In re: Tina Chi Houng

                                                            FILED
                                                             DEC 06 2012
                                                         SUSAN M SPRAUL, CLERK
                                                           U.S. BKCY. APP. PANEL
                                                           OF THE NINTH CIRCUIT
 1
 2
 3                   UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                             OF THE NINTH CIRCUIT
 5   In re:                           )     BAP No.   CC-12-1208-DHKi
                                      )
 6   TINA CHI HOUNG,                  )     Bk. No.   2:07-bk-21354-BR
                                      )
 7                       Debtor.      )     Adv. No. 2:09-ap-02717-BR
     ________________________________ )
 8                                    )
     NICK ARGAMAN ALDEN,              )
 9                                    )
                         Appellant,   )
10                                    )
     v.                               )     M E M O R A N D U M1
11                                    )
     EDWARD M. WOLKOWITZ, Chapter 7   )
12   Trustee,                         )
                                      )
13                       Appellee.    )
     ________________________________ )
14
                    Argued and Submitted on November 15, 2012
15                           at Pasadena, California
16                           Filed - December 6, 2012
17                Appeal from the United States Bankruptcy Court
                      for the Central District of California
18
               Honorable Barry Russell, Bankruptcy Judge, Presiding
19
20   Appearances:         Appellant, Nick Argaman Alden, appeared in pro
                          per; Irv M. Gross of Levene, Neale, Bender, Yoo
21                        & Brill, LLP, appeared and argued for Appellee,
                          Edward M. Wolkowitz, Chapter 7 Trustee.
22
23   Before:   DUNN, HOLLOWELL, and KIRSCHER, Bankruptcy Judges.
24
          1
               This disposition is not appropriate for publication.
25   Although it may be cited for whatever persuasive value it may have
26   (see Fed. R. App. P. 32.1), it has no precedential value. See 9th
     Cir. BAP Rule 8013-1.

                                        1
 1
              On October 24, 2011, the Panel issued a Memorandum
 2
     (“Houng I”) affirming the entry of default against Appellant.     Alden
 3
     v. Wolkowitz (In re Houng), 2011 WL 6989900 (9th Cir. BAP 2011).
 4
     Although the record in Houng I suggested that the bankruptcy court
 5
     had made a ruling at the hearing on the Appellee’s motion for
 6
     default judgment, the official transcript of the hearing ended:
 7
              “THE COURT:   Yeah, I’m going to rule (portion of proceedings
 8
     not available.)
 9
              (Proceedings concluded.)”
10
     Accordingly, there were no findings available to allow the Panel to
11
     conduct a full appellate review of the bankruptcy court’s default
12
     judgment (“2011 Default Judgment”) entered against Appellant.2    The
13
     Houng I Panel vacated the 2011 Default Judgment and remanded the
14
     matter to the bankruptcy court for further proceedings.3
15
              On remand, the bankruptcy court conducted further proceedings
16
     on a renewed motion for default judgment, made findings of fact and
17
18
19        2
               On remand, the Appellee advised the bankruptcy court:
     “However, when I ordered a transcript of the hearing in connection
20   with the notice of appeal, I discovered that the electronic
21   transcription of the hearing had prematurely ended (“THE COURT:
     Yeah, I’m going to rule (Portion of proceedings not available.)
22   (Proceedings concluded.)”). It appears that somehow eventually the
     full record was recovered. A complete transcript of the February 1,
23   2011 hearing is now available.
24        3
               The Houng I Panel did determine, as a matter of law, that
25   the claim against Appellant, which sought to avoid and recover a
     preferential transfer, was untimely. The bankruptcy court noted in
26   the proceedings on remand that the preference claim was not viable.

                                          2
 1   conclusions of law on two claims for relief asserted against the
 2   Appellant,4 and again entered a default judgment (“2012 Default
 3   Judgment”) against the Appellant, which we now AFFIRM.
 4                                   I.   FACTS5
 5   A.   Scope of the Remand.
 6             The remand proceedings at issue in the current appeal were
 7   framed by the Houng I decision.
 8        Civil Rule 55(b)(1) allows for entry of a default judgment
          by the Clerk only when the amount demanded is for a sum
 9        certain, “or a sum that can be made certain by
          computation.” Otherwise, entry of a default judgment must
10        be by the court, pursuant to Rule 55(b)(2):
11
                  (2) By the Court. In all other cases, the party
12                must apply to the court for a default judgment.
                  . . . The court may conduct hearings or make
13                referrals - preserving any federal statutory
                  right to a jury trial - when, to enter or
14                effectuate a judgment, it needs to:
15                     (A) conduct an accounting;
                       (B) determine the amount of damages;
16                     (C) establish the truth of any
                           allegation by evidence; or
17                     (D) investigate any other matter.
18               Courts have wide discretion in deciding whether to
          enter a default judgment. Wells Fargo Bank v. Beltran
19        (In re Beltran), 182 B.R. 820, 823 (9th Cir. BAP 1995).
          Factors a court may consider in exercising its discretion
20
21         4
                The remaining claims against Appellant were (1) conspiracy
22   to commit fraud, and (2) avoidance and recovery of fraudulent
     transfers.
23
           5
               Unless otherwise indicated, all chapter and section
24
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532, and
25   all rule references are to the Federal Rules of Bankruptcy
     Procedure, Rules 1001-9037. The Federal Rules of Civil Procedure
26   are referred to as Civil Rules.

                                          3
 1        include:
 2             (1) the possibility of prejudice to the
               plaintiff, (2) the merits of plaintiff’s
 3             substantive claim, (3) the sufficiency of the
               complaint, (4) the sum of money at stake in the
 4             action, (5) the possibility of a dispute
               concerning material facts, (6) whether the
 5             default was due to excusable neglect, and
               (7) the strong policy underlying the Federal
 6             Rules of Civil Procedure favoring decisions on
               the merits.
 7
          Eitel v. McCool, 782 F.2d [1470,] 1471-72 (9th Cir. 1986).
 8
                 Where a default has been entered, the court should
 9        accept as true all allegations in the complaint, except
          those relating to damages. Televideo Sys., Inc. v.
10        Heiddenthal, 826 F.2d 915, 917 (9th Cir. 1987); Geddes v.
          United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977).
11
12   Houng I, 2011 WL 6989900 at *5-*6.
13   B.   Proceedings Following Remand
14          Following remand, the bankruptcy court set a status
15   conference for December 19, 2011 at 2:00 p.m.      Just before that
16   status hearing, the plaintiff in the adversary proceeding
17   (“Trustee”) applied to the bankruptcy court to schedule a “prove-up
18   hearing on the issue of damages.”       No record of the December 19
19   hearing is available for our review.
20          On January 17, 2012, the Trustee filed a new motion for
21   default judgment (“Default Judgment Motion”) and noticed a hearing
22   on the Default Judgment Motion for 10:00 a.m. on February 7, 2012.
23   On the same date, the Trustee filed his Memorandum of Points and
24   Authorities and Evidence in Support of Trustee’s Request for Entry
25   of Default Judgment Against Defendant Nick Alden; Declaration of
26   Irv M. Gross in Support Thereof (“Submissions”).      The Submissions

                                         4
 1   also contained a statement that a “Prove-Up Hearing” would be held
 2   at 10:00 a.m. on February 7, 2012.
 3            Mr. Alden filed an opposition (“Opposition”) to the Default
 4   Judgment Motion, which included his memorandum of points and
 5   authorities, and his declaration.       The Opposition noted the correct
 6   hearing date, but stated that the hearing time was “2:00 a.m.”
 7   [sic].    On January 16, 2012, Mr. Alden issued a subpoena to City
 8   National Bank (“Bank”), commanding it to appear and testify on
 9   February 7, 2012 at 2:00 p.m, and to produce at that time “[a]ll the
10   documents evidencing the wire transfer of the sum of $150,000 from
11   PIA Development, Inc. account, xxxx997, to Unique Holding
12   Corporation, dated March 5, 2007, a copy of which is attached.”        The
13   subpoena was served by personal service on “Ramon Nuno” by process
14   server Chad Van Hazelan on January 17, 2012.      The certificate of
15   service does not establish Mr. Nuno’s relationship to the Bank.        In
16   addition, the subpoena had an incorrect case number in the caption,
17   and it did not reference the adversary proceeding in which the
18   February 7 appearance was to be made.      Mr. Alden apparently provided
19   no notice to the Trustee that the subpoena had been issued.6
20
          6
21             A discussion about whether the Trustee was served with the
     subpoena is in the record:
22
          MR. GROSS: I never even received notice of the subpoena,
23        by the way. I don’t know if you sent it to me.
24
          MR. ALDEN:    We always send a copy of the subpoena.
25
     Hr’g Tr. (February 7, 2012) at 5:3-5.      In light of (1) Mr. Alden’s
26                                                             (continued...)

                                         5
 1            On February 7, 2012, the bankruptcy court called the matter
 2   for hearing (“February 7 Hearing”) at 10:00 a.m.    Mr. Alden was not
 3   present.    Counsel for the Trustee advised the bankruptcy court that
 4   when he reviewed the Opposition, he saw Mr. Alden’s notation of the
 5   hearing time of 2:00 p.m., assumed that was the correct time, and
 6   sent a revised notice of hearing stating the February 7 Hearing
 7   would take place at 2:00 p.m.    On the morning of the February 7
 8   Hearing, however, he realized the revised notice of hearing should
 9   not have been sent, and called Mr. Alden, who advised he would be
10   unavailable to be at the bankruptcy court at 10:00 a.m., because he
11   was to be at state court ex parte proceedings that morning.     In
12   light of the Trustee’s explanation of Mr. Alden’s absence, the
13   bankruptcy court agreed to postpone the proceedings on the Default
14   Judgment Motion until 2:00 p.m.
15            However, at the end of its morning calendar at approximately
16   11:30 a.m., the bankruptcy court observed that Mr. Alden in fact was
17   in the courtroom.    Rather than have the parties reappear at
18   2:00 p.m., the bankruptcy court called the case again.    The colloquy
19   between Mr. Alden and the bankruptcy court was confusing, and
20   concluded with the bankruptcy court agreeing to recall the case at
21   2:00 p.m., apparently because of Mr. Alden’s subpoena of the Bank
22   to provide documents to explain the Wire Transfer.    No record of the
23
          6
           (...continued)
24
     continuous disregard of procedures and (2) the bankruptcy court’s
25   observation that Mr. Alden did not file any statement that he had “a
     witness that’s just going to appear,” it is unlikely that the
26   Trustee did receive a copy of the subpoena. See id. at 5:5-6.

                                        6
 1   2:00 p.m. portion of the February 7 Hearing is available for our
 2   review.7
 3            A continued hearing on the Default Judgment Motion was held
 4   on March 12, 2012 (“March 12 Hearing”).    After the case was called,
 5   the bankruptcy court recapped the reason for not conducting the
 6   February 7 Hearing:    “Well, last time we were here, we continued it,
 7   because you were going to get a witness.”    Hr’g Tr. (March 12, 2012)
 8   at 1:10-11.    At the March 12 Hearing, the bankruptcy court recounted
 9   the evidence and made preliminary findings, granting the Default
10   Judgment Motion and stating that the 2012 Default Judgment, when
11   entered, would be for the amount of $250,000.8
12            It appears that after the March 12 Hearing, the Trustee
13
          7
14             There is no record of proceeding or transcript for the
     2:00 p.m. portion of the February 7 Hearing. There are only two
15   unnumbered entries on the docket for February 7, 2012. The first
     reads:
16
          Hearing (Adv. Motion) Continued (RE: related document(s)
17
          96 MOTION FOR DEFAULT JUDGMENT filed by Edward M.
18        Wolkowitz) Hearing to be held on 02/07/2012 at 02:00 PM
          255 E. Temple St. Courtroom 1668 Los Angeles, CA 90012 for
19        96, (Fortier, Stacey)(Entered: 02/07/2012)
20   The second reads:
21
          Hearing (Adv. Motion) Continued (RE: related document(s)
22        96 MOTION FOR DEFAULT JUDGMENT filed by Edward M.
          Wolkowitz) Hearing to be held on 03/12/2012 at 02:00 PM
23        255 E. Temple St. Courtroom 1668 Los Angeles, CA 90012 for
24        96, (Fortier, Stacey)(Entered: 02/07/2012)
          8
25             The adversary proceeding docket does not contain any
     record of the March 12 Hearing or any notation that the March 12
26   Hearing was held.

                                        7
 1   prepared proposed findings of fact and conclusions of law (“Proposed
 2   Findings”).     On March 26, 2012, Mr. Alden filed a declaration
 3   regarding his objection to the Proposed Findings, to which the
 4   Trustee responded on April 2, 2012.     The bankruptcy court entered
 5   its Findings of Fact and Conclusions of Law After Hearing on Motion
 6   for Entry of Default Judgment (“Findings and Conclusions”) on
 7   April 10, 2012,9 with respect to the conspiracy and fraudulent
 8   transfer claims for relief.     The 2012 Default Judgment was entered
 9   the same date.
10   C.   The Underlying Facts
11             Few facts of the actual dispute are set out in Houng I.
12   Accordingly, we restate here the findings the bankruptcy court made
13   on remand to the extent necessary to resolve the only issue in the
14   pending appeal, i.e., whether the bankruptcy court abused its
15   discretion when it entered the 2012 Default Judgment.
16             The debtor in this case, Tina Chi Houng, acquired title to
17   her residence (“Residence”) on October 24, 2003.     In mid-2006,
18   Ms. Houng entered into a purported agreement to sell the Residence
19   to her friend, Conglin Shen, for a sale price of $2,150,000.        At
20   that time, liens against the Residence totaled approximately
21   $1,100,000.
22             To facilitate the “sale” of the Residence, Ms. Houng borrowed
23
24
           9
25             Mr. Alden filed his Notice of Appeal on April 2, 2012,
     before the Findings and Conclusions and the 2012 Default Judgment
26   were entered by the bankruptcy court.

                                         8
 1   $430,000 from Kenneth Lu (“Lu Loan”).10    The record reflects that
 2   the Lu Loan was repaid within days from the “sale” proceeds.        The
 3   bankruptcy court found that the sale proceeds from which the Lu Loan
 4   was repaid included $14,773.42 from Ms. Shen and the proceeds of two
 5   loans Ms. Shen obtained, secured by the Residence, apparently to
 6   finance the purchase.     The loans obtained by Ms. Shen in connection
 7   with the “sale” ultimately went into default.
 8             On October 3, 2006, Ms. Houng executed a grant deed (“Houng
 9   Grant Deed”) purporting to transfer all of her right, title, and
10   interest in the Residence to Ms. Shen.     Escrow closed on the “sale”
11   of the Residence from Ms. Houng to Ms. Shen on October 26, 2006.
12   The Houng Grant Deed was recorded with the Los Angeles County
13   Recorder as Document 062376824 on October 26, 2006.
14             Also on October 3, 2006, Ms. Shen executed a grant deed
15   (“Shen Grant Deed”) purporting to transfer all of her right, title,
16   and interest in the Residence to Unique Holding Corporation
17   (“Unique”), a California corporation owned by Ms. Houng.     The Shen
18   Grant Deed was recorded with the Los Angeles County Recorder as
19   Document 062431473 on November 1, 2006, and it reflects that it was
20
          10
21             Additional facts about the Lu Loan are available in the
     record, including the fact that Mr. Lu received more than $20,000
22   from this transaction. Further, the Trustee was successful in
     obtaining judgment against Mr. Lu to recover the $21,118.49 in
23   interest determined to be usurious. The bankruptcy court entered
     summary judgment on the Trustee’s motion against Mr. Lu on July 29,
24
     2010. Mr. Lu appealed the summary judgment entered against him (BAP
25   No. CC-10-1319), but later stipulated to the dismissal of the appeal
     on the basis that he no longer wished to pursue the appeal. See
26   Docket Nos. 57 and 59 in the adversary proceeding.

                                         9
 1   a “[c]onveyance given for no value.      Gift.”
 2             The bankruptcy court found that as a result of the “sale”
 3   from Ms. Houng to Ms. Shen, and the “almost immediate gift” of the
 4   Residence by Ms. Shen to Unique, Ms. Houng (1) effectively
 5   continued to own the Residence and (2) obtained several hundred
 6   thousand dollars out of escrow.
 7             Ms. Houng’s real estate agent in connection with the “sale”
 8   was Mr. Alden’s son, Guy Alden (“Guy”).     At the time of the
 9   purported “sale,” Ms. Houng was a defendant in litigation filed
10   against her by Guaranty Bank of California (“Guaranty Bank
11   Litigation”).     Guy referred Ms. Houng to Mr. Alden, who thereafter
12   represented Ms. Houng, inter alia, in the Guaranty Bank Litigation.
13   Mr. Alden also represented Ms. Houng in litigation filed against her
14   and others by Tianjin New Sun Light Industry Products Co., Ltd.
15   (“Tianjin Litigation”).     Default was entered against Ms. Houng in
16   the Tianjin Litigation on October 6, 2006, and a default judgment
17   was entered against her in the Tianjin Litigation on October 24,
18   2006.11    Finally, Export-Import Bank of the United States
19   (“Export-Import Bank Litigation”) sued Ms. Houng on November 9, 2006
20   to collect on a guaranty she had executed for a promissory note.
21   The promissory note had been declared in default for nonpayment in
22   March of 2006, and demand had been made upon Ms. Houng for payment
23
24        11
               Although the default judgment against Ms. Houng in the
25   Tianjin Litigation was set aside approximately two years after it
     was entered, Tianjin was a creditor of Ms. Houng at the time of the
26   “sale.”

                                         10
 1   under the guaranty prior to the time of the “sale.”12
 2             Although Mr. Alden denies that he participated in the “sale,”
 3   the Shen Grant Deed states on its face that after recording, it was
 4   to be mailed to Mr. Alden, as were the tax statements on the
 5   Residence.     On October 30, 2006, Ms. Houng directed the escrow
 6   company to deliver a check representing $250,000 of the “sale”
 7   proceeds to Mr. Alden.
 8             After Ms. Houng filed her bankruptcy petition, the Trustee
 9   filed an adversary proceeding against Mr. Alden, among others,
10   seeking (1) a determination among other claims, that the “sale” was
11   a fraudulent transfer, and (2) to recover the $250,000 in “sale”
12   proceeds received by Mr. Alden.13
13
          12
14             In his opposition to the Default Judgment Motion,
     Mr. Alden admitted that he was first hired on August 23, 2006 to
15   represent Ms. Houng in the Guaranty Bank Litigation. He also
     admitted that he was later hired to represent Ms. Houng in other
16   litigation. He asserted that the $100,000 he was paid from escrow
     as attorneys fees was for work he performed in four lawsuits over a
17
     period of two years. Since at the time he received the $100,000
18   from escrow he had, by his own admission, provided legal services to
     Ms. Houng for no more than 68 days, he cannot also claim the
19   $100,000 as attorneys fees earned for representing Ms. Houng in four
     lawsuits over two years.
20
          13
21             The other defendants in this litigation were Mr. Lu, based
     on the Trustee’s claim to recover the usurious interest, and
22   Mr. Alden’s son, Guy. Guy filed a chapter 7 bankruptcy case,
     determined to be a no asset case, in which Guy received a discharge.
23   The Trustee did not pursue a nondischargeable judgment against Guy
     in Guy’s bankruptcy case. Therefore, he is foreclosed from pursuing
24
     the litigation against Guy in the adversary proceeding in
25   Ms. Houng’s bankruptcy case.
          The Trustee filed separate fraudulent transfer litigation
26                                                         (continued...)

                                         11
 1             Mr. Alden’s position, both before the bankruptcy court and on
 2   appeal, is that $100,000 of the $250,000 was to pay legal fees
 3   Ms. Houng owed to him.14       However, the bankruptcy court found that
 4   Mr. Alden was unable to produce “any documentation (ex: time
 5   records, billing statements) evidencing that any legal fees were
 6   owed him by [Ms.] Houng at that time, let alone in the amount of
 7   $100,000.”     Findings and Conclusions at 5:8-10.
 8             With respect to the remaining $150,000, Mr. Alden asserted
 9   that pursuant to a written agreement between Ms. Houng and Ms. Shen,
10   Mr. Alden was to hold the $150,000 as a reserve, for the benefit of
11   Ms. Shen, to make mortgage payments, presumably on the loans she
12   obtained on the property, for a one-year period.       Mr. Alden
13   allegedly drafted the agreement, but could not produce either a copy
14   of it or any evidence of its existence at the time of the March 12
15   Hearing.     Notwithstanding his purported understanding that he was to
16   hold the $150,000 for the period of one year in order to ensure
17   Ms. Shen’s loans on the Property were paid, Mr. Alden paid the
18   $150,000 to Unique on Ms. Houng’s sole instructions on March 5,
19   2007, less than five months after Mr. Alden received the funds.        At
20
          13
21         (...continued)
     against Ms. Shen and Unique (Adv. Proc. 08-01481). The Trustee
22   obtained default judgments (“Shen Default Judgment”) against these
     defendants on July 27, 2009, after they failed to comply with
23   discovery and failed to defend or appear. The Shen Default Judgment
24   avoided the Houng Grant Deed which effectuated the transfer of the
     Residence from Ms. Houng to Ms. Shen. No appeal was taken from the
25   Shen Default Judgment.
          14
26                See n.12 above.

                                           12
 1   Mr. Alden’s direction, City National Bank wired $150,000 from the
 2   account of “Pia Development, Inc.” to East-West Bank for the benefit
 3   of Unique.     Mr. Alden asserts that, having made this transfer, he
 4   should be insulated from any fraudulent transfer claim brought by
 5   the Trustee, because he effectively “gave back the money” to
 6   Ms. Houng.
 7                               II.   JURISDICTION
 8             The bankruptcy court had jurisdiction under 28 U.S.C. §§ 1334
 9   and 157(b)(2)(H).     We have jurisdiction under 28 U.S.C. § 158.
10                                  III.   ISSUES
11             Mr. Alden asserts numerous issues on appeal.   To the extent
12   they assert error on the part of the bankruptcy court in entering
13   default, as opposed to entering the 2012 Default Judgment, they are
14   not properly before us, having previously been the subject of the
15   Panel’s decision in Houng I.      Specifically, we do not address
16   Mr. Alden’s issues (1) that the bankruptcy court erred when it
17   entered a default after he had made a general appearance, and
18   (2) that the bankruptcy court erred as a matter of law when it
19   failed to consider his motion to dismiss at trial.15
20
21        15
               Mr. Alden asserts that the bankruptcy court erred when it
22   failed to consider his “Anti-SLAPP” motion at the trial on the
     merits, as the bankruptcy court promised to do when it denied the
23   motion prior to the entry of default and the 2011 Default Judgment
     against Mr. Alden. As the Panel stated in Houng I, “[g]iven that
24
     the judgment entered by the bankruptcy court and appealed by
25   [Mr. Alden] is based on a claim under federal bankruptcy law, none
     of the state law [Anti-SLAPP] provisions cited [by Mr. Alden] are
26   applicable. We therefore decline to delve any further into the
     court’s failure to consider those provisions.”

                                           13
 1            Neither do we address Mr. Alden’s issue argued before us that
 2   the bankruptcy court erred in entering the 2012 Default Judgment
 3   because the claim against him for preferential transfer was
 4   untimely.    That issue was raised and affirmatively disposed of, in
 5   Mr. Alden’s favor, in Houng I in connection with the 2011 Default
 6   Judgment.    The 2012 Default Judgment was not based on a preference
 7   claim.
 8            To the extent Mr. Alden’s issues raise defenses, affirmative
 9   or otherwise, to the complaint, they were foreclosed by the entry of
10   default, and we need not consider them here.    Those issues include
11   Mr. Alden’s assertions that the Trustee acted with “unclean hands,”
12   that the alleged refinance of the Residence did not render Ms. Houng
13   insolvent, and whether Mr. Alden’s legal advice to Ms. Houng is
14   privileged.
15            The only issue with which we are concerned in this appeal is
16   whether the bankruptcy court abused its discretion when it entered
17   the 2012 Default Judgment.
18                           IV.   STANDARDS OF REVIEW
19            As the Panel stated in Houng I, the bankruptcy court's
20   decision to enter a default judgment is reviewed for abuse of
21   discretion.    Speiser, Krause & Madole P.C. v. Ortiz, 271 F.3d 884,
22   886 (9th Cir. 2001).
23            We apply a two-part test to determine whether the bankruptcy
24   court abused its discretion.    United States v. Hinkson, 585 F.3d
25   1247, 1261-62 (9th Cir. 2009)(en banc).    First, we consider de novo
26   whether the bankruptcy court applied the correct legal standard to

                                         14
 1   the relief requested.   Id.   Then, we review the bankruptcy court’s
 2   fact findings for clear error.     Id. at 1262 & n.20.   We must affirm
 3   the bankruptcy court’s fact findings unless we conclude that they
 4   are “(1) ‘illogical,’ (2) ‘implausible,’ or (3) without ‘support in
 5   inferences that may be drawn from the facts in the record.’”      Id.
 6         We may affirm the bankruptcy court’s ruling on any basis
 7   supported by the record.   See, e.g., Heilman v. Heilman (In re
 8   Heilman), 430 B.R. 213, 216 (9th Cir. BAP 2010); FDIC v. Kipperman
 9   (In re Commercial Money Ctr., Inc.), 392 B.R. 814, 826-27 (9th Cir.
10   BAP 2008); see also McSherry v. City of Long Beach, 584 F.3d 1129,
11   1135 (9th Cir. 2009).
12                                 V.   DISCUSSION
13   A.    The Bankruptcy Court Applied the Correct Legal Standard in
           Determining Whether to Enter the 2012 Default Judgment
14
15         In the Ninth Circuit, the law is clear regarding the factors
16   a trial court may consider in exercising its discretion in deciding
17   whether to enter a default judgment.      Those factors (“Eitel
18   factors”) include:
19
          (1) the possibility of prejudice to the plaintiff, (2) the
20        merits of plaintiff’s substantive claim, (3) the
          sufficiency of the complaint, (4) the sum of money at
21        stake in the action, (5) the possibility of a dispute
          concerning material facts, (6) whether the default was due
22        to excusable neglect, and (7) the strong policy underlying
          the Federal Rules of Civil Procedure favoring decisions on
23        the merits.
24   Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
25         1.   The possibility of prejudice to the Trustee
26         In Houng I, the Panel cautioned that the standard to apply in

                                          15
 1   determining whether setting aside a judgment is prejudicial is
 2   “whether [plaintiff’s] ability to pursue his claim will be
 3   hindered.”    Houng I, 2011 WL 6989900 at *8 (quoting TCI Group Life
 4   Ins. Plan v. Knoebber, 244 F.3d 691, 701 (9th Cir. 2001)).    The
 5   bankruptcy court’s determination concerning this factor is explicit:
 6        Without a default judgment, the estate will be prejudiced
          because it will have been deprived of the significant
 7        equity in the [Residence] which was stolen by [Ms.] Houng,
          a substantial portion of which, $250,000, was fraudulently
 8        transferred by [Ms.] Houng to [Mr.] Alden. The
          [Residence] has been lost in foreclosure and the estate
 9        has no other recourse or remedy for recovering the
          fraudulently transferred funds.
10
11   Findings and Conclusions at 7:11-15.
12            The Trustee is a fiduciary for Ms. Houng’s bankruptcy estate,
13   charged with liquidating nonexempt assets for distribution to
14   Ms. Houng’s creditors in conformance with statutory priorities
15   established in the Bankruptcy Code.     See §§ 323(a) and 704(a).   The
16   Trustee was hampered in his role to liquidate his claim against
17   Mr. Alden, for the benefit of Ms. Houng’s creditors, by Mr. Alden’s
18   recurring failures to meet the obligations of a litigant vis-a-vis
19   the Rules regarding pleadings, appearances and other formalities.
20   It is clear on this record that giving Mr. Alden more time would not
21   lead to a different result.    Mr. Alden was not able to provide the
22   bankruptcy court with any of the documents upon which his defenses
23   were based, despite being given numerous opportunities over time to
24   do so.
25   //
26   //

                                        16
 1         2.   The sufficiency of the complaint, the merits of Trustee’s
                substantive claims, and the possibility of a dispute
 2              concerning material facts
 3         Because they are interwoven, we consider together three of
 4   the Eitel factors:   whether the complaint was sufficient, whether
 5   the Trustee’s claim against Mr. Alden has merit, and whether there
 6   is a dispute regarding material facts.
 7         The third claim for relief in the Trustee’s complaint against
 8   Mr. Alden alleges, inter alia, that [Ms.] Houng (1) made the
 9   transfer of $250,000 to Mr. Alden from the escrow of the “sale” of
10   the Residence “with the actual intent to hinder, delay or defraud”
11   an entity to which [Ms.] Houng was, or became, on or after the date
12   that the escrow transfer was made indebted.   The bankruptcy court
13   determined that the complaint sufficiently alleged all of the
14   necessary elements of a fraudulent transfer pursuant to
15   § 548(a)(1)(A).   We agree, and therefore reject Mr. Alden’s
16   assertion on appeal that the complaint failed to state a claim for
17   relief.
18         Mr. Alden challenged the allegations on several grounds.
19   First, Mr. Alden asserts that the bankruptcy court’s prior
20   determinations (1) that the Shen Grant Deed was a fraudulent
21   transfer, and (2) that Ms. Houng acted with the requisite “intent to
22   hinder, delay, or defraud a creditor,” in making the escrow transfer
23   to him (and others) cannot be used against him because those
24   determinations were made by default in litigation to   which he was
25   not a party.
26         We need not reach these issues, because in light of

                                       17
 1   Mr. Alden’s default, the allegations identified above are deemed to
 2   be true.    See Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172,
 3   1177 (C.D. Cal. 2002).
 4         Second, Mr. Alden asserts that because the claim for relief
 5   was made on the Trustee’s “information and belief,” it must fail
 6   because the Trustee provided no evidence of facts to support the
 7   information and belief.   Mr. Alden disregards the evidence presented
 8   by the Trustee in support of the Default Judgment Motion, which was
 9   appropriately considered by the bankruptcy court, and which
10   Mr. Alden did not counter with evidence of his own.
11         Third, Mr. Alden asserts that there could be no fraudulent
12   transfer because Ms. Houng had no creditors at the time the transfer
13   was made.   We consider this assertion specious, all the more so
14   because Mr. Alden was representing Ms. Houng in litigation in which
15   she was a defendant both at the time the “sale” of the Residence
16   occurred and at the time he received the $250,000 from the escrow
17   proceeds of the “sale.”
18         Despite the fact that the Trustee made sufficient allegations
19   to establish that the transfer of $250,000 to Mr. Alden constituted
20   a fraudulent transfer and that the bankruptcy court was entitled to
21   deem the allegations true, the bankruptcy court nevertheless
22   provided Mr. Alden with an opportunity in responding to the Default
23   Judgment Motion to present evidence to establish that the
24   allegations were not true.   Thereafter, the bankruptcy court made
25   the following analysis with respect to the Eitel factor requiring an
26   evaluation of the Trustee’s substantive claims:

                                        18
 1       The Trustee’s claims are meritorious. The Trustee and
         [Mr.] Alden had every opportunity to present evidence and
 2       argue in support of their respective positions. The
         evidence and argument of the Trustee was persuasive in
 3       demonstrating (I) [Ms.] Houng’s fraudulent scheme and
         intent to strip the [Residence] of its equity and place
 4       such equity out of the reach of her creditors by, among
         other things, causing $250,000 of the escrow proceeds to
 5       be transferred to [Mr.] Alden (ii) [Mr.] Alden’s receipt
         of $250,000 in fraudulently obtained funds (iii) [Mr.]
 6       Alden’s participation in assisting [Ms.] Houng to divert
         the fraudulently obtained and transferred funds. [Mr.]
 7       Alden, on the other hand, was unable to offer any
         probative competent evidence that he was owed $100,000 in
 8       attorneys fees by [Ms.] Houng at the time of the transfer,
         or that he held $150,000 (out of the $250,000) in good
 9       faith pursuant to a written agreement between [Ms.] Houng
         and [Ms.] Shen (who also participated in the fraud) that
10       [Mr.] Alden would hold the money as a reserve to cover
         unpaid mortgage payments, a written agreement [Mr.] Alden
11       claims he prepared but could not produce.
12   Findings and Conclusions at 7:16-27.    There is adequate evidence in
13   the record before us to support the bankruptcy court’s analysis that
14   the Trustee’s claim for recovery of the $250,000 as a fraudulent
15   transfer was both sufficiently stated in the complaint and
16   meritorious.   More important, although given the opportunity to
17   present evidence to establish a dispute as to material facts,
18   Mr. Alden did not do so.
19         3.   The sum of money at stake
20         The bankruptcy court implicitly suggested that this factor
21   likely was at issue in Eitel itself, where the default judgment
22   there was in the amount of $3 million.    The bankruptcy court
23   determined that a judgment in the amount of $250,000 was “not so
24   large as to weigh against entry of a default judgment,” especially
25   where Mr. Alden admitted that he retained $100,000 of the amount
26   that Ms. Houng transferred to him.     The bankruptcy court pointed to

                                       19
 1   an unpublished decision holding that a $250,000 default judgment was
 2   not excessive.      See Vallavista Corp. v. Vera Bradley Designs,
 3   2011 WL 7462065 *3 (N.D. Cal. 2011).
 4             Mr. Alden appears to assert that the judgment is too large,
 5   because he “returned” $150,000 to Ms. Houng.      The record reflects
 6   otherwise.      Mr. Alden, at Ms. Houng’s request, transferred $150,000
 7   to Unique, a separate legal entity from Ms. Houng.      This transfer
 8   assisted Ms. Houng in placing the $150,000 beyond the reach of her
 9   personal creditors.      As to the $100,000 Mr. Alden asserted he
10   retained for payment of his attorney’s fees, we agree with the
11   bankruptcy court that there is insufficient evidence in the record
12   to support Mr. Alden’s claim that Ms. Houng owed him anything, let
13   alone $100,000, for services Mr. Alden provided to Ms. Houng between
14   the date he was retained, August 23, 2006, and the date he received
15   the escrow proceeds, October 26, 2006.
16             In light of the foregoing, judgment in the amount of $250,000
17   is supported by the record, and is not excessive.
18             4.   The strong policy favoring decisions on the merits
19             We turn finally to the Eitel factor that emphasizes the
20   strong policy favoring decisions on the merits.16     “Judgment by
21   default is a drastic step appropriate only in extreme circumstances;
22   a case should, whenever possible, be decided on the merits.”        United
23   States v. Signed Personal Check No. 730 of Yubran S. Mesle, 615 F.3d
24
          16
25             We agree with the bankruptcy court that the Eitel factor
     which requires consideration of whether the default was the result
26   of excusable neglect was addressed in Houng I.

                                          20
 1   1085, 1091 (9th Cir. 2010), quoting Falk v. Allen, 739 F.2d 461, 463
 2   (9th Cir. 1984).   Aware of this admonition, the bankruptcy court
 3   asserted that the policy is strong, but not dispositive, in light of
 4   the existence of Civil Rule 55(b) which authorizes the entry of a
 5   judgment by default in appropriate contexts.    The record establishes
 6   that the bankruptcy court accorded Mr. Alden every opportunity to
 7   challenge entry of the default judgment by providing evidence to
 8   support both his claims and his defenses.     The record establishes
 9   Mr. Alden had no evidence to present beyond his own testimony.
10   Requiring the bankruptcy court to conduct a trial on the merits
11   would be a pointless exercise under these facts.
12                              VI.   CONCLUSION
13         The bankruptcy court’s findings in support of the 2012
14   Default Judgment satisfy the Eitel factors and are not illogical,
15   implausible, or without support in inferences that may be drawn from
16   the facts in the record.   The 2012 Default Judgment was based only
17   on the conspiracy and fraudulent transfer claims asserted against
18   Mr. Alden, not on the preference claim that the Houng I Panel
19   determined was untimely.   Accordingly, the bankruptcy court did not
20   abuse its discretion when it entered the 2012 Default Judgment.     We
21   AFFIRM.
22
23
24
25
26

                                       21