Court Opinion

ID: 4216618
Source: CourtListenerOpinion
Date Created: 2017-10-31 20:01:39.715535+00
Date Added: 2024-06-11T07:47:44.103923
License: Public Domain

FILED
                             NOT FOR PUBLICATION
                                                                            OCT 31 2017
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

In re: CHONGHEE JANE KIM,              )      No. 16-60045
                                       )
      Debtor,                          )      BAP No. 15-1273
                                       )
                                       )      MEMORANDUM*
EDWARD M. WOLKOWITZ,                   )
Chapter 7 Trustee,                     )
                                       )
      Appellant,                       )
                                       )
      v.                               )
                                       )
BENJAMIN HOOSHIM;                      )
ALEXANDRE OH,                          )
                                       )
      Appellees.                       )
                                       )

                            Appeal from the Ninth Circuit
                             Bankruptcy Appellate Panel
                Taylor, Kurtz, and Faris, Bankruptcy Judges, Presiding

                             Submitted October 4, 2017**
                                Pasadena, California

Before: FERNANDEZ, RAWLINSON, and N.R. SMITH, Circuit Judges.

      *
       This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
      **
      The panel unanimously finds this case suitable for decision without oral
argument. Fed. R. App. P. 34(a)(2).
      Edward Wolkowitz, Chapter 7 Trustee (hereafter “the Trustee”) for the

bankruptcy estate of Chonghee Jane Kim (“Debtor”), appeals the decision of the

United States Bankruptcy Panel of the Ninth Circuit (“BAP”) which vacated the

default judgment issued by the United States Bankruptcy Court for the Central

District of California against Benjamin Hooshim and Alexandre Oh (hereafter

collectively “Creditors”) on August 12, 2015. We agree with the BAP and vacate

the judgment of the bankruptcy court.

      (1)      The Trustee asserts that the BAP erred when it determined that the

Trustee did not have standing to avoid1 deeds of trust on certain property (hereafter

“the Property”) securing notes held by the Creditors. We disagree. The BAP held

that the Trustee lacked standing to pursue avoidance of the Creditors’ liens on the

property at issue. However, on appeal the Trustee fails to address the issue of

standing in the opening brief. We affirm the BAP’s conclusion that the Trustee

lacked standing. The Trustee had previously sold the Property at an auction sale

confirmed by the bankruptcy court, and had quitclaimed the Property to the highest

bidder (the Debtor) subject to the deed of trust liens. Thus, the Property was no

longer part of the bankruptcy estate, and avoiding or otherwise setting aside the

deed of trust liens thereon could not benefit the estate. See 11 U.S.C. § 551

      1
          See 11 U.S.C. § 544(a).

                                           2
(stating that avoided transfers are designed to preserve benefits “with respect to

property of the estate”). In short, as the BAP cogently held, the Trustee had no

standing to pursue avoidance of the Creditors’ liens on the property. See, e.g., Elk

Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11–12, 124 S. Ct. 2301, 2308–09,

159 L. Ed. 2d 98 (2004), abrogated on other grounds by Lexmark Int’l, Inc. v.

Static Control Components, Inc., __U.S.__, __, 134 S. Ct. 1377, 1387, 188 L. Ed.

2d 392 (2014); Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61, 112 S. Ct. 2130,

2136, 119 L. Ed. 2d 351 (1992); Valley Forge Christian Coll. v. Ams. United for

Separation of Church & State, Inc., 454 U.S. 464, 472–73, 102 S. Ct. 752, 758, 70

L. Ed. 2d 700 (1982); Sahni v. Am. Diversified Partners, 83 F.3d 1054, 1057 (9th

Cir. 1996).

      (2)     The Trustee also asserts that the BAP erred when it determined that

the bankruptcy court default judgment erroneously transferred assets of the

Creditors to the Trustee. Again, we disagree. Although we ordinarily do not

address the merits of an issue once we have determined that there is a defect in a

party’s standing, the BAP also addressed the merits in its decision. In doing so, the

BAP held that the bankruptcy court erred to the extent it granted a default

judgment award that exceeded the relief requested in the complaint. See Fed. R.

Bankr. P. 7054(a) (incorporating Fed. R. Civ. P. 54(c)); McDonald v. Checks-N-

                                          3
Advance, Inc. (In re Ferrell), 539 F.3d 1186, 1192–93 (9th Cir. 2008) (per curiam).

We find no error in the BAP’s conclusion on this issue.2

      The BAP correctly decided that the default judgment issued by the

bankruptcy court should be vacated in its entirety.

      We therefore VACATE the judgment of the bankruptcy court and remand

for further proceedings. Costs are to be taxed against the Appellant.

      2
        The adversary complaint prayed for an avoidance of the liens, not for orders
transferring the Creditors’ properties to the bankruptcy estate.

                                          4