In re: Helen Lim-Suk Fung

Filing 55

MINUTES IN CHAMBERS - ORDER AFFIRMING BANKRUPTCY COURT'S RULING TO DENY STAY by Judge Dolly M. Gee: In light of the foregoing, the judgment of the Bankruptcy Court is AFFIRMED. (Made JS-6. Case Terminated.) (jp)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No.

Date

CV 15-6245-DMG
2:15-bk-21213-VZ

Title In Re: Helen Lim-Suk Fung
Present: The Honorable

JS-6

August 10, 2016

Page

1 of 8

DOLLY M. GEE, UNITED STATES DISTRICT JUDGE

KANE TIEN
Deputy Clerk

NOT REPORTED
Court Reporter

Attorneys Present for Plaintiff(s)
None Present

Attorneys Present for Defendant(s)
None Present

Proceedings: IN CHAMBERS - ORDER AFFIRMING BANKRUPTCY COURT’S
RULING TO DENY STAY
I.
PROCEDURAL BACKGROUND
On August 17, 2015, pro se Appellant Helen Lim-Suk Fung filed a notice of appeal of the
Bankruptcy Court’s denial of her motion for a stay. [Doc. # 2.] On March 28, 2016, the Court
received notice that the bankruptcy record was complete. [Doc. # 27.]
On April 22, 2016, Appellant filed her opening brief. (Appellant’s Opening Brief
(“AOB”) [Doc. # 41].) On May 2, 2016, Appellant filed her second opening brief. (Appellant’s
Second Opening Brief (“ASB”) [Doc. # 43].) On May 19, 2016, Appellee Oregon Trail
Corporation, Inc. filed its reply brief. (Appellee’s Reply Brief (“ARB”) [Doc. # 46].) On June
7, 2016, Appellant filed her reply brief. (Appellant’s Reply Brief (“Fung Reply”) [Doc. # 53].)1
II.
FACTUAL BACKGROUND
Fung was the owner of real property (“the Property”) located at 28635 Hazelridge Drive,
Rancho Palos Verdes, CA 90275. (Appellant’s Designation of Record at 132 (“Fung Record”)
[Doc. # 24].) In December 2012, Fung received a “hardmoney” loan of $80,000 from Oregon
Trail, secured by a lien against the Property. (AOB at 2:1-13.) The terms were for a 24-month
loan at a fixed interest rate of 12.5%, with a balloon payment due on December 15, 2014. (Id. at
1

This filing is labeled as “Appellant’s Objections to Appellee’s Responding Brief to Appellant’s First and
Second Opening Briefs,” which the Court construes as a reply brief.
2

Page references are to the page numbers inserted in the header of the document upon filing with the
CM/ECF filing system.
CV-90

CIVIL MINUTES—GENERAL

Initials of Deputy Clerk KT

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No.

Date

CV 15-6245-DMG
2:15-bk-21213-VZ

Title In Re: Helen Lim-Suk Fung

JS-6

August 10, 2016

Page

2 of 8

22.) Fung made payments on the loan until June 2014. (Id. at 2:6-13.) A Notice of Default was
executed on the Property on June 18, 2014. (Id. at 30-31.) On November 19, 2014, Fung filed
for Chapter 13 bankruptcy protection, but voluntarily dismissed those proceedings on March 25,
2015. [Bk Doc. #1 at 2.]
On July 16, 2015, Appellant again filed for Chapter 13 bankruptcy protection and moved
for an order “Imposing a Stay or Continuing the Automatic Stay as the Court Deems
Appropriate.” [BK Doc. # 1, 5.] On August 4, Oregon Trail moved for relief from the automatic
stay (“Relief Motion”). [Bk Doc. # 23.] On August 11, 2015, the Honorable Vincent P. Zurzolo
of the United States Bankruptcy Court for the Central District of California issued an oral ruling,
denying Appellant’s motion. [Bk Doc. # 31.] The Order was formally entered onto the
bankruptcy docket on August 18, 2015. (Id.)
On August 25, 2015, the Bankruptcy Court granted Oregon Trail’s request for relief from
the automatic stay. (Order Granting in part, Denying in part Relief Motion (“Relief Order”) [Bk
Doc. #39].) Fung was not present at that hearing because she was attending a section 341(a)
meeting of creditors in a different location that was scheduled for the same date and time. (AOB
at 3:3-13.) The lifting of the automatic stay allowed for the commencement of non-judicial
foreclosure proceedings on Appellant’s home. (Id. at 6:1-6.) Fung contends that on October 8,
2015, “Appellee illegally foreclosure sold Appellant’s home, and evict[ed] her and her children
out at May 19, 2016.” (Fung Reply at 3:11-12.) Given that Fung filed a “Notice of Change of
address” with this Court on June 7, 2016, it appears that she no longer resides at the Property.
[Doc. # 52.]
III.
JURISDICTION
As noted above, Fung appeals an order of the United States Bankruptcy Court granting
appellee’s motion for relief from the automatic stay.3 Pursuant to 28 U.S.C. section 158, “district
courts of the United States shall have jurisdiction to hear appeals from final judgments, orders,
and decrees.” 28 U.S.C. § 158(a)(1). “An order granting or denying a motion for relief from the
3

Appellant technically appeals the oral ruling of the Bankruptcy Court on August 11, 2015, denying
Appellant’s motion for a stay because an automatic stay was already in place at that time as a result of Appellant’s
filing for bankruptcy. Because the effects of the Bankruptcy Court’s denial of Appellant’s motion for a stay and
granting of Appellee’s motion for relief from the automatic stay are functionally equivalent in this case, and because
Appellant’s papers appear to challenge the August 25, 2015 ruling, the Court construes Appellant’s appeal to be of
the Bankruptcy Court’s Order granting Appellee relief from the automatic stay.
CV-90

CIVIL MINUTES—GENERAL

Initials of Deputy Clerk KT

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No.

Date

CV 15-6245-DMG
2:15-bk-21213-VZ

Title In Re: Helen Lim-Suk Fung

JS-6

August 10, 2016

Page

3 of 8

automatic stay is a final, appealable order.” Kamai v. Long Beach Mortg. Co. (In re Kamai), 316
B.R. 544, 547 (B.A.P. 9th Cir. 2004). Therefore, the Court has jurisdiction to hear Appellant’s
appeal.
IV.
STANDARD OF REVIEW
A district court reviews a Bankruptcy Court’s conclusions of law and interpretation of the
Bankruptcy Code de novo. In re Greene, 583 F.3d 614, 618 (9th Cir. 2009) (citing In re Salazar,
430 F.3d 992, 994 (9th Cir. 2005)). Factual findings are reviewed for clear error. Id. A district
court must accept the Bankruptcy Court’s factual findings unless, upon review, the “court is left
with the definite and firm conviction that a mistake has been committed by the bankruptcy
judge.” In re Greene, 583 F.3d at 618 (citing Latman v. Burdette, 366 F.3d 774, 781 (9th Cir.
2004)). “A decision to lift [an] automatic stay . . . is within the discretion of the bankruptcy
judge and reviewed for an abuse of discretion.” In re Mac Donald, 755 F.2d 715, 716 (9th Cir.
1985).
V.
DISCUSSION
Fung appeals the Bankruptcy Court’s Relief Order primarily on two grounds: (1) Oregon
Trail never properly served Fung with notice of Appellee’s Relief Motion and (2) Appellee
willfully scheduled the hearing on the motion on the same date and time that it knew Fung would
be across town in another meeting so that Fung would be unable to oppose the motion in
Bankruptcy Court. (“Appellant’s Statement of Issues on Appeal,” Ex. 2, Fung Record at 9-11.)
A.

Appellant’s Appeal is Moot

As a threshold matter, Fung’s appeal is moot. “Failure actually to stay a foreclosure sale
generally renders an appeal regarding that sale moot.” National Mass Media Telecomm. Sys. v.
Stanley (In re Nat’l Mass Media Telecomm. Sys., Inc.), 152 F.3d 1178, 1180 (9th Cir. 1998).
“Whether an order directly approves the sale or simply lifts the automatic stay, the mootness rule
dictates that the appellant’s failure to obtain a stay moots the appeal.” In re Onouli-Kona Land
Co., 846 F.2d 1170, 1171 (9th Cir. 1988).
Here, in the time since the Bankruptcy Court lifted the automatic stay, Fung has not been
granted a stay by this Court or the Bankruptcy Court. After filing notice of her appeal to this
CV-90

CIVIL MINUTES—GENERAL

Initials of Deputy Clerk KT

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No.

Date

CV 15-6245-DMG
2:15-bk-21213-VZ

Title In Re: Helen Lim-Suk Fung

JS-6

August 10, 2016

Page

4 of 8

Court, Fung moved on September 30, 2015 to voluntarily dismiss the case, noting that “debtor
does not need chapter-12 any more.” [BK Doc. # 53 at 2.] On October 1, 2015, the Bankruptcy
Court dismissed Fung’s bankruptcy case, which is the subject of this appeal. [Bk Doc. # 54.] On
December 31, 2015, Fung then filed a motion to vacate the dismissal of the bankruptcy case
below. [Bk Doc. # 64.] On January 25, 2016, Fung filed a motion to withdraw her previous
motion to vacate the dismissal of the bankruptcy case. [Bk Doc. # 76.] Before this Court, Fung
made an “Ex Parte Request” for a stay on April 7, 2016, which the Court denied on April 13,
2016. [Doc. ## 29, 31.] On April 18, 2016, Fung filed an “emergency motion” for a “Request
for Reconsideration of her Request of Stay Pending Appeal” which the Court denied the same
day. [Doc. ## 33, 37.] On April 20, 2016, Fung filed an ex parte application for “Stop Eviction
Pending Appeal or Rescind Appellee’s Illegal Closure Sale Pending Appeal,” which the Court
denied on April 25, 2016. [Doc. ## 38, 40.] With no stay in place since the Bankruptcy Court
granted Appellee’s Relief Motion, Oregon Trail was able to foreclose upon the Property and sell
it on October 8, 2015. Further, Appellant has indicated that she and her family were evicted
from the Property on May 19, 2016. Accordingly, Appellant’s appeal is moot and must
necessarily fail because the Court cannot grant the sort of effective relief—i.e., rescission of the
foreclosure and subsequent sale of the Property —that Appellant seeks through this appeal.
Even if the appeal were not moot, Fung’s appeal would fail on the merits. Because the
issues are important to the parties, the Court proceeds to address the merits.
B.

Fung was Properly Served

“Rule 9014(b) requires that a motion for stay relief be served as required by Rule 7004.”
In re Sazegar, No. CC-14-1188-TADPA, 2015 WL 728464, at *2, 2015 Bankr. LEXIS 583, at
*5 (U.S. B.A.P. 9th Cir. Feb. 19, 2015). Rule 7004 of the Federal Rules of Bankruptcy
Procedure provides that service may be effected:
Upon an individual other than an infant or incompetent, by mailing a copy of the
summons and complaint to the individual’s dwelling house or usual place of
abode or to the place where the individual regularly conducts a business or
profession.
*

*

*

Upon the debtor, after a petition has been filed by or served upon the debtor and
until the case is dismissed or closed, by mailing a copy of the summons and
CV-90

CIVIL MINUTES—GENERAL

Initials of Deputy Clerk KT

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No.

Date

CV 15-6245-DMG
2:15-bk-21213-VZ

JS-6

August 10, 2016

Title In Re: Helen Lim-Suk Fung

Page

5 of 8

complaint to the debtor at the address shown in the petition or to such other
address as the debtor may designate in a filed writing.
Fed. R. Bankr. P. 7004(b)(1),(9). “The factual circumstances surrounding service of process are
reviewed under the clearly erroneous standard[.]” In re Cossio, 163 B.R. 150, 154 (B.A.P. 9th
Cir. 1994), aff’d, 56 F.3d 70 (9th Cir. 1995).
Here, Fung contends that Oregon Trail’s service of the Relief Motion was improper and
that she never received notice that a hearing on the motion would be held on August 25, 2015.
(Fung Record at 10:3-6.) Accompanying the Relief Motion is a proof of service document in
which the declarant, under penalty of perjury, declares that she served Fung on August 4, 2015
by “placing a true and correct copy thereof in a sealed envelope in the United States mail, first
class, postage prepaid, and addressed as follows . . . Helen Lim-Suk Fung . . . 28635 Hazelridge
Drive, Rancho Palos Verdes, CA 90275.” (Relief Motion at 69-70.) This is the same address
that Fung listed on her Chapter 13 petition filed on July 16, 2015. Fung has failed to provide
evidence which indicates that the finding that service of the motion was proper was “clearly
erroneous.” See In re Cossio, 163 B.R. 150 at 154-55 (holding that a finding that service of
process was proper where the sender declared that service had been made by certified mail and
the addressee declared that service had not been made by certified mail was not “clearly
erroneous” because “lack of receipt does not controvert the evidence that the papers were mailed
as stated . . . [i]t is just as logical to assume that the papers were subsequently misdirected or . . .
or simply misplaced or overlooked.”). Accordingly, Fung’s appeal on this ground fails.
C.

Fung’s Absence from the August 25, 2014 Hearing was not Prejudicial

Fung contends that the Bankruptcy Court erred in granting Appellee’s Relief Motion
because she was not present at the August 25, 2015 hearing to oppose the motion. (Fung Record
at 10:7-18.) Specifically, Fung alleges that Oregon Trail intentionally scheduled the hearing on
its Relief Motion “at the same date and same hour” as Fung’s previously scheduled meeting with
trustees and creditors so that she could not rebut Oregon Trail’s arguments. (Id. at 10:15-18.) In
support of her contention, Fung attaches the transcript of that hearing, which states, in pertinent
part:
THE COURT:
MR. HINDS:

CV-90

20 is Oregon Trail Corporation v. Helen Fung.
Good morning, your Honor. James Hinds, Hinds & Shankman, for
Oregon Trail.
CIVIL MINUTES—GENERAL

Initials of Deputy Clerk KT

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No.

Date

CV 15-6245-DMG
2:15-bk-21213-VZ

Title In Re: Helen Lim-Suk Fung

JS-6

August 10, 2016

Page

THE COURT:

Good morning. Okay. Any response to your motion?

MR. HINDS:

No response.

THE COURT:

6 of 8

Okay. I grant your relief[.]

(Id. at 6:4-11).
As a preliminary matter, the Court notes that both Oregon Trail and the Bankruptcy Court
had notice that Fung would be attending a “Meeting of Creditors” on August 25, 2015, because
the docket below lists as an entry the scheduling of that meeting. [Bk Doc. # 2.] Accordingly, as
a matter of simple courtesy, a hearing on Appellee’s Relief Motion should not have been
scheduled on that same date. As discussed below, however, scheduling of the hearing at the
same time that Fung was attending a separate meeting such that she could not attend the hearing
and oppose the motion was not prejudicial because there is ample evidence in the record to
support the Bankruptcy Court’s granting of Appellee’s Relief Motion.
In its order granting Appellee’s Relief Motion, the Bankruptcy Court noted that:
[The] Motion is granted under: a. 11 U.S.C. § 362(d)(1) [and] d. 11 U.S.C. §
362(d)(4). The filing of the bankruptcy petition was a part of a scheme to hinder,
delay, or defraud creditors that involved: (2) Multiple bankruptcy cases affecting
the Property. (3) The court makes a finding that Debtor was involved in this
scheme.
(Relief Motion Order at 2.) Thus, the Bankruptcy Court found that one basis for granting
Appellee’s Relief Motion was that Fung’s filing of the first bankruptcy suit (which Fung later
voluntarily dismissed) and filing of the instant bankruptcy suit were ploys to utilize the automatic
stay that commences upon the filing of a bankruptcy petition to delay or prevent the institution of
foreclosure proceedings on the Property by creditors including Appellee.
As noted, under section 362(d)(4), the Bankruptcy Court is permitted to grant relief from
the automatic stay when the Court determines that the debtor’s bankruptcy petition is part of a
scheme to defraud, delay, or hinder creditors through multiple bankruptcy filings. In this Circuit,

CV-90

CIVIL MINUTES—GENERAL

Initials of Deputy Clerk KT

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No.

Date

CV 15-6245-DMG
2:15-bk-21213-VZ

Title In Re: Helen Lim-Suk Fung

JS-6

August 10, 2016

Page

7 of 8

To obtain relief under § 362(d)(4), the court must find three elements to be
present. First, debtor’s bankruptcy filing must have been part of a scheme.
Second, the object of the scheme must be to delay, hinder, or defraud creditors.
Third, the scheme must involve either (a) the transfer of some interest in the real
property without the secured creditor’s consent or court approval, or (b) multiple
bankruptcy filings affecting the property.
In re First Yorkshire Holdings, Inc., 470 B.R. 864, 870 (B.A.P. 9th Cir. 2012). Under the
statute, a “scheme is an intentional artful plot or plan to delay, hinder or defraud creditors. It is
not common to have direct evidence of an artful plot or plan to deceive others. In general, the
court must infer the existence and contents of a scheme from circumstantial evidence.” In re
Duncan & Forbes Dev., Inc., 368 B.R. 27, 32 (Bankr. C.D. Cal. 2007).
Here, the record is more than adequate to support the Bankruptcy Court’s finding that
Fung was engaged in a scheme to hinder Oregon Trail’s attempts to foreclose upon the Property.
For instance, the court in the state court action granted Fung a preliminary injunction against
Oregon Trail, which prevented Oregon Trail from foreclosing upon the Property, provided that
Appellant paid $66,752 before July 17, 2015. (“Order of Preliminary Injunction,” Ex. 6, Relief
Motion at 64:9-12.) Appellant conveniently filed the petition for Chapter 13 bankruptcy
protection in the instant case on July 16, 2015, the eve that the $66,752 payment was due. The
Ninth Circuit has held that a “scheme” may be found for the purposes of section 362 where
“debtors . . . use bankruptcy to seek refuge from another court[.]” In re Sherman, 491 F.3d 948,
971 (9th Cir. 2007). Appellant has offered no persuasive arguments to refute the notion that she
filed the instant bankruptcy case to take advantage of the automatic stay provision to prevent
foreclosure upon her home and evade the payment then due imminently in the state court action.
Similarly, the number of suits initiated by Fung strongly suggests the existence of a
“scheme” to hinder the efforts of creditors, including Oregon Trail, from foreclosing on the
Property. Fung concedes that she “had 2 civil cases in Torrance court for rescind[ing]
Appellee’s illegal closure sale.” (ASB at 2:23-24.) As noted, she previously filed another
bankruptcy petition related to the Property but voluntarily dismissed that case before filing the
instant one. Finally, Fung admits that the purpose of her suits is to prevent foreclosure upon her
home because “only can do is file case to the court for save her home . . . [w]hat ever she is an
‘vextious litigant’ or not, she must to be fight for her home for her and for her children.” (Fung
Reply at 4:16-20).

CV-90

CIVIL MINUTES—GENERAL

Initials of Deputy Clerk KT

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES—GENERAL
Case No.

Date

CV 15-6245-DMG
2:15-bk-21213-VZ

Title In Re: Helen Lim-Suk Fung

JS-6

August 10, 2016

Page

8 of 8

Accordingly, the Court cannot conclude that the Bankruptcy Court abused its discretion
in granting Appellee’s Relief Motion. See In re Aguilar, No. 13-02076-BR, 2014 WL 6981285,
at *5, 2014 Bankr. LEXIS 4982, at *11 (B.A.P. 9th Cir. Dec. 10, 2014) (holding that bankruptcy
court did not abuse its discretion in granting relief from the automatic stay because the debtor’s
“making four bankruptcy filings within the past twelve months . . . constituted an abuse of the
bankruptcy process.”); see also In re Hymes, No. A12-00599-GS, 2013 WL 653060, at *4, 2013
Bankr. LEXIS 664, at *12 (U.S. Bankr. D. Alaska Feb. 20, 2013) (holding that the bankruptcy
court did not abuse its discretion in granting a creditor relief from the automatic stay where
debtor had engaged in a scheme by “twice filing bankruptcy on the eve of scheduled foreclosure
sales.”). Appellant’s arguments that the Bankruptcy Court committed a reversible error in
granting Appellee’s Relief Motion are unpersuasive and Appellant’s appeal therefore fails.
VI.
CONCLUSION
In light of the foregoing, the judgment of the Bankruptcy Court is AFFIRMED.
IT IS SO ORDERED.

cc: Bankruptcy Court

CV-90

CIVIL MINUTES—GENERAL

Initials of Deputy Clerk KT