United States District Court, D. Hawaii
YOUNG HUI KIM; GLORY OF GOD PRESBYTERIAN CHURCH; PACIFIC EAGLE REALTY LLC, Plaintiffs,
DANE S. FIELD, TRUSTEE; JULIA RIIHIMAKI, Defendants.
ORDER AFFIRMING BANKRUPTCY COURT'S ORDER GRANTING
TRUSTEE'S MOTION FOR ORDER APPROVING SETTLEMENT
A. Otake United States District Judge.
Hui Kim (“Kim”), Glory of God Presbyterian
Church, and Pacific Eagle Realty LLC (collectively
“Appellants”) appeal the Order Granting
Trustee's Motion for Order Approving Settlement Agreement
Regarding Settlement of Claims and Purchase of Property of
the Estate, Filed on March 7, 2018 (“Settlement
Approval Order”) issued by Bankruptcy Judge Robert J.
Faris on April 23, 2018. Dane S. Field, Chapter 7 Trustee
(“the Trustee”) and Julia Riihimaki
“Appellees”) contend the Settlement Approval
Order should be affirmed.
reasons stated below, the Court AFFIRMS the Settlement
pastor of the Glory of God Presbyterian Church and owner of
Pacific Eagle Realty LLC, and Riihimaki have a long history
of business and personal dealings together. Kim and Riihimaki
sued each other in state court for various causes of action
largely stemming from alleged fraudulent real estate
transactions. See Adv. Doc. No. 2 at
In October 2014, while the litigation between Kim and
Riihimaki was still pending, Kim filed for Chapter 7
bankruptcy. Id.; Bk Doc. No. 1. Riihimaki filed an
adversary proceeding in Kim's bankruptcy case seeking a
determination that certain of the debts and damages alleged
in the state court proceeding were non-dischargeable. Adv.
Doc. No. 2. Kim filed a counterclaim against Riihimaki in the
adversary proceeding (“the Riihimaki Claim”).
See Adv. Doc. No. 377. To account for the Riihimaki
Claim in her bankruptcy case, Kim amended her bankruptcy
schedule to list the Riihimaki Claim, and indicated it was
worth $252, 000. See Bk. Doc. No. 53.
around July of 2015, Kim's attorney settled all of the
claims in the adversary proceeding with Riihimaki (the
“2015 Settlement Agreement”)-both Riihimaki's
claims against Kim, and Kim's counterclaim against
Riihimaki. See Adv. Doc. No. 245. The substance of
the agreement was that Riihimaki would be awarded a judgment
against Kim in the amount of $1, 350, 000, with $650, 000 of
that award being nondischargeable in Kim's bankruptcy
proceeding. See Id. at 5. It also required Kim or
her codefendants to make two cash payments of $30, 000 and
$28, 450 to Riihimaki. It further stated that the agreement
would be subject to review and approval from the Trustee and
the bankruptcy court, and that both Kim and Riihimaki would
join efforts in seeking to approve the 2015 Settlement
Agreement with the bankruptcy court and the Trustee. SER at
November of 2015, Riihimaki moved to enforce the 2015
Settlement Agreement. Adv. Doc. No. 83. Kim opposed
enforcement of the 2015 Settlement Agreement, disputing that
she ever agreed to the settlement and arguing that her
attorney settled the claim without her consent. See
Adv. Doc. No. 245 at 12. In February 2017, the bankruptcy
court found, over Kim's opposition, that Kim was fully
aware of the terms of the 2015 Settlement Agreement and had
legally consented to it. See Id. Based on that
conclusion, the bankruptcy court held that the 2015
Settlement Agreement was valid and enforceable. Id.
at 16; Adv. Doc. No. 247 at 2.
ruling to enforce the 2015 Settlement Agreement, the
bankruptcy court noted that Kim's claims against
Riihimaki were “all property of her bankruptcy estate
under the exclusive control of the bankruptcy trustee.”
Adv. Doc. No. 245 at 15. Thus, the bankruptcy court held that
Kim did not have the authority-absent the Trustee's or
court's approval-to settle her own claims. Ultimately,
the bankruptcy court held that the 2015 Settlement Agreement
“is an enforceable contract, ” but would
“leave for another day the question whether the
conditions to its effectiveness can be satisfied.”
Id. at 16.
the bankruptcy court determined in the adversary proceeding
that the 2015 Settlement Agreement was valid and enforceable,
but subject to court and Trustee approval, the Trustee
entered into a new settlement agreement that again resolved
the Riihimaki Claim (the “2018 Settlement
Agreement”). Although it is unclear whether the parties
knew this at the time, they now concede that the claims
against Riihimaki settled by the Trustee in the 2018
Settlement Agreement are the same claims that were already
settled in the 2015 Settlement Agreement. See
Appellants' Br. at 3 (“The Riihimaki Claim was
articulated in the Counterclaim . . . in Adversary Proceeding
No. 15-90001.”); Appellants' Reply Br. at 6
(“[T]he Counterclaim . . . is the claim being
settled[.]”); Adv. Doc. No. 388 (dismissing the
Riihimaki Claim with prejudice under both the 2015
Settlement Agreement and the 2018 Settlement Agreement). The
2018 Settlement Agreement, negotiated by the Trustee,
relinquishes any of Kim's claims against Riihimaki for
the following consideration: (1) Riihimaki pays the estate
$15, 000; (2) Riihimaki files an amended proof of claim,
reducing her proof of claim against Kim's bankruptcy
estate to a $1, 360, 000 unsecured claim; and (3) Riihimaki
releases her Notice of Pendency of Action
(“NOPA”) previously recorded against one of
Kim's properties. See Bk. Doc. No. 251 at 13.
March 7, 2018, the Trustee sought approval of the 2018
Settlement Agreement, and Kim objected on the grounds that
the Trustee's motion did not provide sufficient evidence
that the settlement was fair and equitable. See Bk.
Doc. No. 251, 256. The Trustee filed a reply on April 2,
2018. Bk. Doc. No. 257. Oral argument was held on April 9,
2018. ER at 190-95. Judge Faris presided over both
the bankruptcy case and adversary proceeding, and as such,
was familiar with the parties and their contentions. He
approved the 2018 Settlement Agreement orally. ER at 192-93.
The Settlement Approval Order was issued on April 23, 2018.
Bk. Doc. No. 266. Kim timely filed this appeal on May 7,
STANDARD OF REVIEW
district court sitting in appellate jurisdiction over a
bankruptcy court's order under 28 U.S.C. § 158(a)(1)
applies the same legal standard as a federal court of
appeals. In re Crystal Props. Ltd., 268 F.3d 743,
755 (9th Cir. 2001). This generally requires that a district
court review a bankruptcy court's findings of fact for
clear error and its conclusions of law de novo. See In re
Kimura, 969 F.2d 806, 810 (9th Cir. 1992). When
reviewing a bankruptcy court's order approving a
settlement, however, district courts review the order for an
abuse of discretion. See In re Debbie Reynolds Hotel
& Casino, Inc., 255 F.3d 1061, 1065 (9th Cir. 2001);
In re A & C Props., 784 F.2d 1377, 1380 (9th
Appellees' Requests for Judicial Notice
addressing the merits of the appeal, the Court first
addresses Appellees' requests for judicial notice.
Appellees request that the Court take judicial notice of (1)
a NOPA recorded against one of Kim's properties by
appellee Riihimaki; and (2) two documents filed in the
underlying bankruptcy case that were not designated by the
parties to be included in the record on appeal. Appellee
Trustee's Br. at 3 n.2, 7 n.3; Appellee Riihimaki's
Br. at 18 n.9. Appellants did not object to the requests for
judicial notice. The Court addresses these requests in turn.
Federal Rule of Evidence 201, a court may take judicial
notice of facts that can be accurately and readily determined
from sources whose accuracy cannot reasonably be questioned.
Courts must take judicial notice “if a party requests
it and the court is supplied with the necessary
information.” Fed.R.Evid. 201(c)(2). On appeal, courts
will generally not take judicial notice of documents that
were not before the lower court. See U.S. ex Rel.
Robinson Rancheria Citizens Council v. Borneo, Inc., 971
F.2d 244, 248 (9th Cir. 1992); In re Brown & Cole
Stores, LLC, 375 B.R. 873, 876 n.5 (B.A.P. 9th Cir.
regarding the request that the Court take notice of the NOPA,
the NOPA does not appear to have ever been before the
bankruptcy court in the underlying proceeding. The copy of
the NOPA submitted with Appellee's filing was not a
version that was ever filed in the bankruptcy court, and the
parties do not identify where in the underlying bankruptcy
proceeding the NOPA was filed. Normally, a reviewing court
“will not supplement the record on appeal with material
not considered by the trial court.” Daly-Murphy v.
Winston, 837 F.2d 348, 351 (9th Cir. 1987). Therefore,
the Court declines to take judicial notice of the NOPA.
Appellees request that this Court take judicial notice of two
related documents filed in the bankruptcy court-documents 59
and 60. These two documents were part of the
bankruptcy court's record and their accuracy cannot
reasonably be questioned. Therefore, the Court takes judicial
notice of them.
the Court takes judicial notice of these documents, the Court
notes that their relevance to this appeal is minimal at best.
Bankruptcy document 59 is the Trustee's request for an
examination of Kim, including interrogatories and requests
for production of documents, under Federal Rule of Bankruptcy
Procedure 2004. Bankruptcy document 60 is merely the
bankruptcy court's order granting the motion. Neither
document contains Kim's answers to the interrogatories
and document requests propounded. Moreover, the relevant
interrogatories, as well as Kim's answers to the ...