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1 This disposition is not appropriate for publication. 

Although it may be cited for whatever persuasive value it may have

(see Fed. R. App. P. 32.1), it has no precedential value. See 9th

Cir. BAP Rule 8013-1.

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP Nos. CC-12-1223-KiPaD

) CC-12-1366-KiPaD

YAN SUI, ) CC-12-1367-KiPaD

) (related appeals)

Debtor. ) ) Bk. No. 8:11-20448-CB

)

YAN SUI, )

)

Appellant, ) ) M E M O R A N D U M1

v. )

)

RICHARD A. MARSHACK, Chapter 7)

Trustee; AMRANE COHEN, )

Chapter 13 Trustee, )

)

Appellees. )

______________________________)

Argued and Submitted on February 22, 2013, 

at Pasadena, California

Filed - April 4, 2013

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Catherine E. Bauer, Bankruptcy Judge, Presiding 

Appearances: Appellant Yan Sui argued pro se; D. Edward Hays,

Esq. argued for Appellee Richard A. Marshack,

Chapter 7 Trustee. 

Before: KIRSCHER, PAPPAS and DUNN, Bankruptcy Judges.

FILED

APR 04 2013

SUSAN M SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT
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2 Unless specified otherwise, all chapter, code and rule

references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and

the Federal Rules of Bankruptcy Procedure, Rules 1001-9037.

-2-

In these related appeals, debtor Yan Sui (“Sui”) appeals

three orders from the bankruptcy court: (1) the order allowing the

former chapter 72 trustee's administrative claim for fees and

expenses incurred while Sui's case was in chapter 7; (2) the order

allowing the Goodrich Law Corporation's (“GLC”) administrative

claim for fees and expenses incurred while Sui's case was in

chapter 7; and (3) the order reconverting Sui's chapter 13

bankruptcy case to chapter 7. We AFFIRM the order reconverting

Sui's case to chapter 7. However, we DISMISS for lack of

jurisdiction the appeal of the interlocutory orders allowing the

administrative claims of the former trustee and GLC.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 

A. Prepetition facts

In 2000, Sui and his non-debtor wife, Pei-Yu Yang (“Yang”),

acquired a fee simple interest in a residence in Costa Mesa,

California (“Residence”). In 2003, Sui and Yang executed a

$207,000 promissory note and first deed of trust in favor of World

Savings Bank against the Residence. 

In July 2007, Sui sued his former attorney, Kenny K. Tan

(“Tan”), for professional negligence. Tan prevailed against Sui

in arbitration and, in October 2008, was awarded $7,329.40. After

a hearing on June 10, 2009, the state court confirmed the

arbitration award and awarded Tan an additional $2,365.00 for

sanctions and costs of $40.00, for a total judgment against Sui of

$9,734.40. The judgment was entered on June 25, 2009 (“Tan
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Judgment”). Within minutes of the June 10 hearing, Sui filed and

recorded a quitclaim deed conveying his entire interest in the

Residence to Yang for little or no consideration.

Sui exhausted all of his appeals, and the Tan Judgment is

final. As of the filing of his bankruptcy case, the Tan Judgment

remained unpaid.

B. Sui's chapter 7 bankruptcy filing 

Sui, pro se, filed a chapter 7 bankruptcy case on July 27,

2011. Richard A. Marshack was appointed to serve as trustee for

Sui's chapter 7 bankruptcy estate (“Trustee” or “former Trustee”). 

Sui did not list any real property in his Schedule A or list any

secured debts in his Schedule D. Sui claimed in his Schedule I

that he was “separated” from Yang.

On August 22, 2011, Trustee sought an order approving the

employment of GLC as his general counsel. According to the

application, Trustee wished to employ GLC to pursue and recover

what he believed was a fraudulent transfer by Sui of the Residence

to Yang in 2009. Trustee believed that a substantial amount of

equity was available to pay creditors based on a valuation of the

Residence of at least $410,000 and a secured debt held by World

Savings Bank of $220,000. Other services to be performed by GLC

included (1) representing Trustee in any action where the rights

of the estate or Trustee may be affected, (2) conducting

examinations of Sui, witnesses, claimants or adverse parties and

preparing and assisting in the preparation of reports, accounts,

applications, motions, complaints and orders, and (3) performing

any and all other legal services incident and necessary for the

administration of the bankruptcy case. David M. Goodrich 
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(“Goodrich”) of GLC agreed to perform legal services at the hourly

rate of $250.00. The application stated that GLC's compensation

was subject to court approval under § 328, and that GLC would be

paid for its legal services only if it recovered any money or

property.

Also on August 22, 2011, Trustee filed an adversary

proceeding against Yang seeking to avoid the alleged fraudulent

transfer of Sui's interest in the Residence. 

In a letter dated August 23, 2011, Goodrich informed Sui that

Trustee had learned of Sui's involvement as plaintiff in a number

of lawsuits pending before the state and federal court, and that

Sui had filed pleadings in some of these cases postpetition.

Goodrich informed Sui that Trustee had assumed all rights in any

of Sui's litigation once his bankruptcy was filed, and that Sui

was not authorized to file any further pleadings without Trustee's

permission. 

On September 1, 2011, Sui filed a combined opposition to

GLC's employment application and a notice of dismissal. Sui

contended that GLC was not a “disinterested” party because the

firm rented an office in a building owned by Trustee. No action

was taken on Sui's notice of dismissal. 

On September 8, 2011, Trustee filed an amended application

for the employment of GLC to disclose that GLC was a tenant of

Marshack Hays, LLP, a law firm in which Trustee was a partner. 

Other than this disclosure, the terms of GLC's employment remained

the same. 

On September 19, 2011, Sui moved to dismiss his chapter 7

bankruptcy case. Sui contended that he was a party to four
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lawsuits (three in state court and one in federal court) against

the homeowners association for the community in which the

Residence is located (“HOA”), as well as one federal court lawsuit

against a party named Southside Towing, and he wanted to prosecute

these cases without Trustee's interference. Sui also contended

that he had voluntarily paid in full his two unsecured creditors,

Capital One and American Express. Finally, Sui contended that

Tan, a judgment creditor, did not meet the definition of

“creditor” for the purpose of his bankruptcy case, and that Tan

was mistakenly added to Sui's schedules. Therefore, argued Sui,

dismissal was appropriate because his two creditors were now paid,

and Tan was not technically a creditor. The bankruptcy court

denied Sui's dismissal motion for failure to show cause, and

because the motion was not properly noticed and set for hearing. 

Sui filed a second motion to dismiss his chapter 7 case on

October 11, 2011. This dismissal motion was essentially identical

to the first. Trustee opposed dismissal, contending that Sui had

failed to demonstrate cause, and that the best interests of

creditors would be served by allowing Trustee to administer the

case. Specifically, Trustee opposed dismissal because:

• Sui and Yang held at least $300,000 in equity in the

Residence;

• Sui failed to disclose several pending lawsuits in his

bankruptcy petition, including those filed against the HOA;

• Sui lived in the Residence with Yang despite his claim that

he was separated;

• Sui failed to list any of Yang's assets as assets of the

bankruptcy estate;

• Sui continued to prosecute disclosed and undisclosed

litigation despite Goodrich's demands to cease such activity;
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3

 According to a motion for relief from stay filed by Wells

Fargo Bank on October 14, 2011, borrowers Alberto and Patricia

Valencia had defaulted under the terms of a note and deed of trust

regarding certain property in Manteca, California. A trustee's

sale was scheduled for August 10, 2011. On July 5, 2011, the

Valencias purportedly conveyed an ownership interest in the

property to Yan Sui, “a single woman,” by grant deed. According

to Wells Fargo, this “Yan Sui” was the debtor Yan Sui. Sui did

not disclose an ownership interest in this property in his

schedules. Wells Fargo contended that cause existed to terminate

the stay because Sui's bankruptcy case was being used for an

improper purpose to frustrate its efforts to foreclose upon the

property.

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• after filing the chapter 7 case, Sui filed a new civil

lawsuit for a potential claim that was not scheduled;

• Yang had filed a petition for dissolution of marriage, but no

decree of separation or divorce had been entered; 

• Sui claimed at the § 341(a) meeting of creditors that he was

never legally married to Yang yet his tax returns indicated

he was married to Yang, he affirmed his marriage to Yang in a

recently filed lawsuit, and he was the respondent in Yang's

petition for dissolution; 

• Sui had allegedly paid over $8,000 in prepetition debt to two

creditors after he filed his chapter 7 case;

• three cars were regularly seen at the Residence, but Sui had

not scheduled any vehicles; 

• Sui had paid the HOA $10,000 within 90 days of the bankruptcy

filing, but this payment was not scheduled;

• one of Sui's creditors had obtained an order from the state

court determining Sui to be a vexatious litigant; 

• at least two creditors did not consent to dismissal and

neither of these creditors were listed in Sui's schedules;

and

• an undisclosed ownership interest in real property located in

Manteca, California was transferred to Sui on July 5, 2011 -

twenty-two days before he filed his chapter 7 case.3

The HOA, who Sui did not list as a creditor in his schedules, also

opposed dismissal, contending that Sui owed the HOA approximately

$18,000 in attorney's fees incurred in defending Sui's frivolous

and duplicative lawsuits. 
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4 Sui appealed the order approving GLC's employment and the

order denying his second motion to dismiss his chapter 7 case on

November 8, 2011. The Panel denied Sui's motion for leave to

appeal the interlocutory orders and dismissed the appeal.

5 Trustee and GLC filed a combined objection to Sui's

chapter 13 plan on March 5, 2012. They opposed confirmation

because the plan failed to provide for their administrative claims

for preconversion fees and expenses.

-7-

After a hearing on Sui's second motion to dismiss and GLC's

employment application, the bankruptcy court entered an order

approving GLC's employment under § 327, stating that any

compensation or reimbursement of costs would “only be paid upon

application to and approval of the Court pursuant to 11 U.S.C.

§ 330.” The bankruptcy court denied Sui's second motion to

dismiss his chapter 7 case for failing to show cause to grant it.4

C. Sui's conversion to chapter 13, Trustee's and GLC's

administrative claims and Sui's motion to dismiss the

chapter 13 bankruptcy case

On January 9, 2012, Sui moved to convert his chapter 7 case

to chapter 13. No opposition was filed. The bankruptcy court

entered an order on January 30, 2012, converting Sui's case to

chapter 13 under § 706(a). 

Sui filed his chapter 13 plan on February 14, 2012. The plan 

proposed payments of $402.00 per month for 24 months, which would

pay the Tan Judgment, Sui's alleged sole debt, in full. The plan

proposed to pay $0.00 for fees of either the chapter 13 trustee or

the former Trustee.5 A confirmation hearing was set for April 12,

2012. 

On February 28, 2012, GLC moved for an order allowing its

administrative claim (claim #2) for fees and expenses incurred in

Sui's chapter 7 case prior to the conversion. GLC contended that
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-8-

its fees and expenses were directly related to the protracted

investigation of a variety of undisclosed assets and avoidable

fraudulent transfers. GLC contended that all of its services were

necessary and benefitted the estate by proving significant assets

existed that could be liquidated and/or recovered and liquidated

to pay creditors. GLC further contended that its uncovering of

assets forced Sui into chapter 13, whereby most, if not all, of

his unsecured debt would now be paid. Therefore, argued GLC, its

fees of $14,987.50 and expenses of $37.70 should be allowed as an

administrative expense under § 503(b)(1)(A). GLC attached copies

of detailed time and expense records for preconversion services

provided in Sui's chapter 7 case between August 17, 2011 and

December 27, 2011. 

On March 6, 2012, the former Trustee filed a similar motion

to allow his administrative claim (claim #3) for preconversion

fees and expenses under § 503(b)(1)(A). Trustee essentially set

forth the same basis for why his claim should be allowed as an

administrative expense, adding that his (and his staff's) services

were instrumental in the bankruptcy court's denials of Sui's

multiple motions to dismiss the case. Trustee requested fees of

$5,890.00, which were based on an hourly rate and time spent, and

expenses of $64.08. Attached were copies of detailed time and

expense records for services Trustee and his staff provided in

Sui's chapter 7 case. 

Sui opposed both motions to allow the administrative claims
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6 Sui did not file a claim objection but rather an opposition

to the former Trustee's and GLC's motions to allow their

administrative claims. Presumably, the bankruptcy court construed

Sui's opposition to be an objection to their proofs of claim.

-9-

for preconversion fees and expenses.6 In his thirty-one page

objection to GLC's fees, Sui contended the claim should be

disallowed in its entirety because: (1) the fees were unreasonable

in light of the debt; (2) the services were not reasonably likely

to benefit the estate; (3) the services were duplicative with that

of Trustee's or consisted of tasks that should have been performed

by Trustee; (4) any fees incurred before GLC filed its amended

employment application on September 8, 2011, were unauthorized;

(5) Trustee's adversary action against Yang had no merit and would

fail; and (6) GLC was not entitled to compensation because of

various false statements made by Goodrich during Sui's case, and

because GLC caused Sui and Yang to lose two favorable default

judgments against Southside Towing and the HOA. Sui virtually

went through each of GLC's time entries, contending that it was

either “unnecessary,” “unfounded,” “unconvincing,” “groundless,”

“duplicative,” or a “secretarial” function that was charged at an

attorney rate. 

Sui contended that the former Trustee's claim for fees should

also be disallowed because: (1) the fees were unreasonable;

(2) Trustee failed to explain to Sui how his fees were calculated

and documented; (3) some of Trustee's services were duplicative

with those of GLC; (4) Trustee's staff members were not authorized

by the court to assist him; and (5) Trustee was not entitled to

any compensation because he had caused Sui, his estate and Yang

damages in the Southside Towing and HOA cases.
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On March 21, 2012, Sui moved to dismiss his chapter 13 case.

Sui explained the reasons for why he quitclaimed his interest in

the Residence and why he indicated that he was “separated” in his

Schedule I. Sui contended that Trustee's actions or failures to

act regarding the pending lawsuits caused him and his creditors

damages. Sui also contended that Trustee and GLC were not

entitled to any fees because they caused their own damages.

Attached to Sui's motion were various court documents and emails

from Sui to Tan attempting to work out a payment plan for the Tan

Judgment.

The former Trustee and GLC opposed Sui's motion to dismiss,

asserting essentially the same bases for denial of the motion as

Trustee had asserted in his opposition to Sui's prior motions to

dismiss his then chapter 7 case. In short, Trustee and GLC

contended that Sui's acts had been in bad faith, and that it was

in the best interests of creditors to deny Sui's motion to dismiss

and reconvert his case to chapter 7. In his attached declaration,

Goodrich stated that Sui had testified at the initial § 341(a)

meeting of creditors in his chapter 13 case that his sole purpose

for conversion was to seek dismissal of his case. 

The matters of Sui's plan confirmation and motion to dismiss

and the motions for allowance of Trustee's and GLC's

administrative claims were heard by the bankruptcy court on

April 12, 2012. At the outset, Goodrich, appearing for both GLC

and the former Trustee, moved to reconvert Sui's case to

chapter 7. Counsel for the chapter 13 trustee supported

reconversion, noting that Sui had failed to make any plan payments

or show any attempt to set forth a confirmable plan. After Sui
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explained that he had paid his three creditors in full, the

bankruptcy court announced its decision to deny the motion to

dismiss and reconvert the case to chapter 7:

The problem is that you used the bankruptcy system

inappropriately. You filed documents that were untrue.

And we can't allow that. You misused the Bankruptcy

Court and all the people involved. That's why we can't

let you dismiss this case because you caused a lot of

people a lot of work. And you violated some federal

laws. That's why we're not going to dismiss this case.

I'm going to reconvert it to a Chapter 7. The Chapter 7

Trustee had to do a lot of work because of the

inconsistencies between your statements in writing and

orally. And had to do a lot of investigations to fine

[sic] out that, frankly, there were lies involved in your

bankruptcy case. And we can't run the system that way.

So I am going to reconvert it back to a Chapter 7. 

. . . .

So I'm not dismissing the bankruptcy case. That's denied.

Hr'g Tr. (Apr. 12, 2012) 2:10-23; 3:9-10. 

The bankruptcy court then announced its decision to allow

GLC's and the former Trustee's administrative claims for

preconversion fees and expenses:

I am going to allow the administrative claim of the

Goodrich Law Firm because they had to do a lot of work on

this case because of the way you abused the system. 

. . . . 

I am also going to allow the motion for the

administrative claim of the Chapter 7 Trustee, who also

had to do a lot of work because of your many inconsistent

statements. 

Id. at 3:10-13; 16-19. After Sui contended that he had been

truthful in his bankruptcy case, the bankruptcy court further

found:

With all due respect I'm finding the opposite.

Therefore, you need to understand that this is the end of

the road. You can't keep coming here and trying to get

rid of this bankruptcy case. You came here seeking the

protection of the bankruptcy court, but you did not
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7 Sui did not appeal the order denying his motion to dismiss

the chapter 13 case. As for the three orders that are on appeal,

although Sui filed only one notice of appeal for all of them, we

entered an order on July 18, 2012, assigning each order its own

appeal number: CC-12-1223 for the order allowing the former

Trustee's administrative claim; CC-12-1366 for the order allowing

GLC's administrative claim; and CC-12-1367 for the order

reconverting the bankruptcy case to chapter 7.

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follow the rules. Yes, you are getting penalized for

doing things you should not have done. That's where we

are at at this point. Because we have to protect the

integrity of this system.

. . . .

You came here voluntarily, sir. You cannot leave when we

find out that you're abusing the system. And money has

been spent by various parties in the bankruptcy system to

bring out the fact that you have lied. They're entitled

to be paid. 

Id. at 4:9-17; 4:24-5:3. Based on the court's ruling,

confirmation of the plan was denied. The court also denied Sui's

request to file a new plan. 

On April 13, 2012, the bankruptcy court entered an order

allowing the former Trustee's administrative claim for

preconversion fees of $5,980.00 and expenses of $64.08. On

April 20, 2012, the bankruptcy court entered three more orders:

(1) the order allowing GLC's administrative claim for

preconversion fees of $14,987.50 and expenses of $37.70; (2) the

order denying Sui's motion to dismiss the chapter 13 case; and

(3) the order reconverting Sui's bankruptcy case to chapter 7.

Sui timely appealed the orders allowing the former Trustee's

and GLC's administrative claims and the order reconverting the

case to chapter 7.7

II. JURISDICTION

The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334

and 157(b)(2)(A), (B) and (L). We have jurisdiction over the
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order reconverting Sui's case to chapter 7 under 28 U.S.C. § 158. 

We address below our jurisdiction over the orders allowing the

administrative claims of the former Trustee and GLC. 

III. ISSUES

1. Did the bankruptcy court abuse its discretion when it

reconverted Sui's case to chapter 7? 

2. Do we have jurisdiction over the appeal of the orders

allowing the former Trustee’s and GLC's administrative claims for

preconversion fees and expenses? 

IV. STANDARDS OF REVIEW

We review for abuse of discretion the bankruptcy court's

decision to deny a request for dismissal of a chapter 13 case

under § 1307(b) and to convert a case from chapter 13 to

chapter 7. Rosson v. Fitzgerald (In re Rosson), 545 F.3d 764, 771

(9th Cir. 2008). A bankruptcy court abuses its discretion if it

applied the wrong legal standard or its findings were illogical,

implausible or without support in the record. TrafficSchool.com,

Inc. v. Edriver, Inc., 653 F.3d 820, 832 (9th Cir. 2011).

“Bad faith” is a finding of fact reviewed for clear error. 

Id. at 774 (citing Leavitt v. Soto (In re Leavitt), 171 F.3d 1219,

1222-23 (9th Cir. 1999); and Eisen v. Curry (In re Eisen), 14 F.3d

469, 470 (9th Cir. 1994)(per curiam)). A bankruptcy court's

factual finding is clearly erroneous if it is illogical,

implausible, or without support in the record. Retz v. Samson

(In re Retz), 606 F.3d 1189, 1196 (9th Cir. 2010)(citing United

States v. Hinkson, 585 F.3d 1247, 1261-62 & n.21 (9th Cir.

2009)(en banc)). 

When a question regarding our jurisdiction exists, we are
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8 Section 1307(c) provides a non-exhaustive list of acts and

omissions that constitute “cause,” none of which is directly

applicable here.

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“entitled to raise [that issue] sua sponte and [address it] de

novo.” Menk v. Lapaglia (In re Menk), 241 B.R. 896, 903 (9th Cir.

BAP 1999). 

V. DISCUSSION

A. The bankruptcy court did not abuse its discretion when it

reconverted Sui's case to chapter 7.

Sui’s brief on appeal spends a great deal of time discussing

the alleged wrongful acts of the former Trustee and GLC rather

than explaining how the bankruptcy court erred in its decision to

reconvert his case to chapter 7. However, Sui appears to contend

the bankruptcy court abused its discretion in reconverting his

case to chapter 7 for abuse of process when his prepetition

creditors had been paid in full prior to the hearing. Sui also

appears to contend that his right to dismiss his chapter 13 case

was absolute under § 1307(b). 

Sections 1307(b) and 1307(c) provide, in relevant part:

(b) On request of the debtor at any time, if the case has

not been converted under section 706, 1112, or 1208 of

this title, the court shall dismiss a case under this

chapter. 

(c) [O]n request of a party in interest or the United

States trustee and after notice and a hearing, the court

may convert a case under [chapter 13] to a case under

chapter 7 of this title, or may dismiss a case under this

chapter, whichever is in the best interest of creditors

and the estate, for cause . . . . (Emphasis added).8

Section 1307(c) establishes a two-step analysis for dealing with

questions of conversion and dismissal. “First, it must be

determined that there is ‘cause’ to act. Second, once a
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9 Section 706(a) provides:

The debtor may convert a case under this chapter to a case

under chapter 11, 12, or 13 of this title at any time, if the

case has not been converted under section 1112, 1208, or 1307

of this title. Any waiver of the right to convert a case

under this subsection is unenforceable.

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determination of ‘cause’ has been made, a choice must be made

between conversion and dismissal based on the ‘best interests of

the creditors and the estate.’” Nelson v. Meyer (In re Nelson),

343 B.R. 671, 675 (9th Cir. BAP 2006)(citations omitted).

Because Sui’s case had already been converted under § 706,9

the bankruptcy court was not required to dismiss Sui’s case on his

request. Further, even if Sui had not previously converted his

case, the right to dismiss his chapter 13 case was not absolute. 

In reviewing the U.S. Supreme Court’s holding in Marrama v.

Citizens Bank of Mass. (In re Marrama), 549 U.S. 365 (2007), the

Ninth Circuit held in In re Rosson that a “debtor's right of

voluntary dismissal under § 1307(b) is not absolute, but is

qualified by the authority of a bankruptcy court to deny dismissal

on grounds of bad-faith conduct or ‘to prevent an abuse of

process.’” 545 F.3d at 774 (citing § 105(a))(other citations

omitted). In other words, a bankruptcy court may dismiss or

convert a chapter 13 case to chapter 7 for “cause,” which courts

have routinely interpreted to include bad faith conduct. 

In re Marrama, 549 U.S. at 373; In re Rosson, 545 F.3d at 774-75;

In re Leavitt, 171 F.3d at 1224 (although not specifically listed,

bad faith is a “cause” for dismissal under § 1307(c));

In re Eisen, 14 F.3d at 470 (chapter 13 case filed in bad faith

may be dismissed “for cause”).
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In determining whether a debtor has engaged in bad-faith

conduct, the bankruptcy court must review the “totality of the

circumstances.” In re Eisen, 14 F.3d at 470 (quoting Goeb v. Heid

(In re Goeb), 675 F.2d 1386, 1391 (9th Cir. 1982)). A bankruptcy

court should consider: 

(1) whether the debtor misrepresented facts in his or her

petition or plan, unfairly manipulated the Bankruptcy Code or

otherwise filed the chapter 13 petition or plan in an

inequitable manner;

(2) the debtor's history of filings and dismissals;

(3) whether the debtor's only purpose in filing for

chapter 13 protection is to defeat state court litigation;

and

(4) whether egregious behavior is present.

In re Leavitt, 171 F.3d at 1224. A finding of bad faith does not

require fraudulent intent by the debtor. Id.

It is undisputed that Sui failed to disclose several pending

lawsuits in his bankruptcy schedules, and that he unlawfully

continued to prosecute disclosed and undisclosed litigation in

other courts while his case was in chapter 7. See Moneymaker v.

CoBen (In re Eisen), 31 F.3d 1447, 1451 n.2 (9th Cir. 1994)

(debtor’s prepetition causes of action become property of the

estate upon the bankruptcy filing and the trustee is the only

party with standing to prosecute those actions). Sui also

apparently owns or possesses at least three vehicles, none of

which was ever scheduled. Sui claimed at the § 341(a) meeting of

creditors that he was never legally married to Yang, yet in recent

tax returns and pleadings filed in other courts, Sui has

affirmatively represented that Yang is his wife. He also claimed

in his Schedule I that he is “separated” from Yang. Further, Sui
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admitted at the initial § 341(a) meeting of creditors in his

chapter 13 case that his sole purpose for conversion was to seek

dismissal of his case. Finally, although he disputes it, Sui may

have obtained an ownership interest in real property located in

Manteca, California just days before his bankruptcy filing, but he

failed to disclose this interest in his schedules.

Based on these facts and more, the bankruptcy court found

that Sui had filed untrue documents, violated federal law and

abused the bankruptcy process. Therefore, under the totality of

the circumstances, the bankruptcy court found that “cause” to

convert had been established. 

The bankruptcy court also determined that because of Sui’s

conduct, converting the case to chapter 7 was preferred to

dismissing it. Although it did not expressly find that conversion

was in the best interest of creditors as opposed to dismissal, the

record supports the bankruptcy court’s decision to reconvert the

case. See Shanks v. Dressel, 540 F.3d 1082, 1086 (9th Cir. 2008)

(we may affirm on any ground supported by the record). In their

opposition to dismissal, both the former Trustee and GLC suggested

conversion would be in the best interests of creditors because Sui

had shown a pattern of avoiding paying his creditors, particularly

Tan, and no assurances existed that he would pay his creditors

outside of bankruptcy. For example, just moments after the state

court announced its oral ruling in favor of Tan, Sui recorded a

quitclaim deed conveying his entire interest in the Residence to

Yang for little or no consideration. Sui also filed his chapter 7

bankruptcy case just one day before Tan was to conduct a scheduled

debtor’s examination on July 28, 2011. Moreover, it was quite
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10 Although Sui does not raise this issue, the former Trustee

had standing to suggest the case be reconverted instead of

dismissed. See In re Barnes, 275 B.R. 889, 892-93 (Bankr. E.D.

Cal. 2002). Even if Trustee somehow lacked standing, the

bankruptcy court had the authority to sua sponte convert Sui’s

case. In re Rosson, 545 F.3d at 774 (bankruptcy court has

authority to sua sponte dismiss or convert a case on its own

motion under § 105(a) to prevent what it reasonably perceives as

an abuse of process).

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possible, based on the multitude of omissions in his schedules,

that Sui had not listed all of his creditors. For certain, Sui

did not list the HOA, with whom he had been in litigation for

years prior to his bankruptcy filing.

Obviously, Sui's plan of filing a chapter 7 bankruptcy case

to shield himself from his prepetition creditors backfired. It

ended up, much to Sui's dismay, giving the former Trustee power

over his prepetition claims and litigation. It also allowed the

former Trustee to investigate Sui's undisclosed assets, as well as

pursue and recover what might have been a fraudulent transfer of

the Residence to Yang. 

We see no clear error in the bankruptcy court’s finding of

bad faith conduct. We also see no error in its apparent

determination that conversion, as opposed to dismissal, was in the

best interests of creditors. Accordingly, we conclude the

bankruptcy court did not abuse its discretion when it reconverted

Sui’s case to chapter 7.10

B. We lack jurisdiction over the appeal of the interlocutory

orders allowing the former Trustee's and GLC's administrative

claims for preconversion fees and expenses.

We conclude, on this record, that the orders allowing the

former Trustee's and GLC's administrative claims for preconversion

fees and expenses are interlocutory. Counsel for the former
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Trustee conceded as much at oral argument. We also decline to

consider Sui's notice of appeal of these orders as a motion for

leave to appeal under Rule 8003(c). As such, we must DISMISS

these appeals for lack of jurisdiction. 

Because Sui's case was reconverted to chapter 7, which the

former Trustee is again administering, and because Sui never

confirmed a chapter 13 plan allowing for the administrative claims

of the former Trustee and GLC for preconversion fees and expenses,

the orders at issue are, at best, interim fee awards under § 331. 

Interim awards under § 331 are interlocutory and are always

subject to the court's reexamination and adjustment during the

course of the case. Leichty v. Neary (In re Strand), 375 F.3d

854, 858 (9th Cir. 2004)(citations omitted). 

Although we believe that this case should run its course and

decline to exercise jurisdiction over the appeal of these orders

under Rule 8003(c), we perceive considerable issues with the

merits of the awarded fees and strongly suggest that the

bankruptcy court revisit the awards upon the parties' final fee

applications. We note, the bankruptcy court did not articulate

upon what legal standard it was awarding fees and expenses for

either the former Trustee or GLC, nor did it conduct any

reasonableness analysis, even when reasonableness was questioned

by Sui. The court also made no finding that Trustee's and GLC's

services were likely to benefit the estate at the time rendered. 

Now that Sui's case has been reconverted to chapter 7, the former

Trustee's fees would presumably be subject to § 326. As counsel
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11 Although GLC's employment application expressly sought

employment under § 328, the bankruptcy court's order approving

GLC's employment, which was drafted by GLC, made no mention of 

§ 328, and instead stated that any compensation or reimbursement

was subject to court approval under § 330. Therefore, as GLC even

seems to concede on appeal, its fees were subject to a

reasonableness determination under § 330. See Appellee Response

Brief at 8. We further note that GLC agreed to accept fees only

if property or money is recovered. Other than the $5,000 Trustee

recovered in a settlement with the HOA, we fail to see what other

assets had been recovered prior to GLC being awarded nearly

$15,000 in fees.

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for Trustee employed under § 327(a),11 GLC's fees were (and are)

subject to a reasonableness determination under § 330(a). 

VI. CONCLUSION

Based on the foregoing, we AFFIRM the order reconverting

Sui's case to chapter 7. However, we DISMISS for lack of

jurisdiction the appeal of the interlocutory orders allowing the

former Trustee's and GLC's administrative claims for preconversion

fees and expenses.