Lan-Anh Truong V. , 398 F. App'x 300 ( 2010 )

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NOT FOR PUBLICATION OCT 06 2010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.
3