Benjamin Hooshim v. Edward M. Wolkowitz , 700 F. App'x 710 ( 2017 )

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NOT FOR PUBLICATION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. § 5511
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-
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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