Lei v. Yan (In re Yan)

Citation:
Lei v. Yan (In re Yan), 9th Cir. B.A.P (NC-14-1266-JuTaPa), February 26, 2015 [Not for Publication]
Tag(s):
Ruling:
In an unpublished opinion the Bankruptcy Appellate Panel for the 9th Circuit affirmed the bankruptcy court’s denial of creditor motion seeking damages for violations of the automatic stay under § 362(k)(1). The court held that the creditor did not have standing to prosecute the violations of the automatic stay. The bankruptcy court further held since creditor did not have standing to seek damages under § 362(k)(1) she was not eligible to receive attorney's fees and that the court could not impose sanctions.
Procedural context:
On October 17, 2013, Lei filed a motion for attorney fees and punitive damages against Debtor. The order denying creditor's (Lei) motion was entered on May 9, 2014. The creditor (Lei) filed a timely notice of appeal.
Facts:
On October 18, 2000, Demas W. Yan (Debtor) and Tony Fu (Fu) entered into a joint-venture agreement to convert a single-family residence into condominium units (the Real Property). Debtor executed a promissory note in favor of Fu’s sister, Stella Chen (Chen); the note was secured by a deed of trust against the Real Property. On February 20, 2004, Debtor filed an action in state court to prevent Chen from foreclosing under the note. After the state court denied Debtor’s motion to stop the foreclosure, Debtor filed for chapter 11 relief on December 19, 2004. While in chapter 11, Debtor sold the Real Property at a price sufficient to pay all allowed secured and unsecured claims in full. On May 19, 2006, the bankruptcy court entered an order appointing Janina N. Hoskins (Hoskins) as chapter 11 trustee. Later the case was converted to chapter 7, and Hoskins continued to serve as the chapter 7 trustee (Trustee). Lei filed two proofs of claim in the bankruptcy case. On May 29, 2008, the bankruptcy court approved a settlement agreement between Trustee and Lei (the Settlement). The Settlement provided that Lei would have an allowed, unsecured non-priority claim in the amount of $45,000 and included broad mutual releases of all known and unknown claims of Lei and Trustee. By June 2008, Trustee had released all of the estate’s pre-petition claims against Lei. The assets of the estate have since been liquidated and all allowed claim holders, including Lei, have been paid in full with interest /p/ /p/ /p/ Without authorization from the bankruptcy court or the Trustee, Debtor filed three post-petition lawsuits against both Fu and Lei in state court (collectively, the State Court Actions). Fu commenced an adversary proceeding on December 31, 2008, which sought to enjoin Debtor from asserting prepetition claims that remained property of the estate. On February 26, 2009, the bankruptcy court granted a permanent injunction prohibiting Debtor from asserting prepetition claims. Because there were sufficient estate funds to pay all claims in full, on June 15, 2009, the Court entered an order abandoning all prepetition claims to Debtor. The effect of the abandonment was to dissolve the injunction. On February 22, 2011, the bankruptcy court vacated the order abandoning the prepetition claims to Debtor. Lei became a de facto party to the adversary proceeding when the bankruptcy court entered an injunction on July 26, 2011, directing Debtor to dismiss the State Court Actions against both Fu and Lei. On December 24, 2013, in a separate adversary proceeding, the bankruptcy court found that the State Court Actions were frivolous because the claims asserted were property of the estate and Debtor had no authority to assert the claims on the estate’s behalf. Moreover, the estate had already given a full release of all claims.
Judge(s):
JURY, TAYLOR, and PAPPAS, Bankruptcy Judges.

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