Case 2:21-cv-07004-MCS Document 21 Filed 01/13/22 Page 1 of 6 Page ID #:3053

1 2 3 4 JS-6 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 IN RE CATHERINE TRINH, Case No. 2:21-cv-07004-MCS 11 Debtor. Bankruptcy Case No. 2:18-bk-11475-RK 12

13 KEVIN VOONG, Adversary Case No. 2:18-ap-01209-RK

14 Plaintiff-Appellant, ORDER AFFIRMING JUDGMENT 15 v. 16 17 CATHERINE TRINH,

18 Defendant-Appellee. 19

20 Appellant Kevin Voong appeals the Bankruptcy Court’s judgment upon its order 21 granting Second Generation, Inc.’s motion for summary adjudication in an adversary 22 proceeding between Voong and Debtor Catherine Trinh, in which Second Generation 23 intervened. 24 I. BACKGROUND 25 Voong and Trinh were married in 2001. According to Voong, he and Trinh made 26 certain agreements concerning their separate and community property. (Appellant’s 27 Excerpts of Record (“Appellant’s EOR”), tab 1 (“Adversary Compl.”) ¶¶ 4–12, ECF 28 No. 16.) 1 Case 2:21-cv-07004-MCS Document 21 Filed 01/13/22 Page 2 of 6 Page ID #:3054

1 Second Generation sued Trinh and others in state superior court. The state court 2 issued a prejudgment writ of attachment against Trinh. Second Generation had the 3 attachment executed against certain property Voong contends is his separate property— 4 including, as relevant to this appeal, Voong and Trinh’s residence in Arcadia (the “Las 5 Flores Property”), which Voong claims is 85 percent his separate property. (See 6 generally Adversary Compl. ¶¶ 13–16, 18.) 7 Trinh filed for bankruptcy protection. (Appellee’s Excerpts of Record 8 (“Appellee’s EOR”), tab 8, ECF No. 19-4.) Voong brought an adversary proceeding 9 against Trinh in the Bankruptcy Court seeking a declaratory judgment that certain 10 property, including 85 percent of the Las Flores Property, was his sole and separate 11 property, and that the attachments on his property must be released. (Adversary Compl. 12 ¶¶ 32–34 & Prayer for Relief ¶ 2.) Second Generation intervened. (See Appellant’s 13 EOR, tabs 11–12, ECF No. 16-1.) 14 Second Generation moved for summary adjudication as to issues pertaining to 15 the Las Flores Property. (Appellant’s EOR, tabs 15–16, ECF No. 16-1.) Trinh did not 16 oppose. (Appellant’s EOR, tab 34 (“Tr.”), at 1–2, ECF No. 16-2.) In his response to 17 Second Generation’s statement of undisputed facts, Voong conceded that title to the 18 property was taken and held as community property, and that any transfer or 19 transmutation was unrecorded. (See Appellant’s EOR, tab 26 (“SUF Resp.”) ¶¶ 3–6, 20 ECF No. 16-2.) Voong did not argue that the purchase of the Las Flores Property could 21 be traced to his separate property or offer any evidence that the Las Flores Property was 22 acquired or improved with Voong’s separate-property funds. (See Appellant’s EOR, tab 23 25 (“MSA Opp’n”), at 6, ECF No. 16-2; id., Voong Decl. ¶¶ 2–6.) At oral argument, 24 however, Voong and Trinh both argued that the Las Flores Property could be traced to 25 a separate-property source. (See Tr. 3–4, 18, 20–21.) The Bankruptcy Court rejected 26 their argument, noting that “neither spouse offered any evidence about the source of the 27 funds to buy the residence.” (Id. at 21.) The Bankruptcy Court noted that no party had 28 argued or presented evidence in the motion papers that the Las Flores Property could 2 Case 2:21-cv-07004-MCS Document 21 Filed 01/13/22 Page 3 of 6 Page ID #:3055

1 be traced to a separate-property source. (Tr. 4–5, 14, 21–22, 25–26, 32.) 2 The Bankruptcy Court granted Second Generation’s motion. (Appellant’s EOR, 3 tab 28 (“MSA Order”), ECF No. 16-2.) The Bankruptcy Court found that any transfer 4 or transmutation of the Las Flores Property was avoided, and that the property was 5 Trinh’s community property and property of the estate as of the petition date. (Id. at 2– 6 3.) The Bankruptcy Court did not address whether the Las Flores Property could be 7 traced to Voong’s separate property. (See generally id.) 8 Voong appealed the Bankruptcy Court’s order on the motion, and this Court 9 affirmed it. (Appellee’s EOR, tab 1 (“Order Affirming”), ECF No. 19-2.) The Ninth 10 Circuit dismissed Voong’s further appeal for lack of jurisdiction. Voong v. Trinh (In re 11 Trinh), No. 21-55186, 2021 U.S. App. LEXIS 13951, at *1 (9th Cir. May 11, 2021). 12 Subsequently, the Bankruptcy Court entered a final judgment against Voong pursuant 13 to its MSA Order. (Appellee’s EOR, tab 2, ECF No. 19-2.) Voong appeals the judgment. 14 II. LEGAL STANDARD 15 “Findings of fact of the bankruptcy court are reviewed for clear error, and 16 conclusions of law are reviewed de novo. Mixed questions of law and fact are reviewed 17 de novo.” Harkey v. Grobstein (In re Point Ctr. Fin., Inc.), 957 F.3d 990, 995 (9th Cir. 18 2020) (citations omitted). The bankruptcy court’s “findings of fact are accorded 19 considerable deference and are only clearly erroneous if we are left with a definite and 20 firm conviction a mistake has been committed.” Nichols v. Marana Stockyard & 21 Livestock Mkt., Inc. (In re Nichols), 618 B.R. 1, 5 (9th Cir. B.A.P. 2020). This court 22 may affirm a decision on any basis supported by the record. Id. 23 III. DISCUSSION 24 The sole issue presented is whether the Bankruptcy Court erred in failing to allow 25 tracing to demonstrate separate-property interests in the Las Flores Property. (Opening 26 Br. 1–2, ECF No. 15.) The Court’s analysis of the issue has not changed since the last 27 appeal: the Bankruptcy Court did not err. (See generally Order Affirming.) 28 Voong admitted that title to the Las Flores Property was taken and held as 3 Case 2:21-cv-07004-MCS Document 21 Filed 01/13/22 Page 4 of 6 Page ID #:3056

1 community property, and that any transfer or transmutation was unrecorded. (See SUF 2 Resp. ¶¶ 3–6.) The Bankruptcy Court properly determined based on the uncontroverted 3 facts that the Las Flores Property was community property and that any transfer or 4 transmutation was avoided. (MSA Order 2–3.) See 11 U.S.C. § 544(a) (permitting 5 bankruptcy trustee to avoid unrecorded transfers); Cal. Fam. Code § 760 (describing 6 community-property presumption); id. § 852(b) (“A transmutation of real property is 7 not effective as to third parties without notice thereof unless recorded.”); In re Marriage 8 of Valli, 58 Cal. 4th 1396, 1400 (2014) (“Property that a spouse acquired during the 9 marriage is community property unless it is (1) traceable to a separate property source, 10 (2) acquired by gift or bequest, or (3) earned or accumulated while the spouses are 11 living separate and apart.” (citations omitted)). 12 Although Voong complains that the Bankruptcy Court did not discuss tracing in 13 its written decision, Voong did not present a tracing argument in his written opposition 14 to Second Generation’s motion. (See generally MSA Opp’n.) The Bankruptcy Court 15 addressed and rejected the tracing theory at oral argument on the basis that Voong failed 16 to present evidence and argument supporting the theory in the motion papers. (Tr. 4–5, 17 14, 21–22, 25–26.) Voong’s counsel acknowledged that evidence in the record of the 18 motion did not support the theory. (See id. at 3–4.) The Bankruptcy Court rejected the 19 theory on the record, reasoning that “there are certain ways to rebut the presumption of 20 community property, and he didn’t do it. You know, he didn’t trace to separate property 21 source.” (Id. at 32.) 22 The Bankruptcy Court did not err by limiting its written decision to the claims 23 and arguments presented by the parties in their moving papers. As articulated by the 24 Supreme Court: 25 In our adversary system, in both civil and criminal cases, in 26 the first instance and on appeal, we follow the principle of 27 party presentation. That is, we rely on the parties to frame the 28 issues for decision and assign to courts the role of neutral 4 Case 2:21-cv-07004-MCS Document 21 Filed 01/13/22 Page 5 of 6 Page ID #:3057

1 arbiter of matters the parties present. . . . [A]s a general rule, 2 “[o]ur adversary system is designed around the premise that 3 the parties know what is best for them, and are responsible for 4 advancing the facts and arguments entitling them to relief.” 5 Greenlaw v. United States, 554 U.S. 237, 243–44 (2008) (second alteration in original) 6 (quoting Castro v. United States, 540 U.S. 375, 386 (2003)). Further, courts may decline 7 to consider an argument raised for the first time at a motion hearing. Rice Corp. v. Grain 8 Bd. of Iraq, 582 F. Supp. 2d 1309, 1313 (E.D. Cal. 2008); see also Johnson v. Gruma 9 Corp., 614 F.3d 1062, 1069 (9th Cir. 2010) (deeming waived contentions raised for the 10 first time at oral argument). The Bankruptcy Court had discretion not to address an 11 argument presented outside the motion papers and unsupported by submitted evidence. 12 It properly declined to address in the written decision a tracing theory presented at oral 13 argument. 14 Voong argues that the declaration he submitted in opposition to the motion 15 provides evidence that the Las Flores Property could be traced to his separate property. 16 (See Opening Br. 8–10; Reply Br. 2, ECF No. 20.) It does not. “[V]irtually any credible 17 evidence may be used” to overcome the community-property presumption, including 18 “an agreement or clear understanding between parties regarding ownership status.” In 19 re Marriage of Haines, 33 Cal. App. 4th 277, 290 (1995). The declaration articulates 20 that Voong and Trinh believed the Las Flores Property was 85 percent Voong’s separate 21 property, as memorialized in their postnuptial agreement. (MSA Opp’n, Voong Decl. 22 ¶¶ 4–5.) The declaration might show how the couple characterized the Las Flores 23 Property, but it does not indicate how the couple came to that agreement or provide any 24 information upon which Voong’s separate-property interest may be traced. The 25 couple’s agreement instead could be understood as an attempted transmutation. See Cal. 26 Fam. Code § 850. Indeed, Voong advanced a transmutation theory in his opposition 27 brief. (See MSA Opp’n 6.) As the Bankruptcy Court commented, the declaration does 28 not provide evidence supporting tracing. (See Tr. 22 (“There’s no evidence regarding, 5 Case 2:21-cv-07004-MCS Document 21 Filed 01/13/22 Page 6 of 6 Page ID #:3058

1 you know, the source of the funds . . . .”).) Even if it did, the Bankruptcy Court was 2 under no obligation to invent a tracing argument on Voong’s behalf based on its review 3 of the declaration. Indep. Towers of Wash. v. Washington, 350 F.3d 925, 929 (9th Cir. 4 2003); see also United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) (“Judges are 5 not like pigs, hunting for truffles buried in briefs.”). 6 Voong presents additional evidence supporting his assertion that the purchase of 7 the Las Flores Property is traceable to his separate property. (See Opening Br. 2 (citing 8 Appellant’s EOR, tab 30, ECF No. 16-2).) This evidence, first submitted in a motion 9 for leave to appeal, was not presented to the Bankruptcy Court for its consideration of 10 the motion for summary adjudication, or any subsequent, timely motion for 11 reconsideration or motion to alter or amend the judgment. This Court cannot review it. 12 See Coomes v. Edmonds Sch. Dist. No. 15, 816 F.3d 1255, 1261 n.4 (9th Cir. 2016) 13 (“We decline to address new evidence cited for the first time on appeal to seek reversal 14 of a lower court’s summary judgment determination.”). 15 IV. CONCLUSION 16 The Court affirms the judgment of the Bankruptcy Court. The Court directs the 17 Clerk to close the case. 18 19 IT IS SO ORDERED. 20

21 Dated: January 13, 2022

MARK C. SCARSI

22

UNITED STATES DISTRICT JUDGE

23 cc: Bankruptcy Court 24 25 26 27 28 6