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Court of Appeal:
Bankruptcy Trustee Can’t Gain Party Status In Family Law Case in Bid to Assume Asset
To Allow That, Opinion Says, Would ‘Complicate,’
‘Confuse’ Issues in State-Court Proceeding
By a MetNews Staff Writer
The First District Court of Appeal has affirmed an order denying the motion of a trustee in bankruptcy to join in a family law action in order to gain possession, on behalf of creditors, of an asset she claims was fraudulently transferred to the mother of the bankrupt’s child, with the holding coming in an opinion that conceals the identity of the debtor notwithstanding that he has been identified by name in the bankruptcy case and other proceedings.
Div. Two’s decision in Q.Y.J. v. R.T, A163134, was issued on Monday, and was not certified for publication. “R.T.,” as designated in the opinion by Presiding Justice Therese M. Stewart, is actually Richard Tom, who is referred to in his true name in his petition in the U.S. Bankruptcy Court for the Northern District of California seeking Chapter 7 protection and in proceedings in that court.
He has also been so identified in a state wrongful death action against him and in state criminal proceedings, including a California Supreme Court opinion that resulted in springing him from prison.
Transfer of Interest
The appellant in the case decided on Monday is Lynn Schoenmann, who resigned from the State Bar in 2014 with no charges pending. She wants possession of Tom’s 32 percent interest in a commercial building in San Francisco which was transferred by a San Francisco Superior Court order of June 14, 2010, to Qiu Yue Jiang, as security for child support payments.
That property then had an estimated value of $295,000. The support order and the transfer of the property were pursuant to a stipulation by Tom and Jiang (who have never been married).
Contesting the transfer, in a separate action in San Francisco Superior Court, were Loraine Wong and Mark Ng, who had obtained a judgment against Tom based on the wrongful death in 2007 of their daughter, Sydney Ng, age 8, killed in a car-collision caused by Tom, who was allegedly drunk. The judgment—for $7.23 million—also encompassed personal injuries to Wong and to another daughter, Kendall Ng, aged 10 at the time of the mishap.
Jury’s Finding
In the subsequent action by the judgment creditors challenging the transfer, the jury found that Tom’s transfer to Jiang “was done to delay, to hinder, or to defraud the plaintiffs in connection with their claims” and that Jiang “did not take the interest in the partnership in good faith and for reasonably equivalent value.” However, in the November 2013 judgment, the judge declared that jurisdiction was lacking to countermand the 2010 judgment in the paternity action, advising:
“Plaintiffs may seek relief in the family court matter, to the extent allowed under California law.”
Such relief was not sought. By 2019, the amount of the judgment had burgeoned to about $11 million.
Tom sought bankruptcy protection to avoid that judgment. However, on July 29, 2022, Bankruptcy Judge Hannah L. Blumenstiel held that the debt is nondischargeable.
Applying the doctrine of collateral estoppel, she said:
“Mr. Tom does not seriously dispute that the issues of his intoxication and of his willful and oppressive or malicious behavior were actually litigated in the Wrongful Death Action, nor could he. The parties tried Wrongful Death Action to a jury. The court of appeals affirmed the jury’s verdict and judgment.”
Ninth Circuit Decision
With the bankruptcy proceeding pending, Schoenmann sought to latch onto the interest in the San Francisco building conveyed by Tom to Jiang. Stewart wrote:
“Here, the trial court concluded that allowing joinder would complicate and confuse the issue of child support. The trustee acknowledges that finding but asserts that joining her in the case would not complicate or confuse the issues without offering any real argument as to why that is so. Her conclusory, undeveloped argument on that point does not demonstrate an abuse of discretion.
“And we perceive none. The trial court reasonably concluded that allowing her to join would complicate and confuse the issue of child support. If the trial court were to vacate or modify the child support security order that had been in place for over a decade, it is not clear that mother would have any means of ensuring that father pay the child support he had been ordered to pay. The parties and the court could face the prospect of continued litigation over child support arrearages, and/or requests to modify father’s stipulated child support obligations.”
She continued:
“The court did not abuse its discretion in declining to let this happen. It reasonably refused to let a stipulated resolution of the parties’ respective child support rights and obligations that the superior court had declined to set aside be challenged a second time, potentially complicating and confusing the family law proceedings and undermining support for the minor. The trustee cites no authority suggesting this was an abuse of discretion.”
Appellate Record Sealed
The opinion declares, in a footnote:
“Much of the record has been conditionally filed under seal under the Uniform Parentage Act….Because of the confidential nature of the record, we hereby order the appellate record sealed. We also refer to the parties other than appellant by their initials and discuss the facts in abbreviated fashion.”
In October 2009, Tom was convicted of gross vehicular manslaughter in connection with the accident and was sentenced to seven years in state prison. The Court of Appeal affirmed; the California Supreme Court on Aug. 14, 2014, reversed, in a 4-3 opinion, on Fifth Amendment grounds, in People v. Tom; Tom was retried, with a resulting hung jury, and apparently was not tried for a third time.
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