Benjamin Hooshim v. Edward M. Wolkowitz
700 F. App'x 710
| 9th Cir. | 2017Background
- Debtor Chonghee Jane Kim’s bankruptcy estate was represented by Chapter 7 Trustee Edward Wolkowitz, who sought to avoid deeds of trust on certain real property that secured notes held by creditors Benjamin Hooshim and Alexandre Oh.
- Trustee previously sold the Property at a court-confirmed auction and quitclaimed the Property to the highest bidder (the Debtor) subject to existing deed of trust liens.
- Bankruptcy Court entered a default judgment on August 12, 2015 against the Creditors concerning avoidance of their liens; the Trustee’s complaint sought avoidance of the liens.
- The United States Bankruptcy Appellate Panel (BAP) vacated the bankruptcy court’s default judgment, concluding the Trustee lacked standing and that the judgment granted relief beyond what the complaint requested.
- Trustee appealed the BAP decision to the Ninth Circuit, arguing (1) he had standing under avoidance statutes to attack the liens and (2) the default judgment was improperly vacated.
- The Ninth Circuit affirmed the BAP: the Trustee lacked standing because the Property was no longer part of the estate, and the bankruptcy court’s default judgment gave relief exceeding the complaint’s requested relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing to avoid deeds of trust | Trustee: can avoid creditors’ liens under avoidance provisions to benefit estate | Creditors: Property was sold and quitclaimed; liens remain on non‑estate property so Trustee has no standing | Held: No standing — Property no longer estate property, so avoiding liens would not benefit estate |
| Scope of default judgment relief | Trustee: default judgment valid and can effectuate relief sought | Creditors: judgment exceeded relief requested in complaint (no transfer of their property requested) | Held: Judgment vacated in full — bankruptcy court awarded relief beyond complaint, violating Rule 54(c) and Ninth Circuit precedent |
Key Cases Cited
- Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1 (2004) (standing principles and Article III limits on litigant standing)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (constitutional standing requirements)
- Valley Forge Christian Coll. v. Americans United for Separation of Church & State, Inc., 454 U.S. 464 (1982) (prudential and constitutional standing analysis)
- Sahni v. American Diversified Partners, 83 F.3d 1054 (9th Cir. 1996) (standing under Ninth Circuit law)
- McDonald v. Checks-N-Advance, Inc. (In re Ferrell), 539 F.3d 1186 (9th Cir. 2008) (default judgment relief limited by pleadings under Rule 54(c))