Court Opinion

ID: 9951622
Source: CourtListenerOpinion
Date Created: 2024-03-18 16:00:56.678886+00
Date Added: 2024-06-11T14:41:50.845342
License: Public Domain

FOR PUBLICATION

     UNITED STATES COURT OF APPEALS
          FOR THE NINTH CIRCUIT

In re: EDWIN C. LICUP;                          No. 23-60017
CHRISTINE TRACY CASTRO,
                                              BAP No. 22-1111
            Debtors.
______________________________
                                                  OPINION
EDWIN C. LICUP; CHRISTINE
TRACY CASTRO,

                Defendants-Appellants,

    v.

JEFFERSON AVENUE TEMECULA
LLC,

                Plaintiff-Appellee.

                Appeal from the Ninth Circuit
                 Bankruptcy Appellate Panel
    Gan, Brand, and Spraker, Bankruptcy Judges, Presiding

                  Submitted March 8, 2024 *
                    Pasadena, California

*
 The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2             LICUP V. JEFFERSON AVE. TEMECULA LLC

                      Filed March 18, 2024

Before: Richard R. Clifton, Holly A. Thomas, and Roopali
                H. Desai, Circuit Judges.

                Opinion by Judge H.A. Thomas

                          SUMMARY **

                           Bankruptcy

   The panel affirmed the Bankruptcy Appellate Panel’s
decision affirming the bankruptcy court’s summary
judgment in favor of a judgment creditor in the creditor’s
adversary proceeding against two Chapter 7 debtors.
    The debtors’ schedule of creditors listed an incorrect
mailing address for the creditor’s attorney, and the creditor
did not file a claim in the bankruptcy case. In the adversary
proceeding, the creditor sought a determination that its
default judgment in an unlawful detainer case was not
discharged by the Chapter 7 bankruptcy judgment because
the creditor was never provided with notice of the
bankruptcy. The bankruptcy court ruled that no portion of
the unlawful detainer judgment was dischargeable.
    Affirming, the panel held that the creditor had standing
to file the adversary proceeding, and the creditor’s standing
to enforce the unlawful detainer judgment was not at issue

**
  This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
            LICUP V. JEFFERSON AVE. TEMECULA LLC           3

because it sought only a determination whether any debt held
by it was nondischargeable.
    The panel rejected, as foreclosed by the plain language
of 11 U.S.C. § 523(a)(3)(A), the debtors’ argument that all
but $1,614.74 of the unlawful detainer judgment, the amount
the creditor would have received had it timely filed a claim
in the bankruptcy proceeding, was discharged as a result of
that proceeding.

                        COUNSEL

Timothy J. Walsh, Timothy J. Walsh Attorney at Law,
Fairfield, California, for Appellant.
Allan D. Sarver, Law Offices of Alan D. Sarver, Encino,
California, for Appellee.

                        OPINION

H.A. THOMAS, Circuit Judge:

    We answer in this appeal a question previously
unresolved by our court: Is any portion of an unscheduled
debt dischargeable in a Chapter 7 bankruptcy proceeding?
We have jurisdiction over this appeal from the Bankruptcy
Appellate Panel (BAP) pursuant to 28 U.S.C. § 158(d). For
the reasons explained below, we conclude that, outside of a
non-asset bankruptcy, a debtor’s failure to properly schedule
a debt renders that debt nondischargeable in its entirety.
4            LICUP V. JEFFERSON AVE. TEMECULA LLC

                               I.
    In December 2012, Jefferson Avenue Temecula LLC,
the creditor in this action, filed an unlawful detainer suit
against debtor Christine Tracy Castro. After Castro failed to
appear in the suit, a default judgment was entered against her
in January 2013. Although the caption of the judgment
named “Christina Castro, D.D.S.” as the defendant, a field
in the body of the judgment form indicated that judgment
was entered against “Christina Castro, LLC.” The unlawful
detainer judgment included, among other relief, a monetary
award to Jefferson of $31,780.29.
    On February 3, 2014, Castro and her spouse, Edwin C.
Licup (who together are the appellants in this matter), filed
for Chapter 7 bankruptcy relief. As required by 11 U.S.C.
§ 342(f), Castro and Licup submitted a schedule, or list, of
their creditors, along with the creditors’ mailing addresses.
The schedule, however, provided an incorrect mailing
address for Jefferson’s attorney. Jefferson did not file a claim
against Castro and Licup in the bankruptcy action. The
bankruptcy case was closed on September 12, 2016. The
debt owed to Jefferson was listed among the debts
discharged.
    On July 7, 2021, Jefferson initiated this proceeding.
Jefferson sought a determination that its 2013 default
judgment in the unlawful detainer case was not discharged
by the Chapter 7 bankruptcy judgment because Jefferson
was never provided with notice of the bankruptcy. Castro
and Licup responded by filing a motion for summary
judgment. They argued that the unlawful detainer judgment
was nondischargeable only up to the amount that Jefferson
would have received had it timely filed a claim during
bankruptcy proceedings—an amount Castro and Licup
            LICUP V. JEFFERSON AVE. TEMECULA LLC             5

calculated at $1,614.74—and that the rest of the debt had
been extinguished by the bankruptcy.
    The bankruptcy court directed Castro and Licup to file
briefs addressing why the court should not, on its own
motion, grant Jefferson summary judgment in the entire
amount of its claim. In response, Castro and Licup withdrew
their first motion for summary judgment and filed two new
motions for summary judgment. These motions argued, in
part, that because the 2013 unlawful detainer judgment had
named an LLC rather than Castro and Licup personally,
Jefferson lacked standing to enforce it.
    After suspending briefing on the two new summary
judgment motions pending resolution of the first, the
bankruptcy court sua sponte granted summary judgment to
Jefferson. The bankruptcy court found that no portion of the
2013 unlawful detainer judgment was dischargeable because
Jefferson had undisputedly received no notice of Castro and
Licup’s bankruptcy. The court declined to address Castro
and Licup’s contention that the unlawful detainer judgment
was not enforceable against them, advising Castro and Licup
to raise any defenses against Jefferson’s collection efforts in
“another forum with proper jurisdiction.”
    Castro and Licup appealed to the BAP, which affirmed
the bankruptcy court. The BAP rejected Castro and Licup’s
argument that most of their debt to Jefferson was
dischargeable, explaining that the Bankruptcy Code did not
permit partial discharge of the unlawful detainer judgment
in the manner Castro and Licup sought. The BAP also
declined to consider the argument that the unlawful detainer
judgment could not be enforced against Castro and Licup,
noting that the bankruptcy court had not addressed this issue
6           LICUP V. JEFFERSON AVE. TEMECULA LLC

and that Castro and Licup could raise their enforceability
arguments in state court. This appeal followed.
                             II.
    “We review BAP decisions de novo, applying ‘the same
standard of review that the BAP applied to the bankruptcy
court’s ruling.’” In re Albert, 998 F.3d 1088, 1091 (9th Cir.
2021) (quoting In re Boyajian, 564 F.3d 1088, 1090 (9th Cir.
2009)). “Whether a claim is nondischargeable presents
mixed issues of law and fact and is reviewed de novo.”
Lockerby v. Sierra, 535 F.3d 1038, 1040 (9th Cir. 2008)
(quoting In re Su, 290 F.3d 1140, 1142 (9th Cir. 2002)).
                             III.
     Castro and Licup renew before us their argument that
Jefferson lacks standing to enforce the 2013 unlawful
detainer judgment because that judgment named an LLC
rather than Castro or Licup personally. But as the bankruptcy
court explained, Jefferson, in the adversary proceeding that
is the subject of this appeal, did not seek a judgment for the
underlying debt or seek to enforce the 2013 unlawful
detainer judgment already entered by the state court. The
only material issue before the bankruptcy court was whether
any debt held by Jefferson—whom Castro and Licup
attempted to schedule as a creditor—was nondischargeable.
The court concluded that it was.
    Against whom that state court judgment can be collected
is a matter of state law and interpretation of the prior state
court judgment. Those issues are properly resolved by the
state court, not by the bankruptcy court or by us; we
therefore do not address them. Because it is conceded that
Jefferson suffered an actual injury, and because a judgment
of nondischargeability can redress that injury, Jefferson did
            LICUP V. JEFFERSON AVE. TEMECULA LLC             7

not lack standing to file this adversary proceeding. See In re
Tower Park Props., LLC, 803 F.3d 450, 456–57 (9th Cir.
2015) (describing the requirements of bankruptcy standing).
                             IV.
     Castro and Licup argue that, even if Jefferson has
standing to seek a judgment of nondischargeability, all but
$1,614.74 of the judgment—the amount they contend
Jefferson would have received had it timely filed a claim in
the bankruptcy proceeding—was discharged as a result of
that proceeding. They reason that Jefferson’s recovery of the
full $31,780.29 provided for in the unlawful detainer
judgment would constitute a windfall, one possible only
because Jefferson lacked proper notice of the bankruptcy
filing. Castro and Licup also attempt to draw comparisons
between their case and “non-asset” bankruptcy cases, in
which we have held that a debtor’s failure to notify a creditor
does not render a debt nondischargeable. In re Beezley, 994
F.2d 1433 (9th Cir. 1993) (per curiam); In re Nielsen, 383
F.3d 922 (9th Cir. 2004). Their reasoning is flawed.
    “In order for a debt to be duly listed” under the
bankruptcy rules, “the debtor must state the name and
address of the creditor.” In re Fauchier, 71 B.R. 212, 215
(B.A.P. 9th Cir. 1987) (citing Fed. R. Bankr. P. 1007). As
the BAP held in Fauchier, this rule is grounded in basic
principles of due process: In the absence of such notice, a
creditor may well be deprived of her right to have her day in
court. Id. To ensure that a creditor has the opportunity to
vindicate her property rights, the Bankruptcy Code generally
makes a debt nondischargeable if the debt is “neither listed
nor scheduled under [11 U.S.C. § 521(a)(1)] . . . in time to
permit . . . timely filing of a proof of claim, unless such
8             LICUP V. JEFFERSON AVE. TEMECULA LLC

creditor had notice or actual knowledge of the case in time
for such timely filing.” 11 U.S.C. § 523(a)(3)(A).
    Castro and Licup do not contend that they correctly listed
Jefferson’s address. Nor do they argue that Jefferson had
actual knowledge of their bankruptcy petition. The plain
language of Section 523(a)(3)(A) therefore precludes the
discharge of the unlawful detainer debt.
    Castro and Licup nevertheless urge us to follow the
reasoning of “non-asset” bankruptcy cases, such as In re
Beezley and In re Nielsen. We explained in those cases that
in a “no-assets, no-bar-date Chapter 7 bankruptcy,” 1 the
bankruptcy rules do not require creditors to file any claims,
as there are no assets to distribute. In re Nielsen, 383 F.3d at
926–27; Fed. R. Bankr. P. 2002(e). Section 523(a)(3)(A)’s
protections are plainly irrelevant in such cases—creditors
need not be notified of proceedings in which filing a claim
would be “meaningless and worthless.” In re Nielsen, 383
F.3d at 927. But those protections are relevant here, where
Castro and Licup had assets to distribute, and their creditors
were therefore required to file claims during the Chapter 7
bankruptcy proceedings. See Fed. R. Bankr. P. 3002(a).
    Nor does Castro and Licup’s policy argument regarding
a potential “windfall” to Jefferson prevail. That Jefferson
may stand to recover a greater amount than it would have
had it been properly notified—$31,780.29 versus $1,614.74,
by Castro and Licup’s calculation—is of no moment. The
Bankruptcy Code states plainly, and without qualification,
that a bankruptcy court’s order of discharge “does not

1
  The “bar date” is the deadline set by a bankruptcy court for filing a
proof of claim. See In re Beezley, 994 F.2d at 1436 (O’Scannlain, J.,
concurring).
            LICUP V. JEFFERSON AVE. TEMECULA LLC             9

discharge an individual debtor from any debt” if the creditor
was not appropriately listed. 11 U.S.C. § 523(a). We decline
to read into Section 523(a)(3)(A) a limitation that the statute
does not contain.
    The plain language of 11 U.S.C. § 523(a)(3)(A) makes
the 2013 unlawful detainer judgment in favor of Jefferson
nondischargeable in Castro and Licup’s bankruptcy. The
BAP’s decision is therefore AFFIRMED.