Court Opinion

ID: 176743
Source: CourtListenerOpinion
Date Created: 2010-10-07 00:01:47+00
Date Added: 2024-06-11T17:25:39.547728
License: Public Domain

FILED
                            NOT FOR PUBLICATION                               OCT 06 2010

                                                                          MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In the Matter of: LAN-ANH TRUONG,                No. 09-55613

              Debtor,                            D.C. No. 8:08-cv-00631-JVS

LAN-ANH TRUONG and PHAN-ANH                      MEMORANDUM*
DO,

              Appellants,

  v.

JOHN M. WOLFE, the Chapter 7 Trustee
of the Debtor,

              Appellee.

                   Appeal from the United States District Court
                      for the Central District of California
                    James V. Selna, District Judge, Presiding

                        Argued and Submitted June 9, 2010
                               Pasadena, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: GOODWIN and RAWLINSON, Circuit Judges, and MARBLEY, United
States District Judge.***

      Appellant challenges the district court’s affirmance of the bankruptcy court

order for the turnover of assets in Lan Anh Truong’s (“Debtor”) Chapter 7

bankruptcy proceeding and the bankruptcy court’s judgment after a one-day trial in

an adversary proceeding filed by Chapter 7 Trustee John M. Wolfe (“Trustee”).

      The bankruptcy court had jurisdiction to order the turnover of trust proceeds

because an order to turn over property of the estate is enumerated as a core

bankruptcy proceeding, which bankruptcy judges are specifically empowered to

hear and determine. 28 U.S.C. § 157(b). The stock at issue in the turnover order

qualifies as property of the bankruptcy estate. 11 U.S.C. § 541(c)(2); 11 U.S.C. §

541(a)(7). Debtor’s self-settled trust is invalid under state law and there is no

federal nonbankruptcy law under which the provision is enforceable. See In re

Neuton, 922 F.2d 1379, 1383 (9th Cir. 1990) ( “However, California has placed

restrictions on the trustor's power to create a spendthrift trust.”).

      Appellant’s appeal of the turnover order is untimely. The turnover order,

which held that Trustee was entitled to income distributions from certain trust

property, substantively affected the rights of the parties and was a final order

        ***
            The Honorable Algenon L. Marbley, United States District Judge for
the Southern District of Ohio, sitting by designation.

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requiring immediate review. In re Allen, 896 F.2d 416, 419 (9th Cir. 1990); see

also In re Mason, 709 F.2d 1313, 1318 (9th Cir. 1983) (“The unique nature of

bankruptcy procedure dictates, however, that we take a pragmatic approach to the

question of finality.”).

      Appellant was the proper party to receive notice and to represent the 1998

Trust in the bankruptcy court’s adversary proceeding because the trustee of an

express trust is competent to defend on behalf of the beneficiaries in an action

against a third party, unless inhibited by the trust instrument. Bernstein v.

Equitable Discount Corp., 8 Cal. App. 2d 265, 269 (1935); Johnson v. Curley, 83

Cal. App. 627, 630 (1927); see also Fed. R. Civ. P. 17(a) (permitting suits by

persons other than those whose legal rights are at issue if the plaintiff is “trustee of

an express trust”). Additionally, the bankruptcy court did not clearly err in finding

that the 1998 Trust was the alter ego of Debtor. See Towe Antique Ford Found. v.

I.R.S., 999 F.2d 1387, 1391 (9th Cir. 1993) (alter ego determinations are typically

findings of fact reviewed for clear error).

      We have examined the remaining issues raised on appeal and conclude that

none of them has merit.

      AFFIRMED.

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