Fursman v. Ulrich (In Re First Protection, Inc.), 440 B.R. 821

Debtors David and Laura Fursman own FP, an Arizona corporation, and Redux LLC; they filed separate Chapter 11 petitions on July 18, 2008 and managed both estates as debtors-in-possession with joint administration approved September 16, 2008.
On January 19, 2009, the Fursmans transferred 50% of Redux to Thompson (Laura Fursman’s mother) in exchange for a $1,000 contribution and future loans/credit; Thompson subsequently loaned Redux about $70,000 for completing a residential project.
The Fursmans amended Schedule B to reflect Redux ownership as $70,000 after the transfer.
On June 15, 2009, the cases were converted to Chapter 7 and Dale Ulrich was appointed trustee; the debtor’s Schedule B subsequently still reflected Redux as $70,000.
On October 1, 2009, Ulrich filed an adversary to avoid the postpetition transfer under § 549 and sought turnover of Redux books/records under § 542; the court granted TRO and later a preliminary injunction.
On March 15, 2010, the bankruptcy court granted summary judgment for the trustee, avoiding the Redux transfer; the court denied reconsideration and later the Debtors appealed.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to appeal the avoidance judgment	Fursmans argue Thompson is aggrieved and Debtors lack standing to appeal	Trustee contends Debtors lack pecuniary stake; Thompson lacking joinder; however Debtors participate	Debtors have standing; Thompson’s joinder cured defect, and appeal remains viable
Effect of the NOA and briefs signed by Fursmans on Thompson	NOA/briefs signed by Fursmans should bind Thompson	Rule 9011 is non-jurisdictional for NOA; Thompson’s signing not required	Thompson properly included; unsigned-signature issue cured; jurisdiction preserved
Whether the bankruptcy court erred in granting summary judgment for the trustee under § 549	Debtors argue transfers occurred pre-petition and/or were authorized as DIP actions	Transfer occurred postpetition and was not authorized; estate property included Redux rights	No genuine issue of material fact; transfer was postpetition and avoidable under § 549

Debbie Reynolds Hotel & Casino, Inc. v. Calstar Corp. (In re Debbie Reynolds Hotel & Casino, Inc.), 255 F.3d 1061 (9th Cir. 2001) (standing to appeal requires direct pecuniary harm)
Trujillo v. Grimmett (In re Trujillo), 215 B.R. 200 (9th Cir. BAP 1997) (debtors may appeal on limited issues affecting them as transferors)
Becker v. Montgomery, 532 U.S. 757 (U.S. 2001) (unsigned papers may be cured and jurisdiction vests if timely filed)
McCarthy, Johnson & Miller v. N. Bay Plumbing, Inc. (In re Pettit), 217 F.3d 1072 (9th Cir. 2000) (state-law property interests govern extent of debtor’s estate rights)
In re Ehmann, 319 B.R. 200 (Bankr. D. Ariz. 2005) (§ 541(c)(1)(A) overrides contract/state-law limits on transfers into the estate)
In re Lovitt (Cheadle v. Appleatchee Riders Ass'n), 757 F.2d 1035 (9th Cir. 1985) (executory contracts require trustee affirmative assumption to vest)
In re JZ L.L.C., 371 B.R. 412 (9th Cir. BAP 2007) (ride-through doctrine does not apply in Chapter 7)