowers on a loan secured by

church property located in Sunnyvale, CA (the “Property”). As of

the petition date, BBCN Bank held the underlying note and a valid

and perfected deed of trust lien on the Property. BBCN Bank filed

a motion for relief from stay (“MRS”) on February 24, 2016; the

Kim Defendants, identifying themselves as the True FKCC, filed a

motion to dismiss the bankruptcy case (“MTD BK”) two days later.

At a hearing on March 29, 2016, the court indicated that it

would deny the MTD BK, holding that Debtor, through its current

pastor, had the authority to file the chapter 11 petition and that

DW Kim did not have authority to act on behalf of FKCC. The order

denying the MTD BK was entered on April 4, 2016, and the Kim

Defendants filed a notice of appeal on April 13, 2016 (the

“Appeal”). The Appeal is currently pending in the U.S. District

1

Even though KECA was nominally identified as a defendant by

FKCC and FKCC was nominally identified as a counter-defendant by

KECA, their interests in this litigation align with each other, as

discussed below.

2

The court will make no ruling on the motions to remand Adv.

Proc. 15-5139 and Adv. Proc. 15-5151 (the “Related APs”) that were

on calendar at the same time.

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Court for the Northern District of California as Case No. 16-cv01959-EJD. A motion to dismiss the Appeal as interlocutory is

pending in that matter.

The court continued the hearing on BBCN Bank’s MRS to allow

FKCC an opportunity to sell the Property for the benefit of the

estate. FKCC thereafter obtained an order authorizing it to hire

real estate brokers and, in July 2016, filed a motion to sell the

Property free and clear of liens. The court entered an order on

September 14, 2016, authorizing a sale of the Property for

$6,650,000 and providing for payment in full of the BBCN Bank debt

as well as all secured tax liens. The sale has closed. 

Pursuant to the sale order, the various and conflicting

interests asserted by Debtor, the Kim Defendants and KECA in the

Property were transferred to the net proceeds of the sale (the

“Net Funds”). The Net Funds were deposited into an interestbearing joint account, disbursement from which requires the

written consent of all parties or a judicial determination of the

parties’ respective rights in the funds. See Order Granting

Motion to Sell Real Property Free and Clear of Interests Combined

with Motion to Sell Real Property at Docket No. 117 in the Main

Case.

On October 7, 2016, Debtor filed this adversary proceeding,

alleging that it and KECA owned the Property and thus now own the

Net Proceeds. KECA filed an answer seeking the same relief, and

asserting the counterclaim against the Kim Defendants. Both

parties requested that the Net Funds be released to the estate and

to KECA. The Kim Defendants filed the MTD AP on December 10,

2016, and the MTD CC on December 14, 2017. Debtor filed its MSJ

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on December 27, 2016. Because Debtor has established as a matter

of law and undisputed fact that the estate and KECA are entitled

to the Net Funds, the court is granting the MSJ and denying the

MTD AP and the MTD CC.

II. JURISDICTION

The Kim Defendants erroneously contend that this court lacks

jurisdiction to resolve the dispute as to the ownership of the Net

Funds. This is a dispute over an identified sum of money in which

the Debtor claims ownership. The court has jurisdiction and

constitutional authority to determine whether identified property

constitutes property of the estate under 11 U.S.C. § 541(a). See,

e.g. Waldron v. F.D.I.C. (In re Venture Financial Group, Inc.),

558 B.R. 386 (Bankr. W.D. Wash. 2016); see also Velo Holdings,

Inc. v. Paymentech, LLC (In re Velo Holdings, Inc.), 475 B.R. 367,

387–88 (Bankr. S.D.N.Y. 2012) (“[t]he determination whether

something is property of the estate is a core matter”) (collecting

cases). In addition, turnover actions are core pursuant to 28

U.S.C. § 157(b)(2)(E). Here, Debtor is seeking a determination

that the Net Funds are property of the estate which must be turned

over to it. This court has core jurisdiction to resolve the

disputed claims to the Net Funds. Inherent in such a resolution

is the issue of who controls Debtor: DW Kim or an appointed

successor.

The Kim Defendants also argue that the pendency of the Appeal

deprives this court of jurisdiction to decide the MSJ. They are

incorrect. Even though control of Debtor is a central issue in

both the Appeal and this adversary proceeding, the court can enter

a judgment as to disposition of the Net Proceeds. The appealed

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order denying the motion to dismiss the chapter 11 case is

interlocutory. In re 405 N. Bedford Dr. Corp., 778 F.2d 1374,

1379 (9th Cir. 1985). As the Ninth Circuit held in In re Rains,

428 F.3d 893, 904 (9th Cir. 2005), an appeal from an interlocutory

order is premature and does not transfer jurisdiction to the

appellate court absent leave of that court. Id., citing In re

United States Abatement Corp., 39 F.3d 563, 568 (5th Cir.1994)

(holding that premature notice of appeal from interlocutory

bankruptcy order was of no effect and the trial court retains

jurisdiction to enter final judgment) and Albiero v. City of

Kankakee, 122 F.3d 417, 418 (7th Cir.1997).

The Kim Defendants have also suggested that this court lacks

jurisdiction to resolve the dispute over entitlement to the Net

Funds as it implicates matters of religious doctrine and practice. 

This court undoubtedly must “defer to the resolution of issues of

religious doctrine or polity by the highest court of a

hierarchical church organization.” Jones v. Wolf, 443 U.S. 595,

602 (1979). Nonetheless, “the First Amendment does not dictate

that a State must follow a particular method of resolving church

property disputes. Indeed, ‘a State may adopt any one of various

approaches for settling church property disputes so long as it

involves no consideration of doctrinal matters, whether the ritual

and liturgy of worship or the tenets of faith.’” Id. Thus, this

court cannot review decisions to excommunicate, a religious

matter, or matters involving religious doctrines and tenets. It

can, however, apply “neutral principles of law” such as corporate

governance in settling disputes as to ownership of church property

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as long as the analysis does not involve inquiry into religious

doctrine. Id. at 602-03.

Consequently, this court can consider the relevant by-laws 

as well as minutes and orders from governing bodies to determine

whether a particular faction controls the Debtor and its property

disposition. Such a determination does not invoke religious

precepts but is instead a secular examination of documents of

governance.

The Kim Defendants also assert that they are entitled to a

trial by jury and thus this court cannot issue a dispositive

ruling. Assuming without deciding that they are entitled to a

jury trial, that entitlement does not preclude this court from

ruling on the MSJ or the MTD AP. In Sigma Micro Corp. v.

Healthcentral.com (In re Healthcentral.com), the Ninth Circuit

adopted the majority rule that the valid right to a jury trial

does not require the bankruptcy court to cede jurisdiction and

transfer the action immediately, but instead may retain

jurisdiction over the action for pretrial matters (such as motions

to dismiss or motions for summary judgment) until the matter is

ready for trial. Id. at 788 (“allowing the bankruptcy court to

retain jurisdiction over pre-trial matters, does not abridge a

party’s Seventh Amendment right to a jury trial”). 

IV. STANDARDS FOR SUMMARY JUDGMENT

 Summary judgment is appropriate when the moving party “shows

that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R. Civ.

P. 56(a), applicable here by Fed. R. Bankr. P. 7056. The moving

party “initially bears the burden of proving the absence of a

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genuine issue of material fact.” In re Oracle Corp. Sec.

Litigation, 627 F.3d 376, 387 (9th Cir. 2010). If the moving

party meets its initial responsibility, the burden then shifts to

the opposing party to establish that a genuine issue as to any

material fact actually does exist. See Matsushita Elec. Indus. Co.

v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). 

“In evaluating the evidence to determine whether there is a

genuine issue of fact,” the court draws “all reasonable inferences

supported by the evidence in favor of the non-moving party.” 

Walls v. Central Contra Costa Transit Auth., 653 F.3d 963, 966

(9th Cir. 2011). It is the opposing party's obligation to produce

a factual predicate from which the inference may be drawn. See

Richards v. Nielsen Freight Lines, 602 F. Supp. 1224, 1244-45

(E.D. Cal. 1985), aff'd, 810 F.2d 898, 902 (9th Cir. 1987). 

Finally, to demonstrate a genuine issue, the opposing party “must

do more than simply show that there is some metaphysical doubt as

to the material facts.... Where the record taken as a whole could

not lead a rational trier of fact to find for the nonmoving party,

there is no ‘genuine issue for trial.’ ” Matsushita, 475 U.S. at

587 (citation omitted).

As discussed below, Debtor has established as a matter of

undisputed fact that it is the governing entity entitled to

recovery of the Net Funds and the Kim Defendants have not set

forth any material fact that reflects a genuine dispute as that

entitlement. Drawing all reasonable inferences from the evidence

offered by the Kim Defendants in response to the MSJ AP, the court

concludes that summary judgment in favor of Debtor is appropriate. 

V. UNDISPUTED MATERIAL FACTS

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On May 29, 2008, Debtor entered into a membership agreement

with KECA; that agreement required that Debtor comply with the

bylaws of KECA and to place KECA as a title holder of the

Property. See Declaration of Chong Kon Cho (“Cho Decl.”) ¶ 3;

Exhibit 1); Declaration of Nam W. Kim (“NW Kim Decl.”) ¶ 6. In

the same year, Debtor and KECA executed the loan documents

providing Innovative Bank (subsequently taken over by BBCN) with a

deed of trust lien on the Property. NW Kim Decl. ¶ 3; Exhibits 3

and 4 to Cho Decl. 

KECA is nationally subdivided into multiple district

conferences. The KECA district conference responsible for the

Debtor is the Northern California District Conference (“NCDC”).

Cho Decl. ¶ 6. Because KECA’s by-laws superseded the prior bylaws of Debtor, Debtor’s Board of Directors, upon deeming certain

conduct of its then presiding pastor (DW Kim) were contrary to the

morals of the church, requested in July 2012 that KECA (through

the NCDC) suspend him from his position as senior pastor. NW Kim

Decl. ¶ 10. The disciplinary proceedings were to be completed in 

accordance with the disciplinary laws of KECA. Cho Decl. ¶¶ 7-10,

Exhibit 8. NW Kim Decl. ¶ 10. 

In August 2012, the NCDC suspended DW Kim’s ministry duties

until disciplinary hearings were concluded and appointed Sang Kook

Lee as a temporary governing pastor. NW Kim Decl. ¶ 11; Cho

Decl., Exhibits 5 and 6). On September 14, 2012, the NCDC

Disciplinary Committee excommunicated DW Kim and stripped him of

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all ministry duties.3 NW Kim Decl. ¶ 12; Cho Decl., Exhibit 7.

September 14, 2012, counsel for Debtor sent a letter to DW Kim

terminating him as pastor. NW Kim Decl. ¶¶ 12-13; Exhibits 3 and

4. On September 17, 2012, NCDC issued an official notice that DW

Kim was excommunicated and stripped of all powers regarding the

church and that two elders Myoung I. Youm and Jin-Gook Kim were

suspended from their duties. NW Kim Decl. ¶ 15; Cho Decl.,

Exhibit 8. 

On November 1, 2012, DW Kim filed an appeal to the KECA

national body. Cho Decl. ¶ 8. The excommunication decision

remained effective pending appeal. Cho Decl. ¶ 13, Exhibit 20. 

On November 13, 2012, the General Assembly of KECA prepared a

document entitled “The Ruling Statement of the Judgment Committee”

stating:

Since there is an illegality matter on the judgment

procedure and the fact that there is not evidence beyond

a reasonable doubt on the criminal acts of [DW Kim], we

request that you annul the ruling from the original

trial and propagate [DW Kim’s] innocence.

DW Kim Decn., Exhibit 5, part 2(B). This unsigned document

reflects a recommendation by the Judgment Committee that the 

Regional Council vacate the excommunication order in accordance

with Article 5 (Paragraph 7) and Article 3 (Paragraphs 6 and 7) of

the Judgment Committee Operation Regulation, and Article 20 of the

3

As noted in the Jurisdiction discussion above,

excommunication is a matter pertaining to religion and is not

appropriate for court involvement. However, the issue of whether

DW Kim remained as pastor is a secular matter involving principles

of corporate governance and thus falls within the scope of this

court’s jurisdiction to determine who controls Debtor and what

constitutes property of the estate under section 541 of the

Bankruptcy Code.

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Disciplinary Action Regulation. Id. at 3(b)(1) and (2). 

DW Kim has offered the “Ruling Statement of the Judgment

Committee” in an effort to establish a dispute as to a material

fact, i.e., whether he was stripped of his position as pastor. 

As noted above, however, the Kim Defendants have not authenticated

the report by a declaration from any member of the committee that

the report was in fact adopted by the Assembly. But even if a

signed, authenticated report existed, it would not have been final

and would have been subject to further review of the Regional

Council. 

On February 19, 2013, the NCDC notified DW Kim that his

appeal to the General Assembly did not overturn the termination of

his services as pastor. Cho Decn., Exhibit 10. It denied DW Kim

access to the Property and to the podium and dispatched Sang Kook

Lee to serve as the governing pastor. Id.

Thereafter, and quite significantly to the issues before the

court, the Special Judgment Committee met during the annual

meeting of KECA in April 2013 to determine the appropriate

disciplinary actions to be taken with respect to DW Kim. Cho

Decn., Exhibit 11. On April 10, 2013, the Special Judgment

Committee issued its judgment finding DW Kim guilty of the charges

against him and dismissing him from his position as a pastor,

consistent with the NCDC decision to strip him of his ministry

duties. Cho Decn., Exhibit 12; Decl. of Nam W. Kim at ¶¶ 20-21. 

Thus, regardless of the status of the “first deliberation” by the

General Assembly and regardless of the status of his

excommunication from membership, DW Kim was no longer the pastor

of FKCC as a matter of corporate law.

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Accordingly, on September 16, 2013, KECA notified its

Northern California District Office of the Notice of Judgment by

the Special Disciplinary Committee regarding its decision to

dismiss DW Kim as pastor. Cho Decn., Exh. 14.4 The decision and

order, which was sent with the Notice of Judgment, concluded:

Therefore, based on the state[d] reasons, and based on

the Article 4, Section 1 of the Law of Disciplinary

Punishment, [and] according to the Article 5, Section 3

(Dismissal from Office) of the Law of Disciplinary

Punishment, the Special Disciplinary Committee hands

down the Judgment of Dismissal from Office to the

appealer, Mr. Dong Wuk Kim.

Id.

 In November and December 2013, after he was stripped of his

duties and rights as pastor, DW Kim and his supporters convened

several meetings at which some church members voted to withdraw

from membership in NCDC and KECA. Cho Decn. ¶¶ 22-23, Exhibit 16.

However, as he had been formally terminated as pastor of FKCC

months before these meetings, such withdrawal was ineffective and

against existing regulations and rules of operation. Id. Despite

the continued eviction efforts of KECA and Debtor, DW Kim and his

supporters continued to occupy the Property. Cho Decn. ¶ 23,

Exhibit 17. While the supporters of DW Kim (the “DW Kim

Faction”) warred with KECA and Debtor, Debtor was unable to pay

BBCN Bank as required by the loan documents. Declaration of Kelly

Cho in Support of BBCN Bank’s Motion for Relief from Stay ¶¶ 24-

29, Docket 58-3 in the Main Case. Faced with a possible

foreclosure, Debtor filed its chapter 11 petition. The DW Faction

moved for dismissal of the case, asserting that it was the true

4

The exhibits to the Cho Declaration are out of order, with

Exhibit 17 preceding Exhibit 14. Exhibit 14 can be found at

Docket No. 26-9, pages 30-34.

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church and that Debtor lacked authority to commence the underlying

bankruptcy case. See Motion to Dismiss Pursuant to 11 U.S.C. §§

1109 and 1112(a), Docket No. 61 in the Main Case. The court

disagreed and denied the dismissal motion for the reasons set

forth on the record on March 29, 2016.

VI. ANALYSIS

In support of its MSJ, Debtor has presented undisputed

evidence that it and KECA share title on the Property and are both

signatories to deeds of trust under which the Property secured the

obligations of Debtor to BBCN Bank. Moreover, as set forth in the

Undisputed Material Facts section above, Debtor has presented

significant and verified evidence that DW Kim was stripped of his

position as the official pastor for Debtor in 2013. In other

words, Debtor met its initial burden of showing the absence of a

material and triable issue of fact as to DW Kim’s ouster and its

entitlement to the Net Proceeds through control of Debtor by its

current pastor.

Given that Debtor met its initial burden on the MSJ, the Kim

Defendants had to come forward with evidence demonstrating that

there are genuine issues of material fact to be decided at trial.

A fact issue is “genuine” if there is enough evidence for a

reasonable trier of fact to make a finding in favor of the

non-moving party. Far Out Prods., Inc. v. Oskar, 247 F.3d 986, 992

(9th Cir. 2001). A fact is “material” if, “under the governing

substantive law ... it could affect the outcome of the case.”

Caneva v. Sun Cmtys. Operating Ltd. P'ship (In re Caneva), 550

F.3d 755, 760–61 (9th Cir. 2008) (quoting Thrifty Oil Co. v. Bank

of Am. Nat'l Tr. & Savs. Ass'n, 322 F.3d 1039, 1046 (9th Cir.

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2003) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

248–49 (1986))).

Here, the Kim Defendants have not presented a “genuine” issue

of material fact which could result in a jury reasonably finding

in their favor. First, the Kim Defendants’ primary argument is

that KECA reversed the disciplinary rulings of the NCDC and thus

DW Kim retains his authority as the pastor of Debtor. As

discussed in the Undisputed Material Facts section above, however,

the document upon which the Kim Defendants rely is not signed and

has not been authenticated. Moreover, in subsequent rulings, KECA

upheld the disciplinary findings against DW Kim and reaffirmed his

removal as pastor of Debtor. Furthermore, the Kim Defendants’

unilateral efforts to negate the excommunication order by

disclaiming Debtor’s membership in KECA are ineffective and

contrary to governing rules of operation and governance. The Kim

Defendants have not set any other cognizable arguments that they,

and not the current pastor of Debtor, D.Y. Kim, are entitled to

control the Debtor and the Net Proceeds.5

VII. CONCLUSION

Because Debtor has shown that there is no genuine issue as to

any material fact and that it is entitled to judgment as a matter

of law, the court will enter an order granting the MSJ, orders

denying the MTD AP and the MTD CC, and a judgment releasing the

Net Proceeds to Debtor and KECA. Counsel for Debtor should upload

orders granting the MSJ and denying the MTD; KECA should submit an

5

At the hearing on January 25, 2017, counsel for Debtor

conceded the obvious, namely that if the court granted the MSJ,

Debtor’s disposition of the Net Proceeds would be governed by

applicable bankruptcy and non-bankruptcy law.

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order denying the MTD CC. The orders should reflect that the

relief is being granted (or denied) “for the reasons set forth in

the Memorandum Decision entered on [Date] at {Docket Number].”

Upon entry of these orders, counsel for Debtor and KECA should

submit a single judgment on the complaint and the countercomplaint. When uploading the orders, counsel for Debtor and KECA

should file on the docket a proof of service indicating that they

have served the proposed orders and judgment on counsel for the

Kim Defendants, or the orders should reflect opposing counsel’s

agreement as to form.6

 *** END OF MEMORANDUM DECISION ***

6

Based on comments by Debtor’s counsel at the hearing, the

court assumes Debtor will now dismiss the Related APs, rendering

the motions to remand moot. If that is not the case, counsel

should set them for status conference on the court’s regular San

Jose calendar.

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