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FILED

JAN 05 2016

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

NOT FOR PUBLICATION

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

In re: ) BAP No. CC-15-1106-TaKuKi

)

HOLY HILL COMMUNITY CHURCH, ) Bk. No. 2:14-bk-21070-WB

)

Debtor. ) Adv. No. 2:14-ap-01744-WB

______________________________)

)

DANA PARK, )

)

Appellant, )

)

v. ) MEMORANDUM*

)

RICHARD J. LASKI, Chapter 11 ) 

Trustee; 1111 SUNSET, LLC; )

DOWNTOWN CAPITAL, LLC, )

)

Appellees.** )

______________________________)

Argued and Submitted on November 19, 2015

at Pasadena, California

Filed – January 5, 2016

Appeal from the United States Bankruptcy Court

for the Central District of California

Honorable Julia Wagner Brand, Bankruptcy Judge, Presiding

 

Appearances: Marvin Levy argued for appellant Dana Park; 

Richard D. Buckley, Jr. of Arent Fox LLP argued 

for appellee Richard J. Laski, Chapter 11 

Trustee.

 

FILED

JAN 05 2016

SUSAN M. SPRAUL, CLERK

U.S. BKCY. APP. PANEL

OF THE NINTH CIRCUIT

* 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 8024-1(c)(2).

** Although named by Appellant in the notice of appeal,

1111 Sunset, LLC was not a party to the adversary proceeding. 

And Downtown Capital, LLC did not appear in the appeal.
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Before: TAYLOR, KURTZ, and KIRSCHER, Bankruptcy Judges.

INTRODUCTION

Dana Park appeals from an order dismissing, without leave

to amend, a complaint against chapter 111 debtor Holy Hill

Community Church. DISMISSAL of the appeal, based on mootness,

is warranted. To the extent any portion of the appeal retains

vitality, a merits review yields no basis for reversal and we

would AFFIRM. 

FACTS

The Debtor is a Presbyterian church that formerly owned

valuable real property located in Los Angeles, California (the

“Property”).

Prepetition Events

In 2010, a schism developed between the Debtor’s membership

and leadership. Eventually, The Western California Presbytery,

a governing organization for the Debtor, became involved. The

dispute escalated, and the Presbytery took action; on March 24,

2011, it terminated Dong Sub Bang as pastor and president of the

board of elders, and it replaced the three members of the board

of elders. The result of the Presbytery’s actions was a

competition between the factions for possession and control of

the church and the Property. 

In April 2011, the Presbytery sought a secular solution to

the discord and commenced an action against Bang and the three

1 Unless otherwise indicated, all chapter and section

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

All “Rule” references are to the Federal Rules of Bankruptcy

Procedure and all “Civil Rule” references are to the Federal

Rules of Civil Procedure.

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removed elders (collectively, the “Bang Faction”) in California

state court (the “Presbytery action”). The Bang Faction

responded by recording two deeds of trust purporting to create

liens in their favor and against the Property. And in August

2011, it executed and recorded a quitclaim deed (“Beverly Deed”)

purporting to transfer the Property from the Debtor to Beverly

Real Estate Investments LLC (“Beverly LLC”). Beverly LLC later

recorded a quitclaim deed transferring the Property to Golden

Fish, LLC. Park now entered the fray; she controls both

Beverly LLC and Golden Fish, LLC.

After its discovery of this activity, the Debtor took

action independent of the Presbytery and commenced a quiet title

action against Park, Beverly LLC, and the Bang Faction in state

court. Subsequently it filed an application for an order

restoring title in the Property to the Debtor, based on an order

entered in the related Presbytery action. 

In the Presbytery action, the court had issued an order

finding the Beverly Deed invalid because the Bang Faction

executed it after their removal from the Debtor’s governance

(“Presbytery action order”). Based on that finding, the court

then granted a request for injunctive relief preventing the Bang

Faction, Park, and Beverly LLC from interfering with the

Debtor’s possession, management, and control of the Property. 

It also ordered restoration of the Property to the Presbytery. 

Notably, the Presbytery action order contained express reference

to Park and Beverly LLC, although neither was a named party in

the litigation. 

Consistent with the Presbytery action order, the court in

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the Debtor’s quiet title action granted the Debtor’s

application, over Park’s objection, and ordered that title in

the Property be restored to the Debtor (“order restoring

title”). Its decision was made in accordance with the

Presbytery action order, “finding invalid the attempt to

transfer the Property . . . .” Concurrently, the state court

clerk of court, on behalf of Beverly LLC, executed a quitclaim

deed that transferred the Property from Beverly LLC back to the

Debtor; the deed was properly recorded. The Debtor also moved

for and obtained a state court order expunging the deeds of

trust recorded by the Bang Faction (“order expunging liens”). 

Park and Beverly LLC soon found themselves without counsel

in the quiet title action. As a result, the state court struck

their answers and entered defaults (but not default judgments)

against them; they did not appear again in the litigation. 

Meanwhile, having obtained restoration of title to the Property,

the Debtor successfully petitioned for voluntary case dismissal

of its action.

Bankruptcy Filing and Post-Petition Events 

The Debtor filed its chapter 11 petition in June 2014. A

chapter 11 trustee was appointed soon after.

In September 2014 and in spite of knowledge of the

bankruptcy, Park commenced an action against the Debtor and

members of the Bang Faction (but not Bang), in state court; she

did not seek stay relief prior to filing the action. The

complaint alleged broadly that Park held an interest in the

Property based on “a quitclaim deed.” It sought to quiet title

against the Debtor’s claims to the Property as of the chapter 11

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petition date and requested a declaration that the defendants

did not have any right, title, estate, lien, or interest in the

Property. The complaint also alleged that the defendants

wrongfully threatened to sell the Property; thus, Park sought

injunctive relief preventing interference with her use of the

Property.

The Trustee removed Park’s action to the bankruptcy court

and moved to dismiss the complaint under Civil Rule 12(b)(6),

without leave to amend, based on the issue preclusive effect of

the state court orders in the Debtor’s quiet title action. 

Thus, he discounted the impact of the Beverly Deed because the

state court previously deemed it invalid. Similarly, he also

dismissed the impact of an unrecorded deed in lieu of

foreclosure relied upon by Park; the Bang Faction signed it

during a time when the state court previously determined they

lacked authority to take action on behalf of the Debtor.

Park opposed. Beyond a broad assertion that the complaint

contained sufficient factual allegations supporting a plausible

claim for relief, she also asserted, vaguely, that other claims

for relief possibly existed, including fraud, unjust enrichment,

and “other causes of action.” Park admitted, however, that she

needed to propound discovery on the Debtor and “other involved

parties” to flesh out these claims. 

At the bankruptcy court’s request, the parties submitted

supplemental briefs on the issue of issue preclusion; the

bankruptcy court was particularly concerned with whether the

“final judgment” element was satisfied, given that the Debtor

had dismissed its quiet title action prior to trial. Park

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responded with an assertion aslant of this request; according to

Park, the Beverly Deed was executed on account of Beverly LLC’s

purchase of the promissory note evidencing an obligation owed

for the Property in July 2011. She also argued more generally

that the state court orders were not final for issue preclusion

purposes and that, in any event, she was not a party to or in

privity with the party subject to the Presbytery action order.

At a continued hearing, the bankruptcy court stated that

after a careful review of the Trustee’s motion, Park’s

opposition, and the supplemental briefs, it would dismiss the

complaint without leave to amend. It found all of the elements

for issue preclusion satisfied, as it deemed the order restoring

title a final order. It also noted that quitclaim deed executed

by the state court clerk of court had transferred the Property

back to the Debtor, and that no appeal followed. The bankruptcy

court concluded with the observation that Park was free to file

a proof of claim in the bankruptcy case if she had claims beyond

the complaint, but that leave to amend the complaint was not

warranted. 

The bankruptcy court entered an order dismissing Park’s

claims with prejudice. Park appealed.

JURISDICTION

The bankruptcy court had jurisdiction pursuant to 28 U.S.C.

§§ 1334 and 157(b)(2)(A). We have jurisdiction under 28 U.S.C.

§ 158, as discussed further below.

ISSUES

Whether this appeal is moot; if not, whether the bankruptcy

court erred in dismissing the complaint or abused its discretion

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in dismissing without leave to amend.

STANDARDS OF REVIEW

We review the following issues de novo: our jurisdiction,

including questions of mootness, Ellis v. Yu (In re Ellis),

523 B.R. 673, 677 (9th Cir. BAP 2014); dismissal of an adversary

proceeding under Civil Rule 12(b)(6), Johnson v. Fed. Home Loan

Mortg. Corp., 793 F.3d 1005, 1007 (9th Cir. 2015); and the

availability of issue preclusion. Plyam v. Precision Dev., LLC

(In re Plyam), 530 B.R. 456, 461 (9th Cir. BAP 2015).

If issue preclusion was available, we next review the

bankruptcy court’s application for an abuse of discretion. Id. 

A bankruptcy court abuses its discretion if it applies the wrong

legal standard, misapplies the correct legal standard, or if its

factual findings are illogical, implausible, or without support

in inferences that may be drawn from the facts in the record. 

Id. We also review for an abuse of discretion a bankruptcy

court’s decision to dismiss a complaint without leave to amend. 

Tracht Gut, LLC v. Cty. of Los Angeles Treasurer & Tax Collector

(In re Tracht Gut, LLC), 503 B.R. 804, 810 (9th Cir. BAP 2014). 

Finally, we may affirm on any basis supported by the

record. Heers v. Parsons (In re Heers), 529 B.R. 734, 740 (9th

Cir. BAP 2015).

DISCUSSION

Following the filing of the notice of appeal, the

bankruptcy court entered an order approving a § 363 sale (the

“§ 363 order”) of the Property to a third party purchaser, “free

and clear of all liens, liabilities, claims and encumbrances of

any kind and nature . . . .” The § 363 order contained several

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critical findings: the bankruptcy estate was “the sole and

lawful owner of the Property”; the sale vested the purchaser

with all of the estate’s “right, title, and interest . . . to

the Property”; and the purchaser was a good faith buyer within

the meaning of § 363(m). Park received notice of the motion to

sell; she did not file any opposition. No appeal was taken from

the § 363 order, and it is now final.

In response to a BAP Clerk order on potential mootness,

Park contends that the sale did not moot the appeal, as the

Panel could provide that the sale was subject to Park’s claims

in her quiet title action. And she contends that the buyer was

not a bona fide purchaser because it knew or should have known

of Park’s quiet title action. In the alternative, she asserts

that the Panel could order the “Trustee [to] hold in reserve,

from future distributions to be made to unsecured creditors,

funds sufficient to pay [Park’s] pro rate [sic] share of her

claim as required by section 502(j) of the Bankruptcy Code,

especially since the Chapter 11 Plan has not yet been confirmed

by the bankruptcy court.” In closing, Park argues that hotly

contested issues remain as to her asserted rights and claims to

the Property. 

Based on the record before us, we conclude that the appeal

is moot as to Park’s claims for injunctive relief and requesting

a quiet title order as to the Property. 

“A case is moot if the issues presented are no longer live

and there fails to be a ‘case or controversy’ under Article III

of the Constitution.” Pilate v. Burrell (In re Burrell),

415 F.3d 994, 998 (9th Cir. 2005). Determining constitutional

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mootness turns on whether “the appellate court can give the

appellant any effective relief in the event that it decides the

matter on the merits in [its] favor.” Id. An appeal may be

equitably moot if an appellant fails to seek a stay pending

appeal. See JPMCC 2007-C1 Grasslawn Lodging, LLC v. Transwest

Resort Properties, Inc. (In re Transwest Resort Props., Inc.),

801 F.3d 1161, 1167 (9th Cir. 2015). 

Here, the complaint sought to quiet title in Park’s favor

and for injunctive relief barring the Debtor’s “interference”

with Park’s use of the Property. Curiously, title to and

possession of the Property was restored to the Debtor nearly two

and a half years before Park commenced her action. In any

event, the § 363 sale extinguished Park’s requests as to title

and possession. As stated, the § 363 order is now final. 

Park’s failure to appeal, let alone seek a stay pending appeal

of the § 363 order, only strengthens a mootness determination. 

See Rev Op Grp. v. ML Manager LLC (In re Mortgs. Ltd.), 771 F.3d

1211, 1216 (9th Cir. 2014). 

To the extent Park believes that she possesses a damages

claim or is entitled to the sale proceeds based on an

extinguished ownership interest in the Property, on this record,

we disagree. Park’s interest in the Property was premised on

the Beverly Deed. But, the state court in the Presbytery action

determined that the deed was invalid. As the bankruptcy court

determined, Park was precluded from relitigating the validity of

the Beverly Deed issue so as to establish an ownership interest

in the Property. Therefore, it did not err in dismissing the

complaint with prejudice. But, even if issue preclusion was not

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available, any error was harmless as the § 363 order supplies an

ultimate bar to Park’s claims to the Property. 

A motion to dismiss under Civil Rule 12(b)(6) (incorporated

into adversary proceedings by Rule 7012(b)) challenges the

sufficiency of the allegations set forth in a complaint and “may

be based on either a lack of [: (1)] a cognizable legal theory

or . . . [(2)] sufficient facts alleged under a cognizable

legal theory.” Johnson v. Riverside Healthcare Sys., LP,

534 F.3d 1116, 1121 (9th Cir. 2008) (internal quotation marks

and citation omitted). The court’s review is limited to the

allegations of material facts set forth in the complaint, which

must be read in the light most favorable to the non-moving

party, and together with all reasonable inferences therefrom,

must be taken as true. Pareto v. Fed. Dep’t Ins. Corp.,

139 F.3d 696, 699 (9th Cir. 1998).

Consistent with Civil Rule 8(a)(2), the factual allegations

in the complaint must state a claim for relief that is facially

plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); see

also Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007). Thus,

based on the Iqbal/Twombly rubric, the bankruptcy court must

first identify bare assertions that “do nothing more than state

a legal conclusion—even if that conclusion is cast in the form

of a factual allegation,” and discount them from an assumption

of truth. See Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th

Cir. 2009). Then, if there remain well-pleaded factual

allegations, the bankruptcy court should assume their truth and

determine whether the allegations “and reasonable inferences

from that content” give rise to a plausible claim for relief. 

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Id. “[D]etermining whether a complaint states a plausible claim

is context-specific, requiring the reviewing court to draw on

its experience and common sense.” 556 U.S. at 679. 

In California, issue preclusion applies: (1) after final

adjudication; (2) of an identical issue; (3) actually litigated

in the former proceeding; (4) necessarily decided in the former

proceeding; and (5) asserted against a party in the former

proceeding or in privity with that party. See DKN Holdings LLC

v. Faerber, 61 Cal. 4th 813, 825 (2015).

Park challenges only the bankruptcy court’s determinations

in relation to two of the elements of issue preclusion: that the

state court orders were final and that Park was a party to or in

privity with the parties to those orders. To be clear, there

are two sets of state court orders: the Presbytery action order

(consisting of a preliminary injunction order) and the Debtor’s

quiet title action orders (consisting of the order restoring

title and the order expunging liens). In issuing its orders,

the state court in the Debtor’s quiet title action explicitly

relied on the Presbytery action order. 

These orders, admittedly, provided for injunctive relief,

so as to preserve the status quo during the pendency of the

Debtor’s quiet title action (and the Presbytery action). In

California, “a decision on an application for a preliminary

injunction does not amount to a decision on the ultimate rights

in controversy.” Bomberger v. McKelvey, 35 Cal. 2d 607, 612

(1950). Nonetheless, an exception is carved out when “it

appears that the court intended a final adjudication of the

issue involved . . . .” Id.

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That was the result here. As stated, Park’s interest in

the Property is premised on the Beverly Deed. But, the state

court in the Presbytery action found that the Beverly Deed was

invalid because the Bang Faction had been removed from their

positions in the church at the time that the Beverly Deed was

executed and recorded. In particular:

The evidence show[ed] that the attempt by Bang and his

affiliates to quitclaim the deed to the Property was

invalid as these individuals had already been removed

from their positions by the Presbytery, and thus, had

no authority to act on behalf of the Church. See

August 29, 2011 Order (finding that Bang was removed

by the Presbytery as Senior Pastor on March 29, 2011,

that the Presbytery appointed a new Board of Elders

headed by the new Senior Pastor Reverend Abraham Cho,

and that “the Cho faction was entitled to operate and

manage Church property on an interim basis.”).

Adv. Dkt. No. 11 at 124 (emphasis added).

On appeal in the Presbytery action, the California court of

appeal in effect reaffirmed this finding. See The W. Cal.

Presbytery v. Holy Hill Cmty. Church, 2012 WL 5360909, at *2, 4

(Cal. Ct. App. Nov. 1, 2012) (the record supported the trial

court’s determination that Bang was removed from his pastorship

in March 2011); see also Jun Ki Kim v. True Church Members of

Holy Hill Cmty. Church, 236 Cal. App. 4th 1435, 1442 (2015)

(“[W]ithout authority, Rev. Bang entered into financial

arrangements with . . . other entities which had the effect of

encumbering the [Property] . . . .”). That Bang and his faction

were no longer in control of the church and, thus, lacked any

authority to effectuate a transfer of the Property in August

2011 is beyond dispute; it is now a conclusive fact. Nothing

Park asserts can change this fact. And, even if Park could

surmount this hurdle, she ignores the consequences of the

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quitclaim deed later issued by the state court clerk of court,

transferring the Property back to the Debtor. 

Park’s arguments as to the same party or privity element

similarly fail. There is no question that Park was a party to

the Debtor’s quiet title action or that the state court’s orders

in that litigation applied to Park and Beverly LLC. Again, the

state court in the Debtor’s quiet title action relied on the

finding in the Presbytery action order, but it acted

independently. In any event, the state court in the Presbytery

action identified Park and Beverly LLC in its order. That Park

and Beverly LLC were not parties to the Presbytery action is,

thus, irrelevant. 

Based on the foregoing, issue preclusion was available and

the bankruptcy court did not abuse its discretion in giving

preclusive effect to the state court orders. But, even if issue

preclusion was not available, any error was harmless based on

the § 363 order.

Again, the § 363 order contained critical findings, such as

the estate’s sole ownership of the Property. The order,

inclusive of the findings, is now final and non-appealable. The

result serves to bar any assertion by Park of an interest in the

Property. Instead, Park’s continued efforts to challenge

ownership constitute an impermissible collateral attack of the

§ 363 order.

In sum, Park could not show that she had a valid interest

in the Property when she filed her complaint. The § 363 order

now further bars any such assertion. Consequently, there was no

error in the bankruptcy court’s dismissal of the complaint; nor

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did it abuse its discretion in denying leave to amend as any

amendment would be futile. 

CONCLUSION

We conclude that DISMISSAL of the appeal as moot is

appropriate. In the alternative, based on a merits review, we

would AFFIRM the bankruptcy court.

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