                                                                  FILED
                                                                    JUN 6 2016
 1                         NOT FOR PUBLICATION
 2                                                             SUSAN M. SPRAUL, CLERK
                                                                 U.S. BKCY. APP. PANEL
                                                                 OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )      BAP No.    CC-15-1352-TaLKi
                                   )
 6   YAN SUI,                      )      Bk. No.    8:11-bk-20448-CB
                                   )
 7                  Debtor.        )      Adv. No.   8:13-ap-01246-CB
     ______________________________)
 8                                 )
     YAN SUI; PEI-YU YANG,         )
 9                                 )
                    Appellants,    )
10                                 )
     v.                            )      MEMORANDUM*
11                                 )
     RICHARD A. MARSHACK, CHAPTER )
12   7 TRUSTEE,                    )
                                   )
13                  Appellee.      )
     ______________________________)
14
               Submitted Without Oral Argument** on May 19, 2016
15
                              Filed – June 6, 2016
16
                Appeal from the United States Bankruptcy Court
17                  for the Central District of California
18      Honorable Catherine E. Bauer, Bankruptcy Judge, Presiding
19
     Appearances:     Yan Sui and Pei-Yu Yang, pro se, on brief; David
20                    Edward Hays and Chad V. Haes of Marshack Hays LLP
                      on brief for appellee.
21
22
23
          *
24           This disposition is not appropriate for publication.
     Although it may be cited for whatever persuasive value it may
25   have (see Fed. R. App. P. 32.1), it has no precedential value.
     See 9th Cir. BAP Rule 8024-1(c)(2).
26
          **
27           The Panel unanimously determined that the appeal was
     suitable for submission on the briefs and the record pursuant to
28   Rule 8019(b)(3).
 1   Before:    TAYLOR, LANDIS,*** and KIRSCHER, Bankruptcy Judges.
 2
 3                              INTRODUCTION
 4        Yan Sui and Pei-Yu Yang (jointly, the “Appellants”) appeal
 5   from a bankruptcy court order finding them in civil contempt
 6   pursuant to § 105(a)1 and imposing sanctions against them.   We
 7   AFFIRM in part, REVERSE in part, VACATE the order, and REMAND to
 8   the bankruptcy court for further proceedings consistent with
 9   this decision.
10                                 FACTS2
11        Prepetition, chapter 7 debtor Yan Sui transferred his
12   interest in real property located in Costa Mesa, California (the
13   “Property”) to Pei-Yu Yang.   Although the record is not clear,
14   it appears that Yang was the Debtor’s wife, ex-wife, or domestic
15   partner.
16
          ***
              The Honorable August B. Landis, United States
17
     Bankruptcy Judge for the District of Nevada, sitting by
18   designation.

19        1
             Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
20
          2
21           Appellants filed three requests for judicial notice.
     After the first request was filed, a BAP motions panel deferred
22   the request for judicial notice to the merits panel.
          Having reviewed the documents, we determine that many are
23   documents required by Rule 8009(a)(4) as part of the record on
24   appeal. Thus, judicial notice of those documents is
     appropriate.
25        To the extent that pertinent documents are not available in
     the Trustee’s excerpts of record or Appellants’ documents, we
26   exercise our discretion to take judicial notice of documents
27   electronically filed in the several case dockets. See Atwood v.
     Chase Manhattan Mortg. Co. (In re Atwood), 293 B.R. 227, 233 n.9
28   (9th Cir. BAP 2003).

                                      2
 1        The Trustee promptly commenced an adversary proceeding
 2   solely against Yang and successfully obtained an order (the
 3   “Avoidance Order”) avoiding the transfer as a fraudulent
 4   conveyance pursuant to § 544 and California Civil Code § 3439.
 5   The Avoidance Order is now final.3
 6        The Trustee then commenced a second adversary proceeding
 7   solely against Yang seeking to compel turnover, to allow a § 363
 8   sale, and to surcharge Yang’s interest in the Property (the
 9   “Property Administration Proceeding”).   The Trustee again
10   prevailed and obtained a default judgment.   The resulting order
11   (the “Default Order”) required immediate turnover of the
12   Property by Yang and authorized the Trustee to sell the
13   Property, including any interest held by Yang, free and clear of
14   all interests.4   Appellants were subsequently evicted from the
15   Property pursuant to a writ of assistance issued by the
16   bankruptcy court.
17        Appellants then undertook a vigorous campaign to stymie the
18   Trustee’s efforts to market and sell the Property.   First, they
19   commenced an action in federal district court against the
20   Trustee, his law firm, attorneys at his law firm, his special
21   litigation counsel, the bankruptcy judge, the real estate
22
23        3
             After Yang appealed from the Avoidance Order, the Ninth
24   Circuit affirmed. See Marshack v. Yang (In re Sui), 582 F.
     App’x 740 (9th Cir. June 14, 2014), cert. denied sub nom. Yang
25   v. Marshack, 135 S. Ct. 869 (2014).
26        4
             Yang appealed from the Default Order, but the Panel
27   dismissed this appeal as moot. See BAP No. 14-1498 Dkt. No. 33.
     An appeal from this dismissal order is pending before the Ninth
28   Circuit. See 9th Cir. No. 15-60066.

                                      3
 1   company, and the real estate agent, among others; the complaint
 2   asserted 26 claims for relief.   The district court action was
 3   subsequently dismissed.5
 4        Second, Appellants leveled a harassment and smear campaign
 5   against the estate’s real estate professionals and the real
 6   estate company charged with marketing and selling the Property.
 7   This included a barrage of electronic messages sent to real
 8   estate agents via various online real estate platforms.    The
 9   messages claimed that Appellants owned the Property and
10   threatened to add agents for buyers and any prospective buyers
11   to the district court action.    Apparently, Appellants also filed
12   complaints against the estate’s real estate professionals with
13   the California Commission of Real Estate, based on their
14   purported failure to disclose to potential buyers that the
15   Property was subject to litigation.   And the Debtor posted
16   several negative reviews against the estate’s real estate agent
17   and real estate company on Yelp.
18        In spite of Appellants’ efforts to derail any sale, the
19   Trustee obtained an order (the “Sale Order”) approving a sale of
20   the Property free and clear of all liens, claims, and interests
21   pursuant to § 363(b) and (m).6
22        Understandably frustrated with Appellants’ antics, the
23
          5
24           See 8:15-cv-00059-JAK-AJW (C.D. Cal.) Dkt. No. 50.
     Appellants appealed the dismissal to the Ninth Circuit, where it
25   remains pending. See 9th Cir. No. 15-56130.
26        6
             The Debtor appealed from the Sale Order, which the Panel
27   dismissed as moot. See BAP No. 15-1200 Dkt. No. 16. An appeal
     of the dismissal order is currently pending before the Ninth
28   Circuit. See 9th Cir. No. 15-60065.

                                      4
 1   Trustee moved for an order to show cause (“OSC”) requiring
 2   Appellants to explain why they should not be held in civil
 3   contempt for their actions.   He asserted that Appellants had
 4   violated the Default Order by filing the district court action,
 5   representing in numerous electronic correspondence and internet
 6   postings that they owned the Property, and actively threatening
 7   to sue the real estate agent and the buyer in order to obstruct
 8   the sale.   The Trustee sought compensatory damages for fees and
 9   costs incurred in defending the district court action,
10   addressing Appellants’ electronic correspondence and internet
11   postings, and communicating with the buyer and his real estate
12   agents regarding concerns with the sale.
13        At the hearing, the bankruptcy court agreed that an OSC was
14   warranted and issued one; the OSC expanded the basis for civil
15   contempt so as to include violations of the Sale Order.
16        Before the OSC issued, Appellants filed a document titled
17   “Cause to Disobey and Appeal the Order Granting Motion of
18   Marshack for Default Judgment; Cause to Disobey and Appeal From
19   Order for Sale of The Property; Memorandum of P&A’s in Support”
20   (“Motion to Disobey”).   They argued that the contempt proceeding
21   lacked legitimacy because the bankruptcy court’s orders -
22   presumably, the Avoidance Order, the Default Order, and the Sale
23   Order - were invalid.    Appellants’ Motion to Disobey was set for
24   hearing concurrently with the hearing on the OSC.   Appellants,
25   however, never formally replied to the OSC.
26        Only the Trustee appeared at the OSC and Motion to Disobey
27   hearings.   The bankruptcy court stated on the record that it
28   denied Appellants’ Motion to Disobey and found Appellants in

                                      5
 1   civil contempt.    In its subsequent order (the “Contempt Order”),
 2   the bankruptcy court reiterated its finding of civil contempt
 3   and imposed sanctions against Appellants in the collective
 4   amount of $93,832.72; the calculated sanctions included fees
 5   incurred by the Trustee’s special litigation counsel in the
 6   district court action.    Appellants timely appealed.7
 7                               JURISDICTION
 8        The bankruptcy court had jurisdiction pursuant to 28 U.S.C.
 9   §§ 1334 and 157(b)(2)(A) and (O).       We have jurisdiction under
10   28 U.S.C. § 158.
11                                   ISSUE
12        Whether the bankruptcy court abused its discretion in
13   finding Appellants in civil contempt under § 105(a) and imposing
14   sanctions against them.
15                            STANDARDS OF REVIEW
16        “We review the decision to impose contempt for an abuse of
17   discretion, and underlying factual findings for clear error.”
18   Knupfer v. Lindblade (In re Dyer), 322 F.3d 1178, 1191 (9th Cir.
19   2003); see also Nash v. Clark Cty. Dist. Att’ys Office
20   (In re Nash), 464 B.R. 874, 878 (9th Cir. BAP 2012) (“An award
21   or denial of sanctions under § 105(a) is reviewed for abuse of
22   discretion.”).
23        The bankruptcy court abuses its discretion if it applies
24
          7
25           Appellants appealed from the Trustee’s lodged order,
     which they asserted “merged” with the order denying their Motion
26   to Disobey. In their notice of appeal, Appellants expressly
27   state that the order denying Appellants’ Motion to Disobey “is
     not the subject of this appeal.” Thus, we review only the
28   Contempt Order in this appeal.

                                       6
 1   the wrong legal standard, misapplies the correct legal standard,
 2   or if its factual findings are clearly erroneous.       See
 3   TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820, 832
 4   (9th Cir. 2011) (citing United States v. Hinkson, 585 F.3d 1247,
 5   1262 (9th Cir. 2009) (en banc)).       Factual findings are clearly
 6   erroneous if illogical, implausible, or without support in
 7   inferences that may be drawn from the facts in the record.      See
 8   id.
 9                                DISCUSSION
10   A.    Appellants’ Motion Regarding the Trustee’s Acknowledgment
11         of Satisfaction of Judgment.
12         While this appeal was pending, the Trustee moved for
13   authorization to offset the sanctions awarded to him in the
14   Contempt Order against Yang’s interest in the Property sale
15   proceeds.   The bankruptcy court entered an order granting the
16   motion; accordingly, the Trustee thereafter took action and
17   filed an acknowledgment of satisfaction in the Property
18   Administration Proceeding.   Appellants promptly appealed from
19   the offset order.   See BAP No. 16-1053 (the “offset order
20   appeal”).
21         Appellants now move in both this appeal and in their newest
22   appeal for an order instructing the Trustee to withdraw the
23   acknowledgment of satisfaction.       They argue that the
24   acknowledgment may interfere with or hinder disposition of the
25   appeals.    They also argue that the acknowledgment is unlawful,
26   based on Appellants’ reiterated allegations that the avoidance
27   adversary proceeding was improper.
28         We lack jurisdiction to direct the Trustee to withdraw a

                                       7
 1   document filed in accordance with a valid and enforceable
 2   bankruptcy court order that was issued after this appeal was
 3   filed.    While we recognize that the acknowledgment is related to
 4   the sanctions awarded against Appellants, it neither deprives us
 5   of jurisdiction nor impacts our decisional process.    Appellants’
 6   motion is instead subject to appropriate consideration in the
 7   offset order appeal.    Therefore, Appellants’ motion in this
 8   appeal is DENIED.
 9   B.   The Contempt Order.
10        The bankruptcy court is authorized under § 105(a) to hold a
11   party in civil contempt and impose compensatory or coercive
12   sanctions.   In re Dyer, 322 F.3d at 1189–90; Renwick v. Bennett
13   (In re Bennett), 298 F.3d 1059, 1069 (9th Cir. 2002); Walls v.
14   Wells Fargo Bank, N.A., 276 F.3d 502, 506-07 (9th Cir. 2002);
15   In re Nash, 464 B.R. at 880.    To find a party in civil contempt,
16   the movant must prove “by clear and convincing evidence that the
17   contemnor[] violated a specific and definite order of the
18   court.”   In re Dyer, 322 F.3d at 1190-91.   The bankruptcy court
19   must also find that the contemnor “had sufficient notice of [the
20   order’s] terms and the fact that he would be sanctioned if he
21   did not comply.”    Hansbrough v. Birdsell (In re Hercules
22   Enters., Inc.), 387 F.3d 1024, 1028 (9th Cir. 2004).    Whether
23   the contemnor violated a court order is not based on subjective
24   beliefs or intent in complying with the order, “but whether in
25   fact [the] conduct complied with the order at issue.”
26   In re Dyer, 322 F.3d at 1191 (citation omitted).
27        Here, two orders formed the basis for the OSC and the
28   resultant Contempt Order.    Appellants do not raise or address on

                                      8
 1   appeal, and did not raise to the bankruptcy court, issues
 2   directly relating to the merits of the sanctions process.       Our
 3   facial review of the Contempt Order, however, reveals issues we
 4   cannot overlook.
 5        The Default Order.     On this record, we cannot affirm the
 6   finding of civil contempt and the imposition of sanctions in
 7   relation to the Default Order.    The order granted relief in the
 8   Trustee’s favor.   It, however, did not require any action from
 9   Appellants; thus, it could not warn them of the consequences for
10   violating the order.    Further, the order was entered solely
11   against Yang.   The Debtor could not violate an order where he
12   was not named and neither the Debtor nor Yang could violate an
13   order that did not direct them to act or refrain from action.
14        Thus, we reverse the bankruptcy court's determination of
15   civil contempt based on the Default Order.
16        The Sale Order.     Conversely, the Sale Order contained
17   specific requirements.    It expressly stated that: “Neither Yan
18   Sui nor Pei-yu Yang shall assert any lien, claim, or interest in
19   the Property in violation of the free and clear provisions of
20   this order.   Any actions taken in violation of this order may be
21   adjudicated to be contempt.”    There can be no doubt that this
22   provision directed Appellants to refrain from taking actions
23   against the Property that were inconsistent with the Sale Order
24   and provided Appellants with notice of the possible consequences
25   for non-compliance.    There also is no doubt that actions in
26   violation of this order occurred.
27        Thus, we affirm the bankruptcy court’s determination of
28   civil contempt based on the Sale Order.

                                       9
 1        Sanctions Award.    The Sale Order was entered on June 4,
 2   2015.    It appears that the majority of Appellants’ efforts to
 3   thwart the sale of the Property occurred prior to that date.
 4   Given that the majority of the sanctions awarded to the Trustee
 5   did not flow from the Sale Order, we vacate the Contempt Order
 6   and remand the matter to the bankruptcy court for a
 7   recalculation of the amount of sanctions.    The Trustee is
 8   entitled to compensatory damages solely for fees and costs
 9   incurred in relation to Appellants’ civil contempt after the
10   entry of the Sale Order.8
11        We fully recognize that Appellants’ efforts to thwart the
12   sale of the Property were egregious.    Perhaps their actions were
13   tantamount to the type of bad faith or willful misconduct
14   necessary to sanction a party under the bankruptcy court’s
15   inherent sanctions power, see Price v. Lehtinen
16   (In re Lehtinen), 564 F.3d 1052, 1061 (9th Cir. 2009);
17   In re Dyer, 322 F.3d at 1196, or as a result of vexatious
18   conduct preventing an orderly and expeditious disposition of the
19   Property Administration Proceeding and the bankruptcy case, see
20   Hale v. U.S. Tr., 509 F.3d 1139, 1148 (9th Cir. 2007); Caldwell
21   v. Unified Capital Corp. (In re Rainbow Magazine, Inc.), 77 F.3d
22   278, 284 (9th Cir. 1996), or perhaps they violate Rule 9011(b).
23   See Fed. R. Bankr. P. 9011(b)(1)-(4).    Appellants’ continued
24   efforts to rehash the same tired arguments before a litany of
25
          8
             Thus, to the extent Appellants are concerned about the
26   Trustee recovering fees for special litigation counsel both as
27   part of Appellants’ civil contempt and in the district court
     action, the bankruptcy court can address those concerns on
28   remand.

                                      10
 1   courts clearly evidences an abuse of process.   Our decision,
 2   thus, is without prejudice to the Trustee’s ability to seek
 3   sanctions under another sanctions theory.
 4                              CONCLUSION
 5        Based on the foregoing, we REVERSE the bankruptcy court’s
 6   determination of civil contempt as to the Default Order, we
 7   AFFIRM its determination of civil contempt as to the Sale Order,
 8   and we VACATE the Contempt Order and REMAND to the bankruptcy
 9   court for a modification of the sanctions award.
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