Kim v. Young Jin Yoon (In re Young Jin Yoon)

• Decision Date: 12 May 2021
• Docket Number: Case No.: 6:18-bk-16831-MH,Adv. No.: 6:18-ap-01210-MH
• Citation: 627 B.R. 905
• Parties: IN RE: YOUNG JIN YOON, Debtor Vivian Kim aka Myoung Shin Kim, Plaintiff v. Young Jin Yoon, an individual, Hyun Myung Park aka Hyun M. Park, and Joshua S. Park aka Joshua Seunghun Park aka Joshua Park, Defendants
• Court: U.S. Bankruptcy Court — Central District of California

627 B.R. 905

IN RE: YOUNG JIN YOON, DebtorVivian Kim aka Myoung Shin Kim, Plaintiff

v.Young Jin Yoon, an individual, Hyun Myung Park aka Hyun M. Park, and Joshua S. Park aka Joshua Seunghun Park aka Joshua Park, Defendants

Case No.: 6:18-bk-16831-MH

Adv. No.: 6:18-ap-01210-MH

United States Bankruptcy Court, C.D. California, Riverside Division.

Signed May 12, 2021

Jiyoung Kym, Law Offices of Jiyoung Kym, Los Angeles, CA, for Plaintiff.

Ji Yoon Kim, LK Professional Law Group, La Mirada, CA, for Defendants.

MEMORANDUM DECISION AND ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

Mark Houle, United States Bankruptcy Judge

I. PROCEDURAL BACKGROUND¹

On August 13, 2018, Young Jin Yoon ("Debtor") filed a Chapter 7 voluntary petition, commencing this above-captioned bankruptcy case. In his petition, Debtor listed $190,000 in unsecured debt to Myoung Shin Kim a.k.a. Vivien Kim ("Plaintiff").

On October 24, 2018, Plaintiff filed commenced adversary no. 6:18-ap-01210-MH by filing a nondischargeability complaint ("Complaint") against Debtor, Debtor's wife, Hyun Myung Park ("Wife"), and their son, Joshua Seunghun Park ("Son") (collectively, "Defendants"). The first two claims for relief were only against the Debtor for the nondischargeability of the $190,000 debt pursuant to 11 U.S.C. §§ 523(a)(2)(A) and (a)(6). The third, fourth, and fifth claims for fraudulent transfer, declaratory relief, and injunctive relief were pled against all Defendants. Defendants filed an answer on November 9, 2018. Plaintiff amended the Complaint on November 28, 2018. [ECF Dkt. 10]. On October 4, 2019, Plaintiff and Defendant filed their joint pre-trial stipulation. [ECF Dkt. 21, hereinafter, "Pretrial Stip"].

On August 17, 2020, Plaintiff filed a motion for summary judgment on all causes of action, except for the declaratory and injunctive relief causes of action. [ECF Dkt. 47]. The motion included a declaration [ECF Dkt. 47-1] (hereinafter, "Pl.'s Decl."), an exhibit showing copies of bank statements and checks [ECF Dkt. 47-1] (hereinafter, "Pl.'s Ex. 1"), and a statement of undisputed facts pursuant to LBR 7056-1(b)(2) [ECF Dkt. 47-2] (hereinafter, "Pl.'s Stmt.").² Plaintiff also filed a request for judicial notice [ECF Dkt. 48] attaching copies of the joint pretrial stipulation, Plaintiff's trial exhibits 1-30, and Defendants' trial exhibit 4 (hereinafter, "Pl.'s Tr. Ex." or "Def.'s Tr. Ex."). Defendants filed an opposition on November 3, 2020. [ECF Dkt. 51]. As Plaintiff pointed out in her reply [ECF Dkt. 52], filed on November 5, 2020, the opposition contained no evidence, whether in the form of declarations, a statement of disputed facts, or exhibits. Because of the lack of evidence, the legal arguments in the opposition were recitations of legal conclusions and did not raise any issue of law to challenge Plaintiff's position. Additionally, the opposition was filed seven days late.

At the hearing on the motion on November 18, 2020, the Court closed the evidentiary record as the deadline to file had passed on October 28, 2020. The hearing was continued for supplemental briefing on the issues of jurisdiction and standing with respect to the fraudulent transfer action. Plaintiff filed her brief timely on December 31, 2020. [ECF Dkt. 58]. Defendants filed their opposition one day late on January 14, 2021. [ECF Dkt. 60]. Plaintiff filed a reply on February 1, 2021, twelve days after the deadline, stating that she had filed an action in state court, which has been stayed pending the Court's exercise of jurisdiction. [ECF Dkt. 61].

II. UNDISPUTED FACTS³

Debtor and Wife imported and sold a well-known brand of plum extract from Korea through their business, JSM, Inc. ("JSM") [Pl.'s Decl. ¶ 3]. Plaintiff often purchased their plum extract. [Pl.'s Stmt. No. 54]. JSM's products were displayed and sold in Korean supermarkets and shops in Los Angeles through the summer of 2018. [Pl.'s Decl. ¶ 3]. Plaintiff has known Debtor and Wife since 2008. Id . In 2014, Debtor and Wife came to Plaintiff's office, and Wife asked to borrow money to purchase plum extract products from Korea for Debtor and Wife's business. [Id. at ¶ 4]. Plaintiff loaned them $60,000, and Debtor and Wife began coming to Plaintiff twice a year to borrow money, stating they needed the loans to purchase the plum extract. [Id. at ¶ 4, 5]. Although Wife did most of the communicating, Debtor always accompanied her and agreed that the loans from Plaintiff would be used for importing goods from Korea. [Pl.'s Decl. ¶ 16, Pretrial Stip., Pg. 22 ¶ 269]. For each loan, per Debtor and Wife's request, Plaintiff gave Debtor and Wife several checks with the payee line blank allowing them to use their discretion as to whom the checks should be made out to. [Pl.'s Stmt. Nos. 39-43]. In return, Debtor and Wife gave Plaintiff post-dated checks, usually drawn on JSM's account. [Id. at 44-45].

The debt at issue arises from oral contracts for three loans borrowed on April 25, 2017, November 16, 2017, and May 1, 2018, each loan in the amount of $100,000. [Id. at 23-26]. As of the petition date, the Debtor and Wife still owed $100,000 on the May 1, 2018 loan, $67,500 on the November 16, 2017 loan, and $25,000 on the April 25, 2017 loan, totaling $190,000. [Pl.'s Stmt. Nos. 29-33; Pretrial Stip., Pg. 5 ¶ 29, Pg. 7 ¶ 57, Pg. 8 ¶ 75].

Plaintiff made these three loans to Debtor and Wife only because of their statements that the loan proceeds would be used to import plum extract from Korea through their business, JSM, Inc. [Pl.'s Stmt. Nos. 50, 52, 85; Pl.'s Decl. ¶ 17]. Although JSM was an active cooperation at the time Plaintiff made the loans, JSM was winding down its business. [Pl.'s Stmt. Nos. 55, 59, 63, 68, 70, 71]. More importantly, however, JSM stopped purchasing products sometime before June 2017, yet Debtor and Wife continued to borrow money from Plaintiff for the stated purpose of purchasing plum extract. [Pl.'s Stmt. No. 63; Pretrial Stip., Pg. 26 ¶¶ 351, 353]. By either January or February 2018, JSM no longer kept any inventory in its warehouse. [Pl.'s Stmt. No. 68]. By March 2018, JSM completely ceased all business activities. [Id. at 70-71]. On August 6, 2018, one week prior to the petition date, JSM was dissolved. [Id . at 77-78].

Plaintiff did not know that JSM was in the process of ceasing its operations. [Id. at 61, 66]. Debtor and Wife never told Plaintiff that the business was suffering or that they were planning on closing JSM. [Id. at 60, 65]. Additionally, as JSM's products were still on display at the time of the last loan on May 1, 2018, Plaintiff had no reason to believe JSM was not actively doing business. [Id. at 72].

None of the Plaintiff's loans were used to purchase JSM products. [Id. at 75, 76]. Specifically, of the three outstanding loans, the loans from November 16, 2017 and May 1, 2018 were not used to purchase plum extract. [Id. at 73, 74]. Instead they were used as cash deposits for Debtor and Wife. [Id. at 80-82]. Prior to dissolving JSM, Debtor emptied its account. [Pl.'s Stmt. ¶ 79; Pl. Tr. Ex. 16-19]. Debtor distributed $26,630 to himself and $93,000 to Wife between May and June 2018. [Pl.'s Stmt. Nos. 80-81; Pl. Tr. Ex. 16-39:42]. Between January and April 2018, Debtor distributed $43,000 to Wife. [Pl.'s Stmt. No. 82; Pl. Tr. Ex. 16-34:38]. These distributions were all in addition to the standard payroll. [Pl.'s Stmt. Nos. 80-82]. Plaintiff stated she would not have loaned Debtor and Wife money had she known that JSM was in decline and that Debtor and Wife were not using the loan proceeds towards product purchases. [Pl.'s Decl. ¶ 17; Pl.'s Stmt. Nos. 83-85].

Additionally, when Debtor and Wife met with Plaintiff on May 1, 2018 for the last $100,000 loan, they also requested to swap checks they had post-dated and previously given to Plaintiff as part of the repayment schedule. [Pl.'s Stmt. Nos. 56, 87]. Debtor and Wife gave Plaintiff thirteen post-dated checks drawn on JSM's account in the amount of $67,500 and five checks in the amount of $62,500 drawn on Wife's personal account in exchange for the previously given checks, which had been drawn from their joint account and JSM's account (or "Check Swap"). [Id. at 89-93]. On May 2, 2018, JSM disbursed two checks for a total of $64,000 to Wife, who in turn deposited them to her new personal account. [Id. at 109-110]. The five replacement checks that were drawn on Wife's personal account cleared from the deposited funds borrowed on May 1, 2018. [Id. at 110].

Of the total amount borrowed by Debtor and Wife, $70,000 worth of checks had been paid to Wife. [Id. at 96]. Debtor and Wife paid back $62,500 of this amount through the five replacement checks drawn on Wife's personal account and $7,500 of this amount from the other five replacement checks drawn on Debtor and Wife's joint account in the total amount of $70,000. [Pl.'s Stmt. Nos. 91, 92, 97, 99, 106, 110; Pretrial Stip., Pg. 6 ¶ 44; Pl.'s Tr. Ex. 6, 10, 27]. The Check Swap combined with the May 1, 2018 loan ensured that Wife could pay back any debt that she presumably owed based on the amount of checks specifically made out to her. [Pl.'s Stmt. Nos. 91, 92, 97, 99, 107, 110, 113; Pretrial Stip. Pg., 6 ¶ 44; Pl.'s Ex. 1].

At the time of the petition, Wife temporarily shared a fifty-percent interest with Son in the house that she and Debtor lived in located at 32229 Cedar Crest, Temecula, California 92592 ("House"). [Pl.'s Stmt. No. 115; Pl.'s Tr. Ex. 20, 27]. Son had been the sole owner on title of the House until he deeded it to Wife and himself in January 2018. [Pl.'s Stmt. No. 116]. Three days after the 341(a) meeting, on September 20, 2018, Wife transferred her interest back to Son. [Pl.'s Stmt. Nos. 121-122; Pl.'s Tr. Ex. 20, 27].

III. DISCUSSION

First, as the Court noted above, Defendants have submitted no evidence to create an issue of fact. Defendants' opposition contained no evidence, whether in the form of declarations or exhibits, nor did Def...