In re: Yan Sui
BAP No. CC-16-1284-TaKuF BAP No. CC-16-1310-TaKuF BAP No. CC-16-1252-TaKuF
| 9th Cir. BAP | Jun 7, 2017Background
- Debtor Yan Sui transferred title to real property to Pei‑Yu Yang prepetition; Trustee obtained an Avoidance Order and a Default Order avoiding the transfer and ordering turnover; the Property was sold pursuant to a final Sale Order.
- Appellants Sui and Yang then pursued multiple actions and online campaigns (district court suit, complaints, postings, threats) that interfered with the Trustee’s marketing and sale of the Property. The Trustee moved for civil contempt and sanctions.
- The bankruptcy court found Appellants in civil contempt and originally awarded roughly $93,833 in sanctions; this Panel earlier affirmed contempt as to the Sale Order but vacated and remanded the sanction calculation so only fees after the Sale Order would be compensable.
- On remand the Trustee sought $31,174 (attorneys’ fees incurred after the Sale Order) and separately sought additional sanctions under the court’s inherent authority for broader bad‑faith conduct; the bankruptcy court entered amended contempt and sanctions orders totaling $31,174 and later an additional $62,251 under inherent authority.
- Appellants appealed multiple orders but failed to supply critical hearing transcripts for key hearings (July 26 and August 30, 2016), limiting appellate review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether contempt‑based sanctions were properly recalculated to include only fees after the Sale Order | Sui/Yang argued Trustee not entitled to fees or that many fees were unrelated or duplicative; some fees defended against contempt of discharge, not sale order | Trustee argued fees after Sale Order relate to Appellants’ attacks on the Sale Order and are compensable; Dentons’ fees as special counsel are recoverable | Court affirmed recalculation: $31,174 awarded for fees incurred after Sale Order as compensatory contempt sanctions |
| Whether bankruptcy court permissibly imposed sanctions under its inherent authority for broader bad‑faith conduct | Appellants contended their actions were not in bad faith and challenged factual basis and duplication; argued sanctions punitive | Trustee argued pattern of obstructive, vexatious litigation and harassment supported inherent‑authority sanctions; earlier Panel left open alternative sanction theories | Court affirmed inherent‑authority sanctions (amended Second Sanctions Order) but limited review because Appellants failed to provide transcript; sanctions characterized as compensatory for fees incurred and justified by bad faith findings |
| Whether the Amended OSC was appealable and whether appellants preserved challenges | Appellants appealed the Amended OSC and raised many substantive attacks | Trustee argued OSC was interlocutory; final sanctions orders are appealable and appellants waived some arguments by not challenging amounts | Court held Amended OSC was interlocutory (not separately appealable); appellants waived challenges to amounts by not arguing them on appeal |
| Whether appellate record was adequate to review the Second Sanctions Order | Appellants argued errors in order but did not supply hearing transcripts | Trustee moved to dismiss or seek summary affirmance for inadequate record | Court declined to review factual findings fully because critical transcripts were missing and summarily affirmed in part; failure to provide transcript supported affirmation |
Key Cases Cited
- In re Lehtinen, 564 F.3d 1052 (9th Cir.) (standard for review and availability of sanctions)
- In re Dyer, 322 F.3d 1178 (9th Cir.) (civil contempt standard and sanctions authority)
- Walls v. Wells Fargo Bank, N.A., 276 F.3d 502 (9th Cir.) (sanctions and contempt principles)
- Barber v. Miller, 146 F.3d 707 (9th Cir.) (inherent‑authority sanctions require bad faith)
- Goodyear Tire & Rubber Co. v. Haeger, 137 S. Ct. 1178 (Sup. Ct.) (compensatory sanctions for attorney’s fees under inherent authority)
- United States v. Rylander, 460 U.S. 752 (U.S.) (contempt proceeding does not permit relitigation of underlying order)
- Maggio v. Zeitz, 333 U.S. 56 (U.S.) (same principle regarding contempt and reopening prior adjudication)
- Caldwell v. Unified Capital Corp. (In re Rainbow Magazine, Inc.), 77 F.3d 278 (9th Cir.) (bad‑faith sanction authority)