10:00 AM
Adv#: 8:16-01164 Hager v. Bushore
(con't from 11-30-17 per order approving stipulation entered 11-3-17
Docket 1
Debtor(s):
Russell W Bushore Represented By Parisa Fishback
Defendant(s):
Russell W Bushore Pro Se
Plaintiff(s):
Jennifer Hager Represented By
D Scott Doonan
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01088 Karen Sue Naylor v. Biddeford Blankets, LLC
(con't from 10-26-17)
Docket 1
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Biddeford Blankets, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
10:00 AM
Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01097 Karen Sue Naylor, Chapter 7 Trustee v. Saturday Knight, Ltd.
(con't from 10-26-17)
Docket 1
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Saturday Knight, Ltd. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
10:00 AM
Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01128 Karen Sue Naylor, Chapter 7 Trustee v. Franco Manufacturing Co., Inc.
(con't from 10-26-17)
Docket 1
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Franco Manufacturing Co., Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
10:00 AM
Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01133 Karen Sue Naylor, Chapter 7 Trustee v. Royale Linens, Inc.
(con't from 10-26-17)
Docket 1
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Royale Linens, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
10:00 AM
Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:16-01042 Howard Grobstein, as Chapter 7 trustee v. POINT CENTER MORTGAGE
Docket 75
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
POINT CENTER MORTGAGE Represented By
Nancy A Conroy Lauren N Gans Jonathan Shenson
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Jack A Reitman
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg
10:00 AM
Michael G Spector Peter J Gurfein Jack A Reitman
10:00 AM
Adv#: 8:13-01255 City National Bank, a national banking association v. Fu et al
(set from status conference held on 3-3-16)
(con't from 7-13-17 per order approving second stip cont hrg. ent. 7-6-17)
Docket 1
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T Madden Beth Gaschen Susann K Narholm
Defendant(s):
Cheri Fu Pro Se
Thomas Fu Pro Se
Joint Debtor(s):
Thomas Fu Represented By
Evan D Smiley
Plaintiff(s):
City National Bank, a national Represented By Evan C Borges
Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
10:00 AM
James J Joseph (TR)
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:16-01233 Hong v. LIU et al
(set a s/c held on 3/2/17) (con't from 11-9-17)
Docket 1
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen
Defendant(s):
LONG-DEI LIU Pro Se
Shu-Shen Liu Pro Se
Plaintiff(s):
Yuanda Hong Represented By Philip D Dapeer
10:30 AM
THE BANK OF NEW YORK MELLON FKA BANK OF NEW YORK
Vs.
DEBTOR
Docket 46
There are a number of questions not answered in the pleadings. First, it would appear that most, if not all, steps were taken after the petition was filed April 3, 2017. The court cannot determine on this record whether the sale preceded the petition but clearly the recording of the deed did. This goes primarily to the question of voidness of the sale. No annulment is requested so the court cannot ratify the other post-petition acts in any event. On the other hand, the court observes that another debtor named Eun Ko was dismissed August 15, 206, which might implicate section 362(c)(3) but this is not argued except obliquely as part of a section 362(d)(4) allegation. The court notes this is a Chapter 7 and the trustee has not objected. So whether a valid bankruptcy purpose is raised justifying continuation of the stay does not seem clear either.
Continue for further record development.
Debtor(s):
Tae Hoon Ko Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
CENTERPOINTE SPECTRUM APARTMENTS LLC
Vs DEBTOR
Docket 14
Grant. What is the basis for extraordinary relief?
Debtor(s):
Dan Chi Ha Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
KONSTANTINOS MANDAS
Vs DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Jose Hernandez Parada Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
SUN TRUST MORTGAGE, INC
Vs DEBTOR
Docket 11
Grant. There is no stay to discussions between the parties provided that section 363 and Rule 9019 are observed.
Debtor(s):
Varinder Kumar Represented By Dana M Douglas
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK
Vs.
DEBTOR
Docket 44
- NONE LISTED -
Debtor(s):
Steven Johnson Represented By
Diane L Mancinelli
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A. d/b/a WELLS FARGO DEALER SERVICES
Vs.
DEBTORS
Docket 20
Grant. Appearance is optional.
Debtor(s):
Mark Cartnal Represented By
Alan L. Armstrong
Joint Debtor(s):
Jennifer Cartnal Represented By
Alan L. Armstrong
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
SANTANDER CONSUMER USA INC
Vs
DEBTORS; AND RICHARD A. MARSHACK, TRUSTEE
Docket 12
Grant. Appearance is optional.
Debtor(s):
John M Casas Represented By
Rachelle Shakoori
Joint Debtor(s):
Arlene A Casas Represented By Rachelle Shakoori
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
EXETER FINANCE LLC
Vs DEBTOR
Docket 31
- NONE LISTED -
Debtor(s):
Louie Robert Martinez Represented By
Diane L Mancinelli
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTORS
Docket 9
Grant. Appearance is optional.
Debtor(s):
Remo Obsiana Madlangbayan Represented By Raymond J Bulaon
Joint Debtor(s):
Marilyn Nacisvalencia Represented By Raymond J Bulaon
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
AMERICAN HONDA FINANCE CORPORATION
Vs.
DEBTORS
Docket 11
Grant. Appearance is optional.
Debtor(s):
David Anthony Zepeda Pro Se
Joint Debtor(s):
Chantell Bridgette Zepeda Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
(con't from 11-28-17)
PROF-2013-S3 LEGAL TITLE TRUST IV, BY U.S. BANK NATIONAL ASSOCIATION, AS LEGAL TITLE TRUSTEE
Vs.
DEBTOR
Docket 112
Grant unless APO or delinquency cured.
Debtor(s):
Terry Lee Represented By
Gary Leibowitz Jacqueline D Serrao
Movant(s):
PROF-2013-S3 Legal Title Trust IV Represented By
Alexander K Lee Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 11-28-17)
LENDINGHOME FUNDING CORPORATION
Vs DEBTOR
Docket 8
Grant. Appearance is optional.
Debtor(s):
James Michael Clancy Pro Se
Movant(s):
LendingHome Funding Corporation Represented By
Martin W. Phillips
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
THE BANK OF NEW YORK MELLON
Vs.
DEBTORS
Docket 41
Grant. Appearance is optional.
Debtor(s):
William C West Represented By Julie J Villalobos
Joint Debtor(s):
Monday West Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 20
Apparently, there is no equity in the subject property. So under section 362(d)(2) relief of stay is indicated unless the property is necessary to a reorganization "in prospect." Debtor has the burden on this issue but offers very little except conclusory remarks. Obviously, periodic payments at a minimum are required yet no specifics are offered.
Grant unless a reasonable adequate protection offer is made and debtor demonstrates how all of this figures into a plan confirmable in near future.
Debtor(s):
Freda Philomena D'Souza Represented By Michael Jones
10:30 AM
U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE FOR THE HOLDERS OF THE CITIGROUP MORTGAGE LOAN TRUST INC ASSET-BACKED PASS- THROUGH CERTIFICATES SERIES 2005-HE3
Vs DEBTOR
Docket 60
Grant. Appearance is optional.
Debtor(s):
Kenneth E Strother Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
RICHARD A. MARSHACK, CHAPTER 7 TRUSTEE HAHN FIFE & COMPANY, LLP, TAX PREPARER
Docket 0
Allow as prayed. Appearance is optional.
Debtor(s):
Anne Marie Price Represented By Michael Jones Sara Tidd
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
HAHN FIFE & COMPANY
Docket 0
Allow as prayed. Appearance is optional.
Debtor(s):
Jessie Ann Mariann Chavez Represented By Sherry C Cross
Trustee(s):
Richard A Marshack (TR) Represented By Kyra E Andrassy Michael Simon
11:00 AM
KAREN SUE NAYLOR, CHAPTER 7 TRUSTEE
Docket 29
Allow as prayed. Appearance is optional.
Debtor(s):
Mark Christopher Kauffman Represented By Steven A Alpert
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
JEFFREY I. GOLDEN, TRUSTEE
LAW OFFICE OF THOMAS H. CASEY, INC., ATTORNEY FOR TRUSTEE HAHN FIFE & COMPANY, LLP, ACCOUNTANT FOR TRUSTEE
Docket 70
Allow as prayed. Appearance is optional.
Debtor(s):
Marla Kathy Shulman Represented By Anerio V Altman
Trustee(s):
Jeffrey I Golden (TR) Represented By Thomas H Casey Steve Burnell
11:00 AM
JOHN M. WOLFE, CHAPTER 7 TRUSTEE
LEVENE, NEALE BENDER, YOO & BRILL, ATTORNEYS FOR TRUSTEE SHULMAN HODGES & BASTIAN LLP, ATTORNEY FOR CREDITOR (Ch. 11) MAHAFFEY & ASSOCIATES, PLC, ATTORNEY FOR CREDITOR WEINSTEIN LAW FIRM, ATTORNEY FOR CREDITOR'S COMMITTEE (Ch.
11)
Docket 615
Allow as prayed. Appearance is optional.
Debtor(s):
Stephen Thomas Harris Represented By Raymond H. Aver Roger S Hanson Michael Jones Robert Hohenberger
Trustee(s):
John M Wolfe (TR) Represented By Philip A Gasteier Irving M Gross John M Wolfe
11:00 AM
Docket 51
Grant.
Debtor(s):
FireForge, Inc. Represented By Matthew J Olson
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello
11:00 AM
(con't from 11-28-17 per order approving stip to continued ent. 11-27-17)
Docket 41
The court presumes this motion is consistent with #21 on calendar, and merely implements a portion thereof. If so, grant.
Debtor(s):
FireForge, Inc. Represented By Matthew J Olson
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello
11:00 AM
7-1 Filed by Mark Kenneth
Docket 55
The Trustee has rebutted the prima facie validity of this claim by showing that there is no evidence of a security interest in Debtor’s assets and no evidence of any priority wages. Mr. Kenneth has not responded to support his claim. The objection will be sustained.
Debtor(s):
FusionBridge, Ltd. Represented By
Carlos F Negrete - INACTIVE -
Trustee(s):
Karen S Naylor (TR) Represented By
D Edward Hays Karen S Naylor (TR) Matthew Grimshaw David Wood
11:00 AM
Docket 34
By this motion, Debtor seeks declaratory relief that a debt owed to Creditor is discharged and issuance of an OSC as to why sanctions should not issue as to actions taken to enforce the debt. Creditor was not listed in Debtor’s schedules and obtained a small claims judgment post-petition. Creditor’s president, Doug Ramirez, testifies in his declaration that he has not taken any steps to enforce the judgment since he learned of the bankruptcy and has not made any other demands for payment. Creditor wishes to pursue its rights under section 523(a)(3) because it believes the debt was procured through fraud. Creditor has the right to do this. Although the state court has joint jurisdiction on the question of whether the claim was not discharged because of section 523(a)(3), if a further determination that the debt is also not dischargeable based on fraud under section 523(a)(2), that remains the sole province of the bankruptcy court. See e.g. In re McGhan, 288 F.3d 1172, 1181 (9th Cir. 2002). Such a determination will need to be by adversary proceeding in this court. However, this is debtor's motion seeking relief and an OSC re sanctions. Viewed that way the motion falls short. Declaratory relief is not properly requested by motion (FRBP 7001(9)) and Debtor has not established that this debt has been discharged. There does not seem to be any basis for issuing an OSC at this time. The allegations under Cal. Prof. Rule of Conduct 2-100 are not concerning since it appears that communications occurred in the small claims case and were initiated by Debtor.
Debtor(s):
Christian Niagara Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
(Installment payment of $100.00 due on December 1, 2017)
Docket 1
- NONE LISTED -
Debtor(s):
Don Jon Tipton Pro Se
Joint Debtor(s):
Kristine Ivy Tipton Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
2:00 PM
(Order Setting Hearing Signed 11-28-17) (con't from 12-19-17 per order ent. 12-1-17)
Docket 188
This is the emergency motion of Grace Baek, Richard Baek, Baek 153 LLC, and Pacific Commercial Group, LLC (collectively "Movants" or "Baek parties") to recuse bankruptcy judge Mark Wallace pursuant to 28 U.S.C. § 455. The motion is opposed by the Chapter 7 Trustee, Dan Halvorson, Jerry Ann Randall and Debtor (the "opposing parties"). Pursuant to an order of the District Court, this court has been randomly assigned to rule on the motion. The motion will be denied for the reasons given below.
Debtor and Ms. Baek were formerly spouses. Movants and Debtor have been involved in litigation in various forums, including Oregon civil court, California family court, District Court for the Eastern District of California, and this bankruptcy court. Debtor also has criminal proceedings pending in Oregon arising from alleged forgery, perjury and identity theft. Currently at issue before Judge Wallace are two adversary proceedings. The first, involving fraudulent transfer claims, was removed from District Court and is assigned adversary case number 8:15-01391-MW. The parties involved in the first adversary proceeding at this point are the Trustee, Movants, Dan Halvorson (Debtor’s brother), Jerry Ann Randall (Debtor’s mother), and certain Debtor-related entities. The second is a declaratory relief action filed by Ms. Baek against Debtor and the Trustee wherein she seeks a determination of interests in certain property and is assigned adversary case number 8:15-01454-MW. Debtor filed a counter-complaint in the second adversary proceeding; the Trustee has
2:00 PM
been substituted in as the real party in interest. The parties in both adversary proceedings were ordered to mediation by Judge Wallace pursuant to orders entered March 4, 2016. The mediation was scheduled for May 27, 2016 before Judge Meredith Jury in the Riverside Division. About five hours into the mediation Debtor was arrested pursuant to a warrant issued in the Oregon criminal proceeding.
Unsurprisingly, the mediation concluded shortly thereafter in failure. The arrest triggered a series of hearings on the question of Movants’ alleged unclean hands beginning with a status conference on June 22, 2016 and culminating in a trial in early November 2017 on the unclean hands question. Although concluded, reportedly no decision has yet been made on the unclean hands trial pending resolution of this recusal motion. It is the conduct of Judge Wallace during this series of events that is the subject of this motion.
In their motion, Movants allege that Judge Wallace has engaged in a "continual pattern of improper, adverse conduct" directed at Movants. [Motion, p. 1, lines 9-10]. Movants claim that Judge Wallace has engaged in improper ex parte communications with the mediator, Judge Jury, and that he has made a series of sua sponte rulings and statements they construe as adverse to Movants, effectively adopting a role of advocate rather than an impartial judicial officer. Movants also assert that Judge Wallace is trying to punish Movants for exercising their right to communicate with law enforcement. Movants assert that : (1) Judge Jury improperly expressed her opinion to the effect that Movants came to the mediation in bad faith and sabotaged it by having Debtor arrested by commentary during a hearing in another matter, In re Myers, 14-bk-21429-MJ; (2) Judge Wallace engaged in improper ex parte communications with Judge Jury wherein she shared her conclusions with Judge Wallace who has adopted that opinion; (3) Judge Wallace raised the issue of an affirmative defense of unclean hands sua sponte based on Movants’ alleged improper conduct at the mediation and set the matter for a bifurcated trial; (4) Judge Wallace issued numerous other sua sponte rulings that were adverse to Movants; and (5) Judge Wallace questioned the good faith of Movants’ counsel for asserting two alternative legal arguments. In their supplemental brief, Movants argue other points from events that occurred during the unclean hands trial, including: (a) Judge Wallace confirmed
2:00 PM
that the unclean hands defense was raised sua sponte because the bankruptcy court is a court of equity (although this affirmative defense also appears in the opposing parties’ original answers); (b) Judge Wallace admitted he engaged in ex parte communications with Judge Jury, disclosing that "Judge Jury informed me that the mediation was unsuccessful" and "that Mr. Halvorson [the Debtor] was arrested at the mediation, and that’s what she informed me." [Supplemental Brief, p. 1-2, lines 22- 23, 1]; (c) Judge Wallace did not stay the unclean hands trial to first address the motion to recuse; (d) On the second day of trial Judge Wallace stated that he had an opportunity to review the motion to recuse and criticized Movants for not serving Judge Jury and ordered it be served; (e) Judge Wallace accused Baek parties’ counsel of questionable litigation conduct and possibly bad faith; and (f) Judge Wallace accused counsel of intentionally violating the June 29, 2016 order partially staying the adversary proceedings by executing a settlement and sale agreement with the Trustee. All of these are argued both singly and cumulatively to be clear signs of partiality or bias against the Baek parties. In the supplemental brief, Movants requests that Judge Wallace disclose all of his ex parte communications with Judge Jury and give Movants a further opportunity to respond. Movants argue that the ex parte communications and sua sponte actions in aggregate create an appearance of partiality requiring recusal.
The opposing parties argue that this motion is a transparent attempt to delay a ruling on the unclean hands defense. Debtor questions the timing of the motion since it was brought as an emergency motion at the threshold of the unclean hands trial although most of the operative facts were known since at least June, 2016. The opposing parties all believe that Judge Wallace’s rulings have been appropriate and that he should not be recused based upon opinions or rulings he has made during the course of this litigation.
2:00 PM
28 U.S.C. § 455 provides, in pertinent part:
Any justice, judge, or magistrate judge of the United States shall disqualify himself in any proceeding in which his impartiality might reasonably be questioned.
He shall also disqualify himself in the following circumstances:
Where he has a personal bias or prejudice concerning a party, or personal knowledge of disputed evidentiary facts concerning the proceeding;…
"It is a general rule that the appearance of partiality is as dangerous as the fact of it."
U.S. v. Conforte, 624 F.2d 869, 881 (9th Cir. 1980). But in the absence of a legitimate reason to recuse himself, a judge should participate in the cases he is assigned. U.S. v. Holland, 519 F.3d 909, 912 (9th Cir. 2008). If it is a close case, the balance tips in favor of recusal. Id.
Recusal is appropriate where "a reasonable person with knowledge of all the facts would conclude that the judge’s impartiality might reasonably be questioned." Blixseth v. Yellowstone Mountain Club, LLC, 742 F.3d 1215, 1219 (9th Cir. 2014) citing Pesnell v. Arsenault, 543 F.3d 1038, 1043 (9th Cir. 2008); see also Holland, 519 F.3d at 913 (section 455(a) asks whether a reasonable person perceives a significant risk that the judge will resolve the case on a basis other than the merits). The appearance of impropriety can be enough for recusal; actual bias is not necessary. Id. citing Liljeberg v. Health Servs. Acq. Corp., 486 U.S. 847, 864-65 (1988); Yagman
v. Republic Ins., 987 F.2d 622, 626 (9th Cir. 1993). Appearance is evaluated by looking at how the conduct would be seen by a reasonable person, not someone "hypersensitive or unduly suspicious." Id. citing Holland, 519 F.3d at 913. Recusal under section 455(a) is fact-driven and may turn on the subtleties of a specific case. The analysis should not be focused on comparisons to similar situations, but by an independent examination of the specific facts and circumstances at issue. Holland, 519 F.3d at 913.
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The most important authority on these issues, cited in virtually all of the recent cases, is Liteky v. U.S., 510 U.S. 540, 555, 114 S. Ct. 1147 (1994). In Liteky, the Supreme Court explained the proper application in recusal motions of the so-called "extrajudicial source doctrine." That doctrine had been misunderstood in some earlier authority as requiring that the source of the bias or predisposition (in order to be sufficient for recusal) be from something outside of the proceedings at hand. The Liteky court clarified that an extrajudicial source is merely a factor in recusal jurisprudence. Further, "judicial rulings alone almost never constitute a valid basis for a bias or partiality motion." These are almost always proper grounds for appeal, not recusal. Id.at 554-55. In Liteky, the Supreme Court explained:
[O]pinions formed by the judge on the basis of facts introduced or events occurring in the course of the current proceedings, or of prior proceedings, do not constitute a basis for a bias or partiality motion unless they display a deep-seated favoritism or antagonism that would make fair judgment impossible. Thus, judicial remarks during the course of a trial that are critical or disapproving of, or even hostile to, counsel, the parties, or their cases, ordinarily do not support a bias or partiality challenge. They may do so if they reveal an opinion that derives from an extrajudicial source; and they will do so if they reveal such a high degree of favoritism or antagonism as to make fair judgment impossible.
Id. at 555.
Not establishing bias or partiality, however, are expressions of impatience, dissatisfaction, annoyance, and even anger, that are within the bounds of what imperfect men and women, even after having been confirmed as federal judges, sometimes display. A judge’s ordinary efforts at courtroom administration− even a stern and short-tempered judge’s ordinary efforts at courtroom administration− remain immune. Id. at
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555-556.
Rather, the sort of bias or unfavorable disposition must somehow be wrongful or inappropriate either because it is undeserved, or because it rests upon knowledge that the subject ought not to possess. Id. at 550-51.
But importantly, "impartiality is not gullibility." Id. at 551 citing In re J.P. Linahan, Inc., 138 F. 2d 650, 654 (2d Cir. 1943). A judge may become exceedingly ill-disposed toward a defendant who has been shown to be a reprehensible person, but this does not require recusal. Id. at 550; see also Blixeth, 742 F.3d at 1221. But, as Liteky teaches, the source of that predisposition becomes important for recusal purposes unless that bias is so extreme, obvious and wrongful as to make fair judgment impossible. As the court understands it, Liteky directs an inquiry as to whether the information upon which the predisposition rests was improperly obtained, such as from an extrajudicial source, or, alternatively, whether the alleged bias is so obvious, wrongful and extreme (even if obtained from within the normal course of the proceeding) as to make fair judgment impossible. Further restated, if the source of the wrongful predisposition is shown to be extrajudicial and improperly obtained, the bar is somewhat lower. If the source however is from the proceedings itself, then the bar is higher, and merely because a judge has become ill-disposed toward a party, recusal is not required. Wrongly decided orders (in the opinion of the movant) are almost never a basis for recusal; they are grounds for appeal, not recusal. The court now examines these issues as they apply in this case.
Ex Parte Communications
Movants assert that Judge Jury made what they regard as improper statements about what happened at the mediation on the record in the unrelated Myers hearing and that Judge Wallace and Judge Jury had improper conversations about the mediation. Movants refer to the Bankruptcy Court for the Central District of California’s General Order No. 95-01, ¶ 8.10(b), of which provides:
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Within 14 days of the Mediation Conference, the Mediator shall file with the Court and serve on the parties and the Mediation Program Administrator a certificate in the form attached as Official Form 706, which shows whether there has been compliance with the Mediation Conference requirements and whether or not a settlement has been reached. Regardless of the outcome of the Mediation Conference, the Mediator will not provide the Judge with any details of the substance of the Mediation Conference. (Italics added)
The question then arises as to what is meant by the "substance" of the
mediation conference. The court has not been cited to any definition that controls here. But likely there is (and should be) a distinction between procedural aspects of a conference, which are ordinarily not confidential, vs. the substance of the negotiations, i.e. the give and take in settlement discussions going to the perceived strength or weakness of a party’s case. Clearly, for policy reasons the latter category is the "substance" and it must remain confidential or else parties will be reluctant to participate in candor with the mediator. But that distinction supports (and the court agrees with) the gist of Judge Wallace’s comments found in the transcript from the hearing of June 22, 2016. There Judge Wallace makes exactly this distinction going to the question of whether parties could testify regarding (and take discovery regarding) the events of the mediation. So long as the "substance" is avoided and only the procedural events are disclosed, the discovery regarding the alleged obstruction and unclean hands issues were on safe and discoverable grounds. [See Decl. of Ali Matin, Exh. 20, p. 12-13 [Transcript p.8-9]; see also RJN in Support of Motion, Exh. 28 & 29, Order after Status Conference entered June 29, 2016, p.2-3] Judge Wallace at that hearing bolstered this distinction by citation to Federal Evidence Code 408, which provides:
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contradiction:
furnishing , promising, or offering-or accepting, promising to accept, or offering to accept-a valuable consideration in compromising or attempting to compromise the claim; and
conduct or a statement made during compromise negotiations about the claim-except when offered in a criminal case and when the negotiations related to a claim by a public office in the exercise of its regulatory, investigative, or enforcement authority.
Obviously the Evidence Code observes the distinction between the "substance" of settlement discussions, (or, one presumes, a mediation), and its procedural aspects, particularly when the purpose is other than to prove the validity or amount of a claim. Thus, proving bad faith "unclean hands" as an affirmative defense, or offense against the court, would fall within the excepted category as it has nothing to do with the viability of the claim.
Movants also refer to the mediation stipulations they entered into which provide that the mediations would be confidential (ignoring that Judge Jury is not a signatory). The opposing parties refer to the Commentary to the Code of Conduct for United State Judges Canon 3A(4), which provides, in pertinent part:
The restriction on ex parte communications concerning a proceeding includes communications from lawyers, law teachers, and others who are not participants in the proceeding. A judge may consult with other judges or with court personnel whose function is to aid the judge in carrying out adjudicative responsibilities. A judge
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should make reasonable efforts to ensure that law clerks and other court personnel comply with this provision. (Italics added)
Canon 3A(4) provides that a judge should avoid ex parte communications. If
an ex parte communication is received, then it provides that the judge should promptly notify the parties of the subject matter of the communication and allow an opportunity to respond. Movants have requested this disclosure. But, assuming that discussion between sitting judges is even included among ex parte communications subject to the Canon, it would seem the disclosure has already been made. As quoted in Movants’ supplemental brief, Judge Wallace has already disclosed his communication with Judge Jury. When the motion to recuse was presented after the motion to continue the trial was denied, Movants’ counsel referred to Judge Jury’s statements from the bench in the unrelated case and Judge Wallace responded "[t]his is the first I’m hearing this." [Supplemental Brief, Declaration of Ali Matin, Exh. 1, p. 29 [Transcript p. 7] lines 14-22]. Judge Wallace then continued to say:
[t]o be clear, Judge Jury informed me that the mediation was unsuccessful. She informed me that Mr. Halvorson was arrested at the mediation, and that’s what she informed me. Hearing these things from you, I’ve heard them for the first time.
[Id. at p. 29-30 [Transcript p. 7-8], lines 24-25, 1-3]. These statements do not give any reason to believe that there was more to the communications between Judge Wallace and Judge Jury. Perhaps ideally Judge Wallace should have disclosed that he had spoken with Judge Jury earlier, but there does not seem to be any harm that came from this conversation or that such a conversation was improper. This is particularly so since sanctions motions containing the gist of these events were filed June 3 in each of the adversary proceedings only a week or so after the mediation failed. So the question was then public record.
There is no evidence the "substance" of the mediation was discussed between the judges, which is really what General Order. 95-01 addresses. As to Judge Jury’s
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statements on the bench in the Myers case [See Motion, Decl. of Ali Matin, Exhibit 23, p. 30-31 [Transcript p.27-28]] they were made in the context of Judge Jury explaining that she was hesitant to order parties to mediation because of her recent experience. She did not mention any names or specifics. There is no reason to believe that Judge Wallace knew about them. But even if he did, he cannot control what Judge Jury says and her feelings about the outcome of the mediation cannot be imputed to him or to his alleged partiality. If Judge Jury had made these comments to Judge Wallace as well, which Movants assume happened because they argue that Judge Wallace used words similar to those used by Judge Jury (an extensive colloquy over the word "sabotage" appears in the briefs), the fact that she also made them on the record brings them into the light. It is true that none of these parties were present at the Myers hearing, but Movants did find out about them rather promptly as counsel ordered a transcript on June 26, 2016. Nothing is hidden here, and there is no evidence that any substance of the mediation was shared in any event.
Moreover, it is not clear that Judges Jury and Wallace were not perfectly correct in discussing the events leading to the failure of the mediation. As the italicized language from the commentary on Canon 3A(4) above suggests, it is not improper for judges to discuss as between themselves "adjudicative responsibilities." The "adjudication" here would be the question of unclean hands. Movants argue that a sitting judge acting as a mediator is different, but no authority for this proposition is cited. But in the end this probably turns more on the question of whether the "substance" of the mediation (discussed above as more properly defined as the settlement of claims portion) was discussed as opposed to the administrative aspects. There is absolutely no evidence this occurred. The alleged offensive conduct in sabotaging the mediation would fall within the administrative aspects of the conference and would have been appropriate to discuss in assisting Judge Wallace’s adjudicative responsibility on the question of unclean hands. Further, even if the distinctions between "substance" of the mediation and its other aspects were not compelling, still no authority is cited for the proposition that these communications (between two judges, one of whom acted as mediator) provoke the same concerns
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referred to in Liteky and other cases discussing the extrajudicial source doctrine.
In sum, the court sees no reason to believe that any basis for alleged wrongful predisposition from an extrajudicial source appears in this case. Consequently, under the Liteky analysis, the recusal motion can only succeed if it is shown that the alleged wrongful bias is so obvious and extreme that fair judgment has become impossible. It bears reemphasis that orders or opinions even if wrongly decided are not a basis for recusal.
Sua Sponte Actions and Allegations of Bad Faith
Movants complain that Judge Wallace sua sponte advanced a theory of unclean hands and in the "Order after Status Conference" entered June 29, 2016 [Motion, RJN, Exhibits 28 and 29] in each adversary proceeding stayed everything else to their detriment. They assert that Judge Wallace has acted as an advocate, which leads to an appearance of partiality. Movants assert that Judge Wallace’s predisposition against them has also affected the way he treats their counsel. A review of the record paints a different picture.
Judge Wallace ordered the parties in the two adversary proceedings to mediation. A fellow sitting judge agreed to conduct the mediation. During the course of the mediation, Debtor was arrested and there was suspicion that Movants may have been involved (Debtor tries to introduce evidence from the unclean hands trial that he suggests proves that Movants were indeed involved. Movants object to this evidence. The court does not need to get to this because whether or not Movants were indeed involved is not really the issue). Judge Wallace decided that the unclean hands question should be resolved before he proceeded with the rest of the case. At the status conference on June 22, 2016, Judge Wallace stated:
t’s not really the Court’s view that this is a situation where sanctions are in play. Rather, it’s the Court’s thinking that there is a substantive rule of equity, that he
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who seeks equity must do equity. And if there is evidence, if there is compelling proof that this mediation was intentionally sabotaged through the arrest of Mr. Halvorson, that would raise a question of whether that rule of equity was violated. And if the – as a rule of equity, if it were determined, and the Court obviously has not seen any evidence on this. It was not
– is not, it still remains to be determined…
[Motion, Decl. of Ali Matin, Ex. 20, p. 17-18 [Transcript p. 13-14], lines 21-
25, 1-8].
It is Judge Wallace’s right and indeed his responsibility to manage his cases as he sees fit. The defense of unclean hands is concerned primarily with protecting the integrity of the court. Hall v. Wright, 240 F.2d 787, 795 (9th Cir. 1957). This is an unusual circumstance, and a review of the record shows Judge Wallace initially pondered as to how he would best proceed, but that is to be expected because (thankfully) this is not something that courts regularly face. See Motion, Decl. of Ali Matin, Exhibit 34, p. 64 [Transcript p. 60], lines 13-19 ("I mean, the Court has thought about that. And I think what the procedural setting of this is, essentially, an unclean hands defense that’s raised by the Court sua sponte. I think that’s the procedural setting…). Movants argue that Judge Wallace invited the defendants to amend their pleadings and they did not, but all three filed instead notices that they had already asserted unclean hands as a defense, so perhaps they had nothing to amend. [Motion, RJN, Exhibits 30, 31, 32]. There is nothing in the fact that Judge Wallace decided to go forward with a bifurcated trial on the issue of unclean hands that would lead a reasonable person to conclude that he lacked impartiality. At the conclusion of the June 22 status conference, Judge Wallace stated:
The Court is, has no intention of using evidence relating to conduct, namely, the arrest of Mr. Halvorson, to affect its view of the Plaintiffs’ claims or the Defendants’ claims. This doesn’t go to settlement negotiations, to offers made during settlement, what party would be willing to settle for what. This goes to
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the underlying question of whether bad, serious bad faith occurred during mediation.
And it’s the Court’s preliminary view that if a mediation is used to get a party arrested, and the people who were, some of the people who were participating in the mediation are using it for that purpose, that shows bad faith, and really runs smack into the equity rule that he who seeks equity must do equity.
I mean, no one is required to mediate, but once you agree to mediate you’re under a duty, the Court’s view is, you’re under a duty to exercise some minimal level of good faith.
[Motion, Decl. of Ali Matin, Exh. 20, p. 32 [Transcript p.28]]
Contrary to Movant’s assertions, Judge Wallace’s statements during various
hearings also tend to show that he listened to and considered all arguments, and he stated more than once that the issue of unclean hands had not been determined and Movants could prevail. During argument on Movants’ motion to dismiss the unclean hands proceeding at a hearing on May 31, 2017, in response to arguments made by Movants’ counsel regarding the balancing rule in Northbay Wellness Group, Inc. v.
Beyries, 789 F. 3d 956 (9th Cir. 2015), Judge Wallace stated:
Well, the Court certainly doesn’t mean to deprive you of the right to present your arguments in the balancing test. I mean, that was always open to discovery. That was always – the unclean hands involves – balancing is integral to unclean hands.
I mean, you certainly had the opportunity to conduct discovery on that. You have the opportunity to present evidence on that at trial. The Court doesn’t mean to cut the ground out from under you. That can be presented. It’s relevant to unclean hands because unclean hands
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requires balancing.
[Motion, Decl. of Ali Matin, Exh. 34, p. 34 [Transcript p. 30], lines 2-12].
In response to counsel’s argument that there would be too much overlap if the
bifurcated trial were held, Judge Wallace responded:
I don’t see it that way, Mr. Kveton. I mean, I see that there’s some overlap to be sure, but I don’t think it’s a complete overlap. I mean, I think there are certain issues. That if the Court were to hold the bifurcated trial on unclean hands, and reject the unclean hands defense, and then we went on a full-blown trial on the remaining issues, I think there would be evidence presented on the remaining issues that would never be presented in connection with the unclean hands, either by the parties who are asserting that defense or the parties who are opposing that defense. I don’t think there’s a complete overlap. If there was a complete overlap, they there’d be no point to a bifurcation…
[Id. at p. 35-36 [Transcript p.31-32], lines 15-25, 1-3].
When discussing Movants’ rights to raise the arguments in their motion to dismiss, Judge Wallace explained:
I think the Baek parties have a right to argue what they’re arguing in the motion to dismiss. I mean, the question I have is the timeliness
[Id. at p. 47 [Transcript p. 43], lines 5-9].
Judge Wallace also acknowledged Movants’ counsel’s argument at the conclusion of the motion to dismiss:
So I think from the very beginning, I’m not sure that there’s support for what Mr. Kveton is arguing. But the Court recognizes what he’s arguing. I think it’s a very
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interesting argument. I’m going to take it into account. [Id. at p. 55 [Transcript p. 51], lines 11-14].
At the conclusion of argument on Movants’ motions to dismiss and for
summary judgment, Judge Wallace acknowledged that there was "a lot of interesting argument that have been presented by both sides." [Id. at p. 82 [Transcript p.78], lines 12-14]. Judge Wallace also made it clear that the test for unclean hands was a balancing test, and that Movants "are certainly entitled to present a defense to the affirmative defense. No doubt about that." [Id. at p. 84 [Transcript p. 80], lines 4-6]. Judge Wallace denied both the motion to dismiss and the motion for summary judgment, but he did so in detailed Memoranda of Decision that explained his reasons and which appear to be written very fairly and cogently. [Motion, RJN, Exhibits 35 and 37].
Finally, on October 18, 2017, Judge Wallace heard the motion to continue trial and motions in limine. Defendants did not prevail on their motions in limine. In ruling that Ms. Randall should be present for half a day of trial, Judge Wallace stated:
And the Baek parties, I think, have, you know, two roots [sic routes?] to prevailing. One is to show that what they did wasn’t – didn’t fit within the definition of unclean hands.
And the other would be, even if it did fit within unclean hands, that the balancing is such that it’s in their favor. And so, conceivably, that might – you know, they need a fair opportunity to develop that I think.
[Motion, Exh. 43, p. 36 [Transcript p. 32], lines 9-16].
Nothing in these interactions would cause a reasonable person to question Judge Wallace’s impartiality.
The denial of the motion to continue the trial also does not lead to a conclusion that Judge Wallace’s impartiality should be questioned. The motion to
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continue was opposed. See Motion, Decl. of Ali Matin, Exh. 43, p. 18-23 [Transcript
p. 14-19]. It seems there were questions with the proposed settlement and what would remain for Movants to purchase. The bifurcated trial on the unclean hands defense is adjudicating an offense against the court. Despite Movants’ proclamations of shock and surprise, the unclean hands issue is not merely an item of commerce, something the parties can settle away without addressing the separate issues of an affront against the court and the court’s power to protect its own integrity. See e.g. The Highwayman (Everet v. Williams), Ex. 1725, 9 L.Q. Rev. 197; Hall v. Wright, 240 F. 2d at 795; Art Metal Works v. Abraham & Strauss, 70 F. 641, 646 (2d Cir. 1934); Goldstein v. Delgratia Mining Co., 176 F.R.D. 454, 458 (1997); In re Casa Nova of Lansing, Inc., 146 B.R. 370. 380 (Bankr. W.D. Mich. 1992). Since the separate issue of the court’s integrity had been placed into issue, it was well within the court’s purview and discretion to decide that it wanted to proceed with trial, especially since there were other parties involved. Movants emphasize the fact that Judge Wallace approved stipulations to continue deadlines based on representations that the parties were negotiating a settlement, but then later found that the settlement agreement violated the stay that he had imposed on the adversary proceedings. When Judge Wallace approved the stipulations he did not know the contents of the proposed settlement. Judge Wallace’s conclusion that the settlement violated the stay after he had an opportunity to review it is not so unreasonable as to lead to a conclusion that his impartiality should be questioned.
Movants also refer to an exchange between Judge Wallace and Movants’ counsel where Judge Wallace questioned whether counsel was in good faith. Judge Wallace asked:
Well, please explain to the Court how you can file a pleading that says, in the alternative, your Honor, if you’re inclined to deny the claim of privilege, we request in-camera review. Now I’m granting your request for in-camera review, and now you want to withdraw it. How is that good faith?
[Motion, Exh. 48, p. 14, [Transcript p. 11], lines 13-18]. When counsel questioned the
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accusation that he was in bad faith, Judge Wallace withdrew the comment. [Id. at p. 15, lines 16-17]. Exchanges such as this one can occur during litigation. Moreover, this was not an accusation of bad faith; it was a request to counsel to explain why apparently contradictory positions were not in bad faith. These do not demonstrate the level of "antagonism" that would cause one to question whether Judge Wallace could be fair. These exchanges are nowhere close to the kind of bias and predisposition mentioned in Liteky, which must be of a sort so extreme and wrongful as to compel the conclusion that fair judgment is impossible. Indeed, it would appear that Judge Wallace at all times displayed a restrained temperament well within the margins of what is expected of federal judges.
Further, that the unclean hands issue was raised sua sponte (although this affirmative defense appears in the answers) means very little. If the mediation were so sabotaged as to have displayed unclean hands this can be correctly construed as an offense against the court sitting in equity. See e.g. Hall v. Wright, 240 F. 2d at 794.
But this is a far cry from Movants’ cited case In re U.S., 441 F. 3d 44, 65-68 (1st Cir. 2006) and does not support the argument that Judge Wallace had improperly become an advocate. In U.S. the court stayed trial in a criminal conspiracy, fraud and extortion case while it investigated the government’s alleged misconduct concerning a grand jury. The District Court in U.S. improperly returned to an investigative role far afield from its role in courtroom administration, despite the fact that its prior investigations revealed little and apparently improperly supplanted the proper investigative and prosecutorial roles of the executive branches of government in a criminal proceeding. But this is not remotely comparable to our case. Unclean hands is an affirmative defense under civil law and goes to protection of the court’s own integrity, a role more properly within Judge Wallace’s purview. But even if Judge Wallace were wrong in that conclusion the remedy is appeal, not recusal.
Movants obviously are not happy with Judge Wallace’s rulings. But there is no evidence that Judge Wallace is being biased or acting as an advocate for the other side. Of course it is inconvenient for Movants that Judge Wallace wants to get to the
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bottom of what happened at the mediation before he proceeds with the rest of the two adversary proceedings. But the fact that it is inconvenient does not make it wrong.
Rather, if unclean hands might properly bar any relief it makes perfect sense for efficiency’s sake that this issue be first decided before all of the other issues. Ample authority is cited suggesting this issue, if decided against Movants, may close the court’s figurative doors to the relief sought in the adversary proceedings, so this is not some kind of lark embarked upon by Judge Wallace. Further, even if Movants’ alleged conduct in this case and the two adversary proceedings has negatively impressed Judge Wallace, or if the judge may have on a few occasions been understandably short with counsel, that does not provide grounds for recusal as Liteky and other authorities make clear. Movant has not shown any evidence that Judge Wallace has demonstrated such a "high degree of favoritism or antagonism as to make fair judgment impossible" as described in Liteky. The transcripts from the hearings show that Judge Wallace considered all of the arguments Movants raised and did so respectfully and thoughtfully. The judge did not always agree, but the remedy for that is not recusal, it is an appeal once there is a final judgment (which may not be so far away since trial has already been held). The very fact that the unclean hands trial did not occur until a year and five months after the events at issue, speaks to Judge Wallace’s efforts to remain temperate, even handed and to expose the events to the light of discovery, law and motion and other due process. Moreover, since this court concludes that information about the alleged "sabotage" of the mediation did not come from an improper or extrajudicial source, under Liteky the bar for recusal is quite high and is not met here.
Deny
Debtor(s):
John Olaf Halvorson Represented By Marc C Forsythe Charity J Miller
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Movant(s):
Grace Baek Represented By
Steven J. Katzman Ali Matin
Pacific Commercial Group, LLC Represented By
Steven J. Katzman Ali Matin
Baek 153, LLC Represented By Steven J. Katzman Ali Matin
Richard Baek Represented By Steven J. Katzman Ali Matin
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Faye C Rasch Jeffrey I Golden
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Docket 188
- NONE LISTED -
Debtor(s):
Lorraine M. Nichols (Deceased) Represented By Illyssa I Fogel
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(con't from 10-11-17)
Docket 1
Tentative for 1/10/18: Status?
Tentative for 10/11/17:
Continue for about 60-90 days to coincide with probable confirmation date?
Tentative for 8/23/17:
Continue conference into mid December.
Tentative for 8/9/17:
Continue to August 23, 2017 at 10:00 a.m.
Tentative for 6/7/17:
Deadline for filing plan and disclosure statement: November 30, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: August 1, 2017
Debtor(s):
Mariano Mendoza Represented By Onyinye N Anyama
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Joint Debtor(s):
Mercedes Mendoza Represented By Onyinye N Anyama
10:00 AM
Docket 1
- NONE LISTED -
Debtor(s):
Your Neighborhood Urgent Care, Represented By
Jeffrey I Golden
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(con't from 9-27-17)
Docket 0
Tentative for 1/10/18:
Where's the final decree motion?
Tentative for 9/27/17: Status?
Tentative for 6/28/17:
Continue for further status report in approximately three months.
Debtor(s):
Fantasea Enterprises Inc Represented By Vicki L Schennum
Brian J McGoldrick Ahren A Tiller Brett F Bodie Robert J Feldhake
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(con't from 12-6-17 as a holding date)
Docket 1
Tentative for 12/6/17:
Moot in light of recent hearing/order?
Tentative for 11/1/17:
Continue to coincide with hearing on Application for Discharge on November 29, 2017 at 10:00 a.m.
Tentative for 8/2/17: See #4.
Tentative for 3/28/17:
Deadline for filing plan and disclosure statement: November 1, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date Debtor to give notice of the deadline by May 1, 2017
Why isn't this case a Chapter 13?
Debtor(s):
Jaime Leigh Kaufman Represented By Andy C Warshaw
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10:00 AM
(con't from 11-1-17)
Docket 0
Tentative for 1/10/18:
There are some issues raised last time which were not addressed in the Amended Disclosure. Additionally, although feasibility is usually a confirmation issue, the UST's objection points out that projections are not being met and indeed are not reporting profitable. Debtor's response?
Tentative for 11/1/17:
This is the debtor’s motion to approve its Disclosure Statement ("DS") as containing adequate information to enable creditors to make an informed decision on the plan as required under §1125. The narrative is a little thin on detail about what will happen post-confirmation, and in some places seems contradictory. It appears the restaurant will continue to operate, but there are some hints that a sale of the restaurant might be sought. The court notes the following:
At p. 1, lines 11-12, the DS states that all interests will be cancelled and the Reorganized Debtor will be owned by the "New Value Contributor." Yet, we see no information about the identity of the New Value Contributor, or the amount of value contributed. At p. 10, "New Value Contributor" is defined as "the individual or entity contributing new value to acquire 100% ownership of the Reorganized Debtor." This may or may not conflict with the fact that the current manager of Debtor, who is the sole shareholder of Debtor, will continue to manage Debtor. [DS p. 13, lines 2-4]. The
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DS needs to be amended to reflect this important information. It looks like the debtor is preparing for a cram down fight over the absolute priority rule and so is planning a backup argument over "new value." But if the plan proposes to pay creditors in full, it is at least unclear why this is necessary. Discuss please.
At p. 20, line 25 the DS provides that a risk factor is that Debtor will be unable to sell the property. At p. 20, line 11 the DS states that the plan will be funded through operations of Debtor. Left unclear is which property is proposed to be sold. If everything is to be sold the Plan and DS need to make that clear. If a sale can happen at any time at discretion of management, that should be specified.
Treatment under Class 5 provides that all interests will be cancelled. [DS p. 19] There is no explanation of who will hold interests in the Reorganized Debtor.
"Collateral" could be defined more clearly as it is referred to throughout the DS. We do not know what these assets are by reading just this document.
The debtor offers no explanation as to why the BOE claim is classified separately from other unsecured claims in Class 3. If this is to gerrymander a vote, it is improper without a better explanation. [DS p. 18]
There is no breakdown of assets and their values in the liquidation analysis. The reason given is that the assets are over encumbered so there would likely be no distribution to creditors. [DS p. 21] The court notes that there has been a valuation order, but it would be helpful to explain why the $14,000+ valuation equates to zero recovery in a Chapter 7.
Debtor has not provided actual dollar amounts in the discussion of feasibility, but the only administrative claim is expected to be that of Goe & Forsythe, who will reportedly stipulate to a payment schedule if necessary, so maybe actual numbers are not necessary. But what might be necessary is a clarification that payment of fees will be subordinated to plan payments to creditors.
· The plan provides that Class 3 creditors will be paid in full through quarterly
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payments. Although the DS contains Exhibit 3 as projections, and between $20
and 30 thousand appears as net available profit in each period, no effort is made to estimate what the quarterly payments are supposed to be. Is all available cash to be paid? Will a prudent operational reserve be created? Disputed claims reserve? How much? Are dividends to the new equity to be paid before creditors? These points should be clarified.
· Class 4 is identified as the Hungry Bear claim and the DS says the "claim shall be disallowed." But it is left unclear what is meant by this. The dischargeability complaint was dismissed but this cannot be said to be determinative of claim allowance, a very different question. At p.13 reference is made to a $218,706 disputed claim of Hungry Bear. One supposes that the debtor intends to object to allowance and that there might ensue allowance litigation. But the DS should make clear that the ultimate amount of allowed claims, and hence amount of quarterly payments on a pro rata basis, will depend on the outcomes of this litigation. If the debtor is attempting by the plan’s confirmation to resolve the Hungry Bear claim, that must be made clear.
Continue for amendments as indicated.
Debtor(s):
Casa Ranchero, Inc. Represented By Robert P Goe Charity J Miller
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(con't from 9-27-17)
Docket 1
Tentative for 1/10/18:
Estimate approximate timeline to confirmation.
Tentative for 9/27/17:
Continue until early 2018 to allow consideration of whether plan can be confirmed.
Tentative for 3/28/17:
Deadline for filing plan and disclosure statement: September 1, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date Debtor to give notice of the deadline by May 1, 2017
Debtor(s):
Casa Ranchero, Inc. Represented By Robert P Goe Charity J Miller
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(con't from 11-29-17)
RM MACHINERY INC.
Vs.
DEBTOR
Docket 68
Tentative for 1/10/18: Is this resolved?
Tentative for 11/29/17: See #11.
Tentative for 9/26/17:
Any reason not to continue until at least confirmation hearing?
Tentative for 7/12/17:
While considerable questions regarding feasibility and other confirmation issues remain, the court cannot say that no reorganization is in prospect. Deny.
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Tentative for 5/3/17:
Continue about 30 days.
Tentative for 4/4/17:
This is the continued motion for relief of stay brought by the major secured creditor, RM Machinery, Inc. This matter was continued from 12/16, and again from 2/7 on the prospect of the filing of a plan of reorganization, one that could possibly be confirmed. A plan has been reportedly filed; whether it can be confirmed is a closer question. There is both good news and bad news reported. In no particular order the court has been told:
The debtor has managed to pay the $10,000 monthly adequate protection previously ordered, and seems poised to continue to do so;
Reportedly, the principal of the debtor, Mr. Wang, is prepared to make a "new value" contribution of a minimum of $150,000;
MORS have been filed. But depending on who is believed they report average
$270,000 gross monthly sales with only a single printer, which one expects could nearly double with the other machine online;
But the other machine may never come online since it has been reportedly cannibalized for parts to keep the first machine operating;
Further, analyzed on a net basis, the sales are reportedly only a net $1578.19 to date, or a paltry $315.64 per month, hardly sufficient to fund any reorganization. Reportedly $300,000 was the stated monthly minimum but neither that nor the $291,000 premised under the plan has ever been reached to date (reportedly only $245,000 net has actually been achieved);
Most disturbing of all, debtor seems to be relying heavily on the hope that the
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court will revise its §506 valuation from $885,000 down to something like
$350,000 based solely on a remark attributed to movant about useful life being only 5 years instead of the 12-15 years or so mentioned by debtor’s own appraiser. Two points here: first, if the depreciation is really that accelerated, then $10,000 per month may in fact not be adequate protection. Second, the court is more interested in what is true in the appraiser’s opinion, not in a "gotcha" game with opposing counsel. Debtor may be relying heavily on a very thin reed here. It would be more impressive if the case penciled at the ordered value; and
Although the court is glad to hear of the promised new value, debtor cannot forget about the teaching of the Supreme Court in Bank of America v. 203 N. LaSalle Street Ptsp which holds that any contribution of new value to get around the absolute priority rule must be itself "market tested" so that the court is assured that the promised new value is the most reasonably obtainable under the circumstances. Such a showing would be crucial to confirmation in a cram down.
In sum, there may still be a reorganization in prospect within the teaching of the Timbers case, but it would seem there remain very substantial hurdles to confirmation. Nevertheless, the court does not conclude at this point that reorganization is entirely unlikely, and it is just possible that debtor can still pull it together. For this the court is willing to continue the matter until the May 3, 2017 date scheduled for consideration of the Disclosure Statement. But debtor must realize that the expectation of demonstrated actual ability to perform rises with each continuance. And unless a more compelling case can be in meantime assembled, there may not be more beyond that.
Deny, continue to May 3
Tentative for 2/7/17:
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This is the continued motion for relief of stay brought by the major secured
creditor, RM Machinery, Inc. This motion was previously heard December 13, 2016. Relief of stay was denied at that time and continued for further evaluation on the major issue in dispute, i.e. whether there is a reorganization "in prospect" within the meaning of 11 U.S.C. §363(d)(2). As described at the last hearing "cause including lack of adequate protection" within the meaning of §362(d)(1) does not appear to be an issue inasmuch as the adequate protection payments earlier ordered (including the increased amount) are reportedly current. But the parties dispute whether the debtor has turned a corner respecting its ongoing financial performance. The UST has weighed in with his own motion to dismiss or convert (#1 on calendar), primarily based it seems on a lack of evidence that debtor is performing at a sustainable level. But there appears to be a dispute as to whether the MORS are current and as to what exactly those reports reveal, including whether the equipment is properly insured.
According to debtor, these reports are current, insurance is in place and the reports show a turnaround in progress. Moreover, a bit more detail is offered in the pleadings over the debtor’s proposal to add approximately $200,000 capital to the debtor. The deadline to file a plan and disclosure statement is March 10, which is rapidly approaching.
As stated from the beginning, this case is very challenged. Debtor also argues that the accounts payable are not as delinquent as might first appear after errors were corrected, and that the bulk is actually in the 30-day column. Reportedly, accounts receivable are increasing and something like $14,000 monthly operating profit is expected. But the question of whether actual profitability has been achieved remains elusive; moreover, it appears that the process of correcting bad information and budgeting for long-term compensation to officers is still in flux. Some of the distance to long-term profitability seems to rely upon debtor’s optimism about correcting employee morale, new capital and productivity. In sum, the court cannot say based on this record that there is clearly no reorganization in prospect. At least a possible route to confirmation has been set forth by debtor, although it obviously won’t be easy and a number of obstacles (cram down interest rate, feasibility, valuation) remain. The debtor bears the burden of proof on this issue. On a preponderance standard that
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burden is carried (albeit barely) for purposes of this hearing. The court prefers to see what the plan actually says, which is due in only a few weeks. With the plan on hand the court will review the reformed MORS [which are expected to be up to date and accurate] and will question about whether promised new funds are actually on deposit to see if the debtor’s burden of proving feasibility seems possible.
Deny and continue hearing approximately forty days to follow plan filing.
This is the motion for relief of stay by RM Machinery, Inc. assignee of a secured obligation now reduced to a judgment for $1,808,969 plus fees and costs. RM argues that it should be granted relief of stay under a variety of theories. Most of these theories are advanced under §362(d)(2) not (d)(1) inasmuch as the court has already made an adequate protection order which is reportedly not in default. RM argues instead that debtor bears the burden of proving the presses are necessary to a reorganization that is, in the language of the Timbers opinion, "in prospect." United Sav. Assn. of Tex. V. Timbers of Inwood Forest Assocs., 484 U.S. 365, 375-76 (1988). RM argues that debtor has not and cannot prove such reorganization is imminent partly because debtor will need RM’s vote as the only member of the secured creditor class. But this is a misstatement of the law as cram down under §1129(b)(2) may be attempted so long as there exists at least one class of consenting impaired claims.
Such a class debtor claims exists. Debtor also speaks vaguely of some investment or a purchase forthcoming that will provide a basis for reorganization. RM advances another theory, i.e. that the debtor does not own the presses by reason of a judgment entered in U.S. District Court case #16-cv-07541 the day before the petition was filed. Thus, RM contends, there is nothing around which reorganization could be proposed. In response Debtor argues about unenforceability of the judgment because it is not yet registered in California. Debtor’s discussion about a lien arising from the judgment is inapposite. It is not a question of a lien; rather, it is a question of ownership of the property. As the court reads the District Court opinion (and RM’s argument), the judgment purports to determine immediate ownership of title, and requires delivery of possession. See Judgment ¶3 D. At least that is one plausible
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reading. Other parts of the Judgment, however, can be read as treating the presses as mere collateral still requiring the formalities of foreclosure before title passes See ¶2. However, the court does not view this judgment as determinative of the whole case because, presumably, debtor still has appeal rights which are tolled under 11 U.S.C. § 108.
Of course, none of this is to say that this case is not extremely challenged. The court seems to recall its admonition to counsel last hearing that this was not a case likely to last very long absent some immediate and tangible demonstration of viability. The court notes that a further hearing is scheduled December 20 on continued use of collateral and adequate protection, and that exclusivity is scheduled to lapse in about another month. The outside deadline for filing of a plan set by order is in March. The court is inclined to find that some "prospect" still remains as of this hearing but the window is closing fast. The court will reevaluate in about 45 days. The debtor can assume that RM will succeed at that continued hearing absent a much clearer demonstration how all of this works.
Deny pending continued hearing in about 45 days.
Debtor(s):
CYU Lithographics Inc Represented By John H Bauer Scott Talkov
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(set at d/s hrg. held 9-13-17) (con't from 11-29-17) (third amended plan filed 12-18-17)
Docket 250
Tentative for 1/10/18:
As a result of the stipulation with RM Machinery all classes have voted to accept the plan. The Court finds that the modifications are non-material as they only affect RM Machinery and arguably make feasibility of the plan better for all creditors. There are no objections to confirmation. Confirm.
Tentative for 11/29/17:
Pursuant to stipulation of the parties the confirmation deadlines were vacated and new ones are to be set at this hearing.
Tentative for 9/13/17:
Most of the court's issues from the July 12 hearing appear to have been addressed. The Second Amended Disclosure Statement is by no means perfect, but that is not the standard. The court need only find that it contains adequate information to enable creditors to make an informed decision. There remain significant issues but these should be taken up in confirmation.
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Approve for dissemination. Schedule confirmation hearing.
Tentative for 7/12/17:
This is debtor’s motion to approve its First Amended Disclosure Statement under §1125. Adequacy of the disclosure statement is opposed by RM Machinery, Inc., the major secured and unsecured creditor. The disclosure statement is better than earlier attempts but still falls short in a few areas, as explained below. Many of the objections in fact go to confirmation questions which can be identified at this point but will not be decided until confirmation. In no particular order the court observes:
The draft disclosure statement contains many pages of what reads as a brief in a declaratory adversary proceeding on the question of the extent of RM’s security interest. It is an important question, of course, but the bulk should be excised from the disclosure statement as it ends up being largely misplaced and confusing to most of the creditor body. For this purpose it should instead suffice to tell the reader that there is an important dispute between the debtor and RM over the extent of its security interest involving alleged discrepancies between the financing statement(s), the body of the security agreement and case law determining what is properly "proceeds." It should be further stated that likely this question will be resolved post confirmation with the practical effect (if debtor succeeds) of reducing the amount of monthly payment to correspond to the amount determined by the court to be collateral. In this same place it would be appropriate to tell the reader that there is also a dispute over the effect of the District Court judgment, and that it might be necessary to determine this question through an appeal unless the debtor is willing to allow the judgment to become final. Thus, it would also be appropriate to describe any additional cost anticipated to compensate for litigation expenses post confirmation.
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One assumes that the treatment of the secured claims is fully amortized over a five-year term in monthly payments at 8%, and this
means that the lien is extinguished at the end of this term. This seems to be the gist of pages 21-22, but it would be appropriate to simply say so.
The polemical statements about the court’s "punitive" order and "punishment" of the debtor at the top of page 3 are inappropriate, incorrect and counterproductive.
Pages 33-38 are confusing as to exactly what is proposed to be paid to the unsecured classes. The court supposes that it is either 5.6%, 11.6% or 17.5%, depending on what is required to amortize the secured claim. It would be better to condense this section into something more "bottom line" oriented and make clear what is proposed, i.e. a percentage of the claim amortized over five years(?) either quarterly on monthly at no interest.
At page 42 lines 16-18 there is a misstatement of the law. Class 8 is permitted to vote. The class simply does not count as the single impaired class necessary under §1129(a)(10).
The "liquidation analysis" found at pages 44-46 leaves a lot to be desired. Ideally, it would be in a user-friendly table format. The court believes debtor is contending that unsecured creditors would receive a 4.5% recovery in a liquidation compared to a minimum 5.6 % under the plan over five years. Since no interest is promised in the plan one assumes the arithmetic is still correct even assuming a time value of money, but it might be helpful to say so.
Much is made in the opposition about the absolute priority rule and that clearly is a confirmation issue, as seemingly we are headed for a cram down effort. Adequacy of the $150,000 "new value" contribution will likewise be a central confirmation issue. But the "brief" on this subject
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offered by debtor at pages 49-50 is largely incorrect and is not appropriate for a disclosure statement. While it might be the case in practical terms that there is no CYU Lithographic without Mr. Michael Wang, that is not the teaching of the Supreme Court in Bank of America v. 203 N. LaSalle Street Ptsp.526 U.S. 434, 457 (1999).
Instead, it will be part of debtor’s burden at confirmation to show that
after some marketing effort suitable to the circumstances it can be said without reasonable fear of contradiction that no one in the investment world would pay more for the opportunity. Debtor can try to establish this point anyway it thinks best, but the court suggests that some effort at advertising would be an appropriate precaution. See In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281 (Bankr. C.D.Cal. 2014).
Further to the above, it should be made explicit whether the new value is in hand, must it be borrowed, and will it come in all in lump sum, or as needed? If the money is not in hand a more thorough explanation of Mr. Wang’s ability will be needed.
The disclosure should make explicit the percentage post confirmation of ownership of Messrs. Wang and Gu, and whether Ms. Chak will retain anything.
RM alleges that its deficiency claim is improperly segregated (gerrymandered) from Class 7 as discussed in cases such as Barrakat. This is likewise a confirmation issue not a disclosure issue. The court does not view such segregation as ipso facto impermissible, but debtor will have to explain the business justification for the classification other than merely getting a consenting impaired class.
The court is unsure why there is such disagreement between the parties over the numbers regarding net monthly sales as appears at pages 21-22 of the Opposition compared to pp. 7-8 of the Reply. The question should be reduced to a user-friendly table showing the actual sales and the projected sales over about the last 12 month period and
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projected over the next 12 (and on to 60 months). There should also
appear a clear sales "breakeven" number i.e., that number that exactly equals all enumerated costs of operation/taxes and promised debt service payments. If that is a negative number (i.e. we must assume some change going forward), the debtor should succinctly explain how it is nevertheless reasonably achievable and identify the assumptions.
There seem to be procedural steps both parties vaguely contemplate but that are not yet on calendar. As the court has made clear, it has already granted a §506 valuation for the printers at $885,000. Absent some compelling reason (not yet seen), the court does not intend to revisit this number, whether at $949,000 or otherwise. But this leaves ancillary questions such as accounts receivable, other equipment and the like. There is also the overhanging question of the legal extent of the security interest. This is not a point that can be simply assumed away in confirmation briefs but must be procedurally teed up in an adversary proceeding. If this becomes a prerequisite to confirmation, the debtor is advised to prepare for it, but the court assumes based on what is filed that debtor will argue that no matter what the ultimate decision becomes on these questions, it can still confirm a plan albeit with differing percentages and monthly payments. If so, debtor must be prepared to assume the worst case for confirmation purposes.
Deny as written. Continue for further clean-up.
Tentative for 6/28/17:
Continue about 30 days. See #4.
Debtor(s):
CYU Lithographics Inc Represented By John H Bauer
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(con't from 12-12-17)
PLAZA BANK
Vs.
DEBTOR
Docket 44
Tentative for 1/10/18:
Relief from stay granted.
Tentative for 12/12/17: Status?
Tentative for 10/24/17:
This is the motion for relief of stay filed by the first lienholder, Plaza Bank, against the property commonly known as 3110 Newport Blvd., Newport Beach, CA ("property"). Debtor is the owner of this property which is reportedly the location of a bar/restaurant. The only source of income is reported as the right to receive rent under a lease by the restaurant operator, although the papers are unclear as to whether that lease is expired or if any rent at all is being currently paid by the operator. Reportedly, operations are very challenged by street work and remodeling of adjoining businesses. The value of the property is contested as being between $5,170,000 and $7 million.
Accordingly, there is either a very small slice of equity or none at all (depending on which valuation is believed) given that the liens total about $6,100,000. Debtor argues
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primarily that there is adequate protection of the bank’s first position consisting of value behind the first position. But to what end is this bankruptcy proceeding? Based on debtor’s papers, it seems that the primary purpose is to get some time to refinance the heavy debt on the property, and some exhibits are offered showing preliminary discussions about refinance. This raises the question of whether there is a reorganization "in prospect" within the meaning of §362(d)(2) and the Timbers case. Debtor has not carried its burden on this issue, but then the question of equity (which is the bank’s burden) is not clearly established either given the disparate appraisals.
As the court has previously stated, this is a much challenged case and the debtor must know that time is extremely limited. Prospects of reorganization appear very remote to non-existent, and the refinance discussions seem preliminary and rather unlikely, given the lack of operational revenue and the large amounts needed to make any of this work. Nevertheless, some small amount of additional time can be given before the bank is relieved of stay because danger to its position is less severe. The same cannot be said for the second trust deed [see #7 on calendar]. The suggestion is made that more time be tied to adequate protection payments. This seems right to the court. If the debtor cannot afford to make even some monthly payments its dreams of refinance are too far-fetched, such that it cannot expect the entire risk of delay be borne by the creditors.
Continue for sixty days conditioned on immediate payment of $18,500 to first, with another payment due in thirty days.
Debtor(s):
TCCB Investors, LLC Represented By Brian C Andrews
Movant(s):
Plaza Bank Represented By
Steven Casselberry
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(con't from 12-12-17)
STRATEGIC EMERGING ECONOMICS, INC.
Vs.
DEBTOR
Docket 17
Tentative for 1/10/18:
Relief of stay granted.
Tentative for 12/12/17: Status?
Tentative for 10/24/17:
Status? See #8. More time dependent on adequate protection payments to first and second.
Tentative for 10/10/17:
Movant is in second position, behind a first trust deed of $3,255,000. The fair market value is variously described as $6 million or $6.5 million. In either case, movant is shielded by around $1 million plus in value junior to it. The closer question is whether section 362(d)(2) is met, on the question of whether there is any equity and is the property necessary to a reorganization. Both elements must be shown. There appears to be a sliver of equity, maybe
$100,000. One supposes the property is necessary to any reorganization possible here. But in the Timbers case we are told this means a
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"reorganization in prospect." Are any payments being made? Debtor cannot expect an extended period of debt payment moratorium and so must propose something that can keep the movant in relative equilibrium. The bad faith question is equivocal, given counsel's explanation. But none of this bodes well for any extended proceeding, and so unless a resolution is at hand, the court expect to re-hear the motion in 60 days. Longer will not be considered absent adequate protection payments.
Continue approximately 60 days, or longer only if adequate protection payments offered.
Debtor(s):
TCCB Investors, LLC Represented By Brian C Andrews
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Docket 81
Tentative for 1/10/18:
In view of numbers 9 and 10 is this largely moot? Should the case be dismissed or converted?
Tentative for 12/12/17: Opposition due at hearing.
Debtor(s):
TCCB Investors, LLC Represented By John H Bauer
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(con't from 12-12-17)
Docket 1
Tentative for 1/10/18:
Should the matter be dismissed or converted?
Tentative for 12/12/17: Status?
Tentative for 11/1/17: Status?
Tentative for 10/25/17:
This continues to be a challenged case. Have the deficiencies been cured? If not why not?
Debtor(s):
TCCB Investors, LLC Represented By Brian C Andrews
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Docket 88
- NONE LISTED -
Debtor(s):
TCCB Investors, LLC Represented By John H Bauer
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Docket 287
An update from debtor is needed. Is this request now for only non-Hoag entities?
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
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Docket 334
This is Debtors’ motion to extend exclusivity for proposing and soliciting approval of a plan. The motion is opposed by Opus Bank on the basis that it is not timely.
First, as the court recollects, these administratively consolidated cases are to be pared down considerably. Everything with the name "Hoag" was not long for this world as the landlord Newport Healthcare and the licensor, Hoag Memorial Hospital, were granted relief of stay in mid-December. Opus may be heard on its version of relief of stay by the time this motion is heard. So, one presumes, this motion is moot as to anything other than the Cypress and Laguna-Dana cases.
Second, the exclusivity period for Debtors terminated on November 30, 2017. Thus, under §1121(d)(1), a motion to extend the period must have been filed by this date. The court is without power to extend the deadline once missed. See e.g. In re Perkins, 71 B.R. 294, 297 (W. D. Tenn. 1987). Debtors filed their motion on December 1, 2017. Debtors claim that they prepared their motion on November 29 and discovered in surprise on November 30 that the CM/ECF system for electronic filing would be down from 1 p.m. on November 30 to 8:30 a.m. on December 1.
Debtors’ assert that their counsel is required to file electronically, so they had to wait until December 1.
Even if this court could construe this as a motion under Rule 60(b), Debtor’s version of events does not match with the motion as filed and does not support relief either under Rule 60 or similar law. The motion was filed at 4:47 p.m. on December 1 (not immediately upon the renewal of service in the early a.m.). The proof of service and declarations are all dated December 1. If Debtors really had the motion prepared
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on November 29 as they claim, they could have (should have) filed it manually at the window, as set forth in § 3.12(a) of the Court Manual. It is at least suspicious that Debtors did not mention anything about the late filing in their initial motion and only offered the story about the ECF outage after Opus filed its opposition. Moreover, the outage was a planned outage to implement the new forms which became effective December 1. The planned outage was very well publicized to the bar. So, even assuming that Rule 60 could help, finding excusable neglect here would be a real stretch.
Deny
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
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OPUS BANK
Vs
DEBTORS: HOAG URGENT CARE - ANAHEIM HILLS, INC; HOAG URGENT CARE - HUNTINGTON HARBOUR, INC.; HOAG URGENT CARE - ORANGE,
INC; HOAG URGENT CARE - TUSTIN, INC
(OST signed 1-3-2018)
Docket 399
Opposition due at hearing.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Movant(s):
Opus Bank Represented By
Anthony J Napolitano Steven M Spector
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Adv#: 8:16-01164 Hager v. Bushore
(con' from 14-18 per ntc. of hrg. entered 12-20-17)
Docket 1
- NONE LISTED -
Debtor(s):
Russell W Bushore Represented By Parisa Fishback
Defendant(s):
Russell W Bushore Pro Se
Plaintiff(s):
Jennifer Hager Represented By
D Scott Doonan
Trustee(s):
Karen S Naylor (TR) Pro Se
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Adv#: 8:16-01045 Howard B. Grobstein, Chapter 7 Trustee v. Benice et al
(cont'd from 11-2-17 per order approving stipulation entered 10-18-17)
Docket 1
Tentative for 6/23/16:
Deadline for completing discovery: October 31, 2016 Last date for filing pre-trial motions: November 14, 2016 Pre-trial conference on: December 1, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 5/5/16:
Deadline for completing discovery: October 1, 2016 Last date for filing pre-trial motions: October 24, 2016
Pre-trial conference on: November 10, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Jeffrey S. Benice Pro Se
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Law Offices Of Jeffrey S. Benice Pro Se
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Represented By Frank Cadigan
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Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
& 523(a)(6) and (2) Objection to Discharge Pursuant to 11 U.S.C. Sections 727 (a)(2), 727(c)(1) & 727(c)(2)
(set at s/c held 6-15-17)
Docket 1
Tentative for 6/15/17:
Why no status report? Should the court rely on the February 15, 2017 version?
Tentative for 3/2/17:
Status Conference continued to June 15, 2017 at 10:00 a.m.
Refer to Mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by June 1, 2017.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Nezamiddin Farmanfarmaian Pro Se
Plaintiff(s):
Omni Steel Company, Inc. Represented By Sean A Topp
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Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
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Adv#: 8:16-01238 Newport Crest Homeowners Association, Inc. v. Adams
To Allow Plaintiff to Recoup its Claim Against the Claim of the Defendant (cont'd from s/c held on 12-13-16 in the main case; also hrg held re: s/c in adversary case on 12-13-16)
(con't from 10-12-17 per order granting motion to continue entered 9-20-17)
Docket 1
- NONE LISTED -
Debtor(s):
Kristine Lynne Adams Pro Se
Defendant(s):
Kristine Lynne Adams Pro Se
Plaintiff(s):
Newport Crest Homeowners Represented By Todd C. Ringstad
Trustee(s):
Weneta M Kosmala (TR) Pro Se
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Adv#: 8:17-01126 Naylor v. Bari Home Corporation
Docket 8
Grant.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Bari Home Corporation Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
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Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:17-01130 Karen Sue Naylor, Chapter 7 Trustee v. Idea Nuova, Inc.
Docket 8
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Idea Nuova, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By
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Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:14-01237 LaPrima Investments LTD et al v. Bartholomew
(con't from 11-2-17)
Docket 92
Tentative for 1/11/18:
This is a motion for entry of judgment after default on this adversary proceeding to determine dischargeability. The hearing was continued from November 2 to allow the plaintiffs to augment the record to prove elements of fraud under 11 U.S.C. §523(a)(2). The plaintiffs have submitted the Declaration of Clifford Oliver, but the problem was not cured. The declaration reveals a series of loan transactions and defaults thereunder. Debtor largely acted as guarantor. But a mere breach of contract happens in every bankruptcy. No particular evidence is offered as to how the obligation was incurred through fraud. Some reference was made to promises that the proceeds of the loans would be invested by debtor’s company in certain endeavors described as "life settlement market.", and the implication is offered that they were not so invested. Indeed, oblique reference is made that the debtor was running a Ponzi scheme. Some substantiation of that assertion would have been most helpful. Likewise, a judgment was entered June 19, 2013 in Superior Court case no. 30-2012-0055925. Unfortunately, no findings were made and no punitive damages were awarded, so the court is left to surmise whether the alternative cause of action for fraud played any role in the amount awarded. So, still the court is left without a sufficient basis to enter a judgment based on §523(a)(2). The court is mindful that this is a default proceeding and that by failing to answer the debtor effectively admitted the allegations of the complaint. The court does not want to multiply the plaintiff’s losses or cause unnecessary difficulty. But some effort should be made to substantiate that this case as based on nondischargeable
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conduct such as fraud and not merely breach of contract. Is there no way to prove that there was a Ponzi scheme? If so, that there was no genuine intent to repay could be inferred.
No tentative
Tentative for 11/2/17:
Two problems are presented. First, defendant has filed a hand-written opposition, which suggests a Rule 60 motion is forthcoming. Second, no evidence is submitted with the motion. It is insufficient to simply rely upon failure to answer. Reference is made to a judgmet which might be collateral estoppel, if it contains findings, etc. as plaintiffs contend. But court cannot simply rely on characterizations. Continue.
Debtor(s):
Joseph Francis Bartholomew Represented By Dana M Douglas Edward T Weber
Defendant(s):
Joseph Francis Bartholomew Represented By Michael B Kushner
Plaintiff(s):
LaPrima Investments LTD Represented By Michael B Kushner M Jonathan Hayes
Westdale Construction Co. Limited Represented By
Michael B Kushner M Jonathan Hayes
Browside International Limited Represented By Michael B Kushner
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M Jonathan Hayes
Allen Weiss Represented By
Michael B Kushner M Jonathan Hayes
John and Pamela Korn Represented By Michael B Kushner M Jonathan Hayes
Trustee(s):
John M Wolfe (TR) Represented By David M Goodrich
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Adv#: 8:14-01237 LaPrima Investments LTD et al v. Bartholomew
(con't from 11-2-17)
Docket 33
Tentative for 1/11/18:
The court agrees that the answer should be treated more as a Rule 60 motion. See also #7 regarding default and prove up.
Tentative for 11/2/17: See #8.
Tentative for 10/26/17:
Status conference continued to November 2, 2017 at 11:00 a.m.
Tentative for 8/31/17:
Status conference continued to October 26, 2017 at 10:00 a.m.
Tentative for 7/13/17: Dismiss.
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Tentative for 4/13/17: Case is being dismissed.
Tentative for 3/9/17:
It appears that Debtor is incarcerated. Is a motion for summary judgment more appropriate/efficient than trial?
Tentative for 11/10/16: Status?
Tentative for 7/7/16:
Status Conference continued to July 28, 2016 at 11:00 a.m. The parties should be prepared to propose a timeline for disposition of this matter.
Tentative for 10/29/15: See #1-3, 13, 14.
Tentative for 5/7/15:
Continue to October 29, 2015 at 10:00 a.m.
Prior Tentative:
Deadline for completing discovery: February 1, 2015 Last date for filing pre-trial motions: February 16, 2015 Pre-trial conference on: March 5, 2015 at 10:00 a.m.
Joint pre-trial order due per local rules.
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Creditor Atty(s):
John and Pamela Korn Pro Se
John and Pamela Korn Pro Se
Debtor(s):
Joseph Francis Bartholomew Represented By
M Jonathan Hayes
Defendant(s):
Joseph Francis Bartholomew Pro Se
Interested Party(s):
Courtesy NEF Represented By
M Jonathan Hayes
Plaintiff(s):
LaPrima Investments LTD Represented By Michael B Kushner
Westdale Construction Co. Limited Represented By
Michael B Kushner
Browside International Limited Represented By Michael B Kushner
Allen Weiss Represented By
Michael B Kushner
John and Pamela Korn Represented By Michael B Kushner
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 217
Tentative for 1/11/18: Status?
Tentative for 11/9/17:
The case continues to generate heat but little light. Despite the court’s several admonitions, the parties continue with their uncooperative battles. This latest version is the Plaintiff’s motion to compel appears to relate solely to Defendant Frank Jakubaitis’s refusal to answer several questions placed to him during a deposition June 2, 2017. Plaintiff also complains that a Rule 34 Notice to Produce documents accompanying the deposition was ignored by Defendant, and nothing was produced. But if a compulsion order is sought regarding that Notice to Produce, it is properly the subject of a separate motion, with the preliminary meet and confer requirements of the LBRs still applying.
In his motion Plaintiff broadly complains of two issues: (1) a nearly uniform refusal to testify regarding various health and medication related issues and (2) what are contended to be lies told by Defendant. The court is neither equipped nor inclined to rule upon what may or may not have been lies in summary proceedings such as this one. The proper course is to use the testimony at trial to impeach.
The great bulk of the motion seems to be directed at Defendant’s near uniform
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refusal to testify about medications he might be under, trauma he may have experienced in the Vietnam War or whether he has been diagnosed with mental infirmities. Many of these questions were met with objections based on doctor-patient or psychotherapist-patient privileges. The Federal Rules of Evidence at Rule 501 were amended to omit reference to the specific physician-patient and psychotherapist- patient privileges which had been previously recognized in favor of a current general reference to common law. The court notes that California still recognizes patient- physician and psychotherapist privileges at Evidence Code §§994 and 1014, respectively. Where the privilege was asserted the court is not in a position on this record to judge its proper application, so if answers to those question are required there will have to be a subsequent motion wherein the underlying facts regarding treatment or care by the medical personnel is established by Defendant.
A relevance objection was also frequently raised. That objection is not well- taken for two reasons. First, the court agrees that Defendant has placed his medical and/or mental condition in question. Indeed, he attempted to get a protective order relieving him from testifying altogether on these grounds, which was denied. So, the question of Defendant’s mental condition or medical ability to give truthful testimony has been placed in question and, absent a protective order, cannot be avoided now.
Defendant argues that he testified at the outset he had not taken medications that day and believed he was competent to testify. This proves nothing and is not nearly sufficient. The Plaintiff has a right to explore the question to the extent not protected by a specific protective order, because (one presumes) Plaintiff intends at a future time to place into evidence seeming contradictions in testimony as impeachment. It simply will not do to then resurrect some reference to wartime trauma or medication as an explanation alternative to the inference that Defendant is merely lying.
So, the testimony regarding medications, treatments and /or effects of wartime trauma is compelled. Specific objection of privilege, to be effective, must be backed by a protective order that Defendant has the burden to obtain, in advance. That burden will need to be supported by specific reference to the records of treating physicians or psychotherapists.
11:00 AM
The court notes that Plaintiff requests a sanctions order in the sum of $4830.
Sanctions will not be awarded at this time but rather will be considered again after the second installment of the deposition. At subsequent hearing the court will renew the inquiry and evaluate the degree of cooperation shown in meantime.
Grant, in part. Question of sanctions continued until later hearing.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:17-01037 Aguilar et al v. Treadway
Docket 10
This motion to extend deadlines shows a case where it is unclear that the parties are heeding the court's orders or cooperating in good faith. Why hasn't the ordered mediation occurred? Deadlines and orders are not mere suggestions. Noncompliance started with the failure to even lodge a scheduling order until December 2017 (well after the deadline had passed).
The plaintiff wants relief but must remember those who would have equity must do equity. Also, equity aids the diligent. More explanation is needed.
Debtor(s):
No tentative.
Kevin Michael Treadway Represented By Michael R Totaro
Defendant(s):
Kevin Michael Treadway Represented By Matthew Grimshaw
Movant(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By Bradley D Blakeley
11:00 AM
Plaintiff(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By Bradley D Blakeley
Trustee(s):
Karen S Naylor (TR) Represented By Burd & Naylor William M Burd
11:00 AM
Adv#: 8:15-01257 Law Offices of Steven H. Marcus v. Lionetti
Docket 91
- NONE LISTED -
Debtor(s):
Teina Mari Lionetti Represented By Abel H Fernandez
Defendant(s):
Teina Mari Lionetti Represented By Matthew Bouslog
Plaintiff(s):
Law Offices of Steven H. Marcus Represented By
Louis J Esbin
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
FOOTHILL FINANCIAL, L.P.
Vs DEBTOR
Docket 23
This is the motion for relief of stay of Foothill Financial, L.P. ("Foothill") which holds the first trust deed loan on the property commonly known as 21871 Winnebago Lane, Lake Forest, CA ("property"). Foothill proceeds under the alternative theories that its position is not adequately protected, there is no equity and the property is not necessary to a reorganization, and that the case is part of a scheme to hinder delay and defraud creditors as described in, respectively, §§362(d)(10(2) and (4). Foothill asserts the value is $1 million against which it is owed approximately
$975,000 considering accrued interest and fees. Junior mortgages and liens clearly eclipse all equity. Foothill also is the judgment creditor on a judicial order of foreclosure entered August 16, 2017 under which a writ of sale was issued August 17, 2017. This Chapter 11 was filed before a Sheriff’s sale could be conducted.
The mere fact that a petition was filed to stop a foreclosure does not by itself a bad faith scheme make within the meaning of §362(d)(4). However, both of the other grounds for relief seem compelling to the court. Debtor argues that under cases like Timbers the debtor need only maintain the relative value of the secured creditor’s interest in the property, which he contends is not declining, or at least there is no evidence of decline. So, under this theory, only modest adequate protection payments if any need be made so as to preserve Foothill’s relative position. There are problems with this theory and it can only go so far in the best of circumstances. Whatever small margin of equity as might tenuously exist in this property (maybe $25,000?) is either entirely illusory or is being eroded very quickly. Further, there is not only the question
10:00 AM
of preserving the relative property value but also the secured creditor’s position in the property. No one is apparently making the property tax or homeowner association payments, both of which potentially are ahead of Foothill. So, before any adequate protection amount can even be discussed the debtor has to show how those issues are also being met.
But even debtor admits there is no equity in the property. This calls into question §362(d)(2) which indicates in such circumstances that relief should be granted unless the property is necessary to a reorganization. Debtor has the burden on this question under §362(g). Debtor’s sole argument is that because this is debtor’s residence, it is perforce "necessary to reorganization." For this proposition debtor cites to various Chapter 13 cases. See e.g. In re Elmore, 94 B.R. 670, 677 (Bankr.
C.D. Cal. 1988). The court is not convinced. First, Timbers makes clear that not just any theoretical reorganization is what Congress meant in §362(d)(2). Rather, that reorganization, to survive a relief of stay motion, must be one "in prospect." United Savings Assoc. v. Timbers of Inwood Forest Associates, 484 U.S. 365, 376 (1988). Moreover, Chapter 11 and 13 bear some similarities but they are also very different, particularly as concerns timing and thus "prospect.".
Chapter 13 is formulaic and form-driven, and a plan is usually due with the initially filed papers (or within a few weeks thereafter in rare cases). Plans can be amended and initial confirmation hearings are sometimes continued. But such a plan is typically a wage earner’s straightforward promise to stay current on a mortgage, pay the arrears within 5 years and, to the extent disposable income remains, pay something to other creditors. Usually it is a matter of arithmetic whether there is room within debtor’s monthly budget to make this happen and the case will not confirm and either be dismissed or converted within 60 days in the usual case unless those points are settled. The debt thresholds in 13 are much lower. So, unlike Chapter 11, the creditors and the court can usually quickly determine as a matter of arithmetic whether the case will meet all of the requirements of §1325. Consequently, the case law built up around the concept of the family home being necessary to the debtor’s Chapter 13 plan is unsurprising since the typical wage earner can’t keep his income unless he can
10:00 AM
keep his home.
But this is far less clear in Chapter 11 and the timeline is usually much more extended. Moreover, as in Chapter 13 plans, for a Chapter 11 plan to be "in prospect" within the meaning of Timbers there has to be a prompt and plausible explanation of just how a plan would work, if not an actual plan on file. In this respect the debtor’s explanation is woefully short of the mark. For example, an assertion is made in the opposition that the anti-modification provisions of §1123(b)(5) do not apply because the debt to Foothill is secured by something other than the property. But just what is that? If what is meant are insurance proceeds or rents typically involved as "additional collateral" in trust deeds, that is simply not the law in the Ninth Circuit, as this court understands it. Moreover, if that section does apply, how do we deal with the order of foreclosure which presumably has accelerated the sums due; so there is not even an obligation that can be decelerated at this point. But the record is silent on these points, at least to the court’s reading. Reportedly, the MORS show that the debtor’s practice has not been profitable recently. If so, where’s the immediate and dramatic turnaround that would surely be needed in the very near future to support reorganization "in prospect"? Vague reference is made to a "reverse mortgage." Really? How is that going to work since the amount necessary to take out Foothill is probably as much or more than the property is worth? Unless debtor has identified such a lender willing to make reverse mortgages on a 100% loan to value basis (and surely the rest of the debtor bar will want that number) this seems very far-fetched indeed. And these are before we even get to the other issues such as the absolute priority rule and the like. Debtor has the burden on these issues and that burden is just not carried.
Grant
Debtor(s):
Richard Paul Herman Represented By Michael Jones
10:00 AM
Movant(s):
Foothill Financial, L.P. Represented By Jeanne M Jorgensen
10:00 AM
CITY OF SAN CLEMENTE, CALIFORNIA
Vs DEBTOR
Docket 29
Grant. Appearance is optional.
Debtor(s):
Freda Philomena D'Souza Represented By Michael Jones Sara Tidd
Movant(s):
City of San Clemente Represented By Caroline Djang
10:00 AM
MISSION RIDGE LADERA RANCH, LLC
Vs DEBTOR
Docket 1576
Relief of stay to SRF to proceed under non-bankruptcy law to change managers on a prospective basis would appear in order; the court offers no opinion as to whether or how that might be done and it would not affect rights already accrued for management fees or the like to the estate. To the extent a declaratory relief is also sought as to who has been the manager whether by member resolution or otherwise, that is properly brought as an adversary proceeding not as a summary proceeding under section 362.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Movant(s):
Mission Ridge Ladera Ranch, LLC Represented By
Stella A Havkin
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps
10:00 AM
John P Reitman Robert G Wilson Monica Rieder Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
10:00 AM
Docket 273
The UST's remarks are well taken and must be addressed in a revised version of the Disclosure Statement. But otherwise approval could be provided on a conditional basis.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
(con't from 11-1-17)
Docket 1
Tentative for 1/1618:
Continue to confirmation hearing.
Tentative for 11/1/17:
An updated status report would have been helpful. Does the Trustee foresee a plan? Would a deadline or a continued status hearing help?
Tentative for 8/9/17:
Continue status conference approximately 90 days to November 8, 2017 at 10:00 a.m.
Tentative for 6/28/17: See #12.
Tentative for 6/7/17:
Continue to June 28, 2017 at 10:00 a.m.
Tentative for 4/26/17:
Deadline for filing plan and disclosure statement: September 30, 2017
10:00 AM
Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: June 1, 2017
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
9:30 AM
Docket 14
- NONE LISTED -
Debtor(s):
Agustin Dominguez Represented By
Michael H Colmenares
Joint Debtor(s):
Lorenia Dominguez Represented By
Michael H Colmenares
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
Docket 15
- NONE LISTED -
Debtor(s):
Agustin Dominguez Represented By
Michael H Colmenares
Joint Debtor(s):
Lorenia Dominguez Represented By
Michael H Colmenares
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
(2013 Nissan Quest 3.5 S - $18,711.76) [SC CASE]
Docket 19
- NONE LISTED -
Debtor(s):
Daniel Joseph Ortega Jr. Represented By Daniel Uribe
Trustee(s):
Thomas H Casey (TR) Pro Se
9:30 AM
Docket 9
- NONE LISTED -
Debtor(s):
Dona L. Goetz Represented By Christine A Kingston
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
(RE 2015 Hyundai Tucson - $21,217.67) (CB CASE)
Docket 11
- NONE LISTED -
Debtor(s):
Victor Tomek Represented By Michael D Franco
Trustee(s):
Jeffrey I Golden (TR) Pro Se
9:30 AM
Docket 13
NONE LISTED -
Debtor(s):
Jay Lewis Bloom Pro Se
Joint Debtor(s):
Tina Margaret Bloom Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
N.A. (RE: 2016 Toyota Corolla - $16,039.41)
Docket 17
NONE LISTED -
Debtor(s):
Jay Lewis Bloom Pro Se
Joint Debtor(s):
Tina Margaret Bloom Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
(RE: Leased 17 Fiat 500X - $12,275.01) [ES CASE]
Docket 12
NONE LISTED -
Debtor(s):
Martin Curtis Represented By
Peter Rasla
Joint Debtor(s):
Asha Curtis Represented By
Peter Rasla
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
(RE: 2017 Ford F150 - $25,884.16) [ES CASE]
Docket 13
NONE LISTED -
Debtor(s):
Martin Curtis Represented By
Peter Rasla
Joint Debtor(s):
Asha Curtis Represented By
Peter Rasla
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
(RE: 2014 Jeep Grand Cherokee - $24,598.52) (CB CASE)
Docket 13
NONE LISTED -
Debtor(s):
Jaima Jo Macias Represented By Diana K Zilko
Trustee(s):
Jeffrey I Golden (TR) Pro Se
9:30 AM
(RE 2014 BMW 3 SERIES - $7700.16)
Docket 10
NONE LISTED -
Debtor(s):
Lisa Reid Miller Represented By Andy C Warshaw
Trustee(s):
Thomas H Casey (TR) Pro Se
9:30 AM
[fr: 12/20/17]
Docket 10
NONE LISTED -
Debtor(s):
Brittaney Rene Phelps Represented By Daniel King
Trustee(s):
Karen S Naylor (TR) Pro Se
9:30 AM
(RE: 2061 Lexus RX350 - $39,863.90) [ES CASE]
Docket 10
NONE LISTED -
Debtor(s):
Stephen Leroy Sanders Represented By Kevin J Kunde
Trustee(s):
Jeffrey I Golden (TR) Pro Se
9:30 AM
Docket 8
NONE LISTED -
Debtor(s):
Myrna Natividad Del Rosario Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
Docket 14
NONE LISTED -
Debtor(s):
Alma Gonzalez Represented By Daniel King
Trustee(s):
Karen S Naylor (TR) Pro Se
9:30 AM
(RE: 2015 Harley-Davidson FLHXS Street Glide Special - $8,432.81)
Docket 11
NONE LISTED -
Debtor(s):
John K. Speckmann Represented By Christine A Kingston
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
(RE: 2004 Toyota 4 Runner - $3,943.12) [CB CASE]
Docket 8
NONE LISTED -
Debtor(s):
Deanna L. Lofquist Represented By Christine A Kingston
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
Docket 11
NONE LISTED -
Debtor(s):
Deanna L. Lofquist Represented By Christine A Kingston
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
Docket 10
NONE LISTED -
Debtor(s):
Carole Ann Locatelli Represented By Daniel King
Trustee(s):
Jeffrey I Golden (TR) Pro Se
1:30 PM
(con't from 12-20-17)
Docket 3
NONE LISTED -
Debtor(s):
Julia Schenden Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 12-20-17)
Docket 16
Debtor(s):
Steve C Woods Represented By Bahram Madaen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 12-20-17)
Docket 21
NONE LISTED -
Debtor(s):
James Eulis Morgan Represented By Christine A Kingston
Joint Debtor(s):
Jean Fisher Morgan Represented By Christine A Kingston
Movant(s):
James Eulis Morgan Represented By Christine A Kingston Christine A Kingston
Jean Fisher Morgan Represented By Christine A Kingston Christine A Kingston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 12-20-17)
Docket 2
NONE LISTED -
Debtor(s):
Terry Gonzalez Represented By Claudia C Osuna
Movant(s):
Terry Gonzalez Represented By Claudia C Osuna
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 14
NONE LISTED -
Debtor(s):
David D Ronquillo Represented By Tate C Casey
Joint Debtor(s):
Kathryn A Ronquillo Represented By Tate C Casey
Movant(s):
David D Ronquillo Represented By Tate C Casey
Kathryn A Ronquillo Represented By Tate C Casey Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 10
NONE LISTED -
Debtor(s):
Danilo Dimayuga Lumbera Represented By Raymond Perez
Joint Debtor(s):
Gregoria Perfinan Lumbera Represented By Raymond Perez
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 6
Tentative for 1/17/18:
Assuming U.S. Bank's arrearage number is accurate, is the plan feasible?
Tentative for 12/20/17:
Does the amount of arrearage (twice the amount recognized by debtor) render this plan infeasible?
Debtor(s):
Alejandro Cifuentes Pro Se
Movant(s):
Alejandro Cifuentes Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 2
NONE LISTED -
Debtor(s):
Miguel Cedeno Perez Represented By
Rabin J Pournazarian
Movant(s):
Miguel Cedeno Perez Represented By
Rabin J Pournazarian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 2
NONE LISTED -
Debtor(s):
Rollin C Shades Represented By Julie J Villalobos
Joint Debtor(s):
Judy Kaye Shades Represented By Julie J Villalobos
Movant(s):
Rollin C Shades Represented By Julie J Villalobos
Judy Kaye Shades Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 2
NONE LISTED -
Debtor(s):
Heather Juarez Represented By Julie J Villalobos
Movant(s):
Heather Juarez Represented By Julie J Villalobos Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 2
NONE LISTED -
Debtor(s):
Oscar Sandoval Represented By Christopher J Langley
Movant(s):
Oscar Sandoval Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 2
NONE LISTED -
Debtor(s):
Benito Moctezuma Represented By Alon Darvish
Movant(s):
Benito Moctezuma Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 19
Hearing RE: Confirmation of Chapter 13 Plan
Debtor(s):
James Michael Clancy Pro Se
Movant(s):
James Michael Clancy Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 11
NONE LISTED -
Debtor(s):
Kelly R Manson Represented By Bert Briones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 20
NONE LISTED -
Debtor(s):
Philip Malloy Represented By Arlene M Tokarz
Joint Debtor(s):
Brenda Malloy Represented By Arlene M Tokarz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 18
Tentative for 1/17/18:
Wilmington is correct. The plan cannot modify the rights under the note, and that would include substituting "adequate protection" payments of lesser amount in lieu of regular monthly payments. Also, the entire arrearage of
$212,544 must be dealt with. What happens if the sale does not occur within the designated period? The plan should address.
Debtor(s):
Unsoon Kwon Kang Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 1
NONE LISTED -
Debtor(s):
Eduardo Meza Represented By Sandra J Coleman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 12
NONE LISTED -
Debtor(s):
Michael Abbasi Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
NONE LISTED -
Debtor(s):
Gary Lee Trautloff Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 1
NONE LISTED -
Debtor(s):
Mario Hernandez Ramirez Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 8
Tentative for 1/17/18:
Stacie Corntassel, debtor’s ex-wife, objects to confirmation on bad faith grounds. As the court understands the argument, the objector claims that the confirmation should be denied because the debtor was in bad faith when stipulating in State Domestic Court to a $25,000 equalization payment (along with support arrearages of another $30,645) but filing Chapter 13 shortly thereafter. Because the former category is dischargeable but under §1328(a)
the latter category is not, objector argues that the entire case should be regarded as in bad faith. First, any portion of domestic support that is due but unpaid post-petition is alone grounds for denying confirmation under §1325(a) (8). But assuming those amounts are current or made current as of confirmation, the court doubts that confirmation can be/ should be denied solely on amorphous bad faith grounds based only on timing of a stipulation. If that were the case many Chapter 13s would have to be thrown out under the vague allegation that debtors never really intended to perform some pre- petition obligation. But as counsel must realize, most cases in bankruptcy have some form of this phenomenon, particularly if one substitutes "stipulation" with "contract." The argument is even more tenuous given the facts here; presumably these obligations accrued long before the petition was filed. The stipulation merely liquidates the amount of the claims. A rather more productive inquiry might be whether this plan represents so-called ‘best efforts;’ some reference is made to debtor’s prospective pay raise on or before May 1, 2018. This should be dealt with either as a step- up in payments, or perhaps upon post confirmation modification motion under § 1329 by the objecting party. In either event, "disposable income" as determined under §1325(b)(1)-(3) must be analyzed. Moreover, "best interest
1:30 PM
of creditors" under §1325(a)(4) regarding the City ‘deferred compensation account’ reportedly held by debtor is also a factor. Ms. Corntassel also objects to debtor paying anything to priority tax claims until all of her DSOs (presumably both post-petition and pre-petition) are paid. No authority is cited for this proposition and the mere fact that these obligations inhabit different rungs on the liquidation ladder under §§507 and 726 is not alone a compelling reason to deny confirmation.
Overrule bad faith objection. No tentative as to other requirements of confirmation.
Debtor(s):
Brian Corntassel Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 41
Grant.
Debtor(s):
Anna Agurre-Joma Represented By Justin Lynch
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 46
One supposes this motion tests the question of whether a filing of Chapter 13 when debtor lacks sufficient income to support a plan can be in good faith and/or not an abuse. It appears in this case debtor was merely trying to buy sufficient time to accomplish a sale of the residence, which was done. Viewed this way the court does not see the fee as excessive although the question remains over whether the court should deny the fee as a sanction for an improper use of the bankruptcy court's jurisdiction. This is probably not the best case for testing the question.
Debtor(s):
Deny.
Eddie Meza Represented By
Lionel E Giron Kevin Tang
Joint Debtor(s):
Francis Meza Represented By
Lionel E Giron Kevin Tang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 11-15-17)
Docket 78
Tentative for 1/17/18:
Same. Has modification mooted this motion?
Tentative for 11/15/17:
Grant unless Trustee agrees that default has been cured.
Debtor(s):
Joe Gerard Vahey Represented By David V Luu
Joint Debtor(s):
Marci Ann Vahey Represented By David V Luu
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 11-15-17)
Docket 54
Tentative for 1/17/18: Status?
Tentative for 11/15/17:
Is ths moot in view of order on motion to modify entered October 20, 2017?
Tentative for 10/18/17:
Has Trustee filed comments on requested modification?
Tentative for 9/20/17:
A motion to modify was filed August 29. Waiting for trustee comments.
Tentative for 8/16/17: Status? Motion to modify?
Tentative for 7/26/17: See #25.
3:00 PM
Tentative for 6/21/17:
Continue to allow for processing of motion to modify filed June 14, 2017.
Debtor(s):
Albert Ngoc Ninh Represented By Tina H Trinh
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 11-15-17)
Docket 106
Tentative for 1/17/18: Grant unless current.
Tentative for 11/15/17: Grant unless current.
Debtor(s):
Murph Drewery Davis Represented By Halli B Heston
Benjamin R Heston
Joint Debtor(s):
Tracy L Davis Represented By Halli B Heston
Benjamin R Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 11-15-17)
Docket 57
Tentative for 1/17/18: Grant.
Tentative for 11/15/17:
Is this moot in view of order granting motion to modify entered November 8, 2017?
Tentative for 10/18/17:
Same. Is this resolved yet? It has been continued many times.
Tentative for 9/20/17: Same.
Tentative for 8/16/17: Same.
Tentative for 5/17/17:
Grant unless motion to modify on file.
3:00 PM
Debtor(s):
Marilyn J. Bartholomew Represented By Joseph A Weber Fritz J Firman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 11-15-17)
Docket 64
Tentative for 1/17/18: Grant.
Tentative for 11/15/17: Grant unless motion on file.
Debtor(s):
Olga Ruiz Represented By
Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 11-15-17)
Docket 24
Tentative for 1/17/18:
Does the order on motion to modify entered January 4 moot the motion?
Tentative for 11/15/17:
Grant unless current or motion on file.
Debtor(s):
Richard Collins Jr. Represented By Andrew Moher
Joint Debtor(s):
Kristi Collins Represented By
Andrew Moher
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 12-20-17)
Docket 87
Tentative for 1/17/18:
What is status of tax returns?
Tentative for 12/20/17: Status?
Tentative for 10/18/17:
Continue to November 15, 2017 at 3:00 p.m. to coincide with hearing on Motion to Modify.
Tentative for 9/20/17: Same.
Tentative for 8/16/17: Same.
Tentative for 5/17/17:
Grant unless issues resolved.
3:00 PM
Debtor(s):
David J. Sukert Represented By
Don E Somerville Tate C Casey
Joint Debtor(s):
Denise R. Sukert Represented By
Don E Somerville Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
{11 U.S.C. Section 1307(c)(6)}
(con't from 12-20-17)
Docket 48
Tentative for 1/17/18: Status?
Tentative for 12/20/17: Status on refinance?
Tentative for 10/18/17:
The promise to refinance does not fulfill tax return/refund requirements. But the court will grant a continuance if the Trustee does not object.
Debtor(s):
Mark A. Wedmore Represented By
James D. Hornbuckle
Joint Debtor(s):
Christy E. Wedmore Represented By
James D. Hornbuckle
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 12-20-17)
Docket 63
Tentative for 1/17/18: Status?
Tentative for 12/20/17:
Has this been resolved by orders granting motion to modify and motion to sell entered November 7.
Tentative for 10/18/17:
Continue to allow for resolution of pending modification and sale motions.
Debtor(s):
Thomas Alan Valenzuela Represented By Gary Leibowitz
Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 48
Tentative for 1/17/18: Grant unless current.
Tentative for 12/20/17: Grant unless current.
Debtor(s):
Gabriel Oviedo Jr Represented By
S Renee Sawyer Blume Matthew D Resnik
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 12-20-17)
Docket 48
Tentative for 1/17/18:
Grant unless current or motion on file.
Tentative for 12/20/17:
Grant unless current or motion on file.
Debtor(s):
Todd Eric Szkotnicki Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Lori Lynn Szkotnicki Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
- 1307(c))
(con't from 12-20-17)
Docket 40
Tentative for 1/17/18:
Is this moot in view of order granting motion to modify entered December 21?
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
Tentative for 9/20/17:
Grant unless modification motion on file and payment made.
Debtor(s):
Joseph Taylor Represented By
Richard L. Sturdevant
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 12-20-17)
Docket 24
Tentative for 1/17/18:
Is this moot in view of order to modify filed December 4?
Tentative for 12/20/17:
Continue to allow for processing of motion to modify filed December 4.
Debtor(s):
Christyna Lynn Gray Represented By Gary Leibowitz
Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 12-20-17)
Docket 32
Tentative for 1/17/18:
Moot in view of modification order entered December 15?
Tentative for 12/20/17:
Continue to allow for processing of motion to modify filed December 15.
Debtor(s):
Charles Lofton Represented By Cynthia L Gibson Sundee M Teeple
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 12-20-17)
Docket 66
Tentative for 1/17/18:
See #39 - motion to modify.
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
Tentative for 10/18/17:
See #43 - motion to modify.
Debtor(s):
Luis A Escobar Represented By Rajiv Jain
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 12-20-17)
Docket 67
Tentative for 1/17/18:
Grant as suggested by Trustee.
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
Tentative for 10/18/17:
Debtor needs to respond to the Trustee's comments.
Debtor(s):
Luis A Escobar Represented By Rajiv Jain
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 131
Tentative for 1/17/18: Grant unless current.
Debtor(s):
Maryborne P Dofredo Represented By Paul M Allen
Joint Debtor(s):
Wilfred John Dofredo Represented By Paul M Allen
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
Docket 65
Tentative for 1/17/18: Grant.
Debtor(s):
Ceasar Miguel Barrientos Represented By
John Eom - SUSPENDED BK -
Joint Debtor(s):
Grace Doyo Barrientos Represented By
John Eom - SUSPENDED BK -
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
Docket 117
Tentative for 1/17/18:
Grant unless stipulation regarding 2016 refund.
Debtor(s):
Frank Zepeda Represented By Sundee M Teeple
Joint Debtor(s):
Miriam Zepeda Represented By Sundee M Teeple
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 68
Tentative for 1/17/18: Grant.
Debtor(s):
Barbara Nelson Haynes Represented By Halli B Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 77
Tentative for 1/17/18:
Grant unless current or motion to modify on file.
Debtor(s):
Victor Ledesma Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 45
Tentative for 1/17/18:
Deny if Trustee's question has been addressed.
Debtor(s):
Mary L Esparza Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 42
Tentative for 1/17/18:
Grant unless current or motion to modify on file.
Debtor(s):
Alfredo Javier Talavera Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(ntc. of hrg. fld 11-7-17)
(cont'd from 12-20-17)
Docket 275
Tentative for 1/17/18: Deny.
Tentative for 12/20/17:
Unless debtor satisfactorily responds to Trustee's comments, deny.
Debtor(s):
Kaoru S Nakagawa Represented By Caroline S Kim
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
Docket 104
Tentative for 1/17/18:
There is no showing that the plan as originally confirmed is not feasible, and the Trustee raises other issues of non-compliance which would be barriers to confirmation. Deny.
Debtor(s):
Karen Pedersen Represented By Karen Geiss
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 40
NONE LISTED -
Debtor(s):
Lisa Michelle Lindsay Represented By Halli B Heston
Joint Debtor(s):
Matthew Craig Lindsay Represented By Halli B Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 137
Tentative for 1/17/18:
Deny for reasons stated in Trustee's comments.
Debtor(s):
Jennifer Anne Ritchie Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont' from 12-20-17 per order appr. stip. to con't ent. 12-18-17)
Docket 42
NONE LISTED -
Debtor(s):
Julia Schenden Represented By Anerio V Altman
Movant(s):
Julia Schenden Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
[11 U.S.C. Section 506(d)]) [Creditor: Franklin Credit Management Corp]
Docket 21
Tentative for 1/17/18:
Continue for creditor to obtain appraisal.
Debtor(s):
Victor Lamarr James Represented By Brad Weil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 50
Tentative for 1/17/18:
For the reasons stated by the Trustee, the motion should be denied. Judge Bauer is Santa Ana division judge in pilot program.
Debtor(s):
Frank Kester Represented By
Veronica M Aguilar
Joint Debtor(s):
Gloria Betty Kester Represented By Veronica M Aguilar
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 69
Tentative for 1/17/18:
Perhaps a motion to modify is needed but so written this motion makes no sense and is therefore denied.
Debtor(s):
Linda Spinks Represented By
Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 20
Tentative for 1/17/18:
This is an evidentiary hearing. Nothing new has been filed?
Tentative for 12/20/17:
Continue for evidentiary hearing.
Debtor(s):
Kenneth Mathew Sale Represented By
S Renee Sawyer Blume
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 30
Tentative for 1/17/18:
This is an evidentiary hearing. Nothing new has been filed?
Tentative for 12/20/17:
Continue for evidentiary hearing.
Debtor(s):
Maria De Los Garcia Represented By
George C Hutchinson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
PARKWOOD VILLAGE LTD
Vs DEBTOR
Docket 13
Grant. Appearance is optional.
Debtor(s):
Jorge Garcia Reyna Represented By Minh Duy Nguyen
Movant(s):
PARKWOOD VILLAGE LTD. Represented By Scott Andrews
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
AMERICREDIT FINANCIAL SERVICES, INC dba GM FINANCIAL
Vs DEBTOR
Docket 18
Grant. Appearance is optional.
Debtor(s):
Pedro Guzman Regalado Pro Se
Movant(s):
Americredit Financial Services, Inc., Represented By
Sheryl K Ith
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
(con't from 12-19-17)
WELLS FARGO BANK, NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 97
Tentative for 12/19/17: Status?
Tentative for 12/5/17:
Grant. Appearance is optional.
Debtor(s):
Nancy Karen Chambers Represented By Michael D Franco
Movant(s):
Wells Fargo Bank, National Represented By Nancy L Lee Merdaud Jafarnia
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WILMINGTON SAVINGS FUND SOCIETY, FSB D/B/A CHRISTIANA TRUST. NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS TRUSTEE FOR BROUGHAM FUND I TRUST
Vs DEBTOR
Docket 28
Grant. The court will hear argument as to why the 4001(a)(3) stay should not be waived.
Debtor(s):
Kenshaka Ali Represented By Christopher J Langley
Movant(s):
Wilmington Savings Fund Society, Represented By
Erin M McCartney
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 12-5-17)
Docket 12
Tentative for 1/23/18: Status?
Tentative for 12/5/17:
Deny. Debtors appear to be in good faith, but with one prior dismissal this is a motion to continue the stay that needed to be heard within 30 days of October 31 under section 362(c)(3)(B). This motion is not timely. Perhaps plan confirmation can provide the assistance needed.
Debtor(s):
Philip Malloy Represented By Arlene M Tokarz
Joint Debtor(s):
Brenda Malloy Represented By Arlene M Tokarz
Movant(s):
Philip Malloy Represented By Arlene M Tokarz
Brenda Malloy Represented By Arlene M Tokarz
10:30 AM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Central Justice Center
(con't from 12-5-17)
COMMONWEALTH LAND TITLE COMPANY
Vs.
DEBTOR
Docket 1558
Tentative for 1/23/18:
Was the service issue corrected?
Tentative for 12/5/17:
Debtor was not served as required by LBRs. Continue for this?
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Movant(s):
COMMONWEALTH LAND TITLE Represented By
Jean C Wilcox
10:30 AM
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
11:00 AM
JEFFREY I. GOLDEN, TRUSTEE
HAHN FIFE & COMPANY, ACCOUNTANT
Docket 0
Allow as prayed. Appearance is optional.
Debtor(s):
Kenneth Lloyd Tucker Represented By Dana C Bruce
Joint Debtor(s):
Clarissa Jane Tucker Represented By Dana C Bruce
Trustee(s):
Jeffrey I Golden (TR) Pro Se
11:00 AM
WENETA M.A. KOSMALA, CHAPTER 7 TRUSTEE
LAW OFFICES OF WENETA M.A. KOSMALA, ATTORNEY FOR TRUSTEE HAHN FIFE & COMPANY, LLP, ACCOUNTANT
Docket 91
Allow as prayed. Appearance is optional.
Debtor(s):
Antonio Martinez Represented By
Timothy L McCandless
Joint Debtor(s):
Maria Estela Martinez Represented By
Timothy L McCandless
Trustee(s):
Weneta M Kosmala (TR) Represented By Erin P Moriarty
11:00 AM
Donald W Sieveke, Trustee's Attorney, Fee: $4,300.00, Expenses: $65.30.
Docket 40
Allow as prayed. Appearance is optional.
Debtor(s):
Tomas K Gryczka Represented By Robert S Altagen
Trustee(s):
Richard A Marshack (TR) Represented By Donald W Sieveke
11:00 AM
Docket 0
No tentative.
Debtor(s):
Richard Anthony Stelma Represented By Amid Bahadori
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
(con't from 11-28-17 per order granting stip. to cont. ent. 11-27-17)
Docket 258
This is the motion of American National Insurance Company ("Movant") for allowance of an administrative expense for its attorneys’ fees and costs incurred in connection with determining what to do with commissions that were due to Debtor. Movant filed an interpleader action in this court that was eventually resolved by stipulation. The Trustee opposes this request, asserting that the requirements of section 503(b)(1) and (b)(4) have not been met.
Section 503(b)(1) provides for an administrative expense for "the actual, necessary costs and expenses of preserving the estate." Movant must show that the alleged administrative expense "(1) arose from a transaction with the debtor-in- possession…and (2) directly and substantially benefitted the estate." In re DAK Industries, Inc., 66 F.3d 1091, 1094 (9th Cir. 1995). There was no transaction with the estate here. Movant filed an adversary proceeding and the Trustee had to get involved to resolve it. While the commissions were ultimately paid to the estate, the legal services did not directly and substantially benefit the estate because Movant was under an obligation to turn over assets that were due to Debtor to the estate. This could have been done without an adversary proceeding. All of the fees requested were also apparently not incurred in connection with this bankruptcy. Recovery of those fees as an administrative expense would not be appropriate.
Section 503(b)(4) provides for recovery of attorneys’ fees and expenses by a creditor for (1) the filing of an involuntary petition; (2) the recovery, after court approval, of property transferred or concealed by a debtor for the benefit of the estate;
the prosecution of a criminal offense relating to the case or to the business or property of the debtor; and (4) a substantial contribution made in a chapter 9 or 11.
11:00 AM
The fees requested here do not fall into any of these categories. Moreover, even if there were some legal avenue to an award of fees, the amount requested is not substantiated by any supporting records, and so the court is given no means to evaluate alleged value conferred.
Debtor(s):
Deny.
Joseph Francis Bartholomew Represented By Dana M Douglas Edward T Weber
Trustee(s):
John M Wolfe (TR) Represented By David M Goodrich
10:00 AM
(con't from 8-23-17)
Docket 105
Tentative for 1/24/18: Why no status report?
Tentative for 8/23/17:
Continue for further status in approximately 120 days.
Debtor(s):
Michael Frederic Gellerman Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Denise Walz Gellerman Represented By Michael Jones Sara Tidd
10:00 AM
Docket 0
Tentative for 1/24/18:
Continue to July 25, 2018 at 10:00 a.m.
Tentative for 7/12/17:
It looks like only one unsecured claim remains. Continue status conference to January 24, 2018 at 10:00 a.m.
Tentative for 1/11/17:
Continue for further hearing approximately 6 months.
Tentative for 6/22/16: Status?
Tentative for 2/10/16:
Continue approximately 120 days for further status conference.
Tentative for 10/28/15:
Continue to April 6, 2015 at 10:00 a.m.
10:00 AM
Tentative for 5/13/15:
When will a final decree motion be filed? Continue for follow up status conference.
Tentative for 12/10/14:
Schedule further status conference in approximately 180 days.
Tentative for 7/30/14:
Still no report? Issue OSC re dismissal for hearing in 45 days.
Tentative for 5/28/14:
Why no follow up report? What is status of payments?
Tentative for 11/6/13:
Continue for further status conference. Approximately six months.
Debtor(s):
Ruben Corona Jr Represented By Michael R Totaro
Joint Debtor(s):
Maria Elena Corona Represented By Michael R Totaro
10:00 AM
Docket 0
Dismiss.
Debtor(s):
Del Diablo LLC Represented By Alan M Lurya
10:00 AM
Docket 1
See #3.
Debtor(s):
Del Diablo LLC Represented By Alan M Lurya
10:00 AM
Grobstein Teeple, LLP, Accountants For Debtor and Debtor-in- Possession;
Fees: $2,445.00, Expenses: $0.00.
Docket 192
Allow as prayed. Appearance is optional.
Debtor(s):
Tho Van Phan Represented By Michael R Totaro Richard A Marshack David Wood Matthew Grimshaw
10:00 AM
Marshack Hays LLP, Chapter 11 Debtor's Special Litigation and Reoganization Counsel
FEES: $11,104.00; EXPENSES: $229.63
Docket 195
Allow as prayed, conditioned on obtaining non-opposition declaration from Reorganized Debtor.
Debtor(s):
Tho Van Phan Represented By Michael R Totaro Richard A Marshack David Wood Matthew Grimshaw
10:00 AM
Docket 193
NONE LISTED -
Debtor(s):
Tho Van Phan Represented By Michael R Totaro Richard A Marshack David Wood Matthew Grimshaw
10:00 AM
(con't from 11-29-17)
Docket 341
Tentative for 1/24/18: Is this resolved?
Tentative for 11/29/17:
Status of agreement mentioned in November 6 stipulation?
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
§ 1127(a)
Docket 419
See #10.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
(set at d/s hrg. held 8-23-17) (con't from 11-29-17)
Docket 305
Tentative for 1/24/18:
This is the continued hearing on confirmation of the Debtor’s Fourth Amended Plan. It continues to be vigorously opposed by the judgment creditor. While the court gave fairly explicit guidelines at the Nov. 29 hearing, and the plan proponent is closer than he was, the court finds the plan is still short of confirmability, for the following reasons:
Unfair Discrimination and Gerrymandering: Since In re Barrakat, 99 F. 3d 1520, 1525 (9th Cir. 1996), it has been the law of this Circuit that separate classification solely to obtain a consenting class on a plan is not permitted and is a form of bad faith under §1129(a)( 3). However, exceptions have been found where a "legitimate business or economic justification" is articulated supporting the separate classification. In re Loop 76, LLC, 465 B.R. 525, 538 (9th Cir. BAP 2012); Steelcase, Inc. v. Johnston (In re Johnston), 21 F. 3d 323, 327 (9th Cir. 1994). Moreover, there is a separate concern in evaluating a "cram down" that a plan may not "unfairly discriminate…with respect to each class of claims or interests that is impaired under…the plan." The court earlier remarked that a legitimate, non-voting basis had probably been articulated for separately classifying the judgment creditor since that claim (unlike all other unsecured creditors) was on appeal and was subject to ongoing litigation. Consequently, unlike the other unsecured claims the judgment claim is not "final." It is perfectly obvious that the entire need for reorganization may rest on the results of the appeal. But what is not sufficiently shown is the need for disparate treatment as provided under the Fourth Amended Plan. Obviously, while the claim is still contested it makes sense to not actually pay the disputed
10:00 AM
judgment claim. But there are other, better ways to mitigate the disparate treatment. All other claims start getting payments shortly after the effective date. But the dissenting judgment claim gets nothing until 120 days after the "Litigation Resolution Date," which is defined to require that all appeals be exhausted. This is a date potentially years in the future. This has two pernicious effects of concern. First, all of the risk of non-performance is imposed solely on the objecting creditor without any real basis in law for doing so. Second, this can be regarded as a sub rosa attempt to put the Litigation Trustee’s efforts into effective limbo pending the appeal since obviously no liquidation or even attempt to liquidate assets is even needed to
fulfill the plan until all the appeals are resolved. Perhaps a better approach is to put all creditors on a truly equal footing whereby they all get a pro rata portion of a defined periodic payment, with the judgment creditor’s portion held in an escrow at interest administered by the Litigation Trustee. That way risks are evenly imposed on the creditor body, not solely on the judgment creditor.
Artificial Impairment: The objector is correct that classification of the Honda Finance creditor as the sole member of Class 2 bears some of the aroma of artificial impairment, another form of bad faith, as this court observed in In re NNN Parkway 400 26, LLC, 505 B.R. 277, 284-85(Bankr. C.D. Cal. 2014). The fact that it was incurred the day before the petition is clearly suspicious. However, this "aroma" is largely dissipated when it develops that there is another class of unsecured creditors supporting the plan comprised of several members holding an aggregate of $38,690.83 in claims. The fact that only American Express, a creditor holding only a claim of $110.64, was the only voting member cannot be attributed to bad faith of the debtor. There is no showing that these other creditors’ claims were incurred just to create an impaired class.
10:00 AM
10:00 AM
plan. This may well be so, largely for the reasons articulated in ¶3 above. For debtor’s argument to succeed, one would have to conclude that paying both for Mr. Mosier and his lawyers and accountants and the ongoing appeal costs less than only a Chapter 7 trustee. This is a proposition for which there is no evidence offered. The debtor will have to propose paying for his lawyers either from exempt assets or from no-estate assets for this to work, or prove that a Chapter 7 would be more expensive. The court is less convinced by the objector’s argument that the creditor should consequently steer the litigation at its expense, however. There are countervailing concerns about who should steer the litigation beyond the monetary costs.
Early Discharge: Debtor proposes in the plan to obtain a discharge not on conclusion of payments, as required under §1141(d)(5)(A), but rather upon confirmation. While this can theoretically be done if "cause" is shown after notice and a hearing, the question arises whether any such cause is shown here. Debtor argues that the structure of the plan amounts to a form of collateral for the payments, citing In re Sheridan, 391 B.R. 287, 291 (Bankr. E.D.N.C. 2008), thus assuring payment. But the problem with this is that full payment is not assured in this plan despite attempts to improve recoveries if the appeal is lost. Only the right to sue for declaratory relief (and perhaps an injunction against transfer of assets) is provided. But there are a dozen ways this could still go wrong. Ms. Shen could decide to defy the injunction and put the assets in China or Japan. Since the debtor continues to make good money as a physician, the court sees no reason to discharge him until all promised payments are made.
10:00 AM
Deny Confirmation
Tentative for 11/29/17:
Rather than simply continuing the confirmation hearing without direction, the court will want to have a hearing focused on issues raised in the briefs but not fully answered:
In view of the objection raised in the opposition about short notice of the changes found in the Third Amended Plan, does the judgment creditor disagree that the changes are 'non material’, thus avoiding re-balloting, or need for more time to meet the arguments? It would seem that the role of the appointed trustee and fetters, if any, on his responsibility is rather material, but perhaps for no one other than the judgment creditor. Should that matter?
Has the Trust Agreement with Mr. Mosier been finalized and made available for review?
The present value analysis for cram down requires some evidence regarding interest rates and risks being imposed. Merely citing the federal judgment rate (is that where 1.5% comes from?) is wholly inadequate. While the debtor carefully includes an elastic provision that ‘such other rate as the court requires’ is offered, this does not provide any analysis or evidence that could
10:00 AM
guide the decision. It is also unclear how/whether the judgment creditor is a secured claimant and thus whether analysis of collateral value becomes
relevant. But whether proceeding under §1129(b)(2)(A)(i) [secured claims] or (b)(2)(B)(i) [unsecured claims] there is an "as of the effective date" requirement on future payments which translates into a present value analysis. The federal judgment rate is manifestly not sufficient to render present value on a stream of payments such as under a plan. If that were true, in economic terms, the prime rate would be quoted consistent with the federal judgment rate instead of at 4.25% per annum. One holding a judgment presumably has some near prospect of actually levying and getting paid, so the time value of money is further distorted and judgment rates are a poor comparison. One who is obliged to wait for years under a plan has no such prospect and so imposed risk is greater and so must be compensated. This record is inadequate upon which to render a decision.
How is the teaching of Bank of America v.203 N. La Salle Ptsp., 526 U.S. 434, 456-57 (1999) being met here? In La Salle we are taught that to the extent that a new value exception to the absolute priority rule exists, a plan cannot be crammed down over the objection of a class of creditors on the strength of a "new value" contribution absent some ability to "market test" the amount of that contribution. As the court observed in In re NNN Parkway, LLC, 505 B.R. 277, 281-82 (2014), the Supreme Court gave us only the vaguest direction on how the market test can be accomplished in any particular case. But the court does not read the difficulty of fashioning an appropriate test to mean that the requirement can be ignored altogether consistent with the absolute priority rule. To do so is to vest in the debtor/ plan proponent a form of uncompensated property, i.e. an option, to direct or determine the amount and source of new value. Debtor attempts to close the gap regarding the family residence, but the plan merely suggests that the relatives will contribute an amount roughly equal to what they contend to be the non-exempt equity. What analysis, if any, is offered regarding the going concern/market value of debtor's medical practice for this purpose? All that is offered is the conclusory
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argument that as a sole practice it cannot have much value. Really? The court sees professional practice valuations all the time. One method of clarifying the new value question described in La Salle is the possibility of a competing plan. The court is not aware of the current status of the judgment creditor’s ability to propose a competing plan.
Concerning uncompensated imposed risk is the unanswered question regarding alleged community property in the wife’s name. What about the injunction against transfer of wife's alleged separate assets? Is a form of order being offered for review? Only a stipulation is referenced. How does the risk of violation of an injunction translate into cram down interest rate? One supposes that if the appeal is lost the presence of an injunction is some protection against transfers, but hardly a foolproof one. Certainly it is not the same as a lien. This does not mean these issues cannot be resolved; it is only to say that they are left unresolved on this record.
Continue for further hearing.
Tentative for 8/23/17:
The remaining issues are best dealt with at confirmation. Approve.
Tentative for 7/12/17:
With some amendments this FADS appears to contain adequate information. Debtor should make it clearer that an early discharge will be requested, but that if the Court does not find cause then the discharge will be entered upon completion of payments. As written the information about the Court finding cause comes at the end of the discussion of the discharge. Debtor has agreed to attach a copy of the Trust Agreement. Debtor provides a sufficient description of the litigation with the Judgment Creditor. Perhaps the plan should be amended so that it provides that the
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interest rate will be as described or as ordered by the Court. This leaves open the option of litigating the issue of the interest rate at confirmation. There seems to be a reasonable basis for separately classifying the unsecured claim of the Judgment Creditor because the claim is still subject to litigation and so cannot be paid on the same terms as the other unsecured creditors. Debtor should amend the DS to provide that Debtor is retaining his interest in some property. There should also be a more clear discussion of the absolute priority rule. Debtor states that he will amend the DS to make it clear that the plan does not avoid Judgment Creditor’s ORAP lien and that he will correct the errors noted by the Judgment Creditor.
Debtor(s):
Continue for clean up of these disclosure issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
Adv#: 8:17-01225 The Kiken Group v. Bloom et al
Docket 1
NONE LISTED -
Debtor(s):
Jay Lewis Bloom Pro Se
Defendant(s):
Jay Lewis Bloom Pro Se
Tina Margaret Bloom Pro Se
Joint Debtor(s):
Tina Margaret Bloom Pro Se
Plaintiff(s):
The Kiken Group Represented By Dale A Kiken
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:15-01482 P & A Marketing, Inc. et al v. Gladstone et al
(con't from 9-14-17)
Docket 1
Tentative for 1/25/18:
Continue status conference approximately six months.
Tentative for 9/14/17:
No deadlines were fixed at the last conference. Now, six months later, it appears from the joint status report that discovery is only just starting and both parties believe trial should be at least one year away. Would setting of deadlines now assist timely preparation of the case?
Tentative for 3/30/17:
It would seem too early to fix deadlines. Continue status conference for approximately 6 months hence.
Debtor(s):
Anna's Linens, Inc. Represented By
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David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Defendant(s):
Alan Gladstone Pro Se
Scott Gladstone Pro Se
Loren Pannier Pro Se
Kevin Reilly Pro Se
J.E. Rick Bunka Pro Se
Janet Grove Pro Se
Shepherd Pryor Pro Se
DCP Linens Lenders, LLC Represented By Howard Steinberg
Downtown Capital Partners, LLC Represented By
Howard Steinberg
Fidelity & Guaranty Life Insurance Represented By
Jeffry A Davis Abigail V O'Brient
Does 1-25 Pro Se
Salus CLO 2012-1, Ltd. Represented By Howard Steinberg
Alan Gladstone, Scott Gladstone, Represented By
Cynthia M Cohen
Salus Capital Partners, LLC Represented By
10:00 AM
Howard Steinberg
Plaintiff(s):
P & A Marketing, Inc. Represented By Steven T Gubner Michael W Davis Jason B Komorsky
Karen Sue Naylor Represented By Steven T Gubner
Welcome Industrial Corporation Represented By
Steven T Gubner Michael W Davis Jason B Komorsky
Shewak Lajwanti Home Fashions, Represented By
Steven T Gubner Michael W Davis Jason B Komorsky
Panda Home Fashions LLC Represented By Steven T Gubner Michael W Davis Jason B Komorsky
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky
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Adv#: 8:17-01126 Naylor v. Bari Home Corporation
(con't from 10-26-17)
Docket 1
Tentative for 10/26/17:
Status conference continued to January 25, 2018 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Bari Home Corporation Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By
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Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:17-01130 Karen Sue Naylor, Chapter 7 Trustee v. Idea Nuova, Inc.
(con't from 10-26-17)
Docket 1
Tentative for 1/25/18:
Status conference continued to March 29, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to January 25, 2018 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Idea Nuova, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
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Trustee(s):
Christopher Minier
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:17-01217 Marshack v. Roach
Docket 1
NONE LISTED -
Debtor(s):
Elaine Marie Roach Represented By
Diane L Mancinelli
Defendant(s):
Elaine Marie Roach Pro Se
Plaintiff(s):
Richard A Marshack Represented By
Stephen F Biegenzahn
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Chad V Haes
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Adv#: 8:16-01168 United States Trustee v. Olson
U.S.C. Section 727
(con't from 11-30-17)
Docket 1
Tentative for 1/25/18:
Status conference continued to April, 26, 2018 at 10:00 a.m.
Tentative for 11/30/17:
Status conference continued to January 11, 2018 at 10:00 a.m. to allow for disposition of appeal.
Tentative for 8/1/17: Status?
Tentative for 6/20/17:
Status conference continued to October 5, 2017 at 10:00 a.m. to allow resolution of appeal, etc.
Tentative for 4/25/17:
Reconsideration is unsupported and therefore denied (see #13). Updated status report would be appreciated.
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Tentative for 3/23/17:
Court will continue to a hearing date determined at the hearing.
Tentative for 11/17/16:
Status conference continued to December 8, 2016 at 10:00 a.m.
Debtor(s):
Jana W. Olson Pro Se
Defendant(s):
Jana W. Olson Pro Se
Plaintiff(s):
United States Trustee Represented By Frank Cadigan
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays
Ashley M Teesdale
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Docket 75
In view of stip to convert to adversary proceeding is this moot?
Debtor(s):
Mariano Mendoza Represented By Onyinye N Anyama
Joint Debtor(s):
Mercedes Mendoza Represented By Onyinye N Anyama
Movant(s):
Mariano Mendoza Represented By Onyinye N Anyama
Mercedes Mendoza Represented By Onyinye N Anyama
10:00 AM
Adv#: 8:16-01138 Bermuda Road Properties, LLC v. Hudson, III et al
(con't from 10-26-17)
Docket 1
Tentative for 1/25/18:
By order entered December 15, 2017 the adversary proceeding was stayed for 60 days. Continue to February 15, 2018?
Tentative for 10/26/17:
In view of stay ordered October 23, 2017, continue to January 25, 2018.
Tentative for 8/4/16:
Deadline for completing discovery: December 1, 2016 Last date for filing pre-trial motions: December 15, 2016 Pre-trial conference on: January 12, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Joseph Roland Hudson III Represented By James C Bastian Jr Rika Kido
Defendant(s):
Joseph Roland Hudson III Pro Se
Diana Hudson Pro Se
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Joint Debtor(s):
Diana Hudson Represented By James C Bastian Jr Rika Kido
Plaintiff(s):
Bermuda Road Properties, LLC Represented By Colby Balkenbush Alan J Lefebvre
Trustee(s):
Karen S Naylor (TR) Pro Se
Karen S Naylor (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
(con't from 11-30-17)
Docket 1
Tentative for 1/25/18:
Assign trial date for approximately 45-60 days hence.
Tentative for 11/30/17:
Why still no joint pre-trial stip?
Tentative for 10/26/17: Why no joint pre-trial stip?
Tentative for 9/15/16:
Deadline for completing discovery: March 17, 2017 Last date for filing pre-trial motions: March 30, 2017 Pre-trial conference on: April 27, 2017 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 1/28/16:
See #3.1.
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Debtor(s):
Desiree C Sayre Represented By Andrew A Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Pro Se WENETA M KOSMALA Represented By
Reem J Bello
Plaintiff(s):
Fernando F Chavez Pro Se
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
Weneta M.A. Kosmala Represented By Reem J Bello
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:16-01233 Hong v. LIU et al
(set a s/c held on 3/2/17) (con't from 1-4-18 per order appr. stip. to con't ent. 12-12-17)
Docket 1
Tentative for 1/25/18:
What further discovery is desired?
Tentative for 3/2/17:
Deadline for completing discovery: August 1, 2017 Last Date for filing pre-trial motions: August 21, 2017
Pre-trial conference on September 7, 2017 at 10:00 a.m.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen
Defendant(s):
LONG-DEI LIU Pro Se
Shu-Shen Liu Pro Se
Plaintiff(s):
Yuanda Hong Represented By Philip D Dapeer
10:00 AM
10:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 110
Tentative for 1/25/18: Status?
Tentative for 9/14/17:
Status of discovery and cooperation?
Tentative for 7/13/17: Status?
Tentative for 5/4/17: See #10.
Tentative for 4/13/17:
This is a hearing on the sanctions portion of the motion first heard February 2,
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2017. As usual, this motion is plagued by the mess and finger pointing that these adversary proceedings have become.
The deposition of Frank Jakubaitis was to have been conducted within 45 days of the February 2 date, as required by an Order Granting Motion to Compel Production of documents entered February 3 as #123 on the docket, compelling the deposition at its page two. The form of that order originally submitted by Attorney Shirdel had to be almost completely rewritten as it did not match the results of the hearing, but only addressed the documents portion. On the adversary 8:15-ap-01426 TA, concerning another order more narrowly addressing the deposition of Frank Jakubaitis, the court’s judicial assistant, Ms. Hong, telephoned Attorney Shirdel and advised that the order was being held as this was a contested Motion (Opposition being filed by Attorney Firman on February 27, 2017 at #66 on the Court’s docket). As required by the LBRs, the order needed to be held for the 7-day period to see if the opposing side would object to the form of order. Also, Ms. Hong notified Attorney Shirdel that there was a procedural defect in that no Notice of Lodgment was filed with the Order--so the opposing party was not even aware an Order had been uploaded to which they could object. Attorney Shirdel’s staff told Ms. Hong that they would check on this procedural defect and get back to her. Attorney Shirdel finally uploaded the Notice of Lodgment of the Order Granting Motion to Compel Deposition on April 4, 2017 as #76 on the docket. That Order Granting Motion to Compel Deposition of Frank Jakubaitis was finally entered on April 5, 2017 with "as soon as possible" listed as the date the deposition was to be conducted by in place of the stricken "by March 19, 2017," as so much time had elapsed as to make the original date of March 19 (the 45th day from February 2) impossible. But, of course, none of this changed the original order entered February 3 which separately required the deposition within 45 days, except to make everything confused.
In meantime, one gathers from the briefs on the question of sanctions, it appears that defendant would like to impose conditions upon the deposition that the plaintiff, Mr. Padilla, not attend and that the deposition not be videotaped. These are not agreed to by plaintiff. Moreover, absent a protective order, there is no
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requirement in law that either condition be imposed. However, the question of the parties seeking a protective order is alluded to in the February 3 Order. It appears to the court’s ongoing dismay that these parties are unable to cooperate in virtually anything but rather constantly resort to court intervention, even for the basics. The strategy of the court had been to allow a reasonable time for matters to be set straight before the unpleasant question of sanctions is considered, and so an amount appropriate to the circumstances, if any, could be imposed. But that approach has failed because we are still not even at square one and no deposition has occurred. All we have is the usual finger pointing notwithstanding the court’s firm directive February 2 that a deposition must occur within 45 days. Looked at differently, one could say that the defendant has decided to double down his bet on obtaining the relief requested in the protective order motion scheduled 5/4/17 by studiously not giving a deposition in the meantime. He was not privileged to do this.
What is the court to do with these parties? The court can only steer this case using blunt instruments, which in normal cases should not be necessary. But this is not a normal case. The appropriate amount of sanctions for failure to give a deposition cannot be easily determined now because the matter has been so awkwardly handled in that we have two orders addressing essentially the same question. But the court is not inclined to reward defendant for his non-cooperation either. So we are left with the dilemma, and no easy answer except to continue the matter yet again until after the protective order is considered May 4. We should also continue this motion to a date certain after that protective order hearing so that a deposition might actually occur in the meantime, with any protective provisions that the court may or may not direct.
Continue
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Tentative for 2/2/17:
The court has had just about enough of the petty, unprofessional squabbling which has plagued this case from the outset. As explained below, the conduct of both sides falls far below what the court should be able to expect. This latest is a motion to compel attendance of Mr. Jakubaitis at deposition and for $3307.50 in sanctions.
On January 5, 2017, Plaintiffs served a notice of deposition on Debtor’s counsel Mr. Fritz Firman ("Firman") indicating that Plaintiffs would depose Debtor on January 19, 2017. Plaintiffs’ counsel Mr. Shirdel ("Shirdel") argues that he did not receive notice Debtor would be unable to attend the deposition until the eve of the deposition. According to Plaintiffs, they received objections at 4:00 p.m. on January 18, 2017, which objections asserted insufficient notice, failure to consult regarding the deposition dates, unavailability of counsel, and that Debtor was unable to be properly deposed because he was taking prescription medication. Shirdel contends he attempted to confer with Firman after receiving the objections, but to no avail.
According to Debtor, Plaintiffs purposefully scheduled the deposition for January 19, 2017 knowing that Debtor would be unable to attend, so this motion has been brought in bad faith. In support, Debtor explains that he successfully brought an anti-SLAPP motion against Plaintiff Carlos Padilla’s defamation claim in state court (Shirdel represents Carlos Padilla III in this adversary proceeding and in the state court action). Because Debtor prevailed, Debtor was permitted to seek recovery of attorney fees. Debtor filed a motion seeking recovery of attorney fees, with the hearing on this motion scheduled for January 5, 2017. Shirdel then sent a notice of deposition for January 5, 2017 (one infers the scheduling was intended to interfere with the motion?). On December 29, 2016, Firman responded that he and Debtor would be unable to attend the deposition on January 5, 2017. Debtor now argues that because Shirdel had notice Debtor was unable to attend the January 5, 2017 deposition, Plaintiffs were somehow on constructive notice that Debtor and Firman would be unable to attend the deposition on January 19, 2016, some two weeks later.
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To call that argument thin is being generous.
Failure of a party to attend a properly noticed deposition without first obtaining a protective order will subject that party to sanctions under Rule 37(d). In re Honda, 106 B.R. 209, 211 (Bankr. Haw.1989). Here, Debtor’s counsel received proper and reasonable notice, as the proof of service indicates notice of the deposition was delivered by email on January 5, 2017, approximately two weeks before the deposition at issue was to take place. Thus, absent a finding Firman was substantially justified or that Shirdel did not confer in good faith, Firman and /or Defendant should be liable for the costs of bringing this motion to compel. The argument that Plainitff was on constructive notice of Debtor’s unavailability and thus gave a notice of deposition for that time in bad faith is unpersuasive. Firman makes reference to a deposition that was scheduled for January 5, 2017. Although not entirely clear, it appears this deposition is related to the state court action as the notice of the January 5 deposition was sent to Debtor’s state court counsel. Firman argues that Shirdel knew Debtor would be unable to attend the January 5 Deposition, as this was the same day the motion for recovery of attorney fees in the state court action was set for hearing. In addition, Firman also asserts that Shirdel received objections to the January 5 Deposition on December 29, 2016. But it is unclear why Debtor’s unavailability on January 5, 2017 somehow provides constructive notice Debtor would be unavailable on January 19, 2017, two weeks later. Firman points to no additional hearings or related proceedings in the state court action that were to occur on January 19, 2017.
Consequently, the argument that Plaintiff should have known Debtor was unavailable on January 19, 2017 is not supported. That Defendant responded at 4:00 p.m. on the eve of the deposition further undermines this contention. Plaintiff does not appear to have acted in bad faith in scheduling the deposition. If Debtor had issues with the deposition, his recourse was to have filed a motion for a protective order.
An argument is also raised that Plaintiff should have sought leave to request this deposition, as multiple depositions have already occurred. But the examples of other depositions Defendant highlights are not persuasive. Defendant argues that the § 341(a) meeting should be treated as a deposition because Shirdel conducted
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questioning at the meeting. In addition, Defendant argues that a judgment debtor’s examination should also be treated as a deposition. However, Defendant cites to no authority in support of these dubious propositions. Finally, the papers do not appear to raise any argument as to why Firman and Debtor were substantially justified in not attending the deposition, aside from Firman’s declaration that he was appearing before Judge Smith at this time. Thus, Defendant has not met his burden and cannot avoid sanctions on these grounds.
Distressingly, Plaintiff did not perform much better. Under Rule 37, failure to appear at the deposition would ordinarily warrant an award of the costs in bringing this motion to compel. However, in order to award sanctions, the party seeking sanctions must also demonstrate they have not "filed the motion before attempting in good faith to obtain the disclosure or discovery without court action." Fed. R. Civ. P. 37(a)(5)(A)(i). Here, Shirdel appears to have sent Firman an email on January 18, 2017 at approximately 4:41 p.m. The email plainly states, "If [D]ebtor does not appear at the deposition, we’ll take a non-appearance and we’ll move to compel and seek sanctions." This language hardly demonstrates Shirdel attempted in good faith to resolve the discovery dispute before filing the instant motion. This language, coupled with the fact that this motion was filed only one day after the email was sent suggest Plaintiff failed to engage in a meaningful good faith effort actually designed to resolve this discovery dispute without involving the court, as required under the Rule 37. In this view, the costs and fees associated with bringing this motion should either not be awarded, or perhaps awarded only in part.
Therefore, the court will forbear from awarding sanctions at this time but will instead reserve the question until after one additional opportunity to cooperate with discovery requirements as compelled below is given to Defendant. The court will then evaluate the question of appropriate sanctions after the fact. The parties are admonished not to test the court’s patience any further.
Deposition is compelled and is to be given within thirty days as scheduled by Plaintiff after consulting with respective calendars. The deposition is to last no longer than 7 hours and is to be completed within one day unless otherwise agreed. The
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question of sanctions is to be continued about 45 days to evaluate compliance with these requirements.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
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Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 1
Tentative for 1/25/18:
What update can be given on Frank's deposition?
Should this be continued to coordinate with item #11.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled with discovery incomplete?
Tentative for 7/13/17:
It would appear that discovery disputes must be ironed out before any firm date can be set.
Tentative for 5/4/17:
Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
Tentative for 3/23/17:
The failure of defendants to participte in preparation of joint status report, and
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reported lack of discovery cooperation is troubling. Should the answer be stricken?
Tentative for 12/8/16: No status report?
Tentative for 3/10/16:
It sounds from the report that dispositive motions are being prepared on both sides. So, a continuance as requested by Plaintiff has some appeal, although the court notes this case has been pending one year.
Tentative for 1/28/16:
Why no status report? Have issues described from October 29, 2015 docket entry been addressed?
Tentative for 10/29/15:
Why has there been no apparent update, report or progress?
Tentative for 8/27/15: Status of service/default?
Tentative for 4/23/15:
Status conference continued to August 27, 2015 at 10:00 a.m. to afford time to resolve dismissal motions.
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Debtor(s):
Frank Jakubaitis Represented By Harlene Miller
Defendant(s):
Frank Jakubaitis Pro Se
Tara Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR)
Jeffrey I Golden (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:15-01426 Marshack v. Jakubaitis et al
Docket 60
Tentative for 1/25/18: See #11.
Tentative for 9/14/17: Status?
Tentative for 7/13/17:
It would appear that discovery disputes must be first resolved and a motion to compel is reportedly forthcoming.
Tentative for 5/4/17: See #10.
Tentative for 4/13/17: See #18.
Tentative for 3/2/17:
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An objection to the Shirdel declaration was filed but otherwise the court sees no opposition. It would seem the issues are the same as discussed in the February 2 tentative in Padilla v. Jakubaitis and the February 3 order in the Golden v. Jakubaitis case. Therefore, the order should be the same. The question of monetary sanctions is reserved until the April 13 hearing, and will be evaluated in view of cooperation, if any, in meantime.
Debtor(s):
Grant
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
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Adv#: 8:15-01426 Marshack v. Jakubaitis et al
U.S.C. Section 544; 3. Revocation of Discharge - 11 U.S.C. Section 727(d)
(con't from 9-14-17)
Docket 1
Tentative for 1/25/18: See #11, 12 and 13.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled before discovery is complete?
Tentative for 7/13/17:
It looks like discovery disputes must be resolved before any hard dates can be set.
Tentative for 5/4/17:
Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
Tentative for 3/23/17: See #13.1
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Tentative for 12/8/16: No status report?
Tentative for 3/10/16: See #6 and 7.
Tentative for 1/14/16:
Status conference continued to March 10, 2016 at 11:00 a.m. to coincide with motion to dismiss.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Pro Se
Frank Jakubaitis Pro Se
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Pro Se
Richard A Marshack (TR) Pro Se
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U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:15-01257 Law Offices of Steven H. Marcus v. Lionetti
(rescheduled from 1-11-18 per amended ntc. of hrg. filed 12-14-17)
Docket 91
This is Defendant’s motion for her attorneys’ fees under §523(d) incurred in defending Plaintiff’s action under §523(a)(2)(A) to determine nondischargeability of a debt. The debt in question is comprised of about $150,000 in unpaid attorney’s fees claimed by Plaintiff for representing debtor in a divorce proceeding. Summary judgment was granted in Defendant’s favor, which order has been appealed.
Plaintiff contends that this court cannot consider this motion because the appeal has divested the court of jurisdiction. While it is true that an appeal normally divests the trial court of jurisdiction to further determine merits of the matter being appealed, this is not correct as to ancillary matters such as an award of attorney’s fees. Buchanan v. Stanships, Inc., 485 U.S. 265, 267-68 (1988). The Ninth Circuit has held that a "district court retained the power to award attorneys’ fees after the notice of appeal from the decision on the merits has been filed." Masolosalo by Masalosalo v. Stonewall Ins. Co., 718 F.2d 955, 957 (9th Cir. 1983). See, e.g., Moore v. Permanente Med. Grp., Inc., 981 F.2d 443, 445 (9th Cir. 1992); Patrick v. Williams & Assoc., 456
F. App’x 708, 709-10 (9th Cir. 2011).
In order to prevail on a motion for attorney's fees under § 523(d), a debtor must prove that: (1) the creditor requested a determination of the dischargeability of the debt, (2) the debt is a consumer debt, and (3) the debt was discharged. Stine v.
Flynn (In re Stine), 254 B.R. 244, 249 (9th Cir. BAP 2000), aff’d, 19 Fed. App’x 626
(9th Cir. 2001).
The first Stine element is obvious and not contested.
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The second element is that the debt be a "consumer debt" within the meaning
of §101(8) of the Bankruptcy Code. Under §101(8) "[t]he term "consumer debt" means debt incurred by an individual primarily for a personal, family, or household purpose. "Legal fees incurred as a result of litigation for family-related matters… are in the nature of a ‘consumer debt’ within the meaning of §§ 101(8) and 707(b)." See In re Renteria, 456 B.R. 444, 447-48 (Bankr. E.D. Cal. 2001); Law Offices of Donna Buttler v. Bonebo (In re Bonebo), 345 B.R. 42, 48 (Bankr. D. Conn. 2006). Plaintiff argues that Defendant failed to provide any evidence that the debt is a consumer debt, and merely states that the debt falls within the statute’s meaning. But Defendant correctly counters that the Plaintiff did not dispute that the debt for fees arose from its representation of the Defendant in her divorce proceeding, and she in fact offered evidence confirming this to be accurate. See Opposition at Exhibit A (Marcus Declaration), "As counsel for Defendant in the Family Law Case, my office provided legal services and advanced costs on behalf of Debtor." In Hakopian v Mukasey, 551
F. 3d 843, 846 (9th Cir 2008) the court held: "[A]llegations in a complaint are considered judicial admissions." The Ninth Circuit has also held that judicial admissions have "the effect of withdrawing [the] fact from issue and dispensing wholly with the need for proof of the fact" and is "binding on both parties and the court…" United States v. Davis, 332 F.3d 1163, 1168 (9th Cir. 2003). Therefore, although the Defendant did not provide evidence that the debt was within the meaning of §101(8), Plaintiff made a judicial admission as to this fact.
The last Stine element is that the debt was ultimately discharged. The Defendant cites this Court’s Summary Judgment Order, dismissing Plaintiff’s nondischargeability action with prejudice, and therefore discharging the debt pursuant to the discharge order. Neither side offers any analysis of whether the appeal has any bearing here. If the dismissal is not a final order, is the last Stine element satisfied?
Once the three elements are established, the burden shifts to the creditor to prove that its actions were substantially justified. In re Harvey, 172 B.R. 314, 317 (9th Cir. BAP 1994). "To avoid a fee award, a creditor must show that it had a reasonable basis in law or fact to file an action, or otherwise demonstrate the existence of special
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circumstances." In re Duplante, 215 B.R. at 449, quoting In re Carolan, 204 B.R. 980, 987 (9th Cir. BAP 1996).
First, the creditor must show that it had a reasonable basis in law or fact so as to be substantially justified in bringing the adversary proceeding to determine the dischargeability of the debt. Card v. Hunt (In re Hunt), 238 F.238 F.3d 1098, 1103 (9th Cir. 2001). Plaintiff argues it was substantially justified in bringing the dischargeability proceeding because of its interpretation of the holding in In re Kirsh, 973 F2d 1454 (9th Cir.1992), a case relied upon by Defendant in bringing the summary judgment motion. Kirsh is mostly a reasonable reliance case but is argued by Plaintiff now seemingly for the proposition discussed in dicta at the end of the Kirsh opinion that the Rules of Professional Conduct, which require that when a loan transaction is contemplated between counsel and client a reasonable opportunity must be given to obtain separate counsel, cannot be utilized by clients as a sword to wrong their attorneys. This statement in Kirsh had little bearing on the actual outcome of that case and was made to address one of the debtor’s defenses, which was rejected. Although the defense that the plaintiff could not pursue a section 523(a)(2)(A) claim because the attorney had violated a rule of professional conduct was rejected, the actual holding in Kirsh upheld dismissal of the claim based on lack of justifiable reliance. It is this aspect which was the primary support for this court’s summary judgment ruling. Plaintiff’s attempt to distinguish between the lawyer in Kirsh and his pension fund on the question of reliance is unpersuasive.
Plaintiff’s reliance on the Dougherty factors (see In re Dougherty 84 B.R. 653 (9th Cir BAP 1988)) and the totality of the circumstances approach as discussed in cases such as Carolan, 204 B.R. at 987 and In re Eashai, 167 B.R. 181, 183 (9th Cir. BAP 1994, aff’d 87 F. 3d 1082 (9th Cir 1996) (to determine the Defendant’s intent under section 523(a)(A)(2)), is also misplaced. The Ninth Circuit has expressly rejected this approach outside of the credit card context because this approach is needed only in that context where the transaction involves three parties and the creditor is not dealing face to face with the debtor. Turtle Rock Meadows Homeowner’s Ass’n v. Slyman (In re Slyman), 234 F.3d 1081, 1086 (9th Cir. 2000).
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The court rejected the argument that it was necessary to extend this heightened test to a transaction involving only two parties.
But the question presented in this motion is a different one. The question is not whether the Plaintiff was fully correct in bringing the dischargeability action.
Obviously that has been decided against Plaintiff. Rather, the question is whether there was a reasonable basis for bringing the action. The court construes this to mean that fees may be awarded where the answer is (or should have been) obvious, and Congress’ purpose in §523(d) is to deter abusive shake downs of debtors in the consumer context (particularly by finance companies) to force a settlement of a dubious claim. See e.g. All Am. of Ashburn, Inc., v. Fox (In re Fox), 725 F. 2d 661, 663 (11th Cir. 1984). But it is not clear to the court that this is what we have here.
While §523(d) was designed to discourage creditors from initiating meritless actions in the hope of obtaining a settlement, this must be balanced against the risk that imposing the expense of debtor’s attorneys fees on the creditor may chill creditor efforts to have debts that were fraudulently incurred declared non- dischargeable.
Thus the "substantially justified" standard should not be read to raise a presumption that the creditor was not substantially justified simply because it lost the challenge. Carolan at 987. Rather, here we have a lawyer who understandably is disappointed in not being paid for his efforts, which reportedly were in large part successful, by a client whom he believes and asserts strung him along all the while intending never to pay for any of it. In the crucible of legal analysis and in retrospect, this lawyer has been determined not to have a case. Reasonable reliance was not found here, and other defects were noted; but such a determination by the court cannot be said to have been obvious. The totality of the circumstances approach to determine intent was not correct, but it could have gone the other way. The court cannot say that the inferential approach in cases like Dougherty in proving intent outside the credit card context is so wholly inappropriate as to have been without substantial justification or at least arguable justification. The court cannot say that this result is so obvious that the action was abusive or without any reasonable (or at least arguably reasonable) basis. Section 523(d) is not written like an attorney’s fees clause in a contract, i.e. winner gets his fees, full stop. Rather, the court is specifically directed to inquire whether there was
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"substantial justification" and this court cannot determine on this record that there was no substantial justification for the action.
Notwithstanding the determination that a nondischargeability proceeding is not substantially justified, a creditor can also defend against fee recovery if it establishes "special circumstances" that make the award unjust. Plaintiff argues that such special circumstances exist under the circumstances of this case including: (1) that it would be patently unjust to allow further recovery of $80,000 in fees in addition to other amounts unjustly obtained/retained by the Defendant through Plaintiff’s representation in her divorce proceeding, (2) Gibson Dunn did not comply with the California Business and Professions Code in regards to their employment by the Defendant, (3) that Gibson Dunn did not comply with its bankruptcy disclosure obligations, (4) that Gibson Dunn was never properly employed by the Defendant, and
the Defendant never incurred the legal fees as her own liability (presumably because Gibson Dunn is acting pro bono).
First, Plaintiff argues it would be patently unjust to impose on Plaintiff an additional $80,000 loss as a result of Defendant’s conduct. However, the Ninth Circuit BAP rejected a similar pleas for sympathy because congressional intent in enacting § 523(d) was to deter creditors from pursuing patently unwarranted challenges. Kilbey v. Nawrocki, (In re Nawrocki, 2010 WL 6259978 (9th Cir. BAP Mar. 3, 2010). If Congress had intended that fees not be awarded even when an action to determine the dischargeability of a debt has been brought without a reasonable basis in fact or in law, they would not have included this subsection. But, as mentioned above, the court is not convinced that the "without reasonable basis" element has been shown here.
Second, Plaintiff complains that there "is no evidence that Gibson Dunn complied with the Business & Professions Code in regards to their employment by Defendant." Opp. at 14-15. However, this argument fails because it is the Plaintiff’s burden and it provided no evidence supporting this contention.
Third, Plaintiff argues that Gibson Dunn did not comply with its bankruptcy
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compensation disclosure obligations. However, the disclosure requirements under § 329 of the Bankruptcy Code and Rule 2016 of the Federal Rules of Bankruptcy Procedure do not apply when fees are sought from an opposing party rather than from a debtor or the estate. In re Nabavi, 514 B.R. 895, 901 (M.D. Fla. 2014); see also Card v. Hunt, (In re Hunt), 238 F. 3d 1098, 1104 (9th Cir. 2001) (upholding a fee award under section 523(d) where pro bono representation was disclosed for the first time in connection with the fee motion).
Fourth, Plaintiff argues that Gibson Dunn was not properly employed by the Defendant. Again, because Gibson Dunn never received or requested payment from the Defendant there is no requirement under the Bankruptcy Code requiring an order approving such employment.
Finally, Plaintiff argues it cannot be liable under section 523(d) because "Defendant never incurred the legal fees as her own liability." However, this argument has been expressly rejected by the Ninth Circuit. See In re Hunt, 238 F.3d at 1104 (holding that section 523(d) "does not distinguish between pro bono representation and fee-generating representation, and the deterrence policy underlying § 523(d) is served by the award of fees to debtors who are represented pro bono.").
There is also argument that Gibson Dunn’s fees are quite high. Yes they are. The services provided were first rate, however, as the results show. But the court does not need to parse through appropriate hourly rates here because, in the end, the court is not convinced that Plaintiff had no reasonable basis or in the language of the statute "no substantial justification" for its dischargeability action within the meaning of §523 (d). Rather, if such rate issue were to be visited, it would more properly be in the context of "special circumstances [as] would make the award unjust." The fact that debtor’s son in law is reportedly a Gibson attorney would undoubtedly also factor in here.
Deny
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Debtor(s):
Teina Mari Lionetti Represented By Abel H Fernandez
Defendant(s):
Teina Mari Lionetti Represented By Matthew Bouslog
Plaintiff(s):
Law Offices of Steven H. Marcus Represented By
Louis J Esbin
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
Docket 40
- NONE LISTED -
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Pro Se
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
IAC AT JAMBOREE LLC
Vs.
DEBTOR
Docket 20
Grant. Appearance is optional.
Debtor(s):
Woo Young Choi Represented By Ji Yoon Kim
Movant(s):
IAC AT JAMBOREE LLC Represented By Richard Sontag
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
FIRST TECH FEDERAL CREDIT UNION
Vs DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Jake E Lowe Represented By
Joseph M Tosti
Movant(s):
First Tech Federal Credit Union Represented By Nichole Glowin
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
WILSHIRE CONSUMER CREDIT
Vs.
DEBTOR
Docket 152
Grant without fees and costs. Appearance is optional.
Debtor(s):
Randy R. Reynoso Represented By Bruce D White
Movant(s):
WILSHIRE CONSUMER CREDIT Represented By
Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 1-9-18)
THE BANK OF NEW YORK MELLON
Vs.
DEBTORS
Docket 41
Grant. Appearance is optional.
Debtor(s):
William C West Represented By Julie J Villalobos
Joint Debtor(s):
Monday West Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 1-9-18)
U.S. BANK NATIONAL ASSOCIATION AS TRUSTEE FOR THE HOLDERS OF THE CITIGROUP MORTGAGE LOAN TRUST INC ASSET-BACKED PASS- THROUGH CERTIFICATES SERIES 2005-HE3
Vs DEBTOR
Docket 60
Grant. Appearance is optional.
Debtor(s):
Kenneth E Strother Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 1-9-18)
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 20
Tentative for 1/30/18: Grant.
Tentative for 1/9/18:
Apparently, there is no equity in the subject property. So under section 362(d)(2) relief of stay is indicated unless the property is necessary to a reorganization "in prospect." Debtor has the burden on this issue but offers very little except conclusory remarks. Obviously, periodic payments at a minimum are required yet no specifics are offered.
Grant unless a reasonable adequate protection offer is made and debtor demonstrates how all of this figures into a plan confirmable in near future.
Debtor(s):
Freda Philomena D'Souza Represented By Michael Jones
10:30 AM
NATIONSTAR MORTGAGE LLC
Vs DEBTOR
Docket 63
Grant. Appearance is optional.
Debtor(s):
Nicole Renee Haner Represented By Halli B Heston
Movant(s):
Nationstar Mortgage, LLC. Represented By Jarred Ruggles Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
OSAT BPL TRUST 2016-1
Vs DEBTOR
Docket 27
Grant. Appearance is optional.
Debtor(s):
James Ben Stewart Represented By Brian J Soo-Hoo
Movant(s):
OSAT BPL Trust 2016-I Represented By Reilly D Wilkinson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
SETERUS, INC AS THE AUTHORIZED SUBSERVICER FOR FEDERAL NATIONAL MORTGAGE ASSOCIATION ("FANNIE MAE"), ITS SUCCESSORS AND/OR ASSIGNS
Vs DEBTOR
Docket 39
Grant. Appearance is optional.
Debtor(s):
John R Bennett Represented By Julie J Villalobos
Movant(s):
Seterus, Inc., servicer for Federal Represented By
James F Lewin Renee M Parker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(OST signed 1-19-18)
BLUE WATER - DUPONT, LLC, a California limited liability company Vs.
DEBTOR
Docket 7
Grant if no opposition and proof of telephonic notice.
Debtor(s):
Billy Joe Brunner Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Adv#: 8:93-01234 Bankruptcy Recovery Network v. Siadate et al
(con't from 12-5-17)
Docket 58
Tentative for 1/30/18: Status?
Tentative for 12/5/17: Same.
Tentative for 11/7/17: Status?
Tentative for 9/26/17: Appearance?
Defendant(s):
Soheila Zahrabi Siadate Pro Se
Seyed Abbas Siadate Taremi Pro Se
Plaintiff(s):
Bankruptcy Recovery Network Represented By Richard W Snyder Brett Ramsaur
11:00 AM
11:00 AM
RICHARD A. MARSHACK, TRUSTEE
LAW OFFICES OF MICHAEL G. SPECTOR, ATTORNEY FOR TRUSTEE HAHN FIFE & COMPANY LLP, ACCOUNTANT
Docket 0
Allow as prayed. Appearance is optional.
Debtor(s):
Richard Joseph Bates Represented By Halli B Heston
Trustee(s):
Richard A Marshack (TR) Represented By Michael G Spector
11:00 AM
(con't from 11-28-17 per order approving third stip. to cont. ent. 11-14-17)
Claim No. 4-2 Dennis Hartmann
Docket 198
This is the Trustee’s objection to allowance as a secured claim, or indeed allowance at all, of claim #4-3 filed by claimant Dennis Hartmann (superseding Claim #4-2). The facts are somewhat convoluted and the parties do a very poor job of setting up the factual predicates for analysis. For example, for us to have anything to talk about one must presume that the monies in the estate for the consolidated entities are somehow attributable to the efforts of attorney/claimant Hartmann. As near as the court can determine, the estate’s funds represent in whole or in part liquidation of some entities owned or controlled by one or more of the Baer entities, which were the antagonists in the underlying litigation. Reportedly, the trial court in the underlying litigation at some point appointed a receiver to take possession of"$15 million or real estate held by various Baer entities including $750,000 in cash. This markedly increased the likelihood of collection." [Claimant’s brief, p. 007, ln.9-13]. Because reportedly claimant Hartmann had obtained a $5million judgment, we assume that the receiver was in aid of collection and can therefore be said to be attributable to claimant’s effort. It might be relevant as to whether this was accomplished before or after the May 3, 2009 agreement discussed below. If the source of the estate’s funds came from multiple sources, however, the analysis becomes more difficult. It would have helped to have made these points clear. But it seems fairly clear that claimant has filed this claim to recover some $180,000 in fees incurred by an accounting firm in the
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underlying litigation that has been awarded by an arbitrator as a personal obligation of claimant, who retained the accountants. Reportedly, claimant retained the accounting firm as support and part of the underlying litigation.
Assuming this understanding is correct, the question of "secured" at bar turns on whether there is an attorney’s lien or, more correctly understood, an "equitable charge" upon proceeds of the underlying litigation. The trustee argues correctly that such an attorney’s lien under California law must be a product of a written agreement, and the May 3, 2009 "Restated Retainer Agreement" ("retainer agreement") does not specifically mention the word "lien." But specific mention of a lien is not determinative; it is more important that the contract make clear that the parties have agreed that professionals are to look to the judgment as the sole source of payment for fees. If that is so, an equitable lien on proceeds is created. Bartlett v. Pacific Nat’l Bank, 110 Cal. App. 2d 683, 688 (1952). There is no doubt that the parties to the retainer agreement contemplated that costs would be deducted from the proceeds, as appears at page 7 [Exhibit F, Bates p. 56] of the retainer agreement. Trustee argues that because the contingency percentage was to be figured on the amount of recovery after costs were deducted, this somehow negates that any equitable charge could have followed the costs portion of the obligation. But no authority is cited for this proposition and it seems counter-intuitive to the court.
However, another, bigger issue is raised going to whether there is any allowable claim at all. Apparently, the estate monies on hand are only $350,000 (whether gross or net of administrative costs is not made clear). The amount of a bankruptcy court sanctions awarded in two cases associated with Mr. Baer, IBT International and Southern California Developers are in the sums of $408,531 and
$830,816, respectively, as reflected in proofs of claim #8 and 9. Under the retainer agreement, the fee (and presumably costs as well) are only recoverable from a net recovery after payment of the bankruptcy sanction. Exhibit F, pp. 55-56. So, unless the bankruptcy award has been reduced or otherwise satisfied (and no evidence is offered) the sanction completely eclipses the amount of proceeds on hand and so, in the language used by the Trustee interpreting the retainer agreement, the contingency
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triggering a fee (or costs) never occurred. The same result would be reached under § 510(a) as the retainer agreement could be read as a subordination to the claims of IBT International and Southern California Developers.
Sustain
Debtor(s):
Banyan Limited Partnership, a Represented By Hutchison B Meltzer Adam L Karp
Trustee(s):
Thomas H Casey (TR) Represented By Beth Gaschen Jeffrey I Golden
11:00 AM
(OST signed 1-17-18)
Docket 95
Opposition due at hearing.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
11:00 AM
(con't from 12-12-17 per order entered 12-11-17)
Docket 0
Tentative for 10/3/17: See #14.
Tentative for 8/1/17: Status?
Tentative for 4/25/17:
No tentative. Court will hear updated status report from parties.
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16:
Status?
11:00 AM
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays
Ashley M Teesdale
11:00 AM
Docket 286
Tentative for 10/3/17: See #14.
Tentative for 8/1/17:
Status? Where should passports be kept?
Tentative for 4/25/17: Updated status report?
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16: Status?
Tentative for 5/12/16:
The court has two concerns: (1) by now hopefully the Trustee has more
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particularized descriptions of the exact items including records to be turned over (e.g. all monthly statements of Bank of America Account ). Some or even most may still not be known to the trustee, but all specificity should be given where possible preliminary to a contempt charge and (2) how do we incorporate mediation efforts before Judge Wallace into this program. This court is reluctant to enter any order that would short circuit that effort.
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
Ashley M Teesdale
11:00 AM
(set from evidentiary hrg held on 1-26-16)
(con't from 12-12-17 per order entered 12-11-17)
Docket 105
Tentative for 10/3/17:
The issue of who holds Debtor's passports still needs to be addressed.
Tentative for 8/1/17: Status?
Tentative for 4/25/17: Updated status?
Tentative for 7/7/16:
Status? Is Ms. Olson retaining counsel or not?
Tentative for 6/7/16: Status?
Tentative for 4/28/16:
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Status? The court is evaluating Debtor's efforts to purge her contempt.
Tentative for 4/7/16:
The trustee's report filed April 6 is not encouraging.
Tentative for 3/29/16: Status?
Tentative for 3/15/16:
Status? The court expects discussion on a workable protective mechanism as requested in paragraph 7 of the order shortening time.
Tentative for 1/19/16:
A status report would be helpful.
Tentative for 1/5/16:
No tentative. Request update.
Revised tentative for 11/5/15:
This matter is being immediately transferred to Judge Albert, who will hear the matter as scheduled at 10:00 a.m. in Courtroom 5B. A separate transfer order will issue shortly.
*************************************************************************
11:00 AM
Tentative for 11/5/15:
Physical appearances are required by all parties, including Debtor, in Courtroom 5C, located at 411 West Fourth Street, Santa Ana, CA 92701.
Debtor(s):
Jana W. Olson Represented By Thomas J Polis
Movant(s):
Passport Management, LLC Represented By Philip S Warden
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
11:00 AM
(con't from 11-28-17 per order appr. seventh stip. to cont. ent. 11-27-17)
Docket 40
Dismiss.
Debtor(s):
National Financial Lending, LLC Represented By
John N Tedford
11:00 AM
(con't from 11-28-17 per order appr. seventh stip. to cont. ent. 11-27-17)
Docket 1
See #17.
Debtor(s):
National Financial Lending, LLC Represented By
John N Tedford
10:00 AM
(cont'd from 8-23-17)
Docket 1
Tentative for 8/23/17:
Continue conference approximately 120 days.
Tentative for 3/22/17:
Deadline for filing plan and disclosure statement: September 1, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date Debtor to give notice of the deadline by: April 1, 2017.
Debtor(s):
Clarke Project Solutions, Inc. Represented By Pamela Jan Zylstra
10:00 AM
(con't from 12-6-17)
PARKER MILLS LLP, SPECIAL LITIGATION COUNSEL TO TRUSTEE
Docket 772
Tentative for 1/31/18:
This is the continued hearing on the application of Parker Mills L.P for allowance of attorney’s fees and costs. The matter is continued from Dec. 6, 2017. The court’s tentative decision from that date is incorporated herein by reference. Applicant continues to argue that the Legal Representation and Fee Agreement is not ambiguous or, if it is, that parol evidence helps the court construe the meaning of the parties in entering into it. From this Applicant argues that it should be awarded a simple 33% upon the $3,386,194 repatriated from the Cook Islands, or $1,117,444. In this Applicant suggests it is compromising on the base of the recovery, acknowledging that of the $4,342,194 originally targeted some $956,000 was used to create the children’s trust and never came to the Trustee. But perhaps recognizing that its contract interpretation argument might be not as strong as it would like, Applicant discusses the possible compromise alluded to the court last hearing, i.e. an hourly compensation plus lodestar. Under this approach, Applicant figures it is entitled to $586,440 multiplied by the 124% recommended by the Trustee, yielding $727,185. Of course, the dispute here is whether all categories of services actually benefitted the estate under a §330 analysis.
First, the court sees nothing new regarding the contract interpretation arguments. The Legal Representation and Fee Agreement is ambiguous particularly as concerns the definition of the key term "Gross Recovery", as it is unclear whether the recovery is limited
by the later term "from any defendant." Manifestly the Cook Island Trust, the direct source of funds, was never a defendant. Applicant argues that this could be read as implicitly referring to recovery of the Cook Islands monies through the efforts of the defendants and Applicant points to the leverage created by prosecuting the malpractice action as creating a "settlement." There is some merit to this position as the court has already acknowledged (see matter # 3 on calendar) but one must also remember that Applicant was brought in primarily
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to prosecute a malpractice action against lawyers, not a fraudulent conveyance action against the Cook Islands Trust. That the settlement was not comprised from theirs (or their insurance carriers’) monies, but instead from the Cook Islands Trust, is a factor.
So, as the court earlier suggested, the original terms and conditions of the Legal Representation and Fee Agreement have proven "improvident" and a departure from an "all or nothing" approach thereunder, or a strict and technical contract interpretation, is just and proper as is provided under 11 U.S.C. §328(e ). Therefore, the court adopts the second alternative approach. The court believes the Trustee has carefully reviewed the time entries and finds little to dispute on his conclusion that a $659,407.20 maximum is a just fee, if the application is supplemented with the additional detail requested in the Trustee’s response. If there is any continuing dispute over the weight and meaning of the additional detail, Trustee is directed to either give the benefit of the doubt on any sum above the $626,212.40 base to the $659,407.20 maximum in his discretion, or to request a further hearing focused only on the allowability of that incremental portion if it is logical and efficient to do so. The process to finally reconcile the amount in the order should take no longer than thirty days, but if the parties cannot agree, either may set the matter for further hearing by document filed within that period.
Allow between $626,212.40 and $659,407.20 in Trustee’s discretion based on further
proof
Tentative for 12/6/17:
This is the application of Parker Mills L.P. ("Applicant") for allowance of a contingency attorneys’ fee in the sum of$1,432,909.40. Applicant’s view is straightforward: it is entitled as a matter of simple arithmetic to its agreed 33% of "gross recovery" and it points to the success in obtaining repatriation of $4,342,194.40 from a Cook Islands trust. Applicant makes the expected arguments about how contingency lawyers take substantial risk and, in effect, finance the case for their impecunious clients, and should therefore be rewarded handsomely for their efforts when the case is won.
Unfortunately, life and this case are not that clear. Difficulties arise here
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mostly because of the way the Legal Representation and Fee Agreement [Exhibit "C"] was written. The engagement of Applicant was as malpractice counsel against Jeffrey Matsen, various other lawyers and the Snell& Wilmer firm. The description of services is a little broader: "to assist Clients pursuing and attempting to resolve legal malpractice and aiding and abetting claims against [various lawyers]…including (but not limited to?) prosecution of ongoing litigation…" (italics and parenthetical added). The main problem arises from the definition of "Gross Recovery" against which the percentages apply. As appears in the Agreement, in pertinent part:
"Gross Recovery" means the total of all amounts received by settlement, arbitration and/or judgment including any award of attorney’s fees and/costs obtained from any defendant, respondent or their respective insurance carriers." (italics added)
Passport argues for a strict interpretation. Passport points out that none of the repatriated proceeds are malpractice damages and the source, the Cook Islands trust, was never a defendant. Passport argues that risk means risk, and since the source ended up not being one of the named defendants, Applicant should receive zero.
Fortunately, the Bankruptcy Court has origins in equity. The Trustee observes that § 328(a) contains a provision for:
"compensation different from the compensation provided under such terms and conditions after the conclusion of such employment, if such terms and conditions prove to have been improvident in light of developments not capable of being anticipated at the time of the fixing of such terms and conditions."
There is no doubt in the court’s view that the threat of action against Mr.
Matsen and others materially contributed to the repatriation. Mr. Matsen reportedly assisted in the repatriation effort, and he likely would not have done so without the leverage provided by the threat of action against him and his firm. Reportedly, Mr. Matsen’s efforts proved crucial in successfully repatriating the monies. Also, it was no small effort to repatriate the funds from the Cook Islands, and the more formal efforts
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and legal process to reach those funds seemed to have reached a practical standstill. Incarcerating the debtor of course added pressure, but that seemed to have been as far as Passport and the Trustee could have pushed things without other, more innovative assistance. Passport must accept that the court could not have incarcerated her forever and there was little the court could practically have further done to ‘force the door open.’ Those who by ingenuity arranged the appropriate confluence of leverage and hard work through back doors to accomplish it should, in fairness, be compensated.
The court disagrees with Passport’s assertion that Matsen’s role as the intermediary should have been anticipated and was therefore subsumed within the Agreement. The court wants to reward innovation and practicality and the language of §328 provides that key.
So, how does one properly weigh the value of the efforts in this amended framework? The Trustee suggests a quantum meruit analysis comprised of a blend of time spent at hourly rates (around $450,000) enhanced by 22% resulting in $550,000. This seems largely arbitrary but does not feel inappropriate. So, the court will award the sum suggested by the Trustee unless Applicant wishes to further contest the matter based on the more traditional analysis of time recorded on the classical lodestar method. This will allow the Applicant to disagree, if necessary, on which entries should have been included in the analysis, and to argue a "bonus" as is allowed in some circumstances. If such further contest is desired, the court will continue the matter with the expectation that Applicant will resubmit its application focused under
§330 based on time recorded.
Allow $550,000 or continue for further hearing based on a lodestar analysis
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays
10:00 AM
D Edward Hays Laila Masud
10:00 AM
Docket 833
This is Erlend Olson’s supplemental motion for payment of administrative expense under the Joint Prosecution Agreement ("JPA") with the Trustee. The Court’s tentative on Mr. Olson’s original motion from the Nov. 13, 2017 hearing read as follows:
This is creditor Erlend Olson’s motion for allowance of an administrative expense in the amount of $311,163.14 for fees and costs incurred in connection with a malpractice action filed in Superior Court. Mr. Olson and the Trustee are parties to a Joint Prosecution Agreement ("JPA") that contemplates the potential allowance of an administrative claim at its §24(c). The Trustee has filed a response, stating that he believes that Mr. Olson did make a "substantial contribution" to the case, but that an administrative expense in the amount of $150,000 in fees and $4,443.14 in costs is more appropriate after his review of the billing records. Passport opposes the application, arguing that there has been no demonstration of substantial contribution and that Mr. Olson should be barred by judicial estoppel.
There is a split of authority over whether an administrative expense based on a substantial contribution can be awarded in a Chapter 7 case. Judge Houle has come to the conclusion, which this court shares, that where a creditor has made a substantial contribution in a Chapter 7 case the court has the discretion to allow an administrative expense in accordance with the equities of the case. See In re Maqsoudi, 566 B.R. 40, 45 (Bankr. C.D. Cal. 2017). In Maqsoudi, the court found that the applicant had substantially assisted the trustee
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in maintaining an adversary proceeding that resulted in the recovery and sale of property, resulting in a surplus estate. The Trustee recommends a similar outcome here. It does appear that Mr. Olson and his counsel made a substantial contribution to the effort to repatriate the funds from the Cook Islands. The Trustee states that without the JPS and malpractice action, Mr. Matsen would not have had sufficient incentive to cooperate. The trustee in the Cook Islands was refusing to communicate with the Trustee, so a well-placed intermediary appears to have been necessary. Calculating where assistance in repatriating the money includes efforts in filing the malpractice action, and whether all of the time spent is necessarily allocable, is not an easy task. It is more an art than a science in this court’s view. The court can accept the Trustee’s calculation because he is in the best position to review the billing records in light of his own experience in the case to determine what should justly be included.
That Passport is upset to see the funds being diminished in favor of professionals is understandable. But, there is an agreement between the Trustee and Mr. Olson for payment of an administrative expense, if one were to be allowed. Also, it was no small effort to repatriate the funds from the Cook Islands, and the more formal efforts and legal process to reach those funds seemed to have reached a practical standstill. Incarcerating the debtor of course added pressure, but that seemed to have been as far as Passport and the Trustee could have pushed things without other assistance. Passport must accept that the court could not have incarcerated her forever and there was little the court could practically have further done to ‘force the door open.’ Those who by ingenuity arranged the appropriate confluence of leverage and hard work through back doors to accomplish it
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should, in fairness, be compensated. Grant as recommended by the Trustee.
The Order Granting Motion for Payment of Interim Administrative Expense Under Joint Prosecution Agreement entered Jan. 3, 2018 provided, in part, the following:
With respect to the balance of requested attorneys’ fees and costs, the Motion is denied without prejudice. Per Movant’s stipulation, any renewed motion will not exceed $30,000 for attorneys’ fees and costs incurred during the Fee Period for all work unrelated to the Snell/Grad defendants. If a recovery is subsequently obtained from the Snell/Grad defendants, Movant retains the right to seek an administrative claim related to such recovery; …
The current motion is brought pursuant to this provision.
In the motion, Mr. Olson goes through several categories of expenses, explaining why he believes he is entitled to compensation from the estate. The Trustee has responded, agreeing to some and not others. In total, the Trustee suggests that Mr. Olson should be awarded an additional $19,025. Passport has also objected generally to Mr. Olson being compensated, as it did in connection with the original motion. In reply, Mr. Olson agrees with some of the Trustee’s suggestions but requests reimbursement of an additional $10,925 on top of what the Trustee agrees to (in aggregate amounting back to the original $30,000 cap).
The court is unsure what to make of the fees for the RICO claim, Mr. Weiss’ deposition, or those related to Snell & Wilmer. There are at least two problems here. First, the standard is that the contributions be not merely of some assistance, but that they should be "substantial." The court agrees with the Trustee that the filing of joinders and replies to the Trustee’s motion to approve the settlement were not of "substantial" benefit and should not be compensated from the estate. The Trustee has agreed that Mr. Olson should be compensated for at least some of the telephone calls with Mr. Weiss. This is likely where the important explanations about the settlement agreement occurred, which arguably provided
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the most "substantial" contribution to the estate in getting this deal done. But just how one quantifies any of this is difficult. There was no "substantial" contribution provided by pleadings filed in connection with the settlement motion. The second problem is that the contributions to the estate were interspersed with other services that may have benefitted Mr. Olson but were only of tangential (not necessarily "substantial") benefit to the estate. So, carving out a fair portion for compensation is exceedingly difficult. And the overarching problem is that all of this does not submit to an arithmetic formula in any event, but is largely subjective. For these reasons again the court will adopt the Trustee’s analysis and award only the recommended portion.
Allow an additional $19,025
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
10:00 AM
Adv#: 8:17-01074 Marshack v. Stegin
Docket 1
Tentative for 1/31/18:
Status conference continued to June 7, 2018 at 10:00 a.m. per request. Appearance is optional.
Tentative for 12/14/17:
Status conference continued to January 31, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to December 14, 2017 at 10:00 a.m. to allow for fulfillment of settlement terms. Appearance is waived.
Debtor(s):
Jana W. Olson Pro Se
Defendant(s):
Elliott G. Stegin Pro Se
Plaintiff(s):
Richard A Marshack Represented By
D Edward Hays
10:00 AM
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays
10:00 AM
(set by order entered 1-4-18)
Docket 0
Status?
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
(OST signed 1-26-18)
Docket 292
Status?
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
11:00 AM
(OST signed 1-24-18)
Docket 243
This is the motion of Grace Baek, Richard Baek, Baek 153, LLC and Pacific Commercial Group, LLC ("Baek parties") for Certification of Direct Appeal to Ninth Circuit pursuant to 28 U.S.C. §158(d)(2). The motion is opposed by the Debtor, Dan Halvorson, Jerry Ann Randall and the Trustee ("Opponents"). An appeal of the court’s order denying the Baek parties’ recusal motion has already been filed January 22, 2018 electing that the appeal be heard in the District Court. Yet, by this motion the Baek parties are seeking an order in effect bypassing the District Court to the Circuit Court.
There are three enumerated bases for such a direct appeal found in §158(d)(2):
The judgment, order, or decree involves a question of law as to which there is no controlling decision of the court of appeals for the circuit or of the Supreme Court of the United States, or involves a matter of public importance;
The judgment, order, or decree involves a question of law requiring resolution of conflicting decisions; or
An immediate appeal from the judgment, order, or decree may materially advance the progress of the case or proceeding in which the appeal is taken; and if the court of appeals authorizes the direct appeal of the judgment, order or decree"
The question presented is whether any of these criteria apply here. The Opponents argue that none apply and that this is yet another cynical (and increasingly desperate) attempt to delay Judge Wallace from entering his judgment after the unclean hands trial conducted in early November, 2017. The Baek parties apparently do not argue that either of subparagraphs (ii)
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or (iii) [a question of law requiring resolution of conflicting decisions or one that may materially advance the progress of the case or proceeding] apply. Rather, their argument seems to be that there is no controlling decision of either the Circuit or the Supreme Court or that the question is a matter of public importance as described in subparagraph (i) of Section 158(d)(2).
This court doubts that the question is really one of "public importance" within the meaning of the statute. This is not like Kentucky Employees Ret. Sys. v. Seven Counties Services, 2014 LEXIS 4079, 2014 WL 4792202 *8 (Bankr. W.D. Ky 2014) [one of the few cases cited on the point]. Kentucky Employees was a case involving the retirement system for state employees and whether its administrator was a government unit eligible for bankruptcy able to assume or reject contracts, obviously an important and immediate public issue in Kentucky not only for the employees but the 33,000 citizens relying on the debtor’s services. While every case is, of course, important to its parties, and all cases have the potential to create precedent on issues of law that transcend the dispute at hand, this court does not see that as fitting the meaning of the statute. Rather, the court observes that this sort of direct appeal is a question that very rarely arises, and since it bypasses the ordinary course of litigation, Congress must have intended to reserve such direct appeals to those rare cases having large and immediate public ramifications. Or in the words of the court in In re Qimonda AG, 470 B.R. 374, 387 (E.D.Va. 2012), "a matter of public importance should transcend the litigants and involve a legal question the resolution of which will advance the cause of jurisprudence to a degree that is usually not the case…Alternatively, a court may find a matter to be of public importance if it could impact a large number of jobs or other vital interest in the community." Other than the argument that it would be helpful to know the extent, if any, of the prohibition on ex parte contact as may involve inter-judge discussions following mediations, no argument is developed here suggesting that a matter of "public importance" is truly raised, or that such a question is likely to arise in the immediate future or ever.
Rather, the Baek parties argue primarily that its questions are ones of law to which there is no apparent controlling Ninth Circuit or Supreme Court decisions, invoking the first portion of subsection (i) of §158(d)(2). The court suggests that this argument might only have some traction if one narrows the questions down to a granular level. On the bigger question,
i.e. what are the standards for recusal of a federal judge under 28 U.S.C. §455, this court is confident that the Supreme Court has spoken definitively in Liteky v. U.S., 510 U.S. 540, 55,
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114 S. Ct. 1147 (1994) as has the Circuit in various cases like Blixeth v. Yellowstone Mountain Club, LLC, 742 F. 3d 1215, 1219 (9th Cir. 2014). Both cases were thoroughly discussed in briefs as well as in the court’s recusal decision. This court sees no need for additional decisional law on those points, certainly not to the point of requiring the unusual step of immediate Circuit review.
But to give the Baek parties benefit of the doubt, they seem to be asking for a Circuit review of rather narrower questions, particularly the "extrajudicial source" doctrine, stated thusly:
First Question: When (1) a mediating judge and a trial judge privately discuss a mediation: (2) independent evidence supports the inference that during the discussion, the mediating judge asserts that one of the parties sabotaged the mediation in bad faith by causing the debtor’s arrest ; and (3) the trial judge later seeks to adjudicate whether the asserted misconduct constituted unclean hands precluding relief on the party’s claim, has the trial judge obtained information from an "extrajudicial source" for purposes of assessing recusal under 28 U.S.C. §455(a)?
Second Question: When (1) a mediating judge and a trial judge privately discuss a mediation; (2) independent evidence support the inference that during the discussion, the mediating judge asserts that one of the parties sabotaged the mediation in bad faith by causing the debtor’s arrest; and (3) the trial judge later seek to adjudicate whether the asserted misconduct constituted unclean hands precluding relief on that party’s claims, was the discussion an "ex parte communication[ ] or other communication[ ] concerning a pending or impending matter…outside the presence of the parties or their lawyers" under Canon 3A(4) of the Code of Conduct for United States Judges? [See Baek brief p. 11]
But the court agrees with the Opponents on a critical point. Both from the actual language of §158(d)(2), i.e. that the question be one of "law," and from various cases that have interpreted either this section or the similar 28 U.S.C. §1292(b)[governing interlocutory appeals], mixed questions of law and fact are ill-suited to this sort of extraordinary interlocutory appeal. The questions posed by the Baek parties above are clearly mixed issues of law and fact, not the least because, as appears in the paragraph (2) of each "question" above, it is necessary to first presume the Baek parties’ version of ( or "inference" from ) the factual record. As the court in Kentucky Employees observed in reaching its conclusion to
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decline to recommend the direct appeal to the Circuit, mixed issues of law and fact make such extraordinary resort to the Circuit inappropriate. Kentucky Employees, 2014 Lexis 4079 at *19-20. Similarly, as observed by the Second Circuit in Weber v. United States Trustee, 484 F. 3d 154, 158 (2d Cir. 2007) in considering the legislative history of section 1233 of BAPCPA from which §158 is derived, concluded that direct appeal "would be most appropriate where we are called upon to resolve a question of law not heavily dependent on the particular facts of a case, because such questions can often be decided based on an incomplete or ambiguous record. Id. citing H.R. Rep. No. 109-32, at 148-49, U.S. Code Cong. & Admin. News 2005, 88, 206. Moreover, on the subject of the best method of expediting bankruptcy cases through the appeals process, the Weber court observed that District Courts often resolve appeals much faster than Circuit courts and there is often salutary effect in allowing "some cases to percolate through the normal channels." Id. at 160- 61.
Applying these various principles to the Baek parties’ motion, the court will decline to certify the appeal to the Ninth Circuit. First, the "questions" are fraught with factual issues. It is better to allow development of the contents of the communication between the judges (if that is what the parties need) either to the trial court, or to the District Court on a more complete record and through normal channels. The District Court is able to reach a conclusion much faster in any event. The supposed "legal questions" which are largely factual issues frankly are so unique that it is very hard to find anything of public consequence in their immediate resolution even if the court were to take an expansive view on that issue (which it does not). Moreover, there is every indication that Judge Wallace is likely to issue his judgment very promptly so there is really little to be gained by this unusual detour. In sum, the court is convinced that direct appeal to the Circuit under §158(d)(2) is reserved for rare legal issues far different from those presented here.
Deny
Debtor(s):
John Olaf Halvorson Represented By Marc C Forsythe Charity J Miller
11:00 AM
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Faye C Rasch Jeffrey I Golden
10:00 AM
Adv#: 8:17-01085 Karen Sue Naylor, Chapter 7 Trustee v. Home Trends International Inc.
(con't from 10-26-17)
Docket 2
Tentative for 2/1/18:
Status conference continued to March 29, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to February 1, 2018 at 10:00 a.m.
Tentative for 8/31/17:
Status conference continued to October 26, 2017 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
10:00 AM
Home Trends International Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01122 Marshack v. Choubey et al
U.S.C. Section 550
(con' from 11-30-17)
Docket 1
Tentative for 2/1/18:
Status conference continued to April 26, 2018 at 10:00 a.m. to allow input from any responding party.
Tentative for 11/30/17:
Status conference continued to January 4, 2018 at 10:00 a.m. to accomodate default and prove up.
Debtor(s):
Rahul Choubey Represented By Richard G Heston
Defendant(s):
Rahul Choubey Pro Se
Misha Choubey Pro Se
Shahi K. Pandey Pro Se
Vandana Pandey Pro Se
Jitendra Patel Pro Se
Azahalea Ahumada Pro Se
10:00 AM
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
10:00 AM
Adv#: 8:17-01221 Millan's Restoration, Inc. v. Manely
Docket 1
Tentative for 2/1/18:
Would plaintiff prefer deadlines be set now, or continue conference?
Debtor(s):
Feridon M Manely Pro Se
Defendant(s):
Feridon M Manely Pro Se
Plaintiff(s):
Millan's Restoration, Inc. Represented By Paul V Reza
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
(con't from 11-2-17)
Docket 1
Tentative for 2/1/18:
In view of amended complaint filed January 29, status conference should be continued approximately 60 days.
Tentative for 11/2/17:
See #4. What is happening on February 1, 2018 at 11:00 am?
Tentative for 10/12/17:
Status conference continued to November 2, 2017 at 10:00 a.m.
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Pro Se
10:00 AM
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:15-01099 Howard B. Grobstein, Chapter 7 Trustee v. Ponce
(con't from 12-14-17 per order ent. 11-7-17)
Docket 0
Tentative for 8/4/16:
Deadline for completing discovery: November 7, 2016 Pre-trial conference on: December 1, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Raymond E Ponce Represented By Nancy A Conroy
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Jon L Dalberg
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau
10:00 AM
Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
10:00 AM
Adv#: 8:15-01293 Martz-Gomez v. Anna's Linens, Inc.
( set from status conference held on 10-8-15)
(cont'd from 9-28-17 per order approving stip. entered 6-14-17)
Docket 6
Tentative for 10/8/15:
Deadline for completing discovery: June 1, 2016 Last date for filing pre-trial motions: June 20, 2016 Pre-trial conference on: July 7, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh
Defendant(s):
Anna's Linens, Inc. Pro Se
Plaintiff(s):
Linda Martz-Gomez Represented By
10:00 AM
Gail L Chung Jack A Raisner Rene S Roupinian
U.S. Trustee(s):
United States Trustee (SA) Represented By Michael J Hauser
10:00 AM
Adv#: 8:17-01024 Golden v. Farmanfarmaian et al
(set per order entered. 9-13-17, docket entry no. 46) (con't from 11-30-17)
Docket 41
Tentative for 11/30/17:
Status conference continued to February 1, 2018 at 10:00 a.m.
Tentative for 11/2/17:
Continue to November 30, 2017 at 10:00 a.m. Court expects a report whether this matter is settled.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Carolyn Farmanfarmaian Represented By Ethan H Nelson
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Pondfield International Limited Represented By Steven M Mayer
10:00 AM
Plaintiff(s):
Jeffrey I Golden Represented By Aaron E de Leest Eric P Israel Walter K Oetzell Sonia Singh
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
10:00 AM
Adv#: 8:17-01024 Golden v. Farmanfarmaian et al
For injunctive relief; and (7) In the alternative, for sale of the entirety of real property pursuant to 11 U.S.C. Section 363(h)
(cont'd from 11-30-17 per order approving stipulation entered 11-17-17)
Docket 1
Tentative for 5/4/17:
Status conference continued to September 28, 2017 at 10:00 a.m.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by September 1, 2017.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Carolyn Farmanfarmaian Pro Se
Nezamiddin Farmanfarmaian Pro Se
Pondfield International Limited Pro Se
Plaintiff(s):
Jeffrey I Golden Represented By Aaron E De Leest
10:00 AM
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel
Aaron E De Leest
11:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
Docket 50
Grant.
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
(con't from 11-2-17)
Docket 21
Tentative for 2/1/18: See #9.
Tentative for 11/2/17:
At the last hearing on September 28, 2017 on this Motion for Default Judgment the court’s tentative decision began: "This is an unintelligible mess…." The motion was twice continued, first to October 12 and again to today’s date. The purpose of the continuances was to allow the plaintiff an opportunity to explain her case and, importantly, provide evidence to support entry of a judgment either for
denial of discharge under §727 or determining debt(s) to be non-dischargeable under § 523(a)(2)(A), (a)(4) or (a)(6), all of which seem to be implicated one way or another in the papers.
Unfortunately, what was filed was a disorganized and rambling collection of papers sprinkled with disjointed arguments and legalese, in a largely inappropriate and incomprehensible manner, supported by perhaps a thousand pages of unbound and unnumbered Exhibits in violation of the LBRs. The court had to resort to rubber bands and clips to keep this telephone book sized pile of papers from becoming even more disorganized. In short, not much has changed from September 28. The court has tried to read portions of all of this but it has made little progress in understanding either what plaintiff’s case is about, or perhaps more importantly, why this plaintiff has standing to file the complaint in the first place. It seems most of the dischargeability questions go to questions involving one-time putative "partnerships" between the
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debtor and one Lonnie Reynolds, or to disputed ownership of various entities and/or to real estate in Huntington Beach and Arizona between Schmidt and Reynolds. If that is so Mr. Reynolds should be the plaintiff, not Ms. Marx. How Ms. Marx is implicated as a creditor whose debt could be said to have resulted from any of these issues is left very unclear. At least that is the impression one obtains by reading the Arbitrator’s "Partial Final Award on Liability Phase …" dated March 1, 2017 [Exhibit "4"]. The court read the Arbitrator’s Decision [Exhibit "4"] but the court essentially gave up after reading about fifty pages of plaintiff’s other material. Obviously, the plaintiff has the burden of presenting in an intelligible manner; it is not the court’s burden to try to make out what plaintiff is talking about or to try to fit what is said into some sort of legal framework on her behalf. At most it would seem plaintiff has a claim for her arbitration costs, but the court cannot make that determination on the presentation here.
To make matters even more unsettled, there are two pleadings filed by the defendant, notwithstanding the entry of a default. One is a Rule 12(b) motion to dismiss scheduled for hearing February 1, 2018. The second is a handwritten "Motion for Continuance" filed late on October 31. Of course, for the dismissal motion to be considered (and probably the continuance as well) there has to be a Rule 60 motion to set aside the default granted. No such motion has been filed that the court is aware of.
What to do? The court cannot grant a judgment unless there first is a sufficient prove-up, and that is not what has been presented so far. If plaintiff is serious about obtaining a judgment either denying discharge or that debts are determined non-dischargeable, she really should obtain counsel. The court does not intend to go through another such frustrating ordeal. It is her choice, of course, but even minimal standards have not been met here and the court’s patience is limited.
The court will continue the matter one more time. February 1 might be a logical date so that both motions can be considered at the same time (assuming the default is also set aside) in order to minimize costs.
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Deny
Tentative for October 12, 2017:
This is an unintelligible mess. It would seem that the complaint involves somehow dischargeability under section 523(a)(2) and maybe (a)(6), as well as denial of discharge under section 727. But what any of the operable facts might be is a mystery. Plaintiff needs a clear and concise statement of operative facts and an explanation as to how those are: (1) included in the complaint and (2) supporting a judgment either in holding a debt non-dischargeable and/or (2) a basis for denial of discharge. These need support in evidence. A dollar sum on the non-dischargeabilty claim would also be helpful.
Debtor(s):
Continue to status conference on October 12, 2017 at 10:00 a.m.
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Pro Se
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
(rescheduled from 1-25-18 per ntc. of rescheduling of hrg. ent 10-20-18)
Docket 40
This is moot in view of amended complaint filed January 29.
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Pro Se
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 226
This is the motion of defendant Frank Jakubaitis for a protective order pursuant to Federal Rule of Civil Procedure ("Rules") Rule 26(c) to avoid being compelled to disclose information he was questioned about at a June 2, 2017 deposition (to which he was compelled to give testimony by earlier order). Defendant contends the questions asked, largely about medications Defendant has allegedly been prescribed, are protected from answer by the psychotherapist-patient privilege.
Defendant argues that questioning about his medication and its effects is both irrelevant and designed to annoy, embarrass, and oppress the Defendant. Defendant also renews his motion for an order preventing Plaintiff from attending the deposition. Defendant argues that the only purpose served by having him attend the June 2 deposition was to harass and annoy the deponent.
Rule 26(c)(1) provides in relevant part "the court may for good cause issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: (A) forbidding disclosure or discovery; (D) forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters; (E) designating the persons who may be present while the discovery is conducted." Defendant relates that he sought treatment from psychiatrists at the Veteran’s Administration for traumatic memories from his experiences in the Vietnam War, and that Plaintiff is precluded from seeking information concerning this treatment. Defendant’s motion seems to project from this issue a rather broader prohibition into all medications and treatments.
A court may make a protective order under Rule 26(c) only for good cause
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shown. 10A FED. PROC., L. ED. § 26:273 (2017). The party seeking a protective order has the burden of demonstrating that good cause exists for issuance of the order. 10A FED. PROC., L. ED. § 26:273 (2017) (citing Frost v. BNSF Railway Company, 218 F. Supp. 3d 1122 (D. Mont. 2016)). The good cause requirement furthers the goal that the court grant only the narrowest protective order as is necessary under the facts. 10A FED. PROC., L. ED. § 26:273 (2017) (citing Frideres v. Schiltz, 150 F.R.D. 153, 27 Fed. R. Serv. 3d 1061 (S.D. Iowa 1993)). Whether good cause exists for an entry of a protective order depends on the facts and circumstances of each particular case.
10A FED. PROC., L. ED. § 26:274 (2017) (citing Lund v. Chemical Bank, 107 F.R.D. 374 (S.D. N.Y. 1985)).
The issuance of a protective order may be based upon the privileged nature of the material sought. 10A FED. PROC., L. ED. § 26:280 (2017) (citing Burka v. New York City Transit Authority, 110 F.R.D. 660 (S.D. N.Y. 1986)). The privilege at issue here is the psychotherapist-client privilege as applied to Defendant’s medicines and their effects. The Supreme Court in Jaffee v. Redmond, 518 U.S. 1, 17 (1996) held that conversations between a police officer under investigation for a shooting and a social worker, and the notes taken during their counseling sessions, were protected from compelled disclosure under Rule 501 of the Federal Rules of Evidence.
Defendant misconstrues the Jaffee holding to include a list of medications. In Jaffee, the protection was afforded to the communications between the therapist and the patient. It is at least a stretch to contend that a list of medicines the Defendant was taking at the time of the deposition would be a direct communication between the Defendant and his therapist, and Defendant has failed to persuasively do so here, which was his burden. Therefore, the list of medications and their effect is not afforded protection under the psychotherapist-patient privilege, and absent a claim of other privilege, is subject to disclosure in discovery. Defendant’s citation to authority seeming to hold otherwise is taken largely out of correct context or misconstrued.
A party seeking a protective order under Rule 26(c) must demonstrate that failure to issue the order requested will work a serious injury. 10A FED. PROC., L. ED. § 26:277 (2017) (citing Ground Zero Center for Non-Violent Action v. United
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States Department of Navy, 2017 WL 2766091 (9th Cir. 2017)). Here, Defendant has simply not met his burden. Plaintiff seeks a list of medications and their effects to ascertain what, if any, effect they could have on the Defendant’s testimony, presumably going to the issue of credibility. Defendant has not proposed any cognizable theory under which disclosing the medicines he is taking and their effects would work serious injury upon him. Simply stating that it would disclose information he contends to be protected by privilege is insufficient. Moreover, viewed as a balancing test, Defendant cannot be allowed to interject self-serving claims of treatment or medication every time he is asked about awkward subjects or contradictions in testimony. Since his credibility is central to this case, such a free- floating means of evasion would work a serious disadvantage to the Plaintiff that the law cannot countenance.
Defendant has also failed to meet his burden to prove good cause for excluding Plaintiff from attending the deposition. Parties normally are allowed to attend all depositions, as they are the persons most affected by what transpires (and are usually paying the bill). To fashion an exception to this rule, a great deal more would have had to been offered than appears here. If Defendant’s allegations of Mr. Padilla’s behavior are true (denied by Plainitff), he certainly acted childishly and disrespectfully. However, his interest in attending the deposition as a Plaintiff still outweighs any minor annoyance of eye rolling, cell phone handling, or sleeping may cause the Defendant. None of these petty annoyances rise to the serious level of preventing the deposition or excluding Plaintiff from attending. One hopes that all litigants will behave civilly, of course, but minor acts of rudeness do not rise to the level requiring the kind of judicial intervention sought here.
Deny
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman
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Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
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Adv#: 8:17-01104 Ingle et al v. Ocampo et al
Docket 24
This is Plaintiffs’ Rule 56 motion for summary judgment on their §§523(a)(4) and (a)(6) claims for relief. Plaintiffs filed a state court action against Defendants alleging elder abuse. The parties entered into a settlement agreement prior to a trial on damages in the state court action. Defendants breached the settlement agreement and filed this bankruptcy case. Defendants are not represented by counsel and have not opposed the motion, although a letter attached to the Declaration by Pedro H.F. de Souza and Carmela M. Ocampo filed December 15, 2017 requests that they be allowed to proceed in pro se and notifying that Mr. de Souza would be out of the country to Brazil to attend his son’s health needs.
The facts as recited in the "Mutual General Release and Settlement Agreement" ("Settlement Agreement") entered into by the parties on October 31, 2016 [Exh. B] and otherwise supported in the record seem undisputed. David A. Ingle, Sr. ("Decedent") executed a revocable trust and funded the trust with his residence located at 5591 Rockledge Drive, Buena Park (the "Property"). Decedent was married to Mary Louise Ingle until his death. Decedent suffered from a mental disorder that resulted in his hospitalization in January 2009 after which he was moved to the TLC Guest Home, where he resided until he died July 11, 2014. Defendant Carmela Ocampo apparently resided at the Property with Decedent prior to his hospitalization and assisted in the move to TLC. Decedent provided Ocampo with a power of attorney which was used in April 2010 to obtain a reverse mortgage on the Property.
Defendants were married in February 2009 and lived in the Property rent free until November 2014. Ms. Ocampo rented out rooms over the years and generated rents, which alleged were not turned over to the trust.
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Plaintiffs are Decedent’s daughter, Sandra Ingle, the successor trustee of the
trust and his widow, Mary Ingle. Plaintiffs filed suit against Defendants in state court in July 2015 alleging financial elder abuse, return of property, breach of fiduciary duty, and surcharge. [Exh. A] In a minute order dated September 16, 2016, the state court found that as to Ms. Ocampo the issue of liability (but not damages) was established as to the financial elder abuse and breach of fiduciary duty claims. [Exh. G] The state court compelled the responses of Mr. Souza to discovery requests and stated that if responses were not received the motion to deem requests for admission admitted would be granted. [Exh. G]. On September 21, 2016, an order deeming the requests for admission admitted and awarding sanctions was entered. [Exh. H] On October 31, 2016, the parties executed the Settlement Agreement. [Exh. B] On November 2, 2016, the state court entered a minute order that provides that the settlement was read and considered and that the parties were to file a dismissal upon completion of the settlement terms. [Exh. J] Defendants did not comply with the terms of the Settlement Agreement. By this motion, Plaintiffs now seek an order finding that $92,000 and sanctions of $4,352.50 are nondischargeable pursuant to sections 523(a)(4) and (a)(6).
Plaintiffs proceed primarily on a collateral estoppel theory. They argue that they are entitled to summary judgment based upon the findings made by the state court in minute orders dated June 3, 2016, September 16, 2016, and November 1, 2016 [Exh. E, G, H, respectively] and admissions made by Defendants. Plaintiffs also assert that they can show as a matter of law that the debt reflected in the settlement agreement is nondischargeable based on the elder abuse claims.
There is no question that Plaintiffs have a righteous case, but it is still undeveloped. The problem here is that there is no "judgment" that the court can find. Federal courts must give the same preclusive effect to a state court judgment as would be given to that judgment under the law of the state in which the judgment was rendered. In re Younie, 211 B.R. 367, 373 (9th Cir. BAP 1997). Collateral estoppel applies in dischargeability proceedings. Id., citing Grogan v. Garner, 498 U.S. 279, 284-285 & n. 11, 111 S.Ct. 654, 658 & n. 11, (1991). Under California law, the
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application of collateral estoppel requires that: (1) the issue sought to be precluded from re-litigation must be identical to that decided in a former proceeding; (2) the issue must have been actually litigated in the former proceeding; (3) it must have been necessarily decided in the former proceeding; (4) the decision in the former proceeding must be final and on the merits; and (5) the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding.
Id., citing In re Kelly, 182 B.R. 255, 258 (9th Cir. BAP 1995), aff’d, 100 F.3d 110 (9th Cir. 1996). But without a judgment, the court cannot find that any decision of the state court is "final" and on the merits.
The evidence submitted in support of this motion is somewhat confusing.
First, no declarations have been filed in support of the motion, so there is, technically, no admissible evidence. This is probably easily corrected, and should be when Plaintiffs return on this motion as discussed below. Second, reference is made to minute orders [Exhibits G and J] and to an order deeming certain matters admitted for failure to answer, compelling answers and for sanctions [H]. But the court sees no judgment. The settlement agreement provides that a stipulated judgment may be entered upon a default, but there is no evidence that one has actually been obtained. [Exh. B ¶8] Without a stipulated judgment, or any judgment, the court cannot find that the issues were necessarily decided or that the former proceeding is final and on the merits. It is true that Defendants filed a bankruptcy petition which they promised to dismiss, but Plaintiffs should obtain relief from stay and go back to state court to obtain an actual judgment, hopefully this time with findings. Once that judgment is obtained, this Court will be in a position to evaluate the other collateral estoppel factors. The parties are the same in this case and in the state court case, satisfying elements(5) and probably (2) above. Once a judgment is entered there will be a final judgment against both defendants, rather than only discovery orders against Mr.
Souza. That would satisfy element (4). Based upon what is presented, with the appropriate findings, the Court should be able to find that the issues are identical and were actually litigated in the prior proceeding, satisfying elements (1) and (3). When Plaintiffs return with this motion, they could help the Court by addressing specifically
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(hopefully with findings) the issues discussed below.
Section 523(a)(4) provides that debts for fraud or defalcation while acting in a fiduciary capacity are not dischargeable. The meaning of fiduciary under § 523(a)(4) is a question of federal law. Ragsdale v. Haller, 780 F.2d 794, 796 (9th Cir. 1986) citing Davis v. Aetna Acceptance Co., 293 U.S. 328, 55 S.Ct. 151, 153-54 (1934). The broad, general definition of fiduciary, a relationship involving confidence, trust and good faith, is not applicable in the dischargeability setting. Id. citing Angelle v. Reed (In re Angelle), 610 F.2d 1335, 1338-39 (5th Cir. 1980). The trust giving rise to the fiduciary duty must be imposed prior to any wrongdoing. Id. State law may be consulted to determine when a trust exists. Id. When Plaintiffs bring this motion after obtaining a judgment, they should brief whether the fiduciary relationship pled in state court and/or as found by the state court satisfies these requirements of section 523(a) (4). If the state court can make the requisite, specific findings, that would be immensely helpful.
In order to prevail under section 523(a)(6), a plaintiff must establish that the debtor deliberately or intentionally committed a wrongful act which necessarily produced harm without just cause or excuse. Lin v. Ehrle (In re Ehrle), 189 B.R. 771, 776 (9th Cir. BAP 1995). The willful injury requirement is met when it is shown that the debtor either had a subjective motive to inflict the injury or that the debtor believed that injury was substantially certain to occur as a result of his conduct.
Petralia v. Jercich (In re Jercich), 238 F.3d 1202, 1208 (9th Cir. 2001). A malicious injury involves (1) a wrongful act, (2) done intentionally, (3) which necessarily causes injury, and (4) is done without just cause or excuse. Id. at 1209. In the September 16, 2016 minute order the state court found that the issue of liability was established on the cause of action for financial elder abuse. [Exh. G] Cal. Welf. & Inst. Code § 15610.30 provides:
A person or entity shall be deemed to have taken, secreted, appropriated, obtained, or retained property for a wrongful use if, among other things, the person or entity takes, secretes, appropriates, obtains, or retains the property and the person or entity knew or should have known that this conduct is likely
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to be harmful to the elder or dependent adult.
This language seems to be in line with section 523(a)(6), but the "among other things" language is concerning. If Plaintiffs can obtain a judgment with specific findings tailored to these facts this concern could be eliminated.
In view of this tentative decision, and Debtors failure to respond, it seems unnecessary and wasteful to impose the additional step of a relief of stay motion, so the court sua sponte relieves the stay for the sole purpose of obtaining further judgment and/or findings from the Superior Court to further support his motion.
Deny motion without prejudice to re-filing. Relieve stay for purpose of returning to Superior Court.
Debtor(s):
Pedro Souza Represented By
Filemon Kevin Samson III
Defendant(s):
Carmela Morales Ocampo Pro Se
Pedro Souza Pro Se
Joint Debtor(s):
Carmela Morales Ocampo Represented By
Filemon Kevin Samson III
Plaintiff(s):
Sandra Ingle Represented By
F Edie Mermelstein
Mary Louise Ingle Represented By
F Edie Mermelstein
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Trustee(s):
Weneta M Kosmala (TR) Pro Se
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Adv#: 8:17-01104 Ingle et al v. Ocampo et al
(con't from 10-26-17)
Docket 1
Tentative for 2/1/18:
See #13. Continue approximately 45 days for further status conference.
Tentative for 10/26/17:
Status conference continued to January 25, 2018 at 10:00 a.m. allowing motion for summary judgment in meantime. What result from mediation ordered last hearing?
Tentative for 8/31/17:
Status conference continued to November 9, 2017 at 10:00 a.m.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by October 31, 2017.
Debtor(s):
Pedro Souza Represented By
Filemon Kevin Samson III
Defendant(s):
Carmela Morales Ocampo Pro Se
Pedro Souza Pro Se
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Joint Debtor(s):
Carmela Morales Ocampo Represented By
Filemon Kevin Samson III
Plaintiff(s):
Sandra Ingle Represented By
Desiree V Causey
Mary Louise Ingle Represented By Desiree V Causey
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
KONSTANTINOS MANDAS
Vs DEBTOR
Docket 8
Grant. Appearance is optional.
Debtor(s):
Xiomara De la Paz Castro Pro Se
Movant(s):
Konstantinos Mandas Represented By Barry L O'Connor
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
BANK OF THE WEST
Vs DEBTOR
Docket 10
Grant. Appearance is optional.
Debtor(s):
Renee Lynn Roper Represented By Harlene Miller
Movant(s):
BANK OF THE WEST Represented By
Mary Ellmann Tang
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
AMERICAN HONDA FINANCE CORPORATION
Vs
DEBTOR; AND JEFFREY I. GOLDEN, CHAPTER 7 TRUSTEE
Docket 12
Grant. Appearance is optional.
Debtor(s):
Daniel Gene Crook Represented By Joseph M Tosti
Movant(s):
AMERICAN HONDA FINANCE Represented By
Vincent V Frounjian
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
HSBC BANK USA, NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 25
Grant as to debtor; continue as to Chapter 7 trustee.
Debtor(s):
Deborah A Brookhyser Represented By Alon Darvish
Movant(s):
HSBC Bank USA, National Represented By Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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(con't from 1-30-18 per order approving fourth stip. to cont. ent. 1-29-18)
Claim No. 4-2 Dennis Hartmann
Docket 198
This is the Trustee’s objection to allowance as a secured claim, or indeed allowance at all, of claim #4-3 filed by claimant Dennis Hartmann (superseding Claim #4-2). The facts are somewhat convoluted and the parties do a very poor job of setting up the factual predicates for analysis. For example, for us to have anything to talk about one must presume that the monies in the estate for the consolidated entities are somehow attributable to the efforts of attorney/claimant Hartmann. As near as the court can determine, the estate’s funds represent in whole or in part liquidation of some entities owned or controlled by one or more of the Baer entities, which were the antagonists in the underlying litigation. Reportedly, the trial court in the underlying litigation at some point appointed a receiver to take possession of"$15 million or real estate held by various Baer entities including $750,000 in cash. This markedly increased the likelihood of collection." [Claimant’s brief, p. 007, ln.9-13]. Because reportedly claimant Hartmann had obtained a $5million judgment, we assume that the receiver was in aid of collection and can therefore be said to be attributable to claimant’s effort. It might be relevant as to whether this was accomplished before or after the May 3, 2009 agreement discussed below. If the source of the estate’s funds came from multiple sources, however, the analysis becomes more difficult. It would have helped to have made these points clear. But it seems fairly clear that claimant has filed this claim to recover some $180,000 in fees incurred by an accounting firm in the
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underlying litigation that has been awarded by an arbitrator as a personal obligation of claimant, who retained the accountants. Reportedly, claimant retained the accounting firm as support and part of the underlying litigation.
Assuming this understanding is correct, the question of "secured" at bar turns on whether there is an attorney’s lien or, more correctly understood, an "equitable charge" upon proceeds of the underlying litigation. The trustee argues correctly that such an attorney’s lien under California law must be a product of a written agreement, and the May 3, 2009 "Restated Retainer Agreement" ("retainer agreement") does not specifically mention the word "lien." But specific mention of a lien is not determinative; it is more important that the contract make clear that the parties have agreed that professionals are to look to the judgment as the sole source of payment for fees. If that is so, an equitable lien on proceeds is created. Bartlett v. Pacific Nat’l Bank, 110 Cal. App. 2d 683, 688 (1952). There is no doubt that the parties to the retainer agreement contemplated that costs would be deducted from the proceeds, as appears at page 7 [Exhibit F, Bates p. 56] of the retainer agreement. Trustee argues that because the contingency percentage was to be figured on the amount of recovery after costs were deducted, this somehow negates that any equitable charge could have followed the costs portion of the obligation. But no authority is cited for this proposition and it seems counter-intuitive to the court.
However, another, bigger issue is raised going to whether there is any allowable claim at all. Apparently, the estate monies on hand are only $350,000 (whether gross or net of administrative costs is not made clear). The amount of a bankruptcy court sanctions awarded in two cases associated with Mr. Baer, IBT International and Southern California Developers are in the sums of $408,531 and
$830,816, respectively, as reflected in proofs of claim #8 and 9. Under the retainer agreement, the fee (and presumably costs as well) are only recoverable from a net recovery after payment of the bankruptcy sanction. Exhibit F, pp. 55-56. So, unless the bankruptcy award has been reduced or otherwise satisfied (and no evidence is offered) the sanction completely eclipses the amount of proceeds on hand and so, in the language used by the Trustee interpreting the retainer agreement, the contingency
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triggering a fee (or costs) never occurred. The same result would be reached under § 510(a) as the retainer agreement could be read as a subordination to the claims of IBT International and Southern California Developers.
Sustain
Debtor(s):
Banyan Limited Partnership, a Represented By Hutchison B Meltzer Adam L Karp
Trustee(s):
Thomas H Casey (TR) Represented By Beth Gaschen Jeffrey I Golden
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Docket 36
Grant with a one year bar to refiling.
Debtor(s):
Ruben Arriaga Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
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Docket 16
This is the UST’s motion to dismiss with a 180- day re-filing bar under §109 (g). The UST alleges abuse of the Bankruptcy System and serial bad case filing.
Bankruptcy courts must look at the totality of the circumstances in determining whether a debtor filed in bad faith; thus, bad faith is determined on a case-by-case basis. Matter of Love, 957 F.2d 1350, 1355 (7th Cir. 1992). In the 9th Circuit, this case-by-case analysis is guided by factors indicating "bad faith" indicia. In re Price, 353 F.3d 1135, 1139-40 (9th Cir. 2004); In re Leavitt, 171 F.3d 1219, 1224 (9th Cir.
1999). These factors include, but are not limited to: (1) whether the debtor has a history of bankruptcy petition filings and case dismissals, (2) whether the debtor intended to invoke the automatic stay for improper purposes, (3) whether the debtor's petition was filed as a consequence of illness, disability, unemployment, or some other calamity; and (4) whether egregious behavior is present. Id.
Debtor is a serial filer who has filed three bankruptcy cases since February 2015. The prior two filings were under chapter 13, and were dismissed at the hearing of confirmation. For the current chapter 7 filing, the UST attempted to question the debtor regarding her serial filings, but was unable to do so because the debtor failed to attend consecutive § 341(a) examinations in violation of Bankruptcy Code §§ 343 and 521(a)(3) as well as F.R.B.P. 4002(a)(1). UST contends that this meets the standard of "abuse" under 11 U.S.C. § 707(b)(3)(A) which was lowered by the enactment of BAPCPA from "substantial abuse." While this may be facially true, a court should make this determination based on a case-by-case analysis as guided by the Price- Leavitt factors to determine whether the petition was filed in bad faith. In re Price, 353 F.3d at 1139-40; In re Leavitt, 171 F.3d at 1219. Section 109(g) suggests that a
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bar is reserved for cases where debtors act "willfully."
A court should also consider whether the debtor’s petition was filed as a consequence of illness, disability, unemployment, or some other calamity. Debtor contends the reason she has failed to attend the section 341 meetings and communicate with the UST is that she is very ill due to a medical condition known as "Churg Strauss Vascolitis," now also referred to by its medically more accurate term eosinophilic granulomatosis with polyangiitis (EGPA). According to online sources, the condition is a rare systemic vasculitis (inflammation in the wall of blood vessels of the body), predominantly affecting small-sized vessels. https://www.vasculitisfoundation.org /education/forms/eosinophilic-granulomatosis- with-polyangiitis-churg-strauss-syndrome. EGPA (Churg-Strauss) predominantly affects the small-sized arteries in the body. The symptoms depend on which organs are affected and to which extent. Thus, symptoms vary from one person to another and not all symptoms are present in everyone at the time of diagnosis or during the course of the disease. However, almost all patients have asthma and/or nasal sinus polyps and blood eosinophilia. Id.
If the Debtor’s medical condition is as serious as she contends and she did attempt to contact her former attorney regarding the matter as she claims, then the weight of the prior dismissals and failure to communicate with the UST might be lessened to something less than "abuse." However, the Debtor has not provided any evidence of her medical condition or its debilitating effects or that she tried to contact her former attorney about the §341 meetings. This she promises to bring to the hearing.
The court is confident that the UST intends to bring dismissal motions with a bar only for willful abuse, not for defalcations arising from serious illness. The court suggests that the UST review any material produced at the hearing and a continuance for further review/evaluation might be appropriate, depending on what is revealed, and if requested. If no substantiation is provided then the court agrees that the
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behavior appears abusive and should result in dismissal with the bar requested.
Grant or continue, depending on substantiation provided by debtor.
Debtor(s):
Cathy Arlene Bailey Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
(con't from 12-19-17)
Docket 28
There are several issues here that cannot be resolved on this record.
The question of intervening judicial lien between two consensual liens needs briefing. Movant makes the argument but gives no citation of authority. Is section 522(f) able to remove a judicial lien based upon something done voluntarily afterward?
There seems to be a genuine issue on value. Although Zillow is hardly an authoritative source, it should be backed up by more reliable evidence such as an appraisal.
How much exemption is requested? Only $37,433 appears on Schedule C although $175,000 is referenced in the brief. The court has to rule upon what is formally claimed, now what might hypothetically be sought.
Continue approximately 45 days for briefing and valuation.
Debtor(s):
Chong Ae Dugan Represented By Michael H Yi
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello
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Brother International Corporation Claim No 10-1 $5,874.84
Docket 44
Sustain. Allow only as a secured not entitled to a distribution.
Debtor(s):
James A. Schneider Represented By Michael W Binning
Joint Debtor(s):
Kathleen P. Schneider Represented By Michael W Binning
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Docket 129
This is the debtors’ motion to reopen the case under §350(b). Debtors propose to bring motions regarding sanctions, contempt, damages, etc., allegedly arising either from violation of the discharge injunction and/or for disobedience to this court’s Feb. 11, 2016 order. The February 11 "Order on Motion to Lift Discharge Injunction …." denied the plaintiff Chen’s motion to lift the discharge injunction (a discharge having been entered August 12, 2013) but importantly gave leave to continue in the pending Superior Court action on the narrow issue of the fraudulent conveyance action. As explained in the tentative decision attached to the February 11 Order and referenced as an exhibit thereto, there was at least some uncertainty as to whether the fraudulent conveyance action relating to a transfer alleged to have occurred in April 2014 was in fact a post-petition tort (petition filed 2/25/2013). It could not have been discharged because debts to be discharged must have arisen prepetition under 11 U.S.C. §727(b). But the case law makes even this question somewhat muddy since certain debts, if "fairly contemplated" from original conduct, are treated retroactively and thus discharged. See e.g., In re Jensen, 995 F, 2d 925, 930 (9th Cir. 1993). The court specifically requested that the parties ask for careful findings from the Superior Court so as to pinpoint on these issues. The court also mentioned that the Chens could "request this court, if necessary, make a future declaratory relief judgment on the timing question and ‘connectedness’ question if not made sufficiently clear in the Superior Court’s findings." Regrettably, despite this court’s admonition, the parties did a miserable job of asking for pinpoint findings on this important issue. The
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Superior Court’s "Statement of Decision" filed September 12, 2017 scarcely mentions the question at all. Is it possible that the parties did not share the court’s February 11, 2016 order with the Superior Court judge?
At first the court thought maybe the point had not been entirely lost since only the Sixth Cause of Action for Fraudulent Conveyance mentions defendant/debtor Brian Horowitz. This would be consistent with the narrow scope of this court’s February 11, 2016 order. But any optimism fades when the court reviewed the Opposition to this motion. Reviewing pages 5 and 6 of the Chens’ brief, it is evident the Chens misunderstand the point. Liability is not carved out of the discharge in this case because of the nature of the liability, i.e. an intentional tort such as fraud. It is the timing of the liability (i.e. arising post-petition) which is all important. Even intentional torts are dischargeable if they arise pre-petition but are not the subject of a timely adversary proceeding. As also explained in the tentative decision attached to the February 11 Order, the Chens clearly did not timely file an adversary proceeding although they had notice of the FRBP Rule 4007(c) deadline of June 3, 2013. The findings the Superior Court did issue (far from the careful findings the court requested) give little clue as to whether all or any portion of the damages assessed are attributable to the Sixth Cause of Action. But from ¶9 of the Statement of Decision it appears that some of the compensatory damages relate to years 2012 and 2013, clearly prepetition and before the April 2014 fraudulent conveyance. As stated above, there might still be a retroactive application under Jensen or similar authority, but that should have been clearly set forth in the opinion.
So the court reluctantly re-opens the case to get this resolved. In that respect, the court has no intention of re-litigating everything anew in this court. Rather, the parties should be prepared to suggest alternative and efficient methods such as a remand for further findings in the Superior Court. Of course, the court also reads that an appeal has been filed so even that may be foreclosed. Perhaps a narrower declaratory relief action or similar can be fashioned, but the court expects proactive suggestions now that the best opportunity has been squandered. The court doubts on this record that sanctions are appropriate.
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Grant for limited purpose of cleaning up and identifying dischargeable portions of Superior Court judgment.
Debtor(s):
Brian Alan Michael Horowitz Pro Se
Joint Debtor(s):
Tammy Jean Horowitz Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
(con't from 10-11-17)
Docket 1
Deadline for filing plan and disclosure statement: December 31, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: December 1, 2017
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
(con't from 1-24-18)
Marshack Hays LLP, Chapter 11 Debtor's Special Litigation and Reoganization Counsel
FEES: $11,104.00; EXPENSES: $229.63
Docket 195
Tentative for 2/7/18:
Same. Where is the non-opposition declaration?
Tentative for 1/24/18:
Allow as prayed, conditioned on obtaining non-opposition declaration from Reorganized Debtor.
Debtor(s):
Tho Van Phan Represented By Michael R Totaro Richard A Marshack David Wood Matthew Grimshaw
10:00 AM
(con't from 1-24-18 per order apprv. stip. to cont. ent. 1-19-18)
Docket 193
This is Debtor’s motion for entry of final decree, discharge and closing of the case. Debtor states that he has completed making payments under his confirmed plan and that nothing remains to be done in this case. Therefore, Debtor suggests, entry of a final decree and discharge and an order closing the case would be appropriate at this time. Creditors Kim Minh, Inc. ("KMI"), LG Gold, Inc., Douglas Chang, Vina Golden Investments, LLC, and Diep Huynh Nguyen (the "Objecting Creditors") have jointly filed an objection to the motion. The Objecting Creditors assert that they did not have proper notice of the bankruptcy proceeding and that they should be given an opportunity to file late proofs of claim. They note that Debtor listed their claims as disputed but with actual amounts in his schedules. The objection is supported by declarations from the principal of KMI and Diep Nguyen. Debtor has filed a reply, arguing that his motion should be granted because the Objecting Creditors had notice of the bankruptcy and sat on their rights. Debtor states that he made decisions about his plan based on the size of the creditor body and argues that his plan should not be derailed now.
Pursuant to FRBP 3022, a final decree should be entered after an estate is fully administered. Pursuant to section 1141(d)(5), a discharge may be granted in an individual chapter 11 case upon completion of payments. Under section 350(a), a case should be closed once it is fully administered. Based upon the plan that was confirmed Debtor has met all of these requirements. He has made all of the payments called for under the plan. The adversary proceedings are resolved. Nothing remains to be done. The Objecting Creditors objection should not change this fact. Debtor demonstrates that the Objecting Creditors all had notice of the bankruptcy proceeding. Even Mr. Ly, who asserts in his declaration that he did not know about the bankruptcy until much
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later, appears to have had at least constructive notice of the case in June 2017, which was before plan confirmation. While Mr. Ly claims he did not have timely notice, there is a ¶8 of his declaration which states: "During the course of the Bankruptcy cases I advised the Debtor that he was serving KMI at the wrong address, but I am informed and believe he took no steps to fix this problem…." While it is true that debtors should take steps to correct incorrect addresses, the critical question here is one of creditor notice, and if the creditor had notice that a case was pending there were steps he could have/should have taken to ensure that he kept up with critical deadlines. Requests for notice could have been filed or counsel could have been retained. If the Objecting Creditors chose not to follow up, it is their loss and the processes of the case will not be derailed for this lack of diligence.
The objecting creditors other than Mr. Ly for Kim Minh, Inc. and Diep Nguyen offer no evidence at all of their alleged lack of notice, and so the presumption that notice was properly given (but ignored) which arises from listing on the proof of service is not overcome. But the Nguyen declaration does not go to the notice issue, and so it also provides no basis for granting the motion. The Ly declaration is suspect for reasons stated above. Claims bar orders are an important part of Chapter 11 jurisprudence as is finality of plans. Nothing here is sufficient to overturn those important policies.
Grant
Debtor(s):
Tho Van Phan Represented By Michael R Totaro Richard A Marshack David Wood Matthew Grimshaw
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Adv#: 8:16-01164 Hager v. Bushore
(con't from 1-11-18 per order entered 12-28-17)
Docket 1
Tentative for 2/8/18:
In view of Superior Court judgment, continue approximately 90 days to allow for filing of a summary judgment motion.
Debtor(s):
Russell W Bushore Represented By Parisa Fishback
Defendant(s):
Russell W Bushore Pro Se
Plaintiff(s):
Jennifer Hager Represented By
D Scott Doonan
Trustee(s):
Karen S Naylor (TR) Pro Se
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Adv#: 8:17-01224 Weaver v. United States Department of Education et al
Docket 1
- NONE LISTED -
Debtor(s):
Charles Thomas Weaver Pro Se
Defendant(s):
United States Department of Pro Se
Educational Credit Management Pro Se
USA Funds Inc Pro Se
Navient Solutions LLC Pro Se
Navient Education Loan Corp. Pro Se Deutsche Bank ELT Navient & SLM Pro Se
Plaintiff(s):
Charles Thomas Weaver Represented By Leigh E Ferrin Kari E Gibson
Trustee(s):
Richard A Marshack (TR) Pro Se
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Adv#: 8:13-01117 Padilla, III v. Jakubaitis
(set at s/c held 8-17-17)
Docket 1
Tentative for 2/8/18:
We have a declaration that no draft pre-trial stipulation was served on defendant? He also seeks relief on motion set for March 8. Continue approximately 60 days to accomodate.
Tentative for 8/17/17: See #1.
Tentative for 6/22/17: See #2.
Tentative for 4/10/14:
Off calendar in view of summary judgment?
Tentative for 2/27/14:
Status of summary judgment motion?
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Tentative for 12/12/13:
Status conference continued to February 27, 2014 at 10:00 a.m. to allow hearing of motion for summary judgment.
Tentative for 8/29/13:
Deadline for completing discovery: November 1, 2013 Last date for filing pre-trial motions: November 18, 2013 Pre-trial conference on: December 15, 2013 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 6/13/13:
Status conference continued to August 29, 2013 at 10:00 a.m. to allow for default or summary judgment motion in meantime.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller
Defendant(s):
Frank Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Pro Se
Jeffrey I Golden (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
7001(7)
(set at s/c held 8-17-17)
Docket 1
Tentative for 2/8/18:
See #3. Same approach?
Tentative for 8/17/17: See #1 and 3.
Tentative for 6/22/17:
In view of the objection to the bankruptcy court entering final judgment, should the court abstain?
Tentative for 3/30/17: See #12.
Tentative for 12/1/16: No status report?
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Tentative for 10/13/16:
Motion to Amend Complaint filed on September 20, 2016 without a hearing. So when are we going to be at issue? Continue to date following.
Tentative for 8/11/16:
This was supposed to be resolved by summary judgment motion. What happened?
Tentative for 1/28/16:
Status conference continued to August 11, 2016 at 10:00 a.m. to allow hearing on summary judgment to be determined and then to evaluate effect on this case. The court is not pleased with the apparent failure of cooperation.
Tentative for 9/24/15:
Continue to January 28, 2016 to allow for Rule 56 motion, as appropriate.
Tentative for 3/12/15:
Status conference continued to September 24, 2015 at 10:00 a.m.
Tentative for 9/25/14:
No updated status report? Has Superior Court ruled?
Tentative for 3/27/14:
Status conference continued to September 25, 2014 at 10:00 a.m. Court is inclined to allow Superior Court to make factual determinations, and if suitable findings are made, can be collateral estopped here.
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Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Pro Se
Tara Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
David L Hahn (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:17-01037 Aguilar et al v. Treadway
(2) Deny discharge of Debtor under 11 U.S.C. Sections 727(a)(2)(A) and 727(a) (4)(A)
(set from s/c hearing held on 6-1-17)
Docket 1
Tentative for 6/1/17:
Deadline for completing discovery: January 15, 2018 Last date for filing pre-trial motions: January 29, 2018 Pre-trial conference on:February 8, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by September 1, 2017.
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Defendant(s):
Kevin Michael Treadway Pro Se
Plaintiff(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By Bradley D Blakeley
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Trustee(s):
Karen S Naylor (TR) Represented By Burd & Naylor
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Adv#: 8:17-01140 Al Attiyah v. Manier
Docket 12
This is the defendant’s motion to dismiss this adversary proceeding under FRBP Rule 12(b) on grounds that there is no subject matter jurisdiction since the underlying Chapter 13 bankruptcy has been dismissed and, consequently, discharge is not sought in any event. But both sides seem to recognize that dismissal of the underlying bankruptcy is not conclusive on the issue of whether the adversary proceedings arising after the petition must be dismissed. Rather, it is a matter of discretion and the court must weigh several factors such as judicial economy, fairness, convenience and comity. Carraher v. Morgan Electronics, Inc. (In re Carraher), 971
F. 2d 327, 328 ((th Cir. 1992) citing Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 353, 108 S. Ct. 614, 620-21 (1988); Linkway Inv. Co. v. Olsen (In re Casamont Investors), 196 B.R. 517, 525 (9th Cir. BAP 1996). There are factors on both sides for the court to consider. Favoring dismissal is the simple fact that the expense and trouble of actual proceeding any further may be unnecessary, unless the debtor should actually file a third bankruptcy. Also favoring dismissal is the apparent early stage of the proceedings in that neither side reportedly has invested much time or effort in advancing the adversary proceeding to date. Therefore, one could say relatively little is lost by a dismissal. But factors against dismissal are also present. First, the court has relatively little sympathy for repeat filers, and sequential filings that are not pursued raise a question of bona fides of the debtor who repeatedly uses up the time of the court and interested parties without follow through. A suggestion is made in the opposition that debtor may be delaying in an effort to lull Plaintiff into inattention whereupon he might try a third bankruptcy hoping for a quick discharge. Also of interest is the report that plaintiff now holds a judgment for fraud, although this may have been obtained by default. But in the Ninth Circuit default judgments can mean
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that issues are "actually litigated" and therefore do invoke principles of collateral estoppel. See In re Younie, 211 B.R. 367, 374-75 (9th Cir. BAP 1997) aff’d 163 F. 3d 609. But a critical issue remains unclear. That is whether this particular judgment has supporting findings such that the court can reach the conclusion that the matter has been actually litigated and that the issues were necessarily decided in the judgment, elements necessary for a conclusion of collateral estoppel under California law. See
e.g. In re Kelly, 182 B.R. 255, 258 (9th Cir. BAP 1995), aff’d, 100 F.3d 110 (9th Cir. 1996). As the court has experienced in numerous other cases, without findings or a means to determine that the questions central to fraud have been conclusively established, particularly in default cases, we may be facing the prospect of starting from square one without any particular savings of time or money. For example, when a complaint contains multiple theories for relief, some not based on intentional torts, a default judgment on a simple, undifferentiated form not supported by findings, is largely useless. If this is true it tips the analysis in favor of dismissal. Plaintiff reports that he is inclined to bring a summary judgment motion in the near future. If he does, he will need to confront this very question.
Continue for 60 days to permit a summary judgment motion based on collateral estoppel. Otherwise dismiss.
Debtor(s):
Dana Dion Manier Represented By Andrew Moher
Defendant(s):
Dana Dion Manier Represented By Andrew Moher
Plaintiff(s):
Abdulrahman Al Attiyah Represented By David D Jones
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Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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Adv#: 8:17-01140 Al Attiyah v. Manier
(con't from 12-21-17)
Docket 1
Tentative for 2/8/18: See #6.
Tentative for 12/21/17:
Status conference continued to February 8, 2018 at 11:00 a.m. to coincide with dismissal motion.
Tentative for 11/2/17:
In view of dismissal of underlying case, do parties propose to continue?
Debtor(s):
Dana Dion Manier Represented By Andrew Moher
Defendant(s):
Dana Dion Manier Pro Se
Plaintiff(s):
Abdulrahman Al Attiyah Represented By David D Jones
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Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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Adv#: 8:16-01042 Howard Grobstein, as Chapter 7 trustee v. POINT CENTER MORTGAGE
Docket 90
This is the Trustee’s Motion to Dismiss the counter claim of Point Center Mortgage Fund I, LLC ("PCMFI") under FRCP Rule 12(b). This memo also deals with #9 on calendar, the Rule 12(b) motion brought by Dan Harkey, CalComm Capital, Inc. and National Financial Lending, Inc. (collectively "Harkey Parties") to dismiss the third party claim brought by PCMF because the alleged facts and issues are interrelated.
The Trustee’s original complaint against PCMFI was filed February 17, 2016 seeking to avoid alleged fraudulent transfers and preferences. PCMFI’s Counter claim was filed October 5, 2017 against the estate of Point Center and the Harkey with claims for Restitution, Contribution and Indemnity as against the Harkey Parties, Breach of Contract and Breach of Fiduciary Duty against the Trustee and Point Center, as well as Unjust Enrichment and "Abuse of Control" as against all defendants.
FRCP Rule 8 requires that a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." A pleading that does not state a claim upon which relief can be granted may be dismissed by the respondent pursuant to Rule 12(b)(6). "To survive a motion to dismiss, a complaint must contain sufficient factual matter accepted as true, to ‘state a claim to relief that is plausible on its face.’" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A pleading that merely "offers ‘labels and conclusions’ or a formulaic recitation of the elements of a
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cause of action will not do." Id.
Before Iqbal and Twombly interjected a "plausibility" requirement, Rule 12 motions to dismiss were judged under a stricter standard. "A complaint should not be dismissed under the rule ‘unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.’ Conley v.
Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102 (1957); see also, Amfac Mortgage Corp. v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 429-30 (9th Cir.1978). All allegations of material fact were taken as true and construed in the light most favorable to the non-moving party. Western Reserve Oil & Gas Co. v. New, 765 F.2d 1428, 1430 (9th Cir.1985), cert.denied, 474 U.S. 1056, 106 S.Ct. 795 (1986). While
some of the old standards continue to apply, now the pleader must allege specific facts which, if true, plausibly state a theory of relief against the defendant. The court believes this standard is not met here, for the reasons given below.
The court also questions whether it is the right court for the dispute with the Harkey Parties.
The Trustee in his motion presents a formidable statute of limitations defense.
The statute of limitations in Delaware for both breach of contract and for breach of fiduciary duty is 3 years. Fike v. Ruger, 754 A.2d 254, 260 (1999). The statute of limitations for unjust enrichment is also 3 years. Vichi v. Koninklijke Philips Elecs.N.V., 2009 Del. Ch. Lexis 209 at *50 (citing 10 Del. C. § 8106). Delaware law applies under the choice of law provision found at ¶14.8 in the Operating Agreement dated February 3, 1996, the agreement under which Point Center managed PCMFI. The Trustee on behalf of the estate rejected the Operating Agreement under U.S.C. § 365, effective as of the date of the Point Center petition, February 19, 2013. This is manifestly more than three years before the counter claim was filed October 5, 2017. So, unless some other doctrine applies, it would appear that the counter claim is barred by the statute of limitations.
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However, PCMFI contends that the doctrine of "equitable tolling," is appropriate here.
The United States Supreme Court has established two elements that a plaintiff must demonstrate in order to obtain equitable tolling. In Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005), the court explained that a plaintiff seeking equitable tolling must establish two elements: "(1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way." Id. PCMFI does not address this standard in its Opposition.
The record does not demonstrate that PCMFI has diligently attempted to pursue its rights against the Trustee until the filing of the Counterclaim. In short, PCMFI contends that the Trustee’s purported refusal to bring an action behalf of PCMFI against PCF over the controversial management fees excused PCMFI from attempting to diligently pursue on its own its causes of action in some other fashion.
The second prong of the equitable tolling standard from Pace also presents a challenge for PCMFI. The second prong requires the plaintiff to show that extraordinary circumstances prevented them from filing a claim as the PCMFI’s Opposition correctly points out. But it is somewhat odd that for this proposition, PCMFI cites Seattle Audubon Soc’y v. Robertson, 931 F.2d 590, 595 (9th Cir. 1991) because that opinion gives explicit examples of what constitutes extraordinary circumstances:
"Courts have held that when external forces, rather than plaintiff's lack of diligence, account for the failure to file a timely claim, equitable tolling is proper. When courts have actually been closed by conditions of war, statutes of limitations are equitably tolled. See Hanger v. Abbott, 73 U.S. (6 Wall.) 532, 18 L. Ed. 939 (1867) (courts in southern states closed during Civil War). Similarly, when war prevents a plaintiff from gaining access to a court that has remained open, the principles of equitable tolling apply. See Osbourne v.
United States, 164 F.2d 767 (2d Cir. 1947) (plaintiff held in Japan during the
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Second World War unable to file his claim in court." Robertson, 931 F.2d 596 (reversed on other grounds).
Obviously, war is not the only extraordinary condition that can make filing a claim impossible (or at least very difficult). It is however, an indicator that the standard for showing the impediments against filing a claim to qualify for estoppel is quite high, and for good policy reasons if statutes of limitation are to retain any meaning. Although it might have been inconvenient, an alleged uncooperative manager does not appear to rise to this same level of extraordinary circumstances beyond one’s control alluded to in Pace. For example, PCMFI does not explain why none of its various members ever filed or attempted to file a derivative claim for the several years that the general meltdown of the Point Center empire was underway.
Moreover, the charges of abuse and self-dealing against Mr. Harkey were widely discussed from day one in this bankruptcy case begun in February 2013, so it is at least very difficult to argue now with a straight face "who knew?" But that doesn’t stop PCMFI from trying.
PCMFI argues that the statute of limitations has not run yet at all. This argument is based on the allegation that TAMCO, when it took over management in November, 2016, had no knowledge of the prior misconduct, and thus the statute of limitations on the causes of action did not begin to run until TAMCO was on "inquiry notice" in 2016. Thus, PCMFI argues, the claims filed in October, 2017 are still timely. For reasons stated, it is not at all clear to the court that actual or imputed knowledge of TAMCO is the deciding factor. TAMCO happens to be the manager ultimately selected, but certainly the law cannot be that parties in such circumstances (like PCMFI) can save their time-barred claims merely by selecting someone ignorant as manager. Further, TAMCO’s lack of knowledge of the prior misconduct may not meet the Iqbal and Twombly plausibility test. The Trustee alleges that TAMCO, through its president, has had knowledge of the alleged misconduct for nearly a decade. This is because the president of TAMCO, Mr. Gomberg, was a plaintiff in a lawsuit called Charton v. PCF et al. [CASC 2008-00114401], which involved Mr.
Harkey, PCF, and much of the same misconduct as is alleged here.
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PCMFI argues that certain Delaware cases support its claim for equitable tolling. PCMFI relies on In re Tyson Foods, Inc., 919 A.2d 563, 585 (Del. Ch. 2007) for the proposition that equitable tolling applies because it relied on the competence and good faith of its manager, PCF, and later the Trustee. Further, PCMFI contends, citing Laventhol, Krekstein, Horwath & Horwath v. Tuckman, 372 A.2d 168, 170 (Del. 1976), that the Counterclaim satisfies the elements for a prima facie case for equitable tolling because it "contains allegations of self-dealing for profit by a fiduciary" making summary dismissal based on untimeliness inappropriate. (Opp. 6:4- 11). PCMFI also relies on Seattle Audubon Soc’y v. Robertson 931 F.2d 590, 595 (9th Cir. 1991) for the proposition that federal courts will apply the doctrine of equitable tolling when extraordinary circumstances beyond the plaintiff’s control make it nearly impossible for the plaintiff to file claims on time. The decision in Robertson was reversed on other grounds.
PCMFI’s reliance on these cases is misplaced. First, in Tyson Foods, the Court of Chancery in Delaware explained the Delaware statute of limitations standard in general terms: "[t]he statute of limitations begins to run at the time that the cause of action accrues, which is generally when there has been a harmful act by a defendant." Tyson Foods, 919 A.2d at 584. The Delaware court then introduced various exceptions to the statute of limitations. Most relevant to the Counterclaim is the rule that the statute of limitations stops running when the plaintiff has reasonably relied on the competence and good faith of a fiduciary. Id. However, the Court warned that the plaintiff bears the burden of showing that the statute was tolled and no theory will toll the statute beyond the point where the plaintiff was objectively aware, or should have been aware, of the facts giving rise to the wrong. Id.
As discussed above, it is at least problematic that PCMFI should have relied on the Trustee’s competence and good faith in pursuing PCMFI’s legal rights against PCF during the statute of limitations period. PCMFI accuses the Trustee of misconduct during this period, but it does not articulate how PCMFI or its members
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could have reasonably relied on Mr. Grobstein to bring suit against the very estate (PCF) that he was charged with preserving on behalf of a non-debtor. PCMFI does not address the explicit warning in Tyson Foods that "no theory will toll the statute beyond the point where the plaintiff was objectively aware, or should have been aware, of the facts giving rise to the wrong. Id. For PCMFI to now argue that it was relying on Mr. Grobstein to sue his own estate and it was thus justifiably ignorant of its rights within the meaning of Tyson Foods lacks the plausibility requirement of Iqbal and Twombly.
Regarding the self-dealing claim, PCMFI relies on Laventhol for the proposition that when corporate fiduciaries "are required to answer for wrongful acts of commission by which they have enriched themselves to the injury of the corporation, a court of conscience will not regard such acts as mere torts, but as serious breaches of trust, and will point the moral and make clear the principle that corporate officers and directors, while not in strictness trustees, will, in such case, be treated as though they were in fact trustees of an express and subsisting trust, and without the protection of the statute of limitations " Laventhol, 372 A.2d at 170.
In short, "the benefit of the statute of limitations will be denied to a corporate fiduciary who has engaged in fraudulent self-dealing." Id.
Laventhol is distinguishable from the current case. In Laventhol, the plaintiffs were stockholders in a corporation that was absorbed by another corporation following a merger. The Plaintiffs accused the accounting firms involved in the merger and the directors of both companies of conspiring to defraud the shareholders by filing key financial documents containing false and misleading information. It is obvious that the accounting firms and directors owed fiduciary duties to the shareholders, and the shareholders reasonably relied on the material representations in the financial statements. In this context the Laventhol court was willing to deny protection of the statute of limitations to the defendants . Here, unlike in Laventhol, it is not clear from PCMFI’s Counterclaim or Opposition to the Motion to Dismiss that the Trustee is actually alleged to have breached a fiduciary duty owed to PCMFI. Nor is it alleged that the Trustee engaged in fraudulent self-dealing. PCMFI levels several
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accusations of misconduct at the Trustee, such as failing to bring actions on behalf of PCMFI against PCF over the controversial management fees. But this alleged misconduct on the Trustee’s part is characterized as conflict of interest, not fraudulent self-dealing. Further, PCMFI alleges that the Trustee knew or had or had reason to know that the Harkey Parties were stealing money from PCMFI. (Counterclaim, 12- 13) However, these accusations stop short of suggesting fraudulent self-dealing on the Trustee’s part. Thus, because Laventhol (at least as to the Trustee) is clearly distinguishable, the court sees no plausible basis that PCMFI should be granted the extraordinary relief they seek.
Third, PCMFI’s reliance on Robertson for the proposition that equitable tolling is appropriate when there exist extraordinary circumstances beyond the plaintiff’s control is also misplaced. As discussed above, PCMFI has not adequately demonstrated that extraordinary circumstances existed that prevented it from pursuing its rights. The only circumstance PCMFI describes is that the Trustee purportedly refused to sue PCF on behalf of PCMFI. PCMFI claims that pursuing its rights against PCF only became possible when the Trustee was replaced by TAMCO. Despite that this is clearly an overstatement; TAMCO took over management in November, 2016. The Counterclaim was not filed for nearly a year after, and no justification is given for the lengthy delay. Also as discussed above, PCMFI has failed to demonstrate that it diligently pursued its rights during the period that the Trustee was in control even accepting arguendo that PCMFI should have looked to the Trustee to do anything, particularly after the Operating Agreement had been rejected. The nearly year-long delay after TAMCO’s appointment to file a claim strongly suggests a general lack of diligence on the part of PCMFI. Moreover, as alleged in pp.4-5 of the Harkey Parties’ reply, several Supreme Court and Ninth Circuit authorities hold that the reasonable period of time equity will allow parties to wait following notice and still preserve equitable tolling is quite limited; no case suggest that a full year as occurred here is within tolerable limits. See Evans v. Chris, 546 U.S. 189, 201, 126 S. Ct. 846 (2006) [not as much as 6 months]; Nelmida v.
ShellyEurocars, Inc., 112 F. ed 380, 385 (9th Cir 1997) [ten weeks too long]; Scholar v. Pac. Bell, 963 F. 2d 264, 268 (9th Cir 1992); Banjo v. Ayers, 614 F. 3d 964, 970 (9th
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Cir)[146 days not reasonable]; Darnaa, LLC v. Google, Inc., 2016 WL 6540452 at*5 (N.D.Cal. Nov. 2, 2017) [ten months too long].
The TAMCO Argument: "The Statute of Limitations Has Not Run" is unconvincing. Leaving aside the question of whether knowledge of an individual can be imputed to a corporation, sound public policy seems to weigh in favor of rejecting PCMFI’s TAMCO argument. If the court were to accept PCMFI’s TAMCO argument, then that would send a message to companies wishing to preserve claims beyond the statute of limitations period, that all they need to do is change up the management every few years. Accepting this argument would also run afoul of the judicial system’s general disfavor toward rewarding those who fail to exercise reasonable diligence in filing their claims.
Therefore, PCMFI has not carried its burden of demonstrating both its diligence in pursuing its rights, and it has not demonstrated that there existed extraordinary circumstances beyond its control that prevented timely filing of a claim (at least as against the Trustee). Consequently, the court sees no basis for equitable tolling and the statute of limitations prevents on the breach of contract claims.
Statute of limitations Concerning Breach of Fiduciary Duty and Unjust Enrichment
The Trustee also argues that the Breach of Fiduciary Duty and Unjust Enrichment claims are similarly barred. As already discussed, the Delaware statute for breach of fiduciary duty is likewise three years and so the above discussion is equally applicable. The Ninth Circuit held in Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954 (9th Cir. 2010) that a claim may be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) "on the ground that it is barred by the applicable statute of limitations only when ‘the running of the statute is apparent on the face of the complaint.’ Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997 (9th Cir. 2006). ‘[A] complaint cannot be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts that would establish the timeliness of the claim.’" Supermail
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Cargo, Inc. v. U.S., 68 F.3d 1204, 1206 (9th Cir. 1995).
For reasons stated the running of the statute of limitations is clear from the face of the complaint. Nothing in the facts suggest that any of PCMFI’s causes of actions accrued after October, 2014 (at least as to the Trustee). It also appears that PCMFI cannot prove any facts that would establish the timeliness of its claim. But against this conclusion PCMFI argues that irrespective of the rejection of the Operating Agreement a fiduciary duty persisted because the Trustee "held himself out" as the continuing manager of PCMFI. There is some support for this in the record as PCMFI cites in its footnote 8 to the Trustee’s "Motion to Strike Unauthorized Answer of Defendant Point Center Mortgage Fund I, LLC… "[Docket # 11 filed April 14, 2016; see also ¶23 of Counterclaim]. Indeed, in the Motion referenced the Trustee argues "a deemed rejection of PCMFI’s operating agreement does not invalidate or nullify the operating agreement any more than a simple breach of the agreement would…." The question arises whether whatever alleged holdover status of manager persisted after rejection was enough to create the sort of fiduciary duty PCMFI contends. Although this is a somewhat closer question, the court ultimately concludes the answer is "no." The court reaches this conclusion based primarily on state law.
As a general matter, Ninth Circuit law indicates that a rejection of a contract has the effect of ending all liability, known and unknown that might arise to the counter party from the contract. See e.g. Agarwal v. Pomona Valley Med. Grp., Inc. (In re Pomona Valley Med. Grp. Inc.), 476 F. 3d 665, 672 (9th Cir. 2007). This is obviously sound bankruptcy law policy since one of the purposes of assumption/rejection under 11 U.S.C. §365 is to provide the trustee the opportunity to weigh the benefits against the burden of continuing with a prepetition contract.
Obviously, if liabilities continued to accrue notwithstanding, this choice would be illusory in most cases. But the court construes PCMFI’s argument to be somewhat different. PCMFI argues that even if the contract no longer existed, some continuing duties persisted because of Point Center’s role as default "manager", and from this PCMFI argues that the Trustee must have had ongoing fiduciary duties to PCMFI and
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to the members of PCMFI.
But Delaware law (and remember Delaware law was chosen by the parties) seems to be against PCMFI on this point. Delaware recognizes a primacy of contract law over fiduciary claims arising from the same underlying conduct or nucleus of facts. Blaustein v. Lord Balt. Capital Corp, 2013 De. Ch. LEXIS 108 at *42-43 (Jan. 17, 2013). Plaintiffs thus may not ‘bootstrap’ a breach of fiduciary duty into an arena where there is also a contract between the parties on the same subject, such as the Operating Agreement. Grunstein v. Silva, 2009 Del. Ch. LEXIS 206 at *17-18 (Dec. 8, 2009); see also BAE Sys. N. Am. Inc. v. Lockheed Martin Corp., 2004 Del. Ch.
LEXIS 119 at *29-30 (Del. Ch. Aug. 3, 2004). Delaware also speaks to "unjust enrichment" in the same manner as unable to stand independently where a contract governs the relationship between the parties. See e.g. Monroe County Employees Retire Sys. v. Carlson, 2010 Del. Ch. LEXIS 132 at *8 (Del Ch. June 7, 2010). The court takes this to mean that although Point Center might technically have retained the label of "manager" despite the rejection of the Operating Agreement (because no one else was), the duties and responsibilities attendant to that position were cut off under the contract, and the law will not support a fiduciary duty based on the same relationship. So whether the Trustee was in fact correct in finding a "power" in his Motion to Strike Unauthorized Answer (perhaps a debatable point), an ongoing accrual of fiduciary duties would be inconsistent with bankruptcy law under §365 and Delaware law. Consequently, the statute of limitations clearly ran on the fiduciary duty and unjust enrichment claims as well more than three years preceding the filing of the Counter claim.
The court doubts that such a tort separately exists. The Trustee argues persuasively that "abuse of control" is not a recognized claim under Delaware Law. Further, the Trustee cites In re Zoran Corp. Derivative Litig., 511 F.Supp. 2d 986, 1019 (N.D. Cal. 2007) where the court explained, "these claims are often considered a repackaging of claims for breach of fiduciary duties instead of being a separate tort. (italics added). See Clark v. Lacy, 376 F.3d 682, 686-87 (7th Cir. 2004). PCMFI
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contends that the court in Zoran did not expressly close the door on abuse of control as a cause of action because the court said "these claims are often considered…" as opposed to "always considered." PCMFI also argues that pleading alternative theories on the same set of facts is proper. PCMFI is correct, but the argument still fails because PCMFI has not presented the court with any basis for determining whether an ‘abuse of control’ is really anything other than as already discussed regarding breach of fiduciary duty or breach of contract. In other words, the same facts/argument that the Trustee, Point Center or the Harkey Parties allegedly breached a fiduciary duty or breached the Operating Agreement in taking unearned or improper fees gains nothing by changing the label to "Abuse of Control,’ as it is all the same alleged acts.
The court wonders why this bankruptcy court should entertain the Third Party Claim as against The Harkey Parties or, in other words, why it should find subject matter jurisdiction for Rule 12(b) purposes. If the court stays with its tentative to dismiss as against Point Center and the Trustee on the breach of contract and fiduciary duty claims, that portion of the Counter claim will no longer persist. We would then have only a claim of unjust enrichment, contribution, restitution and "abuse of control" by PCMFI as against the Harkey Parties. Remember, this is a dispute between two non-debtors over non-estate assets and liabilities. Its relationship to the administration of this estate seems very tenuous at best. At best the court would have "related to" jurisdiction as there is no suggestion that the issues are "core." PCMFI does not articulate to the court’s satisfaction why whatever liability or other outcome as might be established as against The Harkey Parties, for breach of fiduciary duty, unjust enrichment or otherwise, will have any remote effect on the affairs of this estate sufficient to establish even "related to" jurisdiction under former 28 U.S.C. §1471, now 28 U.S.C. §§1334 or 157. See e.g. Pacor v. Higgins, 743 F. 2d 984, 994 (9th Cir 1988); See also In re Fietz, 852 F. 2d 455, 457 (9th Cir 1988).
While recognizing that courts in the Ninth Circuit are split, the court doubts that if it lacked "related to " jurisdiction it should nevertheless stay involved in the Third Party Claims under a "supplemental jurisdiction" theory found at 28 U.S.C. §
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1367. The court agrees with the Harkey Parties that In re Pegasus Gold Corp., 394 F. 3d 1189, 1194 (9th Cir. 2005) is unclear whether a finding of "related to" jurisdiction under §1334 is a prerequisite to also finding supplemental jurisdiction under §1367. Those cases favoring independent supplemental jurisdiction hold that it is discretionary. See e.g. Hawkins v. Eads (In re Eads), 135 B.R. 387 (Bankr. E.D.Cal. 1991); Davis v. Courington (In re Davis), 177 B.R. 907 (9th Cir BAP 1995). The court further agrees that the decisions holding that "related to" jurisdiction is the prerequisite are better reasoned. After Stern v. Marshall, 564 U.S. 462 (2011), it is universally recognized that the proper place for bankruptcy court jurisdiction is narrower, not wider. It should make little sense, then, to have a system of weighing a variety of factors to find "related to" jurisdiction such as in Pacor or Fietz, [or when weighing the related abstention question as below (see e.g. In re Tucson Estates, 912
F. 2d 1162, 1167 (9th Cir 1990)] just to short circuit all of that by concluding supplemental jurisdiction always exists in the alternative wherever there is a common nucleus of facts.
Moreover, even if the court had "related to " jurisdiction, as PCMFI argues, it would abstain as it is permitted to do on its own motion under 28 U.S.C. §1334(c).
See e.g. In re Fruit of the Loom, Inc., 407 B.R. 593, 599, n. 1 (Bankr. Del. 2009). Several of the twelve factors discussed in Tucson Estates are met here. There is no asserted core proceeding, the issues in the Third Party Claim are exclusively ones of state law and that law appears well-settled, non-debtor parties are present (indeed they are exclusively non-debtor in the Third Party Claim), there is little or no effect that the court can see on the administration of this estate and it is remote from the bankruptcy proceedings, severing the Third Party claim is very feasible as it pertains to issues rather distinct from the fraudulent conveyance claims in the Complaint, and to keep jurisdiction over this matter is an unjustified burden on the court’s docket. Id. at 1167. Consequently, even if the court does have subject matter jurisdiction for Rule 12 purposes (and that is doubtful), the court can and would abstain.
PCMFI does not establish a basis for equitable tolling of the statutes of
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limitation under Delaware law. Nor does it establish that theories of relief such as breach of fiduciary duty or unjust enrichment ancillary to the breach of contract claim can be entertained under Delaware law where the rejected contract occupies the same space. While many of the same infirmities exist as to the Third Party Claim, the court does not need to reach those issues because, even if "related to" jurisdiction exists for Rule 12 purposes (a point much in doubt), the court on its own motion would abstain from hearing the Third Party Claim. The court will hear argument as to whether leave to amend is appropriate.
Grant as to Trustee; Abstain as to The Harkey Parties
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
POINT CENTER MORTGAGE Represented By
Nancy A Conroy Lauren N Gans Jonathan Shenson
Movant(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Jack A Reitman
Howard Grobstein, as Chapter 7 Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By
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Trustee(s):
Roye Zur
Jack A Reitman
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
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Adv#: 8:16-01042 Howard Grobstein, as Chapter 7 trustee v. POINT CENTER MORTGAGE
Docket 86
This is the Trustee’s Motion to Dismiss the counter claim of Point Center Mortgage Fund I, LLC ("PCMFI") under FRCP Rule 12(b). This memo also deals with #9 on calendar, the Rule 12(b) motion brought by Dan Harkey, CalComm Capital, Inc. and National Financial Lending, Inc. (collectively "Harkey Parties") to dismiss the third party claim brought by PCMF because the alleged facts and issues are interrelated.
The Trustee’s original complaint against PCMFI was filed February 17, 2016 seeking to avoid alleged fraudulent transfers and preferences. PCMFI’s Counter claim was filed October 5, 2017 against the estate of Point Center and the Harkey with claims for Restitution, Contribution and Indemnity as against the Harkey Parties, Breach of Contract and Breach of Fiduciary Duty against the Trustee and Point Center, as well as Unjust Enrichment and "Abuse of Control" as against all defendants.
FRCP Rule 8 requires that a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." A pleading that does not state a claim upon which relief can be granted may be dismissed by the respondent pursuant to Rule 12(b)(6). "To survive a motion to dismiss, a complaint must contain sufficient factual matter accepted as true, to ‘state a claim to relief that is plausible on its face.’" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A pleading that merely "offers ‘labels and conclusions’ or a formulaic recitation of the elements of a cause of action will not do." Id.
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Before Iqbal and Twombly interjected a "plausibility" requirement, Rule 12 motions to dismiss were judged under a stricter standard. "A complaint should not be dismissed under the rule ‘unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.’ Conley v.
Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102 (1957); see also, Amfac Mortgage Corp. v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 429-30 (9th Cir.1978). All allegations of material fact were taken as true and construed in the light most favorable to the non-moving party. Western Reserve Oil & Gas Co. v. New, 765 F.2d 1428, 1430 (9th Cir.1985), cert.denied, 474 U.S. 1056, 106 S.Ct. 795 (1986). While
some of the old standards continue to apply, now the pleader must allege specific facts which, if true, plausibly state a theory of relief against the defendant. The court believes this standard is not met here, for the reasons given below.
The court also questions whether it is the right court for the dispute with the Harkey Parties.
The Trustee in his motion presents a formidable statute of limitations defense.
The statute of limitations in Delaware for both breach of contract and for breach of fiduciary duty is 3 years. Fike v. Ruger, 754 A.2d 254, 260 (1999). The statute of limitations for unjust enrichment is also 3 years. Vichi v. Koninklijke Philips Elecs.N.V., 2009 Del. Ch. Lexis 209 at *50 (citing 10 Del. C. § 8106). Delaware law applies under the choice of law provision found at ¶14.8 in the Operating Agreement dated February 3, 1996, the agreement under which Point Center managed PCMFI. The Trustee on behalf of the estate rejected the Operating Agreement under U.S.C. § 365, effective as of the date of the Point Center petition, February 19, 2013. This is manifestly more than three years before the counter claim was filed October 5, 2017. So, unless some other doctrine applies, it would appear that the counter claim is barred by the statute of limitations.
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However, PCMFI contends that the doctrine of "equitable tolling," is
appropriate here.
The United States Supreme Court has established two elements that a plaintiff must demonstrate in order to obtain equitable tolling. In Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005), the court explained that a plaintiff seeking equitable tolling must establish two elements: "(1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way." Id. PCMFI does not address this standard in its Opposition.
The record does not demonstrate that PCMFI has diligently attempted to pursue its rights against the Trustee until the filing of the Counterclaim. In short, PCMFI contends that the Trustee’s purported refusal to bring an action behalf of PCMFI against PCF over the controversial management fees excused PCMFI from attempting to diligently pursue on its own its causes of action in some other fashion.
The second prong of the equitable tolling standard from Pace also presents a challenge for PCMFI. The second prong requires the plaintiff to show that extraordinary circumstances prevented them from filing a claim as the PCMFI’s Opposition correctly points out. But it is somewhat odd that for this proposition, PCMFI cites Seattle Audubon Soc’y v. Robertson, 931 F.2d 590, 595 (9th Cir. 1991) because that opinion gives explicit examples of what constitutes extraordinary circumstances:
"Courts have held that when external forces, rather than plaintiff's lack of diligence, account for the failure to file a timely claim, equitable tolling is proper. When courts have actually been closed by conditions of war, statutes of limitations are equitably tolled. See Hanger v. Abbott, 73 U.S. (6 Wall.) 532, 18 L. Ed. 939 (1867) (courts in southern states closed during Civil War). Similarly, when war prevents a plaintiff from gaining access to a court that has remained open, the principles of equitable tolling apply. See Osbourne v.
United States, 164 F.2d 767 (2d Cir. 1947) (plaintiff held in Japan during the Second World War unable to file his claim in court." Robertson, 931 F.2d 596
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(reversed on other grounds).
Obviously, war is not the only extraordinary condition that can make filing a claim impossible (or at least very difficult). It is however, an indicator that the standard for showing the impediments against filing a claim to qualify for estoppel is quite high, and for good policy reasons if statutes of limitation are to retain any meaning. Although it might have been inconvenient, an alleged uncooperative manager does not appear to rise to this same level of extraordinary circumstances beyond one’s control alluded to in Pace. For example, PCMFI does not explain why none of its various members ever filed or attempted to file a derivative claim for the several years that the general meltdown of the Point Center empire was underway.
Moreover, the charges of abuse and self-dealing against Mr. Harkey were widely discussed from day one in this bankruptcy case begun in February 2013, so it is at least very difficult to argue now with a straight face "who knew?" But that doesn’t stop PCMFI from trying.
PCMFI argues that the statute of limitations has not run yet at all. This argument is based on the allegation that TAMCO, when it took over management in November, 2016, had no knowledge of the prior misconduct, and thus the statute of limitations on the causes of action did not begin to run until TAMCO was on "inquiry notice" in 2016. Thus, PCMFI argues, the claims filed in October, 2017 are still timely. For reasons stated, it is not at all clear to the court that actual or imputed knowledge of TAMCO is the deciding factor. TAMCO happens to be the manager ultimately selected, but certainly the law cannot be that parties in such circumstances (like PCMFI) can save their time-barred claims merely by selecting someone ignorant as manager. Further, TAMCO’s lack of knowledge of the prior misconduct may not meet the Iqbal and Twombly plausibility test. The Trustee alleges that TAMCO, through its president, has had knowledge of the alleged misconduct for nearly a decade. This is because the president of TAMCO, Mr. Gomberg, was a plaintiff in a lawsuit called Charton v. PCF et al. [CASC 2008-00114401], which involved Mr.
Harkey, PCF, and much of the same misconduct as is alleged here.
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PCMFI argues that certain Delaware cases support its claim for equitable tolling. PCMFI relies on In re Tyson Foods, Inc., 919 A.2d 563, 585 (Del. Ch. 2007) for the proposition that equitable tolling applies because it relied on the competence and good faith of its manager, PCF, and later the Trustee. Further, PCMFI contends, citing Laventhol, Krekstein, Horwath & Horwath v. Tuckman, 372 A.2d 168, 170 (Del. 1976), that the Counterclaim satisfies the elements for a prima facie case for equitable tolling because it "contains allegations of self-dealing for profit by a fiduciary" making summary dismissal based on untimeliness inappropriate. (Opp. 6:4- 11). PCMFI also relies on Seattle Audubon Soc’y v. Robertson 931 F.2d 590, 595 (9th Cir. 1991) for the proposition that federal courts will apply the doctrine of equitable tolling when extraordinary circumstances beyond the plaintiff’s control make it nearly impossible for the plaintiff to file claims on time. The decision in Robertson was reversed on other grounds.
PCMFI’s reliance on these cases is misplaced. First, in Tyson Foods, the Court of Chancery in Delaware explained the Delaware statute of limitations standard in general terms: "[t]he statute of limitations begins to run at the time that the cause of action accrues, which is generally when there has been a harmful act by a defendant." Tyson Foods, 919 A.2d at 584. The Delaware court then introduced various exceptions to the statute of limitations. Most relevant to the Counterclaim is the rule that the statute of limitations stops running when the plaintiff has reasonably relied on the competence and good faith of a fiduciary. Id. However, the Court warned that the plaintiff bears the burden of showing that the statute was tolled and no theory will toll the statute beyond the point where the plaintiff was objectively aware, or should have been aware, of the facts giving rise to the wrong. Id.
As discussed above, it is at least problematic that PCMFI should have relied on the Trustee’s competence and good faith in pursuing PCMFI’s legal rights against PCF during the statute of limitations period. PCMFI accuses the Trustee of misconduct during this period, but it does not articulate how PCMFI or its members
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could have reasonably relied on Mr. Grobstein to bring suit against the very estate (PCF) that he was charged with preserving on behalf of a non-debtor. PCMFI does not address the explicit warning in Tyson Foods that "no theory will toll the statute beyond the point where the plaintiff was objectively aware, or should have been aware, of the facts giving rise to the wrong. Id. For PCMFI to now argue that it was relying on Mr. Grobstein to sue his own estate and it was thus justifiably ignorant of its rights within the meaning of Tyson Foods lacks the plausibility requirement of Iqbal and Twombly.
Regarding the self-dealing claim, PCMFI relies on Laventhol for the proposition that when corporate fiduciaries "are required to answer for wrongful acts of commission by which they have enriched themselves to the injury of the corporation, a court of conscience will not regard such acts as mere torts, but as serious breaches of trust, and will point the moral and make clear the principle that corporate officers and directors, while not in strictness trustees, will, in such case, be treated as though they were in fact trustees of an express and subsisting trust, and without the protection of the statute of limitations " Laventhol, 372 A.2d at 170.
In short, "the benefit of the statute of limitations will be denied to a corporate fiduciary who has engaged in fraudulent self-dealing." Id.
Laventhol is distinguishable from the current case. In Laventhol, the plaintiffs were stockholders in a corporation that was absorbed by another corporation following a merger. The Plaintiffs accused the accounting firms involved in the merger and the directors of both companies of conspiring to defraud the shareholders by filing key financial documents containing false and misleading information. It is obvious that the accounting firms and directors owed fiduciary duties to the shareholders, and the shareholders reasonably relied on the material representations in the financial statements. In this context the Laventhol court was willing to deny protection of the statute of limitations to the defendants . Here, unlike in Laventhol, it is not clear from PCMFI’s Counterclaim or Opposition to the Motion to Dismiss that the Trustee is actually alleged to have breached a fiduciary duty owed to PCMFI. Nor is it alleged that the Trustee engaged in fraudulent self-dealing. PCMFI levels several
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accusations of misconduct at the Trustee, such as failing to bring actions on behalf of PCMFI against PCF over the controversial management fees. But this alleged misconduct on the Trustee’s part is characterized as conflict of interest, not fraudulent self-dealing. Further, PCMFI alleges that the Trustee knew or had or had reason to know that the Harkey Parties were stealing money from PCMFI. (Counterclaim, 12- 13) However, these accusations stop short of suggesting fraudulent self-dealing on the Trustee’s part. Thus, because Laventhol (at least as to the Trustee) is clearly distinguishable, the court sees no plausible basis that PCMFI should be granted the extraordinary relief they seek.
Third, PCMFI’s reliance on Robertson for the proposition that equitable tolling is appropriate when there exist extraordinary circumstances beyond the plaintiff’s control is also misplaced. As discussed above, PCMFI has not adequately demonstrated that extraordinary circumstances existed that prevented it from pursuing its rights. The only circumstance PCMFI describes is that the Trustee purportedly refused to sue PCF on behalf of PCMFI. PCMFI claims that pursuing its rights against PCF only became possible when the Trustee was replaced by TAMCO. Despite that this is clearly an overstatement; TAMCO took over management in November, 2016. The Counterclaim was not filed for nearly a year after, and no justification is given for the lengthy delay. Also as discussed above, PCMFI has failed to demonstrate that it diligently pursued its rights during the period that the Trustee was in control even accepting arguendo that PCMFI should have looked to the Trustee to do anything, particularly after the Operating Agreement had been rejected. The nearly year-long delay after TAMCO’s appointment to file a claim strongly suggests a general lack of diligence on the part of PCMFI. Moreover, as alleged in pp.4-5 of the Harkey Parties’ reply, several Supreme Court and Ninth Circuit authorities hold that the reasonable period of time equity will allow parties to wait following notice and still preserve equitable tolling is quite limited; no case suggest that a full year as occurred here is within tolerable limits. See Evans v. Chris, 546 U.S. 189, 201, 126 S. Ct. 846 (2006) [not as much as 6 months]; Nelmida v.
ShellyEurocars, Inc., 112 F. ed 380, 385 (9th Cir 1997) [ten weeks too long]; Scholar v. Pac. Bell, 963 F. 2d 264, 268 (9th Cir 1992); Banjo v. Ayers, 614 F. 3d 964, 970 (9th
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Cir)[146 days not reasonable]; Darnaa, LLC v. Google, Inc., 2016 WL 6540452 at*5 (N.D.Cal. Nov. 2, 2017) [ten months too long].
The TAMCO Argument: "The Statute of Limitations Has Not Run" is unconvincing. Leaving aside the question of whether knowledge of an individual can be imputed to a corporation, sound public policy seems to weigh in favor of rejecting PCMFI’s TAMCO argument. If the court were to accept PCMFI’s TAMCO argument, then that would send a message to companies wishing to preserve claims beyond the statute of limitations period, that all they need to do is change up the management every few years. Accepting this argument would also run afoul of the judicial system’s general disfavor toward rewarding those who fail to exercise reasonable diligence in filing their claims.
Therefore, PCMFI has not carried its burden of demonstrating both its diligence in pursuing its rights, and it has not demonstrated that there existed extraordinary circumstances beyond its control that prevented timely filing of a claim (at least as against the Trustee). Consequently, the court sees no basis for equitable tolling and the statute of limitations prevents on the breach of contract claims.
Statute of limitations Concerning Breach of Fiduciary Duty and Unjust Enrichment
The Trustee also argues that the Breach of Fiduciary Duty and Unjust Enrichment claims are similarly barred. As already discussed, the Delaware statute for breach of fiduciary duty is likewise three years and so the above discussion is equally applicable. The Ninth Circuit held in Von Saher v. Norton Simon Museum of Art at Pasadena, 592 F.3d 954 (9th Cir. 2010) that a claim may be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) "on the ground that it is barred by the applicable statute of limitations only when ‘the running of the statute is apparent on the face of the complaint.’ Huynh v. Chase Manhattan Bank, 465 F.3d 992, 997 (9th Cir. 2006). ‘[A] complaint cannot be dismissed unless it appears beyond doubt that the plaintiff can prove no set of facts that would establish the timeliness of the claim.’" Supermail
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Cargo, Inc. v. U.S., 68 F.3d 1204, 1206 (9th Cir. 1995).
For reasons stated the running of the statute of limitations is clear from the face of the complaint. Nothing in the facts suggest that any of PCMFI’s causes of actions accrued after October, 2014 (at least as to the Trustee). It also appears that PCMFI cannot prove any facts that would establish the timeliness of its claim. But against this conclusion PCMFI argues that irrespective of the rejection of the Operating Agreement a fiduciary duty persisted because the Trustee "held himself out" as the continuing manager of PCMFI. There is some support for this in the record as PCMFI cites in its footnote 8 to the Trustee’s "Motion to Strike Unauthorized Answer of Defendant Point Center Mortgage Fund I, LLC… "[Docket # 11 filed April 14, 2016; see also ¶23 of Counterclaim]. Indeed, in the Motion referenced the Trustee argues "a deemed rejection of PCMFI’s operating agreement does not invalidate or nullify the operating agreement any more than a simple breach of the agreement would…." The question arises whether whatever alleged holdover status of manager persisted after rejection was enough to create the sort of fiduciary duty PCMFI contends. Although this is a somewhat closer question, the court ultimately concludes the answer is "no." The court reaches this conclusion based primarily on state law.
As a general matter, Ninth Circuit law indicates that a rejection of a contract has the effect of ending all liability, known and unknown that might arise to the counter party from the contract. See e.g. Agarwal v. Pomona Valley Med. Grp., Inc. (In re Pomona Valley Med. Grp. Inc.), 476 F. 3d 665, 672 (9th Cir. 2007). This is obviously sound bankruptcy law policy since one of the purposes of assumption/rejection under 11 U.S.C. §365 is to provide the trustee the opportunity to weigh the benefits against the burden of continuing with a prepetition contract.
Obviously, if liabilities continued to accrue notwithstanding, this choice would be illusory in most cases. But the court construes PCMFI’s argument to be somewhat different. PCMFI argues that even if the contract no longer existed, some continuing duties persisted because of Point Center’s role as default "manager", and from this PCMFI argues that the Trustee must have had ongoing fiduciary duties to PCMFI and
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to the members of PCMFI.
But Delaware law (and remember Delaware law was chosen by the parties) seems to be against PCMFI on this point. Delaware recognizes a primacy of contract law over fiduciary claims arising from the same underlying conduct or nucleus of facts. Blaustein v. Lord Balt. Capital Corp, 2013 De. Ch. LEXIS 108 at *42-43 (Jan. 17, 2013). Plaintiffs thus may not ‘bootstrap’ a breach of fiduciary duty into an arena where there is also a contract between the parties on the same subject, such as the Operating Agreement. Grunstein v. Silva, 2009 Del. Ch. LEXIS 206 at *17-18 (Dec. 8, 2009); see also BAE Sys. N. Am. Inc. v. Lockheed Martin Corp., 2004 Del. Ch.
LEXIS 119 at *29-30 (Del. Ch. Aug. 3, 2004). Delaware also speaks to "unjust enrichment" in the same manner as unable to stand independently where a contract governs the relationship between the parties. See e.g. Monroe County Employees Retire Sys. v. Carlson, 2010 Del. Ch. LEXIS 132 at *8 (Del Ch. June 7, 2010). The court takes this to mean that although Point Center might technically have retained the label of "manager" despite the rejection of the Operating Agreement (because no one else was), the duties and responsibilities attendant to that position were cut off under the contract, and the law will not support a fiduciary duty based on the same relationship. So whether the Trustee was in fact correct in finding a "power" in his Motion to Strike Unauthorized Answer (perhaps a debatable point), an ongoing accrual of fiduciary duties would be inconsistent with bankruptcy law under §365 and Delaware law. Consequently, the statute of limitations clearly ran on the fiduciary duty and unjust enrichment claims as well more than three years preceding the filing of the Counter claim.
The court doubts that such a tort separately exists. The Trustee argues persuasively that "abuse of control" is not a recognized claim under Delaware Law. Further, the Trustee cites In re Zoran Corp. Derivative Litig., 511 F.Supp. 2d 986, 1019 (N.D. Cal. 2007) where the court explained, "these claims are often considered a repackaging of claims for breach of fiduciary duties instead of being a separate tort. (italics added). See Clark v. Lacy, 376 F.3d 682, 686-87 (7th Cir. 2004). PCMFI
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contends that the court in Zoran did not expressly close the door on abuse of control as a cause of action because the court said "these claims are often considered…" as opposed to "always considered." PCMFI also argues that pleading alternative theories on the same set of facts is proper. PCMFI is correct, but the argument still fails because PCMFI has not presented the court with any basis for determining whether an ‘abuse of control’ is really anything other than as already discussed regarding breach of fiduciary duty or breach of contract. In other words, the same facts/argument that the Trustee, Point Center or the Harkey Parties allegedly breached a fiduciary duty or breached the Operating Agreement in taking unearned or improper fees gains nothing by changing the label to "Abuse of Control,’ as it is all the same alleged acts.
The court wonders why this bankruptcy court should entertain the Third Party Claim as against The Harkey Parties or, in other words, why it should find subject matter jurisdiction for Rule 12(b) purposes. If the court stays with its tentative to dismiss as against Point Center and the Trustee on the breach of contract and fiduciary duty claims, that portion of the Counter claim will no longer persist. We would then have only a claim of unjust enrichment, contribution, restitution and "abuse of control" by PCMFI as against the Harkey Parties. Remember, this is a dispute between two non-debtors over non-estate assets and liabilities. Its relationship to the administration of this estate seems very tenuous at best. At best the court would have "related to" jurisdiction as there is no suggestion that the issues are "core." PCMFI does not articulate to the court’s satisfaction why whatever liability or other outcome as might be established as against The Harkey Parties, for breach of fiduciary duty, unjust enrichment or otherwise, will have any remote effect on the affairs of this estate sufficient to establish even "related to" jurisdiction under former 28 U.S.C. §1471, now 28 U.S.C. §§1334 or 157. See e.g. Pacor v. Higgins, 743 F. 2d 984, 994 (9th Cir 1988); See also In re Fietz, 852 F. 2d 455, 457 (9th Cir 1988).
While recognizing that courts in the Ninth Circuit are split, the court doubts that if it lacked "related to " jurisdiction it should nevertheless stay involved in the Third Party Claims under a "supplemental jurisdiction" theory found at 28 U.S.C. §
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1367. The court agrees with the Harkey Parties that In re Pegasus Gold Corp., 394 F. 3d 1189, 1194 (9th Cir. 2005) is unclear whether a finding of "related to" jurisdiction under §1334 is a prerequisite to also finding supplemental jurisdiction under §1367. Those cases favoring independent supplemental jurisdiction hold that it is discretionary. See e.g. Hawkins v. Eads (In re Eads), 135 B.R. 387 (Bankr. E.D.Cal. 1991); Davis v. Courington (In re Davis), 177 B.R. 907 (9th Cir BAP 1995). The court further agrees that the decisions holding that "related to" jurisdiction is the prerequisite are better reasoned. After Stern v. Marshall, 564 U.S. 462 (2011), it is universally recognized that the proper place for bankruptcy court jurisdiction is narrower, not wider. It should make little sense, then, to have a system of weighing a variety of factors to find "related to" jurisdiction such as in Pacor or Fietz, [or when weighing the related abstention question as below (see e.g. In re Tucson Estates, 912
F. 2d 1162, 1167 (9th Cir 1990)] just to short circuit all of that by concluding supplemental jurisdiction always exists in the alternative wherever there is a common nucleus of facts.
Moreover, even if the court had "related to " jurisdiction, as PCMFI argues, it would abstain as it is permitted to do on its own motion under 28 U.S.C. §1334(c).
See e.g. In re Fruit of the Loom, Inc., 407 B.R. 593, 599, n. 1 (Bankr. Del. 2009). Several of the twelve factors discussed in Tucson Estates are met here. There is no asserted core proceeding, the issues in the Third Party Claim are exclusively ones of state law and that law appears well-settled, non-debtor parties are present (indeed they are exclusively non-debtor in the Third Party Claim), there is little or no effect that the court can see on the administration of this estate and it is remote from the bankruptcy proceedings, severing the Third Party claim is very feasible as it pertains to issues rather distinct from the fraudulent conveyance claims in the Complaint, and to keep jurisdiction over this matter is an unjustified burden on the court’s docket. Id. at 1167. Consequently, even if the court does have subject matter jurisdiction for Rule 12 purposes (and that is doubtful), the court can and would abstain.
PCMFI does not establish a basis for equitable tolling of the statutes of
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limitation under Delaware law. Nor does it establish that theories of relief such as breach of fiduciary duty or unjust enrichment ancillary to the breach of contract claim can be entertained under Delaware law where the rejected contract occupies the same space. While many of the same infirmities exist as to the Third Party Claim, the court does not need to reach those issues because, even if "related to" jurisdiction exists for Rule 12 purposes (a point much in doubt), the court on its own motion would abstain from hearing the Third Party Claim. The court will hear argument as to whether leave to amend is appropriate.
Grant as to Trustee; Abstain as to The Harkey Parties
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
POINT CENTER MORTGAGE Represented By
Nancy A Conroy Lauren N Gans Jonathan Shenson
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Jack A Reitman
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau
11:00 AM
Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
10:30 AM
ELMER THOMAS MEAGHER AND ELAINE LOUISE MEAGHER
Vs.
DEBTOR
Docket 6
- NONE LISTED -
Debtor(s):
Alejandro Alvarado Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 1-30-18)
WILSHIRE CONSUMER CREDIT
Vs.
DEBTOR
Docket 152
Grant without fees and costs. Appearance is optional.
Debtor(s):
Randy R. Reynoso Represented By Bruce D White
Movant(s):
WILSHIRE CONSUMER CREDIT Represented By
Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
CAPITAL ONE AUTO FINANCE, A DIVISION OF CAPITAL ONE N.A.
Vs DEBTOR
Docket 28
- NONE LISTED -
Debtor(s):
Rose M Magana Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
SANTANDER CONSUMER USA INC
Vs.
DEBTOR
Docket 60
Grant. Appearance is optional.
Debtor(s):
Tineke Inkiriwang Represented By Jeffrey J Hagen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A. DBA WELLS FARGO DEALER SERVICES
Vs DEBTOR
Docket 10
Grant. Appearance is optional.
Debtor(s):
Mindy Jae Osborne Represented By Brian J Soo-Hoo
Movant(s):
Wells Fargo Bank, N.A. dba Wells Represented By
Sheryl K Ith
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
(con't from 1-30-18)
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 20
Tentative for 1/30/18: Grant.
Tentative for 1/9/18:
Apparently, there is no equity in the subject property. So under section 362(d)(2) relief of stay is indicated unless the property is necessary to a reorganization "in prospect." Debtor has the burden on this issue but offers very little except conclusory remarks. Obviously, periodic payments at a minimum are required yet no specifics are offered.
Grant unless a reasonable adequate protection offer is made and debtor demonstrates how all of this figures into a plan confirmable in near future.
Debtor(s):
Freda Philomena D'Souza Represented By Michael Jones
10:30 AM
Docket 16
Deny. The motion was not apparently served upon the landlord. Further, the court granted relief of stay Jan. 30, 2018. So to the extent this is an attempt to revisit that ruling, iti is procedurally improper. Further, no adequate showing on the merits is made.
Debtor(s):
Billy Joe Brunner Pro Se
Movant(s):
Billy Joe Brunner Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Docket 9
No tentative
Debtor(s):
Tracy Marie Marx Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
RICHARD A. MARSHACK, CHAPTER 7 TRUSTEE
Docket 25
Allow as prayed. Appearance is optional.
Debtor(s):
Kiem Han Johnstone Represented By Raymond J Seo
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
Docket 169
The trustee has investigated this claim and reached the conclusion that it has no value to the estate, particularly none net of the lien claim of the objector, Catanzarite. Catanzarite opposes, arguing that the claim would have value "properly handled" and further proposes that he resume role as plaintiff's attorney. The parties were unable to reach terms on a single sale for a relatively modest amount. This speaks volumes. Moreover, this court is very disinclined to effectively force a trustee to be represented by counsel other than of his choosing, particularly in a case like this wehre there is already attorney/client litigation.
Debtor(s):
Grant.
Zia Shlaimoun Represented By Charles Shamash
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
11:00 AM
(con't from 2-6-18 per order approving fifth stip. to cont. ent. 2-5-18)
Claim No. 4-2 Dennis Hartmann
Docket 198
Tentative for 2/13/18: Settled?
Tentative for 9/26/17:
This is the Trustee’s objection to allowance as a secured claim, or indeed allowance at all, of claim #4-3 filed by claimant Dennis Hartmann (superseding Claim #4-2). The facts are somewhat convoluted and the parties do a very poor job of setting up the factual predicates for analysis. For example, for us to have anything to talk about one must presume that the monies in the estate for the consolidated entities are somehow attributable to the efforts of attorney/claimant Hartmann. As near as the court can determine, the estate’s funds represent in whole or in part liquidation of some entities owned or controlled by one or more of the Baer entities, which were the antagonists in the underlying litigation. Reportedly, the trial court in the underlying litigation at some point appointed a receiver to take possession of"$15 million or real estate held by various Baer entities including $750,000 in cash. This markedly increased the likelihood of collection." [Claimant’s brief, p. 007, ln.9-13]. Because reportedly claimant Hartmann had obtained a $5million judgment, we assume that the receiver was in aid of collection and can therefore be said to be attributable to claimant’s effort. It might be relevant as to whether this was accomplished before or
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after the May 3, 2009 agreement discussed below. If the source of the estate’s funds came from multiple sources, however, the analysis becomes more difficult. It would have helped to have made these points clear. But it seems fairly clear that claimant has filed this claim to recover some $180,000 in fees incurred by an accounting firm in the underlying litigation that has been awarded by an arbitrator as a personal obligation of claimant, who retained the accountants. Reportedly, claimant retained the accounting firm as support and part of the underlying litigation.
Assuming this understanding is correct, the question of "secured" at bar turns on whether there is an attorney’s lien or, more correctly understood, an "equitable charge" upon proceeds of the underlying litigation. The trustee argues correctly that such an attorney’s lien under California law must be a product of a written agreement, and the May 3, 2009 "Restated Retainer Agreement" ("retainer agreement") does not specifically mention the word "lien." But specific mention of a lien is not determinative; it is more important that the contract make clear that the parties have agreed that professionals are to look to the judgment as the sole source of payment for fees. If that is so, an equitable lien on proceeds is created. Bartlett v. Pacific Nat’l Bank, 110 Cal. App. 2d 683, 688 (1952). There is no doubt that the parties to the retainer agreement contemplated that costs would be deducted from the proceeds, as appears at page 7 [Exhibit F, Bates p. 56] of the retainer agreement. Trustee argues that because the contingency percentage was to be figured on the amount of recovery after costs were deducted, this somehow negates that any equitable charge could have followed the costs portion of the obligation. But no authority is cited for this proposition and it seems counter-intuitive to the court.
However, another, bigger issue is raised going to whether there is any allowable claim at all. Apparently, the estate monies on hand are only $350,000 (whether gross or net of administrative costs is not made clear). The amount of a bankruptcy court sanctions awarded in two cases associated with Mr. Baer, IBT International and Southern California Developers are in the sums of $408,531 and
$830,816, respectively, as reflected in proofs of claim #8 and 9. Under the retainer agreement, the fee (and presumably costs as well) are only recoverable from a net
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recovery after payment of the bankruptcy sanction. Exhibit F, pp. 55-56. So, unless the bankruptcy award has been reduced or otherwise satisfied (and no evidence is offered) the sanction completely eclipses the amount of proceeds on hand and so, in the language used by the Trustee interpreting the retainer agreement, the contingency triggering a fee (or costs) never occurred. The same result would be reached under § 510(a) as the retainer agreement could be read as a subordination to the claims of IBT International and Southern California Developers.
Sustain
Debtor(s):
Banyan Limited Partnership, a Represented By Hutchison B Meltzer Adam L Karp
Trustee(s):
Thomas H Casey (TR) Represented By Beth Gaschen Jeffrey I Golden
10:00 AM
(con't from 1-10-18)
Docket 1
Tentative for 2/14/18: No tentative.
Tentative for 1/10/18:
Should the matter be dismissed or converted?
Tentative for 12/12/17: Status?
Tentative for 11/1/17: Status?
Tentative for 10/25/17:
This continues to be a challenged case. Have the deficiencies been cured? If not why not?
Debtor(s):
TCCB Investors, LLC Represented By Brian C Andrews
10:00 AM
10:00 AM
Docket 129
This is the motion of the debtor for an adequate protection order under §361. One presumes this motion is an attempt to somehow preclude the amounts necessary to head off the relief of stay motion brought by secured creditors Damoder and Soumitri Reddy, et al, ("Reddys") scheduled for February 20 @ 10:00 a.m. The Reddys hold the first and second trust deeds against the property commonly known as 2626 Basswood Street, Newport Beach, CA. securing the sums of $1,587,243 and
$493,389, respectively. Both loans are now matured and in foreclosure; apparently a forbearance agreement governing the first loan has been breached by loss of the restaurant property earlier in the case. Reportedly, there may be two additional loans of record on the Basswood property, a third securing $149,500 and a fourth securing another $500,000. All in it looks like there is approximately +$2,700,000 secured by the Basswood property. No appraisals are offered but debtor estimates the value "as is" at around $2.1 million. If correct there is no equity in the property, and in fact even the first to trust deeds held by the Reddys are either under secured or maybe just barely secured. If the junior liens are also considered there is clearly no equity.
Debtor tries to create a question on value by hypothesizing that if about $150,000 of work is done refurbishing, an adjusted value of $2.7 million might be achieved. Little effort is made to substantiate either that this sum is sufficient, the time needed to accomplish this or that the target value could be achieved, or, indeed, that such sums are immediately available (except by the vaguest reference to "white knight" a Mr.
Brian Maddox.) There was an initial proposal made in the motion that monthly payments of $4500 be ordered as adequate protection, based on the estimate by debtor’s principal of "rental value." Sensing rightly that such a number would be a complete non-starter, the monthly sum of $10,000 is offered in the Reply.
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This is much too little too late. Even if the court could come up with an
appropriate "adequate protection" number under these circumstances, it would be higher than $10,000 and would not achieve a resolution of the motion to be heard February 20 in any event. That hearing will largely turn on the distinct §362(d)(2) question of whether a reorganization is in prospect. A great deal more will be necessary to establish that point and the debtor bears the burden of proof under §362 (g). While the court is tempted to just deny this motion outright, perhaps the better course is to continue it to coincide with the hearing February 20.
Continue to February 20 to coincide with relief of stay hearing.
Debtor(s):
TCCB Investors, LLC Represented By John H Bauer
10:00 AM
Docket 103
Grant. Appearance is optional.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
(con't from 1-10-18)
Docket 334
Tentative for 2/14/18:
This is a continued hearing on the debtors’ motion to extend the exclusivity period under §11 U.S.C. §1121(d). The court at the last hearing asked for further briefing on the question of whether an FRBP Rule 9006(b) motion for relief from excusable neglect could be utilized to extend exclusivity where the motion was, as here, filed one day late. Both the debtors and Opus Bank have filed supplemental briefs on this question.
Exclusivity expired November 30, 2017, as both sides agree in their papers.
Debtors filed their motion to extend exclusivity on December 1, 2017 although it was reportedly prepared and ready for filing on November 30. They argue this should be permitted because the lateness was inadvertent and any neglect on their part was excusable within the meaning of FRBP 9006(b) and Rule 60(b) because of a unique circumstance that the CM/ECF system of the court was shut down from 1:00 p.m. on November 30 during a planned and advertised maintenance and reconfiguration.
Counsel for debtors claim they did not know of the outage until 3:55p.m.on the November 30 date, too late, reportedly, for a manual filing, as the filing window closes at 4:00 p.m. FRBP Rule 9024, with some exceptions not applicable here, adopts FRCP 60(b), which provides that a party may seek relief of an order, judgment or proceeding for reasons of mistake, inadvertence or excusable neglect. FRBP Rule 9006 discusses proper measuring of days and periods required by the rules or "any statute that does not specify a method of computing time." The question is whether Rule 9006(b)(1), which discusses enlargement of time after a period has expired, if
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accompanied by excusable neglect, applies here.
Debtors have found one case that stands for their proposition, i.e. that enlargement of §1121(d) is possible if excusable neglect is shown. In re Crescent Manufacturing Co., 122 B.R. 979, 982 (Bankr. N.D. Ohio 1990). Unfortunately, the Crescent court does not discuss at all the critical question of whether a Rule 9006(b) motion can provide relief from a statutory time limit. The statute in question is 11
U.S.C. §1121(d) which provides:
The court can find no other authority that has cited Crescent on this point. All other courts considering this §1121(d) question have gone the other way and have held that Rule 9006(b) does not apply. See e.g. In re Perkins, 71 B.R. 294, 297 (W.D. Tenn. 1987); In re Cramer, Inc., 105 B.R. 433 (Bankr. W.D.Tenn. 1989); In re Century Inv. Fund VII Ltd. P’ship, 96 B.R. 884, 892 (Bankr. E.D.Wis. 1989); In re Congoleum Corp. 362 B.R. 198, 204-05 (Bankr. N.J. 2007).
The court also submits there are good interpretive and policy reasons for adopting the majority view. The first is the language of FRBP Rule 9006 itself. In subpart (a) of the Rule it is provided that the rule only applies: "in any statute that does not specify a method of computing time." But it is well argued that in contrast § 1121(d) does specifically set out the condition that any motion to enlarge must be filed "within" the respective periods, so logically the "measure of time" is already specified. Additionally, subpart (b) which is that portion of Rule 9006 speaking of enlargement, limits its applicability to "when an act is required or allowed to be done at or within a specified period by these rules, or by a notice given thereunder or by order of court…." (Italics added) Conspicuously absent from the list in this subpart is any reference to a statutory limitation such as §1121(d). So, it is argued that enlargement is just not available under the Rule when the question is one specified by
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statute. Further, 28 U.S.C. §2075 provides that the FRBP "shall not abridge, enlarge, or modify any substantive right." So, conflicts between the Bankruptcy Code and the Bankruptcy Rules must be settled in favor of the Code. Am. Law Ctr. PC v. Stanley (In re Jastrem), 253 F. 3d 438, 441-42 (9th Cir. 2001). Consequently, Opus Bank correctly argues that its ability to file a competing plan should be viewed as a right that cannot be abridged by the Rule.
This principle of strict construction of time limits has been adopted in similar contexts such as: an extension to file a plan in a small business case under §1121(e), In re Roots Rents, Inc., 420 B.R. 28, 32-37 (Bankr. Idaho 2009); or an extension to file a non-dischargeability complaint, See e.g , In re Brown, 102 B.R. 187 (9th Cir BAP 1989); or for motions to re-impose the stay for one-time repeat filers under §362 (c)(3)(C) although injunctive relief might still be available, In re Whitaker, 341 B.R. 336, 343 (Bankr. S.D. Ga. 2006); or in extensions to assume or reject executory contracts where the ruling on extension may be later, but the motion must be filed within the limitations period. See e.g. In re Southwest Aircraft Services, Inc., 831 F. 2d 848, 852 (9th Cir 1987) cert. den 108 S. Ct. 2848; and motions to extend filed after the §365 deadline cannot be entertained under an "excusable neglect" Rule 9006 approach. In re Damach, Inc., 235 B.R. 727, 731 (BAnkr. Conn. 1999). These cases and similar authority merely embody the time-honored rule that where Congress has clearly and unambiguously spoken in the language of a statute, a court’s analysis is complete and it must enforce the statute per its terms, unless such reading would lead to an absurd result. Lamie v. United States Tr., 540 U.S. 526, 534, 124 S. Ct. 1023 (2004).
The court also observes a theme running throughout these cases, that is, Congress intended to create certain hard and unambiguous walls against persistent delays in bankruptcy cases in some contexts. The purpose for such explicit and strict limitations, such as found in §1121(d), is to avoid delays and to encourage (or to force) an earlier rather than later resolution to reorganization cases. This goal would be seriously undermined if the door were always left slightly ajar for Rule 60(b) type motions. Even debtors’ cited case, Pioneer Inv. Servs. Co. v. Brunswick Assocs Ltd.
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P’ship, 507 U.S. 380, 388, 113 S. Ct. 1489, 1495 (1993), a late-filed claim case, is less than convincing on this point since the Supreme Court in Pioneer carefully hedged that not all missed deadlines could be undone by a Rule 9006 motion; rather, Congress "contemplated that the courts would be permitted, where appropriate, to accept late filings caused by inadvertence…." Id. at 388 (italics added). Obviously, there is far less opportunity to delay a proceeding on account of a single just but inadvertently late-filed claim than would be presented by continued exclusivity in an entire series of reorganization cases. With these principles in mind, it is hard to make debtors’ argument where Congress clearly set forth in the very language of §1121(d) that an extension had to be filed "within" the designated period.
Consequently, the court does not need to reach the question of whether under these circumstance the neglect was indeed "excusable" within the meaning of Rule 9006(b), or that "cause" is shown under §1121(d) since it concludes that it has no discretion on the point.
Deny
Tentative for 1/10/18:
This is Debtors’ motion to extend exclusivity for proposing and soliciting approval of a plan. The motion is opposed by Opus Bank on the basis that it is not timely.
First, as the court recollects, these administratively consolidated cases are to be pared down considerably. Everything with the name "Hoag" was not long for this world as the landlord Newport Healthcare and the licensor, Hoag Memorial Hospital, were granted relief of stay in mid-December. Opus may be heard on its version of relief of stay by the time this motion is heard. So, one presumes, this motion is moot as to anything other than the Cypress and Laguna-Dana cases.
Second, the exclusivity period for Debtors terminated on November 30, 2017.
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Thus, under §1121(d)(1), a motion to extend the period must have been filed by this date. The court is without power to extend the deadline once missed. See e.g. In re Perkins, 71 B.R. 294, 297 (W. D. Tenn. 1987). Debtors filed their motion on December 1, 2017. Debtors claim that they prepared their motion on November 29 and discovered in surprise on November 30 that the CM/ECF system for electronic filing would be down from 1 p.m. on November 30 to 8:30 a.m. on December 1.
Debtors’ assert that their counsel is required to file electronically, so they had to wait until December 1.
Even if this court could construe this as a motion under Rule 60(b), Debtor’s version of events does not match with the motion as filed and does not support relief either under Rule 60 or similar law. The motion was filed at 4:47 p.m. on December 1 (not immediately upon the renewal of service in the early a.m.). The proof of service and declarations are all dated December 1. If Debtors really had the motion prepared on November 29 as they claim, they could have (should have) filed it manually at the window, as set forth in § 3.12(a) of the Court Manual. It is at least suspicious that Debtors did not mention anything about the late filing in their initial motion and only offered the story about the ECF outage after Opus filed its opposition. Moreover, the outage was a planned outage to implement the new forms which became effective December 1. The planned outage was very well publicized to the bar. So, even assuming that Rule 60 could help, finding excusable neglect here would be a real stretch.
Deny
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
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(set as a s/c from hearing held 10-12-17) (con't per order ent. 1-8-18)
Docket 12
Tentative for 2/14/18: Status?
Tentative for 12/13/17: See #6 & 8.
Tentative for 10/12/17:
These are the motions, respectively, of the debtors for continued use of cash collateral and of secured creditor Opus Bank (joined by the landlord) for dismissal. Both are considered together since the issues overlap. The central question presented to the court on these motions is remarkably similar to the one presented at the hearing on first-day motions August 4. As the court observed at the initial hearing, these are very challenged cases. It would appear that the value of all of the estates’ assets is probably less than the balance owed Opus. As originally stated, these cases were about getting enough time to find a sale better than the one almost consummated by the receiver prepetition. The court has allowed that time in the hope that debtors’ search would be productive. But the court cautioned that this search could not be at the sole expense and risk of Opus Bank. Stated differently, the court cannot consistent with the dictates
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of the Code allow debtors to "boil away" the value of the collateral through extended, losing operations.
So, two questions are front and center on these motions: (1) has the bank lost ground through operations and (2) is there a sale at hand which would be sufficiently likely and advantageous as to warrant going further, even if operations are only break even or slightly at a loss? The court examines each below.
On the question of whether the last ten weeks’ operations have been at an overall loss the answer is muddled and somewhat obscure (surprise), largely dependent on whom one believes. Each of the financial advisors expresses a different spin. The Bank argues that the increasing balance of cash is not grounds for optimism because this has been accomplished largely by failing to pay accrued operational costs. The bank points out that debtors have not met their targets in sales and projected revenue as actual receipts are down by a factor of about $101,150 or 8.1%. The net accounts receivable balance is down from $1,574,779 on the petition date to
$1,391,775 at the end of August, for a decrease of $183,004. Overall the Bank argues there has been a downward trend: from gross billings of $1,898,891 in January 2017 to $1,502,490 for September 2017; shrinking collections from $662,769 to $551,393 and gross A/R down from $2,865,039 to $2,268,055 for the same period. Moreover, more losses or "negative cash flows" of a total of $193,690 for fourth quarter 2017 are projected. Against this the debtors point to the increased cash ($281,680 to $519,413) and reportedly a bounce back of net accounts receivable from approximately $1.4 million in August to $1.45 million as of the end of September. Debtors argue that sales will increase in the oncoming flu season of December through March. Debtors also point to alleged improvements in operational efficiencies including a decline in write-down percentages. On the question of whether the cash balances are artificially inflated by failure to pay accruing bills, debtors deny this and argue that all payables are ‘current within terms.’ But there is some continuing obscurity on that point since reference is also made to "deals" regarding timing of payables. The court is little concerned with the narrow question of whether any payables are ‘overdue’ within adjusted terms. The real question is whether on a day by day basis accruing expenses
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are outstripping receipts because, eventually, there must be reconciliation, or stated differently, losing operations cannot be cured by just delaying payment until later. While the court is still unable to pinpoint the net results of operations over the last ten weeks, its overall impression is that Opus Bank is probably, on an "all in" basis, down relatively, perhaps by approximately the $100,000 the bank has argued. Of course, none of this addresses the accrual of professional fees which is probably a multiple of that sum.
But this loss of relative position might be worth the price if a solution were at hand, such as a viable sale for more than is otherwise achievable. In this vein debtors argue that the letter of intent regarding a possible §363 sale to Marque Medical at $3.2 million, not including receivables (which might be another $1.5 million) is the answer. If such a sale could be promptly consummated this would surely result in a greater recovery for not only Opus Bank but, perhaps, other creditors as well (although this might not be that large after administrative fees and costs). But there appears to be a problem. Marque wants an assignment of the leases, and it develops that the debtors only hold subleases. The landlord has indicated that an "up the chain "consent to assignment will not be forthcoming. But as late as October 5 the buyer still seems interested.
One supposes (based on other pleadings on file) that Dr. Amster has already been considering a bankruptcy proceeding of the master lessee, an entity reportedly he controls. Maybe that can solve the problem somehow if the two estates act in tandem as the barrier to §365 assumption would, in that case, seemingly be overcome (or at least mitigated). Maybe the offer can be adjusted or improved. The debtors have finally seen that no more time is available absent adequate protection and so they offer
$18,500 per month payments (and a few thousand to the landlord). They assert that such an amount is available from operations although this is doubted by Opus Bank.
So, what to do? The court is as dubious now (maybe more so) than it was ten weeks ago. Every prudent doubt should be indulged favoring reorganization, or an advantageous sale with the powers of §363, if that can be reasonably done without imposing undue risk on an unwilling bank. But this is a very close question given all
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of the issues discussed above. It does not appear that this is a case that will improve with an extended delay as operations appear to be, at best, break even. Even the debtor projects negative cash flows. Adequate protection payments would lessen but hardly eliminate the huge risk being imposed as the bank no doubt figures it’s all its collateral anyhow. But maybe a 60-day extension of the use of cash collateral, and like continuance of the dismissal motion, would be the best route assuming no precipitous decline in operations so that the current offer (or overbid) can be vetted. But the debtors should be admonished and harbor no illusions that more time is available, or that the bank won’t be in court on another shortened time motion should its tenuous position further deteriorate.
Grant use for period of 60 days pending further hearing, to coincide with continued dismissal motion, conditioned on payment of $18,500 immediately to bank and $2500 to landlord, with second monthly payments in 30 days.
-
What are the cash result from actual operations? We have the bank's estimates which are dismal. Where is the supposed better offer?
Debtor(s):
No tentative.
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney
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Docket 1
Tentative for 2/14/18: Status?
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
10:00 AM
Adv#: 8:16-01042 Howard Grobstein, as Chapter 7 trustee v. POINT CENTER MORTGAGE
Answer to Complaint for Avoidance and Recovery of Fraudulent Transfers; Counterclaims and Third Party Complaint filed 10-5-17
Docket 1
Tentative for 2/15/18: Status? Why no report?
Tentative for 10/12/17: See #11.
Tentative for 6/8/17:
A stay was entered March 21 but is up soon. What next?
Tentative for 2/9/17:
Status Conference continued to June 8, 2017 at 10:00 a.m. Is a stay appropriate?
Tentative for 11/10/16: No tentative.
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Tentative for 8/25/16:
Status conference continued to November 10, 2016 at 10:00 a.m. with stay of proceedings extended in interim, per trustee's request.
Tentative for 5/5/16:
Deadline for completing discovery: October 1, 2016 Last date for filing pre-trial motions: October 24, 2016
Pre-trial conference on: November 10, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
POINT CENTER MORTGAGE Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson
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Monica Rieder Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:13-01278 Grobstein v. Harkey et al
(cont'd from 10-12-17 per order approving stip to cont'd entered 10-6-17)
Docket 1
Tentative for 1/30/14:
Deadline for completing discovery: May 30, 2014 Last date for filing pre-trial motions: June 16, 2014 Pre-trial conference on: June 26, 2014 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 11/14/13:
The status report is so sparse as to be meaningless. What is a reasonable discovery cutoff? May 2014?
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe
Defendant(s):
Dan J Harkey Pro Se
National Financial Lending, Inc. Pro Se
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CalComm Capital, Inc. Pro Se
Plaintiff(s):
Howard B. Grobstein Represented By
Kathy Bazoian Phelps
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:17-01105 Naylor v. Gladstone
(con't from 12-14-17 per order approving. stip. to cont. ent. 10-31-17)
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Scott Gladstone Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Melissa Davis Lowe
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
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Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:13-01247 U.S. Trustee v. Shyu et al
(cont'd from 5-05-16) (changed to a s/c per order approv. stip. ent. 12-19- 17)
Docket 2
Tentative for 2/15/18:
How much time to continued pre-trial conference?
Tentative for 12/11/14:
Deadline for completing discovery: September 1, 2015 Last date for filing pre-trial motions: September 21, 2015 Pre-trial conference on: October 1, 2015 at 10:00 a.m.
Joint pre-trial order due per local rules.
Tentative for 9/4/14:
Status conference in part continued to December 11, 2014 at 10:00 a.m. Court understands that MSJ will be argued on the section 727(b)(4) theory. All other portions continued for further status conference.
Tentative for 5/29/14:
Status conference continued to September 4, 2014 at 10:00 a.m. More delays should not be expected.
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Tentative for 3/27/14:
Status conference continued to May 29, 2014 at 10:00 a.m. to accomodate Rule 56 motion.
Tentative for 12/12/13:
Status conference continued to February 27, 2014 at 10:00 a.m. to allow motion for summary judgment to be heard.
Tentative for 10/24/13:
Status conference continued to December 2, 2013 at 10:00 a.m.
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T Madden Beth Gaschen Susann K Narholm
Defendant(s):
Cheri L Shyu Pro Se
THOMAS CHIA FU Pro Se
Joint Debtor(s):
Thomas Fu Represented By
Evan D Smiley
Plaintiff(s):
U.S. Trustee Represented By
Frank Cadigan
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Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
James J Joseph (TR)
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:13-01247 U.S. Trustee v. Shyu et al
(set at s/c held 1-14-16)
(cont'd from 4-7-16 per order continuing pre-trial conf entered 4-4-16)
Docket 103
Tentative for 1/14/16:
Is there any reason to revisit either the deadlines established in the August 19, 2015 order or the continued status conference scheduled May 5, 2016 at
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Tentative for 9/10/15:
Court will extend dates as suggested if order to that effect is lodged. Is another status conference helpful? Or will May 5 pre-trial suffice?
Tentative for 7/8/15:
Has a substitute party been named yet?
Tentative for 3/5/15:
Grant. Schedule status conference to review in 60 days.
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Attorney(s):
Irell & Manella Represented By Evan C Borges
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T. Madden Beth Gaschen Susann K Narholm Mark A Albert
Defendant(s):
Cheri L Shyu Represented By
Evan D Smiley Mark A Albert
THOMAS CHIA FU Represented By Beth Gaschen Mark A Albert
Interested Party(s):
Courtesy NEF Represented By Isabelle L Ord Byron B Mauss William S Brody
Joint Debtor(s):
Thomas Fu Pro Se
Plaintiff(s):
U.S. Trustee Represented By
Frank Cadigan
Trustee(s):
James J Joseph (TR) Pro Se
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James J Joseph (TR) Represented By
James J Joseph (TR)
U.S. Trustee(s):
United States Trustee (SA) Represented By Frank Cadigan
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Adv#: 8:13-01342 Naylor (TR) v. Aarsvold et al
(cont'd from 4-7-16 per order approving stip to cont. pre-trial entered 3-25-16 re: the motion for summary judgment )
[ONLY AS TO THE QUESTION OF DAMAGES]
(cont'd from 11-30-17)
Docket 34
Tentative for 2/15/18:
Continue status conference to August 23, 2018 at 10:00 a.m. per request.
Tentative for 11/30/17:
Continue to February 25, 2018 at 10:00 a.m.
Tentative for 10/1/15:
This is a hearing on that portion of the Trustee’s summary judgment motion going to the question of damages for the fraudulent transfer to defendant Fusionbridge Wyoming and for defendant Aarsvold’s breach of fiduciary duty. The court has already indicated in its lengthy tentative decision published for the hearing August 6, 2015 (see Exhibit "1" to moving papers) that liability has been established. The court set this matter for further hearing and briefing because it did not believe that the amount of damages had been adequately established in the earlier motion. The court still does not believe that the amount has been established as a matter of law nor as
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one without material question of fact, as is required in a Rule 56 context.
The Trustee’s argument boils down to the dubious assertion that all amounts shown on defendant Fusion Bridge Wyoming’s 2012 tax return taken as a business deduction for expenditures to consultants or subcontractors ($594,587 or $516,523.90 in defendants’’ version) is either a fraudulent deduction or in fact represents payment (in the main) to Mr. Aarsvold. From this premise the Trustee further argues that perforce such sums must be "damages" caused by the fraudulent conveyance. There are problems with this premise even before we get to the bulk of the argument about excluding evidence, as addressed below. The first problem is that the court cannot accept the premise that even if most of the said sum went to Aarsvold this necessarily translates dollar for dollar as damages. Presumably, Aarsvold did some work allegedly to earn these payments. This is the assumption although neither side produces much addressing this issue. Presumably, the revenue enjoyed would not have been received by Fusionbridge Wyoming absent someone doing some work, at a cost. The Trustee’s task would seem to be in establishing that there a margin or delta of some kind between the cost of producing the product and the amounts received, representing the value of the transferred assets. If the contention is that fraudulent transferors like Aarsvold don’t get anything for their labors, or that they work for free, and therefore their efforts are simply added to the value of the transferred assets, that contention will have to be supported by some authority. But the court sees none.
The bulk of the Trustee’s argument seems to be that the burden is on the defendants to prove the validity of deductions, and that defendant should be foreclosed from proving or even questioning any of this because some of the substantiating documentation of amounts paid other consultants than Aarsvold was not timely produced, or was not timely identified by Aarsvold in his deposition.
Turning to FRCP 37(c)(1), the Trustee argues that any such evidence offered now should be stripped from the record as a sanction. But there are problems with this argument too. First, as discussed above, the court is not convinced that this is the defendants’ burden or that the court can accept the Trustee’s dubious premise (that the revenue can be produced or counted dollar for dollar without someone spending time
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as a deductible cost). But even if it were the defendants’ burden, Rule 37(c)(1) is not by its terms absolute. Other alternative sanctions are enumerated in the Rule and the sanction is qualified if there is a showing that the omission was "substantially justified" or "harmless." While the court is not prepared to say that any of these omissions were justified, Mr. Negrete’s prolonged and unexplained absence and the question raised in the papers whether the documents were given to him (but inexplicably not forwarded in discovery) make a strict application of the sanction unlikely, at least absent more explanation.
In sum, the court is not convinced on this record that the amount of damages can be determined without consideration of disputed fact. Nor is the court persuaded of the Trustee’s premise on damages in the first place.
Deny
Tentative for 8/6/15:
This is Trustee’s Motion for Summary Judgment to (1) avoid and recover fraudulent transfer, (2) for judgment that Defendant breached fiduciary duty, and (3) that Defendant is the alter ego of Debtor. The key issue in the fraudulent transfer claims is whether Defendant had the requisite intent to hinder, delay or defraud creditors. The undisputed facts indicate that he did. Prior to bankruptcy, Mr. Matthew Aarsvold ("Aarsvold") transferred substantially all of Debtor’s assets to Fusionbridge Wyoming. He did this while litigation against Debtor was pending. There was no consideration given for the exchange. Although Aarsvold asserts that this transfer was intended to protect Debtor, he offers no documentary evidence or specific details to support his argument.
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There is an extended history involving transfers of assets between Aarsvold’s
corporations and entities, in each case after creditors began to apply pressure. Back in 2005, Aarsvold owned Strategix, Ltd. ("Strategix") and ePassage, Inc. ("ePassage"). A lawsuit was filed in Orange County Superior Court and claims were asserted by Infocrossing West, Inc. and Infocrossing Services, Inc. (collectively, "Infocrossing") against Strategix, ePassage, and Aarsvold ("State Court Action"). See State Court Action’s docket attached as Exhibit "10" to Wood Decl. Infocrossing obtained a preliminary injunction against Strategix, ePassage, and Aarsvold. Id. On August of 2005, Aarsvold filed paperwork to incorporate Debtor. See Wood Decl., Ex. "18." Debtor performed substantially the same services as Strategix and ePassage. See Wood Decl., Ex. 8, pg. 405:26-406:3. In June of 2009, a judgment was entered against Aarsvold, Strategix, and ePassage amounting to approximately $1.3 million in damages. Wood Decl., Ex. 9 and Ex. 10, pg. 428. Mr. and Mrs. Aarsvold filed a Chapter 7 petition that same month. See copy of docket for Aarsvold Bankruptcy attached as Ex. "19" to Wood Decl.
On January 14, 2011, Aarsvold acquired Webworld, Inc., a Wyoming Corporation, and changed its name to Fusionbridge Ltd. Wood Decl., Ex. "17." In October of 2011, Aarsvold executed the APA as CEO of both Debtor and Fusionbridge Wyoming. Wood Decl., Ex. 2, pg. 49. Debtor and Fusionbridge Wyoming entered into an Asset Purchase Agreement ("APA") on October 29, 2011. Exhibit "2." Pursuant to the APA, substantially all of Debtor’s assets were sold to Fusionbridge Wyoming. In exchange for these assets, Fusionbridge Wyoming agreed to pay approximately $100,000 in Debtor’s credit card debt. All of the assumed credit card debt had been personally guaranteed by Aarsvold. Why only these selected obligations were assumed is never explained in the opposition. The contracts that Fusionbridge Wyoming agreed to assume were customer contracts and the consulting agreements of Debtor’s contractors that were performing the work required by the assumed customer contracts. Wood Decl., Ex. 2, pg. 40, § 1.4. Aarsvold signed the APA as "Chief Executive Officer" for both Debtor and Fusionbridge Wyoming. Id., pg. 49.
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On November 28, 2012 ("Petition Date"), Fusionbridge, Ltd. ("Fusionbridge
California" or "Debtor") filed a Chapter 7 petition. Karen S. Naylor is the appointed Chapter 7 Trustee ("Trustee"). On January 2, 2013, Debtor filed its schedules and statement of financial affairs ("Schedules"). Pursuant to the Schedules, Debtor had assets valued at $6.17 and liabilities totaling $4,762,895.60 as of the Petition Date. See Wood Decl., Ex. 1, pg. 6-25. In Debtor’s Statement of Financial Affairs ("SOFA"), Debtor disclosed a transfer of assets to Fusionbridge Wyoming. The SOFA states that Debtor received no value in connection with the transfer and that it had no relationship with the transferee, Fusionbridge Wyoming. Id., at pg. 32. The Schedules were signed by Aarsvold as Debtor’s "CEO." Id. at pg. 28 & 36.
In November of 2013, Trustee filed this adversary proceeding against Fusionbridge Wyoming and Aarsvold seeking recovery on the following claims for relief: (1) For avoidance and recovery of fraudulent transfer pursuant to 11 U.S.C. §§ 544, 548(a)(1)(A), 550, 551; Cal. Civ. Code §§ 3439, et seq., against both Fusion Wyoming and Aarsvold; (2) For avoidance and recovery of fraudulent transfer pursuant to 11 U.S.C. §§ 544, 548(a)(1)(B), 550, 551; Cal. Civ. Code §§ 3439.05, et seq., against both Fusion Wyoming and Aarsvold; (3) Breach of fiduciary duty against Aarsvold; and (4) Conversion against both Fusion Wyoming and Aarsvold. On November 1, 2013, Trustee filed the Complaint, asserting claims against Fusionbridge Wyoming and Aarsvold. Wood Decl., Ex. "3."
A similar pattern continued even after this bankruptcy was filed. On January 10, 2014, Aarsvold’s wife, Ms. Laurel Aarsvold, incorporated Glomad Services, Ltd. ("Glomad Services"). Wood Decl., Ex. "16." Sometime between January 10, 2014 and August 15, 2014, Aarsvold begins "shutting down" Fusionbridge Wyoming and starts working at 77 North Baker Inc. ("North Baker"), a company owned by Mrs. Aarsvold. Wood Decl., Ex "6" and "4." Between August 15, 2014 and December 12, 2014, North Baker begins shutting down. Mr. Aarsvold begins to work at Glomad Services where he performs the same services as he performed while working for Debtor.
Wood Decl., Ex. 7, pg. 317:5-22.
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Trustee moves for summary judgment on the following claims. First, Trustee
seeks a judgment on a matter of law that Defendants committed a fraudulent transfer (both actual and constructive fraud) pursuant to 11 U.S.C. §§ 544, 548(a)(1)(A), (a)(1) (B), 550, 551, and Cal. Civ. Code §§ 3439, et seq. Second, Trustee seeks a judgment that Aarsvold breached his fiduciary duties to Debtor. Third, Trustee seeks summary judgment that Aarsvold is the alter ego of both Debtor and Fusionbridge Wyoming.
Fourth, Trustee seeks summary judgment dismissing all of Defendants’ asserted affirmative defenses in Defendants’ Answer to Complaint.
Rule 56 of the FRCP, which applies in adversary proceedings pursuant to Rule 7056 of the FRBP, provides that a party seeking to recover upon a claim may move for summary judgment in the party’s favor upon all or any part thereof. See Fed. R. Civ. P. 56. Summary judgment is appropriate on a claim when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. See Aronsen v. Zellerback, 662 F. 2d 584, 591, (9th Cir. 1981). In addition to declaration testimony, it is also appropriate for the court to consider previous matters of record (such as orders, pleadings and the like) by way of a request for judicial notice when considering a motion for summary judgment. See Insurance Co. of North America v. Hilton Hotels USA, Inc., et al., 908 F. Supp. 809 (D. Nev. 1995).
The party seeking summary judgment bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). However once the moving party has carried its burden under Rule 56, its opponent must do more than show that there is some metaphysical doubt as to the material facts . . . the non-moving party must come forward with "specific facts showing that there is a genuine issue for trial." Matsushita Electric Industrial Co Ltd
v. Zenith Radio Corp., 475 U.S. 574 (1986). In fact, if the factual context makes the nonmoving party’s claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue of material fact. Calhoun v. Liberty Northwest Ins. Corp., 789 F. Supp. 1540, 1545 (W.D. Wash. 1992) (citing Matsushita Electric, supra, at 538). A party cannot
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"rest upon the mere allegations or denials of his pleading" in opposing summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
A self-serving declaration without evidence is not enough to show that there is a genuine issue of material fact. The Ninth Circuit has held that a "conclusory, self- serving affidavit, lacking detailed facts and any supporting evidence, is insufficient to create a genuine issue of material fact." F.T.C. v. Publ’g Clearing House, Inc., 104 F. 3d 1168, 1171 (9th Cir. 1997). A declaration which contradicts earlier deposition testimony will also fail to create an issue of material fact. See Andreini & Co., Inc. v. Lindner, 931 F. 2d 896 (9th Cir. 1991) (citing Radobenko v. Automated Equipment Corp., 520 F. 2d 540 (9th Cir. 1975)).
Under 11 U.S.C. § 548, a trustee may avoid a debtor’s fraudulent transfer of property made with the intent to hinder, delay, or defraud creditors. See 11 U.S.C. §§ 544, 548(a)(1)(A). To prevail in a 11 U.S.C. § 548(a)(1)(A) action, the trustee must show: (1) the debtor transferred an interest in property or a debt; (2) within two years before the petition filing date; and (3) with actual intent to hinder, delay, or defraud present or future creditors.
In this case, Defendants do not dispute the claim that a transfer occurred two years before the Petition Date. The key issue here centers on the third element: whether Defendants had the actual intent to hinder, delay or defraud creditors.
Whether a transfer has been made with actual intent to hinder, delay or defraud a creditor is a question of fact. United States v. Tabor Court Realty Corp., F. 2d 1288, 1304 (3rd Cir. 1986). Courts generally infer fraudulent intent from the circumstances surrounding the transaction. In re Acequia, Inc., 34 F. 3d 800, 805-806 (9th Cir.
1994). Courts look for "badges of fraud" that indicate fraudulent intent. Id. at 806. The traditional "badges of fraud" include:
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The transfer of an obligation to an insider or other person with a special relationship with the debtor;
The debtor retained possession or control over the property after the transfer;
The transfer was not disclosed;
Actual or threatened litigation against the debtor at the time of the transfer;
The transfer included all or substantially all of the debtor’s assets;
The debtor absconded;
The debtor removed or concealed assets;
The value of the consideration received by the debtor was not reasonably equivalent to the value of the asset transfer;
Insolvency or other unmanageable indebtedness on the part of the debtor;
The transfer occurred shortly after a substantial debt was incurred; and
Whether the debtor transferred the essential assets of the business to a lienholder who transferred the assets to an insider of the debtor.
In re Acequia, Inc., 34 F. 3d at 806; see also Cal. Civ. Code § 3439.04(b)(1)-(11). Fraudulent intent is inferred "when an insolvent debtor makes a transfer and gets nothing or very little in return." Kupetz v. Wolf, 845 F. 2d 842, 846 (9th Cir. 1988).
Here, the evidence in the record shows that at least six (6) "badges of fraud" are present. Each applicable to this case is discussed below:
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The Debtor was involved in pending litigation at the time of the transfer. At the time of the APA transfer, Aarsvold and his previous companies (Strategix and ePassage) had been in litigation with Infocrossing since June of 2005. Aarsvold and his companies kept losing legal battles and per Aarsvold’s own testimony, the APA was entered into because "it was unlikely that [Debtor] could get an additional line of credit for operating funds. . ." Tellingly, the Petition Date was only days after the state court granted Infocrossing’s motion compelling Aarsvold to appear to furnish information to aid in enforcement of money judgment and Infocrossing’s motion for attorney’s fees. Wood Decl., Ex. 10, pg. 443. The facts are undisputed that Debtor was involved in litigation at the time of the transfer. Thus this "badge of fraud" (of litigation against the Debtor at the time of the transfer) is present here.
The court finds that the transferred assets pursuant to the APA were substantially all of Debtor’s assets. This "badge of fraud" is present for the following reasons. First, a review of Debtor’s bankruptcy documents strongly indicates that substantially all of Debtor’s assets were transferred. Debtor disclosed only $6.17 of personal property on its Schedule B. However in its Statement of Financial Affairs, Debtor admitted to receiving $1,331,772.00 in gross income in 2010, and $996,015.00 in gross income for 2011. The only logical explanation is that substantially all of Debtor’s assets were transferred to Fusionbridge Wyoming. Defendants do not offer any documentary evidence showing that Debtor retained assets that were not transferred to Fusionbridge Wyoming.
Second, the plain language of the APA provides that there was a transfer of all or substantially all of Debtor’s property. Specifically, section 1.1 of the APA provides that the Debtor was selling to Fusionbridge Wyoming all its "right, title, and interest in and to the assets of the Business.
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Third, Fusionbridge Wyoming assumed all, save one, of Debtor’s contracts to
perform services. The only customer that Debtor did not transfer had a contract that ended before the APA sale closed on January 1, 2012. Based on the above evidence, this "badge of fraud" is present here.
It is uncontroverted and self-evident that Debtor was insolvent or became insolvent when the sale contemplated in the APA was concluded. Debtor no longer had assets to conduct business but retained virtually all of its liabilities. Wood Decl., Ex. 1, pg. 8-25. Aarsvold himself testified that the sale was necessary because of Debtor’s "debt load" and "it was unlikely that [Debtor] could get an additional line of credit for operating funds . . ." Wood Decl., Ex. 6, pg. 265:10-12. Defendants do not offer any evidence indicating Debtor was not insolvent when the APA was executed. Thus this "badge of fraud" is also present.
It is undisputed that Aarsvold was acting as the CEO for both Debtor and Fusionbridge Wyoming at the time the APA was negotiated and executed. Wood Decl., Ex.2, pg. 49. Aarsvold himself recalled being the only person involved in deciding to enter into the APA. Wood Decl., Ex. 6, pg. 237:2-8. The evidence is clear--there existed a special relationship between Debtor and Fusionbridge Wyoming.
Debtor did not receive reasonably equivalent value in the APA transfer.
Although Fusionbridge Wyoming received substantially all of Debtor’s assets, the only consideration it "paid" to Debtor was the assumption of certain debts that had been personally guaranteed by Aarsvold. Even then, Fusionbridge Wyoming has not paid those debts. Yet the contracts Fusionbridge Wyoming received generated significant earnings. According to its 2012 tax return, Fusionbridge Wyoming earned
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approximately $771,000 during 2012. Moreover, Aarsvold admitted he did not go through a process of trying to value the assets held by Fusionbridge California before transferring those assets to Fusionbridge Wyoming.
Defendants argue that somehow valid consideration was passed as equivalent value in their Opposition. Defendants’ argument fails. First, Defendants’ Opposition cites case law that elaborates on the definition of "reasonably equivalent value." See Opposition, pg. 6. What is sorely lacking in Defendants’ Opposition, however, is any kind of evidence or specific facts pertaining to the APA transfer that support any kind of legal argument that Debtor did receive a reasonably equivalent value. From the standpoint of creditors (particularly those left behind and not assumed), nothing of any consequence was received in return for transfer of all of the Debtor’s assets.
The circumstances and evidence strongly indicate the transfer was concealed.
Fusionbridge Wyoming used the same corporate name as Debtor. Fusionbridge Wyoming used Debtor’s mailing address, telephone number, and email addresses. Fusionbridge Wyoming used the same consultants as Debtor. Fusionbridge Wyoming even generated invoices that appeared identical to Debtor’s invoices. All of these practices suggest that Aarsvold desired to keep the APA transfer secret.
Defendants do not even address this "badge of fraud" in their Opposition. They do not assert that they disclosed the transfer to anyone, nor do they offer any evidence to rebut Trustee’s claims. Without any argument or evidence to the contrary, the evidence on the record strongly indicates that the APA transfer was concealed and this "badge of fraud" is present.
In conclusion, the Court should grant the Trustee’s motion for summary judgment as to the first claim. Defendants concede that there was a transfer within 2 years of the petition date. The only remaining element in question is whether Defendants had the requisite intent. To infer intent, courts rely on the presence of
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"badges of fraud." Here, the record shows that at least six badges of fraud are present. These "badges of fraud" strongly indicate that Defendants had the intent to delay, defraud or hinder creditors. Defendants do not offer any documentary evidence or specifics to rebut Trustee’s claims regarding these "badges of fraud." Defendants’s only evidence is Aarsvold’s self-serving declaration that he was actually attempting to assist the Debtor by transferring what he claims were mostly unprofitable accounts.
But this is inherently incredible; the court does not see how denuding a corporation of all of its assets and leaving it with only debt can somehow be regarded as indicative of benign intent. And although every transferred contract or relationship might not have been a winner, the continued income enjoyed by Fusionbridge Wyoming immediately starting from zero, belies this claim.
Under federal law, Trustee can avoid a "constructively" fraudulent transfer even in the absence of actual fraudulent intent. A "constructively" fraudulent transfer is one that was made in exchange for less than "reasonably equivalent value" at a time when debtor was insolvent. 11 U.S.C. § 548(a)(1)(B). To prevail on a claim for constructive fraudulent transfer under § 548(a)(1)(B), a trustee must establish (1) debtor transferred an interest in property, (2) debtor was insolvent at time of transfer or was rendered insolvent as a result of transfer, was engaged in business or was about to engage in business for which debtor’s remaining property constituted unreasonably small capital, or intended to incur or believed that it would incur debts beyond its ability to pay as they matured, and (3) debtor received less than reasonably equivalent value in exchange for transfer. In re Saba Enterprises, Inc., 421 B.R. 626, 645 (Bankr.
S.D.N.Y. 2009); In re Pajaro Dunes Rental Agency, Inc., 174 B.R. 557 (N.D. Cal. 1994).
Under California law, a transfer is constructively fraudulent: (1) as to a creditor whose claim arose before the transfer was made or the obligation was incurred; (2) if the debtor made the transfer or incurred the obligation without
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receiving a reasonably equivalent value in exchange for the transfer or obligation; and
the debtor was insolvent at the time or the debtor became insolvent as a result of the transfer or obligation. Cal. Civ. Code § 3439.05.
As discussed below, Trustee meets all elements of a constructively fraudulent transfer under both Federal and state law. There is no genuine issue of material fact as to this claim.
Trustee establishes all the following elements for a constructively fraudulent transfer claim under Federal law:
It is uncontested that Debtor executed the APA and a transfer occurred.
According to the APA, Debtor sold, assigned and delivered to Fusion Wyoming all of Debtor’s ". . . equipment, furniture, fixtures, supplies and other similar property used in the Business; all material records related to the performance of the Assumed Contracts prior to the Closing Date; All Business Intellectual Property; All customer lists, price lists, advertising and promotional materials, sales and marketing materials, e-mail addresses used in the Business; [and] the goodwill and other intangible assets of the Business." Wood Decl., Ex. 2, pg. 39 & 51. Defendants concede that a transfer occurred.
It is also uncontested that Debtor was insolvent or became insolvent when the transfer contemplated in the APA was concluded. At the time of the transaction, Debtor had over one million dollars in debt but had virtually no assets with which such obligations could be paid. See Wood Decl., Ex. 28. Defendants also do not offer any argument or evidence to show that Debtor was not insolvent at the time the APA transfer was executed.
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The Debtor did not receive "reasonably equivalent value in exchange for the
transfer or obligation." Aarsvold admitted that "[n]o cash was exchanged" from Fusionbridge Wyoming to Debtor. Wood Decl. Ex. 5, pg. 166, at 79:20-21. Any revenue generated from the contracts was paid to Fusionbridge Wyoming. These customer contracts provided Fusionbridge Wyoming with approximately $771,000 in revenue in 2012. Additionally, Fusionbridge Wyoming received Debtor’s accounts receivables, which exceeded $2.5 million.
In return, Debtor received nothing. Debtor was supposed to receive payment of selected credit card debt, but even that did not occur.
Defendants assert that Aarsvold was transferring "risky" contracts in order to save Debtor from further liability. This assertion fails because Defendants offer no documentary evidence in support of this assertion. There is no evidence these contracts were costly or risky. A self-serving declaration that the contracts were liabilities will not suffice. It is clear from the record that Debtor received less than reasonably equivalent value (in fact, nothing) in exchange for the transfer.
Trustee succeeds in establishing all the following requisite elements of a constructive fraudulent transfer under California state law.
It is undisputed that there was at least one creditor in existence at the time the transfer was made. Pursuant to Cal. Civ. Code § 3439.05, Trustee must establish that there was a creditor in existence at the time of the transfer whose claim remained unpaid on the Petition Date. Here, there are at least two creditors.
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On October 28, 2013, Superior Financial Group ("Superior"), filed proof of
claim 4-1 indicating that Superior loaned Debtor $10,000 pursuant to a "loan agreement/promissory note" executed by Aarsvold in December of 2008. As of the Petition Date, the account balance was $12,847.92. Additionally, on November 4, 2013, Global Systems Integration, Inc. ("Global,") filed proof of claim 5-1 asserting a claim for $18,662.50 ("Global POC"). According to the Global POC, Debtor incurred the $18,662.50 liability between 2007 and 2008. The obligations to both Superior and Global arose before the transfer, and still existed as of the Petition Date.
Both state and federal law defining constructively fraudulent transfers share this element. As discussed above, Debtor did not receive reasonably equivalent value for the transfer. Despite Defendants’ assertion that Aarsvold was trying to transfer liabilities to Fusionbridge Wyoming or that valid consideration was passed as equivalent value, Defendants offer no evidence in support of this argument. Rather, the evidence on the record shows that Debtor received nothing in return for giving up its assets to Fusionbridge Wyoming.
Both state and federal law defining constructive fraudulent transfers share this element as well. As discussed above, Debtor was insolvent at the time of the APA transfer. This element is also undisputed. The record shows that Debtor had over one million in debt and virtually no assets to pay its obligations. Defendants do not argue this point and so this element is easily established.
Defendants offer no evidence to support an argument that Debtor received an equivalent value in the transfer. The other elements are uncontroverted. Thus there are no genuine issues of material facts as to any of the elements of this claim and the Court should grant summary judgment.
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The elements of a claim for breach of fiduciary duty are "(1) the existence of a fiduciary relationship; (2) the breach of relationship; and (3) damages proximately caused by the breach." In re Intelligent Direct Marketing, 518 B.R. 579, 589 (E.D. Cal. 2014). While a director may be protected by the business judgment rule, an exception to the rule exists "in ‘circumstances which inherently raise an inference of conflict of interest’ and the rule ‘does not shield actions taken without reasonable inquiry, with improper motives, or as a result of a conflict of interest.’" Id., (citing Berg & Berg Enterprises LLC v. Boyle, 178 Cal. App. 4th 1020, 1045 (2009).
There is no genuine issue of material fact as to whether Aarsvold owed a fiduciary duty to Debtor. The Supreme Court has held that a director is a fiduciary, and so is a dominant or controlling stockholder or group of stockholders. Pepper v. Litton, 308 U.S. 295, 306 (1939). In the instant case, it is uncontested that Aarsvold was not only the CEO of Debtor, but that he was also the sole shareholder of Debtor. Mr. Aarsvold admitted these material facts himself. Wood Decl., Ex. 13, Request for Admissions, No. 2-3, 5. Therefore there is no genuine issue of material fact under the first element that establishes Mr. Aarsvold owed a fiduciary duty to Debtor.
Aarsvold breached his fiduciary duty to Debtor, and that the business judgment rule does not protect the actions taken by Aarsvold. A director breaches their fiduciary duty when approving and carrying out transactions "in ‘circumstances which inherently raise an inference of conflict of interest’ and the business judgment rule ‘does not shield actions taken without reasonable inquiry, with improper motives, or as a result of a conflict of interest.’" In re Intelligent Direct Mktg., supra, at 589.
Aarsvold breached his fiduciary duty by carrying out transactions in circumstances which were such as to inherently raise a conflict of interest. A "conflict
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of interest" is a "real or seeming incompatibility between one's private interests and one's public or fiduciary duties." Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 112 (2008) (quoting Black's Law Dictionary 319 (8th ed. 2004)). The Trustee alleges that the circumstances surrounding Aarsvold, the CEO of the Debtor and Fusionbridge Wyoming, gave rise to the inference of a conflict of interest for a few reasons. First, a conflict of interest is inherent in Aarsvold’s transfer of substantially all of the Debtor’s assets to Fusionbridge Wyoming without reasonably equivalent value. Wood Decl., Ex. 2, Pg. 70, 81; Ex. 6, Pg. 252:6-14. Second, a conflict of interest is present when the debt transferred from the Debtor to Fusionbridge Wyoming only consisted of debt that Aarsvold had personally guaranteed. Id., Ex. 2, Pg. 83. In his Opposition, Aarsvold fails to allege facts or provide any evidence that there was no "conflict of interest" so as to create a genuine issue of material fact.
The business judgment rule does not protect Aarsvold. The business judgement rule "does not shield actions taken without reasonable inquiry, with improper motives, or as a result of a conflict of interest." In re Intelligent Direct Mktg, supra, at 589. By Aarsvold’s own admissions, he failed to value the assets of Debtor before transfer. There was no "reasonable inquiry" that Aarsvold took in preparation for the APA transfer.
Alternatively, the Trustee makes the argument that the business judgement rule does not apply. Aarsvold’s actions were taken with improper motives. The Trustee alleges that Aarsvold made the transfer in order to shield Debtor’s assets from Infocrossing. Wood Decl., Ex. 2; Wood Decl., Ex. 6, Pg. 211-213. Infocrossing appeared ready to execute a judgment against Debtor when Aarsvold initiated the transfer of Debtor’s assets to Fusionbridge Wyoming. Aarsvold does not deny such allegations made by the Trustee.
Aarsvold argues that he executed the transfer of assets from Debtor in order to prevent its contracts from becoming worthless and to prevent Debtor from "slipping into a position of bankruptcy." See Opposition, Pg. 8. Once again, Aarsvold fails to provide evidence. A party cannot manufacture a genuine issue of material fact merely by making assertions in its legal memoranda. Hardwick v. Complete Skycap Services,
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Inc., 247 Fed. Appx. 42, 43-44 (9th Cir. 2007) (unpublished). Thus Aarsvold has failed to create a genuine issue of material fact about his true intentions as he has not presented evidence in support of his alleged intentions.
Aarsvold’s breach of fiduciary duty was the proximate cause of Debtor’s damages. Whether proximate cause exists as a result of Defendants' breach of a duty are questions of fact generally resolved by a trier of fact. Quechan Indian Tribe v.
U.S., 535 F. Supp. 2d 1072, 1120 (S.D. Cal. 2008) (citing Armstrong v. United States, 756 F.2d 1407, 1409 (9th Cir.1985)). But when the facts are undisputed, and only one conclusion can be reasonably drawn, the question of causation is one of law. Quechan Indian Tribe v. U.S., 535 F. Supp. 2d at 1120 (citing Lutz v. United States, 685 F.2d 1178, 1185 (9th Cir.1982)).
The Trustee alleges that Debtor sustained monetary damages after Aarsvold made the transfer of Debtor’s assets. The Trustee presents evidence that prior to Aarsvold transferring Debtor’s assets, in the years 2010 and 2011, the Debtor admitted to receiving $1,331,772.00 and $996,015.00 in gross income respectively. Wood Decl., Ex. 1, Pg. 59. But after Aarsvold executed the transfer in 2012, Debtor only totaled a gross income of $15,681.39. Id. In contrast, Fusionbridge Wyoming had a gross income of approximately $771,000.00 in 2012. Wood Decl., Ex. 14; Wood Decl., Ex. 25.
The only defense Defendants offer in their Opposition is that Aarsvold’s decision to execute the APA was a "valid business judgment." See Opp., pg. 8:20. Aarsvold transferred contracts that "required the use and deployment of specific contractors with specific skills." Id., pg. 8:20-22. Defendants argue that "if these contractors left, they would be worthless, as is the nature of the business."
This argument fails for the following reasons. First, Defendants attach no documentary evidence showing the specifics of the contracts and how by transferring them, they were protecting the Debtor. Second, is it unclear why it matters that the
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transferred contracts required specific contractors. Did the contractors in fact leave? On the contrary, it appears the contractors continued working for Fusionbridge Wyoming after the APA transfer was executed.
In conclusion, the Trustee has satisfied all three elements for a claim of a breach of fiduciary duty by Aarsvold. There has been no genuine issue of material fact established for the three elements of (1) the existence of a fiduciary relationship; (2) the breach of relationship; and (3) damages proximately caused by the breach.
Trustee seeks an order determining that Aarsvold, Debtor, and Fusionbridge Wyoming are alter egos of each other. Under California law, alter ego is present when "(1) there is such a unity of interest and ownership between the corporation and the individual or organization controlling it that their separate personalities no longer exist; and (2) failure to disregard the corporate entity would sanction a fraud or promote an injustice. In re Intelligent Direct Marketing, supra, at 588 (citing Community Party v. 522 Valencia, Inc., 35 Cal. App. 4th 980, 993 (1995). To determine whether alter ego is present, courts consider numerous factors including commingling of funds and other assets, unauthorized diversion of corporate funds to other than corporate uses, the treatment by an individual of the assets of the corporation as his own, among others. Twenty-eight of these factors that indicate "alter ego" are listed in Associated Vendors v. Oakland Meat Co., 210 Cal. App. 2d 838-840 (1962).
Here, many of the Associated Vendors factors are present.
First, Aarsvold uses multiple corporate entities for a single venture. When Aarsvold’s previous companies (ePassage and Strategix) encountered legal problems, Aarsvold transferred their assets to Debtor. When Debtor was facing a judgment, Aarsvold transferred its assets to Fusionbridge Wyoming. Now that Trustee as asserted claims, Aarsvold ceased operating Fusionbridge Wyoming to work for "Glomad Services." Glomad Services was incorporated by Mrs. Aarsvold and Glomad
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lists the same principal office and mailing address as Fusionbridge Wyoming. Wood Decl., Ex. 16.
Further, a review of Aarsvold’s company’s financial statements provide evidentiary support for this factor. Aarsvold testifies that North Baker is owned by his wife and provided both Debtor and Fusionbridge Wyoming with IT and administrative work. The following list of exchanges from Trustee’s review of financial statements provided by North Baker reveals the interconnectivity of Mr. and Mrs. Aarsvold’s multiple corporate entities, to wit:
As of December 31, 2011, ePassage owed Debtor $2,031,089.11 for legal fees that Debtor paid on behalf of ePassage and Strategix in connection with Infocrossing litigation.
The receivable owed to Debtor by ePassage (in the amount of over two million dollars) was transferred to Fusionbridge Wyoming.
As of December 31, 2011, North Baker owed Debtor $496,201.79.
The receivable owed to Debtor by North Baker was transferred to Fusionbridge Wyoming. As of December 31, 2012, North Baker owed Fusionbridge Wyoming $489,562.41.
Second, Aarsvold diverted corporate assets. North Baker’s financial statements show that Mr. Aarsvold diverted Debtor’s assets to pay the obligations of his other entities. A review of North Baker’s 2012 "Balance Sheet" indicates that North Baker had outstanding loan and note receivables from Aarsvold, Aarsvold’s son—Andy Aarsvold, and accounts receivable owed from ePassage and Strategix. Wood Decl., 21, pg. 593. Moreover, North Baker lists as liabilities certain credit card obligations of Andy Aarsvold, Andy Asarsvold’s student loans, and outstanding obligations owed to Debtor and/or Fusionbridge Wyoming.
Third, there is no dispute that Aarsvold owns and dominates Debtor and Fusionbridge Wyoming. By his own admission, Aarsvold owned and controlled
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ePassage, Strategix, Debtor, and Fusionbridge Wyoming. Wood Decl., Ex. 5, pg. 147, at 8:7-9; Ex. 6, pg. 203:2-4, pg. 222:10-11. Aarsvold executed the APA on behalf of Debtor and Fusionbridge Wyoming while serving as the CEO of both companies. Id.
Fourth, Mr. Aarsvold, Debtor and Fusionbridge Wyoming use the same address. See Wood Decl., Ex. 1; Ex. 6, pg. 183:14-15; 187:1-4; 227:6-16.
Additionally, Debtor and Fusionbridge Wyoming shared the same telephone numbers and email.
Fifth, Debtor and Fusionbridge Wyoming use the same employees and consultants. Mr. and Mrs. Aarsvold are employees/owners of Debtor, Fusionbridge Wyoming, and North Baker. The APA also indicates that Fusionbridge Wyoming and Debtor used the same consultants. Wood Decl., Ex. "2," pg. 82.
Sixth, Aarsvold, Debtor and Fusionbridge Wyoming do not deal at arm’s length with each other. For example, Debtor paid the legal fees and other obligations of ePassage and Strategix. Wood Decl., Ex. 7, pg. 281:22-282:13. Then, pursuant to the APA, Aarsvold assigned the ePassage receivable held by Debtor to Fusionbridge Wyoming. Debtor had also loaned money to North Baker (Mrs. Aarsvold’s company). Pursuant to the APA, that receivable was assigned to Fusionbridge Wyoming. These actions strongly indicate that Aarsvold improperly uses the corporate entity as a shield against personal and corporate liability.
Seventh, Aarsvold intentionally had Fusionbridge Wyoming operate as if it were Debtor. Fusionbridge Wyoming and Debtor shared the same mailing address and telephone number. Their logos are the same and their invoices also appear identical.
Wood Decl., Ex. 22 & 23. Mr. Aarsvold’s electronic signature on email is also identical from Debtor and Fusionbridge Wyoming. These actions strongly indicate Aarsvold’s intent to present one single entity to customers.
In sum, multiple Associated Vendors factors are present to indicate that Aarsvold, Debtor, and Fusionbridge Wyoming are the alter egos of each other. Defendants do not even attempt to argue against this claim in their Opposition.
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Because of the undisputed evidence in the record, the Court determines that Aarsvold, Debtor, and Fusionbridge Wyoming are the alter egos of each other.
Trustee seeks summary judgment on each of Defendants’ affirmative defenses.
In their Answer to the Complaint, Defendants assert the following seventeen (17) affirmative defenses:
Trustee fails to state a claim for relief;
The Complaint fails to establish the elements necessary to establish the purported claims for relief;
Plaintiff seeks relief not available to her;
Complaint has been filed in bad faith;
Plaintiff failed to mitigate damages;
Plaintiff is barred from recovering damages because of unclean hands;
Plaintiff is stopped from recovery damages;
Plaintiff has waived any right to recover damages;
Plaintiff waited an unreasonable period of time to complain of the alleged wrongdoing;
Damages alleged in the Complaint were caused by other unnamed Defendants;
Allegations in the Complaint is barred by statutes of limitation;
Allegations in the Complaint are barred because the Defendants’ actions were justified;
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Plaintiff has not set forth a sufficient factual or legal basis for the recovery of attorneys’ fees from Defendants;
Any award in Plaintiff’s favor would constitute unjust enrichment;
Allegations in Complaint are barred because Plaintiff has not suffered injury or damages alleged;
Defendants have substantially complied with all requirements of law; and
Plaintiff lacks standing to sue.
There is simply no legal or factual support for any of the above affirmative
defenses. In light of the extensive discovery conducted, Defendants still cannot apparently offer facts or legal theories to support any of these affirmative defenses, and these are Defendants’ burden to prove. Thus, there is no genuine issue of material fact as to any of these affirmative defenses and the Court should grant summary judgment dismissing these defenses.
Defendants have not offered any meaningful evidence to indicate a genuine issue of material fact as to any of Trustee’s claims. Trustee’s evidence in contrast is clear and persuasive. There does not appear to be any genuine issue of law. It would appear that this is a proper case for judgment by motion.
Debtor(s):
FusionBridge, Ltd. Represented By Carlos F Negrete
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Defendant(s):
Matthew David Aarsvold Represented By Carlos F Negrete
Fusion Bridge, Ltd. Represented By Carlos F Negrete
Mediator(s):
Thomas H. Casey Represented By Thomas H Casey
Plaintiff(s):
Karen S. Naylor (TR) Represented By
D Edward Hays David Wood Matthew Grimshaw
Trustee(s):
Karen S Naylor (TR) Represented By
D Edward Hays Karen S Naylor (TR)
Karen S Naylor (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:16-01138 Bermuda Road Properties, LLC v. Hudson, III et al
(con't from 1-25-17
Docket 1
Tentative for 2/15/18:
Continued to April 26, 2018 at 10:00 a.m.
Tentative for 1/25/18:
By order entered December 15, 2017 the adversary proceeding was stayed for 60 days. Continue to February 15, 2018?
Tentative for 10/26/17:
In view of stay ordered October 23, 2017, continue to January 25, 2018.
Tentative for 8/4/16:
Deadline for completing discovery: December 1, 2016 Last date for filing pre-trial motions: December 15, 2016 Pre-trial conference on: January 12, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Joseph Roland Hudson III Represented By James C Bastian Jr Rika Kido
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Defendant(s):
Joseph Roland Hudson III Pro Se
Diana Hudson Pro Se
Joint Debtor(s):
Diana Hudson Represented By James C Bastian Jr Rika Kido
Plaintiff(s):
Bermuda Road Properties, LLC Represented By Colby Balkenbush Alan J Lefebvre
Trustee(s):
Karen S Naylor (TR) Pro Se
Karen S Naylor (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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(OST signed 2-13-18)
Docket 316
Per OST opposition due at the hearing.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
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Adv#: 8:17-01130 Karen Sue Naylor, Chapter 7 Trustee v. Idea Nuova, Inc.
(con't from 1-11-18 per order approving stip to cont ent 1-8-18)
Docket 8
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Idea Nuova, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By
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Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:17-01006 Lim v. Le et al
Docket 61
The last day to complete discovery for the instant case was 09/08/2017 and the last day to file a pre-trial motion was 10/02/2017. Plaintiff had ample time to file a motion to extend discovery before the pretrial motion cutoff of 10/02/2017. Plaintiff has failed to show that he was diligent, post the three weeks of his surgery, by a showing that he couldn’t reasonably meet the deadlines despite attempting to do so.
Plaintiff states that after his surgery he constantly suffered from severe fatigue and had other litigation deadlines that caused him to fall behind on this instant case. However, this doesn’t show any diligent efforts to comply with rule 16 on behalf of Counsel.
Instead Plaintiff has only proven he chose to put the instant case on the back burner instead of, at minimum, seeking an extension in accordance with the Scheduling Order.
Debtor(s):
Deny.
David Thien Le Represented By Roman Quang Vu
Defendant(s):
David Thien Le Represented By Roman Quang Vu
Kimmie Thien Le Represented By Roman Quang Vu
Joint Debtor(s):
Kimmie Thien Le Represented By Roman Quang Vu
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Plaintiff(s):
Phuong X. Lim Represented By Marcello M Di Mauro Marcello M Di Mauro Roman Quang Vu
Trustee(s):
Richard A Marshack (TR) Pro Se
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Adv#: 8:17-01156 Goe & Forsythe, LLP v. Roebuck et al
Docket 33
This is the Motion to Quash the Summons for improper service and a Rule 12
Motion to Dismiss for Lack of Jurisdiction. Both Mr. Rodarte and Ms. Roebuck on behalf of the Shell Beach Trust filed Answers on February 8, 2018 and February 12, 2018, respectively. Consequently, questions regarding the propriety of service of the Summons are waived. The questions raised in the Rule 12(b) motion regarding lack of jurisdiction are likely also waived by the filing of the Answers, but since the Motion was originally denominated as "Specially Appearing," the court will address the points raised in the Rule 12 motion out of an abundance of caution.
In their motion, Roebuck and Rodarte begin by challenging the court’s subject matter jurisdiction over the question of G&F’s fees. To support the contention that the court lacks both personal jurisdiction and subject matter jurisdiction, Movants assert that neither she, nor the entity Shell Beach Trust, nor her co-defendants Rodarte, has a pending bankruptcy. Thus, Movants conclude that personal jurisdiction (and one presumes, subject jurisdiction) does not exist. In opposition, G&F correctly argues that personal jurisdiction is waivable, and that consent to personal jurisdiction can be either express or implied. Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472, n.14 (1985). In the commercial contract context, forum selection clauses are common. When such contract clauses have been freely negotiated, and are not unreasonable or unjust, their enforcement does not offend due process. Id. Here, G&F submits as Exhibit 1, a copy of the Retainer Agreement signed by Roebuck (both as manager of Anchor R&R and as trustee of the Shell Beach Trust) and Michael Renee Rodarte. Roebuck and Rodarte signed "guarantees of fees and
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costs" as part of the Retainer Agreement on page 7. Page 4 of the Retainer Agreement has a section titled "Fee Disputes and Arbitration" wherein the clause plainly states: "Any fee dispute for fees and costs incurred during the bankruptcy case will be resolved by the Bankruptcy Court." The fact that this agreement was signed by Roebuck and Rodarte is strong evidence that they expressly waived the right to challenge personal jurisdiction when the fee dispute arose. Waiver is reinforced by the filing of Answers, of course.
The court also has subject matter jurisdiction. District courts have "original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334 (emphasis added). Bankruptcy courts are units of the district courts and may exercise the authority conferred onto district courts in bankruptcy matters. 28 U.S.C. § 151. Thus, bankruptcy courts have subject matter jurisdiction over "all core proceedings arising under title 11, or arising in a case under title 11." 28 U.S.C. § 157(b)(1). Bankruptcy courts also have subject matter jurisdiction over non-core proceedings that are otherwise related to a bankruptcy case. Id. at § 157(c)(1). Core proceedings include all "matters concerning the administration of the estate." Id. at § 157(b)(2)(A). Whether a dispute is affected by state law is irrelevant to determining whether it is core or non-core. Id. at §157(b) (3).
Here, the dispute is arguably a core proceeding because it concerns the fees owed to the attorneys in connection with the administration of the bankruptcy estate as awarded by this court , and certainly the question arose in a bankruptcy case pursuant to 28 U.S.C. §157 (b)(2)(A). Movants engaged G&F to provide legal services as debtor’s counsel for the bankruptcy of Anchor R&R. Furthermore, this court approved the employment of G&F by Anchor R&R on April 13, 2017 (Docket #57 in the main bankruptcy case 8:17-bk-10703). This court also approved G&F’s fees and costs in a July 10, 2017 Order (Docket #97.
Movants raise a "venue" argument, although this is more properly described as
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a question regarding subject matter. Movants contend that this is a dispute concerning personal guarantees of payment regarding a California attorney’s fees, so the proper venue would be California state court. 28 U.S.C. §1409 governs "Venue of proceedings arising under title 11 or arising in or related to cases under title 11" Subsection (a) states: "a proceeding arising under title 11 or arising in or related to a case under title 11 may be commenced in the district court in which such case is pending." Here, venue properly lies in this judicial district pursuant to 28 U.S.C. § 1409(a) because this is a civil proceeding arising in and/or related to the chapter 11 bankruptcy case of Anchor R&R, LLC and case # 8:17-bk-10703-TA, previously pending before this court. But characterized more properly as a question regarding subject matter jurisdiction, even if this were not a core matter as discussed above it, and even if the question did not arise "in" a bankruptcy case certainly the matter has at least "related to" jurisdiction since there can be no question that this fee dispute is related to the Anchor bankruptcy, as indeed the fees were awarded in the Anchor case by this court.
Lastly, the Motion could be read as raising a question of whether facts have been alleged sufficient to constitute a claim upon which relief can be granted. In order to survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, a plaintiff must comply with the pleading standards found in Fed. R. Civ. P. 8, which states that a claim must contain: (1) a short and plain statement of the grounds for the court's jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support; (2) a short and plain statement of the claim showing that the pleader is entitled to relief; and (3) a demand for the relief sought, which may include relief in the alternative or different types of relief.
As the U.S. Supreme Court stated, "To survive a motion to dismiss, a complaint must contain sufficient factual matter accepted as true, to ‘state a claim to relief that is plausible on its face.’" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v Twombly, 550 U.S. 544 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the
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reasonable inference that the defendant is liable for the misconduct alleged." Id. A pleading that merely "offers ‘labels and conclusions’ or a formulaic recitation of the elements of a cause of action will not do." Id. ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice").
Even though Iqbal and Twombly tightened the standards of pleading somewhat, many of the older precepts still continue. "A complaint should not be dismissed under the rule ‘unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.’ Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957); see also, Amfac
Mortgage Corp. v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 429-30 (9th Cir.1978). All allegations of material fact are taken as true and construed in the light most favorable to the non-moving party. Western Reserve Oil & Gas Co. v. New, 765 F.2d 1428, 1430 (9th Cir.1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 795 (1986). If a
complaint is accompanied by attached documents, the court is not limited by the allegations contained in the complaint. Amfac Mortgage Corp., 583 F.2d at 429. These documents are part of the complaint and may be considered in determining whether the plaintiff can prove any set of facts in support of the claim." Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987).
Here, G&F have complied with Rule 8 because the complaint contains short and plain statements demonstrating the basis of the court’s jurisdiction, the basis upon which G&F is entitled to relief, and the demand for the relief sought. Furthermore, the complaint alleges many facts supported by documentary evidence that would allow the court to draw the inference that G&F is entitled to the relief it seeks. The accusations are not mere recitals of the elements for a cause of action and do not rely on mere conclusory statements. Therefore, the Iqbal and Twombly standards are satisfied.
Deny
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Debtor(s):
Anchor R&R, LLC Represented By Charity J Miller Robert P Goe
Defendant(s):
Teresa Roebuck Pro Se
Michael Rene Rodarte Pro Se
Plaintiff(s):
Goe & Forsythe, LLP Represented By Robert P Goe Charity J Miller
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Adv#: 8:17-01156 Goe & Forsythe, LLP v. Roebuck et al
(con't from 12-14-17)
Docket 1
Tentative for 2/15/18:
Why don't we have defendant input on status report? Continue 30 days for that reason.
Tentative for 12/14/17:
Status conference continued to February 15, 2018 at 11:00 a.m. to coincide with motion to quash.
Debtor(s):
Anchor R&R, LLC Represented By Charity J Miller Robert P Goe
Defendant(s):
Teresa Roebuck Pro Se
Michael Rene Rodarte Pro Se
Plaintiff(s):
Goe & Forsythe, LLP Represented By Robert P Goe Charity J Miller
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Adv#: 8:12-01330 Casey v. Ferrante et al
Docket 847
Grant. Trustee to submit form of judgment. Appearance is optional.
Debtor(s):
Robert A. Ferrante Represented By
Richard M Moneymaker Arash Shirdel
Ryan D ODea
Defendant(s):
Armani Ferrante, Gianni Ferrante, Represented By
Kyra E Andrassy
Chanel Christine Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Robert Ferrante Represented By Dennis D Burns Kyra E Andrassy Robert E Huttenhoff Ryan D ODea
Gianni Martello Ferrante Represented By Dennis D Burns Kyra E Andrassy
Steven Fenzl Represented By
D Edward Hays
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Martina A Slocomb Laila Masud
Mia Ferrante Represented By
D Edward Hays Martina A Slocomb Laila Masud
Systems Coordination & Pro Se
American Yacht Charters, Inc. Pro Se
Rising Star Development, LLC Pro Se
Heritage Garden Properties, Inc. Pro Se Saxadyne Energy Management, LLC Represented By
Gary C Wykidal
Saxadyne Energy Group, LLC Represented By Gary C Wykidal
Cygni Securities, LLC Represented By Gary C Wykidal
Cygni Capital Partners, LLC Represented By Gary C Wykidal Ryan D ODea
Glinton Energy Group, LLC Represented By Gary C Wykidal
Richard C. Shinn Pro Se
Richard C. Shinn Represented By Marilyn Thomassen
Cygni Capital, LLC Represented By Gary C Wykidal Ryan D ODea
CAG Development, LLC Pro Se
Envision Investors, LLC Pro Se
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Traveland USA, LLC Pro Se
Rising Star Investments, LLC Represented By Marilyn Thomassen
Envision Consultants, LLC Pro Se
Oscar Chacon Pro Se
Richard C. Shinn Represented By Shawn P Huston
Global Envision Group, LLC Pro Se
Robert A. Ferrante Represented By
Robert E Huttenhoff Ryan D ODea
Glinton Energy Management, LLC Represented By
Gary C Wykidal
Plaintiff(s):
Thomas H Casey Represented By Thomas A Vogele Thomas A Vogele Timothy M Kowal Brendan Loper
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Thomas A Vogele Kathleen J McCarthy Brendan Loper Steve Burnell
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Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
(con't from 2-1-18)
Docket 226
Tentative for 2/15/18:
Why shouldn't the court sign the unilateral version for failure to cooperate?
Tentative for 2/1/18:
This is the motion of defendant Frank Jakubaitis for a protective order pursuant to Federal Rule of Civil Procedure ("Rules") Rule 26(c) to avoid being compelled to disclose information he was questioned about at a June 2, 2017 deposition (to which he was compelled to give testimony by earlier order). Defendant contends the questions asked, largely about medications Defendant has allegedly been prescribed, are protected from answer by the psychotherapist-patient privilege.
Defendant argues that questioning about his medication and its effects is both irrelevant and designed to annoy, embarrass, and oppress the Defendant. Defendant also renews his motion for an order preventing Plaintiff from attending the deposition. Defendant argues that the only purpose served by having him attend the June 2 deposition was to harass and annoy the deponent.
Rule 26(c)(1) provides in relevant part "the court may for good cause issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including one or more of the following: (A) forbidding disclosure or discovery; (D) forbidding inquiry into certain matters, or limiting the scope of disclosure or discovery to certain matters; (E) designating the persons who
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may be present while the discovery is conducted." Defendant relates that he sought treatment from psychiatrists at the Veteran’s Administration for traumatic memories from his experiences in the Vietnam War, and that Plaintiff is precluded from seeking information concerning this treatment. Defendant’s motion seems to project from this issue a rather broader prohibition into all medications and treatments.
A court may make a protective order under Rule 26(c) only for good cause shown. 10A FED. PROC., L. ED. § 26:273 (2017). The party seeking a protective order has the burden of demonstrating that good cause exists for issuance of the order. 10A FED. PROC., L. ED. § 26:273 (2017) (citing Frost v. BNSF Railway Company, 218 F. Supp. 3d 1122 (D. Mont. 2016)). The good cause requirement furthers the goal that the court grant only the narrowest protective order as is necessary under the facts. 10A FED. PROC., L. ED. § 26:273 (2017) (citing Frideres v. Schiltz, 150 F.R.D. 153, 27 Fed. R. Serv. 3d 1061 (S.D. Iowa 1993)). Whether good cause exists for an entry of a protective order depends on the facts and circumstances of each particular case.
10A FED. PROC., L. ED. § 26:274 (2017) (citing Lund v. Chemical Bank, 107 F.R.D. 374 (S.D. N.Y. 1985)).
The issuance of a protective order may be based upon the privileged nature of the material sought. 10A FED. PROC., L. ED. § 26:280 (2017) (citing Burka v. New York City Transit Authority, 110 F.R.D. 660 (S.D. N.Y. 1986)). The privilege at issue here is the psychotherapist-client privilege as applied to Defendant’s medicines and their effects. The Supreme Court in Jaffee v. Redmond, 518 U.S. 1, 17 (1996) held that conversations between a police officer under investigation for a shooting and a social worker, and the notes taken during their counseling sessions, were protected from compelled disclosure under Rule 501 of the Federal Rules of Evidence.
Defendant misconstrues the Jaffee holding to include a list of medications. In Jaffee, the protection was afforded to the communications between the therapist and the patient. It is at least a stretch to contend that a list of medicines the Defendant was taking at the time of the deposition would be a direct communication between the Defendant and his therapist, and Defendant has failed to persuasively do so here, which was his burden. Therefore, the list of medications and their effect is not
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afforded protection under the psychotherapist-patient privilege, and absent a claim of other privilege, is subject to disclosure in discovery. Defendant’s citation to authority seeming to hold otherwise is taken largely out of correct context or misconstrued.
A party seeking a protective order under Rule 26(c) must demonstrate that failure to issue the order requested will work a serious injury. 10A FED. PROC., L. ED. § 26:277 (2017) (citing Ground Zero Center for Non-Violent Action v. United States Department of Navy, 2017 WL 2766091 (9th Cir. 2017)). Here, Defendant has simply not met his burden. Plaintiff seeks a list of medications and their effects to ascertain what, if any, effect they could have on the Defendant’s testimony, presumably going to the issue of credibility. Defendant has not proposed any cognizable theory under which disclosing the medicines he is taking and their effects would work serious injury upon him. Simply stating that it would disclose information he contends to be protected by privilege is insufficient. Moreover, viewed as a balancing test, Defendant cannot be allowed to interject self-serving claims of treatment or medication every time he is asked about awkward subjects or contradictions in testimony. Since his credibility is central to this case, such a free- floating means of evasion would work a serious disadvantage to the Plaintiff that the law cannot countenance.
Defendant has also failed to meet his burden to prove good cause for excluding Plaintiff from attending the deposition. Parties normally are allowed to attend all depositions, as they are the persons most affected by what transpires (and are usually paying the bill). To fashion an exception to this rule, a great deal more would have had to been offered than appears here. If Defendant’s allegations of Mr. Padilla’s behavior are true (denied by Plainitff), he certainly acted childishly and disrespectfully. However, his interest in attending the deposition as a Plaintiff still outweighs any minor annoyance of eye rolling, cell phone handling, or sleeping may cause the Defendant. None of these petty annoyances rise to the serious level of preventing the deposition or excluding Plaintiff from attending. One hopes that all litigants will behave civilly, of course, but minor acts of rudeness do not rise to the level requiring the kind of judicial intervention sought here.
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Deny
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
(Order entered 2-5-18)
Docket 1
No tentative. The court wants to discuss the future of these cases.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
11:00 AM
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 110
Tentative for 2/15/18:
Status? Agreed protective order?
Tentative for 1/25/18: Status?
Tentative for 9/14/17:
Status of discovery and cooperation?
Tentative for 7/13/17: Status?
Tentative for 5/4/17: See #10.
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Tentative for 4/13/17:
This is a hearing on the sanctions portion of the motion first heard February 2, 2017. As usual, this motion is plagued by the mess and finger pointing that these adversary proceedings have become.
The deposition of Frank Jakubaitis was to have been conducted within 45 days of the February 2 date, as required by an Order Granting Motion to Compel Production of documents entered February 3 as #123 on the docket, compelling the deposition at its page two. The form of that order originally submitted by Attorney Shirdel had to be almost completely rewritten as it did not match the results of the hearing, but only addressed the documents portion. On the adversary 8:15-ap-01426 TA, concerning another order more narrowly addressing the deposition of Frank Jakubaitis, the court’s judicial assistant, Ms. Hong, telephoned Attorney Shirdel and advised that the order was being held as this was a contested Motion (Opposition being filed by Attorney Firman on February 27, 2017 at #66 on the Court’s docket). As required by the LBRs, the order needed to be held for the 7-day period to see if the opposing side would object to the form of order. Also, Ms. Hong notified Attorney Shirdel that there was a procedural defect in that no Notice of Lodgment was filed with the Order--so the opposing party was not even aware an Order had been uploaded to which they could object. Attorney Shirdel’s staff told Ms. Hong that they would check on this procedural defect and get back to her. Attorney Shirdel finally uploaded the Notice of Lodgment of the Order Granting Motion to Compel Deposition on April 4, 2017 as #76 on the docket. That Order Granting Motion to Compel Deposition of Frank Jakubaitis was finally entered on April 5, 2017 with "as soon as possible" listed as the date the deposition was to be conducted by in place of the stricken "by March 19, 2017," as so much time had elapsed as to make the original date of March 19 (the 45th day from February 2) impossible. But, of course, none of this changed the original order entered February 3 which separately required the deposition within 45 days, except to make everything confused.
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In meantime, one gathers from the briefs on the question of sanctions, it
appears that defendant would like to impose conditions upon the deposition that the plaintiff, Mr. Padilla, not attend and that the deposition not be videotaped. These are not agreed to by plaintiff. Moreover, absent a protective order, there is no requirement in law that either condition be imposed. However, the question of the parties seeking a protective order is alluded to in the February 3 Order. It appears to the court’s ongoing dismay that these parties are unable to cooperate in virtually anything but rather constantly resort to court intervention, even for the basics. The strategy of the court had been to allow a reasonable time for matters to be set straight before the unpleasant question of sanctions is considered, and so an amount appropriate to the circumstances, if any, could be imposed. But that approach has failed because we are still not even at square one and no deposition has occurred. All we have is the usual finger pointing notwithstanding the court’s firm directive February 2 that a deposition must occur within 45 days. Looked at differently, one could say that the defendant has decided to double down his bet on obtaining the relief requested in the protective order motion scheduled 5/4/17 by studiously not giving a deposition in the meantime. He was not privileged to do this.
What is the court to do with these parties? The court can only steer this case using blunt instruments, which in normal cases should not be necessary. But this is not a normal case. The appropriate amount of sanctions for failure to give a deposition cannot be easily determined now because the matter has been so awkwardly handled in that we have two orders addressing essentially the same question. But the court is not inclined to reward defendant for his non-cooperation either. So we are left with the dilemma, and no easy answer except to continue the matter yet again until after the protective order is considered May 4. We should also continue this motion to a date certain after that protective order hearing so that a deposition might actually occur in the meantime, with any protective provisions that the court may or may not direct.
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continue pushing his luck by again not giving his deposition testimony to the continued date.
Continue
Tentative for 2/2/17:
The court has had just about enough of the petty, unprofessional squabbling which has plagued this case from the outset. As explained below, the conduct of both sides falls far below what the court should be able to expect. This latest is a motion to compel attendance of Mr. Jakubaitis at deposition and for $3307.50 in sanctions.
On January 5, 2017, Plaintiffs served a notice of deposition on Debtor’s counsel Mr. Fritz Firman ("Firman") indicating that Plaintiffs would depose Debtor on January 19, 2017. Plaintiffs’ counsel Mr. Shirdel ("Shirdel") argues that he did not receive notice Debtor would be unable to attend the deposition until the eve of the deposition. According to Plaintiffs, they received objections at 4:00 p.m. on January 18, 2017, which objections asserted insufficient notice, failure to consult regarding the deposition dates, unavailability of counsel, and that Debtor was unable to be properly deposed because he was taking prescription medication. Shirdel contends he attempted to confer with Firman after receiving the objections, but to no avail.
According to Debtor, Plaintiffs purposefully scheduled the deposition for January 19, 2017 knowing that Debtor would be unable to attend, so this motion has been brought in bad faith. In support, Debtor explains that he successfully brought an anti-SLAPP motion against Plaintiff Carlos Padilla’s defamation claim in state court (Shirdel represents Carlos Padilla III in this adversary proceeding and in the state court action). Because Debtor prevailed, Debtor was permitted to seek recovery of attorney fees. Debtor filed a motion seeking recovery of attorney fees, with the hearing on this motion scheduled for January 5, 2017. Shirdel then sent a notice of deposition for January 5, 2017 (one infers the scheduling was intended to interfere with the motion?). On December 29, 2016, Firman responded that he and Debtor
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would be unable to attend the deposition on January 5, 2017. Debtor now argues that because Shirdel had notice Debtor was unable to attend the January 5, 2017 deposition, Plaintiffs were somehow on constructive notice that Debtor and Firman would be unable to attend the deposition on January 19, 2016, some two weeks later. To call that argument thin is being generous.
Failure of a party to attend a properly noticed deposition without first obtaining a protective order will subject that party to sanctions under Rule 37(d). In re Honda, 106 B.R. 209, 211 (Bankr. Haw.1989). Here, Debtor’s counsel received proper and reasonable notice, as the proof of service indicates notice of the deposition was delivered by email on January 5, 2017, approximately two weeks before the deposition at issue was to take place. Thus, absent a finding Firman was substantially justified or that Shirdel did not confer in good faith, Firman and /or Defendant should be liable for the costs of bringing this motion to compel. The argument that Plainitff was on constructive notice of Debtor’s unavailability and thus gave a notice of deposition for that time in bad faith is unpersuasive. Firman makes reference to a deposition that was scheduled for January 5, 2017. Although not entirely clear, it appears this deposition is related to the state court action as the notice of the January 5 deposition was sent to Debtor’s state court counsel. Firman argues that Shirdel knew Debtor would be unable to attend the January 5 Deposition, as this was the same day the motion for recovery of attorney fees in the state court action was set for hearing. In addition, Firman also asserts that Shirdel received objections to the January 5 Deposition on December 29, 2016. But it is unclear why Debtor’s unavailability on January 5, 2017 somehow provides constructive notice Debtor would be unavailable on January 19, 2017, two weeks later. Firman points to no additional hearings or related proceedings in the state court action that were to occur on January 19, 2017.
Consequently, the argument that Plaintiff should have known Debtor was unavailable on January 19, 2017 is not supported. That Defendant responded at 4:00 p.m. on the eve of the deposition further undermines this contention. Plaintiff does not appear to have acted in bad faith in scheduling the deposition. If Debtor had issues with the deposition, his recourse was to have filed a motion for a protective order.
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An argument is also raised that Plaintiff should have sought leave to request
this deposition, as multiple depositions have already occurred. But the examples of other depositions Defendant highlights are not persuasive. Defendant argues that the § 341(a) meeting should be treated as a deposition because Shirdel conducted questioning at the meeting. In addition, Defendant argues that a judgment debtor’s examination should also be treated as a deposition. However, Defendant cites to no authority in support of these dubious propositions. Finally, the papers do not appear to raise any argument as to why Firman and Debtor were substantially justified in not attending the deposition, aside from Firman’s declaration that he was appearing before Judge Smith at this time. Thus, Defendant has not met his burden and cannot avoid sanctions on these grounds.
Distressingly, Plaintiff did not perform much better. Under Rule 37, failure to appear at the deposition would ordinarily warrant an award of the costs in bringing this motion to compel. However, in order to award sanctions, the party seeking sanctions must also demonstrate they have not "filed the motion before attempting in good faith to obtain the disclosure or discovery without court action." Fed. R. Civ. P. 37(a)(5)(A)(i). Here, Shirdel appears to have sent Firman an email on January 18, 2017 at approximately 4:41 p.m. The email plainly states, "If [D]ebtor does not appear at the deposition, we’ll take a non-appearance and we’ll move to compel and seek sanctions." This language hardly demonstrates Shirdel attempted in good faith to resolve the discovery dispute before filing the instant motion. This language, coupled with the fact that this motion was filed only one day after the email was sent suggest Plaintiff failed to engage in a meaningful good faith effort actually designed to resolve this discovery dispute without involving the court, as required under the Rule 37. In this view, the costs and fees associated with bringing this motion should either not be awarded, or perhaps awarded only in part.
Therefore, the court will forbear from awarding sanctions at this time but will instead reserve the question until after one additional opportunity to cooperate with discovery requirements as compelled below is given to Defendant. The court will then evaluate the question of appropriate sanctions after the fact. The parties are
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admonished not to test the court’s patience any further.
Deposition is compelled and is to be given within thirty days as scheduled by Plaintiff after consulting with respective calendars. The deposition is to last no longer than 7 hours and is to be completed within one day unless otherwise agreed. The question of sanctions is to be continued about 45 days to evaluate compliance with these requirements.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 1
Tentative for 2/15/18: Status?
Tentative for 1/25/18:
What update can be given on Frank's deposition?
Should this be continued to coordinate with item #11.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled with discovery incomplete?
Tentative for 7/13/17:
It would appear that discovery disputes must be ironed out before any firm date can be set.
Tentative for 5/4/17:
Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
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Tentative for 3/23/17:
The failure of defendants to participte in preparation of joint status report, and reported lack of discovery cooperation is troubling. Should the answer be stricken?
Tentative for 12/8/16: No status report?
Tentative for 3/10/16:
It sounds from the report that dispositive motions are being prepared on both sides. So, a continuance as requested by Plaintiff has some appeal, although the court notes this case has been pending one year.
Tentative for 1/28/16:
Why no status report? Have issues described from October 29, 2015 docket entry been addressed?
Tentative for 10/29/15:
Why has there been no apparent update, report or progress?
Tentative for 8/27/15: Status of service/default?
11:00 AM
Tentative for 4/23/15:
Status conference continued to August 27, 2015 at 10:00 a.m. to afford time to resolve dismissal motions.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller
Defendant(s):
Frank Jakubaitis Pro Se
Tara Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR)
Jeffrey I Golden (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:15-01426 Marshack v. Jakubaitis et al
(Order entered 2-5-18)
Docket 1
No tentative. The court wants to discuss the future of these cases.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
11:00 AM
Adv#: 8:15-01426 Marshack v. Jakubaitis et al
Docket 60
Tentative for 2/15/18: Status?
Tentative for 1/25/18: See #11.
Tentative for 9/14/17: Status?
Tentative for 7/13/17:
It would appear that discovery disputes must be first resolved and a motion to compel is reportedly forthcoming.
Tentative for 5/4/17: See #10.
Tentative for 4/13/17:
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See #18.
Tentative for 3/2/17:
An objection to the Shirdel declaration was filed but otherwise the court sees no opposition. It would seem the issues are the same as discussed in the February 2 tentative in Padilla v. Jakubaitis and the February 3 order in the Golden v. Jakubaitis case. Therefore, the order should be the same. The question of monetary sanctions is reserved until the April 13 hearing, and will be evaluated in view of cooperation, if any, in meantime.
Debtor(s):
Grant
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
11:00 AM
Adv#: 8:15-01426 Marshack v. Jakubaitis et al
U.S.C. Section 544; 3. Revocation of Discharge - 11 U.S.C. Section 727(d)
(con't from 1-25-18)
Docket 1
Tentative for 2/15/18: Status?
Tentative for 1/25/18: See #11, 12 and 13.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled before discovery is complete?
Tentative for 7/13/17:
It looks like discovery disputes must be resolved before any hard dates can be set.
Tentative for 5/4/17:
Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
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Tentative for 3/23/17: See #13.1
Tentative for 12/8/16: No status report?
Tentative for 3/10/16: See #6 and 7.
Tentative for 1/14/16:
Status conference continued to March 10, 2016 at 11:00 a.m. to coincide with motion to dismiss.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Pro Se
Frank Jakubaitis Pro Se
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
11:00 AM
Trustee(s):
Richard A Marshack (TR) Pro Se
Richard A Marshack (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
MALLARD TRUST #10711, SOUTHLAND HOMES REAL ESTATE AND INVESTMENT, LLC
VS.
DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Tuyet T Nguyen Pro Se
Movant(s):
Mallard Trust #10711, Southland Represented By
Barry L O'Connor
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
JPMORGAN CHASE BANK, N.A.
Vs DEBTOR
Docket 174
Grant. Appearance is optional.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Movant(s):
JPMorgan Chase Bank, N.A. Represented By Jamie D Hanawalt
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
10:00 AM
FORD MOTOR CREDIT COMPANY LLC
Vs DEBTOR
Docket 12
Grant. Appearance is optional.
Debtor(s):
Cheryl Denise Holmes Represented By
Diane L Mancinelli
Movant(s):
Ford Motor Credit Company LLC Represented By
Sheryl K Ith
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
JPMORGAN CHASE BANK, N.A.
Vs DEBTOR
Docket 128
Grant. The allegation of prejudice and hardship makes no sense. Although the stay technically has evolved to a discharge injunction upon the entry of a discharge, the analysis is the same.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Movant(s):
JPMorgan Chase Bank, N.A. Represented By Jamie D Hanawalt
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
10:00 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY VS.
DEBTOR
Docket 22
Grant. Appearance is optional.
Debtor(s):
Cathy Arlene Bailey Pro Se
Movant(s):
Deutsche Bank National Trust Represented By Angie M Marth
Trustee(s):
Thomas H Casey (TR) Pro Se
10:00 AM
DAMODER P. REDDY AND SOUMITRI P. REDDY
Vs.
DEBTOR
Docket 132
Debtor bears the burden of proving that the reorganization mentioned at section 362(d)(2) is "in prospect." (See section 362(g)). That burden is not carried. Grant.
Debtor(s):
TCCB Investors, LLC Represented By John H Bauer
Movant(s):
Damoder P. Reddy and Soumitri P. Represented By
Martin W. Phillips
10:00 AM
(con't from 1-10-18)
Docket 1
Tentative for 2/20/18:
See #6. If stay is relieved as to Basswood, is there anything left to reorganize?
Tentative for 2/14/18: No tentative.
Tentative for 1/10/18:
Should the matter be dismissed or converted?
Tentative for 12/12/17: Status?
Tentative for 11/1/17: Status?
Tentative for 10/25/17:
This continues to be a challenged case. Have the deficiencies been cured? If not why not?
10:00 AM
Debtor(s):
TCCB Investors, LLC Represented By Brian C Andrews
10:00 AM
Docket 129
Tentative for 2/20/18: See #6.
Tentative for 2/14/18:
This is the motion of the debtor for an adequate protection order under §361. One presumes this motion is an attempt to somehow preclude the amounts necessary to head off the relief of stay motion brought by secured creditors Damoder and Soumitri Reddy, et al, ("Reddys") scheduled for February 20 @ 10:00 a.m. The Reddys hold the first and second trust deeds against the property commonly known as 2626 Basswood Street, Newport Beach, CA. securing the sums of $1,587,243 and
$493,389, respectively. Both loans are now matured and in foreclosure; apparently a forbearance agreement governing the first loan has been breached by loss of the restaurant property earlier in the case. Reportedly, there may be two additional loans of record on the Basswood property, a third securing $149,500 and a fourth securing another $500,000. All in it looks like there is approximately +$2,700,000 secured by the Basswood property. No appraisals are offered but debtor estimates the value "as is" at around $2.1 million. If correct there is no equity in the property, and in fact even the first to trust deeds held by the Reddys are either under secured or maybe just barely secured. If the junior liens are also considered there is clearly no equity.
Debtor tries to create a question on value by hypothesizing that if about $150,000 of work is done refurbishing, an adjusted value of $2.7 million might be achieved. Little effort is made to substantiate either that this sum is sufficient, the time needed to
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accomplish this or that the target value could be achieved, or, indeed, that such sums are immediately available (except by the vaguest reference to "white knight" a Mr.
Brian Maddox.) There was an initial proposal made in the motion that monthly payments of $4500 be ordered as adequate protection, based on the estimate by debtor’s principal of "rental value." Sensing rightly that such a number would be a complete non-starter, the monthly sum of $10,000 is offered in the Reply.
This is much too little too late. Even if the court could come up with an appropriate "adequate protection" number under these circumstances, it would be higher than $10,000 and would not achieve a resolution of the motion to be heard February 20 in any event. That hearing will largely turn on the distinct §362(d)(2) question of whether a reorganization is in prospect. A great deal more will be necessary to establish that point and the debtor bears the burden of proof under §362 (g). While the court is tempted to just deny this motion outright, perhaps the better course is to continue it to coincide with the hearing February 20.
Continue to February 20 to coincide with relief of stay hearing.
Debtor(s):
TCCB Investors, LLC Represented By John H Bauer
10:00 AM
U.S. BANK NA Vs.
DEBTOR
Docket 22
- NONE LISTED -
Debtor(s):
Alejandro Cifuentes Represented By Christopher J Langley
Movant(s):
U.S. Bank NA, successor trustee to Represented By
Nancy L Lee Merdaud Jafarnia
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
BANC OF CALIFORNIA, NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 21
Case was dismissed February 2, 2018. Is this now moot?
Debtor(s):
Del Diablo LLC Represented By Alan M Lurya
Movant(s):
Banc of California, National Represented By Caren J Castle
10:00 AM
Petition Individual.
(set at plan confirmation hearing held on 10-11-17)
Docket 76
Tentative for 10/11/17: See #4.
Tentative for 9/13/17: Status?
Tentative for 6/28/17: Status?
Tentative for 3/22/17:
Deadline for filing plan and disclosure statement: August 1, 2017.
Debtor(s):
Tho Van Phan Represented By Michael R Totaro Richard A Marshack David Wood
1:30 PM
(cont'd from 12-20-17)
Docket 27
Tentative for 2/21/18:
Until the points raised by the Trustee are addressed, this plan cannot be confirmed. Additionally the missed payments and eligibility questions suggest a dismissal is in order.
Debtor(s):
Surat Singh Represented By
Michael A Younge
Movant(s):
Surat Singh Represented By
Michael A Younge Michael A Younge Michael A Younge
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 12-20-17)
Docket 14
- NONE LISTED -
Debtor(s):
Annette Mercado Represented By Christopher J Langley
Movant(s):
Annette Mercado Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 11
Tentative for 12/20/17:
All secured claims must be addressed in the plan.
Debtor(s):
Kenneth Mathew Sale Represented By
S Renee Sawyer Blume
Movant(s):
Kenneth Mathew Sale Represented By
S Renee Sawyer Blume S Renee Sawyer Blume S Renee Sawyer Blume
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 16
Tentative for 12/20/17:
All secured claims must be addressed in the plan. Moreover, there seems to be a feasibility issue.
Debtor(s):
Maria De Los Garcia Represented By
George C Hutchinson
Movant(s):
Maria De Los Garcia Represented By
George C Hutchinson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 14
- NONE LISTED -
Debtor(s):
James Ben Stewart Represented By Brian J Soo-Hoo
Movant(s):
James Ben Stewart Represented By Brian J Soo-Hoo Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 12-20-17)
Docket 35
Tentative for 2/21/18:
It would appear that a valuation of the residence is critical if this plan has any prospect.
Debtor(s):
Victor Lamarr James Represented By Brad Weil
Movant(s):
Victor Lamarr James Represented By Brad Weil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 1-17-18)
Docket 3
Tentative for 2/21/18:
There appear to be some fundamental questions of feasibility, etc.
Debtor(s):
Julia Schenden Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 1-17-18)
Docket 21
- NONE LISTED -
Debtor(s):
James Eulis Morgan Represented By Christine A Kingston
Joint Debtor(s):
Jean Fisher Morgan Represented By Christine A Kingston
Movant(s):
James Eulis Morgan Represented By Christine A Kingston Christine A Kingston
Jean Fisher Morgan Represented By Christine A Kingston Christine A Kingston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 1-17-18)
Docket 2
- NONE LISTED -
Debtor(s):
Terry Gonzalez Represented By Claudia C Osuna
Movant(s):
Terry Gonzalez Represented By Claudia C Osuna
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 1-17-18)
Docket 10
- NONE LISTED -
Debtor(s):
Danilo Dimayuga Lumbera Represented By Raymond Perez
Joint Debtor(s):
Gregoria Perfinan Lumbera Represented By Raymond Perez
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 1-17-18)
Docket 2
- NONE LISTED -
Debtor(s):
Miguel Cedeno Perez Represented By
Rabin J Pournazarian
Movant(s):
Miguel Cedeno Perez Represented By
Rabin J Pournazarian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 1-17-18)
Docket 2
- NONE LISTED -
Debtor(s):
Heather Juarez Represented By Julie J Villalobos
Movant(s):
Heather Juarez Represented By Julie J Villalobos Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 1-17-18)
Docket 2
- NONE LISTED -
Debtor(s):
Benito Moctezuma Represented By Alon Darvish
Movant(s):
Benito Moctezuma Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 1-17-18)
Docket 18
Tentative for 1/17/18:
Wilmington is correct. The plan cannot modify the rights under the note, and that would include substituting "adequate protection" payments of lesser amount in lieu of regular monthly payments. Also, the entire arrearage of
$212,544 must be dealt with. What happens if the sale does not occur within the designated period? The plan should address.
Debtor(s):
Unsoon Kwon Kang Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 1-17-18)
Docket 2
- NONE LISTED -
Debtor(s):
Gary Lee Trautloff Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 15
- NONE LISTED -
Debtor(s):
Laurie Patricia Mammolite Represented By Raymond Perez
Movant(s):
Laurie Patricia Mammolite Represented By Raymond Perez
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 6
Debtor(s):
Hector Benavides Pro Se
Movant(s):
Hector Benavides Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Kirk T Catlin Represented By
Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Wendy K. McElfish Represented By Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Arabella Strong Represented By Lionel E Giron
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Kirk P Howland Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Cheryl H Hermann Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
John M. Burns Represented By Christine A Kingston
Joint Debtor(s):
Tina M. Burns Represented By Christine A Kingston
Movant(s):
John M. Burns Represented By Christine A Kingston Christine A Kingston
Tina M. Burns Represented By Christine A Kingston Christine A Kingston Christine A Kingston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 1
- NONE LISTED -
Debtor(s):
Jose Hernandez Parada Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 18
- NONE LISTED -
Debtor(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Movant(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 1
- NONE LISTED -
Debtor(s):
Ali Farahmand Pro Se
Movant(s):
Ali Farahmand Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 16
- NONE LISTED -
Debtor(s):
Varinder Kumar Represented By Dana M Douglas
Movant(s):
Varinder Kumar Represented By Dana M Douglas Dana M Douglas Dana M Douglas Dana M Douglas
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 9
- NONE LISTED -
Debtor(s):
Kerry A McIntyre Pro Se
Movant(s):
Kerry A McIntyre Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
1:30 PM
Docket 6
- NONE LISTED -
Debtor(s):
Michael Abbasi Pro Se
Movant(s):
Michael Abbasi Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 12-20-17)
Docket 57
Tentative for 2/21/18: Status?
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
Tentative for 9/20/17:
Motion to modify was filed August 22. Waiting for trustee comments.
Tentative for 8/16/17: Grant unless current.
Debtor(s):
Francisco Jr Gonzalez Represented By
Juan J Gonzalez - DISBARRED - Christopher J Langley
3:00 PM
Joint Debtor(s):
Lizeth Gonzalez Represented By
Juan J Gonzalez - DISBARRED - Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
(cont'd from 12-20-17)
Docket 111
Tentative for 2/21/18: See #32.
Tentative for 12/20/17: Grant unless motion on file.
Debtor(s):
Terry Lee Represented By
Gary Leibowitz Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 119
Tentative for 2/21/18:
Debtor needs to respond to the Trustee's comments, otherwise deny.
Debtor(s):
Terry Lee Represented By
Gary Leibowitz Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 12-20-17)
Docket 31
Tentative for 2/21/18: See #34.
Tentative for 12/20/17: Grant unless motion on file.
Debtor(s):
Debbie Lynn Selikson Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 37
Tentative for 2/21/18:
Debtor needs to respond to Trustee's comments, otherwise deny.
Debtor(s):
Debbie Lynn Selikson Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 12-20-17)
Docket 60
Tentative for 2/21/18: Same.
Tentative for 12/20/17:
Grant unless current or motion on file.
Debtor(s):
Guy A. Rojo Represented By
Joseph A Weber
Joint Debtor(s):
Eva P. Rojo Represented By
Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
{11 U.S.C. Section 1307(c)(6)}
(cont'd from 1-17-18)
Docket 48
Tentative for 2/21/18: Status?
Tentative for 1/17/18: Status?
Tentative for 12/20/17: Status on refinance?
Tentative for 10/18/17:
The promise to refinance does not fulfill tax return/refund requirements. But the court will grant a continuance if the Trustee does not object.
Debtor(s):
Mark A. Wedmore Represented By Edward T Weber Kristi M Wells
Joint Debtor(s):
Christy E. Wedmore Represented By Edward T Weber
3:00 PM
Movant(s):
Kristi M Wells
Amrane (SA) Cohen (TR) Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 1-17-18)
Docket 24
Tentative for 2/21/18:
Is this moot in view of order granting motion to modify entered January 18, 2018?
Tentative for 1/17/18:
Is this moot in view of order to modify filed December 4?
Tentative for 12/20/17:
Continue to allow for processing of motion to modify filed December 4.
Debtor(s):
Christyna Lynn Gray Represented By Gary Leibowitz
Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 1-17-18)
Docket 32
Tentative for 2/21/18: Same.
Tentative for 1/17/18:
Moot in view of modification order entered December 15?
Tentative for 12/20/17:
Continue to allow for processing of motion to modify filed December 15.
Debtor(s):
Charles Lofton Represented By Cynthia L Gibson Sundee M Teeple
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 1-17-18)
Docket 66
Tentative for 2/21/18: Status?
Tentative for 1/17/18:
See #39 - motion to modify.
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
Tentative for 10/18/17:
See #43 - motion to modify.
Debtor(s):
Luis A Escobar Represented By Rajiv Jain
3:00 PM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 1-17-18)
Docket 67
Tentative for 2/21/18: Status?
Tentative for 1/17/18:
Grant as suggested by Trustee.
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
Tentative for 10/18/17:
Debtor needs to respond to the Trustee's comments.
Debtor(s):
Luis A Escobar Represented By Rajiv Jain
3:00 PM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 1-17-18)
Docket 131
Tentative for 2/21/18: Same.
Tentative for 1/17/18: Grant unless current.
Debtor(s):
Maryborne P Dofredo Represented By Paul M Allen
Joint Debtor(s):
Wilfred John Dofredo Represented By Paul M Allen
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
(cont'd from 1-17-18)
Docket 117
Tentative for 1/17/18:
Grant unless stipulation regarding 2016 refund.
Debtor(s):
Frank Zepeda Represented By Sundee M Teeple
Joint Debtor(s):
Miriam Zepeda Represented By Sundee M Teeple
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 1-17-18)
Docket 45
Tentative for 2/21/18: Same.
Tentative for 1/17/18:
Deny if Trustee's question has been addressed.
Debtor(s):
Mary L Esparza Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(put on cal by oppos fld 1-21-18)
Docket 115
Tentative for 2/21/18: Grant unless current.
Debtor(s):
Maria Dolores Garcia Luvianos Represented By David R Chase
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 92
Tentative for 2/21/18:
Grant unless current or motion to modify on file.
Debtor(s):
Daniel J Powers Represented By Gaurav Datta
Joint Debtor(s):
Ellen A Powers Represented By Gaurav Datta
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 57
Tentative for 2/21/18: Grant unless current.
Debtor(s):
Kenneth E Strother Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 86
Tentative for 2/21/18:
Grant unless current or motion on file.
Debtor(s):
Jeffrey Earl Sargent Represented By Sundee M Teeple
Joint Debtor(s):
Myrsha Sargent Represented By Sundee M Teeple
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 26
Tentative for 2/21/18:
See motion to modify - #48.1 on calendar.
Debtor(s):
Arniel Dominguez Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Joint Debtor(s):
Evangelina Ogatis Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(notice of hearing filed 1-18-18)
Docket 27
Tentative for 2/21/18:
Debtor should respond to Trustee's comments.
Debtor(s):
Arniel Dominguez Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Joint Debtor(s):
Evangelina Ogatis Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 28
Tentative for 2/21/18:
Grant unless current or motion on file.
Debtor(s):
Arthur Alvarez Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 85
Tentative for 2/21/18:
Continue to allow for processing of motion to modify filed February 6, 2018 (Trustee has recommended approval).
Debtor(s):
Craig Leroy Wolfram Represented By Matthew D Resnik Kevin T Simon
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 73
Tentative for 2/21/18: Grant.
Debtor(s):
Linda Spinks Represented By
Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(put on cal. by ntc. of hrg. fld. 1-18-18)
Docket 49
- NONE LISTED -
Debtor(s):
Nereida Jaime Represented By Frank J Alvarado
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 42
Tentative for 2/21/18:
Continue to March 21, 2018 at 3:00 p.m.
Debtor(s):
Alan Bell Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(put on calendar per order entered 1-12-18)
Richard G Heston, Debtor's Attorney Fee: $8340.90, Expenses: $144.84.
Docket 106
Tentative for 2/21/18:
The motion (and ex-husband's objection) do not address the critical question, i.e., what is the character of the family home from which the money held by Mr. Heston is apparently proceeds. If it was, as appears, community property, then it is chargeable with all debts including Mr. Heston's fees. Husband's interest, if any, is only in what remains after all debt is paid.
Debtor(s):
Melinda Bonnie Underwood Represented By Richard G Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont' from 1-17-18 per order appr. stip. to con't ent. 1-16-17)
Docket 42
Tentative for 2/21/18:
If U.S. Bank's lien has attached to even one dollar of value, which appears to be the case, then the value as alleged does not help debtor as the claim cannot be bifurcated.
Debtor(s):
Julia Schenden Represented By Anerio V Altman
Movant(s):
Julia Schenden Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
[11 U.S.C. Section 506(d)]) [Creditor: Franklin Credit Management Corp]
(cont'd from 1-17-18)
Docket 21
Tentative for 2/21/18:
Set for evidentiary hearing.
Tentative for 1/17/18:
Continue for creditor to obtain appraisal.
Debtor(s):
Victor Lamarr James Represented By Brad Weil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 19
Tentative for 2/21/18: Grant.
Debtor(s):
Cheryl H Hermann Represented By Christopher J Langley
Movant(s):
Cheryl H Hermann Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(OSC entered 1-30-18)
Docket 1
Tentative for 2/21/18:
Deficiency appears to have been cured. Certificates dated December 1, 2017 were filed on January 23, 2018.
Debtor(s):
Tony Kallah Represented By
Anerio V Altman
Joint Debtor(s):
Joulia Kallah Represented By
Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 30
Tentative for 2/21/18: Evidentiary hearing.
Tentative for 1/17/18:
This is an evidentiary hearing. Nothing new has been filed?
Tentative for 12/20/17:
Continue for evidentiary hearing.
Debtor(s):
Maria De Los Garcia Represented By
George C Hutchinson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:13-01106 Karen M Good - Judgment Enforcement Bureau v. Charles W Daff Chapter
(con't from 12-14-17)
Docket 55
Tentative for 2/22/18:
This matter is on remand from the 9th Circuit Court of Appeals to resolve two narrow questions only, i.e. the validity of service of the ORAP upon the Debtor and separately upon Mrs. Swintek. In the words of the Circuit in its October 10, 2017 Order, this is a threshold question of justiciability: "If the ORAPs were not properly served, then Good never obtained liens on Swintek’s personal property under California law." Citing S. Cal. Bank v. Zimmerman (In re Hilde), 120 F. 3d 950, 956 (9th Cir. 1997). The court understands that the service upon the Debtor is not being contested.
Therefore, the court’s analysis will focus solely on the disputed validity and efficacy of the service of the Third-Party ORAP on Mrs. Swintek. The court is given a narrow task and so declines outside of this purview to wade into the largely factual dispute over what may have been separate vs. community property, or as to what became estate property upon the filing of the petition, as discussed at length in both sides’ briefs. Further, this court does not explore the legal effect of its determination as to the proceeds within the Trustee’s possession, as that it is a factual question beyond the scope of the remand.
Cal. Civ. Proc. §708.120 is the statute governing orders for appearance of third parties alleged to be in possession of property in which the judgment debtor may have an interest. Cal. Civ. Proc. §708.120(a)-(c) governs how an ORAP lien is created in such property. The Trustee contends that the third-party ORAP lien at issue here is not effective because at the time the ORAP was served upon Mrs. Swintek, September 2, 2010, there was
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no accompanying tender of fees for the mileage necessary to be traveled from her residence to the place of examination. In support of this contention, Trustee cites §708.120(f) which states:
"(f) An order made pursuant to subdivision (a) is not effective unless, at the time it is served on the third person, the person serving the order tenders to the third person fees for the mileage necessary to be traveled from the third person's residence to the place of examination. The mileage fees shall be in the same amount generally provided for witnesses when legally required to attend civil proceedings in the court where the examination proceeding is to be conducted." (italics added)
Good does not dispute that Mr. Olson (the process server) made no tender for fees related to mileage for Mrs. Swintek’s travels at the time of personal service. The Proof of Service, when it was filled out by the process server, leaves the mileage box blank, supporting the inference that there was no tender for mileage fees at the time of service. Also, the process server himself makes no reference to mileage fees in his declaration. However, Good argues, that the language found in In re Hilde, 120 F.3d at 956 stating "an ORAP lien is created simply by service on the debtor of an order to appear for a debtor's examination [.]" is the controlling authority as to what makes the ORAP effective. Further, the Hilde court states: "A lien is also created on the debtor's personal property in the hands of a third party when the third party is served with notice to appear for an examination." Id. at 953. Good also argues from this that Hilde holds that no "perfection" of this lien is necessary.
First, clearly "perfection" is not the issue. Perfection refers to the recording with the Secretary of State, Department of Motor Vehicles or county records of a security interest (or other lien), such as would impart constructive notice to third parties. It is precisely because there is no recording of ORAP liens that makes them anomalous (and so difficult) in commercial law. But rather it is threshold "effectiveness" of the ORAP lien that is at issue in this
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motion, as directed by the Ninth Circuit’s remand.
Presumably, when discussing service on the Third Party creating the ORAP lien, the Hilde court meant "proper service." As it happens, at least one California Court of Appeal has held, albeit in an unpublished decision, that §708.120(f) is meant to be strictly construed and that failure to tender fees for mileage is fatal to the service itself. In Hinds & Co. v. Hetos, 2003 WL 1827264, 2003 Cal. App. Unpub. LEXIS 3418 (April 9, 2003), that court was faced with a similar situation as here. In Hinds a Mr. Todd Kurtin was served with a third-party ORAP and Kurtin did not appear at the examination. Kurtin asserted that he should have been excused because service of the ORAP was not enforceable as it did not comply with §708.120(f). The appellate court agreed with Kurtin:
"The statute that authorizes the issuance of an order for examination of a third party states the order is "not effective" unless mileage fees are tendered at the time the order is served. (§ 708.120, subd. (f).) It is undisputed that no such tender was made, so Kurtin did not have to obey the order." Id. at * 5.
The judgment creditor in Hinds argued that tender for mileage fees was made because the creditor offered to pay the mileage fees at the actual examination. On that point, the court stated: "Hinds offers various arguments in support of the sanction order, but all are wide of the mark. He contends the offer to pay the fee prior to the examination was a sufficient tender. But that ignores the statutory requirement that tender be made at the time of service." Id. (Emphasis Added). The Hinds court stated further:
"In the case of an order for examination, fees must be tendered in the first instance, and the duty to do so is not dependent upon a demand from the witness. The language in the subpoena duces tecum form is not a substitute for the rule that fees must be tendered when an order for examination is served on a third person." Id. at *6.
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The Hinds court concluded:
"Underlying this dispute is the cat-and-mouse game that often takes place when a judgment creditor attempts to collect. A part of that is making sure one follows all of the often intricate and obscure rules. The one in issue is plainly set out upon the face of the statute. When Kurtin's lawyer alerted Hinds to the oversight, Hinds could have realized the mistake and served the order anew, with the proper tender. It would have been more productive and less costly all around. Doing battle over every issue, no matter how trivial, is a costly pastime." Id. at * 7
This opinion, though unpublished, is consistent with several secondary sources such as:
California Practice Guide: Enforcing Judgments and Debts, Judge Alan M. Ahart (Ret.) (May 2017 Update) in Chapter 6G-1 (6:1300) "A third person examinee is entitled to mileage fees for the distance between his or her residence and the place of examination. These mileage fees must be tendered when the order is served; otherwise, the examination order is ineffective. [CCP § 708.120(f)"
Cal Jur: "An examination order is not effective unless, at the time it is served on the third person, the person serving the order tenders to the third person fees for the mileage necessary to be traveled from the third person's residence to the place of examination. The mileage fees must be in the same amount generally provided for witnesses when legally required to attend civil proceedings in the court where the examination proceeding is to be conducted." 30 Cal. Jur. 3d. Enforcement of Judgments §245.
Cal. Judges Benchbook Civil Proceedings - After Trial §7.14 (October 2017 update) "An order for examination of a third person is not effective unless, at the time it is served on the third person, the
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person serving the order tenders mileage fees for travel from the third person's residence to the place of examination. The fees must be in
the same amount generally provided for witnesses who are required to attend civil proceedings in the court where the examination proceeding is to be conducted. CCP § 708.120(f). See Govt C § 68093. These fees are recoverable costs. Comment to CCP § 708.120."
The court notes that each of the authorities starting with Hinds does not merely hold that a bench warrant will not issue for disobedience if fees are not tendered (as was the fact pattern of Hinds), but rather, more fundamentally and of central concern to us, that the ORAP was never "effective", mirroring the actual language of §708.120(f). From this the court infers that an ineffective ORAP cannot logically have created an effective lien. And importantly, Hinds holds that the statutory scheme, with its arcane procedures and rules, must be strictly construed.
Good argues that California Evidence Code §647 creates a presumption of valid service when service is completed by a registered process server. Therefore, Good argues the party seeking to invalidate the service (the Trustee) bears the burden of producing evidence that service was, in fact, improper. But this is an overstatement. The presumption affecting the burden of producing evidence in this statute only pertains to "the facts stated in the return." There is nothing in the proof of service going to the issue of tender of fees, and so the court doubts that a burden of proof one way or the other has been created.
Good argues that Trustee failed to raise this issue in the past, and therefore waived his right to raise it now, or is guilty of laches. The court does not find this argument persuasive either. Much of the length of these proceedings has been consumed by appeals, and many possible arguments have not been pressed until now largely because they would have been unnecessary given this court’s original determination that the ORAP lien had lapsed as a matter of statutory interpretation. Moreover, this court does not
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read that a question of waiver or laches is necessarily even in this court’s limited purview given the narrow scope of the Circuit’s October 10, 2017 Order.
ORAP service effective as to Debtor but Third Party ORAP ineffective (and thus not supporting a lien) as to Mrs. Swintek.
Tentative for 12/14/17:
Court adopts briefing schedule suggested by plaintiff and continue for hearing February 22, 2018 at 10:00 a.m. This hearing might continue until afternoon if evidentiary hearing is needed.
Tentative for 12/15/16:
Continue until 9th Circuit issues a ruling?
Tentative for 4/7/16:
Should status conference be continued to a date following Ninth Circuit's determination?
Debtor(s):
Richard James Swintek Represented By Richard W Snyder D Edward Hays Sarah C Boone
Defendant(s):
Charles W Daff Chapter 7 Trustee Represented By
Cathrine M Castaldi Joel S. Miliband Sara A Milroy
10:00 AM
Arjun Sivakumar
Plaintiff(s):
Karen M Good - Judgment Represented By Karen Good Roya Rohani
Trustee(s):
Charles W Daff (TR) Represented By Joel S. Miliband
Cathrine M Castaldi Arjun Sivakumar
Charles W Daff (TR) Represented By Cathrine M Castaldi Joel S. Miliband Charles W Daff (TR)
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
U.S.C. Section 510 (C); (5) For an Award of Damages Resulting from Unlawful Modification of Principal Balance of JPMorgan Chase Bank, N.A.'s Claim; and
(6) Relief from Order Avoiding Plaintiff's Lien
(set from s/c hearing held on 1-26-17) (con't from 12-7-17 per order approving stip. ent. 9-15-17)
Docket 82
Tentative for 1/26/17:
Deadline for completing discovery: July 1, 2017. Last Date for filing pre-trial motions: July 24, 2017.
Pre-trial conference on August 10, 2017 at 10:00 a.m.
Tentative for 12/15/16:
Status Conference continued to January 26, 2017 at 10:00 am after amended compalint is filed.
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
Aleli A. Hernandez Pro Se
10:00 AM
Virgil Theodore Hernandez Pro Se
Virgil Theodore Hernandez and Pro Se JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
DIANNE MARX
Vs.
DEBTOR
Docket 12
Grant. No basis for annulment or in rem relief.
Debtor(s):
Tracy Marie Marx Pro Se
Movant(s):
Dianne Marx Represented By
Thomas J Stolp
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
VW CREDIT, INC.
Vs.
DEBTORS
Docket 49
Grant. Appearance is optional.
Debtor(s):
Larry Robert Rosenwinkel II Represented By Michael W Binning
Joint Debtor(s):
Tesha Kathryn Rosenwinkel Represented By Michael W Binning
Movant(s):
VW Credit, Inc., servicing agent for Represented By
Austin P Nagel
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURG, PA
Vs.
DEBTOR
Docket 2079
This is the motion of National Union Fire Insurance Co. for relief of stay, also described as a motion for a "comfort order." At issue is Directors and Officers Policy No. 14156626. The movant seeks clarification that it may continue to advance costs and fees to various former officers and directors’ lawyers in defense of adversary Case No. 15-bk-013008TA Naylor v. Salus Capital Partners, LLC et al. Allegedly this is a
$5 million "wasting" policy against which $687,000 in defense costs had already been consumed as of the end of 2017. Understandably, the Trustee is concerned that the policy will be completely exhausted in defense costs and fees without ever getting to a settlement, for which, apparently, the Trustee hopes the policy will be the source of funding.
But in reading the parties’ respective briefs it develops that there is actually little disagreement. The parties each argue the threshold question of whether D & O policies are even "property of the estate", or more particularly, whether proceeds are property of the estate aside from the policies themselves. There are cases on both sides of this issue. But both sides seem to acknowledge that in the most recent local treatment of this issue In re Mila, 423 B.R. 537, 543 (9th Cir BAP 2010), the BAP side-stepped the property of the estate question by holding that even if the proceeds were property of the estate a pragmatic approach involved balancing of rights in a relief of stay would apply. There is no reason not to adopt this approach here since even the Trustee embraces it.
10:30 AM
The insurance company has offered on 45 days’ request to provide quarterly
reports stating: (a) the total amount disbursed (b) the amount disbursed in the last quarter (c) the amount of requested fees and costs not yet paid and (d) the total amount of coverage remaining. That seems entirely appropriate. If there is still a dispute it seems to be over the question of whether the Trustee gets to exercise some kind of control over the amount or rate of disbursement by weighing in on hourly rates. For this proposition the Trustee cites Cal. Civ. Code §2860. Actually, the Trustee only requests that the court’s order be without prejudice to any rights that might arise thereunder. It is very doubtful that this is a question that this court needs to deal with, particularly at this time, and so the court is not inclined to rule on the question one way or the other. Consequently, the court will not construe its order as affecting that question. If the Trustee is correct the she has rights of action derived from that statute or otherwise to retroactively contest fees advanced, then an appropriate request can be made at some future time. The Trustee might even attempt to enjoin further disbursements before the entire policy is exhausted. But that is for another day. Thereupon the insurance company can argue that she has no such standing as the purpose of the statute is to protect the insurer, or that the payments are justified, or both. But this court will not wade into setting defense rates in advance particularly not in a summary porceeding without an adversary proceeding on the issue.
Grant on terms as suggested by movant without implication on other issues.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh
10:30 AM
Movant(s):
Jeffrey S Kwong Daniel J Weintraub
National Union Fire Insurance Represented By Mark A Neubauer
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION, SERVICING AGENT FOR TOYOTA LEASE TRUST
Vs DEBTORS
Docket 23
Grant. Appearance is optional.
Debtor(s):
Harv Wyman Represented By
Thomas J Polis
Joint Debtor(s):
Kim M. Wyman Represented By Thomas J Polis
Movant(s):
Toyota Motor Credit Corporation, Represented By
Austin P Nagel
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
GATEWAY ONE LENDING & FINANCE
Vs.
DEBTOR
Docket 10
Grant. Appearance is optional.
Debtor(s):
William Patrick McGill Jr. Represented By Joseph M Tosti
Movant(s):
Gateway One Lending & Finance Represented By
Austin P Nagel
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
(con't from 1-30-18)
NATIONSTAR MORTGAGE LLC
Vs DEBTOR
Docket 63
Grant. Appearance is optional.
Debtor(s):
Nicole Renee Haner Represented By Halli B Heston
Movant(s):
Nationstar Mortgage, LLC. Represented By Jarred Ruggles Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
NATIONSTAR MORTGAGE LLC
Vs DEBTOR
Docket 48
Grant. "Time to complete a loan modification" is not grounds to deny relief of stay. Moreover, $29,608 of post-petition arrears is unacceptable and inconsistent with bona fides required of Chapter 13 debtors.
Debtor(s):
Jesus Jaime Cabrera Represented By Norma Duenas
Movant(s):
Nationstar Mortgage LLC as Represented By Merdaud Jafarnia
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 1-30-18)
THE BANK OF NEW YORK MELLON
Vs.
DEBTORS
Docket 41
Grant. Appearance is optional.
Debtor(s):
William C West Represented By Julie J Villalobos
Joint Debtor(s):
Monday West Represented By Julie J Villalobos
Movant(s):
The Bank of New York Mellon fka Represented By
Lisa Thomas Kristine Sidinger Erin M McCartney
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
US BANK NATIONAL ASSOCATION
Vs.
DEBTOR
Docket 41
- NONE LISTED -
Debtor(s):
Yolanda Galicia Hernandez Represented By Paul J Kurtzhall
Movant(s):
U.S. BANK, NA AS LEGAL TITLE Represented By
Diane Weifenbach
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 6
This is a repeat filing and debtors have not rebutted the presumption that the filing is in bad faith. Therefore, the stay should not be continued.
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
11:00 AM
Docket 16
This is the UST’s motion to dismiss with a 180- day re-filing bar under §109 (g). The UST alleges abuse of the Bankruptcy System and serial bad case filing.
Bankruptcy courts must look at the totality of the circumstances in determining whether a debtor filed in bad faith; thus, bad faith is determined on a case-by-case basis. Matter of Love, 957 F.2d 1350, 1355 (7th Cir. 1992). In the 9th Circuit, this case-by-case analysis is guided by factors indicating "bad faith" indicia. In re Price, 353 F.3d 1135, 1139-40 (9th Cir. 2004); In re Leavitt, 171 F.3d 1219, 1224 (9th Cir.
1999). These factors include, but are not limited to: (1) whether the debtor has a history of bankruptcy petition filings and case dismissals, (2) whether the debtor intended to invoke the automatic stay for improper purposes, (3) whether the debtor's petition was filed as a consequence of illness, disability, unemployment, or some other calamity; and (4) whether egregious behavior is present. Id.
Debtor is a serial filer who has filed three bankruptcy cases since February 2015. The prior two filings were under chapter 13, and were dismissed at the hearing of confirmation. For the current chapter 7 filing, the UST attempted to question the debtor regarding her serial filings, but was unable to do so because the debtor failed to attend consecutive § 341(a) examinations in violation of Bankruptcy Code §§ 343 and 521(a)(3) as well as F.R.B.P. 4002(a)(1). UST contends that this meets the standard of "abuse" under 11 U.S.C. § 707(b)(3)(A) which was lowered by the enactment of BAPCPA from "substantial abuse." While this may be facially true, a court should make this determination based on a case-by-case analysis as guided by the Price- Leavitt factors to determine whether the petition was filed in bad faith. In re Price, 353 F.3d at 1139-40; In re Leavitt, 171 F.3d at 1219. Section 109(g) suggests that a
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bar is reserved for cases where debtors act "willfully."
A court should also consider whether the debtor’s petition was filed as a consequence of illness, disability, unemployment, or some other calamity. Debtor contends the reason she has failed to attend the section 341 meetings and communicate with the UST is that she is very ill due to a medical condition known as "Churg Strauss Vascolitis," now also referred to by its medically more accurate term eosinophilic granulomatosis with polyangiitis (EGPA). According to online sources, the condition is a rare systemic vasculitis (inflammation in the wall of blood vessels of the body), predominantly affecting small-sized vessels. https://www.vasculitisfoundation.org /education/forms/eosinophilic-granulomatosis- with-polyangiitis-churg-strauss-syndrome. EGPA (Churg-Strauss) predominantly affects the small-sized arteries in the body. The symptoms depend on which organs are affected and to which extent. Thus, symptoms vary from one person to another and not all symptoms are present in everyone at the time of diagnosis or during the course of the disease. However, almost all patients have asthma and/or nasal sinus polyps and blood eosinophilia. Id.
If the Debtor’s medical condition is as serious as she contends and she did attempt to contact her former attorney regarding the matter as she claims, then the weight of the prior dismissals and failure to communicate with the UST might be lessened to something less than "abuse." However, the Debtor has not provided any evidence of her medical condition or its debilitating effects or that she tried to contact her former attorney about the §341 meetings. This she promises to bring to the hearing.
The court is confident that the UST intends to bring dismissal motions with a bar only for willful abuse, not for defalcations arising from serious illness. The court suggests that the UST review any material produced at the hearing and a continuance for further review/evaluation might be appropriate, depending on what is revealed, and if requested. If no substantiation is provided then the court agrees that the
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behavior appears abusive and should result in dismissal with the bar requested.
Grant or continue, depending on substantiation provided by debtor.
Debtor(s):
Cathy Arlene Bailey Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
(set from evidentiary hrg held on 1-26-16)
(con't from 1-30-18 order approving stipulation entered 1-23-18)
Docket 105
Tentative for 2/27/18:
What would the Trustee suggest be done? Passport in the custody of the Marshal?
Tentative for 10/3/17:
The issue of who holds Debtor's passports still needs to be addressed.
Tentative for 8/1/17: Status?
Tentative for 4/25/17: Updated status?
Tentative for 7/7/16:
Status? Is Ms. Olson retaining counsel or not?
Tentative for 6/7/16:
11:00 AM
Status?
Tentative for 4/28/16:
Status? The court is evaluating Debtor's efforts to purge her contempt.
Tentative for 4/7/16:
The trustee's report filed April 6 is not encouraging.
Tentative for 3/29/16: Status?
Tentative for 3/15/16:
Status? The court expects discussion on a workable protective mechanism as requested in paragraph 7 of the order shortening time.
Tentative for 1/19/16:
A status report would be helpful.
Tentative for 1/5/16:
No tentative. Request update.
Revised tentative for 11/5/15:
11:00 AM
This matter is being immediately transferred to Judge Albert, who will hear the matter as scheduled at 10:00 a.m. in Courtroom 5B. A separate transfer order will issue shortly.
************************************************************************* Tentative for 11/5/15:
Physical appearances are required by all parties, including Debtor, in Courtroom 5C, located at 411 West Fourth Street, Santa Ana, CA 92701.
Debtor(s):
Jana W. Olson Represented By Thomas J Polis
Movant(s):
Passport Management, LLC Represented By Philip S Warden
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
11:00 AM
Docket 286
Tentative for 2/27/18: Status?
Tentative for 10/3/17: See #14.
Tentative for 8/1/17:
Status? Where should passports be kept?
Tentative for 4/25/17: Updated status report?
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16: Status?
11:00 AM
Tentative for 5/12/16:
The court has two concerns: (1) by now hopefully the Trustee has more particularized descriptions of the exact items including records to be turned over (e.g. all monthly statements of Bank of America Account ). Some or even most may still not be known to the trustee, but all specificity should be given where possible preliminary to a contempt charge and (2) how do we incorporate mediation efforts before Judge Wallace into this program. This court is reluctant to enter any order that would short circuit that effort.
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
Ashley M Teesdale
11:00 AM
(con't from 1-30-18 order approving stipulation entered 1-23-18)
Docket 0
Tentative for 2/27/18: Status?
Tentative for 10/3/17: See #14.
Tentative for 8/1/17: Status?
Tentative for 4/25/17:
No tentative. Court will hear updated status report from parties.
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16: Status?
11:00 AM
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays
Ashley M Teesdale
11:00 AM
Docket 625
Grant.
Debtor(s):
Stephen Thomas Harris Represented By Raymond H. Aver Roger S Hanson Michael Jones Robert Hohenberger
Trustee(s):
John M Wolfe (TR) Represented By Philip A Gasteier Irving M Gross John M Wolfe
11:00 AM
WENETA M.A. KOSMALA, CHAPTER 7 TRUSTEE HAHN FIFE & COMPANY
Docket 50
Allow as prayed. Appearance is optional.
Debtor(s):
ALEX JERONIMO LLORENTE Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
(con't from 2-6-18 per order approving stip. to cont. hrg. entered 1-26-18)
Docket 28
Tentative for 2/27/18:
The creditor still has not presented evidence of a value higher than
$783,000, which came from its own appraiser. Oblique reference to the trustee's broker's opinion is insufficient. On the question of priority of liens, the debtor is correct in that all consensual liens are counted, irrespective of priority relative to the judicial lien to be avoided. See Moldo v. Charnock (In re Charnock), 318 B.R. 720 (9th Cir. BAP 2004). Moreover, the amended exemption at $175,000 removes any reasonable doubt on the question.
Grant.
Tentative for 12/19/17:
There are several issues here that cannot be resolved on this record.
The question of intervening judicial lien between two consensual liens needs briefing. Movant makes the argument but gives no citation of authority. Is section 522(f) able to remove a judicial lien based upon something done voluntarily afterward?
There seems to be a genuine issue on value. Although Zillow is hardly an authoritative source, it should be backed up by more reliable evidence such as an appraisal.
How much exemption is requested? Only $37,433 appears on Schedule C although $175,000 is referenced in the brief. The court has to rule upon what is formally claimed, now what might hypothetically be sought.
Continue approximately 45 days for briefing and valuation.
11:00 AM
Debtor(s):
Chong Ae Dugan Represented By Michael H Yi
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello
11:00 AM
Docket 55
Grant.
Debtor(s):
Timothy Bror Touve Pro Se
Trustee(s):
Weneta M Kosmala (TR) Represented By Erin P Moriarty
11:00 AM
Docket 527
It would appear, based on the Trustee's argument, that it is the unencumbered $1.5 million, representing the estate's half of proceeds under the carve out agreement, which the Trustee proposes to use to engage the mediator. Assuming that is correct, this would appear to be a proper section 503 administrative expense.
Debtor(s):
Grant.
Robert A. Ferrante Represented By
Richard M Moneymaker Arash Shirdel
Ryan D ODea
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Thomas A Vogele Kathleen J McCarthy Brendan Loper Steve Burnell
10:00 AM
(con't from 1-10-18)
Docket 1
Tentative for 2/28/18:
Continue to March 28, 2018 at 10 a.m. to coincide with hearing on disclosure.
Tentative for 1/10/18: Status?
Tentative for 10/11/17:
Continue for about 60-90 days to coincide with probable confirmation date?
Tentative for 8/23/17:
Continue conference into mid December.
Tentative for 8/9/17:
Continue to August 23, 2017 at 10:00 a.m.
Tentative for 6/7/17:
Deadline for filing plan and disclosure statement: November 30, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: August 1, 2017
10:00 AM
Debtor(s):
Mariano Mendoza Represented By Onyinye N Anyama
Joint Debtor(s):
Mercedes Mendoza Represented By Onyinye N Anyama
10:00 AM
(con't from 1-24-18)
Docket 105
Tentative for 2/28/18:
Continue approximately 120 days.
Tentative for 1/24/18: Why no status report?
Tentative for 8/23/17:
Continue for further status in approximately 120 days.
Debtor(s):
Michael Frederic Gellerman Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Denise Walz Gellerman Represented By Michael Jones Sara Tidd
10:00 AM
Petition Individual.
(set at plan confirmation hearing held on 10-11-17)(con't from 2-21-17)
Docket 76
Tentative for 10/11/17: See #4.
Tentative for 9/13/17: Status?
Tentative for 6/28/17: Status?
Tentative for 3/22/17:
Deadline for filing plan and disclosure statement: August 1, 2017.
Debtor(s):
Tho Van Phan Represented By Michael R Totaro Richard A Marshack David Wood
10:00 AM
Docket 219
This is Creditors’ motion to extend time to file proofs of claim. Creditors Kim Minh, Inc. ("KMI"), LG Gold, Inc., Douglas Chang, Vina Golden Investments, LLC, and Diep Huynh Nguyen (the "Objecting Creditors") assert that they did not have proper notice of the bankruptcy proceeding and consequently that they should be given an opportunity to file late proofs of claim. Objecting Creditors note that Debtor listed their claims as disputed but with actual amounts in his schedules. The objection is supported by declarations from the principal of KMI, Diep Nguyen, Douglass Chang, and Huong Huynh. Debtor has filed a reply, arguing that this motion is moot because this court granted Debtor’s Final Decree Motion on February 7, 2018, with an order of discharge being entered on February 22, 2018. In the event this court determines the case should be reopened, Debtor argues this Motion should not be granted because the Objecting Creditors had notice of the bankruptcy and sat on their rights. Debtor states that he made decisions about his plan based on the size of the creditor body and argues that his plan should not be derailed now.
First, this motion is virtually indistinguishable from the court’s order granting of the Final Decree motion, heard February 7 and the subject of a discharge order entered February 22. But even if that were not the case, it would be denied on substantive grounds as described below.
Under FRBP 3022, a final decree should be entered after an estate is fully administered. Pursuant to section 1141(d)(5), a discharge may be granted in an individual chapter 11 case upon completion of payments. Under section 350(a), a case should be closed once it is fully administered. Based upon the plan that was confirmed Debtor has met all of these requirements. He has made all of the payments called for under the plan. The adversary proceedings are resolved. The discharge has been
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granted, and the case has been (or is about to be) closed. Nothing remains to be done. The Objecting Creditors objection should not change this fact based on the weak showing made.
Debtor demonstrates that the Objecting Creditors all had notice of the bankruptcy proceeding. Even Mr. Ly, who asserts in his declaration that he did not know about the bankruptcy until much later, appears to have had at least constructive notice of the case in June 2017, which was before plan confirmation. While Mr. Ly claims he did not have timely notice, there is a ¶8 of his declaration which states: "During the course of the Bankruptcy cases I advised the Debtor that he was serving KMI at the wrong address, but I am informed and believe he took no steps to fix this problem…." While it is true that debtors should always take steps to correct incorrect addresses, the critical question here is one of creditor notice, and if the creditor had notice that a case was pending there were steps he could have/should have promptly taken to ensure that he kept up with critical deadlines. Requests for notice could have been filed or counsel could have been retained. If the Objecting Creditors chose not to follow up, the finality of the case will not be derailed for this lack of diligence.
The objecting creditors other than Mr. Ly for Kim Minh, Inc. and Diep Nguyen offer no evidence at all of their alleged lack of notice, and so the presumption that notice was properly given (but ignored) which arises from listing on the proof of service, is not overcome. But the Nguyen, Chang, and Huynh declarations do not go to the notice issue, and so also provide no basis for granting the motion. The Ly declaration is suspect for reasons stated above. Claims bar orders are an important part of Chapter 11 jurisprudence as is finality of judgments. Discharges, once granted, will not be upset except for fraud. Nothing here is sufficient to overturn those important policies by reopening the case and nothing is presented that should change the court’s ruling on the Final Decree.
Deny
10:00 AM
Debtor(s):
Tho Van Phan Represented By Michael R Totaro Richard A Marshack David Wood Matthew Grimshaw
Movant(s):
Kim Minh, Inc. Represented By Sandford L. Frey
10:00 AM
§ 1127(a)
(con't from 1-24-18)
Docket 419
Tentative for 2/28/18: Is this resolved?
Tentative for 1/24/18: See #10.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
(set at conf. hrg. held 1-24-18)
Docket 305
Tentative for 2/28/18:
This is a continued hearing on confirmation of the Debtor’s Third Amended Plan. At the court’s request the parties filed briefs on the question of separate classification. Additionally, further evidence is offered by the objecting creditors Yuanda Hong, et al ("Hong creditors") on the question of the values of the Denise property and the Debtor’s medical practice, relevant to the quantum of new value offered under the plan. The court discusses each subject below:
Separate Classification: What qualifies as proper classification of claims under §1122, or stated negatively, what is improper classification and thus rendering a plan in non-confirmable bad faith under §1129(a)(3), is an important question. Unfortunately, it is one that has engendered surprisingly little definitive authority in the Ninth Circuit. The objecting creditors have cited numerous authorities from outside of the Circuit that stand generally for the proposition that separately classifying a claim solely because it is on appeal is not in good faith, mostly because the character of the claim is not, in a legalistic sense, any different from that of the standard commercial claims.. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E.D.Va. 2004); In re Salem Suede, Inc., 219 B.R. 922 (Bankr. D. Mass 1998); In re Local Union 722 Int’l Bhd. Of Teamsters, 414 B.R. 443, 453 (Bankr. N.D. Ill. 2009); Bustop Shelters of Louisville, Inc. v. Classic Homes, Inc., 914 F. 2d 810, 811-12 (6th Cir 1990). But it is not clear that this is the law of the Ninth Circuit.
Nearly all of the cases adopt some version of the Ninth Circuit’s ruling in
Barakat v. Life ins. Co. of Va. (In re Barakat), 99 F. 3d 1520, 1525, cert. den. 520
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U.S. 1143(1997), i.e., that separate classification solely to manipulate the vote to obtain a consenting class is not in good faith and will prevent confirmation. But the ambiguity begins with the statute itself. Section 1122 provides that claims may be placed together in a class only if "substantially similar." But whether all similar claims must, in turn, be classified together is not statutorily addressed. Barakat at 1524. Noting that this question has divided courts outside the Circuit, the Barakat court gives us only the limited guidance that classification (determined as a question of fact) solely to manipulate voting to obtain the consenting impaired class is a form of bad faith and is not allowed. But the Barakat court acknowledges that In re Johnston 21 F. 3d 323, 327 (9th Cir. 1994) provides that separate classification may be justified if "the legal character of their claims is such as to accord them a status different from other unsecured creditors." Id. at 328. Further, as noted in Barakat, Johnston provides that separate classification may be justified if a "business or economic justification" is offered. Barakat at 1526 citing Johnston at 328. The Hong creditors argue correctly that both of Debtor’s cases, Johnston and In re Basha’s, Inc., 437 B.R. 874 (Bankr. D. Ariz. 2010), are factually distinguishable. In Johnston the debt arose from a guaranty, there was collateral involved and it alone among the creditor body was the subject of litigation. Similarly, in Basha’s the class of litigation claims was deservedly separate since the litigation was still in its early stages although it had been pending some time and involved "speculative" claims. In both cases the separate classification withstood scrutiny. But certainly our case is a closer question since we are dealing not with litigation generally but with a judgment on appeal. Whether this latter stage of litigation makes a crucial difference is not clear.
Debtor argues that if intent is the question he is somewhat absolved since the plan in its early iterations treated the objecting creditors’ claims as secured (by reason, one supposes, of recorded abstracts but also because that’s what the claim said) and therefore separate. Barakat can be read to primarily focus on the intent behind the classification. But neither side cites any authority on the question of what happens when, as here, the parties reach an agreement post-petition to surrender the claim of secured status (here because the claimed lien was likely a preference). Is a plan proponent then obliged to drop the separate classification in order to remain "in good
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faith"? Another question involves the "business or economic justification" as discussed in Barakat and Johnston. Here Debtor in effect argues that separate classification is not only economically justified, it is also very necessary to maintain an operating business on any terms while not adopting either of two unpalatable alternatives, i.e. paying claims before the appeals are resolved and the claims become final, or, alternatively, making all undisputed general unsecured claims wait for an extended period by depositing payment into an escrow on their account. Further, the very size of the Hong creditors’ claim makes it different, although it is not clear that this size question alone works in justifying different classification. The appeal adds some weight. But the fact that there reportedly is also still an unresolved counter claim (as reported by Debtor) of the reported parallel fraudulent conveyance action, and the charge that the judgment was amended post-petition in technical violation of the stay, might be seen as additional justifications for the separate classification. In aggregate, the court is inclined to find sufficient justification for the separate classification although it is admittedly a very close question.
The objecting creditors take issue with the valuations presented by the Debtor of his medical practice and of his residence on Denise Avenue in Orange. The values offered by Debtor are $ 5-10,000 and $756,000, respectively, supported by the declarations of Sam Biggs, CPA and John Aust, appraiser. Pinpointing the value of these becomes necessary as the Debtor proposes to keep these assets while not paying all creditors in full under the Plan. The Hong creditors have objected, so confirmation is therefore only possible under the so-called "new value" corollary.to the absolute priority rule. Debtor must under this doctrine provide new value equal to the retained assets of the estate (and not less than any other party is willing to pay). See Bank of America v.203 N. LaSalle Street Ptsp.526 U.S. 434, 456-57 (1999).
Hong creditors offer the declaration of David Hayward for the Denise property "conservatively" at $785,000. This is not far from the Debtor’s valuation but the court is disinclined to choose between these two opinions without cross examination.
Mindful of the cost of a mini trial on this issue, the court encourages a stipulation to
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split the difference, i.e. $770,500. Otherwise, an evidentiary hearing will have to be scheduled with opportunity for cross examination of live witnesses. Mr. Hayward’s opinion about additional value based on a lot split is too speculative for our purposes.
The business valuation is even more problematic. It is almost certain that both appraisers are off the mark. The Biggs appraisal suffers from the omission of any separate values for hard assets, such as equipment. Presumably, these have a separate value from the value of the ongoing practice, but if so, the court could not find it.
Appraiser Stake observes that something is being depreciated on tax returns, suggesting there is missing information. The court sees the nominal amount of $1,500 per year as an equipment "expense" in the forecast, but doubts this equates to a value for all of the existing equipment. Whether the equipment is owned or leased is also a factor. The biggest problem, of course, is what to do with a projected income analysis in the hands of a hypothetical buyer. The court has no doubt that there would be a profound fall off in that the clientele are described as mostly Chinese with limited English skills. Also, one imagines, that an OB/GYN practice has a higher than usual retention problem if/when the familiar physician becomes no longer associated. This probably is exacerbated when the language/cultural issue is also factored in. The Stake declaration strikes the court as making far too little allowance for this factor. It reads primarily just as a clinical analysis of projected income averages assuming more or less the same stream of income (a very large assumption under these facts) multiplied by some sort of capitalization or discount rate. The problem, of course, is the court cannot make a meaningful determination on this sparse record. Again the court encourages a "split the difference" approach, say $50,000, as an alternative to having a mini trial on these issues as well.
Bank of America v. 203 N. La Salle St. Ptsp.
The court has also not yet made a ruling on the question whether the Debtor’s marketing efforts to date are adequate to fix the quantum of value as demanded in the La Salle case. But the court observes that some effort was made to advertise and the Hong creditors have not filed a competing plan although they have been free to do so. The court is inclined to hold that this narrow issue (of whether anyone else would pay
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more) is resolved.
No tentative on confirmation pending resolution of valuations
Tentative for 1/24/18:
This is the continued hearing on confirmation of the Debtor’s Fourth Amended Plan. It continues to be vigorously opposed by the judgment creditor. While the court gave fairly explicit guidelines at the Nov. 29 hearing, and the plan proponent is closer than he was, the court finds the plan is still short of confirmability, for the following reasons:
Unfair Discrimination and Gerrymandering: Since In re Barrakat, 99 F. 3d 1520, 1525 (9th Cir. 1996), it has been the law of this Circuit that separate classification solely to obtain a consenting class on a plan is not permitted and is a form of bad faith under §1129(a)( 3). However, exceptions have been found where a "legitimate business or economic justification" is articulated supporting the separate classification. In re Loop 76, LLC, 465 B.R. 525, 538 (9th Cir. BAP 2012); Steelcase, Inc. v. Johnston (In re Johnston), 21 F. 3d 323, 327 (9th Cir. 1994). Moreover, there is a separate concern in evaluating a "cram down" that a plan may not "unfairly discriminate…with respect to each class of claims or interests that is impaired under…the plan." The court earlier remarked that a legitimate, non-voting basis had probably been articulated for separately classifying the judgment creditor since that claim (unlike all other unsecured creditors) was on appeal and was subject to ongoing litigation. Consequently, unlike the other unsecured claims the judgment claim is not "final." It is perfectly obvious that the entire need for reorganization may rest on the results of the appeal. But what is not sufficiently shown is the need for disparate treatment as provided under the Fourth Amended Plan. Obviously, while the claim is still contested it makes sense to not actually pay the disputed judgment claim. But there are other, better ways to mitigate the disparate treatment. All other claims start getting payments shortly after the effective
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date. But the dissenting judgment claim gets nothing until 120 days after the "Litigation Resolution Date," which is defined to require that all appeals be exhausted. This is a date potentially years in the future. This has two pernicious effects of concern. First, all of the risk of non-performance is imposed solely on the objecting creditor without any real basis in law for doing so. Second, this can be regarded as a sub rosa attempt to put the Litigation Trustee’s efforts into effective limbo pending the appeal since obviously no liquidation or even attempt to liquidate assets is even needed to
fulfill the plan until all the appeals are resolved. Perhaps a better approach is to put all creditors on a truly equal footing whereby they all get a pro rata portion of a defined periodic payment, with the judgment creditor’s portion held in an escrow at interest administered by the Litigation Trustee. That way risks are evenly imposed on the creditor body, not solely on the judgment creditor.
Artificial Impairment: The objector is correct that classification of the Honda Finance creditor as the sole member of Class 2 bears some of the aroma of artificial impairment, another form of bad faith, as this court observed in In re NNN Parkway 400 26, LLC, 505 B.R. 277, 284-85(Bankr. C.D. Cal. 2014). The fact that it was incurred the day before the petition is clearly suspicious. However, this "aroma" is largely dissipated when it develops that there is another class of unsecured creditors supporting the plan comprised of several members holding an aggregate of $38,690.83 in claims. The fact that only American Express, a creditor holding only a claim of $110.64, was the only voting member cannot be attributed to bad faith of the debtor. There is no showing that these other creditors’ claims were incurred just to create an impaired class.
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alleging that his plan is "fair and equitable" in not retaining any non-exempt
property (except as may be contributed/paid for in "new value"), so he argues, the absolute priority rule is observed. The only "new value" proposed to be contributed is, apparently, the value of the three assets he explicitly proposes to keep: the Denise Property, debtor’s medical practice and a Honda Odyssey. Debtor proposes to pay for these from non-estate assets. The automobile does not seem to be much in controversy since there are readily available methods of determining value, such as Kelley Blue Book. This is not so easily done regarding the Denise Property and the practice, however. While the single advertisement in The Orange County Register is better than nothing, it seems more a mere fig leaf than anything really designed to elicit a response. Certainly, just as Kelley Blue Book is a recognized source of reliability on vehicle values, either a formal appraisal and/or perhaps a listing for 60 days would be a better source of reliable values for real estate. Debtor offers an appraisal of Mr. Aust at $756,000. The objectors want to engage Mr. Yoshikane for a second opinion. This is appropriate and if a variation of say more than 5% emerges, there should be an evidentiary hearing. On the value of the practice, the objector should have an opportunity to depose Mr. Biggs and offer an alternative valuation, if needed. But the court’s main concern on this topic is with debtor’s premise that he is retaining under the plan only those three enumerated assets. If the court is reading it correctly, debtor actually plans on keeping a great deal more in the form of making the Liquidating Trust pay the debtor’s attorney’s fees and costs on a going forward basis. Presumably, this means that the costs of the appeal are to be borne by the Trust. Since it could be argued that the appeal is being prosecuted primarily if not solely for the debtor’s benefit, this is an indirect way of debtor keeping non-exempt assets. If this reading is correct, debtor is not, in fact, observing the absolute priority rule. The court is not as concerned as it might be since the objector has not filed a competing plan.
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For debtor’s argument to succeed, one would have to conclude that paying both for Mr. Mosier and his lawyers and accountants and the ongoing appeal costs less than only a Chapter 7 trustee. This is a proposition for which there is no evidence offered. The debtor will have to propose paying for his lawyers either from exempt assets or from no-estate assets for this to work, or prove that a Chapter 7 would be more expensive. The court is less convinced by the objector’s argument that the creditor should consequently steer the litigation at its expense, however. There are countervailing concerns about who should steer the litigation beyond the monetary costs.
Early Discharge: Debtor proposes in the plan to obtain a discharge not on conclusion of payments, as required under §1141(d)(5)(A), but rather upon confirmation. While this can theoretically be done if "cause" is shown after notice and a hearing, the question arises whether any such cause is shown here. Debtor argues that the structure of the plan amounts to a form of collateral for the payments, citing In re Sheridan, 391 B.R. 287, 291 (Bankr. E.D.N.C. 2008), thus assuring payment. But the problem with this is that full payment is not assured in this plan despite attempts to improve recoveries if the appeal is lost. Only the right to sue for declaratory relief (and perhaps an injunction against transfer of assets) is provided. But there are a dozen ways this could still go wrong. Ms. Shen could decide to defy the injunction and put the assets in China or Japan. Since the debtor continues to make good money as a physician, the court sees no reason to discharge him until all promised payments are made.
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any sense to rule on this question.
Deny Confirmation
Tentative for 11/29/17:
Rather than simply continuing the confirmation hearing without direction, the court will want to have a hearing focused on issues raised in the briefs but not fully answered:
In view of the objection raised in the opposition about short notice of the changes found in the Third Amended Plan, does the judgment creditor disagree that the changes are 'non material’, thus avoiding re-balloting, or need for more time to meet the arguments? It would seem that the role of the appointed trustee and fetters, if any, on his responsibility is rather material, but perhaps for no one other than the judgment creditor. Should that matter?
Has the Trust Agreement with Mr. Mosier been finalized and made available for review?
The present value analysis for cram down requires some evidence regarding interest rates and risks being imposed. Merely citing the federal judgment rate (is that where 1.5% comes from?) is wholly inadequate. While the debtor carefully includes an elastic provision that ‘such other rate as the court requires’ is offered, this does not provide any analysis or evidence that could guide the decision. It is also unclear how/whether the judgment creditor is a secured claimant and thus whether analysis of collateral value becomes
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relevant. But whether proceeding under §1129(b)(2)(A)(i) [secured claims] or (b)(2)(B)(i) [unsecured claims] there is an "as of the effective date" requirement on future payments which translates into a present value analysis. The federal judgment rate is manifestly not sufficient to render present value on a stream of payments such as under a plan. If that were true, in economic terms, the prime rate would be quoted consistent with the federal judgment rate instead of at 4.25% per annum. One holding a judgment presumably has some near prospect of actually levying and getting paid, so the time value of money is further distorted and judgment rates are a poor comparison. One who is obliged to wait for years under a plan has no such prospect and so imposed risk is greater and so must be compensated. This record is inadequate upon which to render a decision.
How is the teaching of Bank of America v.203 N. La Salle Ptsp., 526 U.S. 434, 456-57 (1999) being met here? In La Salle we are taught that to the extent that a new value exception to the absolute priority rule exists, a plan cannot be crammed down over the objection of a class of creditors on the strength of a "new value" contribution absent some ability to "market test" the amount of that contribution. As the court observed in In re NNN Parkway, LLC, 505 B.R. 277, 281-82 (2014), the Supreme Court gave us only the vaguest direction on how the market test can be accomplished in any particular case. But the court does not read the difficulty of fashioning an appropriate test to mean that the requirement can be ignored altogether consistent with the absolute priority rule. To do so is to vest in the debtor/ plan proponent a form of uncompensated property, i.e. an option, to direct or determine the amount and source of new value. Debtor attempts to close the gap regarding the family residence, but the plan merely suggests that the relatives will contribute an amount roughly equal to what they contend to be the non-exempt equity. What analysis, if any, is offered regarding the going concern/market value of debtor's medical practice for this purpose? All that is offered is the conclusory argument that as a sole practice it cannot have much value. Really? The court sees professional practice valuations all the time. One method of clarifying the
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new value question described in La Salle is the possibility of a competing plan. The court is not aware of the current status of the judgment creditor’s ability to propose a competing plan.
Concerning uncompensated imposed risk is the unanswered question regarding alleged community property in the wife’s name. What about the injunction against transfer of wife's alleged separate assets? Is a form of order being offered for review? Only a stipulation is referenced. How does the risk of violation of an injunction translate into cram down interest rate? One supposes that if the appeal is lost the presence of an injunction is some protection against transfers, but hardly a foolproof one. Certainly it is not the same as a lien. This does not mean these issues cannot be resolved; it is only to say that they are left unresolved on this record.
Continue for further hearing.
Tentative for 8/23/17:
The remaining issues are best dealt with at confirmation. Approve.
Tentative for 7/12/17:
With some amendments this FADS appears to contain adequate information. Debtor should make it clearer that an early discharge will be requested, but that if the Court does not find cause then the discharge will be entered upon completion of payments. As written the information about the Court finding cause comes at the end of the discussion of the discharge. Debtor has agreed to attach a copy of the Trust Agreement. Debtor provides a sufficient description of the litigation with the Judgment Creditor. Perhaps the plan should be amended so that it provides that the interest rate will be as described or as ordered by the Court. This leaves open the option of litigating the issue of the interest rate at confirmation. There seems to be a
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reasonable basis for separately classifying the unsecured claim of the Judgment Creditor because the claim is still subject to litigation and so cannot be paid on the same terms as the other unsecured creditors. Debtor should amend the DS to provide that Debtor is retaining his interest in some property. There should also be a more clear discussion of the absolute priority rule. Debtor states that he will amend the DS to make it clear that the plan does not avoid Judgment Creditor’s ORAP lien and that he will correct the errors noted by the Judgment Creditor.
Debtor(s):
Continue for clean up of these disclosure issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
(con't from 2-1-18)
Docket 1
Tentative for 3/1/18:
Is the dismissal motion set for March 29 on the latest version of the amended complaint? Continue to that date.
Tentative for 2/1/18:
In view of amended complaint filed January 29, status conference should be continued approximately 60 days.
Tentative for 11/2/17:
See #4. What is happening on February 1, 2018 at 11:00 am?
Tentative for 10/12/17:
Status conference continued to November 2, 2017 at 10:00 a.m.
10:00 AM
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Pro Se
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01225 The Kiken Group v. Bloom et al
(another summons issued on 12-12-17)
Docket 1
Tentative for 3/1/18:
Deadline for completing discovery: May 1, 2018 Last date for filing pre-trial motions: May 21, 2018 Pre-trial conference on: June 7, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Jay Lewis Bloom Pro Se
Defendant(s):
Jay Lewis Bloom Pro Se
Tina Margaret Bloom Pro Se
Joint Debtor(s):
Tina Margaret Bloom Pro Se
Plaintiff(s):
The Kiken Group Represented By Dale A Kiken
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:17-01230 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Hoag Memorial Hospital
Docket 1
- NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Defendant(s):
Hoag Memorial Hospital Pro Se
Newport Healthcare Center, LLC Pro Se
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By
10:00 AM
Ashley M McDow
Dr Robert Amster Represented By Ashley M McDow
Robert Amster, M.D., Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
10:00 AM
Adv#: 8:17-01240 Pacific Western Bank v. Haretakis
Docket 1
- NONE LISTED -
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
Defendant(s):
Catherine M Haretakis Pro Se
Plaintiff(s):
Pacific Western Bank Represented By Kenneth Hennesay
10:00 AM
Adv#: 8:17-01241 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Newport Healthcare Center
Docket 1
- NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Defendant(s):
Newport Healthcare Center LLC Pro Se
Hoag Memorial Hospital Pro Se
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care - Orange, Inc. Represented By
Ashley M McDow
10:00 AM
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
10:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 12-14-17 per order approving stip to con't ent. 12-12-18)
Docket 83
Tentative for 6/8/17:
Status conference continued to September 7, 2017 at 10:00 a.m. with expectation that involuntary proceeding will be clarified and settlement examined.
Tentative for 2/9/17:
Status Conference continued to May 25, 2017 at 10:00 a.m. Personal appearance not required.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Estancia Atascadero Investments, Pro Se
10:00 AM
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se Olive Avenue Investors, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se Palm Springs Country Club Pro Se
Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se South 7th Street Investments, LLC Pro Se Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se
Van Buren Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Park Scottsdale, LLC Pro Se
El Jardin Atascadero Investments, Pro Se
Enterprise Temecula, LLC Pro Se
Deer Canyon Investments, LLC Pro Se CALCOMM CAPITAL, INC., a Represented By
Nancy A Conroy
NATIONAL FINANCIAL Represented By Nancy A Conroy
10:00 AM
POINT CENTER MORTGAGE Represented By
Carlos F Negrete
NATIONAL FINANCIAL Represented By Carlos F Negrete Sean A Okeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A Okeefe
M. Gwen Melanson Represented By Nancy A Conroy
RENE ESPARZA Represented By Nancy A Conroy
Dillon Avenue 44, LLC Pro Se
16th Street San Diego Investors, Pro Se
DOES 1-30, inclusive Pro Se
Altamonte Springs Church Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se
Champagne Blvd Investors, LLC Pro Se
Cobb Parkway Investments, LLC Pro Se
6th & Upas Investments, LLC Pro Se
Interested Party(s):
Courtesy NEF Represented By Monica Rieder
10:00 AM
Roye Zur Murray M Helm
Jeffrey G Gomberg Rachel A Franzoia
Richard K. Diamond Represented By George E Schulman
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
Howard B Grobstein (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:16-01213 Grobstein v. Charton et al
U.S.C. Section 502(B)(1) or, In The Alternative, Mandatory Subordination Under 11 U.S.C. Section 510(B)[Relates to Claim Numbers 2, 114, 118, 119, 120, 121, 122, 123, 124, 126, 130, 138, 139, 140, 143, 146, 147, 193, 194, 195, 197, 310, 311, 405, 601, 613, 636]
(con't from 12-14-17 per order approving stip to cont. to s/c ent 12-13-17)
Docket 1
Tentative for 3/1/18:
Deadline for completing discovery: September 1, 2018 Last date for filing pre-trial motions: September 17, 2018 Pre-trial conference on: October 4, 2018 at 10:00 a.m.
Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
LLOYD CHARTON Pro Se
ROBERT L. WELLS Pro Se
Donna Joy Wall Pro Se
Lorna E Titzer Pro Se
Gary L Titzer Pro Se
WENDY TAKAHASHI Pro Se
10:00 AM
REID TAKAHASHI Pro Se
Frank Soracco Pro Se
Kurt Sipolski Pro Se
Robert M Peppercorn Pro Se
JON A. NORD Pro Se
DON MEALING, TRUSTEE Pro Se
Sid Louie Pro Se
Jessica Louie Pro Se
Cheryl Licht Pro Se
JOHN G. FRY Pro Se
Daniel K Larson Pro Se
LRH Operating Group Inc Pro Se
Jeffrey Gomberg Pro Se
WILLIAM E. GLYNN Pro Se
ETTA M. GLYNN Pro Se
Robert Garber Pro Se
Ana Garber Pro Se
Erin Larson Pro Se
Raymond Bille Pro Se
THOMAS F. BEREAN Pro Se
Monica Bayless Pro Se
JOHN R. BAYLESS Pro Se
Kent Azaren Pro Se
Lloyd Charton Pro Se
10:00 AM
Plaintiff(s):
Howard B. Grobstein Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
10:00 AM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
U.S.C. Section 510 (C); (5) For an Award of Damages Resulting from Unlawful Modification of Principal Balance of JPMorgan Chase Bank, N.A.'s Claim; and
(6) Relief from Order Avoiding Plaintiff's Lien
(set from s/c hearing held on 1-26-17)
(con't from 2-22-18 per order approving stip. ent. 12-5-177)
Docket 82
Tentative for 3/1/18:
Discovery already ended? Continue to April 26, 2018 at 10:00 a.m. for pre- trial conference.
Tentative for 1/26/17:
Deadline for completing discovery: July 1, 2017. Last Date for filing pre-trial motions: July 24, 2017.
Pre-trial conference on August 10, 2017 at 10:00 a.m.
Tentative for 12/15/16:
Status Conference continued to January 26, 2017 at 10:00 am after amended compalint is filed.
Debtor(s):
Aleli A. Hernandez Represented By
10:00 AM
Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo
Virgil Theodore Hernandez and Pro Se
Virgil Theodore Hernandez Pro Se
Aleli A. Hernandez Pro Se
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:17-01058 Karen Sue Naylor, Chapter 7 Trustee v. Beatrice Home Fashions, Inc.
(set at s/c held 8-31-17)
Docket 1
Tentative for 3/1/18:
Continue to May 31, 2018 at 10:00 a.m. per request.
Tentative for 8/31/17:
Deadline for completing discovery: February 1, 2018 Last date for filing pre-trial motions: February 14, 2018 Pre-trial conference on: March 1, 2018 at 10:00 a.m.
Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Beatrice Home Fashions, Inc. Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
11:00 AM
Adv#: 8:16-01168 United States Trustee v. Olson
Docket 50
Grant as moot. Appearance is optional.
Debtor(s):
Jana W. Olson Pro Se
Defendant(s):
Jana W. Olson Pro Se
Plaintiff(s):
United States Trustee Represented By Frank Cadigan
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 11-30-17 per order continuing motion and s/c entered 11-21- 17)
Docket 1
- NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps
11:00 AM
John P Reitman Robert G Wilson Monica Rieder Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 11-30-17 per order continuing motion and s/c entered 11-21- 17)
Docket 8
- NONE LISTED -
3rd Party Defendant(s):
Richard Diamond Represented By Aaron E de Leest
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Interested Party(s):
Courtesy NEF Represented By Rodger M Landau Monica Rieder Jack A Reitman Rachel A Franzoia
11:00 AM
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
2:00 PM
Adv#: 8:15-01099 Howard B. Grobstein, Chapter 7 Trustee v. Ponce
Docket 90
This is Defendant Ponce’s second attempt at a motion for summary judgment in this case. This court denied his previous attempt in November of 2017 primarily because Trustee claimed that discovery was incomplete as of that time. According to the Joint Pretrial Order, discovery is now complete.
It might be useful to recite the relevant facts. Insofar as the court is aware, the following facts are undisputed.
On February 19, 2013 ("Petition Date"), Point Center Financial, Inc. ("PCF" of "debtor") filed its voluntary petition for relief under Chapter 11. On October 28, 2013, the Court granted the Trustee’s motion to convert the Bankruptcy Case to Chapter 7. The Ponce Trust is listed on PCF’s Schedule E as having a contingent, unliquidated general unsecured claim in the amount of $535,119 ("Ponce Claim").
This adversary proceeding was commenced on February 23, 2015 when the Trustee filed his Complaint for (1) Breach of Fiduciary Duty; (2) Aiding and Abetting Breach of Fiduciary Duty; and (3) Subordination of Claim Pursuant to Section 510(c) against Defendants. Defendants answered the Complaint on November 20, 2015 and demanded a jury trial. (Docket No. 39).
As of the Petition Date, PCF was in the business of residential and commercial loan origination and servicing. Primarily, PCF’s loan funding was procured from private investors who in some instances received fractionalized interests in deeds of trust securing their investments and in other instances invested in a blind mortgage
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pool in which they did not receive a direct interest in deeds of trust. Following default on a loan, PCF initiated foreclosure proceedings against the property securing the loan, which typically resulted in PCF being the successful purchaser at the foreclosure auction. As the purchaser, PCF frequently set up limited liability companies to hold title to the property, with itself as manager of the LLC, while its investors’ interests under the foreclosed deed of trust were converted to membership interests in the LLC. PCF’s operations yielded income to PCF in the form of loan origination, loan servicing, and management fees.
Dillon Avenue 44, LLC ("Dillon") is one of the LLCs established by PCF to hold title to a property following foreclosure. Specifically, Dillon was formed in June 2011 for the purpose of taking title to approximately 1,180 acres of undeveloped land in Indio, California (the "Indio Property"). The members of Dillon comprise approximately 90 private investors, who jointly provided the funding for the loan secured by the Indio Property and whose fractional interests in the loan were converted into equivalent membership interests in Dillon following the foreclosure. Defendants hold a minority interest in Dillon.
Prior to the Petition Date Dillon and PCF entered into an operating agreement pursuant to which PCF was appointed manager of Dillon (the "Dillon Operating Agreement"). On May 31, 2016, the Trustee filed his Notice of Motion and Motion for Order: (1) Authorizing the Trustee to Exercise Management Rights Over Dillon Avenue 44, LLC; and (2) Compelling Harkey Parties to Turn Over to the Trustee All Books, Records, and Personal Property Owned By Dillon Avenue 44, LLC (the "Dillon Motion") (Bankr. Case Docket No. 1328), which, among other things, sought an order confirming that PCF as the manager of Dillon, retroactive to the Petition Date, and authorizing the Trustee to assume the Dillon Operating Agreement pursuant to 11 U.S.C. § 365.
Defendant Ponce was aware of the Dillon Motion [Ponce Deposition, p. 47, lines 1 – 23]. Ponce discussed the Dillon Motion with Dan J. Harkey ("Harkey") and
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Jeffrey S. Benice ("Benice"). Harkey was the sole shareholder and President of PCF from PCF’s inception until the appointment of the Trustee, and Benice acted as counsel to Harkey and certain entities controlled by Harkey. On June 13, 2016, a Complaint for Appointment of Receiver ("Receivership Complaint") over Dillon was filed in the Superior Court of California, County of Riverside ("Superior Court") ("Dillon Receivership Action"). No notice was given to the Trustee of the Receivership Complaint. Defendants are named as plaintiffs in the Receivership Complaint.
On June 16, 2016, a joint ex parte application was filed in the Superior Court seeking appointment of a receiver over Dillon pursuant to a stipulation ("Receivership Stipulation") between plaintiffs in the Dillon Receivership Action (including Defendants here), on one hand, and Dillon and Harkey as defendants in the Dillon Receivership Action, on the other for the appointment of a receiver. No notice of the Receivership Stipulation was given to the Trustee. On June 16, 2016 the Trustee first learned of the Dillon Receivership Action and removed it to this Bankruptcy Court as Adv. No. 8:16-ap-01160-TA.
On June 29, 2016, following a hearing held on June 21, 2016, the Bankruptcy Court entered its order granting the Dillon Motion confirming PCF as the manager of Dillon and authorizing the Trustee to assume the Dillon Operating Agreement nunc pro tunc to the Petition Date [Bankr. Case Docket No. 1372] ("Dillon Motion Order").
On October 4, 2016, the court issued that certain Order to Show Cause (Docket No. 31 (the "OSC") in adversary case 8:16-ap-01160-TA at the request of the Trustee. In the order denying relief against the Defendants in the OSC (Docket No.
49, Removed Action) (the "OSC/Remand Order") the court ruled:
"There is not much question that members of Dillon had a right to recourse for their disputes over rightful management before a court of law, such as the Superior Court. Dillon is not property of the estate, and the only arguable
property
of the estate involved was the management rights which had, as of these
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events,
from
ostensibly been rejected for failure to assume under §365. So it is by no means clear that the members of Dillon would have been obligated to seek redress
this court."
The court further ruled in the OSC/Remand Order that "it cannot even really be said that there was interference with an order of this court not yet entered, much less damages therefrom" in addressing the impact of the Receivership Action on the bankruptcy case. (Docket 49, Removed Action).
On June 20, 2017 the Trustee filed his Notice of Motion and Motion for Order Approving Payments from the Assets of Dillon Avenue 44, LLC, to Professionals that Performed Services for Dillon Avenue 44, LLC [Bankr. Docket No. 1516] ("Dillon Fees Motion") seeking an order of the Bankruptcy Court authorizing PCF, in its capacity, as manager of Dillion, to pay from the assets of Dillon, $660,879.00 in fees and $19,986.11 in expenses to the Trustee’s counsel, Landau Gottfried & Berger LLP ("LGB"), incurred in connection with services rendered by LGB on behalf of Dillon. This amount included as a subset fees in the amount of $151,071.50 for services relating to the Receivership Action. On July 12, 2017, the Bankruptcy Court entered its order granting the Dillon Fees Motion [Bankr. Docket No. 1524] ("Dillon Fees Order"). Dillon has since paid LGB its fees and expenses in accordance with the terms of the Dillon Fees Order. On November 21, 2017, the Trustee filed the Chapter 7 Trustee’s Notice of Motion and Motion for Order Approving Procedure for Liquidation of Assets, Distribution of Proceeds, and Winding Up of Affairs of Dillon Avenue 44, LLC [Bankr. Docket No. 1562] ("Dillon Windup Motion"]. On December 14, 2017, following a hearing held on December 12, 2017 the Trustee lodged with the Bankruptcy Court an Order granting the Dillon Windup Motion, as modified by an agreement between the Trustee and the Receiver for National Financial Lending, LLC [Docket No. 1574] ("Dillon Windup Order").
As the court understands it, at the core of this adversary proceeding is the
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Trustee’s argument that the estate of the debtor has been damaged by Dillon’s inability to pay further management fees by reason of Dillon already having paid the allowed $151,071.50 in fees to LGB. It is contended that these should be considered not as an award of fees, but rather as a form of damages proximately caused by Ponce’s participation in, and aiding and abetting of, a conspiracy by Messrs. Harkey and Benice to violate fiduciary duties owed by Mr. Harkey not only to Dillon, but to the estate of the debtor as well. The Trustee describes the filing of the Receivership Action as among those allegedly malevolent actions and alleges a purpose thereby to deprive the estate of funds. While the Dillon windup is not yet completed, the Trustee projects a shortfall.
FRBP 7056 makes FRCP 56 applicable in bankruptcy proceedings. FRCP 56
provides that judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. FRCP 56(e) provides that supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein, and that sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served forthwith. FRCP 56(e) further provides that when a motion is made and supported as required, an adverse party may not rest upon mere allegations or denials, but must set forth specific facts showing that there is a genuine issue for trial. FRCP 56(f) provides that if the opposing party cannot present facts essential to justify its opposition, the court may refuse the application for judgment or continue the motion as is just.
A party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine issue of material fact, and establishing that it is entitled to judgment as a matter of law as to those matters upon which it has the burden of proof. Celotex Corporation v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548,
2553 (1986); British Airways Board v. Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978).
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The opposing party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at 324. The substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,106 S.Ct. 2505, 2510 (1986). A factual dispute is genuine where the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. The court must view the evidence presented on the motion in the light most favorable to the opposing party. Id. If reasonable minds could differ on the inferences to be drawn from those facts, summary judgment should be denied. Adickes v. S.H. Kress & Co, 398 U.S. 144, 157, 90 S. Ct. 1598, 1608 (1970).
The court is not entirely sure that it understands all of the arguments presented either in the motion or in the Trustee’s response. Some of the theories for relief are convoluted. The court tries its best to describe the arguments (as it understands them) and, if the court understands correctly, the answers below.
Ponce asserts that Trustee’s claim is barred because it was not raised in Trustee’s complaint. Ponce asserts that the Receivership Action where Dillon incurred the attorney’s fees is not even mentioned in the Trustee’s complaint at all. Furthermore, "Dillon" is only mentioned in the context of a general listing of the entities formed or managed by PCF prepetition.
However, this claim is set forth in the Joint Stipulated Pretrial Order. Ponce agreed and signed off without objection to the added claim. The Joint Stipulation Pretrial Order also says that it supersedes the pleadings. Furthermore, this claim is largely based on information that was not available when the original complaint was filed. Specifically, the deposition of Ponce, taken in November 2017, yielded information that the Trustee believes is probative of whether there was a larger
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fraudulent scheme designed to deprive the PCF estate of funds as outlined in complaints from other related adversary proceedings attached as exhibits to the complaint in this matter. Great liberality is afforded to amendments, so even if the Joint Pretrial Stipulation did not supersede the court would grant leave to amend the complaint. So this procedural argument is not persuasive.
Ponce argues that Dillon, not PCF, paid the legal fees in connection with the Receivership claim. This payment of attorney’s fees, Trustee argues, deprived Dillon of the ability to pay the management fees it owed to PCF, with the result that PCF was damaged by that conduct. Ponce says, if anything, it is Dillon who has the claim against Ponce, not PCF. Ponce argues that a creditor does not obtain a claim against a third party who happened to cause its debtor to incur and pay another expense, whether justified or not. In Ponce’s view, the causative chain is just too indirect.
Ponce contends that the management fee shortfall claim comes down to a claim held by one non-debtor (Dillon) against another non-debtor (Ponce).
In support of this contention, Ponce cites McQuaid v. Owners of NW 20 Real Estate (Matter of Fed. Shopping Way, Inc.) 717 F.2d 1264, 1272 (9th Cir. 1983) for the proposition that "[W]here property is outside the possession of the bankruptcy court and is held adversely to the trustee, the court, absent consent, has no jurisdiction to adjudicate conflicting claims of title to the property, even where one of the claims is asserted by the trustee himself." Ponce also cites In re Stokes, 2013 WL 5313412, at*3 (B.A.P. 9th Cir. 2013) where the court stated, "Consequently, as was true under the Act, a bankruptcy court ordinarily lacks jurisdiction to adjudicate ownership disputes involving former property of the estate." Ponce also relies on In re Hall’s Motor Transit Co., 889 F.2d 520, 522 (3d Cir. 1989) ("The bankruptcy court’s jurisdiction does not follow the property, but rather, it lapses when the property leaves the debtor’s estate.")
None of these authorities are on point. The question presented is not about adjudication of title to non-estate assets. Rather, it is a question (as alleged) of
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whether the defendants including Ponce committed tortious acts causing damages to the estate. Moreover, this is not really a question of jurisdiction at all. Clearly this court has at least "related to" jurisdiction inasmuch as these events arose out of a Title 11 case and involve questions going to the administration of a Title 11 case. As Trustee correctly points out, by assuming the Dillon Operating Agreement, the management fees owing under that agreement, or to be earned thereunder (or the rights of action to obtain same) became property of the PCF estate. The Trustee is charged with liquidating all assets of the estate, including its causes of action.
Consequently, 28 U.S.C. §§157 and 1334 clearly apply and provide "related to" jurisdiction.
If Ponce has an argument it is that the Trustee lacks the required standing to bring the claim. The party invoking federal jurisdiction has the burden of establishing that the "case or controversy" requirement is satisfied. Standing is an important part of that requirement. Hollyn D’Lil v. Best Western Encina Lodge & Suites, 538 F.3d 1031 (9th Cir. 2008). To meet its burden, a party must show: (1) it suffered an injury in fact; (2) a causal connection between the injury and the conduct complained of; and
(3) it is likely, not merely speculative, that the injury will be redressed by a favorable decision. Id. An "injury in fact" is "(1) a concrete and particularized ‘invasion of a legally protected interest’ that is actual or imminent, (2) a causal connection between the injury and the conduct complained of, and (3) that a favorable decision will likely redress the injury." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). A litigant cannot pursue a damage claim held by another. Powers v. Ohio, 499 U.S. 400, 410 (1991).
Upon the court’s initial review, the court saw this argument as maybe akin to derivative actions by shareholders for corporate injuries. It has long been the law that a shareholder does not have independent standing to bring an action for injury to the corporation which diminishes the value of the shares; this must be brought by the corporation itself. See e.g. Nelson v. Anderson, 72 Cal. App. 4th 111, 123-25(1999). But, as the court understands it, the Trustee is not bringing an action belonging to
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Dillon but instead is bringing an action belonging to the PCF estate for damages to Dillon that are also damages to the estate, but not in the context of an ownership of Dillon but rather because, according to the Trustee, Dillon was rendered unable to pay its obligations to the estate for management fees by reason of defendants’ actions. As thus understood, the closest analog is to an alleged interference with contract or economic advantage, both recognized torts. Of course, the alleged tort is not described this way in the complaint; rather, the charge is that Ponce aided and abetted Harkey’s alleged breach of fiduciary duty owed to PCF or to the creditors of PCF. But as this is a summary judgment motion, the court must construe the complaint and evidence presented in the manner most favorable to the opposing party.
The Restatement (Second) of Torts §766 deals with the "Intentional Interference with Performance of Contract by Third Person." This section states:
"One may not, however, intentionally and improperly frustrate dealings that have been reduced to the form of a contract." §766 at (b). This principle is applicable to all types of contracts (except contracts to marry). Id. at (d). The essential thing is the intent to cause the result. Id. at (h). To be subject to liability, under the stated in this Section, the actor must have knowledge of the contract with which he is interfering and of the fact that he is interfering with the performance of the contract. Id. at (i). But it is not necessary that the actor appreciate the legal significance of the facts giving rise to the contractual duty, at least in the case of an express contract. Id. The rule stated in the Section is applicable if the actor acts for the primary purpose of interfering with the performance of the contract, and also if he desires to interfere, even though he acts for some other purpose in addition. The rule is broader, however, in its application that to cases in which the defendant has acted with this purpose or desire. It applies also to intentional interference, as that term is defined in § 8A, in which the actor does not act for the purpose of interfering with the contract or desire it but knows that the interference is certain or substantially certain to occur as a result of his action. Id. at (j). Interference with a third party’s performance may be by depriving him of the means of performance. Id.
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The authors of The Restatement point out that the plaintiff must show, in
addition to interference, that the interference was improper. Restatement (Second) of Torts §767, "Factors in Determining Whether Interference is Improper" lays out a 7 factor analysis that is heavily fact dependent. Although perhaps differently stated in the Complaint as aiding and abetting a breach of fiduciary duty, there appears to be a plausible theory under which Trustee could conceivably recover damages from Ponce and has standing to bring this action. At the very least, it raises issues of material fact that are likely to be contested, which argue against granting Ponce’s motion for summary judgment.
With respect to Trustee’s aiding and abetting a breach of fiduciary duty claim, Trustee did not provide an analysis of this claim as to the motion currently before the court. The California Court of Appeal in American Master Lease LLC v. Idanta Partners, Ltd., 225 Cal.App. 4th 1451 (2014), lays out the law of liability for aiding and abetting a breach of fiduciary duty in California:
"‘[A]iding-abetting focuses on whether a defendant knowingly gave ‘substantial assistance’ to someone who performed wrongful conduct, not on whether the defendant agreed to join the wrongful conduct." [¶] …[W]hile aiding and abetting may not require a defendant to agree to join the wrongful conduct, it necessarily requires a defendant to reach a conscious decision to participate in tortious activity for the purpose of assisting another in performing a wrongful act. …’ [Citation.] The aider and abetter's conduct need not, as ‘separately considered,’ constitute a breach of duty." American Master Lease at 1475-76.
The American Master court clarified, "under California law a defendant can be liable for aiding and abetting a breach of fiduciary duty in the absence of an independent duty owed to the plaintiff. Id. citing Neilson v. Union Bank of California, N.A. (C.D.Cal. 2003) 290 F.Supp.2d 1101. The American Master court further elaborated: "California cases outlining the elements of aiding and abetting liability have consistently cited the elements of the tort as they are set forth in the Restatement (Second) of Torts, § 876, and have omitted any reference to an independent duty on
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the part of the aider and abettor. Under this formulation, liability may properly be imposed on one who knows that another's conduct constitutes a breach of duty and substantially assists or encourages the breach." Id. (quoting Neilson). The court in American Master also noted that the aiding and abetting of a tortious act is a close relation to conspiracy to commit a tort, but they are, in fact, separate causes of action. Since Trustee only raised aiding and abetting as a cause of action against Ponce, there is no need to elucidate the somewhat subtle differences between the causes of action. But the point of this analysis is that separate standing to bring the action seems clear.
As the court in American Master Lease held, there is no requirement that Ponce owed a fiduciary duty to PCF. Nor is the argument that Harkey had no duty after appointment of the trustee persuasive either. While no authority is cited on the point, the court very much doubts that just because a Chapter 11 trustee is appointed to relieve management of a corporate debtor this signifies that all continuing duty to shareholders and creditors is relieved as to allow such an officer (such as Harkey) to work against the interests of his former corporation. Whether Ponce did actually aid and abet Harkey in such an alleged breach of fiduciary duty pursuant to the factors in
§876 of the Restatement is also a fact intensive analysis.
Trustee contends that Ponce’s conduct caused Dillon to pursue a Receivership Action through which it incurred legal fees. Dillon paid these legal fees. Trustee claims that the legal fees, in turn, caused Dillon’s inability to pay the full management fee debt it owed to PCF, thereby injuring the PCF estate. It is a close call whether those fees and the subsequent expected management fee shortfall constitute an injury to the Trustee’s (PCF’s) legally protected right(s). The party bringing the complaint bears the burden of demonstrating the injury in fact. PCF’s best argument appears to be that PCF had a management agreement under which Dillon was obligated to pay management fees amounting to over $2.7 million, and Trustee claims that Ponce aided and abetted Harkey’s scheme to take control of Dillon via the Receivership Action, with the intent this action would cause Dillon to expend funds that otherwise would
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have gone to pay the PCF management fees.
Moreover, if as Trustee is alleging this conduct was intended to deprive the PCF estate of funds, then pursuing a receivership is a curious tactic. As this court pointed out in the tentative ruling on the Removed Action (Docket #49, 8:16-ap- 01160), the purpose of a receiver is to "preserve estate funds as an arm of the court." Still, although figures are still being tabulated, the Trustee is certain that when all of Dillon’s assets are liquidated, there will be insufficient funds to pay PCF the management fees in full. But, as this is a motion for summary judgment, the court views the arguments in the light most favorable to the nonmoving party, and there does seem to be a genuine dispute about the existence of PCF’s injury and the extent of it. Reasonable minds could conceivably differ on this point. Therefore, the Trustee should get the benefit of the doubt, and the court declines to find lack of standing based on a failure to articulate an injury on summary judgment.
The second prong of the standing inquiry requires that the plaintiff make a causal connection between the injury and the conduct complained of. Trustee and Ponce expend a great deal of effort arguing over whether the proper test for causation is the "but for test" (Ponce) or the "substantial factor test" (Trustee). In his reply, Ponce argues that regardless of the test for causation, Trustee cannot sufficiently prove a causal link between Ponce’s conduct and the management fee shortfall.
Mindful of the fact that Trustee, as plaintiff, bears the burden of demonstrating causation, and also that the nonmoving party should be given the benefit of the doubt, this court will apply the substantial factor test to the facts as presented.
The substantial factor test is the appropriate test when at least two causes concur to bring about an event, and either one of them alone could also have brought about the event. In such a case, neither one can be said to be a "but for" cause of the injury because either one could have brought about the injury independently of the
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other. (Paraphrasing Major v. R.J. Reynolds Tobacco Co., 14 Cal. App. 5th 1179, 1195-96 (2017). However, the California Supreme Court has noted, "The term ‘substantial factor’ has not been judicially defined with specificity, and indeed it has been observed that it is ‘neither possible nor desirable to reduce it to any lower terms.’ The court has suggested that a force which plays only an ‘infinitesimal’ or ‘theoretical’ part in bringing about injury, damage, or loss is not a substantial factor." Rutherford v. Owens-Illinois, Inc., 16 Cal. 4th 953, 969 (1997)(internal citations omitted). Furthermore, the California Supreme Court has stated that a cause in fact must be a necessary antecedent to the plaintiff’s injury. (See State Dept. of State Hospitals v. Superior Court, 61 Cal. 4th 339, 352 (2015) discussing the concept of "proximate causation.")
Here, Trustee concludes, albeit without reference to any specific evidence in the record, that Dillon paying the legal fees in the Receivership Action was a "substantial factor" in causing the management fee shortfall as it will have insufficient funds when its affairs are concluded. Trustee points out that the full extent of the shortfall is currently being tabulated by the Trustee and it will be known. (Decl. of Jon L.R. Dalberg p. 1) As discussed above, Trustee asserts that Ponce aided and abetted Harkey and Benice’s scheme to use legal maneuvers to block Trustee from management of Dillon’s affairs.
In any case, Ponce argues that much of the money spent on the receivership action actually related to seeking sanctions against Dan Harkey’s counsel, rather than on the action itself. Ponce also points out that the filing of the Receivership Action was not a "necessary antecedent" to Trustee’s claimed injury because at the time the action was filed, the court had not yet even heard the motion authorizing the Trustee to assume the Dillon Operating Agreement. In other words, at the time the Receivership Action took place, Dillon did not owe management fees to PCF. Furthermore, Ponce points out that, according to the Trustee, Dan Harkey disbursed over $700,000 of Dillon funds in 2016, and also that Trustee incurred $500,000 in legal fees on matters other than the Receivership Action. Taken as true, all of these points reflect that there may be many reasons why Dillon has insufficient assets to pay
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the full management fees. But again, viewing the arguments in the light most favorable to the nonmoving party, Trustee’s argument that Dillon’s payment of attorney’s fees on the Receivership Action was at least a substantial factor in the management fee shortfall is debatable, and until the exact shortfall is known, it appears that reasonable minds could at least differ on the extent to which Ponce’s alleged actions regarding the Receivership Action led to the management fee shortfall. Thus, this is not an appropriate ground for dismissing the claim on summary judgment under a lack of causation theory.
It must be noted that it is not entirely clear Ponce’s alleged conduct in pursuing the Receivership Action, in and of itself, was wrongful. Regarding the Receivership Action, this court said in its adopted tentative ruling in November, 2016:
"There is not much question that members of Dillon had a right to recourse for their disputes over rightful management before a court of law, such as the Superior Court. Dillon is not property of the estate, and the only arguable property of the estate involved was the management rights which had, as of these events, ostensibly been rejected for failure to assume under §365.
So it is by no means clear that the members of Dillon would have been obligated to seek redress from this court." (See Docket #49, 8:16-ap-01160- TA, Exhibit #1, p. 7)
This court did note that the Receivership Action was "a transparent maneuver and an effort to head off the reinstallation of the Trustee as manager of Dillon." Id. at
But this court also said, "The hyperbole about installing a receiver so that Messrs. Benice and Harkey could continue stealing money is belied by the very remedy sought, i.e. installation of a receiver whose very job is to preserve estate funds as an arm of the court. No credible evidence is offered that somehow the receiver would have been unable to put a stop to any alleged pilfering." Id. at 7. However, Trustee has since deposed Ponce and now believes based on his answers, that the purpose of the Receivership Action was indeed to intentionally (and one presumes wrongfully)
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wrest control of Dillon away from Trustee in an effort not to enhance the fortunes of Dillon but to deprive PCF of funds.
This seems to be an issue of material fact that, if proven, could potentially result in a judgment in favor of the Trustee. Thus, for this reason as well, summary judgment is not appropriate. Issue preclusion, or collateral estoppel, is the idea that once an issue has been ruled upon in a prior proceeding, it cannot be re-litigated.
Ponce argues that this claim has already been ruled upon in the action arising from the order to show cause issued by this Court on October 4, 2016 in 8:16-ap-01160-TA (Docket # 31) at the request of the Trustee. However, that ruling and observation by this court occurred prior to Ponce’s deposition. The ruling in that prior case dealt primarily with the issue of whether sanctions should be imposed on Benice for his actions relating to the Receivership Action. By contrast, the issue brought up by the claim in this complaint is whether PCF has suffered damage as a result of Ponce’s participation in the Receivership Action, and whether Ponce aided and abetted Harkey in breaching his fiduciary duty to PCF.
Moreover, it is far from clear that the elements of issue preclusion or collateral estoppel are met here. Federal courts must give the same preclusive effect to a state court judgment as would be given to that judgment under the law of the state in which the judgment was rendered. In re Younie, 211 B.R. 367, 373 (9th Cir. BAP 1997). Under California law, the application of collateral estoppel requires that: (1) the issue sought to be precluded from re-litigation must be identical to that decided in a former proceeding; (2) the issue must have been actually litigated in the former proceeding; (3) it must have been necessarily decided in the former proceeding; (4) the decision in the former proceeding must be final and on the merits; and (5) the party against whom preclusion is sought must be the same as, or in privity with, the party to the former proceeding. Id., citing In re Kelly, 182 B.R. 255, 258 (9th Cir.
BAP 1995), aff’d, 100 F.3d 110 (9th Cir. 1996). California courts will not apply collateral estoppel unless they find that the public policies underlying the doctrine would be furthered by its application. Baldwin v. Kilpatrick (In re Baldwin), 249 F.3d 912, 919 (9th Cir. 2001). It is at least unclear whether these issues have been
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adjudicated in a final order by this court, or that the determination on the sanctions and remand matters "necessarily decides" whether Ponce wrongfully aided and abetted the commission of wrongful activity. It is just left too unclear to form the basis for summary judgment.
It is undisputed that in June, 2016, Ponce, with others, commenced a Receivership Action contesting management control of Dillon. This court held that Ponce and the others were within their rights to pursue such a course of action.
Therefore, Ponce argues, this court is barred from entertaining arguments regarding the filing of the Receivership Action by the Rooker-Feldman doctrine.
The Rooker-Feldman doctrine "prohibits a federal district court from exercising subject matter jurisdiction over a suit that is a de facto appeal from a state court judgment." Kougasian v. TMSL, Inc., 359 F.3d 1136, 1139 (9th Cir. 2004) (citing Bianchi v. Rylaarsdam, 334 F.3d 895, 898 (9th Cir. 2003)). Here, it appears that Ponce and Trustee are not on the same wavelength. Trustee asserts that this is not a de facto appeal because the allegation being brought has not been adjudicated.
Trustee is not disputing that this court has ruled that Ponce was within his rights to bring the Receivership Action. Rather, Trustee is asking the court to inquire whether the receivership was brought in bad faith, as part of a fraudulent scheme with Harkey to deprive the Trustee of control of Dillon and deprive PCF of funds. Ponce’s reply evidences a misunderstanding of Trustee’s claim. Ponce doubles down on the de facto appeal argument, and does not address the purported evidence of a fraudulent scheme. Rooker-Feldman clearly does not apply here. First, at least one of the prior rulings is not of a state court, but of this court on the sanctions/remand motion. But even focusing on the Superior Court’s granting of a receivership order on ex parte motion, the court doubts that this Complaint, raising as it does, the theory that Ponce aided Harkey in a scheme to deprive the estate of monies, cannot have been subsumed within the Superior Court’s order on an unopposed ex parte motion made without notice to the Trustee. Viewing the argument in the light most favorable to Trustee as the nonmoving party, summary judgment based on Rooker-Feldman is not
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appropriate.
Under the American system, both sides to a lawsuit bear their own costs in contrast to the British system where the prevailing party is often awarded attorney’s fees without a supporting contract or statute. In the American system, attorney’s fees are generally not recoverable unless allowed by statute or by contract. In re Dinan, 448 B.R. 775, 784 (B.A.P. 9th Cir. 2011) (citing Alyeska Pipeline Serv. Co. v.
Wilderness Soc’y 421 U.S. 240, 257 (1975).
Ponce argues that Trustee is simply trying claw back the attorney’s fees Dillon paid to the law firm in the Receivership Action. But this only works if characterized as an attempt to recover attorneys’ fees qua fees. The Trustee characterizes this instead as an attempt to recover damages from Ponce, and it is only incidental that the source of the damages was the imposition of attorney’s fees. Viewing this argument in the light most favorable to the Trustee as the nonmoving party, this could qualify as a disputed issue of material fact inappropriate for summary judgment.
Trustee claims that there is a case to be made for equitable subordination. However, the court understands that pursuant to the Joint Stipulated Pretrial Order, the Trustee is not pursuing claims against Ponce as they relate to Ponce’s actions as a member of the Official Committee of Unsecured Creditors of PCF. In the Ninth Circuit, a party seeking equitable subordination must prove that the purportedly wrongful conduct resulted in "injury to competing claimants," or conveyed an "unfair advantage" upon the claimant being subordinated to the detriment of those "competing claimants." In re Filtercorp, 163 F.3d. 570 (9th Cir. 1998). Ponce argues that this rule should be interpreted to mean that general inequitable conduct will not suffice to satisfy the standard of relief, but rather the alleged misconduct must improve the target creditor’s status relative to other creditors. (see In re First Alliance Mortgage, Inc., 471 F.3d 977, 1066 (9th Cir. 2006). Ponce argues that none of the alleged
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misconduct was calculated to confer any advantage to himself relative to the other creditors, and no creditor was actually harmed.
Trustee argues in his opposition that, at the very least an issue of fact exists as to whether Ponce’s conduct as it related to his alleged leaking of confidential information to Harkey and assisting Harkey in his attempts to divert estate assets would be sufficiently "gross and egregious" to warrant equitable subordination. As the Court of Appeals noted in the First Alliance Mortgage opinion, the level of pleading and proof differs depending on whether or not the claim to be subordinated is held by a fiduciary or insider. However, where the claimant is an insider or fiduciary, the court will exercise heightened scrutiny in determining whether inequitable conduct exists. Fluharty v. Wood Products, Inc. (In re Daugherty Coal Co., Inc.), 144 B.R. 320, 323 – 4 (N.D. Va. 1992). If the claimant is a fiduciary or insider "the trustee/debtor must only prove unfairness in the transaction." Id. Once the Trustee presents evidence of unfair conduct, "the claimant must then prove the fairness of his transactions" or his claim will be subordinated. Estes v. N & D Properties, Inc. (In re N & D Properties, Inc.), 799 F.2d 726, 731 (8th Cir. 1986).
Trustee argues that Ponce is a fiduciary and it is clear that a genuine issue of fact exists, based on the evidence adduced thus far, that even if Dr. Ponce’s conduct was not "gross and egregious," it was inequitable. Furthermore, Trustee disputes that Dr. Ponce’s actions had no adverse effect on creditors in the bankruptcy case; Dr. Ponce’s alleged conduct damaged the estate by occasioning it to bear unnecessary fees being incurred by the Committee and by the estate in combatting Mr. Harkey’s fraudulent scheme to divert assets of the estate. As a result, distributions to unsecured creditors will be reduced, to their detriment.
This issue of Equitable Subordination was not discussed by either party in the latest Motion for Summary Judgment. The Joint Pretrial Stipulation Order says that Trustee is not challenging anything regarding Ponce’s conduct in relation to his capacity as a member of the committee of unsecured creditors. However, it appears that at least some of the allegedly inequitable conduct may be related to actions taken
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while a member of that committee. Therefore, where exactly this claim is with regard to the summary judgment motion is somewhat unclear. What does seem clear is that the parties are far apart on whether there was gross and egregious conduct, and whether Ponce’s conduct impaired the rights of other creditors. Because this issue was not re-briefed by either party to give the court an idea of whether there is still a genuine dispute of material fact to considered, the court will not grant summary judgment or summary adjudication as to this claim.
While the theories for relief in the Complaint are somewhat convoluted, and the arguments as to why no case is stated as appear in the Motion are not easy to grasp, the court believes that enough is alleged to support a cognizable theory of relief that the factual issues can only be resolved at trial. Consequently, the Motion must be denied.
Deny
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
Raymond E Ponce Represented By Madison S Spach Jr Sean A OKeefe
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Jon L Dalberg
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Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs DEBTOR
Docket 8
Grant. Appearance is optional.
Debtor(s):
Angel E Perez Represented By Lauren M Foley
Movant(s):
Toyota Motor Credit Corporation Represented By
Austin P Nagel
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 47
Grant. Appearance is optional.
Debtor(s):
Yu Tan Katy Yoh Represented By Lawrence B Yang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 42
- NONE LISTED -
Debtor(s):
Enrique Martinez Represented By Brian J Soo-Hoo
Movant(s):
Wells Fargo Bank, N.A. Represented By Merdaud Jafarnia
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 2-6-18)
HSBC BANK USA, NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 25
Tentative for 3/6/18:
Grant assuming service to trustee.
Tentative for 2/6/18:
Grant as to debtor; continue as to Chapter 7 trustee.
Debtor(s):
Deborah A Brookhyser Represented By Alon Darvish
Movant(s):
HSBC Bank USA, National Represented By Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Docket 26
No tentative.
Debtor(s):
Richard Anthony Stelma Represented By Amid Bahadori
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
(con't from 1-23-18)
Docket 0
No tentative.
Debtor(s):
Richard Anthony Stelma Represented By Amid Bahadori
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
Docket 12
Grant.
Debtor(s):
Tuyet T Nguyen Pro Se
Movant(s):
Frank M Cadigan Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
DONALD W. SIEVEKE, ATTORNEY FOR TRUSTEE HAHN FIFE & COMPANY LLP
Docket 49
Allow as prayed. Appearance is optional.
Debtor(s):
Tomas K Gryczka Represented By Robert S Altagen
Trustee(s):
Richard A Marshack (TR) Represented By Donald W Sieveke
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IMPOSSIBILITY RE: Kenneth Gharib aka Kenneth Garrett aka Khosrow Gharib Rashtabadi and Freedom Investment Corporation, a Nevada Corporation In Contempt Of This Court and Imposing Sanctions
(cont'd from 10-3-17 )
Docket 0
Tentative for 3/6/18:
No tentative.
Tentative for 1/24/17:
This is the oft-continued hearing for status conferences concerning Kenneth Gharib’s ("contemnor"), ongoing contempt, as well as a hearing on his motion late- filed on January 12 as #17 on calendar, styled as: "Notice of Motion and Motion to Dismiss the Sanction Order; Defense of Impossibility to Comply as of January 2017." The court repeats verbatim below the tentative decision from its September 14, 2017 hearings because, regrettably, nothing or almost nothing has changed. For those earlier hearings and conferences the court wrote:
"This is the continued status conference regarding Mr. Gharib’s ongoing contempt, purging the contempt and/or regarding the defense of impossibility. At the last status conference June 16, 2016 the court continued the matter until August 24, 2016. In the meantime the Trustee filed a motion for continuance until September 14 and, in turn, Mr. Gharib on August 15 filed a "Motion to Dismiss Sanction Order Due to Impossibility to Comply…" which was not set for separate hearing, but is construed as part of the ongoing issue of the impossibility defense. Mr. Gharib has been in custody under this
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court’s order since May of 2015.
It is clear that the contemnor has the burden of proving impossibility.
But Mr. Gharib has cited Falstaff Brewing Corp. v. Miller Brewing Co., 702 F. 2d 770 (9th Cir. 1983) for the proposition that impossibility is a complete defense, even if self-induced. Id. at 779-82 n. 7 quoting United States v.
Rylander, 656 F. 2d 1313, 1318 n. 4 (9th Cir. 1981). As the Trustee has argued, this authority is somewhat dubious since the discussion in Falstaff is in dicta and one of the authorities relied upon by the Falstaff court, United States v. Rylander, was later overturned in United States v. Rylander, 460 U.S. 752, 103 S. Ct. 1548 (1983). Further, on the very question before us, i.e. the question of self-induced impossibility, the Ninth Circuit has ruled subsequently to Falstaff in Federal Trade Commission v. Affordable Media, LLC, 179 F. 3d 1228 (9th Cir 1999) that self-induced impossibility, particularly in the asset protection trust context, is not a defense to civil contempt or at least that the contemnor’s burden of proof on the point is very high. Id. at 1239-41. Instead, the contemnor must still prove "categorically and in detail" why he is unable to comply. Id. at 1241 citing Rylander, 460 U.S. at 757, 103 S. Ct. 1548. Moreover, on that point and in that context the court is justified in maintaining a healthy skepticism, as did the Affordable Media court. Id. at 1242. See also In re Marciano, 2013 WL 180057*5 (C.D. Cal.
Jan. 17, 2013); In re Lawrence , 251 B.R. 630, 651-52 (S.D. Fla. 2000);
United States v. Bright, 2009 WL 529153*4-5 (Feb. 27, 2009).
Here, with even a mild degree of skepticism it is sufficient to find that Mr. Gharib has not met his burden of proving "categorically and in detail" why he is unable to purge the contempt. While this is not exactly an asset protection trust context as in Affordable Media, we have a near cousin of this phenomenon, i.e. multiple transfers to apparent sham corporations. As near as the court can understand it, Mr. Gharib argues that he has had no access or control over any funds since losing all of the $11.9 million+ he claimed under penalty of perjury to own in November 2012 in filings made with this court. In
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previous briefs some of the subject proceeds from the Hillsborough sale were traced by the Trustee into two previously unidentified corporations, Office Corp and D Coffee Shop. In response to this evidence and in Mr. Gharib’s own words:
"In March of 2015, foreigner [sic] investors decided to terminate their contract and business with Gharib. Foreigner investors demanded and instructed Gharib to close all bank accounts of Best Entertainment Corp and Hayward Corporation in Bank of America and transfer the remaining balance to Office Corp. Gharib followed foreigner investors demand and instruction and he closed both bank accounts of Best Entertainment Corp in Bank of America. The remaining balance of approximately six hundred thousand dollars was transferred to Office Corp per foreigner investors’ demand and instruction. Gharib never was the owner of funds or shareholder of Office Corporation. Gharib has no knowledge who owned stocks of Office Corp and foreigner investors never revealed to Gharib either. Shortly after, Gharib was detained in May 2015. While Gharib was in custody, trustee subpoenaed Office Corp bank account in Bank of America (see exhibit "26 and 27").
Office Corp’s bank statements show the authorized signer was Mrs. Firouzabadi. Approximately three hundred thousand dollars of funds in that account was spent in a variety of items and the remaining funds were
transferred to D Coffee Shop Corp (see exhibit "26"). Trustee also subpoenaed D Coffee Shop Corporation bank account in Bank of America (See exhibit "28" and "29"). D Coffee Shop Corp’s bank statements show Mr. Rushtabadi was authorized signer and the remaining balance in D Coffee Shop Corp’s account was spent in variety of items, and nothing left over in that account as of December 2015, 8 months ago. Gharib has no information why and for what purpose the funds were spent in both Office Corp and D Coffee Shop Corp. Gharib was incarcerated during that period (May to December 2015).
Gharib has no information as to identity of stock holder of either Office Corp or D Coffee Shop Corp. Gharib was not part of any of the above Corporations in any way or shape… Gharib did not have any interest or ownership in any of
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the above corporations at all. It is undisputable that that all funds (whether proceed of sales of Hillsborough or Foreigner investors’ money) in both corporations were spent and gone (definitely not by Gharib)…."
Gharib’s "Motion to Dismiss…" filed August 15, 2016 at pp. 4-5
Since the last hearing the Trustee has been unable to find or subpoena Mr. Rushtabadi, Gharib’s brother. That a brother would be apparently so indifferent to Mr. Gharib’s ongoing incarceration so as to offer his assistance or at least testimony is by itself rather noteworthy, particularly since Mr.
Rushtabadi does know of the incarceration and makes telephone calls at Gharib’s behest. But the Trustee was able to depose Ms. Firouzabadi August 26, 2016 [See Trustee’s Exhibit "4"]. From her testimony it develops that she had a romantic relationship with Gharib allegedly ending in about 2014 and that, believing he was a successful businessman, she trusted him and allowed him to use her signature on various items and documents on things she apparently does not understand. [Transcript p. 57, line 16-19]. But, importantly, she testified she had absolutely no knowledge of either Office Corp or D Coffee Shop corporations or of any transfers therefrom [Transcript
p. 75, line 6-7] and identified that her purported signature on several of said corporations’ papers offered as exhibits by the Trustee were forgeries. [Transcript at p. 56, line 1-17] Interestingly, she also testified that Mr. Rushtabadi, the brother, requested by telephone just before the deposition that she leave the country. [Transcript pp. 22-23] Why she should leave her home on such short notice at Mr. Rushtabadi’s request was not clarified but the implication is pretty clear, to avoid service just as Mr. Rushtabadi has reportedly done (at least so far).
In sum, the court is even less persuaded than before that Mr. Gharib
does not have continuing access to funds and the ability to control funds, suing various shills, to purge the contempt either in part or in whole. His stories about what happened to the Hillsborough proceeds, about phantom investments in Iranian real estate, unnamed "foreigner investors" and the like,
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have absolutely no substance or corroboration and defy all credibility. The few details offered have proven to be either outright lies or very suspect, at best. In sum, Mr. Gharib’s burden of proving impossibility has not been carried."
The only developments that could be construed as "new" do not help the contemnor’s case. The Trustee now reports that his investigation reveals that the contemnor’s brother, Steven Rushtabadi, has depleted all of the remaining money from the account maintained by D Coffee Shop Corporation’s (a subsequent transferee from Office Corporation, itself a transferee from the debtor) at Bank of America in a series of over-the-counter withdrawals, presumably in cash. For a few weeks between January 11 through February 26, 2016 (See, Exhibits"2" and "3" to Trustee’s Declaration) these withdrawals are supported by video evidence of Mr. Rushtabadi receiving the cash. But it appears that the incremental depletion of the account has actually gone on for months earlier in cash withdrawal amounts alternating between
$4500 and $3500. Exhibit "1." But the court notes that all withdrawals appear to be below the regulatory threshold of $10,000. The contemnor argues that it is impossible now to comply with the court’s order because he is indigent and has no control over either his brother’s or Ms. Firouzabadi’s activities (or funds). The contemnor correctly points out that many of these transfers occurred after he was confined. But the court is not so naïve as to believe that transfers to corporations ostensibly controlled by a one-time girlfriend and a brother necessarily means that the contemnor has no ongoing control. At the very least it is the contemnor’s burden to prove this to be the case and that burden is manifestly not carried here. The simple fact that Mr.
Rustabadi refuses to cooperate by giving testimony, either in response to the Trustee’s subpoenas or, conspicuously, even in support of his own brother’s testimony which might relieve contemnor’s incarceration, renders this whole line of excuse very dubious. Equally dubious is the argument that because the contemnor has allegedly not formally communicated with either the girlfriend or the brother in several months according to the contemnor’s declaration and the records of the Metropolitan Detention Center, this must mean he has no ongoing control But the court declines to take such an inference. Even less persuasive is the argument that the District Court has approved an in forma pauperis waiver of fees; all this means is that someone at
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the District Court believes what contemnor has said in an application, not that it is necessarily true. Rather, absent some more compelling and direct evidence to the contrary (such as declarations from Mr. Rustabadi or Ms. Firouzabadi), the court is more inclined to believe the more plausible scenario; i.e. the transfers from debtor to Office Corporation and then to corporations controlled by such close relatives or friends, were not mere coincidences, but were designed to camouflage the contemnor’s ongoing control. Also disturbing is the Trustee’s point made in page 5 of his Opposition: i.e. that several properties which contemnor claims were foreclosed upon as evidence of his indigence were actually transferred to a corporation, Las Vegas Investment, Inc., ostensibly controlled by the brother, Mr. Rushtabadi, using the name Steven Rush. If true this is yet further evidence that contemnor continues to control his investments using his brother as a shill. In sum, the court sees even less reason to find that impossibility has been proven.
Deny motion and confine for further status conference regarding ongoing contempt and/or defense of impossibility
Tentative for 9/14/16:
This is the continued status conference regarding Mr. Gharib’s ongoing contempt, purging the contempt and/or regarding the defense of impossibility. At the last status conference June 16, 2016 the court continued the matter until August 24, 2016. In the meantime the Trustee filed a motion for continuance until September 14 and ,in turn, Mr. Gharib on August 15 filed a "Motion to Dismiss Sanction Order Due to Impossibility to Comply…" which was not set for separate hearing, but is construed as part of the ongoing issue of the impossibility defense. Mr. Gharib has been in custody under this court’s order since May of 2015.
It is clear that the contemnor has the burden of proving impossibility. But Mr. Gharib has cited Falstaff Brewing Corp. v. Miller Brewing Co., 702 F. 2d 770 (9th Cir. 1983) for the proposition that impossibility is a complete defense, even if self-induced. Id. at 779-82 n. 7 quoting United States v. Rylander, 656 F. 2d 1313, 1318 n. 4 (9th
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Cir. 1981). As the Trustee has argued, this authority is somewhat dubious since the discussion in Falstaff is in dicta and one of the authorities relied upon by the Falstaff court, United States v. Rylander, was later overturned in United States v. Rylander, 460 U.S. 752, 103 S. Ct. 1548 (1983). Further, on the very question before us, i.e. the question of self-induced impossibility, the Ninth Circuit has ruled subsequently to Falstaff in Federal Trade Commission v. Affordable Media, LLC, 179 F. 3d 1228 (9th Cir 1999) that self-induced impossibility, particularly in the asset protection trust context, is not a defense to civil contempt or at least that the contemnor’s burden of proof on the point is very high. Id. at 1239-41. Instead, the contemnor must still prove "categorically and in detail" why he is unable to comply. Id. at 1241 citing Rylander, 460 U.S. at 757, 103 S. Ct. 1548. Moreover, on that point and in that context the court is justified in maintaining a healthy skepticism, as did the Affordable Media court. Id. at 1242. See also In re Marciano, 2013 WL 180057*5 (C.D. Cal. Jan. 17, 2013); In re Lawrence , 251 B.R. 630, 651-52 (S.D. Fla. 2000); United States v.
Bright, 2009 WL 529153*4-5 (Feb. 27, 2009).
Here, with even a mild degree of skepticism it is sufficient to find that Mr. Gharib has not met his burden of proving "categorically and in detail" why he is unable to purge the contempt. While this is not exactly an asset protection trust context as in Affordable Media, we have a near cousin of this phenomenon, i.e. multiple transfers to apparent sham corporations. As near as the court can understand it, Mr. Gharib argues that he has had no access or control over any funds since losing all of the $11.9 million+ he claimed under penalty of perjury to own in November 2012 in filings made with this court. In previous briefs some of the subject proceeds from the Hillsborough sale were traced by the Trustee into two previously unidentified corporations, Office Corp and D Coffee Shop. In response to this evidence and in Mr. Gharib’s own words:
"In March of 2015, foreigner [sic] investors decided to terminate their contract and business with Gharib. Foreigner investors demanded and instructed Gharib to close all bank accounts of Best Entertainment Corp and Hayward Corporation in Bank of America and transfer the remaining balance
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to Office Corp. Gharib followed foreigner investors demand and instruction and he closed both bank accounts of Best Entertainment Corp in Bank of America. The remaining balance of approximately six hundred thousand dollars was transferred to Office Corp per foreigner investors’ demand and instruction. Gharib never was the owner of funds or shareholder of Office Corporation. Gharib has no knowledge who owned stocks of Office Corp and foreigner investors never revealed to Gharib either. Shortly after, Gharib was detained in May 2015. While Gharib was in custody, trustee subpoenaed Office Corp bank account in Bank of America (see exhibit "26 and 27").
Office Corp’s bank statements show the authorized signer was Mrs. Firouzabadi. Approximately three hundred thousand dollars of funds in that account was spent in a variety of items and the remaining funds were
transferred to D Coffee Shop Corp (see exhibit "26"). Trustee also subpoenaed D Coffee Shop Corporation bank account in Bank of America (See exhibit "28" and "29"). D Coffee Shop Corp’s bank statements show Mr. Rushtabadi was authorized signer and the remaining balance in D Coffee Shop Corp’s account was spent in variety of items, and nothing left over in that account as of December 2015, 8 months ago. Gharib has no information why and for what purpose the funds were spent in both Office Corp and D Coffee Shop Corp. Gharib was incarcerated during that period (May to December 2015).
Gharib has no information as to identity of stock holder of either Office Corp or D Coffee Shop Corp. Gharib was not part of any of the above Corporations in any way or shape… Gharib did not have any interest or ownership in any of the above corporations at all. It is undisputable that that all funds (whether proceed of sales of Hillsborough or Foreigner investors’ money) in both corporations were spent and gone (definitely not by Gharib)…."
Gharib’s "Motion to Dismiss…" filed August 15, 2016 at pp. 4-5 Since the last hearing the Trustee has been unable to find or subpoena Mr.
Rushtabadi, Gharib’s brother. That a brother would be apparently so indifferent to Mr. Gharib’s ongoing incarceration so as to not offer his assistance or at least testimony is
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by itself rather noteworthy, particularly since Mr. Rushtabadi does know of the incarceration and makes telephone calls at Gharib’s behest. But the Trustee was able to depose Ms. Firouzabadi August 26, 2016 [See Trustee’s Exhibit "4"]. From her testimony it develops that she had a romantic relationship with Gharib allegedly ending in about 2014 and that, believing he was a successful businessman, she trusted him and allowed him to use her signature on various items and documents on things she apparently does not understand. [Transcript p. 57, line 16-19]. But, importantly, she testified she had absolutely no knowledge of either Office Corp or D Coffee Shop corporations or of any transfers therefrom [Transcript p. 75, line 6-7] and identified that her purported signature on several of said corporations’ papers offered as exhibits by the Trustee were forgeries. [Transcript at p. 56, line 1-17] Interestingly, she also testified that Mr. Rushtabadi, the brother, requested by telephone just before the deposition that she leave the country. [Transcript pp. 22-23] Why she should leave her home on such short notice at Mr. Rushtabadi’s request was not clarified but the implication is pretty clear, to avoid service just as Mr. Rushtabadi has reportedly done (at least so far).
In sum, the court is even less persuaded than before that Mr. Gharib does not have continuing access to funds and the ability to control funds, using various shills, to purge the contempt either in part or in whole. His stories about what happened to the Hillsborough proceeds, about phantom investments in Iranian real estate, unnamed "foreigner investors" and the like, have absolutely no substance or corroboration and defy all credibility. The few details offered have proven to be either outright lies or very suspect, at best. In sum, Mr. Gharib’s burden of proving impossibility has not been carried.
Deny motion to dismiss. Continue for further evaluation conference.
Debtor(s):
Kenny G Enterprises, LLC Represented By Robert P Goe Jeffrey S Souders
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Trustee(s):
Raymond H Aver
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey Steve Burnell
11:00 AM
(cont'd from 10-3-17)
Docket 457
Tentative for 3/6/18: No tentative.
Tentative for 1/24/17: See #15.
Tentative for 9/14/16: See #6.
Debtor(s):
Kenny G Enterprises, LLC Represented By Robert P Goe Jeffrey S Souders
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey Steve Burnell
10:00 AM
Docket 194
- NONE LISTED -
Debtor(s):
Lorraine M. Nichols (Deceased) Represented By Illyssa I Fogel
10:00 AM
Docket 34
Deny if UST confirms that Debtor has cured the delinquencies.
Debtor(s):
Richard Paul Herman Represented By Michael Jones
10:00 AM
Docket 185
Where is the status report?
Debtor(s):
Shahid Chaudhry Represented By Anerio V Altman
10:00 AM
Docket 1
Continue to coincide with the continued date on reimposition of stay (March 20, 2018 at 10:00 a.m.)
Debtor(s):
John J Trejo Represented By
Michael Jones
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones
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Docket 1
Tentative for 3/7/18: See #6.
Tentative for 1/10/18:
Estimate approximate timeline to confirmation.
Tentative for 9/27/17:
Continue until early 2018 to allow consideration of whether plan can be confirmed.
Tentative for 3/28/17:
Deadline for filing plan and disclosure statement: September 1, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date Debtor to give notice of the deadline by May 1, 2017
Debtor(s):
Casa Ranchero, Inc. Represented By Robert P Goe Charity J Miller
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(set at disclosure statement hrg on 1-10-18)
Docket 104
Tentative for 3/7/18:
Confirm. Set post-confirmation status conference.
Tentative for 1/10/18:
There are some issues raised last time which were not addressed in the Amended Disclosure. Additionally, although feasibility is usually a confirmation issue, the UST's objection points out that projections are not being met and indeed are not reporting profitable. Debtor's response?
Tentative for 11/1/17:
This is the debtor’s motion to approve its Disclosure Statement ("DS") as containing adequate information to enable creditors to make an informed decision on the plan as required under §1125. The narrative is a little thin on detail about what will happen post-confirmation, and in some places seems contradictory. It appears the restaurant will continue to operate, but there are some hints that a sale of the restaurant might be sought. The court notes the following:
At p. 1, lines 11-12, the DS states that all interests will be cancelled and the Reorganized Debtor will be owned by the "New Value Contributor." Yet, we see no information about the identity of the New Value Contributor, or the amount of value
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contributed. At p. 10, "New Value Contributor" is defined as "the individual or entity contributing new value to acquire 100% ownership of the Reorganized Debtor." This may or may not conflict with the fact that the current manager of Debtor, who is the sole shareholder of Debtor, will continue to manage Debtor. [DS p. 13, lines 2-4]. The DS needs to be amended to reflect this important information. It looks like the debtor is preparing for a cram down fight over the absolute priority rule and so is planning a backup argument over "new value." But if the plan proposes to pay creditors in full, it is at least unclear why this is necessary. Discuss please.
At p. 20, line 25 the DS provides that a risk factor is that Debtor will be unable to sell the property. At p. 20, line 11 the DS states that the plan will be funded through operations of Debtor. Left unclear is which property is proposed to be sold. If everything is to be sold the Plan and DS need to make that clear. If a sale can happen at any time at discretion of management, that should be specified.
Treatment under Class 5 provides that all interests will be cancelled. [DS p. 19] There is no explanation of who will hold interests in the Reorganized Debtor.
"Collateral" could be defined more clearly as it is referred to throughout the DS. We do not know what these assets are by reading just this document.
The debtor offers no explanation as to why the BOE claim is classified separately from other unsecured claims in Class 3. If this is to gerrymander a vote, it is improper without a better explanation. [DS p. 18]
There is no breakdown of assets and their values in the liquidation analysis. The reason given is that the assets are over encumbered so there would likely be no distribution to creditors. [DS p. 21] The court notes that there has been a valuation order, but it would be helpful to explain why the $14,000+ valuation equates to zero recovery in a Chapter 7.
Debtor has not provided actual dollar amounts in the discussion of feasibility, but the only administrative claim is expected to be that of Goe & Forsythe, who will reportedly stipulate to a payment schedule if necessary, so maybe actual numbers are
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not necessary. But what might be necessary is a clarification that payment of fees will be subordinated to plan payments to creditors.
The plan provides that Class 3 creditors will be paid in full through quarterly payments. Although the DS contains Exhibit 3 as projections, and between $20 and 30 thousand appears as net available profit in each period, no effort is made to estimate what the quarterly payments are supposed to be. Is all available cash to be paid? Will a prudent operational reserve be created? Disputed claims reserve? How much? Are dividends to the new equity to be paid before creditors? These points should be clarified.
Class 4 is identified as the Hungry Bear claim and the DS says the "claim shall be disallowed." But it is left unclear what is meant by this. The dischargeability complaint was dismissed but this cannot be said to be determinative of claim allowance, a very different question. At p.13 reference is made to a $218,706 disputed claim of Hungry Bear. One supposes that the debtor intends to object to allowance and that there might ensue allowance litigation. But the DS should make clear that the ultimate amount of allowed claims, and hence amount of quarterly payments on a pro rata basis, will depend on the outcomes of this litigation. If the debtor is attempting by the plan’s confirmation to resolve the Hungry Bear claim, that must be made clear.
Continue for amendments as indicated.
Debtor(s):
Casa Ranchero, Inc. Represented By Robert P Goe Charity J Miller
10:00 AM
Docket 107
Because supporting documentation is not attached, the claim is not prima facie evidence of the validity of the claim. Even if it were, Debtor has rebutted the prima facie evidence and Claimant has not responded to support its claim. Sustain.
Debtor(s):
Casa Ranchero, Inc. Represented By Robert P Goe Charity J Miller
10:00 AM
JOHN H. BAUER, ATTORNEY FOR DEBTOR FEES: $129,850.00
EXPENSES: $0
Docket 302
The court agrees that the format of the application is not user friendly, and not in keeping with standards expected of Chapter 11 counsel. At the very least, the computerized billing should be sorted by task and, to the extent multiple professionals are involved, a blended rate should appear. This helps the reader evaluate at a glance the amount of time spent on a particular task. An unsegregated total per task at the end is better than nothing, but not much better.
As the UST acknowledges, a good result was ultimately obtained. But this does not change the need for review, and leaving the data in a raw form as this multiplies the work required by reviewing parties and the court.
Either: (1) a 10% reduction in the allowance or (2) continue 30 days for filing of a revised application consistent with these suggestions.
Debtor(s):
CYU Lithographics Inc Represented By John H Bauer
10:00 AM
Docket 138
Grant.
Debtor(s):
Parviz Akradi Represented By Bruce A Boice
10:00 AM
(notice of hearing filed 2-15-18)
Docket 290
- NONE LISTED -
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Adv#: 8:17-01217 Marshack v. Roach
(con't from 1-25-18 per order approving stip. to continue s/c ent. 1-12-18)
Docket 1
- NONE LISTED -
Debtor(s):
Elaine Marie Roach Represented By
Diane L Mancinelli
Defendant(s):
Elaine Marie Roach Pro Se
Plaintiff(s):
Richard A Marshack Represented By
Stephen F Biegenzahn
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Chad V Haes
10:00 AM
Adv#: 8:17-01234 Brown v. U.S. Department of Education et al
Docket 2
- NONE LISTED -
Debtor(s):
Hutton Douglas Michael Brown Represented By Christine A Kingston
Defendant(s):
U.S. Department of Education Pro Se
Wells Fargo Education Financial Pro Se
Nel Net Loan Services Pro Se
Plaintiff(s):
Hutton Douglas Michael Brown Represented By Christine A Kingston
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01245 Little v. Clarke
Docket 1
Tentative for 3/8/18: Why no status report?
Debtor(s):
Elmer Clarke Represented By
Patrick J D'Arcy
Defendant(s):
Elmer Clarke Pro Se
Plaintiff(s):
Katie L. Little Represented By
R Grace Rodriguez
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
Adv#: 8:17-01246 Ko v. The Bank of New York Mellon et al
Docket 1
Tentative for 3/8/18:
No status report? Underlying dismissal renders this moot? Dismiss?
Debtor(s):
Tae Hoon Ko Pro Se
Defendant(s):
The Bank of New York Mellon Pro Se
Specialized Loan Servicing LLC Pro Se
NBS Default Services LLC Pro Se
Countrywide Bank, FSB Pro Se
All Persons Unknown Pro Se
Plaintiff(s):
Tae Ko Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:17-01247 Karen Sue Naylor, Chapter 7 Trustee v. Sam Hedaya Corp.
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Sam Hedaya Corp. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:00 AM
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01248 Karen Sue Naylor, Chapter 7 Trustee v. Lewis Hyman, Inc.
Docket 1
Tentative for 3/8/18:
Status conference continued to June 7, 2018 at 10:00 a.m. Appearance is optional.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Lewis Hyman, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:00 AM
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01250 Karen Sue Naylor, Chapter 7 Trustee v. Playhut, Inc.
Docket 1
Tentative for 3/8/18:
Status conference continued to June 7, 2018 at 10:00 a.m. Appearance is optional.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Playhut, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:00 AM
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:18-01018 The Bank of New York Mellon v. Ko
Docket 1
Tentative for 3/8/18: Remand.
Debtor(s):
Tae Hoon Ko Pro Se
Defendant(s):
Tae Hoon Ko Pro Se
Plaintiff(s):
The Bank of New York Mellon Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
& 523(a)(6) and (2) Objection to Discharge Pursuant to 11 U.S.C. Sections 727 (a)(2), 727(c)(1) & 727(c)(2)
(set at s/c held 6-15-17) (con't from 1-11-18 per order entered 11-29-17)
Docket 1
Tentative for 6/15/17:
Why no status report? Should the court rely on the February 15, 2017 version?
Tentative for 3/2/17:
Status Conference continued to June 15, 2017 at 10:00 a.m.
Refer to Mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by June 1, 2017.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Nezamiddin Farmanfarmaian Pro Se
Plaintiff(s):
Omni Steel Company, Inc. Represented By Sean A Topp
10:00 AM
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
11:00 AM
Adv#: 8:14-01237 LaPrima Investments LTD et al v. Bartholomew
(con't from 1-11-17
Docket 33
Tentative for 3/8/18:
This is a confused hearing, at best. It is calendared as a "status conference" yet neither side has filed a status report for this hearing. Reportedly, a default has been entered against Defendant.
Defendant has filed a "Reply to Objection..." dated February 5, 2018 which seems to go to the question of whether an "answer" also filed was proper. This case needs to be cleaned up procedurally. Example: motion to set aside default?
Tentative for 1/11/18:
The court agrees that the answer should be treated more as a Rule 60 motion. See also #7 regarding default and prove up.
Tentative for 11/2/17: See #8.
Tentative for 10/26/17:
Status conference continued to November 2, 2017 at 11:00 a.m.
11:00 AM
Tentative for 8/31/17:
Status conference continued to October 26, 2017 at 10:00 a.m.
Tentative for 7/13/17: Dismiss.
Tentative for 4/13/17: Case is being dismissed.
Tentative for 3/9/17:
It appears that Debtor is incarcerated. Is a motion for summary judgment more appropriate/efficient than trial?
Tentative for 11/10/16: Status?
Tentative for 7/7/16:
Status Conference continued to July 28, 2016 at 11:00 a.m. The parties should be prepared to propose a timeline for disposition of this matter.
Tentative for 10/29/15: See #1-3, 13, 14.
11:00 AM
Tentative for 5/7/15:
Continue to October 29, 2015 at 10:00 a.m.
Prior Tentative:
Deadline for completing discovery: February 1, 2015 Last date for filing pre-trial motions: February 16, 2015 Pre-trial conference on: March 5, 2015 at 10:00 a.m.
Joint pre-trial order due per local rules.
Creditor Atty(s):
John and Pamela Korn Pro Se
John and Pamela Korn Pro Se
Debtor(s):
Joseph Francis Bartholomew Represented By
M Jonathan Hayes
Defendant(s):
Joseph Francis Bartholomew Pro Se
Interested Party(s):
Courtesy NEF Represented By
M Jonathan Hayes
Plaintiff(s):
LaPrima Investments LTD Represented By Michael B Kushner
Westdale Construction Co. Limited Represented By
Michael B Kushner
Browside International Limited Represented By
11:00 AM
Michael B Kushner
Allen Weiss Represented By
Michael B Kushner
John and Pamela Korn Represented By Michael B Kushner
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:14-01237 LaPrima Investments LTD et al v. Bartholomew
(con't from 1-11-18)
Docket 92
Tentative for 3/8/18: Status?
Tentative for 1/11/18:
This is a motion for entry of judgment after default on this adversary proceeding to determine dischargeability. The hearing was continued from November 2 to allow the plaintiffs to augment the record to prove elements of fraud under 11 U.S.C. §523(a)(2). The plaintiffs have submitted the Declaration of Clifford Oliver, but the problem was not cured. The declaration reveals a series of loan transactions and defaults thereunder. Debtor largely acted as guarantor. But a mere breach of contract happens in every bankruptcy. No particular evidence is offered as to how the obligation was incurred through fraud. Some reference was made to promises that the proceeds of the loans would be invested by debtor’s company in certain endeavors described as "life settlement market.", and the implication is offered that they were not so invested. Indeed, oblique reference is made that the debtor was running a Ponzi scheme. Some substantiation of that assertion would have been most helpful. Likewise, a judgment was entered June 19, 2013 in Superior Court case no. 30-2012-0055925. Unfortunately, no findings were made and no punitive damages were awarded, so the court is left to surmise whether the alternative cause of action for fraud played any role in the amount awarded. So, still the court is left without a sufficient basis to enter a judgment based on §523(a)(2). The court is mindful that this is a
11:00 AM
default proceeding and that by failing to answer the debtor effectively admitted the allegations of the complaint. The court does not want to multiply the plaintiff’s losses or cause unnecessary difficulty. But some effort should be made to substantiate that this case as based on nondischargeable conduct such as fraud and not merely breach of contract. Is there no way to prove that there was a Ponzi scheme? If so, that there was no genuine intent to repay could be inferred.
No tentative
Tentative for 11/2/17:
Two problems are presented. First, defendant has filed a hand-written opposition, which suggests a Rule 60 motion is forthcoming. Second, no evidence is submitted with the motion. It is insufficient to simply rely upon failure to answer. Reference is made to a judgmet which might be collateral estoppel, if it contains findings, etc. as plaintiffs contend. But court cannot simply rely on characterizations. Continue.
Debtor(s):
Joseph Francis Bartholomew Represented By Dana M Douglas Edward T Weber
Defendant(s):
Joseph Francis Bartholomew Represented By Michael B Kushner
Plaintiff(s):
LaPrima Investments LTD Represented By Michael B Kushner M Jonathan Hayes
Westdale Construction Co. Limited Represented By
Michael B Kushner
11:00 AM
M Jonathan Hayes
Browside International Limited Represented By Michael B Kushner M Jonathan Hayes
Allen Weiss Represented By
Michael B Kushner M Jonathan Hayes
John and Pamela Korn Represented By Michael B Kushner M Jonathan Hayes
Trustee(s):
John M Wolfe (TR) Represented By David M Goodrich
11:00 AM
Adv#: 8:13-01117 Padilla, III v. Jakubaitis
(set at s/c held 8-17-17)(con't from 2-8-18)
Docket 1
Tentative for 3/8/18:
These are scheduled as Pre-Trial Conferences in both adversary proceedings which are considered together in single memorandum in view of the substantial factual overlap between them. Emblematic of how these cases have "progressed" to date, we have no Joint Pre-Trial Stipulations of the parties as required by the LBRs. Instead, we have only separate Unilateral Stipulations and/or "Statements," with charges and counter charges as to the other side’s violations of the rules and/or acts in bad faith. Plaintiff’s proposed pre-trial stipulation moreover is not really an attempt at a stipulation at all. It is styled "Unilateral Pretrial Statement" and reads more like an extensive narrative brief on his view of the case and polemic about defendants’ failures under Rule 26 and other violations. By not utilizing separate and discreet paragraphs, there is little opportunity to utilize this version as a beginning template for formulation of a true joint stipulation to serve the purposes envisioned in the LBRs. The defendants’ versions actually read closer to the mark in that they (whatever the truth or accuracy of same) are at least broken down into short, declarative numbered paragraphs that might, if agreed, create a factual structure serving the purpose of limiting court time at trial. But, of course (at least as to the Frank version) these paragraphs are not agreed; rather, they have drawn the Plaintiff’s "Objection to the Pretrial ‘Stipulation’ …." But the "Objection…" reads more as a brief against failure to timely submit Rule 26 disclosures and other offenses against the LBRs, and not as any attempt to formulate the needed factual
11:00 AM
structure that is supposed to save the parties and the court time by agreeing to facts that become unnecessary to prove at trial.
The drill shouldn’t be that difficult. The LBRs provide that the plaintiff is to timely propose and serve a joint stipulation, and to the extent that parties cannot agree on the basic facts, the directive of the LBRs is to move those not-agreed paragraphs into a "Disputed" heading but, hopefully, still including as much as possible in the "Undisputed" category. If the other side does not cooperate, the remedy is to file a unilateral version that could be adopted by the court without input from the other side, as a form of sanction. But none of that was done here. Rather, the parties continue with the pattern of interminable bickering and failure to abide by the requirements of the FRCP or the LBRs. Matters are not improved when Mr. Firman "specially" appears some times to defend Frank but in other times Frank appears in pro se. In consequence, continuity is completely absent. The court also sees that there are motions on this calendar to continue the deadlines to file motions and to conduct discovery, as well as for this court to abstain. It is painfully evident that these cases are not nearly in a position to schedule a trial date. So, in view of the other matters on calendar, the court will hear argument as to what the parties suggest be done. This disappointing development warrants sanctions but since each side seems substantially at fault, such penalties would probably cancel each other out.
No tentative
Tentative for 2/8/18:
We have a declaration that no draft pre-trial stipulation was served on defendant? He also seeks relief on motion set for March 8. Continue approximately 60 days to accomodate.
Tentative for 8/17/17:
11:00 AM
See #1.
Tentative for 6/22/17: See #2.
Tentative for 4/10/14:
Off calendar in view of summary judgment?
Tentative for 2/27/14:
Status of summary judgment motion?
Tentative for 12/12/13:
Status conference continued to February 27, 2014 at 10:00 a.m. to allow hearing of motion for summary judgment.
Tentative for 8/29/13:
Deadline for completing discovery: November 1, 2013 Last date for filing pre-trial motions: November 18, 2013 Pre-trial conference on: December 15, 2013 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 6/13/13:
Status conference continued to August 29, 2013 at 10:00 a.m. to allow for default or summary judgment motion in meantime.
11:00 AM
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller
Defendant(s):
Frank Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Pro Se
Jeffrey I Golden (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:13-01117 Padilla, III v. Jakubaitis
Docket 198
These are motions for abstention under 28 U.S.C. §1334 in the two adversary proceedings mentioned in the caption. These two are considered together since the facts are almost identical and there is large overlap in the principles to be considered. Both sides agree that the question of abstention turns on the weighing of a list of factors, as articulated in In re Tucson Estates, 912 F. 2d 1162, 1167 (9th Cir 1990). As applied in this case, there are factors on both sides of the abstention question and several factors are close or probably neutral. The court will briefly explain its thinking on each Tucson Estates factor:
The effect or lack thereof on the efficient administration of the estate. Debtors argue there can be no effect upon the estate as there is no estate, both trustees having filed "No Asset" reports. This is probably an oversimplification, particularly if one considers Plaintiff’s assertion that there might yet be undiscovered assets and trustees can withdraw such reports. But, assuming that the "effect of administration" mentioned in cases like Tucson Estates means administration of assets and not only the question of discharge, it does seem to the court that the main questions yet to be determined have to do with Debtors’ discharges and not recovery of assets and/or administration of same. Without additional recovery of assets the possibility of revocation of discharge reopening the door to claims makes this a distinction without much of a difference. This factor favors abstention.
11:00 AM
all states, including California, have adopted nearly identical versions of the Uniform Fraudulent Transfer Act. Further, related questions such as alter ego are likewise based on state law concepts. While it is true that discharge under
§523(a)(2) or (a)(6) is determined as a question of federal bankruptcy law, it is frequently this court’s approach to abstain in favor of state court actions with the admonition that careful findings are needed, so the prevailing party can then institute a straightforward Rule 56 motion on the question of discharge in this court. The joker in that deck is the advent of a changing standard regarding "actual fraud" within the meaning of §523(a)(2)(A) after Husky International Electronics v. Ritz, 136 S. Ct. 1581 (2016). In some ways these cases resemble Husky as both involved alleged fraudulent transfer schemes between a debtor principal(s) and related corporations. But the court does not view this as a determinative issue dictating a denial of abstention. Rather, the same admonition applies as applies in any fraud action. Careful findings are absolutely necessary if a subsequent Rule 56 motion brought here is to be successful. Plaintiff’s’ counsel, acquainted as he is with the issues raised in Husky, should be able to insure that. This factor narrowly favors abstention.
The difficulty or unsettled nature of the applicable law. As Debtors explain, although the state action issues are not difficult or unsettled in nature, the issues are highly codified by California statutory authority and abstaining would reduce the likelihood of erroneous interpretation. Provided careful findings are obtained so as to allow a Husky application, this factor weighs in favor of abstention.
11:00 AM
and this is likely a core matter implicating dischargeability as "arising under" or at least "related to" a Title 11 proceeding. But, as explained regarding factor #2 above it is not unusual to litigate the underlying factual questions in state court subject to Rule 56 motion in this court on the ultimate question of discharge. One could argue that §§548 and 727(a)(2) also apply, but these are already subsumed as "arising under" Title 11. This factor is either neutral or weighs against abstention.
The feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court. As explained in factor (2) above, it is common to allow litigation over the predicate facts to continue in state court with the ultimate question of dischargeability to be handled by Rule 56 motion here based on careful findings. Consequently, this factor favors abstention.
11:00 AM
system. Although bankruptcy filings are down just now (relatively speaking), the court is busy enough with true bankruptcy questions that cannot be adjudicated elsewhere. Thus, this factor narrowly supports abstention.
the parties, with the ultimate legal question of discharge reserved to this court, as discussed in factors (2) and (8) above. This factor narrowly favors abstention.
Nine of the twelve Tucson Estates factors support abstention, some narrowly so. Two weigh against and one is neutral. But there is no law suggesting that the ultimate answer is found strictly by counting up the ledger. There are at least two
11:00 AM
more questions that must be weighed. The first is the court’s concerns over the long time these matters have been pending and Plaintiffs’ plea that he should not be delayed any longer than necessary. But two factors cut against this. First, the court is not sure about Plaintiff’s argument that we are at the threshold of a trial in bankruptcy court. On calendar are two motions to extend discovery and pretrial motion deadlines, the tentative decisions on which are to grant. So, we may be looking at a delay in any event. The second is that much of the delay was occasioned by the plaintiff’s decision to appeal dismissal of the defamation count after the Anti-SLAPP motion. It could be said that the delay is in partly self-induced, so this lessens the sympathy factor. But the second question relates to the status of discovery as ordered in this court. The court is aware that there have already been several hearings on the question of Frank’s alleged refusal to provide discovery and/or protective orders and/or sanctions. The court is not willing to let go of that question, at least not before Frank has appeared for at least one day of deposition as already ordered and has cooperated in giving discovery (consistent with the protective order already discussed) and has shown cause why he has not paid sanctions already ordered. Otherwise it could be said that his recalcitrance has been rewarded, not a precedent that this court is anxious to set. So, the court will delay abstention until after those duties have been fulfilled (and any follow-up compulsion motion decided) with a stay on all matters except the ordered discovery.
Grant after further hearing reporting that Frank’s one-day deposition has been concluded and sanctions either paid (or cause is shown why they are not paid). If a motion to compel the already ordered deposition is also filed, the court will hear that as well before ordering the abstention. Court reserves over the ultimate question of dischargeability as discussed above.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
11:00 AM
Defendant(s):
Frank Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:13-01117 Padilla, III v. Jakubaitis
Docket 200
See #17.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
7001(7)
(set at s/c held 8-17-17) (con't from 2-8-18)
Docket 1
Tentative for 3/8/18:
These are scheduled as Pre-Trial Conferences in both adversary proceedings which are considered together in single memorandum in view of the substantial factual overlap between them. Emblematic of how these cases have "progressed" to date, we have no Joint Pre-Trial Stipulations of the parties as required by the LBRs. Instead, we have only separate Unilateral Stipulations and/or "Statements," with charges and counter charges as to the other side’s violations of the rules and/or acts in bad faith. Plaintiff’s proposed pre-trial stipulation moreover is not really an attempt at a stipulation at all. It is styled "Unilateral Pretrial Statement" and reads more like an extensive narrative brief on his view of the case and polemic about defendants’ failures under Rule 26 and other violations. By not utilizing separate and discreet paragraphs, there is little opportunity to utilize this version as a beginning template for formulation of a true joint stipulation to serve the purposes envisioned in the LBRs. The defendants’ versions actually read closer to the mark in that they (whatever the truth or accuracy of same) are at least broken down into short, declarative numbered paragraphs that might, if agreed, create a factual structure serving the purpose of limiting court time at trial. But, of course (at least as to the Frank version) these paragraphs are not agreed; rather, they have drawn the Plaintiff’s "Objection to the Pretrial ‘Stipulation’ …." But the "Objection…" reads more as a brief against failure to timely submit Rule 26 disclosures and other offenses
11:00 AM
against the LBRs, and not as any attempt to formulate the needed factual structure that is supposed to save the parties and the court time by agreeing to facts that become unnecessary to prove at trial.
The drill shouldn’t be that difficult. The LBRs provide that the plaintiff is to timely propose and serve a joint stipulation, and to the extent that parties cannot agree on the basic facts, the directive of the LBRs is to move those not-agreed paragraphs into a "Disputed" heading but, hopefully, still including as much as possible in the "Undisputed" category. If the other side does not cooperate, the remedy is to file a unilateral version that could be adopted by the court without input from the other side, as a form of sanction. But none of that was done here. Rather, the parties continue with the pattern of interminable bickering and failure to abide by the requirements of the FRCP or the LBRs. Matters are not improved when Mr. Firman "specially" appears some times to defend Frank but in other times Frank appears in pro se. In consequence, continuity is completely absent. The court also sees that there are motions on this calendar to continue the deadlines to file motions and to conduct discovery, as well as for this court to abstain. It is painfully evident that these cases are not nearly in a position to schedule a trial date. So, in view of the other matters on calendar, the court will hear argument as to what the parties suggest be done. This disappointing development warrants sanctions but since each side seems substantially at fault, such penalties would probably cancel each other out.
No tentative
Tentative for 2/8/18:
See #3. Same approach?
Tentative for 8/17/17: See #1 and 3.
11:00 AM
Tentative for 6/22/17:
In view of the objection to the bankruptcy court entering final judgment, should the court abstain?
Tentative for 3/30/17: See #12.
Tentative for 12/1/16: No status report?
Tentative for 10/13/16:
Motion to Amend Complaint filed on September 20, 2016 without a hearing. So when are we going to be at issue? Continue to date following.
Tentative for 8/11/16:
This was supposed to be resolved by summary judgment motion. What happened?
Tentative for 1/28/16:
Status conference continued to August 11, 2016 at 10:00 a.m. to allow hearing on summary judgment to be determined and then to evaluate effect on this case. The court is not pleased with the apparent failure of cooperation.
11:00 AM
Tentative for 9/24/15:
Continue to January 28, 2016 to allow for Rule 56 motion, as appropriate.
Tentative for 3/12/15:
Status conference continued to September 24, 2015 at 10:00 a.m.
Tentative for 9/25/14:
No updated status report? Has Superior Court ruled?
Tentative for 3/27/14:
Status conference continued to September 25, 2014 at 10:00 a.m. Court is inclined to allow Superior Court to make factual determinations, and if suitable findings are made, can be collateral estopped here.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Pro Se
Tara Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By
11:00 AM
Trustee(s):
Arash Shirdel
David L Hahn (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
Docket 223
See #13.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
Docket 226
Defendant, Tara Jakubaitis ("Tara"), moves to extend the discovery and pre- trial motion deadlines. The Defendant’s argues that the 90 days to a January 1 deadline to complete discovery emanating from the September 7, 2017 status conference was not a fair opportunity to fully conduct it. Defendant argues that this is her first time seeking an extension and it is made in the interest of justice.
FRBP Rule 9006(b) provides that the court may extend the period for an act required to be done within a specified time after a showing of cause. An "act" is construed to include discovery. Here, one asserted cause is that this adversary laid dormant while litigation in the State action was occurring; when the State action got stayed because of an appeal, this adversary resurfaced. Based on the contentious discovery disputes in the State action, where a discovery referee was appointed, Defendant believes that the same issues will arise here.
Rule 9006(b) requires a showing of "good cause" to exist before extending discovery cut off deadlines. Good cause requires a showing that the party seeking the extension was diligent in its discovery efforts, yet could not complete discovery by the court ordered deadline. Marcin Engineering, LLC v. Founders at Grizzly Ranch, LLC, 219 F.R.D. 516, 521 (9th Cir. BAP 1988).
Defendant’s counsel does not provide any details regarding its discovery efforts. Rather, Defendant’s counsel merely states that he needs more time because all of his litigation resources have been allocated to the State action as this adversary laid dormant. Plaintiff argues that Defendant never even attempted to propound discovery and instead waited almost three weeks after the discovery cutoff to file this motion. A
11:00 AM
debate ensues over the "filed" vs. "heard" wording of the order. Rule 9006(b) requires a showing that the party seeking the extension was diligent in its discovery efforts.
The Defendant has not explained why she waited until after the last day to file pretrial motions, to file this motion or why she failed to file a Rule 26 disclosure statement.
Nor, has Defendant attempted to argue that she was diligent in her discovery efforts.
However, with the State action stayed on appeal, and with little discovery having been produced, this case is not ready for trial. Although a discovery referee was appointed in the State action, the attempts to conduct discovery seem to have been both cursory and unsuccessful as an appeal was filed shortly after the appointment. Even though these cases have been in litigation for several years, here and in state court, it appears that there has been relatively little movement on discovery. Defendant’s excuses seem, on the whole, rather lame. But the law prefers that matters be decided upon the merits, not on procedural issues. Given that this is Defendant’s first request for an extension, a limited extension would seem to be in the interest of justice. More extensions should not be expected.
Extend deadlines by 90 days from date of order
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Represented By Fritz J Firman
11:00 AM
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
2:00 PM
Adv#: 8:13-01481 Auzenne et al v. Crantz
Docket 58
This is the Plaintiffs’ renewed motion for summary judgment on grounds of collateral estoppel based on a Superior Court judgment entered 10/31/12. The court incorporates herein by reference its tentative decision issued for the first summary judgment hearing December 18, 2014. The first motion was denied at that hearing on the sole grounds that the state court judgment was not final since an appeal was then pending. The court can find that all of the elements of collateral estoppel have now been satisfied. Plaintiffs have a state court judgment with specific findings on the issue of fraud that was issued after a bench trial. The issues are identical, were actually litigated, and necessarily decided. The parties are identical. At this point the court can also find that the judgment is final. The order dismissing the appeal was entered on April 10, 2017. [RJN Exh. 10] Pursuant to California Rules of Court Rule 8.264(b)(1), the order dismissing the appeal was final 30 days after that filing. Close to a year has passed and Defendant has not taken any action to undo that dismissal.
Even if he only found out about the dismissal at a status conference before this Court, there have been two since the appeal was dismissed – August 31, 2017 and October 26, 2017. This motion was filed on October 25, 2017. Defendant has had more than sufficient time to address the dismissal. At this point the state court judgment is final, the elements of collateral estoppel have all been met, and summary judgment is appropriate.
Grant
Debtor(s):
David Jerome Crantz Represented By
2:00 PM
Michael Debenon
Defendant(s):
David Crantz Represented By
Michael S DeBenon
Plaintiff(s):
Fred Auzenne Represented By Willie W Williams
Mathew D Boone Represented By Willie W Williams
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
FORD MOTOR CREDIT COMPANY LLC
Vs.
DEBTOR
Docket 76
Grant. Appearance is optional.
Debtor(s):
Kenneth E Strother Represented By Bruce D White
Movant(s):
Ford Motor Credit Company LLC Represented By
Sheryl K Ith Jennifer H Wang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTORS
Docket 42
Grant unless current or APO. Appearance is optional.
Debtor(s):
Jaime Manuel Perez Represented By Christopher J Langley
Joint Debtor(s):
Lizette Galvan-Perez Represented By Christopher J Langley
Movant(s):
Toyota Motor Credit Corporation Represented By
Austin P Nagel
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTOR
Docket 13
Grant. Appearance is optional.
Debtor(s):
Timothy R. Whybrew Represented By David P Farrell
Joint Debtor(s):
Emilie R. Whybrew Represented By David P Farrell
Movant(s):
Toyota Motor Credit Corporation, Represented By
Austin P Nagel
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
SANTANDER CONSUMER USA INC
Vs.
DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Shaun Martin Lachapelle Represented By Christopher J Langley
Movant(s):
Santander Consumer USA Inc. dba Represented By
Sheryl K Ith
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
TD AUTO FINANCE LLC
Vs DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Adan Ravelo Ortiz Represented By Kevin J Kunde
Movant(s):
TD Auto Finance LLC Represented By Sheryl K Ith
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
SPARROW HLLS HOMEOWNER'S ASSOCIATION
Vs.
DEBTOR
Docket 60
Grant. Appearance is optional.
Debtor(s):
Salvador Manuel Robledo Represented By Joshua L Sternberg
Movant(s):
Sparrow Hills Homeowner's Represented By David Brian Lally
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 32
Grant. Appearance is optional.
Debtor(s):
Sarkis Tchaghatzbanian Represented By Bruce D White
Movant(s):
Wells Fargo Bank, N.A. Represented By
Dane W Exnowski John Chandler
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 42
Grant. Appearance is optional.
Debtor(s):
Steven Lewis Ridley Represented By Mark S Martinez
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil Senique Moore
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 41
Grant as to Debtor; continue for notice to Chapter 7 Trustee appointed March 2.
Debtor(s):
Victor Lamarr James Represented By Brad Weil
Movant(s):
Deutsche Bank National Trust Represented By
Kristin A Zilberstein
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
PACIFIC LOANWORKS, INC.,
Vs.
DEBTOR
Docket 16
Grant.
Debtor(s):
Ana F. Barahona Represented By Peter Recchia
Movant(s):
Pacific Loan Works, Inc. Represented By Gerrick Warrington
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
MAGNUM PROPERTY INVESTMENTS, LLC' AND STRATEGIC ACQUISITIONS, INC.
Vs.
DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Steven Jeffrey Portwood Pro Se
Movant(s):
Strategic Acquisitions, Inc. Represented By Harris L Cohen
LIBERTY FUND, LLC Represented By Harris L Cohen
Trustee(s):
Amrane (RS) Cohen (TR) Pro Se
10:00 AM
Docket 138
Any opposition? Appearance required?
Debtor(s):
Mariano Mendoza Represented By Richard L Barnett
Joint Debtor(s):
Mercedes Mendoza Represented By Richard L Barnett
10:00 AM
(con't from 3-7-18)
Docket 1
Tentative for 3/20/18: Status? See #13.
Tentative for 3/7/18:
Continue to coincide with the continued date on reimposition of stay (March 20, 2018 at 10:00 a.m.)
Debtor(s):
John J Trejo Represented By
Michael Jones
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones
10:00 AM
(con't from 2-27-18)
Docket 6
This is a repeat filing and debtors have not rebutted the presumption that the filing is in bad faith. Therefore, the stay should not be continued.
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
(OST Signed 3-8-18)
Docket 17
Opposition? Proof of telephonic notice?
Debtor(s):
Alain Azoulay Represented By Dana M Douglas
10:00 AM
(con't from 1-16-18)
Docket 1
Tentative for 3/20/18: See #15.
Tentative for 1/1618:
Continue to confirmation hearing.
Tentative for 11/1/17:
An updated status report would have been helpful. Does the Trustee foresee a plan? Would a deadline or a continued status hearing help?
Tentative for 8/9/17:
Continue status conference approximately 90 days to November 8, 2017 at 10:00 a.m.
Tentative for 6/28/17: See #12.
Tentative for 6/7/17:
Continue to June 28, 2017 at 10:00 a.m.
10:00 AM
Tentative for 4/26/17:
Deadline for filing plan and disclosure statement: September 30, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: June 1, 2017
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
(con't from 1-31-18)
Docket 0
Tentative for 3/20/18:
Why no response from Imaginutrition et al? What is an appropriate sanction?
Tentative for 1/31/18: Status?
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
(set at d/s hrg. held 1-16-18)
Docket 272
Tentative for 3/20/18:
Status on plan?
Tentative for 1/16/18:
The UST's remarks are well taken and must be addressed in a revised version of the Disclosure Statement. But otherwise approval could be provided on a conditional basis.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Docket 337
Grant.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Docket 0
What is the status of the various discovery requests?
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
11:00 AM
(osc signed 1-31-18)
Docket 125
While the facts presented by Debtors do indicate a high degree of negligence in Creditor's conduct or lack thereof, Debtor has not met their burden of proving malicious, wanton, or oppresive conduct and the award of punitive damages is not appropriate under these circumstances.
Award attorney fees incurred by Debtors in this matter in the amount of
$4,326.00. In addition, award the additional $197.50 that was not included in the refund.
Debtor(s):
Murph Drewery Davis Represented By Halli B Heston
Benjamin R Heston
Joint Debtor(s):
Tracy L Davis Represented By Halli B Heston
Benjamin R Heston
Movant(s):
Murph Drewery Davis Represented By Halli B Heston Halli B Heston
Benjamin R Heston Benjamin R Heston
Tracy L Davis Represented By
11:00 AM
Trustee(s):
Halli B Heston Halli B Heston Benjamin R Heston Benjamin R Heston
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 2-21-18)
Docket 3
Tentative for 2/21/18:
There appear to be some fundamental questions of feasibility, etc.
Debtor(s):
Julia Schenden Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 2-21-18)
Docket 10
- NONE LISTED -
Debtor(s):
Danilo Dimayuga Lumbera Represented By Raymond Perez
Joint Debtor(s):
Gregoria Perfinan Lumbera Represented By Raymond Perez
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 2-21-18)
Docket 11
Tentative for 12/20/17:
All secured claims must be addressed in the plan.
Debtor(s):
Kenneth Mathew Sale Represented By
S Renee Sawyer Blume
Movant(s):
Kenneth Mathew Sale Represented By
S Renee Sawyer Blume S Renee Sawyer Blume S Renee Sawyer Blume
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 2-21-18)
Docket 16
Tentative for 3/21/18:
Trojan appears to be correct in its argument that the plan must deal with the junior lien.
Tentative for 12/20/17:
All secured claims must be addressed in the plan. Moreover, there seems to be a feasibility issue.
Debtor(s):
Maria De Los Garcia Represented By
George C Hutchinson
Movant(s):
Maria De Los Garcia Represented By
George C Hutchinson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 2-21-18)
Docket 2
- NONE LISTED -
Debtor(s):
Heather Juarez Represented By Julie J Villalobos
Movant(s):
Heather Juarez Represented By Julie J Villalobos Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Kirk T Catlin Represented By
Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Arabella Strong Represented By Lionel E Giron
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 2-21-18)
Docket 2
- NONE LISTED -
Debtor(s):
Kirk P Howland Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 2-21-18)
Docket 18
- NONE LISTED -
Debtor(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Movant(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 17
- NONE LISTED -
Debtor(s):
Sara Barnett Represented By
Jacqueline D Serrao
Movant(s):
Sara Barnett Represented By
Jacqueline D Serrao Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Dale Grabinski Represented By Christopher J Langley
Movant(s):
Dale Grabinski Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Kellie J Richardson-Ford Represented By Andy C Warshaw
Movant(s):
Kellie J Richardson-Ford Represented By Andy C Warshaw
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 19
Tentative for 3/21/18:
There are obviously profound problems with this plan. Feasibility does not appear. Moreover, eligibility in view of the size of the Deutsche Bank claim, and good faith, in view of previous filings are also in question. Deny.
Debtor(s):
Mladen Luksic Represented By Scott Dicus
Movant(s):
Mladen Luksic Represented By Scott Dicus
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 19
- NONE LISTED -
Debtor(s):
Mladen Luksic Represented By Scott Dicus
Movant(s):
Mladen Luksic Represented By Scott Dicus
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 22
- NONE LISTED -
Debtor(s):
Geoffrey David Lloyd Represented By Michael W Collins
Movant(s):
Geoffrey David Lloyd Represented By Michael W Collins Michael W Collins
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Xiomara De la Paz Castro Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 22
- NONE LISTED -
Debtor(s):
Joel Virgil Langord Represented By
D Justin Harelik
Joint Debtor(s):
Mary Grace Langord Represented By
D Justin Harelik
Movant(s):
Joel Virgil Langord Represented By
D Justin Harelik
Mary Grace Langord Represented By
D Justin Harelik
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Uc Nguyen Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 2-21-18)
Docket 57
Tentative for 3/21/18:
Was a modification motion filed? Status?
Tentative for 2/21/18: Status?
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
Tentative for 9/20/17:
Motion to modify was filed August 22. Waiting for trustee comments.
Tentative for 8/16/17:
Grant unless current.
3:00 PM
Debtor(s):
Francisco Jr Gonzalez Represented By
Juan J Gonzalez - DISBARRED - Christopher J Langley
Joint Debtor(s):
Lizeth Gonzalez Represented By
Juan J Gonzalez - DISBARRED - Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
(cont'd from 2-21-18)
Docket 66
Tentative for 3/21/18: Status?
Tentative for 2/21/18: Status?
Tentative for 1/17/18:
See #39 - motion to modify.
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
Tentative for 10/18/17:
See #43 - motion to modify.
3:00 PM
Debtor(s):
Luis A Escobar Represented By Rajiv Jain
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(put on cal by oppos fld 1-21-18) (con't from 2-21-18)
Docket 115
Tentative for 3/21/18: Status of modification?
Tentative for 2/21/18: Grant unless current.
Debtor(s):
Maria Dolores Garcia Luvianos Represented By David R Chase
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 171
- NONE LISTED -
Debtor(s):
Jose Ruiz Vasquez Represented By Michael Jones Sara Tidd Laily Boutaleb
Joint Debtor(s):
Martha Carolina Ruiz Represented By Michael Jones Sara Tidd Laily Boutaleb
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 31
Tentative for 3/21/18: Grant unless current.
Debtor(s):
Lourdes C. Malunes Represented By Paul M Allen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 1-17-18)
Docket 64
Tentative for 3/21/18:
Continue to coincide with hearing on modification motion.
Tentative for 1/17/18: Grant.
Tentative for 11/15/17: Grant unless motion on file.
Debtor(s):
Olga Ruiz Represented By
Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 92
Tentative for 3/21/18:
Status on modification motion?
Tentative for 2/21/18:
Grant unless current or motion to modify on file.
Debtor(s):
Daniel J Powers Represented By Gaurav Datta
Joint Debtor(s):
Ellen A Powers Represented By Gaurav Datta
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 2-21-18)
Docket 85
Tentative for 2/21/18:
Continue to allow for processing of motion to modify filed February 6, 2018 (Trustee has recommended approval).
Debtor(s):
Craig Leroy Wolfram Represented By Matthew D Resnik Kevin T Simon
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 2-21-18)
Docket 57
Tentative for 3/21/18: Same.
Tentative for 2/21/18: Grant unless current.
Debtor(s):
Kenneth E Strother Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 2-20-18)
Docket 31
Tentative for 3/21/18: See #28.
Tentative for 2/21/18: See #34.
Tentative for 12/20/17: Grant unless motion on file.
Debtor(s):
Debbie Lynn Selikson Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 2-21-18)
Docket 37
Tentative for 3/21/18:
Debtor must supply more substance as requested in Trustee's comments or modification will be denied.
Tentative for 2/21/18:
Debtor needs to respond to Trustee's comments, otherwise deny.
Debtor(s):
Debbie Lynn Selikson Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 2-21-18)
Docket 60
Tentative for 3/21/18:
What has changed since additional time granted on February 21?
Tentative for 2/21/18: Same.
Tentative for 12/20/17:
Grant unless current or motion on file.
Debtor(s):
Guy A. Rojo Represented By
Joseph A Weber
Joint Debtor(s):
Eva P. Rojo Represented By
Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(oppos. fld. 2-16-18)
Docket 30
Tentative for 3/21/18:
Does order granting motion to modify signed March 14 resolve this?
Debtor(s):
Craig Anthony Fee Represented By Nicholas M Wajda
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 27
Tentative for 3/21/18: Grant unless current.
Debtor(s):
Rose M Magana Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 21
This is debtor Brian Corntassel’s ("Debtor") ex parte motion to vacate the order of dismissal of his chapter 13 bankruptcy case with a 180 day bar to refiling which was entered after he failed to appear at his plan confirmation hearing January 17, 2018. Debtor contends his failure to appear was inadvertent due to a scheduling mistake and so asks for relief from the dismissal pursuant to F.R.B.P. 9024, F.R.C.P. 60(b)(1), and L.B.R. 1017-2(c) on grounds that the scheduling mistake falls within "mistake, inadvertence, surprise, or excusable neglect" required to grant relief from a final judgment. Objecting creditor and former spouse of debtor, Stacie Corntassel ("Objecting Creditor"), opposes the Debtor’s motion to vacate the dismissal and reinstate the chapter 13 case on grounds that requirements for an ex parte motion to vacate under L.B.R. 1017-2(c) have not been met, and that instead of bringing the motion ex parte, Debtor should set the matter for hearing pursuant to L.B.R.
9013-1(o)(4). The Trustee suggests that the motion be only granted in part so the 180- day bar may be lifted.
F.R.C.P. Rule 60(b), incorporated in bankruptcy proceedings by F.R.B.P. Rule 9024, allows for a court to relieve a party of a final judgment, order, or proceeding on the grounds of "mistake, inadvertence, surprise, or excusable neglect… or any other reason that justifies neglect. F.R.C.P. Rule 60(b); F.R.B.P. Rule 9024. The 9th Circuit has held that "surprise, inadvertence, and excusable neglect" under Rule 60 all boil down to just excusable neglect. Meadows v. Dominican Republic, 817 F.2d 517, 520 (9th Cir. 1987). Excusable neglect under Rule 60(b) deals with actions that are attributed with negligence, such as missing a deadline or failing to appear at a hearing. Pioneer Investment Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380, 394 (1993). It is understood that "excusable neglect" requires at a minimum "a
3:00 PM
convincing explanation as to why the neglect was excusable." Cintron-Lorenzo v. Departamento de Asuntos del Consumidor, 312 F. 3d 522, 527 (1st Cir. 2002); see also Montae v. Am. Airlines, Inc., 757 F. Supp. 2d 47, 55 (D. Mass. 2010). Courts have viewed Rule 60(b) as "a vehicle for extraordinary relief’ which should be invoked and allowed "only under extraordinary circumstances." Davila-Alvarez v. Escuela de Medicina Universidad Central del Caribe, 257 F.3d 58, 64 (1st Cir. 2001); Christeson v. Griffith, 860 F.3d 585 (D. Mo. 2017). Stated differently, "Rule 60(b)(1) is addressed to the discretion of the court and is based on the desire of equity to do justice, it is not meant to relieve a party of the consequences of his own mistake or ignorance." In re Devault Mfg. Co., 4 B.R. 382, 386 (Bankr. E.D. Pa. 1980), aff’d, 14
B.R. 536 (E.D. Pa. 1981); see also, e.g., Bershad v. McDonough, 469 F.2d 1333 (7th Cir. 1972); United States v. Thompson, 438 F.2d 254 (8th Cir. 1971); Hoffman v. Celebrezze, 405 F.2d 833 (8th Cir. 1969).
Although Debtor filed his petition in pro se, he should not be given leeway for failure to abide by the court’s procedural requirements such as appearing at a hearing for confirmation of a payment plan. The 9th Circuit has held that "[A]lthough pro se pleadings may be held to less stringent standards that those prepared by attorneys, pro se litigants must ‘abide by the rules of the court in which he litigates.’" Haines v.
Kerner, 154 F.3d 952, 957 (9th Cir. 1998)(citing Haines v. Kerner, 404 U.S. 519,
520-21 (1972); Carter v. Commissioner of Internal Revenue, 784 F.2d 1006, 1008 (9th Cir. 1986). Here, debtor was served with a notice of the date, time, and location of the Confirmation Hearing. Docket #2 – Notice of 341(a) and Confirmation Hearing. The Trustee also served notice on the Debtor that the Trustee may request that the court dismiss the case with a section 109(g) bar if the Debtor failed to comply with Bankruptcy Code §§ 1307, 1322, 1325, and L.B.R. 3015-1. Docket #11 – Trustee’s Notice to the Debtor(s) that the Case May be Dismissed or Converted at the Confirmation Hearing. Furthermore, Objecting Creditor filed her Opposition to Confirmation of the Debtor’s Chapter 13 Plan which also stated the hearing date on which the Opposition was to be heard. Docket #16 – Objection to Confirmation of Plan with Declaration of Creditor Stacie Corntassel. Here, debtor had ample notice of the date, time, and location of the hearing. The inadvertence excuse given is pretty
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thin given that the debtor was notice not once but twice.
But perhaps more troubling, the Objecting Creditor has also presented uncontested evidence that the Debtor is being assisted in his bankruptcy case by an unregistered bankruptcy petition preparer (BPP) in violation of Bankruptcy Code § 110(C). Section 110 regulates and imposes penalties for persons who negligently or fraudulently prepare bankruptcy documents, and/or who fail to reveal their involvement in bankruptcy proceedings. As evidence that Debtor is being assisted by a BPP, Objecting Creditor notes that the Debtor’s declaration regarding post-petition, pre-confirmation payments on deeds of trust, leases and payments on PMSI liens which was served by mail on the Trustee showed that the declaration of service was signed by a "Mark J. Kizer." A Google search of this name revealed that he is a "Founder and Principal" of Berkeley LDA Services, which is operated from the address of 41 Linhaven, Irvine, CA 92602. The business’s website states that the business is "A small, hard-working legal document assistant firm based in Irvine, California" which offers clients "a wide variety of self-help legal assistance at affordable prices." Finally, the proof of service of Debtor’s instant motion was signed by Mark J. Kizer which included the address of 41 Linhaven, Irvine, CA 92602. This undermines not only the Debtor’s claim that he was excusably negligent for his pro se status because he is actually receiving paid bankruptcy assistance, but also raises the question of Debtor’s bona fides generally to the extent that assistance was not revealed as is required.
Furthermore, Debtor has failed to provide a meritorious defense as to why the court would not have entered the exact same order even if he had been present at the hearing. Debtor’s confirmation was opposed by the Objecting Creditor, and this Motion does not address any of these deficiencies presented in that opposition. A party seeking relief from a court’s order must present a meritorious defense as to why setting aside the order would produce a different result, and failure to do so is grounds for denial of relief. Williams v. Meyer, 346 F.3d 607, 614 (6th Cir. 2003); United States v. Aguilar, 782 F.3d 1101, 1107 (9th Cir. 2015); Jenkens & Gilchrist v. Groia & Co., 542 F.3d 114, 120-22 (5th Cir. 2008). "All that is necessary to satisfy the
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‘meritorious defense’ requirement is to allege sufficient facts that, if taken as true, would constitute a defense." United States v. Aguilar, 782 F.3d at 1107.
But the Trustee hits upon a just solution. That is, the court will not vacate the dismissal, but it will vacate that portion of the order imposing the 180-day bar. This will afford the opportunity for Debtor to refile, and in so doing, he is cautioned to reveal the existence and compensation of any petition preparer, think about how his case is viable and be prepared to show this and to more carefully schedule the important hearings and deadlines involved in a new proceeding.
Deny portion of the motion directed to vacating dismissal. Vacate 180-day
bar.
Debtor(s):
Brian Corntassel Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 2-21-18)
Docket 42
Tentative for 3/21/18: See #32.1.
Tentative for 2/21/18:
Continue to March 21, 2018 at 3:00 p.m.
Debtor(s):
Alan Bell Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 46
Tentative for 3/21/18:
Debtor must address Trustee's comments on modification motion.
Debtor(s):
Alan Bell Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont' from 1-17-18 per order appr. stip. to con't ent. 1-16-17) (con't from 2-21-18)
Docket 42
Tentative for 3/21/18:
How is this motion proper under section 1322(b)(2)?
Tentative for 2/21/18:
If U.S. Bank's lien has attached to even one dollar of value, which appears to be the case, then the value as alleged does not help debtor as the claim cannot be bifurcated.
Debtor(s):
Julia Schenden Represented By Anerio V Altman
Movant(s):
Julia Schenden Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 42
Notice and service is short, the motion was filed and served on February 21, 2018 and the hearing is set for March 21, 2018, which is fewer than 30 days later. In addition to short service, this motion raises curious issues. How is it possible that no money was drawn, as debtor contends. The court wants a more complete evidentiary hearing. Continue.
Debtor(s):
Surat Singh Represented By
Michael A Younge
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 41
Pursuant to FRBP 3001(f), Debtor, as the objecting party, bears the burden of overcoming the presumption of the validity of the proof of claim by alleging facts tending to defeat the claim by probative force equal to that of the allegations of the proofs of claim themselves. (See In re Holm, 931 F.2d 620, 623 (9th Cir. 1991) Debtor has not met this burden. As the Opposition correctly states, the Debtor’s objection to this claim is based upon the same arguments and factual allegations he has made in the past in several courts including this one.
The only supporting evidence Debtor submits is his own declaration where he purports to have personal knowledge that the Assignment of the Deed of Trust to Bank of New York Mellon was signed and executed on 11/3/11 by Norma Rojas, not Christopher Herrera. Debtor asserts that he has examined many Assignments purportedly signed by Herrera, that he alleges were in fact signed by Norma Rojas.
This, Debtor contends, shows that the Assignment was void on its face. Debtor’s claim objection does not include how he came to learn the information, what evidence of fraud exists beyond just his word (for example a comparison of signatures to show the dissimilarities), or statements from other witnesses.
These factual allegations are not new. This court heard and rejected them at a noticed hearing on 11/9/17 in a related adversary proceeding (see 8:17-ap-01135-TA docket # 38). The court rejected the fraud allegations that form the basis of this current objection in the following ways:
"There are numerous grounds to deny Singh’s complaint. First, Singh’s complaint is barred by the doctrine of claim preclusion. Second, under California law, Singh lacks standing to challenge the allegedly fraudulent assignment. Third, Singh’s fraud claim is time barred. Fourth, each and every claim Singh raised in his complaint fails to allege facts sufficient to state a cause of action as required by Rule 9." (# 38 "Notice of Ruling", 8:17-ap-01135-TA)
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The objection to Claim #6 is essentially just a repackaging of the allegations made and overruled.
Debtor(s):
Overrule.
Surat Singh Represented By
Michael A Younge
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:16-01226 B.A.K. Precious Metals, Inc. v Phan
Removal of State Court Action to Federal Bankruptcy Court [Los Angeles County Superior Court Case No. BC629891]
(set from s/c held on 12-1-16)
(cont'd from 10-12-17 per order approv. stip to cont. ent. 9-13-17)
Docket 1
Debtor(s):
Tho Van Phan Represented By Michael R Totaro
Defendant(s):
B.A.K. Precious Metals, Inc. Pro Se
Plaintiff(s):
Tho Van Phan Represented By Richard A Marshack David Wood
10:00 AM
Adv#: 8:16-01227 P&P Precious Metals, Inc v Phan
BC631034]
(set from s/c held on 12-1-16)
(con't from 10-12-17 per order approv. stip. to con't ent. 9-13-17)
Docket 1
Debtor(s):
Tho Van Phan Represented By Michael R Totaro
Defendant(s):
P&P Precious Metals, Inc. Pro Se
Plaintiff(s):
Tho Van Phan Represented By Richard A Marshack David Wood
10:30 AM
(con't from 2-27-18)
NATIONSTAR MORTGAGE LLC
Vs DEBTOR
Docket 48
Grant. "Time to complete a loan modification" is not grounds to deny relief of stay. Moreover, $29,608 of post-petition arrears is unacceptable and inconsistent with bona fides required of Chapter 13 debtors.
Debtor(s):
Jesus Jaime Cabrera Represented By Norma Duenas
Movant(s):
Nationstar Mortgage LLC as Represented By Merdaud Jafarnia
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
US BANK NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 81
Grant. Appearance is optional.
Debtor(s):
Juan Bernal Torres Represented By Mark S Martinez
Movant(s):
US Bank National Association, as Represented By
Daniel K Fujimoto Caren J Castle
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
HILTON RESORTS CORPORATION
Vs.
DEBTORS
Docket 42
Grant. Appearance is optional.
Debtor(s):
Todd A Carpenter Represented By Eric A Jimenez
Joint Debtor(s):
Mary A Carpenter Represented By Eric A Jimenez
Movant(s):
Hilton Resorts Corporation Represented By Thomas R Mulally
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
GUILD MORTGAGE COMPANY
Vs.
DEBTOR
Docket 41
- NONE LISTED -
Debtor(s):
Rose M Magana Represented By Bruce D White
Movant(s):
GUILD MORTGAGE COMPANY Represented By
Edward G Schloss
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
THE BANK OF NEW YORK MELLON
Vs.
DEBTOR
Docket 20
Grant. Appearance is optional.
Debtor(s):
Barnabas John Molle Pro Se
Movant(s):
Bank of New York Mellon Represented By Tyneia Merritt
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
NATIONSTAR MORTGAGE LLC
Vs.
DEBTOR
Docket 15
Grant. Appearance is optional.
Debtor(s):
Alexandre Miroshnichenko Jr Represented By Thomas J Polis
Joint Debtor(s):
Tamara L. Miroshnichenko Represented By Thomas J Polis
Movant(s):
Nationstar Mortgage LLC d/b/a Mr. Represented By
Merdaud Jafarnia
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
(cont'd from 2-20-18)
JPMORGAN CHASE BANK, N.A.
Vs DEBTOR
Docket 174
Grant. Appearance is optional.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Movant(s):
JPMorgan Chase Bank, N.A. Represented By Jamie D Hanawalt
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
11:00 AM
Docket 187
Grant.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
11:00 AM
RICHARD A.MARSHACK, Chapter 7 Trustee SULMEYERKUPETZ, Attorney for Trustee HAHN FIFE & COMPANY, LLP, Accountant BICHER & ASSOCIATES, OTHER FRANCHISE TAX BOARD
U.S. BANKRUPTCY COURT
Docket 104
Allow as prayed. Appearance is optional.
Debtor(s):
Masters and Associates Electrical Represented By
Bert Briones
Trustee(s):
Richard A Marshack (TR) Represented By David M Goodrich
11:00 AM
KAREN SUE NAYLOR, Chapter 7 Trustee HAHN FIFE & COMPANY, LLP, Accountant
Docket 54
Allow as prayed. Appearance is optional.
Debtor(s):
James A. Schneider Represented By Michael W Binning
Joint Debtor(s):
Kathleen P. Schneider Represented By Michael W Binning
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
(con't from 2-6-18 per order approving stip. to cont. hrg. entered 1-26-18) (con't from 2-27-18)
Docket 28
Tentative for 3/27/18:
Same as 2/27/18.
Tentative for 2/27/18:
The creditor still has not presented evidence of a value higher than
$783,000, which came from its own appraiser. Oblique reference to the trustee's broker's opinion is insufficient. On the question of priority of liens, the debtor is correct in that all consensual liens are counted, irrespective of priority relative to the judicial lien to be avoided. See Moldo v. Charnock (In re Charnock), 318 B.R. 720 (9th Cir. BAP 2004). Moreover, the amended exemption at $175,000 removes any reasonable doubt on the question.
Grant.
Tentative for 12/19/17:
There are several issues here that cannot be resolved on this record.
The question of intervening judicial lien between two consensual liens needs briefing. Movant makes the argument but gives no citation of authority. Is section 522(f) able to remove a judicial lien based upon something done voluntarily afterward?
There seems to be a genuine issue on value. Although Zillow is hardly an authoritative source, it should be backed up by more reliable evidence such as an appraisal.
11:00 AM
How much exemption is requested? Only $37,433 appears on Schedule C although $175,000 is referenced in the brief. The court has to rule upon what is formally claimed, now what might hypothetically be sought.
Debtor(s):
Continue approximately 45 days for briefing and valuation.
Chong Ae Dugan Represented By Michael H Yi
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello
11:00 AM
(con't from 2-13-18)
Claim No. 4-2 Dennis Hartmann
Docket 198
Tentative for 2/13/18: Settled?
Tentative for 9/26/17:
This is the Trustee’s objection to allowance as a secured claim, or indeed allowance at all, of claim #4-3 filed by claimant Dennis Hartmann (superseding Claim #4-2). The facts are somewhat convoluted and the parties do a very poor job of setting up the factual predicates for analysis. For example, for us to have anything to talk about one must presume that the monies in the estate for the consolidated entities are somehow attributable to the efforts of attorney/claimant Hartmann. As near as the court can determine, the estate’s funds represent in whole or in part liquidation of some entities owned or controlled by one or more of the Baer entities, which were the antagonists in the underlying litigation. Reportedly, the trial court in the underlying litigation at some point appointed a receiver to take possession of"$15 million or real estate held by various Baer entities including $750,000 in cash. This markedly increased the likelihood of collection." [Claimant’s brief, p. 007, ln.9-13]. Because reportedly claimant Hartmann had obtained a $5million judgment, we assume that the receiver was in aid of collection and can therefore be said to be attributable to
11:00 AM
claimant’s effort. It might be relevant as to whether this was accomplished before or after the May 3, 2009 agreement discussed below. If the source of the estate’s funds came from multiple sources, however, the analysis becomes more difficult. It would have helped to have made these points clear. But it seems fairly clear that claimant has filed this claim to recover some $180,000 in fees incurred by an accounting firm in the underlying litigation that has been awarded by an arbitrator as a personal obligation of claimant, who retained the accountants. Reportedly, claimant retained the accounting firm as support and part of the underlying litigation.
Assuming this understanding is correct, the question of "secured" at bar turns on whether there is an attorney’s lien or, more correctly understood, an "equitable charge" upon proceeds of the underlying litigation. The trustee argues correctly that such an attorney’s lien under California law must be a product of a written agreement, and the May 3, 2009 "Restated Retainer Agreement" ("retainer agreement") does not specifically mention the word "lien." But specific mention of a lien is not determinative; it is more important that the contract make clear that the parties have agreed that professionals are to look to the judgment as the sole source of payment for fees. If that is so, an equitable lien on proceeds is created. Bartlett v. Pacific Nat’l Bank, 110 Cal. App. 2d 683, 688 (1952). There is no doubt that the parties to the retainer agreement contemplated that costs would be deducted from the proceeds, as appears at page 7 [Exhibit F, Bates p. 56] of the retainer agreement. Trustee argues that because the contingency percentage was to be figured on the amount of recovery after costs were deducted, this somehow negates that any equitable charge could have followed the costs portion of the obligation. But no authority is cited for this proposition and it seems counter-intuitive to the court.
However, another, bigger issue is raised going to whether there is any allowable claim at all. Apparently, the estate monies on hand are only $350,000 (whether gross or net of administrative costs is not made clear). The amount of a bankruptcy court sanctions awarded in two cases associated with Mr. Baer, IBT International and Southern California Developers are in the sums of $408,531 and
$830,816, respectively, as reflected in proofs of claim #8 and 9. Under the retainer
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agreement, the fee (and presumably costs as well) are only recoverable from a net recovery after payment of the bankruptcy sanction. Exhibit F, pp. 55-56. So, unless the bankruptcy award has been reduced or otherwise satisfied (and no evidence is offered) the sanction completely eclipses the amount of proceeds on hand and so, in the language used by the Trustee interpreting the retainer agreement, the contingency triggering a fee (or costs) never occurred. The same result would be reached under § 510(a) as the retainer agreement could be read as a subordination to the claims of IBT International and Southern California Developers.
Sustain
Debtor(s):
Banyan Limited Partnership, a Represented By Hutchison B Meltzer Adam L Karp
Trustee(s):
Thomas H Casey (TR) Represented By Beth Gaschen Jeffrey I Golden
10:00 AM
Docket 115
- NONE LISTED -
Debtor(s):
Casa Ranchero, Inc. Represented By Robert P Goe Charity J Miller
10:00 AM
Docket 148
Grant. Dismiss.
Debtor(s):
TCCB Investors, LLC Represented By John H Bauer
10:00 AM
Docket 51
NONE LISTED -
Debtor(s):
Freda Philomena D'Souza Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 1-10-18)
Docket 0
Tentative for 3/28/18:
Off calendar in view of pending motion for final decree.
Tentative for 1/10/18:
Where's the final decree motion?
Tentative for 9/27/17: Status?
Tentative for 6/28/17:
Continue for further status report in approximately three months.
Debtor(s):
Fantasea Enterprises Inc Represented By Vicki L Schennum
Brian J McGoldrick Ahren A Tiller Brett F Bodie Robert J Feldhake
10:00 AM
(con't from 1-10-18)
Docket 1
Tentative for 3/28/18: See #6.
Tentative for 2/28/18:
Continue to March 28, 2018 at 10 a.m. to coincide with hearing on disclosure.
Tentative for 1/10/18: Status?
Tentative for 10/11/17:
Continue for about 60-90 days to coincide with probable confirmation date?
Tentative for 8/23/17:
Continue conference into mid December.
Tentative for 8/9/17:
Continue to August 23, 2017 at 10:00 a.m.
10:00 AM
Tentative for 6/7/17:
Deadline for filing plan and disclosure statement: November 30, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: August 1, 2017
Debtor(s):
Mariano Mendoza Represented By Onyinye N Anyama
Joint Debtor(s):
Mercedes Mendoza Represented By Onyinye N Anyama
10:00 AM
Docket 123
Tentative for 3/28/18:
Continue to June 6, 2018 at 10:00 a.m. with expectation that a revised disclosure will be filed and considered at that time.
Debtor(s):
Mariano Mendoza Represented By Onyinye N Anyama
Joint Debtor(s):
Mercedes Mendoza Represented By Onyinye N Anyama
10:00 AM
Docket 452
NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
10:00 AM
Docket 0
Deadline for filing plan and disclosure statement: August 1, 2018
Claims bar: 60 days after dispatch of notice to creditors advising of bar date (unless already set per status report).
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
Docket 23
Award $4,326 actual damages (attorneys fees). Insufficient showing for punitive damages.
Debtor(s):
Nicolas Edward Siligo Represented By Michael Jones Sara Tidd
Trustee(s):
Thomas H Casey (TR) Pro Se
10:00 AM
Docket 0
NONE LISTED -
Debtor(s):
CYU Lithographics Inc Represented By John H Bauer
10:00 AM
Docket 296
NONE LISTED -
Debtor(s):
CYU Lithographics Inc Represented By John H Bauer
10:00 AM
Donald W Sieveke, Debtor's Attorney, Fee: $32,625.00, Expenses: $413.36.
Docket 107
Grant. Counsel is requested to clarify the contradiction between the form p. 2 and p. 2, ln 22-23 of the pleading regarding draw down of the retainer.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
C Tucker Cheadle, Accountant
Fee: $13,206.50, Expenses: $88.50.
Docket 108
Allow as prayed. Appearance is optional.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
Overland Pacific & Cutler, Inc, Appraiser Fee: $2,500.00
Docket 109
Grant. Appearance is optional.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
Docket 458
Grant as to both section 546 and section 549(d).
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
11:00 AM
(Emergency Order Signed 3-20-18)
Docket 495
NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
2:00 PM
§ 1127(a)
(con't from 1-24-18)
Docket 419
Tentative for 3/28/18: See #17.
Tentative for 2/28/18: Is this resolved?
Tentative for 1/24/18: See #10.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
2:00 PM
(set at conf. hrg. held 1-24-18)
Docket 305
Tentative for 3/28/18:
This is the continued hearing on debtor’s attempt to confirm his Fourth Amended Plan. The hearing has been continued for several times; this last continuance was to consider two points, upon which the court requested further briefing: (1) if the debtor does not keep his practice (the home and Honda having been paid for in cash new value at court-determined values) can the court confirm under 11
U.S.C. §1129(b)(2)(B)(ii) consistent with the absolute priority rule in light of the creditor having just filed a competing plan that offers more to creditors and (2) is there a "best interest of creditors" problem? The court also took under submission the pending question of separate classification of the Hong creditor’s claim. The court in meantime ordered the parties to mediation. Apparently, the mediation was unsuccessful.
That the mediation failed is truly unfortunate since the questions presented here are very difficult and the consequences profound.
On the question of best interest of creditors found at 11 U.S.C. §1129(a)(7), the court does not find any application since the comparison is to what creditors would receive in a hypothetical Chapter 7 liquidation. But both plans are demonstrably superior to what would likely be received in liquidation, even considering that the Fourth Amended Plan contemplates some considerable delays in payment.
But on the question of the absolute priority rule and "new value" the debtor has hit a snag. The question is not one of the court’s management of its docket, as
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debtor in his brief seems to assume. Rather, it is the question of whether the Fourth Amended Plan can be confirmed when the Hong creditor has filed a competing plan offering to pay to the Class Seven creditor body (about $38,690) more than the Fourth Amended Plan. Debtor proposes to pay the Class Seven creditors pro rata in four installments dependent on "Available Cash" and tied to future events such as "Litigation Resolution Date" which could be years in the future. Unless debtor succeeds on his appeal the payment percentage, and the timing of payment, is left vague and uncertain. In contrast, under the Hong plan creditors are offered an option of either 50% of their allowed claims on the effective date ("or as reasonably practicable after the Disbursing Agent has sufficient cash on hand to pay 50%...") or, alternatively, 100% tied to when the disbursing agent has accumulated and is ready to distribute $1 million. Importantly, the Hong creditors subordinate their recovery to those of the other creditors, a not-insignificant point considering they amount to about 98+% of all debt. Given the amounts alleged to be recoverable under various rights of action, it is hard not to see this as a promise of 100% or nearly so for those willing to wait.
All of this is important because of the teaching of the Supreme Court in Bank of America Nat’l Trust & Sav. Ass’n. v. 203 N. LaSalle St. P’ship, 526 U.S.434, 453 (1999). In LaSalle the court did not explicitly find that a "new value corollary" to the absolute priority rule actually existed. But if such a corollary existed, the LaSalle court found that the proponent of the plan must show that the quantum of new value was the most/best reasonably available. In making such a determination, the court must find that the quantum of proposed new value has been "market tested" and that no other person is willing to pay more to acquire the bundle of rights that the debtor retains under the plan. The La Salle court was vague as to how one goes about this market test, but the filing of a competing plan is one suggestion. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at §1129(b)(2)(B)(ii). Id. See also In re NNN
2:00 PM
Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014).
The keeping of property can include the rights to direct actions, such as an appeal. While the debtor cites to some authorities including from other jurisdictions to the effect that "defensive" appeals are not estate property, this does not appear to be the case in the Ninth Circuit. See e.g. In re Fridman, 2016 WL 3961303 at *7 (9th Cir. BAP July 2016) citing In re McCarthy, 2008 WL 8448338 at *16 (9th Cir BAP Feb.
2008); In re Marciano, 2012 WL 4369743 at *2 (Dist. C.D. Cal. Sept. 2012). In those cited cases the trustees sold pending appeals for money. There is little doubt in the court’s mind that if a creditor wants to pay the estate to make a debtor’s appeal go away, that is a transaction that must be viewed from the standpoint of creditors unless they are paid in full from another source. The debtor must, in effect, pay at least the same in "new value" for the privilege of seeing an appeal to the end. In the Chapter 11 context, if a debtor proposes in a plan to keep an appeal, his plan must offer creditors more for that privilege (in combination with all other retained assets) than is otherwise available. Viewed this way debtor at bar has a problem. The terms of the Hong plan offer more to the Class 7 creditors and some of that overage could be viewed as payment for extinguishment of the appeal; but it would appear that the debtor proposes in his plan to keep the appeal going and is not offering anything to creditors for that privilege in contrast to purchase of the Denise property and the Honda.
There is also the question of separate classification. As the court has already said, this is a very close question. The 9th Circuit case law precedent is unclear respecting whether the mere fact that a claim is on appeal (and thus still disputed) should account for enough of a distinction by itself to justify separate classification. If attributes of a claim are not otherwise distinguishable such as having been guaranteed or supported by collateral, the court is left to question what is meant by the "business reasons" spoken of in cases like In re Johnston, 21 F. 3d 323, 327 (9th Cir. 1994).
Surely "business reasons" cannot mean merely that it would be more expedient if a pending appeal resolved in the debtor’s favor would improve ability to repay debt. While that might be a question of "business" the court is hard-pressed to see it as a justification. It is clear in all of the authorities that gerrymandering is not permitted,
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but since the court cannot look into the debtor’s mind regarding motivations, we are left to examine external reasons claimed as to why the separately classified claim is not "substantially similar" to other debt. In the case at bar this task is made even more difficult since the separately classified claim is 98+% of the body of debt. If the point of this whole inquiry is to make sure that each creditor has a meaningful vote, and to prohibit arbitrary classification as a device to reaching a consenting class, then the debtor’s plan at bar is likened to the tail wagging the dog. While it might be possible for the extremely clever counsel to succeed in effectively disenfranchising 98+% of the creditor vote by separate classification, the court cannot see its clear path to doing so in this case, particularly when the other issues mentioned above weigh against confirmation as well.
Deny
Tentative for 2/28/18:
This is a continued hearing on confirmation of the Debtor’s Third Amended Plan. At the court’s request the parties filed briefs on the question of separate classification. Additionally, further evidence is offered by the objecting creditors Yuanda Hong, et al ("Hong creditors") on the question of the values of the Denise property and the Debtor’s medical practice, relevant to the quantum of new value offered under the plan. The court discusses each subject below:
Separate Classification: What qualifies as proper classification of claims under §1122, or stated negatively, what is improper classification and thus rendering a plan in non-confirmable bad faith under §1129(a)(3), is an important question. Unfortunately, it is one that has engendered surprisingly little definitive authority in the Ninth Circuit. The objecting creditors have cited numerous authorities from outside of the Circuit that stand generally for the proposition that separately classifying a claim solely because it is on appeal is not in good faith, mostly because the character of the claim is not, in a legalistic sense, any different from that of the standard commercial claims.. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr.
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E.D.Va. 2004); In re Salem Suede, Inc., 219 B.R. 922 (Bankr. D. Mass 1998); In re Local Union 722 Int’l Bhd. Of Teamsters, 414 B.R. 443, 453 (Bankr. N.D. Ill. 2009); Bustop Shelters of Louisville, Inc. v. Classic Homes, Inc., 914 F. 2d 810, 811-12 (6th Cir 1990). But it is not clear that this is the law of the Ninth Circuit.
Nearly all of the cases adopt some version of the Ninth Circuit’s ruling in
Barakat v. Life ins. Co. of Va. (In re Barakat), 99 F. 3d 1520, 1525, cert. den. 520
U.S. 1143(1997), i.e., that separate classification solely to manipulate the vote to obtain a consenting class is not in good faith and will prevent confirmation. But the ambiguity begins with the statute itself. Section 1122 provides that claims may be placed together in a class only if "substantially similar." But whether all similar claims must, in turn, be classified together is not statutorily addressed. Barakat at 1524. Noting that this question has divided courts outside the Circuit, the Barakat court gives us only the limited guidance that classification (determined as a question of fact) solely to manipulate voting to obtain the consenting impaired class is a form of bad faith and is not allowed. But the Barakat court acknowledges that In re Johnston 21 F. 3d 323, 327 (9th Cir. 1994) provides that separate classification may be justified if "the legal character of their claims is such as to accord them a status different from other unsecured creditors." Id. at 328. Further, as noted in Barakat, Johnston provides that separate classification may be justified if a "business or economic justification" is offered. Barakat at 1526 citing Johnston at 328. The Hong creditors argue correctly that both of Debtor’s cases, Johnston and In re Basha’s, Inc., 437 B.R. 874 (Bankr. D. Ariz. 2010), are factually distinguishable. In Johnston the debt arose from a guaranty, there was collateral involved and it alone among the creditor body was the subject of litigation. Similarly, in Basha’s the class of litigation claims was deservedly separate since the litigation was still in its early stages although it had been pending some time and involved "speculative" claims. In both cases the separate classification withstood scrutiny. But certainly our case is a closer question since we are dealing not with litigation generally but with a judgment on appeal. Whether this latter stage of litigation makes a crucial difference is not clear.
Debtor argues that if intent is the question he is somewhat absolved since the
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plan in its early iterations treated the objecting creditors’ claims as secured (by reason, one supposes, of recorded abstracts but also because that’s what the claim said) and therefore separate. Barakat can be read to primarily focus on the intent behind the classification. But neither side cites any authority on the question of what happens when, as here, the parties reach an agreement post-petition to surrender the claim of secured status (here because the claimed lien was likely a preference). Is a plan proponent then obliged to drop the separate classification in order to remain "in good faith"? Another question involves the "business or economic justification" as discussed in Barakat and Johnston. Here Debtor in effect argues that separate classification is not only economically justified, it is also very necessary to maintain an operating business on any terms while not adopting either of two unpalatable alternatives, i.e. paying claims before the appeals are resolved and the claims become final, or, alternatively, making all undisputed general unsecured claims wait for an extended period by depositing payment into an escrow on their account. Further, the very size of the Hong creditors’ claim makes it different, although it is not clear that this size question alone works in justifying different classification. The appeal adds some weight. But the fact that there reportedly is also still an unresolved counter claim (as reported by Debtor) of the reported parallel fraudulent conveyance action, and the charge that the judgment was amended post-petition in technical violation of the stay, might be seen as additional justifications for the separate classification. In aggregate, the court is inclined to find sufficient justification for the separate classification although it is admittedly a very close question.
The objecting creditors take issue with the valuations presented by the Debtor of his medical practice and of his residence on Denise Avenue in Orange. The values offered by Debtor are $ 5-10,000 and $756,000, respectively, supported by the declarations of Sam Biggs, CPA and John Aust, appraiser. Pinpointing the value of these becomes necessary as the Debtor proposes to keep these assets while not paying all creditors in full under the Plan. The Hong creditors have objected, so confirmation is therefore only possible under the so-called "new value" corollary.to the absolute
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priority rule. Debtor must under this doctrine provide new value equal to the retained assets of the estate (and not less than any other party is willing to pay). See Bank of America v.203 N. LaSalle Street Ptsp.526 U.S. 434, 456-57 (1999).
Hong creditors offer the declaration of David Hayward for the Denise property "conservatively" at $785,000. This is not far from the Debtor’s valuation but the court is disinclined to choose between these two opinions without cross examination.
Mindful of the cost of a mini trial on this issue, the court encourages a stipulation to split the difference, i.e. $770,500. Otherwise, an evidentiary hearing will have to be scheduled with opportunity for cross examination of live witnesses. Mr. Hayward’s opinion about additional value based on a lot split is too speculative for our purposes.
The business valuation is even more problematic. It is almost certain that both appraisers are off the mark. The Biggs appraisal suffers from the omission of any separate values for hard assets, such as equipment. Presumably, these have a separate value from the value of the ongoing practice, but if so, the court could not find it.
Appraiser Stake observes that something is being depreciated on tax returns, suggesting there is missing information. The court sees the nominal amount of $1,500 per year as an equipment "expense" in the forecast, but doubts this equates to a value for all of the existing equipment. Whether the equipment is owned or leased is also a factor. The biggest problem, of course, is what to do with a projected income analysis in the hands of a hypothetical buyer. The court has no doubt that there would be a profound fall off in that the clientele are described as mostly Chinese with limited English skills. Also, one imagines, that an OB/GYN practice has a higher than usual retention problem if/when the familiar physician becomes no longer associated. This probably is exacerbated when the language/cultural issue is also factored in. The Stake declaration strikes the court as making far too little allowance for this factor. It reads primarily just as a clinical analysis of projected income averages assuming more or less the same stream of income (a very large assumption under these facts) multiplied by some sort of capitalization or discount rate. The problem, of course, is the court cannot make a meaningful determination on this sparse record. Again the court encourages a "split the difference" approach, say $50,000, as an alternative to having a
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mini trial on these issues as well.
Bank of America v. 203 N. La Salle St. Ptsp.
The court has also not yet made a ruling on the question whether the Debtor’s marketing efforts to date are adequate to fix the quantum of value as demanded in the La Salle case. But the court observes that some effort was made to advertise and the Hong creditors have not filed a competing plan although they have been free to do so. The court is inclined to hold that this narrow issue (of whether anyone else would pay more) is resolved.
No tentative on confirmation pending resolution of valuations
Tentative for 1/24/18:
This is the continued hearing on confirmation of the Debtor’s Fourth Amended Plan. It continues to be vigorously opposed by the judgment creditor. While the court gave fairly explicit guidelines at the Nov. 29 hearing, and the plan proponent is closer than he was, the court finds the plan is still short of confirmability, for the following reasons:
Unfair Discrimination and Gerrymandering: Since In re Barrakat, 99 F. 3d 1520, 1525 (9th Cir. 1996), it has been the law of this Circuit that separate classification solely to obtain a consenting class on a plan is not permitted and is a form of bad faith under §1129(a)( 3). However, exceptions have been found where a "legitimate business or economic justification" is articulated supporting the separate classification. In re Loop 76, LLC, 465 B.R. 525, 538 (9th Cir. BAP 2012); Steelcase, Inc. v. Johnston (In re Johnston), 21 F. 3d 323, 327 (9th Cir. 1994). Moreover, there is a separate concern in evaluating a "cram down" that a plan may not "unfairly discriminate…with respect to each class of claims or interests that is impaired under…the plan." The court earlier remarked that a legitimate, non-voting basis had probably been articulated for
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separately classifying the judgment creditor since that claim (unlike all other unsecured creditors) was on appeal and was subject to ongoing litigation.
Consequently, unlike the other unsecured claims the judgment claim is not "final." It is perfectly obvious that the entire need for reorganization may rest
on the results of the appeal. But what is not sufficiently shown is the need for disparate treatment as provided under the Fourth Amended Plan. Obviously, while the claim is still contested it makes sense to not actually pay the disputed judgment claim. But there are other, better ways to mitigate the disparate treatment. All other claims start getting payments shortly after the effective date. But the dissenting judgment claim gets nothing until 120 days after the "Litigation Resolution Date," which is defined to require that all appeals be exhausted. This is a date potentially years in the future. This has two pernicious effects of concern. First, all of the risk of non-performance is imposed solely on the objecting creditor without any real basis in law for doing so. Second, this can be regarded as a sub rosa attempt to put the Litigation Trustee’s efforts into effective limbo pending the appeal since obviously no liquidation or even attempt to liquidate assets is even needed to fulfill the plan until all the appeals are resolved. Perhaps a better approach is to put all creditors on a truly equal footing whereby they all get a pro rata portion of a defined periodic payment, with the judgment creditor’s portion held in an escrow at interest administered by the Litigation Trustee. That way risks are evenly imposed on the creditor body, not solely on the judgment creditor.
Artificial Impairment: The objector is correct that classification of the Honda Finance creditor as the sole member of Class 2 bears some of the aroma of artificial impairment, another form of bad faith, as this court observed in In re NNN Parkway 400 26, LLC, 505 B.R. 277, 284-85(Bankr. C.D. Cal. 2014). The fact that it was incurred the day before the petition is clearly suspicious. However, this "aroma" is largely dissipated when it develops that there is
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another class of unsecured creditors supporting the plan comprised of several members holding an aggregate of $38,690.83 in claims. The fact that only American Express, a creditor holding only a claim of $110.64, was the only voting member cannot be attributed to bad faith of the debtor. There is no showing that these other creditors’ claims were incurred just to create an impaired class.
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means that the costs of the appeal are to be borne by the Trust. Since it could be argued that the appeal is being prosecuted primarily if not solely for the debtor’s benefit, this is an indirect way of debtor keeping non-exempt assets. If this reading is correct, debtor is not, in fact, observing the absolute priority rule. The court is not as concerned as it might be since the objector has not filed a competing plan.
plan. This may well be so, largely for the reasons articulated in ¶3 above. For debtor’s argument to succeed, one would have to conclude that paying both for Mr. Mosier and his lawyers and accountants and the ongoing appeal costs less than only a Chapter 7 trustee. This is a proposition for which there is no evidence offered. The debtor will have to propose paying for his lawyers either from exempt assets or from no-estate assets for this to work, or prove that a Chapter 7 would be more expensive. The court is less convinced by the objector’s argument that the creditor should consequently steer the litigation at its expense, however. There are countervailing concerns about who should steer the litigation beyond the monetary costs.
Early Discharge: Debtor proposes in the plan to obtain a discharge not on conclusion of payments, as required under §1141(d)(5)(A), but rather upon confirmation. While this can theoretically be done if "cause" is shown after notice and a hearing, the question arises whether any such cause is shown here. Debtor argues that the structure of the plan amounts to a form of collateral for the payments, citing In re Sheridan, 391 B.R. 287, 291 (Bankr. E.D.N.C. 2008), thus assuring payment. But the problem with this is that full payment is not assured in this plan despite attempts to improve recoveries if the appeal is lost. Only the right to sue for declaratory relief (and perhaps an injunction against transfer of assets) is provided. But there are a dozen ways this could
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still go wrong. Ms. Shen could decide to defy the injunction and put the assets in China or Japan. Since the debtor continues to make good money as a physician, the court sees no reason to discharge him until all promised payments are made.
Deny Confirmation
Tentative for 11/29/17:
Rather than simply continuing the confirmation hearing without direction, the court will want to have a hearing focused on issues raised in the briefs but not fully answered:
In view of the objection raised in the opposition about short notice of the changes found in the Third Amended Plan, does the judgment creditor disagree that the changes are 'non material’, thus avoiding re-balloting, or need for more time to meet the arguments? It would seem that the role of the appointed trustee and fetters, if any, on his responsibility is rather material, but perhaps for no one other than the judgment creditor. Should that matter?
Has the Trust Agreement with Mr. Mosier been finalized and made available
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for review?
The present value analysis for cram down requires some evidence regarding
interest rates and risks being imposed. Merely citing the federal judgment rate (is that where 1.5% comes from?) is wholly inadequate. While the debtor carefully includes an elastic provision that ‘such other rate as the court requires’ is offered, this does not provide any analysis or evidence that could guide the decision. It is also unclear how/whether the judgment creditor is a secured claimant and thus whether analysis of collateral value becomes relevant. But whether proceeding under §1129(b)(2)(A)(i) [secured claims] or (b)(2)(B)(i) [unsecured claims] there is an "as of the effective date" requirement on future payments which translates into a present value analysis. The federal judgment rate is manifestly not sufficient to render present value on a stream of payments such as under a plan. If that were true, in economic terms, the prime rate would be quoted consistent with the federal judgment rate instead of at 4.25% per annum. One holding a judgment presumably has some near prospect of actually levying and getting paid, so the time value of money is further distorted and judgment rates are a poor comparison. One who is obliged to wait for years under a plan has no such prospect and so imposed risk is greater and so must be compensated. This record is inadequate upon which to render a decision.
How is the teaching of Bank of America v.203 N. La Salle Ptsp., 526 U.S. 434, 456-57 (1999) being met here? In La Salle we are taught that to the extent that a new value exception to the absolute priority rule exists, a plan cannot be crammed down over the objection of a class of creditors on the strength of a "new value" contribution absent some ability to "market test" the amount of that contribution. As the court observed in In re NNN Parkway, LLC, 505 B.R. 277, 281-82 (2014), the Supreme Court gave us only the vaguest direction on how the market test can be accomplished in any particular case. But the court does not read the difficulty of fashioning an appropriate test to mean that the requirement can be ignored altogether consistent with the absolute priority
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rule. To do so is to vest in the debtor/ plan proponent a form of
uncompensated property, i.e. an option, to direct or determine the amount and source of new value. Debtor attempts to close the gap regarding the family residence, but the plan merely suggests that the relatives will contribute an amount roughly equal to what they contend to be the non-exempt equity. What analysis, if any, is offered regarding the going concern/market value of debtor's medical practice for this purpose? All that is offered is the conclusory argument that as a sole practice it cannot have much value. Really? The court sees professional practice valuations all the time. One method of clarifying the new value question described in La Salle is the possibility of a competing plan. The court is not aware of the current status of the judgment creditor’s ability to propose a competing plan.
Concerning uncompensated imposed risk is the unanswered question regarding alleged community property in the wife’s name. What about the injunction against transfer of wife's alleged separate assets? Is a form of order being offered for review? Only a stipulation is referenced. How does the risk of violation of an injunction translate into cram down interest rate? One supposes that if the appeal is lost the presence of an injunction is some protection against transfers, but hardly a foolproof one. Certainly it is not the same as a lien. This does not mean these issues cannot be resolved; it is only to say that they are left unresolved on this record.
Continue for further hearing.
Tentative for 8/23/17:
The remaining issues are best dealt with at confirmation. Approve.
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Tentative for 7/12/17:
With some amendments this FADS appears to contain adequate information. Debtor should make it clearer that an early discharge will be requested, but that if the Court does not find cause then the discharge will be entered upon completion of payments. As written the information about the Court finding cause comes at the end of the discussion of the discharge. Debtor has agreed to attach a copy of the Trust Agreement. Debtor provides a sufficient description of the litigation with the Judgment Creditor. Perhaps the plan should be amended so that it provides that the interest rate will be as described or as ordered by the Court. This leaves open the option of litigating the issue of the interest rate at confirmation. There seems to be a reasonable basis for separately classifying the unsecured claim of the Judgment Creditor because the claim is still subject to litigation and so cannot be paid on the same terms as the other unsecured creditors. Debtor should amend the DS to provide that Debtor is retaining his interest in some property. There should also be a more clear discussion of the absolute priority rule. Debtor states that he will amend the DS to make it clear that the plan does not avoid Judgment Creditor’s ORAP lien and that he will correct the errors noted by the Judgment Creditor.
Debtor(s):
Continue for clean up of these disclosure issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
Adv#: 8:13-01481 Auzenne et al v. Crantz
(con't from 10-26-17)
Docket 1
Tentative for 10/26/17:
Status conference continued to January 11, 2018 at 10:00 a.m. with expectation of motion for summary judgment in meantime.
Tentative for 8/31/17:
Status conference continued to October 26, 2017 at 10:00 a.m. Expecting a MSJ in meantime.
Tentative for 11/12/17: Updates on appeal status?
Tentative for 6/23/16:
Do we know the result of the appeal and if not yet, when is this likely?
Tentative for 1/7/16:
The main question seems to be whether this action should be stayed pending resolution of the appeal.
10:00 AM
Tentative for 8/6/15:
Does plaintiff contend the judgment being appealed will resolvethis case on grounds of collateral estoppel. Assuming answer is "yes" status conference continued to December 3, 2015 at 10:00 a.m.
Tentative for 5/7/15:
How will this matter be affected by summary judgment in Caliber Companies adversary?
Tentative for 8/28/14:
Status conference continued to October 30, 2014 at 10:00 a.m. Court expects MSJ in meantime.
Tentative for 6/5/14:
Status conference continued to August 28, 2014 at 10:00 a.m. When is MSJ to be filed? One more continuance.
Tentative for 3/13/14:
Status conference continued to June 5, 2014 at 10:00 a.m. Court expects MSJ in meantime.
Debtor(s):
David Jerome Crantz Represented By Michael Debenon
Defendant(s):
David Jerome Crantz Pro Se
10:00 AM
Plaintiff(s):
Mathew D Boone Represented By Willie W Williams
Fred Auzenne Represented By Willie W Williams
Trustee(s):
Jeffrey I Golden (TR) Pro Se
Jeffrey I Golden (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 3-1-18 per order approving stip. to con't ent. 2-16-18)
Docket 83
Tentative for 6/8/17:
Status conference continued to September 7, 2017 at 10:00 a.m. with expectation that involuntary proceeding will be clarified and settlement examined.
Tentative for 2/9/17:
Status Conference continued to May 25, 2017 at 10:00 a.m. Personal appearance not required.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
10:00 AM
Defendant(s):
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se Olive Avenue Investors, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se Palm Springs Country Club Pro Se
Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se South 7th Street Investments, LLC Pro Se Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se
Van Buren Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Park Scottsdale, LLC Pro Se
El Jardin Atascadero Investments, Pro Se
Enterprise Temecula, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy
10:00 AM
NATIONAL FINANCIAL Represented By Nancy A Conroy
POINT CENTER MORTGAGE Represented By Carlos F Negrete
NATIONAL FINANCIAL Represented By Carlos F Negrete Sean A Okeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A Okeefe
M. Gwen Melanson Represented By Nancy A Conroy
RENE ESPARZA Represented By Nancy A Conroy
Dillon Avenue 44, LLC Pro Se
16th Street San Diego Investors, Pro Se
DOES 1-30, inclusive Pro Se
Altamonte Springs Church Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se
Champagne Blvd Investors, LLC Pro Se
Cobb Parkway Investments, LLC Pro Se
6th & Upas Investments, LLC Pro Se
10:00 AM
Interested Party(s):
Courtesy NEF Represented By Monica Rieder Roye Zur Murray M Helm
Jeffrey G Gomberg Rachel A Franzoia
Richard K. Diamond Represented By George E Schulman
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
Howard B Grobstein (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:16-01098 Joseph v. United States Of America
(con't from 11-30-17)
Docket 1
Tentative for 11/30/17:
Status conference continued to March 29, 2017 at 10:00 a.m.
Tentative for 8/10/17:
Status conference continued to November 28, 2017 at 10:00 a.m. Personal appearance not required.
Tentative for 3/30/17:
Status Conference continued to August 10, 2017 at 10:00 a.m.
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T. Madden Beth Gaschen
Susann K Narholm - SUSPENDED - Mark Anchor Albert
Defendant(s):
United States Of America Pro Se
10:00 AM
Joint Debtor(s):
Thomas Fu Pro Se
Plaintiff(s):
James J Joseph Represented By
A. Lavar Taylor
Trustee(s):
James J Joseph (TR) Represented By
James J Joseph (TR) Paul R Shankman Lisa Nelson
James J Joseph (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:17-01085 Karen Sue Naylor, Chapter 7 Trustee v. Home Trends International Inc.
(con't from 3-29-18)
Docket 2
Tentative for 3/29/18:
Status conference continued to May 31, 2018 at 10:00 a.m.
Tentative for 2/1/18:
Status conference continued to March 29, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to February 1, 2018 at 10:00 a.m.
Tentative for 8/31/17:
Status conference continued to October 26, 2017 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg
10:00 AM
Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Home Trends International Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01105 Naylor v. Gladstone
(con't from 2-15-18 per order approving. stip. to cont. ent. 1-4-18)
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Scott Gladstone Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Melissa Davis Lowe
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
(con't from 3-1-18)
Docket 1
Tentative for 3/29/18: See #19.
Tentative for 3/1/18:
Is the dismissal motion set for March 29 on the latest version of the amended complaint? Continue to that date.
Tentative for 2/1/18:
In view of amended complaint filed January 29, status conference should be continued approximately 60 days.
Tentative for 11/2/17:
See #4. What is happening on February 1, 2018 at 11:00 am?
10:00 AM
Tentative for 10/12/17:
Status conference continued to November 2, 2017 at 10:00 a.m.
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Pro Se
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01130 Karen Sue Naylor, Chapter 7 Trustee v. Idea Nuova, Inc.
(con't from 1-25-17)
Docket 1
Tentative for 3/29/18:
Status conference continued to May 24, 2018 at 10:00 a.m. What is status of service/default?
Tentative for 1/25/18:
Status conference continued to March 29, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to January 25, 2018 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
10:00 AM
Defendant(s):
Idea Nuova, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:18-01001 Tender Care 24/7 Home Health, Inc. et al v. Misa
Docket 1
Tentative for 3/29/18:
In view of the parallel Superior Court case, should a relief of stay be granted with moratorium of this action pending a judgment in Superior Court?
Debtor(s):
Maria T. Misa Represented By
W. Derek May
Defendant(s):
Maria T. Misa Pro Se
Plaintiff(s):
Tender Care 24/7 Home Health, Inc. Represented By
Carol G Unruh
Perla Neri Represented By
Carol G Unruh
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:18-01009 Millan v. Kasiano et al
Docket 1
Tentative for 3/29/18:
Will a Rule 56 motion on collateral estoppel be filed?
Debtor(s):
Pio Kasiano Pro Se
Defendant(s):
Pio Kasiano Pro Se
Kiele Kathleen-Akiona Kasiano Pro Se
Joint Debtor(s):
Kiele Kathleen-Akiona Kasiano Pro Se
Plaintiff(s):
Chad Millan Represented By
Heidi M Plummer
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
Adv#: 8:15-01099 Howard B. Grobstein, Chapter 7 Trustee v. Ponce
(con't from 2-1-18 per order granting stip. re continuance ent. 1-26-18)
Docket 0
Tentative for 8/4/16:
Deadline for completing discovery: November 7, 2016 Pre-trial conference on: December 1, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Raymond E Ponce Represented By Nancy A Conroy
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Jon L Dalberg
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau
10:00 AM
Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
10:00 AM
Adv#: 8:16-01226 B.A.K. Precious Metals, Inc. v Phan
Removal of State Court Action to Federal Bankruptcy Court [Los Angeles County Superior Court Case No. BC629891]
(set from s/c held on 12-1-16)
(con't from 3-22-17 per notice of hrg. fld. 11-6-18)
Docket 1
This is a hearing on the court’s OSC re remand on an action removed from the Los Angeles County Superior Court B.A.K. Precious Metals, Inc. v. Tho Van Phan, No. BC629891. The Plaintiff in the removed action, B.A.K. Precious Metals (hereinafter "Plaintiff") styles its response as a motion for remand as well as a response to the OSC. Accordingly, the court will construe this matter as a motion for remand.
Both sides agree that the court has at least "related to jurisdiction" within the meaning of 28 U.S.C. §157(a). Both sides cite to much of the same law on remand and the closely related concept of abstention. It is interpreting the 14 factors of cases like Citigroup Inc. v. Pacific Investment Management Co. (In re Enron Corp.), 296
B.R. 505, 508 (C.D. Cal. 2003) and applying them to this case that the parties differ. Some of the factors clearly support remand such as extent to which state law predominates, unsettled nature of the law, burden on the bankruptcy court’s docket, right to jury trial and possibly presence of non-debtor parties. But in the end the court believes the factor with the most weight is "effect or lack thereof on the efficient administration of the estate…" This is because, as debtor argues, it will likely be necessary to first determine whether liability exists on the claims before a reasonable plan of reorganization can be proposed. The theory for relief is the same as claims field by the Plaintiff. There will need to be an allowance determination in any event.
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While the court is often inclined to let the state court determine liability preceding allowance as a claim, this case may be different in that allegedly the liability alleged is a very large portion of the total of debtor’s obligations. Moreover, the court is generally not well disposed to delaying the reorganization effort while litigation drags on. In the court’s view, reorganization cases are more likely successful when they are diligently prosecuted. So an earliest resolution is required here, and the possibility of an estimation under §503(c) should not be disregarded.
Deny remand.
Debtor(s):
Tho Van Phan Represented By Michael R Totaro
Defendant(s):
B.A.K. Precious Metals, Inc. Pro Se
Plaintiff(s):
Tho Van Phan Represented By Richard A Marshack David Wood
10:00 AM
Adv#: 8:16-01227 P&P Precious Metals, Inc v Phan
BC631034]
(set from s/c held on 12-1-16)
(con't from 3-22-17 per ntc. of hrg. fld. 11-6-17)
Docket 1
Tentative for 12/1/16:
Deadline for completing discovery: April 30, 2017
Last Date for filing pre-trial motions: May 22, 2017 (except remand which if sought must be heard by January 27)
Pre-trial conference on June 1, 2017
Debtor(s):
Tho Van Phan Represented By Michael R Totaro
Defendant(s):
P&P Precious Metals, Inc. Pro Se
Plaintiff(s):
Tho Van Phan Represented By Richard A Marshack David Wood
10:00 AM
Adv#: 8:17-01006 Lim v. Le et al
Docket 3
Tentative for 3/29/18:
Why shouldn't the court adopt the unilateral pre-trial stipulation as filed by defendants?
Tentative for 10/26/17:
Continue to November 9, 2017 at 11:00 a.m. to evaluate whether trial can be set.
Tentative for 6/8/17: See #12.
Tentative for 4/13/17:
Status conference continued to June 8, 2017 at 2:00 p.m.
Debtor(s):
David Thien Le Represented By Roman Quang Vu
Defendant(s):
David Thien Le Pro Se
10:00 AM
Kimmie Thien Le Pro Se
Joint Debtor(s):
Kimmie Thien Le Represented By Roman Quang Vu
Plaintiff(s):
Phuong X. Lim Represented By Marcello M Di Mauro Marcello M Di Mauro
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:17-01037 Aguilar et al v. Treadway
(2) Deny discharge of Debtor under 11 U.S.C. Sections 727(a)(2)(A) and 727(a) (4)(A)
(set from s/c hearing held on 6-1-17) (con't from 2-8-18)
Docket 1
Tentative for 6/1/17:
Deadline for completing discovery: January 15, 2018 Last date for filing pre-trial motions: January 29, 2018 Pre-trial conference on:February 8, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by September 1, 2017.
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Defendant(s):
Kevin Michael Treadway Pro Se
Plaintiff(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By Bradley D Blakeley
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Burd & Naylor
10:00 AM
Adv#: 8:17-01087 Karen Sue Naylor, Chapter 7 Trustee v. Vara Home USA, LLC
(set at s/c held 9-28-17)
Docket 1
Tentative for 9/28/17:
Deadline for completing discovery: February 28, 2018 Last date for filing pre-trial motions: March 12, 2018 Pre-trial conference on: March 29, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Vara Home USA, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Nanette D Sanders
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Docket 75
Tentative for 3/29/18:
Continue to May 3, 2018 at 10:00 a.m. in view of settlement?
Tentative for 11/1/17:
This objection to claim does not comply with LBR 3001-1(c)(2), which requires that a complete copy of the proof of claim be attached to the motion. But this motion is briefed and Claimant has not raised this objection. In this circumstance the Court can overlook the deficiency. The motion refers to Exhibit A being the proof of claim, so it is possible it was an oversight.
In this claim #14, Claimant asserts that it is owed $150,000 for damages caused to property that Debtors and their corporation have vacated. Debtors object to the claim, arguing that they did not cause any damage and left the property in better condition than when they received it. Debtors also accuse Claimant of trying to collect twice – Claimant has filed another claim (Claim No 13) that is based on a stipulated judgment, apparently for back rent. Claimant responds to the motion, explaining, without any supporting evidence, that there was damage and that repairs had to be made. Claimant asks that this objection be converted into an adversary proceeding.
A proof of claim ordinarily enjoys a presumption of validity, and Debtors have not offered any evidence to rebut it other than their subjective belief that they did not damage the property. But Claimant in turn offers no evidence in support either of the claim or of its response, but merely asserts that the claim is based upon damage
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caused and repairs that had to be made. The Court cannot make a determination on these factual questions in a summary proceeding. The Court can either instruct Claimant to go to state court to liquidate the claim (after obtaining relief from stay for that purpose) or can convert this matter to an adversary proceeding, set deadlines and liquidate the claim here. It is unclear to the court whether there is or was a pending proceeding in Superior Court which could be utilized for this purpose. The court will hear argument as to the better course.
Either lift stay for purposes of litigating in Superior Court or convert to adversary proceeding.
Debtor(s):
Mariano Mendoza Represented By Onyinye N Anyama
Joint Debtor(s):
Mercedes Mendoza Represented By Onyinye N Anyama
11:00 AM
Adv#: 8:09-01313 Seacliff Packaging Inc v. Lee
Docket 24
Grant.
Debtor(s):
Larina Lee Represented By
Young K Chang
Defendant(s):
Larina Lee Pro Se
Plaintiff(s):
Seacliff Packaging Inc Represented By Joshua H Abel
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:17-01156 Goe & Forsythe, LLP v. Roebuck et al
Docket 58
This motion should be moot as the case was dismissed with prejudice by stipulation of the parties. Order approving the stipulation was entered March 5, 2018. Off calendar?
Debtor(s):
Anchor R&R, LLC Represented By Charity J Miller Robert P Goe
Defendant(s):
Teresa Roebuck Represented By Julie C Flores
Michael Rene Rodarte Pro Se
Plaintiff(s):
Goe & Forsythe, LLP Represented By Robert P Goe Charity J Miller
11:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
Docket 59
This is the defendant Schmidt’s motion to dismiss under Rule 12(b). The complaint is in its third iteration. The court reviewed an earlier version(s) of the complaint on September 28 and again on November 2, 2017 in conjunction with a Motion for Relief of Default and attempted prove-up. On those occasions the court described the complaint as an "unintelligible mess." The court requested that plaintiff Marx amend, and further requested that if plaintiff were serious about prosecuting this matter, that counsel be engaged. Plaintiff is still in pro se and although some improvement was noted, the complaint is still very difficult to understand and even more difficult to fit into any cognizable theory of relief.
In the complaint Plaintiff describes this action as being for denial or revocation of discharge (11 U.S.C. §727), and perhaps for determination of dischargeability (§ 523(a)(2),(4) and (6)) as well. Plaintiff in her allegations never seems to show that she understands the difference, but litters references to both theories promiscuously throughout. But they are quite different theories, and for our purposes, can be explained simply: (1) dischargeability of debt under §523(a)(2) presumes the existence of a debt incurred pre-petition. The debt in question must be held by the Plaintiff and alleged as one obtained by fraud under §523(a)(2)(A), or represent damages from a breach of a fiduciary duty or embezzlement (§523(a)(4) or incurred as a result of willful and malicious injury ( §523(a)(6)). In contrast, §727 pertains to denial or revocation of discharge generally. As is pertinent here, either denial or revocation of discharge under §727 involves alleged offenses against the bankruptcy system as a whole, and, as pertinent here, usually involves alleged false oaths including false schedules occurring post-petition (although they may reference falsely
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to prepetition events). In order to have standing for a §727 action, the complaining creditor must in fact be a creditor of the debtor. Moreover, the omissions must be material and deliberate, and it must be shown that the discharge was procured by fraud, not just that fraud may have occurred somewhere vaguely connected to debtor’s affairs. See In re Nielsen 383 F. 3d 922, 925 9th Cir 2004).
Further, to survive a motion to dismiss, Rule 9 requires that the complaint contain detailed allegations of: who, what, when and how of the fraud with particularity. Vess v. Ciba-Geigy Corp. USA, 317 F. 3d 1097, 1106 (9th Cir 2003).
The complaint must contain allegations of fact which, if accepted as true, state a claim that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Bare recital of labels and conclusions will not suffice. Id. It is also very necessary that the Plaintiff have standing, meaning that the Plaintiff is acting on her own behalf for injuries to her, not for grievances of third parties. The court in reviewing the long and rambling complaint is left with the impression that most if not all of the alleged misconduct was as against Lonnie Reynolds or his corporations. Plaintiff’s connections to any of this, particularly any §523(a)(2)(4) or (6) theories of fraud, embezzlement or willful and malicious injury, are left completely unexplained.
Viewed through these lenses the complaint is still very deficient. Plaintiff needs to include her allegations of fact with particularity segregated by theories for relief, i.e. it will not do to leave the reader unclear as to whether alleged events are pre-petition or post-petition, and whether they relate to §727, a §523 theory, or to both. Plaintiff in her §727 theories needs to allege that omissions of fact regarding debtor’s affairs are both material and made intentionally, and she would be well-
advised to allege whether such discrepancies were explained orally at the first meeting of creditors or otherwise. It is hard to make a §727 case over insignificant or non- material factual discrepancies, particular ones that may have been explained to the trustee. Plaintiff needs in each theory to allege why she has standing; in the §523 context this will require allegations that specific misrepresentations were made to her (not to Mr. Reynolds), or embezzlement as to her property (not to Mr. Reynolds or his companies) or willful and malicious injury was perpetrated as to her (again not to Mr.
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Reynolds or his companies). Under both theories Plaintiff‘s standing as an actual creditor should be alleged, not merely that she is listed as one (which is better than nothing but is not by itself conclusive).
Again the court urges retention of counsel. This is a court of law, not a classroom. The court must expect that the rules will be observed and the pleadings be at least intelligible. Plaintiff is urged to consider whether she really has a case based on the explanations above; counsel can assist in this. To the extent pleadings are not compliant, some initial leeway may be given but patience is not unlimited. Because of her pro se status the court will give the benefit of the doubt and one more leave to amend. But the court does not intend to go through yet another excruciating attempt to make sense of long, disjointed and vague sets of allegations. In that regard, extreme length does not compensate for lack of focus on what is relevant, material and appropriate. It is in fact counterproductive.
Grant with final thirty days leave to amend
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 3-1-18 per order continuing motion and s/c entered 2-16-18)
Docket 1
- NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps
11:00 AM
John P Reitman Robert G Wilson Monica Rieder Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 3-1-18 per order continuing mtn and s/c entered 2-16-18)
Docket 8
- NONE LISTED -
3rd Party Defendant(s):
Richard Diamond Represented By Aaron E de Leest
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Interested Party(s):
Courtesy NEF Represented By Rodger M Landau Monica Rieder Jack A Reitman Rachel A Franzoia
11:00 AM
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
Docket 149
- NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se Olive Avenue Investors, LLC Pro Se
Enterprise Temecula, LLC Pro Se
Palm Springs Country Club Pro Se
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Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se South 7th Street Investments, LLC Pro Se Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se
Van Buren Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Park Scottsdale, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se El Jardin Atascadero Investments, Pro Se
Dillon Avenue 44, LLC Pro Se
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy Sean A OKeefe
NATIONAL FINANCIAL Represented By Nancy A Conroy
POINT CENTER MORTGAGE Represented By
Carlos F Negrete - INACTIVE - Nancy A Conroy
NATIONAL FINANCIAL Represented By
Carlos F Negrete - INACTIVE - Sean A OKeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A OKeefe
M. Gwen Melanson Represented By Nancy A Conroy
11:00 AM
RENE ESPARZA Represented By Nancy A Conroy
DOES 1-30, inclusive Pro Se
16th Street San Diego Investors, Pro Se
6th & Upas Investments, LLC Pro Se
Altamonte Springs Church Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se
Champagne Blvd Investors, LLC Pro Se
Cobb Parkway Investments, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
11:00 AM
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 11
Grant. Appearance is optional.
Debtor(s):
Susan Marta Represented By
D Justin Harelik
Movant(s):
Wells Fargo Bank, N.A. dba Wells Represented By
Jennifer H Wang
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
REVERSE MORTGAGE SOLUTIONS, INC.
Vs.
DEBTOR
Docket 51
Grant. Appearance is optional.
Debtor(s):
Alice C. Sessamen Represented By Richard G Heston
Movant(s):
REVERSE MORTGAGE Represented By Sean C Ferry
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
REVERSE MORTGAGE SOLUTIONS, INC.
Vs.
DEBTOR
Docket 68
Grant. Appearance is optional.
Debtor(s):
Elmer Clarke Represented By
Patrick J D'Arcy
Movant(s):
Reverse Mortgage Solutions Inc Represented By Sean C Ferry
Trustee(s):
Jeffrey I Golden (TR) Pro Se
11:00 AM
Docket 29
Grant.
Debtor(s):
Roberto Eduardo T Ruljancic Pro Se
Joint Debtor(s):
Cindy Trylesinski Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Docket 55
Allow as prayed. Appearance is optional.
Debtor(s):
Quang T Dang Pro Se
Trustee(s):
Jeffrey I Golden (TR) Represented By Erin P Moriarty
11:00 AM
LOBEL WEILAND GOLDEN FRIEDMAN, LLP, ATTORNEY FOR THE CHAPTER 7 TRUSEE
HAHN FIFE & COMPANY, LLP, ACCOUNTANT FOR TRUSTEE
Docket 166
Allow as prayed. Appearance is optional.
For future applications: the court remembers this case and accepts that debtor's apparent obstruction multiplied the fees. The court appreciates the subordination to allow nominal recovery to creditors. However when/if such an unfortunate case happens again the court encourages a more expansive narrative showing how the large fee compared to nominal recovery was not reasonably avoidable. The narrative provided here is barely adequate and is probably too pro forma. We have to be cognizant of the optics at all times.
Debtor(s):
Barbara J Martinosky Represented By Joseph A Weber Fritz J Firman
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
10:00 AM
(con't from 2-7-18 per order entered 1-31-18)
Docket 1
Tentative for 4/4/18: Status?
Tentative for 2/7/18:
Deadline for filing plan and disclosure statement: December 31, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: December 1, 2017
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
(con't from 3-20-18)
Docket 1
Tentative for 4/4/18:
See #3 - Disclosure Statement.
Tentative for 3/20/18: Status? See #13.
Tentative for 3/7/18:
Continue to coincide with the continued date on reimposition of stay (March 20, 2018 at 10:00 a.m.)
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
Docket 33
This is the Debtors’ Motion for Approval of their Disclosure Statement as containing adequate information within the meaning of 11 U.S.C. §1125. It should be noted that this is the Debtors’ Fifth bankruptcy since 2011. Understandably, there is a degree of skepticism voiced by the parties filing oppositions. In their reply, the Debtors suggest that this Disclosure Statement is more in the nature of a first draft, and they seem to acknowledge a willingness to cooperate on the question of appraisal and a need to have further negotiations on such issues as interest rates. To assist the parties in their discussions the court notes the following points which should be addressed in any further iteration of the disclosure:
There are large questions concerning the absolute priority rule and the quantum of new value. The Debtors may be confused by its proper application in individual cases but that does not change the fact that it is unquestionably the law of the Ninth Circuit. See In re Zachary, 811 F. 3d 1191 (9th Cir 2016). Moreover, this court’s view has been in favor of this interpretation for an even longer time. See In re Kamell, 451 B.R. 505 (Bankr. C.D. Cal. 2011). So the question is not if the doctrine applies but rather how the debtor intends to meet its requirements, lest the plan be regarded as unconfirmable on its face.
This raises the second question, i.e. the quantum of new value in order to meet the "new value corollary." The Debtors in this draft of the disclosure and plan pick what seems to be an arbitrary sum, $15,000. But arbitrary sums will not do when the confirmation will be opposed as it is likely to be in this case. Instead the Debtors will need to establish not only that the sum is "substantial" and "reasonably equivalent" to whatever interest is retained (See In re Ambanc La Mesa Ltd. Partnership, 115 F. 3d 650, 654 (9th Cir. 1997)) but also that the
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quantum of new value has been "market tested" within the meaning of Bank of America v. 201 N. LaSalle St. Ptsp., 526 U.S. 434 (1999). The La Salle court does not instruct us as to what exactly must be done to "market test", but the court must reach the conclusion that no one else would pay more for the privilege of directing these affairs in the way proposed by the Debtors.
Otherwise it can be argued that the Debtors are retaining something on account of equity, a form of intangible property in the nature of an option. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at § 1129(b)(2)(B)(ii). See also In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014). Market testing can be implemented through a variety of means, such as advertising or the retention of an investment broker. LaSalle at 458; N.N.N Parkway at 283. These issues are not strictly disclosure issues; they could be resolved at confirmation. But the court will have to have a stronger feeling that this plan has a chance for confirmation before it will authorize dissemination of a disclosure statement that assumes a new value exception to absolute priority.
In order to prove that a crammed down plan is "fair and equitable" as to dissenting classes of secured claims, the Debtors must show that the stream of promised future payments has a present value equal to not less than the value of the secured claim. 11 U.S.C. §1129(b)(2)(A)(i). In this regard the plan as written falls far short. Most of the subject properties are fully encumbered, so the secured claims are either 100% loan to value, or in the case of the most junior liens, they are behind large senior encumbrances. In either event, the plan imposes upon such creditors a very high degree of risk. Risk equates to interest rates; the higher the imposed risk the higher should be the rate. Otherwise, the present value of such a stream is less than the secured claim, under the most basic principles of economics. This court has offered the "blended rate" approach as a principled expression of this basic economic
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concept. See In re North Valley Mall, 432 B.R. 825 (Bankr. C.D.Cal. 2010). In the draft of the plan now on file, the Debtors either offer 5% per annum fixed, or, in the case of HOAs, 0% interest. 5% might work for a conforming
loan (i.e. approximately 70% loan to value) but is not even close for creditors at the 90+% on the value totem pole. Of course, no interest at all on liens to HOAs is a non-starter. Even a riskless loan offers some interest in recognition of the time value of money. Prime borrowers have to pay at least 4.5% and even the U.S. Government offers something on its borrowings (i.e. bonds).
Further to the last point, valuations will be critical. Formal valuation orders under §506 are indispensable in the absence of stipulations.
Deny. Continue for further revisions.
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
Docket 14
Grant. Appearance is optional.
Debtor(s):
Alain Azoulay Represented By Dana M Douglas
10:00 AM
Docket 1
Why no status report? An OSC re dismissal is set (see #6).
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 1
- NONE LISTED -
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 18
The court needs a better explanation as to why this case has any prospect of success.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 19
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 20
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 21
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 22
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 23
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 24
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 25
Deny.
Debtor(s):
Jack Richard Finnegan Pro Se
11:00 AM
(Order Approving Stip. to Cont. Signed 3-26-18)
Docket 495
Per OST opposition is due at the hearing.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
10:00 AM
(set per order entered 2-2-18)
Docket 0
Tentative for 4/5/18: See #2.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
Adv#: 8:17-01240 Pacific Western Bank v. Haretakis
(con't per order re stipulation entered 2-23-18)
Docket 1
Tentative for 4/5/18:
Parties are to submit an order consolidating the contested matter regarding the homestead with this dischargeability/denial of discharge adversary proceeding;
Deadline for completing discovery: September 1, 2018 Last date for filing pre-trial motions: September 24, 2018 Pre-trial conference on: October 25, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
Defendant(s):
Catherine M Haretakis Pro Se
Plaintiff(s):
Pacific Western Bank Represented By Kenneth Hennesay
10:00 AM
Adv#: 8:13-01255 City National Bank, a national banking association v. Fu et al
(set from status conference held on 3-3-16)
(con't from 1-4-18 per order approving stip continuing conf. ent. 12-12-17)
Docket 1
Tentative for 1/5/17:
Continue to date following likely resolution of appeal.
Tentative for 3/3/16:
Deadline for completing discovery: June 1, 2016 Last date for filing pre-trial motions: June 13, 2016 Pre-trial conference on: June 30, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 11/5/15:
Status conference continued to March 3, 2016 at 2:00 p.m.
Tentative for 8/27/15:
Continue to November 5, 2015 at 2:00 p.m.
Tentative for 6/25/15:
10:00 AM
Continue to coincide with MSJ on August 27, 2015 at 2:00 p.m.
Tentative for 4/23/15:
Continue to June 25, 2015 at 2:00 p.m.
Tentative for 12/4/14: See #25, 26 and 27.
Tentative for 9/4/14:
Status conference continued to December 4, 2014 at 2:00 p.m. to coincide with MSJ.
Tentative for 5/29/14:
Status conference continued to September 4, 2014 at 10:00 a.m. More delays should not be expected.
Tentative for 4/2/14:
No status report. When can we expect a resolution of this?
Tentative for 12/5/13:
Status conference continued to April 2, 2014 at 10:00 a.m. to follow motion for summary judgment.
10:00 AM
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T Madden Beth Gaschen Susann K Narholm
Defendant(s):
Cheri Fu Pro Se
Thomas Fu Pro Se
Joint Debtor(s):
Thomas Fu Represented By
Evan D Smiley
Plaintiff(s):
City National Bank, a national Represented By Evan C Borges
Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
James J Joseph (TR)
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:18-01018 The Bank of New York Mellon v. Ko
Docket 7
- NONE LISTED -
Debtor(s):
Tae Hoon Ko Pro Se
Defendant(s):
Tae Hoon Ko Pro Se
Plaintiff(s):
The Bank of New York Mellon Represented By
Dane W Exnowski
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTORS
Docket 42
Grant unless current or APO. Appearance is optional.
Debtor(s):
Jaime Manuel Perez Represented By Christopher J Langley
Joint Debtor(s):
Lizette Galvan-Perez Represented By Christopher J Langley
Movant(s):
Toyota Motor Credit Corporation Represented By
Austin P Nagel
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTOR
Docket 47
See #12 - Motion to Redeem.
Debtor(s):
Randy Raneses Represented By William Radcliffe
Movant(s):
Toyota Motor Credit Corporation Represented By
Austin P Nagel
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
BAYVIEW LOAN SERVICING, LLC
Vs.
DEBTORS
Docket 52
Grant. Appearance is optional.
Debtor(s):
Joanne Harkins Davis Represented By Brad Weil
Joint Debtor(s):
Jon Clinton Davis Represented By Brad Weil
Movant(s):
BAYVIEW LOAN SERVICING, Represented By
Edward G Schloss
Trustee(s):
Thomas H Casey (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A.
Vs DEBTOR
Docket 36
Grant. Appearance is optional.
Debtor(s):
Frank Pestarino Represented By Lauren Rode
Movant(s):
WELLS FARGO BANK, N.A. Represented By Arnold L Graff
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Docket 88
Grant for limited purposes set forth in the motion.
Debtor(s):
Martin Rojas Represented By
Bryn C Deb
Joint Debtor(s):
Maria Mercedes Rojas Represented By Bryn C Deb
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Docket 89
Grant.
Debtor(s):
Martin Rojas Represented By
Bryn C Deb
Joint Debtor(s):
Maria Mercedes Rojas Represented By Bryn C Deb
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
HAHN FIFE & COPY, ACCOUNTANT FOR TRUSTEE
LOBEL, WEILAND GOLDEN FRIEDMAN LLP, ATTORNEY FOR TRUSTEE MLG AUTOMATIVE LAW, APLC, SPECIAL COUNSEL FOR TRUSTEE FEES ADP, CHAPTER 7 OPERATING EXPENSES
ALEJANDO ROJO, CHAPTER 7 OPERATING EXPENSES CITY OF SANTA ANA, CHAPTER 7 OPERATING EXPENSES
COOPERATIVE OF AMERICAN PHYSICIANS, CHAPTER 7 OPERATING EXPENSES
DMR COMMUNICATIONS, CHAPTER 7 OPERATING EXPENSES IRON MOUNTAIN, CHAPTER 7 OPERATING EXPENSES READYREFRESH, CHAPTER 7 OPERATING EXPENSES
SOUTHERN CALIFORNIA EDISON, CHAPTER 7 OPERATING EXPENSES FRANCHISE TAX BOARD, OTHER STATE OR LOCAL TAXES
THOMAS H. CASEY, ESQ., ATTORNEY FOR TRUSTEE FEES CONTANCE M. DOYLE, OTHER PROFESSIONAL FEES
LABORATORY COPORATION OF AMERICA, OTHER OPERATING EXPENSES
Docket 387
10:00 AM
Allow as prayed. Appearance is optional.
Debtor(s):
David A. Sanchez, M.D., Inc. Represented By Joshua R Engle
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy Steve Burnell Michael J. Weiland Beth Gaschen Jonathan A Michaels
10:00 AM
SMILEY WANG-EKVALL, LLP, ATTORNEY FOR CHAPTER 7 TRUSTEE HAHN FIFE & COMPANY, LLP, ACCOUNTANT
FRANCHISE TAX BOARD, BANKRUPTCY SECTION MS
Docket 49
Allow as prayed. Appearance is optional.
Debtor(s):
EcoLogical Steel Systems Inc. Represented By James C Bastian Jr Rika Kido
Trustee(s):
Richard A Marshack (TR) Represented By Kyra E Andrassy
10:00 AM
Docket 165
- NONE LISTED -
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Trustee(s):
Karen S Naylor (TR) Represented By Burd & Naylor William M Burd
10:00 AM
Docket 169
Sustain, allowed only as a late-filed claim subordinated to all other timely filed claims.
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Trustee(s):
Karen S Naylor (TR) Represented By Burd & Naylor William M Burd
10:00 AM
Docket 172
Allowed as a secured claim not entitled to distribution from the estate.
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Trustee(s):
Karen S Naylor (TR) Represented By Burd & Naylor William M Burd
10:00 AM
Docket 49
This is the debtor’s motion to redeem a 2010 Toyota Prius automobile under 11 U.S.C. §722. Debtor in his motion asserts the vehicle has a "redemption value" of
$4566 based on a 1/24/2018 valuation report from Sharon Monroe of Valuation Services, Inc. of Cincinnati, Ohio. The motion is opposed by the lienholder Toyota Motor Credit Corporation. The lienholder asserts that the vehicle has a "retail value" of $8,300 based on the NADA Guide valuation for this model year and make.
There are at least two problems. The first is that the court has not been given adequate information on value. Toyota is correct that §506(a)(2) provides that "with respect to property acquired for personal, family, or household purposes, replacement value shall mean the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time value is determined." Toyota is also correct that a general industry guide such as the NADA Guide (or Kelley Blue Book) is appropriate evidence of value. See In re Thayer, 98 B.R.748 (Bankr. W.D.Va. 1989). But §506 also provides that the court should take into account current condition of the vehicle. Toyota makes no effort to offer evidence on this point, and the excerpt of the NADA Guide only references a category "clean retail." What does this mean? Is this a value achievable if the dealer first cleans and preps the vehicle? Debtor in his appraisal contends that the vehicle has a "fair" and in one category a "poor" condition. As to what subtraction might be appropriate for condition from "clean retail" we are given no clue. Of course, debtor’s evidence is deficient also, and is probably inadmissible as presented since we have no authentication from the appraiser nor any indication she has ever laid eyes upon the vehicle..
10:00 AM
The second problem involves the amount that can be redeemed. Section 722
provides that "[a]n individual debtor ….may redeem tangible personal property intended primarily for personal, family, or household use, from a lien securing a dischargeable consumer debt, if such property is exempted under section 522 of this title. California law (which is incorporated into the exemption scheme of §722) has a limit on exemption for one or more vehicles of $4,800 under CCP §703.140. Under his Schedule C as it now reads debtor has only sought to exempt $500, but since he does not also claim a homestead, he might be able to amend to assert a "wildcard" under §§703.140(b)(1) and (5). But, of course, none of this is before the court.
Deny. Continue for further evidence and/or amendment?
Debtor(s):
Randy Raneses Represented By William Radcliffe
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Docket 33
- NONE LISTED -
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
Docket 1
- NONE LISTED -
Debtor(s):
Your Neighborhood Urgent Care, Represented By
Jeffrey I Golden
10:00 AM
Docket 155
Grant.
Debtor(s):
Mariano Mendoza Represented By Richard L Barnett
Joint Debtor(s):
Mercedes Mendoza Represented By Richard L Barnett
10:00 AM
Docket 152
This is the debtors’ motion to sell the property commonly known as 1619 N. Fairmont, Santa Ana to Sergio and Diana Lopez, or highest bidder, at the price of
$550,000, or as may be overbid. The sale is proposed free of liens pursuant to 11
U.S.C. §§363(f)(3)(4) or (5). The sale is opposed only by the first lienholder, Roundpoint Mortgage Servicing Corp. on behalf of Compass Bank. Roundpoint argues that §363(f)(5) cannot apply based on precedent, and that § (f)(4) cannot apply since the lien is not in bona fide dispute. Roundpoint also argues that §363(f)(3) cannot apply because the debtor does not propose to immediately pay the lien but rather hold the proceeds, subject to the lien, in counsel’s trust account. But that’s not what the statute says. The only requirement seemingly applicable is that the price be in excess of the value of all liens, a fact not apparently in dispute here. Why exactly the debtors do not propose to pay the claim immediately is not entirely clear, but since the price is in an amount sufficient to adequately protect the lien, the statute is satisfied. Apparently, because there is a mysterious "Release of Obligation" recorded April 4, 2005, the debtors want the opportunity to examine the circumstances and determine whether the obligation is genuine. Roundpoint makes much of the word "discretion" as used by debtors in the motion, but as the court reads it, the debtors are merely reserving the right to pay the obligation without further order if they have satisfied themselves as to the veracity of the lien. The court sees nothing wrong with this approach, assuming of course that everyone accepts that, until the veracity of the lien is established, the proceeds must be kept untouched in counsel’s account. If a compromise is involved, Rule 9019 will apply.
Grant
10:00 AM
Debtor(s):
Mariano Mendoza Represented By Richard L Barnett
Joint Debtor(s):
Mercedes Mendoza Represented By Richard L Barnett
10:00 AM
SLBIGGS, ACCOUNTANT Fee $13,903.50
Expenses $158.57
Docket 463
Grant but need client declaration. Appearance is optional.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
ROSENBERG, SHPALL, & ZEIGEN AS SPECIAL COUNSEL
Fees: $48,795.00
Expenses: $17,527.95
Docket 467
Grant. Appearance is optional.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
David A. Kay, Special Counsel, Fees $10,102.50
Expense $ 7,353.46
Docket 470
Allow as prayed. Appearance is optional.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
Smiley Wang-Ekvall, LLP; Lei Lei Wang Ekvall, Debtor's Attorney, Fee: $182,955.00
Expenses: $8,292.94
Docket 473
Allow as prayed. The opposition argues that since the plan has not been confirmed no benefit is conveyed. But this is too narrow and short-sighted. But for efforts on the plan there would likely be no competing plan, and no prospect of creditor payment.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
11:00 AM
(con't from 2-14-18)
Docket 1
Tentative for 4/11/18:
Where's the status report? Convert the Hoag entities?
Tentative for 2/14/18: Status?
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
11:00 AM
Section 361 and 363, and (3) Granting Related Relief
(con't from 2-14-18)
Docket 12
Tentative for 4/11/18:
This is the renewed motion for use of cash collateral brought ostensibly by all of the debtors, although the context and substance of the motion suggests that the motion is really only on behalf of the two remaining operating debtors, Cypress Urgent Care, Inc. and Laguna-Dana Urgent Care, Inc. ("Cypress and Laguna"). The existing cash collateral order concludes at end of this April 2018. One of the points correctly made in the opposition is that any continued order should govern starting May, 2018 and should last about three months. Based upon the report of Chad Kurtz it would appear that operations for Cypress and Laguna have stabilized and perhaps improved. Whether the improved cash flow results in improvement net of continuing legal expenses is a closer question. But that need not detain us at this point. The court sees no reason not to continue the terms of the existing order until August 1, 2018.
Just as in the previous iterations of cash collateral authority, the debtors are admonished to make sure that only the expenses (including legal fees) attributable to the specific entity are paid by that entity. There has not been a substantive consolidation and, consequently, each debtor entity must enjoy only its own income and bear its own expenses, and scrupulous accounting must continue so that this result is achieved. Opus Bank makes another point. This court is concerned that if reorganization is in prospect, more tangible progress should be made in that direction, such as a disclosure statement. At conclusion of the extended cash collateral authority proposed here, it will be the anniversary of the filings (or nearly). In consequence, further extensions of the use of cash collateral should not be expected absent
11:00 AM
commensurate demonstration of progress toward reorganization. Regarding the Hoag entities, is there a reason not to convert?
Grant through August 1 on same terms.
Tentative for 2/14/18: Status?
Tentative for 12/13/17: See #6 & 8.
Tentative for 10/12/17:
These are the motions, respectively, of the debtors for continued use of cash collateral and of secured creditor Opus Bank (joined by the landlord) for dismissal. Both are considered together since the issues overlap. The central question presented to the court on these motions is remarkably similar to the one presented at the hearing on first-day motions August 4. As the court observed at the initial hearing, these are very challenged cases. It would appear that the value of all of the estates’ assets is probably less than the balance owed Opus. As originally stated, these cases were about getting enough time to find a sale better than the one almost consummated by the receiver prepetition. The court has allowed that time in the hope that debtors’ search would be productive. But the court cautioned that this search could not be at the sole expense and risk of Opus Bank. Stated differently, the court cannot consistent with the dictates of the Code allow debtors to "boil away" the value of the collateral through extended, losing operations.
So, two questions are front and center on these motions: (1) has the bank lost
11:00 AM
ground through operations and (2) is there a sale at hand which would be sufficiently likely and advantageous as to warrant going further, even if operations are only break even or slightly at a loss? The court examines each below.
On the question of whether the last ten weeks’ operations have been at an overall loss the answer is muddled and somewhat obscure (surprise), largely dependent on whom one believes. Each of the financial advisors expresses a different spin. The Bank argues that the increasing balance of cash is not grounds for optimism because this has been accomplished largely by failing to pay accrued operational costs. The bank points out that debtors have not met their targets in sales and projected revenue as actual receipts are down by a factor of about $101,150 or 8.1%. The net accounts receivable balance is down from $1,574,779 on the petition date to
$1,391,775 at the end of August, for a decrease of $183,004. Overall the Bank argues there has been a downward trend: from gross billings of $1,898,891 in January 2017 to $1,502,490 for September 2017; shrinking collections from $662,769 to $551,393 and gross A/R down from $2,865,039 to $2,268,055 for the same period. Moreover, more losses or "negative cash flows" of a total of $193,690 for fourth quarter 2017 are projected. Against this the debtors point to the increased cash ($281,680 to $519,413) and reportedly a bounce back of net accounts receivable from approximately $1.4 million in August to $1.45 million as of the end of September. Debtors argue that sales will increase in the oncoming flu season of December through March. Debtors also point to alleged improvements in operational efficiencies including a decline in write-down percentages. On the question of whether the cash balances are artificially inflated by failure to pay accruing bills, debtors deny this and argue that all payables are ‘current within terms.’ But there is some continuing obscurity on that point since reference is also made to "deals" regarding timing of payables. The court is little concerned with the narrow question of whether any payables are ‘overdue’ within adjusted terms. The real question is whether on a day by day basis accruing expenses are outstripping receipts because, eventually, there must be reconciliation, or stated differently, losing operations cannot be cured by just delaying payment until later.
While the court is still unable to pinpoint the net results of operations over the last ten weeks, its overall impression is that Opus Bank is probably, on an "all in" basis, down
11:00 AM
relatively, perhaps by approximately the $100,000 the bank has argued. Of course, none of this addresses the accrual of professional fees which is probably a multiple of that sum.
But this loss of relative position might be worth the price if a solution were at hand, such as a viable sale for more than is otherwise achievable. In this vein debtors argue that the letter of intent regarding a possible §363 sale to Marque Medical at $3.2 million, not including receivables (which might be another $1.5 million) is the answer. If such a sale could be promptly consummated this would surely result in a greater recovery for not only Opus Bank but, perhaps, other creditors as well (although this might not be that large after administrative fees and costs). But there appears to be a problem. Marque wants an assignment of the leases, and it develops that the debtors only hold subleases. The landlord has indicated that an "up the chain "consent to assignment will not be forthcoming. But as late as October 5 the buyer still seems interested.
One supposes (based on other pleadings on file) that Dr. Amster has already been considering a bankruptcy proceeding of the master lessee, an entity reportedly he controls. Maybe that can solve the problem somehow if the two estates act in tandem as the barrier to §365 assumption would, in that case, seemingly be overcome (or at least mitigated). Maybe the offer can be adjusted or improved. The debtors have finally seen that no more time is available absent adequate protection and so they offer
$18,500 per month payments (and a few thousand to the landlord). They assert that such an amount is available from operations although this is doubted by Opus Bank.
So, what to do? The court is as dubious now (maybe more so) than it was ten weeks ago. Every prudent doubt should be indulged favoring reorganization, or an advantageous sale with the powers of §363, if that can be reasonably done without imposing undue risk on an unwilling bank. But this is a very close question given all of the issues discussed above. It does not appear that this is a case that will improve with an extended delay as operations appear to be, at best, break even. Even the debtor projects negative cash flows. Adequate protection payments would lessen but hardly eliminate the huge risk being imposed as the bank no doubt figures it’s all its
11:00 AM
collateral anyhow. But maybe a 60-day extension of the use of cash collateral, and like continuance of the dismissal motion, would be the best route assuming no precipitous decline in operations so that the current offer (or overbid) can be vetted. But the debtors should be admonished and harbor no illusions that more time is available, or that the bank won’t be in court on another shortened time motion should its tenuous position further deteriorate.
Grant use for period of 60 days pending further hearing, to coincide with continued dismissal motion, conditioned on payment of $18,500 immediately to bank and $2500 to landlord, with second monthly payments in 30 days.
-
What are the cash result from actual operations? We have the bank's estimates which are dismal. Where is the supposed better offer?
Debtor(s):
No tentative.
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney
10:00 AM
Adv#: 8:13-01256 Wells Fargo Bank, N.A. v. Fu et al
(cont'd from 5-5-16 per order re: stip: re sched. ord. ent. 4-7-16)
Docket 1
Tentative for 4/23/15:
Deadline for completing discovery: September 15, 2015 Last date for filing pre-trial motions: September 30, 2015 Pre-trial conference on: October 8, 2015 at 10:00 a.m.
Joint pre-trial order due per local rules.
Tentative for 10/23/14:
Continued to April 23, 2015 at 10 a.m. to assess disposition of U.S. Trustee's action.
Tentative for 7/31/14:
Continue to follow scheduled MSJ.
Tentative for 1/9/14:
Deadline for completing discovery: June 30, 2014 Last date for filing pre-trial motions: July 14, 2014 Pre-trial conference on: July 31, 2014 at 10:00 a.m. Joint pre-trial order due per local rules.
10:00 AM
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T. Madden Beth Gaschen
Susann K Narholm - SUSPENDED - Mark Anchor Albert
Defendant(s):
THOMAS CHIA FU Represented By Milburn Matthew Mark Anchor Albert
Cheri Fu Represented By
Evan D Smiley Mark Anchor Albert
Interested Party(s):
Courtesy NEF Represented By Isabelle L Ord
Joint Debtor(s):
Thomas Fu Pro Se
Plaintiff(s):
Wells Fargo Bank, N.A. Represented By Byron B Mauss
Trustee(s):
James J Joseph (TR) Represented By
James J Joseph (TR) Paul R Shankman
James J Joseph (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
10:00 AM
Adv#: 8:13-01261 Martin et al v. Horowitz et al
(set at s/c held 11-30-17)
Docket 1
Tentative for 11/30/17:
Deadline for completing discovery: March 1, 2018 Last date for filing pre-trial motions: March 19, 2018 Pre-trial conference on: April 5, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Brian Alan Michael Horowitz Represented By Brendan Loper Thomas A Vogele
Defendant(s):
Brian Alan Michael Horowitz Represented By Marc C Forsythe
Tammy Jean Horowitz Represented By Marc C Forsythe
Joint Debtor(s):
Tammy Jean Horowitz Represented By Brendan Loper
10:00 AM
Plaintiff(s):
David Pooley Represented By Jeffrey W Shields Michael A Tate Rick A Varner
Margaret Pooley Represented By Jeffrey W Shields Michael A Tate Rick A Varner
Sheldon G. Pooley Jr. Represented By Jeffrey W Shields Michael A Tate Rick A Varner
Christy Martin Represented By Jeffrey W Shields Michael A Tate Rick A Varner
Kenneth Martin Represented By Jeffrey W Shields Michael A Tate Rick A Varner
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:17-01131 Karen Sue Naylor, Chapter 7 Trustee v. Jay Franco and Sons, Inc.
(set at s/c held 10-26-17)
Docket 1
Tentative for 4/12/18:
Off calendar in light of compromise order entered April 11?
Tentative for 10/26/17:
Deadline for completing discovery: March 16, 2018 Last date for filing pre-trial motions: March 30, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Jay Franco and Sons, Inc. Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01234 Brown v. U.S. Department of Education et al
Docket 12
Tentative for 4/12/18:
Deadline for completing discovery: September 1, 2018 Last date for filing pre-trial motions: September 24, 2018 Pre-trial conference on: October 4, 2018 at 10:00 a.m.
Joint pre-trial order due per local rules.
Debtor(s):
Hutton Douglas Michael Brown Represented By Christine A Kingston
Defendant(s):
U.S. Department of Education Pro Se
Wells Fargo Education Financial Pro Se
Nel Net Loan Services Pro Se
Plaintiff(s):
Hutton Douglas Michael Brown Represented By Christine A Kingston
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
Docket 1
Tentative for 4/12/18:
Status conference continued to May 3, 2018 at 11:00 a.m.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Pro Se
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
10:00 AM
Adv#: 8:18-01013 Haretakis v. Pacific Western Bank
Docket 1
Tentative for 4/12/18:
Deadline for completing discovery: September 30, 2018 Last date for filing pre-trial motions: October 15, 2018 Pre-trial conference on: October 25, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
Defendant(s):
Pacific Western Bank Pro Se
Plaintiff(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
Adv#: 8:16-01045 Howard B. Grobstein, Chapter 7 Trustee v. Benice et al
(cont'd from 1-11-18 per order approving stipulation entered 12-20-17)
Docket 1
Tentative for 6/23/16:
Deadline for completing discovery: October 31, 2016 Last date for filing pre-trial motions: November 14, 2016 Pre-trial conference on: December 1, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 5/5/16:
Deadline for completing discovery: October 1, 2016 Last date for filing pre-trial motions: October 24, 2016
Pre-trial conference on: November 10, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Jeffrey S. Benice Pro Se
Law Offices Of Jeffrey S. Benice Pro Se
10:00 AM
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Represented By Frank Cadigan
10:00 AM
Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
& 523(a)(6) and (2) Objection to Discharge Pursuant to 11 U.S.C. Sections 727(a)(2), 727(c)(1) & 727(c)(2)
(set at s/c held 6-15-17) (con't from 3-8-18 per order entered 1-23-18)
Docket 1
Tentative for 6/15/17:
Why no status report? Should the court rely on the February 15, 2017 version?
Tentative for 3/2/17:
Status Conference continued to June 15, 2017 at 10:00 a.m.
Refer to Mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by June 1, 2017.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Nezamiddin Farmanfarmaian Pro Se
Plaintiff(s):
Omni Steel Company, Inc. Represented By
10:00 AM
Trustee(s):
Sean A Topp
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
10:00 AM
Adv#: 8:17-01127 Karen Sue Naylor, Chapter 7 Trustee v. Candyrific, LLC
(set at s/c held 10-26-17)
Docket 1
Tentative for 4/12/18:
Schedule trial date approximately 30-45 days hence.
Tentative for 10/26/17:
Deadline for completing discovery: March 16, 2018 Last date for filing pre-trial motions: March 30, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Candyrific, LLC Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01129 Karen Sue Naylor, Chapter 7 Trustee v. Housewares International, Inc.
(set at s/c held 10-26-17)
Docket 1
Tentative for 4/12/18:
Where's the joint pre-trial stip/order? While the court is not happy with the parties' seeming indifference to the timing requirements of the LBRs, the minor points raised by defendant can be dealt with by means other than quibbling over the pre-trial stipulation.
Tentative for 10/26/17:
Deadline for completing discovery: March 16, 2018 Last date for filing pre-trial motions: March 30, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
10:00 AM
Defendant(s):
Housewares International, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01134 Karen Sue Naylor, Chapter 7 Trustee v. Ivie and Associates, Inc.
(set at s/c held 10-26-17)
Docket 1
Tentative for 10/26/17:
Deadline for completing discovery: March 16, 2018 Last date for filing pre-trial motions: March 30, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Ivie and Associates, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
10:00 AM
Trustee(s):
Nanette D Sanders
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
11:00 AM
Adv#: 8:17-01152 Nguyen v. National Collegiate Studen Loan Trust 2006-3 et al
Docket 31
Grant. Schedule an OSC re dismissal.
Debtor(s):
Xuan Nhi Thi Nguyen Represented By Christine A Kingston
Defendant(s):
National Collegiate Studen Loan Represented By
Scott S Weltman
United States Department of Represented By Elan S Levey
Key Bank USA Pro Se
National Collegiate Student Loan Represented By
Scott S Weltman
National Collegiate Student Loan Represented By
Scott S Weltman
Educational Credit Management Represented By
Scott A Schiff
Plaintiff(s):
Xuan Nhi Thi Nguyen Pro Se
11:00 AM
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:17-01140 Al Attiyah v. Manier
(con't from 2-8-18)
Docket 1
Tentative for 4/12/18:
Why no updated status report. Does plainitff intend to prosecute?
Tentative for 2/8/18: See #6.
Tentative for 12/21/17:
Status conference continued to February 8, 2018 at 11:00 a.m. to coincide with dismissal motion.
Tentative for 11/2/17:
In view of dismissal of underlying case, do parties propose to continue?
Debtor(s):
Dana Dion Manier Represented By Andrew Moher
Defendant(s):
Dana Dion Manier Pro Se
11:00 AM
Plaintiff(s):
Abdulrahman Al Attiyah Represented By David D Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Adv#: 8:17-01140 Al Attiyah v. Manier
(con't from 2-8-18)
Docket 12
Tentative for 4/12/18:
In view of counsel's withdrawal, what is ahead for this adversary proceeding. the court expected that a Rule 56 motion would be filed.
Tentative for 2/8/18:
This is the defendant’s motion to dismiss this adversary proceeding under FRBP Rule 12(b) on grounds that there is no subject matter jurisdiction since the underlying Chapter 13 bankruptcy has been dismissed and, consequently, discharge is not sought in any event. But both sides seem to recognize that dismissal of the underlying bankruptcy is not conclusive on the issue of whether the adversary proceedings arising after the petition must be dismissed. Rather, it is a matter of discretion and the court must weigh several factors such as judicial economy, fairness, convenience and comity. Carraher v. Morgan Electronics, Inc. (In re Carraher), 971
F. 2d 327, 328 ((th Cir. 1992) citing Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 353, 108 S. Ct. 614, 620-21 (1988); Linkway Inv. Co. v. Olsen (In re Casamont Investors), 196 B.R. 517, 525 (9th Cir. BAP 1996). There are factors on both sides for the court to consider. Favoring dismissal is the simple fact that the expense and trouble of actual proceeding any further may be unnecessary, unless the debtor should actually file a third bankruptcy. Also favoring dismissal is the apparent early stage of the proceedings in that neither side reportedly has invested much time or effort in advancing the adversary proceeding to date. Therefore, one could say relatively little
11:00 AM
is lost by a dismissal. But factors against dismissal are also present. First, the court has relatively little sympathy for repeat filers, and sequential filings that are not pursued raise a question of bona fides of the debtor who repeatedly uses up the time of the court and interested parties without follow through. A suggestion is made in the opposition that debtor may be delaying in an effort to lull Plaintiff into inattention whereupon he might try a third bankruptcy hoping for a quick discharge. Also of interest is the report that plaintiff now holds a judgment for fraud, although this may have been obtained by default. But in the Ninth Circuit default judgments can mean that issues are "actually litigated" and therefore do invoke principles of collateral estoppel. See In re Younie, 211 B.R. 367, 374-75 (9th Cir. BAP 1997) aff’d 163 F. 3d 609. But a critical issue remains unclear. That is whether this particular judgment has supporting findings such that the court can reach the conclusion that the matter has been actually litigated and that the issues were necessarily decided in the judgment, elements necessary for a conclusion of collateral estoppel under California law. See
e.g. In re Kelly, 182 B.R. 255, 258 (9th Cir. BAP 1995), aff’d, 100 F.3d 110 (9th Cir. 1996). As the court has experienced in numerous other cases, without findings or a means to determine that the questions central to fraud have been conclusively established, particularly in default cases, we may be facing the prospect of starting from square one without any particular savings of time or money. For example, when a complaint contains multiple theories for relief, some not based on intentional torts, a default judgment on a simple, undifferentiated form not supported by findings, is largely useless. If this is true it tips the analysis in favor of dismissal. Plaintiff reports that he is inclined to bring a summary judgment motion in the near future. If he does, he will need to confront this very question.
Continue for 60 days to permit a summary judgment motion based on collateral estoppel. Otherwise dismiss.
Debtor(s):
Dana Dion Manier Represented By Andrew Moher
11:00 AM
Defendant(s):
Dana Dion Manier Represented By Andrew Moher
Plaintiff(s):
Abdulrahman Al Attiyah Represented By David D Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
Docket 214
- NONE LISTED -
Debtor(s):
Desiree C Sayre Represented By Andrew Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Represented By
Richard W Labowe
WENETA M KOSMALA Represented By Reem J Bello Michael R Adele
Plaintiff(s):
Fernando F Chavez Represented By Anthony J Palik Gregory B Henry Lance H Swanner
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
Docket 215
- NONE LISTED -
Debtor(s):
Desiree C Sayre Represented By Andrew Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Represented By
Richard W Labowe
WENETA M KOSMALA Represented By Reem J Bello Michael R Adele
Plaintiff(s):
Fernando F Chavez Represented By Anthony J Palik Gregory B Henry Lance H Swanner
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
Docket 216
- NONE LISTED -
Debtor(s):
Desiree C Sayre Represented By Andrew Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Represented By
Richard W Labowe
WENETA M KOSMALA Represented By Reem J Bello Michael R Adele
Plaintiff(s):
Fernando F Chavez Represented By Anthony J Palik Gregory B Henry Lance H Swanner
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
(set at ptc held 1-25-18)
Docket 1
Tentative for 4/16/18: Informed that this has settled?
Tentative for 1/25/18:
Assign trial date for approximately 45-60 days hence.
Tentative for 11/30/17:
Why still no joint pre-trial stip?
Tentative for 10/26/17: Why no joint pre-trial stip?
Tentative for 9/15/16:
Deadline for completing discovery: March 17, 2017 Last date for filing pre-trial motions: March 30, 2017 Pre-trial conference on: April 27, 2017 at 10:00 a.m. Joint pre-trial order due per local rules.
10:00 AM
Tentative for 1/28/16: See #3.1.
Debtor(s):
Desiree C Sayre Represented By Andrew A Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Pro Se WENETA M KOSMALA Represented By
Reem J Bello
Plaintiff(s):
Fernando F Chavez Pro Se
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
Weneta M.A. Kosmala Represented By Reem J Bello
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
(cont'd from 3-20-18)
FORD MOTOR CREDIT COMPANY LLC
Vs.
DEBTOR
Docket 76
Grant. Appearance is optional.
Debtor(s):
Kenneth E Strother Represented By Bruce D White
Movant(s):
Ford Motor Credit Company LLC Represented By
Sheryl K Ith Jennifer H Wang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
GATEWAY ONE LENDING & FINANCE
Vs DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
David R. Garcia Represented By Thomas J Tedesco
Movant(s):
Gateway One Lending & Finance Represented By
Karel G Rocha
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTORS
Docket 9
Grant. Appearance is optional.
Debtor(s):
David Allen Miller Represented By Raymond J Seo
Joint Debtor(s):
Arsenia E. Miller Represented By Raymond J Seo
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
(con't from 3-27-18 per stip. to cont. hrg entered 3-26-18)
NATIONSTAR MORTGAGE LLC
Vs DEBTOR
Docket 48
Grant. "Time to complete a loan modification" is not grounds to deny relief of stay. Moreover, $29,608 of post-petition arrears is unacceptable and inconsistent with bona fides required of Chapter 13 debtors.
Debtor(s):
Jesus Jaime Cabrera Represented By Norma Duenas
Movant(s):
Nationstar Mortgage LLC as Represented By Merdaud Jafarnia
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
NATIONSTAR MORTGAGE LLC
Vs.
DEBTOR
Docket 106
Grant. Appearance is optional.
Debtor(s):
Nancy Karen Chambers Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
JPMC SPECIALTY MORTGAGE LLC
Vs.
DEBTORS
Docket 48
Grant. Appearance is optional.
Debtor(s):
Marco T Cortez Represented By Michael R Totaro
Joint Debtor(s):
Dinora Cortez Represented By Michael R Totaro
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
(con't from 3-27-18)
US BANK NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 81
Tentative for 4/17/18:
Status? It looks from Debtor's late opposition that Debtor made several payments that may have brought the loan almost current in March. The creditor is entitled to 100% post petition current status, or else the plan is in default. Default on a confirmed plan is itself "cause" for relief of stay so the argument about no decline in value is beside the point.
No tentative
Tentative for 3/27/18:
Grant. Appearance is optional.
Debtor(s):
Juan Bernal Torres Represented By Mark S Martinez
Movant(s):
US Bank National Association, as Represented By
Daniel K Fujimoto Caren J Castle
10:00 AM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
LAKESIDE PARK COMMUNITY ASSOCIATION
Vs.
DEBTOR
Docket 33
No service on debtor? Continue for service on Debtor.
Debtor(s):
Benito Moctezuma Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
(cont'd from 3-20-18)
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 41
Tentative for 4/17/18
Grant. Appearance is optional.
Tentative for 3/20/18
Grant as to Debtor; continue for notice to Chapter 7 Trustee appointed March 2.
Debtor(s):
Victor Lamarr James Represented By Brad Weil
Movant(s):
Deutsche Bank National Trust Represented By
Kristin A Zilberstein
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
THE BANK OF NEW YORK MELLON
Vs.
DEBTOR
Docket 9
Grant. Appearance is optional.
Debtor(s):
Ali Farahmand Represented By Timothy McFarlin
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 11
Grant. Appearance is optional.
Debtor(s):
Patricia Ann Hoffman Represented By Andrew Goodman
Movant(s):
Wells Fargo Bank, N.A. Represented By Alexander K Lee
Trustee(s):
Thomas H Casey (TR) Pro Se
10:00 AM
Docket 6
Grant. Appearance is optional.
Debtor(s):
Christopher Charles Rauch Represented By
Misty A Perry Isaacson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Docket 14
- NONE LISTED -
Debtor(s):
Kenneth Mathew Sale Represented By Matthew D Resnik
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
(set at ptc held 1-25-18)
Docket 1
Tentative for 1/25/18:
Assign trial date for approximately 45-60 days hence.
Tentative for 11/30/17:
Why still no joint pre-trial stip?
Tentative for 10/26/17: Why no joint pre-trial stip?
Tentative for 9/15/16:
Deadline for completing discovery: March 17, 2017 Last date for filing pre-trial motions: March 30, 2017 Pre-trial conference on: April 27, 2017 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 1/28/16:
See #3.1.
10:00 AM
Debtor(s):
Desiree C Sayre Represented By Andrew A Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Pro Se WENETA M KOSMALA Represented By
Reem J Bello
Plaintiff(s):
Fernando F Chavez Pro Se
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
Weneta M.A. Kosmala Represented By Reem J Bello
U.S. Trustee(s):
United States Trustee (SA) Pro Se
1:30 PM
(cont'd from 3-21-18)
Docket 10
- NONE LISTED -
Debtor(s):
Danilo Dimayuga Lumbera Represented By Raymond Perez
Joint Debtor(s):
Gregoria Perfinan Lumbera Represented By Raymond Perez
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 3-21-18)
Docket 2
- NONE LISTED -
Debtor(s):
Heather Juarez Represented By Julie J Villalobos
Movant(s):
Heather Juarez Represented By Julie J Villalobos Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(cont'd from 2-21-18)
Docket 2
- NONE LISTED -
Debtor(s):
Benito Moctezuma Represented By Alon Darvish
Movant(s):
Benito Moctezuma Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 3-21-18)
Docket 2
- NONE LISTED -
Debtor(s):
Kirk P Howland Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 3-21-18)
Docket 22
- NONE LISTED -
Debtor(s):
Geoffrey David Lloyd Represented By Michael W Collins
Movant(s):
Geoffrey David Lloyd Represented By Michael W Collins Michael W Collins
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Steven Jeffrey Portwood Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Sophia Loukatos Represented By Hayk Grigoryan
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Gilbert Sarmiento Japgos Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Phuong Nguyen Huynh Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 9
Tentative for 4/18/18:
The comments/issues raised by the Trustee must be addressed.
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Movant(s):
Carmen V Anderle Represented By Allan O Cate Allan O Cate Allan O Cate Allan O Cate Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 20
- NONE LISTED -
Debtor(s):
Michael Dennis Casey Represented By Derik N Lewis
Joint Debtor(s):
Theresa Leigh Casey Represented By Derik N Lewis
Movant(s):
Michael Dennis Casey Represented By Derik N Lewis
Theresa Leigh Casey Represented By Derik N Lewis
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
- NONE LISTED -
Debtor(s):
Rilla Ann Huml Represented By Christopher J Langley
Movant(s):
Rilla Ann Huml Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Alejandro Alvarado Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Celia Navarrete Pano Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Frank Pestarino Represented By Lauren Rode
Trustee(s):
Karen S Naylor (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Jonathan Matthew Rose Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 12
Tentative for 4/18/18:
Not only does the plan not address at all the Dept. of Labor claim, but based on Wells Fargo proof of claim there is also an issue of eligibility (too much secured debt?)
Debtor(s):
John Benjamin Riddle Represented By Stephen L Burton
Movant(s):
John Benjamin Riddle Represented By Stephen L Burton
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
- NONE LISTED -
Debtor(s):
Alicia Contreras Represented By Luis G Torres
Movant(s):
Alicia Contreras Represented By Luis G Torres Luis G Torres
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 15
- NONE LISTED -
Debtor(s):
Isabel Garcia Rainey Represented By John Habashy
Movant(s):
Isabel Garcia Rainey Represented By John Habashy
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 3
- NONE LISTED -
Debtor(s):
Tony Kallah Represented By
Anerio V Altman
Joint Debtor(s):
Joulia Kallah Represented By
Anerio V Altman
Movant(s):
Tony Kallah Represented By
Anerio V Altman
Joulia Kallah Represented By
Anerio V Altman Anerio V Altman Anerio V Altman Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 17
- NONE LISTED -
Debtor(s):
Benjamin Hernandez Represented By Christopher P Walker
Joint Debtor(s):
Faviola Ruiz Hernandez Represented By Christopher P Walker
Movant(s):
Benjamin Hernandez Represented By Christopher P Walker
Faviola Ruiz Hernandez Represented By Christopher P Walker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 18
- NONE LISTED -
Debtor(s):
Elizabeth Guzman Represented By Christine A Kingston
Movant(s):
Elizabeth Guzman Represented By Christine A Kingston Christine A Kingston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
James Frank Kentros Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Frank Francis Barilla Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Michael Eduardo Real Represented By
Ethan Kiwhan Chin
Movant(s):
Michael Eduardo Real Represented By
Ethan Kiwhan Chin
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Joseph Ringo Arrocha Represented By Sunita N Sood
Movant(s):
Joseph Ringo Arrocha Represented By Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
James M Harris Represented By Andy C Warshaw
Movant(s):
James M Harris Represented By Andy C Warshaw
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Randall Stephen Held Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 6
- NONE LISTED -
Debtor(s):
Luis Salvador Sosa Represented By Chris A Mullen
Movant(s):
Luis Salvador Sosa Represented By Chris A Mullen Chris A Mullen Chris A Mullen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Soraya Nauroz Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 12
- NONE LISTED -
Debtor(s):
Cynthia Louise Armenta Represented By Anerio V Altman
Movant(s):
Cynthia Louise Armenta Represented By Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Steven Jeffrey Portwood Pro Se
Trustee(s):
Amrane (RS) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Parvaneh Fereidouni Represented By
Raj T Wadhwani
Movant(s):
Parvaneh Fereidouni Represented By
Raj T Wadhwani
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
April D. Quinn Represented By Kelly Zinser
Movant(s):
April D. Quinn Represented By Kelly Zinser Kelly Zinser Kelly Zinser
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Brett Town Represented By
Scott Dicus
Joint Debtor(s):
Kristin Town Represented By
Scott Dicus
Movant(s):
Brett Town Represented By
Scott Dicus
Kristin Town Represented By
Scott Dicus Scott Dicus
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Christopher Rauch Represented By William Radcliffe
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Jill Ann Veneracion Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
- NONE LISTED -
Debtor(s):
Mitra Barzegar Represented By Tony M Diab
Movant(s):
Mitra Barzegar Represented By Tony M Diab
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Ben R Aragon Represented By Sunita N Sood
Joint Debtor(s):
Marie A Aragon Represented By Sunita N Sood
Movant(s):
Ben R Aragon Represented By Sunita N Sood
Marie A Aragon Represented By Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 39
- NONE LISTED -
Debtor(s):
Varinder Kumar Represented By Dana M Douglas
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
{11 U.S.C. Section 1307(c)(6)}
(cont'd from 2-21-18)
Docket 48
Tentative for 4/18/18: Status?
Tentative for 2/21/18: Status?
Tentative for 1/17/18: Status?
Tentative for 12/20/17: Status on refinance?
Tentative for 10/18/17:
The promise to refinance does not fulfill tax return/refund requirements. But the court will grant a continuance if the Trustee does not object.
Debtor(s):
Mark A. Wedmore Represented By Edward T Weber Kristi M Wells
3:00 PM
Joint Debtor(s):
Christy E. Wedmore Represented By Edward T Weber Kristi M Wells
Movant(s):
Amrane (SA) Cohen (TR) Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 151
Tentative for 4/18/18:
Claims in Calendar #'s 43 & 44 have been objected to, albeit improperly. The court cannot discern whether, if sustained, these would make up for the plan shortfall.
It also appears these objections are very late, and Debtor even asks for a "refund" on #43. The court needs an explanation and probably a continuance.
Debtor(s):
Mark A Mindiola Represented By Emilia N McAfee
Joint Debtor(s):
Daily Mindiola Represented By Emilia N McAfee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 153
Tentative for 4/18/18:
This objection is somewhat confusing. It is styled as an objection to the claim of Michael D. Schulman, but the POC lists the creditor as NDS, LLC with Michael Schulman as the attorney. This is further muddled by the fact that on the second page of the POC Mr. Schulman signs under a checked box saying he is the creditor. Regardless of the identity of the creditor, Mr.
Schulman is listed as the entity to receive notice. But so is the objection problematic. Rather than mailing notice and serving the motion to the address on the POC, Debtors have relied on the Court’s NEF list. It is unclear that this is sufficient. Given the confused nature of this motion, perhaps it should be continued so that Debtors may effect proper service.
In support of the POC, Claimant attaches a breakdown of the claim amounts and an abstract of judgment issued in Fullerton, California. The abstract does name a "Mark A. Mindiola" who lives in Pensacola Florida. Debtor states he has never lived in Florida and does not recognize this creditor. If Claimant is served properly and does not respond, then Debtor’s declaration rebuts the prima facie validity of this claim. But procedure on the objection should be cured first.
Continued for proper service and then sustain if no response is received.
Appearance: Required
Debtor(s):
Mark A Mindiola Represented By Emilia N McAfee
Joint Debtor(s):
Daily Mindiola Represented By
3:00 PM
Trustee(s):
Emilia N McAfee
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 154
Tentative for 4/18/18:
There might be an issue with the Service of this motion. It is not clear that Debtor properly served the Creditor because the proof of service indicates that Notice if this motion was only emailed to an address that does not match the address on the proof of claim. The proof of claim indicates a mailing address and an actual person along with a phone number and direct email for that person. The proof of service of this motion does not match any of those addresses or name any of those people. The email address listed on the proof of service for this motion is "indybankruptcy@navient.com." This email address does not appear on the CM/ECF list of email addresses for electronic service. Therefore, it is not possible to determine that the Creditor was properly served. If the Creditor was not properly served, that will likely explain the lack of Opposition.
Continue to correct service.
Debtor(s):
Mark A Mindiola Represented By Emilia N McAfee
Joint Debtor(s):
Daily Mindiola Represented By Emilia N McAfee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 89
Tentative for 4/18/18:
Continue for about 45 days. More time should not be expected.
Debtor(s):
Gilbert Pena Perez Represented By Halli B Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(put on cal by oppos fld 1-21-18) (con't from 3-21-18)
Docket 115
Tentative for 4/18/18: Status?
Tentative for 3/21/18: Status of modification?
Tentative for 2/21/18: Grant unless current.
Debtor(s):
Maria Dolores Garcia Luvianos Represented By David R Chase
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 2-21-18)
Docket 111
Tentative for 4/18/18: Status?
Tentative for 2/21/18: See #32.
Tentative for 12/20/17: Grant unless motion on file.
Debtor(s):
Terry Lee Represented By
Gary Leibowitz Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 2-21-18)
Docket 119
Tentative for 4/18/18:
Failing a response after continuance to Trustee's comment, deny.
Tentative for 2/21/18:
Debtor needs to respond to the Trustee's comments, otherwise deny.
Debtor(s):
Terry Lee Represented By
Gary Leibowitz Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 28
Tentative for 4/18/18: Grant unless current.
Debtor(s):
Paul F. Colice Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 3-21-18)
Docket 31
Tentative for 4/18/18:
Has delinquency been cured? New counsel? Failing explanation, grant.
Tentative for 3/21/18: Grant unless current.
Debtor(s):
Lourdes C. Malunes Represented By Paul M Allen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 47
Tentative for 4/18/18:
Does the order granting motion to modify entered 4/12/18 resolve this?
Debtor(s):
Andrew John Kelley Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 43
Tentative for 4/18/18: Grant unless current.
Debtor(s):
Aida L. Plotena Represented By Paul M Allen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 3-21-18)
Docket 85
Tentative for 2/21/18:
Continue to allow for processing of motion to modify filed February 6, 2018 (Trustee has recommended approval).
Debtor(s):
Craig Leroy Wolfram Represented By Matthew D Resnik Kevin T Simon
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 43
Tentative for 4/18/18:
Grant unless motion to modify is on file.
Debtor(s):
Timothy Dale Cox Represented By
Thomas E Brownfield
Joint Debtor(s):
Diane Gloria Cox Represented By
Thomas E Brownfield
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 3-21-18)
Docket 57
Tentative for 4/18/18: Same.
Tentative for 3/21/18: Same.
Tentative for 2/21/18: Grant unless current.
Debtor(s):
Kenneth E Strother Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 3-21-18)
Docket 31
Tentative for 4/18/18:
What is status of motion to modify?
Tentative for 3/21/18: See #28.
Tentative for 2/21/18: See #34.
Tentative for 12/20/17: Grant unless motion on file.
Debtor(s):
Debbie Lynn Selikson Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 3-21-18)
Docket 60
Tentative for 4/18/18:
Grant unless delinquency cured.
Tentative for 3/21/18:
What has changed since additional time granted on February 21?
Tentative for 2/21/18: Same.
Tentative for 12/20/17:
Grant unless current or motion on file.
Debtor(s):
Guy A. Rojo Represented By
Joseph A Weber
Joint Debtor(s):
Eva P. Rojo Represented By
Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
3:00 PM
Docket 93
- NONE LISTED -
Debtor(s):
Gerritt Dwayne Schuitema Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 26
Tentative for 4/18/18: Status of modification?
Tentative for 2/21/18:
See motion to modify - #48.1 on calendar.
Debtor(s):
Arniel Dominguez Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Joint Debtor(s):
Evangelina Ogatis Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(notice of hearing filed 1-18-18)(con't from 2-21-18)
Docket 27
Tentative for 4/18/18:
Have modification changes been made? If not, dismiss.
Tentative for 2/21/18:
Debtor should respond to Trustee's comments.
Debtor(s):
Arniel Dominguez Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Joint Debtor(s):
Evangelina Ogatis Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 45
- NONE LISTED -
Debtor(s):
Kenneth Mathew Sale Represented By
S Renee Sawyer Blume Matthew D Resnik
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 4-17-18 per order granting stip to cont. entered 4-9-18)
Docket 14
Tentative for 4/18/18:
To defeat the bad-faith presumption, "probably the most important indicia of good faith is a realistic prospect of success in the second case, contrary to the failure of the first case." In re Jackola, No. 11-01278, 2011 WL 2518930, at *3 (Bankr. D. Haw. June 22, 2011) (citing In re Elliot-Cook, 357
B.R. 811, 815-16 (Bankr. N.D. Cal. 2006)). Making this showing requires "clear and convincing evidence" that the instant "case will result in a confirmed plan." In re Hart, No. 12-21220-TLM, 2012, WL 6644703, at *3-4 (Bankre. D. Idaho Nov. 23, 2012) (examining §§ 362(c)(3)(C)(i)(III) and (III) (bb)). Here, Debtor’s Motion merely professes good faith while not resolving the objections which caused his prior case to be dismissed. Although Debtor claims to need the stay "to sell the property… or have the property purchased by extended family," merely stating these objectives does not overcome the statutory presumption of bad faith. Debtor’s Motion at 5. Debtor has not offered evidence that demonstrates the feasibility of a plan in this case. The proximity in time of the Debtor’s two bankruptcy cases, the use of the filings solely to defeat foreclosures, and the inability of the Debtor to propose a confirmable plan (or even qualify for chapter 13) all militate towards dismissal of this case for bad faith and the termination of the automatic stay per Section 362(c)(3).
It is clear that the presumption of bad faith filing is raised by the facts of this case. Once that presumption has been raised the burden shifts to the Debtor to prove by clear and convincing evidence that the case will result in a confirmed plan. Here, the Debtor has not met this burden, and instead requests the stay be continued with no supporting evidence and only conclusory statements to support his request. Therefore, this Motion fails the evidentiary standard and must be denied.
3:00 PM
See # 62
Debtor(s):
Deny
Kenneth Mathew Sale Represented By Matthew D Resnik
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 16
Tentative for 4/18/18: Grant.
Debtor(s):
Kenneth Mathew Sale Represented By Matthew D Resnik
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 33
Tentative for 4/18/18:
Settlement? Continue 30 days.
Debtor(s):
Lisa Kathryn Dell'Arco Represented By Michael Jones Sara Tidd
Movant(s):
Lisa Kathryn Dell'Arco Represented By Michael Jones Michael Jones Michael Jones Sara Tidd Sara Tidd Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 47
- NONE LISTED -
Debtor(s):
Surat Singh Represented By
Michael A Younge
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 31
- NONE LISTED -
Debtor(s):
Manuel Farias - Munoz Represented By John E Mortimer
Randal A Whitecotton
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 1-17-18)
Docket 104
Tentative for 4/18/18: Same.
Tentative for 1/17/18:
There is no showing that the plan as originally confirmed is not feasible, and the Trustee raises other issues of non-compliance which would be barriers to confirmation. Deny.
Debtor(s):
Karen Pedersen Represented By Karen Geiss
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 82
- NONE LISTED -
Debtor(s):
Olga Ruiz Represented By
Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 37
Tentative for 4/18/18:
Debtor objects to the claim of Verizon because he doesn't "think" he ever opened an account. The supporting evidence/declaration is minimal to non- existent (but no opposition was filed either). Moreover, the claim has an exhibit attached suggesting an account for a Miguel Cedeno with accumulating monthly charges and a billing address at 915 Catalina, Santa Ana. Is this debtor's address? Did he / does he have a cell phone?
No tentative.
Debtor(s):
Miguel Cedeno Perez Represented By
Rabin J Pournazarian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 4-10-18)
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTOR
Docket 47
Tentative for 4/24/18: See #2.
Tentative for 4/10/18:
See #12 - Motion to Redeem.
Debtor(s):
Randy Raneses Represented By William Radcliffe
Movant(s):
Toyota Motor Credit Corporation Represented By
Austin P Nagel
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
(con't from 4-10-18)
Docket 49
Tentative for 4/24/18: Status?
Tentative for 4/10/18:
This is the debtor’s motion to redeem a 2010 Toyota Prius automobile under 11 U.S.C. §722. Debtor in his motion asserts the vehicle has a "redemption value" of
$4566 based on a 1/24/2018 valuation report from Sharon Monroe of Valuation Services, Inc. of Cincinnati, Ohio. The motion is opposed by the lienholder Toyota Motor Credit Corporation. The lienholder asserts that the vehicle has a "retail value" of $8,300 based on the NADA Guide valuation for this model year and make.
There are at least two problems. The first is that the court has not been given adequate information on value. Toyota is correct that §506(a)(2) provides that "with respect to property acquired for personal, family, or household purposes, replacement value shall mean the price a retail merchant would charge for property of that kind considering the age and condition of the property at the time value is determined." Toyota is also correct that a general industry guide such as the NADA Guide (or Kelley Blue Book) is appropriate evidence of value. See In re Thayer, 98 B.R.748 (Bankr. W.D.Va. 1989). But §506 also provides that the court should take into account current condition of the vehicle. Toyota makes no effort to offer evidence on this point, and the excerpt of the NADA Guide only references a category "clean
10:30 AM
retail." What does this mean? Is this a value achievable if the dealer first cleans and preps the vehicle? Debtor in his appraisal contends that the vehicle has a "fair" and in one category a "poor" condition. As to what subtraction might be appropriate for condition from "clean retail" we are given no clue. Of course, debtor’s evidence is deficient also, and is probably inadmissible as presented since we have no authentication from the appraiser nor any indication she has ever laid eyes upon the vehicle..
The second problem involves the amount that can be redeemed. Section 722 provides that "[a]n individual debtor ….may redeem tangible personal property intended primarily for personal, family, or household use, from a lien securing a dischargeable consumer debt, if such property is exempted under section 522 of this title. California law (which is incorporated into the exemption scheme of §722) has a limit on exemption for one or more vehicles of $4,800 under CCP §703.140. Under his Schedule C as it now reads debtor has only sought to exempt $500, but since he does not also claim a homestead, he might be able to amend to assert a "wildcard" under §§703.140(b)(1) and (5). But, of course, none of this is before the court.
Deny. Continue for further evidence and/or amendment?
Debtor(s):
Randy Raneses Represented By William Radcliffe
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
FORD MOTOR CREDIT COMPANY LLC
Vs DEBTOR
Docket 15
Grant. Appearance is optional.
Debtor(s):
SUM International Inc. Represented By Tye G Trostad
Movant(s):
Ford Motor Credit Company LLC Represented By
Sheryl K Ith
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
BAYVIEW LOAN SERVICING, LLC
Vs.
DEBTOR
Docket 50
Grant. Even with payments made as shown in Exhibit A to the opposition there is still a significant delinquency.
Debtor(s):
Maria I Mena Represented By
Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK N.A.
Vs.
DEBTORS
Docket 101
Grant. Appearance is optional.
Debtor(s):
Daniel J Powers Represented By Gaurav Datta
Joint Debtor(s):
Ellen A Powers Represented By Gaurav Datta
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK NA Vs.
DEBTOR
Docket 51
- NONE LISTED -
Debtor(s):
Carl Hardin Represented By
Andrew Moher
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
ARVEST CENTRAL MORTGAGE COMPANY
Vs.
DEBTOR
Docket 11
Grant. Appearance is optional.
Debtor(s):
Jorge Munoz Represented By
Gary Polston
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
(con't from 4-17-18)
THE BANK OF NEW YORK MELLON
Vs.
DEBTOR
Docket 9
Tentative for 4/24/18: Grant.
Tentative for 4/17/18:
Grant. Appearance is optional.
Debtor(s):
Ali Farahmand Represented By Timothy McFarlin
Trustee(s):
Jeffrey I Golden (TR) Pro Se
11:00 AM
Docket 59
The Opposition does not explain why this case was converted to Chapter 13 when: (1) debtor was manifestly ineligible (2) lacked resources to meet feasibility requirement and (3) failed to file a means test form B22. It looks like this was a stalling tactic while litigation was pursued, but the court would like to hear an explanation.
Debtor(s):
No tentative.
Surat Singh Represented By
Michael A Younge
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Docket 34
Grant.
Debtor(s):
Billy Joe Brunner Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Docket 12
- NONE LISTED -
Debtor(s):
Alba L Gonzalez Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
Docket 10
- NONE LISTED -
Debtor(s):
Marie Faasala Fesili Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
Claim 2-1 APL-American President Lines Ltd. Claim 3-1 Hyundai America Shipping Agency, Inc.
Claim 4-1 American Express Bank, FSB [withdrawal of objection filed 4-3-18]
Claim 7-1 Maersk Line
Claim 8-1 NYK Line (North America) Inc.
Docket 116
Sustain as to 2-1, 3-1, 7-1 and 8-1.
Debtor(s):
Mark Anthony Lynch Represented By Michael N Nicastro
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Jeffrey I Golden Beth Gaschen
11:00 AM
Claim # 5-1 Cosco Container Lines Americas, Inc. Claim # 9-1 Cosco Container Lines Americas, Inc.
Docket 111
Sustain.
Debtor(s):
Mark Anthony Lynch Represented By Michael N Nicastro
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Jeffrey I Golden Beth Gaschen
11:00 AM
Claim # 10-1 United States Logistics Group dba US Logistics Claim # 11-1 Infiniti Financial Services
Docket 113
Sustain; allow Infiniti #11-1 only as a secured claim not entitled to a dividend.
Debtor(s):
Mark Anthony Lynch Represented By Michael N Nicastro
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Jeffrey I Golden Beth Gaschen
11:00 AM
Docket 9
- NONE LISTED -
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
11:00 AM
Docket 10
- NONE LISTED -
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
10:00 AM
(con't from 3-20-18)
Docket 0
Tentative for 4/25/18:
Off calendar per Trustee's request.
Tentative for 3/20/18:
Why no response from Imaginutrition et al? What is an appropriate sanction?
Tentative for 1/31/18: Status?
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Docket 0
Tentative for 4/25/18: Status?
Tentative for 3/20/18:
What is the status of the various discovery requests?
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
GOE& FORSYTHE, LLP, COUNSEL FOR REORGANIZED DEBTOR:
FEE: | $92,014.00 | |
EXPENSES: | $ 2,143.95 | |
Docket | 133 |
Allow as prayed. Appearance is optional.
Debtor(s):
Casa Ranchero, Inc. Represented By Robert P Goe Charity J Miller
10:00 AM
Period: 4/27/2017 to 3/18/2018
ANYAMA LAW FIRM, DEBTOR IN POSSESSION FEE: $20,510.00
EXPENSES $485.16
Docket 169
The court observes:
This should have been a rather simple case, assuming the characterization appearing in the opposition that its resolution depended on sale of one of the properties.
There is a disagreemenent over the facts, i.e. whether it was debtor who wanted to try a reorganization first before liquidation. This might have to be sorted out by discovery.
Some reduction seems in order, but the amount is unclear depending on paragraph 2 above. The court is inclined to order mediation, but only if applicant is willing.
Continue approximately 60 days.
Debtor(s):
Mariano Mendoza Represented By Richard L Barnett
Joint Debtor(s):
Mercedes Mendoza Represented By Richard L Barnett
10:00 AM
Docket 64
It would appear that most of the objection relates to the creditor's unhappiness with plan treatment, not so much on disclosure. If there has been a cash collateral violation, that should be the subject of a different motion. Regarding "unconfirmable on its face" that will likely turn on two issues: "fair and equitable" on the question of a 5% interest rate and overall feasibility. Presumably, the alleged "silence" on the lien on the Florencia property means it remains in place until the claim is paid. If something else is intended, that must be clarified. Approve and schedule confirmation date.
Debtor(s):
Freda Philomena D'Souza Represented By Michael Jones Sara Tidd
10:00 AM
Docket 451
Judgment Creditor’s DS generally contains adequate information, but there are some changes that should be made. Judgment Creditor has already agreed to some changes in his reply. In addition, Judgment Creditor should more clearly explain that he has agreed to subordinate his claim in the DS. A separate agreement may not be necessary, but it can be explained in a more clear fashion. Judgment Creditor should also update the DS to state that oral argument has already occurred because his DS and plan have not been disseminated to creditors yet. When it does it should contain accurate information. Debtor’s DS and plan were mailed before the oral argument occurred. Debtor also makes a good point that Judgment Creditor should make it clear from headings and titles that this is a liquidation plan not a reorganization plan. Otherwise, it is pretty clear from the DS what Judgment Creditor proposes to do, and other issues are best left for confirmation.
The court notes that the DS provides for discharge upon confirmation, rather than upon completion of payments. [DS p. 30] Is this proper?
Debtor(s):
Continue for amendment on these minor issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
§ 1127(a)
(con't from 3-28-18)
Docket 419
Tentative for 4/25/18: See #8.
Tentative for 3/28/18: See #17.
Tentative for 2/28/18: Is this resolved?
Tentative for 1/24/18: See #10.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
10:00 AM
(set at conf. hrg. held 1-24-18) (con't from 3-28-18)
Docket 305
Tentative for 4/25/18:
This is a further hearing on confirmation of the debtor’s Fourth Amended Plan ("plan"). At the last hearing the court identified two remaining obstacles to confirmation. Those are: (1) does the plan violate the absolute priority rule in that creditors are not being paid in full although the debtor keeps his ongoing appeal, a form of "property" within the meaning of §1129(b)(2)(B)(ii) and (2) does the plan impermissibly separately classify the claim of the judgment creditor? The debtor requested an opportunity for further briefing. Note that in earlier hearings the court had analyzed the first question in terms of the quantum of new value assuming that the "new value" exception to the absolute priority rule existed, as described in Bank of America N.T. & S.A. v. 203 N. LaSalle St. Ptsp. 526 U.S.434 (1999). But as La Salle teaches, the new value offered by the debtor has to be more than offered by any other party, i.e. "market tested." But this version of the question has apparently faded into the background as the judgment creditor has filed a rival plan offering a potentially greater recovery to creditors.
Debtor argues in his Supplemental Brief that the prosecution of a "defensive"
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appeal is not a form of property at all, thus the absolute priority rule is not triggered by his keeping the appeal under his plan (and the house and car he also proposes to keep will be purchased with non-estate funds at established fair values and there is no indication the creditor is willing to pay more for these). The "not property" argument is based primarily on a statutory analysis of California law. While the effort is interesting, even admirable, the court is not convinced in the end. Debtor points out that "an appeal" is nowhere in the California Civil Code specifically identified as "property." But the question is how much can be inferred from its absence in other defined categories. Debtor argues that Civil Code §657 defines all property as either personal or real, and that "personal" property includes "things in action" under Civil Code §14(b)(3). But importantly, the statute §14(b)(3) actually says: "The words ‘personal property’ include money, goods, chattels, things in action, and evidences of debt." So, the question arises about what does "include" mean and whether the definition is exhaustive or in contrast should be read, as "include" is more usually defined, i.e. "including but not limited to….?" Civil Code §953 defines "things in action" as "a right to recover money or other personal property by a judicial proceeding." Debtor argues, perhaps logically, that a defensive appeal does not involve (or at least does not primarily involve) recovery of money. But debtor fails to analyze whether "personal property" might include other intangibles, particularly given the exclusive vs. inclusive question highlighted about §14(b)(3) in the discussion above. Debtor also does not analyze the tangential rights on an appeal such as recovery of costs and the like, clearly a right to obtain money if the appeal is successful. See CCP §1032(b). Debtor argues that an appeal is really just a "continuation of a judicial proceeding", open only to those aggrieved, and is purely a question of standing. Debtor then follows a rhetorical path observing that CCP § 700.180(a) provides no method of levy as against an appeal right nor does §708.410 provide a means of obtaining a lien thereon. The implication is that if one cannot levy upon the "right" or obtain a lien thereon it must not be property. No authority is offered for this assertion and the court is not sure that the conclusion follows.
Debtor’s extensive discussion of the Nevada case Butwinick v. Hepner, 128 Nev. 718 (2012) adds little to this analysis since this case stands for the unsurprising
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proposition that a judgment creditor cannot, through levy of its judgment, short circuit the appeal. The Butwinick court concludes that since an appeal is not a "chose in action" within the meaning of Nevada law and Nevada’s statutes provided no means of levy, the appeal right could not have been reached by the judgment creditor that way. Butwinick and debtor’s other out of state authorities (See e.g. In re Morales, 403
B.R. 629, 632 (Bankr. N.D. Iowa 2009)) also hold that a defensive appeal is not assignable. But the court is not convinced that this lack of assignability (even if that were correct under California law) necessarily means that what is not assignable is necessarily not "property" within the meaning of §1129(b)(2)(B)(ii).
But more importantly, debtor is left to argue that several Ninth Circuit authorities on point interpreting California law are just wrongly decided. Most significant among these is Mozer v. Goldman (In re Mozer), 302 B.R. 892, 895 (C.D. Cal. 2003). But this is not the only one. See also Fridman v. Anderson (In re Fridman), 2016 WL 3961303*8 (9th Cir. BAP 2016); McCarthy v. Goldman (In re McCarthy), 2008 WL 8448338, at *16 (9th Cir. BAP Feb. 19, 2008) aff’d 320 F. App’x 518 (9th Cir 2009); In re Marciano, 2012 WL 4369743 at *1 (Dist. C.D. Cal. Sept. 2012). Debtor argues that these cases other than Mozer should be disregarded because they are unpublished. No authority for this proposition is cited and unpublished decisions can and often do provide valuable insight if the facts and analysis are close to those on hand.
In Mozer the District Court analyzed the definition of property found at California Civil §655 which provides that property may include "…rights created or granted by statute." There is no question that the right to appeal is created by statute. See e.g. CCP §902. But more importantly for our analysis, the appeal right has real monetary value. The fact that it might not be reachable by levy or lien does not mean it has no value. And this point becomes obvious in the context of a bankruptcy. As in Mozer and the other Ninth Circuit cases interpreting California law, a trustee as the representative of the estate and successor to the debtor has the power, and even the obligation, to monetize this right (and really all assets) for the maximum benefit of creditors, if possible. Debtor argues that the issue should really be viewed not as a sale
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of property but one of a compromise of dispute, and that such a hypothetical sale might not be in the best interest of creditors. Neither point is persuasive.
As observed in several of the cases, the sale of rights and/or compromise of disputes in bankruptcy are closely parallel concepts and often both must be analyzed together in the same proposed transaction. Fridman 2016 WL 3961303 at *5 citing Goodwin v. Mickey Thompson Entm't Grp., Inc. (In re Mickey Thompson Entm't Grp., Inc.), 292 B.R. 415, 421 (9th Cir. BAP 2003). In Mickey Thompson the court went so far as to characterize the trustee’s motion to compromise as a sale of assets. Id. at 421. So, little persuasion lies in trying to label the process only as one of compromise and ignore the sale of property aspects. Even less persuasive is to argue that a hypothetical sale might not be in the best interests of the estate, and so therefore the entire approach is flawed. So might a compromise also not be in creditors’ interest?
But such a question must be answered in the context of the facts of a particular motion, and cannot be accepted as a general rule.
Debtor argues alternatively that even if the appeal were property it is automatically exempt and thus not figured into the §1129(b)(2)(B)(ii) analysis. To reach this conclusion debtor relies on CCP §704.210 which provides that "property not subject to enforcement of a money judgment is exempt, without making a claim." Debtor goes on to argue that while some judgments for money held by a judgment creditor can be reached by levy or lien, notably absent is a purely defensive appeal.
See CCP §708.410(a). The problems here are that even a defensive appeal can result in a claim for costs and other monies as discussed above and that while under California law a formal claim is not needed, bankruptcy law in contrast requires a formal and affirmative claim of exemption. See 11 U.S.C. §522(b). There has been as yet no such claim in Schedule C. See also FRBP 4003. Moreover, this "automatic exemption" argument relying on CCP §704.210 has been tried before without success in similar contexts. McCarthy, 2008 WL 8448338 at *8, citing In re Petruzelli, 139 B.R. 241, 247 (Bankr. E.D.Cal. 1992)
The court appreciates the attempt, but in the end concludes that the argument that a defensive appeal cannot be a form of property under California law (and thus
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bankruptcy law) is not watertight. In sum, the court is not persuaded by either debtor’s statutory analysis, or by the out of state authorities cited, that a defensive appeal is not "property" within the meaning of §1129(b)(2)(b)(ii). This conclusion is reinforced by three factors: (1) there is case law almost directly on point interpreting California law (Mozer etc.); (2) there is really no disputing that, however it is described statutorily, even a defensive appeal can yield real value, particularly in a bankruptcy context, and therefore the purpose of the absolute priority rule would be subverted under debtor’s theory if valuable things can be retained and (3) in addition to the authorities construing California law the bulk of out of state authority (mostly Texas) seem to support the conclusion that a defensive appeal can indeed be regarded as a form of property. See e.g. Croft v. Lowry (In re Croft), 737 F. 3d 372, 376 (5th Cir 2013); Valenciana v. Hereford Bi-Products Mgmt., 2005 WL 3803144 (Tex. Ct. App. 2006); Kahn v. Helevetia Asset Recovery, Inc., 475 S.W. 3d 389, 393(Tex. Ct. App. 2015).
This is still the very close question it started out to be. The court’s previous tentative decisions are incorporated herein. The question seems to boil down to whether In re Johnston, 21 F. 3d 323, 327 (9th Cir 1994), the only definitive Ninth Circuit authority, can be read so far as to mean that just because a liquidated claim is on appeal, and thus not final, this is sufficient "business" reason for separate classification. Another way to describe the question might be "are litigation claims automatically separately classified (classifiable)" just because the debtor disagrees with them? Of course, Johnston is distinguishable on its facts and much more obvious than is our case. In Johnston the creditor held the debtor’s guaranty of a corporate debt and collateral besides. Here there is no such complication. The only distinction seems to be the litigation source of the claim and that it is on appeal.
Further, all of the cases are uniform "thou shalt not gerrymander to obtain a consenting impaired class." See e.g. Barakat v. Life Ins. Co. of Va. (In re Barakat), 99
F. 3d 1520, 1525, cert. den. 520 U.S. 1143 (1997). The court consequently has two
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main problems here: 1. How is the court to view the fact that 98+% of the debt, including administrative debt, is represented by the single Hong judgment creditor? 2. Since effectively both classes of unsecured claims are being paid exactly the same (although the judgment creditor’s proceeds are being escrowed) what can possibly be the motive for this classification except to engineer the vote? Isn’t the purpose of voting in Chapter 11 to enfranchise the creditors in deciding the course of the estate? So, shouldn’t the court guard against easy artifices that don’t readily have an alternative explanation grounded in business or economic justifications? Isn’t that really the point of Barakat and Johnston? Debtor tries to make an issue of intent, arguing that intent should be determined when the plan was first filed and at that point in time the Hong creditor claimed secured status (subsequently the ORAP lien was waived in favor of unsecured status). But no authority is cited for this proposition.
Moreover, the court doubts this is or should be the law. Confirmation speaks as of the date of confirmation and is guided by circumstances obtaining at that time. Debtor has the affirmative duty to show the elements of §1129(a), including the element of good faith as found at subsection (a)(3).
While not binding on Ninth Circuit courts, courts from outside the Circuit have held that appeals alone do not justify separate classification. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E,D,Va. 2004); In re Salem Suede, Inc., 219 B.R. 922, 933 (Bankr. Mass. 1998). Additionally, this was the implicit holding of a Nevada bankruptcy court. In re Zante, Inc., 467 B.R. 216, 219-20 (Bankr. D. Nev.
2012). Debtor’s non-Ninth Circuit or non-California authorities are somewhat less persuasive because in those cases the litigation over the claims was, importantly, in the very early stages, or the claims remained unliquidated and/or subject to substantial counterclaims. See e.g. In re Multuit Corp., 449 B.R. 323, 334-35 (Bankr.
N.D. Ill. 2011); In re Bashas’ Inc., 437 B.R. 874, 904 (Bankr. D. Ariz 2010). In contrast, here we have a liquidated claim but undistinguished from other liquidated claims excepting only the appeal. The court concludes in the end that the mere origin of a liquidated claim through litigation, and the fact that it is not final because appealed, is not, absent other factors not applicable here, a justifiable basis for separate classification. While admittedly a debtor retains substantial discretion in
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classification of claims, a plausible basis for the separate classification grounded in some business or economic justification apart from voting must be shown. Instead, the court here concludes the likely reason for the separate classification resides not in business or economic justification but in the desire to engineer a consenting impaired class.
Deny
Tentative for 3/28/18:
This is the continued hearing on debtor’s attempt to confirm his Fourth Amended Plan. The hearing has been continued for several times; this last continuance was to consider two points, upon which the court requested further briefing: (1) if the debtor does not keep his practice (the home and Honda having been paid for in cash new value at court-determined values) can the court confirm under 11
U.S.C. §1129(b)(2)(B)(ii) consistent with the absolute priority rule in light of the creditor having just filed a competing plan that offers more to creditors and (2) is there a "best interest of creditors" problem? The court also took under submission the pending question of separate classification of the Hong creditor’s claim. The court in meantime ordered the parties to mediation. Apparently, the mediation was unsuccessful.
That the mediation failed is truly unfortunate since the questions presented here are very difficult and the consequences profound.
On the question of best interest of creditors found at 11 U.S.C. §1129(a)(7), the court does not find any application since the comparison is to what creditors would receive in a hypothetical Chapter 7 liquidation. But both plans are demonstrably superior to what would likely be received in liquidation, even considering that the Fourth Amended Plan contemplates some considerable delays in payment.
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But on the question of the absolute priority rule and "new value" the debtor
has hit a snag. The question is not one of the court’s management of its docket, as debtor in his brief seems to assume. Rather, it is the question of whether the Fourth Amended Plan can be confirmed when the Hong creditor has filed a competing plan offering to pay to the Class Seven creditor body (about $38,690) more than the Fourth Amended Plan. Debtor proposes to pay the Class Seven creditors pro rata in four installments dependent on "Available Cash" and tied to future events such as "Litigation Resolution Date" which could be years in the future. Unless debtor succeeds on his appeal the payment percentage, and the timing of payment, is left vague and uncertain. In contrast, under the Hong plan creditors are offered an option of either 50% of their allowed claims on the effective date ("or as reasonably practicable after the Disbursing Agent has sufficient cash on hand to pay 50%...") or, alternatively, 100% tied to when the disbursing agent has accumulated and is ready to distribute $1 million. Importantly, the Hong creditors subordinate their recovery to those of the other creditors, a not-insignificant point considering they amount to about 98+% of all debt. Given the amounts alleged to be recoverable under various rights of action, it is hard not to see this as a promise of 100% or nearly so for those willing to wait.
All of this is important because of the teaching of the Supreme Court in Bank of America Nat’l Trust & Sav. Ass’n. v. 203 N. LaSalle St. P’ship, 526 U.S.434, 453 (1999). In LaSalle the court did not explicitly find that a "new value corollary" to the absolute priority rule actually existed. But if such a corollary existed, the LaSalle court found that the proponent of the plan must show that the quantum of new value was the most/best reasonably available. In making such a determination, the court must find that the quantum of proposed new value has been "market tested" and that no other person is willing to pay more to acquire the bundle of rights that the debtor retains under the plan. The La Salle court was vague as to how one goes about this market test, but the filing of a competing plan is one suggestion. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under
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the absolute priority rule as embodied at §1129(b)(2)(B)(ii). Id. See also In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014).
The keeping of property can include the rights to direct actions, such as an appeal. While the debtor cites to some authorities including from other jurisdictions to the effect that "defensive" appeals are not estate property, this does not appear to be the case in the Ninth Circuit. See e.g. In re Fridman, 2016 WL 3961303 at *7 (9th Cir. BAP July 2016) citing In re McCarthy, 2008 WL 8448338 at *16 (9th Cir BAP Feb.
2008); In re Marciano, 2012 WL 4369743 at *2 (Dist. C.D. Cal. Sept. 2012). In those cited cases the trustees sold pending appeals for money. There is little doubt in the court’s mind that if a creditor wants to pay the estate to make a debtor’s appeal go away, that is a transaction that must be viewed from the standpoint of creditors unless they are paid in full from another source. The debtor must, in effect, pay at least the same in "new value" for the privilege of seeing an appeal to the end. In the Chapter 11 context, if a debtor proposes in a plan to keep an appeal, his plan must offer creditors more for that privilege (in combination with all other retained assets) than is otherwise available. Viewed this way debtor at bar has a problem. The terms of the Hong plan offer more to the Class 7 creditors and some of that overage could be viewed as payment for extinguishment of the appeal; but it would appear that the debtor proposes in his plan to keep the appeal going and is not offering anything to creditors for that privilege in contrast to purchase of the Denise property and the Honda.
There is also the question of separate classification. As the court has already said, this is a very close question. The 9th Circuit case law precedent is unclear respecting whether the mere fact that a claim is on appeal (and thus still disputed) should account for enough of a distinction by itself to justify separate classification. If attributes of a claim are not otherwise distinguishable such as having been guaranteed or supported by collateral, the court is left to question what is meant by the "business reasons" spoken of in cases like In re Johnston, 21 F. 3d 323, 327 (9th Cir. 1994).
Surely "business reasons" cannot mean merely that it would be more expedient if a pending appeal resolved in the debtor’s favor would improve ability to repay debt. While that might be a question of "business" the court is hard-pressed to see it as a
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justification. It is clear in all of the authorities that gerrymandering is not permitted, but since the court cannot look into the debtor’s mind regarding motivations, we are left to examine external reasons claimed as to why the separately classified claim is not "substantially similar" to other debt. In the case at bar this task is made even more difficult since the separately classified claim is 98+% of the body of debt. If the point of this whole inquiry is to make sure that each creditor has a meaningful vote, and to prohibit arbitrary classification as a device to reaching a consenting class, then the debtor’s plan at bar is likened to the tail wagging the dog. While it might be possible for the extremely clever counsel to succeed in effectively disenfranchising 98+% of the creditor vote by separate classification, the court cannot see its clear path to doing so in this case, particularly when the other issues mentioned above weigh against confirmation as well.
Deny
Tentative for 2/28/18:
This is a continued hearing on confirmation of the Debtor’s Third Amended Plan. At the court’s request the parties filed briefs on the question of separate classification. Additionally, further evidence is offered by the objecting creditors Yuanda Hong, et al ("Hong creditors") on the question of the values of the Denise property and the Debtor’s medical practice, relevant to the quantum of new value offered under the plan. The court discusses each subject below:
Separate Classification: What qualifies as proper classification of claims under §1122, or stated negatively, what is improper classification and thus rendering a plan in non-confirmable bad faith under §1129(a)(3), is an important question. Unfortunately, it is one that has engendered surprisingly little definitive authority in the Ninth Circuit. The objecting creditors have cited numerous authorities from outside of the Circuit that stand generally for the proposition that separately classifying a claim solely because it is on appeal is not in good faith, mostly because the character of the claim is not, in a legalistic sense, any different from that of the
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standard commercial claims.. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E.D.Va. 2004); In re Salem Suede, Inc., 219 B.R. 922 (Bankr. D. Mass 1998); In re Local Union 722 Int’l Bhd. Of Teamsters, 414 B.R. 443, 453 (Bankr. N.D. Ill. 2009); Bustop Shelters of Louisville, Inc. v. Classic Homes, Inc., 914 F. 2d 810, 811-12 (6th Cir 1990). But it is not clear that this is the law of the Ninth Circuit.
Nearly all of the cases adopt some version of the Ninth Circuit’s ruling in
Barakat v. Life ins. Co. of Va. (In re Barakat), 99 F. 3d 1520, 1525, cert. den. 520
U.S. 1143(1997), i.e., that separate classification solely to manipulate the vote to obtain a consenting class is not in good faith and will prevent confirmation. But the ambiguity begins with the statute itself. Section 1122 provides that claims may be placed together in a class only if "substantially similar." But whether all similar claims must, in turn, be classified together is not statutorily addressed. Barakat at 1524. Noting that this question has divided courts outside the Circuit, the Barakat court gives us only the limited guidance that classification (determined as a question of fact) solely to manipulate voting to obtain the consenting impaired class is a form of bad faith and is not allowed. But the Barakat court acknowledges that In re Johnston 21 F. 3d 323, 327 (9th Cir. 1994) provides that separate classification may be justified if "the legal character of their claims is such as to accord them a status different from other unsecured creditors." Id. at 328. Further, as noted in Barakat, Johnston provides that separate classification may be justified if a "business or economic justification" is offered. Barakat at 1526 citing Johnston at 328. The Hong creditors argue correctly that both of Debtor’s cases, Johnston and In re Basha’s, Inc., 437 B.R. 874 (Bankr. D. Ariz. 2010), are factually distinguishable. In Johnston the debt arose from a guaranty, there was collateral involved and it alone among the creditor body was the subject of litigation. Similarly, in Basha’s the class of litigation claims was deservedly separate since the litigation was still in its early stages although it had been pending some time and involved "speculative" claims. In both cases the separate classification withstood scrutiny. But certainly our case is a closer question since we are dealing not with litigation generally but with a judgment on appeal. Whether this latter stage of litigation makes a crucial difference is not clear.
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Debtor argues that if intent is the question he is somewhat absolved since the
plan in its early iterations treated the objecting creditors’ claims as secured (by reason, one supposes, of recorded abstracts but also because that’s what the claim said) and therefore separate. Barakat can be read to primarily focus on the intent behind the classification. But neither side cites any authority on the question of what happens when, as here, the parties reach an agreement post-petition to surrender the claim of secured status (here because the claimed lien was likely a preference). Is a plan proponent then obliged to drop the separate classification in order to remain "in good faith"? Another question involves the "business or economic justification" as discussed in Barakat and Johnston. Here Debtor in effect argues that separate classification is not only economically justified, it is also very necessary to maintain an operating business on any terms while not adopting either of two unpalatable alternatives, i.e. paying claims before the appeals are resolved and the claims become final, or, alternatively, making all undisputed general unsecured claims wait for an extended period by depositing payment into an escrow on their account. Further, the very size of the Hong creditors’ claim makes it different, although it is not clear that this size question alone works in justifying different classification. The appeal adds some weight. But the fact that there reportedly is also still an unresolved counter claim (as reported by Debtor) of the reported parallel fraudulent conveyance action, and the charge that the judgment was amended post-petition in technical violation of the stay, might be seen as additional justifications for the separate classification. In aggregate, the court is inclined to find sufficient justification for the separate classification although it is admittedly a very close question.
The objecting creditors take issue with the valuations presented by the Debtor of his medical practice and of his residence on Denise Avenue in Orange. The values offered by Debtor are $ 5-10,000 and $756,000, respectively, supported by the declarations of Sam Biggs, CPA and John Aust, appraiser. Pinpointing the value of these becomes necessary as the Debtor proposes to keep these assets while not paying all creditors in full under the Plan. The Hong creditors have objected, so confirmation
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is therefore only possible under the so-called "new value" corollary.to the absolute priority rule. Debtor must under this doctrine provide new value equal to the retained assets of the estate (and not less than any other party is willing to pay). See Bank of America v.203 N. LaSalle Street Ptsp.526 U.S. 434, 456-57 (1999).
Hong creditors offer the declaration of David Hayward for the Denise property "conservatively" at $785,000. This is not far from the Debtor’s valuation but the court is disinclined to choose between these two opinions without cross examination.
Mindful of the cost of a mini trial on this issue, the court encourages a stipulation to split the difference, i.e. $770,500. Otherwise, an evidentiary hearing will have to be scheduled with opportunity for cross examination of live witnesses. Mr. Hayward’s opinion about additional value based on a lot split is too speculative for our purposes.
The business valuation is even more problematic. It is almost certain that both appraisers are off the mark. The Biggs appraisal suffers from the omission of any separate values for hard assets, such as equipment. Presumably, these have a separate value from the value of the ongoing practice, but if so, the court could not find it.
Appraiser Stake observes that something is being depreciated on tax returns, suggesting there is missing information. The court sees the nominal amount of $1,500 per year as an equipment "expense" in the forecast, but doubts this equates to a value for all of the existing equipment. Whether the equipment is owned or leased is also a factor. The biggest problem, of course, is what to do with a projected income analysis in the hands of a hypothetical buyer. The court has no doubt that there would be a profound fall off in that the clientele are described as mostly Chinese with limited English skills. Also, one imagines, that an OB/GYN practice has a higher than usual retention problem if/when the familiar physician becomes no longer associated. This probably is exacerbated when the language/cultural issue is also factored in. The Stake declaration strikes the court as making far too little allowance for this factor. It reads primarily just as a clinical analysis of projected income averages assuming more or less the same stream of income (a very large assumption under these facts) multiplied by some sort of capitalization or discount rate. The problem, of course, is the court cannot make a meaningful determination on this sparse record. Again the court
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encourages a "split the difference" approach, say $50,000, as an alternative to having a mini trial on these issues as well.
Bank of America v. 203 N. La Salle St. Ptsp.
The court has also not yet made a ruling on the question whether the Debtor’s marketing efforts to date are adequate to fix the quantum of value as demanded in the La Salle case. But the court observes that some effort was made to advertise and the Hong creditors have not filed a competing plan although they have been free to do so. The court is inclined to hold that this narrow issue (of whether anyone else would pay more) is resolved.
No tentative on confirmation pending resolution of valuations
Tentative for 1/24/18:
This is the continued hearing on confirmation of the Debtor’s Fourth Amended Plan. It continues to be vigorously opposed by the judgment creditor. While the court gave fairly explicit guidelines at the Nov. 29 hearing, and the plan proponent is closer than he was, the court finds the plan is still short of confirmability, for the following reasons:
Unfair Discrimination and Gerrymandering: Since In re Barrakat, 99 F. 3d 1520, 1525 (9th Cir. 1996), it has been the law of this Circuit that separate classification solely to obtain a consenting class on a plan is not permitted and is a form of bad faith under §1129(a)( 3). However, exceptions have been found where a "legitimate business or economic justification" is articulated supporting the separate classification. In re Loop 76, LLC, 465 B.R. 525, 538 (9th Cir. BAP 2012); Steelcase, Inc. v. Johnston (In re Johnston), 21 F. 3d 323, 327 (9th Cir. 1994). Moreover, there is a separate concern in evaluating a "cram down" that a plan may not "unfairly discriminate…with respect to each class of claims or interests that is impaired under…the plan." The court earlier
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remarked that a legitimate, non-voting basis had probably been articulated for separately classifying the judgment creditor since that claim (unlike all other unsecured creditors) was on appeal and was subject to ongoing litigation.
Consequently, unlike the other unsecured claims the judgment claim is not "final." It is perfectly obvious that the entire need for reorganization may rest on the results of the appeal. But what is not sufficiently shown is the need for disparate treatment as provided under the Fourth Amended Plan. Obviously, while the claim is still contested it makes sense to not actually pay the disputed judgment claim. But there are other, better ways to mitigate the disparate treatment. All other claims start getting payments shortly after the effective date. But the dissenting judgment claim gets nothing until 120 days after the "Litigation Resolution Date," which is defined to require that all appeals be exhausted. This is a date potentially years in the future. This has two pernicious effects of concern. First, all of the risk of non-performance is imposed solely on the objecting creditor without any real basis in law for doing so. Second, this can be regarded as a sub rosa attempt to put the Litigation Trustee’s efforts into effective limbo pending the appeal since obviously no liquidation or even attempt to liquidate assets is even needed to fulfill the plan until all the appeals are resolved. Perhaps a better approach is to put all creditors on a truly equal footing whereby they all get a pro rata portion of a defined periodic payment, with the judgment creditor’s portion held in an escrow at interest administered by the Litigation Trustee. That way risks are evenly imposed on the creditor body, not solely on the judgment creditor.
Artificial Impairment: The objector is correct that classification of the Honda Finance creditor as the sole member of Class 2 bears some of the aroma of artificial impairment, another form of bad faith, as this court observed in In re NNN Parkway 400 26, LLC, 505 B.R. 277, 284-85(Bankr. C.D. Cal. 2014). The fact that it was incurred the day before the petition is clearly suspicious.
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However, this "aroma" is largely dissipated when it develops that there is
another class of unsecured creditors supporting the plan comprised of several members holding an aggregate of $38,690.83 in claims. The fact that only American Express, a creditor holding only a claim of $110.64, was the only voting member cannot be attributed to bad faith of the debtor. There is no showing that these other creditors’ claims were incurred just to create an impaired class.
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debtor’s attorney’s fees and costs on a going forward basis. Presumably, this means that the costs of the appeal are to be borne by the Trust. Since it could be argued that the appeal is being prosecuted primarily if not solely for the debtor’s benefit, this is an indirect way of debtor keeping non-exempt assets. If this reading is correct, debtor is not, in fact, observing the absolute priority rule. The court is not as concerned as it might be since the objector has not filed a competing plan.
creditors would do better in a Chapter 7 liquidation than under the plan. This may well be so, largely for the reasons articulated in ¶3 above. For debtor’s argument to succeed, one would have to conclude that paying both for Mr.
Mosier and his lawyers and accountants and the ongoing appeal costs less than only a Chapter 7 trustee. This is a proposition for which there is no evidence offered. The debtor will have to propose paying for his lawyers either from exempt assets or from no-estate assets for this to work, or prove that a Chapter 7 would be more expensive. The court is less convinced by the objector’s argument that the creditor should consequently steer the litigation at its expense, however. There are countervailing concerns about who should steer the litigation beyond the monetary costs.
Early Discharge: Debtor proposes in the plan to obtain a discharge not on conclusion of payments, as required under §1141(d)(5)(A), but rather upon confirmation. While this can theoretically be done if "cause" is shown after notice and a hearing, the question arises whether any such cause is shown here. Debtor argues that the structure of the plan amounts to a form of collateral for the payments, citing In re Sheridan, 391 B.R. 287, 291 (Bankr. E.D.N.C. 2008), thus assuring payment. But the problem with this is that full payment is not assured in this plan despite attempts to improve recoveries if the appeal is lost. Only the right to sue for declaratory relief (and perhaps an injunction against transfer of assets) is provided. But there are a dozen ways this could
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still go wrong. Ms. Shen could decide to defy the injunction and put the assets in China or Japan. Since the debtor continues to make good money as a physician, the court sees no reason to discharge him until all promised payments are made.
Deny Confirmation
Tentative for 11/29/17:
Rather than simply continuing the confirmation hearing without direction, the court will want to have a hearing focused on issues raised in the briefs but not fully answered:
In view of the objection raised in the opposition about short notice of the changes found in the Third Amended Plan, does the judgment creditor disagree that the changes are 'non material’, thus avoiding re-balloting, or need for more time to meet the arguments? It would seem that the role of the appointed trustee and fetters, if any, on his responsibility is rather material, but perhaps for no one other than the judgment creditor. Should that matter?
Has the Trust Agreement with Mr. Mosier been finalized and made available
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for review?
The present value analysis for cram down requires some evidence regarding
interest rates and risks being imposed. Merely citing the federal judgment rate (is that where 1.5% comes from?) is wholly inadequate. While the debtor carefully includes an elastic provision that ‘such other rate as the court requires’ is offered, this does not provide any analysis or evidence that could guide the decision. It is also unclear how/whether the judgment creditor is a secured claimant and thus whether analysis of collateral value becomes relevant. But whether proceeding under §1129(b)(2)(A)(i) [secured claims] or (b)(2)(B)(i) [unsecured claims] there is an "as of the effective date" requirement on future payments which translates into a present value analysis. The federal judgment rate is manifestly not sufficient to render present value on a stream of payments such as under a plan. If that were true, in economic terms, the prime rate would be quoted consistent with the federal judgment rate instead of at 4.25% per annum. One holding a judgment presumably has some near prospect of actually levying and getting paid, so the time value of money is further distorted and judgment rates are a poor comparison. One who is obliged to wait for years under a plan has no such prospect and so imposed risk is greater and so must be compensated. This record is inadequate upon which to render a decision.
How is the teaching of Bank of America v.203 N. La Salle Ptsp., 526 U.S. 434, 456-57 (1999) being met here? In La Salle we are taught that to the extent that a new value exception to the absolute priority rule exists, a plan cannot be crammed down over the objection of a class of creditors on the strength of a "new value" contribution absent some ability to "market test" the amount of that contribution. As the court observed in In re NNN Parkway, LLC, 505 B.R. 277, 281-82 (2014), the Supreme Court gave us only the vaguest direction on how the market test can be accomplished in any particular case. But the court does not read the difficulty of fashioning an appropriate test to mean that the requirement can be ignored altogether consistent with the absolute priority
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rule. To do so is to vest in the debtor/ plan proponent a form of
uncompensated property, i.e. an option, to direct or determine the amount and source of new value. Debtor attempts to close the gap regarding the family residence, but the plan merely suggests that the relatives will contribute an amount roughly equal to what they contend to be the non-exempt equity. What analysis, if any, is offered regarding the going concern/market value of debtor's medical practice for this purpose? All that is offered is the conclusory argument that as a sole practice it cannot have much value. Really? The court sees professional practice valuations all the time. One method of clarifying the new value question described in La Salle is the possibility of a competing plan. The court is not aware of the current status of the judgment creditor’s ability to propose a competing plan.
Concerning uncompensated imposed risk is the unanswered question regarding alleged community property in the wife’s name. What about the injunction against transfer of wife's alleged separate assets? Is a form of order being offered for review? Only a stipulation is referenced. How does the risk of violation of an injunction translate into cram down interest rate? One supposes that if the appeal is lost the presence of an injunction is some protection against transfers, but hardly a foolproof one. Certainly it is not the same as a lien. This does not mean these issues cannot be resolved; it is only to say that they are left unresolved on this record.
Continue for further hearing.
Tentative for 8/23/17:
The remaining issues are best dealt with at confirmation. Approve.
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Tentative for 7/12/17:
With some amendments this FADS appears to contain adequate information. Debtor should make it clearer that an early discharge will be requested, but that if the Court does not find cause then the discharge will be entered upon completion of payments. As written the information about the Court finding cause comes at the end of the discussion of the discharge. Debtor has agreed to attach a copy of the Trust Agreement. Debtor provides a sufficient description of the litigation with the Judgment Creditor. Perhaps the plan should be amended so that it provides that the interest rate will be as described or as ordered by the Court. This leaves open the option of litigating the issue of the interest rate at confirmation. There seems to be a reasonable basis for separately classifying the unsecured claim of the Judgment Creditor because the claim is still subject to litigation and so cannot be paid on the same terms as the other unsecured creditors. Debtor should amend the DS to provide that Debtor is retaining his interest in some property. There should also be a more clear discussion of the absolute priority rule. Debtor states that he will amend the DS to make it clear that the plan does not avoid Judgment Creditor’s ORAP lien and that he will correct the errors noted by the Judgment Creditor.
Debtor(s):
Continue for clean up of these disclosure issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon
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Adv#: 8:17-01104 Ingle et al v. Ocampo et al
(con't from 2-1-18)
Docket 1
Tentative for 4/26/18:
Should we continue for a period sufficient to bring a Rule 56 motion?
Tentative for 2/1/18:
See #13. Continue approximately 45 days for further status conference.
Tentative for 10/26/17:
Status conference continued to January 25, 2018 at 10:00 a.m. allowing motion for summary judgment in meantime. What result from mediation ordered last hearing?
Tentative for 8/31/17:
Status conference continued to November 9, 2017 at 10:00 a.m.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by October 31, 2017.
Debtor(s):
Pedro Souza Represented By
Filemon Kevin Samson III
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Defendant(s):
Carmela Morales Ocampo Pro Se
Pedro Souza Pro Se
Joint Debtor(s):
Carmela Morales Ocampo Represented By
Filemon Kevin Samson III
Plaintiff(s):
Sandra Ingle Represented By
Desiree V Causey
Mary Louise Ingle Represented By Desiree V Causey
Trustee(s):
Weneta M Kosmala (TR) Pro Se
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Adv#: 8:17-01122 Marshack v. Choubey et al
U.S.C. Section 550
(con' from 2-1-18)
Docket 1
Tentative for 4/26/18:
Status report? Status of service? Is settlement still in prospect?
Tentative for 2/1/18:
Status conference continued to April 26, 2018 at 10:00 a.m. to allow input from any responding party.
Tentative for 11/30/17:
Status conference continued to January 4, 2018 at 10:00 a.m. to accomodate default and prove up.
Debtor(s):
Rahul Choubey Represented By Richard G Heston
Defendant(s):
Rahul Choubey Pro Se
Misha Choubey Pro Se
Shahi K. Pandey Pro Se
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Vandana Pandey Pro Se
Jitendra Patel Pro Se
Azahalea Ahumada Pro Se
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
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Adv#: 8:17-01221 Millan's Restoration, Inc. v. Manely
(con't from 2-1-18)
Docket 1
Tentative for 4/26/18:
Are we ready to set deadlines? Discovery status?
Tentative for 2/1/18:
Would plaintiff prefer deadlines be set now, or continue conference?
Debtor(s):
Feridon M Manely Pro Se
Defendant(s):
Feridon M Manely Pro Se
Plaintiff(s):
Millan's Restoration, Inc. Represented By Paul V Reza
Trustee(s):
Karen S Naylor (TR) Pro Se
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Adv#: 8:17-01247 Karen Sue Naylor, Chapter 7 Trustee v. Sam Hedaya Corp.
(con't from 3-8-18 at 10:00 a.m. per order approving stip. ent. 2-15-18)
Docket 1
Tentative for 4/26/18:
Status conference continued to August 2, 2018 at 10:00AM.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Sam Hedaya Corp. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
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Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:18-01027 Thompson v. FedLoan Servicing et al
Docket 1
Tentative for 4/26/18: Status of Service?
Debtor(s):
Tamara Mae Thompson Pro Se
Defendant(s):
FedLoan Servicing Pro Se
Navient Pro Se
Plaintiff(s):
Tamara Mae Thompson Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
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Adv#: 8:18-01058 The Bank of New York Mellon v. Ko
Docket 0
Tentative for 4/26/18:
Deny removal. Grant remand. The underlying BK case was dismissed. Therefore, there is likely not even "related to" jurisdiction. It is also unclear exactly what proceeding is sought to be removed, but in any case, this court is an improper forum.
Debtor(s):
Tae Hoon Ko Pro Se
Defendant(s):
Tae Hoon Ko Pro Se
Plaintiff(s):
The Bank of New York Mellon Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
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Adv#: 8:18-01059 Lief Organics, LLC v. Hans-Drake International Corporation et al
Docket 1
Tentative for 4/26/18:
Status conference continued to coincide with remand OSC.
Debtor(s):
David R. Garcia Represented By Thomas J Tedesco
Defendant(s):
Hans-Drake International Pro Se
David Garcia Pro Se
Plaintiff(s):
Lief Organics, LLC Represented By Diana L Fitzgerald
Trustee(s):
Weneta M Kosmala (TR) Pro Se
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Adv#: 8:12-01330 Casey v. Ferrante et al
(cont'd from 12-14-17)
Docket 724
Tentative for 12/14/17:
Was this case settled? If not, where is joint pre-trial stipulation?
Tentative for 2/2/17:
Deadline for completing discovery: August 1, 2017
Last Date for filing pre-trial motions: September 1, 2017 Pre-trial conference on September 28, 2017 at 10:00 am
Tentative for 6/23/16:
This is the motion of Cygni Capital, LLC and Cygni Capital Partners, LLC (collectively "Cygni") for judgment on the pleadings under Rule 12(c). Defendant Ferrante joins in the motion but offers no additional substance. A motion for judgment on the pleadings may be granted only if, taking all the allegations in the pleading as true, the moving party is entitled to judgment as a matter of law. Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001); Fleming v.
Pickard, 581 F.3d 922, 925 (9th Cir. 2009). For purposes of a Rule 12(c) motion, the
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allegations of the non-moving party are accepted as true, and construed in the light most favorable to the non-moving party, and the allegations of the moving party are assumed to be false. Hal Roach Studios, Inc. V. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989); Fleming v. Pickard at 925.
The Second Amended Complaint ("SAC") contains claims for turnover under section 542 and declaratory relief. The Trustee in the SAC alleges that Debtor has hidden and concealed assets in various shell entities, including Cygni, that are controlled by his associates as strawmen, and are established to perpetrate a fraud on Debtor’s creditors. [SAC ¶ 39] It is alleged that many of these entities share the same office address. [Id. at ¶ 40]. In the turnover claim, the Trustee in the SAC alleges that the assets held by each of these entities are held for Debtor’s benefit and that he possesses equitable title. [Id. at ¶ 75]. The Second Claim is for declaratory relief and seeks a determination that each of the entities is the alter ego of Debtor and the bare legal title of any assets can be ignored. [Id. at ¶ 83].
Movants argue that there is no "substantive alter ego" or "general alter ego" theory recognized under California law. Rather, movants argue that the alter ego doctrine as expressed in California is purely procedural, i.e. merely used to implement recovery on a separate theory of recovery. For this proposition movants cite Ahcom, Ltd. v. Smeding, 623 F. 3d 1248, 1251 (9th Cir. 2010). Movants also cite three other cases which they contend are the controlling authority in this area: (1) Stodd v.
Goldberger, 73 Cal. App. 3d 827 (4th Dist. 1977); (2) Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290 (1985) and (3) Shaoxing City Huayue Imp. & Exp. v. Bhaumik, 191 Cal. App. 4th 1189 (2nd. Dist 2011). Movants argue that since the Trustee has not alleged some independent theory of recovery, such as fraudulent conveyance or conversion, there is no legally cognizable purpose for application of alter ego. Apparently, in movant’s view, declaratory relief is not a suitably independent theory of recovery.
The court is not so sure.
First, the court agrees that the law in this area is somewhat unclear, contradictory and bewildering to grasp in its full complexity. Attempting to order all the intricacies of "indirect outside piercing" and the like can give one a headache.
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However, since each of the authorities cited by the movants is distinguishable in one or more key aspects, and since each case decides a narrower and somewhat different problem from the one presented at bar, the court is not persuaded that the law is quite as limited and cramped as is now urged by the movants. To understand this conclusion, one must first consider the purpose of the alter ego doctrine, at least as it was classically formulated. This purpose is perhaps best expressed by the court in Mesler v. Bragg Management, one of movant’s cited cases, concerning the allied doctrine of "piercing the corporate veil" :
"There is no litmus test to determine when the corporate veil will be pierced: rather the result will depend on the circumstance of each particular case. There are, nevertheless, two general requirements: ‘(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow." (Citing Automotriz etc. de California v. Resnick (1957) 47 Cal. 2d 792, 796).
And ‘only a difference in wording is used in stating the same concept where the entity sought to be held liable is another corporation instead of an individual. ‘citing McLoughlin v. L. Bloom Sons Co., Inc., 206 Cal. App. 2d 848, 851 (1962)….The essence of the alter ego doctrine is that justice be done. "What the formula comes down to, once shorn of verbiage about control, instrumentality, agency and corporate entity, is that liability is imposed to reach an equitable result…thus the corporate from will be disregarded only in narrowly defined circumstance and only when the ends of justice so require.’" (internal citations omitted)
38 Cal. 3d at 300-01
A similar sentiment was expressed in In re Turner, 335 B.R. 140, 147 (2005) concerning the related question of "asset protection" devices:
"However, an entity or series of entities may not be created with no business purpose and personal assets transferred to them with no relationship
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to any business purpose, simply as a means of shielding them from creditors. Under such circumstances, the law views the entity as the alter ego of the individual debtor and will disregard it to prevent injustice."
These statements accord with the court’s general understanding. Corporate
form is a privilege, not a right. Those who abuse the corporate form and disregard its separateness in their own activities and purposes can hardly expect the law to uphold the shield of separateness when it comes to the rights of creditors. And the court understands that the alter ego doctrine is an equitable remedy highly dependent upon and adaptable to the circumstances of each case. So the question becomes whether, as movants contend, the law in California has departed from these classic precepts in some way fatal to the Trustee’s case. The court concludes that the answer is "no" for the following reasons.
First, let us consider movants principal case, Ahcom, Ltd. v. Smeding. The facts of Ahcom are adequately stated at p. 6 of the Reply. But Ahcom is primarily a standing case. The defendant shareholders of the corporate judgment debtor argued that the judgment creditor had no standing to pursue them as alter egos of the debtor corporation as that was the sole domain of the bankruptcy trustee. The Ahcom court concluded that under those facts the shareholders’ argument presumed that the trustee had a general alter ego claim precluding individual creditors from asserting the same. The Ahcom court goes on to note that "no California court has recognized a freestanding general alter ego claim that would require a shareholder to be liable for all of a company’s debts and, in fact, the California Supreme Court state that such a cause of action does not exist. " 623 F. 3d at 1252 citing Mesler , 216 Cal. Rptr. 443. But as noted above, there is other language in Mesler and cases cited by the Mesler court that seems supportive of the Trustee’s theory that the doctrine of alter ego is adaptable to circumstances. Of course, our case is the inverse of Ahcom. In our case it is not an attempt to hold the debtor as a shareholder liable for the debts of the corporation, but rather to disregard the corporation altogether as a fraudulent sham.
There is (or at least may be) in this a distinction with a difference. The Trustee’s case can be construed not so much as an attempt to visit liability onto a corporation under a
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general alter ego claim but to urge that in justice and equity the corporate privilege should be withdrawn and disregarded altogether as a deliberate device to frustrate creditors. Although the opinions in CBS, Inc. v. Folks (In re Folks), 211 B.R. 378, 387 (9th Cir. BAP 1997) and the similar In re Davey Roofing, Inc., 167 B.R. 604, 608 (Bank. C.D. Cal. 1994) are roundly criticized in Ahcom, the court is not persuaded that Ahcom can be cited for the proposition that a fraudulent sham corporations need to be honored because the bankruptcy trustee lacks a "general alter ego" right of action, or that Folks is not good law, at least in some circumstances. This is a remarkable and unnecessary departure from what the court understands to be established law.
Mesler has already been discussed above. In the court’s view, it is not properly cited for the proposition that there is no such thing as "general alter ego" claim under any circumstances. The actual holding of Mesler is that "under certain circumstances a hole will be drilled in the wall of limited liability erected by the corporate form: for all purposes other than that for which the hole was drilled the wall still stands." 39 Cal 3d at 301 In Mesler it was decided that a release of the corporate subsidiary did not necessarily release the parent who was alleged to be an alter ego. This merely reinforces the notion that alter ego is an equitable doctrine heavily dependent on circumstances and confined to what is necessary to effect justice.
Stodd v. Goldberger is likewise not determinative. It is more properly cited for a more limited proposition, i.e., that an action to disregard a corporate entity or to impose the debts of the debtor corporation upon its principal cannot be maintained absent some allegation that some injury has occurred to the corporate debtor. In this a trustee does not succeed to the various claims of creditors unless they are claims of the estate. But facts of Stodd are different from what is alleged in the case at bar. In effect, the Trustee here alleges that all of the assets of various sham entities belong in truth to the debtor and hence to the estate, and he seeks a declaratory judgment to this effect. Actually, Stodd includes at 73 Cal. App. 3d p. 832-33 a citation to the more general principles as quoted above that the two indispensable prerequisites for application of alter ego are: (1) that there be such unity of interest and ownership that
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the separate personalities of the corporation and the individual no longer exist and (2) that if the acts are treated as those of the corporation alone, an inequitable result will follow. Citing Automotriz etc. de California v. Resnick, 47 Cal. 2d at 796. The Trustee’s complaint would seem to fall well within those parameters.
Lastly, we consider Shaoxing City Huayue Imp. & Exp. v. Bhaumik. Shaoxing in essence merely repeats the holding of Stodd that an allegation giving the estate a right of action against the defendant is a prerequisite to imposition of alter ego liability. The plaintiff creditor sued the corporation ITC and included allegations that the shareholder, Bhaumik, was the corporation’s alter ego. The shareholder’s argument that the action was stayed by the corporation’s bankruptcy, or that the creditor lacked standing in favor of the corporate bankruptcy trustee, failed for the same reasons articulated in Stodd, i.e., that the trustee has no standing to sue on behalf of creditors but must address wrongs done to the corporation itself. The Shaoxing court at 191 Cal. App. 4th at 1198-99 goes on to state the doctrine of alter ego as a procedural question thusly: "In applying the alter ego doctrine, the issue is not whether the corporation is the alter ego of its shareholders for all purposes, or whether the corporation was organized for the purpose of defrauding the plaintiff, but rather, whether justice and equity are best accomplished in a particular case, and fraud defeated, by disregarding the separate nature of the corporate form as to the claim in that case. " citing Mesler, 39 Cal. 3d at 300. But the court does not read this to mean that in extreme cases (and this is alleged as an extreme case) the court cannot be called upon to consider the possibility that corporations and bogus entities, owned by straw men, cannot be called out for what they really are. Indeed, the language cited suggests that is still the case. Moreover, the court reads the Second Amended Adversary Complaint in this case as meeting all of the requirements. The particularized harm to the debtor, i.e. Ferrante (or more correctly his estate), is alleged to be in creation of bogus loans and artificial entities designed to create apparent (but not real) separation of the estate from its assets while preserving to the person of Ferrante and his family members (and not the estate) beneficial interest in very substantial assets which in truth and equity should be liquidated for his creditors.
Trustee seeks a declaratory judgment to this effect. The principles of equity are not so
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constrained as to deny the Trustee access to the court in his attempt to unwind the alleged clever maze of overlapping and interrelated entities to get to the reality of the situation. All of the cases hold that application of the doctrine is dependent on the circumstances, and the circumstances here are that debtor has allegedly woven an almost impenetrable maze of entities. The Trustee seeks assistance from the court in separating reality from fiction. That is all that is required.
Lastly, the court should address what may be the most problematic authority cited by the movants (even though it was not described as one of the determinative cases). That is Postal Instant Press, Inc. v. Kaswa Corporation, 162 Cal. App. 4th 1510, 1518-20 (2008). The Postal court discusses "outside reverse piercing", i.e. "when fairness and justice require that the property of individual stockholders be made subject to the debts of the corporation…" (and presumably the reverse of same). In doubting that such a doctrine exists under California law, the Postal court discusses some of the inherent problems in disregarding the corporate form, such as impinging on the rights of innocent shareholders when the corporation is alleged to be the alter ego. Mostly the Postal court declined to embrace such a doctrine because there was a less invasive remedy available, i.e., levy upon the shares to exercise the rights the obligor shareholder might enjoy in the alleged alter ego corporation. The Postal court also held that in most inverse cases transfer of personal assets to the corporation by the shareholder could be dealt with under traditional claims of fraudulent conveyance and/or conversion. But, of course, ours is a different case and of an entirely different order. What is alleged here is a brazen and wholesale creation of numerous fraudulent entities operated for years by strawmen. Ferrante is alleged to have no shares that might be levied upon. And while it might be said that allegations of specific fraudulent transfers could have helped this case, the court does not read Postal or any of the other cases cited by movants to hold that in suitably extreme situations the court cannot assist in dismantling such a web of intrigue. Indeed, the Postal court at 162 Cal. App. 4th 1519 seems to acknowledge that in extreme circumstances there is room still for the traditional application of alter ego where adherence to the fiction of a separate corporate existence ‘would promote an injustice" to the stockholder’s
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creditors." Citing Taylor v. Newton, 117 Cal. App. 2d 752, 760-61 (1953).
One more point should be made. On this question of whether there is a general alter ego right of action (or not) we need to remember context here. While the parties have all termed the discussion as one about limits under California law on the doctrine of alter ego, or "outside reverse piercing" and the like, it is easy to forget the primary purpose of a trustee in bankruptcy. The trustee is not just another creditor. He is uniquely charged with identifying, gathering and liquidating the assets of the estate. This is so that a dividend on the just claims of all creditors can be maximized. And where the equitable principles of the Code have been violated, the trustee must object to discharge. But trustees must from time to time confront clever debtors who are unwilling to report faithfully all that they hold. Elaborate schemes are sometimes resorted to and the various forms of fraud are infinite. Sometimes the nature and extent of the artifice is not so easy to discern or the date or amount of any transfer easily discovered. This court does not construe the equitable doctrine of alter ego to be so limited or confined as the movants have suggested. Instead, in the court’s view it is (and must be) adaptable to the circumstances. In can be as simple as disregarding corporate form when to recognize it would be to perpetrate fraud and injustice. The cases cited by movants all pertain to a much more specific and limited circumstances on facts very different from the ones alleged at bar. None of the authorities say that all traditional equitable notions of disregarding corporate form when it is abused have been abrogated. Rather, the cases when properly read say that the law must evolve and adapt to the ingenuity of alleged fraudsters. So, it may be that under California law the alter ego doctrine is purely procedural, not substantive, but that does not in the court’s view dictate a different result here as the procedure here is to implement the substantive claim for declaratory relief.
Deny
Attorney(s):
Marilyn Thomassen Represented By Shawn P Huston
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Marilyn R Thomassen
Pacific Premier Law Group Represented By Arash Shirdel
Creditor Atty(s):
Lt. Col. William Seay Represented By Brian Lysaght Jonathan Gura
Debtor(s):
Robert A. Ferrante Represented By
Richard M Moneymaker Arash Shirdel
Defendant(s):
Saxadyne Energy Management, LLC Represented By
Gary C Wykidal
Heritage Garden Properties, Inc. Pro Se
Rising Star Development, LLC Pro Se
American Yacht Charters, Inc. Pro Se
Systems Coordination & Pro Se
Steven Fenzl Represented By
D Edward Hays Martina A Slocomb
Saxadyne Energy Group, LLC Represented By Gary C Wykidal
Gianni Martello Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Robert Ferrante Represented By Dennis D Burns Kyra E Andrassy
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Robert E Huttenhoff Ryan D ODea
Chanel Christine Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Ferrante, Gianni Ferrante, Represented By
Kyra E Andrassy
Mia Ferrante Represented By
D Edward Hays Martina A Slocomb
Cygni Securities, LLC Represented By Gary C Wykidal
Cygni Capital Partners, LLC Represented By Gary C Wykidal Robert P Goe
Envision Consultants, LLC Pro Se
Glinton Energy Group, LLC Represented By Gary C Wykidal
Richard C. Shinn Pro Se
Richard C. Shinn Represented By
Marilyn R Thomassen
Cygni Capital, LLC Represented By Gary C Wykidal Robert P Goe
CAG Development, LLC Pro Se
Envision Investors, LLC Pro Se
Traveland USA, LLC Pro Se
Rising Star Investments, LLC Represented By
Marilyn R Thomassen
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Glinton Energy Management, LLC Represented By
Gary C Wykidal
Oscar Chacon Pro Se
Richard C. Shinn Represented By Shawn P Huston
Global Envision Group, LLC Pro Se
Robert A. Ferrante Represented By
Robert E Huttenhoff Ryan D ODea
Interested Party(s):
United States Marshals Service Pro Se
Plaintiff(s):
Thomas H Casey Represented By Thomas A Vogele Thomas A Vogele Timothy M Kowal Brendan Loper
Trustee(s):
Thomas H Casey (TR) Represented By Thomas A Vogele Brendan Loper Thomas H Casey Kathleen J McCarthy Timothy M Kowal
Thomas H Casey (TR) Represented By Thomas H Casey Thomas A Vogele Kathleen J McCarthy
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:16-01138 Bermuda Road Properties, LLC v. Hudson, III et al
(con't from 2-15-18)
Docket 1
Tentative for 2/15/18:
Continued to April 26, 2018 at 10:00 a.m.
Tentative for 1/25/18:
By order entered December 15, 2017 the adversary proceeding was stayed for 60 days. Continue to February 15, 2018?
Tentative for 10/26/17:
In view of stay ordered October 23, 2017, continue to January 25, 2018.
Tentative for 8/4/16:
Deadline for completing discovery: December 1, 2016 Last date for filing pre-trial motions: December 15, 2016 Pre-trial conference on: January 12, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
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Debtor(s):
Joseph Roland Hudson III Represented By James C Bastian Jr Rika Kido
Defendant(s):
Joseph Roland Hudson III Pro Se
Diana Hudson Pro Se
Joint Debtor(s):
Diana Hudson Represented By James C Bastian Jr Rika Kido
Plaintiff(s):
Bermuda Road Properties, LLC Represented By Colby Balkenbush Alan J Lefebvre
Trustee(s):
Karen S Naylor (TR) Pro Se
Karen S Naylor (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:17-01037 Aguilar et al v. Treadway
(2) Deny discharge of Debtor under 11 U.S.C. Sections 727(a)(2)(A) and 727(a) (4)(A)
(set from s/c hearing held on 6-1-17)
(con't from 3-29-18 per stip & order entered 3-2-18 )
Docket 1
Tentative for 6/1/17:
Deadline for completing discovery: January 15, 2018 Last date for filing pre-trial motions: January 29, 2018 Pre-trial conference on:February 8, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by September 1, 2017.
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Defendant(s):
Kevin Michael Treadway Pro Se
Plaintiff(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By
10:00 AM
Trustee(s):
Bradley D Blakeley
Karen S Naylor (TR) Represented By Burd & Naylor
10:00 AM
Adv#: 8:17-01096 Karen Sue Naylor, Chapter 7 Trustee v. Josie Accessories, Inc. et al
(set at s/c held 10-26-17)
Docket 1
Tentative for 10/26/17:
Deadline for completing discovery: March 29, 2018 Last date for filing pre-trial motions: April 16, 2018 Pre-trial conference on: April 26, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 8/31/17:
Status conference continued to October 26, 2017 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
10:00 AM
Defendant(s):
Josie Accessories, Inc. Pro Se
Elrene Home Fashions Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
(OST Signed 4-18-18)
ANERIO V. ALTMAN, DEBTOR'S ATTORNEY, FEE: $6250.00
EXPENSES: 0.00
Docket 73
Tentative for 4/26/18:
Allowed as prayed. Appearance optional.
Debtor(s):
Julia Schenden Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Adv#: 8:17-01130 Karen Sue Naylor, Chapter 7 Trustee v. Idea Nuova, Inc.
(con't from 2-15-18 per order approving stip to cont ent 2-14-18)
Docket 8
Tentative for 4/26/18: Grant.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Idea Nuova, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
11:00 AM
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 1
Tentative for 2/15/18: Status?
Tentative for 1/25/18:
What update can be given on Frank's deposition?
Should this be continued to coordinate with item #11.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled with discovery incomplete?
Tentative for 7/13/17:
It would appear that discovery disputes must be ironed out before any firm date can be set.
Tentative for 5/4/17:
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Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
Tentative for 3/23/17:
The failure of defendants to participte in preparation of joint status report, and reported lack of discovery cooperation is troubling. Should the answer be stricken?
Tentative for 12/8/16: No status report?
Tentative for 3/10/16:
It sounds from the report that dispositive motions are being prepared on both sides. So, a continuance as requested by Plaintiff has some appeal, although the court notes this case has been pending one year.
Tentative for 1/28/16:
Why no status report? Have issues described from October 29, 2015 docket entry been addressed?
Tentative for 10/29/15:
Why has there been no apparent update, report or progress?
Tentative for 8/27/15:
11:00 AM
Status of service/default?
Tentative for 4/23/15:
Status conference continued to August 27, 2015 at 10:00 a.m. to afford time to resolve dismissal motions.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller
Defendant(s):
Frank Jakubaitis Pro Se
Tara Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR)
Jeffrey I Golden (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
(Order entered 2-5-18) (con't from 2-15-18)
Docket 1
No tentative. The court wants to discuss the future of these cases.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
11:00 AM
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 110
Tentative for 2/15/18:
Status? Agreed protective order?
Tentative for 1/25/18: Status?
Tentative for 9/14/17:
Status of discovery and cooperation?
Tentative for 7/13/17: Status?
Tentative for 5/4/17:
11:00 AM
See #10.
Tentative for 4/13/17:
This is a hearing on the sanctions portion of the motion first heard February 2, 2017. As usual, this motion is plagued by the mess and finger pointing that these adversary proceedings have become.
The deposition of Frank Jakubaitis was to have been conducted within 45 days of the February 2 date, as required by an Order Granting Motion to Compel Production of documents entered February 3 as #123 on the docket, compelling the deposition at its page two. The form of that order originally submitted by Attorney Shirdel had to be almost completely rewritten as it did not match the results of the hearing, but only addressed the documents portion. On the adversary 8:15-ap-01426 TA, concerning another order more narrowly addressing the deposition of Frank Jakubaitis, the court’s judicial assistant, Ms. Hong, telephoned Attorney Shirdel and advised that the order was being held as this was a contested Motion (Opposition being filed by Attorney Firman on February 27, 2017 at #66 on the Court’s docket). As required by the LBRs, the order needed to be held for the 7-day period to see if the opposing side would object to the form of order. Also, Ms. Hong notified Attorney Shirdel that there was a procedural defect in that no Notice of Lodgment was filed with the Order--so the opposing party was not even aware an Order had been uploaded to which they could object. Attorney Shirdel’s staff told Ms. Hong that they would check on this procedural defect and get back to her. Attorney Shirdel finally uploaded the Notice of Lodgment of the Order Granting Motion to Compel Deposition on April 4, 2017 as #76 on the docket. That Order Granting Motion to Compel Deposition of Frank Jakubaitis was finally entered on April 5, 2017 with "as soon as possible" listed as the date the deposition was to be conducted by in place of the stricken "by March 19, 2017," as so much time had elapsed as to make the original date of March 19 (the 45th day from February 2) impossible. But, of course, none of this changed the original order entered February 3 which separately required the deposition within 45 days,
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except to make everything confused.
In meantime, one gathers from the briefs on the question of sanctions, it appears that defendant would like to impose conditions upon the deposition that the plaintiff, Mr. Padilla, not attend and that the deposition not be videotaped. These are not agreed to by plaintiff. Moreover, absent a protective order, there is no requirement in law that either condition be imposed. However, the question of the parties seeking a protective order is alluded to in the February 3 Order. It appears to the court’s ongoing dismay that these parties are unable to cooperate in virtually anything but rather constantly resort to court intervention, even for the basics. The strategy of the court had been to allow a reasonable time for matters to be set straight before the unpleasant question of sanctions is considered, and so an amount appropriate to the circumstances, if any, could be imposed. But that approach has failed because we are still not even at square one and no deposition has occurred. All we have is the usual finger pointing notwithstanding the court’s firm directive February 2 that a deposition must occur within 45 days. Looked at differently, one could say that the defendant has decided to double down his bet on obtaining the relief requested in the protective order motion scheduled 5/4/17 by studiously not giving a deposition in the meantime. He was not privileged to do this.
What is the court to do with these parties? The court can only steer this case using blunt instruments, which in normal cases should not be necessary. But this is not a normal case. The appropriate amount of sanctions for failure to give a deposition cannot be easily determined now because the matter has been so awkwardly handled in that we have two orders addressing essentially the same question. But the court is not inclined to reward defendant for his non-cooperation either. So we are left with the dilemma, and no easy answer except to continue the matter yet again until after the protective order is considered May 4. We should also continue this motion to a date certain after that protective order hearing so that a deposition might actually occur in the meantime, with any protective provisions that the court may or may not direct.
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just how much in monetary or non-monetary sanctions should be imposed, he will continue pushing his luck by again not giving his deposition testimony to the continued date.
Continue
Tentative for 2/2/17:
The court has had just about enough of the petty, unprofessional squabbling which has plagued this case from the outset. As explained below, the conduct of both sides falls far below what the court should be able to expect. This latest is a motion to compel attendance of Mr. Jakubaitis at deposition and for $3307.50 in sanctions.
On January 5, 2017, Plaintiffs served a notice of deposition on Debtor’s counsel Mr. Fritz Firman ("Firman") indicating that Plaintiffs would depose Debtor on January 19, 2017. Plaintiffs’ counsel Mr. Shirdel ("Shirdel") argues that he did not receive notice Debtor would be unable to attend the deposition until the eve of the deposition. According to Plaintiffs, they received objections at 4:00 p.m. on January 18, 2017, which objections asserted insufficient notice, failure to consult regarding the deposition dates, unavailability of counsel, and that Debtor was unable to be properly deposed because he was taking prescription medication. Shirdel contends he attempted to confer with Firman after receiving the objections, but to no avail.
According to Debtor, Plaintiffs purposefully scheduled the deposition for January 19, 2017 knowing that Debtor would be unable to attend, so this motion has been brought in bad faith. In support, Debtor explains that he successfully brought an anti-SLAPP motion against Plaintiff Carlos Padilla’s defamation claim in state court (Shirdel represents Carlos Padilla III in this adversary proceeding and in the state court action). Because Debtor prevailed, Debtor was permitted to seek recovery of attorney fees. Debtor filed a motion seeking recovery of attorney fees, with the hearing on this motion scheduled for January 5, 2017. Shirdel then sent a notice of deposition for January 5, 2017 (one infers the scheduling was intended to interfere
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with the motion?). On December 29, 2016, Firman responded that he and Debtor would be unable to attend the deposition on January 5, 2017. Debtor now argues that because Shirdel had notice Debtor was unable to attend the January 5, 2017 deposition, Plaintiffs were somehow on constructive notice that Debtor and Firman would be unable to attend the deposition on January 19, 2016, some two weeks later. To call that argument thin is being generous.
Failure of a party to attend a properly noticed deposition without first obtaining a protective order will subject that party to sanctions under Rule 37(d). In re Honda, 106 B.R. 209, 211 (Bankr. Haw.1989). Here, Debtor’s counsel received proper and reasonable notice, as the proof of service indicates notice of the deposition was delivered by email on January 5, 2017, approximately two weeks before the deposition at issue was to take place. Thus, absent a finding Firman was substantially justified or that Shirdel did not confer in good faith, Firman and /or Defendant should be liable for the costs of bringing this motion to compel. The argument that Plainitff was on constructive notice of Debtor’s unavailability and thus gave a notice of deposition for that time in bad faith is unpersuasive. Firman makes reference to a deposition that was scheduled for January 5, 2017. Although not entirely clear, it appears this deposition is related to the state court action as the notice of the January 5 deposition was sent to Debtor’s state court counsel. Firman argues that Shirdel knew Debtor would be unable to attend the January 5 Deposition, as this was the same day the motion for recovery of attorney fees in the state court action was set for hearing. In addition, Firman also asserts that Shirdel received objections to the January 5 Deposition on December 29, 2016. But it is unclear why Debtor’s unavailability on January 5, 2017 somehow provides constructive notice Debtor would be unavailable on January 19, 2017, two weeks later. Firman points to no additional hearings or related proceedings in the state court action that were to occur on January 19, 2017.
Consequently, the argument that Plaintiff should have known Debtor was unavailable on January 19, 2017 is not supported. That Defendant responded at 4:00 p.m. on the eve of the deposition further undermines this contention. Plaintiff does not appear to have acted in bad faith in scheduling the deposition. If Debtor had issues with the
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deposition, his recourse was to have filed a motion for a protective order.
An argument is also raised that Plaintiff should have sought leave to request this deposition, as multiple depositions have already occurred. But the examples of other depositions Defendant highlights are not persuasive. Defendant argues that the § 341(a) meeting should be treated as a deposition because Shirdel conducted questioning at the meeting. In addition, Defendant argues that a judgment debtor’s examination should also be treated as a deposition. However, Defendant cites to no authority in support of these dubious propositions. Finally, the papers do not appear to raise any argument as to why Firman and Debtor were substantially justified in not attending the deposition, aside from Firman’s declaration that he was appearing before Judge Smith at this time. Thus, Defendant has not met his burden and cannot avoid sanctions on these grounds.
Distressingly, Plaintiff did not perform much better. Under Rule 37, failure to appear at the deposition would ordinarily warrant an award of the costs in bringing this motion to compel. However, in order to award sanctions, the party seeking sanctions must also demonstrate they have not "filed the motion before attempting in good faith to obtain the disclosure or discovery without court action." Fed. R. Civ. P. 37(a)(5)(A)(i). Here, Shirdel appears to have sent Firman an email on January 18, 2017 at approximately 4:41 p.m. The email plainly states, "If [D]ebtor does not appear at the deposition, we’ll take a non-appearance and we’ll move to compel and seek sanctions." This language hardly demonstrates Shirdel attempted in good faith to resolve the discovery dispute before filing the instant motion. This language, coupled with the fact that this motion was filed only one day after the email was sent suggest Plaintiff failed to engage in a meaningful good faith effort actually designed to resolve this discovery dispute without involving the court, as required under the Rule 37. In this view, the costs and fees associated with bringing this motion should either not be awarded, or perhaps awarded only in part.
Therefore, the court will forbear from awarding sanctions at this time but will instead reserve the question until after one additional opportunity to cooperate with discovery requirements as compelled below is given to Defendant. The court will
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then evaluate the question of appropriate sanctions after the fact. The parties are admonished not to test the court’s patience any further.
Deposition is compelled and is to be given within thirty days as scheduled by Plaintiff after consulting with respective calendars. The deposition is to last no longer than 7 hours and is to be completed within one day unless otherwise agreed. The question of sanctions is to be continued about 45 days to evaluate compliance with these requirements.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR)
11:00 AM
Arash Shirdel
11:00 AM
Adv#: 8:15-01426 Marshack v. Jakubaitis et al
U.S.C. Section 544; 3. Revocation of Discharge - 11 U.S.C. Section 727(d)
(con't from 2-15-18)
Docket 1
Tentative for 2/15/18: Status?
Tentative for 1/25/18: See #11, 12 and 13.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled before discovery is complete?
Tentative for 7/13/17:
It looks like discovery disputes must be resolved before any hard dates can be set.
Tentative for 5/4/17:
11:00 AM
Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
Tentative for 3/23/17: See #13.1
Tentative for 12/8/16: No status report?
Tentative for 3/10/16: See #6 and 7.
Tentative for 1/14/16:
Status conference continued to March 10, 2016 at 11:00 a.m. to coincide with motion to dismiss.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Pro Se
Frank Jakubaitis Pro Se
11:00 AM
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Pro Se
Richard A Marshack (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:15-01426 Marshack v. Jakubaitis et al
(Order entered 2-5-18)(con't from 2-15-18)
Docket 1
No tentative. The court wants to discuss the future of these cases.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
11:00 AM
Adv#: 8:15-01426 Marshack v. Jakubaitis et al
Docket 60
Tentative for 2/15/18: Status?
Tentative for 1/25/18: See #11.
Tentative for 9/14/17: Status?
Tentative for 7/13/17:
It would appear that discovery disputes must be first resolved and a motion to compel is reportedly forthcoming.
Tentative for 5/4/17: See #10.
11:00 AM
Tentative for 4/13/17: See #18.
Tentative for 3/2/17:
An objection to the Shirdel declaration was filed but otherwise the court sees no opposition. It would seem the issues are the same as discussed in the February 2 tentative in Padilla v. Jakubaitis and the February 3 order in the Golden v. Jakubaitis case. Therefore, the order should be the same. The question of monetary sanctions is reserved until the April 13 hearing, and will be evaluated in view of cooperation, if any, in meantime.
Debtor(s):
Grant
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By
11:00 AM
Arash Shirdel
11:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 3-29-18 per order approving stip. to con't ent. 3-13-18)
Docket 83
Tentative for 6/8/17:
Status conference continued to September 7, 2017 at 10:00 a.m. with expectation that involuntary proceeding will be clarified and settlement examined.
Tentative for 2/9/17:
Status Conference continued to May 25, 2017 at 10:00 a.m. Personal appearance not required.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
11:00 AM
Defendant(s):
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se Olive Avenue Investors, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se Palm Springs Country Club Pro Se
Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se South 7th Street Investments, LLC Pro Se Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se
Van Buren Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Park Scottsdale, LLC Pro Se
El Jardin Atascadero Investments, Pro Se
Enterprise Temecula, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy
11:00 AM
NATIONAL FINANCIAL Represented By Nancy A Conroy
POINT CENTER MORTGAGE Represented By Carlos F Negrete
NATIONAL FINANCIAL Represented By Carlos F Negrete Sean A Okeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A Okeefe
M. Gwen Melanson Represented By Nancy A Conroy
RENE ESPARZA Represented By Nancy A Conroy
Dillon Avenue 44, LLC Pro Se
16th Street San Diego Investors, Pro Se
DOES 1-30, inclusive Pro Se
Altamonte Springs Church Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se
Champagne Blvd Investors, LLC Pro Se
Cobb Parkway Investments, LLC Pro Se
6th & Upas Investments, LLC Pro Se
11:00 AM
Interested Party(s):
Courtesy NEF Represented By Monica Rieder Roye Zur Murray M Helm
Jeffrey G Gomberg Rachel A Franzoia
Richard K. Diamond Represented By George E Schulman
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
Howard B Grobstein (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 3-29-18 per order approving stip. to con't ent. 3-13-18)
Docket 149
- NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se Olive Avenue Investors, LLC Pro Se
Enterprise Temecula, LLC Pro Se
11:00 AM
Palm Springs Country Club Pro Se
Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se South 7th Street Investments, LLC Pro Se Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se
Van Buren Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Park Scottsdale, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se El Jardin Atascadero Investments, Pro Se
Dillon Avenue 44, LLC Pro Se
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy Sean A OKeefe
NATIONAL FINANCIAL Represented By Nancy A Conroy
POINT CENTER MORTGAGE Represented By
Carlos F Negrete - INACTIVE - Nancy A Conroy
NATIONAL FINANCIAL Represented By
Carlos F Negrete - INACTIVE - Sean A OKeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A OKeefe
11:00 AM
M. Gwen Melanson Represented By Nancy A Conroy
RENE ESPARZA Represented By Nancy A Conroy
DOES 1-30, inclusive Pro Se
16th Street San Diego Investors, Pro Se
6th & Upas Investments, LLC Pro Se
Altamonte Springs Church Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se
Champagne Blvd Investors, LLC Pro Se
Cobb Parkway Investments, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman
11:00 AM
Robert G Wilson Monica Rieder Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 3-29-18 per order continuing motion and s/c entered 3-13-18)
Docket 1
- NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps
11:00 AM
John P Reitman Robert G Wilson Monica Rieder Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 3-29-18 per order continuing mtn and s/c entered 3-13-18)
Docket 8
- NONE LISTED -
3rd Party Defendant(s):
Richard Diamond Represented By Aaron E de Leest
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Interested Party(s):
Courtesy NEF Represented By Rodger M Landau Monica Rieder Jack A Reitman Rachel A Franzoia
11:00 AM
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
(con't from 4-24-18)
Docket 9
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
11:00 AM
(con't from 4-24-18)
Docket 10
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
10:30 AM
Vs. DEBTOR
Docket 34
- NONE LISTED -
Debtor(s):
Darryl Samuel Taylor Represented By Michael Jones Sara Tidd
Movant(s):
Capital One Auto Finance, a Represented By Bret D. Allen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
MAS FINANCIAL SERVICES
Vs.
DEBTOR
Docket 25
Tentative for 5/1/18:
Grant. Appearance is optional.
Debtor(s):
Apolinar Rosas Represented By John Hamilton
Joint Debtor(s):
Maria De Lourdes V Rosas Represented By John Hamilton
Movant(s):
MAS Financial Services Represented By Paul V Reza
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTORS
Docket 8
Tentative for 5/1/18:
Grant. Appearance is optional.
Debtor(s):
Carlos Martin Blanco Represented By Christopher J Langley
Joint Debtor(s):
Kumiko Diana Blanco Represented By Christopher J Langley
Movant(s):
Toyota Motor Credit Corporation, Represented By
Austin P Nagel
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
JP MORGAN CHASE BANK
Vs.
DEBTOR
Docket 67
Tentative for 5/1/18:
Grant. Appearance is optional.
Debtor(s):
Salvador Manuel Robledo Represented By Joshua L Sternberg
Movant(s):
JPMorgan Chase Bank, National Represented By
Christina J O
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 4-17-18)
JPMC SPECIALTY MORTGAGE LLC
Vs.
DEBTORS
Docket 48
Grant. Appearance is optional.
Debtor(s):
Marco T Cortez Represented By Michael R Totaro
Joint Debtor(s):
Dinora Cortez Represented By Michael R Totaro
Movant(s):
JPMC Specialty Mortgage LLC Represented By
Kristin A Zilberstein Ann Nguyen
Nancy L Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 25
Tentative for 5/1/18:
Grant unless current or APO.
Debtor(s):
Justin Stumpf Represented By Nima S Vokshori
Movant(s):
WELLS FARGO BANK, N.A. Represented By Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 14
Tentative for 5/1/18: Grant.
Debtor(s):
Mohsen Mahmanesharad Represented By Alon Darvish
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Docket 2143
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr
11:00 AM
Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
§363(M); And For Authority Not To Pay Claimed Homestead Exemption At This Time
Docket 87
- NONE LISTED -
Debtor(s):
Elaine Marie Roach Represented By
Diane L Mancinelli William M Burd
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Chad V Haes Alan I Nahmias
11:00 AM
Docket 91
- NONE LISTED -
Debtor(s):
Elaine Marie Roach Represented By
Diane L Mancinelli William M Burd
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Chad V Haes Alan I Nahmias
10:00 AM
(con't from 3-28-18 per order approving stip. to cont. entered 3-21-18)
Docket 452
- NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
10:00 AM
(con't from 3-28-18)
Docket 1
Tentative for 5/2/18:
Any other comments about status or filing of adversary proceeding?
Deadline for filing plan and disclosure statement: August 1, 2018
Claims bar: 60 days after dispatch of notice to creditors advising of bar date (unless already set per status report).
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
Docket 1
Tentative for 5/2/18:
Deadline for filing plan and disclosure statement: August 31, 2018
Claims bar: 60 days after dispatch of notice to creditors advising of bar date.
What inference should the court draw from the repeat filing? It appears the primary residence may be overencumbered. Has creditor cooperation been obtained? Shortsale authorized?
Debtor(s):
Joseph T Bubonic Represented By Julie J Villalobos
Joint Debtor(s):
Mary A Bubonic Represented By Julie J Villalobos
10:00 AM
Adv#: 8:18-01037 Papac v. Speckmann
(another summons issued 2-14-18)
Docket 1
Tentative for 5/3/18:
Status Conference continued to July 12 at 10:00 a.m. with expectation that prove up will occur in meantime.
Debtor(s):
John K. Speckmann Represented By Christine A Kingston
Defendant(s):
John K Speckmann Pro Se
Plaintiff(s):
Linda Papac Represented By
Shelly L Hanke
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
U.S.C. Section 510 (C); (5) For an Award of Damages Resulting from Unlawful Modification of Principal Balance of JPMorgan Chase Bank, N.A.'s Claim; and
(6) Relief from Order Avoiding Plaintiff's Lien (set from s/c hearing held on 1-26-17) (con't from 3-01-18)
Docket 82
Tentative for 3/1/18:
Discovery already ended? Continue to April 26, 2018 at 10:00 a.m. for pre- trial conference.
Tentative for 1/26/17:
Deadline for completing discovery: July 1, 2017. Last Date for filing pre-trial motions: July 24, 2017.
Pre-trial conference on August 10, 2017 at 10:00 a.m.
Tentative for 12/15/16:
Status Conference continued to January 26, 2017 at 10:00 am after amended compalint is filed.
10:00 AM
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo
Virgil Theodore Hernandez and Aleli Pro Se Virgil Theodore Hernandez Pro Se
Aleli A. Hernandez Pro Se
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:17-01039 Marshack v. Movafagh
(set from s/c hearing held on 6-1-17)
(con't from 11-2-17 per order on stipulation entered 10-31-17)
Docket 1
Tentative for 5/3/18:
Discovery deadline is already past. Pretrial conference is Aug. 2 at 10:00a.m. Trustee to give notice.
Tentative for 6/1/17:
Deadline for completing discovery: October 1, 2017 Last date for filing pre-trial motions: October 23, 2017
Pre-trial conference on: November 2, 2017 at 10:00 a.m. Joint pre-trial order due per local rules.
Why did defendant fail to participate in the status report?
Debtor(s):
Fazlollah Movafagh Represented By Kaveh Ardalan
Defendant(s):
Fazlollah Movafagh Pro Se
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
10:00 AM
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
11:00 AM
Adv#: 8:18-01058 The Bank of New York Mellon v. Ko
Docket 6
- NONE LISTED -
Debtor(s):
Tae Hoon Ko Pro Se
Defendant(s):
Tae Hoon Ko Pro Se
Plaintiff(s):
The Bank of New York Mellon Represented By
Dane W Exnowski
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
Docket 33
- NONE LISTED -
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Plaintiff(s):
Omni Steel Company, Inc. Represented By Sean A Topp
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
11:00 AM
Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
Docket 11
- NONE LISTED -
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Represented By David B Shemano
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee Timothy P Dillon
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy Michael Jason Lee
Sunjina Kaur Anand Ahuja
10:30 AM
AIC OWNER, LLC
Vs.
DEBTOR
Docket 10
Tentative for 5/8/18:
Grant. Appearance is optional.
Debtor(s):
Jennifer Ko Represented By
David L Shin
Movant(s):
AIC Owner, LLC, a Delaware Represented By Glen Dresser
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTORS
Docket 15
Tentative for 5/8/18:
Grant. Appearance is optional.
Debtor(s):
Perlito Olivos Joson Represented By Daniel King
Joint Debtor(s):
Madelaine Joson Represented By Daniel King
Movant(s):
Toyota Motor Credit Corporation Represented By
Austin P Nagel
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
DAIMLER TRUST
Vs.
DEBTOR
Docket 49
Tentative for 5/8/18:
Grant. Appearance is optional.
Debtor(s):
George Tyler Fower Represented By Vatche Chorbajian
Movant(s):
Daimler Trust Represented By
Sheryl K Ith
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
DAIMLER TRUST
Vs.
DEBTOR
Docket 35
Tentative for 5/8/18:
Grant. Appearance is optional.
Debtor(s):
Radiology Solutions Corp. Represented By Vatche Chorbajian
Movant(s):
Daimler Trust Represented By
Sheryl K Ith
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 43
- NONE LISTED -
Debtor(s):
Zenaida S. Trinidad Represented By James D Zhou
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
JP MORGAN CHASE BANK
Vs.
DEBTOR
Docket 32
- NONE LISTED -
Debtor(s):
Paul F. Colice Represented By Bruce D White
Movant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Patriciea C Vaughn Ann Nguyen Caryn Barron Christina J O
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTORS
Docket 37
Tentative for 5/8/18:
Grant unless current or APO
Debtor(s):
Gustavo Ocegueda Represented By Joseph A Weber
Joint Debtor(s):
Maria Ocegueda Represented By Joseph A Weber
Movant(s):
U.S. Bank National Association, as Represented By
Tyneia Merritt
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 66
Tentative for 5/8/18:
Grant. Appearance is optional.
Debtor(s):
Kristen Roberts Represented By Julie J Villalobos
Movant(s):
U.S. Bank National Association, as Represented By
Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 12
- NONE LISTED -
Debtor(s):
Soraya Nauroz Pro Se
Movant(s):
Soraya Nauroz Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 11
Tentative for 5/8/18:
Grant. Appearance is optional.
Debtor(s):
Enrique Perez Represented By Christopher J Langley
Movant(s):
Enrique Perez Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 10
- NONE LISTED -
Debtor(s):
Linda April Spinks Represented By Michael Jones Sara Tidd
Movant(s):
Linda April Spinks Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
§363(M); And For Authority Not To Pay Claimed Homestead Exemption At This Time
(cont'd from 5-1-18 per order signed 4-16-18)
Docket 87
Tentative for 5/8/18:
These are, respectively, the Trustee’s motions for an order authorizing sale free of liens the property commonly known as 20391 Via Guadalupe, Yorba Linda, CA ("the property") and the Trustee’s motion to distribute the proceeds of sale. The motions are opposed by the debtor and Merhab, Robinson, Jackson & Clarkson, a law firm and holder of the 4th lien on the property.
The price at $1,300,000, overbid procedure, business justification, good faith and compliance with UST requirements do not appear to be controversial and are, insofar as the court can determine, unopposed. The debtor’s opposition (joined by Merhab) focuses primarily on distribution of proceeds and the free of liens request. The Trustee has entered into a Compromise Agreement with Mutual of Omaha Bank ("the Bank") regarding its third priority lien securing the sum of approximately
$634,831. Under that compromise, which was approved by the court after notice and hearing by order entered December 4, 2017 (Docket#72), the Trustee settles the estate’s alleged claims against the Bank and/or its counsel, arising out of alleged misconduct and threats not included on the schedules but reportedly discussed at the §
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341(a) first meeting of creditors. Under the Compromise, the Bank agrees to subordinate 50% of its claim under §510(c)(1) [which deals with equitable subordination] and, importantly for our discussion, assigns the lien securing the subordinated 50% to the estate pursuant to §510(c)(2).
Under the motions the Trustee proposes to pay the senior first and second liens in full, current property taxes, a broker’s commission, and title and escrow fees, and then evenly split the approximate $279,286 remaining proceeds with the Bank. Of the proceeds available to the estate under this approach the Trustee estimates he will be able to pay priority claims of about $31,696 in full, administrative claims capped at
$100,000 (but subject to reduction as appears below) and then about $8000 to general unsecured claims. But the Trustee further proposes to cut his and his firms’ own administrative fees such that at least $18,520 or about 15% is distributed to unsecured creditors. This distribution exhausts the proceeds leaving nothing for either Merhab’s 4th lien or the debtor’s homestead.
The oppositions raise primarily two points. First, it is argued, for policy reasons, that sales providing little or nothing to general unsecured creditors under "carve out" arrangements cannot/should not be used by trustees to displace debtors from their homes. Secondly, it is argued that there is no provision under §363(f) which permits a sale free of liens in circumstances such as these where the junior lien is neither paid nor consents to the sale. Neither argument is persuasive, for reasons explained below.
Debtor relies heavily on three cases: In re Wilson, 494 B.R. 502 (Bankr. C.D. Cal. 2013); In re Reade, 2014 Bankr. LEXIS 1391, at *1 (Bankr. C.D. Cal. March 28, 2014), 2014 WL 1329808, at *1 (Bankr. C.D. Cal. March 28, 2014), and In re Christensen, 561 B.R. 195 (Bankr. D. Utah 2016). But all of these cases are factually and legally distinguishable.
In Wilson, the trustee entered into an agreement with a secured lienholder that
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upon the sale of the property, the trustee would take a certain amount of the proceeds. In re Wilson, 494 B.R. 504. The Wilson court likened this to a "tip" for services rendered (presumably, for selling the distressed property saving the creditor the delay and expense of a foreclosure) and held that the money paid to the trustee was, notwithstanding the agreement, actually property of the estate. Id. at 506. Therefore, as all other property of the estate, it should remain available to pay the claimed exemptions. Id. But here, Mutual of Omaha Bank entered into a subordination agreement with the Trustee. The practical effect of the agreement was that the Bank assigned a portion of its rights to proceeds and the lien securing same to the estate, making the Trustee the holder of a valid assignment of a voluntary lien. When the sale occurs, the Bank will take its portion as a voluntary secured lienholder and the Trustee will as well. There is no prejudice to either the Debtor or other junior secured lienholders. This is not inconsistent with Wilson because the estate continues as a lien creditor by assignment. Homestead exemptions are subordinate to voluntary liens.
Debtor also relies on In re Reade. There, the trustee agreed that the lienholder would voluntarily reduce its recovery on the sale proceeds by some unspecified amount. The amount of that reduction would be earmarked for the benefit of the estate. In re Reade, 2014 WL 1329808, *15-16 However, the Reade court could find no language in any agreement that specified how much would be "carved out" and returned to the Trustee for the benefit of the estate. Id. The court also found no language in any agreement prohibiting the debtor from receiving any portion of the sale proceeds generated by the secured creditor’s debt reduction. Id. at *16. But more importantly, there was no purported lien assignment. Thus, when the sale was consummated, all of the now unencumbered $70,000 proceeds became property of the estate. Id. The Reade court held that debtor had a right to amend her claim of exemption to assert a $75,000 homestead exemption in the property at any time during the pendency of her case. Id. at *16-17. Absent a showing of bad faith or prejudice to creditors, the Reade court had no discretion to deny the amendment. Id.
In Christensen the trustee had received offers on the properties that exceeded
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the amount of the liens encumbering the properties. In re Christensen, 561 B.R. 209. The court held that there was "no bona fide dispute" that there was value in the homes as defined under Utah law. Id. The consequence was that the trustee could no longer dispute the debtor’s homestead exemptions based on the premise that there was no equity in the homes to which the exemptions could attach. Id. at 209-10. Furthermore, the Christensen court was greatly concerned about carve-out agreements and their potential to prejudice junior lienholders. Id. at 210-11.
But here there is an explicit Compromise Agreement between the Bank and Trustee that was approved by this court after notice and a hearing. Unlike Debtor’s cases, here there was an assignment of the Bank’s lien to the estate as part of the compromise. Homesteads cannot be used to trump voluntary liens and the court sees no reason that should change just because the lien is assigned to the estate. The estate as lien creditor makes this fundamentally different from all of Debtor’s authorities.
Debtor did not file a written opposition. Furthermore, this agreement contains no suggestion of bad faith or prejudice to creditors.
Nor is the court troubled by any of the policy reasons discussed in cases like In re KVN Corp., Inc. 514 B.R. 1 (9th Cir BAP 2014). The compromise before this court fulfills all of the requirements enumerated in KVN : (1) the Trustee has fulfilled his basic duty [which is to try, if possible, to create an estate for unsecured creditors]; (2) there is a meaningful benefit in that general unsecured are here receiving about 15% on their claims and (3) the terms of the agreement were fully disclosed to the court. Id. at 8. Importantly, unlike KVN, this case does not even involve a true "carve out"; it is instead a lien assignment which effectively shields from the ability to assert a homestead in the still encumbered proceeds. Similarly, Debtor’s other case In re Bird, 577 B.R. 365 (10th Cir BAP 2017) is not persuasive. Bird stands for the unsurprising proposition that a trustee should not attempt to sell over-encumbered property unless to do so would bring a meaningful payment to unsecured creditors, particularly if as in Bird the result is to leave non-dischargeable tax claims. But the body of creditors in Bird was $539,042 so that $10,000 carved out yielded only a de minimus recovery.
That is not the case here as 15% is not de minimus. And finally, the court agrees with
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the Trustee that the debtor voluntarily liened the property for far more than its value, and there is no reason in law or equity that the Debtor should now receive proceeds that the Trustee was able to pry out of the Property at the expense of her creditors.
An even more vexing issue concerns application of §363(f)(5). This statute provides the basis for the Trustee’s argument that the property can be sold free and clear of the Merhab lien, although no proceeds will be paid to that lienholder as it is "out of the money." The case law is not entirely consistent and the language of the statute is obscure. First, we consider the language of the statute:
"The trustee may sell property under subsection (b) or (c) of this section free and clear of any interest in such property of an entity other than the estate, only if…
(5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest."
Any discussion of this question must begin with the preeminent case in the Ninth Circuit, Clear Channel Outdoor Inc., v. Knupfer ( In re PW, LLC) ["Clear Channel"], 391 B.R. 25, 39-42 (B.A.P. 9th Cir. 2008). The Clear Channel court parsed the language of the subsection to find that it contains three elements: (1) that a proceeding exists or could be brought in which (2) the nondebtor could be compelled to accept a money satisfaction of (3) its interest. The Clear Channel court found that liens are clearly "an interest" in the property. But the Clear Channel court appeared to have trouble with accepting that ‘compelling money satisfaction’ fitted the situation of an interest such as sold out junior liens where the proceeds are insufficient in a mere foreclosure sale to reach the liens. The Clear Channel court offered the precept that words of a statute must be read in their context and so reasoned that such a reading would render subsection 363(f)(3) [such interest is a lien and the price exceeds all liens] largely superfluous since in all cases (f)(5) would apply whether or not the proceeds were sufficient. Id. at 42-44; see also id. at 39 citing Davis v. Mich. Dep’t of
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Treasury, 489 U.S. 803, 809, 109 S. Ct. 1500, (1989) ("[S]tatutory language cannot be construed in a vaccum. It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme"). After citing to other authorities interpreting §363(f)(5) that have held more or less exactly that, i.e. that full payment is not necessary, only that a mechanism exists to compel extinguishment of a lien for less than payment in full (e.g. id at p. 43 citing Scherer v. Federal Nat’l Mortgage Ass’n (In re Terrace Chalet Apts.),159 B.R. 821, 829 (N.D. Ill 1993); WBQ P’ship v. Virginia Dep’t of Med.
Assistance Servs (In re WBQ P’ship)189 B.R. 97, 107 (Bankr. E.D.Va. 1995) the Clear Channel court implicitly concluded that such "legal or equitable proceeding" must mean something other than a vanilla foreclosure. Looking to harmonize the subsections so as to not render any of them superfluous the Clear Channel court gave examples of other kinds of "proceedings" such as specific performance actions to force buy-out arrangements under partnership agreements or enforcing liquidated damages in real estate purchase transactions. Id. at 43. The Clear Channel court focused on the language "legal or equitable proceeding" as the main reason for necessary separateness from (f)(3). So as to harmonize the subsections the Clear Channel court concluded that the trustee must be able to cite to the existence of such proceedings (apparently other than simple foreclosure), which had not been done in that case. Id. at 46. But it should be noted that nowhere in the Clear Channel opinion does the BAP explicitly state that simple foreclosure proceedings do not qualify as the "proceeding required by § 363(f)(5)." It seems rather that the Clear Channel panel focused on the procedural failure in that case to cite the other proceedings, more than holding that such proceedings do not exist. See In re Jolan, 403 B.R.866, 868-69 (Bankr. W.D.Wash. 2009).
While the court agrees with Clear Channel that the language of the statute is somewhat difficult and that there is considerable overlap between subsections (f)(3) and (f)(5), the court disagrees that it must therefore strip subsection (f)(5) of such an obviously applicable interpretation. See Lamie v. United States Trustee, 540 U.S. 526, 534, 124 S. Ct. 1023, (2004)("The starting point in discerning congressional intent is the existing statutory text…and not the predecessor statutes. It is well established that
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‘when the statute’s language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.’"). Clear Channel has not been universally acclaimed. "[T]he overwhelming weight of authority disagrees with [Clear Channel’s] holding that the § 363(m) stay does not apply to the ‘free and clear’ aspect of a sale under § 363(f)[.]" In re Nashville Senior Living, LLC, 407 B.R. 222, 231 (B.A.P. 6th Cir. 2009); see also Joseph S. Bolnick, "Revisiting Clear Channel - Acquiring Real Property in A Section 363 Bankruptcy Sale "Free and Clear" of Liens", 20 Am. Bankr. Inst. L. Rev. 517, 520 (2012)("Clear Channel has limited precedential value and has been subject to considerable criticism, both from commentators and in judicial opinions). Moreover, this court does not believe it is bound by Clear Channel. "BAP decisions are not binding on bankruptcy courts, as district court decisions are not." In re Rinard, 451
B.R. 12, 21 (Bankr. C.D. Cal. 2011).
"Several courts and commentators have identified state law foreclosure as a qualifying proceeding under the facts of the Clear Channel case." See Bolnick at 525. "[A] properly conducted foreclosure sale extinguishes all liens which are junior to that of the foreclosing lender (though the junior lienholders will be paid in their order of priority with any surplus remaining after the senior lien is satisfied)." Id. at 525-26, see also Streiff v. Darlington, 9 Cal. 2d 42. 68 P.2d 728, 729 (Cal. 1937)("Assuming the appellants to have been the purchasers at the sale, they acquired title to the real property free from all claims subordinate to their deed of trust or subject to all prior liens and titles."). See also Bolnick at 525-26, n. 81("George W. Kuney, Misinterpreting Bankruptcy Code Section 363(f) and Undermining the Chapter 11 Process," 76 Am. Bankr. L.J. 235, 251-52 (2002) ("[F]oreclosure sales are commonly recognized hypothetical proceedings that can satisfy § 363(f)(5).") (footnote omitted)); Joel H. Levitan, Stephen J. Gordon & Richard A. Stieglitz, "Ninth Circuit BAP Dresses Down Lienstripping: Could This Be the Last Dance for Section 363 Sales?", 27 Am. Bankr. Inst. J., Oct. 2008, at 52. ("Presumably it is clear that in the context of a foreclosure proceeding, if nothing else, a senior secured creditor can credit bid and eliminate the liens of junior secured creditors."); accord Frank A. Oswald & Andy Winchell, "Missing the Forest for the Trees in § 363: How the Ninth Circuit's
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Bankruptcy Appellate Panel Neglected the Big Picture in the Clear Channel Decision," Norton Bankr. Law Adviser, April 2009, 4, 8 ("[A] cursory review of discussions on the topic unsurprisingly suggests that a real estate foreclosure under state law almost certainly would satisfy the criteria of § 363(f)(5).")).
Other courts in the Ninth Circuit since Clear Channel have held that it should indeed apply to sales insufficient to clear all liens. First, consider In re Hassen Imports P'ship, 502 B.R. 851, 858–59 (C.D. Cal. 2013). While the interest in Hassen was an equitable servitude and not a lien, it was for only this reason that the court concluded that, unlike a lien, the holder could not be compelled to accept a money satisfaction and was therefore outside the language of the statute. At the conclusion of the opinion the Hassen court makes clear that had the interest been a lien, it could be removed as a sold-out junior in a foreclosure and therefore fit within the meaning of §363(f)(5). Id. at 862-63
In Jolan, the court considered "whether §363(f)(5) permits a sale free and clear of liens when the sale price is insufficient to satisfy all liens." Id. at 868. In Jolan, the chapter 7 trustee attempted to sell personal property of the estate free and clear of liens. Ultimately, the Jolan court held that "there are legal and equitable proceedings in Washington in which a junior lienholder could be compelled to accept a money satisfaction…" Id. at 869. Therefore, "[b]ecause there are in Washington legal and equitable proceedings by which lienholder may be compelled to accept money satisfactions, § 363(f)(5) here permits a sale free and clear of liens, with the liens attaching to the proceeds, notwithstanding that those proceeds may be insufficient to pay all liens." Id. at 870. Although the facts in Jolan involved sale of personal property, the court opined that "were the trustee proposing to sell real property, judicial and nonjudicial foreclosures in Washington operate to clear junior lienholders’ interests, and their liens attach to proceeds in excess of the costs of sale and the obligation of judgment foreclosed." Id. The Jolan court subsequently cited to Wash. Rev. Code Ann. § 61.24 in support. Although not expressly stated, the Jolan court implied that Wash. Rev. Code § 61.24 satisfied § 363(f)(5)
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because it was a legal proceeding that compelled lienholders to accept money satisfaction. Jolan has been cited favorably on the point in many authorities. See In re Kabuto Ariz. Props., LLC, 2009 Bankr. LEXIS 4961 *69 (Bankr. D. Ariz 2009); Banning Lewis Ranch Co. LLC v. City of Colorado Springs (In re
Banning Lewis Ranch Co.,LLC), 532 B.R. 335,350-51 (Bankr. D. Colo. 2015); In re WK Lang Holdings, LLC, 2013 Bankr. LEXIS 5224, n. 45 (Bankr. D. Kansas 2013).
California law parallels Wash. Rev. Code Ann. § 61.24 as discussed in Jolan.
Like Washington, California too provides that the excess proceeds from a trustee’s sale are distributed to junior lienholders in order of priority. Wash Rev. Code §
61.24.080 states in part, "Interests in, or liens or claims of liens against the property eliminated by sale under this section shall attach to the surplus in the order of priority that it had attached to the property, as determined by the court." Similarly, Cal. Civ. Code. § 2924k(a)(3) provides that "[t]he trustee…shall distribute the proceeds…in the following order of priority…to satisfy the outstanding balance of obligations secured by any junior liens." See also Caito v. United California Bank, 20 Cal. 3d 694, 701, 576 P.2d 466, 469 (1978)("Following a foreclosure sale and satisfaction of the obligation of the creditor who forecloses, subordinate liens against the foreclosed property attach to the surplus proceeds in order of their priority"); Darlington 68 P. 2d at 729. To the same effect is Code of Civil Procedure §701.810(d) in the context of a sheriff’s sale. The Trustee cites still other examples. In short, because California law provides for a proceeding (a trustee’s sale/foreclosure sale or sheriff’s sale) that compels a money satisfaction to junior lienholders, § 363(f)(5) is satisfied.
This reasoning has also been followed outside the Ninth Circuit. A New York bankruptcy court noted that the "existence of judicial and nonjudicial foreclosure actions and enforcement actions under state law can satisfy section 363(f)(5)." In re Boston Generating, LLC, 440 B.R. 302, 333 (Bankr. S.D.N.Y. 2010)(citing Jolan, at 870). The Boston Generating court then concluded that because "numerous legal and equitable proceedings exist [under state law] by which the [opposing parties] could be forced to accept less than full payment...section 363(f)(5)" was therefore satisfied.
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Boston Generating at 333. See also In re Gulf States Steel, 285 B.R. 497, 509 (Bankr.
N.D. Ala. 2002)("In this case, each of the claims, liens or interests identified in the Sale Motion could be compelled to accept a money satisfaction…Moreover, the DIP Financing Orders provide that Ableco has a lien on the Property that is senior in priority to such claims, liens or interests. Thus, the holders thereof would be compelled as a matter of law to release the same in a judicial or non-judicial foreclosure of the senior liens held by Ableco. See Ala. Code § 35-10-5.")(emphasis added).
The unifying precept of all of these authorities, Hassen, Jolan, Boston Generating, and the others is that it is not necessary to determine that proceeds of a hypothetical foreclosure or sheriff’s sale would necessarily be sufficient to pay the claim in full. What matters is the existence of law under which, if such a proceeding is initiated by a senior interest, the junior claim is compelled by law to accept whatever comes from the "waterfall" of proceeds as satisfaction of the claim in the subject property. If such law exists, §363(f)(5) is satisfied. California has law that if such a "proceeding" was to be initiated, the junior lien could be stripped from the property to the extent the monies resulting were insufficient.
While the court respects the Clear Channel analysis in dealing with the awkward language of the statute, the court disagrees that the plain meaning of §363(f)
(5) must therefore be ignored under a vague precept that some distinction must logically be attributed because of the overlap with subsection (f)(3). As is demonstrated in this case, there can indeed arise logical reasons for that different approach to maximize the trustee’s power in extracting value from troubled assets.
Grant
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Debtor(s):
Elaine Marie Roach Represented By
Diane L Mancinelli William M Burd
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Chad V Haes Alan I Nahmias
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(cont'd from 5-1-18 per order signed 4-16-18)
Docket 91
Tentative for 5/8/18: See Calendar #12
Debtor(s):
Elaine Marie Roach Represented By
Diane L Mancinelli William M Burd
Movant(s):
Richard A Marshack (TR) Represented By
D Edward Hays Chad V Haes Alan I Nahmias
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Chad V Haes Alan I Nahmias
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Docket 61
Tentative for 5/8/18:
Deny.
There is a question of service/ notice since only the U.S. Trustee and the Chapter 7 Trustee are listed as having been served.
More significantly, no showing of "excusable neglect" is made under Rule 60, and indeed no evidence at all is offered.
Debtor(s):
Tae Hoon Ko Pro Se
Movant(s):
Tae Hoon Ko Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
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LOBEL WEILAND GOLDEN FRIEDMAN, ATTORNEY FOR TRUSTEE WEILAND GOLDEN GOODRICH, LLP, OTHER
HAHN FIFE & COMPANY LLP, ACCOUNTANT FRANCHISE TAX BOARD, BANKRUPTCY SECTION MS
Docket 75
Tentative for 5/8/18:
Allow as prayed. Appearance is optional.
Debtor(s):
California Oil Independents, Inc. Represented By
Chris Gautschi
Trustee(s):
Richard A Marshack (TR) Represented By Beth Gaschen Jeffrey I Golden
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JEFFREY I. GOLDEN, Chapter 7 Trustee
HAHN FIFE & COMPANY LLP, Accountant for the Trustee FRANCHISE TAX BOARD, Administrative Tax Claim #1-2
Docket 24
Tentative for 5/8/18:
Allow as prayed. Appearance is optional.
Debtor(s):
Haidar Glass & Mirrors, Inc. Represented By Robert S Altagen
Trustee(s):
Jeffrey I Golden (TR) Pro Se
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(3) Approving Compromise of Controversy Pursuant to Federal Rule of Bankruptcy Procedure 9019
Docket 128
Tentative for 5/8/18: Grant.
Debtor(s):
Great American Mint & Refinery, Represented By
Michael R Totaro Matthew Grimshaw David Wood Richard A Marshack Marshack Hays LLP
Movant(s):
Thomas H Casey (TR) Represented By Beth Gaschen
Trustee(s):
Thomas H Casey (TR) Represented By Beth Gaschen
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Docket 28
Tentative for 5/8/18:
Trustee objects to Debtor’s claim for exemption concerning a $120,000 interest Debtor has in a condo in Huntington Beach because Debtor’s claimed exemption far exceeds that allowed under the invoked statute, CCP §703.140 (b)(5).
Under CCP §703.140(b)(5), a Debtor may claim as exempt, property up to
$25,340 in value. This number is derived by adding the statutory maximums from §703.140(b)(1) and (b)(5) together ($24,060 + $1,280 = $25,340).
Debtor currently seeks to exempt both her interest in the condo ($120,000) and an "Arbitration Award" ($11,117.83) for a total of $131,117.83. This number clearly exceeds the statutory limit. Therefore, Debtor’s claimed exemption with respect to the condo will need to be reduced to $14,222.17. This number is derived by taking statutory maximum from §703.140(b)(5) ($25,340) and subtracting the "Arbitration Award" ($11,117.83).
It should be noted that both Debtor and Trustee are apparently using outdated forms for the calculations in their briefs. Debtor’s and Trustee’s calculations are based on the Judicial Council of California’s form "EJ-156" which was revised on April 1, 2016 and purports to cite CCP §703.140.
Trustee attached this form as "Exhibit B." This form states that the statutory limit is slightly higher at $28,225. However, as of January 1, 2017 the statutory limit has been lowered to $25,340.00. Debtor filed after this revision to the statute. This only has the effect of changing the amount that Debtor can claim as exempt under §703.140(b)(5).
Sustain. Alleged "condo" interest exemption reduced to $14,222.17. The Court makes no determination as to title issues regarding the Sims condo.
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Debtor(s):
Tracy Marie Marx Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Donald W Sieveke
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(con't as a s/c from 11-7-17 per order approving stip to cont. entered 11-6-17)
Docket 1382
Tentative for 5/8/18: No tentative.
Tentative for 5/2/17
Continued Status Conference Date: Date: November 7, 2017 at 11:00 a.m. per stip and order submitted on 5/1/17.
Movants are unsecured creditors of Debtor who have initiated an adversary proceeding against Debtor’s secured lender Salus Capital Partners et al ("Lender"). The adversary proceeding involves tort claims stemming from Movants’ allegations that Lender induced Movants to accept notes Lender knew were worthless, and to ship goods when Lender knew that a bankruptcy was imminent, a "pump and dump" scheme, if you will. Movants assert that Lender sought to plump up its portfolio of unpaid inventory collateral so Lenders would be in an oversecured position at the expense of unpaid vendors.
Movants assert that Lender improperly submitted invoices to the DIP and have been paid thereon a total amount of between $1.5 million and $2.213 million in improper professional fees from the estate. Movants offer an analysis of the indemnity provisions of both the pre-petition Credit Agreement and the DIP Financing Order
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entered in this case. Movants argue neither appears to cover litigation over alleged torts committed pre-petition. The Creditors Committee and another creditor, Baltic Linen Company, Inc., have joined the motion. The Trustee has filed a "Statement of Position" generally supporting the motion.
These fees (in whole or in part) apparently cover services for pre-litigation investigation, mediation and litigation of the adversary proceeding. Movants argue that the adversary proceeding has nothing to do with DIP financing, but rather involves tort claims arising out of pre-petition conduct, and so Lender should not have been reimbursed. Movants assert that these services are not covered by the indemnification provision in the Credit Agreement, and that even if they were, there is no duty to defend or advance costs. Movants argue Lender would have to first negate the possibility of gross negligence or willful misconduct for indemnification to be ripe, and that cannot be done because the complaint has not been litigated. Movants request that Lender be required to return all of the fees and costs that have been paid from the estate and that an accounting from June 2015 to the present be provided at Lender’s expense. Movants also request that no other fees be paid to Lender unless Lender demonstrates that the fees fall correctly within the indemnification provision and all contingencies for indemnification are satisfied.
Lender opposes the motion, arguing that the fees are valid prepetition obligations that were properly charged under the Credit Agreement and DIP Financing Order. Lender notes that Movants do not identify the specific fees that are not appropriate, but assert a blanket objection to everything. Lender asserts that the fees were immediately reimbursable as "Credit Party Expenses" pursuant to § 10.04(a) of the Credit Agreement because Lender’s only relationship with Debtor was through the Credit Agreement, so defending against claims that it abused its position as lender falls within this section. Lender cites the DIP Financing Order for authority to receive payment on a monthly basis. Lender also argues that the fees fall within the indemnification rights under § 10.04(b)(i) of the Credit Agreement because the claims in the adversary proceeding are claims in connection with Lender’s obligations under the Credit Agreement. Lender asserts that immediate payment was provided for in §
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10.04(e) of the Credit Agreement. Lender also argues that the Final DIP Order at ¶26 provides a procedure for submitting invoices to Debtor for immediate payment and creates a 10-day window for objections to be made. Lender asserts that this objection procedure was not complied with, so Movants either have waived their argument or do not have standing and should not be permitted to circumvent the procedures set forth in the DIP Financing Order. Lender quotes ¶ 26:
DIP and Other Expenses. The Debtor is authorized and directed to pay all reasonable and documented out- of-pocket expenses of (x) the DIP Agent and the DIP Lenders in connection with the DIP Facility (including, without limitation, expenses incurred prior to the Petition Date), as provided in the DIP Loan Documents, and (y) the Prepetition Agent (including, without limitation, expenses incurred prior to the Petition Date) as provided in the Prepetition Credit Documents, including, without limitation, reasonable legal, accounting, collateral examination, monitoring and appraisal fees, financial advisory fees, fees and expenses of other consultants, and indemnification and reimbursement of fees and expenses, upon the Debtor’s receipt of invoices for the payment thereof. Payment of all such fees and expenses shall not be subject to allowance by the Court and professionals for the DIP Agent, the DIP Lenders and the Prepetition Agent shall not be required to comply with the U.S. Trustee fee guidelines. Notwithstanding the foregoing, at the same time such invoices are delivered to the Debtor, the professionals for the DIP Agent, the DIP Lenders and the Prepetition Agent shall deliver a copy of their respective invoices to counsel for the Committee and the
U.S. Trustee, redacted as necessary with respect to any
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privileged or confidential information contained therein. Any objections raised by the Debtor, the U.S. Trustee or the Committee with respect to such invoices within ten (10) business days of the receipt thereof will be resolved by the Court. In the event of any objection, the provisions of section 107 of the Bankruptcy Code and Rule 9018 of the Federal Rules of Bankruptcy Procedure shall apply. Pending such resolution, the undisputed portion of any such invoice will be paid promptly by the Debtor. Notwithstanding the foregoing, the Debtor is authorized and directed to pay on the Closing Date all reasonable fees, costs and expenses of the DIP Agent, the DIP Lenders and the Prepetition Agent incurred on or prior to such date without the need for any professional engaged by the DIP Agent, the DIP Lenders or the Prepetition Agent to first deliver a copy of its invoice as provided for herein. (italics and emphasis added)
The scheme endorsed above was obviously an attempt to bypass the usual allowance requirement, but it can be argued that the allowance requirement was maintained if objection was timely filed (within 10 days).
To further support their entitlement to immediate compensation, Lender cites to § 10.04(e) of the Credit Agreement, which provides that "[a]ll amounts due under this Section shall be payable on demand therefor."
Lender notes that there is no provision for the return of payments in ¶ 26 of the DIP Financing Order, as compared to ¶ 3 of the same order, where the potential return of funds is contemplated. A procedure for doing so is set forth. ¶ 3 of the DIP Financing Order provides:
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This seems to create the possibility of a clawback if fees are successfully challenged. It may not answer whether such payments were correctly made in the first place.
In their reply, Movants argue that Lender has ignored New York law for contract interpretation and indemnification. Movants believe that the indemnification provision should control, not the Credit Party Expense provisions because the indemnification provision specifically covers third-party tort claims. Movants also reiterate that there is no advancement of fees provision. Movants reply that the 10-day period in the DIP Financing Order does not apply to them as unsecured creditors (although several of them are also Committee members). Movants note that their counsel received the invoices for the first time on February 26, 2016 and filed this motion only five days later.
The Credit Agreement, at § 10.14(a), provides that it is governed by New York law. [Motion, Exhibit 1, bates p. 158] In order to avoid inconsistency, all parts of a contract should be reconciled. National Conversion Corp. v. Cedar Bldg. Corp., 23 N.Y.2d 621, 625 (1969). Agreements should be read in their entirety, and interpretations that would render parts of an agreement superfluous should be avoided. Lawyers' Fund for Client Protection of State of N.Y. v Bank Leumi Trust Co. of N.Y., 94 N.Y.2d 398, 404 (2000). Specific provisions generally restrict general provisions.
Bowmer v. Bowmer, 50 N.Y.2d 288, 294 (1980) citing 4 Williston, Contracts [3d ed],
§ 624, pp 822-825.
With these general principles in mind, the court must review the provisions of
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the Credit Agreement relied upon by the parties to determine if there is any merit to Movants’ argument. Lender asserts that all of the fees and costs incurred in connection with the pre-litigation investigation, mediation and adversary proceeding are immediately compensable as "Credit Party Expenses." The Credit Agreement, at § 10.04(a), provides that the Borrower shall pay all Credit Party Expenses. [Motion, Exh. 1, bates p. 149] "Credit Party Expenses" are defined at § 1.01, p. 11, in part, as:
(a) all reasonable and documented allocable expenses incurred by the Agent, the Tranche A-1 Agents, any Lender and its Affiliates in connection with this Agreement and the other Loan Documents, including without limitation (i) the reasonable fees, charges and disbursements of (A) counsel for the Agent, Tranche A- 1 Agents and Lenders, (B) outside consultants for the Agent, (C) appraisers, (D) commercial finance examinations, and (E) all such reasonable and documented allocable expenses incurred during any workout, restructuring or negotiations in respect of the Obligations, (ii) in connection with . . . (D) the enforcement or protection of the rights of the Credit Parties in connection with this Agreement or the Loan Documents or efforts to monitor, preserve, protect, collect, or enforce the Collateral…
[Id. at bates p. 42]
Lender also asserts that the fees and costs are compensable under the indemnification provision of the Credit Agreement, at § 10.04(b), which provides, in part, as follows:
The Loan Parties shall indemnify the Agent (and any sub-agent thereof), each other Credit Party, and each Related Party of any of the foregoing
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Persons…against…any and all losses, claims, causes of action, damages, liabilities, settlement payments, costs and related expenses…arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, or, in the case of the Agent (and any sub- agents thereof) and their Related Parties only, the administration of this Agreement and the other Loan Documents . . . or (v) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party or any of the Loan Parties’ directors, shareholders or creditors, and regardless of whether any Indemnitee is a party thereto, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of the Indemnitee; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower or any other Loan Party against an Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other Loan
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Document, if the Borrower or such Loan Party has obtained a final and nonappealable judgment in its favor on such claim as determined by a court of competent jurisdiction. (italics and emphasis added)
Stated differently, the main issue at bench seems to be whether by reason of
the "provided that" language the fees and costs charged by Lender in connection with pre-litigation investigation, mediation and litigation of the adversary proceeding were properly charged under the Credit Agreement and/or Final DIP Order and paid immediately, before there was any determination whether the indemnification expenses were of the excluded category, merely because such claims are prospective. Stated differently, is determination of the character of the indemnity obligation a condition precedent to payment? If Lender had its way, anything that ever arose in connection with this loan to Debtor would be a "Credit Party Expense" because its only relationship with Debtor is through the Credit Agreement. But if this were the case, then arguably there would be no need for the indemnification provision, which specifically identifies tort claims brought by third parties as excludable.
It is difficult to see how defending against third-party tort claims qualifies as enforcing or protecting rights in connection with the Credit Agreement or Lender’s collateral. Lenders are not enforcing or protecting their rights under the Credit Agreement, they are defending against claims that they induced Movants to accept notes and ship goods when they knew that Debtor was insolvent. The fees and expenses for the pre-litigation investigation, mediation and litigating the adversary proceeding do not look like Credit Party Expenses, and it cannot be the case that Lender can charge a borrower the costs of Lender’s fraud.
It is possible that Lender will be covered under the indemnification provision of the Credit Agreement, at § 10.04(b)(v), because it covers tort claims brought by third parties. But, viewing the above language as a condition precedent, it would appear that Lender first needs to determine what its liability is and the basis of that liability before it can be reimbursed. The indemnification provision is limited by the following language: "…provided that such indemnity shall not, as to any Indemnitee,
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be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee…" This seems to indicate that first Lender must first demonstrate that there was no gross negligence or willful misconduct before it can be reimbursed. This conclusion appears to be supported by New York law, which provides that indemnification and advancement of legal fees are two distinct obligations. Crossroads ABL LLC v. Canaras Capital Management, LLC, 963 N.Y.S. 2d 645, 647 (1st Dept. 2013) citing Ficus Invs., Inc. v. Private Capital Mgt., LLC, 61 A.D.3d 1, 9 (1st Dept. 2009). Lender cites to Bank of the West v. The Valley National Bank of Arizona, 41 F.3d 471, 479 (9th Cir. 1994), but even in that case the suit was to recover fees and costs that had already been incurred in a case that had concluded. The dispute here is not whether Lender may ever be entitled to reimbursement, but whether it is entitled to it immediately and on an ongoing basis. Bank of the West does not address this question.
In further support of its claimed right to immediate payment, Lender cites to § 10.04(e) of the Credit Agreement, which provides that "[a]ll amounts due under this Section shall be payable on demand therefor." (emphasis added) As Movants correctly argue, in order to receive payment under this section there must be something due. At this time, with respect to the pre-litigation investigation, mediation and litigation of the adversary proceeding, Lender has not demonstrated (at least not convincingly) that anything is due. The Final DIP Order at ¶ 26 provides for payment of expenses in connection with the DIP Facility and Prepetition Credit Documents. Lender has similarly not demonstrated any entitlement to payment under this provision and the court does not believe that merely insertion of the word "prospective" in the Credit Agreement changes this calculation. The more natural reading seems to condition recovery of the indemnity costs on first a determination that they do not arise from a tort involving gross negligence or willful misconduct.
Lender argues that Movants motion is moot because ¶ 26 of the DIP Financing Order provides a 10-day window for Debtor, the United States Trustee and the
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Committee to object to Lenders’ invoices. While Movants are members of the Committee, the invoices were only sent to Committee’s counsel. [Reply filed March 16, 2016, Exh. B]. Perhaps the Committee qua committee should not be permitted to join in the motion as it had the opportunity to object but arguably waived the right.
But that is about as far as this argument can go. Movants note that they filed this motion very quickly (five days) after receiving the invoices.
There are other complications. The funds involved are reportedly Lender’s cash collateral. A major gap appears in the facts as recited in the papers. Has the Lender been otherwise paid in full except for these fees and expenses? If not, the question may be largely academic and merely one of accounting for the size of the deficiency since until all principal and interest accrued up to value of the collateral are paid, there is no room left for accrual of attorney’s fees under §506 in any event. The court cannot tell from this record whether the Lender is in fact over secured except for the disputed fees. Specifics are also lacking; no evidence has been provided by the parties regarding which fees need to be returned. Movants ask for an accounting.
Perhaps this will be necessary. Movants could identify exactly which fees and costs are objectionable, rather than just asking that everything that has been paid be returned. Moreover, the court sees no basis to rule in summary fashion that the subject fees are of the excluded character, or that the disputed funds must be paid over to the trustee until there has first been an adjudication on the merits (provided repayment is assured). Some of the terms in the Credit Agreement (and maybe the DIP Financing Order as well) are vague and therefore subject to admission of parol evidence. See e.g. Bank of the West, 41 F.3d at 477 citing Pac. Gas & Elec. Co. v.
G.W. Thomas Drayage & Rigging Co., 69 Cal.2d 33, 37-40 (1968). This does not recommend itself to a summary adjudication as is requested here.
At most, this would suggest an order issue segregating the disputed sums pending adjudication on the merits and that an accounting be provided in meantime.
Grant in part; monies will be segregated and held pending accounting and a determination of the character and allowability of the indemnification expenses.
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Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Movant(s):
Panda Home Fashions LLC Represented By David J Mahoney Daniel J Weintraub
P&A Marketing Represented By David J Mahoney Daniel J Weintraub
Welcome Industrial Represented By Leslie A Cohen Daniel J Weintraub
Shewak Lajwanti Home Fashions, Represented By
David L Prince Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky
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Christopher Minier Jerrold L Bregman Todd C. Ringstad
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(con't from 5-1-18 per order granting stip. to cont. hrg. entered 4-18-18)
Docket 2143
Tentative for 5/8/18:
This is the Trustee’s motion to approve a compromise settlement between the Trustee for estate as lead plaintiff joined by various vendor plaintiffs (collectively "plaintiffs") and defendants Salus Capital Partners, LLC, Salus CLO 2012-1, Ltd, etc. (collectively "Lenders"). Broadly, the Trustee alleges in her complaint that the Lenders and certain officers and directors of the debtor (collectively "individual defendants") engaged in a conspiracy whereby the individual defendants aided and abetted the Lenders in concocting a "pump and dump" scheme whereby the vendor plaintiffs were induced to ship more product and take notes for outstanding receivables at a time when the defendants knew, or should have known, that the debtor was in perilous financial condition.
Under the proposed settlement a package of claim waivers and payments of new funds aggregate to about $6,800,000 in value, according to the Trustee. In return, the Lenders obtain a general release. The settlement is conditioned not only upon a court approval under FRBP 9019 but also upon a court determination that the settlement is in "good faith" under Cal. Civ. Proc. Code §877.6. The practical effect of such a good faith determination is that joint tortfeasors or co-obligors are barred
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from claims against the settling defendants for contribution or indemnity based on comparative fault. Also, under Cal. Civ. Proc. Code §877.6(d) the party asserting lack of good faith bears the burden on that issue.
The elements supporting a settlement as in the best interest of the estate such as probability of success, difficulties in collection, complexity of the litigation and delay, and paramount views of the creditor body, listed in cases such as Martin v.
Kane (In re A & C Properties), 784 F. 2d 1377, 1381 (9th Cir. 1986) is not really contested by the individual defendants in their opposition. The individual defendants however oppose the attempt to obtain a "good faith" finding under Cal. Civ. Proc.
Code §877.6. Individual defendants argue that on other statutory or common law schemes, there has to be an evidentiary showing, which is lacking here.
The individual defendants argue that the court exercises federal question jurisdiction here, and therefore Cal. Civ. Proc. Code § 877.6 does not apply; rather, individual defendants urge that federal common law or perhaps the Uniform Comparative Fault Act should apply. But the court doubts this is correct. The court exercises "supplemental jurisdiction" because this action is "related to" the bankruptcy proceeding under 28 U.S.C. §§157 and 1334. Most of the allegations of the complaint invoke purely questions of state law fraud, aiding and abetting and the like.
Consequently, when a federal court sits in diversity or on supplemental jurisdiction, as here, the court applies state substantive law to state law claims including Cal. Civ.
Proc. Code §877.6, as held in individual defendants’ own cited case, Mason & Dixon Intermodal, Inc. v. Lapmaster Intern. LLC, 632 F. 3d 1056, 1060 (9th Cir 2011).
But even if state law should apply, the individual defendants argue that Delaware not California law should govern. This argument is based solely on the point that the debtor was incorporated in Delaware. Individual defendants invoke the so-called "internal affairs" doctrine which may apply where breach of fiduciary duty is claimed as to Delaware corporate officers and directors. But their point weakens considerably when it develops that the fiduciary duty claims involving the settling defendants were dismissed earlier in the case. Moreover, the local law of the state of incorporation will be applied ... except where, with respect to the particular issue,
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some other state has a more significant relationship ... to the parties and the transaction. (Rest.2d Conf. of Laws, § 309). In Lidow v. Superior Ct., 206 Cal. App. 4th 351, 359 (2012) the court held "[t]here is, however, a vital limitation to the internal affairs doctrine…. [citing the Restatement at § 302, com. (e), p. 309)]… there is no reason why corporate acts ‘involving the making of contracts, the commission of torts and the transfer of property’ should not be governed by the local law of different states."
California applies the governmental interest analysis to the resolution of choice of law questions. In In re Nucorp Energy Securities Litigation, 661 F. Supp. 1403 (9th Cir 1987) the court determined a three-part test: First the court must determine whether there is in fact a conflict between the competing jurisdictions since there is obviously no problem where the laws of the states are identical. Second, "[i]f a conflict exists the court must determine whether each jurisdiction has a legitimate interest in the application of its law and underlying policy…. [third,] if both jurisdictions have a legitimate interest in the application of their conflicting laws, the court should apply the law of the state whose interest would be the more impaired if its laws were not applied." Id. at 1412. For reasons already stated the "internal affairs" doctrine of concern in Delaware has only tangential, if any, continuing application in this case. In contrast, the corporate headquarters were reportedly in Costa Mesa, California and the alleged frauds and other tortious acts attributed to the Lenders and the individual defendants would have occurred primarily there. None are reported as having occurred in Delaware. The interests of California in applying its law would seem to outweigh Delaware’s.
The burden of proof is on the objecting party under Cal. Civ. Proc. Code § 877.6(d) to prove a lack of good faith (See Tech-Bilt, Inc. v. Woodward-Clyde & Assoc., 38 Cal. 3d 488, 493 (1985)), so the fact that the record is largely void of the evidence from which the court could make a determination of the overall liability of the alleged tortfeasors, supports the settlement, not the objection. But even so, the court is satisfied that this proposed settlement is well within the zone of reasonableness. The objectors would have to show that the settlement is so far "out of
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the ballpark" as to be inconsistent with the equitable objectives of the statute. Id. at 499-500; See also Long Beach Memorial Med. Ctr. v. Superior Court, 172 Cal. App. 4th 865, 873 (2009). The court is not blind to some of the hard realities of bankruptcy litigation, not the least of which is that the Trustee has, absent the settlement, little unencumbered funds with which prolonged litigation could be waged. There is no showing that an exchange of $6.8 million is in any way outsized compared to total damages alleged, particularly when properly discounted in view of the realities of bankruptcy litigation. Moreover, as the Trustee argues, most if not all of the alleged wrongdoing is derivative in nature, i.e. the individual actors could not be liable for less than the corporate defendants on whose behalf they allegedly acted. In considering Rule 9019 motions the court relies heavily on the business judgment of trustees and their counsel. Nothing is shown to suggest that reliance is misplaced here.
Grant
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Movant(s):
Karen S Naylor (TR) Represented By
11:00 AM
Trustee(s):
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Docket 2147
Tentative for 5/8/18:
On the "good faith" settlement question, see Calendar #20. The opposition articulates little on why, assuming the settlement is approved, that distribution should not be made except to say they intend to appeal. For this sole reason the objectors urge the court to delay distribution. This is not a legally cognizable reason unless objectors want to post a bond.
Grant motion, deny stay.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Movant(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
11:00 AM
Trustee(s):
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Docket 202
Tentative for 5/9/18:
Grant. Appearance is optional.
Debtor(s):
Shahid Chaudhry Represented By Anerio V Altman
Movant(s):
Anerio V Altman Represented By Anerio V Altman
10:00 AM
Adv#: 8:17-01224 Weaver v. United States Department of Education et al
(cont'd from 2-8-18 per order entered 1-23-18)
Docket 1
- NONE LISTED -
Debtor(s):
Charles Thomas Weaver Pro Se
Defendant(s):
United States Department of Represented By Elan S Levey
Educational Credit Management Represented By
Scott A Schiff
USA Funds Inc Pro Se
Plaintiff(s):
Charles Thomas Weaver Represented By Leigh E Ferrin Kari E Gibson
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:16-01225 American Express Centurion Bank et al v. Fox
(set per order entered 1-4-18)
Docket 1
Tentative for 12/7/17:
Deadline for completing discovery: March 15, 2018 Last date for filing pre-trial motions: March 26, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Bradley Ray Fox Represented By
R Gibson Pagter Jr.
Defendant(s):
Bradley Ray Fox Represented By
R Gibson Pagter Jr.
Plaintiff(s):
American Express Centurion Bank Represented By
Robert S Lampl
American Express Bank, FSB Represented By Robert S Lampl
10:00 AM
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello
10:00 AM
Adv#: 8:17-01006 Lim v. Le et al
Docket 3
Tentative for 5/10/18:
This is the oft-continued Pre-Trial Conference. The court has requested that the parties work on filing a Joint Pre Trial Stipulation. The court even entered an Order on March 29, 2018 from the last Pre-Trial Conference setting forth a timetable for good faith review of the latest in drafts of Joint Pre-trial Stipulations. Despite all of this we still have only two unilateral proposed Pre-Trial Stipulations. Both sides continue their finger- pointing and invective and blame the other for this failure. To add salt, both sides seek an award of sanctions from the other.
The court is tired and disgusted. As near as the court can discern, the major point of contention goes to whether certain questions were covered by Requests for Admission and either omitted from the proposed stipulations or are disputed as admissions. Defendant argues that ¶33 (¶s 16, 17, 21 as well) of Plaintiff’s draft should be omitted from agreed facts and moved to disputed facts. Plaintiff argues instead that failure to address certain requests for admission should have consequence, and seeks to force that conclusion by including them within a stipulation. The court disagrees. A stipulation, by definition, is a voluntary attempt to narrow issues, not create them. If there should be a "deemed admitted" consequence, that can be addressed by other means, such as motion in limine. But in meantime the obvious solution is to move these items to the disputed category, so at least we can get to a point where a trial can be scheduled and this matter can move along.
10:00 AM
Stipulations are not the place for enforcing discovery sanctions.
Adopt defendants’ version. Sanctions denied.
Tentative for 3/29/18:
Why shouldn't the court adopt the unilateral pre-trial stipulation as filed by defendants?
Tentative for 10/26/17:
Continue to November 9, 2017 at 11:00 a.m. to evaluate whether trial can be set.
Tentative for 6/8/17: See #12.
Tentative for 4/13/17:
Status conference continued to June 8, 2017 at 2:00 p.m.
Debtor(s):
David Thien Le Represented By Roman Quang Vu
Defendant(s):
David Thien Le Represented By Roman Quang Vu
Kimmie Thien Le Represented By Roman Quang Vu
10:00 AM
Joint Debtor(s):
Kimmie Thien Le Represented By Roman Quang Vu
Plaintiff(s):
Phuong X. Lim Represented By Marcello M Di Mauro Marcello M Di Mauro Roman Quang Vu
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
Adv#: 8:13-01040 Iorio v. Huang et al
Docket 157
Tentative for 5/10/18:
Grant.
Debtor(s):
Pearl Li-Chu Huang Represented By
Ken Liang - SUSPENDED - Bert Briones
Defendant(s):
Pearl Li-Chu Huang Represented By David Brian Lally
Roy Huei-Ming Huang Represented By David Brian Lally
Joint Debtor(s):
Roy Huei-Ming Huang Represented By
Ken Liang - SUSPENDED -
Movant(s):
Kelly Iorio Represented By
David M Reeder Allan Herzlich
11:00 AM
Plaintiff(s):
Kelly Iorio Represented By
David M Reeder Allan Herzlich
Trustee(s):
John M Wolfe (TR) Represented By Richard L Barnett
11:00 AM
Adv#: 8:17-01152 Nguyen v. National Collegiate Studen Loan Trust 2006-3 et al
Docket 34
Tentative for 5/10/18:
Grant.
Debtor(s):
Xuan Nhi Thi Nguyen Represented By Christine A Kingston
Defendant(s):
National Collegiate Studen Loan Represented By
Scott S Weltman
United States Department of Represented By Elan S Levey
Key Bank USA Pro Se
National Collegiate Student Loan Represented By
Scott S Weltman
National Collegiate Student Loan Represented By
Scott S Weltman
Educational Credit Management Represented By
Scott A Schiff
11:00 AM
Movant(s):
National Collegiate Studen Loan Represented By
Scott S Weltman
National Collegiate Student Loan Represented By
Scott S Weltman
National Collegiate Student Loan Represented By
Scott S Weltman
Plaintiff(s):
Xuan Nhi Thi Nguyen Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
Docket 230
Tentative for 5/10/18:
These matters are plaintiff Padilla’s Motion to Quash various subpoenas issued, one in each of the four adversary proceedings, which are matters 6 through 9 on calendar. As near as the court can determine, the motions are identical and so are dealt with in a single memorandum.
The level of frustration with these cases remains unchanged. Almost nothing is done on time or within prescribed rules. The parties and counsel’s continuing refusal to cooperate and endless squabbling multiplies the need for motions about the simplest matters. For example, on March 8, 2018 the court heard the Defendants’ motion for abstention and to extend discovery. The court issued an extensive tentative decision. An important portion of that motion (which was otherwise granted) appears below:
On calendar are two motions to extend discovery and pretrial motion deadlines, the tentative decisions on which are to grant. So, we may be looking at a delay in any event. The second is that much of the delay was occasioned by the plaintiff’s decision to appeal dismissal of the defamation count after the Anti-SLAPP motion. It could be said that the delay is in partly self-induced, so this lessens the sympathy factor. But the second question relates to the status of discovery as ordered in this court. The court is aware that there have already been several hearings on the question of Frank’s alleged refusal to provide discovery and/or protective orders and/or sanctions. The court is not
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willing to let go of that question, at least not before Frank has
appeared for at least one day of deposition as already ordered and has cooperated in giving discovery (consistent with the protective order already discussed) and has shown cause why he has not paid sanctions already ordered. Otherwise it could be said that his recalcitrance has been rewarded, not a precedent that this court is anxious to set. So, the court will delay abstention until after those duties have been fulfilled (and any follow-up compulsion motion decided) with a stay on all matters except the ordered discovery. Grant after further hearing reporting that Frank’s one-day deposition has been concluded and sanctions either paid (or cause is shown why they are not paid). If a motion to compel the already ordered deposition is also filed, the court will hear that as well before ordering the abstention. Court reserves over the ultimate question of dischargeability as discussed above." (See Tentative for 3/8/18, # 13.00). (italics added)
The court’s records show that the defendants were to submit a form of order. No order has yet been lodged (and so the court’s law clerk will prepare one). But that does not mean the court can or should ignore what has already transpired although another level of uncertainty is needlessly injected. So, the first question is, should the stay of all other matters, excepting the deposition, govern the subpoenas which are the subject matter of this motion?
But that is not an easy question to answer since the subpoenas were issued before the last hearing, and well before any stay order thereon was (will be) entered. Further, at one point in the last tentative the court also indicated it intended to grant an extension for discovery. Plaintiff argues (notwithstanding any tentative to extend) that the subpoenas are in any event late since they were issued just before the previous deadline of January 1, 2018. The argument is premised on the fact that there was insufficient time to comply with the subpoena before the discovery cut-off. Padilla cites Integra Lifesciences I, Ltd. v. Merck KGaA, 190 F.R.D. 556 (1999) for the proposition
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that subpoenas served without allowing sufficient time for service, notice, and response before the discovery cut-off date constitutes improper attempts to conduct discovery after the deadline. However, this proposition is not supported by the case cited. The case does say that subpoenas must be served within the time allowed for discovery. Id. at 561 It does not say anything about leaving extra time for procedural matters to take place.
On the contrary, though not argued or cited by Defendants, Liu v. Win Woo Trading, LLC, No. 14-CV-02639-KAW, 2016 U.S. Dist. LEXIS 20559,
2016 WL 661029, at *1 (N.D. Cal. Feb. 18, 2016) significantly undercuts Padilla’s argument. In Liu, the court stated:
"[I]t is undisputed that the subpoenas were served on nonparties before the discovery cut off. Defendants contend, however, that they are untimely, because the date for performance was on January 20, 2016, which was after the January 8, 2016 cut-off. Id. ‘Many courts have found that Rule 45 subpoenas sought after the discovery cut-off are improper attempts to obtain discovery beyond the discovery period.’ nSight, Inc. v. PeopleSoft, Inc., 2006 U.S. Dist.
LEXIS 22383, 2006 WL 988807, at *3 (N.D. Cal. Apr. 13, 2006) (citing
Rice, 164 F.R.D. at 557-59 (subpoenas duces tecum for particular records, issued to third parties after close of discovery, were quashed as improper attempt to engage in discovery after discovery cut-off)). These subpoenas, however, were served prior to the close of discovery. That performance would occur after the cut off does not render the subpoenas untimely." Id. at *2
Padilla also argues that the subpoenas should be quashed because Defendants have refused to participate in Rule 26 conferences and disclosures. Defendants counter saying that Padilla has, in the past, attested that the two sides have met and conferred as mandated by Rule 26, and that Padilla is simply now telling a different story. Further, Defendants point to Docket entry #263 from March 12, 2018 to show that Defendants did file Rule
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26 disclosures. However, the subpoenas were served several months prior to Defendants filing the required disclosures. Defendants do not claim to have already filed their disclosures prior to serving the subpoenas. Defendants also do not provide any statement as to whether the parties have met and conferred, and if they have, when the meeting(s) took place.
Under Rule 26(a), which governs the initial discovery disclosures, provides:
"a party must, without awaiting a discovery request, provide to the other parties:(i) the name and, if known, the address and telephone number of each individual likely to have discoverable information— along with the subjects of that information—that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment;
a copy—or a description by category and location—of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment;
a computation of each category of damages claimed by the disclosing party—who must also make available for inspection and copying as under Rule 34 the documents or other evidentiary material, unless privileged or protected from disclosure, on which each computation is based, including materials bearing on the nature and extent of injuries suffered; and
for inspection and copying as under Rule 34, any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment.
Rule 26(a)(1)(C), which governs the time within which the disclosures must be made, states "A party must make the initial disclosures at or within 14 days after the parties’ Rule 26(f) conference unless a different time is set
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by stipulation or court order, or unless a party objects during the conference that initial disclosures are not appropriate in this action and states the objection in the proposed discovery plan. In ruling on the objection, the court must determine what disclosures, if any, are to be made and must set the time for disclosure."
Lastly, Rule 26(f), which governs the requirements for a meet and confer, provides:
"(f) Conference of the Parties; Planning for Discovery.
Conference Timing. Except in a proceeding exempted from initial disclosure under Rule 26(a)(1)(B) or when the court orders otherwise, the parties must confer as soon as practicable—and in any event at least 21 days before a scheduling conference is held or a scheduling order is due under Rule 16(b).
Conference Content; Parties’ Responsibilities. In conferring, the parties must consider the nature and basis of their claims and defenses and the possibilities for promptly settling or resolving the case; make or arrange for the disclosures required by Rule 26(a)(1); discuss any issues about preserving discoverable information; and develop a proposed discovery plan. The attorneys of record and all unrepresented parties that have appeared in the case are jointly responsible for arranging the conference, for attempting in good faith to agree on the proposed discovery plan, and for submitting to the court within 14 days after the conference a written report outlining the plan. The court may order the parties or attorneys to attend the conference in person.
Discovery Plan. A discovery plan must state the parties’ views and proposals on:(A) what changes should be made in the timing, form, or requirement for disclosures under Rule 26(a), including a statement of when initial disclosures were made or will be made;
the subjects on which discovery may be needed, when discovery should be completed, and whether discovery should be
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conducted in phases or be limited to or focused on particular issues;
any issues about disclosure, discovery, or preservation of electronically stored information, including the form or forms in which it should be produced;
any issues about claims of privilege or of protection as trial- preparation materials, including — if the parties agree on a procedure to assert these claims after production — whether to ask the court to include their agreement in an order under Federal Rule of Evidence 502;
what changes should be made in the limitations on discovery imposed under these rules or by local rule, and what other limitations should be imposed; and
any other orders that the court should issue under Rule 26(c) or under Rule 16(b) and (c)."
Here, it clear that the Rule 26 disclosures were not filed in compliance with Rule 26(a)(1)(C) and are very late. The parties have apparently been wrangling over the Rule 26 Disclosures for some time now. As this is an old case, it is likely that the Rule 26 disclosure should have been made long ago, not just in the past couple of months. It is not clear whether the parties ever conducted the meetings required in Rule 26(f). Rule 26(d) provides that "a party may not seek discovery from any source before the parties have conferred as required by Rule 26(f)." Fed. R. Civ. P. 26(d). The Rule uses the phrase "any source," meaning that this applies to nonparties as well as parties. A subpoena issued before the Rule 26(f) conference is invalid.
Crutcher v. Fid. Nat'l Ins. Co., 2007 U.S. Dist. LEXIS 8208, 2007 WL 430655 (E.D. La. February 5, 2007).
This could be the dispositive issue unless Defendants can show that a Rule 26(f) conference did in fact occur, or that some exception to the Rule 26(f) conference applies. Defendants only say (in a footnote) that indeed they have met and conferred with Padilla as required by Rule 26(d) since
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2014. However, Defendants provide no proof that such conferences occurred. Furthermore, there appears to be nothing in the docket that demonstrates that a Rule 26(f) conference took place before the subpoenas were served. In the absence of such evidence, and given the incessant wrangling and compliance issues that have plagued this case, the court is tempted to conclude that no such meeting or conference has taken place that would satisfy the various requirements found in Rule 26.
On the other hand, the court is not clear how much to make of this procedural fault. In the court’s tentative from the March 8, 2018 hearing the court made clear that abstention would not occur until Frank gave his deposition and explained his failure to pay ordered sanctions. But in view of abstention in the near future, it is unclear to the court just how much additional weight should now be placed in the requirements of Rule 26 and its timely meeting requirement.
This matter will have to end someday, one prays. So, the court is not inclined to do anything that will prolong the agony, unless for a compelling reason. There is little doubt that Defendants are entitled to the information as it is relevant to the issue of damages. Padilla’s arguments to the contrary are not persuasive. Therefore, the court will employ a practical approach and deny the motion which, in the court’s view, is largely an invitation to a "do over" for no long-term practical purpose. The other issues expected of Frank are not forgotten, however.
Deny
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
11:00 AM
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Movant(s):
Carlos Padilla III Represented By Arash Shirdel
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
Docket 231
Tentative for 5/10/18: See Calendar #6
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Movant(s):
Carlos Padilla III Represented By Arash Shirdel
Plaintiff(s):
Carlos Padilla III Represented By
11:00 AM
Trustee(s):
Arash Shirdel
Richard A Marshack (TR) Represented By Arash Shirdel
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
Docket 232
Tentative for 5/10/18: See Calendar #6
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Movant(s):
Carlos Padilla III Represented By Arash Shirdel
Plaintiff(s):
Carlos Padilla III Represented By
11:00 AM
Trustee(s):
Arash Shirdel
Richard A Marshack (TR) Represented By Arash Shirdel
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
Docket 233
Tentative for 5/10/18: See Calendar #6
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Movant(s):
Carlos Padilla III Represented By Arash Shirdel
Plaintiff(s):
Carlos Padilla III Represented By
11:00 AM
Trustee(s):
Arash Shirdel
Richard A Marshack (TR) Represented By Arash Shirdel
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
(set at ptc held 1-25-18) (con't from 4-16-18 trial date)
Docket 1
Debtor(s):
Desiree C Sayre Represented By Andrew A Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Pro Se WENETA M KOSMALA Represented By
Reem J Bello
Plaintiff(s):
Fernando F Chavez Pro Se
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
Weneta M.A. Kosmala Represented By Reem J Bello
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
(set at ptc held 1-25-18) (s/c trial set at hrgs held on 4-16-18)
Docket 1
Debtor(s):
Desiree C Sayre Represented By Andrew A Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Pro Se WENETA M KOSMALA Represented By
Reem J Bello
Plaintiff(s):
Fernando F Chavez Pro Se
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
Weneta M.A. Kosmala Represented By Reem J Bello
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
(con't from 4-16-18)
Docket 214
Debtor(s):
Desiree C Sayre Represented By Andrew Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Represented By
Richard W Labowe
WENETA M KOSMALA Represented By Reem J Bello Michael R Adele
Plaintiff(s):
Fernando F Chavez Represented By Anthony J Palik Gregory B Henry Lance H Swanner
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
(con't from 4-16-18)
Docket 215
Debtor(s):
Desiree C Sayre Represented By Andrew Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Represented By
Richard W Labowe
WENETA M KOSMALA Represented By Reem J Bello Michael R Adele
Plaintiff(s):
Fernando F Chavez Represented By Anthony J Palik Gregory B Henry Lance H Swanner
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
(con't from 4-16-18)
Docket 216
Debtor(s):
Desiree C Sayre Represented By Andrew Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Represented By
Richard W Labowe
WENETA M KOSMALA Represented By Reem J Bello Michael R Adele
Plaintiff(s):
Fernando F Chavez Represented By Anthony J Palik Gregory B Henry Lance H Swanner
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
10:00 AM
LAWNDALE MARKET PLACE, LLC
Vs.
DEBTOR
Docket 10
Tentative for 5/15/18:
Grant. Appearance is optional.
Debtor(s):
Paul Yong Kim Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
SOUTHEAST PARTNERSHIP
Vs.
DEBTOR
Docket 16
Tentative for 5/15/18:
Grant without annulment because no basis shown.
Debtor(s):
Paul Yong Kim Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
SANTANDER CONSUMER USA INC.
Vs.
DEBTOR
Docket 24
- NONE LISTED -
Debtor(s):
Kevin D Maloney Represented By
Catherine Christiansen
Movant(s):
Santander Consumer USA Inc. dba Represented By
Sheryl K Ith
Trustee(s):
Richard A Marshack (TR) Represented By Scott Talkov
10:00 AM
(con't from 4-17-18)
NATIONSTAR MORTGAGE LLC
Vs.
DEBTOR
Docket 106
Grant. Appearance is optional.
Debtor(s):
Nancy Karen Chambers Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A.
Vs DEBTORS
Docket 55
Tentative for 5/15/18:
Grant. Appearance is optional.
Debtor(s):
Lea Puno Deaton Represented By Michael R Totaro
Joint Debtor(s):
Patrick Sean Deaton Represented By Michael R Totaro
Movant(s):
Wells Fargo Bank, N.A. Represented By Nancy L Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
(con't from 4-17-18)
LAKESIDE PARK COMMUNITY ASSOCIATION
Vs.
DEBTOR
Docket 33
Tentative for 5/15/18:
Neither side has analyzed whether as of the foreclosure sale on 1/11/18 an automatic stay was in effect given the provisions of Section 363(c)(3).
Analysis, please?
No service on debtor? Continue for service on Debtor.
Debtor(s):
Benito Moctezuma Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
CREDIT UNION OF SOUTHERN CALIFORNIA
Vs.
DEBTOR
Docket 38
Tentative for 5/15/18:
Grant unless current or APO.
Debtor(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 22
- NONE LISTED -
Debtor(s):
Glenn Lam Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 18
Tentative for 5/15/18: Grant.
Debtor(s):
Mary Jo Bryant Represented By Julie J Villalobos
Movant(s):
Wells Fargo Bank, N.A. Represented By
Dane W Exnowski
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 14
Tentative for 5/15/18:
Reimposition of the stay is sought in #11 on calendar, although service of that motion is unclear. No tentative.
Debtor(s):
Joe P Stubbs Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Docket 17
Tentative for 5/15/18:
Service of this motion is not compliant with Rule 7004, so perhaps the failure to respond is unsurprising. No tentative.
Debtor(s):
Joe P Stubbs Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Docket 22
Tentative for 5/15/18:
Opposition due at hearing. Who was served with this motion?
Debtor(s):
Mark Francis McCarthy Pro Se
Joint Debtor(s):
Shannan Ann McCarthy Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
CHECKMATE KING CORP. LTD
Vs.
DEBTOR
Docket 55
Tentative for 5/15/18:
Grant. The debtor does not dispute that Checkmate is a secured creditor with a perfected security interest in an unspecified number of medical devices/machines. Debtor does not seem to dispute that there is no equity.
The only dispute seems to involve the actual amounts owing and whether any debts are non-dischargeable. The court notes that the Chapter 7 trustee has not appeared on this motion. So, it would appear there is no purpose to be served in continuing the stay regarding posession and property issues.
Further, if there is going to be a dispute about amounts and dischargeability, the underlying facts can be determined in the pending adversary proceeding; if careful findings are made there, a Rule 56 motion can be brought here on collateral estoppel principles. There should be a timely adversary brought here, which can be subject of a moratorium until Judge Bason rules. This court retains the ultimate jurisdiction to determine dischargeability. Grant, as clarified above.
Debtor(s):
George Tyler Fower Represented By Vatche Chorbajian
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
CHECKMATE KING CORP. LTD
Vs.
DEBTOR
Docket 38
Tentative for 5/15/18:
See calendar #12.
Debtor(s):
Radiology Solutions Corp. Represented By Vatche Chorbajian
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:15-01474 Chavez v. California Attorney Lending, LLC et al
(set at ptc held 1-25-18) (s/c trial set at hrgs held on 4-16-18)
Docket 1
Tentative for 1/25/18:
Assign trial date for approximately 45-60 days hence.
Tentative for 11/30/17:
Why still no joint pre-trial stip?
Tentative for 10/26/17: Why no joint pre-trial stip?
Tentative for 9/15/16:
Deadline for completing discovery: March 17, 2017 Last date for filing pre-trial motions: March 30, 2017 Pre-trial conference on: April 27, 2017 at 10:00 a.m. Joint pre-trial order due per local rules.
10:00 AM
Tentative for 1/28/16: See #3.1.
Debtor(s):
Desiree C Sayre Represented By Andrew A Goodman Rudolph E Brandes
Defendant(s):
California Attorney Lending, LLC Pro Se WENETA M KOSMALA Represented By
Reem J Bello
Plaintiff(s):
Fernando F Chavez Pro Se
Trustee(s):
Weneta M.A. Kosmala Represented By Reem J Bello
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
U.S. Trustee(s):
United States Trustee (SA) Pro Se
9:30 AM
[CB CASE]
[fr: 4/18/18]
Docket 12
Appearances Necessary.
Debtor(s):
Abraham Melendez Represented By Lauren M Foley
Trustee(s):
Karen S Naylor (TR) Pro Se
9:30 AM
[SC CASE]
Docket 16
- NONE LISTED -
Debtor(s):
Stephanie Theresa Herrera Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
9:30 AM
Docket 27
- NONE LISTED -
Debtor(s):
Susanne Steiner Petersen Represented By Timothy Quick
Trustee(s):
Jeffrey I Golden (TR) Pro Se
9:30 AM
(RE: 2003 Honda Accord - $1,146.11) [ES CASE]
Docket 22
- NONE LISTED -
Debtor(s):
Oscar Guerrero Guerrero Represented By Shahnaz Hussain
Joint Debtor(s):
Maria Guadalupe Romero Represented By Shahnaz Hussain
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
(RE: 2001 Chevrolet Tahoe - $3267.33) [ES CASE]
Docket 23
- NONE LISTED -
Debtor(s):
Oscar Guerrero Guerrero Represented By Shahnaz Hussain
Joint Debtor(s):
Maria Guadalupe Romero Represented By Shahnaz Hussain
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
(RE: 2007 Cadillac Escalade - $22,393.29 )[ES CASE]
Docket 24
- NONE LISTED -
Debtor(s):
Oscar Guerrero Guerrero Represented By Shahnaz Hussain
Joint Debtor(s):
Maria Guadalupe Romero Represented By Shahnaz Hussain
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
(RE: 2004 Land Rover - $2,922.58) [ES CASE]
Docket 25
- NONE LISTED -
Debtor(s):
Oscar Guerrero Guerrero Represented By Shahnaz Hussain
Joint Debtor(s):
Maria Guadalupe Romero Represented By Shahnaz Hussain
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
(RE: 2014 Dodge Ram 1500 - $22,233.32 - ES case)
Docket 10
- NONE LISTED -
Debtor(s):
Jesse Anthony Echevarria Represented By
Steven A. Alexander
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
[ES CASE]
Docket 11
- NONE LISTED -
Debtor(s):
Jesse Anthony Echevarria Represented By
Steven A. Alexander
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
[RE: 2015 Nissan Rogue S Sport Utility 4D - $20,435.65] [SC CASE]
Docket 13
- NONE LISTED -
Debtor(s):
Alejandro Ocampo Altamirano Represented By
Carlos A Delgado Ibarcena
Trustee(s):
Jeffrey I Golden (TR) Pro Se
9:30 AM
(RE: 2016 Ford Mustang - $26,172.85)
Docket 12
- NONE LISTED -
Debtor(s):
Felicinda Chavez Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
9:30 AM
[RE: 2012 Toyota Camry - $9,931.14] [SC CASE]
Docket 10
- NONE LISTED -
Debtor(s):
Luis Rodriguez Pro Se
Trustee(s):
Jeffrey I Golden (TR) Pro Se
9:30 AM
Docket 20
- NONE LISTED -
Debtor(s):
Erika Nicole Peel Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
Docket 10
- NONE LISTED -
Debtor(s):
Margarita Rivera Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
(ES CASE)
Docket 9
- NONE LISTED -
Debtor(s):
Saleh Adi Represented By
Alaa A Ibrahim
Trustee(s):
Karen S Naylor (TR) Pro Se
1:30 PM
(cont'd from 4-18-18)
Docket 2
- NONE LISTED -
Debtor(s):
Benito Moctezuma Represented By Alon Darvish
Movant(s):
Benito Moctezuma Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 2
- NONE LISTED -
Debtor(s):
Kirk P Howland Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 3-21-18)
Docket 18
- NONE LISTED -
Debtor(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Movant(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 3-21-18)
Docket 17
- NONE LISTED -
Debtor(s):
Sara Barnett Represented By
Jacqueline D Serrao
Movant(s):
Sara Barnett Represented By
Jacqueline D Serrao Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 3-21-18)
Docket 2
- NONE LISTED -
Debtor(s):
Dale Grabinski Represented By Christopher J Langley
Movant(s):
Dale Grabinski Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 22
- NONE LISTED -
Debtor(s):
Geoffrey David Lloyd Represented By Michael W Collins
Movant(s):
Geoffrey David Lloyd Represented By Michael W Collins Michael W Collins
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 9
Tentative for 4/18/18:
The comments/issues raised by the Trustee must be addressed.
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Movant(s):
Carmen V Anderle Represented By Allan O Cate Allan O Cate Allan O Cate Allan O Cate Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 13
- NONE LISTED -
Debtor(s):
Rilla Ann Huml Represented By Christopher J Langley
Movant(s):
Rilla Ann Huml Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 13
- NONE LISTED -
Debtor(s):
Alicia Contreras Represented By Luis G Torres
Movant(s):
Alicia Contreras Represented By Luis G Torres Luis G Torres
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 3
- NONE LISTED -
Debtor(s):
Tony Kallah Represented By
Anerio V Altman
Joint Debtor(s):
Joulia Kallah Represented By
Anerio V Altman
Movant(s):
Tony Kallah Represented By
Anerio V Altman
Joulia Kallah Represented By
Anerio V Altman Anerio V Altman Anerio V Altman Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 2
- NONE LISTED -
Debtor(s):
James M Harris Represented By Andy C Warshaw
Movant(s):
James M Harris Represented By Andy C Warshaw
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 12
- NONE LISTED -
Debtor(s):
Cynthia Louise Armenta Represented By Anerio V Altman
Movant(s):
Cynthia Louise Armenta Represented By Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 2
- NONE LISTED -
Debtor(s):
Parvaneh Fereidouni Represented By
Raj T Wadhwani
Movant(s):
Parvaneh Fereidouni Represented By
Raj T Wadhwani
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 2
- NONE LISTED -
Debtor(s):
April D. Quinn Represented By Kelly Zinser
Movant(s):
April D. Quinn Represented By Kelly Zinser Kelly Zinser Kelly Zinser
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 2
- NONE LISTED -
Debtor(s):
Brett Town Represented By
Scott Dicus
Joint Debtor(s):
Kristin Town Represented By
Scott Dicus
Movant(s):
Brett Town Represented By
Scott Dicus
Kristin Town Represented By
Scott Dicus Scott Dicus
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 4-18-18)
Docket 2
- NONE LISTED -
Debtor(s):
Ben R Aragon Represented By Sunita N Sood
Joint Debtor(s):
Marie A Aragon Represented By Sunita N Sood
Movant(s):
Ben R Aragon Represented By Sunita N Sood
Marie A Aragon Represented By Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Gerardo Rincon Gutierrez Represented By Nicholas M Wajda
Joint Debtor(s):
Maria Gutierrez Represented By Nicholas M Wajda
Movant(s):
Gerardo Rincon Gutierrez Represented By Nicholas M Wajda
Maria Gutierrez Represented By Nicholas M Wajda Nicholas M Wajda
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
- NONE LISTED -
Debtor(s):
Babacar Thiam Represented By Anerio V Altman
Movant(s):
Babacar Thiam Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
- NONE LISTED -
Debtor(s):
Stacy Lynn Bull Represented By Christopher J Langley
Movant(s):
Stacy Lynn Bull Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 21
- NONE LISTED -
Debtor(s):
Morteza Hakimi Represented By Matthew Abbasi
Movant(s):
Morteza Hakimi Represented By Matthew Abbasi
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Maryann Sue Matesz Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 9
- NONE LISTED -
Debtor(s):
Yoshiko N Hafer Represented By Christopher J Langley
Movant(s):
Yoshiko N Hafer Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 16
- NONE LISTED -
Debtor(s):
Timothy N Shorts Represented By William R Cumming
Joint Debtor(s):
Darlene Long-Shorts Represented By William R Cumming
Movant(s):
Timothy N Shorts Represented By William R Cumming
Darlene Long-Shorts Represented By William R Cumming
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
- NONE LISTED -
Debtor(s):
Angela A. Mafioli Represented By Nathan A Berneman
Movant(s):
Angela A. Mafioli Represented By Nathan A Berneman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Uc Nguyen Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 14
- NONE LISTED -
Debtor(s):
Jack Dennis Mitchell Represented By Nicholas M Wajda
Joint Debtor(s):
Kathleen Marie Mitchell Represented By Nicholas M Wajda
Movant(s):
Jack Dennis Mitchell Represented By Nicholas M Wajda
Kathleen Marie Mitchell Represented By Nicholas M Wajda
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
- NONE LISTED -
Debtor(s):
Gilbert Sarmiento Japgos Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
Tentative for 5/16/18:
Both objections are well-taken and must be addressed. Confirmation denied.
Debtor(s):
Mary Jo Bryant Represented By Julie J Villalobos
Movant(s):
Mary Jo Bryant Represented By Julie J Villalobos Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Alexander S. Lauvao Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Michelle Jenine Cabrera Boldt Represented By Joseph A Weber
Movant(s):
Michelle Jenine Cabrera Boldt Represented By Joseph A Weber Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Soraya Nauroz Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
Tentative for 5/16/18:
The objection appears to be well-taken. The court is disinclined to confirm a plan that relies on an unexplained "hockey stick" uptick in payment rate after 17 months, at least not absent a better explanation. Deny.
Debtor(s):
Jose Navarro Represented By
Christopher J Langley
Movant(s):
Jose Navarro Represented By
Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Ana Silvia Reyes Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Hiba Kholio Kairouz Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 15
Tentative for 5/16/18:
The objection is well-taken. Given the near total failure to perform, confirmation is denied, and the court questions whether dismissal is appropriate.
Debtor(s):
Olga Lydia Ramirez Represented By Marcus Gomez
Movant(s):
Olga Lydia Ramirez Represented By Marcus Gomez
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
James Ben Stewart Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 11
- NONE LISTED -
Debtor(s):
Jack Gibson Pro Se
Movant(s):
Jack Gibson Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
- NONE LISTED -
Debtor(s):
Christopher Charles Rauch Represented By
Misty A Perry Isaacson
Movant(s):
Christopher Charles Rauch Represented By
Misty A Perry Isaacson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Gregoria Ocampo Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Mohsen Mahmanesharad Represented By Alon Darvish
Movant(s):
Mohsen Mahmanesharad Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 9
Tentative for 5/16/18:
Objections appear well-taken. Confirmation denied.
Debtor(s):
Joe P Stubbs Pro Se
Movant(s):
Joe P Stubbs Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 22
- NONE LISTED -
Debtor(s):
Kenneth Mathew Sale Represented By Matthew D Resnik
Movant(s):
Kenneth Mathew Sale Represented By Matthew D Resnik Matthew D Resnik Matthew D Resnik
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 3-21-18)
Docket 57
Tentative for 5/16/18: Status?
Tentative for 3/21/18:
Was a modification motion filed? Status?
Tentative for 2/21/18: Status?
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
Tentative for 9/20/17:
Motion to modify was filed August 22. Waiting for trustee comments.
3:00 PM
Tentative for 8/16/17: Grant unless current.
Debtor(s):
Francisco Jr Gonzalez Represented By
Juan J Gonzalez - DISBARRED - Christopher J Langley
Joint Debtor(s):
Lizeth Gonzalez Represented By
Juan J Gonzalez - DISBARRED - Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
Docket 73
Tentative for 5/16/18:
Court will delay ruling on dismissal pending resolution, if any, of issues raised in calendar #45.
Debtor(s):
Jeffrey David Stryker Represented By
John Eom - SUSPENDED BK -
Jacob D Chang - DISBARRED - Anerio V Altman
Joint Debtor(s):
Caroline Quitasol Stryker Represented By
John Eom - SUSPENDED BK -
Jacob D Chang - DISBARRED - Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
Docket 76
Tentative for 5/16/18:
This is Chapter 13 Debtors’ Application for Hardship Discharge.
Trustee objects to the discharge on the ground that Debtors have not turned over bonus income pursuant to the terms of the Ch. 13 plan. To date, Debtors have only turned over about $7,000 in bonus income to Trustee, leaving an outstanding balance of about $28,000 in bonus income owed. A hardship discharge under 11 U.S.C. §1328(b) comes down to an analysis of three factors, all of which must be met:
the debtor's failure to complete such payments is due to circumstances for which the debtor should not justly be held accountable;
the value, as of the effective date of the plan, of property actually distributed under the plan on account of each allowed unsecured claim is not less than the amount that would have been paid on such claim if the estate of the debtor had been liquidated under chapter 7 of this title [11 USCS §§ 701 et seq.] on such date; and
modification of the plan under section 1329 of this title [11 USC § 1329] is not practicable.
Each element is discussed below:
Circumstances Beyond Debtors’ Control?
Debtors assert that during the plan, they incurred several expenses and misfortunes that were beyond their control. First, in 2015, Jeff lost his job and was unemployed for the better part of a year. During this period, Debtors
3:00 PM
still had monthly expenses amounting to about $8,500. To make ends meet, Jeff dipped into his 401k. Debtors also owed taxes to the IRS in the amount of $8,000. Second, Debtors assert that the main reason Debtor did not pay the full amount of his bonuses was because he had unexpected expenses to meet that were also beyond his control. For example, Debtor asserts that in 2015 and again in 2017, Debtor’s family incurred nearly $7,000 in medical costs which were not covered by insurance. Furthermore, reportedly Debtor’s home required necessary repairs such as: $2,500 for mold abatement;
$1,700 for a pool pump repair; $2,297 to have the air conditioning repaired; and $1,000 to fix a leak. Debtor was also required to spend $2,779 for car repairs. The money Debtor received from bonuses allegedly went to pay these costs.
However, Trustee argues that these explanations do not support Debtors’ contention that they could not have turned over the bonus income. For example, Trustee argues that Debtors’ tax returns indicate that, in most years, Debtors’ income was significantly greater than at the time of confirmation (by about $16k to $36k per year) but Trustee has only received
$7,000 in Debtors’ bonus income. Thus, Trustee argues, Debtors should have turned over more, if not all, of the bonus income to the Trustee. Trustee concedes that it is possible that bonuses from 2014 could be excused, but no bonus income from any other year.
Regarding Jeff’s unemployment period, Trustee points out that out of the $76,000 in expenses incurred during that period, Debtor only accounts for about $25,000 in extraordinary expenses. Trustee argues that Debtors need to address this discrepancy. Furthermore, in the two year period of 2014 and 2015, Debtors had a net income of more than $300,000 even with the job loss factored in, unless Debtor did not follow his Schedule J budget. Thus, Debtors suffered no apparent net loss of income despite losing his job.
Therefore, Trustee asserts that Debtors’ hardship did not extend past 2015, leaving no reason why Debtors should not turn over the 2016-17 net bonuses of about another $18,000. Trustee also asserts that Debtors have not
3:00 PM
submitted a 2017 income statement, tax return, or any bank statements making it impossible for the Trustee to determine whether Debtors have the ability to turn over the net bonuses, or simply desire not to. Without the ability to determine Debtors’ actual ability to meet the obligations under the plan, it is difficult to fairly assess Debtors’ hardship claim.
Clearly, Debtors encountered some situations beyond their control and incurred some unexpected expenses throughout the life of the plan.
However, whether any of these setbacks were of such an amount as to justify failing to observe the plan terms (or at least prompting a modification inquiry) is a long way from being established. This factor weighs against the hardship discharge, or at least until Debtors address Trustee’s concerns.
Best Interests: Plan v. Ch. 7 Liquidation?
Neither side really addresses this point in any detail. Debtors argue that the originally proposed plan had a liquidation dividend of 0%. By contrast, Debtors have paid 35.5% of the claims filed to unsecured creditors. Debtors do not cite any specific documentation or declarations on this point, but it is not contested by Trustee. This consideration weighs narrowly by default in favor of discharge.
Modification of Plan
Debtors argue that modification of the plan is not practicable now because the plan has been completed. Trustee argues that the failure to pay the bonus income pursuant to the plan should not be excused now because Trustee reached out to Debtors on several occasions to discuss modifying the plan while it was active. Trustee never received any response. Trustee’s reported attempts to discuss modifying the plan and Debtor’s lack of responsiveness, cuts heavily against a hardship discharge, but it should be noted that Trustee did not provide any proof of these communications, such as emails, copies of letters, etc. On the other hand, Debtors do not appear to be disputing these attempts at outreach. Trustee asserts that Debtors’ failure
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to respond and attempt to modify the plan to allow use of the bonus money was not a circumstance beyond their control. The real question here is, when should modification of the plan be judged for §1328(b) purposes? When the adverse circumstances first arose, or now that the 60th month has passed?
Neither side has cited any authority on the point, nor has the court found guidance elsewhere. But on the facts and circumstances here, the answer seems obvious. The adversities experienced here were on a rolling basis over a period of five years. Yet, at no time did the Debtors attempt to obtain a modification, nor even to communicate with the Trustee. They simply failed to turn over the bonuses. Therefore, it cannot be the law that a debtor can accumulate a list of defaults over an extended period and then wait until the very end at 60 months to argue "no time left" rendering modification infeasible. Such an approach would be to write this element out of the hardship discharge requirements. Moreover, if this approach were adopted there would be little incentive to ever deal timely with such contingent promissory provisions; rather, better to simply wait until the end to see if the Trustee catches the discrepancy, and if so, then argue hardship. This is contrary to any reasonable policy underlying Chapter 13
Conclusion
2 out of the 3 factors weigh against granting a hardship discharge.
Therefore, this motion will be denied with leave to amend.
Debtor(s):
Jeffrey David Stryker Represented By
John Eom - SUSPENDED BK -
Jacob D Chang - DISBARRED - Anerio V Altman
Joint Debtor(s):
Caroline Quitasol Stryker Represented By
3:00 PM
Trustee(s):
John Eom - SUSPENDED BK -
Jacob D Chang - DISBARRED - Anerio V Altman
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
Docket 56
Tentative for 5/16/18: Grant.
Debtor(s):
Patricia Lynne Bagley Represented By Joseph M Adams
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 4-18-18)
Docket 151
Tentative for 5/16/18: Status?
Tentative for 4/18/18:
Claims in Calendar #'s 43 & 44 have been objected to, albeit improperly. The court cannot discern whether, if sustained, these would make up for the plan shortfall.
It also appears these objections are very late, and Debtor even asks for a "refund" on #43. The court needs an explanation and probably a continuance.
Debtor(s):
Mark A Mindiola Represented By Emilia N McAfee
Joint Debtor(s):
Daily Mindiola Represented By Emilia N McAfee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 4-18-18)
Docket 154
Tentative for 5/16/18:
Sustain on lateness grounds, but not on substantive grounds as Debtor's evidentiary showing is thin. No determination of dischargeability.
Tentative for 4/18/18:
There might be an issue with the Service of this motion. It is not clear that Debtor properly served the Creditor because the proof of service indicates that Notice if this motion was only emailed to an address that does not match the address on the proof of claim. The proof of claim indicates a mailing address and an actual person along with a phone number and direct email for that person. The proof of service of this motion does not match any of those addresses or name any of those people. The email address listed on the proof of service for this motion is "indybankruptcy@navient.com." This email address does not appear on the CM/ECF list of email addresses for electronic service. Therefore, it is not possible to determine that the Creditor was properly served. If the Creditor was not properly served, that will likely explain the lack of Opposition.
Continue to correct service.
Debtor(s):
Mark A Mindiola Represented By Emilia N McAfee
Joint Debtor(s):
Daily Mindiola Represented By
3:00 PM
Trustee(s):
Emilia N McAfee
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 63
Tentative for 5/16/18:
Grant, unless current or motion on file.
Debtor(s):
Theresa Sangermano Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 160
Tentative for 5/16/18: Grant, unless current.
Debtor(s):
Randy R. Reynoso Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(put on cal by oppos fld 1-21-18) (con't from 4-18-18)
Docket 115
Tentative for 5/16/18:
Status? Has modification motion addressed this?
Tentative for 4/18/18: Status?
Tentative for 3/21/18: Status of modification?
Tentative for 2/21/18: Grant unless current.
Debtor(s):
Maria Dolores Garcia Luvianos Represented By David R Chase
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 96
- NONE LISTED -
Debtor(s):
Albert Ngoc Ninh Represented By Tina H Trinh
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 29
Tentative for 5/16/18:
Deny if Trustee confirms default is cured.
Debtor(s):
Noela Guhiting Florita Represented By
Marlon B Baldomero
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 57
Tentative for 5/16/18:
Grant, unless motion on file.
Debtor(s):
Jose Angel Gutierrez Represented By
Ramiro Flores Munoz
Joint Debtor(s):
Rosa Galvan Gutierrez Represented By
Ramiro Flores Munoz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 26
Tentative for 5/16/18:
Continue for processing of Debtor's motion to modify/suspend.
Debtor(s):
Maria Albayero Represented By Rebecca Tomilowitz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 37
Tentative for 5/16/18: Grant.
Debtor(s):
Vicki Patrice Scott Represented By James D Zhou
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 3-21-18)
Docket 64
Tentative for 3/21/18:
Continue to coincide with hearing on modification motion.
Tentative for 1/17/18: Grant.
Tentative for 11/15/17: Grant unless motion on file.
Debtor(s):
Olga Ruiz Represented By
Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 92
Tentative for 5/16/18: See #59 on calendar.
Tentative for 3/21/18:
Status on modification motion?
Tentative for 2/21/18:
Grant unless current or motion to modify on file.
Debtor(s):
Daniel J Powers Represented By Gaurav Datta
Joint Debtor(s):
Ellen A Powers Represented By Gaurav Datta
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 96
Tentative for 5/16/18:
Trustee raises questions in his comments that should be addressed.
Debtor(s):
Daniel J Powers Represented By Gaurav Datta
Joint Debtor(s):
Ellen A Powers Represented By Gaurav Datta
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 40
Tentative for 5/16/18: Grant, unless current.
Debtor(s):
Norberto Valladares Represented By Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 56
Tentative for 5/16/18:
Grant, unless current or motion on file.
Debtor(s):
Todd Eric Szkotnicki Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Lori Lynn Szkotnicki Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 4-18-18)
Docket 43
Tentative for 5/16/18: Continue to 6/20/18 at 3pm.
Tentative for 4/18/18:
Grant unless motion to modify is on file.
Debtor(s):
Timothy Dale Cox Represented By
Thomas E Brownfield
Joint Debtor(s):
Diane Gloria Cox Represented By
Thomas E Brownfield
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 38
Tentative for 5/16/18:
Grant, unless motion on file.
Debtor(s):
Christopher Clark Fleury Represented By David S Henshaw
Joint Debtor(s):
Annie Erbabian Fleury Represented By David S Henshaw
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 65
Tentative for 5/16/18:
Order on modification entered (Court prepared order) on May 14. Does this resolve?
Debtor(s):
Alan Bell Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 14
Tentative for 5/16/18:
Grant. Appearance is optional.
Debtor(s):
Jeff Allan Charity Represented By Michael G Spector
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 56
Tentative for 5/16/18: Grant.
Debtor(s):
Wayne Torrisi Represented By David S Henshaw
Joint Debtor(s):
Lori Torrisi Represented By
David S Henshaw
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 17
Tentative for 5/16/18:
The Trustee is correct that the proceeds in the hands of the loan servicer are property of the estate, and should be turned over to the Trustee. However, the court directs the Trustee, with assistance of McCarthy & Holthus, to contact the Superior Court and advise of this procedure / rationale / order. If further clarification is needed, a hearing will be scheduled.
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 28
Tentative for 5/16/18:
This claim was voluntarily withdrawn by creditor on 4/24/18. See docket # 36.
Debtor(s):
Sara Barnett Represented By
Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 29
Tentative for 5/16/18:
This is Debtor Sara Barnett’s objection to claim 3-1 held by Wilshire Commercial Capital, LLC ("Wilshire"). Wilshire amended its Proof of claim, and now it is claim 3-2. Notably, Wilshire’s first claim (3-1) appeared to be a duplicate of Westlake’s claim (2-1). Westlake has voluntarily withdrawn its claim, but did not provide any reasons for doing so. Wilshire’s amended claim (3-2) makes three discernable changes from the original: (1) the amount claimed jumps significantly from about $74,000, to about $148,000; (2) The basis of the claim changes from "money loaned" to "Joint Defense Agreement"; and (3) The amended proof of claim is signed by Thomas Mendoza, not Jackson Lieu as in the previous proof of claim. This is important because incorrect signatures under the LBRs served as one of the bases for objection to the prior proof of claim.
However, Debtor’s main objection was in response to claim 3-1, not the amended claim 3-2. As mentioned, the amended claim had some significant changes. But Debtor uses her "Reply" to serve as a de facto objection to the amended proof of claim. This objection includes assertions of unconscionability, lack of authority to enter into the agreement, etc. This is not the proper way to object to a proof of claim because the claimant is effectively deprived of an opportunity to file a written opposition before the hearing. Debtor concedes this point in the "Conclusion" section of her Reply. The dispute may simply be postponed for further objection; but if the grounds are to be such issues as unconscionability or lack of authority, those will likely have to be resolved through an adversary proceeding allowing for discovery,
3:00 PM
etc., not in a summary proceeding like a claim objection hearing. Allegations of fraud are overblown; carelessness from a party who should know better is a more apt description.
Overrule on procedural grounds, with leave to renew
Debtor(s):
Sara Barnett Represented By
Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 31
Tentative for 5/16/18: Sustain both objections.
Debtor(s):
John Benjamin Riddle Represented By Stephen L Burton
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 12
Tentative for 5/16/18: Sustain.
Debtor(s):
Enrique Perez Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 4-18-18)
Docket 33
Tentative for 4/18/18:
Settlement? Continue 30 days.
Debtor(s):
Lisa Kathryn Dell'Arco Represented By Michael Jones Sara Tidd
Movant(s):
Lisa Kathryn Dell'Arco Represented By Michael Jones Michael Jones Michael Jones Sara Tidd Sara Tidd Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-01-18)
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 14
Tentative for 5/16/18: Status?
Tentative for 5/1/18: Grant.
Debtor(s):
Mohsen Mahmanesharad Represented By Alon Darvish
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
MAISON MAGNIFIQUE LLC
Vs.
DEBTOR
Docket 11
Tentative for 5/22/18:
Grant. Appearance is optional.
Debtor(s):
Humberto F Sanchez Zafra Represented By Randy Alexander
Joint Debtor(s):
Domitila Sanchez Represented By Randy Alexander
Movant(s):
Maison Magnifique LLC Represented By Carol G Unruh
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
MONARCH GRAND VACATIONS OWNERS ASSOCIATION
Vs.
DEBTORS
Docket 42
Tentative for 5/22/18:
Grant. Appearance is optional.
Debtor(s):
Skye D Solley Represented By Benjamin H Berkley
Joint Debtor(s):
Denise M. Myers Represented By Benjamin H Berkley
Movant(s):
Monarch Grand Vacations Owners Represented By
Thomas R Mulally
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
EXETER FINANCE LLC
Vs.
DEBTORS
Docket 22
Tentative for 5/22/18:
Grant. Appearance is optional.
Debtor(s):
Daniel Estrada Estrella Represented By Tristan L Brown
Joint Debtor(s):
Angelina Estrada Represented By Tristan L Brown
Movant(s):
Exeter Finance LLC Represented By Bret D. Allen
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
NISSAN MOTOR ACCEPTANCE CORPORATION
Vs.
DEBTOR
Docket 15
Tentative for 5/22/18:
Grant. The motion is not opposed, the debtor merely requests a continuance because of her new job. This is not a cognizable basis for continuing the stay in a Ch. 7 with no equity. Furthermore, it appears Debtor is seeking a refinance which hopefully is obtained with movants' cooperation. But this is still no basis for not granting the motion. However, no waiver of Rule 4001 to provide some time.
Debtor(s):
Kimberly Sue Minarcin Pro Se
Movant(s):
NISSAN MOTOR ACCEPTANCE Represented By
Michael D Vanlochem
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTOR
Docket 10
Tentative for 5/22/18:
Grant. Appearance is optional.
Debtor(s):
Graciela B Quiroga Represented By Francis Guilardi
Movant(s):
Toyota Motor Credit Corporation, Represented By
Austin P Nagel
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
COLLECT CO
Vs.
DEBTOR
Docket 12
Tentative for 5/22/18:
Grant. Appearance is optional.
Debtor(s):
Patte Lim Represented By
Chris T Nguyen
Movant(s):
Collect Co Represented By
Andrew Phan
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
THE BANK OF NEW YORK MELLON
Vs.
DEBTOR
Docket 49
Tentative for 5/22/18:
Grant without any bad faith determination.
Debtor(s):
Maria Esther Zavala Represented By Andrew Moher
Movant(s):
The Bank of New York Mellon, Represented By Daniel K Fujimoto Caren J Castle
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 31
Tentative for 5/22/18:
Grant. Appearance is optional.
Debtor(s):
Yolanda Carpino Represented By Gary Polston
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 64
Tentative for 5/22/18: Grant, unless current.
Debtor(s):
Leonora B Santiago Represented By Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-15-18)
LAKESIDE PARK COMMUNITY ASSOCIATION
Vs.
DEBTOR
Docket 33
Tentative for 5/22/18: Briefs?
Tentative for 5/15/18:
Neither side has analyzed whether as of the foreclosure sale on 1/11/18 an automatic stay was in effect given the provisions of Section 363(c)(3).
Analysis, please?
No service on debtor? Continue for service on Debtor.
Debtor(s):
Benito Moctezuma Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-15-18)
Docket 22
Tentative for 5/22/18: Any opposition?
Tentative for 5/15/18:
Opposition due at hearing. Who was served with this motion?
Debtor(s):
Mark Francis McCarthy Pro Se
Joint Debtor(s):
Shannan Ann McCarthy Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
U.S.C. 362(j) or That No Stay is in Effect under 11 U.S.C. 362(c)(4)(A)(ii) 2014
SCHOOLSFIRST FEDERAL CREDIT UNION
Vs.
DEBTOR
Docket 16
- NONE LISTED -
Debtor(s):
Michael Dickerson Represented By Shawn Dickerson
Movant(s):
SchoolsFirst Federal Credit Union Represented By
Paul V Reza
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 7
Tentative for 5/22/18: Grant.
Debtor(s):
Robert F. DeLeon Represented By Joseph A Weber
Movant(s):
Robert F. DeLeon Represented By Joseph A Weber
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
(OST Signed 5-2-18)
Docket 6
Tentative for 5/22/18: Grant.
Debtor(s):
Brian G. Corntassel Represented By Kelly Zinser
Movant(s):
Brian G. Corntassel Represented By Kelly Zinser Kelly Zinser Kelly Zinser
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Docket 92
Tentative for 5/22/18: Grant.
Debtor(s):
Hannah Kim Represented By
Dana M Douglas
Trustee(s):
Karen S Naylor (TR) Represented By William M Burd
11:00 AM
JOHN M. WOLF, Chapter 7 Trustee INTERNATIONAL SURETIES, Bond Payment INTERNAL REVENUE SERVICE, Income Taxes
WERTZ & COMPANY, Accountant
Docket 23
Tentative for 5/22/18:
Allowed as prayed. Appearance optional.
Debtor(s):
David Charles Pelz Represented By
Diane L Mancinelli
Trustee(s):
John M Wolfe (TR) Represented By
John M Wolfe (TR)
11:00 AM
Docket 46
- NONE LISTED -
Debtor(s):
Frank Pestarino Represented By Lauren Rode Kevin Tang
Movant(s):
Frank Pestarino Represented By Lauren Rode Kevin Tang
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
(set from order entered 5-3-18)
Docket 872
Tentative for 5/22/18:
The court will hear argument as to proper next steps.
As the court reads the briefs, there are three requested outcomes:
The Children's Trust says nothing was determined ergo it is still not property of the estate so all should be turned over to them;
Passport argues everything is property of the estate notwithstanding agreements to the contrary and so the Trustee/Passport should continue litigation to get the remaining 20%; and
The Trustee argues that the language may be vague as to what is meant by "recover" and therefore we now have in effect a declaratory relief action.
It would appear in any case that the court has insufficient record to make a determination, so further briefing will be required, but the court will hear argument.
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
11:00 AM
11:00 AM
(OST Signed 5-21-18)
Docket 7
Tentative for 5/22/18: Opposition due at hearing.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones
10:00 AM
Docket 1
Tentative for 5/23/18:
Deadline for filing plan and disclosure statement: the court will hear argument. Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of the deadline by: July 1, 2018
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
10:00 AM
Docket 1
Tentative for 5/23/18:
Still no counsel? The status report is so brief as to be useless.
Why no status report? An OSC re dismissal is set (see #6).
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
(con't from 4-4-18)
Docket 1
Tentative for 5/23/18:
This is a continued hearing on the court’s Order to Show Cause entered March 6, 2018 as amended in the "Amended Order to Show Cause Why Bankruptcy Case Should Not be Dismissed or Converted" entered April 5, 2018. Also, as warned in the court’s "Order Setting Scheduling and Case Management Conference" entered March 7, 2018, the court might appoint a Chapter 11 Trustee depending on the records and evidence presented [see Calendar #2]. The court was very blunt at the last hearings that debtor should immediately obtain counsel as he was clearly way over his head in these proceedings. There is no indication that the court’s directive was heeded.
Instead, we have largely the same slew of motions that are mostly irrelevant, unintelligible and/or unsupported by evidence. The court is concerned as to the appropriate remedy. It appears that this case is mostly about appeals concerning some disputed claims, although there is a mortgage that needs to be dealt with. Reportedly, there may be a very significant equity in the debtor’s properties, and it might even be possible to resolve matters without selling properties that debtor would rather not sell. But the court cannot tell from this record. The court can only discern that debtor, whether from ignorance or stubbornness, is not helping his own case. The court is inclined for those reasons to appoint a Chapter 11 Trustee who will be asked to report about the case and to recommend whether continuing in reorganization mode and/or continuing with litigation including appeals, is either feasible or advisable.
10:00 AM
Appoint Chapter 11 Trustee
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
(con't from 4-4-18)
Docket 18
Tentative for 5/23/18: Nothing new for 5/23
The court needs a better explanation as to why this case has any prospect of success.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
(con't from 4-4-18)
Docket 19
Tentative for 5/23/18: Nothing new for 5/23
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
(con't from 4-4-18)
Docket 20
Tentative for 5/23/18:
This motion is one for an Order authorizing use of cash collateral. Yet, it is lacking in the most basic elements such as, is there cash being generated? From what source? Which creditor has an interest? What adequate protection is being offered? Based on this absence of record, the motion is denied.
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
Movant(s):
Jack Richard Finnegan Pro Se
10:00 AM
(con't from 4-4-18)
Docket 21
Tentative for 5/23/18:
No record. No cause shown. Denied.
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
Movant(s):
Jack Richard Finnegan Pro Se
10:00 AM
(con't from 4-4-18)
Docket 22
Tentative for 5/23/18:
No record. No showing. Denied.
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
Movant(s):
Jack Richard Finnegan Pro Se
10:00 AM
(con't from 4-4-18)
Docket 23
Tentative for 5/23/18: Nothing new for 5/23
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
Movant(s):
Jack Richard Finnegan Pro Se
10:00 AM
(con't from 4-4-18)
Docket 24
Tentative for 5/23/18: Nothing new for 5/23
See #7.
Debtor(s):
Jack Richard Finnegan Pro Se
Movant(s):
Jack Richard Finnegan Pro Se
10:00 AM
(con't from 4-4-18)
Docket 25
Tentative for 5/23/18: Nothing new for 5/23
Deny.
Debtor(s):
Jack Richard Finnegan Pro Se
Movant(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 53
Tentative for 5/23/18:
This is titled as a motion for leave to amend all previous motions. It is a RJN with various legal pleadings attached. There is no legal argument to support the previous motions or explain the relevance of the attached pleadings. It therefore cannot be granted. Denied.
Debtor(s):
Jack Richard Finnegan Pro Se
Movant(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 58
Tentative for 5/23/18:
Despite an erroneous title, this appears to be a motion for RFS so Debtor may proceed with certain appeals. Notice is short and the motion is not on the mandatory form. It is also unclear that debtor's pursuit of this appeal is stayed in any event. Deny as unnecessary?
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 60
Tentative for 5/23/18:
This is Debtor's second attempt at this motion. Notice is short under LBR 9013-1. Debtor states he requested counseling but was not able to receive it within 7 days. This is not supported by evidence. There is still no showing of exigent circumstances.
Deny
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 65
Tentative for 5/23/18:
This was filed 5/15 with a 5/23 hearing date. Notice is short and insufficient. It appears to be a claim objection, although it also reads as a motion to allow claims. The affected entities do not seem to have filed claims.
Deny without prejudice.
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 67
Tentative for 5/23/18:
This motion to remove the trustee was filed 5/15. Notice is short. Also there is no trustee to remove in this Ch. 11 case. Section 324(a) does not provide for removal of the U.S. Trustee, if that is what Debtor seeks. Much of the motion is unintelligible.
Deny
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
§ 1127(a)
(con't from 4-25-18)
Docket 419
Tentative for 5/23/18: No tentative
Tentative for 4/25/18: See #8.
Tentative for 3/28/18: See #17.
Tentative for 2/28/18: Is this resolved?
Tentative for 1/24/18: See #10.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello
10:00 AM
Movant(s):
David A Kay Steven H Zeigen Michael Simon Kyra E Andrassy
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Lei Lei Wang Ekvall Robert S Marticello Robert S Marticello David A Kay
David A Kay Steven H Zeigen Steven H Zeigen Michael Simon Michael Simon Kyra E Andrassy Kyra E Andrassy
10:00 AM
(con't from 4-25-18)
Docket 451
Tentative for 5/23/18: no tentative.
Judgment Creditor’s DS generally contains adequate information, but there are some changes that should be made. Judgment Creditor has already agreed to some changes in his reply. In addition, Judgment Creditor should more clearly explain that he has agreed to subordinate his claim in the DS. A separate agreement may not be necessary, but it can be explained in a more clear fashion. Judgment Creditor should also update the DS to state that oral argument has already occurred because his DS and plan have not been disseminated to creditors yet. When it does it should contain accurate information. Debtor’s DS and plan were mailed before the oral argument occurred. Debtor also makes a good point that Judgment Creditor should make it clear from headings and titles that this is a liquidation plan not a reorganization plan. Otherwise, it is pretty clear from the DS what Judgment Creditor proposes to do, and other issues are best left for confirmation.
The court notes that the DS provides for discharge upon confirmation, rather than upon completion of payments. [DS p. 30] Is this proper?
Debtor(s):
Continue for amendment on these minor issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello
10:00 AM
David A Kay Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
YUANDA HONG
Vs.
DEBTOR
Docket 516
Tentative for 5/23/18:
This is Judgement Creditor Yuanda Hong’s ("Hong’s") motion for relief from the automatic stay, seeking an order that the entry of the Second Amended Judgment ("SAJ") by the state court did not violate the stay or, alternatively, annulment. The motion is opposed by Debtor.
Hong is the plaintiff in a wrongful death suit filed against Debtor in state court. After trial, the jury awarded Hong damages in the amount of
$9,734,464. Liability for negligence was apportioned 25% to Debtor and 75% to the Garden Grove Hospital. Debtor asserts that this apportionment also applies to liability for damages (but the California Court of Appeals recently rejected this argument). The original judgment was entered on November 2, 2015. The Hospital settled with Hong for $3,250,000. A First Amended Judgment ("FAJ") was entered on January 8, 2016. The FAJ reduced the non-economic damages owed by Debtor from $600,000 to $62,500, and reduced the economic damages owed by Debtor "by $3,250,000" to account for the Hospital’s settlement. Debtor appealed the FAJ. Judgment Creditor Hong submitted the SAJ to the state court on March 18, 2016 (the date is somewhat blurry, but it is clear that this order was submitted in March 2016).
[Motion, Decl. of Neil Howard, Exh. 4]. The SAJ was apparently lodged in part because Debtor had made an issue of the actual dollar amount of economic damages that he owed by posting a bond that Judgment Creditor asserted
10:00 AM
was not sufficient, and the FAJ did not specifically state an amount. The state court entered the SAJ on April 15, 2016, two days post-petition. On April 18, 2016, the state court entered a minute order stating that, due to clerical oversight, the FAJ did not "‘do the math’ and carry down the net balance of the amount owed by defendant." Id. at Exh. 5. The state court provided that it was exercising "its inherent authority under CCP § 473(d) to correct a clerical oversight in the Judgment" and entered the SAJ with the net amount owed by Debtor. Id. Debtor filed two motions for relief from stay to pursue appeals of the FAJ and SAJ, and also asked for an order finding that the SAJ was void. This court granted relief from stay, but declined to order that the SAJ was void, providing that such determination would have to be sought by separate motion. No such motion was ever filed. On May 15, 2018, the California Court of Appeal affirmed the judgment, explaining, in part, that the SAJ "merely made the implicit explicit." [Reply, Hays Decl., Exh. 1]
Hong asserts that the entry of the SAJ was a clerical act that did not violate section 362(a). Hong points to the statements of the state trial and appeals courts, both of which state that the SAJ simply "did the math" and set forth a specific number for what was already provided in the FAJ and so it was a clerical act. Alternatively, Hong argues that if the entry of the SAJ did violate the stay, the balance of equities warrants an annulment. Debtor opposes the motion, arguing that the entry of the SAJ required judicial acts and so was more than clerical in nature. Debtor argues that this court does not have to accept the descriptions ascribed to the act by the state courts, and that what may be clerical might not be ministerial. Debtor’s arguments also rely heavily on the various "what-ifs" that could occur if he prevailed on his appeal, which we now know did not and will not occur.
Section 362(a) provides for a stay of the commencement or continuation of all nonbankruptcy judicial proceedings against a debtor upon the filing of a bankruptcy petition. The Ninth Circuit has adopted the
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"ministerial act exception." In re Pettit, 217 F.3d 1072, 1080 (9th Cir. 2000) citing Soares v. Brockton Credit Union (In re Soares), 107 F.3d 969, 973-74 (1st Cir.1997). The Pettit court held that the exception arises from the "common-sense principle that a judicial ‘proceeding’ within the meaning of section 362(a) ends once a decision on the merits has been rendered" and that "[m]inisterial acts or automatic occurrences that entail no deliberation, discretion, or judicial involvement do not constitute continuations of such a proceeding." Id. In Pettit, the judge had signed the subject order pre-petition and the clerk of court entered it post-petition.
Here, as the state court has itself explained, the SAJ was entered to correct the state court’s "clerical oversight" in the FAJ. But, there is perhaps a distinction that could/should be made here between "clerical" and "ministerial." It is not clear that the entry of the SAJ was an act that required no "deliberation, discretion, or judicial involvement." To the contrary, judicial involvement and thought were apparently required, even if it was only a question of arithmetic. Whether such a distinction should bring our case within or without the exception is not clear, as it seems to the court that the purpose of the exception is to only stay the weighing of evidence , precedent and the like, not so much the correction of arithmetic errors which presumably does not change once the underlying principles are decided. The SAJ was entered on April 15, 2016 and a minute order was entered April 18, 2016 explaining that the SAJ was entered to correct the state court’s clerical error and ordering a previously posted bond returned. The better approach would have been for Hong to have sought relief from stay so that the state court could enter the SAJ and rule on the issues relating to the bond. It is therefore at least debatable whether the entry of the SAJ falls under the ministerial act exception as outlined in Pettit and similar cases. But even if the court were to rule that the exception does not apply this does not end the inquiry.
A bankruptcy court has the authority to annul the automatic stay under section 362(d). In re Fjeldsted, 293 B.R. 12, 21 (B.A.P. 9th Cir. 2003) citing In re Schwartz, 954 F.2d 569, 573 (9th Cir. 1992) (the bankruptcy court has the
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power to ratify retroactively any violation of the automatic stay that would otherwise be void). In order to determine "cause" to annul the automatic stay, a "balancing of the equities" test is applied. Id. Twelve factors are articulated in Fjeldsted but are not merely counted arithmetically to reach a conclusion. Id. at 25. Rather, these factors provide a framework for analysis. Among these are the relative costs of annulment, possible irreparable injury to the debtor, relative ease of restoring the status quo ante and whether the stay relief will promote judicial economy or other judicial efficiencies. Seen through this lens the balancing of the equities would strongly support annulment. The SAJ was entered just days after the bankruptcy petition was filed. Debtor obtained relief from stay to file an appeal of the SAJ and presumably argued the appeal of the SJC on the merits. This court held that a determination that the SAJ was void would have to be made by separate motion, yet Debtor never sought this determination, preferring to challenge on the merits. The California Court of Appeals two years later ruled and the SAJ has now been affirmed after great expense and delay (including hundreds of thousands spent on crafting a plan largely reliant on the undecided nature of the appeal). At this point, more than two years later, there would be far greater prejudice to Hong to have to go back to the state court to get a new amended judgment (likely identical to the SAJ) entered after already having gone through the whole appeals process on the SAJ. Perhaps more importantly, it is also very unclear what good if any would possibly come from such an elevation of procedure over substance, since presumably the opinion of the Court of Appeals is unlikely to change and all that would be accomplished is to needlessly prolong these bankruptcy proceedings.
Annulment granted
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello
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Movant(s):
David A Kay Steven H Zeigen Michael Simon Kyra E Andrassy
Yuanda Hong Represented By
D Edward Hays
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(set at conf. hrg. held 1-24-18) (con't from 4-25-18)
Docket 305
Tentative for 5/23/18: No tentative
Tentative for 4/25/18:
This is a further hearing on confirmation of the debtor’s Fourth Amended Plan ("plan"). At the last hearing the court identified two remaining obstacles to confirmation. Those are: (1) does the plan violate the absolute priority rule in that creditors are not being paid in full although the debtor keeps his ongoing appeal, a form of "property" within the meaning of §1129(b)(2)(B)(ii) and (2) does the plan impermissibly separately classify the claim of the judgment creditor? The debtor requested an opportunity for further briefing. Note that in earlier hearings the court had analyzed the first question in terms of the quantum of new value assuming that the "new value" exception to the absolute priority rule existed, as described in Bank of America N.T. & S.A. v. 203 N. LaSalle St. Ptsp. 526 U.S.434 (1999). But as La Salle teaches, the new value offered by the debtor has to be more than offered by any other party, i.e. "market tested." But this version of the question has apparently faded into the background as the judgment creditor has filed a rival plan offering a potentially greater recovery to creditors.
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Debtor argues in his Supplemental Brief that the prosecution of a "defensive" appeal is not a form of property at all, thus the absolute priority rule is not triggered by his keeping the appeal under his plan (and the house and car he also proposes to keep will be purchased with non-estate funds at established fair values and there is no indication the creditor is willing to pay more for these). The "not property" argument is based primarily on a statutory analysis of California law. While the effort is interesting, even admirable, the court is not convinced in the end. Debtor points out that "an appeal" is nowhere in the California Civil Code specifically identified as "property." But the question is how much can be inferred from its absence in other defined categories. Debtor argues that Civil Code §657 defines all property as either personal or real, and that "personal" property includes "things in action" under Civil Code §14(b)(3). But importantly, the statute §14(b)(3) actually says: "The words ‘personal property’ include money, goods, chattels, things in action, and evidences of debt." So, the question arises about what does "include" mean and whether the definition is exhaustive or in contrast should be read, as "include" is more usually defined, i.e. "including but not limited to….?" Civil Code §953 defines "things in action" as "a right to recover money or other personal property by a judicial proceeding." Debtor argues, perhaps logically, that a defensive appeal does not involve (or at least does not primarily involve) recovery of money. But debtor fails to analyze whether "personal property" might include other intangibles, particularly given the exclusive vs. inclusive question highlighted about §14(b)(3) in the discussion above. Debtor also does not analyze the tangential rights on an appeal such as recovery of costs and the like, clearly a right to obtain money if the appeal is successful. See CCP §1032(b). Debtor argues that an appeal is really just a "continuation of a judicial proceeding", open only to those aggrieved, and is purely a question of standing. Debtor then follows a rhetorical path observing that CCP § 700.180(a) provides no method of levy as against an appeal right nor does §708.410 provide a means of obtaining a lien thereon. The implication is that if one cannot levy upon the "right" or obtain a lien thereon it must not be property. No authority is
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offered for this assertion and the court is not sure that the conclusion follows.
Debtor’s extensive discussion of the Nevada case Butwinick v. Hepner, 128 Nev. 718 (2012) adds little to this analysis since this case stands for the unsurprising proposition that a judgment creditor cannot, through levy of its judgment, short circuit the appeal. The Butwinick court concludes that since an appeal is not a "chose in action" within the meaning of Nevada law and Nevada’s statutes provided no means of levy, the appeal right could not have been reached by the judgment creditor that way. Butwinick and debtor’s other out of state authorities (See e.g. In re Morales, 403
B.R. 629, 632 (Bankr. N.D. Iowa 2009)) also hold that a defensive appeal is not assignable. But the court is not convinced that this lack of assignability (even if that were correct under California law) necessarily means that what is not assignable is necessarily not "property" within the meaning of §1129(b)(2)(B)(ii).
But more importantly, debtor is left to argue that several Ninth Circuit authorities on point interpreting California law are just wrongly decided. Most significant among these is Mozer v. Goldman (In re Mozer), 302 B.R. 892, 895 (C.D. Cal. 2003). But this is not the only one. See also Fridman v. Anderson (In re Fridman), 2016 WL 3961303*8 (9th Cir. BAP 2016); McCarthy v. Goldman (In re McCarthy), 2008 WL 8448338, at *16 (9th Cir. BAP Feb. 19, 2008) aff’d 320 F. App’x 518 (9th Cir 2009); In re Marciano, 2012 WL 4369743 at *1 (Dist. C.D. Cal. Sept. 2012). Debtor argues that these cases other than Mozer should be disregarded because they are unpublished. No authority for this proposition is cited and unpublished decisions can and often do provide valuable insight if the facts and analysis are close to those on hand.
In Mozer the District Court analyzed the definition of property found at California Civil §655 which provides that property may include "…rights created or granted by statute." There is no question that the right to appeal is created by statute. See e.g. CCP §902. But more importantly for our analysis, the appeal right has real monetary value. The fact that it might not be reachable by levy or lien does not mean it has no value. And this point becomes obvious in the context of a bankruptcy. As in Mozer and the other Ninth Circuit cases interpreting California law, a trustee as the
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representative of the estate and successor to the debtor has the power, and even the obligation, to monetize this right (and really all assets) for the maximum benefit of creditors, if possible. Debtor argues that the issue should really be viewed not as a sale of property but one of a compromise of dispute, and that such a hypothetical sale might not be in the best interest of creditors. Neither point is persuasive.
As observed in several of the cases, the sale of rights and/or compromise of disputes in bankruptcy are closely parallel concepts and often both must be analyzed together in the same proposed transaction. Fridman 2016 WL 3961303 at *5 citing Goodwin v. Mickey Thompson Entm't Grp., Inc. (In re Mickey Thompson Entm't Grp., Inc.), 292 B.R. 415, 421 (9th Cir. BAP 2003). In Mickey Thompson the court went so far as to characterize the trustee’s motion to compromise as a sale of assets. Id. at 421. So, little persuasion lies in trying to label the process only as one of compromise and ignore the sale of property aspects. Even less persuasive is to argue that a hypothetical sale might not be in the best interests of the estate, and so therefore the entire approach is flawed. So might a compromise also not be in creditors’ interest?
But such a question must be answered in the context of the facts of a particular motion, and cannot be accepted as a general rule.
Debtor argues alternatively that even if the appeal were property it is automatically exempt and thus not figured into the §1129(b)(2)(B)(ii) analysis. To reach this conclusion debtor relies on CCP §704.210 which provides that "property not subject to enforcement of a money judgment is exempt, without making a claim." Debtor goes on to argue that while some judgments for money held by a judgment creditor can be reached by levy or lien, notably absent is a purely defensive appeal.
See CCP §708.410(a). The problems here are that even a defensive appeal can result in a claim for costs and other monies as discussed above and that while under California law a formal claim is not needed, bankruptcy law in contrast requires a formal and affirmative claim of exemption. See 11 U.S.C. §522(b). There has been as yet no such claim in Schedule C. See also FRBP 4003. Moreover, this "automatic exemption" argument relying on CCP §704.210 has been tried before without success in similar contexts. McCarthy, 2008 WL 8448338 at *8, citing In re Petruzelli, 139
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B.R. 241, 247 (Bankr. E.D.Cal. 1992)
The court appreciates the attempt, but in the end concludes that the argument that a defensive appeal cannot be a form of property under California law (and thus bankruptcy law) is not watertight. In sum, the court is not persuaded by either debtor’s statutory analysis, or by the out of state authorities cited, that a defensive appeal is not "property" within the meaning of §1129(b)(2)(b)(ii). This conclusion is reinforced by three factors: (1) there is case law almost directly on point interpreting California law (Mozer etc.); (2) there is really no disputing that, however it is described statutorily, even a defensive appeal can yield real value, particularly in a bankruptcy context, and therefore the purpose of the absolute priority rule would be subverted under debtor’s theory if valuable things can be retained and (3) in addition to the authorities construing California law the bulk of out of state authority (mostly Texas) seem to support the conclusion that a defensive appeal can indeed be regarded as a form of property. See e.g. Croft v. Lowry (In re Croft), 737 F. 3d 372, 376 (5th Cir 2013); Valenciana v. Hereford Bi-Products Mgmt., 2005 WL 3803144 (Tex. Ct. App. 2006); Kahn v. Helevetia Asset Recovery, Inc., 475 S.W. 3d 389, 393(Tex. Ct. App. 2015).
This is still the very close question it started out to be. The court’s previous tentative decisions are incorporated herein. The question seems to boil down to whether In re Johnston, 21 F. 3d 323, 327 (9th Cir 1994), the only definitive Ninth Circuit authority, can be read so far as to mean that just because a liquidated claim is on appeal, and thus not final, this is sufficient "business" reason for separate classification. Another way to describe the question might be "are litigation claims automatically separately classified (classifiable)" just because the debtor disagrees with them? Of course, Johnston is distinguishable on its facts and much more obvious than is our case. In Johnston the creditor held the debtor’s guaranty of a corporate debt and collateral besides. Here there is no such complication. The only
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distinction seems to be the litigation source of the claim and that it is on appeal. Further, all of the cases are uniform "thou shalt not gerrymander to obtain a consenting impaired class." See e.g. Barakat v. Life Ins. Co. of Va. (In re Barakat), 99
F. 3d 1520, 1525, cert. den. 520 U.S. 1143 (1997). The court consequently has two main problems here: 1. How is the court to view the fact that 98+% of the debt, including administrative debt, is represented by the single Hong judgment creditor? 2. Since effectively both classes of unsecured claims are being paid exactly the same (although the judgment creditor’s proceeds are being escrowed) what can possibly be the motive for this classification except to engineer the vote? Isn’t the purpose of voting in Chapter 11 to enfranchise the creditors in deciding the course of the estate? So, shouldn’t the court guard against easy artifices that don’t readily have an alternative explanation grounded in business or economic justifications? Isn’t that really the point of Barakat and Johnston? Debtor tries to make an issue of intent, arguing that intent should be determined when the plan was first filed and at that point in time the Hong creditor claimed secured status (subsequently the ORAP lien was waived in favor of unsecured status). But no authority is cited for this proposition. Moreover, the court doubts this is or should be the law. Confirmation speaks as of the date of confirmation and is guided by circumstances obtaining at that time. Debtor has the affirmative duty to show the elements of §1129(a), including the element of good faith as found at subsection (a)(3).
While not binding on Ninth Circuit courts, courts from outside the Circuit have held that appeals alone do not justify separate classification. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E,D,Va. 2004); In re Salem Suede, Inc., 219 B.R. 922, 933 (Bankr. Mass. 1998). Additionally, this was the implicit holding of a Nevada bankruptcy court. In re Zante, Inc., 467 B.R. 216, 219-20 (Bankr. D. Nev.
2012). Debtor’s non-Ninth Circuit or non-California authorities are somewhat less persuasive because in those cases the litigation over the claims was, importantly, in the very early stages, or the claims remained unliquidated and/or subject to substantial counterclaims. See e.g. In re Multuit Corp., 449 B.R. 323, 334-35 (Bankr.
N.D. Ill. 2011); In re Bashas’ Inc., 437 B.R. 874, 904 (Bankr. D. Ariz 2010). In contrast, here we have a liquidated claim but undistinguished from other liquidated
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claims excepting only the appeal. The court concludes in the end that the mere origin of a liquidated claim through litigation, and the fact that it is not final because appealed, is not, absent other factors not applicable here, a justifiable basis for separate classification. While admittedly a debtor retains substantial discretion in classification of claims, a plausible basis for the separate classification grounded in some business or economic justification apart from voting must be shown. Instead, the court here concludes the likely reason for the separate classification resides not in business or economic justification but in the desire to engineer a consenting impaired class.
Deny
Tentative for 3/28/18:
This is the continued hearing on debtor’s attempt to confirm his Fourth Amended Plan. The hearing has been continued for several times; this last continuance was to consider two points, upon which the court requested further briefing: (1) if the debtor does not keep his practice (the home and Honda having been paid for in cash new value at court-determined values) can the court confirm under 11
U.S.C. §1129(b)(2)(B)(ii) consistent with the absolute priority rule in light of the creditor having just filed a competing plan that offers more to creditors and (2) is there a "best interest of creditors" problem? The court also took under submission the pending question of separate classification of the Hong creditor’s claim. The court in meantime ordered the parties to mediation. Apparently, the mediation was unsuccessful.
That the mediation failed is truly unfortunate since the questions presented here are very difficult and the consequences profound.
On the question of best interest of creditors found at 11 U.S.C. §1129(a)(7), the court does not find any application since the comparison is to what creditors would receive in a hypothetical Chapter 7 liquidation. But both plans are
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demonstrably superior to what would likely be received in liquidation, even considering that the Fourth Amended Plan contemplates some considerable delays in payment.
But on the question of the absolute priority rule and "new value" the debtor has hit a snag. The question is not one of the court’s management of its docket, as debtor in his brief seems to assume. Rather, it is the question of whether the Fourth Amended Plan can be confirmed when the Hong creditor has filed a competing plan offering to pay to the Class Seven creditor body (about $38,690) more than the Fourth Amended Plan. Debtor proposes to pay the Class Seven creditors pro rata in four installments dependent on "Available Cash" and tied to future events such as "Litigation Resolution Date" which could be years in the future. Unless debtor succeeds on his appeal the payment percentage, and the timing of payment, is left vague and uncertain. In contrast, under the Hong plan creditors are offered an option of either 50% of their allowed claims on the effective date ("or as reasonably practicable after the Disbursing Agent has sufficient cash on hand to pay 50%...") or, alternatively, 100% tied to when the disbursing agent has accumulated and is ready to distribute $1 million. Importantly, the Hong creditors subordinate their recovery to those of the other creditors, a not-insignificant point considering they amount to about 98+% of all debt. Given the amounts alleged to be recoverable under various rights of action, it is hard not to see this as a promise of 100% or nearly so for those willing to wait.
All of this is important because of the teaching of the Supreme Court in Bank of America Nat’l Trust & Sav. Ass’n. v. 203 N. LaSalle St. P’ship, 526 U.S.434, 453 (1999). In LaSalle the court did not explicitly find that a "new value corollary" to the absolute priority rule actually existed. But if such a corollary existed, the LaSalle court found that the proponent of the plan must show that the quantum of new value was the most/best reasonably available. In making such a determination, the court must find that the quantum of proposed new value has been "market tested" and that no other person is willing to pay more to acquire the bundle of rights that the debtor retains under the plan. The La Salle court was vague as to how one goes about this
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market test, but the filing of a competing plan is one suggestion. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at §1129(b)(2)(B)(ii). Id. See also In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014).
The keeping of property can include the rights to direct actions, such as an appeal. While the debtor cites to some authorities including from other jurisdictions to the effect that "defensive" appeals are not estate property, this does not appear to be the case in the Ninth Circuit. See e.g. In re Fridman, 2016 WL 3961303 at *7 (9th Cir. BAP July 2016) citing In re McCarthy, 2008 WL 8448338 at *16 (9th Cir BAP Feb.
2008); In re Marciano, 2012 WL 4369743 at *2 (Dist. C.D. Cal. Sept. 2012). In those cited cases the trustees sold pending appeals for money. There is little doubt in the court’s mind that if a creditor wants to pay the estate to make a debtor’s appeal go away, that is a transaction that must be viewed from the standpoint of creditors unless they are paid in full from another source. The debtor must, in effect, pay at least the same in "new value" for the privilege of seeing an appeal to the end. In the Chapter 11 context, if a debtor proposes in a plan to keep an appeal, his plan must offer creditors more for that privilege (in combination with all other retained assets) than is otherwise available. Viewed this way debtor at bar has a problem. The terms of the Hong plan offer more to the Class 7 creditors and some of that overage could be viewed as payment for extinguishment of the appeal; but it would appear that the debtor proposes in his plan to keep the appeal going and is not offering anything to creditors for that privilege in contrast to purchase of the Denise property and the Honda.
There is also the question of separate classification. As the court has already said, this is a very close question. The 9th Circuit case law precedent is unclear respecting whether the mere fact that a claim is on appeal (and thus still disputed) should account for enough of a distinction by itself to justify separate classification. If attributes of a claim are not otherwise distinguishable such as having been guaranteed or supported by collateral, the court is left to question what is meant by the "business
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reasons" spoken of in cases like In re Johnston, 21 F. 3d 323, 327 (9th Cir. 1994). Surely "business reasons" cannot mean merely that it would be more expedient if a pending appeal resolved in the debtor’s favor would improve ability to repay debt. While that might be a question of "business" the court is hard-pressed to see it as a justification. It is clear in all of the authorities that gerrymandering is not permitted, but since the court cannot look into the debtor’s mind regarding motivations, we are left to examine external reasons claimed as to why the separately classified claim is not "substantially similar" to other debt. In the case at bar this task is made even more difficult since the separately classified claim is 98+% of the body of debt. If the point of this whole inquiry is to make sure that each creditor has a meaningful vote, and to prohibit arbitrary classification as a device to reaching a consenting class, then the debtor’s plan at bar is likened to the tail wagging the dog. While it might be possible for the extremely clever counsel to succeed in effectively disenfranchising 98+% of the creditor vote by separate classification, the court cannot see its clear path to doing so in this case, particularly when the other issues mentioned above weigh against confirmation as well.
Deny
Tentative for 2/28/18:
This is a continued hearing on confirmation of the Debtor’s Third Amended Plan. At the court’s request the parties filed briefs on the question of separate classification. Additionally, further evidence is offered by the objecting creditors Yuanda Hong, et al ("Hong creditors") on the question of the values of the Denise property and the Debtor’s medical practice, relevant to the quantum of new value offered under the plan. The court discusses each subject below:
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the Ninth Circuit. The objecting creditors have cited numerous authorities from outside of the Circuit that stand generally for the proposition that separately classifying a claim solely because it is on appeal is not in good faith, mostly because the character of the claim is not, in a legalistic sense, any different from that of the standard commercial claims.. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr.
E.D.Va. 2004); In re Salem Suede, Inc., 219 B.R. 922 (Bankr. D. Mass 1998); In re Local Union 722 Int’l Bhd. Of Teamsters, 414 B.R. 443, 453 (Bankr. N.D. Ill. 2009); Bustop Shelters of Louisville, Inc. v. Classic Homes, Inc., 914 F. 2d 810, 811-12 (6th Cir 1990). But it is not clear that this is the law of the Ninth Circuit.
Nearly all of the cases adopt some version of the Ninth Circuit’s ruling in
Barakat v. Life ins. Co. of Va. (In re Barakat), 99 F. 3d 1520, 1525, cert. den. 520
U.S. 1143(1997), i.e., that separate classification solely to manipulate the vote to obtain a consenting class is not in good faith and will prevent confirmation. But the ambiguity begins with the statute itself. Section 1122 provides that claims may be placed together in a class only if "substantially similar." But whether all similar claims must, in turn, be classified together is not statutorily addressed. Barakat at 1524. Noting that this question has divided courts outside the Circuit, the Barakat court gives us only the limited guidance that classification (determined as a question of fact) solely to manipulate voting to obtain the consenting impaired class is a form of bad faith and is not allowed. But the Barakat court acknowledges that In re Johnston 21 F. 3d 323, 327 (9th Cir. 1994) provides that separate classification may be justified if "the legal character of their claims is such as to accord them a status different from other unsecured creditors." Id. at 328. Further, as noted in Barakat, Johnston provides that separate classification may be justified if a "business or economic justification" is offered. Barakat at 1526 citing Johnston at 328. The Hong creditors argue correctly that both of Debtor’s cases, Johnston and In re Basha’s, Inc., 437 B.R. 874 (Bankr. D. Ariz. 2010), are factually distinguishable. In Johnston the debt arose from a guaranty, there was collateral involved and it alone among the creditor body was the subject of litigation. Similarly, in Basha’s the class of litigation claims was deservedly separate since the litigation was still in its early stages although it had been pending some time and involved "speculative" claims. In both cases the separate classification withstood
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scrutiny. But certainly our case is a closer question since we are dealing not with litigation generally but with a judgment on appeal. Whether this latter stage of litigation makes a crucial difference is not clear.
Debtor argues that if intent is the question he is somewhat absolved since the plan in its early iterations treated the objecting creditors’ claims as secured (by reason, one supposes, of recorded abstracts but also because that’s what the claim said) and therefore separate. Barakat can be read to primarily focus on the intent behind the classification. But neither side cites any authority on the question of what happens when, as here, the parties reach an agreement post-petition to surrender the claim of secured status (here because the claimed lien was likely a preference). Is a plan proponent then obliged to drop the separate classification in order to remain "in good faith"? Another question involves the "business or economic justification" as discussed in Barakat and Johnston. Here Debtor in effect argues that separate classification is not only economically justified, it is also very necessary to maintain an operating business on any terms while not adopting either of two unpalatable alternatives, i.e. paying claims before the appeals are resolved and the claims become final, or, alternatively, making all undisputed general unsecured claims wait for an extended period by depositing payment into an escrow on their account. Further, the very size of the Hong creditors’ claim makes it different, although it is not clear that this size question alone works in justifying different classification. The appeal adds some weight. But the fact that there reportedly is also still an unresolved counter claim (as reported by Debtor) of the reported parallel fraudulent conveyance action, and the charge that the judgment was amended post-petition in technical violation of the stay, might be seen as additional justifications for the separate classification. In aggregate, the court is inclined to find sufficient justification for the separate classification although it is admittedly a very close question.
The objecting creditors take issue with the valuations presented by the Debtor of his medical practice and of his residence on Denise Avenue in Orange. The values offered by Debtor are $ 5-10,000 and $756,000, respectively, supported by the
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declarations of Sam Biggs, CPA and John Aust, appraiser. Pinpointing the value of these becomes necessary as the Debtor proposes to keep these assets while not paying all creditors in full under the Plan. The Hong creditors have objected, so confirmation is therefore only possible under the so-called "new value" corollary.to the absolute priority rule. Debtor must under this doctrine provide new value equal to the retained assets of the estate (and not less than any other party is willing to pay). See Bank of America v.203 N. LaSalle Street Ptsp.526 U.S. 434, 456-57 (1999).
Hong creditors offer the declaration of David Hayward for the Denise property "conservatively" at $785,000. This is not far from the Debtor’s valuation but the court is disinclined to choose between these two opinions without cross examination.
Mindful of the cost of a mini trial on this issue, the court encourages a stipulation to split the difference, i.e. $770,500. Otherwise, an evidentiary hearing will have to be scheduled with opportunity for cross examination of live witnesses. Mr. Hayward’s opinion about additional value based on a lot split is too speculative for our purposes.
The business valuation is even more problematic. It is almost certain that both appraisers are off the mark. The Biggs appraisal suffers from the omission of any separate values for hard assets, such as equipment. Presumably, these have a separate value from the value of the ongoing practice, but if so, the court could not find it.
Appraiser Stake observes that something is being depreciated on tax returns, suggesting there is missing information. The court sees the nominal amount of $1,500 per year as an equipment "expense" in the forecast, but doubts this equates to a value for all of the existing equipment. Whether the equipment is owned or leased is also a factor. The biggest problem, of course, is what to do with a projected income analysis in the hands of a hypothetical buyer. The court has no doubt that there would be a profound fall off in that the clientele are described as mostly Chinese with limited English skills. Also, one imagines, that an OB/GYN practice has a higher than usual retention problem if/when the familiar physician becomes no longer associated. This probably is exacerbated when the language/cultural issue is also factored in. The Stake declaration strikes the court as making far too little allowance for this factor. It reads primarily just as a clinical analysis of projected income averages assuming more or
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less the same stream of income (a very large assumption under these facts) multiplied by some sort of capitalization or discount rate. The problem, of course, is the court cannot make a meaningful determination on this sparse record. Again the court encourages a "split the difference" approach, say $50,000, as an alternative to having a mini trial on these issues as well.
Bank of America v. 203 N. La Salle St. Ptsp.
The court has also not yet made a ruling on the question whether the Debtor’s marketing efforts to date are adequate to fix the quantum of value as demanded in the La Salle case. But the court observes that some effort was made to advertise and the Hong creditors have not filed a competing plan although they have been free to do so. The court is inclined to hold that this narrow issue (of whether anyone else would pay more) is resolved.
No tentative on confirmation pending resolution of valuations
Tentative for 1/24/18:
This is the continued hearing on confirmation of the Debtor’s Fourth Amended Plan. It continues to be vigorously opposed by the judgment creditor. While the court gave fairly explicit guidelines at the Nov. 29 hearing, and the plan proponent is closer than he was, the court finds the plan is still short of confirmability, for the following reasons:
Unfair Discrimination and Gerrymandering: Since In re Barrakat, 99 F. 3d 1520, 1525 (9th Cir. 1996), it has been the law of this Circuit that separate classification solely to obtain a consenting class on a plan is not permitted and is a form of bad faith under §1129(a)( 3). However, exceptions have been found where a "legitimate business or economic justification" is articulated supporting the separate classification. In re Loop 76, LLC, 465 B.R. 525, 538 (9th Cir. BAP 2012); Steelcase, Inc. v. Johnston (In re Johnston), 21 F. 3d 323,
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327 (9th Cir. 1994). Moreover, there is a separate concern in evaluating a
"cram down" that a plan may not "unfairly discriminate…with respect to each class of claims or interests that is impaired under…the plan." The court earlier remarked that a legitimate, non-voting basis had probably been articulated for separately classifying the judgment creditor since that claim (unlike all other unsecured creditors) was on appeal and was subject to ongoing litigation.
Consequently, unlike the other unsecured claims the judgment claim is not "final." It is perfectly obvious that the entire need for reorganization may rest on the results of the appeal. But what is not sufficiently shown is the need for disparate treatment as provided under the Fourth Amended Plan. Obviously, while the claim is still contested it makes sense to not actually pay the disputed judgment claim. But there are other, better ways to mitigate the disparate treatment. All other claims start getting payments shortly after the effective date. But the dissenting judgment claim gets nothing until 120 days after the "Litigation Resolution Date," which is defined to require that all appeals be exhausted. This is a date potentially years in the future. This has two pernicious effects of concern. First, all of the risk of non-performance is imposed solely on the objecting creditor without any real basis in law for doing so. Second, this can be regarded as a sub rosa attempt to put the Litigation Trustee’s efforts into effective limbo pending the appeal since obviously no liquidation or even attempt to liquidate assets is even needed to fulfill the plan until all the appeals are resolved. Perhaps a better approach is to put all creditors on a truly equal footing whereby they all get a pro rata portion of a defined periodic payment, with the judgment creditor’s portion held in an escrow at interest administered by the Litigation Trustee. That way risks are evenly imposed on the creditor body, not solely on the judgment creditor.
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artificial impairment, another form of bad faith, as this court observed in In re NNN Parkway 400 26, LLC, 505 B.R. 277, 284-85(Bankr. C.D. Cal. 2014).
The fact that it was incurred the day before the petition is clearly suspicious. However, this "aroma" is largely dissipated when it develops that there is another class of unsecured creditors supporting the plan comprised of several members holding an aggregate of $38,690.83 in claims. The fact that only American Express, a creditor holding only a claim of $110.64, was the only voting member cannot be attributed to bad faith of the debtor. There is no showing that these other creditors’ claims were incurred just to create an impaired class.
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topic is with debtor’s premise that he is retaining under the plan only those three enumerated assets. If the court is reading it correctly, debtor actually plans on keeping a great deal more in the form of making the Liquidating Trust pay the debtor’s attorney’s fees and costs on a going forward basis. Presumably, this means that the costs of the appeal are to be borne by the Trust. Since it could be argued that the appeal is being prosecuted primarily if not solely for the debtor’s benefit, this is an indirect way of debtor keeping non-exempt assets. If this reading is correct, debtor is not, in fact, observing the absolute priority rule. The court is not as concerned as it might be since the objector has not filed a competing plan.
creditors would do better in a Chapter 7 liquidation than under the plan. This may well be so, largely for the reasons articulated in ¶3 above. For debtor’s argument to succeed, one would have to conclude that paying both for Mr.
Mosier and his lawyers and accountants and the ongoing appeal costs less than only a Chapter 7 trustee. This is a proposition for which there is no evidence offered. The debtor will have to propose paying for his lawyers either from exempt assets or from no-estate assets for this to work, or prove that a Chapter 7 would be more expensive. The court is less convinced by the objector’s argument that the creditor should consequently steer the litigation at its expense, however. There are countervailing concerns about who should steer the litigation beyond the monetary costs.
Early Discharge: Debtor proposes in the plan to obtain a discharge not on conclusion of payments, as required under §1141(d)(5)(A), but rather upon confirmation. While this can theoretically be done if "cause" is shown after notice and a hearing, the question arises whether any such cause is shown here. Debtor argues that the structure of the plan amounts to a form of collateral for the payments, citing In re Sheridan, 391 B.R. 287, 291 (Bankr. E.D.N.C. 2008), thus assuring payment. But the problem with this is that full payment is
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not assured in this plan despite attempts to improve recoveries if the appeal is lost. Only the right to sue for declaratory relief (and perhaps an injunction against transfer of assets) is provided. But there are a dozen ways this could still go wrong. Ms. Shen could decide to defy the injunction and put the assets in China or Japan. Since the debtor continues to make good money as a physician, the court sees no reason to discharge him until all promised payments are made.
Deny Confirmation
Tentative for 11/29/17:
Rather than simply continuing the confirmation hearing without direction, the court will want to have a hearing focused on issues raised in the briefs but not fully answered:
In view of the objection raised in the opposition about short notice of the changes found in the Third Amended Plan, does the judgment creditor disagree that the changes are 'non material’, thus avoiding re-balloting, or need for more time to meet the arguments? It would seem that the role of the appointed trustee and fetters, if any, on his responsibility is rather material, but
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perhaps for no one other than the judgment creditor. Should that matter?
Has the Trust Agreement with Mr. Mosier been finalized and made available for review?
The present value analysis for cram down requires some evidence regarding
interest rates and risks being imposed. Merely citing the federal judgment rate (is that where 1.5% comes from?) is wholly inadequate. While the debtor carefully includes an elastic provision that ‘such other rate as the court requires’ is offered, this does not provide any analysis or evidence that could guide the decision. It is also unclear how/whether the judgment creditor is a secured claimant and thus whether analysis of collateral value becomes relevant. But whether proceeding under §1129(b)(2)(A)(i) [secured claims] or (b)(2)(B)(i) [unsecured claims] there is an "as of the effective date" requirement on future payments which translates into a present value analysis. The federal judgment rate is manifestly not sufficient to render present value on a stream of payments such as under a plan. If that were true, in economic terms, the prime rate would be quoted consistent with the federal judgment rate instead of at 4.25% per annum. One holding a judgment presumably has some near prospect of actually levying and getting paid, so the time value of money is further distorted and judgment rates are a poor comparison. One who is obliged to wait for years under a plan has no such prospect and so imposed risk is greater and so must be compensated. This record is inadequate upon which to render a decision.
How is the teaching of Bank of America v.203 N. La Salle Ptsp., 526 U.S. 434, 456-57 (1999) being met here? In La Salle we are taught that to the extent that a new value exception to the absolute priority rule exists, a plan cannot be crammed down over the objection of a class of creditors on the strength of a "new value" contribution absent some ability to "market test" the amount of that contribution. As the court observed in In re NNN Parkway, LLC, 505 B.R. 277, 281-82 (2014), the Supreme Court gave us only the vaguest direction on how the market test can be accomplished in any particular case. But the court
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does not read the difficulty of fashioning an appropriate test to mean that the requirement can be ignored altogether consistent with the absolute priority rule. To do so is to vest in the debtor/ plan proponent a form of
uncompensated property, i.e. an option, to direct or determine the amount and source of new value. Debtor attempts to close the gap regarding the family residence, but the plan merely suggests that the relatives will contribute an amount roughly equal to what they contend to be the non-exempt equity. What analysis, if any, is offered regarding the going concern/market value of debtor's medical practice for this purpose? All that is offered is the conclusory argument that as a sole practice it cannot have much value. Really? The court sees professional practice valuations all the time. One method of clarifying the new value question described in La Salle is the possibility of a competing plan. The court is not aware of the current status of the judgment creditor’s ability to propose a competing plan.
Concerning uncompensated imposed risk is the unanswered question regarding alleged community property in the wife’s name. What about the injunction against transfer of wife's alleged separate assets? Is a form of order being offered for review? Only a stipulation is referenced. How does the risk of violation of an injunction translate into cram down interest rate? One supposes that if the appeal is lost the presence of an injunction is some protection against transfers, but hardly a foolproof one. Certainly it is not the same as a lien. This does not mean these issues cannot be resolved; it is only to say that they are left unresolved on this record.
Continue for further hearing.
Tentative for 8/23/17:
The remaining issues are best dealt with at confirmation. Approve.
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Tentative for 7/12/17:
With some amendments this FADS appears to contain adequate information. Debtor should make it clearer that an early discharge will be requested, but that if the Court does not find cause then the discharge will be entered upon completion of payments. As written the information about the Court finding cause comes at the end of the discussion of the discharge. Debtor has agreed to attach a copy of the Trust Agreement. Debtor provides a sufficient description of the litigation with the Judgment Creditor. Perhaps the plan should be amended so that it provides that the interest rate will be as described or as ordered by the Court. This leaves open the option of litigating the issue of the interest rate at confirmation. There seems to be a reasonable basis for separately classifying the unsecured claim of the Judgment Creditor because the claim is still subject to litigation and so cannot be paid on the same terms as the other unsecured creditors. Debtor should amend the DS to provide that Debtor is retaining his interest in some property. There should also be a more clear discussion of the absolute priority rule. Debtor states that he will amend the DS to make it clear that the plan does not avoid Judgment Creditor’s ORAP lien and that he will correct the errors noted by the Judgment Creditor.
Debtor(s):
Continue for clean up of these disclosure issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
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Adv#: 8:16-01098 Joseph v. United States Of America
Docket 1
Tentative for 11/30/17:
Status conference continued to March 29, 2017 at 10:00 a.m.
Tentative for 8/10/17:
Status conference continued to November 28, 2017 at 10:00 a.m. Personal appearance not required.
Tentative for 3/30/17:
Status Conference continued to August 10, 2017 at 10:00 a.m.
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T. Madden Beth Gaschen
Susann K Narholm - SUSPENDED - Mark Anchor Albert
Defendant(s):
United States Of America Pro Se
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Joint Debtor(s):
Thomas Fu Pro Se
Plaintiff(s):
James J Joseph Represented By
A. Lavar Taylor
Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
James J Joseph (TR) Paul R Shankman Lisa Nelson
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
(con't from 3-29-18)
Docket 1
Tentative for 5/24/18: Why no status report?
Tentative for 3/29/18: See #19.
Tentative for 3/1/18:
Is the dismissal motion set for March 29 on the latest version of the amended complaint? Continue to that date.
Tentative for 2/1/18:
In view of amended complaint filed January 29, status conference should be continued approximately 60 days.
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Tentative for 11/2/17:
See #4. What is happening on February 1, 2018 at 11:00 am?
Tentative for 10/12/17:
Status conference continued to November 2, 2017 at 10:00 a.m.
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Pro Se
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
(con't from 3-29-18)
Docket 59
Tentative for 5/24/18:
Grant. Is leave to amend sought?
Tentative for 3/29/18:
This is the defendant Schmidt’s motion to dismiss under Rule 12(b). The complaint is in its third iteration. The court reviewed an earlier version(s) of the complaint on September 28 and again on November 2, 2017 in conjunction with a Motion for Relief of Default and attempted prove-up. On those occasions the court described the complaint as an "unintelligible mess." The court requested that plaintiff Marx amend, and further requested that if plaintiff were serious about prosecuting this matter, that counsel be engaged. Plaintiff is still in pro se and although some improvement was noted, the complaint is still very difficult to understand and even more difficult to fit into any cognizable theory of relief.
In the complaint Plaintiff describes this action as being for denial or revocation of discharge (11 U.S.C. §727), and perhaps for determination of dischargeability (§ 523(a)(2),(4) and (6)) as well. Plaintiff in her allegations never seems to show that she understands the difference, but litters references to both theories promiscuously throughout. But they are quite different theories, and for our purposes, can be explained simply: (1) dischargeability of debt under §523(a)(2) presumes the existence of a debt incurred pre-petition. The debt in question must be held by the Plaintiff and alleged as one obtained by fraud under §523(a)(2)(A), or represent
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damages from a breach of a fiduciary duty or embezzlement (§523(a)(4) or incurred as a result of willful and malicious injury ( §523(a)(6)). In contrast, §727 pertains to denial or revocation of discharge generally. As is pertinent here, either denial or revocation of discharge under §727 involves alleged offenses against the bankruptcy system as a whole, and, as pertinent here, usually involves alleged false oaths including false schedules occurring post-petition (although they may reference falsely to prepetition events). In order to have standing for a §727 action, the complaining creditor must in fact be a creditor of the debtor. Moreover, the omissions must be material and deliberate, and it must be shown that the discharge was procured by fraud, not just that fraud may have occurred somewhere vaguely connected to debtor’s affairs. See In re Nielsen 383 F. 3d 922, 925 9th Cir 2004).
Further, to survive a motion to dismiss, Rule 9 requires that the complaint contain detailed allegations of: who, what, when and how of the fraud with particularity. Vess v. Ciba-Geigy Corp. USA, 317 F. 3d 1097, 1106 (9th Cir 2003).
The complaint must contain allegations of fact which, if accepted as true, state a claim that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Bare recital of labels and conclusions will not suffice. Id. It is also very necessary that the Plaintiff have standing, meaning that the Plaintiff is acting on her own behalf for injuries to her, not for grievances of third parties. The court in reviewing the long and rambling complaint is left with the impression that most if not all of the alleged misconduct was as against Lonnie Reynolds or his corporations. Plaintiff’s connections to any of this, particularly any §523(a)(2)(4) or (6) theories of fraud, embezzlement or willful and malicious injury, are left completely unexplained.
Viewed through these lenses the complaint is still very deficient. Plaintiff needs to include her allegations of fact with particularity segregated by theories for relief, i.e. it will not do to leave the reader unclear as to whether alleged events are pre-petition or post-petition, and whether they relate to §727, a §523 theory, or to both. Plaintiff in her §727 theories needs to allege that omissions of fact regarding debtor’s affairs are both material and made intentionally, and she would be well-
advised to allege whether such discrepancies were explained orally at the first meeting
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of creditors or otherwise. It is hard to make a §727 case over insignificant or non- material factual discrepancies, particular ones that may have been explained to the trustee. Plaintiff needs in each theory to allege why she has standing; in the §523 context this will require allegations that specific misrepresentations were made to her (not to Mr. Reynolds), or embezzlement as to her property (not to Mr. Reynolds or his companies) or willful and malicious injury was perpetrated as to her (again not to Mr. Reynolds or his companies). Under both theories Plaintiff‘s standing as an actual creditor should be alleged, not merely that she is listed as one (which is better than nothing but is not by itself conclusive).
Again the court urges retention of counsel. This is a court of law, not a classroom. The court must expect that the rules will be observed and the pleadings be at least intelligible. Plaintiff is urged to consider whether she really has a case based on the explanations above; counsel can assist in this. To the extent pleadings are not compliant, some initial leeway may be given but patience is not unlimited. Because of her pro se status the court will give the benefit of the doubt and one more leave to amend. But the court does not intend to go through yet another excruciating attempt to make sense of long, disjointed and vague sets of allegations. In that regard, extreme length does not compensate for lack of focus on what is relevant, material and appropriate. It is in fact counterproductive.
Grant with final thirty days leave to amend
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
10:00 AM
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01122 Marshack v. Choubey et al
U.S.C. Section 550
(con' from 4-26-18)
Docket 1
Tentative for 5/24/18:
In view of the report that Jitendra Patel has not been served, continue to 8/2/18 at 10:00AM.
Tentative for 4/26/18:
Status report? Status of service? Is settlement still in prospect?
Tentative for 2/1/18:
Status conference continued to April 26, 2018 at 10:00 a.m. to allow input from any responding party.
Tentative for 11/30/17:
Status conference continued to January 4, 2018 at 10:00 a.m. to accomodate default and prove up.
Debtor(s):
Rahul Choubey Represented By Richard G Heston
10:00 AM
Defendant(s):
Rahul Choubey Pro Se
Misha Choubey Pro Se
Shahi K. Pandey Pro Se
Vandana Pandey Pro Se
Jitendra Patel Pro Se
Azahalea Ahumada Pro Se
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
10:00 AM
Adv#: 8:17-01152 Nguyen v. National Collegiate Studen Loan Trust 2006-3 et al
(set at s/c held 12-7-17)
Docket 1
Tentative for 5/24/18:
No pretrial stipulation? Continue to 6/28/18 at 11:00AM.
Tentative for 12/7/17:
Deadline for completing discovery: April 30, 2018 Last date for filing pre-trial motions: May 14, 2018 Pre-trial conference on: May 24, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Xuan Nhi Thi Nguyen Represented By Christine A Kingston
Defendant(s):
National Collegiate Studen Loan Pro Se
United States Department of Pro Se
Key Bank USA Pro Se
Navient, et al Pro Se
Plaintiff(s):
Xuan Nhi Thi Nguyen Represented By Christine A Kingston
10:00 AM
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01230 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Hoag Memorial Hospital
(con't from 3-1-18 per order approving stipulation entered 1-18-18)
Docket 1
Tentative for 5/24/18:
See calendar # 22 at 11:00AM.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Defendant(s):
Hoag Memorial Hospital Pro Se
Newport Healthcare Center, LLC Pro Se
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow
10:00 AM
Dr Robert Amster Represented By Ashley M McDow
Robert Amster, M.D., Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
10:00 AM
Adv#: 8:17-01241 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Newport Healthcare Center
Declaratory Relief
(con't from 3-1-18 per order approving stipulation entered 1-18-18)
Docket 1
Tentative for 5/24/18:
See calendar #21 at 11:00AM.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Defendant(s):
Newport Healthcare Center LLC Pro Se
Hoag Memorial Hospital Pro Se
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care - Orange, Inc. Represented By
Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By
10:00 AM
Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
10:00 AM
Adv#: 8:18-01009 Millan v. Kasiano et al
(con't from 3-29-18)
Docket 1
Tentative for 5/24/18: Continue to 8/2/18 at 2:00PM
Tentative for 3/29/18:
Will a Rule 56 motion on collateral estoppel be filed?
Debtor(s):
Pio Kasiano Pro Se
Defendant(s):
Pio Kasiano Pro Se
Kiele Kathleen-Akiona Kasiano Pro Se
Joint Debtor(s):
Kiele Kathleen-Akiona Kasiano Pro Se
Plaintiff(s):
Chad Millan Represented By
Heidi M Plummer Michael C Bock
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
10:00 AM
Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
(con't from 4-12-18)
Docket 1
Tentative for 5/24/18: Continue to 5/31/18.
Tentative for 4/12/18:
Status conference continued to May 3, 2018 at 11:00 a.m.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Pro Se
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
10:00 AM
Adv#: 8:17-01105 Naylor v. Gladstone
(con't from 3-29-18 per order approving. stip. to cont. ent. 2-7-18)
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Scott Gladstone Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Melissa Davis Lowe
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01130 Karen Sue Naylor, Chapter 7 Trustee v. Idea Nuova, Inc.
(con't from 3-29-18)
Docket 1
Tentative for 5/24/18:
Status Conference continued to 6/28/18 at 10:00AM.
Tentative for 3/29/18:
Status conference continued to May 24, 2018 at 10:00 a.m. What is status of service/default?
Tentative for 1/25/18:
Status conference continued to March 29, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to January 25, 2018 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
10:00 AM
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Idea Nuova, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:18-01046 Karen Sue Naylor, Chapter 7 Trustee v. Federal Express Corporation
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Federal Express Corporation Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01045 Karen Sue Naylor, Chapter 7 Trustee v. Brentwood Originals, Inc.
Docket 1
Tentative for 5/24/18:
Deadline for completing discovery: 10/12/18
Last Date for filing pre-trial motions: 10/29/18
Pre-trial conference on 11/8/18 at 10:00AM
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Brentwood Originals, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01047 Karen Sue Naylor, Chapter 7 Trustee v. Outsourcing Solutions Group, LLC
Docket 1
Tentative for 5/24/18:
Deadline for completing discovery: 8/18/18
Last Date for filing pre-trial motions: 8/27/18
Pre-trial conference on 9/6/18 at 10:00AM
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Outsourcing Solutions Group, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01048 Karen Sue Naylor, Chapter 7 Trustee v. Red 288 Invest, LTD.
and Recover Preferential Transfer
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Red 288 Invest, LTD. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
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Adv#: 8:18-01050 Karen Sue Naylor, Chapter 7 Trustee v. La Alameda, LLC
Docket 1
Tentative for 5/24/18:
Status conference continued to 10/4/18 at 10:00AM.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
La Alameda, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson
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James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01051 Karen Sue Naylor v. Azalea Joint Venture, LLC
Docket 1
Tentative for 5/24/18:
Status conference continued to 10/4/18 at 10:00AM.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Azalea Joint Venture, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson
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James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01052 Karen Sue Naylor, Chapter 7 Trustee v. Overland Plaza, LLC
Docket 1
Tentative for 5/24/18:
Status conference continued to 10/4/18 at 10:00AM.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Overland Plaza, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson
10:00 AM
James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
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Adv#: 8:17-01140 Al Attiyah v. Manier
(con't from 4-12-18)
Docket 1
Tentative for 5/24/18:
Dismiss for failure to prosecute.
Tentative for 4/12/18:
Why no updated status report. Does plainitff intend to prosecute?
Tentative for 2/8/18: See #6.
Tentative for 12/21/17:
Status conference continued to February 8, 2018 at 11:00 a.m. to coincide with dismissal motion.
Tentative for 11/2/17:
In view of dismissal of underlying case, do parties propose to continue?
Debtor(s):
Dana Dion Manier Represented By
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Andrew Moher
Defendant(s):
Dana Dion Manier Pro Se
Plaintiff(s):
Abdulrahman Al Attiyah Represented By David D Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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Adv#: 8:17-01140 Al Attiyah v. Manier
Docket 1
Tentative for 5/24/18: Dismiss.
Debtor(s):
Dana Dion Manier Represented By Andrew Moher
Defendant(s):
Dana Dion Manier Pro Se
Plaintiff(s):
Abdulrahman Al Attiyah Represented By David D Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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Adv#: 8:17-01241 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Newport Healthcare Center
(Advanced per court)
Docket 15
Tentative for 5/24/18:
This is Defendant Newport Healthcare Center and Hoag Memorial Hospital Presbyterian’s ("Defendants") motion for partial summary judgment. Defendants move for summary judgment on counts II, III, IV, V, VI, VII, and VIII of the Complaint. The majority of the analysis is spent on counts III, IV, and V, all of which concern alleged fraudulent transfers.
Plaintiff’s Theories of Relief
In Counts III, IV and V of the Complaint (the "Fraudulent Transfer Counts") Plaintiff seeks to avoid all of the rent payments made by the Plaintiffs to Defendants during the four years prior to the Petition Date (the "Transfers"). Counts III and IV seek to avoid the Transfers pursuant to the California Uniform Voidable Transfers Act, Cal. Civ. Code §§ 3439.04(a)(2) and 3439.05. Under each of those sections, the HUC Debtors must show that they did not receive reasonably equivalent value in exchange for the Transfers. Cal. Civ. Code § 3439.04(a)(2) provides: "A transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation… without receiving a reasonably equivalent value in exchange for the transfer or obligation…" and Cal. Civ. Code § 3439.05 provides: "A transfer made or obligation incurred by a debtor is voidable as to a creditor whose claim arose before the transfer was made or the obligation was incurred if the debtor
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made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation…" These theories of avoidance are sometimes called "constructively fraudulent" in that they do not rely upon intent of the transferor.
Under 11 U.S.C. § 548(a)(1)(B), a transfer is only subject to avoidance if, among other things, the debtor did not receive reasonably equivalent value in exchange for the transfer. In re Pringle, 495 B.R. 447, 462–63 (B.A.P. 9th Cir. 2013) ("to avoid that transfer under § 548(a)(1)(B)…a bankruptcy trustee must prove that: (1) the transfer involved property of the debtor; (2) the transfer was made within [two years] of the bankruptcy filing; (3) the debtor did not receive reasonably equivalent value for the property transferred; and
the debtor was insolvent, made insolvent by the transaction, operating or about to operate without sufficient capital or unable to pay debts as they become due.") (internal citations and quotations omitted).
Finally, regarding Count II, Defendants argue that this count, which seeks to invalidate Newport’s security interest in the Equipment, is moot. Defendants assert that, although Newport filed a UCC-1 Financing Statement at the commencement of the lease, those Financing Statements lapsed without continuation or renewal prior to the petition date. For this reason, Newport has never asserted any security interest in the Equipment during the bankruptcy case. As such, there is no longer any perfected security interest to invalidate or any financing arrangement to re-characterize. Thus, without a live "case or controversy" on Count II, this court is without jurisdiction to consider it. Therefore, Defendants argue, they are entitled to summary judgment as to Count II because it is moot (or does this not also mean that avoidance is proper as alleged?).
The Arguments
Defendants argue that the rent they charged Plaintiffs during the 4 years before Plaintiffs filed their petitions represented fair market value, that
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the property was appraised in good faith, and that Plaintiffs cannot show otherwise, entitling Defendants to partial summary judgments on the applicable counts.
Plaintiffs argue, among other things, that the Defendants’ appraisal of the property used flawed methods, giving reason to doubt the validity of such appraisals. Plaintiffs also argue that the timing of the appraisals was improper as the land was appraised prior to the transfers, rather than at the time of the transfers (how could a lease operate otherwise?). Plaintiffs further argue that the leasing of equipment and license for the trademark was possibly improperly valued, giving rise to an actual dispute over whether the Transfers represented "reasonably equivalent value." Plaintiffs argue that because discovery has not yet taken place in this case, there is no way to resolve these factual disputes, which, they argue, makes even partial summary judgment improper. But this bankruptcy case is now approaching a year old.
Regarding Count II, Plaintiffs do not really substantively address the asserted mootness of the Count, but only argue that any interest Newport has in the equipment should be deemed unsecured. If Newport’s claim on the Equipment is re-characterized as unsecured, then Plaintiffs will withdraw Count II.
Standards for Summary Judgment
FRBP 7056 makes FRCP 56 applicable in bankruptcy proceedings.
FRCP 56(c) provides that judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
FRCP 56(e) provides that supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify
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to the matters stated therein, and that sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served forthwith. FRCP 56(e) further provides that when a motion is made and supported as required, an adverse party may not rest upon mere allegations or denials, but must set forth specific facts showing that there is a genuine issue for trial. FRCP 56(f) provides that if the opposing party cannot present facts essential to justify its opposition, the court may refuse the application for judgment or continue the motion as is just.
A party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine issue of material fact, and establishing that it is entitled to judgment as a matter of law as to those matters upon which it has the burden of proof. Celotex Corporation v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553 (1986); British Airways Board v.
Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978). The opposing party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at 324. The substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248,106 S.Ct. 2505, 2510 (1986). A factual dispute is genuine where the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. The court must view the evidence presented on the motion in the light most favorable to the opposing party. Id.
"To defeat summary judgment, the non-moving party must put forth ‘affirmative evidence’ that shows "that there is a genuine issue for trial." Id. at 256–57. This evidence must be admissible. See Fed. R. Civ. P. 56(c), (e).
The non-moving party cannot prevail by ‘simply show[ing] that there is some metaphysical doubt as to the material facts.’ Matsushita Elec. Indus. Co., Ltd.
v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, the non-moving party must show that evidence in the record could lead a rational trier of fact to find in its favor. Id. at 587. In reviewing the record, the Court must believe
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the non-moving party's evidence, and must draw all justifiable inferences in its favor. Anderson, 477 U.S. at 255." Goel v. Coal. Am. Holding Co., Inc., 2012 WL 12884631, at *2 (C.D. Cal. 2012) If reasonable minds could differ on the inferences to be drawn from those facts, summary judgment should be denied. Adickes v. S.H. Kress & C, 398 U.S. 144, 157, 90 S.Ct. 1598, 1608
(1970).
Count II
Summary judgment on Count II is likely appropriate because there really is not a triable issue of material fact in dispute. Defendants assert that this claim is moot and this was not seriously contested by Plaintiffs. So, whether mootness is the theory, or because the court has the power under FRCP 56(f) to rule for the non-moving party, a judgment can be entered establishing that the equipment is not encumbered by a perfected security interest; but it seems Defendants will stipulate.
Counts III, IV and V
It appears that all three Counts arise from the same set of operative facts and there appears to be only one main disputed issue, whether Plaintiffs received reasonably equivalent value in exchange for the transfers. In fact, the only difference between Counts III, IV, and V is the theory of law that Plaintiffs apply seeking to avoid the transfers; but still, the dispositive question appears to be whether reasonably equivalent value was obtained in exchange for the transfers.
Therefore, the court will undertake an analysis on the available evidence and decide whether any triable issue of material fact exists as to whether Plaintiffs received "reasonably equivalent value" for the transfers.
Reasonably Equivalent Value
The main point of contention is Plaintiffs argument that Defendants
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conflate "fair market value" of the rent charged to Plaintiffs as evidence that Plaintiffs received "reasonably equivalent value." Plaintiffs cite In re Hayden, 2015 WL 9491310 at *9 (Bankr. C.D. Cal. Dec. 28, 2015) for the proposition that "[d]etermination of reasonable equivalence takes into account all of the facts and circumstances surrounding the transaction." In essence, Plaintiffs argue that summary judgment is inappropriate here because Defendants have failed to present any evidence aside from alleged "fair market value" that would suggest "reasonably equivalent value" was obtained in the Transfers. However, Plaintiffs stop short of providing any evidence of their own that would suggest fair market value was a poor indicator of reasonably equivalent value in this case and on these facts. Instead, Plaintiffs spend much paper and ink attempting to poke holes in the methodology of the appraisals. But crucially, they do not present any actual evidence that the appraiser or the rent charged was not, in fact, within the realms of either fair market value or "reasonably equivalent value." The closest Plaintiffs come to submitting evidence that suggests some degree of non-equivalence is the Declaration of Dr. Amster. Dr. Amster states that Defendants received certain benefits from the joint venture that tipped the scales in their favor with respect to equivalent value. For example, Dr. Amster states that under the joint venture, Defendants were allowed to dictate terms of improvements to the property (which is very common under real estate leases in any event). Dr.
Amster states that Defendants’ employees were given discounted services. Dr. Amster also states that Defendants benefitted by using Plaintiffs’ provider number for billing purposes, which also added unspecified value to Defendants.
Defendants characterize Dr. Amster’s declaration as "self-serving," "slanted," and a "plain vanilla" recitation of facts. The court would add that the declaration also wants for any specifics as to the lack of equivalence asserted. For example, as this is Plaintiff’s adversary proceeding, one would think that part of the preparation would include collecting readily available evidence such as a second opinion on the fair market value of the properties
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(which Plaintiffs unpersuasively argue they have not had time to do), and some kind of documentary evidence to support Dr. Amster’s assertions of non-equivalence in the joint venture as pertains to these alleged "bonus" items. Nothing of the sort is provided or pointed out by Plaintiffs. Further, the court notes that the standard is "reasonably" equivalent value, not as Plaintiff’s argument suggests, some kind of close-in arithmetic exactitude. For this argument of Plaintiff’s to go anywhere it would have been necessary to provide evidence that the "bonus" items weighed heavily on the exchange of value scale.
Defendants cite Pelz v. Hatten, 279 B.R. 710, 736-738 (D. Del. 2002) sub nom. In re USN Commc’ns, Inc., 60 F. App’x 401 (3d. Cir. 2003) for the proposition that, although a totality of the circumstances test is employed in this circuit when determining whether a transfer has been for an exchange of reasonably equivalent value, fair market value is one of the primary considerations. The court in Pelz further stated that, "in determining whether a value is objectively "reasonable" the court gives significant deference to marketplace values. When sophisticated parties make reasoned judgments about the value of assets that are supported by then prevailing marketplace values and by the reasonable perceptions about growth, risks, and the market at the time, it is not the place of fraudulent transfer law to reevaluate or question those transactions with the benefit of hindsight." Id. at 738. See also In re 3dfx Interactive, Inc., 389 B.R. 842, 883 (Bankr. N.D.Cal. 2008) aff’d sub nom In re 3DFX Interactive, Inc., 585 Fed.Appx. 626 (9th Cir 2014).
But reevaluation of the transactions, with the benefit of hindsight, is exactly what Plaintiffs here are asking the court to do. Even if the court could be persuaded to re-examine the parties’ deals with benefit of hindsight, it must certainly be only on the most convincing of evidence.
Evidence Presented
As summary judgment is a high standard to meet, and because the
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court must look at the available evidence in the light most favorable to Plaintiffs as the nonmoving party, the court will examine Plaintiffs various critiques of the valuation of the real properties, the equipment, and trademarks.
The Fair Market Value Assessment of the Properties by Todd D. Basmajian
Plaintiffs dispute Mr. Basmajian’s calculation of fair rental value for the properties and offer several critiques. First, Plaintiffs assert that the comparable properties used by Mr. Basmajian are not actually comparable to the Properties in this adversary proceeding. For example, in appraising the Anaheim and Huntington Properties, Plaintiffs assert that none of the comparable properties were urgent care facilities. Plaintiffs do not say why the particular use matters in its valuation, or whether the specific use would make it more or less valuable. In other words, the court does not understand the relevance of this observation. This is where a second, independent appraisal would have been of use. The court doubts that Plaintiffs and Plaintiffs’ counsel are competent to assign value to properties without the aid of a professional.
Second, the Tustin Property does have a comparable property that also has an urgent care facility, but the rent on that property is $0.75 cheaper per square foot than the Property in question. Plaintiffs suggest that the similar size and use means that the price should also be nearly identical.
This critique ignores a couple of differences. The comparable property is older by nearly a decade, and is also located several miles away. These are not unimportant considerations. But more to the point, Plaintiffs have not provided any evidence to suggest that the difference in price per square foot is unwarranted. In regard to the Orange Property, which Plaintiffs suggest may have been overpriced, Plaintiffs provide no evidence to suggest it was actually overpriced.
Third, Plaintiffs assert that Mr. Basmajian’s appraisal is questionable
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because he only inspected the exterior of the buildings. Plaintiffs offer no support or evidence to suggest that this is not standard or acceptable industry practice.
Fourth, Plaintiffs assert that Mr. Basmajian admitted that the economic climate could render some of the real estate statistical measures (such as older sale and rent comparables) invalid. Plaintiffs do not elaborate on what this means in this case and provide no evidence to suggest that the real estate statistical measures should be considered invalid.
Plaintiffs also assert that the appraisal and the lease for the Anaheim property agreement might be inconsistent. In the appraisal, Mr. Basmajian noted that the Anaheim property was to have divided uses, with one portion designated for the urgent care facility (2,929 sq. ft.), and the other portion dedicated to physical therapy (3,287 sq. ft.). Apparently the rent was based only on the physical therapy portion: 3,287 sq. ft. x $3.50 per sq. ft. = 11,504.50. Therefore, it appears that Plaintiffs were paying less in rent than they should have on the Anaheim property. Plaintiffs assert that because of this mistake, Ms. Basmajian’s fair market value assessment cannot be relied upon as a fair estimation of the rental value of the Anaheim property.
This is a strange discrepancy to point out from the Plaintiffs’ perspective. Plaintiffs are under obligation to preserve funds for their estates, but they are saying that they actually did not pay enough in rent under the terms of the lease with Defendants. Discrepancies between being undercharged in the lease and the findings in the appraisal are not made clear. In other words, it would appear that this was an error in the drafting of the lease for the Anaheim property rather than an error in the appraisal.
To sum up, Plaintiffs attempts to cast doubt on the findings in the fair market value analysis are unconvincing, mainly because they provide no evidence of their own. Defendants persuasively cite Estrella v. Brandt, 682 F.2d 814, 819-20 (9th Cir. 1982) for the proposition that unsupported attorney argument is not a substitute for the actual evidence required by Rule 56.
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"Legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid summary judgment." Id.; See also In re REMEC Inc. Sec. Litig. 702 F. Supp. 2d 1202, 1250 (S.D. Cal. 2010) ("Attorney argument is not admissible evidence"); Emazing Lights, LLC v. Ramiro Montes de Oca, 2016 WL 3475330, at *3 (C.D. Cal. 2016) ("unsubstantiated attorney argument cannot defeat summary judgment.") Attorney argument cannot rebut expert testimony. Invitrogen Corp. v.
Clontech Labs., Inc., 429 F.3d 1052, 1068 (Fed. Cir. 2005) ("Unsubstantiated attorney argument regarding the meaning of technical evidence is no substitute for competent, substantiated expert testimony. It does not, and cannot, support [non-movant’s] burden on summary judgment."); see also Marchetti v. Treman, 985 F.2d 573 (9th Cir. 1993) ("Furthermore, we have held that in a motion for summary judgment, expert declarations must be met by expert declarations.")
Sanford Smith
Plaintiffs also take issue with the sworn declaration of Sanford L. Smith, Senior Vice President of Hoag Memorial Presbyterian as his declaration relates to the value of the Equipment and Trademarks.
Specifically, Plaintiffs assert that Mr. Smith’s declaration with regard to the rent was unclear. Mr. Smith stated, "Each of the rent payments, including the Transfers made by [Hoag Plaintiffs] to Newport included base rent for use of the Properties, any applicable passed-through CAM Charges, and rent for the Equipment and Trademark." Smith Declaration ¶ 2. Plaintiffs assert that if this is meant to suggest that payment for the Equipment and Trademarks were included in the rent, this is a false statement. Plaintiffs assert that they paid additional rent for the Equipment and Trademarks. It is unclear how or why this minor discrepancy is material and would warrant a denial of summary judgment, since the real question is whether the rent paid was reasonably equivalent for value received.
Plaintiffs also assert that Mr. Smith is not in a good position to assess
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the value of the Equipment or the trademarks. Plaintiffs refer to Mr. Smith’s assertions that the Subleases and Sub-Subleases for the equipment and trademarks were negotiated at arm’s-length as improper legal conclusions because he provides no basis for those assertions beyond his non-expert opinion. However, Plaintiffs do not cite any authority for the proposition that the owner of (or officer of an entity who is the owner) Equipment and/or Trademarks is not in a good position to assess value, or that an owner of property must be qualified as an expert for their opinion to have any evidentiary weight. Plaintiffs also do not present any contrary evidence that could create an inference that negotiations were not conducted at arm’s- length.
By contrast, Defendants argue that Mr. Smith is in a good position to assess because he is the CEO of Newport and a Senior Vice President of Hoag Memorial. Defendants argue that as an officer in both entities, Mr.
Smith is qualified to offer valuations of Newport and Hoag’s own property, meaning the Equipment and the Trademark. In support of this argument, Defendants cite the following cases: Sacramento Suburban Fruit Lands Co. v. Soderman, 36 F.2d 934, 934 (9th Cir. 1929) ("every property owner is competent to testify as to the value of his own property."); United States v. An Easement & Right-of-way Over 6.09 Acres of Land, More or Less, in Madison Cty., Alabama, 140 F. Supp. 3d 1219, 1239 (N.D. Ala. 2015) ("A long line of precedent establishes a general rule in this circuit that an owner of property is competent to testify regarding its value. The owner is generally presumed to be qualified to give such an opinion based on his ownership alone.") (internal citation and quotation omitted); see also Universal Engraving, Inc. v. Metal Magic, Inc., 602 F. App’x 367, 370 (9th Cir. 2015) ("the owner of intangible property may testify as to the value of the property without qualification as an expert"); Christopher Phelps & Assocs., LLC v. Galloway, 492 F.3d 532, 542 (4th Cir. 2007) ("Courts indulge in a common-law presumption that a property owner is competent to testify on the value of his own property."); Rasmussen
v. Dublin Rarities, 2015 WL 1133189, at *18. It has long been the law that
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owners are qualified to testify as to value of their own property.
Plaintiffs Other Assertions are Unconvincing
Plaintiffs argue that even if the court considers the Declarations of Mr. Basmajian and Mr. Smith, there is still no showing that the Plaintiffs received reasonably equivalent value. Specifically, Plaintiffs argue that Defendants have failed to demonstrate in their analysis that Plaintiffs received reasonably equivalent value for the Transfers as a whole, and for the Equipment and Trademarks in particular. Plaintiffs argue that established law requires a proper analysis to include appraisals done at the time of the Transfers.
Therefore, Plaintiffs argue, the Court should disregard the appraisals for a "reasonably equivalent value" analysis because they are outdated. In regard to Plaintiffs assertion that Defendants provide no analysis of "reasonable equivalent value," Defendants persuasively counter by providing evidence that a fair market analysis was performed on the properties, and that Mr.
Smith, an officer in both Newport and Hoag Memorial, is in a good position to assess the value of the Equipment and the Trademark. Defendants also point out that Plaintiffs themselves have unequivocally stated that the Properties, Equipment, and Trademark were worth at least $3,200,000. (Bid Motion p. 6, Dkt. 243). Notably, the Bid Motion explains that "[a]fter extensive marketing efforts, the Debtors have received several offers. The Purchaser presented the highest and best offer to date [$3,200,000.00], which the Debtors believe reflect the market value of the Assets." (Bid Motion, p. 10).
Plaintiffs argue that reasonable equivalent value must be calculated at the time of sale, but Plaintiff’s reliance on UC Lofts on 5th, LLC v. Schaefer, 2015 WL 5209252, at *16 (BAP 9th Cir. Sep 4, 2014) (citing BFP v.
Resolution Trust Corp., 511 U.S. 531, 546, 114 S. Ct. 1757, 128 L.Ed.2d 556 (1994)) is unavailing. First, it is true that UC Lofts, and BFP stand for the general proposition that reasonable equivalent value must be calculated at the time of transfer, but Plaintiffs ignore the fact that both of those cases might be distinguishable because they concerned fraudulent transfers arising
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from either sales or loans involving a pinpoint in time, not leases which imply valuation over an extended period.
Second, Plaintiffs argue that Defendants’ assertion that the Transfers represented reasonable equivalent value should be ignored because the calculation of the fair market value was assessed months before the Transfers took place. Plaintiffs refer again to Mr. Basmajian’s own words regarding the volatility of the economy at the time, and the difficulty that presented in making accurate appraisals. However, Plaintiffs ignore what Mr. Basmajian stated in his very next paragraph. "When compared to retail and general office properties, medical office properties in most areas would appear to be the one segment of the commercial market that remains relatively stable in terms of occupancy levels." (Basmajian Decl. p. 17, Dkt # 18) Furthermore, Mr. Basmajian’s statement quoted by Plaintiffs was qualified: "certain real estate statistical measures" might be invalid due to the overall economy, not all. Plaintiffs do not put forth any evidence to suggest that there was wild fluctuation during the few months between the appraisals of the Properties and the Transfers. Also, Plaintiffs do not instruct the court on what "at the time of transfer" means when the transfer is rent paid pursuant to a lease.
Conclusion
At the center of this action is a rather tall assertion, i.e. that the various leases negotiated between sophisticated parties and acted upon diligently over the several years since their inception are, nevertheless, constructively fraudulent because, in hindsight, Plaintiffs think now they paid too much. As the Pelz case and similar authority makes clear, in making a determination of the "totality of the circumstances" the court defers significantly to marketplace values and the reasonable judgments of the parties at the time. It cannot be the law that every poor business deal (or even one that proves improvident over time) is evaluated after the fact as a fraudulent conveyance. Although Plaintiffs put forth many arguments in an effort to demonstrate the existence
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of a disputed issue of material fact, they do not present any actual evidence to support their arguments. By contrast, Defendants support their arguments with sworn declarations, relevant case law, and Plaintiffs own statements in prior proceedings. To defeat a motion for summary judgment, Plaintiffs must do more than just disagree with the available evidence. Therefore, based upon the evidence in the record and viewing it in the light most favorable to the nonmoving party, there is no issue of material fact in dispute, and Plaintiffs have not provided any evidence that could lead a reasonable trier of fact to find in their favor. Summary judgment in favor of Defendants on Counts III, IV, and V, leads inexorably to a grant of summary judgment on Counts VI, VII, and VIII because these merely involve the recovery of avoided fraudulent transfers.
Grant as to Counts III, IV, V, VI, VII and VIII. The court will hear argument as to what should be done with Count II.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Defendant(s):
Newport Healthcare Center LLC Represented By
Randye B Soref
Hoag Memorial Hospital Represented By Randye B Soref
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
Hoag Urgent Care - Huntington Represented By
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Ashley M McDow
Hoag Urgent Care - Orange, Inc. Represented By
Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
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Adv#: 8:17-01230 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Hoag Memorial Hospital
(Advanced from 2:00 p.m. per court)
Docket 16
Tentative for 5/24/18:
This is the Defendants’ Motion to Dismiss under Rule 12(b)(6). Defendants argue: (1) Plaintiffs lack standing because they are not parties to the "Master Urgent Care Development Agreement dated Nov. 1, 2010 ("MUCDA") or the Subleases; (2) The applicable statutes of limitations have run; and (3) Defendants were released from potential liability under that certain "Agreement Regarding Payoff of Line of Credit…" dated December 2, 2013 ("Payoff Agreement") which contains a "mutual release."
FRCP 12(b)(6) requires a court to consider whether a complaint fails to state a claim upon which relief may be granted. When considering a motion under FRCP 12(b)(6), a court takes all the allegations of material fact as true and construes them in the light most favorable to the nonmoving party. Parks School of Business v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). As classically formulated, the Rule provides that a complaint should not be dismissed unless a plaintiff could prove no set of facts in support of his claim that would entitle him to relief. Id. FRCP 8 requires a pleading that sets forth a claim for relief to contain a short and plain statement of the claim showing that the pleader is entitled to relief. It is not necessary at the pleading stage to plead evidentiary detail, but facts must be alleged to sufficiently apprise the defendant of the complaint against him. Kubick v. F.D.I.C. (In re Kubick), 171
B.R. 658, 660 (9th Cir. BAP 1994). Clarification, greater particularity, and other refinements in pleading are accomplished through motions, discovery, pretrial orders, and liberal toleration of amendments. Yadidi v. Herzlich (In re
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Yadidi), 274 B.R. 843, 849 (9th Cir. BAP 2002).
"While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554-556, 127 S. Ct. 1955,
1964-65 (2007) A complaint must contain sufficient factual matter to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S.662, 677-78 (2009) 129 S.Ct. 1937, 1949 (2009) citing Twombly. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. The plausibility standard asks for more than a sheer possibility that a defendant has acted unlawfully. Id. The tenet that a court must accept as true all factual allegations is not applicable to legal conclusions. Id. Threadbare recitals of elements supported by conclusory statements are not sufficient. Id. In sum, as clarified under Iqbal and Twombly, complaints must now contain specific allegations of fact, which if true, create a plausible case for relief.
The various arguments put forth by both sides are somewhat muddy, and appear to be relatively close-calls, but depend on assumptions. But the allegations, and the arguments against, are obscure because some of the basic factual underpinnings are missing. For example, Defendants argue that this Motion to Dismiss should be granted because Plaintiffs’ claims are time- barred. This is only correct if one assumes a beginning or "anchor date" of the Payoff Agreement, December 2, 2013. All of the possibly applicable statutes are four years or less and the complaint was indisputably filed more than four years after that date.
Plaintiffs do not dispute the statute of limitations for the various causes of action. The statute of limitations for the First Cause of Action (breach of contract based on breach of implied covenant of good faith and fair dealing) is
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years. See Cal. Civ. Proc. Code §337. Defendants argue that, at the latest, the statute of limitations for this cause of action expired on December 2, 2017, two days before Plaintiffs filed their complaint. The Second Cause of Action (Intentional Interference with Contract) is 2 years. See Cal. Civ. Proc. Code §339(1). Defendants argue that the latest the statute of limitations would have expired was December 2, 2015, slightly more than two years before Plaintiffs filed their Complaint. The Third Cause of Action (Unfair Competition) is 4 years. See Fuller v. First Franklin Fin. Corp., 163 Cal. Rptr. 3d. 44, 50 (2013) (citing Cal. Bus. & Prof. Code §§ 17200, 17208).
Defendants argue that, like the First Cause of Action, the statute of limitations expired, at the latest, on December 2, 2017, two days before Plaintiffs filed their Complaint. The Fourth Cause of Action (Breach of Fiduciary Duty) is 3 years. See Fuller, 163 Cal. Rptr. 3d. 50 ("The limitations period is three years for a cause of action for deceit as it is for a cause of action for breach of fiduciary duty where the gravamen of the claim is deceit, rather than the catchall four-year limitations period that would otherwise apply[.]") (internal citations omitted) Defendants argue that the statute of limitations expired, at the latest, on December 2, 2016, a little more than a year before Plaintiffs filed their Complaint. Finally, in regard to the Fifth Cause of Action (Intentional Interference with Economic Advantage), the statute of limitations is 2 years. See Reudy v. Clear Channel Outdoors, Inc., 693 F. Supp. 2d 1091, 1121 (N.D. Cal. 2010), aff'd sub nom. Reudy v. CBS Corp., 430 F. App'x 568 (9th Cir. 2011) ("The statute of limitations for the tort of intentional interference with prospective economic advantage is two years"); Cal. Code Civ. Proc. section 339(1). The statute of limitations expired on December 2, 2015, two years and two days before this adversary proceeding commenced.
The problem here is that it is very unclear exactly when the alleged events or breaches occurred. Defendants seem to be arguing that the breaches (if any) must have preceded the Payoff Agreement and the release of claims appearing therein. While this might seem logical, the complaint and supporting documents cannot necessarily be read that way. The MUCDA at ¶
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of the Payoff Agreement is modified, not abrogated. This leaves a door open, one supposes, that the complaint concerns breaches occurring after the date of the Payoff Agreement, which are thus not barred under the applicable statutes of limitation. It would have been helpful had the complaint specifically alleged dates or at least time frames.
Another argument raised is that any claims must have been released under the Payoff Agreement. Defendants have an argument regarding the actual language of the release, as pertains to events that had already occurred, echoing the problem discussed above. But even that is still muddy. Although the Payoff Agreement did provide for certain mutual releases, they were specifically limited to those matters encompassed within a defined term contained in the Payoff Agreement: "Released Matters" defined to include several agreements contemplated by the MUCDA, but not the MUCDA itself. Were that the end of it, it would be hard not to see the MUCDA within the term "associated…" as used at ¶8, top of page 7.
But the Payoff Agreement expressly defined the MUCDA as a "Continuing Agreement." As such, claims arising under MUCDA were not among the "Released Matters." Rather, on the date of the Payoff Agreement (December 2, 2013) the parties to the MUCDA confirmed and ratified their continuing obligations to one another under the joint venture agreement.
Furthermore, the mutual releases in the Payoff Agreement contained an explicit carveout: "[T]he Released Matters do not include, any rights, claims, or causes of action arising under or associated with this Agreement" which Agreement "may not be used as evidence to prove any alleged wrong in any action or proceeding initiated by any Amster Party or any Hoag Party, against the other, , [sic] except for an action concerning the breach or enforcement of any Continuing Agreement or this Agreement." (Complaint, Exhibit 3, p. 7, ¶ 8). So, it is not clear that the Mutual Releases in the Payoff Agreement released claims existing pursuant to the MUCDA because (i) the parties confirmed and ratified their continuing obligations under the MUCDA in the Payoff Agreement; (ii) the parties continued to operate under the MUCDA
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long after the Payoff Agreement was executed, and (iii) the Payoff Agreement contained an explicit reservation of rights and remedies by the parties several "Continuing Agreements", which agreements expressly included the MUCDA. Ergo, the pending causes of action have not been released as the Defendants claim (or not clearly so). Still we have the problem whether the breaches complained of occurred before or after the Payoff Agreement.
Perhaps realizing and/or conceding that Defendants’ statute of limitations argument has at least some merit, Plaintiffs also assert that they are entitled to Equitable Tolling, which would make their Complaint timely. In support of this contention, Plaintiffs cite Lantzy v. Centex Homes, 31 Cal.4th 363,370, 73 P.3d 517, 523 (2003) for the proposition that "one cannot justly or equitably lull his adversary into a false sense of security, and thereby cause his adversary to subject his claim to the bar of statute of limitations, and then be permitted to plead the very delay caused by his course of conduct as a defense to the action when brought." However, like other cases cited by Plaintiffs, Lantzy is distinguishable because that case occurred in the construction defect context.
California’s equitable tolling doctrine requires that a plaintiff must have been diligently pursuing another remedy while the limitations period on a second remedy has run. McDonald v. Antelope Valley Cmty. Coll. Dist., 194 P.3d 1026, 1031–32 (Cal. 2008) ("Broadly speaking, the doctrine applies when an injured person has several legal remedies and, reasonably and in good faith, pursues one. Thus, it may apply where one action stands to lessen the harm that is the subject of a potential second action; where administrative remedies must be exhausted before a second action can proceed; or where a first action, embarked upon in good faith, is found to be defective for some reason.") (internal citations and quotations omitted).
California courts and treatises recognize that "[w]hen a plaintiff relies on a theory of fraudulent concealment, delayed accrual, equitable tolling, or
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estoppel to save a cause of action that otherwise appears on its face to be time-barred, he or she must specifically plead facts which, if proved, would support the theory. (McKelvey v. Boeing North American, Inc., 74 Cal.App.4th 151, 160 [86 Cal. Rptr. 2d 645] (1999); 5 Witkin, Cal. Procedure (4th ed.
1997) Pleading, §§ 883–886, pp. 342–346.) This is where Plaintiffs’ Complaint falls short. Plaintiffs have not alleged that they were diligently pursuing their rights in any way during the statute of limitations period.
Plaintiffs argue that because a Receiver was appointed, all rights to pursue litigation rested with the Receiver, therefore, the statutes of limitations should be tolled for the Receivership period because they could not bring claims on their own behalf. Plaintiffs do not offer any evidence or even allegation that they ever attempted to persuade the Receiver to pursue their causes of action, or that such circumstances would invoke equitable tolling.
Additionally, Plaintiffs have not pled sufficient facts that, if proven, would support the theory because they have not demonstrated that they lacked knowledge of the alleged wrongdoing until after December 2, 2013 (date of Payoff Agreement) for preexisting claims, (or that such rights of action accrued after December 2, 2013).
Plaintiffs argue that none of the statutes of limitations have expired. Plaintiffs’ argument is thin on authority, but appears to be that Defendants and Plaintiffs had continuing contractual obligations under the MUCDA and that these obligations were ratified by the parties by signing the Payoff Agreement. Plaintiffs’ argument is rather convoluted, but suggests that when there are ongoing contractual obligations, as here, a Plaintiff may elect to rely on the contract despite a breach, and the statute of limitation does not begin to run until the plaintiff has elected to treat the breach as terminating the contract. See Witkin, Summary of Law, supra, Contracts §§800-801, pp.
723-724.) Romano v. Rockwell Internat., Inc., 14 Cal. 4th 479, 489, 926 P.2d 1114, 1120 (1996). Plaintiffs reliance on this case, and therefore on this theory, are unconvincing because Romano, as Defendants point out, involves a contract in the employment law context, which is a clearly distinguishable
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from this case. Thus, there are strong reasons to doubt that this reasoning is plausibly applicable to the current adversary proceeding.
However, even if the court were tempted to entertain such an argument, Plaintiffs would still have to explain, and they do not, when, in their minds, the breach or breaches occurred. In California, the rule is that cause of action for breach of contract accrues when the breach occurs. See Spear
v. Cal. State Automobile Ass’n, 2 Cal.4th 1035, 1042 (1992) [9 Cal.Rptr.2d 381, 831 P.2d 821]. ("A contract cause of action does not accrue until the contract has been breached.") The claim accrues when the plaintiff discovers, or could have discovered through reasonable diligence, the injury and its cause." (Angeles Chem. Co. v. Spencer & Jones, 44 Cal.App.4th 112, 119 (1996) [51 Cal.Rptr.2d 594].) The exception is for delayed discovery, wherein "If [defendant] proves that [plaintiff]’s claimed harm occurred before [the date from applicable statute of limitations], [plaintiff]’s lawsuit was still filed on time if [plaintiff] proves that before that date, [plaintiff] did not discover, and did not know of facts that would have caused a reasonable person to suspect, that [he/she/it] had suffered harm that was caused by someone’s wrongful conduct.] (Judicial Council of California Civil Jury Instruction 455) See also: Stella v. Asset Management Consultants, Inc., 8 Cal. App. 5th 181, 213 (2017) (citing Jolly v. Eli Lilly & Co., 44 Cal.3d 1103, 1112 (1988))
Here, neither Plaintiffs’ Complaint nor the Opposition to this motion suggests that the alleged breaches occurred after the Payoff Agreement was executed. Nor do Plaintiffs argue that they could not, with reasonable diligence, have discovered the alleged breaches until after the Payoff Agreement was executed. Instead, Plaintiffs rely on the convoluted continuing contractual obligation theory that, at best, has questionable applicability to the facts of this case.
The court also has difficulty with the standing theory. Plaintiffs seem to argue that the Hoag entities and Amster M.D., Inc. were "third party
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beneficiaries" of the MUCDA. How this could be is not really explained since, apparently at least the Hoag entities did not exist as of the MUCDA. However, a third party need not be specifically named to be found a third party beneficiary provided circumstances/negotiations are explained established that intent. Spinks v. Equity Residential Briarwood Apartments, 171 Cal. App. 4th at 1023–24 quoting (Civ.Code, § 1647.) "In determining the meaning of a written contract allegedly made, in part, for the benefit of a third party, evidence of the circumstances and negotiations of the parties in making the contract is both relevant and admissible." Garcia v. Truck Ins. Exchange (1984) 36 Cal.3d 426, 437, 204 Cal.Rptr. 435, 682 P.2d 1100; accord, Souza
v. Westlands Water Dist., supra, 135 Cal.App.4th at p. 891, 38 Cal.Rptr.3d
78. Additionally, a court may consider the subsequent conduct of the parties in construing an ambiguous contract. Spinks, 90 Cal. Rptr. 3d at 470 (2009) citing Southern Cal. Edison Co. v. Superior Court (1995) 37 Cal.App.4th 839, 851, 44 Cal.Rptr.2d 227. How these principles might apply for an entity that does not even yet exist, however, is not explained. Again a problem is presented of when the alleged breaches occurred, which, if specified, might assist as well on the standing question.
The same problem is echoed in the whole joint venture allegation. "The essential element of a joint venture is an undertaking by two or more persons to carry out a single business enterprise jointly for profit." Pellegrini v. Weiss, 165 Cal. App. 4th 515, 524– 25, 81 Cal. Rptr. 3d 387, 397 (2008) citing
Nelson v. Abraham (1947) 29 Cal.2d 745, 749, 177 P.2d 931. "The rights and liabilities of joint adventurers, as between themselves, are governed by the same rules which apply to partnerships." Pellegrini, 165 Cal. App. 4th at 524–25 citing Boyd v. Bevilacqua (1966) 247 Cal.App.2d 272, 288, 55 Cal.Rptr. 610. "Whether a joint venture relationship exists is a question of fact, depending on the intention of the parties." Pellegrini, 165 Cal. App. 4th at 524–25 (internal citations omitted); County of Riverside v. Loma Linda University, 118 Cal.App.3d 300, 313 (1981) (joint venture a question of fact unless "there is no conflicting extrinsic evidence concerning the interpretation
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of the contract creating the relationship"). Here, the allegations in the Complaint and the MUCDA, attached as an exhibit, arguably sufficiently allege the existence of a joint venture entitling at least some Plaintiffs (i.e. original signatories) to maintain the pending causes of action. Left unclear, however, is whether the late-formed Hoag entities can come in as third party beneficiaries or whether there is a statute of limitations problem tied to the dates of the alleged breaches.
Substantial cleanup is required for a threshold of plausibility to arise.
Grant with leave to amend. Care must be given to pinpoint dates of alleged offenses.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Defendant(s):
Hoag Memorial Hospital Represented By Randye B Soref
Newport Healthcare Center, LLC Represented By
Randye B Soref
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow
11:00 AM
Dr Robert Amster Represented By Ashley M McDow
Robert Amster, M.D., Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
2:00 PM
Adv#: 8:17-01241 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Newport Healthcare Center
Docket 15
- NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Defendant(s):
Newport Healthcare Center LLC Represented By
Randye B Soref
Hoag Memorial Hospital Represented By Randye B Soref
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care - Orange, Inc. Represented By
Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
2:00 PM
Ashley M McDow
10:30 AM
MARK PROEFROCK
Vs.
DEBTOR
Docket 10
Tentative for 5/29/18:
No service on Debtor? Email address is listed in NEF section but Debtor is not on the Court's list for email notice.
Debtor(s):
Gregory Burke Pro Se
Movant(s):
Mark Proefrock Represented By Cara J Hagan
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WORLDWIDE COPORATE HOUSING, LP
Vs.
DEBTOR
Docket 8
- NONE LISTED -
Debtor(s):
Craig Ell Pro Se
Movant(s):
Worldwide Corporate Housing, LP Represented By
Scott Andrews
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
HONDA LEASE TRUSTS and AMRANE COHEN, CHAPTER 13 TRUSTEE
Vs.
DEBTOR
Docket 31
Tentative for 5/29/18:
Grant. Appearance is optional.
Debtor(s):
Lam D. Tran Represented By
Tina H Trinh
Movant(s):
HONDA LEASE TRUST Represented By Vincent V Frounjian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
ANTHONY ALMADA
Vs.
DEBTOR
Docket 374
Tentative for 5/29/18:
Grant as to this payment only.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:30 AM
SANTANDER CONSUMER USA INC.
Vs.
DEBTOR
Docket 25
Tentative for 5/29/18:
Grant. Appearance is optional.
Debtor(s):
Donald Karn Represented By
Ashishkumar Patel
Movant(s):
Santander Consumer USA Inc. dba Represented By
Sheryl K Ith
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 29
Tentative for 5/29/18:
Grant. The assignment was recorded in 2011. Any of the other arguments and theories belong to the Ch. 7 trustee.
Debtor(s):
Donald Karn Represented By
Ashishkumar Patel
Movant(s):
U.S. Bank National Association, as Represented By
Arnold L Graff
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
NATIONSTAR MORTGAGE LLC
Vs.
DEBTORS
Docket 78
Tentative for 5/29/18:
Grant. Appearance is optional.
Debtor(s):
Brian G Blake Represented By Henry L Ng
Joint Debtor(s):
Elda B Blake Represented By
Henry L Ng
Movant(s):
Nationstar Mortgage LLC, its Represented By
Kristin A Zilberstein Nancy L Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-08-18)
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTORS
Docket 37
Tentative for 5/8/18:
Grant unless current or APO
Debtor(s):
Gustavo Ocegueda Represented By Joseph A Weber
Joint Debtor(s):
Maria Ocegueda Represented By Joseph A Weber
Movant(s):
U.S. Bank National Association, as Represented By
Tyneia Merritt
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTORS
Docket 47
Tentative for 5/29/18:
Grant. Appearance is optional.
Debtor(s):
Todd A Carpenter Represented By Eric A Jimenez
Joint Debtor(s):
Mary A Carpenter Represented By Eric A Jimenez
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-15-18)
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 18
Tentative for 5/29/18: Grant.
Tentative for 5/15/18: Grant.
Debtor(s):
Mary Jo Bryant Represented By Julie J Villalobos
Movant(s):
Wells Fargo Bank, N.A. Represented By
Dane W Exnowski
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-15-18)
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 14
Tentative for 5/29/18: Grant.
Tentative for 5/15/18:
Reimposition of the stay is sought in #11 on calendar, although service of that motion is unclear. No tentative.
Debtor(s):
Joe P Stubbs Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 17
Tentative for 5/29/18: Service of Motion?
Tentative for 5/15/18:
Service of this motion is not compliant with Rule 7004, so perhaps the failure to respond is unsurprising. No tentative.
Debtor(s):
Joe P Stubbs Represented By
Bruce A Boice
Movant(s):
Joe P Stubbs Represented By
Bruce A Boice Bruce A Boice
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Docket 57
- NONE LISTED -
Debtor(s):
Frank Pestarino Represented By Lauren Rode Kevin Tang
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Docket 12
Tentative for 5/29/18:
Grant. Appearance is optional.
Debtor(s):
Martin Cisneros Mendoza Pro Se
Movant(s):
United States Trustee (SA) Represented By Michael J Hauser
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Docket 79
Tentative for 5/29/18:
In her declaration, the Trustee, Karen Sue Naylor, echoes some of the frustrations expressed by Bayview with respect to Debtor’s failure to cooperate, and also believes that the claims in the pending litigation constitute assets of the estate, but has not had any bidders for them. The Trustee doubts these claims are worth much at all. Therefore, the Trustee takes no position on whether the court should grant this motion, but expresses doubt that any good will come of denying Debtor’s motion.
Finally, as an equitable consideration, Debtor reports that he is in ill health and is facing mounting medical care costs. Debtor says that this case has put a lot of strain on him, and because the prejudice to creditors is only slight or nonexistent, he argues, the court should grant his motion.
Debtor and Trustee both seem to agree that the prejudice to creditors would be only slight or nonexistent because the main assets in estate are underwater and there will be no equity to pay off the unsecured creditors.
Trustee has tried to sell the claims in the pending litigation because they are assets of the estate, but has been unable to find a buyer. However, it is also true that Debtor has been less than forthcoming about providing requested documentation to the Trustee, and the court does not want to reward such behavior. At the same time, the Court is mindful of the resources being used to administer this estate, and even the Trustee believes that denying this motion would be of questionable benefit to estate. On balance, the facts, as pled, tip slightly in favor of granting this motion.
Grant.
11:00 AM
Debtor(s):
Surat Singh Represented By
Michael A Younge
Movant(s):
Surat Singh Represented By
Michael A Younge Michael A Younge Michael A Younge
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Docket 12
Tentative for 5/29/18:
Grant. Appearance is optional.
Debtor(s):
Atif Hussain Pro Se
Joint Debtor(s):
Rehana Hussain Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Claim # 3 - Harbor Pipe & Steel, Inc. dba Genesis Metals Claim # 4 - Centennial Streel Div. of Consolidated Fabricators
Claim # 6 - Capital One Bank (USA), N.A. by American Inforsource LP as Agent
Claim # 7 - S&R Metals, Inc.
Docket 72
Tentative for 5/29/18:
Sustain as to all 4 objections. In regard to Claim 6, Capital One Bank (USA), N.A., by American InfoSource LP as agent, this creditor has filed two amended claims. The first amended claim, filed on 5/14/18, correctly identifies the Debtor in the proof of claim and submits supporting credit card statements that reflect the balance claimed.
However, the second amended claim, submitted on 5/22/18, causes some confusion. As in the original claim, the Debtor is identified as Farman Steele, Inc. and the amount owed is the same as the first amended claim and the original. The documentation in support of this amended claim identifies the Debtor, not the corporate entity. It is not clear if this second amended claim is meant to override the first amended claim. The creditor has not filed an opposition to the Trustee’s Objection on this claim, so resolving this discrepancy might not be possible until the hearing.
Allow for opposition at the hearing on Claim 6. If none, sustain.
11:00 AM
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
11:00 AM
(set from evidentiary hrg held on 1-26-16)
(con't from 1-30-18 order approving stipulation entered 1-23-18) (con't from 2-27-18)
Docket 105
Tentative for 5/29/18: Status?
Tentative for 2/27/18:
What would the Trustee suggest be done? Passport in the custody of the Marshal?
Tentative for 10/3/17:
The issue of who holds Debtor's passports still needs to be addressed.
Tentative for 8/1/17: Status?
Tentative for 4/25/17: Updated status?
11:00 AM
Tentative for 7/7/16:
Status? Is Ms. Olson retaining counsel or not?
Tentative for 6/7/16: Status?
Tentative for 4/28/16:
Status? The court is evaluating Debtor's efforts to purge her contempt.
Tentative for 4/7/16:
The trustee's report filed April 6 is not encouraging.
Tentative for 3/29/16: Status?
Tentative for 3/15/16:
Status? The court expects discussion on a workable protective mechanism as requested in paragraph 7 of the order shortening time.
Tentative for 1/19/16:
A status report would be helpful.
11:00 AM
Tentative for 1/5/16:
No tentative. Request update.
Revised tentative for 11/5/15:
This matter is being immediately transferred to Judge Albert, who will hear the matter as scheduled at 10:00 a.m. in Courtroom 5B. A separate transfer order will issue shortly.
************************************************************************* Tentative for 11/5/15:
Physical appearances are required by all parties, including Debtor, in Courtroom 5C, located at 411 West Fourth Street, Santa Ana, CA 92701.
Debtor(s):
Jana W. Olson Represented By Thomas J Polis
Movant(s):
Passport Management, LLC Represented By Philip S Warden
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
11:00 AM
(con't from 2-27-18)
Docket 286
Tentative for 5/29/18: Status?
Tentative for 2/27/18: Status?
Tentative for 10/3/17: See #14.
Tentative for 8/1/17:
Status? Where should passports be kept?
Tentative for 4/25/17: Updated status report?
11:00 AM
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16: Status?
Tentative for 5/12/16:
The court has two concerns: (1) by now hopefully the Trustee has more particularized descriptions of the exact items including records to be turned over (e.g. all monthly statements of Bank of America Account ). Some or even most may still not be known to the trustee, but all specificity should be given where possible preliminary to a contempt charge and (2) how do we incorporate mediation efforts before Judge Wallace into this program. This court is reluctant to enter any order that would short circuit that effort.
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
Ashley M Teesdale
11:00 AM
(con't from 1-30-18 order approving stipulation entered 1-23-18) (con't from 2-27-18)
Docket 0
Tentative for 5/29/18: Status?
Tentative for 2/27/18: Status?
Tentative for 10/3/17: See #14.
Tentative for 8/1/17: Status?
Tentative for 4/25/17:
No tentative. Court will hear updated status report from parties.
11:00 AM
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16: Status?
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays
Ashley M Teesdale
10:00 AM
(con't from 5-2-18 per order approving stip. to cont. entered 4-30-18)
Docket 452
- NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
10:00 AM
(con't from 4-4-18 )
Docket 1
Tentative for 5/30/18:
Has a claims bar date been noticed? See Calendar # 3.
Tentative for 4/4/18: Status?
Tentative for 2/7/18:
Deadline for filing plan and disclosure statement: December 31, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: December 1, 2017
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
Docket 135
Tentative for 5/30/18:
The debtor’s proposed Disclosure Statement does not contain adequate information and cannot be approved, as apparently even she admits. It appears that it was filed knowing the information was not complete, but was filed to meet a deadline. As a starting point, the form for individual debtors is not a good fit for this case. This is not a straightforward individual case where a debtor is trying to address arrears on real property. This case is more complex and is better suited to a traditional disclosure statement format where Debtor provides a more detailed narrative and can describe the various assets and liabilities. The classes of claims should also be set forth more clearly. The explanation of valuation and how the absolute priority rule will be dealt with will be easier to understand in this format as well. This hearing should be continued to give debtor an opportunity to amend. After an amended disclosure is filed the Court should be in a better position to determine whether adequate information has been provided. It is not clear to that the separate classification of PWB will be acceptable. But that is primarily a confirmation issue. Debtor’s own brief at p. 4 lines 11-14 makes it sound like debtor has separately classified in order to gerrymander, which of course is not permitted. But whether there is enough involving arguments about claim of lien, preference and the like to fit within the ruling in In re Johnston, 21 F.
3d 323, 327 (9th Cir. 1994) and similar authority is not clear. But that will be tested at confirmation. The U.S. Bank claim’s separate classification makes a little more sense because payment is allegedly coming from Spires and her liability is as guarantor. But, debtor should first set forth her plan and disclosure in a clear and understandable format, with all of the necessary
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information included. Then the court will be in a better position to review it. The report about delays from the accountants/appraisers is disappointing but ultimately the debtor is the responsible party, so further delays on that account should not be expected.
Continue for amendment.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
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Docket 40
Tentative for 5/30/18:
Convert to Chapter 11. The concerns of the Secretary of Labor are noted. The court will hear argument as to whether an 11 Trustee should also be appointed, and if such relief should be by separate motion.
Debtor(s):
John Benjamin Riddle Represented By Stephen L Burton
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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Adv#: 8:17-01085 Karen Sue Naylor, Chapter 7 Trustee v. Home Trends International Inc.
(con't from 3-29-18)
Docket 2
Tentative for 5/31/18:
Status conference continued to November 8, 2018 at 10:00 a.m.
Tentative for 3/29/18:
Status conference continued to May 31, 2018 at 10:00 a.m.
Tentative for 2/1/18:
Status conference continued to March 29, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to February 1, 2018 at 10:00 a.m.
Tentative for 8/31/17:
Status conference continued to October 26, 2017 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik
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Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Home Trends International Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:18-01001 Tender Care 24/7 Home Health, Inc. et al v. Misa
(con't from 3-29-18)
Docket 1
Tentative for 5/31/18:
Status Conference continued to July 12, 2018 at 10:00am. Notice to provide that failure to appear may result in striking of answer and entry of default judgment.
Tentative for 3/29/18:
In view of the parallel Superior Court case, should a relief of stay be granted with moratorium of this action pending a judgment in Superior Court?
Debtor(s):
Maria T. Misa Represented By
W. Derek May
Defendant(s):
Maria T. Misa Pro Se
Plaintiff(s):
Tender Care 24/7 Home Health, Inc. Represented By
Carol G Unruh
Perla Neri Represented By
Carol G Unruh
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Trustee(s):
Weneta M Kosmala (TR) Pro Se
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Adv#: 8:18-01059 Lief Organics, LLC v. Hans-Drake International Corporation et al
(con't from 4-26-18)
Docket 1
Tentative for 5/31/18:
Court is not clear as to whether remand is appropriate or not, and plaintiff has not addressed substance in writing as suggested by Notice of Ruling filed 5/8. Status?
Tentative for 4/26/18:
Status conference continued to coincide with remand OSC.
Debtor(s):
David R. Garcia Represented By Thomas J Tedesco
Defendant(s):
Hans-Drake International Pro Se
David Garcia Pro Se
Plaintiff(s):
Lief Organics, LLC Represented By Diana L Fitzgerald
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Trustee(s):
Weneta M Kosmala (TR) Pro Se
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Adv#: 8:15-01099 Howard B. Grobstein, Chapter 7 Trustee v. Ponce
(con't from 3-29-18 per order granting stip. re continuance ent. 3-19-18)
Docket 0
Tentative for 8/4/16:
Deadline for completing discovery: November 7, 2016 Pre-trial conference on: December 1, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Raymond E Ponce Represented By Nancy A Conroy
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Jon L Dalberg
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau
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Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
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Adv#: 8:17-01058 Karen Sue Naylor, Chapter 7 Trustee v. Beatrice Home Fashions, Inc.
(con't from 3-1-18 )
Docket 1
Tentative for 3/1/18:
Continue to May 31, 2018 at 10:00 a.m. per request.
Tentative for 8/31/17:
Deadline for completing discovery: February 1, 2018 Last date for filing pre-trial motions: February 14, 2018 Pre-trial conference on: March 1, 2018 at 10:00 a.m.
Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
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Defendant(s):
Beatrice Home Fashions, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
(con't from 5-24-18)
Docket 1
Tentative for 5/31/18: see calendar # 6
Tentative for 5/24/18: Continue to 5/31/18.
Tentative for 4/12/18:
Status conference continued to May 3, 2018 at 11:00 a.m.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Pro Se
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee
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Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
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Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
Docket 16
Tentative for 5/31/18:
This is Debtor’s Rule 12(b)(6) Motion to Dismiss Plaintiff Hybrid Finance Ltd.’s First Amended Complaint for failure to state a claim upon which relief can be granted. Plaintiff alleges two causes of action: (1) Dischargeability of $2,661,457 in damages pursuant to 11 U.S.C. §523(a) and (2) Objection to discharge pursuant to 11 U.S.C. §727, apparently for failure to properly account for missing assets. Plaintiff bases its §523 action primarily on a state court judgment entered June 6, 2017 in Los Angeles County Superior Court, case no. BC523540 ("state court action") wherein the state court found that Debtor had defrauded Plaintiff. Although no subsection of §523(a)(2) is explicitly stated in the first Amended Complaint, Plaintiff apparently seeks to apply the state court’s finding of fraud, making this a case presumably under § 523(a)(2)(A)[actual fraud] but perhaps under subsections (4) or (6)[respectively, breach of fiduciary duty and willful and malicious injury]. Plaintiff’s cause of action under §727 is much less clearly presented.
Pleading Standards
Fed. R. Civ. P. Rule 8 requires that a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." A pleading that does not state a claim upon which relief can be granted may be dismissed by the respondent pursuant to Fed. R. Civ. P. Rule 12(b)(6).
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"To survive a motion to dismiss, a complaint must contain sufficient factual matter accepted as true, to ‘state a claim to relief that is plausible on its face.’" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic v. Twombly, 550 U.S. 544 (1955)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A pleading that merely "offers ‘labels and conclusions’ or a formulaic recitation of the elements of a cause of action will not do." Id. ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice").
If a complaint is accompanied by attached documents, the court is not limited by the allegations contained in the complaint. Amfac Mortgage Corp.v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 429 (9th Cir. 1978). These documents are part of the complaint and may be considered in determining whether the plaintiff can prove any set of facts in support of the claim." Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987).
Plaintiff’s Action to Determine Dischargeability pursuant to 11
U.S.C. § 523
Here, Debtor argues that Plaintiff’s First Amended Complaint is thin on facts relating to this objection to dischargeeability of the claim. However, Debtor is incorrect in asserting that the thinness of facts amounts to a failure to state a claim. Plaintiff’s First Amended Complaint begins with a very general discussion of the state court action where Plaintiff obtained a judgment against Debtor for fraud. This very general discussion is what Debtor claims makes the First Amended Claim deficient. But Debtor ignores that Plaintiff attached to its Complaint a copy of the Statement of Decision, as issued in the state court action. In the Statement of Decision, Judge Newman provides the details of Debtor’s fraudulent scheme to induce investors, such as Plaintiff to entrust to Debtor nearly $1,000,000, that Debtor converted to
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his own use for down payment on a mansion in Malibu.
As stated above, if a complaint is accompanied by attached documents, the court is not limited by the allegations contained in the complaint. Amfac Mortgage Corp., 583 F.2d at 429. These documents are part of the complaint and may be considered in determining whether the plaintiff can prove any set of facts in support of the claim." Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). It should be noted that Plaintiff does not use any excerpts from the Statement of Decision, nor does Plaintiff do any legal analysis of its own to demonstrate the validity of its objection. Instead, Plaintiff essentially says, "see attached exhibit" in lieu of doing any of the analysis one would expect in a complaint, such as fitting it within the appropriate subsection of §523(a)(2). However, the attached Statement of Decision does provide the Court with enough information, taken as true, and viewed in the light most favorable to Plaintiff as the nonmoving party, to state a claim upon which relief can be granted.
In the Statement of Decision, Judge Newman lays out the standard for a fraud claim as follows: "The elements of the tort of intentional fraudulent misrepresentation are: (1) false representation as to a material fact; (2) knowledge of falsity; (3) intent to deceive;( 4) justifiable reliance; and ( 5) resulting damages." (First Amended Complaint, Exh. 1, p. 11) Plaintiff asserts, and this court agrees, that these elements are virtually identical to the elements a bankruptcy court uses to make a determination of whether a debt was procured by fraud pursuant to §523(a)(2)(A). "The elements of a claim for fraudulent misrepresentation under section 523(a)(2)(A) are: (1) a representation of fact by the debtor, (2) that was material, (3) that the debtor knew at the time to be false, (4) that the debtor made with the intention of deceiving the creditor, (5) upon which the creditor relied, (6) that the creditor's reliance was reasonable, and (7) that damage proximately resulted from the misrepresentation." Rubin v. West (In re Rubin), 875 F.2d 755, 759 (9th Cir. 1989); see also, Britton v. Price (In re Britton), 950 F.2d 602, 604 (9th Cir.
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1991).
The state court then chronicled Plaintiff’s decision to invest $960,000
in Debtor’s fraudulent scheme, and Debtor’s eventual use of the money to purchase the Malibu property. Along the way, the state court stated, "The Court finds that the Defendant fraudulently misrepresented to Hybrid that there was an investment opportunity." (First Amended Complaint, Exh. 1, p. 12.) The state court then details how Debtor kept giving Plaintiff assurances that the promised investment was on track. "Berenholtz testified about a conference call that occurred on October 19, 2010, where he requested an update on what was going on. Shlaimoun and Errez were also on the call.
Shlaimoun continued to say that everything was okay and that they had passed compliance." Id. at 13.
The state court further noted that "the Defendant has testified that he believed the lease bond deal to be a valid investment. However, as indicated by Plaintiff’s expert, Mr. Files, this was a fraudulent scheme. In his three decades of experience, he has never heard of someone leasing a bond legitimately and using it as collateral. He testified that the bonds are fake, and the fact that the bonds did not have a CUPSID or ISIN number is significant in demonstrating their fraudulent character." Id. at 14. The state court noted that it found Debtor less than credible on a number of issues. For example, the court stated, "Shlaimoun claimed he leased the bonds from Roxlark by paying them $9 million for a one-month rental. He claims that Roxlark licensed a patent from him for $18 million. However, there was no evidence produced regarding this patent licensing agreement." Id. The state court further found that Defendant lacked credibility when Debtor testified that he had no ownership interest in Roxlark, but later found that he, in fact, owned 100% of Roxlark. Id. Upon further explanation of various inconsistencies in testimony, the state court concluded that the Plaintiff had met its burden of proof with respect to the cause of action for fraud. Id. at 15.
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In regard to conversion, the state court found "the Defendant fraudulently induced Hybrid to provide him with the investment money. He then took possession of the money, converting it to his own use for purchase of the Malibu property." Id. at 16.
Therefore, having prevailed in state court on his action for fraud against Debtor, Plaintiff’s claim requesting a determination of dischargeability may be ready for summary adjudication because every element has already been tried and proven. Therefore, the principles of collateral estoppel likely apply would be binding here. To the extent Debtor asserts that Plaintiff’s claim under §523 is deficiently pled with insufficient particularity under FRCP 9, this is incorrect. If one were to only look at the body of the First Amended Complaint prepared solely for this proceeding, Debtor would have a good argument. However, Plaintiff attached the Statement of Decision, which contains an abundance of facts directly bearing on Plaintiff’s asserted cause of action. It is unquestionably not the best practice for Plaintiff to simply recite the elements of a cause of action, then attach a lengthy Statement of Decision, and leave it up to the court to connect the dots. It is also not a good practice for Plaintiff to leave the precise cause of action somewhat hazy. For example, Plaintiff’s Complaint only makes it clear that it is asserting a cause of action under §523, but does not say which specific subsection, which again leaves it to the Court to figure out. But the proper selection of § 523(a)(2)(A) or possibly §523(a)6), as is cleared up in the Opposition to the Motion to Dismiss, should have been done in the First Amended Complaint.
Despite these relatively minor, but annoying problems, Plaintiff has stated a cause of action upon which relief can be granted. Therefore, Debtor’s motion to dismiss, with regard to the claim under §523, will be denied.
Objection to Discharge Under §727
Plaintiff’s Second Cause of Action objects to Debtor’s discharge under
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11 U.S.C. §727. The portion of §727 cited by Plaintiff states: "(a) The court shall grant the debtor a discharge, unless--
the debtor is not an individual;
the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed--
property of the debtor, within one year before the date of the filing of the petition; or
property of the estate, after the date of the filing of the petition;
the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor's financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case;
the debtor knowingly and fraudulently, in or in connection with the case--
made a false oath or account;
presented or used a false claim;
gave, offered, received, or attempted to obtain money, property, or advantage, or a promise of money, property, or advantage, for acting or forbearing to act; or
withheld from an officer of the estate entitled to possession under
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this title, any recorded information, including books, documents, records, and papers, relating to the debtor's property or financial affairs;
the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor's liabilities;"
Plaintiff does make several factual allegations, but it is not always clear from the text of the First Amended Complaint which subsection of §727 is being invoked. This can make it difficult to tell whether Plaintiff has stated a valid cause of action or whether those facts are even material to any cause of action. This section of the First Amended Complaint is messy and needs to be refined so that the court can adequately assess the viability of the asserted claim(s). Plaintiff’s Opposition to the Motion appears to acknowledge that the First Amended Complaint, as written, is not as clear as it could/should be, and has a section devoted to requesting leave to amend any deficiencies the court identifies.
It appears that Plaintiff not only has a claim that will survive the current motion to dismiss (the §523 claim), but may also prevail on summary judgment motion under Rule 56. In that light Plaintiff does not make it clear why it is pursuing the §727 claim against Debtor as well. But that is certainly Plaintiff’s right to proceed on any theory supported by the facts. It is worth noting that Plaintiff’s claim for fraudulent transfer was denied in the state court action. The claim should be amended to clarify which specific subsection is being invoked under §727, and whether the alleged failure to provide information or explain deficiencies arises from the schedules and statement of affairs, or perhaps other sources.
Conclusion
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Plaintiff has stated a plausible claim upon which relief can be granted
with respect to the First claim based on §523. In fact, Plaintiff could pursue this First claim through summary adjudication. In regard to the Second claim under §727, the allegations lack focus and appear to be done in a scattershot manner, which makes evaluating the claim for plausibility, as written, a more difficult task than it should be.
Deny as to First Claim for Relief. Grant as to Second, with leave to amend.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Represented By David B Shemano
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee Timothy P Dillon
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy Michael Jason Lee
Sunjina Kaur Anand Ahuja
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Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
Docket 25
Tentative for 5/31/18:
This is the Plaintiff’s motion for summary judgment under FRBP 7056, incorporating FRCP 56. Plaintiff alleges that Defendant fraudulently induced Plaintiff to provide product to Defendant’s company based on false pretenses, a false representation, and/or actual fraud. Plaintiff’s claim against Defendant arises from a judgment entered in its favor by the Los Angeles Superior Court finding that Debtor breached a personal guaranty he had signed by which he guaranteed the payment to Plaintiff Omni of any and all obligations owed by Debtor’s company Farman Steel, Inc.
Reportedly, Debtor never complied with his guaranty and never made a single payment to Omni under his guaranty (although apparently Farman Steel did make several payments post guaranty). Now it has been admitted by Debtor in deposition that at the time he entered into the guaranty he knew that Omni was relying upon his guaranty to continue selling goods to Farman Steel, and Omni did continue to sell goods to Farman in reliance on the guaranty. Debtor further admitted in deposition that at the time he entered into the guaranty, he did not have the financial ability to satisfy the obligations of Farman Steel, Inc. to Omni and knew this, but entered into the guaranty anyway to induce Omni to continue selling goods to Farman Steel.
Therefore, Plaintiff asserts, Defendant’s conduct fits within the "actual fraud" exception to discharge found in 11 U.S.C. 523(a)(2)(A). Plaintiff also asserts that Debtors conduct was both willful and malicious within the meaning of 11 U.S.C.
523(a)(6). Plaintiff further asserts that Debtor’s discharge should be denied pursuant to 11 U.S.C. §727(a)(2) because Omni claims that Debtor transferred substantially all of his assets to his wife during his divorce comprising a fraudulent transfer. To support its motion, Omni relies heavily upon inference and "badges of fraud." But, as explained below, this falls short given the requirements of Rule 56.
FRBP 7056 makes FRCP 56 applicable in bankruptcy proceedings. FRCP
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56(c) provides that judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. FRCP 56(e) provides that supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein, and that sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served forthwith. FRCP 56(e) further provides that when a motion is made and supported as required, an adverse party may not rest upon mere allegations or denials, but must set forth specific facts showing that there is a genuine issue for trial. FRCP 56(f) provides that if the opposing party cannot present facts essential to justify its opposition, the court may refuse the application for judgment or continue the motion as is just.
A party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine issue of material fact, and establishing that it is entitled to judgment as a matter of law as to those matters upon which it has the burden of proof. Celotex Corporation v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548,
2553 (1986); British Airways Board v. Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978). The opposing party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at
324. The substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248,106 S.Ct. 2505, 2510 (1986). A factual dispute is genuine where the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. The court must view the evidence presented on the motion in the light most favorable to the opposing party. Id.
"To defeat summary judgment, the non-moving party must put forth ‘affirmative evidence’ that shows "that there is a genuine issue for trial." Anderson, at 477 U.S. at 256–57. This evidence must be admissible. See Fed. R. Civ. P. 56(c), (e). The non-moving party cannot prevail by ‘simply show[ing] that there is some metaphysical doubt as to the material facts.’ Matsushita Elec. Indus. Co., Ltd. v.
Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, the non-moving party must
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show that evidence in the record could lead a rational trier of fact to find in its favor. Id. at 587. In reviewing the record, the Court must believe the non-moving party's evidence, and must draw all justifiable inferences in its favor. Anderson, 477 U.S. at 255." Goel v. Coal. Am. Holding Co., Inc., 2012 WL 12884631, at *2 (C.D. Cal. 2012) If reasonable minds could differ on the inferences to be drawn from those facts, summary judgment should be denied. Adickes v. S.H. Kress & Co, 398 U.S. 144, 157, 90 S.Ct. 1598, 1608 (1970).
Plaintiff Omni claims that Debtor’s debt is not dischargeable pursuant to § 523(a)(2)(A). To establish a claim under §523(a)(2)(A), a plaintiff must establish: (1) a representation of fact by the debtor;(2) that was material; (3) that the debtor knew at the time to be false; (4) that the debtor made with the intention of deceiving the creditor; (5) upon which the creditor relied; (6) that the creditor’s reliance was reasonable; (7) that damage proximately resulted from the misrepresentation. See Rubin v. West (In re Rubin), 875 F.2d 755, 759 (9th Cir. 1989); see also, Britton v.
Price (In re Britton), 950 F.2d 602, 604 (9th Cir. 1991).
Plaintiff argues Debtor’s act of signing the guaranty with Omni, wherein Debtor personally guaranteed that he would pay any and all payments due from Farman Steel to Omni if Farman Steel could not pay, appears to be a material representation. Apparently neither side disagrees about this. Therefore, it appears that there is no dispute as to elements (1) and 2). Moreover, that (5) Omni Relied on Debtor’s Guaranty and that(7) damages are proximately caused are not reasonably disputed. So the court analyzes the remaining factors that are disputed.
(3) The Debtor Knew At the Time Were False & (4) Made with Intention of Deceiving Omni
This is where the summary judgment is most hotly contested and where, ultimately, the motion falls short. Plaintiff argues that Debtor’s own statements in the deposition unequivocally establish that Debtor signed the guaranty knowing that at
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the time he signed it, he did not have the funds to cover any shortfall by Farman Steel. Specifically, Plaintiff points to deposition excerpts where Debtor appears to admit that he knew he could not make good on the guaranty to Omni at the time he signed. Debtor signed the guaranty in April 2013. Omni asserts that Debtor’s personal guaranty was a pre-requisite to supplying any more products to Debtor. In April 2013, Farman Steel ordered about $65,000 worth of goods from Omni. During the Debtor’s deposition, the following exchange took place:
Q: In your capacity as an individual did you have $65,000 in any bank accounts that you could use to pay Omni Steel?
A: No.
The deposition continued:
Q: Say in May 2013 Farman Steel could not pay Omni; had no money to pay Omni. It’s a hypothetical.
A: Uh-huh.
Q: Could you have personally paid Omni $65,000 to cover Farman Steel’s debt?
A: I personally, no.
Q: Go back to April 2013. Hypothetical: $65,548.035. Could you personally have paid Omni that amount in April 2013?
A: Most probably not, to the best of my knowledge.
Q: But you still signed this guarantee where you affirmed that you personally – you personally – would guarantee full and complete payment and performance of all obligations of Farman Steel?
A: That’s correct.
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Debtor counters by arguing that this is, in a sense, a selective reading of the transcript. In fact, Debtor said that the plan was to pay Omni on a monthly basis through some ill-defined commission scheme. (Decl. of Timothy G. McFarlin, p.
14-15) Debtor argues that, in fact, he did actually make substantial payments to Omni on Farman Steel’s behalf after making the personal guaranty. As evidence, Debtor points to several checks, attached as exhibits to his declaration, made out to Omni between April 2013 and January 2014. These checks were from Farman Steel, Inc. a separate and distinct entity from Debtor. The account statements that accompany the copies of the checks in the exhibits also belong to Farman Steel, Inc., not Debtor. Debtor does not cite any authority that says a payment made by a corporation can be considered to have been paid by the individual owner of the corporation even though the two are legally separate entities, and the court doubts such authority exists. Therefore it does not appear that Debtor ever personally paid a debt owed to Omni after the guaranty. But it might tend to show a more general point that Debtor and his company had every intention to pay for the goods purchased, they just found themselves unable to do so. Debtor argues, citing Matter of Bercier, 934 F.2d 689, 691 (5th Cir. 1991) that a promise to perform in the future is no false representation or a false pretense unless the debtor had no intention of performing at the time the representation was made. Therefore, so the argument goes, Debtor’s failure to perform some promised action is not enough to prove a false pretense, false representation or actual fraud. This begs the question: can Debtor have been acting honestly and without fraud if he knew at the time he signed the guaranty he personally did not have the funds to make good on the guaranty?
This is not so easy to answer and is dependent, perhaps, on many facts not before the court. For example, did Debtor have any other business prospects at the time he signed that would, if realized, have given him the wherewithal to make good on the guaranty? Could Debtor have obtained funds elsewhere, such as borrowing or the like? Was he reasonable in his reported belief that some kind of installment payment could have been obtained? Plaintiff seems to argue that the only thing that could have made the guaranty in good faith was equivalent money in the bank as of date of signature to provide instant means of payment. No authority for such a proposition is cited and the court doubts that is the standard. Almost every bankruptcy involves promises to pay that may have been honestly made but,
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because of circumstances, become impossible to fulfill. That does not mean as a result every debtor must be denied a discharge.
Omni argues that justifiable reliance requires only that the creditor not act in bad faith. See In re Gertsch, 237 B.R. 160 (B.A.P. 9th Cir. 1999). Even a negligent attempt to confirm fraudulent misrepresentations can leave the reliance justifiable. See e.g., In re Eashai, 87 F.3d 1082, 1090 (9th Cir. 1996); In re Medley, 214 B.R.
607 (B.A.P. 9th Cir. 1997). Here, Debtor attempts to create a genuine issue of material fact but falls short. Debtor claims that Omni knew that Farman Steel would routinely fall behind on its payments, which was why Omni asked for the personal guaranty in the first place. Therefore, Debtors contend, Omni could not have justifiably relied on Debtor’s representations at the time they were made. This argument does not really make sense, and certainly does not create a triable issue of material fact. On the other hand, Omni does not argue that it made a diligent inquiry into the Debtor’s ability to pay on the guaranty by, for example, asking for bank records or the like. However, as the court in In re Eashai articulated, reliance need not be reasonable, only justifiable for purposes of §523(a)(2)(A). In re Eashai, 87 F.3d, at 1090. Further, the Eashai court stated "’The Restatement expounds upon justifiable reliance by explaining that a person is justified in relying on a representation of fact ‘although he might have ascertained the falsity of the representation had he made an investigation.’ (quoting Restatement (Second) of Torts § 540 (1976))." Id. (internal citations omitted)
Therefore, it appears that Omni was not required to conduct an investigation into Debtor’s ability to pay on the debts owed by Farman Steel, even though doing so could potentially have avoided all this. Debtor has not submitted any evidence to suggest that Omni’s reliance was unjustified, which leads to the inference that there is no issue of material fact in dispute on this element.
Omni’s Second Cause of Action against Debtor alleges that Debtor’s actions were both willful and malicious. The Supreme Court articulated in Kawaauhau v.
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Geiger (In re Geiger), 523 U.S. 57, 62-63 (1998) "’[An] act is willful . . . in the sense that it is intentional and voluntary’ even if performed ‘without any particular malice,’; an act that ‘necessarily causes injury and is done intentionally, may be said to be done willfully and maliciously, so as to come within the [bankruptcy discharge] exception[.]’" (internal citations omitted). In the Ninth Circuit, "§ 523(a)(6)'s willful injury requirement is met ‘when it is shown either that the debtor had a subjective motive to inflict the injury or that the debtor believed that injury was substantially certain to occur as a result of his conduct.’" Carillo v. Su (In re Su), 290 F.3d 1140, 1142 (9th Cir. 2002). The Debtor is charged with the knowledge of the natural consequences of his actions. See Cablevision Sys. Corp. v. Cohen (In re Cohen), 121 B.R. 267, 271 (Bankr. E.D.N.Y. 1990); see also In re Su, 290 F.3d at 1146, FN
6, "[i]n addition to what a debtor may admit to knowing, the bankruptcy court may consider circumstantial evidence that tends to establish what the debtor must have actually known when taking the injury-producing action."
Omni argues that Debtor’s conduct meets the definition of "willful and malicious" because signing the guaranty was a voluntary act, and Debtor knew at the time he signed it, that he lacked the funds to actually make good on the guaranty.
Therefore, Debtor had to know that if Farman Steel could not pay, he also could not pay, making injury to Omni, in the form of a breach of a guaranty, substantially certain to occur. It is important to note that the phrase "willful and malicious" does not mean that the conduct has to be the result of spite or ill-will. See Thiara v.
Spycher Bros. (In re Thiara), 285 B.R. 420, 434 (B.A.P. 9th Cir. 2002). But, as stated above in the analysis of the third and fourth elements of actual fraud, intent to injure is not the only reasonable inference on these facts. It is at least plausible that Debtor intended to make good on the guaranty if Farman Steel failed to do so, it just developed that he was unable to do so. This does not support a finding of intent to injure, at least not in summary judgment.
Under 11. U.S.C. §727(a)(2), "(a) The court shall grant the debtor a discharge, unless--
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the debtor is not an individual;
the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed--
(A) property of the debtor, within one year before the date of the filing of the petition"
"Section 727’s denial of discharge is construed liberally in favor of the debtor and strictly against those objecting to discharge. Accordingly, discharge of debts may be denied under §727 (a) (2) (A) only upon a finding of actual intent to hinder, delay, or defraud creditors. Constructive fraudulent intent cannot be the basis for denial of a discharge. However, intent ‘may be established by circumstantial evidence, or by inferences drawn from a course of conduct.’" In re Adeeb, 787 F.2d 1339, 1343 (9th Cir. 1986) (internal citations omitted). "Because a debtor is unlikely to testify directly that his intent was fraudulent, the courts may deduce fraudulent intent from all the facts and circumstances of a case." In re Devers, 759 F.2d 751, 754 (9th Cir. 1985).
"Certain ‘badges of fraud’ strongly suggest that a transaction's purpose is to defraud creditors unless some other convincing explanation appears. These factors, not all of which need be present, include: ( 1) a close relationship between the transferor and the transferee; (2) that the transfer was in anticipation of a pending suit; (3) that the transferor Debtor was insolvent or in poor financial condition at the time; (4) that all or substantially all of the Debtor's property was transferred; ( 5) that the transfer so completely depleted the Debtor's assets that the creditor has been hindered or delayed in recovering any part of the judgment; and (6) that the Debtor received inadequate consideration for the transfer." In re Woodfield, 978 F.2d 516, 518 (9th Cir. 2002).
Debtor has admitted that he transferred property of the Debtor, including, but not limited to, the property located at Stordahl Circle to his wife, pursuant to a divorce within 1 year of the petition date. The timing of the divorce and transfer of property is very suspicious. Debtor and Omni began negotiations to resolve their state court lawsuit on or about May 16, 2016. On or about May 20, 2016, debtor and
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his now ex-wife filed for divorce. On that same date, the ex-couple submitted their Marital Settlement Agreement by which Debtor agreed to transfer all of their community property assets to his wife, Carolyn, as her sole property, and Debtor did not receive a single community property asset. Further, Debtor and his wife admitted that the Marital Settlement Agreement and the transfer of the Stordahl Circle property left Debtor insolvent. Per Debtor’s ex-wife’s declaration, she and debtor still live together and pool resources.
Debtor claims that the divorce was brought about by Debtor’s decision to personally guaranty the debts owed by Farman Steel to Omni. Debtor suggests that his ex-wife felt she could no longer trust him with their finances and decided divorce was necessary. But because of Debtor’s financial situation and that he had been a dedicated father, Debtor’s now ex-wife agreed to let him continue living in the home. Moreover, in his declaration Debtor claims the now ex-spouses do not sleep together and he merely resides in their former home as a tenant and pays child and spousal support. The circumstances create a picture of a textbook fraudulent transfer. The transfer was made within 1 year of the petition; the property was transferred to his wife for no consideration resulting in Debtor becoming insolvent, and executed just days before resolution of the state court claim with Omni. As courts have observed, a debtor is unlikely to admit that a transfer is fraudulent within the meaning of §727. Fraudulent intent is often gleaned through circumstantial evidence. Here, many, if not all, of the badges of fraud are present from the undisputed facts. The problem is that there is still room (albeit small) for a more benign interpretation of the facts and the court is cited to no authority which holds that in a summary judgment context the court can rely solely on the badges of fraud to reach conclusions about intent in the face of testimony containing factual denials. It seems to the court that such an approach involves weighing of credibility which should not be done in summary proceedings.
Deny
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
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Defendant(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Plaintiff(s):
Omni Steel Company, Inc. Represented By Sean A Topp
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
10:30 AM
AIC OWNER, LLC
Vs.
DEBTOR
Docket 8
Tentative for 6/5/18:
Grant. Appearance is optional.
Debtor(s):
Jennifer Ko Represented By
David L Shin
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
FORD MOTOR CREDIT COMPANY LLC
Vs.
DEBTORS
Docket 11
Tentative for 6/5/18:
Grant. Appearance is optional.
Debtor(s):
Petronilo Ruiz Espinoza Pro Se
Joint Debtor(s):
Rosa Maria Ruiz Pro Se
Movant(s):
Ford Motor Credit Company LLC Represented By
Sheryl K Ith
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
TRABUCO INVESTMENTS, INC.
Vs.
DEBTOR
Docket 112
Tentative for 6/5/18:
Grant. Appearance is optional.
Debtor(s):
Nancy Karen Chambers Represented By Michael D Franco
Movant(s):
Trabuco Investments, Inc. Represented By Richard J Reynolds Joseph P Buchman
Rafael R Garcia-Salgado
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-01-18)
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 25
Tentative for 5/1/18:
Grant unless current or APO.
Debtor(s):
Justin Stumpf Represented By Nima S Vokshori
Movant(s):
WELLS FARGO BANK, N.A. Represented By Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-15-18)
CREDIT UNION OF SOUTHERN CALIFORNIA
Vs.
DEBTOR
Docket 38
Tentative for 6/5/18: Status? If not current, grant.
Tentative for 5/15/18:
Grant unless current or APO.
Debtor(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANKS, N.A.
Vs.
DEBTOR
Docket 9
Tentative for 6/5/18:
Grant. Appearance is optional.
Debtor(s):
Connie Campos Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 13
Tentative for 6/5/18:
Grant. Appearance is optional.
Debtor(s):
Chih Lee Represented By
Nathan Fransen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Docket 0
Tentative for 6/5/18:
Better to continue to be sure the motion is withdrawn. Continue to June 26, 2018 at 11:00A.M. Appearances waived.
Debtor(s):
Nicolas Edward Siligo Represented By Michael Jones Sara Tidd
Trustee(s):
Thomas H Casey (TR) Pro Se
10:00 AM
Docket 195
Tentative for 6/6/18:
Grant. The Court will keep the June 27 fee application on calendar.
Debtor(s):
Mariano Mendoza Represented By Richard L Barnett
Joint Debtor(s):
Mercedes Mendoza Represented By Richard L Barnett
10:00 AM
Docket 75
Tentative for 6/6/18:
These are debtor’s motions to sell real properties at 841 N. Orange St., La Habra and 27850 Aleutia Way, Yorba Linda, comprising an apartment building and residence, respectively. The motion is confusing because although both properties are described in the motion, it appears that the estate only has an offer on one, the apartment building, for the sum of $1,525,000. If there is an offer on the residence it does not appear in the pleadings. To make matters more confusing, the two motions #2 and 3 on the calendar appear to be identical. Consequently, these two motions are considered together in one memorandum.
The matter is further complicated because the properties are jointly owned. Each of debtor’s father and mother (now divorced) reportedly own a 5% interest in title. The mother consents to the sale. In contrast the father has filed written opposition. The qualified objection of Luther Burbank Savings is apparently satisfied in that it will be paid its secured claim directly from escrow. There are also reportedly four tax liens amounting to over $480,000 recorded against the interest of the father, Reuven Arad. The debtor seems to assume this complication will be ironed out merely by doing the arithmetic of applying the lien only against 5% of proceeds.
Whether this will prove true or not, the court is not prepared to say. Somehow § 363(f) is presumed to permit the sale without consent of these lienholders, either because there are enough proceeds to cover the liens or, if only the father’s proceeds are encumbered, that §363(f)(5) is thought to force this result. But little analysis is given. The parties spend a lot of time and ink on arguing for and against the proposition that this sale meets all of the requirements of §363(h). The father even seems to argue that he is owed some sort of charge against the property to reimburse for taxes, mortgage payment and other expenses over a 24 year period. Why this should be regarded as a secured claim despite the provisions of §544(a) is
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not explained.
The court does not need to delve into all of the factors because the motion is procedurally incorrect. Sale of co-owned property must be done by adversary proceeding as FRBP 7001(3) makes crystal clear. The same point has been reiterated by the Ninth Circuit. In re Lyons, 995 F. 2d 923 (9th Cir 1993). Debtor offers the flimsy argument that, well, an adversary proceeding has been initiated, # 18-01080TA. But this is hardly the point. The sale must be conducted through the adversary proceeding, which the court infers must either be after trial or at least via a Rule 56 motion, as was the case in debtor’s cited case In re Nashville Senior Living, LLC., 620 F.3d 584, 588 (6th Cir. 2010). Otherwise the Rule’s requirement for an adversary proceeding would be meaningless. This is not to say that the court believes that the elements of §363(h) are not within debtor’s grasp, or that a substantial showing has not already been made. But this motion did not meet the form or standards of a Rule 56 motion. Given the precedent directly on point, the court is powerless to grant the relief in this way.
Deny
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Movant(s):
G. Bryan Brannan Represented By
G Bryan Brannan William H Brownstein
10:00 AM
Docket 78
Tentative for 6/6/18: See Calendar # 2.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
Docket 551
Tentative for 6/6/18:
We consider Hoag Urgent Care-Orange, Inc.’s motion to incur debt under §364, for the other Hoag entities to loan that money under §363 and by so doing use cash collateral under §363(c). The purpose of the loan is to pay the fees of the UST including a reserve for two additional quarters, to pay the balance on a storage unit and as a reserve for future months of storage, pay bookkeepers, pay Ms. Amster, and for purchase of tail coverage insurance.
The major secured creditor Small Business Development Corp, as successor to Opus Bank, opposes.
The court is not really seeing why any of this is necessary. This debtor is out of business and has been for months. SBDC has been given relief of stay. Further fees are being incurred to the UST primarily because debtors persist in their efforts in Chapter 11, although how any of this will end well or how this is better than Chapter 7 has become progressively more difficult to explain over the last 6 months. Certainly it would be helpful if the records were not destroyed and if someone, say Ms. Amster, were employed to do something about collecting accounts receivable. But these are primarily calls that the secured creditor should make at this point. If they do not want to make these investments the court does not see why the Orange debtor should compel this result, particularly if to do so is to also deepen the administrative insolvency hole for other estates. Of course, debtor still has its vague argument that somehow SBDC’s claimed security interest is vulnerable
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or inapplicable to proceeds. But Debtors still do not articulate this in any way that gives the court the slightest confidence that this is a proper reading.
Further, reportedly, the state court may hear this very question June 8 and make a determination perhaps in only a few days. If somehow that goes the debtor’s way then maybe there will be something to talk about. Otherwise this expensive thrashing about must cease.
Deny
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
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Adv#: 8:16-01042 Howard Grobstein, as Chapter 7 trustee v. POINT CENTER MORTGAGE
Answer to Complaint for Avoidance and Recovery of Fraudulent Transfers; Counterclaims and Third Party Complaint filed 10-5-17
Docket 1
Tentative for 2/15/18: Status? Why no report?
Tentative for 10/12/17: See #11.
Tentative for 6/8/17:
A stay was entered March 21 but is up soon. What next?
Tentative for 2/9/17:
Status Conference continued to June 8, 2017 at 10:00 a.m. Is a stay appropriate?
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Tentative for 11/10/16: No tentative.
Tentative for 8/25/16:
Status conference continued to November 10, 2016 at 10:00 a.m. with stay of proceedings extended in interim, per trustee's request.
Tentative for 5/5/16:
Deadline for completing discovery: October 1, 2016 Last date for filing pre-trial motions: October 24, 2016
Pre-trial conference on: November 10, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
POINT CENTER MORTGAGE Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
10:00 AM
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:17-01074 Marshack v. Stegin
Docket 1
Tentative for 6/7/18:
Status conference continued to August 2, 2018 at 10:00AM. Personal Appearance Not Required.
Tentative for 1/31/18:
Status conference continued to June 7, 2018 at 10:00 a.m. per request. Appearance is optional.
Tentative for 12/14/17:
Status conference continued to January 31, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to December 14, 2017 at 10:00 a.m. to allow for fulfillment of settlement terms. Appearance is waived.
Debtor(s):
Jana W. Olson Pro Se
10:00 AM
Defendant(s):
Elliott G. Stegin Represented By
Natalie B. Daghbandan Sharon Z. Weiss
Plaintiff(s):
Richard A Marshack Represented By
D Edward Hays
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
10:00 AM
Adv#: 8:17-01084 Karen Sue Naylor v. Bess Home Fashions
(set at s/c held 11-30-17)
Docket 1
Tentative for 11/30/17:
Deadline for completing discovery: May 1, 2018 Last date for filing pre-trial motions: May 21, 2018 Pre-trial conference on: June 7, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by May 1.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Bess Home Fashions Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor Represented By Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01089 Karen Sue Naylor, Chapter 7 Trustee v. Natco Products Corporation
(set at s/c held 11-30-17)
Docket 1
Tentative for 11/30/17:
Deadline for completing discovery: May 1, 2018 Last date for filing pre-trial motions: May 21, 2018 Pre-trial conference on: June 7, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by May 1.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Natco Products Corporation Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01248 Karen Sue Naylor, Chapter 7 Trustee v. Lewis Hyman, Inc.
(con't from 3-8-18)
Docket 1
Tentative for 6/7/18:
Status conference continued to December 13, 2018 at 10:00AM
Tentative for 3/8/18:
Status conference continued to June 7, 2018 at 10:00 a.m. Appearance is optional.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Lewis Hyman, Inc. Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01250 Karen Sue Naylor, Chapter 7 Trustee v. Playhut, Inc.
(con't from 3-8-18)
Docket 1
Tentative for 6/7/18:
Status conference continued to September 13, 2018 at 10:00AM.
Tentative for 3/8/18:
Status conference continued to June 7, 2018 at 10:00 a.m. Appearance is optional.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Playhut, Inc. Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:18-01027 Thompson v. FedLoan Servicing et al
(con't from 4-26-18)
Docket 1
Tentative for 6/7/18:
What is status of service / default?
Tentative for 4/26/18: Status of Service?
Debtor(s):
Tamara Mae Thompson Pro Se
Defendant(s):
FedLoan Servicing Pro Se
Navient Pro Se
Plaintiff(s):
Tamara Mae Thompson Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:18-01027 Thompson v. FedLoan Servicing et al
Complaint by Tamera Mae Thompson against FedLoan Servicing , Navient .
Docket 1
Tentative for 6/7/18: Status?
Debtor(s):
Tamara Mae Thompson Pro Se
Defendant(s):
FedLoan Servicing Pro Se
Navient Pro Se
Plaintiff(s):
Tamara Mae Thompson Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:12-01330 Casey v. Ferrante et al
(cont'd from 4-26-18 per order signed 4-16-18))
Docket 724
Tentative for 12/14/17:
Was this case settled? If not, where is joint pre-trial stipulation?
Tentative for 2/2/17:
Deadline for completing discovery: August 1, 2017
Last Date for filing pre-trial motions: September 1, 2017 Pre-trial conference on September 28, 2017 at 10:00 am
Tentative for 6/23/16:
This is the motion of Cygni Capital, LLC and Cygni Capital Partners, LLC (collectively "Cygni") for judgment on the pleadings under Rule 12(c). Defendant Ferrante joins in the motion but offers no additional substance. A motion for judgment on the pleadings may be granted only if, taking all the allegations in the pleading as true, the moving party is entitled to judgment as a matter of law. Owens v.
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Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001); Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009). For purposes of a Rule 12(c) motion, the allegations of the non-moving party are accepted as true, and construed in the light most favorable to the non-moving party, and the allegations of the moving party are assumed to be false. Hal Roach Studios, Inc. V. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989); Fleming v. Pickard at 925.
The Second Amended Complaint ("SAC") contains claims for turnover under section 542 and declaratory relief. The Trustee in the SAC alleges that Debtor has hidden and concealed assets in various shell entities, including Cygni, that are controlled by his associates as strawmen, and are established to perpetrate a fraud on Debtor’s creditors. [SAC ¶ 39] It is alleged that many of these entities share the same office address. [Id. at ¶ 40]. In the turnover claim, the Trustee in the SAC alleges that the assets held by each of these entities are held for Debtor’s benefit and that he possesses equitable title. [Id. at ¶ 75]. The Second Claim is for declaratory relief and seeks a determination that each of the entities is the alter ego of Debtor and the bare legal title of any assets can be ignored. [Id. at ¶ 83].
Movants argue that there is no "substantive alter ego" or "general alter ego" theory recognized under California law. Rather, movants argue that the alter ego doctrine as expressed in California is purely procedural, i.e. merely used to implement recovery on a separate theory of recovery. For this proposition movants cite Ahcom, Ltd. v. Smeding, 623 F. 3d 1248, 1251 (9th Cir. 2010). Movants also cite three other cases which they contend are the controlling authority in this area: (1) Stodd v.
Goldberger, 73 Cal. App. 3d 827 (4th Dist. 1977); (2) Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290 (1985) and (3) Shaoxing City Huayue Imp. & Exp. v. Bhaumik, 191 Cal. App. 4th 1189 (2nd. Dist 2011). Movants argue that since the Trustee has not alleged some independent theory of recovery, such as fraudulent conveyance or conversion, there is no legally cognizable purpose for application of alter ego. Apparently, in movant’s view, declaratory relief is not a suitably independent theory of recovery.
The court is not so sure.
First, the court agrees that the law in this area is somewhat unclear,
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contradictory and bewildering to grasp in its full complexity. Attempting to order all the intricacies of "indirect outside piercing" and the like can give one a headache.
However, since each of the authorities cited by the movants is distinguishable in one or more key aspects, and since each case decides a narrower and somewhat different problem from the one presented at bar, the court is not persuaded that the law is quite as limited and cramped as is now urged by the movants. To understand this conclusion, one must first consider the purpose of the alter ego doctrine, at least as it was classically formulated. This purpose is perhaps best expressed by the court in Mesler v. Bragg Management, one of movant’s cited cases, concerning the allied doctrine of "piercing the corporate veil" :
"There is no litmus test to determine when the corporate veil will be pierced: rather the result will depend on the circumstance of each particular case. There are, nevertheless, two general requirements: ‘(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow." (Citing Automotriz etc. de California v. Resnick (1957) 47 Cal. 2d 792, 796).
And ‘only a difference in wording is used in stating the same concept where the entity sought to be held liable is another corporation instead of an individual. ‘citing McLoughlin v. L. Bloom Sons Co., Inc., 206 Cal. App. 2d 848, 851 (1962)….The essence of the alter ego doctrine is that justice be done. "What the formula comes down to, once shorn of verbiage about control, instrumentality, agency and corporate entity, is that liability is imposed to reach an equitable result…thus the corporate from will be disregarded only in narrowly defined circumstance and only when the ends of justice so require.’" (internal citations omitted)
38 Cal. 3d at 300-01
A similar sentiment was expressed in In re Turner, 335 B.R. 140, 147 (2005) concerning the related question of "asset protection" devices:
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"However, an entity or series of entities may not be created with no business purpose and personal assets transferred to them with no relationship to any business purpose, simply as a means of shielding them from creditors. Under such circumstances, the law views the entity as the alter ego of the individual debtor and will disregard it to prevent injustice."
These statements accord with the court’s general understanding. Corporate
form is a privilege, not a right. Those who abuse the corporate form and disregard its separateness in their own activities and purposes can hardly expect the law to uphold the shield of separateness when it comes to the rights of creditors. And the court understands that the alter ego doctrine is an equitable remedy highly dependent upon and adaptable to the circumstances of each case. So the question becomes whether, as movants contend, the law in California has departed from these classic precepts in some way fatal to the Trustee’s case. The court concludes that the answer is "no" for the following reasons.
First, let us consider movants principal case, Ahcom, Ltd. v. Smeding. The facts of Ahcom are adequately stated at p. 6 of the Reply. But Ahcom is primarily a standing case. The defendant shareholders of the corporate judgment debtor argued that the judgment creditor had no standing to pursue them as alter egos of the debtor corporation as that was the sole domain of the bankruptcy trustee. The Ahcom court concluded that under those facts the shareholders’ argument presumed that the trustee had a general alter ego claim precluding individual creditors from asserting the same. The Ahcom court goes on to note that "no California court has recognized a freestanding general alter ego claim that would require a shareholder to be liable for all of a company’s debts and, in fact, the California Supreme Court state that such a cause of action does not exist. " 623 F. 3d at 1252 citing Mesler , 216 Cal. Rptr. 443. But as noted above, there is other language in Mesler and cases cited by the Mesler court that seems supportive of the Trustee’s theory that the doctrine of alter ego is adaptable to circumstances. Of course, our case is the inverse of Ahcom. In our case it is not an attempt to hold the debtor as a shareholder liable for the debts of the corporation, but rather to disregard the corporation altogether as a fraudulent sham.
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There is (or at least may be) in this a distinction with a difference. The Trustee’s case can be construed not so much as an attempt to visit liability onto a corporation under a general alter ego claim but to urge that in justice and equity the corporate privilege should be withdrawn and disregarded altogether as a deliberate device to frustrate creditors. Although the opinions in CBS, Inc. v. Folks (In re Folks), 211 B.R. 378, 387 (9th Cir. BAP 1997) and the similar In re Davey Roofing, Inc., 167 B.R. 604, 608 (Bank. C.D. Cal. 1994) are roundly criticized in Ahcom, the court is not persuaded that Ahcom can be cited for the proposition that a fraudulent sham corporations need to be honored because the bankruptcy trustee lacks a "general alter ego" right of action, or that Folks is not good law, at least in some circumstances. This is a remarkable and unnecessary departure from what the court understands to be established law.
Mesler has already been discussed above. In the court’s view, it is not properly cited for the proposition that there is no such thing as "general alter ego" claim under any circumstances. The actual holding of Mesler is that "under certain circumstances a hole will be drilled in the wall of limited liability erected by the corporate form: for all purposes other than that for which the hole was drilled the wall still stands." 39 Cal 3d at 301 In Mesler it was decided that a release of the corporate subsidiary did not necessarily release the parent who was alleged to be an alter ego. This merely reinforces the notion that alter ego is an equitable doctrine heavily dependent on circumstances and confined to what is necessary to effect justice.
Stodd v. Goldberger is likewise not determinative. It is more properly cited for a more limited proposition, i.e., that an action to disregard a corporate entity or to impose the debts of the debtor corporation upon its principal cannot be maintained absent some allegation that some injury has occurred to the corporate debtor. In this a trustee does not succeed to the various claims of creditors unless they are claims of the estate. But facts of Stodd are different from what is alleged in the case at bar. In effect, the Trustee here alleges that all of the assets of various sham entities belong in truth to the debtor and hence to the estate, and he seeks a declaratory judgment to this effect. Actually, Stodd includes at 73 Cal. App. 3d p. 832-33 a citation to the more
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general principles as quoted above that the two indispensable prerequisites for application of alter ego are: (1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that if the acts are treated as those of the corporation alone, an inequitable result will follow. Citing Automotriz etc. de California v. Resnick, 47 Cal. 2d at 796. The Trustee’s complaint would seem to fall well within those parameters.
Lastly, we consider Shaoxing City Huayue Imp. & Exp. v. Bhaumik. Shaoxing in essence merely repeats the holding of Stodd that an allegation giving the estate a right of action against the defendant is a prerequisite to imposition of alter ego liability. The plaintiff creditor sued the corporation ITC and included allegations that the shareholder, Bhaumik, was the corporation’s alter ego. The shareholder’s argument that the action was stayed by the corporation’s bankruptcy, or that the creditor lacked standing in favor of the corporate bankruptcy trustee, failed for the same reasons articulated in Stodd, i.e., that the trustee has no standing to sue on behalf of creditors but must address wrongs done to the corporation itself. The Shaoxing court at 191 Cal. App. 4th at 1198-99 goes on to state the doctrine of alter ego as a procedural question thusly: "In applying the alter ego doctrine, the issue is not whether the corporation is the alter ego of its shareholders for all purposes, or whether the corporation was organized for the purpose of defrauding the plaintiff, but rather, whether justice and equity are best accomplished in a particular case, and fraud defeated, by disregarding the separate nature of the corporate form as to the claim in that case. " citing Mesler, 39 Cal. 3d at 300. But the court does not read this to mean that in extreme cases (and this is alleged as an extreme case) the court cannot be called upon to consider the possibility that corporations and bogus entities, owned by straw men, cannot be called out for what they really are. Indeed, the language cited suggests that is still the case. Moreover, the court reads the Second Amended Adversary Complaint in this case as meeting all of the requirements. The particularized harm to the debtor, i.e. Ferrante (or more correctly his estate), is alleged to be in creation of bogus loans and artificial entities designed to create apparent (but not real) separation of the estate from its assets while preserving to the person of Ferrante and his family members (and not the estate) beneficial interest in very
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substantial assets which in truth and equity should be liquidated for his creditors. Trustee seeks a declaratory judgment to this effect. The principles of equity are not so constrained as to deny the Trustee access to the court in his attempt to unwind the alleged clever maze of overlapping and interrelated entities to get to the reality of the situation. All of the cases hold that application of the doctrine is dependent on the circumstances, and the circumstances here are that debtor has allegedly woven an almost impenetrable maze of entities. The Trustee seeks assistance from the court in separating reality from fiction. That is all that is required.
Lastly, the court should address what may be the most problematic authority cited by the movants (even though it was not described as one of the determinative cases). That is Postal Instant Press, Inc. v. Kaswa Corporation, 162 Cal. App. 4th 1510, 1518-20 (2008). The Postal court discusses "outside reverse piercing", i.e. "when fairness and justice require that the property of individual stockholders be made subject to the debts of the corporation…" (and presumably the reverse of same). In doubting that such a doctrine exists under California law, the Postal court discusses some of the inherent problems in disregarding the corporate form, such as impinging on the rights of innocent shareholders when the corporation is alleged to be the alter ego. Mostly the Postal court declined to embrace such a doctrine because there was a less invasive remedy available, i.e., levy upon the shares to exercise the rights the obligor shareholder might enjoy in the alleged alter ego corporation. The Postal court also held that in most inverse cases transfer of personal assets to the corporation by the shareholder could be dealt with under traditional claims of fraudulent conveyance and/or conversion. But, of course, ours is a different case and of an entirely different order. What is alleged here is a brazen and wholesale creation of numerous fraudulent entities operated for years by strawmen. Ferrante is alleged to have no shares that might be levied upon. And while it might be said that allegations of specific fraudulent transfers could have helped this case, the court does not read Postal or any of the other cases cited by movants to hold that in suitably extreme situations the court cannot assist in dismantling such a web of intrigue. Indeed, the Postal court at 162 Cal. App. 4th 1519 seems to acknowledge that in extreme circumstances there is room still for the traditional application of alter ego where adherence to the fiction of a
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separate corporate existence ‘would promote an injustice" to the stockholder’s creditors." Citing Taylor v. Newton, 117 Cal. App. 2d 752, 760-61 (1953).
One more point should be made. On this question of whether there is a general alter ego right of action (or not) we need to remember context here. While the parties have all termed the discussion as one about limits under California law on the doctrine of alter ego, or "outside reverse piercing" and the like, it is easy to forget the primary purpose of a trustee in bankruptcy. The trustee is not just another creditor. He is uniquely charged with identifying, gathering and liquidating the assets of the estate. This is so that a dividend on the just claims of all creditors can be maximized. And where the equitable principles of the Code have been violated, the trustee must object to discharge. But trustees must from time to time confront clever debtors who are unwilling to report faithfully all that they hold. Elaborate schemes are sometimes resorted to and the various forms of fraud are infinite. Sometimes the nature and extent of the artifice is not so easy to discern or the date or amount of any transfer easily discovered. This court does not construe the equitable doctrine of alter ego to be so limited or confined as the movants have suggested. Instead, in the court’s view it is (and must be) adaptable to the circumstances. In can be as simple as disregarding corporate form when to recognize it would be to perpetrate fraud and injustice. The cases cited by movants all pertain to a much more specific and limited circumstances on facts very different from the ones alleged at bar. None of the authorities say that all traditional equitable notions of disregarding corporate form when it is abused have been abrogated. Rather, the cases when properly read say that the law must evolve and adapt to the ingenuity of alleged fraudsters. So, it may be that under California law the alter ego doctrine is purely procedural, not substantive, but that does not in the court’s view dictate a different result here as the procedure here is to implement the substantive claim for declaratory relief.
Deny
Attorney(s):
Marilyn Thomassen Represented By
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Shawn P Huston Marilyn R Thomassen
Pacific Premier Law Group Represented By Arash Shirdel
Creditor Atty(s):
Lt. Col. William Seay Represented By Brian Lysaght Jonathan Gura
Debtor(s):
Robert A. Ferrante Represented By
Richard M Moneymaker Arash Shirdel
Defendant(s):
Saxadyne Energy Management, LLC Represented By
Gary C Wykidal
Heritage Garden Properties, Inc. Pro Se
Rising Star Development, LLC Pro Se
American Yacht Charters, Inc. Pro Se
Systems Coordination & Pro Se
Steven Fenzl Represented By
D Edward Hays Martina A Slocomb
Saxadyne Energy Group, LLC Represented By Gary C Wykidal
Gianni Martello Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Robert Ferrante Represented By Dennis D Burns
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Kyra E Andrassy Robert E Huttenhoff Ryan D ODea
Chanel Christine Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Ferrante, Gianni Ferrante, Represented By
Kyra E Andrassy
Mia Ferrante Represented By
D Edward Hays Martina A Slocomb
Cygni Securities, LLC Represented By Gary C Wykidal
Cygni Capital Partners, LLC Represented By Gary C Wykidal Robert P Goe
Envision Consultants, LLC Pro Se
Glinton Energy Group, LLC Represented By Gary C Wykidal
Richard C. Shinn Pro Se
Richard C. Shinn Represented By
Marilyn R Thomassen
Cygni Capital, LLC Represented By Gary C Wykidal Robert P Goe
CAG Development, LLC Pro Se
Envision Investors, LLC Pro Se
Traveland USA, LLC Pro Se
Rising Star Investments, LLC Represented By
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Marilyn R Thomassen
Glinton Energy Management, LLC Represented By
Gary C Wykidal
Oscar Chacon Pro Se
Richard C. Shinn Represented By Shawn P Huston
Global Envision Group, LLC Pro Se
Robert A. Ferrante Represented By
Robert E Huttenhoff Ryan D ODea
Interested Party(s):
United States Marshals Service Pro Se
Plaintiff(s):
Thomas H Casey Represented By Thomas A Vogele Thomas A Vogele Timothy M Kowal Brendan Loper
Trustee(s):
Thomas H Casey (TR) Represented By Thomas A Vogele Brendan Loper Thomas H Casey Kathleen J McCarthy Timothy M Kowal
Thomas H Casey (TR) Represented By Thomas H Casey Thomas A Vogele Kathleen J McCarthy
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U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:15-01293 Martz-Gomez v. Anna's Linens, Inc.
( set from status conference held on 10-8-15)
(cont'd from 2-1-18 per order approving stip. entered 9-21-17)
Docket 6
Tentative for 10/8/15:
Deadline for completing discovery: June 1, 2016 Last date for filing pre-trial motions: June 20, 2016 Pre-trial conference on: July 7, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh
Defendant(s):
Anna's Linens, Inc. Pro Se
Plaintiff(s):
Linda Martz-Gomez Represented By
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Gail L Chung Jack A Raisner Rene S Roupinian
U.S. Trustee(s):
United States Trustee (SA) Represented By Michael J Hauser
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Adv#: 8:17-01129 Karen Sue Naylor, Chapter 7 Trustee v. Housewares International, Inc.
(con't from 4-12-18 )
Docket 1
Tentative for 6/7/18: Schedule trial.
Tentative for 4/12/18:
Where's the joint pre-trial stip/order? While the court is not happy with the parties' seeming indifference to the timing requirements of the LBRs, the minor points raised by defendant can be dealt with by means other than quibbling over the pre-trial stipulation.
Tentative for 10/26/17:
Deadline for completing discovery: March 16, 2018 Last date for filing pre-trial motions: March 30, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
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Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Housewares International, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Adv#: 8:17-01225 The Kiken Group v. Bloom et al
(another summons issued on 12-12-17) (con't from s/c hrg held 3-1-18)
Docket 1
Tentative for 6/7/18:
Continue to August 9, 2018 at 2:00PM. Schedule trial for any remaning issues not resolved in Motion for Summary Judgment.
Tentative for 3/1/18:
Deadline for completing discovery: May 1, 2018 Last date for filing pre-trial motions: May 21, 2018 Pre-trial conference on: June 7, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Jay Lewis Bloom Pro Se
Defendant(s):
Jay Lewis Bloom Pro Se
Tina Margaret Bloom Pro Se
Joint Debtor(s):
Tina Margaret Bloom Pro Se
Plaintiff(s):
The Kiken Group Represented By
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Trustee(s):
Dale A Kiken
Richard A Marshack (TR) Pro Se
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Adv#: 8:16-01042 Howard Grobstein, as Chapter 7 trustee v. POINT CENTER MORTGAGE
Answer to Complaint for Avoidance and Recovery of Fraudulent Transfers; Counterclaims and Third Party Complaint filed 10-5-17
Docket 1
Tentative for 6/7/18:
See Motion to Dismiss Counterclaim (Calendar # 13 at 11:00AM)
Tentative for 2/15/18: Status? Why no report?
Tentative for 10/12/17: See #11.
Tentative for 6/8/17:
A stay was entered March 21 but is up soon. What next?
Tentative for 2/9/17:
Status Conference continued to June 8, 2017 at 10:00 a.m. Is a stay appropriate?
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Tentative for 11/10/16: No tentative.
Tentative for 8/25/16:
Status conference continued to November 10, 2016 at 10:00 a.m. with stay of proceedings extended in interim, per trustee's request.
Tentative for 5/5/16:
Deadline for completing discovery: October 1, 2016 Last date for filing pre-trial motions: October 24, 2016
Pre-trial conference on: November 10, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
POINT CENTER MORTGAGE Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By
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Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:16-01042 Howard Grobstein, as Chapter 7 trustee v. POINT CENTER MORTGAGE
Docket 110
Tentative for 6/7/18:
This is Chapter 7 Trustee’s Motion to Dismiss Plaintiff Point Center Mortgage Fund I’s ("PCMFI") First Amended Counter-complaint pursuant to Fed Rule Civ. P. 12(b)(6). PCMFI in its First Amended Counter-complaint alleged four causes of action, one of which (The Fourth for intentional interference with contract) was subsequently withdrawn by Plaintiff (See Opposition, p. 2). The three remaining claims are: (1) Breach of fiduciary duty against all defendants; (2) Breach of Contract against all defendants, and ( 3) Unjust enrichment against all defendants. All parties agree that Claim 4 for intentional interference with contractual relations against all defendants should be dismissed, and so this memorandum only addresses the first three claims.
Pleading Standards
FRCP 12(b)(6) requires a court to consider whether a complaint fails to state a claim upon which relief may be granted. When considering a motion under FRCP 12(b)(6), a court takes all the allegations of material fact as true and construes them in the light most favorable to the nonmoving party. Parks School of Business v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). A complaint should not be dismissed unless a plaintiff could prove no set of facts in support of his claim that would entitle him to relief. Id. Motions to dismiss are viewed with disfavor in the federal courts because of the basic
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precept that the primary objective of the law is to obtain a determination of the merits of a claim. Rennie & Laughlin, Inc. v. Chrysler Corporation, 242 F.2d 208, 213 (9th Cir. 1957). There are cases that justify, or compel, granting a motion to dismiss. The line between totally unmeritorious claims and others must be carved out case by case by the judgment of trial judges, and that judgment should be exercised cautiously on such a motion. Id.
Fed. R. Civ. P. Rule 8 requires that a pleading must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." A pleading that does not state a claim upon which relief can be granted may be dismissed by the respondent pursuant to Fed. R. Civ. P. Rule 12(b)(6). "To survive a motion to dismiss, a complaint must contain sufficient factual matter accepted as true, to ‘state a claim to relief that is plausible on its face.’" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v Twombly, 550 U.S. 544 (1955)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A pleading that merely "offers ‘labels and conclusions’ or a formulaic recitation of the elements of a cause of action will not do." Id. ("Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice").
Claim 1, Breach of Fiduciary Duty & Claim 3: Unjust Enrichment
In February, this court dismissed Plaintiff’s complaint for failure to state a claim. At that hearing Plaintiff advanced several of the same arguments that Plaintiff appears to be advancing at present. The court noted that the statute of limitations had run on several of Plaintiff’s claims and found its argument for equitable tolling unpersuasive because Plaintiff could not show
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that it had been diligent in pursuing its rights. Plaintiff also advanced a rather convoluted theory that even though the Trustee rejected PCMFI’s Operating Agreement following the bankruptcy filing, Trustee still owed fiduciary duties to PMCFI because Delaware law continued to impose such duties.
Trustee argued persuasively on that occasion that a trustee’s rejection of an executory contract relieves the trustee of any performance obligation under that contract and permits the counterparty to the contract to file an unsecured claim for breach of contract. Agarwal v. Pomona Valley Med Grp., Inc. (In re Pomona Valley Med. Grp., Inc.), 476 F.3d 665, 671 (9th Cir. 2007) ("Our conclusion that rejection was proper does not end our inquiry. ProMed’s rejection of the Agreement constituted a breach of that contract effective immediately before ProMed filed for bankruptcy on June 29, 2000. 11 U.S.C.
§ 365(g). As of that date, ProMed was relieved of its performance obligations under the Agreement, and Agarwal was permitted to file an unsecured claim for breach of contract.") In dismissing PCMFI’s counterclaim, this court stated in its order, "although Point Center might technically have retained the label of ‘manager’ despite the rejection of the Operating Agreement (because no one else was), the duties and responsibilities attendant to that position were cut off under the contract, and the law will not support a fiduciary duty based on the same relationship…" (Dkt. 101, Exh. 1 to Order: (1) Granting Chapter 7 Trustee’s Motion to Dismiss Counterclaim Pursuant to Fed. R. Civ. P. 12(b)(6) With Leave to Amend; and (2) Granting Third Party Defendants’ Motion to Dismiss Third Party Complaint With Prejudice, at 10).
Consequently, Trustee concluded that the rejection of PCMFI’s Operating Agreement under 11 U.S.C. §365 is a bar to any claims for breach of fiduciary duties relating to the management of PCMFI. Furthermore, as this court noted, "[w]here… a contractual provision governs the specific duty to be enforced, the fiduciary duty claim is precluded by contract. That is simply because to allow a fiduciary duty to coexist in parallel with an implied contractual claim, would undermine the primacy of contract law over fiduciary law." Blaustein v. Lord Balt. Capital Corp., 2013 Del. Ch. LEXIS 108, at *
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42-43 (April 30, 2013). "A plaintiff may not ‘bootstrap’ a breach of fiduciary duty claim into a breach of contract claim merely by restating the breach of contract claim as a breach of fiduciary duty. Courts will dismiss the breach of fiduciary duty claim where the two claims overlap completely and arise from the same underlying conduct or nucleus of operative facts." Grunstein v.
Silva, 2009 Del. Ch. LEXIS 206 at *17-18 (Dec. 8, 2009).
In granting leave to amend, the court was doubtful that PCMFI could allege facts that both established a fiduciary duty and established a cause of action not barred by the statute of limitations. "Now whether you can make this case, this sort of distinction or not between contract and fiduciary duty, I am very doubtful. But even if it were true, you still can’t explain the fact that there was an extraordinary delay here, more than three years, I suggest. And so I think you end up crashing on the same rocks anyway." (Mtn. to Dismiss, Ex. 1, p.47)
Here, PCMFI resumes its argument that the Trustee still owed a fiduciary duty to PCMFI even though Trustee rejected PCMFI’s Operating Agreement. Although PCMFI’s First Amended Counterclaim is longer on purported post-petition facts regarding Trustee’s conduct, PCMFI’s complaint is woefully short on legal authority to establish a cognizable theory of recovery. For example, PCMFI alleges that Trustee enabled the Harkey parties to continue exerting control over PCMFI (a fact that seems to suggest that Trustee was actually not holding himself out as manager of PCMFI), and failed to defend PCMFI in the Brewer Action, all of which took place post- petition. However, this argument is all based on the dubious premise that Trustee still owed fiduciary duties to PCMFI even after Trustee rejected PCMFI’s Operating Agreement.
PCMFI also continues to complain about the "impermissible management fees" levied on PCMFI. However, as in the previous iteration, PCMFI does not tell the court when these impermissible fees were first
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assessed, when PCMFI knew or should have known that the fees were impermissible, or what prevented PCMFI from pursuing a cause of action much earlier than it did. It is possible that PCMFI attempted to give some context in paragraph 40 of the First Amended Counter Complaint wherein the date of a settlement agreement between the PCF estate and NFL is mentioned (February 25, 2016). But the paragraph is confusing as mention is made of a net distribution to PCMFI, presumably net of fees. But left unclear is exactly when the allegedly improper fees were imposed or whether PCMFI should be charged with earlier knowledge. In sum, although PCMFI does allege that Trustee engaged in wrongful post-petition conduct, such as Trustee’s purported failure to respond to the Brewer parties’ Post-Trustee efforts to pursue collection efforts against PCMFI, all of these causes of action are predicated on the dubious assertion that Trustee still owed fiduciary duties to PCMFI, even though Trustee indisputably and unequivocally rejected the PCMFI Operating Agreement. It is also not clear that PCMFI has or could establish the dates of any purported breach of fiduciary duty that would allow the claims to survive a statute of limitations defense. The same appears to be true of PCMFI’s Third Claim for unjust enrichment (the specific issue of fees paid out of the Preserve settlement is addressed below).
PCMFI argues that PCF’s fiduciary duties arose independently of the Operating Agreement under Delaware law, and are therefore unaffected by the rejection of the Operating Agreement. PCMFI argues that managers of LLCs owe a supervening duty of loyalty and care as a matter of Delaware law unless those duties are specifically disclaimed in the LLC Agreement; so, the argument goes, that the Operating Agreement may have been rejected does not bear upon this question. Auriga Capital Corp. v. Gatz Props. LLC, 40 A.
3d 839, 850 (Del. Ch. 2012) aff’d 59 A. 3d 1206 (Del. 2012). But the court continues to believe that if there is a serious conflict between state law provisions and the preemption of bankruptcy law on the breadth of a rejection under §365, under the Supremacy Clause the bankruptcy law should control.
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See In re Old Carco, LLC, 406 B.R. 180, 200-01 (Bankr. S.D.N.Y 2009). As
the court stated on the record at last hearing, to hold otherwise is to retain substantial uncertainties that a rejection was designed to alleviate. A trustee is tasked under §365 with making a business decision about whether the benefits outweigh the burdens under an executory contract. This is a privilege unique to bankruptcy law and provides a method for a trustee to tie off accruing responsibilities that are no longer profitable to the estate. Without such a device, an estate is forever chained to accruing responsibilities under bad deals from the past rendering an already difficult task of limiting ongoing damage nearly impossible. It was very obvious that by rejecting the Operating Agreement, the estate of PCF was attempting to extricate itself from the ongoing responsibilities over the affairs of PCMFI. But under PCMFI’s theory, that would never be possible as the foundational documents of the LLC also reportedly made PCF the "manager" with ongoing and accruing responsibilities. One presumes the only avenue left for trustees of Delaware LLCs that might be managers of other LLCs under this theory would be to formally dissolve the managed LLC under Delaware law. This strikes the court as unreasonable, very expensive, and contrary to any policy of quick and efficient management of estates. Moreover, with the exception of an anomalous, one-time argument about Mr. Harkey’s attempt to file an unauthorized answer, the court sees no attempt by the Trustee to reenter PCF’s role as manager of PCMFI at any level. Instead it was obvious that the Trustee had the opposite intent, and nothing alleged in the First Amended Counter Complaint creates a plausible theory to the contrary within the Twombly/Iqbal standard. Therefore, to the extent Delaware law might create a different result (and frankly the role of managers for LLCs and corporations is likely similar in all states), it is superseded by applicable bankruptcy law.
Claim # 2 – Breach of Contract
The breach of contract claim appears to be new to this First Amended Counterclaim (i.e. not pled in the last counterclaim). In this Claim PCMFI alleges that on February 28, 2014, the Trustee filed a motion to assume the
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Preserve Loan Servicing Agreements. On May 13, 2014, the court authorized the Trustee to assume the Preserve Loan Servicing Agreements. The Preserve Loan Service Agreements constitute valid and binding agreements between PCF (including the Trustee) and the Lenders pursuant to which PCF agreed to "service" the Preserve Loan for the "Lenders" and, in consideration thereof, PCF would be entitled to (a) a monthly servicing fee deducted from the Borrower’s monthly payments on the Preserve Loan and (b) fifty percent of any default interest and late charges paid by the Borrower. PCMFI was one of the "Lenders." PCMFI has fully performed all its duties and obligation under the Preserve Loan Servicing Agreements.
PCMFI asserts that PCF (presumably through its manager, Trustee) breached the Preserve Loan Servicing Agreements by using PCMFI’s investment capital to pay itself the loan origination and servicing fees. PCMFI further alleges that PCF breached the Preserve Loan Servicing Agreements by using PCMFI’s investment capital to fund Borrowers’ interest reserves.
Finally, PCMFI alleges that PCF breached the Preserve Loan Servicing Agreements by assessing and collecting (including in the future) servicing fees which were not, and are not, due and owing by the Lenders. PCMFI alleges that it was harmed by these alleged acts by PCF/ Trustee.
The Trustee argues that the court should dismiss this claim for breach of contract because it is time-barred and because it is precluded by order of this court. Specifically, Trustee contends that the Preserve Loan Servicing Agreements date back to 2006, and the alleged breach of contract (the loan default) took place in 2008. That would make the breach of contract claim about 10 years old. The statute of limitations for breach of contract claims is four years. See Cal. Civ. Code §337.
Further, Trustee asserts that, to the extent PCMFI’s cause of action concerns post-petition conduct, that claim is precluded by, among other things, an order of this court. The Trustee quotes the settlement agreement at length. The end result is that this court approved the settlement agreement
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in which PCF would get $1.7 million in pre-petition servicing fees. Trustee asserts that this settlement agreement has been approved by three separate courts. Therefore, Trustee persuasively argues that PCMFI’s claim amounts to a collateral attack on the court’s order. See Reliable Abstract Co., LLC v. 45 John Lofts, LLC (In re 45 John Lofts, LLC), 2017 Bankr. LEXIS 1034, at * 14-16 (Bankr. S.D.N.Y. Apr. 14, 2017) (prohibiting plaintiff from asserting causes of action based on actions authorized pursuant to a settlement approved by the same court, and stating that the proposed claims amount to a collateral attack on the settlement).
For its part, PCMFI argues that when the court approved Trustee’s assumption of the Loan Servicing Agreement in May, 2014, the court implicitly held that any defaults must also be cured under §365(b)(1)(A), essentially reviving PCMFI’s claim for the default that occurred in 2008. PCMFI argues that it is consequently not barred from demanding the default be cured and therefore, not barred by statute of limitations. But no authority is cited for PCMFI’s extraordinary argument that just because an existing breach might constitute a default under an executory contract, that an assumption order revives any expired statute of limitations facing holders of the rights of action for such a default/breach. Further, PCMFI claims that it was not a party (or at least not a signatory) to the Preserve Settlement, and is therefore not bound by it. But reportedly PCMFI was served with the compromise motion, as was the replacement manager, Mr. Gomberg. Moreover, it is not necessary that PCMFI have been a signatory to the settlement. Non-party preclusion may be justified on a variety of pre-existing substantive legal relationships between the person to be bound and party to the judgment. Taylor v. Sturgell, 553 U.S. 880, 894 (2008). This is particularly so in bankruptcy proceedings where the trustee often by necessity acts in seeking a Rule 9019 compromise not only on behalf of the estate, but also for many of those who have parallel rights to those the trustee seeks to compromise on their collective behalf, i.e. so-called identity of interests. See e.g. Bexanson. Bayside Enters., Inc. (In re Medomak Canning), 922 F. 2d 895, 901-03 (1st Cir. 1991). Rule 9019
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implicitly recognizes this necessity for preclusive effect so that parties settling with the trustee are assured third persons will not re-litigate settled claims. Id.
Conclusion
Very little substantively has changed in this iteration of PCMFI’s complaint. The question is whether, consistent with the Ninth Circuit’s view of extreme liberality in pleading, and in receiving leave to amend, there is some reasonable possibility that PCMFI can successfully amend the complaint. As this is now the second time that the question has been considered, the court will hear argument as to whether further leave to amend should be granted.
Grant
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
POINT CENTER MORTGAGE Represented By Nancy A Conroy Lauren N Gans Jonathan Shenson
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Jack A Reitman
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau
11:00 AM
Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
11:00 AM
Adv#: 8:17-01130 Karen Sue Naylor, Chapter 7 Trustee v. Idea Nuova, Inc.
(con't from 4-26-18 per order approving stip to cont ent 4-26-18)
Docket 8
Tentative for 6/7/18: Grant.
Tentative for 4/26/18: Grant.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Idea Nuova, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
11:00 AM
Trustee(s):
Christopher Minier
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
2:00 PM
Adv#: 8:17-01127 Karen Sue Naylor, Chapter 7 Trustee v. Candyrific, LLC
Docket 43
Tentative for 6/7/18:
This is the Defendant’s Rule 56 motion for summary judgment. Defendant offers two main arguments: (a) that the two transactions within the preference period were protected by the "ordinary course of business" defense found at
§547(c )(2) and/or (b) the Trustee has failed to prove the element of her case found at §547(b)(5), i.e. a transfer: "that enables such creditor to receive more than such creditor would receive if‒
The case were a case under chapter 7 of this title;
§The transfer had not been made; and
Such creditor received payment of such payment of such debt to the extent provided by the provisions of this title."
Dealing with the second argument first, while it is true that the Trustee bears the burden of proving each of the §547(b) elements, and it is also true that Celotex and similar authorities require in summary judgment motions that the party bearing the burden of proof must put forth some evidence, in this case the quantum of evidence required of the Trustee on this issue need only be very slight indeed. That is because the court knows from the scores of hearings in this case and dozens of pleadings that the Debtor has been, and likely will remain, a complete financial train wreck. If the case proves not administratively insolvent it will be a minor miracle. Assuming, as has been argued, that the standard to be met here is 100% payout on the approximate
$140 million in general unsecured claims filed, the court feels safe in finding
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in favor of the Trustee on this element, at least for purposes of a Rule 56 motion.
The second argument is more challenging. The court is asked to make an analysis of the "base" payments that preceded the preference period, and to compare those to the two payments made within the 90 days preceding the petition in order to discern whether the payments were within ordinary course between these parties. The court is hampered by the fact that the business period between the two companies was fairly limited and the number of transfers also very limited Defendant argues the 99.75 days average from invoice to receipt for the base period is not materially different from the 86- day average for the preference period, or 13.75 days difference. Some authorities to this effect are cited. The Trustee argues in response that if the two arguably preferential payments are considered each in their own light, the second payment of $26,500 was only 78 days from invoice stands out, or about a twenty one day difference from the average, a rather larger margin than is spoken of in most of the cases.
At first, the court’s reaction was that these are fundamentally factual questions. But on second thought it occurs to the court that this is probably about as complete a factual record as is likely to be produced, and so it is only a question of how significant the court finds the 21- day period. By its very nature the judicial inquiry on §547(c)(2) issues is largely subjective.
Moreover, the court likes to think it can exert some control on litigation so that a beneficial result for someone other than lawyers remains in mind.
Consequently, to save the parties the time and expense of a trial on the narrow issue over relatively modest sums, the court will grant the motion as to the first arguably preferential payment of $11,920 as within the §547(c)(2) ordinary course defense, but deny as to the second payment of $26,500 as outside the defense. The court does not have enough admissible evidence on the §547(b)(5) question to rule at this time except to deny the motion, but the court doubts this will be a realistic question at trial.
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Grant in part, deny in part
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Candyrific, LLC Represented By Scott A Schiff
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 11
Tentative for 6/12/18:
Grant. Appearance is optional.
Debtor(s):
Robert F. DeLeon Represented By Joseph A Weber
Movant(s):
Wells Fargo Bank, N.A. dba Wells Represented By
Sheryl K Ith
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
Docket 88
Tentative for 6/12/18: Grant.
Debtor(s):
Surat Singh Represented By
Michael A Younge
Movant(s):
BAYVIEW LOAN SERVICING, Represented By
Edward G Schloss
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
SELECT PORTFOLIO SERVICING, INC.
Vs.
DEBTORS
Docket 15
Tentative for 6/12/18:
Grant. Appearance is optional.
Debtor(s):
Michael Dwayne Rowlette Represented By Julie J Villalobos
Movant(s):
Deutsche Bank National Trust Represented By Daniel K Fujimoto Robert P Zahradka
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 9
Tentative for 6/12/18: Grant.
Debtor(s):
Si Tan Le Pro Se
Movant(s):
Wells Fargo Bank, N.A. successor Represented By
Nancy L Lee
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
HAHN FIFE & COMPANY, ACCOUNTANT FEE: $39,0120.00
Expenses: $223.30
Docket 2189
Tentative for 6/12/18: Grant.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner
11:00 AM
Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
RINGSTAD & SANDERS LLP, TRUSTEE'S ATTORNEY Fee: $497,167.50
Expenses: $2,978.06
Docket 2191
Tentative for 6/12/18:
Grant. Appearance is optional.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
11:00 AM
Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
KAREN S NAYLOR (TR), TRUSTEE FEE: $16501.16
EXPENSES: $321.45
Docket 2192
Tentative for 6/12/18:
Grant. Appearance is optional.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
11:00 AM
Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
BARNETT & RUBIN, A PROFESSIONAL CORPORATION, DEBTOR'S ATTORNEY
Fee: $53,469.50
Expenses: $998.52
Docket 199
Tentative for 6/13/18:
Allow as prayed. Appearance optional.
Debtor(s):
Mariano Mendoza Represented By Richard L Barnett
Joint Debtor(s):
Mercedes Mendoza Represented By Richard L Barnett
10:00 AM
Docket 332
Tentative for 6/13/18:
Continue to July 11, 2018 at 10:00AM.
Debtor(s):
CYU Lithographics Inc Represented By John H Bauer
10:00 AM
(con't from 6-6-18)
Docket 75
Tentative for 6/13/18: Status?
Tentative for 6/6/18:
These are debtor’s motions to sell real properties at 841 N. Orange St., La Habra and 27850 Aleutia Way, Yorba Linda, comprising an apartment building and residence, respectively. The motion is confusing because although both properties are described in the motion, it appears that the estate only has an offer on one, the apartment building, for the sum of $1,525,000. If there is an offer on the residence it does not appear in the pleadings. To make matters more confusing, the two motions #2 and 3 on the calendar appear to be identical. Consequently, these two motions are considered together in one memorandum.
The matter is further complicated because the properties are jointly owned. Each of debtor’s father and mother (now divorced) reportedly own a 5% interest in title. The mother consents to the sale. In contrast the father has filed written opposition. The qualified objection of Luther Burbank Savings is apparently satisfied in that it will be paid its secured claim directly from escrow. There are also reportedly four tax liens amounting to over $480,000 recorded against the interest of the father, Reuven Arad. The debtor seems to assume this complication will be ironed out merely by doing the arithmetic of applying the lien only against 5% of proceeds.
Whether this will prove true or not, the court is not prepared to say. Somehow § 363(f) is presumed to permit the sale without consent of these lienholders, either because there are enough proceeds to cover the liens or, if only the father’s proceeds are encumbered, that §363(f)(5) is thought to force this result. But little
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analysis is given. The parties spend a lot of time and ink on arguing for and against the proposition that this sale meets all of the requirements of §363(h). The father even seems to argue that he is owed some sort of charge against the property to reimburse for taxes, mortgage payment and other expenses over a 24 year period. Why this should be regarded as a secured claim despite the provisions of §544(a) is not explained.
The court does not need to delve into all of the factors because the motion is procedurally incorrect. Sale of co-owned property must be done by adversary proceeding as FRBP 7001(3) makes crystal clear. The same point has been reiterated by the Ninth Circuit. In re Lyons, 995 F. 2d 923 (9th Cir 1993). Debtor offers the flimsy argument that, well, an adversary proceeding has been initiated, # 18-01080TA. But this is hardly the point. The sale must be conducted through the adversary proceeding, which the court infers must either be after trial or at least via a Rule 56 motion, as was the case in debtor’s cited case In re Nashville Senior Living, LLC., 620 F.3d 584, 588 (6th Cir. 2010). Otherwise the Rule’s requirement for an adversary proceeding would be meaningless. This is not to say that the court believes that the elements of §363(h) are not within debtor’s grasp, or that a substantial showing has not already been made. But this motion did not meet the form or standards of a Rule 56 motion. Given the precedent directly on point, the court is powerless to grant the relief in this way.
Deny
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Movant(s):
G. Bryan Brannan Represented By
G Bryan Brannan William H Brownstein
10:00 AM
(con't from 6-6-18)
Docket 78
Tentative for 6/13/18: Status?
Tentative for 6/6/18: See Calendar # 2.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
§ 1127(a)
(con't from 5-23-18)
Docket 419
Tentative for 6/13/18: Status?
Tentative for 5/23/18: No tentative
Tentative for 4/25/18: See #8.
Tentative for 3/28/18: See #17.
Tentative for 2/28/18: Is this resolved?
Tentative for 1/24/18: See #10.
10:00 AM
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
Movant(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Lei Lei Wang Ekvall Robert S Marticello Robert S Marticello David A Kay
David A Kay Steven H Zeigen Steven H Zeigen Michael Simon Michael Simon Kyra E Andrassy Kyra E Andrassy
10:00 AM
(con't from 5-23-18)
Docket 451
Tentative for 6/13/18: Status?
Tentative for 5/23/18: no tentative.
Judgment Creditor’s DS generally contains adequate information, but there are some changes that should be made. Judgment Creditor has already agreed to some changes in his reply. In addition, Judgment Creditor should more clearly explain that he has agreed to subordinate his claim in the DS. A separate agreement may not be necessary, but it can be explained in a more clear fashion. Judgment Creditor should also update the DS to state that oral argument has already occurred because his DS and plan have not been disseminated to creditors yet. When it does it should contain accurate information. Debtor’s DS and plan were mailed before the oral argument occurred. Debtor also makes a good point that Judgment Creditor should make it clear from headings and titles that this is a liquidation plan not a reorganization plan. Otherwise, it is pretty clear from the DS what Judgment Creditor proposes to do, and other issues are best left for confirmation.
The court notes that the DS provides for discharge upon confirmation, rather than upon completion of payments. [DS p. 30] Is this proper?
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Debtor(s):
Continue for amendment on these minor issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(set at conf. hrg. held 1-24-18) (con't from 5-23-18)
Docket 305
Tentative for 6/13/18: Status?
Tentative for 5/23/18: No tentative
Tentative for 4/25/18:
This is a further hearing on confirmation of the debtor’s Fourth Amended Plan ("plan"). At the last hearing the court identified two remaining obstacles to confirmation. Those are: (1) does the plan violate the absolute priority rule in that creditors are not being paid in full although the debtor keeps his ongoing appeal, a form of "property" within the meaning of §1129(b)(2)(B)(ii) and (2) does the plan impermissibly separately classify the claim of the judgment creditor? The debtor requested an opportunity for further briefing. Note that in earlier hearings the court had analyzed the first question in terms of the quantum of new value assuming that the "new value" exception to the absolute priority rule existed, as described in Bank of America N.T. & S.A. v. 203 N. LaSalle St. Ptsp. 526 U.S.434 (1999). But as La Salle
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teaches, the new value offered by the debtor has to be more than offered by any other party, i.e. "market tested." But this version of the question has apparently faded into the background as the judgment creditor has filed a rival plan offering a potentially greater recovery to creditors.
Debtor argues in his Supplemental Brief that the prosecution of a "defensive" appeal is not a form of property at all, thus the absolute priority rule is not triggered by his keeping the appeal under his plan (and the house and car he also proposes to keep will be purchased with non-estate funds at established fair values and there is no indication the creditor is willing to pay more for these). The "not property" argument is based primarily on a statutory analysis of California law. While the effort is interesting, even admirable, the court is not convinced in the end. Debtor points out that "an appeal" is nowhere in the California Civil Code specifically identified as "property." But the question is how much can be inferred from its absence in other defined categories. Debtor argues that Civil Code §657 defines all property as either personal or real, and that "personal" property includes "things in action" under Civil Code §14(b)(3). But importantly, the statute §14(b)(3) actually says: "The words ‘personal property’ include money, goods, chattels, things in action, and evidences of debt." So, the question arises about what does "include" mean and whether the definition is exhaustive or in contrast should be read, as "include" is more usually defined, i.e. "including but not limited to….?" Civil Code §953 defines "things in action" as "a right to recover money or other personal property by a judicial proceeding." Debtor argues, perhaps logically, that a defensive appeal does not involve (or at least does not primarily involve) recovery of money. But debtor fails to analyze whether "personal property" might include other intangibles, particularly given the exclusive vs. inclusive question highlighted about §14(b)(3) in the discussion above. Debtor also does not analyze the tangential rights on an appeal such as recovery of costs and the like, clearly a right to obtain money if the appeal is successful. See CCP §1032(b). Debtor argues that an appeal is really just a
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"continuation of a judicial proceeding", open only to those aggrieved, and is purely a question of standing. Debtor then follows a rhetorical path observing that CCP § 700.180(a) provides no method of levy as against an appeal right nor does §708.410 provide a means of obtaining a lien thereon. The implication is that if one cannot levy upon the "right" or obtain a lien thereon it must not be property. No authority is offered for this assertion and the court is not sure that the conclusion follows.
Debtor’s extensive discussion of the Nevada case Butwinick v. Hepner, 128 Nev. 718 (2012) adds little to this analysis since this case stands for the unsurprising proposition that a judgment creditor cannot, through levy of its judgment, short circuit the appeal. The Butwinick court concludes that since an appeal is not a "chose in action" within the meaning of Nevada law and Nevada’s statutes provided no means of levy, the appeal right could not have been reached by the judgment creditor that way. Butwinick and debtor’s other out of state authorities (See e.g. In re Morales, 403
B.R. 629, 632 (Bankr. N.D. Iowa 2009)) also hold that a defensive appeal is not assignable. But the court is not convinced that this lack of assignability (even if that were correct under California law) necessarily means that what is not assignable is necessarily not "property" within the meaning of §1129(b)(2)(B)(ii).
But more importantly, debtor is left to argue that several Ninth Circuit authorities on point interpreting California law are just wrongly decided. Most significant among these is Mozer v. Goldman (In re Mozer), 302 B.R. 892, 895 (C.D. Cal. 2003). But this is not the only one. See also Fridman v. Anderson (In re Fridman), 2016 WL 3961303*8 (9th Cir. BAP 2016); McCarthy v. Goldman (In re McCarthy), 2008 WL 8448338, at *16 (9th Cir. BAP Feb. 19, 2008) aff’d 320 F. App’x 518 (9th Cir 2009); In re Marciano, 2012 WL 4369743 at *1 (Dist. C.D. Cal. Sept. 2012). Debtor argues that these cases other than Mozer should be disregarded because they are unpublished. No authority for this proposition is cited and unpublished decisions can and often do provide valuable insight if the facts and analysis are close to those on hand.
In Mozer the District Court analyzed the definition of property found at California Civil §655 which provides that property may include "…rights created or
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granted by statute." There is no question that the right to appeal is created by statute. See e.g. CCP §902. But more importantly for our analysis, the appeal right has real monetary value. The fact that it might not be reachable by levy or lien does not mean it has no value. And this point becomes obvious in the context of a bankruptcy. As in Mozer and the other Ninth Circuit cases interpreting California law, a trustee as the representative of the estate and successor to the debtor has the power, and even the obligation, to monetize this right (and really all assets) for the maximum benefit of creditors, if possible. Debtor argues that the issue should really be viewed not as a sale of property but one of a compromise of dispute, and that such a hypothetical sale might not be in the best interest of creditors. Neither point is persuasive.
As observed in several of the cases, the sale of rights and/or compromise of disputes in bankruptcy are closely parallel concepts and often both must be analyzed together in the same proposed transaction. Fridman 2016 WL 3961303 at *5 citing Goodwin v. Mickey Thompson Entm't Grp., Inc. (In re Mickey Thompson Entm't Grp., Inc.), 292 B.R. 415, 421 (9th Cir. BAP 2003). In Mickey Thompson the court went so far as to characterize the trustee’s motion to compromise as a sale of assets. Id. at 421. So, little persuasion lies in trying to label the process only as one of compromise and ignore the sale of property aspects. Even less persuasive is to argue that a hypothetical sale might not be in the best interests of the estate, and so therefore the entire approach is flawed. So might a compromise also not be in creditors’ interest?
But such a question must be answered in the context of the facts of a particular motion, and cannot be accepted as a general rule.
Debtor argues alternatively that even if the appeal were property it is automatically exempt and thus not figured into the §1129(b)(2)(B)(ii) analysis. To reach this conclusion debtor relies on CCP §704.210 which provides that "property not subject to enforcement of a money judgment is exempt, without making a claim." Debtor goes on to argue that while some judgments for money held by a judgment creditor can be reached by levy or lien, notably absent is a purely defensive appeal.
See CCP §708.410(a). The problems here are that even a defensive appeal can result in a claim for costs and other monies as discussed above and that while under
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California law a formal claim is not needed, bankruptcy law in contrast requires a formal and affirmative claim of exemption. See 11 U.S.C. §522(b). There has been as yet no such claim in Schedule C. See also FRBP 4003. Moreover, this "automatic exemption" argument relying on CCP §704.210 has been tried before without success in similar contexts. McCarthy, 2008 WL 8448338 at *8, citing In re Petruzelli, 139 B.R. 241, 247 (Bankr. E.D.Cal. 1992)
The court appreciates the attempt, but in the end concludes that the argument that a defensive appeal cannot be a form of property under California law (and thus bankruptcy law) is not watertight. In sum, the court is not persuaded by either debtor’s statutory analysis, or by the out of state authorities cited, that a defensive appeal is not "property" within the meaning of §1129(b)(2)(b)(ii). This conclusion is reinforced by three factors: (1) there is case law almost directly on point interpreting California law (Mozer etc.); (2) there is really no disputing that, however it is described statutorily, even a defensive appeal can yield real value, particularly in a bankruptcy context, and therefore the purpose of the absolute priority rule would be subverted under debtor’s theory if valuable things can be retained and (3) in addition to the authorities construing California law the bulk of out of state authority (mostly Texas) seem to support the conclusion that a defensive appeal can indeed be regarded as a form of property. See e.g. Croft v. Lowry (In re Croft), 737 F. 3d 372, 376 (5th Cir 2013); Valenciana v. Hereford Bi-Products Mgmt., 2005 WL 3803144 (Tex. Ct. App. 2006); Kahn v. Helevetia Asset Recovery, Inc., 475 S.W. 3d 389, 393(Tex. Ct. App. 2015).
This is still the very close question it started out to be. The court’s previous tentative decisions are incorporated herein. The question seems to boil down to whether In re Johnston, 21 F. 3d 323, 327 (9th Cir 1994), the only definitive Ninth Circuit authority, can be read so far as to mean that just because a liquidated claim is on appeal, and thus not final, this is sufficient "business" reason for separate
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classification. Another way to describe the question might be "are litigation claims automatically separately classified (classifiable)" just because the debtor disagrees with them? Of course, Johnston is distinguishable on its facts and much more obvious than is our case. In Johnston the creditor held the debtor’s guaranty of a corporate debt and collateral besides. Here there is no such complication. The only distinction seems to be the litigation source of the claim and that it is on appeal.
Further, all of the cases are uniform "thou shalt not gerrymander to obtain a consenting impaired class." See e.g. Barakat v. Life Ins. Co. of Va. (In re Barakat), 99
F. 3d 1520, 1525, cert. den. 520 U.S. 1143 (1997). The court consequently has two main problems here: 1. How is the court to view the fact that 98+% of the debt, including administrative debt, is represented by the single Hong judgment creditor? 2. Since effectively both classes of unsecured claims are being paid exactly the same (although the judgment creditor’s proceeds are being escrowed) what can possibly be the motive for this classification except to engineer the vote? Isn’t the purpose of voting in Chapter 11 to enfranchise the creditors in deciding the course of the estate? So, shouldn’t the court guard against easy artifices that don’t readily have an alternative explanation grounded in business or economic justifications? Isn’t that really the point of Barakat and Johnston? Debtor tries to make an issue of intent, arguing that intent should be determined when the plan was first filed and at that point in time the Hong creditor claimed secured status (subsequently the ORAP lien was waived in favor of unsecured status). But no authority is cited for this proposition. Moreover, the court doubts this is or should be the law. Confirmation speaks as of the date of confirmation and is guided by circumstances obtaining at that time. Debtor has the affirmative duty to show the elements of §1129(a), including the element of good faith as found at subsection (a)(3).
While not binding on Ninth Circuit courts, courts from outside the Circuit have held that appeals alone do not justify separate classification. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E,D,Va. 2004); In re Salem Suede, Inc., 219 B.R. 922, 933 (Bankr. Mass. 1998). Additionally, this was the implicit holding of a Nevada bankruptcy court. In re Zante, Inc., 467 B.R. 216, 219-20 (Bankr. D. Nev.
2012). Debtor’s non-Ninth Circuit or non-California authorities are somewhat less
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persuasive because in those cases the litigation over the claims was, importantly, in the very early stages, or the claims remained unliquidated and/or subject to substantial counterclaims. See e.g. In re Multuit Corp., 449 B.R. 323, 334-35 (Bankr.
N.D. Ill. 2011); In re Bashas’ Inc., 437 B.R. 874, 904 (Bankr. D. Ariz 2010). In contrast, here we have a liquidated claim but undistinguished from other liquidated claims excepting only the appeal. The court concludes in the end that the mere origin of a liquidated claim through litigation, and the fact that it is not final because appealed, is not, absent other factors not applicable here, a justifiable basis for separate classification. While admittedly a debtor retains substantial discretion in classification of claims, a plausible basis for the separate classification grounded in some business or economic justification apart from voting must be shown. Instead, the court here concludes the likely reason for the separate classification resides not in business or economic justification but in the desire to engineer a consenting impaired class.
Deny
Tentative for 3/28/18:
This is the continued hearing on debtor’s attempt to confirm his Fourth Amended Plan. The hearing has been continued for several times; this last continuance was to consider two points, upon which the court requested further briefing: (1) if the debtor does not keep his practice (the home and Honda having been paid for in cash new value at court-determined values) can the court confirm under 11
U.S.C. §1129(b)(2)(B)(ii) consistent with the absolute priority rule in light of the creditor having just filed a competing plan that offers more to creditors and (2) is there a "best interest of creditors" problem? The court also took under submission the pending question of separate classification of the Hong creditor’s claim. The court in meantime ordered the parties to mediation. Apparently, the mediation was unsuccessful.
That the mediation failed is truly unfortunate since the questions presented
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here are very difficult and the consequences profound.
On the question of best interest of creditors found at 11 U.S.C. §1129(a)(7), the court does not find any application since the comparison is to what creditors would receive in a hypothetical Chapter 7 liquidation. But both plans are demonstrably superior to what would likely be received in liquidation, even considering that the Fourth Amended Plan contemplates some considerable delays in payment.
But on the question of the absolute priority rule and "new value" the debtor has hit a snag. The question is not one of the court’s management of its docket, as debtor in his brief seems to assume. Rather, it is the question of whether the Fourth Amended Plan can be confirmed when the Hong creditor has filed a competing plan offering to pay to the Class Seven creditor body (about $38,690) more than the Fourth Amended Plan. Debtor proposes to pay the Class Seven creditors pro rata in four installments dependent on "Available Cash" and tied to future events such as "Litigation Resolution Date" which could be years in the future. Unless debtor succeeds on his appeal the payment percentage, and the timing of payment, is left vague and uncertain. In contrast, under the Hong plan creditors are offered an option of either 50% of their allowed claims on the effective date ("or as reasonably practicable after the Disbursing Agent has sufficient cash on hand to pay 50%...") or, alternatively, 100% tied to when the disbursing agent has accumulated and is ready to distribute $1 million. Importantly, the Hong creditors subordinate their recovery to those of the other creditors, a not-insignificant point considering they amount to about 98+% of all debt. Given the amounts alleged to be recoverable under various rights of action, it is hard not to see this as a promise of 100% or nearly so for those willing to wait.
All of this is important because of the teaching of the Supreme Court in Bank of America Nat’l Trust & Sav. Ass’n. v. 203 N. LaSalle St. P’ship, 526 U.S.434, 453 (1999). In LaSalle the court did not explicitly find that a "new value corollary" to the absolute priority rule actually existed. But if such a corollary existed, the LaSalle court found that the proponent of the plan must show that the quantum of new value
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was the most/best reasonably available. In making such a determination, the court must find that the quantum of proposed new value has been "market tested" and that no other person is willing to pay more to acquire the bundle of rights that the debtor retains under the plan. The La Salle court was vague as to how one goes about this market test, but the filing of a competing plan is one suggestion. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at §1129(b)(2)(B)(ii). Id. See also In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014).
The keeping of property can include the rights to direct actions, such as an appeal. While the debtor cites to some authorities including from other jurisdictions to the effect that "defensive" appeals are not estate property, this does not appear to be the case in the Ninth Circuit. See e.g. In re Fridman, 2016 WL 3961303 at *7 (9th Cir. BAP July 2016) citing In re McCarthy, 2008 WL 8448338 at *16 (9th Cir BAP Feb.
2008); In re Marciano, 2012 WL 4369743 at *2 (Dist. C.D. Cal. Sept. 2012). In those cited cases the trustees sold pending appeals for money. There is little doubt in the court’s mind that if a creditor wants to pay the estate to make a debtor’s appeal go away, that is a transaction that must be viewed from the standpoint of creditors unless they are paid in full from another source. The debtor must, in effect, pay at least the same in "new value" for the privilege of seeing an appeal to the end. In the Chapter 11 context, if a debtor proposes in a plan to keep an appeal, his plan must offer creditors more for that privilege (in combination with all other retained assets) than is otherwise available. Viewed this way debtor at bar has a problem. The terms of the Hong plan offer more to the Class 7 creditors and some of that overage could be viewed as payment for extinguishment of the appeal; but it would appear that the debtor proposes in his plan to keep the appeal going and is not offering anything to creditors for that privilege in contrast to purchase of the Denise property and the Honda.
There is also the question of separate classification. As the court has already said, this is a very close question. The 9th Circuit case law precedent is unclear
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respecting whether the mere fact that a claim is on appeal (and thus still disputed) should account for enough of a distinction by itself to justify separate classification. If attributes of a claim are not otherwise distinguishable such as having been guaranteed or supported by collateral, the court is left to question what is meant by the "business reasons" spoken of in cases like In re Johnston, 21 F. 3d 323, 327 (9th Cir. 1994).
Surely "business reasons" cannot mean merely that it would be more expedient if a pending appeal resolved in the debtor’s favor would improve ability to repay debt. While that might be a question of "business" the court is hard-pressed to see it as a justification. It is clear in all of the authorities that gerrymandering is not permitted, but since the court cannot look into the debtor’s mind regarding motivations, we are left to examine external reasons claimed as to why the separately classified claim is not "substantially similar" to other debt. In the case at bar this task is made even more difficult since the separately classified claim is 98+% of the body of debt. If the point of this whole inquiry is to make sure that each creditor has a meaningful vote, and to prohibit arbitrary classification as a device to reaching a consenting class, then the debtor’s plan at bar is likened to the tail wagging the dog. While it might be possible for the extremely clever counsel to succeed in effectively disenfranchising 98+% of the creditor vote by separate classification, the court cannot see its clear path to doing so in this case, particularly when the other issues mentioned above weigh against confirmation as well.
Deny
Tentative for 2/28/18:
This is a continued hearing on confirmation of the Debtor’s Third Amended Plan. At the court’s request the parties filed briefs on the question of separate classification. Additionally, further evidence is offered by the objecting creditors Yuanda Hong, et al ("Hong creditors") on the question of the values of the Denise property and the Debtor’s medical practice, relevant to the quantum of new value offered under the plan. The court discusses each subject below:
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Separate Classification: What qualifies as proper classification of claims under §1122, or stated negatively, what is improper classification and thus rendering a plan in non-confirmable bad faith under §1129(a)(3), is an important question. Unfortunately, it is one that has engendered surprisingly little definitive authority in the Ninth Circuit. The objecting creditors have cited numerous authorities from outside of the Circuit that stand generally for the proposition that separately classifying a claim solely because it is on appeal is not in good faith, mostly because the character of the claim is not, in a legalistic sense, any different from that of the standard commercial claims.. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E.D.Va. 2004); In re Salem Suede, Inc., 219 B.R. 922 (Bankr. D. Mass 1998); In re Local Union 722 Int’l Bhd. Of Teamsters, 414 B.R. 443, 453 (Bankr. N.D. Ill. 2009); Bustop Shelters of Louisville, Inc. v. Classic Homes, Inc., 914 F. 2d 810, 811-12 (6th Cir 1990). But it is not clear that this is the law of the Ninth Circuit.
Nearly all of the cases adopt some version of the Ninth Circuit’s ruling in
Barakat v. Life ins. Co. of Va. (In re Barakat), 99 F. 3d 1520, 1525, cert. den. 520
U.S. 1143(1997), i.e., that separate classification solely to manipulate the vote to obtain a consenting class is not in good faith and will prevent confirmation. But the ambiguity begins with the statute itself. Section 1122 provides that claims may be placed together in a class only if "substantially similar." But whether all similar claims must, in turn, be classified together is not statutorily addressed. Barakat at 1524. Noting that this question has divided courts outside the Circuit, the Barakat court gives us only the limited guidance that classification (determined as a question of fact) solely to manipulate voting to obtain the consenting impaired class is a form of bad faith and is not allowed. But the Barakat court acknowledges that In re Johnston 21 F. 3d 323, 327 (9th Cir. 1994) provides that separate classification may be justified if "the legal character of their claims is such as to accord them a status different from other unsecured creditors." Id. at 328. Further, as noted in Barakat, Johnston provides that separate classification may be justified if a "business or economic justification" is offered. Barakat at 1526 citing Johnston at 328. The Hong creditors argue correctly that both of Debtor’s cases, Johnston and In re Basha’s, Inc., 437 B.R. 874 (Bankr. D. Ariz. 2010), are factually distinguishable. In Johnston the debt arose from a guaranty,
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there was collateral involved and it alone among the creditor body was the subject of litigation. Similarly, in Basha’s the class of litigation claims was deservedly separate since the litigation was still in its early stages although it had been pending some time and involved "speculative" claims. In both cases the separate classification withstood scrutiny. But certainly our case is a closer question since we are dealing not with litigation generally but with a judgment on appeal. Whether this latter stage of litigation makes a crucial difference is not clear.
Debtor argues that if intent is the question he is somewhat absolved since the plan in its early iterations treated the objecting creditors’ claims as secured (by reason, one supposes, of recorded abstracts but also because that’s what the claim said) and therefore separate. Barakat can be read to primarily focus on the intent behind the classification. But neither side cites any authority on the question of what happens when, as here, the parties reach an agreement post-petition to surrender the claim of secured status (here because the claimed lien was likely a preference). Is a plan proponent then obliged to drop the separate classification in order to remain "in good faith"? Another question involves the "business or economic justification" as discussed in Barakat and Johnston. Here Debtor in effect argues that separate classification is not only economically justified, it is also very necessary to maintain an operating business on any terms while not adopting either of two unpalatable alternatives, i.e. paying claims before the appeals are resolved and the claims become final, or, alternatively, making all undisputed general unsecured claims wait for an extended period by depositing payment into an escrow on their account. Further, the very size of the Hong creditors’ claim makes it different, although it is not clear that this size question alone works in justifying different classification. The appeal adds some weight. But the fact that there reportedly is also still an unresolved counter claim (as reported by Debtor) of the reported parallel fraudulent conveyance action, and the charge that the judgment was amended post-petition in technical violation of the stay, might be seen as additional justifications for the separate classification. In aggregate, the court is inclined to find sufficient justification for the separate classification although it is admittedly a very close question.
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The objecting creditors take issue with the valuations presented by the Debtor of his medical practice and of his residence on Denise Avenue in Orange. The values offered by Debtor are $ 5-10,000 and $756,000, respectively, supported by the declarations of Sam Biggs, CPA and John Aust, appraiser. Pinpointing the value of these becomes necessary as the Debtor proposes to keep these assets while not paying all creditors in full under the Plan. The Hong creditors have objected, so confirmation is therefore only possible under the so-called "new value" corollary.to the absolute priority rule. Debtor must under this doctrine provide new value equal to the retained assets of the estate (and not less than any other party is willing to pay). See Bank of America v.203 N. LaSalle Street Ptsp.526 U.S. 434, 456-57 (1999).
Hong creditors offer the declaration of David Hayward for the Denise property "conservatively" at $785,000. This is not far from the Debtor’s valuation but the court is disinclined to choose between these two opinions without cross examination.
Mindful of the cost of a mini trial on this issue, the court encourages a stipulation to split the difference, i.e. $770,500. Otherwise, an evidentiary hearing will have to be scheduled with opportunity for cross examination of live witnesses. Mr. Hayward’s opinion about additional value based on a lot split is too speculative for our purposes.
The business valuation is even more problematic. It is almost certain that both appraisers are off the mark. The Biggs appraisal suffers from the omission of any separate values for hard assets, such as equipment. Presumably, these have a separate value from the value of the ongoing practice, but if so, the court could not find it.
Appraiser Stake observes that something is being depreciated on tax returns, suggesting there is missing information. The court sees the nominal amount of $1,500 per year as an equipment "expense" in the forecast, but doubts this equates to a value for all of the existing equipment. Whether the equipment is owned or leased is also a factor. The biggest problem, of course, is what to do with a projected income analysis in the hands of a hypothetical buyer. The court has no doubt that there would be a profound fall off in that the clientele are described as mostly Chinese with limited English skills. Also, one imagines, that an OB/GYN practice has a higher than usual
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retention problem if/when the familiar physician becomes no longer associated. This probably is exacerbated when the language/cultural issue is also factored in. The Stake declaration strikes the court as making far too little allowance for this factor. It reads primarily just as a clinical analysis of projected income averages assuming more or less the same stream of income (a very large assumption under these facts) multiplied by some sort of capitalization or discount rate. The problem, of course, is the court cannot make a meaningful determination on this sparse record. Again the court encourages a "split the difference" approach, say $50,000, as an alternative to having a mini trial on these issues as well.
Bank of America v. 203 N. La Salle St. Ptsp.
The court has also not yet made a ruling on the question whether the Debtor’s marketing efforts to date are adequate to fix the quantum of value as demanded in the La Salle case. But the court observes that some effort was made to advertise and the Hong creditors have not filed a competing plan although they have been free to do so. The court is inclined to hold that this narrow issue (of whether anyone else would pay more) is resolved.
No tentative on confirmation pending resolution of valuations
Tentative for 1/24/18:
This is the continued hearing on confirmation of the Debtor’s Fourth Amended Plan. It continues to be vigorously opposed by the judgment creditor. While the court gave fairly explicit guidelines at the Nov. 29 hearing, and the plan proponent is closer than he was, the court finds the plan is still short of confirmability, for the following reasons:
Unfair Discrimination and Gerrymandering: Since In re Barrakat, 99 F. 3d 1520, 1525 (9th Cir. 1996), it has been the law of this Circuit that separate classification solely to obtain a consenting class on a plan is not permitted and
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is a form of bad faith under §1129(a)( 3). However, exceptions have been found where a "legitimate business or economic justification" is articulated
supporting the separate classification. In re Loop 76, LLC, 465 B.R. 525, 538 (9th Cir. BAP 2012); Steelcase, Inc. v. Johnston (In re Johnston), 21 F. 3d 323, 327 (9th Cir. 1994). Moreover, there is a separate concern in evaluating a "cram down" that a plan may not "unfairly discriminate…with respect to each class of claims or interests that is impaired under…the plan." The court earlier remarked that a legitimate, non-voting basis had probably been articulated for separately classifying the judgment creditor since that claim (unlike all other unsecured creditors) was on appeal and was subject to ongoing litigation.
Consequently, unlike the other unsecured claims the judgment claim is not "final." It is perfectly obvious that the entire need for reorganization may rest on the results of the appeal. But what is not sufficiently shown is the need for disparate treatment as provided under the Fourth Amended Plan. Obviously, while the claim is still contested it makes sense to not actually pay the disputed judgment claim. But there are other, better ways to mitigate the disparate treatment. All other claims start getting payments shortly after the effective date. But the dissenting judgment claim gets nothing until 120 days after the "Litigation Resolution Date," which is defined to require that all appeals be exhausted. This is a date potentially years in the future. This has two pernicious effects of concern. First, all of the risk of non-performance is imposed solely on the objecting creditor without any real basis in law for doing so. Second, this can be regarded as a sub rosa attempt to put the Litigation Trustee’s efforts into effective limbo pending the appeal since obviously no liquidation or even attempt to liquidate assets is even needed to fulfill the plan until all the appeals are resolved. Perhaps a better approach is to put all creditors on a truly equal footing whereby they all get a pro rata portion of a defined periodic payment, with the judgment creditor’s portion held in an escrow at interest administered by the Litigation Trustee. That way risks are evenly imposed on the creditor body, not solely on the judgment creditor.
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Artificial Impairment: The objector is correct that classification of the Honda Finance creditor as the sole member of Class 2 bears some of the aroma of artificial impairment, another form of bad faith, as this court observed in In re NNN Parkway 400 26, LLC, 505 B.R. 277, 284-85(Bankr. C.D. Cal. 2014). The fact that it was incurred the day before the petition is clearly suspicious. However, this "aroma" is largely dissipated when it develops that there is another class of unsecured creditors supporting the plan comprised of several members holding an aggregate of $38,690.83 in claims. The fact that only American Express, a creditor holding only a claim of $110.64, was the only voting member cannot be attributed to bad faith of the debtor. There is no showing that these other creditors’ claims were incurred just to create an impaired class.
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of say more than 5% emerges, there should be an evidentiary hearing. On the
value of the practice, the objector should have an opportunity to depose Mr. Biggs and offer an alternative valuation, if needed. But the court’s main concern on this topic is with debtor’s premise that he is retaining under the plan only those three enumerated assets. If the court is reading it correctly, debtor actually plans on keeping a great deal more in the form of making the Liquidating Trust pay the debtor’s attorney’s fees and costs on a going forward basis. Presumably, this means that the costs of the appeal are to be borne by the Trust. Since it could be argued that the appeal is being prosecuted primarily if not solely for the debtor’s benefit, this is an indirect way of debtor keeping non-exempt assets. If this reading is correct, debtor is not, in fact, observing the absolute priority rule. The court is not as concerned as it might be since the objector has not filed a competing plan.
Best Interest of Creditors: The objector also argues under §1129(a)(7) that creditors would do better in a Chapter 7 liquidation than under the plan. This may well be so, largely for the reasons articulated in ¶3 above. For debtor’s argument to succeed, one would have to conclude that paying both for Mr. Mosier and his lawyers and accountants and the ongoing appeal costs less than only a Chapter 7 trustee. This is a proposition for which there is no evidence offered. The debtor will have to propose paying for his lawyers either from exempt assets or from no-estate assets for this to work, or prove that a Chapter 7 would be more expensive. The court is less convinced by the objector’s argument that the creditor should consequently steer the litigation at its expense, however. There are countervailing concerns about who should steer the litigation beyond the monetary costs.
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Debtor argues that the structure of the plan amounts to a form of collateral for the payments, citing In re Sheridan, 391 B.R. 287, 291 (Bankr. E.D.N.C.
2008), thus assuring payment. But the problem with this is that full payment is not assured in this plan despite attempts to improve recoveries if the appeal is lost. Only the right to sue for declaratory relief (and perhaps an injunction against transfer of assets) is provided. But there are a dozen ways this could still go wrong. Ms. Shen could decide to defy the injunction and put the assets in China or Japan. Since the debtor continues to make good money as a physician, the court sees no reason to discharge him until all promised payments are made.
Deny Confirmation
Tentative for 11/29/17:
Rather than simply continuing the confirmation hearing without direction, the court will want to have a hearing focused on issues raised in the briefs but not fully answered:
In view of the objection raised in the opposition about short notice of the changes found in the Third Amended Plan, does the judgment creditor
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disagree that the changes are 'non material’, thus avoiding re-balloting, or need for more time to meet the arguments? It would seem that the role of the appointed trustee and fetters, if any, on his responsibility is rather material, but perhaps for no one other than the judgment creditor. Should that matter?
Has the Trust Agreement with Mr. Mosier been finalized and made available for review?
The present value analysis for cram down requires some evidence regarding interest rates and risks being imposed. Merely citing the federal judgment rate (is that where 1.5% comes from?) is wholly inadequate. While the debtor carefully includes an elastic provision that ‘such other rate as the court requires’ is offered, this does not provide any analysis or evidence that could guide the decision. It is also unclear how/whether the judgment creditor is a secured claimant and thus whether analysis of collateral value becomes relevant. But whether proceeding under §1129(b)(2)(A)(i) [secured claims] or (b)(2)(B)(i) [unsecured claims] there is an "as of the effective date" requirement on future payments which translates into a present value analysis. The federal judgment rate is manifestly not sufficient to render present value on a stream of payments such as under a plan. If that were true, in economic terms, the prime rate would be quoted consistent with the federal judgment rate instead of at 4.25% per annum. One holding a judgment presumably has some near prospect of actually levying and getting paid, so the time value of money is further distorted and judgment rates are a poor comparison. One who is obliged to wait for years under a plan has no such prospect and so imposed risk is greater and so must be compensated. This record is inadequate upon which to render a decision.
How is the teaching of Bank of America v.203 N. La Salle Ptsp., 526 U.S. 434, 456-57 (1999) being met here? In La Salle we are taught that to the extent that a new value exception to the absolute priority rule exists, a plan cannot be crammed down over the objection of a class of creditors on the strength of a "new value" contribution absent some ability to "market test" the amount of
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that contribution. As the court observed in In re NNN Parkway, LLC, 505 B.R. 277, 281-82 (2014), the Supreme Court gave us only the vaguest direction on how the market test can be accomplished in any particular case. But the court does not read the difficulty of fashioning an appropriate test to mean that the requirement can be ignored altogether consistent with the absolute priority rule. To do so is to vest in the debtor/ plan proponent a form of uncompensated property, i.e. an option, to direct or determine the amount and source of new value. Debtor attempts to close the gap regarding the family residence, but the plan merely suggests that the relatives will contribute an amount roughly equal to what they contend to be the non-exempt equity. What analysis, if any, is offered regarding the going concern/market value of debtor's medical practice for this purpose? All that is offered is the conclusory argument that as a sole practice it cannot have much value. Really? The court sees professional practice valuations all the time. One method of clarifying the new value question described in La Salle is the possibility of a competing plan. The court is not aware of the current status of the judgment creditor’s ability to propose a competing plan.
Concerning uncompensated imposed risk is the unanswered question regarding alleged community property in the wife’s name. What about the injunction against transfer of wife's alleged separate assets? Is a form of order being offered for review? Only a stipulation is referenced. How does the risk of violation of an injunction translate into cram down interest rate? One supposes that if the appeal is lost the presence of an injunction is some protection against transfers, but hardly a foolproof one. Certainly it is not the same as a lien. This does not mean these issues cannot be resolved; it is only to say that they are left unresolved on this record.
Continue for further hearing.
Tentative for 8/23/17:
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The remaining issues are best dealt with at confirmation. Approve.
Tentative for 7/12/17:
With some amendments this FADS appears to contain adequate information. Debtor should make it clearer that an early discharge will be requested, but that if the Court does not find cause then the discharge will be entered upon completion of payments. As written the information about the Court finding cause comes at the end of the discussion of the discharge. Debtor has agreed to attach a copy of the Trust Agreement. Debtor provides a sufficient description of the litigation with the Judgment Creditor. Perhaps the plan should be amended so that it provides that the interest rate will be as described or as ordered by the Court. This leaves open the option of litigating the issue of the interest rate at confirmation. There seems to be a reasonable basis for separately classifying the unsecured claim of the Judgment Creditor because the claim is still subject to litigation and so cannot be paid on the same terms as the other unsecured creditors. Debtor should amend the DS to provide that Debtor is retaining his interest in some property. There should also be a more clear discussion of the absolute priority rule. Debtor states that he will amend the DS to make it clear that the plan does not avoid Judgment Creditor’s ORAP lien and that he will correct the errors noted by the Judgment Creditor.
Debtor(s):
Continue for clean up of these disclosure issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
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Adv#: 8:17-01121 Marx v. Schmidt
(con't from 5-24-18)
Docket 1
Tentative for 6/14/18:
Status on amended complaint?
Tentative for 5/24/18: Why no status report?
Tentative for 3/29/18: See #19.
Tentative for 3/1/18:
Is the dismissal motion set for March 29 on the latest version of the amended complaint? Continue to that date.
Tentative for 2/1/18:
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In view of amended complaint filed January 29, status conference should be continued approximately 60 days.
Tentative for 11/2/17:
See #4. What is happening on February 1, 2018 at 11:00 am?
Tentative for 10/12/17:
Status conference continued to November 2, 2017 at 10:00 a.m.
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Pro Se
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
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Adv#: 8:18-01063 Kim et al v. Kim
Docket 1
Tentative for 6/14/18:
Continue to June 28, 2018 at 11:00 A.M.
Debtor(s):
Hannah Kim Represented By
Dana M Douglas
Defendant(s):
Hannah Kim Pro Se
Plaintiff(s):
Ji Young Kim Represented By
Charles L Murray III
GF KOREA, INC. Represented By Charles L Murray III
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:18-01082 Whipple v. Robertson et al
Docket 1
Tentative for 6/14/18: Status?
Debtor(s):
Laird Malcolm Robertson Represented By Jeffrey B Smith
Defendant(s):
Laird M Robertson Pro Se
Val Muraoka Pro Se
Plaintiff(s):
Gaylord C. Whipple Represented By Gregory J. Ferruzzo
Misty A Perry Isaacson
Trustee(s):
Richard A Marshack (TR) Represented By
Misty A Perry Isaacson
11:00 AM
Misc#: 8:18-00101 Coffeen III et al v. Karr
Docket 4
Tentative for 6/14/18: No tentative
Defendant(s):
John William Karr Pro Se
Plaintiff(s):
Henry F Coffeen III Represented By Jonathan A Michaels
Management Inc Represented By Jonathan A Michaels
11:00 AM
Adv#: 8:16-01233 Hong v. Liu
(THIS MOTION HAS BEEN FILED UNDER SEAL)
Docket 173
Tentative for 6/14/18:
This is Plaintiffs’ third attempt at obtaining a preliminary injunction against Defendant Shu-Shen Liu ("Defendant"), debtor’s wife of 40 years. Plaintiffs believe that Shu-Shen has been dissipating assets, and the injunction would prevent further dissipation. In the underlying adversary proceeding, Plaintiffs seek a declaratory judgment that funds in certain accounts are community property funds, and therefore part of the bankruptcy estate (and liable for payment of Plaintiff’s judgment). A preliminary injunction is sought in order to preserve the status quo until a trial on the merits of the issues, which is scheduled for the week of June18, 2018.
After the first iteration of this motion, back in January, 2017, the court denied the motion and suggested that Plaintiffs had not exhausted their legal remedies pursuant to Grupo Mexicano de Desarrollo S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999). The court suggested that such a legal remedy might be a writ of attachment, but subsequently denied Plaintiffs’ motion for derivative standing. Therefore, Plaintiffs argue that they have exhausted their remedies at law, making equitable relief appropriate. Plaintiffs cite In re Focus Media, Inc. 387 F.3d 1077, 1085 (9th Cir. 2004), cert. denied, 544 U.S. 923, 125 S. Ct. 1674, 161 L. Ed. 2d 482 (2005) for the proposition that cases involving bankruptcy, fraudulent conveyances, and cases in which equitable relief is sought, are exceptions from the proscription against preliminary injunctions freezing assets. Further, Plaintiffs cite In re Atlas Fin., 2014 WL 172283, *1, *10 (Bankr. N.D. Texas, Jan. 14, 2014), a bankruptcy
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case from Texas for the proposition that "…when a plaintiff asserts a cognizable claim to specific assets of the defendant or seeks an equitable remedy involving those assets, a court may issue injunctive relief to preserve the status quo pending judgment where the legal remedy might prove inadequate and the preliminary relief furthers the court’s ability to grant the final relief requested." Therefore, Plaintiffs argue, this court has the authority to issue a preliminary injunction in this type of case.
A few things have changed in the months since this court heard the previous iteration of this motion. Plaintiffs have had their judgment against Debtor affirmed by the California Court of Appeal. Insofar as the court is aware, that judgment is now final. Also, debtor’s several attempts to confirm a plan that would have vested rights of action being advanced in this adversary proceeding in the DIP’s selected agent have failed. Plaintiffs argue that the result is that Defendant will try harder than ever to dissipate assets from the bankruptcy estate, making injunctive relief even more necessary now than in times past. Plaintiffs’ renewed motion contains many of the same arguments from past iterations. The question is whether these new developments tip the balance in favor of issuing an injunction. This analysis will focus on the identifiable differences between past iterations and the current one, such as new or further elaborated arguments not treated in past tentative decisions.
Preliminary Injunction Standard
Preliminary injunction relief is "an extraordinary remedy that may be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter v. Natural Res. Def. Council, Inc. 555 U.S. 7, 22 (2008). To obtain preliminary injunction relief, the moving party must demonstrate that: (1) there is a strong likelihood of success on the merits; (2) in the absence of a preliminary injunction, plaintiff will suffer irreparable injury; (3) the balance of hardships favors the plaintiff; (4) the public interest will be advanced by granting of a preliminary injunction. Id. at 20.
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Community vs. Separate Property
"[[P]roperty] acquired by purchase during a marriage is presumed to be community property, and the burden is on the spouse asserting its separate character to overcome the presumption. This presumption applies to property purchased during the marriage with funds from a disputed source, such as an account or fund in which one of the spouses has commingled his or her separate funds with community funds." In re Marriage of Mix, 14 Cal. 3d 604, 610-11 (1975). (internal citations omitted)."The presumption that all property acquired by either spouse during the marriage is community property may be overcome." Id. at 612. One method is by direct tracing. Id. "The need for specific record tracing arises when there is a commingled account. As this court explained in In re Marriage of Stoll (1998) 63 Cal.App.4th 837, 841 [74 Cal. Rptr. 2d 506], the need for specific records, as it originated in the ‘granddaddy’ case of See v. See (1966) 64 Cal.2d 778 [51 Cal. Rptr. 888, 415 P.2d 776], is the product of two factors: (1) the combination of commingling of separate and community funds and (2) the general presumption that property acquired during marriage is community property. A burden of recordkeeping logically arises out of the very act of commingling funds during marriage so the general community property presumption is not thwarted." In re Marriage of Ficke, 217 Cal. App. 4th 10, 25 (2013). "[T]estimony of a single witness, even a party in a divorce case, may constitute substantial evidence of tracing." Id. at 27.
Plaintiffs suggest that documentary evidence is indispensable to overcome the community property presumption, citing In re Marriage of Frick, 181 Cal. App. 3d. 997 (1986). This reading is too broad. Rather, either testimony or documents or both may provide the necessary showing.
Moreover, Plaintiffs’ cited cases are after trial, not as here, involving summary proceedings where the court has no opportunity to evaluate credibility.
Strong Likelihood of Success on the Merits Is Still Not Shown
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"A preliminary injunction is a provisional remedy. ‘It is the function of a preliminary injunction to preserve the status quo pending a determination of the action on the merits.’ King v. Saddleback Junior Coll. Dist., 425 F.2d 426, 427 (9th Cir.1970) (citation omitted)"; In re Casner, 302 B.R. 695, 699–700 (Bankr. E.D. Cal. 2003). "The ‘merits’ always refer to some underlying substantive claim." Id. at 70. "A ‘likelihood’ of success is not an absolute requirement (citations omitted)." Drakes Bay Oyster Co. v. Jewell, 747 F.3d 1073, 1085 (9th Cir. 2014). "Rather, ‘serious questions going to the merits’ and a hardship balance that tips sharply toward the plaintiff can support issuance of an injunction, assuming the other two elements of the Winter test are also met." Id.
Here, Plaintiffs advances several of the same (nearly identical) arguments supported by the same case law made in the last iteration, which this court did not find persuasive enough to grant the motion. However, what is new to the current iteration is a purported detailing of dissipation of assets in specific bank and insurance accounts, which begins on page 18 of Plaintiffs’ latest motion. Plaintiffs examine six accounts in which it is claimed that Defendant and Debtor transferred assets or altered the names of the beneficiaries after the petition date without court approval. In all, Plaintiff asserts that such activities have resulted in dissipation of assets amounting to either over $315,000 (Motion) or more than $500,000 (Reply). The court examines each contention below:
Western International Securities Acct. # 6087
Plaintiffs assert that evidence suggests that Debtor acted in concert with Defendant to remove Debtor’s name from this account without disclosure or approval from the court. Plaintiffs assert that in order to successfully remove Debtor from this account, spousal consent was required. The court is not sure Plaintiffs’ premise is correct.
Defendant counters by pointing out that her financial advisor, Keith
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Nunokawa, who handled this account on Defendant’s behalf, has testified that Defendant has always been the sole owner of this account. This account was originally funded by Defendant’s gifts from her parents. Initially, the investment was made in Nomura Securities International. In 2004, the Nomura Securities account was closed and the balance was used to open what would become this account. Defendant concedes that Debtor was added as a beneficiary of this account, but was never an owner. Defendant argues that this is an important distinction because beneficiaries only have future ownership rights, which only vest upon the owner’s death. Therefore, Defendant argues, the decision to remove debtor from the list of beneficiaries on this account did not require court approval because Defendant did not file for bankruptcy and the account was never property of the estate since this account was Defendant’s separate property.
The court is aware of this account and the activity Plaintiffs are complaining about. In the tentative ruling from September 28, 2017, this court stated, "…the removal of debtor’s name post- petition from Account 6087 suggests an inclination to transfer or hinder to delay and defraud creditors. The court was not made aware of whether those accounts are part of Schedule C to the family trust or are, in fact, claimed as community property in the debtor’s schedules, or what might be the current balances of same. There may be a more benign explanation, but the court would like to hear it."
On this point, Defendant states that this account, then listed as account # 6303 and later changed to #6087, was listed in the Schedule C of the 2007 Living Trust as part of "Wife’s Separate Property." (See Opp., Ex. A,
p. 23). This evidence does appear to rebut the presumption that the Western International Securities Account # 6087 is community property. The balance on this account is given as $457,400.35 as of April, 2018. Plaintiff’s reply does not acknowledge this evidence.
City National Securities #3948 and City National Bank #3867
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Plaintiffs then discuss City National Securities #3948 and City National Bank #3867. Defendant asserts that both of these accounts were her separate property. City National Securities #3948 is listed on Schedule C of the 2007 Living Trust as "Wife’s Separate Property." (See Opp. Ex. A, p. 23) Defendant asserts that City National Bank #3867 was initially funded with
$8,000 in cash that Defendant had previously kept in her home. Defendant asserts that Debtor has never had an ownership interest in these two accounts. Taken as true, this would seem to rebut the presumption that these two accounts are community assets. Furthermore, Defendant asserts, and Plaintiffs concede that the expenditures from this account reflect payments made to Defendant’s counsel for fees in this adversary proceeding. Plaintiffs cite no authority suggesting that using these funds to pay legal expenses for an ongoing matter is an improper use of those funds, or that Defendant needed to obtain prior court approval. While there is scant documentation, we do have testimony rebutting the presumption. See In re Marriage Ficke, 217 Cal. App. 4th at 27.
Nationwide Life Insurance Co. #6730 and American General Life Insurance #1989
Plaintiffs argue that this account is another example of Defendant attempting to remove Debtor after Plaintiffs had sued debtor, but prior to the petition date. Defendant explains that the Nationwide account was funded by a rollover of Defendant’s previously held annuity account with Jackson National (Account #6170) and another annuity with American General Life Insurance Company with the account ending in "1989." The Jackson National account appears on the 2007 Schedule C under "Wife’s Separate Property." In regard to Plaintiffs’ assertion that these accounts provide evidence that Defendant attempted to remove Debtor as a beneficiary, Defendant argues that this is the result of a misunderstanding. The various forms associated with the "6730" account were pre-populated by Defendant’s financial advisor, who assumed Debtor would be included as an initial beneficiary, but Defendant crossed out Debtor’s name, as it was always her intention that only
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her children be beneficiaries. Thus, Defendant argues that she never intended for Debtor to be a beneficiary and the forms alluded to are not "change of beneficiary forms," but rather "initial beneficiary forms." This appears to be accurate. Defendant concedes that nearly $45,000 has been withdrawn from this account, but that money has gone to pay legal expenses.
Transamerica #1091
Plaintiffs assert that this account was initially funded with a check in the amount of $150,000 whose source was a checking/savings account.
Plaintiffs assert that pay-outs from this annuity went into a joint-account at Union Bank ending in #5622. After the petition date, Plaintiffs assert that Defendant instructed the annuity holder to cease depositing the funds into the joint account, and instead deposit the funds into an account in Defendant’s name, Union Bank #1386. Plaintiffs further assert that after the schedules were amended to include #1386, Defendant requested hard checks be mailed and ultimately deposited into yet another Union Bank account (#3851) that is held in Defendant’s name only. This was done without court approval.
Defendant asserts that the $150,000 was made up from gifts she received from her parents, making its origins her separate property.
However, this was on account #9307, not #1091. Defendant asserts that account #1091 dates back to the 1980s and was initially funded with $50,000 made up from cash gifts from her parents. Defendant does concede that she moved disbursement funds from that account into a jointly held Union Bank account ending in #1386, but this account was included in the bankruptcy estate, as was the joint account ending in #5622. Defendant argues that since Transamerica account #1091 was her separate property to begin with, she is entitled to move funds derived from it around as she sees fit. Thus, when she decided to have disbursements deposited directly into accounts held only by her (Union Bank Account #4099 and 3851), this was legitimate. Defendant asserts that disbursements received from Transamerica account # 1091 and deposited into Union Bank accounts #4099 and 3851 are still in
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those accounts. Plaintiff asserts that only $500 has gone to pay legal fees from Union Bank account #3851. Assuming Defendant’s assertions are true, it would appear that the Transamerica account was funded with Defendant’s separate property, which would make disbursements from that account also her separate property. To the extent that any funds were commingled, it appears that those accounts were listed as part of the bankruptcy estate.
Documentation of the original source of funds is scant, but the testimony cannot be entirely disregarded.
Nationwide Life Insurance Company #1099
Plaintiffs assert that after the petition date (March 8, 2018), without court approval, there was a withdrawal of $50,000. Defendant contends that this account is her separate property. Debtor has never had an ownership interest in this account. The money was withdrawn to pay for legal fees. The money went from her Nationwide account to her City National Bank account # 3867. The Nationwide account does not appear on the 2007 Schedule C Living Trust because, she argues, the account was new and Defendant had not yet received her first statement on that account. In other words, omitting the Nationwide account from the Schedule C list was an oversight, she contends. Again, if true, this would rebut the presumption that this account is community property.
Pacific Life #8556
Plaintiffs assert that on October 13, 2017 and October 27, 2017, there were unauthorized withdrawals amounting to $141,701.75. This occurred after the petition date and without court approval. Again, Defendant argues that these withdrawals were made for the legitimate purpose of paying legal fees in connection with this adversary proceeding and cannot constitute dissipation of estate funds in a nefarious sense. Of course, everything depends on whether the accounts drawn from were comprised of separate property. But the fact that recent withdrawals were made is not as ominous as Plaintiff makes them to be given that this litigation presumably has been
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expensive.
Other Accounts
Plaintiffs assert in the Reply that Defendant has made withdrawals of more than half a million dollars from various accounts that are the subject of this adversary proceeding. However, Plaintiffs stop short of arguing that the purported use of these withdrawn funds (Legal and Professional fees) constitutes improper use.
Likelihood of Success on the Merits is Not Strongly Established
In the Reply, Plaintiffs argue that the Defendant admitted multiple times that the alleged cash gifts were deposited into joint accounts and that she has no documentary evidence that can trace the funds back to any gift. Plaintiffs argue that Defendant’s belated attempts to "correct" these admissions contained in her deposition from being deposits into joint accounts to being deposits into her own accounts are untimely and a sham. Plaintiffs cite FRCP 30(e) for the proposition that on request by the deponent or a party before the deposition is completed, the deponent must be allowed 30 days after being notified by the officer that the transcript or recording is available in which to review the transcript or recording, and if there are changes in the form or substance, to sign a statement listing the changes and the reasons for making them. Plaintiffs assert that Defendant’s proposed revisions were submitted over four months after notice that the transcript was complete. Plaintiff argues consequently that in the Ninth Circuit such untimely changes may be disregarded. No authority is cited, however, that such late attempts must be disregarded.
Although they may be untimely, Defendant’s statements (and documentary evidence when available), if true, appear to undercut several of Plaintiffs’ assertions regarding whether certain accounts are community or separate property. It appears that the result of the underlying adversary
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proceeding will come down to credibility at trial. Therefore, at best, Plaintiffs have established only that prevailing on the merits is possible. However, as this is extraordinary relief determined in summary proceedings, Plaintiffs’ likelihood of success on the merits must be substantial and the court doubts that Plaintiffs have reached this threshold. But even if the balance on this element is not strongly in Plaintiffs’ favor, the difference Plaintiffs argue might be made up in the remaining Winter factors, examined below.
Irreparable Harm
To obtain a preliminary injunction, the moving party must establish that they will suffer irreparable harm in the absence of the injunction. "’Mere injuries, however substantial, in terms of money, time and energy necessarily expended…are not enough’ to constitute irreparable injury." Aznaran v.
Church of Scientology of California, Inc., 1991 U.S. App. LEXIS 15775, *1, * 4-*5(quoting Sampson v. Murray, 415 U.S. 61, 90 (1974)). "Before a court can issue a permanent injunction, the plaintiff must show that the defendant’s actions will cause irreparable harm and that no adequate remedy at law exists." In re Golden Plan of California, Inc., 37 B.R. 167, 170 (Bankr. E.D. Cal. 1984) citing Beacon Theatres v. Westover, 359 U.S. 500, 506, 79 S. Ct.
948, 954 (1959).
Having lost their appeal, Plaintiffs argue that Debtor and Defendant will be even more determined to dissipate estate assets. Plaintiffs assert that Defendant has already dissipated large amounts of money from various accounts and that, if Defendant is not enjoined, she will continue to do so on a daily basis, which will result in irreparable injury to Plaintiffs. However, as Defendant points out, this assertion appears to be mere conjecture about what is possible, not what is certain or even likely to occur. Further, Defendant offers plausible counter arguments. Thus, Plaintiffs’ claim of irreparable harm appears to be speculative at best. It should be noted that in past iterations, Plaintiff had advanced the theory that Defendant might move assets overseas. But there is no evidence that has occurred in the last 24
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months. At best, Plaintiffs have shown that irreparable harm might result if the injunction does not issue. There is certainly reason to be concerned, but the court has not seen enough to move this factor from equipoise considering the other factors such as debtor’s discharge and the fact that Defendant’s family is all located here.
Balance of Equities
This court has previously stated that freezing the assets of Defendant would be problematic and possibly subject Defendant to hardship because she would not be able to use the funds without court approval in an emergency situation, should one arise. Specifically, this court stated in its January 5, 2017 Tentative:
"Plaintiffs contend that the preliminary injunction preserves the status quo for both parties. In response, Defendant contends that she would be greatly prejudiced if she were required to seek Plaintiffs’ consent or obtain a court order to use her purported separate property to pay her legal fees for her defense. Moreover, Shu Shen argues she would be even more prejudiced in the event that she needed the separate property in an emergency. The balance of equities is in equipoise or seems slightly to favor Defendant. If the preliminary injunction were to issue, and the property in question were later determined to be separate property, Defendant would likely be prejudiced, or at least hampered as she presumably would have had to expend resources obtaining consent or court order to use her own assets in order to continue to fund her legal defense. It is true that Plaintiff would also incur more legal fees seeking collection of a judgment if Defendant made property unavailable to levy and this court determined later the property was indeed community property of the bankruptcy estate. But the court is not left with any firm conviction that the balance of possible harms favors either one side or the other, and this is the movant’s burden. Since none of the other factors favor Plaintiffs either, the court
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is left with the view that the burden is not carried."
There are also two practical questions. First, why won’t Shu-Shen
stipulate to an injunction that might only last a week or so, given the proximity of the trial? But one could also ask whether the prospect of wholesale transfer is any more likely now than it has been during the two years’ run up to this trial, and is there any reason given that history to suppose that Shu-Shen would abandon her life here and proximity to her family just to protect assets? The court does not see a clear weight on either side of this question.
The Public Interest
This element is not treated extensively by either side and the public interest is not clearly implicated by the facts at issue.
Conclusion
While admittedly a closer question now that the appeal has been lost and the reorganization plan stalled, the court is left unconvinced that the balance has tipped decisively in Plaintiffs’ favor. Also, the court is not convinced that in practical terms adding contempt of an injunction order is enough of a factor to alter such a dramatic move by Shu-Shen at this late date, now that the underlying question is only days away from being answered. Moreover, as the court understood it, under Plaintiffs’ plan the standing question would be determined, so attachment or levy of judgment is available or will be available, assuming the underlying question of property status is resolved in favor of Plaintiffs.
Deny
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello
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David A Kay Steven H Zeigen Michael Simon Kyra E Andrassy
Defendant(s):
Shu-Shen Liu Represented By Charles C H Wu Vikram M Reddy
Plaintiff(s):
Yuanda Hong Represented By
D Edward Hays
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Adv#: 8:16-01233 Hong v. Liu
Docket 172
Tentative for 6/14/18:
This is Defendant’s motion in limine to preclude Plaintiff from calling Barbara Hopper and William Ryden ("Witnesses) as expert witnesses at trial, which is scheduled to begin June 18, 2018. Plaintiff did not include the Witnesses in the Joint Pretrial Stipulation ("JPS") and first provided notice of the Witnesses to Defendant in an email on May 16, 2018. Plaintiff has described the Witnesses as expert witnesses for purposes of rebuttal or impeachment. Defendant objects, asserting that Plaintiff has not complied with the disclosure requirements of FRCP 26(a)(2) for expert witnesses.
Plaintiff responds that disclosure of rebuttal and impeachment witnesses is not required and that this disclosure was made as a courtesy.
The JPS was filed by the parties on January 11, 2018. An order approving the JPS was entered on February 5, 2018 and an amended order approving the JPS was entered February 20, 2018. At p. 11, lines 13-14, the JPS provides "[t]he following list of witnesses are all the witnesses, including experts, that Plaintiff reserves the right to call at the time of trial, except as allowed for purposes of rebuttal." [Decl. of Vikram Reddy, Exh. B] Defendant represents that she has not disclosed any expert witnesses.
Pursuant to FRBP 7026, FRCP 26 is applicable in adversary proceedings. FRCP 26(a)(2) governs the disclosure of expert witnesses, including for rebuttal purposes. See FRCP 26(a)(2)(D)(ii). Pursuant to FRCP 37(c)(1), which is made applicable in bankruptcy proceedings by FRBP 7037, if a disclosure is not timely made, the witness may be excluded "unless the
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failure was substantially justified or is harmless."
It is fairly clear here that the requirements of FRCP 26(a)(2) have not been met, and Plaintiff does not try to argue that they have. Nor does Plaintiff argue under Rule 37 that the omission was substantially justified or harmless. Rather, relying on the JPS and the LBRs, Plaintiff argues that he is not required to comply with these requirements. Nothing in the JPS or the LBRs overrides the requirements for disclosure of expert witnesses. While it may be true that rebuttal and impeachment factual witnesses do not need to be disclosed, Plaintiff is not apparently trying to introduce a lay witness for rebuttal or impeachment purposes. Plaintiff is trying to introduce two experts to rebut the testimony of lay witnesses. This is not proper. See Stonefire Grill, Inc. v. FGF Brands, Inc., 2013 WL 12126773, *3 (C.D. Cal. June 27, 2013)
("The 1993 Amendments to Rule 26 clarify that a rebuttal expert is that ‘used solely to contradict or rebut the testimony that may be presented by another party’s expert.’ Fed. R. Civ. P. 26 Advisory committee’s note. While the language of Rule 26 does not expressly preclude a rebuttal expert’s testimony where the other party does not introduce its evidence using its own expert, the 1993 Amendments specifies the role of a rebuttal expert as that which contradicts the testimony of another party’s expert.") (Italics added). This is also logical. Experts require an additional amount of preparation. An opponent’s witnesses testifying only as to factual matters require in preparation only knowledge of the facts, but the opponent needs some forewarning as to the opinions and nature of experts in order to prepare a response. By definition, experts testify as to things not within general knowledge of lay persons, so preparation usually requires resort to scholarly publication or the help of counter experts. As a result, pursuant to FRCP 37(c) (1), Ms. Hopper and Mr. Ryden should be precluded from testifying as experts. There has been no showing that the failure is substantially justified or harmless. To the contrary, it seems unfair to spring two expert witnesses on Defendant one month before trial where ordinarily parties are entitled to certain disclosures from experts months in advance. Of course, this does not
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preclude the Witnesses’ testimony if offered purely as factual rebuttal, and not as experts.
Grant
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
Defendant(s):
Shu-Shen Liu Represented By Charles C H Wu Vikram M Reddy
Plaintiff(s):
Yuanda Hong Represented By
D Edward Hays
2:00 PM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
Docket 142
- NONE LISTED -
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo William J Idleman
Virgil Theodore Hernandez and Aleli Pro Se
Virgil Theodore Hernandez Represented By Gregory M Salvato Joseph Boufadel
Aleli A. Hernandez Represented By Gregory M Salvato Joseph Boufadel
Plaintiff(s):
Asset Management Holdings, LLC Represented By
2:00 PM
Trustee(s):
Vanessa M Haberbush Louis H Altman
Amrane (SA) Cohen (TR) Pro Se
2:00 PM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
Docket 146
- NONE LISTED -
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo William J Idleman
Virgil Theodore Hernandez and Aleli Pro Se
Virgil Theodore Hernandez Represented By Gregory M Salvato Joseph Boufadel
Aleli A. Hernandez Represented By Gregory M Salvato Joseph Boufadel
2:00 PM
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush Louis H Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:16-01233 Hong v. LIU et al
(set at ptc held 1-25-18)
Docket 1
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen
Defendant(s):
LONG-DEI LIU Pro Se
Shu-Shen Liu Pro Se
Plaintiff(s):
Yuanda Hong Represented By Philip D Dapeer
10:00 AM
PARTNERS FEDERAL CREDIT UNION
Vs.
DEBTOR
Docket 10
Tentative for 6/19/18:
Grant. Appearance is optional.
Debtor(s):
Claudia Georgeta Brasov Represented By Norma Duenas
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
PNC EQUIPMENT FINANCE, LLC
Vs.
DEBTOR
Docket 59
Tentative for 6/19/18:
Grant. Appearance is optional.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
PNC EQUIPMENT FINANCE, Represented By
Raffi Khatchadourian
10:00 AM
THE BANK OF NEW YORK MELLON
Vs.
DEBTOR
Docket 107
Tentative for 6/19/18:
Grant. Appearance is optional.
Debtor(s):
Thomas Alan Valenzuela Represented By Gary Leibowitz
Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 78
Tentative for 6/19/18:
Grant. Appearance is optional.
Debtor(s):
Rosalie Abad Naval Represented By Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
U.S. BANK TRUST, N.A. Vs.
DEBTOR
Docket 58
Tentative for 6/19/18:
Grant unless current or APO.
Debtor(s):
Geraldine Arguelles Represented By Brad Weil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
(con't from 6-05-18)
CREDIT UNION OF SOUTHERN CALIFORNIA
Vs.
DEBTOR
Docket 38
Tentative for 6/19/18: Status? If not current, grant.
Tentative for 6/5/18: Status? If not current, grant.
Tentative for 5/15/18:
Grant unless current or APO.
Debtor(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
WILMINGTON SAVINGS FUND SOCIETY, FSB
Vs.
DEBTOR
Docket 30
Tentative for 6/19/18:
Grant unless current or APO.
Debtor(s):
Rilla Ann Huml Represented By Christopher J Langley
Movant(s):
Wilmington Savings Fund Society, Represented By
Mark S Krause
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
BAYVIEW LOAN SERVICES, LLC
Vs.
DEBTOR
Docket 32
Tentative for 6/19/18: Grant.
Debtor(s):
Donald Karn Represented By
Ashishkumar Patel
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
DEUSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 12
Tentative for 6/19/18:
Grant. Appearance is optional.
Debtor(s):
Cathy Arlene Bailey Pro Se
Movant(s):
Deutsche Bank National Trust Represented By Angie M Marth
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
THE BANK OF NEW YORK MELLON
Vs.
DEBTOR
Docket 9
Tentative for 6/19/18:
Grant. Appearance is optional.
Debtor(s):
Phuong Nguyen Huynh Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
2:00 PM
(con't from 5-23-18)
Docket 1
Tentative for 6/19/18: See Calendar # 14.
Tentative for 5/23/18:
Deadline for filing plan and disclosure statement: the court will hear argument. Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of the deadline by: July 1, 2018
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
2:00 PM
(con't from 4-30-18)
Docket 9
Tentative for 6/19/18: See calendar #14.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
2:00 PM
(con't from 4-30-18)
Docket 10
Tentative for 6/19/18: See calendar #14.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
2:00 PM
§ 1112(b)
Docket 61
Tentative for 6/19/18:
This is the motion of secured creditor TCJ I, LLC to convert the case to Chapter 7. The motion is joined by secured creditor PMC Financial Services Group, LLC and Vertical Construction, Inc. As the court (and the U.S. Trustee) made clear at the last hearing April 30, 2018, the court was very skeptical about the future of these proceedings and it would need to receive compelling evidence that a turnaround was underway in order to entertain further use of cash collateral. Instead, virtually all empirical indications are that the debtor has continued to lose money for each of the eight or so weeks the case has been pending. Reportedly, the adequate protection payment of
$16,000 due PMC May 18 was not paid and PMC is right to be alarmed that the equipment is not being maintained. According to the first MOR filed May 15, 2018, there was virtually no business activity at all for the second half of April. The Cash Budget attached as Exhibit 1 to the Debtor’s Opposition covering the period of 6/2/18 to 6/22/18 shows a gaping discrepancy between the $299,706 projected and the negative $3557 actually received. While the court understands that the period in question has not all passed, and so this projection is preliminary, obviously the results are very disappointing.
Continuing excuses are offered, including blaming a "cool" May 2018 compared to previous years. But there was nothing about our temperate May in the court’s view that should have made much of a difference, and the repeat of the lament about rainy weather from over a year ago is even less persuasive. Promises of new professionals being recently engaged are offered, but one is hard pressed not to conclude this is too little, far too late, and however skilled the accountants might be they cannot lay asphalt or
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procure new jobs. To call this showing by debtor underwhelming is being generous. The court reluctantly concludes that we have no reason for optimism at this point and the debtor is continuing to lose money. No reorganization is in prospect. The creditors understandably cry out for a full stop while there might still be something left to liquidate.
Grant
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
1:30 PM
(cont'd from 5-16-18)
Docket 2
- NONE LISTED -
Debtor(s):
Benito Moctezuma Represented By Alon Darvish
Movant(s):
Benito Moctezuma Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 2
- NONE LISTED -
Debtor(s):
Kirk P Howland Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 2
- NONE LISTED -
Debtor(s):
Dale Grabinski Represented By Christopher J Langley
Movant(s):
Dale Grabinski Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 22
- NONE LISTED -
Debtor(s):
Geoffrey David Lloyd Represented By Michael W Collins
Movant(s):
Geoffrey David Lloyd Represented By Michael W Collins Michael W Collins
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 9
Tentative for 4/18/18:
The comments/issues raised by the Trustee must be addressed.
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Movant(s):
Carmen V Anderle Represented By Allan O Cate Allan O Cate Allan O Cate Allan O Cate Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 13
- NONE LISTED -
Debtor(s):
Alicia Contreras Represented By Luis G Torres
Movant(s):
Alicia Contreras Represented By Luis G Torres Luis G Torres
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 2
- NONE LISTED -
Debtor(s):
April D. Quinn Represented By Kelly Zinser
Movant(s):
April D. Quinn Represented By Kelly Zinser Kelly Zinser Kelly Zinser
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 2
- NONE LISTED -
Debtor(s):
Brett Town Represented By
Scott Dicus
Joint Debtor(s):
Kristin Town Represented By
Scott Dicus
Movant(s):
Brett Town Represented By
Scott Dicus
Kristin Town Represented By
Scott Dicus Scott Dicus
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 2
- NONE LISTED -
Debtor(s):
Ben R Aragon Represented By Sunita N Sood
Joint Debtor(s):
Marie A Aragon Represented By Sunita N Sood
Movant(s):
Ben R Aragon Represented By Sunita N Sood
Marie A Aragon Represented By Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 10
- NONE LISTED -
Debtor(s):
Stacy Lynn Bull Represented By Christopher J Langley
Movant(s):
Stacy Lynn Bull Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 9
- NONE LISTED -
Debtor(s):
Yoshiko N Hafer Represented By Christopher J Langley
Movant(s):
Yoshiko N Hafer Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 16
- NONE LISTED -
Debtor(s):
Timothy N Shorts Represented By William R Cumming
Joint Debtor(s):
Darlene Long-Shorts Represented By William R Cumming
Movant(s):
Timothy N Shorts Represented By William R Cumming
Darlene Long-Shorts Represented By William R Cumming
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-19)
Docket 13
- NONE LISTED -
Debtor(s):
Angela A. Mafioli Represented By Nathan A Berneman
Movant(s):
Angela A. Mafioli Represented By Nathan A Berneman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 14
- NONE LISTED -
Debtor(s):
Jack Dennis Mitchell Represented By Nicholas M Wajda
Joint Debtor(s):
Kathleen Marie Mitchell Represented By Nicholas M Wajda
Movant(s):
Jack Dennis Mitchell Represented By Nicholas M Wajda
Kathleen Marie Mitchell Represented By Nicholas M Wajda
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 2
Tentative for 5/16/18:
Both objections are well-taken and must be addressed. Confirmation denied.
Debtor(s):
Mary Jo Bryant Represented By Julie J Villalobos
Movant(s):
Mary Jo Bryant Represented By Julie J Villalobos Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 2
Tentative for 6/20/18:
The court does not see the events surrounding the purchase of a new car shortly before the petition as sufficiently egregious to warrant denial of confirmation on bad faith grounds.
Debtor(s):
Michelle Jenine Cabrera Boldt Represented By Joseph A Weber
Movant(s):
Michelle Jenine Cabrera Boldt Represented By Joseph A Weber Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 10
Tentative for 5/16/18:
The objection appears to be well-taken. The court is disinclined to confirm a plan that relies on an unexplained "hockey stick" uptick in payment rate after 17 months, at least not absent a better explanation. Deny.
Debtor(s):
Jose Navarro Represented By
Christopher J Langley
Movant(s):
Jose Navarro Represented By
Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 9
Tentative for 5/16/18:
Objections appear well-taken. Confirmation denied.
Debtor(s):
Joe P Stubbs Pro Se
Movant(s):
Joe P Stubbs Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 23
- NONE LISTED -
Debtor(s):
Roberto Navarro Represented By Patricia A Mireles
Joint Debtor(s):
Margarita Navarro Represented By Patricia A Mireles
Movant(s):
Roberto Navarro Represented By Patricia A Mireles Patricia A Mireles Patricia A Mireles Patricia A Mireles Patricia A Mireles
Margarita Navarro Represented By Patricia A Mireles Patricia A Mireles
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 11
Tentative for 6/20/18:
Continue one cycle for purposes of amending the plan.
Debtor(s):
Paolo Cardinali Represented By Anerio V Altman
Movant(s):
Paolo Cardinali Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 5
- NONE LISTED -
Debtor(s):
Jeff Allan Charity Represented By Michael G Spector
Movant(s):
Jeff Allan Charity Represented By Michael G Spector
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Alexis Le Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Jaime Samson Cayco Represented By
Hasmik Jasmine Papian
Joint Debtor(s):
Junnifer Quiwa Cayco Represented By
Hasmik Jasmine Papian
Movant(s):
Jaime Samson Cayco Represented By
Hasmik Jasmine Papian
Junnifer Quiwa Cayco Represented By
Hasmik Jasmine Papian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Steven Glenn Miller Represented By Anthony B Vigil
Joint Debtor(s):
Terry Lynn Miller Represented By Anthony B Vigil
Movant(s):
Steven Glenn Miller Represented By Anthony B Vigil
Terry Lynn Miller Represented By Anthony B Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 3
- NONE LISTED -
Debtor(s):
Elvin Lorenzana Represented By Anerio V Altman
Joint Debtor(s):
Somer Asako Shimada Represented By Anerio V Altman
Movant(s):
Elvin Lorenzana Represented By Anerio V Altman
Somer Asako Shimada Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Max L. Cunningham Represented By Kelly Zinser
Joint Debtor(s):
Lori F. Cunningham Represented By Kelly Zinser
Movant(s):
Max L. Cunningham Represented By Kelly Zinser Kelly Zinser
Lori F. Cunningham Represented By Kelly Zinser Kelly Zinser Kelly Zinser Kelly Zinser
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
Tentative for 6/20/18:
The Trustee's request for missing documents must be met. The $400 per month contribution to mother in law seems to be within reasonable bounds under the circumstances.
Debtor(s):
Saleem Kamal Erakat Represented By Rex Tran
Movant(s):
Saleem Kamal Erakat Represented By Rex Tran
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Randall Stephen Held Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Yudy Saidaly Canales Represented By Brian J Soo-Hoo
Movant(s):
Yudy Saidaly Canales Represented By Brian J Soo-Hoo Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
Tentative for 6/20/18:
The Highlander debt will likely be approved. Given the other explanations provided, does the Trustee still oppose confirmation?
Debtor(s):
Rigoberto Martinez Represented By
David Samuel Shevitz
Joint Debtor(s):
Geena Martinez Represented By
David Samuel Shevitz
Movant(s):
Rigoberto Martinez Represented By
David Samuel Shevitz David Samuel Shevitz David Samuel Shevitz
Geena Martinez Represented By
David Samuel Shevitz David Samuel Shevitz David Samuel Shevitz David Samuel Shevitz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Roslyn Renay Borges Represented By Alon Darvish
Movant(s):
Roslyn Renay Borges Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Enrique Perez Represented By Christopher J Langley
Movant(s):
Enrique Perez Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Valerie Jill Campbell Represented By Christopher J Langley
Movant(s):
Valerie Jill Campbell Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
James Murray Schmidt Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Linda April Spinks Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
Tentative for 6/20/18:
As indicated in the relief of stay motion, the 19 Sea Island tenancy will be decided in the Superior Court. The plan is deficient insofar as it makes no reference to any ongoing cost of a tenancy, either there or as a replacement. Moreover, the plan is totally insufficient inasmuch as no provision is made for any payments to creditors, although significant income is acknowledged at Part 2.
If this case is all about obtaining a stay, or an alternative venue for litigation with the owners of 19 Sea Island, that battle is lost. Debtor is cautioned to reconsider whether he is serious about a plan / reorganization.
Debtor(s):
Gregory Burke Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 56
Tentative for 6/20/18: Grant.
Tentative for 5/16/18: Grant.
Debtor(s):
Patricia Lynne Bagley Represented By Joseph M Adams
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 3-21-18)
Docket 66
Tentative for 6/20/18: Status?
Tentative for 3/21/18: Status?
Tentative for 2/21/18: Status?
Tentative for 1/17/18:
See #39 - motion to modify.
Tentative for 12/20/17: Status?
Tentative for 11/15/17: Same.
3:00 PM
Tentative for 10/18/17:
See #43 - motion to modify.
Debtor(s):
Luis A Escobar Represented By Rajiv Jain
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 97
Tentative for 6/20/18: Grant, unless current.
Debtor(s):
Joe Gerard Vahey Represented By David V Luu
Joint Debtor(s):
Marci Ann Vahey Represented By David V Luu
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
{11 U.S.C. Section 1307(c)(6)}
(cont'd from 4-18-18)
Docket 48
Tentative for 6/20/18:
Status on promised modification?
Tentative for 4/18/18: Status?
Tentative for 2/21/18: Status?
Tentative for 1/17/18: Status?
Tentative for 12/20/17: Status on refinance?
Tentative for 10/18/17:
The promise to refinance does not fulfill tax return/refund requirements. But the court will grant a continuance if the Trustee does not object.
3:00 PM
Debtor(s):
Mark A. Wedmore Represented By Edward T Weber Kristi M Wells
Joint Debtor(s):
Christy E. Wedmore Represented By Edward T Weber Kristi M Wells
Movant(s):
Amrane (SA) Cohen (TR) Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 67
Tentative for 6/20/18:
Deny for reasons stated by Trustee.
Debtor(s):
Mark A. Wedmore Represented By Edward T Weber Kristi M Wells
Joint Debtor(s):
Christy E. Wedmore Represented By Edward T Weber Kristi M Wells
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-16-18)
Docket 151
Tentative for 6/20/18: Status?
Tentative for 5/16/18: Status?
Tentative for 4/18/18:
Claims in Calendar #'s 43 & 44 have been objected to, albeit improperly. The court cannot discern whether, if sustained, these would make up for the plan shortfall.
It also appears these objections are very late, and Debtor even asks for a "refund" on #43. The court needs an explanation and probably a continuance.
Debtor(s):
Mark A Mindiola Represented By Emilia N McAfee
Joint Debtor(s):
Daily Mindiola Represented By Emilia N McAfee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 166
Tentative for 6/20/18:
The claim is late-filed and so should be disallowed as a claim against the estate. This may not resolve dischargeability questions, however.
Debtor(s):
Mark A Mindiola Represented By Emilia N McAfee
Joint Debtor(s):
Daily Mindiola Represented By Emilia N McAfee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 170
Tentative for 6/20/18: See #43
Debtor(s):
Mark A Mindiola Represented By Emilia N McAfee
Joint Debtor(s):
Daily Mindiola Represented By Emilia N McAfee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 4-18-18)
Docket 89
Tentative for 6/20/18: Grant.
Tentative for 4/18/18:
Continue for about 45 days. More time should not be expected.
Debtor(s):
Gilbert Pena Perez Represented By Halli B Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-16-18)
Docket 63
Tentative for 5/16/18:
Grant, unless current or motion on file.
Debtor(s):
Theresa Sangermano Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 67
Tentative for 6/20/18:
Grant, unless all delinquencies cured.
Debtor(s):
Theresa Sangermano Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 63
Tentative for 6/20/18:
Grant, unless delinquency cured.
Debtor(s):
Jeffery Daniel Sirois Represented By Frank X Ruggier Steven A Alpert
Joint Debtor(s):
Lori Jean Sirois Represented By Frank X Ruggier Steven A Alpert
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 50
Tentative for 6/20/18:
Grant, unless delinquencies are cured.
Debtor(s):
Gary Brennan Carrizosa Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Honeybee Bendoy-Carrizosa Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 35
Tentative for 6/20/18: Grant.
Debtor(s):
Justin Marcus Denicola Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 77
Tentative for 6/20/18: Grant.
Debtor(s):
Alfredo Andrade Represented By Leonard Pena
Joint Debtor(s):
Teresa Banda Represented By Leonard Pena
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 66
NONE LISTED -
Debtor(s):
Salvador Manuel Robledo Represented By Joshua L Sternberg
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 53
Tentative for 6/20/18: Grant, unless current.
Debtor(s):
Nader Tahvildari Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 92
Tentative for 6/20/18:
Status regarding engagement of new counsel, etc.?
Tentative for 5/16/18: See #59 on calendar.
Tentative for 3/21/18:
Status on modification motion?
Tentative for 2/21/18:
Grant unless current or motion to modify on file.
Debtor(s):
Daniel J Powers Represented By Gaurav Datta
Joint Debtor(s):
Ellen A Powers Represented By Gaurav Datta
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
3:00 PM
Docket 113
Tentative for 6/20/18:
Debtor must respond to points raised by the Trustee.
Debtor(s):
Daniel J Powers Represented By
Charles W Hokanson
Joint Debtor(s):
Ellen A Powers Represented By
Charles W Hokanson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 146
Tentative for 6/20/18: Grant.
Debtor(s):
Jennifer Anne Ritchie Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-16-18)
Docket 56
Tentative for 6/20/18:
Grant, unless current or motion on file.
Tentative for 5/16/18:
Grant, unless current or motion on file.
Debtor(s):
Todd Eric Szkotnicki Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Lori Lynn Szkotnicki Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-16-18)
Docket 43
Tentative for 6/20/18: Same.
Tentative for 5/16/18: Continue to 6/20/18 at 3pm.
Tentative for 4/18/18:
Grant unless motion to modify is on file.
Debtor(s):
Timothy Dale Cox Represented By
Thomas E Brownfield
Joint Debtor(s):
Diane Gloria Cox Represented By
Thomas E Brownfield
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 48
Tentative for 6/20/18:
Deny for reasons stated by Trustee.
Debtor(s):
Timothy Dale Cox Represented By
Thomas E Brownfield
Joint Debtor(s):
Diane Gloria Cox Represented By
Thomas E Brownfield
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 4-18-18)
Docket 31
Tentative for 6/20/18: Status?
Tentative for 4/18/18:
What is status of motion to modify?
Tentative for 3/21/18: See #28.
Tentative for 2/21/18: See #34.
Tentative for 12/20/17: Grant unless motion on file.
Debtor(s):
Debbie Lynn Selikson Represented By Anerio V Altman
3:00 PM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 33
Tentative for 6/20/18:
Continue date of modification hearing.
Debtor(s):
Robert Francis Delsasso Represented By
D Justin Harelik
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 54
Tentative for 6/20/18: Grant unless current.
Debtor(s):
Geraldine Arguelles Represented By Brad Weil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-16-18)
Docket 65
Tentative for 6/20/18: Grant unless fully current.
Tentative for 5/16/18:
Order on modification entered (Court prepared order) on May 14. Does this resolve?
Debtor(s):
Alan Bell Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 46
Tentative for 6/20/18: Grant unless current.
Debtor(s):
Keith Michael Brandino Represented By
Rabin J Pournazarian
Joint Debtor(s):
Nicolle Lorraine Butler Represented By
Rabin J Pournazarian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 29
Tentative for 6/20/18:
Grant unless motion to modify on file.
Debtor(s):
Justin Stumpf Represented By Nima S Vokshori
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 80
NONE LISTED -
Debtor(s):
Eddie Julio Flores Sr. Represented By Halli B Heston
Joint Debtor(s):
Juana Martina Flores Represented By Halli B Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
RAMIRO FLORES MUNOZ, DEBTOR'S ATTORNEY, FEE: $350.00
EXPENSES $0.00
Docket 61
NONE LISTED -
Debtor(s):
Jose Angel Gutierrez Represented By
Ramiro Flores Munoz
Joint Debtor(s):
Rosa Galvan Gutierrez Represented By
Ramiro Flores Munoz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 58
NONE LISTED -
Debtor(s):
Angelita Angeles Labrador Represented By Todd B Becker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-16-18)
Docket 29
Tentative for 5/16/18:
This is Debtor Sara Barnett’s objection to claim 3-1 held by Wilshire Commercial Capital, LLC ("Wilshire"). Wilshire amended its Proof of claim, and now it is claim 3-2. Notably, Wilshire’s first claim (3-1) appeared to be a duplicate of Westlake’s claim (2-1). Westlake has voluntarily withdrawn its claim, but did not provide any reasons for doing so. Wilshire’s amended claim (3-2) makes three discernable changes from the original: (1) the amount claimed jumps significantly from about $74,000, to about $148,000; (2) The basis of the claim changes from "money loaned" to "Joint Defense Agreement"; and (3) The amended proof of claim is signed by Thomas Mendoza, not Jackson Lieu as in the previous proof of claim. This is important because incorrect signatures under the LBRs served as one of the bases for objection to the prior proof of claim.
However, Debtor’s main objection was in response to claim 3-1, not the amended claim 3-2. As mentioned, the amended claim had some significant changes. But Debtor uses her "Reply" to serve as a de facto objection to the amended proof of claim. This objection includes assertions of unconscionability, lack of authority to enter into the agreement, etc. This is not the proper way to object to a proof of claim because the claimant is effectively deprived of an opportunity to file a written opposition before the hearing. Debtor concedes this point in the "Conclusion" section of her Reply. The dispute may simply be postponed for further objection; but if the grounds
3:00 PM
are to be such issues as unconscionability or lack of authority, those will likely have to be resolved through an adversary proceeding allowing for discovery, etc., not in a summary proceeding like a claim objection hearing. Allegations of fraud are overblown; carelessness from a party who should know better is a more apt description.
Overrule on procedural grounds, with leave to renew
Debtor(s):
Sara Barnett Represented By
Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 22
Tentative for 6/20/18:
Sustain. Appearance optional.
Debtor(s):
Alicia Contreras Represented By Luis G Torres
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-29-18)
MARK PROEFROCK
Vs.
DEBTOR
Docket 10
Tentative for 6/20/18:
There is obviously an underlying dispute over tenancy concerning the property commonly known as 19 Sea Island Dr., Newport Beach. Charges and countercharges are made concerning alleged bad acts. The court does note that there was an unlawful detainer proceeding in the Superior Ct. predating the bankruptcy. That is the appropriate venue to sort out the various claims, not this court. The property is not necessary to a reorganization unless and until it is first established that there is a tenancy recognized in law. That is to be determined in state court.
Grant for purposes of legal proceedings concerning title / tenancy / occupancy of 19 Sea Island, N.B.
Tentative for 5/29/18:
No service on Debtor? Email address is listed in NEF section but Debtor is not on the Court's list for email notice.
Debtor(s):
Gregory Burke Pro Se
Movant(s):
Mark Proefrock Represented By
3:00 PM
Trustee(s):
Cara J Hagan
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-29-18)
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 18
Tentative for 6/20/18:
Status of loan? Progress toward sale?
Tentative for 5/29/18: Grant.
Tentative for 5/15/18: Grant.
Debtor(s):
Mary Jo Bryant Represented By Julie J Villalobos
Movant(s):
Wells Fargo Bank, N.A. Represented By
Dane W Exnowski
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 15
Tentative for 6/20/18: Grant.
Debtor(s):
Robert Lewis Reynolds Represented By Michael G Spector
Joint Debtor(s):
Kristi Lee Reynolds Represented By Michael G Spector
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 15
NONE LISTED -
Debtor(s):
Randall Stephen Held Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 16
Tentative for 6/20/18: Grant.
Debtor(s):
Rigoberto Martinez Represented By
David Samuel Shevitz
Joint Debtor(s):
Geena Martinez Represented By
David Samuel Shevitz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:16-01233 Hong v. LIU et al
(set at ptc held 1-25-18)
Docket 1
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen
Defendant(s):
LONG-DEI LIU Pro Se
Shu-Shen Liu Pro Se
Plaintiff(s):
Yuanda Hong Represented By Philip D Dapeer
10:00 AM
Adv#: 8:16-01233 Hong v. LIU et al
(set at ptc held 1-25-18)
Docket 1
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen
Defendant(s):
LONG-DEI LIU Pro Se
Shu-Shen Liu Pro Se
Plaintiff(s):
Yuanda Hong Represented By Philip D Dapeer
9:00 AM
Adv#: 8:16-01233 Hong v. LIU et al
(set at ptc held 1-25-18) (con't from 6 22-18)
Docket 1
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen
Defendant(s):
LONG-DEI LIU Pro Se
Shu-Shen Liu Pro Se
Plaintiff(s):
Yuanda Hong Represented By Philip D Dapeer
10:30 AM
DANIEL RAMIREZ, GUADALUPE AGUILAR-RAMIREZ
Vs.
DEBTOR
Docket 11
Tentative for 6/26/18:
Grant. Appearance is optional.
Debtor(s):
Graciela Bahena Rojas Represented By Randy Alexander
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
JOHN WATT
Vs.
DEBTOR
Docket 10
Tentative for 6/26/18:
Grant. Appearance is optional.
Debtor(s):
Paul Dean Pisani Pro Se
Movant(s):
JOHN WATT Represented By Stephen C Duringer
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-15-18 per order approving stip. to cont. entered 5-8-18)
SANTANDER CONSUMER USA INC.
Vs.
DEBTOR
Docket 24
Tentative for 6/26/18:
Grant. Appearance is optional.
Debtor(s):
Kevin D Maloney Represented By
Catherine Christiansen
Movant(s):
Santander Consumer USA Inc. dba Represented By
Sheryl K Ith
Trustee(s):
Richard A Marshack (TR) Represented By Scott Talkov
10:30 AM
TD AUTO FINANCE LLC
Vs.
DEBTOR
Docket 10
Tentative for 6/26/18:
Grant. Appearance is optional.
Debtor(s):
Kevin Michael Melody Represented By Michael Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
US BANK TRUST NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 60
Tentative for 6/26/18:
Grant per APO filed 6/21. Appearance is optional.
Debtor(s):
Danny Gerard Gass Represented By Amanda G Billyard
Movant(s):
U.S. Bank Trust National Represented By
Kristin A Zilberstein
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 93
Tentative for 6/26/18:
Grant. Appearance is optional.
Debtor(s):
Olga Ruiz Represented By
Sunita N Sood
Movant(s):
Wells Fargo Bank, N.A. Represented By Joseph C Delmotte Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTORS
Docket 75
Tentative for 6/26/18: Grant unless current.
Debtor(s):
Guy A. Rojo Represented By
Joseph A Weber
Joint Debtor(s):
Eva P. Rojo Represented By
Joseph A Weber
Movant(s):
Deutsche Bank National Trust Represented By Gilbert R Yabes Merdaud Jafarnia Nancy L Lee Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-22-18)
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 31
Tentative for 6/26/18:
Grant. Appearance is optional.
Tentative for 5/22/18:
Grant. Appearance is optional.
Debtor(s):
Yolanda Carpino Represented By Gary Polston
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-29-18)
WELLS FARGO BANK, N.A.
Vs.
DEBTORS
Docket 47
Tentative for 5/29/18:
Grant. Appearance is optional.
Debtor(s):
Todd A Carpenter Represented By Eric A Jimenez
Joint Debtor(s):
Mary A Carpenter Represented By Eric A Jimenez
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
BAYVIEW LOAN SERVICING, LLC
Vs.
DEBTOR
Docket 57
NONE LISTED -
Debtor(s):
Amanda Vargas Gupta Represented By Andrew Moher
Movant(s):
The Bank of New York Mellon FKA Represented By
Erin M McCartney Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 5-22-18)
LAKESIDE PARK COMMUNITY ASSOCIATION
Vs.
DEBTOR
Docket 33
Tentative for 6/26/18: Grant.
Tentative for 5/22/18: Briefs?
Tentative for 5/15/18:
Neither side has analyzed whether as of the foreclosure sale on 1/11/18 an automatic stay was in effect given the provisions of Section 363(c)(3).
Analysis, please?
No service on debtor? Continue for service on Debtor.
Debtor(s):
Benito Moctezuma Represented By Alon Darvish
10:30 AM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
JP MORGAN CHASE BANK
Vs.
DEBTOR
Docket 29
Tentative for 6/26/18:
Grant unless current or APO.
Debtor(s):
Dale Grabinski Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
CRESCENT CAPITAL HOLDINGS, LLC
Vs.
DEBTOR
Docket 9
NONE LISTED -
Debtor(s):
Sergio Moreno Morales Represented By Kevin Tang
Movant(s):
Crescent Capital Holdings, LLC Represented By Amy E Martinez
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
BANK OF AMERICA, N.A.
Vs.
DEBTOR
Docket 7
Tentative for 6/26/18:
Grant. Appearance is optional.
Debtor(s):
James Kelton Hudzik Pro Se
Movant(s):
BANK OF AMERICA, N.A. Represented By Alexander G Meissner
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
(con't from 6-5-18)
Docket 0
Tentative for 6/26/18: Confirm motion withdrawn?
Tentative for 6/5/18:
Better to continue to be sure the motion is withdrawn. Continue to June 26, 2018 at 11:00A.M. Appearances waived.
Debtor(s):
Nicolas Edward Siligo Represented By Michael Jones Sara Tidd
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Docket 192
Tentative for 6/26/18:
Grant. Appearance is optional.
Debtor(s):
Desiree C Sayre Represented By Andrew Goodman Rudolph E Brandes
Movant(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
11:00 AM
Karen Sue Naylor
(con't from 5-22-18)
Docket 92
Tentative for 6/26/18: Grant.
Tentative for 5/22/18: Grant.
Debtor(s):
Hannah Kim Represented By
Dana M Douglas
Trustee(s):
Karen S Naylor (TR) Represented By William M Burd
11:00 AM
U.S.C. Section 523 to July 31, 2018
Docket 806
Tentative for 6/26/18: Grant.
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T. Madden Beth Gaschen
Susann K Narholm - SUSPENDED - Mark Anchor Albert
Joint Debtor(s):
Thomas Fu (Deceased) Pro Se
Trustee(s):
James J Joseph (TR) Represented By
James J Joseph (TR) Paul R Shankman Lisa Nelson
11:00 AM
(cont'd from 6-27-17 per order approving stipulation entered 4-18-17)
Docket 383
NONE LISTED -
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T Madden Beth Gaschen Susann K Narholm
Movant(s):
Bank of America, N.A. Represented By Kathleen S Kizer Isabelle L Ord
Trustee(s):
James J Joseph (TR) Pro Se
11:00 AM
LOBEL, WEILAND GOLDEN FRIEDMAN LLP, ATTORNEY FOR TRUSTEE HAHN FIFE & COMPANY, ACCOUNTANT FOR TRUSTEE
WEILAND GOLDEN SMILEY & WANG EKVALL LLP, ATTORNEY FOR TRUSTEE
JONATHAN P. CHODOS, A PROFESSIONAL CORP., ATTORNEY CLIENT TRUSTEE ACCOUNT
WEILAND GOLDEN SMILEY & WANG EKVALL LLP, ATTORNEY FOR TRUSTEE EXPENSES
JONATHAN P. CHODOS, A PROFESSIONAL CORP., ATTORNEY CLIENT TRUSTEE ACCOUNT, SPECIAL COUNSEL FOR TRUSTEE EXPENSES
FRANCHISE TAX BOARD, OTHER CHAPTER 7 ADMINISTRATIVE EXPENSES
Docket 251
Tentative for 6/26/18:
Allow as prayed. Appearance optional.
Debtor(s):
Banyan Limited Partnership, a Represented By
11:00 AM
Trustee(s):
Hutchison B Meltzer Adam L Karp
Thomas H Casey (TR) Represented By Beth Gaschen Jeffrey I Golden
11:00 AM
Docket 21
Tentative for 6/26/18: Grant.
Debtor(s):
Adam White Represented By
Ofer M Grossman
Joint Debtor(s):
Carolyn Canning-White Represented By
Ofer M Grossman
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
3. Compel Debtor To Provide The Trustee Of A Copy Of His Last Filed Tax Return; 4. To Refrain From Dismissing This Caser Due To The Debtor's Non- Appearance; 5. Enjoin The Debtor Or Bank of America, N.A. From Affecting Certain Real Property
Docket 13
Tentative for 6/26/18:
The court has concerns: (1) issuance of an injunction against Bank of America would not seem appropriate in view of §362(c)(3) and would, in any case, need to be brought as an adversary proceeding under FRBP 7001(7);
(2) how do we know that there is any realizable equity? Evidence?; (3) The court is loathe to issue mandatory injunctions regarding such tasks as preparing and filing tax returns. Normally the remedy in cases like this one is dismissal; the court would only consider interjecting itself with possible contempt issues for a more compelling showing than is made here. Reliance on § 105 is usually a sign that appropriate remedies are not at hand.
No tentative.
Debtor(s):
Hang Kim Ha Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
2:00 PM
Adv#: 8:16-01233 Hong v. LIU et al
(set at ptc held 1-25-18) (con't from 6-25-18)
Docket 1
Tentative for 1/25/18:
What further discovery is desired?
Tentative for 3/2/17:
Deadline for completing discovery: August 1, 2017 Last Date for filing pre-trial motions: August 21, 2017
Pre-trial conference on September 7, 2017 at 10:00 a.m.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen
Defendant(s):
LONG-DEI LIU Pro Se
Shu-Shen Liu Pro Se
Plaintiff(s):
Yuanda Hong Represented By Philip D Dapeer
10:00 AM
Docket 1
Tentative for 6/27/18:
A final decree motion seems appropriate as soon as tax claim is resolved.
Tentative for 3/7/18: See #6.
Tentative for 1/10/18:
Estimate approximate timeline to confirmation.
Tentative for 9/27/17:
Continue until early 2018 to allow consideration of whether plan can be confirmed.
Tentative for 3/28/17:
Deadline for filing plan and disclosure statement: September 1, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date Debtor to give notice of the deadline by May 1, 2017
Debtor(s):
Casa Ranchero, Inc. Represented By
10:00 AM
Robert P Goe Charity J Miller
10:00 AM
Docket 146
NONE LISTED -
Debtor(s):
Casa Ranchero, Inc. Represented By Robert P Goe Charity J Miller
10:00 AM
(con't from 3-20-18)
Docket 1
Tentative for 6/27/18: Status? Conversion?
Tentative for 3/20/18: See #15.
Tentative for 1/1618:
Continue to confirmation hearing.
Tentative for 11/1/17:
An updated status report would have been helpful. Does the Trustee foresee a plan? Would a deadline or a continued status hearing help?
Tentative for 8/9/17:
Continue status conference approximately 90 days to November 8, 2017 at 10:00 a.m.
Tentative for 6/28/17: See #12.
10:00 AM
Tentative for 6/7/17:
Continue to June 28, 2017 at 10:00 a.m.
Tentative for 4/26/17:
Deadline for filing plan and disclosure statement: September 30, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: June 1, 2017
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Docket 10
Tentative for 6/27/18:
Deadline for filing plan and disclosure statement: October 31, 2018.
Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of the deadline by: August 1, 2018.
Debtor(s):
Jeff Allan Charity Represented By Michael G Spector
10:00 AM
Docket 1
Tentative for 6/27/18:
Deadline for filing plan and disclosure statement: October 19, 2018.
Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of the deadline by: August 1, 2018.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones
10:00 AM
(con't from 3-28-18)
Docket 1
Tentative for 3/28/18: See #6.
Tentative for 2/28/18:
Continue to March 28, 2018 at 10 a.m. to coincide with hearing on disclosure.
Tentative for 1/10/18: Status?
Tentative for 10/11/17:
Continue for about 60-90 days to coincide with probable confirmation date?
Tentative for 8/23/17:
Continue conference into mid December.
Tentative for 8/9/17:
Continue to August 23, 2017 at 10:00 a.m.
10:00 AM
Tentative for 6/7/17:
Deadline for filing plan and disclosure statement: November 30, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: August 1, 2017
Debtor(s):
Mariano Mendoza Represented By Onyinye N Anyama
Joint Debtor(s):
Mercedes Mendoza Represented By Onyinye N Anyama
10:00 AM
Period: 4/27/2017 to 3/18/2018
(con't from 4-25-18)
ANYAMA LAW FIRM, DEBTOR IN POSSESSION FEE: $20,510.00
EXPENSES $485.16
Docket 169
Tentative for 6/27/18: See #8.
The court observes:
This should have been a rather simple case, assuming the characterization appearing in the opposition that its resolution depended on sale of one of the properties.
There is a disagreemenent over the facts, i.e. whether it was debtor who wanted to try a reorganization first before liquidation. This might have to be sorted out by discovery.
Some reduction seems in order, but the amount is unclear depending on paragraph 2 above. The court is inclined to order mediation, but only if applicant is willing.
Debtor(s):
Continue approximately 60 days.
Mariano Mendoza Represented By
10:00 AM
Richard L Barnett
Joint Debtor(s):
Mercedes Mendoza Represented By Richard L Barnett
10:00 AM
Docket 209
Tentative for 6/27/18:
These are, respectively, the final applications for allowance of fees and costs and the Debtors’ motion for disgorgement of the $15,000 retainer paid to applicant. The matters are considered together as they are interrelated. It is very disconcerting and disappointing reading, to be sure. The objection and request for disgorgement seem focused primarily on the disputed factual questions of: (a). was there a misrepresentation about the nature of the fee, that is, was there an oral discussion (translated to Spanish) regarding a "flat fee" despite the clear language of the retainer agreement to the contrary; (b) were Debtors adequately advised as to the purpose and prospects of a reorganization proceeding, when it developed that the solution may have been obvious, i.e. sale of a single piece of property; (c) was applicant reasonably diligent in meeting timetables in the proceedings; (d) were Debtors kept adequately informed as the progress (or lack thereof) and (e) perhaps most important of all, as raised in the Debtors’ reply, was there irregularity in the actual filing of the petition and schedules? Debtors request these matters be set for evidentiary hearing. The court might venture forth on such an incomplete record as to items (a) through (d) under the theory that the cost of the inquiry might be more than the difference is worth. But item
is of a different character altogether. If the petition and schedules were filed without signatures, that is a serious offense. The court cannot proceed unless and until that threshold question is answered.
Continue for evidentiary hearing.
10:00 AM
Debtor(s):
Mariano Mendoza Represented By Richard L Barnett
Joint Debtor(s):
Mercedes Mendoza Represented By Richard L Barnett
10:00 AM
(con't from 3-27-18)
Docket 75
Tentative for 3/29/18:
Continue to May 3, 2018 at 10:00 a.m. in view of settlement?
Tentative for 11/1/17:
This objection to claim does not comply with LBR 3001-1(c)(2), which requires that a complete copy of the proof of claim be attached to the motion. But this motion is briefed and Claimant has not raised this objection. In this circumstance the Court can overlook the deficiency. The motion refers to Exhibit A being the proof of claim, so it is possible it was an oversight.
In this claim #14, Claimant asserts that it is owed $150,000 for damages caused to property that Debtors and their corporation have vacated. Debtors object to the claim, arguing that they did not cause any damage and left the property in better condition than when they received it. Debtors also accuse Claimant of trying to collect twice – Claimant has filed another claim (Claim No 13) that is based on a stipulated judgment, apparently for back rent. Claimant responds to the motion, explaining, without any supporting evidence, that there was damage and that repairs had to be made. Claimant asks that this objection be converted into an adversary proceeding.
A proof of claim ordinarily enjoys a presumption of validity, and Debtors have not offered any evidence to rebut it other than their subjective belief that they did not
10:00 AM
damage the property. But Claimant in turn offers no evidence in support either of the claim or of its response, but merely asserts that the claim is based upon damage caused and repairs that had to be made. The Court cannot make a determination on these factual questions in a summary proceeding. The Court can either instruct Claimant to go to state court to liquidate the claim (after obtaining relief from stay for that purpose) or can convert this matter to an adversary proceeding, set deadlines and liquidate the claim here. It is unclear to the court whether there is or was a pending proceeding in Superior Court which could be utilized for this purpose. The court will hear argument as to the better course.
Either lift stay for purposes of litigating in Superior Court or convert to adversary proceeding.
Debtor(s):
Mariano Mendoza Represented By Onyinye N Anyama
Joint Debtor(s):
Mercedes Mendoza Represented By Onyinye N Anyama
10:00 AM
(con't from 3-28-18)
Docket 123
Tentative for 3/28/18:
Continue to June 6, 2018 at 10:00 a.m. with expectation that a revised disclosure will be filed and considered at that time.
Debtor(s):
Mariano Mendoza Represented By Onyinye N Anyama
Joint Debtor(s):
Mercedes Mendoza Represented By Onyinye N Anyama
10:00 AM
(con't from 4-4-18)
Docket 1
Tentative for 6/27/18:
The report suggests a plan and discovery statement will be filed by July 31, 2018. Should that be a deadline per order?
Tentative for 4/4/18:
See #3 - Disclosure Statement.
Tentative for 3/20/18: Status? See #13.
Tentative for 3/7/18:
Continue to coincide with the continued date on reimposition of stay (March 20, 2018 at 10:00 a.m.)
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones
10:00 AM
Sara Tidd
10:00 AM
Docket 33
Tentative for 6/27/18: Will this be superceded?
This is the Debtors’ Motion for Approval of their Disclosure Statement as containing adequate information within the meaning of 11 U.S.C. §1125. It should be noted that this is the Debtors’ Fifth bankruptcy since 2011. Understandably, there is a degree of skepticism voiced by the parties filing oppositions. In their reply, the Debtors suggest that this Disclosure Statement is more in the nature of a first draft, and they seem to acknowledge a willingness to cooperate on the question of appraisal and a need to have further negotiations on such issues as interest rates. To assist the parties in their discussions the court notes the following points which should be addressed in any further iteration of the disclosure:
There are large questions concerning the absolute priority rule and the quantum of new value. The Debtors may be confused by its proper application in individual cases but that does not change the fact that it is unquestionably the law of the Ninth Circuit. See In re Zachary, 811 F. 3d 1191 (9th Cir 2016). Moreover, this court’s view has been in favor of this interpretation for an even longer time. See In re Kamell, 451 B.R. 505 (Bankr. C.D. Cal. 2011). So the question is not if the doctrine applies but rather how the debtor intends to meet its requirements, lest the plan be regarded as unconfirmable on its face.
This raises the second question, i.e. the quantum of new value in order to meet the "new value corollary." The Debtors in this draft of the disclosure and plan
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pick what seems to be an arbitrary sum, $15,000. But arbitrary sums will not do when the confirmation will be opposed as it is likely to be in this case.
Instead the Debtors will need to establish not only that the sum is "substantial" and "reasonably equivalent" to whatever interest is retained (See In re Ambanc La Mesa Ltd. Partnership, 115 F. 3d 650, 654 (9th Cir. 1997)) but also that the quantum of new value has been "market tested" within the meaning of Bank of America v. 201 N. LaSalle St. Ptsp., 526 U.S. 434 (1999). The La Salle court does not instruct us as to what exactly must be done to "market test", but the court must reach the conclusion that no one else would pay more for the privilege of directing these affairs in the way proposed by the Debtors.
Otherwise it can be argued that the Debtors are retaining something on account of equity, a form of intangible property in the nature of an option. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at § 1129(b)(2)(B)(ii). See also In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014). Market testing can be implemented through a variety of means, such as advertising or the retention of an investment broker. LaSalle at 458; N.N.N Parkway at 283. These issues are not strictly disclosure issues; they could be resolved at confirmation. But the court will have to have a stronger feeling that this plan has a chance for confirmation before it will authorize dissemination of a disclosure statement that assumes a new value exception to absolute priority.
In order to prove that a crammed down plan is "fair and equitable" as to dissenting classes of secured claims, the Debtors must show that the stream of promised future payments has a present value equal to not less than the value of the secured claim. 11 U.S.C. §1129(b)(2)(A)(i). In this regard the plan as written falls far short. Most of the subject properties are fully encumbered, so the secured claims are either 100% loan to value, or in the case of the most junior liens, they are behind large senior encumbrances. In either event, the
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plan imposes upon such creditors a very high degree of risk. Risk equates to interest rates; the higher the imposed risk the higher should be the rate.
Otherwise, the present value of such a stream is less than the secured claim, under the most basic principles of economics. This court has offered the "blended rate" approach as a principled expression of this basic economic concept. See In re North Valley Mall, 432 B.R. 825 (Bankr. C.D.Cal. 2010). In the draft of the plan now on file, the Debtors either offer 5% per annum fixed, or, in the case of HOAs, 0% interest. 5% might work for a conforming
loan (i.e. approximately 70% loan to value) but is not even close for creditors at the 90+% on the value totem pole. Of course, no interest at all on liens to HOAs is a non-starter. Even a riskless loan offers some interest in recognition of the time value of money. Prime borrowers have to pay at least 4.5% and even the U.S. Government offers something on its borrowings (i.e. bonds).
Further to the last point, valuations will be critical. Formal valuation orders under §506 are indispensable in the absence of stipulations.
Deny. Continue for further revisions.
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 5-02-18)
Docket 1
Tentative for 5/2/18:
Any other comments about status or filing of adversary proceeding?
Deadline for filing plan and disclosure statement: August 1, 2018
Claims bar: 60 days after dispatch of notice to creditors advising of bar date (unless already set per status report).
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
(con't from 6-13-18)
Docket 75
Tentative for 6/13/18: Status?
Tentative for 6/6/18:
These are debtor’s motions to sell real properties at 841 N. Orange St., La Habra and 27850 Aleutia Way, Yorba Linda, comprising an apartment building and residence, respectively. The motion is confusing because although both properties are described in the motion, it appears that the estate only has an offer on one, the apartment building, for the sum of $1,525,000. If there is an offer on the residence it does not appear in the pleadings. To make matters more confusing, the two motions #2 and 3 on the calendar appear to be identical. Consequently, these two motions are considered together in one memorandum.
The matter is further complicated because the properties are jointly owned. Each of debtor’s father and mother (now divorced) reportedly own a 5% interest in title. The mother consents to the sale. In contrast the father has filed written opposition. The qualified objection of Luther Burbank Savings is apparently satisfied in that it will be paid its secured claim directly from escrow. There are also reportedly four tax liens amounting to over $480,000 recorded against the interest of the father, Reuven Arad. The debtor seems to assume this complication will be ironed out merely by doing the arithmetic of applying the lien only against 5% of proceeds.
Whether this will prove true or not, the court is not prepared to say. Somehow § 363(f) is presumed to permit the sale without consent of these lienholders, either because there are enough proceeds to cover the liens or, if only the father’s
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proceeds are encumbered, that §363(f)(5) is thought to force this result. But little analysis is given. The parties spend a lot of time and ink on arguing for and against the proposition that this sale meets all of the requirements of §363(h). The father even seems to argue that he is owed some sort of charge against the property to reimburse for taxes, mortgage payment and other expenses over a 24 year period. Why this should be regarded as a secured claim despite the provisions of §544(a) is not explained.
The court does not need to delve into all of the factors because the motion is procedurally incorrect. Sale of co-owned property must be done by adversary proceeding as FRBP 7001(3) makes crystal clear. The same point has been reiterated by the Ninth Circuit. In re Lyons, 995 F. 2d 923 (9th Cir 1993). Debtor offers the flimsy argument that, well, an adversary proceeding has been initiated, # 18-01080TA. But this is hardly the point. The sale must be conducted through the adversary proceeding, which the court infers must either be after trial or at least via a Rule 56 motion, as was the case in debtor’s cited case In re Nashville Senior Living, LLC., 620 F.3d 584, 588 (6th Cir. 2010). Otherwise the Rule’s requirement for an adversary proceeding would be meaningless. This is not to say that the court believes that the elements of §363(h) are not within debtor’s grasp, or that a substantial showing has not already been made. But this motion did not meet the form or standards of a Rule 56 motion. Given the precedent directly on point, the court is powerless to grant the relief in this way.
Deny
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Movant(s):
G. Bryan Brannan Represented By
G Bryan Brannan William H Brownstein
10:00 AM
(con't from 6-13-18)
Docket 78
Tentative for 6/13/18: Status?
Tentative for 6/6/18: See Calendar # 2.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
(con't from 5-09-18)
Docket 202
Tentative for 5/9/18:
Grant. Appearance is optional.
Debtor(s):
Shahid Chaudhry Represented By Anerio V Altman
Movant(s):
Anerio V Altman Represented By Anerio V Altman
10:00 AM
(con't from 3-07-18)
Docket 185
Tentative for 6/27/18:
Report suggests a final decree motion is to be filed soon. When? Does chart in report imply that payments are in arrears?
Where is the status report?
Debtor(s):
Shahid Chaudhry Represented By Anerio V Altman
10:00 AM
(set from discl. stmt hrg held on 4-25-18)
Docket 64
Tentative for 6/27/18:
This is a hearing regarding confirmation of Debtor’s Plan of Reorganization. There are problems as illustrated in the four objections filed. Only classes 2C and 2D have voted to accept. All other impaired seven classes must be "crammed down" under §1129(b). The various objections to confirmation appear below.
The U.S. Trustee also objected to a stipulation between the Class 2C creditor Deutsche Bank and Debtor, but the objection simply states that the stipulation language should be in the text of the plan. This is correct. The plan is the operative document. Upon confirmation it controls the relationship between the parties; and a stipulation attempting to sidestep the terms of the plan is an invitation to a confusing disaster. The other objections are:
(1) Class 2B Dan Z. Bochner, a Secured Creditor
This creditor has a secured claim against Debtor in excess of
$532,979.86 based on a fully matured loan. This loan was intended by the parties to be a short-term loan. The claim is secured by (a) a second trust deed against the real property of this estate located at 167 Avenida Florencia #B in San Clemente, and (b) a first trust Deed and Assignment of Rents recorded against the real property located at 177 Avenida Cabrillo, San Clemente, which is operated by the Debtor as a Bed and Breakfast under the name "Always Inn San Clemente Bed and Breakfast." Creditor objects to the plan because it proposes to stretch out repayment of his loan to debtor for
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30 years at a below market interest rate of 5.00% per annum, fixed.
Creditor asserts that he is 81 years old, and if the plan in confirmed, he would 111 years old by the time the loan is repaid (suggesting a lack of good faith). Furthermore, Creditor believes that Debtor is at least 60 years old, meaning that Debtor would be likely into her 90s by the time this loan was repaid. Creditor also argues that the 5.00% interest rate proposed in the plan is too low to be considered fair and equitable under §1129(b)(2)(B). Creditor argues that that the appropriate rate is something around 8.75%, which reflects fair market rate plus additional risk (given Debtor’s financial history).
Creditor requests an evidentiary hearing on the appropriate interest rate.
Both sides cite this court’s decision in In re North Valley Mall but neither side much explores the application to these facts. Debtor must establish that the present value of the future stream of payments is not less than the value of the secured claim. This can be understood to mean that the proposed cram down interest rate must be sufficient to compensate for all risks, including not only risk of default but of rising interest rates as well. Thus, fixed loans are inherently more risky than floating rates. Debtor argues, without evidence, that the two items of collateral provide combined value well over 200% of the amount of the loan. This would be a lot more convincing if the court had appraisals. Analysis of the risk of being in second position on one of two properties is not analyzed except by vague reference to North Valley Mall wherein the court observed that risk should be evaluated in tranches, with junior positions inherently more risky. The rates can then be blended together to achieve a suitable cram down rate. None of that is done here. Moreover, as the creditors point out, the appropriate comparison is probably not to conforming residential loans, but to commercial loans since these appear to be rental properties. Although no evidence is presented, the court suspects that 5% is way too low as this might be the starting point for Class A notes in the commercial context on otherwise unencumbered property to borrowers with demonstrated cash flow. None of that is shown
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here.
The creditor asserts also that the plan is not feasible. A plan need not contain a guaranty of success, but must offer reasonable assurances of success. Kane v. Johns-Manville Corp., 843 F2d 636, 649 (2nd Cir. 1988). "To provide such reasonable assurance, a plan must provide a realistic and workable framework for reorganization. The plan cannot be based on ‘visionary promises;’ it must be doable." In re Made in Detroit, Inc., 299 B.R. 170 175 (Bankr. E.D. Mich. 2003). Here, creditor argues that regarding the Florencia Property and Cabrillo Property, the Debtor’s businesses do not generate sufficient income to cover the projected payments due under the proposed plan. Creditor argues that there is no evidence regarding who resides at the Florencia Property and/or whether it generates any rental income. The Bed and Breakfast (Always Inn San Clemente), as shown by pre-petition revenue, is allegedly operated/ operates at a net loss. Debtor also has insufficient cash on hand to meet its obligations and apparently has not paid anything on account in some time. Added expenses under the plan make it arguably even less likely that Debtor’s plan will succeed.
Finally, Debtor’s plan violates the absolute priority rule by failing to pay 100% of the allowed general unsecured claims (Class 4) plus interest on those claims. Zachary v. California Bank & Trust, 811 F.3d 1191 (9th Cir.
2016) ("absolute priority rule continues to apply in individual Chapter 11 reorganizations."); In re Perez, 30 F.3d 1209 (9th Cir. 1994): (Absolute priority rule was violated by Chapter 11 cram-down that paid unsecured creditors in full over 57 months without interest.) Here, Creditor asserts that Debtor’s proposed plan states that it will pay the Class 4 general unsecured creditors a total of $7,995.00 over 5 years with no interest. This by definition is not payment in full.
Class 2A, Secured Creditors Samy and Samia Antoun
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Samy Antoun, the Trustee of the Antoun Trust, holds a secured claim; he, is 85 years old and argues that severe prejudice will result if Debtor is allowed to stretch out payments for 30 years. This creditor argues that there are misstatements throughout Debtors Monthly Operating Reports (MORs). For example, although there is no evidence that Debtor has been making payments to any senior lien holder (including this one), Debtor continues to defy reality by asserting that she is only 2 months behind on the secured debt. Creditor is careful to say that this is likely just an oversight, with no intent to mislead. Still, creditor argues, this calls into question Debtor’s calculations.
Like the Class 2B Creditor, this creditor believes that this plan, on its face, cannot be confirmed. Creditor similarly argues that the plan is infeasible. This requirement is understood to mean that the Debtor must demonstrate a reasonable probability of success. In re Sunnyslope Housing, LTD Partnership, 859 F.3d 637, 646-647 (9th Cir. 2017). Here, Creditor scrutinizes the MORs and argues that these documents show that Debtor has insufficient funds to pay any mortgage. Creditor also argues that Debtor fails to keep track of her arrearages on the mortgage payments. Creditor argues that even if the Court were to grant Debtor the crammed-down interest rate she is seeking and stretch out the mortgage payments over 30 years, Debtor would still not be able to make up the mortgage shortfalls.
Creditor also makes the equitable argument that he is an individual lender 85 years old and, therefore stretching his obligation over thirty years is not in good faith. No authority for this proposition is cited, but then nor is any evidence given that a secondary market exists that would allow this creditor to sell out the investment, as debtor argues. Like the Class 2B creditor, this creditor also argues that a 5.00% crammed-down rate for a private money lender is not fair and equitable and thus inappropriate, and would like an evidentiary hearing on what the appropriate interest rate would be. Creditor
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argues that the appropriate figure is something closer to 7%, also citing In re North Valley Mall, LLC, 432 B.R. 825 (Bankr. C.D. Cal 2010).
City of San Clemente’s Objection
Creditor, The City of San Clemente (the City) is described as having a
§507(a)(8) claim. The City objects to the plan because treatment of the City’s priority claim (i) is incorrect in amount ($24,895 vs. $53,782); and (ii) does not comply with the Code because the treatment of the City’s Claim is less favorable than the treatment of general unsecured creditors, thus violating § 1129(a)(9)(C). The plan proposes to pay the City a total of $24,895.02 with
$11,391.00 paid in years 1 and 2 of the Plan, and the remainder to be "paid in a single lump-sum payment on or before the 48th month following the Effective Date."
The City asserts that the figure of $11,391.00 has no relation whatsoever to anything agreed upon by the parties, and appears to be an arbitrary number that Debtor believed she owed to the city in unpaid Transient Occupancy Taxes (TOT). The City states that an assessment of $28,886.85 (assessed from years 2013 – 2016) has been issued for the Always Inn Beach Rentals for unpaid TOT. The City asserts that an assessment for 2017 is still pending. Thus, Creditor argues, Debtor would need to increase the City’s claim to at least $53,782.77, and provide for any additional future TOT assessments.
Further, the City asserts that although the City’s Claim is treated as a § 507(a)(8) priority claim, the Plan, as proposed, does not provide for the City to receive any payment on the Effective Date of the Plan, while holders of general unsecured claims receive payments starting on the Effective Date and will be paid in full by the 20th quarterly payment (presumably this means five years).
Section 1129(a)(9)(C) provides: "with respect to a claim of a kind specified in section 507(a)(8) of this title [11 USCS § 507(a)(8)], the holder of
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such claim will receive on account of such claim regular installment payments in cash--
of a total value, as of the effective date of the plan, equal to the allowed amount of such claim;
over a period ending not later than 5 years after the date of the order for relief under section 301, 302, or 303 [11 USCS § 301, 302, or 303]; and
in a manner not less favorable than the most favored nonpriority unsecured claim provided for by the plan (other than cash payments made to a class of creditors under section 1122(b) [11 USCS § 1122(b)])[.]"
No interest is discussed so, presumably, the "as of" present value analysis has not been done, and the delay of payment favoring unsecured creditors arguably means their treatment is better. Whether "48 months from the effective date" is within the statutory definition of five years from the order for relief is not explained.
Conclusion
There are several problems and barriers to confirmation. Feasibility is very suspect. No evidence is provided on some fundamental issues such as values of collateral and, consequently, no analysis is given on the fair and equitable issues regarding cram down interest rates. The offered rates are likely too low. The City’s claim also needs attention and likely adjustment, and the treatment of Deutsche Bank needs to appear in the plan, not in peripheral documents. The absolute priority rule is likewise ignored.
Deny
10:00 AM
It would appear that most of the objection relates to the creditor's unhappiness with plan treatment, not so much on disclosure. If there has been a cash collateral violation, that should be the subject of a different motion. Regarding "unconfirmable on its face" that will likely turn on two issues: "fair and equitable" on the question of a 5% interest rate and overall feasibility. Presumably, the alleged "silence" on the lien on the Florencia property means it remains in place until the claim is paid. If something else is intended, that must be clarified. Approve and schedule confirmation date.
Debtor(s):
Freda Philomena D'Souza Represented By Michael Jones Sara Tidd
10:00 AM
Docket 561
NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
11:00 AM
(con't from 4-11-18)
Docket 1
Tentative for 6/27/18:
Continue to coincide with adequacy of discovery statement hearing in August.
Tentative for 4/11/18:
Where's the status report? Convert the Hoag entities?
Tentative for 2/14/18: Status?
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
11:00 AM
Section 361 and 363, and (3) Granting Related Relief
(con't from 4-11-18)
Docket 12
Tentative for 6/27/18:
The court is disappointed that we do not have a discovery statement in Cypress and Laguna. Consequently (as Opus argues) it is difficult to judge on this record whether a reorganization is or is not in prospect. A hard deadline in August will be set to coincide with termination of cash collateral use. The court is only willing to allow continued use based upon the Kurtz declaration. A more thorough showing, as well as a plausible plan will be needed at the August hearing.
Tentative for 4/11/18:
This is the renewed motion for use of cash collateral brought ostensibly by all of the debtors, although the context and substance of the motion suggests that the motion is really only on behalf of the two remaining operating debtors, Cypress Urgent Care, Inc. and Laguna-Dana Urgent Care, Inc. ("Cypress and Laguna"). The existing cash collateral order concludes at end of this April 2018. One of the points correctly made in the opposition is that any continued order should govern starting May, 2018 and should last about three months. Based upon the report of Chad Kurtz it would appear that operations for Cypress and Laguna have stabilized and perhaps improved. Whether the improved cash flow results in improvement net of continuing legal expenses is a closer question. But that need not detain us at this point. The court sees no reason not to continue the terms of the existing order until August 1, 2018.
Just as in the previous iterations of cash collateral authority, the debtors are
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admonished to make sure that only the expenses (including legal fees) attributable to the specific entity are paid by that entity. There has not been a substantive consolidation and, consequently, each debtor entity must enjoy only its own income and bear its own expenses, and scrupulous accounting must continue so that this result is achieved. Opus Bank makes another point. This court is concerned that if reorganization is in prospect, more tangible progress should be made in that direction, such as a disclosure statement. At conclusion of the extended cash collateral authority proposed here, it will be the anniversary of the filings (or nearly). In consequence, further extensions of the use of cash collateral should not be expected absent commensurate demonstration of progress toward reorganization. Regarding the Hoag entities, is there a reason not to convert?
Grant through August 1 on same terms.
Tentative for 2/14/18: Status?
Tentative for 12/13/17: See #6 & 8.
Tentative for 10/12/17:
These are the motions, respectively, of the debtors for continued use of cash collateral and of secured creditor Opus Bank (joined by the landlord) for dismissal. Both are considered together since the issues overlap. The central question presented to the court on these motions is remarkably similar to the one presented at the hearing on first-day motions August 4. As the court observed at the initial hearing, these are very
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challenged cases. It would appear that the value of all of the estates’ assets is probably less than the balance owed Opus. As originally stated, these cases were about getting enough time to find a sale better than the one almost consummated by the receiver prepetition. The court has allowed that time in the hope that debtors’ search would be productive. But the court cautioned that this search could not be at the sole expense and risk of Opus Bank. Stated differently, the court cannot consistent with the dictates of the Code allow debtors to "boil away" the value of the collateral through extended, losing operations.
So, two questions are front and center on these motions: (1) has the bank lost ground through operations and (2) is there a sale at hand which would be sufficiently likely and advantageous as to warrant going further, even if operations are only break even or slightly at a loss? The court examines each below.
On the question of whether the last ten weeks’ operations have been at an overall loss the answer is muddled and somewhat obscure (surprise), largely dependent on whom one believes. Each of the financial advisors expresses a different spin. The Bank argues that the increasing balance of cash is not grounds for optimism because this has been accomplished largely by failing to pay accrued operational costs. The bank points out that debtors have not met their targets in sales and projected revenue as actual receipts are down by a factor of about $101,150 or 8.1%. The net accounts receivable balance is down from $1,574,779 on the petition date to
$1,391,775 at the end of August, for a decrease of $183,004. Overall the Bank argues there has been a downward trend: from gross billings of $1,898,891 in January 2017 to $1,502,490 for September 2017; shrinking collections from $662,769 to $551,393 and gross A/R down from $2,865,039 to $2,268,055 for the same period. Moreover, more losses or "negative cash flows" of a total of $193,690 for fourth quarter 2017 are projected. Against this the debtors point to the increased cash ($281,680 to $519,413) and reportedly a bounce back of net accounts receivable from approximately $1.4 million in August to $1.45 million as of the end of September. Debtors argue that sales will increase in the oncoming flu season of December through March. Debtors also point to alleged improvements in operational efficiencies including a decline in
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write-down percentages. On the question of whether the cash balances are artificially inflated by failure to pay accruing bills, debtors deny this and argue that all payables are ‘current within terms.’ But there is some continuing obscurity on that point since reference is also made to "deals" regarding timing of payables. The court is little concerned with the narrow question of whether any payables are ‘overdue’ within adjusted terms. The real question is whether on a day by day basis accruing expenses are outstripping receipts because, eventually, there must be reconciliation, or stated differently, losing operations cannot be cured by just delaying payment until later.
While the court is still unable to pinpoint the net results of operations over the last ten weeks, its overall impression is that Opus Bank is probably, on an "all in" basis, down relatively, perhaps by approximately the $100,000 the bank has argued. Of course, none of this addresses the accrual of professional fees which is probably a multiple of that sum.
But this loss of relative position might be worth the price if a solution were at hand, such as a viable sale for more than is otherwise achievable. In this vein debtors argue that the letter of intent regarding a possible §363 sale to Marque Medical at $3.2 million, not including receivables (which might be another $1.5 million) is the answer. If such a sale could be promptly consummated this would surely result in a greater recovery for not only Opus Bank but, perhaps, other creditors as well (although this might not be that large after administrative fees and costs). But there appears to be a problem. Marque wants an assignment of the leases, and it develops that the debtors only hold subleases. The landlord has indicated that an "up the chain "consent to assignment will not be forthcoming. But as late as October 5 the buyer still seems interested.
One supposes (based on other pleadings on file) that Dr. Amster has already been considering a bankruptcy proceeding of the master lessee, an entity reportedly he controls. Maybe that can solve the problem somehow if the two estates act in tandem as the barrier to §365 assumption would, in that case, seemingly be overcome (or at least mitigated). Maybe the offer can be adjusted or improved. The debtors have finally seen that no more time is available absent adequate protection and so they offer
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$18,500 per month payments (and a few thousand to the landlord). They assert that such an amount is available from operations although this is doubted by Opus Bank.
So, what to do? The court is as dubious now (maybe more so) than it was ten weeks ago. Every prudent doubt should be indulged favoring reorganization, or an advantageous sale with the powers of §363, if that can be reasonably done without imposing undue risk on an unwilling bank. But this is a very close question given all of the issues discussed above. It does not appear that this is a case that will improve with an extended delay as operations appear to be, at best, break even. Even the debtor projects negative cash flows. Adequate protection payments would lessen but hardly eliminate the huge risk being imposed as the bank no doubt figures it’s all its collateral anyhow. But maybe a 60-day extension of the use of cash collateral, and like continuance of the dismissal motion, would be the best route assuming no precipitous decline in operations so that the current offer (or overbid) can be vetted. But the debtors should be admonished and harbor no illusions that more time is available, or that the bank won’t be in court on another shortened time motion should its tenuous position further deteriorate.
Grant use for period of 60 days pending further hearing, to coincide with continued dismissal motion, conditioned on payment of $18,500 immediately to bank and $2500 to landlord, with second monthly payments in 30 days.
-
What are the cash result from actual operations? We have the bank's estimates which are dismal. Where is the supposed better offer?
Debtor(s):
No tentative.
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
10:00 AM
Adv#: 8:17-01130 Karen Sue Naylor, Chapter 7 Trustee v. Idea Nuova, Inc.
(con't from 5-24-18)
Docket 1
Tentative for 5/24/18:
Status Conference continued to 6/28/18 at 10:00AM.
Tentative for 3/29/18:
Status conference continued to May 24, 2018 at 10:00 a.m. What is status of service/default?
Tentative for 1/25/18:
Status conference continued to March 29, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to January 25, 2018 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz
10:00 AM
Todd M Arnold Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Idea Nuova, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:13-01278 Grobstein v. Harkey et al
(con't from 2-15-18 per order approving stip. to continue entered 1-23-18)
Docket 1
Tentative for 1/30/14:
Deadline for completing discovery: May 30, 2014 Last date for filing pre-trial motions: June 16, 2014 Pre-trial conference on: June 26, 2014 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 11/14/13:
The status report is so sparse as to be meaningless. What is a reasonable discovery cutoff? May 2014?
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe
Defendant(s):
CalComm Capital, Inc. Pro Se
National Financial Lending, Inc. Pro Se
10:00 AM
Dan J Harkey Pro Se
Plaintiff(s):
Howard B. Grobstein Represented By
Kathy Bazoian Phelps
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Howard B Grobstein (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:16-01138 Bermuda Road Properties, LLC v. Hudson, III et al
(con't from 4-26-18 per order granting stip to cont. ptc ent. 4-23-18)
Docket 1
Tentative for 2/15/18:
Continued to April 26, 2018 at 10:00 a.m.
Tentative for 1/25/18:
By order entered December 15, 2017 the adversary proceeding was stayed for 60 days. Continue to February 15, 2018?
Tentative for 10/26/17:
In view of stay ordered October 23, 2017, continue to January 25, 2018.
Tentative for 8/4/16:
Deadline for completing discovery: December 1, 2016 Last date for filing pre-trial motions: December 15, 2016 Pre-trial conference on: January 12, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Joseph Roland Hudson III Represented By
10:00 AM
James C Bastian Jr Rika Kido
Defendant(s):
Joseph Roland Hudson III Pro Se
Diana Hudson Pro Se
Joint Debtor(s):
Diana Hudson Represented By James C Bastian Jr Rika Kido
Plaintiff(s):
Bermuda Road Properties, LLC Represented By Colby Balkenbush Alan J Lefebvre
Trustee(s):
Karen S Naylor (TR) Pro Se
Karen S Naylor (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
& 523(a)(6) and (2) Objection to Discharge Pursuant to 11 U.S.C. Sections 727(a)(2), 727(c)(1) & 727(c)(2)
(set at s/c held 6-15-17)
(con't from 4-12-18 per order entered 3-28-18)
Docket 1
Tentative for 6/15/17:
Why no status report? Should the court rely on the February 15, 2017 version?
Tentative for 3/2/17:
Status Conference continued to June 15, 2017 at 10:00 a.m.
Refer to Mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by June 1, 2017.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Nezamiddin Farmanfarmaian Pro Se
10:00 AM
Plaintiff(s):
Omni Steel Company, Inc. Represented By Sean A Topp
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
10:00 AM
Adv#: 8:17-01087 Karen Sue Naylor, Chapter 7 Trustee v. Vara Home USA, LLC
(set at s/c held 9-28-17) (Order on Stipulation to Continue Pre-Trial Entered 2-20-18)
Docket 1
Tentative for 9/28/17:
Deadline for completing discovery: February 28, 2018 Last date for filing pre-trial motions: March 12, 2018 Pre-trial conference on: March 29, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Vara Home USA, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
10:00 AM
Trustee(s):
Nanette D Sanders
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
11:00 AM
Adv#: 8:17-01250 Karen Sue Naylor, Chapter 7 Trustee v. Playhut, Inc.
Docket 7
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Playhut, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson
11:00 AM
James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:18-01063 Kim et al v. Kim
(con't from 6-14-18)
Docket 1
Tentative for 6/28/18: See #8
Tentative for 6/14/18:
Continue to June 28, 2018 at 11:00 A.M.
Debtor(s):
Hannah Kim Represented By
Dana M Douglas
Defendant(s):
Hannah Kim Pro Se
Plaintiff(s):
Ji Young Kim Represented By
Charles L Murray III
GF KOREA, INC. Represented By Charles L Murray III
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:18-01063 Kim et al v. Kim
Docket 9
Tentative for 6/28/18:
Grant. First Amended Judgment from Superior Court is not dischargeable.
Debtor(s):
Hannah Kim Represented By
Dana M Douglas
Defendant(s):
Hannah Kim Pro Se
Plaintiff(s):
Ji Young Kim Represented By
Charles L Murray III
GF KOREA, INC. Represented By Charles L Murray III
Trustee(s):
Karen S Naylor (TR) Represented By William M Burd
11:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 4-26-18 per order approving stip. to con't ent. 4-13-18)
Docket 83
Tentative for 6/8/17:
Status conference continued to September 7, 2017 at 10:00 a.m. with expectation that involuntary proceeding will be clarified and settlement examined.
Tentative for 2/9/17:
Status Conference continued to May 25, 2017 at 10:00 a.m. Personal appearance not required.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
11:00 AM
Defendant(s):
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se Olive Avenue Investors, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se Palm Springs Country Club Pro Se
Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se South 7th Street Investments, LLC Pro Se Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se
Van Buren Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Park Scottsdale, LLC Pro Se
El Jardin Atascadero Investments, Pro Se
Enterprise Temecula, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy
11:00 AM
NATIONAL FINANCIAL Represented By Nancy A Conroy
POINT CENTER MORTGAGE Represented By Carlos F Negrete
NATIONAL FINANCIAL Represented By Carlos F Negrete Sean A Okeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A Okeefe
M. Gwen Melanson Represented By Nancy A Conroy
RENE ESPARZA Represented By Nancy A Conroy
Dillon Avenue 44, LLC Pro Se
16th Street San Diego Investors, Pro Se
DOES 1-30, inclusive Pro Se
Altamonte Springs Church Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se
Champagne Blvd Investors, LLC Pro Se
Cobb Parkway Investments, LLC Pro Se
6th & Upas Investments, LLC Pro Se
11:00 AM
Interested Party(s):
Courtesy NEF Represented By Monica Rieder Roye Zur Murray M Helm
Jeffrey G Gomberg Rachel A Franzoia
Richard K. Diamond Represented By George E Schulman
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
Howard B Grobstein (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 4-26-18 per order approving stip. to con't ent. 4-13-18)
Docket 149
- NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
Enterprise Temecula, LLC Pro Se
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se
11:00 AM
Olive Avenue Investors, LLC Pro Se
Park Scottsdale, LLC Pro Se
Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se South 7th Street Investments, LLC Pro Se Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Palm Springs Country Club Pro Se
El Jardin Atascadero Investments, Pro Se
Dillon Avenue 44, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy Sean A OKeefe
NATIONAL FINANCIAL Represented By Nancy A Conroy
POINT CENTER MORTGAGE Represented By
Carlos F Negrete - INACTIVE - Nancy A Conroy
NATIONAL FINANCIAL Represented By
Carlos F Negrete - INACTIVE - Sean A OKeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A OKeefe
11:00 AM
M. Gwen Melanson Represented By Nancy A Conroy
RENE ESPARZA Represented By Nancy A Conroy
DOES 1-30, inclusive Pro Se
16th Street San Diego Investors, Pro Se
6th & Upas Investments, LLC Pro Se
Van Buren Investors, LLC Pro Se
Altamonte Springs Church Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se
Champagne Blvd Investors, LLC Pro Se
Cobb Parkway Investments, LLC Pro Se
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman
11:00 AM
Robert G Wilson Monica Rieder Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 4-26-18 per order approving stip. to continue mtn and s/c entered 4-13-18)
Docket 1
- NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
11:00 AM
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 4-26-18 per order approving stip to cont. mtn and s/c entered 4-13-18)
Docket 8
- NONE LISTED -
3rd Party Defendant(s):
Richard Diamond Represented By Aaron E de Leest
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Interested Party(s):
Courtesy NEF Represented By Rodger M Landau Monica Rieder Jack A Reitman Rachel A Franzoia
11:00 AM
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
Howard B Grobstein (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:17-01152 Nguyen v. National Collegiate Studen Loan Trust 2006-3 et al
Docket 31
Tentative for 6/28/18:
Dismiss for failure to prosecute.
Grant. Schedule an OSC re dismissal.
Debtor(s):
Xuan Nhi Thi Nguyen Represented By Christine A Kingston
Defendant(s):
National Collegiate Studen Loan Represented By
Scott S Weltman
United States Department of Represented By Elan S Levey
Key Bank USA Pro Se
National Collegiate Student Loan Represented By
Scott S Weltman
National Collegiate Student Loan Represented By
Scott S Weltman
11:00 AM
Educational Credit Management Represented By
Scott A Schiff
Plaintiff(s):
Xuan Nhi Thi Nguyen Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:17-01152 Nguyen v. National Collegiate Studen Loan Trust 2006-3 et al
(set at s/c held 12-7-17) (con't from 5-24-18)
Docket 1
Tentative for 6/28/18:
Dismiss for failure to prosecute.
Tentative for 5/24/18:
No pretrial stipulation? Continue to 6/28/18 at 11:00AM.
Tentative for 12/7/17:
Deadline for completing discovery: April 30, 2018 Last date for filing pre-trial motions: May 14, 2018 Pre-trial conference on: May 24, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Xuan Nhi Thi Nguyen Represented By Christine A Kingston
Defendant(s):
National Collegiate Studen Loan Pro Se
United States Department of Pro Se
Key Bank USA Pro Se
11:00 AM
Navient, et al Pro Se
Plaintiff(s):
Xuan Nhi Thi Nguyen Represented By Christine A Kingston
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:17-01152 Nguyen v. National Collegiate Studen Loan Trust 2006-3 et al
RE: [1] Complaint by Xuan Nhi Thi Nguyen against NATIONAL COLLEGIATE STUDENT LOAN TRUST 2006-3, a Delaware Statutory Trust(s), Key Bank USA NA, Navient Solutions, Inc..
Docket 1
Tentative for 6/28/18: See #13 & #14.
Debtor(s):
Xuan Nhi Thi Nguyen Represented By Christine A Kingston
Defendant(s):
National Collegiate Studen Loan Represented By
Scott S Weltman
United States Department of Represented By Elan S Levey
Key Bank USA Pro Se
National Collegiate Student Loan Represented By
Scott S Weltman
National Collegiate Student Loan Represented By
Scott S Weltman
Educational Credit Management Represented By
Scott A Schiff
11:00 AM
Plaintiff(s):
Xuan Nhi Thi Nguyen Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:18-01080 Arad v. Arad et al
(OST Signed 6-21-18)
Docket 23
Tentative for 6/28/18:
This is debtor’s motion for summary judgment brought on shortened time. Although an auction was conducted last hearing, and a price and buyer identified, the debtor has attempted to overcome the procedural infirmity that a sale of jointly-held property requires an adversary proceeding under FRBP 7001(3). Normally this would be an unreasonably short period within which to determine a contested matter, but this case may be somewhat unique in this respect. Although comments/objections have been filed by debtor’s father Reuven Arad, a joint owner, and the IRS, a lienholder, as the court reads these remarks the sale as jointly–held property is not really opposed. What is opposed is the division of proceeds. Reuven admits that partition by sale is preferable to partition in kind [See ¶13 of The Complaint for Partition attached as an exhibit to Proof of Claim filed by Reuven May 2, 2018]. In a similar vein, the IRS objects only to distribution of proceeds until the extent of its lien thereon can be determined through discovery. Spirited bidding at the last hearing pushed the price to $1,785,000, considerably higher than the starting point. It would therefore be unfortunate for all parties if this favorable sale were lost. Debtor seems to agree that proceeds net of the institutional claim of the bank and broker’s fee will remain in a segregated account until further order of the court. Consequently, it appears that all of the elements of §363(h) are fulfilled without need of further litigation, with proper disposition of proceeds awaiting further determination.
Grant
11:00 AM
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Defendant(s):
Reuven Arad Represented By
Shalem Shem-Tov
Sara Arad Pro Se
IRINA GRINFELD Represented By Shalem Shem-Tov
AMERICAN CENTER FOR Represented By Shalem Shem-Tov
DEPARTMENT OF THE Pro Se
UNITED STATES OF AMERICA Represented By
Jolene Tanner
Plaintiff(s):
Ron S Arad Represented By
William H Brownstein G Bryan Brannan
11:00 AM
(con't from 6-27-18 per ost signed 6-21-18)
Docket 1
Tentative for 6/28/18: See #16
Tentative for 5/2/18:
Any other comments about status or filing of adversary proceeding?
Deadline for filing plan and disclosure statement: August 1, 2018
Claims bar: 60 days after dispatch of notice to creditors advising of bar date (unless already set per status report).
Debtor(s):
Ron S Arad Represented By
William H Brownstein
11:00 AM
(con't from 6-27-18 per ost signed 6-21-18)
Docket 75
Tentative for 6/28/18: See #16
Tentative for 6/13/18: Status?
Tentative for 6/6/18:
These are debtor’s motions to sell real properties at 841 N. Orange St., La Habra and 27850 Aleutia Way, Yorba Linda, comprising an apartment building and residence, respectively. The motion is confusing because although both properties are described in the motion, it appears that the estate only has an offer on one, the apartment building, for the sum of $1,525,000. If there is an offer on the residence it does not appear in the pleadings. To make matters more confusing, the two motions #2 and 3 on the calendar appear to be identical. Consequently, these two motions are considered together in one memorandum.
The matter is further complicated because the properties are jointly owned. Each of debtor’s father and mother (now divorced) reportedly own a 5% interest in title. The mother consents to the sale. In contrast the father has filed written opposition. The qualified objection of Luther Burbank Savings is apparently satisfied in that it will be paid its secured claim directly from escrow. There are also reportedly four tax liens amounting to over $480,000 recorded against the interest of the father, Reuven Arad. The debtor seems to assume this complication will be ironed out
11:00 AM
merely by doing the arithmetic of applying the lien only against 5% of proceeds. Whether this will prove true or not, the court is not prepared to say. Somehow § 363(f) is presumed to permit the sale without consent of these lienholders, either because there are enough proceeds to cover the liens or, if only the father’s proceeds are encumbered, that §363(f)(5) is thought to force this result. But little analysis is given. The parties spend a lot of time and ink on arguing for and against the proposition that this sale meets all of the requirements of §363(h). The father even seems to argue that he is owed some sort of charge against the property to reimburse for taxes, mortgage payment and other expenses over a 24 year period. Why this should be regarded as a secured claim despite the provisions of §544(a) is not explained.
The court does not need to delve into all of the factors because the motion is procedurally incorrect. Sale of co-owned property must be done by adversary proceeding as FRBP 7001(3) makes crystal clear. The same point has been reiterated by the Ninth Circuit. In re Lyons, 995 F. 2d 923 (9th Cir 1993). Debtor offers the flimsy argument that, well, an adversary proceeding has been initiated, # 18-01080TA. But this is hardly the point. The sale must be conducted through the adversary proceeding, which the court infers must either be after trial or at least via a Rule 56 motion, as was the case in debtor’s cited case In re Nashville Senior Living, LLC., 620 F.3d 584, 588 (6th Cir. 2010). Otherwise the Rule’s requirement for an adversary proceeding would be meaningless. This is not to say that the court believes that the elements of §363(h) are not within debtor’s grasp, or that a substantial showing has not already been made. But this motion did not meet the form or standards of a Rule 56 motion. Given the precedent directly on point, the court is powerless to grant the relief in this way.
Deny
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Movant(s):
G. Bryan Brannan Represented By
11:00 AM
G Bryan Brannan William H Brownstein
11:00 AM
(con't from 6-27-18 per ost signed 6-21-18)
Docket 78
Tentative for 6/28/18: See #18
Tentative for 6/13/18: Status?
Tentative for 6/6/18: See Calendar # 2.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
2:00 PM
§ 1127(a)
(con't from 6-13-18)
Docket 419
Tentative for 6/28/18: Status?
Tentative for 6/13/18: Status?
Tentative for 5/23/18: No tentative
Tentative for 4/25/18: See #8.
Tentative for 3/28/18: See #17.
Tentative for 2/28/18: Is this resolved?
2:00 PM
Tentative for 1/24/18: See #10.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
Movant(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Lei Lei Wang Ekvall Robert S Marticello Robert S Marticello David A Kay
David A Kay Steven H Zeigen Steven H Zeigen Michael Simon Michael Simon Kyra E Andrassy Kyra E Andrassy
2:00 PM
(con't from 6-13-18)
Docket 451
Tentative for 6/28/18:
From what the court can tell based on just a short review, the changes discussed last hearing have been made. Does the debtor have any further points he would raise? Are we ready for dissemination?
Tentative for 6/13/18: Status?
Tentative for 5/23/18: no tentative.
Judgment Creditor’s DS generally contains adequate information, but there are some changes that should be made. Judgment Creditor has already agreed to some changes in his reply. In addition, Judgment Creditor should more clearly explain that he has agreed to subordinate his claim in the DS. A separate agreement may not be necessary, but it can be explained in a more clear fashion. Judgment Creditor should also update the DS to state that oral argument has already occurred because his DS and plan have not been disseminated to creditors yet. When it does it should contain accurate information. Debtor’s DS and plan were mailed before the oral argument occurred. Debtor also makes a good point that Judgment Creditor should make it
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clear from headings and titles that this is a liquidation plan not a reorganization plan. Otherwise, it is pretty clear from the DS what Judgment Creditor proposes to do, and other issues are best left for confirmation.
The court notes that the DS provides for discharge upon confirmation, rather than upon completion of payments. [DS p. 30] Is this proper?
Debtor(s):
Continue for amendment on these minor issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
2:00 PM
(set at conf. hrg. held 1-24-18) (con't from 6-13-18)
Docket 305
Tentative for 6/28/18:
Was there to be an evidentiary hearing regarding the Honda? Other issues?
Tentative for 6/13/18: Status?
Tentative for 5/23/18: No tentative
Tentative for 4/25/18:
This is a further hearing on confirmation of the debtor’s Fourth Amended Plan ("plan"). At the last hearing the court identified two remaining obstacles to confirmation. Those are: (1) does the plan violate the absolute priority rule in that creditors are not being paid in full although the debtor keeps his ongoing appeal, a form of "property" within the meaning of §1129(b)(2)(B)(ii) and (2) does the plan
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impermissibly separately classify the claim of the judgment creditor? The debtor requested an opportunity for further briefing. Note that in earlier hearings the court had analyzed the first question in terms of the quantum of new value assuming that the "new value" exception to the absolute priority rule existed, as described in Bank of America N.T. & S.A. v. 203 N. LaSalle St. Ptsp. 526 U.S.434 (1999). But as La Salle teaches, the new value offered by the debtor has to be more than offered by any other party, i.e. "market tested." But this version of the question has apparently faded into the background as the judgment creditor has filed a rival plan offering a potentially greater recovery to creditors.
Debtor argues in his Supplemental Brief that the prosecution of a "defensive" appeal is not a form of property at all, thus the absolute priority rule is not triggered by his keeping the appeal under his plan (and the house and car he also proposes to keep will be purchased with non-estate funds at established fair values and there is no indication the creditor is willing to pay more for these). The "not property" argument is based primarily on a statutory analysis of California law. While the effort is interesting, even admirable, the court is not convinced in the end. Debtor points out that "an appeal" is nowhere in the California Civil Code specifically identified as "property." But the question is how much can be inferred from its absence in other defined categories. Debtor argues that Civil Code §657 defines all property as either personal or real, and that "personal" property includes "things in action" under Civil Code §14(b)(3). But importantly, the statute §14(b)(3) actually says: "The words ‘personal property’ include money, goods, chattels, things in action, and evidences of debt." So, the question arises about what does "include" mean and whether the definition is exhaustive or in contrast should be read, as "include" is more usually defined, i.e. "including but not limited to….?" Civil Code §953 defines "things in action" as "a right to recover money or other personal property by a judicial proceeding." Debtor argues, perhaps logically, that a defensive appeal does not involve (or at least does not primarily involve) recovery of money. But debtor fails to
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analyze whether "personal property" might include other intangibles, particularly given the exclusive vs. inclusive question highlighted about §14(b)(3) in the discussion above. Debtor also does not analyze the tangential rights on an appeal such as recovery of costs and the like, clearly a right to obtain money if the appeal is successful. See CCP §1032(b). Debtor argues that an appeal is really just a "continuation of a judicial proceeding", open only to those aggrieved, and is purely a question of standing. Debtor then follows a rhetorical path observing that CCP § 700.180(a) provides no method of levy as against an appeal right nor does §708.410 provide a means of obtaining a lien thereon. The implication is that if one cannot levy upon the "right" or obtain a lien thereon it must not be property. No authority is offered for this assertion and the court is not sure that the conclusion follows.
Debtor’s extensive discussion of the Nevada case Butwinick v. Hepner, 128 Nev. 718 (2012) adds little to this analysis since this case stands for the unsurprising proposition that a judgment creditor cannot, through levy of its judgment, short circuit the appeal. The Butwinick court concludes that since an appeal is not a "chose in action" within the meaning of Nevada law and Nevada’s statutes provided no means of levy, the appeal right could not have been reached by the judgment creditor that way. Butwinick and debtor’s other out of state authorities (See e.g. In re Morales, 403
B.R. 629, 632 (Bankr. N.D. Iowa 2009)) also hold that a defensive appeal is not assignable. But the court is not convinced that this lack of assignability (even if that were correct under California law) necessarily means that what is not assignable is necessarily not "property" within the meaning of §1129(b)(2)(B)(ii).
But more importantly, debtor is left to argue that several Ninth Circuit authorities on point interpreting California law are just wrongly decided. Most significant among these is Mozer v. Goldman (In re Mozer), 302 B.R. 892, 895 (C.D. Cal. 2003). But this is not the only one. See also Fridman v. Anderson (In re Fridman), 2016 WL 3961303*8 (9th Cir. BAP 2016); McCarthy v. Goldman (In re McCarthy), 2008 WL 8448338, at *16 (9th Cir. BAP Feb. 19, 2008) aff’d 320 F. App’x 518 (9th Cir 2009); In re Marciano, 2012 WL 4369743 at *1 (Dist. C.D. Cal. Sept. 2012). Debtor argues that these cases other than Mozer should be disregarded
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because they are unpublished. No authority for this proposition is cited and unpublished decisions can and often do provide valuable insight if the facts and analysis are close to those on hand.
In Mozer the District Court analyzed the definition of property found at California Civil §655 which provides that property may include "…rights created or granted by statute." There is no question that the right to appeal is created by statute. See e.g. CCP §902. But more importantly for our analysis, the appeal right has real monetary value. The fact that it might not be reachable by levy or lien does not mean it has no value. And this point becomes obvious in the context of a bankruptcy. As in Mozer and the other Ninth Circuit cases interpreting California law, a trustee as the representative of the estate and successor to the debtor has the power, and even the obligation, to monetize this right (and really all assets) for the maximum benefit of creditors, if possible. Debtor argues that the issue should really be viewed not as a sale of property but one of a compromise of dispute, and that such a hypothetical sale might not be in the best interest of creditors. Neither point is persuasive.
As observed in several of the cases, the sale of rights and/or compromise of disputes in bankruptcy are closely parallel concepts and often both must be analyzed together in the same proposed transaction. Fridman 2016 WL 3961303 at *5 citing Goodwin v. Mickey Thompson Entm't Grp., Inc. (In re Mickey Thompson Entm't Grp., Inc.), 292 B.R. 415, 421 (9th Cir. BAP 2003). In Mickey Thompson the court went so far as to characterize the trustee’s motion to compromise as a sale of assets. Id. at 421. So, little persuasion lies in trying to label the process only as one of compromise and ignore the sale of property aspects. Even less persuasive is to argue that a hypothetical sale might not be in the best interests of the estate, and so therefore the entire approach is flawed. So might a compromise also not be in creditors’ interest?
But such a question must be answered in the context of the facts of a particular motion, and cannot be accepted as a general rule.
Debtor argues alternatively that even if the appeal were property it is automatically exempt and thus not figured into the §1129(b)(2)(B)(ii) analysis. To reach this conclusion debtor relies on CCP §704.210 which provides that "property
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not subject to enforcement of a money judgment is exempt, without making a claim." Debtor goes on to argue that while some judgments for money held by a judgment creditor can be reached by levy or lien, notably absent is a purely defensive appeal.
See CCP §708.410(a). The problems here are that even a defensive appeal can result in a claim for costs and other monies as discussed above and that while under California law a formal claim is not needed, bankruptcy law in contrast requires a formal and affirmative claim of exemption. See 11 U.S.C. §522(b). There has been as yet no such claim in Schedule C. See also FRBP 4003. Moreover, this "automatic exemption" argument relying on CCP §704.210 has been tried before without success in similar contexts. McCarthy, 2008 WL 8448338 at *8, citing In re Petruzelli, 139 B.R. 241, 247 (Bankr. E.D.Cal. 1992)
The court appreciates the attempt, but in the end concludes that the argument that a defensive appeal cannot be a form of property under California law (and thus bankruptcy law) is not watertight. In sum, the court is not persuaded by either debtor’s statutory analysis, or by the out of state authorities cited, that a defensive appeal is not "property" within the meaning of §1129(b)(2)(b)(ii). This conclusion is reinforced by three factors: (1) there is case law almost directly on point interpreting California law (Mozer etc.); (2) there is really no disputing that, however it is described statutorily, even a defensive appeal can yield real value, particularly in a bankruptcy context, and therefore the purpose of the absolute priority rule would be subverted under debtor’s theory if valuable things can be retained and (3) in addition to the authorities construing California law the bulk of out of state authority (mostly Texas) seem to support the conclusion that a defensive appeal can indeed be regarded as a form of property. See e.g. Croft v. Lowry (In re Croft), 737 F. 3d 372, 376 (5th Cir 2013); Valenciana v. Hereford Bi-Products Mgmt., 2005 WL 3803144 (Tex. Ct. App. 2006); Kahn v. Helevetia Asset Recovery, Inc., 475 S.W. 3d 389, 393(Tex. Ct. App. 2015).
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This is still the very close question it started out to be. The court’s previous
tentative decisions are incorporated herein. The question seems to boil down to whether In re Johnston, 21 F. 3d 323, 327 (9th Cir 1994), the only definitive Ninth Circuit authority, can be read so far as to mean that just because a liquidated claim is on appeal, and thus not final, this is sufficient "business" reason for separate classification. Another way to describe the question might be "are litigation claims automatically separately classified (classifiable)" just because the debtor disagrees with them? Of course, Johnston is distinguishable on its facts and much more obvious than is our case. In Johnston the creditor held the debtor’s guaranty of a corporate debt and collateral besides. Here there is no such complication. The only distinction seems to be the litigation source of the claim and that it is on appeal.
Further, all of the cases are uniform "thou shalt not gerrymander to obtain a consenting impaired class." See e.g. Barakat v. Life Ins. Co. of Va. (In re Barakat), 99
F. 3d 1520, 1525, cert. den. 520 U.S. 1143 (1997). The court consequently has two main problems here: 1. How is the court to view the fact that 98+% of the debt, including administrative debt, is represented by the single Hong judgment creditor? 2. Since effectively both classes of unsecured claims are being paid exactly the same (although the judgment creditor’s proceeds are being escrowed) what can possibly be the motive for this classification except to engineer the vote? Isn’t the purpose of voting in Chapter 11 to enfranchise the creditors in deciding the course of the estate? So, shouldn’t the court guard against easy artifices that don’t readily have an alternative explanation grounded in business or economic justifications? Isn’t that really the point of Barakat and Johnston? Debtor tries to make an issue of intent, arguing that intent should be determined when the plan was first filed and at that point in time the Hong creditor claimed secured status (subsequently the ORAP lien was waived in favor of unsecured status). But no authority is cited for this proposition. Moreover, the court doubts this is or should be the law. Confirmation speaks as of the date of confirmation and is guided by circumstances obtaining at that time. Debtor has the affirmative duty to show the elements of §1129(a), including the element of good faith as found at subsection (a)(3).
While not binding on Ninth Circuit courts, courts from outside the Circuit
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have held that appeals alone do not justify separate classification. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E,D,Va. 2004); In re Salem Suede, Inc., 219 B.R. 922, 933 (Bankr. Mass. 1998). Additionally, this was the implicit holding of a Nevada bankruptcy court. In re Zante, Inc., 467 B.R. 216, 219-20 (Bankr. D. Nev.
2012). Debtor’s non-Ninth Circuit or non-California authorities are somewhat less persuasive because in those cases the litigation over the claims was, importantly, in the very early stages, or the claims remained unliquidated and/or subject to substantial counterclaims. See e.g. In re Multuit Corp., 449 B.R. 323, 334-35 (Bankr.
N.D. Ill. 2011); In re Bashas’ Inc., 437 B.R. 874, 904 (Bankr. D. Ariz 2010). In contrast, here we have a liquidated claim but undistinguished from other liquidated claims excepting only the appeal. The court concludes in the end that the mere origin of a liquidated claim through litigation, and the fact that it is not final because appealed, is not, absent other factors not applicable here, a justifiable basis for separate classification. While admittedly a debtor retains substantial discretion in classification of claims, a plausible basis for the separate classification grounded in some business or economic justification apart from voting must be shown. Instead, the court here concludes the likely reason for the separate classification resides not in business or economic justification but in the desire to engineer a consenting impaired class.
Deny
Tentative for 3/28/18:
This is the continued hearing on debtor’s attempt to confirm his Fourth Amended Plan. The hearing has been continued for several times; this last continuance was to consider two points, upon which the court requested further briefing: (1) if the debtor does not keep his practice (the home and Honda having been paid for in cash new value at court-determined values) can the court confirm under 11
U.S.C. §1129(b)(2)(B)(ii) consistent with the absolute priority rule in light of the creditor having just filed a competing plan that offers more to creditors and (2) is
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there a "best interest of creditors" problem? The court also took under submission the pending question of separate classification of the Hong creditor’s claim. The court in meantime ordered the parties to mediation. Apparently, the mediation was unsuccessful.
That the mediation failed is truly unfortunate since the questions presented here are very difficult and the consequences profound.
On the question of best interest of creditors found at 11 U.S.C. §1129(a)(7), the court does not find any application since the comparison is to what creditors would receive in a hypothetical Chapter 7 liquidation. But both plans are demonstrably superior to what would likely be received in liquidation, even considering that the Fourth Amended Plan contemplates some considerable delays in payment.
But on the question of the absolute priority rule and "new value" the debtor has hit a snag. The question is not one of the court’s management of its docket, as debtor in his brief seems to assume. Rather, it is the question of whether the Fourth Amended Plan can be confirmed when the Hong creditor has filed a competing plan offering to pay to the Class Seven creditor body (about $38,690) more than the Fourth Amended Plan. Debtor proposes to pay the Class Seven creditors pro rata in four installments dependent on "Available Cash" and tied to future events such as "Litigation Resolution Date" which could be years in the future. Unless debtor succeeds on his appeal the payment percentage, and the timing of payment, is left vague and uncertain. In contrast, under the Hong plan creditors are offered an option of either 50% of their allowed claims on the effective date ("or as reasonably practicable after the Disbursing Agent has sufficient cash on hand to pay 50%...") or, alternatively, 100% tied to when the disbursing agent has accumulated and is ready to distribute $1 million. Importantly, the Hong creditors subordinate their recovery to those of the other creditors, a not-insignificant point considering they amount to about 98+% of all debt. Given the amounts alleged to be recoverable under various rights of action, it is hard not to see this as a promise of 100% or nearly so for those willing to
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wait.
All of this is important because of the teaching of the Supreme Court in Bank of America Nat’l Trust & Sav. Ass’n. v. 203 N. LaSalle St. P’ship, 526 U.S.434, 453 (1999). In LaSalle the court did not explicitly find that a "new value corollary" to the absolute priority rule actually existed. But if such a corollary existed, the LaSalle court found that the proponent of the plan must show that the quantum of new value was the most/best reasonably available. In making such a determination, the court must find that the quantum of proposed new value has been "market tested" and that no other person is willing to pay more to acquire the bundle of rights that the debtor retains under the plan. The La Salle court was vague as to how one goes about this market test, but the filing of a competing plan is one suggestion. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at §1129(b)(2)(B)(ii). Id. See also In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014).
The keeping of property can include the rights to direct actions, such as an appeal. While the debtor cites to some authorities including from other jurisdictions to the effect that "defensive" appeals are not estate property, this does not appear to be the case in the Ninth Circuit. See e.g. In re Fridman, 2016 WL 3961303 at *7 (9th Cir. BAP July 2016) citing In re McCarthy, 2008 WL 8448338 at *16 (9th Cir BAP Feb.
2008); In re Marciano, 2012 WL 4369743 at *2 (Dist. C.D. Cal. Sept. 2012). In those cited cases the trustees sold pending appeals for money. There is little doubt in the court’s mind that if a creditor wants to pay the estate to make a debtor’s appeal go away, that is a transaction that must be viewed from the standpoint of creditors unless they are paid in full from another source. The debtor must, in effect, pay at least the same in "new value" for the privilege of seeing an appeal to the end. In the Chapter 11 context, if a debtor proposes in a plan to keep an appeal, his plan must offer creditors more for that privilege (in combination with all other retained assets) than is otherwise available. Viewed this way debtor at bar has a problem. The terms of the Hong plan
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offer more to the Class 7 creditors and some of that overage could be viewed as payment for extinguishment of the appeal; but it would appear that the debtor proposes in his plan to keep the appeal going and is not offering anything to creditors for that privilege in contrast to purchase of the Denise property and the Honda.
There is also the question of separate classification. As the court has already said, this is a very close question. The 9th Circuit case law precedent is unclear respecting whether the mere fact that a claim is on appeal (and thus still disputed) should account for enough of a distinction by itself to justify separate classification. If attributes of a claim are not otherwise distinguishable such as having been guaranteed or supported by collateral, the court is left to question what is meant by the "business reasons" spoken of in cases like In re Johnston, 21 F. 3d 323, 327 (9th Cir. 1994).
Surely "business reasons" cannot mean merely that it would be more expedient if a pending appeal resolved in the debtor’s favor would improve ability to repay debt. While that might be a question of "business" the court is hard-pressed to see it as a justification. It is clear in all of the authorities that gerrymandering is not permitted, but since the court cannot look into the debtor’s mind regarding motivations, we are left to examine external reasons claimed as to why the separately classified claim is not "substantially similar" to other debt. In the case at bar this task is made even more difficult since the separately classified claim is 98+% of the body of debt. If the point of this whole inquiry is to make sure that each creditor has a meaningful vote, and to prohibit arbitrary classification as a device to reaching a consenting class, then the debtor’s plan at bar is likened to the tail wagging the dog. While it might be possible for the extremely clever counsel to succeed in effectively disenfranchising 98+% of the creditor vote by separate classification, the court cannot see its clear path to doing so in this case, particularly when the other issues mentioned above weigh against confirmation as well.
Deny
Tentative for 2/28/18:
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This is a continued hearing on confirmation of the Debtor’s Third Amended
Plan. At the court’s request the parties filed briefs on the question of separate classification. Additionally, further evidence is offered by the objecting creditors Yuanda Hong, et al ("Hong creditors") on the question of the values of the Denise property and the Debtor’s medical practice, relevant to the quantum of new value offered under the plan. The court discusses each subject below:
Separate Classification: What qualifies as proper classification of claims under §1122, or stated negatively, what is improper classification and thus rendering a plan in non-confirmable bad faith under §1129(a)(3), is an important question. Unfortunately, it is one that has engendered surprisingly little definitive authority in the Ninth Circuit. The objecting creditors have cited numerous authorities from outside of the Circuit that stand generally for the proposition that separately classifying a claim solely because it is on appeal is not in good faith, mostly because the character of the claim is not, in a legalistic sense, any different from that of the standard commercial claims.. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E.D.Va. 2004); In re Salem Suede, Inc., 219 B.R. 922 (Bankr. D. Mass 1998); In re Local Union 722 Int’l Bhd. Of Teamsters, 414 B.R. 443, 453 (Bankr. N.D. Ill. 2009); Bustop Shelters of Louisville, Inc. v. Classic Homes, Inc., 914 F. 2d 810, 811-12 (6th Cir 1990). But it is not clear that this is the law of the Ninth Circuit.
Nearly all of the cases adopt some version of the Ninth Circuit’s ruling in
Barakat v. Life ins. Co. of Va. (In re Barakat), 99 F. 3d 1520, 1525, cert. den. 520
U.S. 1143(1997), i.e., that separate classification solely to manipulate the vote to obtain a consenting class is not in good faith and will prevent confirmation. But the ambiguity begins with the statute itself. Section 1122 provides that claims may be placed together in a class only if "substantially similar." But whether all similar claims must, in turn, be classified together is not statutorily addressed. Barakat at 1524. Noting that this question has divided courts outside the Circuit, the Barakat court gives us only the limited guidance that classification (determined as a question of fact) solely to manipulate voting to obtain the consenting impaired class is a form of bad faith and is not allowed. But the Barakat court acknowledges that In re Johnston 21 F.
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3d 323, 327 (9th Cir. 1994) provides that separate classification may be justified if "the legal character of their claims is such as to accord them a status different from other unsecured creditors." Id. at 328. Further, as noted in Barakat, Johnston provides that separate classification may be justified if a "business or economic justification" is offered. Barakat at 1526 citing Johnston at 328. The Hong creditors argue correctly that both of Debtor’s cases, Johnston and In re Basha’s, Inc., 437 B.R. 874 (Bankr. D. Ariz. 2010), are factually distinguishable. In Johnston the debt arose from a guaranty, there was collateral involved and it alone among the creditor body was the subject of litigation. Similarly, in Basha’s the class of litigation claims was deservedly separate since the litigation was still in its early stages although it had been pending some time and involved "speculative" claims. In both cases the separate classification withstood scrutiny. But certainly our case is a closer question since we are dealing not with litigation generally but with a judgment on appeal. Whether this latter stage of litigation makes a crucial difference is not clear.
Debtor argues that if intent is the question he is somewhat absolved since the plan in its early iterations treated the objecting creditors’ claims as secured (by reason, one supposes, of recorded abstracts but also because that’s what the claim said) and therefore separate. Barakat can be read to primarily focus on the intent behind the classification. But neither side cites any authority on the question of what happens when, as here, the parties reach an agreement post-petition to surrender the claim of secured status (here because the claimed lien was likely a preference). Is a plan proponent then obliged to drop the separate classification in order to remain "in good faith"? Another question involves the "business or economic justification" as discussed in Barakat and Johnston. Here Debtor in effect argues that separate classification is not only economically justified, it is also very necessary to maintain an operating business on any terms while not adopting either of two unpalatable alternatives, i.e. paying claims before the appeals are resolved and the claims become final, or, alternatively, making all undisputed general unsecured claims wait for an extended period by depositing payment into an escrow on their account. Further, the very size of the Hong creditors’ claim makes it different, although it is not clear that this size question alone works in justifying different classification. The appeal adds
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some weight. But the fact that there reportedly is also still an unresolved counter claim (as reported by Debtor) of the reported parallel fraudulent conveyance action, and the charge that the judgment was amended post-petition in technical violation of the stay, might be seen as additional justifications for the separate classification. In aggregate, the court is inclined to find sufficient justification for the separate classification although it is admittedly a very close question.
The objecting creditors take issue with the valuations presented by the Debtor of his medical practice and of his residence on Denise Avenue in Orange. The values offered by Debtor are $ 5-10,000 and $756,000, respectively, supported by the declarations of Sam Biggs, CPA and John Aust, appraiser. Pinpointing the value of these becomes necessary as the Debtor proposes to keep these assets while not paying all creditors in full under the Plan. The Hong creditors have objected, so confirmation is therefore only possible under the so-called "new value" corollary.to the absolute priority rule. Debtor must under this doctrine provide new value equal to the retained assets of the estate (and not less than any other party is willing to pay). See Bank of America v.203 N. LaSalle Street Ptsp.526 U.S. 434, 456-57 (1999).
Hong creditors offer the declaration of David Hayward for the Denise property "conservatively" at $785,000. This is not far from the Debtor’s valuation but the court is disinclined to choose between these two opinions without cross examination.
Mindful of the cost of a mini trial on this issue, the court encourages a stipulation to split the difference, i.e. $770,500. Otherwise, an evidentiary hearing will have to be scheduled with opportunity for cross examination of live witnesses. Mr. Hayward’s opinion about additional value based on a lot split is too speculative for our purposes.
The business valuation is even more problematic. It is almost certain that both appraisers are off the mark. The Biggs appraisal suffers from the omission of any separate values for hard assets, such as equipment. Presumably, these have a separate value from the value of the ongoing practice, but if so, the court could not find it.
Appraiser Stake observes that something is being depreciated on tax returns,
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suggesting there is missing information. The court sees the nominal amount of $1,500 per year as an equipment "expense" in the forecast, but doubts this equates to a value for all of the existing equipment. Whether the equipment is owned or leased is also a factor. The biggest problem, of course, is what to do with a projected income analysis in the hands of a hypothetical buyer. The court has no doubt that there would be a profound fall off in that the clientele are described as mostly Chinese with limited English skills. Also, one imagines, that an OB/GYN practice has a higher than usual retention problem if/when the familiar physician becomes no longer associated. This probably is exacerbated when the language/cultural issue is also factored in. The Stake declaration strikes the court as making far too little allowance for this factor. It reads primarily just as a clinical analysis of projected income averages assuming more or less the same stream of income (a very large assumption under these facts) multiplied by some sort of capitalization or discount rate. The problem, of course, is the court cannot make a meaningful determination on this sparse record. Again the court encourages a "split the difference" approach, say $50,000, as an alternative to having a mini trial on these issues as well.
Bank of America v. 203 N. La Salle St. Ptsp.
The court has also not yet made a ruling on the question whether the Debtor’s marketing efforts to date are adequate to fix the quantum of value as demanded in the La Salle case. But the court observes that some effort was made to advertise and the Hong creditors have not filed a competing plan although they have been free to do so. The court is inclined to hold that this narrow issue (of whether anyone else would pay more) is resolved.
No tentative on confirmation pending resolution of valuations
Tentative for 1/24/18:
This is the continued hearing on confirmation of the Debtor’s Fourth Amended Plan. It continues to be vigorously opposed by the judgment creditor. While the court
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gave fairly explicit guidelines at the Nov. 29 hearing, and the plan proponent is closer than he was, the court finds the plan is still short of confirmability, for the following reasons:
Unfair Discrimination and Gerrymandering: Since In re Barrakat, 99 F. 3d 1520, 1525 (9th Cir. 1996), it has been the law of this Circuit that separate classification solely to obtain a consenting class on a plan is not permitted and is a form of bad faith under §1129(a)( 3). However, exceptions have been found where a "legitimate business or economic justification" is articulated supporting the separate classification. In re Loop 76, LLC, 465 B.R. 525, 538 (9th Cir. BAP 2012); Steelcase, Inc. v. Johnston (In re Johnston), 21 F. 3d 323, 327 (9th Cir. 1994). Moreover, there is a separate concern in evaluating a "cram down" that a plan may not "unfairly discriminate…with respect to each class of claims or interests that is impaired under…the plan." The court earlier remarked that a legitimate, non-voting basis had probably been articulated for separately classifying the judgment creditor since that claim (unlike all other unsecured creditors) was on appeal and was subject to ongoing litigation. Consequently, unlike the other unsecured claims the judgment claim is not "final." It is perfectly obvious that the entire need for reorganization may rest on the results of the appeal. But what is not sufficiently shown is the need for disparate treatment as provided under the Fourth Amended Plan. Obviously, while the claim is still contested it makes sense to not actually pay the disputed judgment claim. But there are other, better ways to mitigate the disparate treatment. All other claims start getting payments shortly after the effective date. But the dissenting judgment claim gets nothing until 120 days after the "Litigation Resolution Date," which is defined to require that all appeals be exhausted. This is a date potentially years in the future. This has two pernicious effects of concern. First, all of the risk of non-performance is imposed solely on the objecting creditor without any real basis in law for doing so. Second, this can be regarded as a sub rosa attempt to put the Litigation Trustee’s efforts into effective limbo pending the appeal since obviously no liquidation or even attempt to liquidate assets is even needed to
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fulfill the plan until all the appeals are resolved. Perhaps a better approach is to put all creditors on a truly equal footing whereby they all get a pro rata portion of a defined periodic payment, with the judgment creditor’s portion held in an escrow at interest administered by the Litigation Trustee. That way risks are evenly imposed on the creditor body, not solely on the judgment creditor.
Artificial Impairment: The objector is correct that classification of the Honda Finance creditor as the sole member of Class 2 bears some of the aroma of artificial impairment, another form of bad faith, as this court observed in In re NNN Parkway 400 26, LLC, 505 B.R. 277, 284-85(Bankr. C.D. Cal. 2014). The fact that it was incurred the day before the petition is clearly suspicious. However, this "aroma" is largely dissipated when it develops that there is another class of unsecured creditors supporting the plan comprised of several members holding an aggregate of $38,690.83 in claims. The fact that only American Express, a creditor holding only a claim of $110.64, was the only voting member cannot be attributed to bad faith of the debtor. There is no showing that these other creditors’ claims were incurred just to create an impaired class.
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Property and the practice, however. While the single advertisement in The Orange County Register is better than nothing, it seems more a mere fig leaf than anything really designed to elicit a response. Certainly, just as Kelley Blue Book is a recognized source of reliability on vehicle values, either a formal appraisal and/or perhaps a listing for 60 days would be a better source of reliable values for real estate. Debtor offers an appraisal of Mr. Aust at $756,000. The objectors want to engage Mr. Yoshikane for a second opinion. This is appropriate and if a variation of say more than 5% emerges, there should be an evidentiary hearing. On the value of the practice, the objector should have an opportunity to depose Mr. Biggs and offer an alternative valuation, if needed. But the court’s main concern on this topic is with debtor’s premise that he is retaining under the plan only those three enumerated assets. If the court is reading it correctly, debtor actually plans on keeping a great deal more in the form of making the Liquidating Trust pay the debtor’s attorney’s fees and costs on a going forward basis. Presumably, this means that the costs of the appeal are to be borne by the Trust. Since it could be argued that the appeal is being prosecuted primarily if not solely for the debtor’s benefit, this is an indirect way of debtor keeping non-exempt assets. If this reading is correct, debtor is not, in fact, observing the absolute priority rule. The court is not as concerned as it might be since the objector has not filed a competing plan.
Best Interest of Creditors: The objector also argues under §1129(a)(7) that creditors would do better in a Chapter 7 liquidation than under the plan. This may well be so, largely for the reasons articulated in ¶3 above. For debtor’s argument to succeed, one would have to conclude that paying both for Mr. Mosier and his lawyers and accountants and the ongoing appeal costs less than only a Chapter 7 trustee. This is a proposition for which there is no evidence offered. The debtor will have to propose paying for his lawyers either from exempt assets or from no-estate assets for this to work, or prove that a Chapter 7 would be more expensive. The court is less convinced by the objector’s argument that the creditor should consequently steer the litigation at its expense, however. There are countervailing concerns about who should steer
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the litigation beyond the monetary costs.
Early Discharge: Debtor proposes in the plan to obtain a discharge not on conclusion of payments, as required under §1141(d)(5)(A), but rather upon confirmation. While this can theoretically be done if "cause" is shown after notice and a hearing, the question arises whether any such cause is shown here. Debtor argues that the structure of the plan amounts to a form of collateral for the payments, citing In re Sheridan, 391 B.R. 287, 291 (Bankr. E.D.N.C. 2008), thus assuring payment. But the problem with this is that full payment is not assured in this plan despite attempts to improve recoveries if the appeal is lost. Only the right to sue for declaratory relief (and perhaps an injunction against transfer of assets) is provided. But there are a dozen ways this could still go wrong. Ms. Shen could decide to defy the injunction and put the assets in China or Japan. Since the debtor continues to make good money as a physician, the court sees no reason to discharge him until all promised payments are made.
Deny Confirmation
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Tentative for 11/29/17:
Rather than simply continuing the confirmation hearing without direction, the court will want to have a hearing focused on issues raised in the briefs but not fully answered:
In view of the objection raised in the opposition about short notice of the changes found in the Third Amended Plan, does the judgment creditor disagree that the changes are 'non material’, thus avoiding re-balloting, or need for more time to meet the arguments? It would seem that the role of the appointed trustee and fetters, if any, on his responsibility is rather material, but perhaps for no one other than the judgment creditor. Should that matter?
Has the Trust Agreement with Mr. Mosier been finalized and made available for review?
The present value analysis for cram down requires some evidence regarding interest rates and risks being imposed. Merely citing the federal judgment rate (is that where 1.5% comes from?) is wholly inadequate. While the debtor carefully includes an elastic provision that ‘such other rate as the court requires’ is offered, this does not provide any analysis or evidence that could guide the decision. It is also unclear how/whether the judgment creditor is a secured claimant and thus whether analysis of collateral value becomes relevant. But whether proceeding under §1129(b)(2)(A)(i) [secured claims] or (b)(2)(B)(i) [unsecured claims] there is an "as of the effective date" requirement on future payments which translates into a present value analysis. The federal judgment rate is manifestly not sufficient to render present value on a stream of payments such as under a plan. If that were true, in economic terms, the prime rate would be quoted consistent with the federal judgment rate instead of at 4.25% per annum. One holding a judgment presumably has some near prospect of actually levying and getting paid, so the time value of money is further distorted and judgment rates are a poor comparison. One who is obliged to wait for years under a plan has no such prospect and so imposed risk is greater and so must be compensated. This record is inadequate
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upon which to render a decision.
How is the teaching of Bank of America v.203 N. La Salle Ptsp., 526 U.S. 434, 456-57 (1999) being met here? In La Salle we are taught that to the extent that a new value exception to the absolute priority rule exists, a plan cannot be crammed down over the objection of a class of creditors on the strength of a "new value" contribution absent some ability to "market test" the amount of that contribution. As the court observed in In re NNN Parkway, LLC, 505 B.R. 277, 281-82 (2014), the Supreme Court gave us only the vaguest direction on how the market test can be accomplished in any particular case. But the court does not read the difficulty of fashioning an appropriate test to mean that the requirement can be ignored altogether consistent with the absolute priority rule. To do so is to vest in the debtor/ plan proponent a form of uncompensated property, i.e. an option, to direct or determine the amount and source of new value. Debtor attempts to close the gap regarding the family residence, but the plan merely suggests that the relatives will contribute an amount roughly equal to what they contend to be the non-exempt equity. What analysis, if any, is offered regarding the going concern/market value of debtor's medical practice for this purpose? All that is offered is the conclusory argument that as a sole practice it cannot have much value. Really? The court sees professional practice valuations all the time. One method of clarifying the new value question described in La Salle is the possibility of a competing plan. The court is not aware of the current status of the judgment creditor’s ability to propose a competing plan.
Concerning uncompensated imposed risk is the unanswered question regarding alleged community property in the wife’s name. What about the injunction against transfer of wife's alleged separate assets? Is a form of order being offered for review? Only a stipulation is referenced. How does the risk of violation of an injunction translate into cram down interest rate? One supposes that if the appeal is lost the presence of an injunction is some protection against transfers, but hardly a foolproof one. Certainly it is not the same as a
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lien. This does not mean these issues cannot be resolved; it is only to say that they are left unresolved on this record.
Continue for further hearing.
Tentative for 8/23/17:
The remaining issues are best dealt with at confirmation. Approve.
Tentative for 7/12/17:
With some amendments this FADS appears to contain adequate information. Debtor should make it clearer that an early discharge will be requested, but that if the Court does not find cause then the discharge will be entered upon completion of payments. As written the information about the Court finding cause comes at the end of the discussion of the discharge. Debtor has agreed to attach a copy of the Trust Agreement. Debtor provides a sufficient description of the litigation with the Judgment Creditor. Perhaps the plan should be amended so that it provides that the interest rate will be as described or as ordered by the Court. This leaves open the option of litigating the issue of the interest rate at confirmation. There seems to be a reasonable basis for separately classifying the unsecured claim of the Judgment Creditor because the claim is still subject to litigation and so cannot be paid on the same terms as the other unsecured creditors. Debtor should amend the DS to provide that Debtor is retaining his interest in some property. There should also be a more clear discussion of the absolute priority rule. Debtor states that he will amend the DS to make it clear that the plan does not avoid Judgment Creditor’s ORAP lien and that he will correct the errors noted by the Judgment Creditor.
Debtor(s):
Continue for clean up of these disclosure issues.
Long-Dei Liu Represented By
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Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 35
Debtor(s):
Cheryl H Hermann Represented By Christopher J Langley
Movant(s):
U.S. Bank National Association Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
BANK OF AMERICA, N.A.
Vs.
DEBTOR
Docket 15
Debtor(s):
Marquita Leilani Pierce Pro Se
Movant(s):
Bank of America, N.A. Represented By Nancy L Lee
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 10
Debtor(s):
Maria Dolores Perez Represented By
James Geoffrey Beirne
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
WEILAND GOLDEN GOODRICH LLP, TRUSTEE'S ATTORNEY FEE: $91,390.00
EXPENSES: $2,140.61
Docket 139
Debtor(s):
Great American Mint & Refinery, Represented By
Michael R Totaro Matthew Grimshaw David Wood Richard A Marshack Marshack Hays LLP
Trustee(s):
Thomas H Casey (TR) Represented By Beth Gaschen
11:00 AM
Docket 22
Debtor(s):
Ericka Lynne Zenz Represented By Leonard M Shulman
Trustee(s):
Richard A Marshack (TR) Represented By Robert P Goe
11:00 AM
Docket 2202
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Docket 2204
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Docket 2206
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01070 CMS Engineering, Inc. v. Lloyd
Docket 1
Debtor(s):
Geoffrey David Lloyd Represented By Michael W Collins
Defendant(s):
Geoffrey David Lloyd Pro Se
Plaintiff(s):
CMS Engineering, Inc. Represented By Keith F Elder
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
U.S.C. Section 510 (C); (5) For an Award of Damages Resulting from Unlawful Modification of Principal Balance of JPMorgan Chase Bank, N.A.'s Claim; and
(6) Relief from Order Avoiding Plaintiff's Lien
(set from s/c hearing held on 1-26-17)
(con't per Order Approving Joint Stipulation entered 3/21/18 )
Docket 82
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
Aleli A. Hernandez Pro Se
Virgil Theodore Hernandez Pro Se Virgil Theodore Hernandez and Aleli Pro Se
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo
10:00 AM
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Adv#: 8:17-01127 Karen Sue Naylor, Chapter 7 Trustee v. Candyrific, LLC
Docket 51
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Candyrific, LLC Represented By Scott A Schiff
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner
11:00 AM
Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:30 AM
CAPITAL ONE AUTO FINANCE
Vs.
DEBTOR
Docket 109
Tentative for 7/10/18:
Grant. Appearance is optional.
Debtor(s):
Thomas Alan Valenzuela Represented By Gary Leibowitz
Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 61
Tentative for 7/10/18:
Grant. Appearance is optional.
Debtor(s):
Danilo Dimayuga Lumbera Represented By Raymond Perez
Joint Debtor(s):
Gregoria Perfinan Lumbera Represented By Raymond Perez
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 64
Tentative for 7/10/18:
Grant. Appearance is optional.
Debtor(s):
Lydia Mawhinney Represented By Christine A Kingston
Movant(s):
Deutsche Bank National Trust Represented By April Harriott Seth Greenhill Sean C Ferry
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
Vs.
DEBTORS
Docket 39
Tentative for 7/10/18: Grant unless current.
Debtor(s):
Sean Patrick Lohr Represented By Christopher J Langley
Joint Debtor(s):
Veronica Lohr Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 6-26-18)
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTORS
Docket 75
Tentative for 7/10/18: Status?
Tentative for 6/26/18: Grant unless current.
Debtor(s):
Guy A. Rojo Represented By
Joseph A Weber
Joint Debtor(s):
Eva P. Rojo Represented By
Joseph A Weber
Movant(s):
Deutsche Bank National Trust Represented By Gilbert R Yabes Merdaud Jafarnia Nancy L Lee Alexander K Lee
10:30 AM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 6-19-18) [ AS A HOLDING DATE ]
U.S. BANK TRUST, N.A. Vs.
DEBTOR
Docket 58
Tentative for 6/19/18:
Grant unless current or APO.
Debtor(s):
Geraldine Arguelles Represented By Brad Weil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 7-3-18 per court order)
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 35
Tentative for 7/10/18:
Grant unless current or APO.
Debtor(s):
Cheryl H Hermann Represented By Christopher J Langley
Movant(s):
U.S. Bank National Association Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 7-3-18 per court order)
BANK OF AMERICA, N.A.
Vs.
DEBTOR
Docket 15
Tentative for 7/10/18:
Grant. Debtor's appearance is excused.
Debtor(s):
Marquita Leilani Pierce Pro Se
Movant(s):
Bank of America, N.A. Represented By Nancy L Lee
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
BAYVIEW LOAN SERVICING, LLC
Vs DEBTOR
Docket 17
Tentative for 7/10/18:
Grant. Excuse Debtor's appearance.
Debtor(s):
Marquita Leilani Pierce Pro Se
Movant(s):
Bayview Loan Servicing, LLC., as Represented By
Erin M McCartney
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
ENTERPRISE FLEET MANAGEMENT
Vs DEBTOR
Docket 82
Tentative for 7/10/18:
Grant. Appearance optional.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
Enterprise Fleet Management, Inc. Represented By
Michael I Gottfried
10:30 AM
(con't from 7-3-18 per court order)
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 10
- NONE LISTED -
Debtor(s):
Maria Dolores Perez Represented By
James Geoffrey Beirne
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
(OST Signed 7-2-18)
Docket 9
Tentative for 7/10/18:
Per OST, Opp is due at hearing.
Debtor(s):
Noah Caplan Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 4
Tentative for 7/10/18:
The court agrees with the Respondent that "some extraordinary expenses" alone, without some elaboration or foundation, does not carry the burden of proof, particularly given this debtor's history of failed Ch. 13s. This is Debtor's 4th case since 2009.
Deny
Debtor(s):
Rose M Magana Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Docket 12
Tentative for 7/10/18:
Grant with 180-day bar on refiling.
Debtor(s):
Miguel Barajas Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
LOBEL WEILAND GOLDEN FRIEDMAN LLP, ATTORNEY FOR TRUSTEE HAHN FIFE & COMPANY, LLP , ACCOUNTANT FOR TRUSTEE INDEPENDENT MANAGEMENT SERVICES, OTHER
INTERNATIONAL SURETIES, LTD., OTHER
STATE OF CALIFORNIA FRANCHISE TAX BOARD, OTHER
Docket 70
Tentative for 7/10/18:
In re FireForge, Inc., #13 @ 11:00 a.m. July 10. 2018
This is the Trustee’s Final report accompanied by the first and final fee applications of her counsel, Weiland Golden & Goodrich LLP and of her adjustor/field agent Independent Management Services. The applications of the Trustee and Independent Management are approved as they are unremarkable, although the court asks that the Trustee take to heart the comments below.
This is an administratively insolvent case, and, very regrettably, not even nearly so. The Weiland firm seeks allowance of $59,000 in fees and
$644.76 in costs. Unfortunately, the Trustee has only $18,046 on hand. So, effectively, a fee three times the whole amount of the estate is requested. The
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Weiland applicant suggests subordination to the Franchise Tax Board and other creditors, plus a carve-out of $1000, so that unsecured creditors other than the professionals and FTB can get something. While the gesture is noble, the $1000 is probably more effort than it is worth, and the court suggests that the Weiland firm do all work necessary to assist the Trustee in making distributions, without charge, only if she elects to attempt payment of small dividends.
The court takes the time to write not because the case is administratively insolvent. That sadly happens from time to time. What is sorely lacking is an explanation of what happened. And by this is not meant the usual dry, featureless recitation of sterling qualifications and meticulous time records from the firm’s form pleadings, cut and pasted for this case. That is merely an exercise in arithmetic and largely unhelpful. The case was an effective disaster and somehow, somewhere, someone should have seen this coming. The court fully understands (because it has been there, so to speak) that cases sometimes don’t turn out as planned and no one can predict adversities that often come out of nowhere but still must be dealt with. But the court does not understand the failure after the fact (in the fee application) to explain it, and to give some reassurance that the best possible decisions were made under the circumstances but the result could not have been helped. Was it a failure of an auction to bring an expected price? Was unavoidable and difficult litigation required? In other words, the average creditor picking up this application ought to have, at the very least, some explanation of what happened and why everything the Trustee has acquired is going to her professionals. Otherwise the usual bad name that bankruptcies have acquired, i.e. that they only are run for the benefit of the professionals, will persist. The court is generally receptive to full payment for professionals who tried but, due to unforeseen circumstances, cannot in the end deliver a meaningful result for creditors; but those applicants should have the courage to defend their efforts, in writing, and not pretend that the case is not what it obviously is or perhaps hope the court won’t notice. The Trustee has a
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necessary role here too. No Trustee likes to stand before the court on a case like this one. But it comes with the territory. What the court wants, however, is an assurance that reasonable oversight was exercised, decisions made were reasonable at the time and the best was done to avoid this kind of result.
What should have been in writing can now be explained in person.
Allow Trustee and Independent Management’s fees and costs as prayed. Independent Management’s appearance is excused. No tentative as to Weiland Golden’s application.
Debtor(s):
FireForge, Inc. Represented By Matthew J Olson
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello
11:00 AM
(con't from 7-3-18 per court order)
WEILAND GOLDEN GOODRICH LLP, TRUSTEE'S ATTORNEY FEE: $91,390.00
EXPENSES: $2,140.61
Docket 139
Tentative for 7/10/18:
Allow as prayed. Appearance optional.
Debtor(s):
Great American Mint & Refinery, Represented By
Michael R Totaro Matthew Grimshaw David Wood Richard A Marshack Marshack Hays LLP
Trustee(s):
Thomas H Casey (TR) Represented By Beth Gaschen
11:00 AM
(con't from 7-3-18 per court order)
Docket 22
Tentative for 7/10/18: Grant.
Debtor(s):
Ericka Lynne Zenz Represented By Leonard M Shulman
Trustee(s):
Richard A Marshack (TR) Represented By Robert P Goe
11:00 AM
(set from evidentiary hrg held on 1-26-16)
(con't from 5-29-18 order approving stipulation entered 5-29-18)
Docket 105
Tentative for 5/29/18: Status?
Tentative for 2/27/18:
What would the Trustee suggest be done? Passport in the custody of the Marshal?
Tentative for 10/3/17:
The issue of who holds Debtor's passports still needs to be addressed.
Tentative for 8/1/17: Status?
Tentative for 4/25/17: Updated status?
11:00 AM
Tentative for 7/7/16:
Status? Is Ms. Olson retaining counsel or not?
Tentative for 6/7/16: Status?
Tentative for 4/28/16:
Status? The court is evaluating Debtor's efforts to purge her contempt.
Tentative for 4/7/16:
The trustee's report filed April 6 is not encouraging.
Tentative for 3/29/16: Status?
Tentative for 3/15/16:
Status? The court expects discussion on a workable protective mechanism as requested in paragraph 7 of the order shortening time.
Tentative for 1/19/16:
A status report would be helpful.
11:00 AM
Tentative for 1/5/16:
No tentative. Request update.
Revised tentative for 11/5/15:
This matter is being immediately transferred to Judge Albert, who will hear the matter as scheduled at 10:00 a.m. in Courtroom 5B. A separate transfer order will issue shortly.
************************************************************************* Tentative for 11/5/15:
Physical appearances are required by all parties, including Debtor, in Courtroom 5C, located at 411 West Fourth Street, Santa Ana, CA 92701.
Debtor(s):
Jana W. Olson Represented By Thomas J Polis
Movant(s):
Passport Management, LLC Represented By Philip S Warden
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
11:00 AM
Docket 286
Tentative for 5/29/18: Status?
Tentative for 2/27/18: Status?
Tentative for 10/3/17: See #14.
Tentative for 8/1/17:
Status? Where should passports be kept?
Tentative for 4/25/17: Updated status report?
11:00 AM
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16: Status?
Tentative for 5/12/16:
The court has two concerns: (1) by now hopefully the Trustee has more particularized descriptions of the exact items including records to be turned over (e.g. all monthly statements of Bank of America Account ). Some or even most may still not be known to the trustee, but all specificity should be given where possible preliminary to a contempt charge and (2) how do we incorporate mediation efforts before Judge Wallace into this program. This court is reluctant to enter any order that would short circuit that effort.
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
Ashley M Teesdale
11:00 AM
(con't from 5-29-18 order approving stipulation entered 5-29-18)
Docket 0
Tentative for 5/29/18: Status?
Tentative for 2/27/18: Status?
Tentative for 10/3/17: See #14.
Tentative for 8/1/17: Status?
Tentative for 4/25/17:
No tentative. Court will hear updated status report from parties.
11:00 AM
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16: Status?
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays
Ashley M Teesdale
10:00 AM
Docket 1
Tentative for 7/11/18:
Deadline for filing plan and disclosure statement: October 31, 2018
Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: August 31, 2018
Debtor(s):
Kimberly Sue Cardenas Represented By Brett Ramsaur
10:00 AM
(con't from 6-13-18)
Docket 332
Tentative for 7/11/18: See # 3
Tentative for 6/13/18:
Continue to July 11, 2018 at 10:00AM.
Debtor(s):
CYU Lithographics Inc Represented By John H Bauer
10:00 AM
Docket 334
Tentative for 7/11/18: Grant.
Debtor(s):
CYU Lithographics Inc Represented By John H Bauer
10:00 AM
(con't from 2-28-18)
Docket 105
Tentative for 2/28/18:
Continue approximately 120 days.
Tentative for 1/24/18: Why no status report?
Tentative for 8/23/17:
Continue for further status in approximately 120 days.
Debtor(s):
Michael Frederic Gellerman Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Denise Walz Gellerman Represented By Michael Jones Sara Tidd
10:00 AM
Docket 93
Tentative for 7/11/18:
The Debtor objects to the claim of Reuven Arad filed May 2, 2018 on the basis that a holographic signature was not given, nor were sufficient supporting documents attached. Debtor seemingly argues that the amended claim filed on June 27 does not cure these defects, perhaps because this filing was beyond the bar date.
Debtor's arguments are unpersuasive. The lack of a holographic signature is cured as an amended claim relates back. The failure to attach supporting documents would likewise be cured. The Rule 3001(c) requirement goes to the prima facie validity, not a per se disallowance. Moreover, the robust doctrine of informal proofs of claim (See e.g. In re Fish, 456 B.R. 413, 417-18 (B.A.P. 9th Cir. 2011) would likely save the claim in any event.
As a practical matter, shouldn't the determination of allowance be handled in the pending adversary proceeding?
Overruled.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
$162,235.66
Docket 90
Tentative for 7/11/18:
This is debtor's objection to the claim of Danielle Arad. But there is an amended claim which relates back. The amended claim has attached a
$100,000 note signed by Reuven Arad, but referencing that it is secured by 841 N. Orange Street, La Habra, which if it is property of the estate, may suffice to establish a secured claim even if no unsecured claim can be made.
More information is needed. No tentative.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
U.S.C. section 1112 .
Docket 591
Tentative for 7/11/18: Off calendar as moot.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar Teresa C Chow
10:00 AM
(con't from 6-27-18)
Docket 561
Tentative for 7/11/18: Off calendar as moot.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
10:00 AM
(con't from 6-28-18) HOLDING DATE
Docket 451
Tentative for 7/11/18:
Parties were to discuss any remaining issues on the disclosure statement. Status?
Tentative for 6/28/18:
From what the court can tell based on just a short review, the changes discussed last hearing have been made. Does the debtor have any further points he would raise? Are we ready for dissemination?
Tentative for 6/13/18: Status?
Tentative for 5/23/18: no tentative.
Judgment Creditor’s DS generally contains adequate information, but there are some changes that should be made. Judgment Creditor has already agreed to some changes
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in his reply. In addition, Judgment Creditor should more clearly explain that he has agreed to subordinate his claim in the DS. A separate agreement may not be necessary, but it can be explained in a more clear fashion. Judgment Creditor should also update the DS to state that oral argument has already occurred because his DS and plan have not been disseminated to creditors yet. When it does it should contain accurate information. Debtor’s DS and plan were mailed before the oral argument occurred. Debtor also makes a good point that Judgment Creditor should make it clear from headings and titles that this is a liquidation plan not a reorganization plan. Otherwise, it is pretty clear from the DS what Judgment Creditor proposes to do, and other issues are best left for confirmation.
The court notes that the DS provides for discharge upon confirmation, rather than upon completion of payments. [DS p. 30] Is this proper?
Debtor(s):
Continue for amendment on these minor issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
Adv#: 8:17-01104 Ingle et al v. Ocampo et al
(con't from 4-26-18)
Docket 1
Tentative for 7/12/18: See # 11.
Tentative for 4/26/18:
Should we continue for a period sufficient to bring a Rule 56 motion?
Tentative for 2/1/18:
See #13. Continue approximately 45 days for further status conference.
Tentative for 10/26/17:
Status conference continued to January 25, 2018 at 10:00 a.m. allowing motion for summary judgment in meantime. What result from mediation ordered last hearing?
Tentative for 8/31/17:
Status conference continued to November 9, 2017 at 10:00 a.m.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by October 31, 2017.
10:00 AM
Debtor(s):
Pedro Souza Represented By
Filemon Kevin Samson III
Defendant(s):
Carmela Morales Ocampo Pro Se
Pedro Souza Pro Se
Joint Debtor(s):
Carmela Morales Ocampo Represented By
Filemon Kevin Samson III
Plaintiff(s):
Sandra Ingle Represented By
Desiree V Causey
Mary Louise Ingle Represented By Desiree V Causey
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:17-01156 Goe & Forsythe, LLP v. Roebuck et al
(con't from 2-15-18)
Docket 1
Tentative for 2/15/18:
Why don't we have defendant input on status report? Continue 30 days for that reason.
Tentative for 12/14/17:
Status conference continued to February 15, 2018 at 11:00 a.m. to coincide with motion to quash.
Debtor(s):
Anchor R&R, LLC Represented By Charity J Miller Robert P Goe
Defendant(s):
Teresa Roebuck Pro Se
Michael Rene Rodarte Pro Se
Plaintiff(s):
Goe & Forsythe, LLP Represented By Robert P Goe Charity J Miller
10:00 AM
Adv#: 8:18-01001 Tender Care 24/7 Home Health, Inc. et al v. Misa
(con't from 3-29-18)
Docket 1
Tentative for 7/12/18:
Status conference continued to September 13, 2018 at 10:00AM for purpose of obtaining Superior Court judgment.
Tentative for 5/31/18:
Status Conference continued to July 12, 2018 at 10:00am. Notice to provide that failure to appear may result in striking of answer and entry of default judgment.
Tentative for 3/29/18:
In view of the parallel Superior Court case, should a relief of stay be granted with moratorium of this action pending a judgment in Superior Court?
Debtor(s):
Maria T. Misa Represented By
W. Derek May
Defendant(s):
Maria T. Misa Pro Se
Plaintiff(s):
Tender Care 24/7 Home Health, Inc. Represented By
10:00 AM
Carol G Unruh
Perla Neri Represented By
Carol G Unruh
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:18-01037 Papac v. Speckmann
(another summons issued 2-14-18)
(con't from 5-3-18)
Docket 1
Tentative for 7/12/18: Prove up?
Tentative for 5/3/18:
Status Conference continued to July 12 at 10:00 a.m. with expectation that prove up will occur in meantime.
Debtor(s):
John K. Speckmann Represented By Christine A Kingston
Defendant(s):
John K Speckmann Pro Se
Plaintiff(s):
Linda Papac Represented By
Shelly L Hanke
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:12-01330 Casey v. Ferrante et al
(cont'd from 6-7-18 per order signed 6-4-18))
Docket 724
Tentative for 12/14/17:
Was this case settled? If not, where is joint pre-trial stipulation?
Tentative for 2/2/17:
Deadline for completing discovery: August 1, 2017
Last Date for filing pre-trial motions: September 1, 2017 Pre-trial conference on September 28, 2017 at 10:00 am
Tentative for 6/23/16:
This is the motion of Cygni Capital, LLC and Cygni Capital Partners, LLC (collectively "Cygni") for judgment on the pleadings under Rule 12(c). Defendant Ferrante joins in the motion but offers no additional substance. A motion for judgment on the pleadings may be granted only if, taking all the allegations in the pleading as true, the moving party is entitled to judgment as a matter of law. Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001); Fleming v.
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Pickard, 581 F.3d 922, 925 (9th Cir. 2009). For purposes of a Rule 12(c) motion, the allegations of the non-moving party are accepted as true, and construed in the light most favorable to the non-moving party, and the allegations of the moving party are assumed to be false. Hal Roach Studios, Inc. V. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989); Fleming v. Pickard at 925.
The Second Amended Complaint ("SAC") contains claims for turnover under section 542 and declaratory relief. The Trustee in the SAC alleges that Debtor has hidden and concealed assets in various shell entities, including Cygni, that are controlled by his associates as strawmen, and are established to perpetrate a fraud on Debtor’s creditors. [SAC ¶ 39] It is alleged that many of these entities share the same office address. [Id. at ¶ 40]. In the turnover claim, the Trustee in the SAC alleges that the assets held by each of these entities are held for Debtor’s benefit and that he possesses equitable title. [Id. at ¶ 75]. The Second Claim is for declaratory relief and seeks a determination that each of the entities is the alter ego of Debtor and the bare legal title of any assets can be ignored. [Id. at ¶ 83].
Movants argue that there is no "substantive alter ego" or "general alter ego" theory recognized under California law. Rather, movants argue that the alter ego doctrine as expressed in California is purely procedural, i.e. merely used to implement recovery on a separate theory of recovery. For this proposition movants cite Ahcom, Ltd. v. Smeding, 623 F. 3d 1248, 1251 (9th Cir. 2010). Movants also cite three other cases which they contend are the controlling authority in this area: (1) Stodd v.
Goldberger, 73 Cal. App. 3d 827 (4th Dist. 1977); (2) Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290 (1985) and (3) Shaoxing City Huayue Imp. & Exp. v. Bhaumik, 191 Cal. App. 4th 1189 (2nd. Dist 2011). Movants argue that since the Trustee has not alleged some independent theory of recovery, such as fraudulent conveyance or conversion, there is no legally cognizable purpose for application of alter ego. Apparently, in movant’s view, declaratory relief is not a suitably independent theory of recovery.
The court is not so sure.
First, the court agrees that the law in this area is somewhat unclear, contradictory and bewildering to grasp in its full complexity. Attempting to order all
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the intricacies of "indirect outside piercing" and the like can give one a headache. However, since each of the authorities cited by the movants is distinguishable in one or more key aspects, and since each case decides a narrower and somewhat different problem from the one presented at bar, the court is not persuaded that the law is quite as limited and cramped as is now urged by the movants. To understand this conclusion, one must first consider the purpose of the alter ego doctrine, at least as it was classically formulated. This purpose is perhaps best expressed by the court in Mesler v. Bragg Management, one of movant’s cited cases, concerning the allied doctrine of "piercing the corporate veil" :
"There is no litmus test to determine when the corporate veil will be pierced: rather the result will depend on the circumstance of each particular case. There are, nevertheless, two general requirements: ‘(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow." (Citing Automotriz etc. de California v. Resnick (1957) 47 Cal. 2d 792, 796).
And ‘only a difference in wording is used in stating the same concept where the entity sought to be held liable is another corporation instead of an individual. ‘citing McLoughlin v. L. Bloom Sons Co., Inc., 206 Cal. App. 2d 848, 851 (1962)….The essence of the alter ego doctrine is that justice be done. "What the formula comes down to, once shorn of verbiage about control, instrumentality, agency and corporate entity, is that liability is imposed to reach an equitable result…thus the corporate from will be disregarded only in narrowly defined circumstance and only when the ends of justice so require.’" (internal citations omitted)
38 Cal. 3d at 300-01
A similar sentiment was expressed in In re Turner, 335 B.R. 140, 147 (2005) concerning the related question of "asset protection" devices:
"However, an entity or series of entities may not be created with no
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business purpose and personal assets transferred to them with no relationship to any business purpose, simply as a means of shielding them from creditors. Under such circumstances, the law views the entity as the alter ego of the individual debtor and will disregard it to prevent injustice."
These statements accord with the court’s general understanding. Corporate
form is a privilege, not a right. Those who abuse the corporate form and disregard its separateness in their own activities and purposes can hardly expect the law to uphold the shield of separateness when it comes to the rights of creditors. And the court understands that the alter ego doctrine is an equitable remedy highly dependent upon and adaptable to the circumstances of each case. So the question becomes whether, as movants contend, the law in California has departed from these classic precepts in some way fatal to the Trustee’s case. The court concludes that the answer is "no" for the following reasons.
First, let us consider movants principal case, Ahcom, Ltd. v. Smeding. The facts of Ahcom are adequately stated at p. 6 of the Reply. But Ahcom is primarily a standing case. The defendant shareholders of the corporate judgment debtor argued that the judgment creditor had no standing to pursue them as alter egos of the debtor corporation as that was the sole domain of the bankruptcy trustee. The Ahcom court concluded that under those facts the shareholders’ argument presumed that the trustee had a general alter ego claim precluding individual creditors from asserting the same. The Ahcom court goes on to note that "no California court has recognized a freestanding general alter ego claim that would require a shareholder to be liable for all of a company’s debts and, in fact, the California Supreme Court state that such a cause of action does not exist. " 623 F. 3d at 1252 citing Mesler , 216 Cal. Rptr. 443. But as noted above, there is other language in Mesler and cases cited by the Mesler court that seems supportive of the Trustee’s theory that the doctrine of alter ego is adaptable to circumstances. Of course, our case is the inverse of Ahcom. In our case it is not an attempt to hold the debtor as a shareholder liable for the debts of the corporation, but rather to disregard the corporation altogether as a fraudulent sham.
There is (or at least may be) in this a distinction with a difference. The Trustee’s case
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can be construed not so much as an attempt to visit liability onto a corporation under a general alter ego claim but to urge that in justice and equity the corporate privilege should be withdrawn and disregarded altogether as a deliberate device to frustrate creditors. Although the opinions in CBS, Inc. v. Folks (In re Folks), 211 B.R. 378, 387 (9th Cir. BAP 1997) and the similar In re Davey Roofing, Inc., 167 B.R. 604, 608 (Bank. C.D. Cal. 1994) are roundly criticized in Ahcom, the court is not persuaded that Ahcom can be cited for the proposition that a fraudulent sham corporations need to be honored because the bankruptcy trustee lacks a "general alter ego" right of action, or that Folks is not good law, at least in some circumstances. This is a remarkable and unnecessary departure from what the court understands to be established law.
Mesler has already been discussed above. In the court’s view, it is not properly cited for the proposition that there is no such thing as "general alter ego" claim under any circumstances. The actual holding of Mesler is that "under certain circumstances a hole will be drilled in the wall of limited liability erected by the corporate form: for all purposes other than that for which the hole was drilled the wall still stands." 39 Cal 3d at 301 In Mesler it was decided that a release of the corporate subsidiary did not necessarily release the parent who was alleged to be an alter ego. This merely reinforces the notion that alter ego is an equitable doctrine heavily dependent on circumstances and confined to what is necessary to effect justice.
Stodd v. Goldberger is likewise not determinative. It is more properly cited for a more limited proposition, i.e., that an action to disregard a corporate entity or to impose the debts of the debtor corporation upon its principal cannot be maintained absent some allegation that some injury has occurred to the corporate debtor. In this a trustee does not succeed to the various claims of creditors unless they are claims of the estate. But facts of Stodd are different from what is alleged in the case at bar. In effect, the Trustee here alleges that all of the assets of various sham entities belong in truth to the debtor and hence to the estate, and he seeks a declaratory judgment to this effect. Actually, Stodd includes at 73 Cal. App. 3d p. 832-33 a citation to the more general principles as quoted above that the two indispensable prerequisites for
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application of alter ego are: (1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that if the acts are treated as those of the corporation alone, an inequitable result will follow. Citing Automotriz etc. de California v. Resnick, 47 Cal. 2d at 796. The Trustee’s complaint would seem to fall well within those parameters.
Lastly, we consider Shaoxing City Huayue Imp. & Exp. v. Bhaumik. Shaoxing in essence merely repeats the holding of Stodd that an allegation giving the estate a right of action against the defendant is a prerequisite to imposition of alter ego liability. The plaintiff creditor sued the corporation ITC and included allegations that the shareholder, Bhaumik, was the corporation’s alter ego. The shareholder’s argument that the action was stayed by the corporation’s bankruptcy, or that the creditor lacked standing in favor of the corporate bankruptcy trustee, failed for the same reasons articulated in Stodd, i.e., that the trustee has no standing to sue on behalf of creditors but must address wrongs done to the corporation itself. The Shaoxing court at 191 Cal. App. 4th at 1198-99 goes on to state the doctrine of alter ego as a procedural question thusly: "In applying the alter ego doctrine, the issue is not whether the corporation is the alter ego of its shareholders for all purposes, or whether the corporation was organized for the purpose of defrauding the plaintiff, but rather, whether justice and equity are best accomplished in a particular case, and fraud defeated, by disregarding the separate nature of the corporate form as to the claim in that case. " citing Mesler, 39 Cal. 3d at 300. But the court does not read this to mean that in extreme cases (and this is alleged as an extreme case) the court cannot be called upon to consider the possibility that corporations and bogus entities, owned by straw men, cannot be called out for what they really are. Indeed, the language cited suggests that is still the case. Moreover, the court reads the Second Amended Adversary Complaint in this case as meeting all of the requirements. The particularized harm to the debtor, i.e. Ferrante (or more correctly his estate), is alleged to be in creation of bogus loans and artificial entities designed to create apparent (but not real) separation of the estate from its assets while preserving to the person of Ferrante and his family members (and not the estate) beneficial interest in very substantial assets which in truth and equity should be liquidated for his creditors.
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Trustee seeks a declaratory judgment to this effect. The principles of equity are not so constrained as to deny the Trustee access to the court in his attempt to unwind the alleged clever maze of overlapping and interrelated entities to get to the reality of the situation. All of the cases hold that application of the doctrine is dependent on the circumstances, and the circumstances here are that debtor has allegedly woven an almost impenetrable maze of entities. The Trustee seeks assistance from the court in separating reality from fiction. That is all that is required.
Lastly, the court should address what may be the most problematic authority cited by the movants (even though it was not described as one of the determinative cases). That is Postal Instant Press, Inc. v. Kaswa Corporation, 162 Cal. App. 4th 1510, 1518-20 (2008). The Postal court discusses "outside reverse piercing", i.e. "when fairness and justice require that the property of individual stockholders be made subject to the debts of the corporation…" (and presumably the reverse of same). In doubting that such a doctrine exists under California law, the Postal court discusses some of the inherent problems in disregarding the corporate form, such as impinging on the rights of innocent shareholders when the corporation is alleged to be the alter ego. Mostly the Postal court declined to embrace such a doctrine because there was a less invasive remedy available, i.e., levy upon the shares to exercise the rights the obligor shareholder might enjoy in the alleged alter ego corporation. The Postal court also held that in most inverse cases transfer of personal assets to the corporation by the shareholder could be dealt with under traditional claims of fraudulent conveyance and/or conversion. But, of course, ours is a different case and of an entirely different order. What is alleged here is a brazen and wholesale creation of numerous fraudulent entities operated for years by strawmen. Ferrante is alleged to have no shares that might be levied upon. And while it might be said that allegations of specific fraudulent transfers could have helped this case, the court does not read Postal or any of the other cases cited by movants to hold that in suitably extreme situations the court cannot assist in dismantling such a web of intrigue. Indeed, the Postal court at 162 Cal. App. 4th 1519 seems to acknowledge that in extreme circumstances there is room still for the traditional application of alter ego where adherence to the fiction of a separate corporate existence ‘would promote an injustice" to the stockholder’s
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creditors." Citing Taylor v. Newton, 117 Cal. App. 2d 752, 760-61 (1953).
One more point should be made. On this question of whether there is a general alter ego right of action (or not) we need to remember context here. While the parties have all termed the discussion as one about limits under California law on the doctrine of alter ego, or "outside reverse piercing" and the like, it is easy to forget the primary purpose of a trustee in bankruptcy. The trustee is not just another creditor. He is uniquely charged with identifying, gathering and liquidating the assets of the estate. This is so that a dividend on the just claims of all creditors can be maximized. And where the equitable principles of the Code have been violated, the trustee must object to discharge. But trustees must from time to time confront clever debtors who are unwilling to report faithfully all that they hold. Elaborate schemes are sometimes resorted to and the various forms of fraud are infinite. Sometimes the nature and extent of the artifice is not so easy to discern or the date or amount of any transfer easily discovered. This court does not construe the equitable doctrine of alter ego to be so limited or confined as the movants have suggested. Instead, in the court’s view it is (and must be) adaptable to the circumstances. In can be as simple as disregarding corporate form when to recognize it would be to perpetrate fraud and injustice. The cases cited by movants all pertain to a much more specific and limited circumstances on facts very different from the ones alleged at bar. None of the authorities say that all traditional equitable notions of disregarding corporate form when it is abused have been abrogated. Rather, the cases when properly read say that the law must evolve and adapt to the ingenuity of alleged fraudsters. So, it may be that under California law the alter ego doctrine is purely procedural, not substantive, but that does not in the court’s view dictate a different result here as the procedure here is to implement the substantive claim for declaratory relief.
Deny
Attorney(s):
Marilyn Thomassen Represented By Shawn P Huston
10:00 AM
Marilyn R Thomassen
Pacific Premier Law Group Represented By Arash Shirdel
Creditor Atty(s):
Lt. Col. William Seay Represented By Brian Lysaght Jonathan Gura
Debtor(s):
Robert A. Ferrante Represented By
Richard M Moneymaker Arash Shirdel
Defendant(s):
Saxadyne Energy Management, LLC Represented By
Gary C Wykidal
Heritage Garden Properties, Inc. Pro Se
Rising Star Development, LLC Pro Se
American Yacht Charters, Inc. Pro Se
Systems Coordination & Pro Se
Steven Fenzl Represented By
D Edward Hays Martina A Slocomb
Saxadyne Energy Group, LLC Represented By Gary C Wykidal
Gianni Martello Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Robert Ferrante Represented By Dennis D Burns Kyra E Andrassy
10:00 AM
Robert E Huttenhoff Ryan D ODea
Chanel Christine Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Ferrante, Gianni Ferrante, Represented By
Kyra E Andrassy
Mia Ferrante Represented By
D Edward Hays Martina A Slocomb
Cygni Securities, LLC Represented By Gary C Wykidal
Cygni Capital Partners, LLC Represented By Gary C Wykidal Robert P Goe
Envision Consultants, LLC Pro Se
Glinton Energy Group, LLC Represented By Gary C Wykidal
Richard C. Shinn Pro Se
Richard C. Shinn Represented By
Marilyn R Thomassen
Cygni Capital, LLC Represented By Gary C Wykidal Robert P Goe
CAG Development, LLC Pro Se
Envision Investors, LLC Pro Se
Traveland USA, LLC Pro Se
Rising Star Investments, LLC Represented By
Marilyn R Thomassen
10:00 AM
Glinton Energy Management, LLC Represented By
Gary C Wykidal
Oscar Chacon Pro Se
Richard C. Shinn Represented By Shawn P Huston
Global Envision Group, LLC Pro Se
Robert A. Ferrante Represented By
Robert E Huttenhoff Ryan D ODea
Interested Party(s):
United States Marshals Service Pro Se
Plaintiff(s):
Thomas H Casey Represented By Thomas A Vogele Thomas A Vogele Timothy M Kowal Brendan Loper
Trustee(s):
Thomas H Casey (TR) Represented By Thomas A Vogele Brendan Loper Thomas H Casey Kathleen J McCarthy Timothy M Kowal
Thomas H Casey (TR) Represented By Thomas H Casey Thomas A Vogele Kathleen J McCarthy
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
10:00 AM
Adv#: 8:13-01255 City National Bank, a national banking association v. Fu et al
(set from status conference held on 3-3-16)
(con't from 4-5-18 per order approving stip continuing conf. ent. 3-15-18)
Docket 1
Tentative for 1/5/17:
Continue to date following likely resolution of appeal.
Tentative for 3/3/16:
Deadline for completing discovery: June 1, 2016 Last date for filing pre-trial motions: June 13, 2016 Pre-trial conference on: June 30, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 11/5/15:
Status conference continued to March 3, 2016 at 2:00 p.m.
Tentative for 8/27/15:
Continue to November 5, 2015 at 2:00 p.m.
Tentative for 6/25/15:
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Continue to coincide with MSJ on August 27, 2015 at 2:00 p.m.
Tentative for 4/23/15:
Continue to June 25, 2015 at 2:00 p.m.
Tentative for 12/4/14: See #25, 26 and 27.
Tentative for 9/4/14:
Status conference continued to December 4, 2014 at 2:00 p.m. to coincide with MSJ.
Tentative for 5/29/14:
Status conference continued to September 4, 2014 at 10:00 a.m. More delays should not be expected.
Tentative for 4/2/14:
No status report. When can we expect a resolution of this?
Tentative for 12/5/13:
Status conference continued to April 2, 2014 at 10:00 a.m. to follow motion for summary judgment.
10:00 AM
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T Madden Beth Gaschen Susann K Narholm
Defendant(s):
Cheri Fu Pro Se
Thomas Fu Pro Se
Joint Debtor(s):
Thomas Fu Represented By
Evan D Smiley
Plaintiff(s):
City National Bank, a national Represented By Evan C Borges
Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
James J Joseph (TR)
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:17-01134 Karen Sue Naylor, Chapter 7 Trustee v. Ivie and Associates, Inc.
(con't from 4-12-18 per order on stip. to extend entered 2-20-18)
Docket 1
Tentative for 10/26/17:
Deadline for completing discovery: March 16, 2018 Last date for filing pre-trial motions: March 30, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Ivie and Associates, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
10:00 AM
Trustee(s):
Nanette D Sanders
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
11:00 AM
Adv#: 8:18-01082 Whipple v. Robertson et al
Docket 102
- NONE LISTED -
Debtor(s):
Laird Malcolm Robertson Represented By Jeffrey B Smith
Defendant(s):
Laird M Robertson Pro Se
Val Muraoka Pro Se
Plaintiff(s):
Gaylord C. Whipple Represented By Gregory J Ferruzzo Jillian P Harris
Trustee(s):
Richard A Marshack (TR) Represented By
Misty A Perry Isaacson
11:00 AM
Adv#: 8:18-01080 Arad v. Arad et al
Docket 10
Tentative for 7/12/18:
This is Plaintiff/Debtor Ron S. Arad’s (Plaintiff or Debtor) motion to compel payment of adequate protection; for an accounting; and for a turnover of rents. Plaintiff has an ownership stake in an 8 unit apartment building and in a large house in Yorba Linda used as a rental. Plaintiff’s father Defendant Reuven Arad also has an ownership stake in those properties. It is unclear, but possible that Defendants Irina Grinfeld (through her company ACPA) also has an ownership stake in the properties. Plaintiff asserts that he is entitled to this motion as a matter of law pursuant to 11 U.S.C. 363(e) and 11 U.S.C.
541(a)(1) and (6). Specifically, Plaintiff is seeking:
an accounting for all proceeds, product, offspring, rents, and/or profits of or from property of the estate including the Yorba Linda residence for the period from January 1, 2012 to the present;
for an immediate turnover of all proceeds, product, offspring, rents, and/or profits of or from property of the estate including the Yorba Linda residence from and after February 14, 2018 to the present;
for an accounting for all proceeds, product, offspring, rents, and/or profits of or from property of the estate including the Yorba Linda residence from February 14, 2018 to the present;
and for an Order compelling the payment of adequate protection, and condition the use of the Yorba Linda residence and any other property of
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the estate by Reuven Arad, and/or Irina Grinfeld and/or the ACPA in the following form:
Requiring Respondents to account for all revenue received which was derived, directly or indirectly, from the Apartment House or the Residence for the period from January 1, 2012 to the present;
Requiring Reuven to turn over the security deposits and unpaid, but collected, rent from the Apartment House for the period from January 1, 2012 to February 14, 2018, to the Debtor;
Requiring Respondents to turn over the Debtor’s proportionate share of the rental income from the Yorba Linda Residence for the period from January 1, 2012 to February 14, 2018;
Requiring Respondents to prove, to the satisfaction of the United States Trustee and the Debtor, that they are operating a legal business which can lawfully rent portions of the Residence to third parties, including a valid business license;
Requiring Respondents to prove, to the satisfaction of the United States Trustee and the Debtor, that they have sufficient insurance on the Yorba Linda residence to cover any liability that might arise as a result of their business operations at the Residence; and,
Requiring Respondents to prove, to the satisfaction of the United States Trustee and the Debtor, that they have sufficient insurance on the Residence to cover any liability that might arise as a result of their business operations at the Residence;
Prohibiting Respondents from using any property of the estate until they have fully complied with the above.
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That is a lot to be sought in a summary proceeding. This motion is
procedurally incorrect and not supported in law. First, defendants are correct that the "adequate protection" spoken of in §363(e) pertains to use by the debtor of property in which another entity holds an interest. This usually arises in the context of use by the debtor of cash collateral such as rents or in proposed use of property such as equipment or inventory in which another entity holds a lien. This motion by debtor to obtain "adequate protection" of his property used by a third party is not appropriate, or at least this court has never seen such a motion. It appears to be exactly backward. No authority is cited by debtor. Even if there were such a right to adequate protection in this context it would be difficult to see what debtor requests here as fitting within the statute. Debtor seeks documents and an accounting, and presumably, turnover of any net proceeds. Turnover of net proceeds is an acknowledged remedy under §542. This could also pertain if the records etc. are property of the estate. Turnover of the property itself might also apply, but a greater showing would need to be made. But none of these is an acknowledged form of "adequate protection" which is how this motion is framed. The Defendant also denies there are any proceeds, and the court is in no position in summary proceedings like this one to cut through all of the competing argument and unknown or disputed facts.
Further, this arises within an adversary proceeding in which many of the same issues are raised as in the underlying complaint. If this motion is to be reformed and re-filed it should be treated as what it is, i.e.: a discovery request and/ or discovery dispute, and for substantive relief such as an accounting or turnover of either the property or net proceeds through a Rule 56 summary judgment motion. Discovery disputes are governed by LBR 7026-1(c).
Deny
11:00 AM
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Defendant(s):
Reuven Arad Represented By
Shalem Shem-Tov
Sara Arad Pro Se
IRINA GRINFELD Represented By Shalem Shem-Tov
AMERICAN CENTER FOR Represented By Shalem Shem-Tov
DEPARTMENT OF THE Pro Se
UNITED STATES OF AMERICA Represented By
Jolene Tanner
Plaintiff(s):
Ron S Arad Represented By
William H Brownstein G Bryan Brannan
11:00 AM
Adv#: 8:17-01127 Karen Sue Naylor, Chapter 7 Trustee v. Candyrific, LLC
Docket 51
Tentative for 7/12/18:
In view of reported settlement, continue approximately 60 days.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Candyrific, LLC Represented By Scott A Schiff
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson
11:00 AM
James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
2:00 PM
Adv#: 8:17-01104 Ingle et al v. Ocampo et al
Docket 40
Tentative for 7/12/18:
Grant. Appearance is optional.
Debtor(s):
Pedro Souza Represented By
Filemon Kevin Samson III
Defendant(s):
Carmela Morales Ocampo Pro Se
Pedro Souza Pro Se
Joint Debtor(s):
Carmela Morales Ocampo Represented By
Filemon Kevin Samson III
Plaintiff(s):
Sandra Ingle Represented By
F Edie Mermelstein
Mary Louise Ingle Represented By
F Edie Mermelstein
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:17-01127 Karen Sue Naylor, Chapter 7 Trustee v. Candyrific, LLC
(set at pre-trial conf. held 4-12-18)
Docket 1
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Candyrific, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
10:00 AM
Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
STEVEN FURMAN, THOMAS LUERA
Vs.
DEBTOR
Docket 19
Tentative for 7/17/18:
Grant. Appearance is optional.
Debtor(s):
Michael John Dozier Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
UNIFY FINANCIAL FEDERAL CREDIT UNION
Vs.
DEBTOR
Docket 20
Tentative for 7/17/18:
Grant. Appearance is optional.
Debtor(s):
Robert F. DeLeon Represented By Joseph A Weber
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
HYUNDAI LEASES TILTLING TRUST
Vs DEBTOR
Docket 8
Tentative for 7/17/18:
Grant. Appearance is optional.
Debtor(s):
Yesica De Rosas Represented By James P Doan
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
JPMORGAN CHASE BANK
Vs.
DEBTOR
Docket 17
Tentative for 7/17/18:
Grant. Appearance is optional.
Debtor(s):
Sami Ullah Mohammed Represented By Brian J Soo-Hoo
Movant(s):
JPMorgan Chase Bank, National Represented By
Nancy L Lee
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Docket 11
Tentative for 7/17/18:
Grant. Appearance is optional.
Debtor(s):
Annette Mercado Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
(con't from 7-10-18)
Docket 4
Tentative for 7/17/18:
Creditor's response due Monday July16.
Tentative for 7/10/18:
The court agrees with the Respondent that "some extraordinary expenses" alone, without some elaboration or foundation, does not carry the burden of proof, particularly given this debtor's history of failed Ch. 13s. This is Debtor's 4th case since 2009.
Deny
Debtor(s):
Rose M Magana Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
(OST Signed 7-11-18)
Docket 109
Tentative for 7/17/18:
Per OST, opposition due at the hearing.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy
10:00 AM
(con't from 7-11-18) HOLDING DATE
Docket 451
Tentative for 7/11/18:
Parties were to discuss any remaining issues on the disclosure statement. Status?
Tentative for 6/28/18:
From what the court can tell based on just a short review, the changes discussed last hearing have been made. Does the debtor have any further points he would raise? Are we ready for dissemination?
Tentative for 6/13/18: Status?
Tentative for 5/23/18: no tentative.
10:00 AM
Judgment Creditor’s DS generally contains adequate information, but there are some changes that should be made. Judgment Creditor has already agreed to some changes in his reply. In addition, Judgment Creditor should more clearly explain that he has agreed to subordinate his claim in the DS. A separate agreement may not be necessary, but it can be explained in a more clear fashion. Judgment Creditor should also update the DS to state that oral argument has already occurred because his DS and plan have not been disseminated to creditors yet. When it does it should contain accurate information. Debtor’s DS and plan were mailed before the oral argument occurred. Debtor also makes a good point that Judgment Creditor should make it clear from headings and titles that this is a liquidation plan not a reorganization plan. Otherwise, it is pretty clear from the DS what Judgment Creditor proposes to do, and other issues are best left for confirmation.
The court notes that the DS provides for discharge upon confirmation, rather than upon completion of payments. [DS p. 30] Is this proper?
Debtor(s):
Continue for amendment on these minor issues.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
1:30 PM
(con't from 6-20-18)
Docket 2
- NONE LISTED -
Debtor(s):
Kirk P Howland Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 17
- NONE LISTED -
Debtor(s):
Sara Barnett Represented By
Jacqueline D Serrao
Movant(s):
Sara Barnett Represented By
Jacqueline D Serrao Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 3
- NONE LISTED -
Debtor(s):
Tony Kallah Represented By
Anerio V Altman
Joint Debtor(s):
Joulia Kallah Represented By
Anerio V Altman
Movant(s):
Tony Kallah Represented By
Anerio V Altman
Joulia Kallah Represented By
Anerio V Altman Anerio V Altman Anerio V Altman Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 12
- NONE LISTED -
Debtor(s):
Cynthia Louise Armenta Represented By Anerio V Altman
Movant(s):
Cynthia Louise Armenta Represented By Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 2
- NONE LISTED -
Debtor(s):
April D. Quinn Represented By Kelly Zinser
Movant(s):
April D. Quinn Represented By Kelly Zinser Kelly Zinser Kelly Zinser
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 2
- NONE LISTED -
Debtor(s):
Ben R Aragon Represented By Sunita N Sood
Joint Debtor(s):
Marie A Aragon Represented By Sunita N Sood
Movant(s):
Ben R Aragon Represented By Sunita N Sood
Marie A Aragon Represented By Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 2
- NONE LISTED -
Debtor(s):
Gerardo Rincon Gutierrez Represented By Nicholas M Wajda
Joint Debtor(s):
Maria Gutierrez Represented By Nicholas M Wajda
Movant(s):
Gerardo Rincon Gutierrez Represented By Nicholas M Wajda
Maria Gutierrez Represented By Nicholas M Wajda Nicholas M Wajda
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 13
- NONE LISTED -
Debtor(s):
Babacar Thiam Represented By Anerio V Altman
Movant(s):
Babacar Thiam Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 0
- NONE LISTED -
Debtor(s):
Maryann Sue Matesz Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 16
- NONE LISTED -
Debtor(s):
Timothy N Shorts Represented By William R Cumming
Joint Debtor(s):
Darlene Long-Shorts Represented By William R Cumming
Movant(s):
Timothy N Shorts Represented By William R Cumming
Darlene Long-Shorts Represented By William R Cumming
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-19)
Docket 13
- NONE LISTED -
Debtor(s):
Angela A. Mafioli Represented By Nathan A Berneman
Movant(s):
Angela A. Mafioli Represented By Nathan A Berneman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 5-16-18)
Docket 10
- NONE LISTED -
Debtor(s):
Gilbert Sarmiento Japgos Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 2
Tentative for 5/16/18:
Both objections are well-taken and must be addressed. Confirmation denied.
Debtor(s):
Mary Jo Bryant Represented By Julie J Villalobos
Movant(s):
Mary Jo Bryant Represented By Julie J Villalobos Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 2
Tentative for 6/20/18:
The court does not see the events surrounding the purchase of a new car shortly before the petition as sufficiently egregious to warrant denial of confirmation on bad faith grounds.
Debtor(s):
Michelle Jenine Cabrera Boldt Represented By Joseph A Weber
Movant(s):
Michelle Jenine Cabrera Boldt Represented By Joseph A Weber Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 23
- NONE LISTED -
Debtor(s):
Roberto Navarro Represented By Patricia A Mireles
Joint Debtor(s):
Margarita Navarro Represented By Patricia A Mireles
Movant(s):
Roberto Navarro Represented By Patricia A Mireles Patricia A Mireles Patricia A Mireles Patricia A Mireles Patricia A Mireles
Margarita Navarro Represented By Patricia A Mireles Patricia A Mireles
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 11
Tentative for 6/20/18:
Continue one cycle for purposes of amending the plan.
Debtor(s):
Paolo Cardinali Represented By Anerio V Altman
Movant(s):
Paolo Cardinali Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 2
- NONE LISTED -
Debtor(s):
Jaime Samson Cayco Represented By
Hasmik Jasmine Papian
Joint Debtor(s):
Junnifer Quiwa Cayco Represented By
Hasmik Jasmine Papian
Movant(s):
Jaime Samson Cayco Represented By
Hasmik Jasmine Papian
Junnifer Quiwa Cayco Represented By
Hasmik Jasmine Papian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 2
- NONE LISTED -
Debtor(s):
Max L. Cunningham Represented By Kelly Zinser
Joint Debtor(s):
Lori F. Cunningham Represented By Kelly Zinser
Movant(s):
Max L. Cunningham Represented By Kelly Zinser Kelly Zinser
Lori F. Cunningham Represented By Kelly Zinser Kelly Zinser Kelly Zinser Kelly Zinser
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Ignacio Rodriguez Represented By Rebecca Tomilowitz
Joint Debtor(s):
Jessica Hernandez Represented By Rebecca Tomilowitz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Michael Dickerson Represented By Shawn Dickerson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Connie Campos Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Randall Stephen Held Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 19
Tentative for 7/18/18:
All three objections are well taken:
Eagle Community disputes the plan valuation of its collateral. A section 506 order is required.
FTB's section 507 claim must be paid in full; and
The Trustee reiterates Eagle Community's point.
Deny.
Debtor(s):
Brian G. Corntassel Represented By Kelly Zinser
Movant(s):
Brian G. Corntassel Represented By Kelly Zinser Kelly Zinser Kelly Zinser
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Venus Williams Represented By Amanda G Billyard
Movant(s):
Venus Williams Represented By Amanda G Billyard
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Odilia Lopez Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 12
- NONE LISTED -
Debtor(s):
Jackie Lee Ek Represented By
Christopher J Langley
Movant(s):
Jackie Lee Ek Represented By
Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Katherine Lei Ozuna Represented By
Rabin J Pournazarian
Movant(s):
Katherine Lei Ozuna Represented By
Rabin J Pournazarian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 17
7/18/18:
The Trustee's objections appear well-taken. Deny.
Debtor(s):
Susan D Aronson Pro Se
Movant(s):
JPMorgan Chase Bank,N.A. Pro Se
JPMorgan Chase Bank,N.A. Pro Se
Susan D Aronson Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Michael Paul Dennis Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Phuong Nguyen Huynh Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
7/18/18:
Both the Trustee's and the Bank's objections are well taken. A sale provision in a Chapter 13 plan must be more specific than is attempted here. Deny.
Debtor(s):
Thutam Thi Phan Represented By Michael D Franco
Movant(s):
Thutam Thi Phan Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Christopher Young Callahan Represented By Roger J Plasse
Joint Debtor(s):
Kristine Nielsen Callahan Represented By Roger J Plasse
Movant(s):
Christopher Young Callahan Represented By Roger J Plasse Roger J Plasse
Kristine Nielsen Callahan Represented By Roger J Plasse
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Patricia Vasquez Lavini Represented By Brian J Soo-Hoo
Movant(s):
Patricia Vasquez Lavini Represented By Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Kevin Michael Melody Represented By Michael Jones
Movant(s):
Kevin Michael Melody Represented By Michael Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 17
- NONE LISTED -
Debtor(s):
Chih Lee Represented By
Nathan Fransen
Movant(s):
Chih Lee Represented By
Nathan Fransen Nathan Fransen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 18
- NONE LISTED -
Debtor(s):
Marlene C. Lewis Represented By Joshua L Sternberg
Movant(s):
Marlene C. Lewis Represented By Joshua L Sternberg
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 16
- NONE LISTED -
Debtor(s):
Dana Dion Manier Represented By Brian J Soo-Hoo
Movant(s):
Dana Dion Manier Represented By Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
- NONE LISTED -
Debtor(s):
Terry A Lee Sr. Represented By Jacqueline D Serrao
Movant(s):
Terry A Lee Sr. Represented By Jacqueline D Serrao Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 67
Tentative for 7/18/18: Same.
Tentative for 6/20/18:
Grant, unless all delinquencies cured.
Debtor(s):
Theresa Sangermano Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 44
Tentative for 7/18/18:
Grant unless current or motion on file.
Debtor(s):
Michael Duane Kovac Represented By Halli B Heston
Joint Debtor(s):
Susan Kim Kovac Represented By Halli B Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 107
- NONE LISTED -
Debtor(s):
Albert Ngoc Ninh Represented By Tina H Trinh
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 104
Tentative for 7/18/18: Grant unless current.
Debtor(s):
Keohen R Smith Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 53
Tentative for 7/18/18: Same.
Tentative for 6/20/18: Grant, unless current.
Debtor(s):
Nader Tahvildari Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 98
- NONE LISTED -
Debtor(s):
Jeffrey Earl Sargent Represented By Sundee M Teeple
Joint Debtor(s):
Myrsha Sargent Represented By Sundee M Teeple
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 113
Tentative for 7/18/18: Grant unless current.
Debtor(s):
Craig Leroy Wolfram Represented By Matthew D Resnik Kevin T Simon
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 43
Tentative for 7/18/18:
This has been continued several times. No more continuances. Dismiss unless current or modification confirmed. See #47.
Tentative for 6/20/18: Same.
Tentative for 5/16/18: Continue to 6/20/18 at 3pm.
Tentative for 4/18/18:
Grant unless motion to modify is on file.
Debtor(s):
Timothy Dale Cox Represented By
Thomas E Brownfield
Joint Debtor(s):
Diane Gloria Cox Represented By
Thomas E Brownfield
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
3:00 PM
(con't from 6-20-18)
Docket 48
Tentative for 7/18/18:
Is the latest documentation sufficient for Trustee?
Tentative for 6/20/18:
Deny for reasons stated by Trustee.
Debtor(s):
Timothy Dale Cox Represented By
Thomas E Brownfield
Joint Debtor(s):
Diane Gloria Cox Represented By
Thomas E Brownfield
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(cont'd from 6-20-18)
Docket 31
Tentative for 7/18/18: Status?
Tentative for 6/20/18: Status?
Tentative for 4/18/18:
What is status of motion to modify?
Tentative for 3/21/18: See #28.
Tentative for 2/21/18: See #34.
Tentative for 12/20/17:
Grant unless motion on file.
3:00 PM
Debtor(s):
Debbie Lynn Selikson Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 61
Tentative for 7/18/18:
Grant unless motion to modify on file.
Debtor(s):
Joseph Taylor Represented By
Richard L. Sturdevant
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 66
- NONE LISTED -
Debtor(s):
Tineke Inkiriwang Represented By Jeffrey J Hagen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 33
Tentative for 6/20/18:
Continue date of modification hearing.
Debtor(s):
Robert Francis Delsasso Represented By
D Justin Harelik
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 65
Tentative for 7/18/18: Same.
Tentative for 6/20/18: Grant unless fully current.
Tentative for 5/16/18:
Order on modification entered (Court prepared order) on May 14. Does this resolve?
Debtor(s):
Alan Bell Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 46
Tentative for 6/20/18: Grant unless current.
Debtor(s):
Keith Michael Brandino Represented By
Rabin J Pournazarian
Joint Debtor(s):
Nicolle Lorraine Butler Represented By
Rabin J Pournazarian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 29
Tentative for 7/18/18: Same.
Tentative for 6/20/18:
Grant unless motion to modify on file.
Debtor(s):
Justin Stumpf Represented By Nima S Vokshori
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Joseph A Weber, Debtor's Attorney, Fee: $350.00
Docket 78
Tentative for 7/18/18:
Trustee raises an issue in the comments that must be addressed by Applicant.
Debtor(s):
Guy A. Rojo Represented By
Joseph A Weber
Joint Debtor(s):
Eva P. Rojo Represented By
Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
RAYMOND PEREZ, DEBTOR'S ATTORNEY, FEE: $2000.00
Docket 67
Tentative for 7/18/18:
No service on creditors and request is over $1000 (LBR 3015-1(x)(5)).
Debtor(s):
Danilo Dimayuga Lumbera Represented By Raymond Perez
Joint Debtor(s):
Gregoria Perfinan Lumbera Represented By Raymond Perez
Trustee(s):
Karen S Naylor (TR) Pro Se
3:00 PM
Docket 22
Tentative for 7/18/18:
Continue for better evidence of value. Also, given that the vehicle was purchased within 90 days, can a valuation under section 506 accomplish anything given section 1325(a) (hanging paragraph)?
Debtor(s):
Babacar Thiam Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18 per order on stip to continue entered 6-15-18)
Docket 80
- NONE LISTED -
Debtor(s):
Eddie Julio Flores Sr. Represented By Halli B Heston
Joint Debtor(s):
Juana Martina Flores Represented By Halli B Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18 per order on stip. to cont. hrg entered 6-15-18)
Docket 58
- NONE LISTED -
Debtor(s):
Angelita Angeles Labrador Represented By Todd B Becker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 29
Tentative for 7/18/18: Status?
Tentative for 5/16/18:
This is Debtor Sara Barnett’s objection to claim 3-1 held by Wilshire Commercial Capital, LLC ("Wilshire"). Wilshire amended its Proof of claim, and now it is claim 3-2. Notably, Wilshire’s first claim (3-1) appeared to be a duplicate of Westlake’s claim (2-1). Westlake has voluntarily withdrawn its claim, but did not provide any reasons for doing so. Wilshire’s amended claim (3-2) makes three discernable changes from the original: (1) the amount claimed jumps significantly from about $74,000, to about $148,000; (2) The basis of the claim changes from "money loaned" to "Joint Defense Agreement"; and (3) The amended proof of claim is signed by Thomas Mendoza, not Jackson Lieu as in the previous proof of claim. This is important because incorrect signatures under the LBRs served as one of the bases for objection to the prior proof of claim.
However, Debtor’s main objection was in response to claim 3-1, not the amended claim 3-2. As mentioned, the amended claim had some significant changes. But Debtor uses her "Reply" to serve as a de facto objection to the amended proof of claim. This objection includes assertions of unconscionability, lack of authority to enter into the agreement, etc. This is not the proper way to object to a proof of claim because the claimant is
3:00 PM
effectively deprived of an opportunity to file a written opposition before the hearing. Debtor concedes this point in the "Conclusion" section of her Reply. The dispute may simply be postponed for further objection; but if the grounds are to be such issues as unconscionability or lack of authority, those will likely have to be resolved through an adversary proceeding allowing for discovery, etc., not in a summary proceeding like a claim objection hearing. Allegations of fraud are overblown; carelessness from a party who should know better is a more apt description.
Overrule on procedural grounds, with leave to renew
Debtor(s):
Sara Barnett Represented By
Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 32
This is the Trustee's objection to the claims #1 and #2 of the Reserve Maintenance Corp and Wells Fargo Bank. The Trustee is holding
$257,542.22 of surplus proceeds after a judicial foreclosure proceeding was conducted by the senior lienholder (also Wells) the day following the petition pursuant to a relief of stay entered in an earlier case. The Trustee seems to believe that the other liens did not attach to proceeds, but he is not clear as to why that should be. Normally, liens follow onto proceeds and this is confirmed under Cal. Civ. Code 2924k. Overrule.
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 20
Because the $155.44 Creditor is claiming does not follow the 5% of unpaid installment payment the Note outlined and is instead a rate of about 40%, this claim should be disallowed. Sustain.
Debtor(s):
Elvin Lorenzana Represented By Anerio V Altman
Joint Debtor(s):
Somer Asako Shimada Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 0
- NONE LISTED -
Debtor(s):
Gregory Burke Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 0
- NONE LISTED -
Debtor(s):
Paul Dean Pisani Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 0
Dismiss.
Debtor(s):
Michael John Dozier Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
(con't from 6-14-18 per stip. & order entered 6-12-18)
Docket 142
This memorandum will address all three motions for summary judgment on calendar at 10:00 a.m. as they are essentially identical and arise from the same nucleus of facts, the same parties and the same underlying causes of action. The motions for summary judgment are in response to Plaintiff, Asset Management Holdings, LLC’s ("Plaintiff’s") Fourth Amended Complaint against co-defendants, JP Morgan Chase ("Chase Bank" "Chase" and sometimes "Defendant") and the debtor, Aleli Hernandez (along with her husband, Virgil Hernandez).
The Fourth Amended Complaint seeks: (1) Determination of Secured Status of Defendant’s Claim pursuant to 11 U.S.C. §506; (2) Objection to Claim – Disallowance of Defendant’s Claim; (3) Equitable Subordination of Defendant’s Claim Pursuant to 11 U.S.C. §510(c); (4) Partial Equitable Subordination of Defendant’s Claim pursuant to 11 U.S.C. §510(c); (5) For an award of damages resulting from unlawful modification of principal balance of Defendant’s claim; and
Relief from order avoiding Plaintiff’s lien.
Chase Bank filed its motion for summary judgment against Plaintiff. Debtor also filed a motion for summary judgment against Plaintiff in which Chase Bank joined. Finally, Plaintiff filed its own cross motion for summary judgment against both Defendants. Chase Bank filed its own opposition to Plaintiff’s Motion for Summary Judgment, and joined in the Hernandez’s opposition. These three motions for summary judgment will be considered together. Taken together, there appear to be very few material facts in dispute. The major points of factual dispute go to causes of action 2 and 6, in which Plaintiff’s allegation that Chase Bank cannot show clean title,
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which, Plaintiff asserts, calls Chase Bank’s claim into question. Therefore, this issue is closer and the facts are contested and at least somewhat unclear, which makes them unsuitable for summary adjudication.
However, there is no disagreement about any material fact relating to the other of Plaintiff’s causes of action, which makes summary judgment appropriate as to those causes of action.
On August 17, 2010, Aleli A. Hernandez received a standard discharge in her voluntary Chapter 7 case, In re Aleli A. Hernandez, Case No. 8:10-bk-15427-TA. On July 16, 2012, Defendant Virgil T. Hernandez received a standard discharge in his prior voluntary Chapter 7 case, In re Virgil T. Hernandez, Case No. 12-bk-13953-TA. Aleli Hernandez commenced this Chapter 13 on February 5, 2015—more than four years after receiving her Chapter 7 discharge.
On Schedule A of her Chapter 13 petition, Aleli valued her residence at $950,000. On Schedule D, she identifies two deeds of trust on the residence. The first mortgage is held by Chase Bank. The second HELOC is held by Plaintiff (successor to SW Linear Investment Group, LLC), and is scheduled with a value of $0.
Chase Bank filed Proof of Claim No. 2 in the amount of $1,035,513. Chase Bank asserts that it holds a first position lien on the Hernandezes’ Residence located in Mission Viejo, California. Chase Bank is the successor-in-interest to the originating lender Metrocities. Metrocities is the originating lender for both the first and second liens at issue here.
On April 8, 2011, Defendants Chase Bank and Virgil Hernandez executed a loan modification agreement, modifying the Hernandez’s mortgage on the Residence. At that time, the Hernandezes were in default on their loan and foreclosure proceedings had been initiated by Chase Bank. Among other things, the loan
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modification agreement modified the principal balance of the mortgage to $1,086,401, lowered the interest rate, and deferred $313,800 of principal to the maturity date of November 1, 2046. Relating to the loan modification agreement, Chase Bank also rescinded the recorded default and demand for sale of the Residence.
Plaintiff filed its Proof of Claim No. 4 in the amount of $459,222. Plaintiff’s claim is based on a (now avoided) second position lien on the Residence. Plaintiff is also the successor-in-interest to the originating lender Metrocities, who was the original holder of the second position deed of trust based on a home equity credit line agreement. Through various assignments originating with Metrocities, Plaintiff acquired its second position interest on the Residence in December 2014—several years after Defendants Chase Bank and Virgil Hernandez’s executed the loan modification agreement.
In May 2015, Aleli moved in her case to avoid Plaintiff’s junior lien from the Residence and to value the lien at $0 in accordance with 11 U.S.C. §506. Plaintiff opposed the motion. On July 31, 2015, this court granted the motion and avoided Plaintiff’s junior lien in its entirety, since its lien was wholly unsecured and did not attach to any equity in the Residence. The Avoidance Order, among other things, establishes that: (a) the Residence is valued at $950,000; (b) Defendant Chase Bank’s has a first position lien in the amount of $1,035,513; (c) Plaintiff’s avoided junior lien resulted in a general unsecured claim in the amount of $459,222. Plaintiff elected not to appeal the Avoidance Order.
On February 19, 2015, Aleli filed her Chapter 13 plan. The Chapter 13 plan explicitly provides for avoidance of Plaintiff’s lien interest. On April 14, 2015, Plaintiff filed both an objection and amended objection to confirmation of the Chapter 13 plan. Plaintiff also moved to dismiss the case on grounds that the Debtor was not entitled to relief because her debts exceeded the debt limitations under Bankruptcy Code Section 109(e), and because avoidance of Plaintiff’s lien interest rose to the level of bad faith, which the Debtor opposed. The court denied Plaintiff’s motion on July 5, 2016 and confirmed Debtor’s Chapter 13 plan on July 25, 2016. Plaintiff appealed the confirmation and dismissal orders, which are currently pending before
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the Ninth Circuit Court of Appeals from the judgment of the Bankruptcy Appellate Panel that affirmed this court’s orders.
FRBP 7056 makes FRCP 56 applicable in bankruptcy proceedings. FRCP 56(c) provides that judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. FRCP 56(e) provides that supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein, and that sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served forthwith. FRCP 56(e) further provides that when a motion is made and supported as required, an adverse party may not rest upon mere allegations or denials, but must set forth specific facts showing that there is a genuine issue for trial. FRCP 56(f) provides that if the opposing party cannot present facts essential to justify its opposition, the court may refuse the application for judgment or continue the motion as is just.
A party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine issue of material fact, and establishing that it is entitled to judgment as a matter of law as to those matters upon which it has the burden of proof. Celotex Corporation v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548,
2553 (1986); British Airways Board v. Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978). The opposing party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at 324. The substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc.,477 U.S.
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242, 248,106 S.Ct. 2505, 2510 (1986). A factual dispute is genuine where the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. The court must view the evidence presented on the motion in the light most favorable to the opposing party. Id. If reasonable minds could differ on the inferences to be drawn from those facts, summary judgment should be denied. Adickes v. S.H. Kress & Co. 398 U.S. 144, 157, 90 S. Ct. 1598, 1608 (1970).
Plaintiff’s first cause of action is for a determination of secured status of Defendant’s claim. This is an issue that this court has conclusively resolved, Plaintiff’s opposition notwithstanding. In 2015, Debtor sought to avoid Plaintiff’s lien, which Plaintiff opposed. This court granted the Debtor’s motion. In its July 8, 2015 tentative ruling, this court stated, "the property has a value of only $950,000 and since it is indisputably subject to a senior mortgage of $1,035,513 to JP Morgan Chase, there is no value to which the junior lien of respondent can attach." (Italics added). Therefore, this is issue cannot be subject to any real dispute. Chase Bank has a senior secured claim and that is res judicata. There is a possibility that the order is not final if it is a subject of the appeal (the papers are unclear), so excepting only that Chas Bank is entitled to judgment. If it is the subject of the pending appeal, it is obviously not properly before the court at this time.
Similarly, the novation argument is not novel to Plaintiff’s Fourth Amended Complaint. The court dealt decisively with this issue back in April of 2017. In a lengthy tentative from April 27, 2017, this court dismissed, without leave to amend, Plaintiff’s argument that the loan modification was a novation. This is especially significant given the Ninth Circuit’s well-known preference for liberality regarding leave to amend. Since the loan modification occurred many years ago, the facts surrounding the loan modification have not changed. The court has entertained Plaintiff’s various theories on the novation issue and found them unpersuasive.
Without quoting the April 27, 2017 adopted tentative at length, or undertaking yet another exhaustive analysis, the court, in the spirit of judicial economy, elects to quote
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only the final paragraph and ruling from the April 27, 2017 tentative:
"There may be other theories possibly providing redress for the increase in the principal balance as articulated in the other claims for relief, but a claim of novation is not one of them. Grant without leave to amend."
Also, in its Motion for Summary Judgment, Plaintiff spends little to no time arguing this first cause of action. The main effort is spent on the next 5 causes of action.
Subject to the appeal question, judgment should enter for Defendants.
In the Second Cause of Action, Plaintiff asserts that Chase does not evidence a claim enforceable against the Debtor or property of Debtor and concludes that the claim should be disallowed pursuant to 11 U.S.C. §502(b)(1). In its Motion for Summary Judgment, Plaintiff asserts that the documentation provided by Chase Bank in its Claim shows that the Deed of Trust Assignment appears to be a rogue deed in the chain of title. Plaintiff further asserts that Chase Bank cannot establish how the Note or Deed of Trust was transferred to it. Therefore, Plaintiff concludes, Chase Bank was not the proper party to the Loan Modification because it was never assigned the Note or Deed of Trust, which makes disallowing the entire Claim appropriate.
Plaintiff correctly points out that Chase Bank is not listed as the creditor in the proof of claim. In fact, the creditor is listed as U.S. Bank National Association.
However, Chase Bank concedes that it transferred the Deed of Trust to U.S. Bank, but that Chase Bank stayed on as loan servicer. The proof of claim shows that Chase Bank is the servicer of the loan and U.S. Bank National Association is the trustee.
Plaintiff does not contest Chase Bank’s status as loan servicer. Plaintiff also cites no authority that Chase Bank, as loan servicer, could not enter into a loan modification agreement with Debtor or her Husband.
However, as mentioned earlier, this is a summary proceeding, the court is only
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tasked with deciding matters of law. In other words, the court only looks at the uncontested material facts to decide if summary judgment or adjudication is appropriate. Whether Chase Bank can show clean chain of title either for itself as servicer or the beneficial interest on behalf of its principal, is largely a question of fact into which the court would like to take a closer look before deciding. In any case, these are facts still contested by the parties, which makes summary adjudication on this cause of action inappropriate at this juncture. The court does note that no other rival claiming the interest under the First Deed of Trust has emerged, so it would seem whatever infirmity might exist in the chain of title appears a long shot.
The analysis on these three motions for summary judgment could end here.
But, after all, if for some reason, Chase Bank is unable to demonstrate its place in the chain of title, then Plaintiff likely has grounds to have its claim reinstated or for damages at least, which would make the next few causes of action moot. But for the sake of thoroughness, and also because there are sufficient uncontested facts, the analysis of the next causes of action will proceed on the assumption that Chase will ultimately demonstrate a clean chain of title.
Plaintiff’s Third Cause of Action seeks equitable subordination of Chase Bank’s claim. Plaintiff asserts that Chase Bank, by executing the loan modification without Plaintiff’s consent, materially prejudiced and harmed Plaintiff’s rights.
Specifically, Plaintiff alleges that, but for the loan modification, there would have been sufficient equity in the Debtor’s home to at least partially secure Plaintiff’s lien. Instead, Plaintiff’s lien was wholly avoided pursuant to an Avoidance Order issued by this court. Therefore, Plaintiff asserts, Chase Bank’s lien, to the extent that it is valid, should be equitably subordinated to all other claims in the bankruptcy estate.
There is no factual dispute on this cause of action. Plaintiff and Defendants acknowledge that Chase Bank, along with Debtor’s husband, executed a loan
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modification that increased the amount of the loan to over $1 million without Plaintiff’s consent. Both sides acknowledge that the court accepted a valuation in Debtor’s home of $950,000. Both sides acknowledge that the court held that Chase Bank’s claim has priority over Plaintiff’s claim and that Chase Bank’s claim left no equity for Plaintiff’s claim. Both sides acknowledge that this court issued an Avoidance Order, which wholly avoided Plaintiff’s claim.
Plaintiff has questioned the standing of the Hernandezes to oppose the third, fourth, fifth, and sixth cause of action because Plaintiff asserts that the dispute is solely between Chase Bank and Plaintiff.
The Hernandezes likely do have standing as to these causes of action because a finding for Plaintiff could have the effect of reinstating Plaintiff’s avoided claim, which would harm the Hernandezes. Further, if Plaintiff is successful in invalidating the loan modification, the Hernandez’s would be harmed because the loan modification was executed in the wake of a default to avoid foreclosure proceedings. However, the Hernandezes might not have standing regarding the Fifth Cause of Action for damages resulting from Chase Bank’s "Unlawful Modification" because damages are apparently sought only against Chase Bank and it is not apparent how the Hernandez’s would be harmed if Chase Bank had to pay damages for Plaintiff’s lost claim. Of course, damages would only be awarded to Plaintiff upon the finding of wrongdoing by Chase Bank regarding the loan modification. If the court finds as a matter of law that Chase Bank’s conduct was wrongful in some regard, it is possible that the loan modification could be invalidated, which could, in turn, harm the Hernandezes because Plaintiff would likely have their claim reinstated. But that is a lot of "ifs." For standing, harm must be imminent or reasonably to occur, not merely speculative. But, as this is a something of a close question, the court agrees that the Hernandezes have standing to challenge all causes of action.
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The doctrine of equitable subordination is governed by 11 U.S.C. §510(c). To determine whether equitable subordination is appropriate, courts in the Ninth Circuit follow a three-part test: (1) the claimant to be subordinated must have engaged in inequitable conduct; (2) that inequitable conduct must have resulted in injury to competing claims or an unfair advantage to the claimant; and (3) subordination must not be inconsistent with bankruptcy law. Paulman v. Gateway Venture Partners Iii,
L.P. (In re Filtercorp, Inc.), 163 F.3d 570, 583 (9th Cir. 1998).
"Where non-insider, non-fiduciary claims are involved, as is the case here, the level of pleading and proof is elevated: gross and egregious conduct will be required before a court will equitably subordinate a claim. See In re Pacific Express, Inc. 69
B.R. 112, 116 (B.A.P. 9th Cir. 1986) (‘The primary distinctions between subordinating the claims of insiders versus those of non-insiders lie in the severity of misconduct required to be shown, and the degree to which the court will scrutinize the claimant's actions toward the debtor or its creditors. Where the claimant is a non- insider, egregious conduct must be proven with particularity.’) (citing In re Teltronics Services, Inc.., 29 B.R. 139, 169 (Bankr. E.D.N.Y. 1983)). Although equitable subordination can apply to an ordinary creditor, the circumstances are ‘few and far between.’ ABF Capital Mgmt. v. Kidder Peabody & Co., Inc. (In re Granite Partners, L.P.), 210 B.R. 508, 515 (Bankr. S.D.N.Y. 1997) (collecting cases)." Henry v. Lehman Commer. Paper, Inc. (In re First Alliance Mortg. Co.), 471 F.3d 977, 1006 (9th Cir. 2006). Therefore, Plaintiff must show with particularity that Chase Bank’s conduct in executing the loan modification rose the level of gross and egregious conduct for the court to grant this extraordinary relief in a summary proceeding.
Gross misconduct has been defined in the Ninth Circuit as "tantamount to ‘fraud, overreaching or spoliation to the detriment of others.’" In re Pacific Express, Inc., 69
B.R. at 116.
Here, Plaintiff contends that the undisputed facts show that Chase Bank engaged in "gross inequitable conduct to the detriment of Plaintiff" because Chase Bank violated applicable California state law governing the modification of a priority
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lien. In support Plaintiff cites Gluskin v. Atlantic Savings & Loan Assn., 32 Cal.App.3d 307, 314 (1973) for the proposition that public policy considerations require "protection of subordinating sellers and that a lender and a borrower may not bilaterally make a material modification in the loan to which the seller has subordinated, without the knowledge and consent of the seller to that modification if the modification materially affects the seller’s rights." Further, "[i]f, however innocently, their bilateral agreement or conduct so modifies the terms of the senior loan that the risk that it will become a subject of default is materially increased, then the buyer and the lender may subject themselves to liability to the seller if they proceed without the latter’s consent, and if the seller's otherwise junior loan is to be adversely affected." Id. at 315.
Plaintiff concedes that the rules stated above in Gluskin are taken from a construction loan context, but argues that this rule has been applied in other contexts as well. Further, Plaintiff cites Lennar Northeast. Partners v. Buice, 49 Cal.App.4th 1576 (1996), for the proposition that California follows the position articulated by a New York court, i.e.:
"It is well established that while a senior mortgagee can enter into an agreement with the mortgagor modifying the terms of the underlying note or mortgage without first having to notify any junior lienors or to obtain their consent, if the modification is such that it prejudices the rights of the junior lienors or impairs the security, their consent is required [citations]. Failure to obtain the consent in these cases results in the modification being ineffective as to the junior lienors [citation] and the senior lienor relinquishing to the junior lienors its priority with respect to the modified terms [citations]. While this sanction ordinarily creates only the partial loss of priority noted above, in situations where the senior lienor's actions in modifying the note or mortgage have substantially impaired the junior lienors' security interest or effectively destroyed their equity, courts have indicated an inclination to wholly divest the senior lien of its priority and to elevate the junior liens to a position of superiority [citation]. (Shultis v. Woodstock Land Dev. Assoc. (1993) 188
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A.D.2d 234, 236-237 [594 N.Y.S.2d 890, 892].)" Lennar 49 Cal.App.4th at
1589.
Plaintiff asserts that the uncontroverted facts show that Chase Bank engaged in just the type of conduct proscribed by Gluskin and Lennar and should be subject to the liabilities and remedies prescribed by Gluskin and Lennar.
However, Plaintiff’s reliance on these cases, even when looking at the available evidence in the light most favorable to Plaintiff, is misplaced because there are critical factual and legal distinctions between Gluskin, Lennar, and the current case. As Defendants argue, Gluskin dealt with the duty on the part of senior lenders toward contractually subordinating sellers.
In Gluskin, the plaintiff sold land to a corporation. 32 Cal.App.3d at 309. The corporation obtained a construction loan from defendant to develop the land. Id. at 309-10. In the transaction between the plaintiff and the corporation, plaintiff received a note secured by a deed of trust. Id. at 310. This note contained an express provision in which plaintiff agreed to subordinated priority of its trust deed to defendant’s trust deeds. Id. Defendant and the corporation then agreed to modify the note securing defendant’s loan to the corporation by an agreement in which the corporation stated that no other entity had an interest in the premises securing the deed of trust. Id. at
311. Plaintiff sued.
The factual distinctions between Gluskin and the case before the court are crucial. Unlike our case, Gluskin dealt with a plaintiff who had contractually subordinated its priority. It is in this context that the Gluskin court discussed the importance of protecting the interests of subordinating sellers due to their vulnerable position. Indeed, at least one California court has observed that;
"Subsequent cases have made clear that a material modification of a senior lien, such as an increase in the principal or interest rate, does not result in loss of priority absent contractual subordination. Where a seller agrees to subordinate to construction loans, a material modification of those loans may
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result in their total loss of priority. (citing Gluskin at 315). However, in the case of a subordinating junior lender, only the modification of the senior lien loses priority. (Lennar Northeast Partners v. Buice (1996) 49 Cal.App.4th
1576, 1586–1587). Bank of New York Mellon v. Citibank, N.A., 8 Cal.App.5th 935, 954 (2017)
The court in Bank of New York Mellon further observed: "[t]hese cases are based on the premise that the junior lienholder has agreed to be in junior position and should be protected from modifications in the senior lien to the extent that those modifications materially increase the risk of default." Id.
Thus, Gluskin and Lennar are of little support to Plaintiff’s position because Chase Bank and Plaintiff did not agree to subordinate Plaintiff’s interest. There is also no evidence in the record that Plaintiff’s predecessor(s) in interest subordinated their liens. It appears uncontested that Plaintiff is simply a junior lienholder with no contractual relationship or any other special relationship with Chase Bank, at least none that would invoke the protections of Gluskin and Lennar. Plaintiff argues that it is not required to show the existence of a subordination agreement or a special relationship because this is an illusory rule and not found in any case law. Plaintiff asserts that to the extent support for this idea exists in the cases cited, it is only found in dicta. The court disagrees, but even if Plaintiff’s assertion were true, the logical underpinnings and legal principles would support this rule only on the limited basis as is discussed in the next paragraph.
California courts have held that the rule in Gluskin should not be read broadly, contrary to Plaintiff’s argument. In Friery v. Sutter Buttes Sav. Bank, 61 Cal.App.4th 869, 878 (1998), the court held that there is "no justification for creating an unlimited duty on the part of all senior lenders not to modify their loans ‘in any material manner which produces an important impact on the value of the junior lien’ other than the fact that the junior may suffer as a result.’" Id. (internal citation omitted) The Friery court observed that such a view "fails to take into account that applying Gluskin in such a
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sweeping fashion might upset established rules of lien priorities and foster uncertainty and instability in the lending market, as is illustrated here." Id. The court then explained: "[r]ead properly, Gluskin does no more than find a duty of good faith and fair dealing in a subordination agreement, preventing two of the parties from substantially impairing the third’s interest in the joint enterprise. This might be the mere dicta Plaintiff alludes to, but, as the Ninth Circuit has explained, and as the court in Friery noted, ‘[t]he rule articulated in Gluskin aims to protect subordinated sellers from secret agreements between buyers and lenders against the interest of the subordinated seller.’ (Resolution Trust Corp. v. BVS Development, Inc. (9th Cir. 1994) 42 F.3d 1206, 1215)" Friery, at 877.
The Friery court then observed that, like Plaintiff in the current case, the plaintiff in Friery, "subordinated to no one." Id. The Fiery court further observed, "California follows the ‘first in time, first in right’ system of lien priorities, a system whose legacy harkens back to the days of the gold rush. A seller who invests in a second deed of trust accepts all the risks of the junior position." Id. at 878. As a result, the Friery court held, "[w]e decline to extend Gluskin to the situation presented here, which involves a garden variety junior lienholder who has not subordinated, bears no special relationship to the senior and possesses no extraordinary facts in her favor which would warrant the imposition of such a duty." Id. at 871.
Plaintiff argues that Lennar is very similar to our case. Plaintiff states:
"Here, Lennar provides guidance because it is the most factually similar to the facts of this adversary. Lennar involved ‘ordinary’ lienholders where the first position lienholder materially modified the note supporting the first position lien to the detriment of the second position lienholder. The same is true here. As in Lennar, the note secured by the first deed of trust had a cap on the principal balance. As in Lennar, Chase and Hernandez entered into the Loan Modification, which materially changed the terms of the Note to the detriment of AMH. This is precisely the type of situation protected by Gluskin and those cases that rely on it." Plaintiff Reply in Support of Motion for Summary
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Judgment, p. 9: 4-10)
While Plaintiff is correct in that there are unquestionably factual parallels
between Lennar and our case, Plaintiff omits a critical fact. Lennar, unlike this adversary proceeding, involved a plaintiff junior lienholder that was contractually subordinated. Lennar at 1580-81. In Lennar, the senior lienholder executed an amendment to a deed of trust that negatively impacted the security of plaintiff’s junior lien. Id. Plaintiff then brought suit arguing that it now had senior priority. Id. at 1581. The court found that the modification to the senior lien was material and substantial because the interest rate greatly increased as did the principal amount, which together worsened plaintiff’s position as a subordinated junior lienholder. Id. at 1585. The court, after a lengthy discussion of Gluskin, among other things, ultimately ruled that the modification would be treated separately, which was informed by what the court found to be equitable under the circumstances. Id. at 1589. In the end the original senior lien would stay senior, the contractually subordinated junior lienholder (plaintiff) would stay in the place it contracted to be in, and the modification portion only would be assigned the status of a junior lien. Id.
A closer reading of Lennar reveals it is legally distinguishable from this adversary, and thus only of limited use. The key distinction is that in Lennar there was a subordination agreement, whereas here, there is no such agreement. Therefore, this adversary is closer in its critical operative facts to Friery.
It is also less persuasive to cite Missouri law in support of a cause of action based on California law. (Plaintiff’s Motion for Summary Judgment, p. 11-13 & fn. 4 mentioning and briefly discussing Burney v. McLaughlin, 63 S.W. 3d 223, 230-32 (2001)). Plaintiff also cites to treatises, which while often helpful, are certainly not, in and of themselves, binding authority.
Then there is the policy argument. The court in Friery opined that an interpretation forbidding any modifications by senior lienholders would have various deleterious effects, and would cause more problems than it solved.
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Still, it is understandable that Plaintiff wants to salvage something from what turned out to be a bad investment, and would argue that equity favors subordinating Chase Bank’s claim. The reality is that Plaintiff’s case does not bear any of the hallmarks that California courts have identified as critical elements (mainly the existence of a contractual subordination agreement or other type of "special relationship") to award the extraordinary relief Plaintiff seeks. It is worth noting, however, that Plaintiff attempts to show the existence of a "special relationship" by arguing that the original lender for both loans was Metrocities. (Plaintiff Reply in Support of Motion for Summary Judgement, p. 9, fn. 3). But Plaintiff cites no authority supporting the argument. The fact that both loans originated with a common lender is not in dispute, but the absence of authority that this is of any particular consequence or serves to constitute a ‘special relationship’, gives the court little reason to adopt Plaintiff’s reasoning.
Chase Bank acknowledges that its loan modification (executed several years before Plaintiff acquired its junior lien) was detrimental to the junior interests because it took all of the available equity leaving nothing for junior lienholders like Plaintiff. But, as the court in Friery observed, there are risks involved in being a junior lienholder. The risk of having a claim wholly avoided because equity is exhausted for the benefit of a senior lienholder is an extremely common and well-known risk.
Therefore, Plaintiff’s assertion that the loan modification was in violation of California law fails as a matter of law, and so too does Plaintiff’s assertion of gross and egregious conduct. Contrary to Plaintiff’s assertion of gross and egregious conduct on the part of Chase Bank, the uncontroverted facts demonstrate that the loan modification was done in 2011 for a noble purpose, i.e. to allow the debtor and her husband to stay in their home and avoid foreclosure. Debtor states that since the loan modification took effect, there has been no default or arrears as of the time of the bankruptcy filing.
Finally, returning to the three factors from Filtercorp., Plaintiff has the burden of demonstrating that (1) the claimant to be subordinated must have engaged in inequitable conduct;( 2) that inequitable conduct resulted in injury to competing
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claims or an unfair advantage to the claimant; and 3) subordination must not be inconsistent with bankruptcy law.
First, the undisputed facts do not show that Chase Bank’s conduct was inequitable. Plaintiff has not shown that Chase Bank engaged in anything resembling fraud or illegality. The closest Plaintiff comes is arguing that Chase Bank’s conduct was illegal under California law. However, as exhaustively demonstrated above, that argument fails as well as a matter of law. Therefore, the first prong is not satisfied even when viewing the undisputed facts in the light most favorable to Plaintiff.
Second, it is freely admitted that the loan modification negatively impacted Plaintiff’s junior claim. But the undisputed facts provide no evidence that the loan modification was a secret agreement between Chase and the Debtor’s husband, or that it was made with the intention of enhancing the Chase Bank’s senior claim at the expense of junior claims, or that there was any inequitable conduct. The second prong is also unsatisfied. Third, Plaintiff has also not shown that applying equitable subordination here would be consistent with bankruptcy law. There is a reason that the third prong is included. That reason is to force the parties and the court to consider whether the proposed subordination furthers the goals of bankruptcy law and policy. Bearing in mind that bankruptcy policy favors keeping debtors in their homes whenever feasible, if Plaintiff were correct there would likely be a chilling effect on lenders’ willingness to modify any distressed mortgagor’s loan even if such a modification allowed the person to stay in their home. Indeed, if all that were necessary to lose senior lien status was that the loan modification had a negative impact (even an unforeseen one) on any junior lienholder, then this chilling effect would almost certainly preclude modifications altogether and quite a few more distressed debtors would lose their homes. This is manifestly inconsistent with public policy and the aspirations of Congress expressed in the Bankruptcy Code, particularly in Chapter 13.
Plaintiff might argue that there would be no risk to senior status so long as the senior lienholder obtained consent from all junior lienholders who might be adversely impacted. However, such a policy would present more questions than answers.
Could a single non-consenting junior lienholder hold a loan modification hostage?
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Would a senior lienholder have to obtain renewed consent every time a junior lien was assigned or transferred? Could a majority of consenting lienholders vote to overrule a minority of non-consenting lienholders? Could/should the court intervene? What would the debtor’s rights be? Such a policy, and the problems it would potentially create, appear to be at odds with bankruptcy law and policy. But this is not inconsistent with the rule in Gluskin and its progeny because those cases were concerned with protecting the interests of entities who had contractually subordinated and thus acquired rights to good faith and fair dealing not necessarily enjoyed by all lienholders.
Plaintiff’s Fourth Cause of action seeks partial subordination of Chase Bank’ claim pursuant to 11 U.S.C. 510(c)(1). Plaintiff’s Fifth Cause of Action seeks damages to compensate it for Chase Bank’s "Unlawful Modification" of the principal balance of its claim.
These two causes of action are intertwined. In both causes of action, Plaintiff asserts that around $51,000 has already been paid to Chase Bank on this loan.
Therefore, because the court has established in the avoidance action that Debtor’s home was worth $950,000 and original note only allowed the loan to be increased by 110% (or to around $979,000) the true upper limit of Chase Bank’s claim could be no more than about $928,000, which would leave equity for Plaintiff’s claim, and would justify vacating the Avoidance Order. All of this is predicated on the argument that Chase Bank’s loan modification was wrongful, which as established above, is an argument not supported by California law. And Plaintiff has not persuaded the court that principles of equity favor granting such extraordinary relief. In this same vein, Plaintiff argues that Chase Bank’s loan modification violated basic principles of good faith and fair dealing, again citing Gluskin and Friery. (Plaintiffs Motion for Summary Judgment, 14, 16-17)
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There are two problems with this argument. First, as the court in Friery noted, the notions of good faith and fair dealing mentioned in Gluskin are rooted in principles of contract law, not in garden variety claim priority principles. Friery, 61 Cal. App. 4th 877. A subordination agreement is a species of contract. Under this type of contract, a senior lienholder does owe a duty of good faith and fair dealing to a contractually subordinated lienholder. Id. Second, immediately following its discussion of Gluskin, the Friery court observed, "[n]o policy considerations of comparable magnitude exist in the relationship presented here. Friery subordinated to no one." Id. The undisputed facts in this adversary do not reveal any contractual relationship between Chase Bank and Plaintiff. Plaintiff does not assert any other basis for such a contractual or even a ‘special’ relationship. Therefore, Plaintiff has not shown that Chase Bank acted wrongfully or that the loan modification was unlawful. Plaintiff has not persuaded the court that the uncontested facts demonstrate that, as a matter of law, the loan modification was wrongful in any respect, despite that Plaintiff’s interests were unquestionably harmed. Therefore, even reducing Chase Bank’s claim by $51,000 still leaves Debtor’s property way over encumbered, leaving no equity onto which Plaintiff’s claim could attach. Thus, the court finds no basis in law upon which the court could find in Plaintiff’s favor on the Fourth and Fifth Claims for Relief. The court should grant summary adjudication as to these causes of action in favor of Defendants.
This cause of action asks the court to vacate its own Avoidance Order. This cause of action, like the earlier causes of action, asserts that Chase Bank’s claim is invalid and should be disallowed because, first, the listed creditor in the Claims Register is U.S. Bank, not Chase Bank. Second, Plaintiff asserts that Chase cannot show good chain of title on the claims and asserts that what Chase really had was a rogue deed. Chase Bank argues that this court has already found (at least impliedly) that its claim is valid, which is why the court issued the Avoidance Order as to Plaintiff’s claim. Under the doctrine of res judicata, Plaintiff is barred from relitigating this claim. Plaintiff argues that the prior hearing was to determine the
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priority of the claims, not the validity of the claims. Also, it is not clarified whether the §506 order at issue here is part of Plaintiff’s appeal. If it is part of the appeal it is not properly before the court in this motion in any event.
The language of this courts adopted tentative ruling from July 8, 2015 stated: "the property has a value of only $950,000 and since it is indisputably subject to a senior mortgage of $1,035,513 to JP Morgan Chase, there is no value to which the junior lien of respondent can attach." Admittedly, this language is somewhat ambiguous regarding the validity of the claim (as the court apparently assumed it was undisputed), but not to its priority. In other words, it is unclear whether court is categorically stating both that Chase Bank has a senior claim and that the claim is valid. With such an ambiguity existing, the court cannot say as a matter of law that this cause of action has been conclusively ruled upon. Due to its close relationship to the Second Cause of Action, this cause of action is also likely not ready for summary judgment or adjudication because certain material facts (i.e. Chase’s clean chain of title) are still in dispute.
Deny as to Second and Sixth Claims for relief. Grant as to all others.
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo William J Idleman
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Virgil Theodore Hernandez and Aleli Pro Se
Virgil Theodore Hernandez Represented By Gregory M Salvato Joseph Boufadel
Aleli A. Hernandez Represented By Gregory M Salvato Joseph Boufadel
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush Louis H Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
(con't from 6-14-18 per stip. & order entered 6-12-18)
Docket 146
See #1.
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo William J Idleman
Virgil Theodore Hernandez and Aleli Pro Se
Virgil Theodore Hernandez Represented By Gregory M Salvato Joseph Boufadel
Aleli A. Hernandez Represented By Gregory M Salvato Joseph Boufadel
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Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush Louis H Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
(Advanced from 8-23-18 -per stip & order entered 6-12-18)
Docket 176
See #1.
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo William J Idleman
Virgil Theodore Hernandez and Aleli Pro Se
Virgil Theodore Hernandez Represented By Gregory M Salvato Joseph Boufadel
Aleli A. Hernandez Represented By Gregory M Salvato Joseph Boufadel
Plaintiff(s):
Asset Management Holdings, LLC Represented By
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Trustee(s):
Vanessa M Haberbush Louis H Altman
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Approving Procedures Limiting Notice
(OST Signed 7-18-18)
Docket 15
Opposition due at hearing.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
10:30 AM
THE IRVINE COMPANY, LLC
Vs.
DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Nubia C. Murphy Represented By Joseph M Tosti
Movant(s):
The Irvine Company, LLC Represented By Scott Andrews
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
U.S. BANK TRUST Vs.
DEBTOR
Docket 9
Grant. Appearance is optional.
Debtor(s):
Hector Daniel Alvarez Jr Pro Se
Movant(s):
U.S. Bank Trust, N.A., as Trustee for Represented By
Laurie Howell
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
CAPITAL ONE AUTO FINANCE
Vs.
DEBTOR
Docket 29
Grant. Appearance is optional.
Debtor(s):
Alicia Contreras Represented By Luis G Torres
Movant(s):
Capital One Auto Finance, a Represented By Bret D. Allen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
ACAR LEASING LTD
vs.
DEBTOR
Docket 8
Grant. Appearance is optional.
Debtor(s):
Elna Louise Simpson Represented By Sanaz S Bereliani
Movant(s):
ACAR Leasing LTD dba GM Represented By Sheryl K Ith
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
SETERUS, INC.
Vs.
DEBTORS
Docket 73
Grant consistent with stipulation. An order should be lodged.
Debtor(s):
James Edward Stanley Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Rachel Stanley Represented By Michael Jones Sara Tidd
Movant(s):
SETERUS, INC., AS THE Represented By James F Lewin Renee M Parker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 6-26-18 per order on stip. ent. 6-15-18)
BAYVIEW LOAN SERVICING, LLC
Vs.
DEBTOR
Docket 57
- NONE LISTED -
Debtor(s):
Amanda Vargas Gupta Represented By Andrew Moher
Movant(s):
The Bank of New York Mellon FKA Represented By
Erin M McCartney Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 6-26-18)
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 31
Tentative for 6/26/18:
Grant. Appearance is optional.
Tentative for 5/22/18:
Grant. Appearance is optional.
Debtor(s):
Yolanda Carpino Represented By Gary Polston
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
TUSTIN GREEN, INC.
Vs.
DEBTOR
Docket 41
Grant. Appearance is optional.
Debtor(s):
Kenshaka Ali Represented By Christopher J Langley
Movant(s):
Tustin Green Inc Represented By
Mark Allen Wilson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
JPMORGAN CHASE BANK
Vs.
DEBTOR
Docket 65
Grant. Appearance is optional.
Debtor(s):
Terry Gonzalez Represented By Claudia C Osuna
Movant(s):
JPMORGAN CHASE BANK, Represented By Merdaud Jafarnia
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTORS
Docket 40
Grant. Appearance is optional.
Debtor(s):
Philip Malloy Represented By Arlene M Tokarz
Joint Debtor(s):
Brenda Malloy Represented By Arlene M Tokarz
Movant(s):
Wells Fargo Bank, N.A. Represented By Austin P Nagel Megan Porter Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 21
Grant. Appearance is optional.
Debtor(s):
Hang Kim Ha Pro Se
Movant(s):
Deutsche Bank National Trust Represented By Robert P Zahradka
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman Anerio V Altman
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 13
Grant. Appearance is optional.
Debtor(s):
Eric Munchul An Represented By Daniel S Lee
Movant(s):
DEUTSCHE BANK NATIONAL Represented By
Darlene C Vigil
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
RICHARD A. MARSHACK, CHAPTER 7 TRUSTEE
WEILAND GOLDEN GOODRICH LLP, ATTORNEY FOR CHAPTER 7 TRUSTEE
HAHN FIFE & COMPANY, LLP, ACCOUNTANT
Docket 144
Reportedly, there are only $30,000 available to pay fees. Whether more is expected is not made clear. The court prefers that in cases where the amount of fees requested seems outsized compared to funds available, applicants explain what happened. This issue has been raised before. No tentative.
Debtor(s):
Mark Anthony Lynch Represented By Michael N Nicastro
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Jeffrey I Golden Beth Gaschen
11:00 AM
(OST Signed 7-19-18)
Docket 126
Per OST, opposition due at hearing.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
11:00 AM
(OST Signed 7-24-18)
PMC FINANCIAL SERVICES GROUP, LLC
Vs.
DEBTOR
Docket 137
Per OST, opposition due at hearing.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
PMC Financial Services Group, LLC Represented By
Paul S Arrow
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
11:00 AM
(OST Signed 7-25-18)
CATERPILLAR FINANCIAL SERVICES CORPORATION
Vs.
DEBTOR
Docket 150
Per OST, opposition due at hearing.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
Caterpillar Financial Services Represented By
Mark D Poniatowski
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
11:00 AM
(OST Signed 7-25-18)
TCJI, LLC
Vs.
DEBTOR
Docket 152
Per OST, opposition due at hearing.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
TCJ I, LLC Represented By
Hal M Mersel
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
11:00 AM
(OST Signed 7-30-18)
CNH INDUSTRIAL CAPITAL AMERICA LLC
Vs DEBTOR
Docket 171
Per OST, opposition due at hearing.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
11:00 AM
(con't from 7-3-18 per court order)
Docket 2202
Sustain. Appearance is optional.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
(con't from 7-3-18 per court order)
Docket 2204
Although the claimant provided a copy of the lease and, after the objection, a ledger showing partial substantiation of the pre-petition damages, there is no substantiation of the administrative portion.
Per the Trustee's suggestion in her reply,the objection is sustained as to any claim exceeding $196,040.16 as a general, non-priority claim.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky
11:00 AM
Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
(con't from 7-3-18 per court order)
Docket 2206
Claim 1027 is disallowed as already paid. Claim 75 is disallowed as a duplicate of Claim 380.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
10:00 AM
Docket 396
Grant.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Docket 120
The court is inclined to continue the matter briefly to allow first rulings on two related matters, the disqualification (recusal) before Judge Clarkson and stay on appeal brought by debtor. These are calendared August 2 and 1 respectively. The court suggests August 8, 2018 at 10:00 a.m.
Debtor(s):
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays
10:00 AM
Docket 101
Debtor has not shown any of the four elements requisite of a stay. See
e.g. Nken v. Holder, 556 U.S. 418, 433 (2009). Moreover, if Trustee is correct on the lateness of the appeal, likelihood of success on the merits is clearly not shown. But even that aside, no evidence is offered to show likelihood of success or irreparable injury, or lack of injury to creditors.
Debtor(s):
Deny.
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays
10:00 AM
Docket 0
Tentative for 8/1/18:
Continue to December 5, 2018 at 10:00 a.m. to coincide with request for final decree.
Tentative for 1/24/18:
Continue to July 25, 2018 at 10:00 a.m.
Tentative for 7/12/17:
It looks like only one unsecured claim remains. Continue status conference to January 24, 2018 at 10:00 a.m.
Tentative for 1/11/17:
Continue for further hearing approximately 6 months.
Tentative for 6/22/16: Status?
Tentative for 2/10/16:
10:00 AM
Continue approximately 120 days for further status conference.
Tentative for 10/28/15:
Continue to April 6, 2015 at 10:00 a.m.
Tentative for 5/13/15:
When will a final decree motion be filed? Continue for follow up status conference.
Tentative for 12/10/14:
Schedule further status conference in approximately 180 days.
Tentative for 7/30/14:
Still no report? Issue OSC re dismissal for hearing in 45 days.
Tentative for 5/28/14:
Why no follow up report? What is status of payments?
Tentative for 11/6/13:
Continue for further status conference. Approximately six months.
Debtor(s):
Ruben Corona Jr Represented By Michael R Totaro
10:00 AM
Joint Debtor(s):
Maria Elena Corona Represented By Michael R Totaro
10:00 AM
Docket 543
Grant. The court is surprised to hear that there is no cash available. Is a distinction being made here between the pre-petition estate and post-petition earnings? See section 1115(a)(2). Could movant clarify?
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
Adv#: 8:17-01074 Marshack v. Stegin
Docket 1
Tentative for 8/2/18:
Status conference continued to September 13, 2018 at 10:00 a.m. Appearance on August 2, 2018 excused.
Tentative for 6/7/18:
Status conference continued to August 2, 2018 at 10:00AM. Personal Appearance Not Required.
Tentative for 1/31/18:
Status conference continued to June 7, 2018 at 10:00 a.m. per request. Appearance is optional.
Tentative for 12/14/17:
Status conference continued to January 31, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to December 14, 2017 at 10:00 a.m. to allow for fulfillment of settlement terms. Appearance is waived.
10:00 AM
Debtor(s):
Jana W. Olson Pro Se
Defendant(s):
Elliott G. Stegin Represented By
Natalie B. Daghbandan Sharon Z. Weiss
Plaintiff(s):
Richard A Marshack Represented By
D Edward Hays
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
10:00 AM
Adv#: 8:17-01105 Naylor v. Gladstone
(con't from 5-24-18 per order approving. stip. to cont. ent. 4-5-18)
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Scott Gladstone Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Melissa Davis Lowe
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01121 Marx v. Schmidt
(con't from 6-14-18)
Docket 83
Tentative for 8/2/18:
Deadline for completing discovery: December 1, 2018 Last date for filing pre-trial motions: December 17, 2018 Pre-trial conference on: January 24, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by October 15, 2018.
Tentative for 6/14/18:
Status on amended complaint?
Tentative for 5/24/18: Why no status report?
Tentative for 3/29/18: See #19.
10:00 AM
Tentative for 3/1/18:
Is the dismissal motion set for March 29 on the latest version of the amended complaint? Continue to that date.
Tentative for 2/1/18:
In view of amended complaint filed January 29, status conference should be continued approximately 60 days.
Tentative for 11/2/17:
See #4. What is happening on February 1, 2018 at 11:00 am?
Tentative for 10/12/17:
Status conference continued to November 2, 2017 at 10:00 a.m.
Debtor(s):
Stacey Lynn Schmidt Represented By Christine A Kingston
Defendant(s):
Stacey Lynn Schmidt Pro Se
Plaintiff(s):
Tracy M Marx Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01122 Marshack v. Choubey et al
U.S.C. Section 550
(con' from 5-24-18)
(another summons issued on defendant Jitendra Patel on 5-11-18)
Docket 1
Tentative for 8/2/18:
Deadline for completing discovery: October 1, 2018 Last date for filing pre-trial motions: October 31, 2018
Pre-trial conference on: December 6, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Why no participation by defendant?
Tentative for 5/24/18:
In view of the report that Jitendra Patel has not been served, continue to 8/2/18 at 10:00AM.
Tentative for 4/26/18:
Status report? Status of service? Is settlement still in prospect?
Tentative for 2/1/18:
Status conference continued to April 26, 2018 at 10:00 a.m. to allow input from any responding party.
10:00 AM
Tentative for 11/30/17:
Status conference continued to January 4, 2018 at 10:00 a.m. to accomodate default and prove up.
Debtor(s):
Rahul Choubey Represented By Richard G Heston
Defendant(s):
Rahul Choubey Pro Se
Misha Choubey Pro Se
Shahi K. Pandey Pro Se
Vandana Pandey Pro Se
Jitendra Patel Pro Se
Azahalea Ahumada Pro Se
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
10:00 AM
Adv#: 8:17-01247 Karen Sue Naylor, Chapter 7 Trustee v. Sam Hedaya Corp.
(con't from 3-8-18 at 10:00 a.m. per order approving stip. ent. 2-15-18)
Docket 1
Tentative for 8/2/18: Status?
Tentative for 4/26/18:
Status conference continued to August 2, 2018 at 10:00AM.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Sam Hedaya Corp. Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
(con't from 5-31-18)(Second Amended Complaint filed 6-20-18)
Docket 1
Tentative for 8/2/18:
Status conference continued to August 23, 2018 at 11:00 a.m.
Tentative for 5/31/18: see calendar # 6
Tentative for 5/24/18: Continue to 5/31/18.
Tentative for 4/12/18:
Status conference continued to May 3, 2018 at 11:00 a.m.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Pro Se
10:00 AM
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
10:00 AM
Adv#: 8:18-01070 CMS Engineering, Inc. v. Lloyd
(con't from 7-5-18 per court order)
Docket 1
Tentative for 8/2/18: Status of service/default?
Debtor(s):
Geoffrey David Lloyd Represented By Michael W Collins
Defendant(s):
Geoffrey David Lloyd Pro Se
Plaintiff(s):
CMS Engineering, Inc. Represented By Keith F Elder
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:18-01079 Caruso v. Olim
Docket 1
- NONE LISTED -
Debtor(s):
Vincent Paul Caruso Represented By Derik J Roy III Shawn M Olson
Defendant(s):
Stephen Olim Pro Se
Plaintiff(s):
Vincent Paul Caruso Represented By Shawn M Olson
Trustee(s):
Karen S Naylor (TR) Represented By Robert P Goe
10:00 AM
Adv#: 8:18-01080 Arad v. Arad et al
money/property - 542 turnover of property)),(11 (Recovery of money/property - 542 turnover of property)),(72 (Injunctive relief - other)),(91 (Declaratory judgment))
Docket 1
Tentative for 8/2/18:
Status conference continued to November 1, 2018 at 10:00 a.m.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by October 15, 2018.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Defendant(s):
Reuven Arad Pro Se
Sara Arad Pro Se
IRINA GRINFELD Pro Se
AMERICAN CENTER FOR Pro Se
DEPARTMENT OF THE Pro Se
10:00 AM
Plaintiff(s):
Ron S Arad Represented By
G Bryan Brannan William H Brownstein
10:00 AM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
U.S.C. Section 510 (C); (5) For an Award of Damages Resulting from Unlawful Modification of Principal Balance of JPMorgan Chase Bank, N.A.'s Claim; and
(6) Relief from Order Avoiding Plaintiff's Lien
(set from s/c hearing held on 1-26-17)
(con't from 7-5-18 per Order Approving Joint Stipulation entered 5/10/18 )
Docket 82
Tentative for 3/1/18:
Discovery already ended? Continue to April 26, 2018 at 10:00 a.m. for pre- trial conference.
Tentative for 1/26/17:
Deadline for completing discovery: July 1, 2017. Last Date for filing pre-trial motions: July 24, 2017.
Pre-trial conference on August 10, 2017 at 10:00 a.m.
Tentative for 12/15/16:
Status Conference continued to January 26, 2017 at 10:00 am after amended compalint is filed.
10:00 AM
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo
Virgil Theodore Hernandez and Aleli Pro Se Virgil Theodore Hernandez Pro Se
Aleli A. Hernandez Pro Se
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:15-01099 Howard B. Grobstein, Chapter 7 Trustee v. Ponce
(con't from 5-31-18 per order approving stip re continuance ent. 5-14-18)
Docket 1
Tentative for 8/2/18:
The court was under the impression a settlement had been reached, but no updated status report has been received.
Tentative for 8/4/16:
Deadline for completing discovery: November 7, 2016 Pre-trial conference on: December 1, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Raymond E Ponce Represented By Nancy A Conroy
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Jon L Dalberg
10:00 AM
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
10:00 AM
Adv#: 8:16-01045 Howard B. Grobstein, Chapter 7 Trustee v. Benice et al
(cont'd from 4-12-18 per order approving stipulation entered 3-05-18)
Docket 1
Tentative for 6/23/16:
Deadline for completing discovery: October 31, 2016 Last date for filing pre-trial motions: November 14, 2016 Pre-trial conference on: December 1, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 5/5/16:
Deadline for completing discovery: October 1, 2016 Last date for filing pre-trial motions: October 24, 2016
Pre-trial conference on: November 10, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Law Offices Of Jeffrey S. Benice Pro Se
10:00 AM
Jeffrey S. Benice Pro Se
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Roye Zur
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
Howard B Grobstein (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Represented By Frank Cadigan
10:00 AM
Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
& 523(a)(6) and (2) Objection to Discharge Pursuant to 11 U.S.C. Sections 727(a)(2), 727(c)(1) & 727(c)(2)
(set at s/c held 6-15-17)
(con't from 6-28-18 per order entered 6-12-18)
Docket 1
Tentative for 8/2/18:
An order adopting the stipulation should be lodged. Set trial date.
Tentative for 6/15/17:
Why no status report? Should the court rely on the February 15, 2017 version?
Tentative for 3/2/17:
Status Conference continued to June 15, 2017 at 10:00 a.m.
Refer to Mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by June 1, 2017.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Nezamiddin Farmanfarmaian Pro Se
10:00 AM
Plaintiff(s):
Omni Steel Company, Inc. Represented By Sean A Topp
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
10:00 AM
Adv#: 8:17-01039 Marshack v. Movafagh
(set from s/c hearing held on 6-1-17)
(con't from 5-3-18 )
Docket 1
Tentative for 8/2/18:
Where is the joint pre-trial stip/order?
Tentative for 5/3/18:
Discovery deadline is already past. Pretrial conference is Aug. 2 at 10:00a.m. Trustee to give notice.
Tentative for 6/1/17:
Deadline for completing discovery: October 1, 2017 Last date for filing pre-trial motions: October 23, 2017
Pre-trial conference on: November 2, 2017 at 10:00 a.m. Joint pre-trial order due per local rules.
Why did defendant fail to participate in the status report?
Debtor(s):
Fazlollah Movafagh Represented By Kaveh Ardalan
Defendant(s):
Fazlollah Movafagh Pro Se
10:00 AM
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
11:00 AM
Misc#: 8:18-00101 Coffeen III et al v. Karr
Docket 10
- NONE LISTED -
Defendant(s):
John William Karr Pro Se
Movant(s):
Henry F Coffeen III Represented By Jonathan A Michaels
Management Inc Represented By Jonathan A Michaels Jonathan A Michaels
Plaintiff(s):
Henry F Coffeen III Represented By Jonathan A Michaels
Management Inc Represented By Jonathan A Michaels
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
(con't from 4-26-18 per order granting stip. to continue hrgs. ent. 4-23-18)
Docket 1
Tentative for 2/15/18: Status?
Tentative for 1/25/18:
What update can be given on Frank's deposition?
Should this be continued to coordinate with item #11.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled with discovery incomplete?
Tentative for 7/13/17:
It would appear that discovery disputes must be ironed out before any firm date can be set.
Tentative for 5/4/17:
11:00 AM
Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
Tentative for 3/23/17:
The failure of defendants to participte in preparation of joint status report, and reported lack of discovery cooperation is troubling. Should the answer be stricken?
Tentative for 12/8/16: No status report?
Tentative for 3/10/16:
It sounds from the report that dispositive motions are being prepared on both sides. So, a continuance as requested by Plaintiff has some appeal, although the court notes this case has been pending one year.
Tentative for 1/28/16:
Why no status report? Have issues described from October 29, 2015 docket entry been addressed?
Tentative for 10/29/15:
Why has there been no apparent update, report or progress?
Tentative for 8/27/15:
11:00 AM
Status of service/default?
Tentative for 4/23/15:
Status conference continued to August 27, 2015 at 10:00 a.m. to afford time to resolve dismissal motions.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller
Defendant(s):
Frank Jakubaitis Pro Se
Tara Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR)
Jeffrey I Golden (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
(con't from 4-26-18 per order granting stp. to cont. ent. 4-23-18)
Docket 1
No tentative. The court wants to discuss the future of these cases.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
11:00 AM
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
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Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 110
Tentative for 2/15/18:
Status? Agreed protective order?
Tentative for 1/25/18: Status?
Tentative for 9/14/17:
Status of discovery and cooperation?
Tentative for 7/13/17: Status?
Tentative for 5/4/17:
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See #10.
Tentative for 4/13/17:
This is a hearing on the sanctions portion of the motion first heard February 2, 2017. As usual, this motion is plagued by the mess and finger pointing that these adversary proceedings have become.
The deposition of Frank Jakubaitis was to have been conducted within 45 days of the February 2 date, as required by an Order Granting Motion to Compel Production of documents entered February 3 as #123 on the docket, compelling the deposition at its page two. The form of that order originally submitted by Attorney Shirdel had to be almost completely rewritten as it did not match the results of the hearing, but only addressed the documents portion. On the adversary 8:15-ap-01426 TA, concerning another order more narrowly addressing the deposition of Frank Jakubaitis, the court’s judicial assistant, Ms. Hong, telephoned Attorney Shirdel and advised that the order was being held as this was a contested Motion (Opposition being filed by Attorney Firman on February 27, 2017 at #66 on the Court’s docket). As required by the LBRs, the order needed to be held for the 7-day period to see if the opposing side would object to the form of order. Also, Ms. Hong notified Attorney Shirdel that there was a procedural defect in that no Notice of Lodgment was filed with the Order--so the opposing party was not even aware an Order had been uploaded to which they could object. Attorney Shirdel’s staff told Ms. Hong that they would check on this procedural defect and get back to her. Attorney Shirdel finally uploaded the Notice of Lodgment of the Order Granting Motion to Compel Deposition on April 4, 2017 as #76 on the docket. That Order Granting Motion to Compel Deposition of Frank Jakubaitis was finally entered on April 5, 2017 with "as soon as possible" listed as the date the deposition was to be conducted by in place of the stricken "by March 19, 2017," as so much time had elapsed as to make the original date of March 19 (the 45th day from February 2) impossible. But, of course, none of this changed the original order entered February 3 which separately required the deposition within 45 days,
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except to make everything confused.
In meantime, one gathers from the briefs on the question of sanctions, it appears that defendant would like to impose conditions upon the deposition that the plaintiff, Mr. Padilla, not attend and that the deposition not be videotaped. These are not agreed to by plaintiff. Moreover, absent a protective order, there is no requirement in law that either condition be imposed. However, the question of the parties seeking a protective order is alluded to in the February 3 Order. It appears to the court’s ongoing dismay that these parties are unable to cooperate in virtually anything but rather constantly resort to court intervention, even for the basics. The strategy of the court had been to allow a reasonable time for matters to be set straight before the unpleasant question of sanctions is considered, and so an amount appropriate to the circumstances, if any, could be imposed. But that approach has failed because we are still not even at square one and no deposition has occurred. All we have is the usual finger pointing notwithstanding the court’s firm directive February 2 that a deposition must occur within 45 days. Looked at differently, one could say that the defendant has decided to double down his bet on obtaining the relief requested in the protective order motion scheduled 5/4/17 by studiously not giving a deposition in the meantime. He was not privileged to do this.
What is the court to do with these parties? The court can only steer this case using blunt instruments, which in normal cases should not be necessary. But this is not a normal case. The appropriate amount of sanctions for failure to give a deposition cannot be easily determined now because the matter has been so awkwardly handled in that we have two orders addressing essentially the same question. But the court is not inclined to reward defendant for his non-cooperation either. So we are left with the dilemma, and no easy answer except to continue the matter yet again until after the protective order is considered May 4. We should also continue this motion to a date certain after that protective order hearing so that a deposition might actually occur in the meantime, with any protective provisions that the court may or may not direct.
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just how much in monetary or non-monetary sanctions should be imposed, he will continue pushing his luck by again not giving his deposition testimony to the continued date.
Continue
Tentative for 2/2/17:
The court has had just about enough of the petty, unprofessional squabbling which has plagued this case from the outset. As explained below, the conduct of both sides falls far below what the court should be able to expect. This latest is a motion to compel attendance of Mr. Jakubaitis at deposition and for $3307.50 in sanctions.
On January 5, 2017, Plaintiffs served a notice of deposition on Debtor’s counsel Mr. Fritz Firman ("Firman") indicating that Plaintiffs would depose Debtor on January 19, 2017. Plaintiffs’ counsel Mr. Shirdel ("Shirdel") argues that he did not receive notice Debtor would be unable to attend the deposition until the eve of the deposition. According to Plaintiffs, they received objections at 4:00 p.m. on January 18, 2017, which objections asserted insufficient notice, failure to consult regarding the deposition dates, unavailability of counsel, and that Debtor was unable to be properly deposed because he was taking prescription medication. Shirdel contends he attempted to confer with Firman after receiving the objections, but to no avail.
According to Debtor, Plaintiffs purposefully scheduled the deposition for January 19, 2017 knowing that Debtor would be unable to attend, so this motion has been brought in bad faith. In support, Debtor explains that he successfully brought an anti-SLAPP motion against Plaintiff Carlos Padilla’s defamation claim in state court (Shirdel represents Carlos Padilla III in this adversary proceeding and in the state court action). Because Debtor prevailed, Debtor was permitted to seek recovery of attorney fees. Debtor filed a motion seeking recovery of attorney fees, with the hearing on this motion scheduled for January 5, 2017. Shirdel then sent a notice of deposition for January 5, 2017 (one infers the scheduling was intended to interfere
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with the motion?). On December 29, 2016, Firman responded that he and Debtor would be unable to attend the deposition on January 5, 2017. Debtor now argues that because Shirdel had notice Debtor was unable to attend the January 5, 2017 deposition, Plaintiffs were somehow on constructive notice that Debtor and Firman would be unable to attend the deposition on January 19, 2016, some two weeks later. To call that argument thin is being generous.
Failure of a party to attend a properly noticed deposition without first obtaining a protective order will subject that party to sanctions under Rule 37(d). In re Honda, 106 B.R. 209, 211 (Bankr. Haw.1989). Here, Debtor’s counsel received proper and reasonable notice, as the proof of service indicates notice of the deposition was delivered by email on January 5, 2017, approximately two weeks before the deposition at issue was to take place. Thus, absent a finding Firman was substantially justified or that Shirdel did not confer in good faith, Firman and /or Defendant should be liable for the costs of bringing this motion to compel. The argument that Plainitff was on constructive notice of Debtor’s unavailability and thus gave a notice of deposition for that time in bad faith is unpersuasive. Firman makes reference to a deposition that was scheduled for January 5, 2017. Although not entirely clear, it appears this deposition is related to the state court action as the notice of the January 5 deposition was sent to Debtor’s state court counsel. Firman argues that Shirdel knew Debtor would be unable to attend the January 5 Deposition, as this was the same day the motion for recovery of attorney fees in the state court action was set for hearing. In addition, Firman also asserts that Shirdel received objections to the January 5 Deposition on December 29, 2016. But it is unclear why Debtor’s unavailability on January 5, 2017 somehow provides constructive notice Debtor would be unavailable on January 19, 2017, two weeks later. Firman points to no additional hearings or related proceedings in the state court action that were to occur on January 19, 2017.
Consequently, the argument that Plaintiff should have known Debtor was unavailable on January 19, 2017 is not supported. That Defendant responded at 4:00 p.m. on the eve of the deposition further undermines this contention. Plaintiff does not appear to have acted in bad faith in scheduling the deposition. If Debtor had issues with the
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deposition, his recourse was to have filed a motion for a protective order.
An argument is also raised that Plaintiff should have sought leave to request this deposition, as multiple depositions have already occurred. But the examples of other depositions Defendant highlights are not persuasive. Defendant argues that the § 341(a) meeting should be treated as a deposition because Shirdel conducted questioning at the meeting. In addition, Defendant argues that a judgment debtor’s examination should also be treated as a deposition. However, Defendant cites to no authority in support of these dubious propositions. Finally, the papers do not appear to raise any argument as to why Firman and Debtor were substantially justified in not attending the deposition, aside from Firman’s declaration that he was appearing before Judge Smith at this time. Thus, Defendant has not met his burden and cannot avoid sanctions on these grounds.
Distressingly, Plaintiff did not perform much better. Under Rule 37, failure to appear at the deposition would ordinarily warrant an award of the costs in bringing this motion to compel. However, in order to award sanctions, the party seeking sanctions must also demonstrate they have not "filed the motion before attempting in good faith to obtain the disclosure or discovery without court action." Fed. R. Civ. P. 37(a)(5)(A)(i). Here, Shirdel appears to have sent Firman an email on January 18, 2017 at approximately 4:41 p.m. The email plainly states, "If [D]ebtor does not appear at the deposition, we’ll take a non-appearance and we’ll move to compel and seek sanctions." This language hardly demonstrates Shirdel attempted in good faith to resolve the discovery dispute before filing the instant motion. This language, coupled with the fact that this motion was filed only one day after the email was sent suggest Plaintiff failed to engage in a meaningful good faith effort actually designed to resolve this discovery dispute without involving the court, as required under the Rule 37. In this view, the costs and fees associated with bringing this motion should either not be awarded, or perhaps awarded only in part.
Therefore, the court will forbear from awarding sanctions at this time but will instead reserve the question until after one additional opportunity to cooperate with discovery requirements as compelled below is given to Defendant. The court will
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then evaluate the question of appropriate sanctions after the fact. The parties are admonished not to test the court’s patience any further.
Deposition is compelled and is to be given within thirty days as scheduled by Plaintiff after consulting with respective calendars. The deposition is to last no longer than 7 hours and is to be completed within one day unless otherwise agreed. The question of sanctions is to be continued about 45 days to evaluate compliance with these requirements.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR)
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Arash Shirdel
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Adv#: 8:15-01426 Marshack v. Jakubaitis et al
U.S.C. Section 544; 3. Revocation of Discharge - 11 U.S.C. Section 727(d)
(con't from 4-26-18 per order granting stip. to continue hrgs ent. 4-23-18)
Docket 1
Tentative for 2/15/18: Status?
Tentative for 1/25/18: See #11, 12 and 13.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled before discovery is complete?
Tentative for 7/13/17:
It looks like discovery disputes must be resolved before any hard dates can be set.
Tentative for 5/4/17:
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Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
Tentative for 3/23/17: See #13.1
Tentative for 12/8/16: No status report?
Tentative for 3/10/16: See #6 and 7.
Tentative for 1/14/16:
Status conference continued to March 10, 2016 at 11:00 a.m. to coincide with motion to dismiss.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Pro Se
Frank Jakubaitis Pro Se
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Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Pro Se
Richard A Marshack (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:15-01426 Marshack v. Jakubaitis et al
(Order entered 2-5-18)
(con't from 4-26-18 per order granting stip. to continue hrgs ent. 4-23-18)
Docket 1
No tentative. The court wants to discuss the future of these cases.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
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Adv#: 8:15-01426 Marshack v. Jakubaitis et al
Docket 60
Tentative for 2/15/18: Status?
Tentative for 1/25/18: See #11.
Tentative for 9/14/17: Status?
Tentative for 7/13/17:
It would appear that discovery disputes must be first resolved and a motion to compel is reportedly forthcoming.
Tentative for 5/4/17: See #10.
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Tentative for 4/13/17: See #18.
Tentative for 3/2/17:
An objection to the Shirdel declaration was filed but otherwise the court sees no opposition. It would seem the issues are the same as discussed in the February 2 tentative in Padilla v. Jakubaitis and the February 3 order in the Golden v. Jakubaitis case. Therefore, the order should be the same. The question of monetary sanctions is reserved until the April 13 hearing, and will be evaluated in view of cooperation, if any, in meantime.
Debtor(s):
Grant
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By
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Arash Shirdel
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Adv#: 8:18-01009 Millan v. Kasiano et al
(con't from 5-24-18)
Docket 1
Tentative for 8/2/18:
See #23 - motion for summary judgment.
Tentative for 5/24/18: Continue to 8/2/18 at 2:00PM
Tentative for 3/29/18:
Will a Rule 56 motion on collateral estoppel be filed?
Debtor(s):
Pio Kasiano Pro Se
Defendant(s):
Pio Kasiano Pro Se
Kiele Kathleen-Akiona Kasiano Pro Se
Joint Debtor(s):
Kiele Kathleen-Akiona Kasiano Pro Se
Plaintiff(s):
Chad Millan Represented By
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Trustee(s):
Heidi M Plummer Michael C Bock
Jeffrey I Golden (TR) Pro Se
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Adv#: 8:18-01009 Millan v. Kasiano et al
Docket 7
This is Plaintiff Chad Mullin’s (the "Plaintiff") Rule 56 motion for summary judgment on his §523 (a)(4); (a)(2); and (a)(6) claims. Additionally, Plaintiff is seeking to include punitive damages and attorneys’ fees as part of a nondischargeable debt. Plaintiff obtained a default judgment against Debtor Pio Kasiano (the "Debtor") for breach of contract, breach of fiduciary duty, and accounting on January 10, 2017 (the "Millan Judgment"). Since Plaintiff proceeds only on a collateral estoppel or issue preclusion theory, and the Millan Judgment is silent as to the wife Kiele Kathleen-Akiano Kasiano, no judgment against her can be obtained through this motion. Whether community property (as opposed to the individual) is liable for the debt is a different issue. The issue is instead whether the debtors, or either of them, should be granted a discharge of the Millan Judgment.
Plaintiff and Debtor Pio were personally acquainted with each other and decided to enter into a partnership to form a company devoted to providing security services in Southern California. The company was called Tribal Protective Services ("TPPS"). A written agreement was entered and later amended to reflect additional contributions made by Plaintiff to the partnership. Debtor apparently informed Plaintiff at some point that the partnership was not earning any money and that was the reason why Plaintiff was not going to be paid the agreed upon share of the profits. Plaintiff became suspicious when Debtor put TPPS up for sale and discovered that the company in fact was making money.
The state court in its decision supporting the Millan Judgment found the
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Debtor Pio liable for conduct constituting violations of fiduciary duties that arise between the partners of a joint venture. The state court awarded Plaintiff the sum of
$162, 483.62. Debtor and his wife filed a chapter 7 Bankruptcy and listed Plaintiff as an unsecured creditor.
Debtor’s opposition fails to comply with LBR 7056-1(c). It was filed past the twenty-one-day deadline. LBR 7056-1(c)(1). Also, Debtor did not file a Statement of Genuine Issues, as required by LBR 7056-1(c)(2). Debtor did file an opposition to Plaintiff’s Statement of facts; however, it still does not meet the requirements of LBR 7056-1(c)(2), because Debtor does not cite to particular portions of any pleading, affidavit, deposition, interrogatory answer, admission, or other document relied upon to establish the dispute and the existence of a genuine issue precluding summary judgment or adjudication. Despite the procedural deficiency, the court has enough to rule upon the merits of the motion.
LBR 7056-1 makes Fed. R. Civ. P. 56 applicable in bankruptcy proceedings.
Courts may grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "Summary judgment will not lie if the dispute about a material fact is ‘genuine,’ that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). "As to materiality, substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Id.
The moving party always bears the initial burden of proof of demonstrating to the court the absence of a material fact. Celotex Corp. at 323. Furthermore, "the burden on the moving party may be discharged by ‘showing’… that there is an absence of evidence to support the nonmoving party’s case." Id. at 325. The evidence presented
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"must be viewed in the light most favorable to the opposing party." Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970) Accordingly, if the moving party "does not discharge that burden then the [moving party] is not entitled to judgment." Adickes at
161. If the moving party meets their burden, then "the nonmoving party must come forward ‘with specific facts showing that there is a genuine issue for trial.’" Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587.
Here, Debtor filed an opposition to Plaintiff’s Motion for Summary Judgment after the deadline. Debtor’s Opposition fails to cite to specific facts that show there is a genuine issue for trial. Debtor’s Opposition to Plaintiff’s Statement of Facts also fails to cite to specific facts. Debtor makes arguments such as "Debtor will testify" as a way to create a genuine dispute of material fact. Plaintiff’s motion cites to relevant and specific facts, which show that for three issues there is no genuine dispute of material fact. To make that determination, the elements of collateral estoppel must be considered as appear below.
3. Collateral Estoppel
In determining the collateral estoppel effect of a state court judgment, under the Full Faith and Credit Act, federal courts must apply that state's law of collateral estoppel. In re Bugna, 33 F.3d 1054, 1057 (9th Cir. 1994); In re Nourbakhsh, 67 F.3d 798 (9th Cir. 1995). In California, the application of collateral estoppel requires the following elements to be met:
the issue sought to be precluded from re-litigation must be identical to that decided in a former proceeding;
the issue must have been actually litigated in the former proceeding;
it must have been necessarily decided in the former proceeding;
the decision in the former proceeding must be final and on the merits; and
the party against whom preclusion is sought must be the same as, or in
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privity with, the party to the former proceeding."
In re Younie, 211 B.R. 367, 373 (9th Cir. B.A.P. 1997); In re Derebery, 324 B.R. 349,
353 (Bankr. C.D. Cal. 2005).
Furthermore, a claim of collateral estoppel is applicable even where the plaintiff has obtained a default judgment against the debtor in state court. See In re Nourbakhsh, 67 F.3d at 800 (Court allowed default judgment to be given preclusive effect in Plaintiff’s summary judgment motion); In re Calvert, 105 F.3d 315, 322 (6th Cir. 1997) (Held collateral estoppel applied to default judgments for cases litigated in California state court). In the context of a default judgment, California law applies issue preclusion only where the defendant has actual notice of the lawsuit and a full and fair opportunity to litigate. In re Cantrell, 329 F.3d 1119, 1124 (9th Cir. 2003).
Where a defendant has actual knowledge of the default judgment within the two-year interval to set aside the default judgment under California law, the defendant had a full and fair opportunity to litigate the state court default judgment. Id.
Here like the default judgments in Nourbakhsh and Calvert, a default judgment was entered against the Debtor by the Superior Court. (Exhibit E). Although a default judgment was entered against the Debtor Pio, ample notice was given and Debtor reportedly told Plaintiff that he will wait to see how the litigation plays out. (Exhibit D ¶15). Debtor’s Opposition cites to Chicago Truck Drivers, Helpers & Warehouse Union Pension Fund v. Century Motor Freight and is claiming that one element of collateral estoppel is "the party against who estoppel is invoked was being fully represented in the prior action. 125 F.3d 526 (7th Cir. 1997). This is a misstatement of the law. As mentioned above, the state’s law must be applied when invoking collateral estoppel. The four necessary elements cited by Debtor from Chicago Truck are not from California. Therefore, Plaintiff’s motion for summary judgment based on collateral estoppel succeeds if it meets the five elements as required in California.
Plaintiff is claiming that Debtor’s debt of $162,483.62 from the Millan Judgment is nondischargeable. The court must determine whether the section 523(a)
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, (a)(2), and (a)(6) issues were ‘actually litigated’ and whether the determination was essential to the judgment. Additionally, then the court must determine whether punitive damages are nondischargeable under section 523(a)(6), and whether attorney’s fees should be included in the nondischargeable debt.
Section 523(a)(4) excepts from discharge any debt "for fraud or defalcation while acting in a fiduciary capacity. Therefore, the plaintiff must prove that the debtor committed fraud or defalcation while the debtor was acting in a fiduciary capacity in order to prevail. In re Honkanen, 446 B.R. 373, 378 (9th Cir. B.A.P. 2011). However, the broad definition of fiduciary is inapplicable in the dischargeability context. ATR- Kim Eng Fin. Corp. v. Bonilla, No. C 08-01062 WHA, 2008 U.S. Dist. LEXIS 82691, at *9 (N.D. Cal. Sep. 25, 2008) (citing Ragsdale v. Haller, 780 F.2d 794, 796 (9th Cir. 1986)). Instead a narrower definition is applicable under §524(a)(4). Id. The narrow definition of fiduciary duty must be one arising from an express or technical trust that was imposed before and without reference to the wrongdoing that caused the debt. In re Lewis, 97 F.3d 1182, 1185 (9th Cir. 1996). The "technical" or "express" trust requirement includes relationships in which trust-type obligations are imposed pursuant to statute or common law. In re Stanifer, 236 B.R. 709, 714 (9th Cir. B.A.P. 1999). Although federal law determines the meaning of "fiduciary," state law is to be considered to determine whether a trust existed within the narrow definition.
Ragsdale, 780 F.2d at 796. Under California law, a partner is considered a trustee and if state law makes it clear that a partner is trustee over partnership assets, then that partner is a fiduciary within the meaning of Section 523(a)(4). Ragsdale, 780 F.2d at 796-797; ATR-Kim Eng Fin. Corp., No. C 08-01062 WHA, 2008 U.S. Dist. LEXIS
82691, at *10-11.
Here, like the parties in Ragsdale, the Debtor Pio and plaintiff were business partners. Ragsdale, 780 F.2d. at 795. The business agreement between Debtor and Plaintiff states that the Plaintiff’s title in that agreement is "Business Partner
/Investor." (Exhibit B). Debtor claims in his opposition to Plaintiff’s Statement of Facts that Plaintiff was not a partner, but an investor. This is contrary to what Exhibit
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B shows and is in any event contrary to the state court’s findings. Debtor fails to provide any evidence to show that Plaintiff was only an investor, and instead states that Debtor "will testify" to show that Plaintiff is an investor. Debtor’s willingness to testify is not sufficient to show that there is a genuine dispute of material fact, particularly in a collateral estoppel context. If the issue has already been litigated, it is quite irrelevant what Defendant will belatedly testify to. Plaintiff in contrast has an agreement with a clause titled "Partnership Agreement." Even when viewing the facts in light most favorable to the non-moving party, Exhibit B clearly proves that Plaintiff was a partner. The Millan Judgment also found in favor of Plaintiff for a breach of fiduciary duty. (Exhibit E). Debtor breached his fiduciary duty by failing to reveal information, withheld sums due to Plaintiff, and failed to provide accurate information upon request. Therefore, Debtor had a fiduciary duty to Plaintiff. This issue was actually litigated in state court and is part of the Millan Judgment.
Defalcation is defined as "misappropriation of trust funds or money held in any fiduciary capacity [or] the failure to properly account for such funds." Destfino v. Bockting, 467 F. App'x 678, 680 (9th Cir. 2012) (citing In re Lewis, 97 F.3d 1182, 1186 (9th Cir. 1996)). Defalcation also "includes the innocent default of a fiduciary who fails to account fully for money received." Lewis, 97 F.3d at 1186. Even if the standard for ‘defalcation’ has been adjusted to require culpable state of mind (See Bullock v. BankChampaign, N.A.,569 U.S.267, 133 S. Ct. 1754 (2013)) that standard has been met by the findings in the Millan Judgment.
Like the debtors in Lewis who failed to provide accurate statements, here Debtor failed to provide Plaintiff accurate statements upon his request. 97 F.3d at 1187. Debtor Pio breached his fiduciary duty by unlawfully retaining profits, and other sums owed to Plaintiff. (Exhibit A). Therefore, the Debtor breached his fiduciary duty due to defalcation.
The State Court did find in favor of Plaintiff for a breach of fiduciary duty. As shown above, the issue to be precluded is identical to the one decided in the former proceeding. Second the issue was actually litigated in the former proceeding, as proven by Exhibit A and Exhibit E. The judgment order from the State Court does
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state that the Debtor was found in breach of his fiduciary duty, and that decision is final on its merits. (Exhibit E). Finally, the party against who the preclusion is sought is the same Debtor in the State Court proceeding and the current suit.
Debtor’s response is untimely and does not put forward any credible evidence. The debtor who fails to respond with credible evidence cannot prevail in a discharge case. In re Aubrey, 111 B.R. 268, 273 (9th Cir. B.A.P. 1990). Because the Plaintiff meets all the elements of collateral estoppel, and there is no genuine dispute of material fact, the Motion as to Plaintiff’s argument for Section 524(a)(4) will be granted.
Section 523(a)(2) excepts from discharge any monetary debt that is obtained by false pretenses, a false representation, or actual fraud. 11 U.S.C. §523(a)(2). In order to preclude this matter from litigation, it must be shown that this issue was decided in a former proceeding.
To establish that the debt is nondischargeable under section 523(a), Plaintiffs must show that (1) the debtor made a misrepresentation, fraudulent omission or engaged in deceptive conduct; (2) at the time he knew they were false; (3) he made them with the intention and purpose of deceiving the creditor; (4) the creditor relied on such representations; and (5) the creditor sustained alleged loss and damage as the proximate result of such representations. In re Diamond, 285 F.3d 822, 827 (9th Cir. 2002); In re Davis, 486 B.R. 182, 191 (Bankr. N.D. Cal. 2013). In the Ninth Circuit, the elements of fraud under California law match the ones under §523(a)(2)(A). In re Younie, 211 B.R. 367, 373-74 (9th Cir. B.A.P. 1997); Davis, 486 B.R. at 191.
Here, it is alleged the Debtor made a false representation to Plaintiff when the parties entered into an original agreement. (SOF24). Debtor made false representations regarding the amount of funds that Plaintiff would receive under the sale of TPPS. (SOF26). Finally, Debtor allegedly made false representations as to the
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dates and amount the Debtor would replay Plaintiff under the terms of the agreements between the parties. (SOF27). Second, it is alleged the Debtor must have known that the misrepresentations were false when he made them as to the conditions of the company’s finances. (SOF28). Plaintiff alleges Debtor’s acts were intentional and done for the purpose of misleading Plaintiff. (SOF29).
A failure to perform on a promise is not sufficient, it must be shown that the debtor did not intend to perform at the time the promise was made. In re Lee, 186
B.R. 695, 699 (9th Cir. B.A.P. 1995). The court in In re Davis found concealment of an important fact to be sufficient to meet the intent to deceive requirement. 486 B.R. 182, 192 (Bankr. N.D. Cal. 2013). Similarly, here the intent to deceive requirement is arguably met when Debtor withheld information regarding TRRP’s profitability.
Fourth, a party must have justifiably relied on the false misrepresentation made by the Debtor. Field v. Mans, 516 U.S. 59, 70 (1995). "A person is justified in relying on a representation of fact although he might have ascertained the falsity of representation has he made an investigation." Id. However, a person cannot justifiably rely on representations that are obviously false. In re Kirsh, 973 F.2d 1454, 1459 (9th Cir. 1992). Justifiable reliance is measured on a subjective standard, which turns on a person's knowledge under the particular circumstances. In re Henriquez, 559 B.R.
900, 908 (Bankr. C.D. Cal. 2016). The Court in Henriquez found justifiable reliance because there was an agreement signed between debtor and plaintiff that sums would be paid back to the plaintiff. Id. Similarly, here Plaintiff relied on the representations made by Debtor, that Plaintiff was entering into an agreement where the Debtor would perform his part in full. (SOF30).
Fifth, there has been damaged suffered by Plaintiff as a result of the proximate result of such representations. Plaintiff has suffered economic damages as the proximate result of Debtor’s false representations, and conduct. (SOF41).
In sum, by meeting the elements of Section 523(a)(2) this issue is identical to that in the former proceeding, and therefore the first element of collateral estoppel is met. This is issue was actually litigated in the former proceeding, as shown in the
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complaint. (Exhibit A).
The issue of fraud was possibly considered in the former proceeding, but it was not granted in the Plaintiff’s favor. The third element of collateral estoppel requires the issue to be necessarily decided in the former proceeding. In re Younie, 211 B.R. 367, 373 (9th Cir. B.A.P. 1997). Plaintiff argues that because the court found Debtor in breach of fiduciary duty, that the preclusive effect of the Judgment is sufficient to meet Plaintiff’s burden of persuasion to satisfy each element of §523(a) (2).
Plaintiff cites no authority which would equate a breach of fiduciary duty to fraud. The breach of fiduciary duty allegation, which was granted in the Millan Judgment, does state that the Debtor failed to "reveal information he was under a fiduciary duty and contractual duty to disclose." (Exhibit A). But "necessarily decided" implies some degree of certitude. Consequently, there remains too much uncertainty to resolve this issue via collateral estoppel.
Therefore, this does create a genuine dispute of material fact since the Millan Judgment is not clear on whether fraud was found in plaintiff’s favor. It is possible that additional documents or facts exist and Plaintiff will be eventually be able to demonstrate Debtors’ liability to Plaintiff at trial, but that conclusion is not clear from the facts before the court now. The court must construe the facts in the light most favorable to Debtor as the nonmoving parties, and there appears to be a genuine issue as to the facts of this case on this issue.
Plaintiff is also seeking summary judgment pursuant to section 523(a)(6). In order to prevail the Plaintiff must show that the injury inflicted by the Debtor was willful and malicious. In re Jercich, 238 F.3d 1202, 1205 (9th Cir. 2001); In re Farrow, Nos. 15-29917-A-7, 16-2055, 2018 Bankr. LEXIS 99, at *17 (Bankr. E.D.
Cal. Jan. 15, 2018). Plaintiff must establish both that the debtor acted willfully and
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that the debtor acted maliciously. In re Derebery, 324 B.R. 349, 356 (Bankr. C.D. Cal. 2005). Additionally, a simple breach of contract is not sufficient to meet the requirement of Section 523(a)(6), it must be accompanied by tortious conduct that gives rise to willful and malicious injury. Jercich, 238 F.3d at 1206; In re Riso, 978 F.2d 1151, 1154 (9th Cir. 1992). Therefore, Plaintiff’s claim that Debtor failed to repay him under the terms of their Agreement is by itself not sufficient to meet § 523(a)(6).
The willful injury requirement of § 523(a)(6) is met when it is shown either that the debtor had a subjective motive to inflict the injury or that the debtor believed that injury was substantially certain to occur as a result of his conduct. Derebery, 324
B.R. at 354 (citing Jercich, 238 F.3d at 1208). The bankruptcy court may consider circumstantial evidence that tends to establish what the debtor must have actually known when taking the injury-producing action. In re Su, 290 F.3d 1140, 1142 (9th Cir. 2002). See In re Ormsby, 591 F.3d 1206 (Even in the absence of an express ruling, conduct was willful because debtor must have known that creditor’s injury was substantially certain to occur. Higgins v. Brion, 2011 WL 2516164 at *5 (Bankr.D.Oregon June 22, 2011) (Finding on intentional interference and breach of fiduciary duty necessarily decided that defendants acted willfully.)
The malicious injury involves 1) a wrongful act, (2) done intentionally, (3) which necessarily causes injury, and (4) is done without just cause or excuse. Jercich, 238 F.3d at 1208; Farrow, Nos. 15-29917-A-7, 16-2055, 2018 Bankr. LEXIS 99, at *
17. The state court imposed punitive damages, which are only imposed where there is oppression, fraud, or malice. Cal.Civ. Code § 3294(a). The award of punitive damages could mean (as Plaintiff argues) that the state court must have decided that defendant acted in a malicious manner. In re Molina 228 B.R. 248, 251-52 (9th Cir. BAP 1998). But a problem arises under the California definition of grounds for punitive damages resting on either ‘Malice’ or "Oppression’ at Civil Code §3294(c). As the court in Derebery found, the alternative definition of ‘Oppression’ "means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights." But only some of the possible scenarios fit the full definition of
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willful and malicious found in Su and Jercich. See Derebery at 356-57. See also, In re Plyam, 530 B.R. 456, 465-70 (9th Cir. BAP 2015). Jercich as amplified in Su requires a subjective intent to injure, and that subjective intent might or might not be inferred from an award of punitive damages. The Millan Judgment is unfortunately silent as to these nuances
The Court in Farrow found the Debtor’s conduct of converting, and taking partnership money that belonged to the partnership to be sufficient to be both willful and malicious. Nos. 15-29917-A-7, 16-2055, 2018 Bankr. LEXIS 99, at *17-18. Here, the Debtor allegedly converted funds to his own possession that were supposed to be received by Plaintiff as part of his ownership interest. (SOF37). Plaintiff pled in his complaint that the Debtor "willfully and intentionally misrepresented the amount of profit" to the plaintiff. (Exhibit A ¶13). Plaintiff’s allegation was in the general section of his complaint that applied to all causes of actions. Including the ones that were granted. Debtor also retained additional profits and other sums owed to the Plaintiff. (SOF40) (Exhibit A ¶ 38). It was not until after the Plaintiff decided to investigate the company’s earnings did he discover that profits existed. All of this, if proven, may well support a judgment under §523(a)(6). But since the Plaintiff is proceeding solely on a collateral estoppel theory, the motion must succeed or fail within the four corners of the Millan Judgment, and that unfortunately for Plaintiff, is too sparse on these issues for summary judgment.
Punitive damages may fall within the scope of "any debts" under §523(a).
Roussos, 251 B.R. at 94, In re Davis, 486 B.R. 182, 190 (Bankr. N.D. Cal. 2013). In California, punitive damages cannot be awarded unless the court finds that the tortious conduct constituted malice, oppression or fraud. Cal. Civ. Code § 3294. In re Roussos, 251 B.R. 86, 93 (9th Cir. B.A.P. 2000); In re Plyam, 530 B.R. at 465. But as held in Derebery and Plyam, it is not enough since under California law there is some room for the possibility of an award of punitive damages not involving the subjective intent to injure requirement found in Jercich and Su. Because Plaintiff in this motion relies solely on the Millan Judgment in his collateral estoppel theory, so this possible
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uncertainty is fatal to summary judgment.
Plaintiff is asserting that it is reasonable to include attorney’s fees and costs as part of his nondischargeable debt. Discharge exception applies to all liability arising on account of a debtor's fraudulent conduct. In re Dinan, 448 B.R. 775, 785 (B.A.P. 9th Cir. 2011) (citing Cohen v. De La Cruz, 523 U.S. 213, 223 (1998)). Attorney’s fees and costs are included in the statutory language "debt for" of Section 523 and therefore can be appropriate to be included as part of the nondischargeable debt.
Dinan, 448 B.R. at 785. However, the "determinative question for awarding attorney's fees is whether the creditor would be able to recover the fee outside of bankruptcy under state or federal law." Id.
Here, plaintiff fails to provide any explanations as to whether he would be able to recover the fee outside of bankruptcy under state or federal law. Plaintiff cites to Cohen to support his argument, however there the court looked to a particular New Jersey state law before award attorney’s fees. 523 U.S. at 223. In Dinan, the court looked at Nevada state law. 448 B.R. at 786. Plaintiff fails to provide any applicable California state law. The court does not believe that fees incurred are necessarily part of any tort judgment, and so must ipso facto follow a tort judgment. Cohen and related cases cannot be read that far. Moreover, the Millan Judgment is silent on the question of fees and since collateral estoppel is the theory relied upon, there is simply no basis offered on this record for an award of fees.
4. Conclusion
Grant for §523(a) (4). Deny as to all other aspects.
Debtor(s):
Pio Kasiano Pro Se
2:00 PM
Defendant(s):
Pio Kasiano Pro Se
Kiele Kathleen-Akiona Kasiano Pro Se
Joint Debtor(s):
Kiele Kathleen-Akiona Kasiano Pro Se
Plaintiff(s):
Chad Millan Represented By
Heidi M Plummer Michael C Bock
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
FLEET RV & BOAT STORAGE LLC
Vs DEBTOR
Docket 114
Grant. Appearance is optional.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
Fleet RV & Boat Storeage LLC Represented By William E Windham
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy
10:30 AM
AMCAL ALEGRE FUND, L.P.
Vs DEBTOR
Docket 10
Even if rent is only due for July the continuation of this tenancy at this point is purely a question between debtor and landlord. The estate is not concerned, so no bankruptcy purpose is served. Grant.
Debtor(s):
Judy Lynn LeClair Pro Se
Movant(s):
Amcal Alegre Fund, L.P. Represented By Scott Andrews
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
MECHANICS BANK
Vs.
DEBTOR AND AMRANE COHEN, CHAPTER 13 TRUSTEE
Docket 37
- NONE LISTED -
Debtor(s):
Oren S. Rapaport Represented By Joseph A Weber
Movant(s):
MECHANICS BANK, a California Represented By
Vincent V Frounjian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
AMERICREDIT FINANCIAL SERVICES, INC
Vs DEBTOR
Docket 42
- NONE LISTED -
Debtor(s):
Kirk P Howland Represented By Christopher J Langley
Movant(s):
AmeriCredit Financial Services, Inc. Represented By
Jennifer H Wang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
ACAR LEASING LTD D/B/A GM FINANCIAL LEASING
Vs DEBTORS
Docket 37
Grant. Appearance is optional.
Debtor(s):
Rigoberto Martinez Represented By
David Samuel Shevitz
Joint Debtor(s):
Geena Martinez Represented By
David Samuel Shevitz
Movant(s):
ACAR Leasing LTD dba GM Represented By Jennifer H Wang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 6-19-18)
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 78
Grant. Appearance is optional.
Debtor(s):
Rosalie Abad Naval Represented By Brian J Soo-Hoo
Movant(s):
U.S. Bank National Association Represented By April Harriott Michael S Kogan Keith Labell Theron S Covey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 47
Grant. Appearance is optional.
Debtor(s):
Diana Solis Represented By
Bryn C Deb
Movant(s):
U.S. BANK NATIONAL Represented By Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
M&T BANK
Vs.
DEBTOR
Docket 44
Grant unless APO.
Debtor(s):
Ross Paul Kline Represented By Barry E Borowitz
Movant(s):
M&T Bank as Attorney in Fact for Represented By
Nancy L Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 6-26-18)
WELLS FARGO BANK, N.A.
Vs.
DEBTORS
Docket 47
Grant. Appearance is optional.
Debtor(s):
Todd A Carpenter Represented By Eric A Jimenez
Joint Debtor(s):
Mary A Carpenter Represented By Eric A Jimenez
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 7-10-18 )
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 35
Tentative for 8/7/18:
Are terms for APO achieved?
Tentative for 7/10/18:
Grant unless current or APO.
Debtor(s):
Cheryl H Hermann Represented By Christopher J Langley
Movant(s):
U.S. Bank National Association Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 20
Grant unless current or APO.
Debtor(s):
Anitra Kay Kyees Represented By Christopher J Langley
Movant(s):
U.S. Bank National Association, as Represented By
Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 16
Grant. Appearance is optional.
Debtor(s):
Kathleen Ohara Represented By Joshua L Sternberg
Movant(s):
Kathleen Ohara Represented By Joshua L Sternberg
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Docket 30
Grant with 180-day bar.
Debtor(s):
Glenn Lam Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Docket 28
Grant.
Debtor(s):
Lazaro G. Barajas Maldonado Represented By Richard M Moss III
Joint Debtor(s):
Rocio Cabrera De Barajas Represented By Richard M Moss III
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Docket 25
Grant.
Debtor(s):
Lazaro G. Barajas Maldonado Represented By Richard M Moss III
Joint Debtor(s):
Rocio Cabrera De Barajas Represented By Richard M Moss III
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Docket 2032
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Docket 56
Grant.
Debtor(s):
Custom Cut Abrasives, Inc. Represented By
R Gibson Pagter Jr.
Trustee(s):
Jeffrey I Golden (TR) Represented By Charity J Manee Robert P Goe
10:00 AM
Docket 15
Dismiss. The court would retain jurisdiction to obtain a better explanation from Mr. Avanesian as to why this Chapter 11 was filed, and how he thought a legitimate purpose was to be served. The court takes a dim view of "renting the automatic stay" while parties figure out what they are doing.
Debtor(s):
Banoo Taat Represented By
Michael Avanesian David R Krause-Leemon
10:00 AM
Docket 1
See # 1 and 3.
Debtor(s):
Banoo Taat Represented By
Michael Avanesian
10:00 AM
Docket 14
See #1.
Debtor(s):
Banoo Taat Represented By
Michael Avanesian David R Krause-Leemon
10:00 AM
(con't from 5-23-18)
Docket 1
Tentative for 8/8/18: No tentative.
Tentative for 5/23/18:
Still no counsel? The status report is so brief as to be useless.
Why no status report? An OSC re dismissal is set (see #6).
Debtor(s):
Jack Richard Finnegan Pro Se
10:00 AM
Docket 120
Tentative for 8/8/18:
The opposition of debtor filed July 20, 2018 is largely unintelligible. It would seem revocation is in order as that is the only means available on this record to pay claims. Grant.
Tentative for 8/1/18:
The court is inclined to continue the matter briefly to allow first rulings on two related matters, the disqualification (recusal) before Judge Clarkson and stay on appeal brought by debtor. These are calendared August 2 and 1 respectively. The court suggests August 8, 2018 at 10:00 a.m.
Debtor(s):
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays
10:00 AM
Docket 1
Why no report?
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley
10:00 AM
Approving Procedures Limiting Notice
(OST Signed 7-18-18)
(con't from 7-20-18)
Docket 15
Tentative for 8/8/18:
The court will feel better about authorizing continued cash collateral use if it had a better picture of where the case is headed. No status report is on file.
Tentative for 7/20/18: Opposition due at hearing.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
10:00 AM
Docket 20
Debtor does not provide any details of what the joint administration will mean. A sample caption page is not provided. Presumably joint notices will be provided on motions that affect both cases, and motions will only be filed in the main case, but claims will still be filed in each individual case. If motions only affect one estate and not the other, a box checked should so indicate.
Debtor and Anton &Chia have different counsel so fees should not be a problem. Assuming these are the parameters contemplated, then joint administration could be more efficient and the motion will be granted. An order should be lodged on the Court’s mandatory form. This is administrative, not substantive consolidation. Professionals should scrupulously segregate their time and costs to their respective estates.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
10:00 AM
Docket 14
See #7.
Debtor(s):
Anton & Chia, LLP Represented By Michael R Totaro
10:00 AM
Docket 595
This motion is confusing. The Hoag debtors were converted to Chapter 7 on June 29. This motion was filed shortly before the conversion and does not appear to have been adopted by the Chapter 7 Trustee in the Hoag cases. Moreover, much of the opposition is answered if the court construes the motion to be at this point solely on behalf of the operating entities Cypress and Laguna. That is the court's inclination.
Debtor(s):
Grant as to Cypress and Laguna estates. Otherwise deny.
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar Teresa C Chow
Tiffany Payne Geyer
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Docket 46
Grant. Appearance is optional.
Debtor(s):
Richard Paul Herman Represented By Michael Jones
10:00 AM
Docket 46
- NONE LISTED -
Debtor(s):
Richard Paul Herman Represented By Michael Jones
10:00 AM
Docket 47
Grant.
Debtor(s):
Richard Paul Herman Represented By Michael Jones
10:00 AM
Docket 468
Grant. Appearance is optional.
Debtor(s):
T Muthu Kumar Represented By Jeffrey S Benice Michael G Spector Vicki L Schennum Joon M Khang
10:00 AM
Adv#: 8:18-01046 Karen Sue Naylor, Chapter 7 Trustee v. Federal Express Corporation
(con't from 5-24-18 per order on stip. to cont. entered 5-10-18)
Docket 1
NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Federal Express Corporation Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01048 Karen Sue Naylor, Chapter 7 Trustee v. Red 288 Invest, LTD.
and Recover Preferential Transfer
(con't from 5-24-18 per order approving stip. to cont. entered 5-10-18)
Docket 1
Continue to November 15, 2018 at 10:00 a.m. to allow documentation of settlement. Appearance waived.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Red 288 Invest, LTD. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:00 AM
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:17-01230 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Hoag Memorial Hospital
Docket 43
NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar Teresa C Chow
Tiffany Payne Geyer
Defendant(s):
Hoag Memorial Hospital Represented By Randye B Soref
Newport Healthcare Center, LLC Represented By
Randye B Soref
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow Teresa C Chow Faye C Rasch
Hoag Urgent Care - Huntington Represented By Ashley M McDow Teresa C Chow Faye C Rasch
11:00 AM
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Teresa C Chow Faye C Rasch
Dr Robert Amster Represented By Ashley M McDow Teresa C Chow Faye C Rasch
Robert Amster, M.D., Inc. Represented By Ashley M McDow Teresa C Chow Faye C Rasch
Your Neighborhood Urgent Care, Represented By
Ashley M McDow Teresa C Chow Faye C Rasch
Trustee(s):
Richard A Marshack (TR) Represented By Caroline Djang
2:00 PM
Adv#: 8:17-01225 The Kiken Group v. Bloom et al
(another summons issued on 12-12-17) (con't from 6-07-18)
Docket 1
Tentative for 8/9/18:
See #5. Mediation would seem in order.
Tentative for 6/7/18:
Continue to August 9, 2018 at 2:00PM. Schedule trial for any remaning issues not resolved in Motion for Summary Judgment.
Tentative for 3/1/18:
Deadline for completing discovery: May 1, 2018 Last date for filing pre-trial motions: May 21, 2018 Pre-trial conference on: June 7, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Jay Lewis Bloom Pro Se
Defendant(s):
Jay Lewis Bloom Pro Se
Tina Margaret Bloom Pro Se
2:00 PM
Joint Debtor(s):
Tina Margaret Bloom Pro Se
Plaintiff(s):
The Kiken Group Represented By Dale A Kiken
Trustee(s):
Richard A Marshack (TR) Pro Se
2:00 PM
Adv#: 8:17-01225 The Kiken Group v. Bloom et al
Docket 16
This is Jay and Tina Bloom’s ("Defendants’") motion for summary judgment on The Kiken Group’s ("Plaintiff") §523(a)(4) and (a)(6) claims. It is not clear why Jay is involved either as a defendant or movant, since there is no effort to attribute any wrongful acts to him, but the court need not sort that question out at this stage.
Plaintiff opposes the motion.
There does not appear to be any real dispute over the following facts. Tina Bloom ("Defendant") was employed by Plaintiff as a paralegal. On July 15, 2017, Plaintiff overpaid Defendant. Defendant informed Dale Kiken of the overpayment by email on July 21, 2017. A series of email communications ensued between Defendant and Mr. Kiken about how the overpayment would be returned/repaid. Those communications appear to end with Mr. Kiken sending emails to Defendant on August 14, 25, and 30 to which no response was received. [Declaration of Dale Kiken, Exh. 1-13] Defendant testifies that she believed she had agreed to repay the amount from her future wages, as apparently offered at once point by Mr. Kiken, and as a result was free to use the funds. [Decl. of Tina Margaret Bloom, ¶ 5] Plaintiff calls this a mistaken conclusion. Shortly thereafter Tina Bloom left work on disability, and soon thereafter filed her bankruptcy petition. In consequence no wages were earned from which a deduction could be made. The amount of the overpayment was
$1,688.73. None of this amount has been repaid.
Defendants assert correctly that the only issue here is Defendant’s intent, and that her testimony along with the emails of the parties defeats this issue. Plaintiff disagrees.
FRBP 7056 makes FRCP 56 applicable in bankruptcy proceedings. FRCP
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56(c) provides that judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. FRCP 56(e) provides that supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein, and that sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served forthwith. FRCP 56(e) further provides that when a motion is made and supported as required, an adverse party may not rest upon mere allegations or denials, but must set forth specific facts showing that there is a genuine issue for trial. FRCP 56(f) provides that if the opposing party cannot present facts essential to justify its opposition, the court may refuse the application for judgment or continue the motion as is just.
A party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine issue of material fact, and establishing that it is entitled to judgment as a matter of law as to those matters upon which it has the burden of proof. Celotex Corporation v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548,
2553 (1986); British Airways Board v. Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978). The opposing party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at 324. The substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc.,477 U.S.
242, 248,106 S.Ct. 2505, 2510 (1986). A factual dispute is genuine where the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. The court must view the evidence presented on the motion in the light most favorable to the opposing party. Id. If reasonable minds could differ on the inferences to be drawn from those facts, summary judgment should be denied. Adickes v. S.H. Kress & Co, 398 U.S. 144, 157, 90 S.Ct. 1598, 1608 (1970).
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Embezzlement under section 523(a)(4) is defined as "the fraudulent
appropriation of property by a person to whom such property has been entrusted or into whose hands it has lawfully come." In re Littleton, 942 F.2d 551, 555 (9th Cir. 1991) citing Moore v. United States, 160 U.S. 268, 269 (1885). A finding of embezzlement requires three elements: "(1) property rightfully in the possession of a nonowner; (2) nonowner's appropriation of the property to a use other than which [it] was entrusted; and (3) circumstances indicating fraud." Id. citing In re Hoffman, 70 B.R. 155, 162 (Bankr.W.D.Ark.1986); In re Schultz, 46 B.R. 880, 889
(Bankr.D.Nev.1985). This is not really an embezzlement case since the funds mistakenly came into Defendant’s possession; they were not entrusted. Moreover, the disposition once the mistake was identified is subject to different interpretation as discussed below, and Plaintiff would have to succeed in establishing a version including fraud.
To prevail under section 523(a)(6), a plaintiff must establish that the debtor deliberately or intentionally committed a wrongful act which necessarily produced harm without just cause or excuse. Lin v. Ehrle (In re Ehrle), 189 B.R. 771, 776 (9th Cir. BAP 1995). The willful injury requirement is met when it is shown that the debtor either had a subjective motive to inflict the injury or that the debtor believed that injury was substantially certain to occur as a result of his conduct. Petralia v.
Jercich (In re Jercich), 238 F.3d 1202, 1208 (9th Cir. 2001). A malicious injury involves (1) a wrongful act, (2) done intentionally, (3) which necessarily causes injury, and (4) is done without just cause or excuse. Id. at 1209. There is a requirement of a subjective intent to cause the injury, or at least conduct from which such wrongful intent can be inferred. Carrillo v. Su (In re Su), 290 F. 3d 1140, 1145 n. 6 (9th Cir. 2002).
Here, Defendants are correct, the issue is their intent when they kept the money. Their intent goes to the third element (circumstances indicating fraud) of the embezzlement claim under section 523(a)(4) and both the willful and malicious elements of the section 523(a)(6) claim. The parties do not dispute the chain of events. But different conclusions can be derived from the evidence, and fraudulent intent has
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to be inferred from the circumstances. Defendants ask the court to accept their interpretation of the evidence. But the court cannot weigh the evidence to make these inferences at the summary judgment stage. Observation of witness demeanor will be needed. This outcome is unfortunate because the amount in controversy is so relatively small. But the court cannot weigh evidence on summary judgment just because it is more expedient.
At the status conference, the parties will be asked to consider mediation as an alternative to litigation certainly more expensive than the amount at issue.
Deny
Debtor(s):
Jay Lewis Bloom Pro Se
Defendant(s):
Jay Lewis Bloom Represented By Dale F Hardeman
Tina Margaret Bloom Represented By Dale F Hardeman
Joint Debtor(s):
Tina Margaret Bloom Pro Se
Plaintiff(s):
The Kiken Group Represented By Dale A Kiken
Trustee(s):
Richard A Marshack (TR) Pro Se
2:00 PM
(OST Signed 8-7-18)
Docket 35
Per OST opposition due at the hearing.
Debtor(s):
Anton & Chia, LLP Represented By Michael R Totaro
10:30 AM
ALLY FINANCIAL INC.
Vs.
DEBTOR
Docket 25
Grant. Appearance is optional.
Debtor(s):
Jason Andrew Johnston Represented By Steven J Diamond
Movant(s):
Ally Financial Inc. Represented By Adam N Barasch
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
NISSAN MOTOR ACCEPTANCE CORPORATION
Vs.
DEBTOR
Docket 21
Grant. Appearance is optional.
Debtor(s):
Guadalupe Vega Represented By Denise Ho
Movant(s):
NISSAN MOTOR ACCEPTANCE Represented By
Michael D Vanlochem
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
KUBOTA CREDIT CORPORATION
Vs.
DEBTOR
Docket 154
Grant. Appearance is optional.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
Kubota Credit Corporation Represented By Austin P Nagel
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
10:30 AM
KUBOTA CREDIT CORPORATION
Vs.
DEBTOR
Docket 155
Grant. Appearance is optional.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
Kubota Credit Corporation Represented By Austin P Nagel
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
10:30 AM
(OST Signed 8-7-18)
U.S. BANK NATIONAL ASSOCIATION dba U.S. BANK EQUIPMENT FINANCE Vs.
DEBTOR
Docket 201
Grant if no compelling opposition.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
U.S. Bank N.A. Represented By
W. Jeffery Fulton
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
10:30 AM
SCHOOLSFIRST FEDERAL CREDIT UNION
Vs.
DEBTOR
Docket 9
Grant. Appearance is optional.
Debtor(s):
John P. Boyd Represented By
Leslie K Kaufman
Movant(s):
SchoolsFirst Federal Credit Union Represented By
Paul V Reza
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
AMERICREDIT FINANCIAL SERVICES, INC.
Vs.
DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
William Junior Roman Represented By Robert N Phan
Movant(s):
AmeriCredit Financial Services, Inc. Represented By
Sheryl K Ith
Mandy D Youngblood
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
THE BANK OF NEW YORK MELLON
Vs.
DEBTOR
Docket 29
Grant. Appearance is optional.
Debtor(s):
Kevin Michael O'Brien Represented By Daniel King
Movant(s):
The Bank of New York Mellon FKA Represented By
Mark S Krause
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 7-31-18 per order on stip. ent. 7-30-18)
BAYVIEW LOAN SERVICING, LLC
Vs.
DEBTOR
Docket 57
NONE LISTED -
Debtor(s):
Amanda Vargas Gupta Represented By Andrew Moher
Movant(s):
The Bank of New York Mellon FKA Represented By
Erin M McCartney Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTORS
Docket 42
Grant. Appearance is optional.
Debtor(s):
Rollin C Shades Represented By Julie J Villalobos
Joint Debtor(s):
Judy Kaye Shades Represented By Julie J Villalobos
Movant(s):
Wells Fargo Bank, N.A. as Trustee Represented By
Christina J O
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
RANCHO VERCRUZ CONDOMINIUM ASSOCIATION
Vs.
DEBTOR
Docket 61
Grant unless current or APO.
Debtor(s):
Richard Ching-Koon Yee Represented By Christopher J Langley
Movant(s):
Rancho Veracruz Condominium Represented By
Mark Allen Wilson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 17
- NONE LISTED -
Debtor(s):
Bruce Howard Haglund Represented By Joseph A Weber
Movant(s):
DEUTSCHE BANK NATIONAL Represented By
Sean C Ferry
Trustee(s):
Richard A Marshack (TR) Represented By David M Goodrich
10:30 AM
WELLS FARGO BANK
Vs.
DEBTOR
Docket 18
Grant. Appearance is optional.
Debtor(s):
Tan K Nguyen Represented By Thinh V Doan
Movant(s):
Wells Fargo Bank, National Represented By James F Lewin
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 20
Grant unless current or APO.
Debtor(s):
Anitra Kay Kyees Represented By Christopher J Langley
Movant(s):
U.S. Bank National Association, as Represented By
Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 14
Grant.
Debtor(s):
Frank Pestarino Represented By Kevin Tang
Movant(s):
Wells Fargo Bank, N.A. Represented By Greg P Campbell
11:00 AM
Docket 35
Grant.
Debtor(s):
Shannon Lee Smith Represented By William E Krall
Movant(s):
United States Trustee (SA) Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
Docket 13
Grant. Appearance is optional.
Debtor(s):
Daniel John Lynch Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
(con't from 5-22-18)
Docket 872
Tentative for 8/21/18:
This is the Trustee’s Motion for Order Approving Compromise after remand from the District Court overruling the court’s earlier approval. The Trustee asks the court to make two determinations, i.e.: the amount "recovered" by the estate because of the settlement and, if the estate only recovered 80%, whether that amount is fair and equitable and still deserving of approval under the principles set forth in authorities interpreting FRBP 9019. The motion is opposed by Passport Management LLC ("Passport"). A Reply was filed by Mr. Weekes as guardian ad litem for debtor’s children and on behalf of The Olson Children’s Irrevocable Trust ("Children’s Trust").
Upon the court’s reading of the motion, briefs and re-reading of the District Court’s Opinion filed April 30, 2018, the court views the questions presented slightly differently. The court agrees it should determine what was "recovered" by the estate, but the Settlement Agreement dated June 17, 2017 can still be approved consistent with the District Court’s opinion, and the court construes this motion as a renewal of the Trustee’s request for approval.
1. The Facts
The court believes there is very little disagreement about the facts material to this motion. Consequently, the court’s synopsis will be very brief. When faced with a lawsuit by Passport the debtor in 2011 transferred the beneficial interest in her self-settled Miyim Cook Islands Trust (later "Pink Panther Trust") to her children. That trust had been funded with
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approximately $4.6 million. In 2014 Passport became a secured creditor because of a judgment entered in Superior Court and recording of a judgment lien with several authorities. In May 2015, debtor filed her Chapter 7 petition. In her schedules the debtor erroneously described the trust as "defunded and defunct." The Trustee and Passport contend that the pre-petition transfer of the beneficial interest for no consideration was a fraudulent conveyance avoidable under 11 U.S.C.§548 and other law. After considerable wrangling, debtor agreed to repatriate the funds by stipulation in open court which resulted in an order. Unfortunately, the debtor’s correspondence with the Cook Islands trustee ostensibly in furtherance of the order appeared to the court to instead be designed to convey that her instructions were made "under duress" and, unsurprisingly, none of the funds were forthcoming given the protective terms of the Pink Panther Trust. In consequence, the debtor was adjudged to be in contempt and incarcerated by this court’s order dated June 7, 2016 for approximately one year.
On February 6, 2017 the court approved a compromise agreement dated November 30, 2016 between Passport and the Trustee ("Passport Compromise"). Under the Passport Compromise, Passport agreed to be treated effectively as an unsecured creditor subordinate to all administrative claims and then-scheduled unsecured claims, but either retaining Passport’s state law lien (or possibly obtaining a new and different lien through the bankruptcy) in "all property recovered under any theory of law or by consent from trust(s) settled by Debtor in the Cook Islands including the ‘Pink Panther Trust…[which] shall constitute property of the estate subject to Passport’s first-in-priority secured claim."
After Debtor sat in jail for over a year, and after numerous status hearings at which this court had sent strong signals from the bench that any reasonable compromise consistent with law would be approved, finally there was an apparent breakthrough in mid-2017 involving this court’s appointment of Barret Weekes as guardian ad litem for the children with an ensuing Settlement Agreement and Release referenced above ("The Settlement
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Agreement"). On July 5, 2017 $4,343,149 of the monies were repatriated care of Mr. Weekes. Of this $3,377,324.13 was given to the Trustee while Mr. Weekes as guardian ad litem and as trustee under the Children’s Trust retained $964,825 for benefit of the children per the terms of the Settlement Agreement, but in trust for the Trustee pending this court’s final approval.
Passport did not participate in negotiating the settlement. The debtor was released from custody two days thereafter, July 7. By force of the Passport Compromise a lien in favor of Passport attached to all property of the estate, including the repatriated proceeds, upon their entry to California. On September 18, 2017 the court granted the Trustee’s motion to approve the Settlement Agreement with the Children’s Trust as embodied in the Settlement Agreement over Passport’s objection. Passport appealed to the District Court.
On April 30, 2018 the District Court reversed the approval of the Settlement Agreement. The District Court did not find that the repatriated proceeds were ‘property of the estate’, but did find that this court committed error "by allowing itself to be bound to the expectations and reliance of the parties…effectively minimiz[ing] its independent role in the process." Effectively, the District Court held that the settling parties had assumed the risk that the settlement would not be approved and that debtor should not be rewarded for her inequitable actions in fraudulently conveying properties in the first place and then refusing to return them. The District Court did recognize the importance when considering a compromise of the difficulty presented to the Trustee in trying to collect in the Cook Islands. But implicitly, the District Court relegated this to a lower importance now that the funds had been successfully repatriated and subject to U.S. law, with apparently small regard for doing equity to miscreants like the debtor or in view of the court’s own "signals" that a compromise should be pursued to break the impasse.
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Issues Presented
Property of the Estate
Under the remand from the District Court this court is charged with "renewed consideration of the settlement agreement consistent with this opinion." As already stated, the Trustee expects that the court will determine what was recovered by the estate (either 100% or only 80%) and if the court finds that it was only 80%, that such a settlement and recovery would still be fair and equitable (and thus approved under FRBP 9019).
The question of whether the recovery was 100% or only 80% (actually the percentages are 77.78% and 22.22%, the discrepancy is not explained) is apparently of consequence largely because Passport contends that its lien continues to extend to all recoveries, not just that 80% portion paid to the estate. The court readily finds that all the monies repatriated were part of the recovery governed by the Passport Compromise and thus property of the estate still subject to Passport’s lien. While there might at one point have been reasonable debate over whether the monies were themselves property of the estate, or, alternatively, just the Trustee’s unrealized avoidance powers were property of the estate which under the Settlement Agreement he would exercise only as to 80%, such an argument is no longer tenable because it would be inconsistent with the documents. Rather, the court’s conclusion is compelled by the way the parties structured their agreement as embodied in the Settlement Agreement and the recitals therein. At ¶2 of the Settlement Agreement it is recited: "Barret, in his capacity as guardian ad litem for the Children, agrees that all transfers of property by JWO (debtor) to the Children are avoided, recovered by, and preserved for the benefit of JWO’s bankruptcy estate." Moreover, under ¶4 of the Settlement Agreement, the transmutation of the monies to becoming not property of the estate pursuant to the settlement is contingent upon a final order approving the compromise. Since
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there is no final order of approval (yet), it must logically follow that the funds are all still property of the estate, including the $964,825 still retained by Mr. Weekes in trust. While The Children’s Trust argues for a different interpretation of the language of the Settlement Agreement, that interpretation is unpersuasive and at odds with the actual language.
But could not it be argued that absent an approval, "all bets are off," leaving the question of status of recoveries as property of the estate open? No, such an argument is not tenable upon a closer review of the Settlement Agreement. This is apparent from the first numbered paragraph wherein it is recited "The effectiveness of the consideration provided by the Trustee pursuant to this Agreement is contingent upon the Court entering an order approving it. Failure of the Court to approve this Agreement shall render such provision void and without effect." (emphasis added). This limiting language does not make the whole agreement contingent, only the consideration provided thereunder by the Trustee, i.e. a release of claims and vesting of the 20% portion in the Children’s Trust. Again, Mr. Weekes argues that because "Effective Date" is defined as the date of the court’s approval, this should somehow supersede the above language and make the whole agreement contingent. But that interpretation is obviously not what the language provides.
The Trustee readily admits at ¶10 of his Declaration that he deliberately structured the transactions this way, i.e.: "If the court did not approve the 80/20 settlement, then the estate would be able to seek turnover of the remaining 20%...." So, the court finds that all the monies including those retained by the guardian ad litem are property of the estate and subject to Passport’s lien because of the Passport Compromise. But the question remains, should/can the court nevertheless approve the Settlement Agreement now? The answer to this question appears to be "yes," although a much closer question this time. This is again bolstered by the way the parties structured their Settlement Agreement. At ¶10 f. of the Settlement
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Agreement the parties included a very expansive severability provision:
Whenever possible, each provision of this agreement shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations. If, however, any provision of this agreement shall be prohibited by or invalid under any such law or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirement of such law or regulation, or , if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provision of this agreement, or the validity or effectiveness of such provision in any other jurisdiction.
So, if any part of the Settlement Agreement must be excised or modified (and, frankly, the court does not see it) all the other provisions remain effective to the fullest extent legally possible. But no deletion or modification is called for because, as discussed below, Passport retains all its property rights unaffected by terms of the settlement and the consideration spoken of in the Settlement Agreement can still pass between the estate and the Children’s Trust. But the severability issue is raised to emphasize that the parties were determined to save some of, most of, or all of the settlement notwithstanding the unforeseen such as the District Court’s interim reversal, provided that a final order of approval was eventually obtained.
Passport’s Lien
The court observes that there is nothing in the Settlement Agreement that specifically purports to remove or erase Passport’s lien in the $964,825. All that is contemplated is the Trustee’s waiver and release of claims on behalf of the estate to the parties embodied at ¶¶ 5 and 6. But it is entirely possible for the estate to release its claim, including any §548 avoidance
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power, without affecting Passport’s lien on monies. Bankruptcy estates do this all the time. An abandonment of property of the estate does not affect existing liens therein. See e.g. In re Vassau, 499 B.R. 864, 870 (Bankr. S.D. Cal.
2013) citing In re Tarpley, 4 B.R. 145 (Bankr. M.D. Tenn 1980). And it is common that estates will sell property of the estate subject to existing liens. Indeed, sales of estate property are by default subject to liens unless one of the subparts of §363(f) are shown to apply. Since no effort is made to sell or transfer the retained $964,825 free of liens, to the extent the Settlement Agreement is interpreted to include a transfer/sale to the Children’s Trust or other counterparties, or an abandonment, this property remains subject to Passport’s lien created by the Passport Compromise. The court does note that under ¶11 of the Passport Compromise the Trustee is obligated to "consult…in good faith" with Passport about employing Passport’s counsel to litigate (presumably for the estate) before an abandonment. But implicit in this is the Trustee’s decision to let Passport litigate its own lien claims without requiring estate involvement if that would serve no purpose. So, it is entirely consistent with the Settlement Agreement as written for the court to hold that the Trustee can waive the estate’s claim to the $964,825 and grant a limited release of claims therein to the counterparties, without affecting Passport’s lien rights whatsoever.
Fair and Equitable Settlement
The question remains whether a settlement by the Trustee keeping only 80% (actually 77.78%) for the estate on the terms as explained above is nevertheless fair and equitable as is required under the authorities interpreting Rule 9019. The court has already so found but now consistent with the District Court’s order it should re-evaluate since all the funds have been repatriated and the single largest impediment previously faced, i.e. collection in the Cook Islands, has been removed. Cases such as In re A & C Properties, 784 F.2d 1377, 1380-81 (9th Cir. 1986) catalog a non-exclusive
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set of factors to consider when considering whether a Rule 9019 compromise is "fair and equitable." These factors include: "(a) The probability of success in the litigation; (b) the difficulties, if any, to be encountered in the matter of collection; (c) the complexity of the litigation involved, and the expense, inconvenience and delay necessarily attending it; (d) the paramount interest of the creditors and a proper deference to their reasonable views in the premises.") Id. After consideration of these factors the court finds that the settlement is nevertheless "fair and equitable," for several reasons.
Taking the A & C Properties elements in reverse order, the party most affected, Passport, (the only party objecting) retains its lien rights in the subject funds which do not go away just because the 20% (actually, 22.22%) is transferred to the counterparties in the Settlement Agreement and thus becomes no longer property of the estate. Again, there is no provision of the Settlement Agreement mandating that the transfer be free of liens, and absent a §363(f) finding, the property transferred remains subject to Passport’s existing lien. Part of this A&C Properties factor, however, is "deference to the reasonable views of creditors…" But emphasis here should be placed on the "reasonable" qualification, as further discussed below. The court does not find Passport’s continued opposition reasonable.
On the first and third A&C Properties factors, the Trustee must still be mindful of the litigation costs and uncertainties which should include concerns over whether, should the Trustee now attempt to sue or seek turnover of the remaining funds, the counterparties will attempt to invalidate everything and countersue. The court sees this as adding both a "complexity" and "further expense" to litigation that might well ensue. While the court does not think the Children’s Trust and other counterparties’ hypothetical arguments likely to succeed (but obviously no prejudgment on the point is intended), it is not impossible. There is much to quarrel over here given the convoluted path bringing us to this point. And this matter has already been enormously expensive and protracted. One wonders what negative result might obtain if the counterparties succeeded in obtaining a jury trial, which, given the
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confused status of the bankruptcy court’s jurisdiction to adjudicate to final decision in wake of the Supreme Court’s decision in Stern v. Marshall, is not an impossibility. The Supreme Court has held that fraudulent conveyance actions in some circumstances must preserve the defendant’s right to a jury. See e.g. Granfinanciera v. Nordberg, 492 U.S. 33, 109 S. Ct. 2782 (1989). Although the bankruptcy court might be able to retain trial of the matter under a consent theory (See ¶9 of Settlement Agreement; Wellness Intl. Network Ltd. v. Sharif, 135 S. Ct. 1932 (2015) and Exec. Benefits Ins. Agency v.
Arkinson (In re Bellingham), 702 F. 3d 553,557 (9th Cir. 2012) affd’_U.S._,134
S. Ct. 2165 (2014)) the point is raised to dispel the notion that results in re- litigation over fraudulent conveyance, or rescission, or even contract interpretation, are simple or must be a foregone conclusion. Moreover, given the Children’s Trust’s Reply, it does not seem to the court that the counterparties are prepared to "roll over" and give everything to either Passport or the estate.
A Trustee must also be mindful of the net effect of his litigation efforts. The court would agree that at some point it is better to "cash out" on litigation instead of continuing to raise the stakes, and given where we started, 80% recovery is not that bad.
Then there is the factor of delay. Passport may want to litigate forever through every penny, and that sentiment under these facts (as to it) might even be sensible, but the Trustee in the end is expected to administer an estate expeditiously and pay claims, while there is something left to distribute. Besides, Passport retains the vehicle to continue litigating its lien, as discussed above, without involving the estate.
Lastly, there is the question of optics. Although not expressly an A & C Properties factor, it is nevertheless of concern here. The A&C Properties court at 784 F. 2d 1381 cites Matter of Jackson Brewing Co., 624 F. 2d 605, 607 (5th Cir. 1980) and quotes the Jackson court’s addition of a general element to the enumerated A&C Properties factors when considering a
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compromise, i.e. "all other factors bearing on the wisdom of the compromise." No trustee (and no bankruptcy court) wants to be challenged (vilified) as having been double-dealing or mendacious, and quaint as it might sound, one’s word should count for something. This might even be true when dealing with contemnors. The Trustee should be commended for his foresight in structuring the Settlement Agreement to maximum advantage, which provides us some flexibility now, but sometimes the best skill is knowing when to quit while ahead. Some might call this factor "wisdom." For the Trustee to now reverse course and essentially repudiate the whole Settlement Agreement is to expose the estate to even stronger rescission claims by The Children’s Trust and the other counterparties, to an uncertain but almost certainly expensive result. This must be particularly so since it would appear Passport is free to litigate against the counter parties on its own behalf over its lien. Although admittedly a closer question than the first time given the District Court’s ruling, still the preponderance of factors support the settlement, and so it should be approved.
Approve Settlement Agreement as clarified above.
Tentative for 5/22/18:
The court will hear argument as to proper next steps.
As the court reads the briefs, there are three requested outcomes:
The Children's Trust says nothing was determined ergo it is still not property of the estate so all should be turned over to them;
Passport argues everything is property of the estate notwithstanding agreements to the contrary and so the Trustee/Passport should continue litigation to get the remaining 20%; and
The Trustee argues that the language may be vague as to what is meant
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by "recover" and therefore we now have in effect a declaratory relief action.
It would appear in any case that the court has insufficient record to make a determination, so further briefing will be required, but the court will hear argument.
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
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(con't from 6-28-18 )
Docket 1
Tentative for 8/22/18:
Did a scheduling order get filed?
Tentative for 6/28/18: See #16
Tentative for 5/2/18:
Any other comments about status or filing of adversary proceeding?
Deadline for filing plan and disclosure statement: August 1, 2018
Claims bar: 60 days after dispatch of notice to creditors advising of bar date (unless already set per status report).
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
Docket 1
Deadline for filing plan and disclosure statement: November 30, 2018. Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: September 1, 2018.
Debtor(s):
Dale Garfield Knox Represented By Andrew S Bisom
Joint Debtor(s):
Cheryl Lynn Knox Represented By Andrew S Bisom
10:00 AM
Docket 1
Deadline for filing plan and disclosure statement: December 31, 2018 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: September 1, 2018
Debtor(s):
Frank Pestarino Represented By Kevin Tang
10:00 AM
Docket 1
NONE LISTED -
Debtor(s):
Anton & Chia, LLP Represented By Michael R Totaro
10:00 AM
(con't from 6-27-18)
Docket 64
Tentative for 8/22/18:
The court would have appreciated a confirmation brief. The status report filed August 7 suggests that the objections have been resolved but there appear to be five classes eligible to vote who have not done so. Does that trigger cramdown? If so, what about absolute priority? What evidence is there on feasibility and the other section 1129(a) elements?
No tentative.
Tentative for 6/27/18:
This is a hearing regarding confirmation of Debtor’s Plan of Reorganization. There are problems as illustrated in the four objections filed. Only classes 2C and 2D have voted to accept. All other impaired seven classes must be "crammed down" under §1129(b). The various objections to confirmation appear below.
The U.S. Trustee also objected to a stipulation between the Class 2C creditor Deutsche Bank and Debtor, but the objection simply states that the stipulation language should be in the text of the plan. This is correct. The plan is the operative document. Upon confirmation it controls the relationship between the parties; and a stipulation attempting to sidestep the terms of the plan is an invitation to a confusing disaster. The other objections are:
Class 2B Dan Z. Bochner, a Secured Creditor
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This creditor has a secured claim against Debtor in excess of
$532,979.86 based on a fully matured loan. This loan was intended by the parties to be a short-term loan. The claim is secured by (a) a second trust deed against the real property of this estate located at 167 Avenida Florencia #B in San Clemente, and (b) a first trust Deed and Assignment of Rents recorded against the real property located at 177 Avenida Cabrillo, San Clemente, which is operated by the Debtor as a Bed and Breakfast under the name "Always Inn San Clemente Bed and Breakfast." Creditor objects to the plan because it proposes to stretch out repayment of his loan to debtor for 30 years at a below market interest rate of 5.00% per annum, fixed.
Creditor asserts that he is 81 years old, and if the plan in confirmed, he would 111 years old by the time the loan is repaid (suggesting a lack of good faith). Furthermore, Creditor believes that Debtor is at least 60 years old, meaning that Debtor would be likely into her 90s by the time this loan was repaid. Creditor also argues that the 5.00% interest rate proposed in the plan is too low to be considered fair and equitable under §1129(b)(2)(B). Creditor argues that that the appropriate rate is something around 8.75%, which reflects fair market rate plus additional risk (given Debtor’s financial history).
Creditor requests an evidentiary hearing on the appropriate interest rate.
Both sides cite this court’s decision in In re North Valley Mall but neither side much explores the application to these facts. Debtor must establish that the present value of the future stream of payments is not less than the value of the secured claim. This can be understood to mean that the proposed cram down interest rate must be sufficient to compensate for all risks, including not only risk of default but of rising interest rates as well. Thus, fixed loans are inherently more risky than floating rates. Debtor argues, without evidence, that the two items of collateral provide combined value well over 200% of the amount of the loan. This would be a lot more convincing if the court had appraisals. Analysis of the risk of being in second position on one of two properties is not analyzed except by vague reference to North Valley Mall wherein the court observed that risk should be evaluated in
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tranches, with junior positions inherently more risky. The rates can then be blended together to achieve a suitable cram down rate. None of that is done here. Moreover, as the creditors point out, the appropriate comparison is probably not to conforming residential loans, but to commercial loans since these appear to be rental properties. Although no evidence is presented, the court suspects that 5% is way too low as this might be the starting point for Class A notes in the commercial context on otherwise unencumbered property to borrowers with demonstrated cash flow. None of that is shown here.
The creditor asserts also that the plan is not feasible. A plan need not contain a guaranty of success, but must offer reasonable assurances of success. Kane v. Johns-Manville Corp., 843 F2d 636, 649 (2nd Cir. 1988). "To provide such reasonable assurance, a plan must provide a realistic and workable framework for reorganization. The plan cannot be based on ‘visionary promises;’ it must be doable." In re Made in Detroit, Inc., 299 B.R. 170 175 (Bankr. E.D. Mich. 2003). Here, creditor argues that regarding the Florencia Property and Cabrillo Property, the Debtor’s businesses do not generate sufficient income to cover the projected payments due under the proposed plan. Creditor argues that there is no evidence regarding who resides at the Florencia Property and/or whether it generates any rental income. The Bed and Breakfast (Always Inn San Clemente), as shown by pre-petition revenue, is allegedly operated/ operates at a net loss. Debtor also has insufficient cash on hand to meet its obligations and apparently has not paid anything on account in some time. Added expenses under the plan make it arguably even less likely that Debtor’s plan will succeed.
Finally, Debtor’s plan violates the absolute priority rule by failing to pay 100% of the allowed general unsecured claims (Class 4) plus interest on those claims. Zachary v. California Bank & Trust, 811 F.3d 1191 (9th Cir.
2016) ("absolute priority rule continues to apply in individual Chapter 11 reorganizations."); In re Perez, 30 F.3d 1209 (9th Cir. 1994): (Absolute priority rule was violated by Chapter 11 cram-down that paid unsecured creditors in
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full over 57 months without interest.) Here, Creditor asserts that Debtor’s proposed plan states that it will pay the Class 4 general unsecured creditors a total of $7,995.00 over 5 years with no interest. This by definition is not payment in full.
Class 2A, Secured Creditors Samy and Samia Antoun
Samy Antoun, the Trustee of the Antoun Trust, holds a secured claim; he, is 85 years old and argues that severe prejudice will result if Debtor is allowed to stretch out payments for 30 years. This creditor argues that there are misstatements throughout Debtors Monthly Operating Reports (MORs). For example, although there is no evidence that Debtor has been making payments to any senior lien holder (including this one), Debtor continues to defy reality by asserting that she is only 2 months behind on the secured debt. Creditor is careful to say that this is likely just an oversight, with no intent to mislead. Still, creditor argues, this calls into question Debtor’s calculations.
Like the Class 2B Creditor, this creditor believes that this plan, on its face, cannot be confirmed. Creditor similarly argues that the plan is infeasible. This requirement is understood to mean that the Debtor must demonstrate a reasonable probability of success. In re Sunnyslope Housing, LTD Partnership, 859 F.3d 637, 646-647 (9th Cir. 2017). Here, Creditor scrutinizes the MORs and argues that these documents show that Debtor has insufficient funds to pay any mortgage. Creditor also argues that Debtor fails to keep track of her arrearages on the mortgage payments. Creditor argues that even if the Court were to grant Debtor the crammed-down interest rate she is seeking and stretch out the mortgage payments over 30 years, Debtor would still not be able to make up the mortgage shortfalls.
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Creditor also makes the equitable argument that he is an individual
lender 85 years old and, therefore stretching his obligation over thirty years is not in good faith. No authority for this proposition is cited, but then nor is any evidence given that a secondary market exists that would allow this creditor to sell out the investment, as debtor argues. Like the Class 2B creditor, this creditor also argues that a 5.00% crammed-down rate for a private money lender is not fair and equitable and thus inappropriate, and would like an evidentiary hearing on what the appropriate interest rate would be. Creditor argues that the appropriate figure is something closer to 7%, also citing In re North Valley Mall, LLC, 432 B.R. 825 (Bankr. C.D. Cal 2010).
City of San Clemente’s Objection
Creditor, The City of San Clemente (the City) is described as having a
§507(a)(8) claim. The City objects to the plan because treatment of the City’s priority claim (i) is incorrect in amount ($24,895 vs. $53,782); and (ii) does not comply with the Code because the treatment of the City’s Claim is less favorable than the treatment of general unsecured creditors, thus violating § 1129(a)(9)(C). The plan proposes to pay the City a total of $24,895.02 with
$11,391.00 paid in years 1 and 2 of the Plan, and the remainder to be "paid in a single lump-sum payment on or before the 48th month following the Effective Date."
The City asserts that the figure of $11,391.00 has no relation whatsoever to anything agreed upon by the parties, and appears to be an arbitrary number that Debtor believed she owed to the city in unpaid Transient Occupancy Taxes (TOT). The City states that an assessment of $28,886.85 (assessed from years 2013 – 2016) has been issued for the Always Inn Beach Rentals for unpaid TOT. The City asserts that an assessment for 2017 is still pending. Thus, Creditor argues, Debtor would need to increase the City’s claim to at least $53,782.77, and provide for any additional future TOT assessments.
Further, the City asserts that although the City’s Claim is treated as a §
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507(a)(8) priority claim, the Plan, as proposed, does not provide for the City to receive any payment on the Effective Date of the Plan, while holders of general unsecured claims receive payments starting on the Effective Date and will be paid in full by the 20th quarterly payment (presumably this means five years).
Section 1129(a)(9)(C) provides: "with respect to a claim of a kind specified in section 507(a)(8) of this title [11 USCS § 507(a)(8)], the holder of such claim will receive on account of such claim regular installment payments in cash--
of a total value, as of the effective date of the plan, equal to the allowed amount of such claim;
over a period ending not later than 5 years after the date of the order for relief under section 301, 302, or 303 [11 USCS § 301, 302, or 303]; and
in a manner not less favorable than the most favored nonpriority unsecured claim provided for by the plan (other than cash payments made to a class of creditors under section 1122(b) [11 USCS § 1122(b)])[.]"
No interest is discussed so, presumably, the "as of" present value analysis has not been done, and the delay of payment favoring unsecured creditors arguably means their treatment is better. Whether "48 months from the effective date" is within the statutory definition of five years from the order for relief is not explained.
Conclusion
There are several problems and barriers to confirmation. Feasibility is very suspect. No evidence is provided on some fundamental issues such as values of collateral and, consequently, no analysis is given on the fair and equitable issues regarding cram down interest rates. The offered rates are likely too low. The City’s claim also needs attention and likely adjustment, and
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the treatment of Deutsche Bank needs to appear in the plan, not in peripheral documents. The absolute priority rule is likewise ignored.
Deny
It would appear that most of the objection relates to the creditor's unhappiness with plan treatment, not so much on disclosure. If there has been a cash collateral violation, that should be the subject of a different motion. Regarding "unconfirmable on its face" that will likely turn on two issues: "fair and equitable" on the question of a 5% interest rate and overall feasibility. Presumably, the alleged "silence" on the lien on the Florencia property means it remains in place until the claim is paid. If something else is intended, that must be clarified. Approve and schedule confirmation date.
Debtor(s):
Freda Philomena D'Souza Represented By Michael Jones Sara Tidd
10:00 AM
Docket 509
NONE LISTED -
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
SL BIGGS, ACCOUNTANT Fee: $13,793.00
Expenses: $69.72
Docket 556
The court has two concerns. First, is it true that net income during the case was only $18,500? Second, since we appear at the threshold of plan confirmation, does it make more sense to postpone for single omnibus final fee application?
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
DAVID A. KAY, SPECIAL COUNSEL Fees: $23,782.50
Expenses: $769.83
Docket 557
Same comment as #7 - may make more sense to defer to final fee application?
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
ROSENBERG, SHPALL & ZEIGEN, APLC, SPECIAL COUNSEL FEES: $57,206.25
EXPENSES: $24,227.97
Docket 561
Same as # 7 and 8 - put off to final fee application.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
SMILEY WANG-EKVALL, LLP, DEBTOR'S ATTORNEY FEES: $165,935.00
EXPENSES: $7,818.96
Docket 562
Same as #7-9. Continue to a final fee application given proximity of plan confirmation.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
11:00 AM
(con't from 6-27-18)
Docket 12
Tentative for 8/22/18: See #13.
Tentative for 6/27/18:
The court is disappointed that we do not have a disclosure statement in Cypress and Laguna. Consequently (as Opus argues) it is difficult to judge on this record whether a reorganization is or is not in prospect. A hard deadline in August will be set to coincide with termination of cash collateral use. The court is only willing to allow continued use based upon the Kurtz declaration. A more thorough showing, as well as a plausible plan will be needed at the August hearing.
Tentative for 4/11/18:
This is the renewed motion for use of cash collateral brought ostensibly by all of the debtors, although the context and substance of the motion suggests that the motion is really only on behalf of the two remaining operating debtors, Cypress Urgent Care, Inc. and Laguna-Dana Urgent Care, Inc. ("Cypress and Laguna"). The existing cash collateral order concludes at end of this April 2018. One of the points correctly made in the opposition is that any continued order should govern starting May, 2018 and should last about three months. Based upon the report of Chad Kurtz it
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would appear that operations for Cypress and Laguna have stabilized and perhaps improved. Whether the improved cash flow results in improvement net of continuing legal expenses is a closer question. But that need not detain us at this point. The court sees no reason not to continue the terms of the existing order until August 1, 2018.
Just as in the previous iterations of cash collateral authority, the debtors are admonished to make sure that only the expenses (including legal fees) attributable to the specific entity are paid by that entity. There has not been a substantive consolidation and, consequently, each debtor entity must enjoy only its own income and bear its own expenses, and scrupulous accounting must continue so that this result is achieved. Opus Bank makes another point. This court is concerned that if reorganization is in prospect, more tangible progress should be made in that direction, such as a disclosure statement. At conclusion of the extended cash collateral authority proposed here, it will be the anniversary of the filings (or nearly). In consequence, further extensions of the use of cash collateral should not be expected absent commensurate demonstration of progress toward reorganization. Regarding the Hoag entities, is there a reason not to convert?
Grant through August 1 on same terms.
Tentative for 2/14/18: Status?
Tentative for 12/13/17: See #6 & 8.
Tentative for 10/12/17:
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These are the motions, respectively, of the debtors for continued use of cash collateral and of secured creditor Opus Bank (joined by the landlord) for dismissal. Both are considered together since the issues overlap. The central question presented to the court on these motions is remarkably similar to the one presented at the hearing on first-day motions August 4. As the court observed at the initial hearing, these are very challenged cases. It would appear that the value of all of the estates’ assets is probably less than the balance owed Opus. As originally stated, these cases were about getting enough time to find a sale better than the one almost consummated by the receiver prepetition. The court has allowed that time in the hope that debtors’ search would be productive. But the court cautioned that this search could not be at the sole expense and risk of Opus Bank. Stated differently, the court cannot consistent with the dictates of the Code allow debtors to "boil away" the value of the collateral through extended, losing operations.
So, two questions are front and center on these motions: (1) has the bank lost ground through operations and (2) is there a sale at hand which would be sufficiently likely and advantageous as to warrant going further, even if operations are only break even or slightly at a loss? The court examines each below.
On the question of whether the last ten weeks’ operations have been at an overall loss the answer is muddled and somewhat obscure (surprise), largely dependent on whom one believes. Each of the financial advisors expresses a different spin. The Bank argues that the increasing balance of cash is not grounds for optimism because this has been accomplished largely by failing to pay accrued operational costs. The bank points out that debtors have not met their targets in sales and projected revenue as actual receipts are down by a factor of about $101,150 or 8.1%. The net accounts receivable balance is down from $1,574,779 on the petition date to
$1,391,775 at the end of August, for a decrease of $183,004. Overall the Bank argues there has been a downward trend: from gross billings of $1,898,891 in January 2017 to $1,502,490 for September 2017; shrinking collections from $662,769 to $551,393 and gross A/R down from $2,865,039 to $2,268,055 for the same period. Moreover, more losses or "negative cash flows" of a total of $193,690 for fourth quarter 2017 are
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projected. Against this the debtors point to the increased cash ($281,680 to $519,413) and reportedly a bounce back of net accounts receivable from approximately $1.4 million in August to $1.45 million as of the end of September. Debtors argue that sales will increase in the oncoming flu season of December through March. Debtors also point to alleged improvements in operational efficiencies including a decline in write-down percentages. On the question of whether the cash balances are artificially inflated by failure to pay accruing bills, debtors deny this and argue that all payables are ‘current within terms.’ But there is some continuing obscurity on that point since reference is also made to "deals" regarding timing of payables. The court is little concerned with the narrow question of whether any payables are ‘overdue’ within adjusted terms. The real question is whether on a day by day basis accruing expenses are outstripping receipts because, eventually, there must be reconciliation, or stated differently, losing operations cannot be cured by just delaying payment until later.
While the court is still unable to pinpoint the net results of operations over the last ten weeks, its overall impression is that Opus Bank is probably, on an "all in" basis, down relatively, perhaps by approximately the $100,000 the bank has argued. Of course, none of this addresses the accrual of professional fees which is probably a multiple of that sum.
But this loss of relative position might be worth the price if a solution were at hand, such as a viable sale for more than is otherwise achievable. In this vein debtors argue that the letter of intent regarding a possible §363 sale to Marque Medical at $3.2 million, not including receivables (which might be another $1.5 million) is the answer. If such a sale could be promptly consummated this would surely result in a greater recovery for not only Opus Bank but, perhaps, other creditors as well (although this might not be that large after administrative fees and costs). But there appears to be a problem. Marque wants an assignment of the leases, and it develops that the debtors only hold subleases. The landlord has indicated that an "up the chain "consent to assignment will not be forthcoming. But as late as October 5 the buyer still seems interested.
One supposes (based on other pleadings on file) that Dr. Amster has already
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been considering a bankruptcy proceeding of the master lessee, an entity reportedly he controls. Maybe that can solve the problem somehow if the two estates act in tandem as the barrier to §365 assumption would, in that case, seemingly be overcome (or at least mitigated). Maybe the offer can be adjusted or improved. The debtors have finally seen that no more time is available absent adequate protection and so they offer
$18,500 per month payments (and a few thousand to the landlord). They assert that such an amount is available from operations although this is doubted by Opus Bank.
So, what to do? The court is as dubious now (maybe more so) than it was ten weeks ago. Every prudent doubt should be indulged favoring reorganization, or an advantageous sale with the powers of §363, if that can be reasonably done without imposing undue risk on an unwilling bank. But this is a very close question given all of the issues discussed above. It does not appear that this is a case that will improve with an extended delay as operations appear to be, at best, break even. Even the debtor projects negative cash flows. Adequate protection payments would lessen but hardly eliminate the huge risk being imposed as the bank no doubt figures it’s all its collateral anyhow. But maybe a 60-day extension of the use of cash collateral, and like continuance of the dismissal motion, would be the best route assuming no precipitous decline in operations so that the current offer (or overbid) can be vetted. But the debtors should be admonished and harbor no illusions that more time is available, or that the bank won’t be in court on another shortened time motion should its tenuous position further deteriorate.
Grant use for period of 60 days pending further hearing, to coincide with continued dismissal motion, conditioned on payment of $18,500 immediately to bank and $2500 to landlord, with second monthly payments in 30 days.
-
What are the cash result from actual operations? We have the bank's estimates which are dismal. Where is the supposed better offer?
No tentative.
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Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
Docket 0
Tentative for 8/22/18:
Are the parties willing to extend existing cash collateral orders to a date reasonably beyond a scheduled confirmation hearing?
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
U.S.C. Section 305 and 1112
Docket 37
This is the motion of Opus Bank in these administratively consolidated Chapter 11cases for dismissal under §§305 and 1112. In its initial motion Opus Bank hits hard on the theme that the debtors are late in filing their proposed plan and disclosure. This is clearly true although there is room for argument whether there was ever any clear deadline established by order. It is undeniable that counsel’s various promises were not met and the plan and disclosure statement once actually filed August 8 was at least 60 days late. Pushing one’s luck seems to be a recurrent theme.
In its Reply the bank hits on another theme, i.e. that the late-filed plan as written is probably infeasible and in any case, is grossly inequitable. The bank argues that the plan as written front loads payment of professional fees while paying interest only on its secured claim. The bank may well be correct but the question is whether this is the time and place to sort out these questions. The court notes that there is a hearing scheduled on adequacy of disclosure September 26, 2018 at 10:00 a.m. That might not be the time either for determination of confirmation issues unless the plan is obviously unconfirmable as various authorities have established. Since the bank’s points are mostly confirmation issues, the court does not feel inclined to decide them now. Dismissals (or conversion) on an interim basis are reserved for cases involving misbehavior or where the results of operations are a loss, or terms proposed for reorganization are so obviously unlikely, as to warrant cutting short the effort to staunch some bleeding. According to the somewhat sketchy reports found in the status report, the debtors are operating profitably. Whether there is enough to build a feasible plan upon, or whether the forecasted increases are real, is another question.
But despite the disappointing failure to meet timetables, the court does not see
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anything warranting an abrupt termination of the cases, at least not at this moment.
However, in the interest of getting sooner to a point where a plan might actually be confirmed, the debtors should make note of some points. First, they have used up just about all the grace available. The failure to follow through on the promised timetable might not have been fatal (this time), but it also instills no confidence either. Second, the debtors are apparently only now commencing the reorganization effort in earnest, well into the second year of these cases. More time should therefore not be assumed. That we are still going into the second autumn of these cases is itself a minor miracle. Third, there may be only one shot at confirmation, so they should make a maximum effort to get it right the first time.
Paying professionals before everyone else just fundamentally smells bad, particularly considering the astounding amounts involved (accrued but not finally allowed).
Maybe the better part of valor would be to align the schedules more closely so that all the risk is not imposed on creditors. The court is not prejudging confirmation issues here, but merely warning debtors that it should not be assumed that there will be prolonged and repeated opportunity to slice the salami.
Continue to coincide with adequacy hearing September 26.
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
1:30 PM
(con't from 7-18-18)
Docket 2
NONE LISTED -
Debtor(s):
Kirk P Howland Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 9
Tentative for 4/18/18:
The comments/issues raised by the Trustee must be addressed.
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Movant(s):
Carmen V Anderle Represented By Allan O Cate Allan O Cate Allan O Cate Allan O Cate Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 7-18-18)
Docket 3
NONE LISTED -
Debtor(s):
Tony Kallah Represented By
Anerio V Altman
Joint Debtor(s):
Joulia Kallah Represented By
Anerio V Altman
Movant(s):
Tony Kallah Represented By
Anerio V Altman
Joulia Kallah Represented By
Anerio V Altman Anerio V Altman Anerio V Altman Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 7-18-18)
Docket 0
NONE LISTED -
Debtor(s):
Maryann Sue Matesz Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 7-18-18)
Docket 13
NONE LISTED -
Debtor(s):
Angela A. Mafioli Represented By Nathan A Berneman
Movant(s):
Angela A. Mafioli Represented By Nathan A Berneman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 7-18-18)
Docket 10
NONE LISTED -
Debtor(s):
Gilbert Sarmiento Japgos Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 7-18-18)
Docket 2
Tentative for 6/20/18:
The court does not see the events surrounding the purchase of a new car shortly before the petition as sufficiently egregious to warrant denial of confirmation on bad faith grounds.
Debtor(s):
Michelle Jenine Cabrera Boldt Represented By Joseph A Weber
Movant(s):
Michelle Jenine Cabrera Boldt Represented By Joseph A Weber Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 3
NONE LISTED -
Debtor(s):
Elvin Lorenzana Represented By Anerio V Altman
Joint Debtor(s):
Somer Asako Shimada Represented By Anerio V Altman
Movant(s):
Elvin Lorenzana Represented By Anerio V Altman
Somer Asako Shimada Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 2
Tentative for 6/20/18:
The Highlander debt will likely be approved. Given the other explanations provided, does the Trustee still oppose confirmation?
Debtor(s):
Rigoberto Martinez Represented By
David Samuel Shevitz
Joint Debtor(s):
Geena Martinez Represented By
David Samuel Shevitz
Movant(s):
Rigoberto Martinez Represented By
David Samuel Shevitz David Samuel Shevitz David Samuel Shevitz
Geena Martinez Represented By
David Samuel Shevitz David Samuel Shevitz David Samuel Shevitz David Samuel Shevitz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 6-20-18)
Docket 2
NONE LISTED -
Debtor(s):
Enrique Perez Represented By Christopher J Langley
Movant(s):
Enrique Perez Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 7-18-18)
Docket 2
NONE LISTED -
Debtor(s):
Kevin Michael Melody Represented By Michael Jones
Movant(s):
Kevin Michael Melody Represented By Michael Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 7-18-18)
Docket 18
NONE LISTED -
Debtor(s):
Marlene C. Lewis Represented By Joshua L Sternberg
Movant(s):
Marlene C. Lewis Represented By Joshua L Sternberg
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 7-18-18)
Docket 16
NONE LISTED -
Debtor(s):
Dana Dion Manier Represented By Brian J Soo-Hoo
Movant(s):
Dana Dion Manier Represented By Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
NONE LISTED -
Debtor(s):
Ronald G Nugent Represented By Ronald A Norman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 12
NONE LISTED -
Debtor(s):
Ann Truong Dam Pro Se
Movant(s):
Ann Truong Dam Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 11
NONE LISTED -
Debtor(s):
Klint Matthew Betz Represented By Christopher J Langley
Movant(s):
Klint Matthew Betz Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
NONE LISTED -
Debtor(s):
Robert Lewis Reynolds Represented By Michael G Spector
Joint Debtor(s):
Kristi Lee Reynolds Represented By Michael G Spector
Movant(s):
Robert Lewis Reynolds Represented By Michael G Spector
Kristi Lee Reynolds Represented By Michael G Spector
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
NONE LISTED -
Debtor(s):
Belinda Caceres Represented By Joseph A Weber
Movant(s):
Belinda Caceres Represented By Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
NONE LISTED -
Debtor(s):
Sergio Moreno Morales Represented By Kevin Tang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
NONE LISTED -
Debtor(s):
Allisa Anne Stayner Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
NONE LISTED -
Debtor(s):
Ghadi Aboulhosn Represented By Andrew Moher
Movant(s):
Ghadi Aboulhosn Represented By Andrew Moher
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
NONE LISTED -
Debtor(s):
Steven Jeffrey Portwood Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 14
NONE LISTED -
Debtor(s):
Joanne Harkins Davis Pro Se
Joint Debtor(s):
Jon Clinton Davis Pro Se
Movant(s):
Joanne Harkins Davis Pro Se
Jon Clinton Davis Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
NONE LISTED -
Debtor(s):
Paul Dean Pisani Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
NONE LISTED -
Debtor(s):
Randall Stephen Held Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 12
NONE LISTED -
Debtor(s):
Victor Arreola Represented By Christopher J Langley
Joint Debtor(s):
Cindy Morelos Arreola Represented By Christopher J Langley
Movant(s):
Victor Arreola Represented By Christopher J Langley
Cindy Morelos Arreola Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 3
Tentative for 8/22/18:
The plan as written reads more like a draft than a serious attempt at confirmation. It lacks two or maybe three essentials: (a) it does not fully provide for secured claims in that it does not clearly provide for the ongoing payments; (b) a sale is proposed but no time limits are given; and (c) there is a question of eligibility as to amount of unsecured debt. Deny.
Debtor(s):
Justin Ha Represented By
Anerio V Altman
Joint Debtor(s):
Jane Ha Represented By
Anerio V Altman
Movant(s):
Justin Ha Represented By
Anerio V Altman Anerio V Altman
Jane Ha Represented By
Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 23
Tentative for 8/22/18:
Isn't notice of confirmation (August 9) short? Should it matter that debtor claims no unsecured creditors? No tentative.
Debtor(s):
Michael Y Ruiz Represented By Shawn M Olson
Movant(s):
Michael Y Ruiz Represented By Shawn M Olson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
NONE LISTED -
Debtor(s):
Ada Elizabeth Serrano Represented By Brian J Soo-Hoo
Movant(s):
Ada Elizabeth Serrano Represented By Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
NONE LISTED -
Debtor(s):
Frank Bowers Jr. Represented By Peter Rasla
Movant(s):
Frank Bowers Jr. Represented By Peter Rasla Peter Rasla
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
NONE LISTED -
Debtor(s):
Frank Bowers Jr. Represented By Peter Rasla
Movant(s):
Frank Bowers Jr. Represented By Peter Rasla Peter Rasla
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
NONE LISTED -
Debtor(s):
William C Lanning Represented By Julie J Villalobos
Movant(s):
William C Lanning Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
NONE LISTED -
Debtor(s):
Ramon Alberto Felix Jr. Represented By Norma Duenas
Joint Debtor(s):
Xiomara Felix Represented By Norma Duenas
Movant(s):
Ramon Alberto Felix Jr. Represented By Norma Duenas
Xiomara Felix Represented By Norma Duenas
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 5-16-18)
Docket 73
Tentative for 5/16/18:
Court will delay ruling on dismissal pending resolution, if any, of issues raised in calendar #45.
Debtor(s):
Jeffrey David Stryker Represented By
John Eom - SUSPENDED BK -
Jacob D Chang - DISBARRED - Anerio V Altman
Joint Debtor(s):
Caroline Quitasol Stryker Represented By
John Eom - SUSPENDED BK -
Jacob D Chang - DISBARRED - Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
(con't from 5-16-18)
Docket 76
Tentative for 5/16/18:
This is Chapter 13 Debtors’ Application for Hardship Discharge.
Trustee objects to the discharge on the ground that Debtors have not turned over bonus income pursuant to the terms of the Ch. 13 plan. To date, Debtors have only turned over about $7,000 in bonus income to Trustee, leaving an outstanding balance of about $28,000 in bonus income owed. A hardship discharge under 11 U.S.C. §1328(b) comes down to an analysis of three factors, all of which must be met:
the debtor's failure to complete such payments is due to circumstances for which the debtor should not justly be held accountable;
the value, as of the effective date of the plan, of property actually distributed under the plan on account of each allowed unsecured claim is not less than the amount that would have been paid on such claim if the estate of the debtor had been liquidated under chapter 7 of this title [11 USCS §§ 701 et seq.] on such date; and
modification of the plan under section 1329 of this title [11 USC § 1329] is not practicable.
Each element is discussed below:
Circumstances Beyond Debtors’ Control?
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Debtors assert that during the plan, they incurred several expenses
and misfortunes that were beyond their control. First, in 2015, Jeff lost his job and was unemployed for the better part of a year. During this period, Debtors still had monthly expenses amounting to about $8,500. To make ends meet, Jeff dipped into his 401k. Debtors also owed taxes to the IRS in the amount of $8,000. Second, Debtors assert that the main reason Debtor did not pay the full amount of his bonuses was because he had unexpected expenses to meet that were also beyond his control. For example, Debtor asserts that in 2015 and again in 2017, Debtor’s family incurred nearly $7,000 in medical costs which were not covered by insurance. Furthermore, reportedly Debtor’s home required necessary repairs such as: $2,500 for mold abatement;
$1,700 for a pool pump repair; $2,297 to have the air conditioning repaired; and $1,000 to fix a leak. Debtor was also required to spend $2,779 for car repairs. The money Debtor received from bonuses allegedly went to pay these costs.
However, Trustee argues that these explanations do not support Debtors’ contention that they could not have turned over the bonus income. For example, Trustee argues that Debtors’ tax returns indicate that, in most years, Debtors’ income was significantly greater than at the time of confirmation (by about $16k to $36k per year) but Trustee has only received
$7,000 in Debtors’ bonus income. Thus, Trustee argues, Debtors should have turned over more, if not all, of the bonus income to the Trustee. Trustee concedes that it is possible that bonuses from 2014 could be excused, but no bonus income from any other year.
Regarding Jeff’s unemployment period, Trustee points out that out of the $76,000 in expenses incurred during that period, Debtor only accounts for about $25,000 in extraordinary expenses. Trustee argues that Debtors need to address this discrepancy. Furthermore, in the two year period of 2014 and 2015, Debtors had a net income of more than $300,000 even with the job loss factored in, unless Debtor did not follow his Schedule J budget. Thus, Debtors suffered no apparent net loss of income despite losing his job.
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Therefore, Trustee asserts that Debtors’ hardship did not extend past 2015, leaving no reason why Debtors should not turn over the 2016-17 net bonuses of about another $18,000. Trustee also asserts that Debtors have not submitted a 2017 income statement, tax return, or any bank statements making it impossible for the Trustee to determine whether Debtors have the ability to turn over the net bonuses, or simply desire not to. Without the ability to determine Debtors’ actual ability to meet the obligations under the plan, it is difficult to fairly assess Debtors’ hardship claim.
Clearly, Debtors encountered some situations beyond their control and incurred some unexpected expenses throughout the life of the plan.
However, whether any of these setbacks were of such an amount as to justify failing to observe the plan terms (or at least prompting a modification inquiry) is a long way from being established. This factor weighs against the hardship discharge, or at least until Debtors address Trustee’s concerns.
Best Interests: Plan v. Ch. 7 Liquidation?
Neither side really addresses this point in any detail. Debtors argue that the originally proposed plan had a liquidation dividend of 0%. By contrast, Debtors have paid 35.5% of the claims filed to unsecured creditors. Debtors do not cite any specific documentation or declarations on this point, but it is not contested by Trustee. This consideration weighs narrowly by default in favor of discharge.
Modification of Plan
Debtors argue that modification of the plan is not practicable now because the plan has been completed. Trustee argues that the failure to pay the bonus income pursuant to the plan should not be excused now because Trustee reached out to Debtors on several occasions to discuss modifying the plan while it was active. Trustee never received any response. Trustee’s reported attempts to discuss modifying the plan and Debtor’s lack of responsiveness, cuts heavily against a hardship discharge, but it should be
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noted that Trustee did not provide any proof of these communications, such as emails, copies of letters, etc. On the other hand, Debtors do not appear to be disputing these attempts at outreach. Trustee asserts that Debtors’ failure to respond and attempt to modify the plan to allow use of the bonus money was not a circumstance beyond their control. The real question here is, when should modification of the plan be judged for §1328(b) purposes? When the adverse circumstances first arose, or now that the 60th month has passed?
Neither side has cited any authority on the point, nor has the court found guidance elsewhere. But on the facts and circumstances here, the answer seems obvious. The adversities experienced here were on a rolling basis over a period of five years. Yet, at no time did the Debtors attempt to obtain a modification, nor even to communicate with the Trustee. They simply failed to turn over the bonuses. Therefore, it cannot be the law that a debtor can accumulate a list of defaults over an extended period and then wait until the very end at 60 months to argue "no time left" rendering modification infeasible. Such an approach would be to write this element out of the hardship discharge requirements. Moreover, if this approach were adopted there would be little incentive to ever deal timely with such contingent promissory provisions; rather, better to simply wait until the end to see if the Trustee catches the discrepancy, and if so, then argue hardship. This is contrary to any reasonable policy underlying Chapter 13
Conclusion
2 out of the 3 factors weigh against granting a hardship discharge.
Therefore, this motion will be denied with leave to amend.
Debtor(s):
Jeffrey David Stryker Represented By
John Eom - SUSPENDED BK -
Jacob D Chang - DISBARRED - Anerio V Altman
3:00 PM
Joint Debtor(s):
Caroline Quitasol Stryker Represented By
John Eom - SUSPENDED BK -
Jacob D Chang - DISBARRED - Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Represented By
Amrane (SA) Cohen (TR)
3:00 PM
Docket 77
Tentative for 8/22/18:
Grant unless deficiency cured.
Debtor(s):
Edwina B. Riley Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(11 U.S.C. - 1307(C)) for failure to complete the plan within its terms
Docket 33
NONE LISTED -
Debtor(s):
Richard Wayne Peterson Represented By Halli B Heston
Joint Debtor(s):
Gayle Ann Peterson Represented By Halli B Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 151
Tentative for 6/20/18: Status?
Tentative for 5/16/18: Status?
Tentative for 4/18/18:
Claims in Calendar #'s 43 & 44 have been objected to, albeit improperly. The court cannot discern whether, if sustained, these would make up for the plan shortfall.
It also appears these objections are very late, and Debtor even asks for a "refund" on #43. The court needs an explanation and probably a continuance.
Debtor(s):
Mark A Mindiola Represented By Emilia N McAfee
Joint Debtor(s):
Daily Mindiola Represented By Emilia N McAfee
3:00 PM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 53
Tentative for 8/22/18: Grant.
Debtor(s):
Diana L. Barnett Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 54
Tentative for 8/22/18: Grant.
Debtor(s):
Diana L. Barnett Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 7-18-18)
Docket 44
Tentative for 8/22/18: Same.
Tentative for 7/18/18:
Grant unless current or motion on file.
Debtor(s):
Michael Duane Kovac Represented By Halli B Heston
Joint Debtor(s):
Susan Kim Kovac Represented By Halli B Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 8-18-18)
Docket 104
Tentative for 8/22/18:
Grant unless deficiency cured.
Tentative for 7/18/18: Grant unless current.
Debtor(s):
Keohen R Smith Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 91
- NONE LISTED -
Debtor(s):
Irma Salazar Allen Represented By Lindsay Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 48
- NONE LISTED -
Debtor(s):
Barry Edward Cambeilh Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Alberta Bonita Cambeilh Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 7-18-18)
Docket 61
Tentative for 8/22/18: Same.
Tentative for 7/18/18:
Grant unless motion to modify on file.
Debtor(s):
Joseph Taylor Represented By
Richard L. Sturdevant
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 32
Tentative for 8/22/18:
Grant unless current or motion to modify on file.
Debtor(s):
Pedro Rodriguez Guillen Represented By Sundee M Teeple
Joint Debtor(s):
Esther Guillen Represented By Sundee M Teeple
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 7-18-18)
Docket 29
Tentative for 8/22/18: Same.
Tentative for 7/18/18: Same.
Tentative for 6/20/18:
Grant unless motion to modify on file.
Debtor(s):
Justin Stumpf Represented By Nima S Vokshori
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 44
Tentative for 8/22/18:
Grant unless current or conversion.
Debtor(s):
Darryl Samuel Taylor Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(11 U.S.C. Section 1307(c))
Docket 33
Tentative for 8/22/18:
Grant unless current or motion to modify on file.
Debtor(s):
Heather Juarez Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 26
- NONE LISTED -
Debtor(s):
Olga Lydia Ramirez Represented By Marcus Gomez
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 0
The correct remedy would have been plan modification, not objection to the Trustee's "Notice of Intent..." Objection overruled.
Debtor(s):
Randy G Bunney Represented By Dennis Connelly
Joint Debtor(s):
Kathleen M Bunney Represented By Dennis Connelly
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 41
Grant. The next senior lien in favor of Wells Fargo is a voluntary lien, hence the homestead claim is irrelevant.
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 7-18-18 per order on second stip. to cont. hrg entered 7-09-18)
Docket 58
- NONE LISTED -
Debtor(s):
Angelita Angeles Labrador Represented By Todd B Becker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 32
Grant.
Debtor(s):
Elvin Lorenzana Represented By Anerio V Altman
Joint Debtor(s):
Somer Asako Shimada Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 44
First, this objection is procedurally defective. Pursuant to LBR 3007-1(c)(2), a copy of the complete proof of claim must be attached to the objection to claim along with a declaration from the objector. The proof of claim has not been attached to the objection. The objection also is not supported by any declarations, and so does not have any evidentiary support. The objection should be denied on these grounds alone.
Even if the objection were not procedurally defective, the argument is flawed. Debtors do not explain why the entire claim should be disallowed simply because they cured the arrears. At most it would seem the claim should be reduced by the amount paid.
Debtor(s):
Timothy N Shorts Represented By William R Cumming
Joint Debtor(s):
Darlene Long-Shorts Represented By William R Cumming
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 32
Sustain.
Debtor(s):
Gilbert Sarmiento Japgos Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 1
- NONE LISTED -
Debtor(s):
Susan D Aronson Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 13
Grant. Appearance is optional.
Debtor(s):
Nancy Karen Chambers Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:17-01230 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Hoag Memorial Hospital
(Amended Complaint filed 6-25-18)
Docket 42
Tentative for 8/23/18:
Status conference continued to September 6, 2018 at 11:00 a.m. The court expects that the Chapter 7 trustee will substitute in as party in interest (or not?) in the meantime.
Tentative for 5/24/18:
See calendar # 22 at 11:00AM.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Defendant(s):
Hoag Memorial Hospital Pro Se
Newport Healthcare Center, LLC Pro Se
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
10:00 AM
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow
Dr Robert Amster Represented By Ashley M McDow
Robert Amster, M.D., Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
10:00 AM
Adv#: 8:17-01241 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Newport Healthcare Center
Declaratory Relief
(con't from 5-24-18)
Docket 1
Tentative for 8/23/18:
Status conference continued to September 27, 2018 at 10:00 a.m. At the very least we need to know whether the Trustee will be substituting in as real party in interest. The court expects this will be done (or specifically disclaimed) by the continued hearing.
Tentative for 5/24/18:
See calendar #21 at 11:00AM.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
Defendant(s):
Newport Healthcare Center LLC Pro Se
Hoag Memorial Hospital Pro Se
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
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Ashley M McDow
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care - Orange, Inc. Represented By
Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
10:00 AM
Adv#: 8:18-01098 Karen Sue Naylor v. Greenleaf Advertising and Media, Inc.
Docket 1
Tentative for 8/23/18:
Deadline for completing discovery: February 28, 2019 Last date for filing pre-trial motions: March 11, 2019 Pre-trial conference on: March 28, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Greenleaf Advertising and Media, Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Christopher Minier
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01100 Karen Sue Naylor v. Logility, Inc.
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Logility, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01101 Karen Sue Naylor, Chapter 7 Trustee v. Marietta Center, LLC
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Marietta Center, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:00 AM
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01102 Karen Sue Naylor, Chapter 7 Trustee v. Pulaski R.E. Partners, LP
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Pulaski R.E. Partners, LP Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:00 AM
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01103 Karen Sue Naylor, Chapter 7 Trustee v. Triangle Home Fashions, LLC
Docket 1
Tentative for 8/23/18:
Deadline for completing discovery: January 31, 2019 Last date for filing pre-trial motions: February 18, 2019 Pre-trial conference on: March 7, 2019 at 10:00 a.m.
Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Triangle Home Fashions, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:13-01342 Naylor (TR) v. Aarsvold et al
(cont'd from 4-7-16 per order approving stip to cont. pre-trial entered 3-25-16 re: the motion for summary judgment )
[ONLY AS TO THE QUESTION OF DAMAGES]
(cont'd from 2-15-18)
Docket 34
Tentative for 8/23/18:
Continued to February 28, 2018 at 10:00 a.m. Appearance is not required.
Tentative for 2/15/18:
Continue status conference to August 23, 2018 at 10:00 a.m. per request.
Tentative for 11/30/17:
Continue to February 25, 2018 at 10:00 a.m.
Tentative for 10/1/15:
This is a hearing on that portion of the Trustee’s summary judgment motion going to the question of damages for the fraudulent transfer to defendant Fusionbridge Wyoming and for defendant Aarsvold’s breach of fiduciary duty. The court has already indicated in its lengthy tentative decision published for the hearing August 6,
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2015 (see Exhibit "1" to moving papers) that liability has been established. The court set this matter for further hearing and briefing because it did not believe that the amount of damages had been adequately established in the earlier motion. The court still does not believe that the amount has been established as a matter of law nor as one without material question of fact, as is required in a Rule 56 context.
The Trustee’s argument boils down to the dubious assertion that all amounts shown on defendant Fusion Bridge Wyoming’s 2012 tax return taken as a business deduction for expenditures to consultants or subcontractors ($594,587 or $516,523.90 in defendants’’ version) is either a fraudulent deduction or in fact represents payment (in the main) to Mr. Aarsvold. From this premise the Trustee further argues that perforce such sums must be "damages" caused by the fraudulent conveyance. There are problems with this premise even before we get to the bulk of the argument about excluding evidence, as addressed below. The first problem is that the court cannot accept the premise that even if most of the said sum went to Aarsvold this necessarily translates dollar for dollar as damages. Presumably, Aarsvold did some work allegedly to earn these payments. This is the assumption although neither side produces much addressing this issue. Presumably, the revenue enjoyed would not have been received by Fusionbridge Wyoming absent someone doing some work, at a cost. The Trustee’s task would seem to be in establishing that there a margin or delta of some kind between the cost of producing the product and the amounts received, representing the value of the transferred assets. If the contention is that fraudulent transferors like Aarsvold don’t get anything for their labors, or that they work for free, and therefore their efforts are simply added to the value of the transferred assets, that contention will have to be supported by some authority. But the court sees none.
The bulk of the Trustee’s argument seems to be that the burden is on the defendants to prove the validity of deductions, and that defendant should be foreclosed from proving or even questioning any of this because some of the substantiating documentation of amounts paid other consultants than Aarsvold was not timely produced, or was not timely identified by Aarsvold in his deposition.
Turning to FRCP 37(c)(1), the Trustee argues that any such evidence offered now
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should be stripped from the record as a sanction. But there are problems with this argument too. First, as discussed above, the court is not convinced that this is the defendants’ burden or that the court can accept the Trustee’s dubious premise (that the revenue can be produced or counted dollar for dollar without someone spending time as a deductible cost). But even if it were the defendants’ burden, Rule 37(c)(1) is not by its terms absolute. Other alternative sanctions are enumerated in the Rule and the sanction is qualified if there is a showing that the omission was "substantially justified" or "harmless." While the court is not prepared to say that any of these omissions were justified, Mr. Negrete’s prolonged and unexplained absence and the question raised in the papers whether the documents were given to him (but inexplicably not forwarded in discovery) make a strict application of the sanction unlikely, at least absent more explanation.
In sum, the court is not convinced on this record that the amount of damages can be determined without consideration of disputed fact. Nor is the court persuaded of the Trustee’s premise on damages in the first place.
Deny
Tentative for 8/6/15:
This is Trustee’s Motion for Summary Judgment to (1) avoid and recover fraudulent transfer, (2) for judgment that Defendant breached fiduciary duty, and (3) that Defendant is the alter ego of Debtor. The key issue in the fraudulent transfer claims is whether Defendant had the requisite intent to hinder, delay or defraud creditors. The undisputed facts indicate that he did. Prior to bankruptcy, Mr. Matthew Aarsvold ("Aarsvold") transferred substantially all of Debtor’s assets to Fusionbridge Wyoming. He did this while litigation against Debtor was pending. There was no consideration given for the exchange. Although Aarsvold asserts that this transfer was intended to protect Debtor, he offers no documentary evidence or specific details to
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support his argument.
There is an extended history involving transfers of assets between Aarsvold’s corporations and entities, in each case after creditors began to apply pressure. Back in 2005, Aarsvold owned Strategix, Ltd. ("Strategix") and ePassage, Inc. ("ePassage"). A lawsuit was filed in Orange County Superior Court and claims were asserted by Infocrossing West, Inc. and Infocrossing Services, Inc. (collectively, "Infocrossing") against Strategix, ePassage, and Aarsvold ("State Court Action"). See State Court Action’s docket attached as Exhibit "10" to Wood Decl. Infocrossing obtained a preliminary injunction against Strategix, ePassage, and Aarsvold. Id. On August of 2005, Aarsvold filed paperwork to incorporate Debtor. See Wood Decl., Ex. "18." Debtor performed substantially the same services as Strategix and ePassage. See Wood Decl., Ex. 8, pg. 405:26-406:3. In June of 2009, a judgment was entered against Aarsvold, Strategix, and ePassage amounting to approximately $1.3 million in damages. Wood Decl., Ex. 9 and Ex. 10, pg. 428. Mr. and Mrs. Aarsvold filed a Chapter 7 petition that same month. See copy of docket for Aarsvold Bankruptcy attached as Ex. "19" to Wood Decl.
On January 14, 2011, Aarsvold acquired Webworld, Inc., a Wyoming Corporation, and changed its name to Fusionbridge Ltd. Wood Decl., Ex. "17." In October of 2011, Aarsvold executed the APA as CEO of both Debtor and Fusionbridge Wyoming. Wood Decl., Ex. 2, pg. 49. Debtor and Fusionbridge Wyoming entered into an Asset Purchase Agreement ("APA") on October 29, 2011. Exhibit "2." Pursuant to the APA, substantially all of Debtor’s assets were sold to Fusionbridge Wyoming. In exchange for these assets, Fusionbridge Wyoming agreed to pay approximately $100,000 in Debtor’s credit card debt. All of the assumed credit card debt had been personally guaranteed by Aarsvold. Why only these selected obligations were assumed is never explained in the opposition. The contracts that Fusionbridge Wyoming agreed to assume were customer contracts and the consulting agreements of Debtor’s contractors that were performing the work required by the assumed customer contracts. Wood Decl., Ex. 2, pg. 40, § 1.4. Aarsvold signed the
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APA as "Chief Executive Officer" for both Debtor and Fusionbridge Wyoming. Id., pg. 49.
On November 28, 2012 ("Petition Date"), Fusionbridge, Ltd. ("Fusionbridge California" or "Debtor") filed a Chapter 7 petition. Karen S. Naylor is the appointed Chapter 7 Trustee ("Trustee"). On January 2, 2013, Debtor filed its schedules and statement of financial affairs ("Schedules"). Pursuant to the Schedules, Debtor had assets valued at $6.17 and liabilities totaling $4,762,895.60 as of the Petition Date. See Wood Decl., Ex. 1, pg. 6-25. In Debtor’s Statement of Financial Affairs ("SOFA"), Debtor disclosed a transfer of assets to Fusionbridge Wyoming. The SOFA states that Debtor received no value in connection with the transfer and that it had no relationship with the transferee, Fusionbridge Wyoming. Id., at pg. 32. The Schedules were signed by Aarsvold as Debtor’s "CEO." Id. at pg. 28 & 36.
In November of 2013, Trustee filed this adversary proceeding against Fusionbridge Wyoming and Aarsvold seeking recovery on the following claims for relief: (1) For avoidance and recovery of fraudulent transfer pursuant to 11 U.S.C. §§ 544, 548(a)(1)(A), 550, 551; Cal. Civ. Code §§ 3439, et seq., against both Fusion Wyoming and Aarsvold; (2) For avoidance and recovery of fraudulent transfer pursuant to 11 U.S.C. §§ 544, 548(a)(1)(B), 550, 551; Cal. Civ. Code §§ 3439.05, et seq., against both Fusion Wyoming and Aarsvold; (3) Breach of fiduciary duty against Aarsvold; and (4) Conversion against both Fusion Wyoming and Aarsvold. On November 1, 2013, Trustee filed the Complaint, asserting claims against Fusionbridge Wyoming and Aarsvold. Wood Decl., Ex. "3."
A similar pattern continued even after this bankruptcy was filed. On January 10, 2014, Aarsvold’s wife, Ms. Laurel Aarsvold, incorporated Glomad Services, Ltd. ("Glomad Services"). Wood Decl., Ex. "16." Sometime between January 10, 2014 and August 15, 2014, Aarsvold begins "shutting down" Fusionbridge Wyoming and starts working at 77 North Baker Inc. ("North Baker"), a company owned by Mrs. Aarsvold. Wood Decl., Ex "6" and "4." Between August 15, 2014 and December 12, 2014, North Baker begins shutting down. Mr. Aarsvold begins to work at Glomad Services where he performs the same services as he performed while working for Debtor.
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Wood Decl., Ex. 7, pg. 317:5-22.
Trustee moves for summary judgment on the following claims. First, Trustee seeks a judgment on a matter of law that Defendants committed a fraudulent transfer (both actual and constructive fraud) pursuant to 11 U.S.C. §§ 544, 548(a)(1)(A), (a)(1) (B), 550, 551, and Cal. Civ. Code §§ 3439, et seq. Second, Trustee seeks a judgment that Aarsvold breached his fiduciary duties to Debtor. Third, Trustee seeks summary judgment that Aarsvold is the alter ego of both Debtor and Fusionbridge Wyoming.
Fourth, Trustee seeks summary judgment dismissing all of Defendants’ asserted affirmative defenses in Defendants’ Answer to Complaint.
Rule 56 of the FRCP, which applies in adversary proceedings pursuant to Rule 7056 of the FRBP, provides that a party seeking to recover upon a claim may move for summary judgment in the party’s favor upon all or any part thereof. See Fed. R. Civ. P. 56. Summary judgment is appropriate on a claim when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. See Aronsen v. Zellerback, 662 F. 2d 584, 591, (9th Cir. 1981). In addition to declaration testimony, it is also appropriate for the court to consider previous matters of record (such as orders, pleadings and the like) by way of a request for judicial notice when considering a motion for summary judgment. See Insurance Co. of North America v. Hilton Hotels USA, Inc., et al., 908 F. Supp. 809 (D. Nev. 1995).
The party seeking summary judgment bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). However once the moving party has carried its burden under Rule 56, its opponent must do more than show that there is some metaphysical doubt as to the material facts . . . the non-moving party must come forward with "specific facts showing that there is a genuine issue for trial." Matsushita Electric Industrial Co Ltd
v. Zenith Radio Corp., 475 U.S. 574 (1986). In fact, if the factual context makes the nonmoving party’s claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine
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issue of material fact. Calhoun v. Liberty Northwest Ins. Corp., 789 F. Supp. 1540, 1545 (W.D. Wash. 1992) (citing Matsushita Electric, supra, at 538). A party cannot "rest upon the mere allegations or denials of his pleading" in opposing summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986).
A self-serving declaration without evidence is not enough to show that there is a genuine issue of material fact. The Ninth Circuit has held that a "conclusory, self- serving affidavit, lacking detailed facts and any supporting evidence, is insufficient to create a genuine issue of material fact." F.T.C. v. Publ’g Clearing House, Inc., 104 F. 3d 1168, 1171 (9th Cir. 1997). A declaration which contradicts earlier deposition testimony will also fail to create an issue of material fact. See Andreini & Co., Inc. v. Lindner, 931 F. 2d 896 (9th Cir. 1991) (citing Radobenko v. Automated Equipment Corp., 520 F. 2d 540 (9th Cir. 1975)).
Under 11 U.S.C. § 548, a trustee may avoid a debtor’s fraudulent transfer of property made with the intent to hinder, delay, or defraud creditors. See 11 U.S.C. §§ 544, 548(a)(1)(A). To prevail in a 11 U.S.C. § 548(a)(1)(A) action, the trustee must show: (1) the debtor transferred an interest in property or a debt; (2) within two years before the petition filing date; and (3) with actual intent to hinder, delay, or defraud present or future creditors.
In this case, Defendants do not dispute the claim that a transfer occurred two years before the Petition Date. The key issue here centers on the third element: whether Defendants had the actual intent to hinder, delay or defraud creditors.
Whether a transfer has been made with actual intent to hinder, delay or defraud a creditor is a question of fact. United States v. Tabor Court Realty Corp., F. 2d 1288, 1304 (3rd Cir. 1986). Courts generally infer fraudulent intent from the circumstances surrounding the transaction. In re Acequia, Inc., 34 F. 3d 800, 805-806 (9th Cir.
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1994). Courts look for "badges of fraud" that indicate fraudulent intent. Id. at 806. The traditional "badges of fraud" include:
The transfer of an obligation to an insider or other person with a special relationship with the debtor;
The debtor retained possession or control over the property after the transfer;
The transfer was not disclosed;
Actual or threatened litigation against the debtor at the time of the transfer;
The transfer included all or substantially all of the debtor’s assets;
The debtor absconded;
The debtor removed or concealed assets;
The value of the consideration received by the debtor was not reasonably equivalent to the value of the asset transfer;
Insolvency or other unmanageable indebtedness on the part of the debtor;
The transfer occurred shortly after a substantial debt was incurred; and
Whether the debtor transferred the essential assets of the business to a lienholder who transferred the assets to an insider of the debtor.
In re Acequia, Inc., 34 F. 3d at 806; see also Cal. Civ. Code § 3439.04(b)(1)-(11). Fraudulent intent is inferred "when an insolvent debtor makes a transfer and gets nothing or very little in return." Kupetz v. Wolf, 845 F. 2d 842, 846 (9th Cir. 1988).
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Here, the evidence in the record shows that at least six (6) "badges of fraud"
are present. Each applicable to this case is discussed below:
The Debtor was involved in pending litigation at the time of the transfer. At the time of the APA transfer, Aarsvold and his previous companies (Strategix and ePassage) had been in litigation with Infocrossing since June of 2005. Aarsvold and his companies kept losing legal battles and per Aarsvold’s own testimony, the APA was entered into because "it was unlikely that [Debtor] could get an additional line of credit for operating funds. . ." Tellingly, the Petition Date was only days after the state court granted Infocrossing’s motion compelling Aarsvold to appear to furnish information to aid in enforcement of money judgment and Infocrossing’s motion for attorney’s fees. Wood Decl., Ex. 10, pg. 443. The facts are undisputed that Debtor was involved in litigation at the time of the transfer. Thus this "badge of fraud" (of litigation against the Debtor at the time of the transfer) is present here.
The court finds that the transferred assets pursuant to the APA were substantially all of Debtor’s assets. This "badge of fraud" is present for the following reasons. First, a review of Debtor’s bankruptcy documents strongly indicates that substantially all of Debtor’s assets were transferred. Debtor disclosed only $6.17 of personal property on its Schedule B. However in its Statement of Financial Affairs, Debtor admitted to receiving $1,331,772.00 in gross income in 2010, and $996,015.00 in gross income for 2011. The only logical explanation is that substantially all of Debtor’s assets were transferred to Fusionbridge Wyoming. Defendants do not offer any documentary evidence showing that Debtor retained assets that were not transferred to Fusionbridge Wyoming.
Second, the plain language of the APA provides that there was a transfer of all or substantially all of Debtor’s property. Specifically, section 1.1 of the APA provides
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that the Debtor was selling to Fusionbridge Wyoming all its "right, title, and interest in and to the assets of the Business.
Third, Fusionbridge Wyoming assumed all, save one, of Debtor’s contracts to perform services. The only customer that Debtor did not transfer had a contract that ended before the APA sale closed on January 1, 2012. Based on the above evidence, this "badge of fraud" is present here.
It is uncontroverted and self-evident that Debtor was insolvent or became insolvent when the sale contemplated in the APA was concluded. Debtor no longer had assets to conduct business but retained virtually all of its liabilities. Wood Decl., Ex. 1, pg. 8-25. Aarsvold himself testified that the sale was necessary because of Debtor’s "debt load" and "it was unlikely that [Debtor] could get an additional line of credit for operating funds . . ." Wood Decl., Ex. 6, pg. 265:10-12. Defendants do not offer any evidence indicating Debtor was not insolvent when the APA was executed. Thus this "badge of fraud" is also present.
It is undisputed that Aarsvold was acting as the CEO for both Debtor and Fusionbridge Wyoming at the time the APA was negotiated and executed. Wood Decl., Ex.2, pg. 49. Aarsvold himself recalled being the only person involved in deciding to enter into the APA. Wood Decl., Ex. 6, pg. 237:2-8. The evidence is clear--there existed a special relationship between Debtor and Fusionbridge Wyoming.
Debtor did not receive reasonably equivalent value in the APA transfer.
Although Fusionbridge Wyoming received substantially all of Debtor’s assets, the only consideration it "paid" to Debtor was the assumption of certain debts that had
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been personally guaranteed by Aarsvold. Even then, Fusionbridge Wyoming has not paid those debts. Yet the contracts Fusionbridge Wyoming received generated significant earnings. According to its 2012 tax return, Fusionbridge Wyoming earned approximately $771,000 during 2012. Moreover, Aarsvold admitted he did not go through a process of trying to value the assets held by Fusionbridge California before transferring those assets to Fusionbridge Wyoming.
Defendants argue that somehow valid consideration was passed as equivalent value in their Opposition. Defendants’ argument fails. First, Defendants’ Opposition cites case law that elaborates on the definition of "reasonably equivalent value." See Opposition, pg. 6. What is sorely lacking in Defendants’ Opposition, however, is any kind of evidence or specific facts pertaining to the APA transfer that support any kind of legal argument that Debtor did receive a reasonably equivalent value. From the standpoint of creditors (particularly those left behind and not assumed), nothing of any consequence was received in return for transfer of all of the Debtor’s assets.
The circumstances and evidence strongly indicate the transfer was concealed.
Fusionbridge Wyoming used the same corporate name as Debtor. Fusionbridge Wyoming used Debtor’s mailing address, telephone number, and email addresses. Fusionbridge Wyoming used the same consultants as Debtor. Fusionbridge Wyoming even generated invoices that appeared identical to Debtor’s invoices. All of these practices suggest that Aarsvold desired to keep the APA transfer secret.
Defendants do not even address this "badge of fraud" in their Opposition. They do not assert that they disclosed the transfer to anyone, nor do they offer any evidence to rebut Trustee’s claims. Without any argument or evidence to the contrary, the evidence on the record strongly indicates that the APA transfer was concealed and this "badge of fraud" is present.
In conclusion, the Court should grant the Trustee’s motion for summary
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judgment as to the first claim. Defendants concede that there was a transfer within 2 years of the petition date. The only remaining element in question is whether Defendants had the requisite intent. To infer intent, courts rely on the presence of "badges of fraud." Here, the record shows that at least six badges of fraud are present. These "badges of fraud" strongly indicate that Defendants had the intent to delay, defraud or hinder creditors. Defendants do not offer any documentary evidence or specifics to rebut Trustee’s claims regarding these "badges of fraud." Defendants’s only evidence is Aarsvold’s self-serving declaration that he was actually attempting to assist the Debtor by transferring what he claims were mostly unprofitable accounts.
But this is inherently incredible; the court does not see how denuding a corporation of all of its assets and leaving it with only debt can somehow be regarded as indicative of benign intent. And although every transferred contract or relationship might not have been a winner, the continued income enjoyed by Fusionbridge Wyoming immediately starting from zero, belies this claim.
Under federal law, Trustee can avoid a "constructively" fraudulent transfer even in the absence of actual fraudulent intent. A "constructively" fraudulent transfer is one that was made in exchange for less than "reasonably equivalent value" at a time when debtor was insolvent. 11 U.S.C. § 548(a)(1)(B). To prevail on a claim for constructive fraudulent transfer under § 548(a)(1)(B), a trustee must establish (1) debtor transferred an interest in property, (2) debtor was insolvent at time of transfer or was rendered insolvent as a result of transfer, was engaged in business or was about to engage in business for which debtor’s remaining property constituted unreasonably small capital, or intended to incur or believed that it would incur debts beyond its ability to pay as they matured, and (3) debtor received less than reasonably equivalent value in exchange for transfer. In re Saba Enterprises, Inc., 421 B.R. 626, 645 (Bankr.
S.D.N.Y. 2009); In re Pajaro Dunes Rental Agency, Inc., 174 B.R. 557 (N.D. Cal. 1994).
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Under California law, a transfer is constructively fraudulent: (1) as to a
creditor whose claim arose before the transfer was made or the obligation was incurred; (2) if the debtor made the transfer or incurred the obligation without receiving a reasonably equivalent value in exchange for the transfer or obligation; and
the debtor was insolvent at the time or the debtor became insolvent as a result of the transfer or obligation. Cal. Civ. Code § 3439.05.
As discussed below, Trustee meets all elements of a constructively fraudulent transfer under both Federal and state law. There is no genuine issue of material fact as to this claim.
Trustee establishes all the following elements for a constructively fraudulent transfer claim under Federal law:
It is uncontested that Debtor executed the APA and a transfer occurred.
According to the APA, Debtor sold, assigned and delivered to Fusion Wyoming all of Debtor’s ". . . equipment, furniture, fixtures, supplies and other similar property used in the Business; all material records related to the performance of the Assumed Contracts prior to the Closing Date; All Business Intellectual Property; All customer lists, price lists, advertising and promotional materials, sales and marketing materials, e-mail addresses used in the Business; [and] the goodwill and other intangible assets of the Business." Wood Decl., Ex. 2, pg. 39 & 51. Defendants concede that a transfer occurred.
It is also uncontested that Debtor was insolvent or became insolvent when the transfer contemplated in the APA was concluded. At the time of the transaction, Debtor had over one million dollars in debt but had virtually no assets with which
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such obligations could be paid. See Wood Decl., Ex. 28. Defendants also do not offer any argument or evidence to show that Debtor was not insolvent at the time the APA transfer was executed.
The Debtor did not receive "reasonably equivalent value in exchange for the transfer or obligation." Aarsvold admitted that "[n]o cash was exchanged" from Fusionbridge Wyoming to Debtor. Wood Decl. Ex. 5, pg. 166, at 79:20-21. Any revenue generated from the contracts was paid to Fusionbridge Wyoming. These customer contracts provided Fusionbridge Wyoming with approximately $771,000 in revenue in 2012. Additionally, Fusionbridge Wyoming received Debtor’s accounts receivables, which exceeded $2.5 million.
In return, Debtor received nothing. Debtor was supposed to receive payment of selected credit card debt, but even that did not occur.
Defendants assert that Aarsvold was transferring "risky" contracts in order to save Debtor from further liability. This assertion fails because Defendants offer no documentary evidence in support of this assertion. There is no evidence these contracts were costly or risky. A self-serving declaration that the contracts were liabilities will not suffice. It is clear from the record that Debtor received less than reasonably equivalent value (in fact, nothing) in exchange for the transfer.
Trustee succeeds in establishing all the following requisite elements of a constructive fraudulent transfer under California state law.
It is undisputed that there was at least one creditor in existence at the time the
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transfer was made. Pursuant to Cal. Civ. Code § 3439.05, Trustee must establish that there was a creditor in existence at the time of the transfer whose claim remained unpaid on the Petition Date. Here, there are at least two creditors.
On October 28, 2013, Superior Financial Group ("Superior"), filed proof of claim 4-1 indicating that Superior loaned Debtor $10,000 pursuant to a "loan agreement/promissory note" executed by Aarsvold in December of 2008. As of the Petition Date, the account balance was $12,847.92. Additionally, on November 4, 2013, Global Systems Integration, Inc. ("Global,") filed proof of claim 5-1 asserting a claim for $18,662.50 ("Global POC"). According to the Global POC, Debtor incurred the $18,662.50 liability between 2007 and 2008. The obligations to both Superior and Global arose before the transfer, and still existed as of the Petition Date.
Both state and federal law defining constructively fraudulent transfers share this element. As discussed above, Debtor did not receive reasonably equivalent value for the transfer. Despite Defendants’ assertion that Aarsvold was trying to transfer liabilities to Fusionbridge Wyoming or that valid consideration was passed as equivalent value, Defendants offer no evidence in support of this argument. Rather, the evidence on the record shows that Debtor received nothing in return for giving up its assets to Fusionbridge Wyoming.
Both state and federal law defining constructive fraudulent transfers share this element as well. As discussed above, Debtor was insolvent at the time of the APA transfer. This element is also undisputed. The record shows that Debtor had over one million in debt and virtually no assets to pay its obligations. Defendants do not argue this point and so this element is easily established.
Defendants offer no evidence to support an argument that Debtor received an
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equivalent value in the transfer. The other elements are uncontroverted. Thus there are no genuine issues of material facts as to any of the elements of this claim and the Court should grant summary judgment.
The elements of a claim for breach of fiduciary duty are "(1) the existence of a fiduciary relationship; (2) the breach of relationship; and (3) damages proximately caused by the breach." In re Intelligent Direct Marketing, 518 B.R. 579, 589 (E.D. Cal. 2014). While a director may be protected by the business judgment rule, an exception to the rule exists "in ‘circumstances which inherently raise an inference of conflict of interest’ and the rule ‘does not shield actions taken without reasonable inquiry, with improper motives, or as a result of a conflict of interest.’" Id., (citing Berg & Berg Enterprises LLC v. Boyle, 178 Cal. App. 4th 1020, 1045 (2009).
There is no genuine issue of material fact as to whether Aarsvold owed a fiduciary duty to Debtor. The Supreme Court has held that a director is a fiduciary, and so is a dominant or controlling stockholder or group of stockholders. Pepper v. Litton, 308 U.S. 295, 306 (1939). In the instant case, it is uncontested that Aarsvold was not only the CEO of Debtor, but that he was also the sole shareholder of Debtor. Mr. Aarsvold admitted these material facts himself. Wood Decl., Ex. 13, Request for Admissions, No. 2-3, 5. Therefore there is no genuine issue of material fact under the first element that establishes Mr. Aarsvold owed a fiduciary duty to Debtor.
Aarsvold breached his fiduciary duty to Debtor, and that the business judgment rule does not protect the actions taken by Aarsvold. A director breaches their fiduciary duty when approving and carrying out transactions "in ‘circumstances which inherently raise an inference of conflict of interest’ and the business judgment rule ‘does not shield actions taken without reasonable inquiry, with improper motives, or as a result of a conflict of interest.’" In re Intelligent Direct Mktg., supra, at 589.
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Aarsvold breached his fiduciary duty by carrying out transactions in circumstances which were such as to inherently raise a conflict of interest. A "conflict of interest" is a "real or seeming incompatibility between one's private interests and one's public or fiduciary duties." Metro. Life Ins. Co. v. Glenn, 554 U.S. 105, 112 (2008) (quoting Black's Law Dictionary 319 (8th ed. 2004)). The Trustee alleges that the circumstances surrounding Aarsvold, the CEO of the Debtor and Fusionbridge Wyoming, gave rise to the inference of a conflict of interest for a few reasons. First, a conflict of interest is inherent in Aarsvold’s transfer of substantially all of the Debtor’s assets to Fusionbridge Wyoming without reasonably equivalent value. Wood Decl., Ex. 2, Pg. 70, 81; Ex. 6, Pg. 252:6-14. Second, a conflict of interest is present when the debt transferred from the Debtor to Fusionbridge Wyoming only consisted of debt that Aarsvold had personally guaranteed. Id., Ex. 2, Pg. 83. In his Opposition, Aarsvold fails to allege facts or provide any evidence that there was no "conflict of interest" so as to create a genuine issue of material fact.
The business judgment rule does not protect Aarsvold. The business judgement rule "does not shield actions taken without reasonable inquiry, with improper motives, or as a result of a conflict of interest." In re Intelligent Direct Mktg, supra, at 589. By Aarsvold’s own admissions, he failed to value the assets of Debtor before transfer. There was no "reasonable inquiry" that Aarsvold took in preparation for the APA transfer.
Alternatively, the Trustee makes the argument that the business judgement rule does not apply. Aarsvold’s actions were taken with improper motives. The Trustee alleges that Aarsvold made the transfer in order to shield Debtor’s assets from Infocrossing. Wood Decl., Ex. 2; Wood Decl., Ex. 6, Pg. 211-213. Infocrossing appeared ready to execute a judgment against Debtor when Aarsvold initiated the transfer of Debtor’s assets to Fusionbridge Wyoming. Aarsvold does not deny such allegations made by the Trustee.
Aarsvold argues that he executed the transfer of assets from Debtor in order to
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prevent its contracts from becoming worthless and to prevent Debtor from "slipping into a position of bankruptcy." See Opposition, Pg. 8. Once again, Aarsvold fails to provide evidence. A party cannot manufacture a genuine issue of material fact merely by making assertions in its legal memoranda. Hardwick v. Complete Skycap Services, Inc., 247 Fed. Appx. 42, 43-44 (9th Cir. 2007) (unpublished). Thus Aarsvold has failed to create a genuine issue of material fact about his true intentions as he has not presented evidence in support of his alleged intentions.
Aarsvold’s breach of fiduciary duty was the proximate cause of Debtor’s damages. Whether proximate cause exists as a result of Defendants' breach of a duty are questions of fact generally resolved by a trier of fact. Quechan Indian Tribe v.
U.S., 535 F. Supp. 2d 1072, 1120 (S.D. Cal. 2008) (citing Armstrong v. United States, 756 F.2d 1407, 1409 (9th Cir.1985)). But when the facts are undisputed, and only one conclusion can be reasonably drawn, the question of causation is one of law. Quechan Indian Tribe v. U.S., 535 F. Supp. 2d at 1120 (citing Lutz v. United States, 685 F.2d 1178, 1185 (9th Cir.1982)).
The Trustee alleges that Debtor sustained monetary damages after Aarsvold made the transfer of Debtor’s assets. The Trustee presents evidence that prior to Aarsvold transferring Debtor’s assets, in the years 2010 and 2011, the Debtor admitted to receiving $1,331,772.00 and $996,015.00 in gross income respectively. Wood Decl., Ex. 1, Pg. 59. But after Aarsvold executed the transfer in 2012, Debtor only totaled a gross income of $15,681.39. Id. In contrast, Fusionbridge Wyoming had a gross income of approximately $771,000.00 in 2012. Wood Decl., Ex. 14; Wood Decl., Ex. 25.
The only defense Defendants offer in their Opposition is that Aarsvold’s decision to execute the APA was a "valid business judgment." See Opp., pg. 8:20. Aarsvold transferred contracts that "required the use and deployment of specific contractors with specific skills." Id., pg. 8:20-22. Defendants argue that "if these
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contractors left, they would be worthless, as is the nature of the business."
This argument fails for the following reasons. First, Defendants attach no documentary evidence showing the specifics of the contracts and how by transferring them, they were protecting the Debtor. Second, is it unclear why it matters that the transferred contracts required specific contractors. Did the contractors in fact leave? On the contrary, it appears the contractors continued working for Fusionbridge Wyoming after the APA transfer was executed.
In conclusion, the Trustee has satisfied all three elements for a claim of a breach of fiduciary duty by Aarsvold. There has been no genuine issue of material fact established for the three elements of (1) the existence of a fiduciary relationship; (2) the breach of relationship; and (3) damages proximately caused by the breach.
Trustee seeks an order determining that Aarsvold, Debtor, and Fusionbridge Wyoming are alter egos of each other. Under California law, alter ego is present when "(1) there is such a unity of interest and ownership between the corporation and the individual or organization controlling it that their separate personalities no longer exist; and (2) failure to disregard the corporate entity would sanction a fraud or promote an injustice. In re Intelligent Direct Marketing, supra, at 588 (citing Community Party v. 522 Valencia, Inc., 35 Cal. App. 4th 980, 993 (1995). To determine whether alter ego is present, courts consider numerous factors including commingling of funds and other assets, unauthorized diversion of corporate funds to other than corporate uses, the treatment by an individual of the assets of the corporation as his own, among others. Twenty-eight of these factors that indicate "alter ego" are listed in Associated Vendors v. Oakland Meat Co., 210 Cal. App. 2d 838-840 (1962).
Here, many of the Associated Vendors factors are present.
First, Aarsvold uses multiple corporate entities for a single venture. When Aarsvold’s previous companies (ePassage and Strategix) encountered legal problems,
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Aarsvold transferred their assets to Debtor. When Debtor was facing a judgment, Aarsvold transferred its assets to Fusionbridge Wyoming. Now that Trustee as asserted claims, Aarsvold ceased operating Fusionbridge Wyoming to work for "Glomad Services." Glomad Services was incorporated by Mrs. Aarsvold and Glomad lists the same principal office and mailing address as Fusionbridge Wyoming. Wood Decl., Ex. 16.
Further, a review of Aarsvold’s company’s financial statements provide evidentiary support for this factor. Aarsvold testifies that North Baker is owned by his wife and provided both Debtor and Fusionbridge Wyoming with IT and administrative work. The following list of exchanges from Trustee’s review of financial statements provided by North Baker reveals the interconnectivity of Mr. and Mrs. Aarsvold’s multiple corporate entities, to wit:
As of December 31, 2011, ePassage owed Debtor $2,031,089.11 for legal fees that Debtor paid on behalf of ePassage and Strategix in connection with Infocrossing litigation.
The receivable owed to Debtor by ePassage (in the amount of over two million dollars) was transferred to Fusionbridge Wyoming.
As of December 31, 2011, North Baker owed Debtor $496,201.79.
The receivable owed to Debtor by North Baker was transferred to Fusionbridge Wyoming. As of December 31, 2012, North Baker owed Fusionbridge Wyoming $489,562.41.
Second, Aarsvold diverted corporate assets. North Baker’s financial statements show that Mr. Aarsvold diverted Debtor’s assets to pay the obligations of his other entities. A review of North Baker’s 2012 "Balance Sheet" indicates that North Baker had outstanding loan and note receivables from Aarsvold, Aarsvold’s son—Andy Aarsvold, and accounts receivable owed from ePassage and Strategix. Wood Decl., 21, pg. 593. Moreover, North Baker lists as liabilities certain credit card obligations of Andy Aarsvold, Andy Asarsvold’s student loans, and outstanding obligations owed to
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Debtor and/or Fusionbridge Wyoming.
Third, there is no dispute that Aarsvold owns and dominates Debtor and Fusionbridge Wyoming. By his own admission, Aarsvold owned and controlled ePassage, Strategix, Debtor, and Fusionbridge Wyoming. Wood Decl., Ex. 5, pg. 147, at 8:7-9; Ex. 6, pg. 203:2-4, pg. 222:10-11. Aarsvold executed the APA on behalf of Debtor and Fusionbridge Wyoming while serving as the CEO of both companies. Id.
Fourth, Mr. Aarsvold, Debtor and Fusionbridge Wyoming use the same address. See Wood Decl., Ex. 1; Ex. 6, pg. 183:14-15; 187:1-4; 227:6-16.
Additionally, Debtor and Fusionbridge Wyoming shared the same telephone numbers and email.
Fifth, Debtor and Fusionbridge Wyoming use the same employees and consultants. Mr. and Mrs. Aarsvold are employees/owners of Debtor, Fusionbridge Wyoming, and North Baker. The APA also indicates that Fusionbridge Wyoming and Debtor used the same consultants. Wood Decl., Ex. "2," pg. 82.
Sixth, Aarsvold, Debtor and Fusionbridge Wyoming do not deal at arm’s length with each other. For example, Debtor paid the legal fees and other obligations of ePassage and Strategix. Wood Decl., Ex. 7, pg. 281:22-282:13. Then, pursuant to the APA, Aarsvold assigned the ePassage receivable held by Debtor to Fusionbridge Wyoming. Debtor had also loaned money to North Baker (Mrs. Aarsvold’s company). Pursuant to the APA, that receivable was assigned to Fusionbridge Wyoming. These actions strongly indicate that Aarsvold improperly uses the corporate entity as a shield against personal and corporate liability.
Seventh, Aarsvold intentionally had Fusionbridge Wyoming operate as if it were Debtor. Fusionbridge Wyoming and Debtor shared the same mailing address and telephone number. Their logos are the same and their invoices also appear identical.
Wood Decl., Ex. 22 & 23. Mr. Aarsvold’s electronic signature on email is also identical from Debtor and Fusionbridge Wyoming. These actions strongly indicate Aarsvold’s intent to present one single entity to customers.
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In sum, multiple Associated Vendors factors are present to indicate that
Aarsvold, Debtor, and Fusionbridge Wyoming are the alter egos of each other. Defendants do not even attempt to argue against this claim in their Opposition. Because of the undisputed evidence in the record, the Court determines that Aarsvold, Debtor, and Fusionbridge Wyoming are the alter egos of each other.
Trustee seeks summary judgment on each of Defendants’ affirmative defenses.
In their Answer to the Complaint, Defendants assert the following seventeen (17) affirmative defenses:
Trustee fails to state a claim for relief;
The Complaint fails to establish the elements necessary to establish the purported claims for relief;
Plaintiff seeks relief not available to her;
Complaint has been filed in bad faith;
Plaintiff failed to mitigate damages;
Plaintiff is barred from recovering damages because of unclean hands;
Plaintiff is stopped from recovery damages;
Plaintiff has waived any right to recover damages;
Plaintiff waited an unreasonable period of time to complain of the alleged wrongdoing;
Damages alleged in the Complaint were caused by other unnamed Defendants;
Allegations in the Complaint is barred by statutes of limitation;
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Allegations in the Complaint are barred because the Defendants’ actions were justified;
Plaintiff has not set forth a sufficient factual or legal basis for the recovery of attorneys’ fees from Defendants;
Any award in Plaintiff’s favor would constitute unjust enrichment;
Allegations in Complaint are barred because Plaintiff has not suffered injury or damages alleged;
Defendants have substantially complied with all requirements of law; and
Plaintiff lacks standing to sue.
There is simply no legal or factual support for any of the above affirmative
defenses. In light of the extensive discovery conducted, Defendants still cannot apparently offer facts or legal theories to support any of these affirmative defenses, and these are Defendants’ burden to prove. Thus, there is no genuine issue of material fact as to any of these affirmative defenses and the Court should grant summary judgment dismissing these defenses.
Defendants have not offered any meaningful evidence to indicate a genuine issue of material fact as to any of Trustee’s claims. Trustee’s evidence in contrast is clear and persuasive. There does not appear to be any genuine issue of law. It would appear that this is a proper case for judgment by motion.
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Debtor(s):
FusionBridge, Ltd. Represented By Carlos F Negrete
Defendant(s):
Matthew David Aarsvold Represented By Carlos F Negrete
Fusion Bridge, Ltd. Represented By Carlos F Negrete
Mediator(s):
Thomas H. Casey Represented By Thomas H Casey
Plaintiff(s):
Karen S. Naylor (TR) Represented By
D Edward Hays David Wood Matthew Grimshaw
Trustee(s):
Karen S Naylor (TR) Represented By
D Edward Hays Karen S Naylor (TR)
Karen S Naylor (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
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Adv#: 8:17-01037 Aguilar et al v. Treadway
Deny discharge of Debtor under 11 U.S.C. Sections 727(a)(2)(A) and 727(a) (4)(A)
(set from s/c hearing held on 6-1-17)
(con't from 4-26-18 per stip & order entered 4-25-18 )
Docket 1
Tentative for 6/1/17:
Deadline for completing discovery: January 15, 2018 Last date for filing pre-trial motions: January 29, 2018 Pre-trial conference on:February 8, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by September 1, 2017.
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Defendant(s):
Kevin Michael Treadway Pro Se
Plaintiff(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By
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Trustee(s):
Bradley D Blakeley
Karen S Naylor (TR) Represented By Burd & Naylor
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Adv#: 8:13-01117 Padilla, III v. Jakubaitis
Docket 222
See #10.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
Docket 282
This motion will be denied as moot. At a hearing on March 8, 2018, this Court abstained from this proceeding after certain limited discovery issues were resolved. An order was entered on May 9, 2018 (prepared by the Court after a proposed order was not lodged). The Court did not want to abstain until Frank Jakubaitis’ deposition had been concluded and sanctions had been paid. These issues are pending in Marshack v. Jakubaitis, 8:15-01426- TA, which remains before this Court. But that those matters are still pending does not resucitate all other aspects of the case, which are remanded to state court. Rule 26 squabbling is in this latter category. The parties have continued the status conference hearings on Mr. Jakubaitis’ deposition and related issues in that adversary twice in the last several months. Based upon what is reported in the opposition to this motion, the parties have picked back up in state court and a trial has been set for early 2019.
Debtor(s):
Deny as moot.
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
11:00 AM
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
11:00 AM
Adv#: 8:16-01098 Joseph v. United States Of America
Docket 1
Tentative for 11/30/17:
Status conference continued to March 29, 2017 at 10:00 a.m.
Tentative for 8/10/17:
Status conference continued to November 28, 2017 at 10:00 a.m. Personal appearance not required.
Tentative for 3/30/17:
Status Conference continued to August 10, 2017 at 10:00 a.m.
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T. Madden Beth Gaschen
Susann K Narholm - SUSPENDED - Mark Anchor Albert
Defendant(s):
United States Of America Pro Se
11:00 AM
Joint Debtor(s):
Thomas Fu Pro Se
Plaintiff(s):
James J Joseph Represented By
A. Lavar Taylor
Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
James J Joseph (TR) Paul R Shankman Lisa Nelson
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
Docket 27
- NONE LISTED -
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Represented By David B Shemano
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee Timothy P Dillon
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy Michael Jason Lee
Sunjina Kaur Anand Ahuja
11:00 AM
2:00 PM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
Docket 176
- NONE LISTED -
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo William J Idleman
Virgil Theodore Hernandez and Aleli Pro Se
Virgil Theodore Hernandez Represented By Gregory M Salvato Joseph Boufadel
Aleli A. Hernandez Represented By Gregory M Salvato Joseph Boufadel
Plaintiff(s):
Asset Management Holdings, LLC Represented By
2:00 PM
Trustee(s):
Vanessa M Haberbush Louis H Altman
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:17-01129 Karen Sue Naylor, Chapter 7 Trustee v. Housewares International, Inc.
(set from pre-trial conference held on 6-07-18 )
Docket 1
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Housewares International, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
10:00 AM
Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
11:00 AM
(OST Signed 8-21-18)
Docket 74
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
10:00 AM
Approving Procedures Limiting Notice
(OST Signed 7-18-18)
(con't from 8-08-18)
Docket 15
Tentative for 8/28/18:
As the Anton & Chia case has been converted, what is the continued need for collateral use? No tentative.
Tentative for 8/8/18:
The court will feel better about authorizing continued cash collateral use if it had a better picture of where the case is headed. No status report is on file.
Tentative for 7/20/18: Opposition due at hearing.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
10:30 AM
VW CREDIT INC.
Vs.
DEBTOR
Docket 34
Grant. Appearance is optional.
Debtor(s):
Julie Marie Duncan Represented By Christine A Kingston
Movant(s):
VW Credit, Inc. Represented By Darren J Devlin
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
CAB WEST, LLC
Vs.
DEBTOR
Docket 34
Grant. Appearance is optional.
Debtor(s):
Heather Juarez Represented By Julie J Villalobos
Movant(s):
Cab West, LLC Represented By Jennifer H Wang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 4-17-18 per stip. to cont. hrg entered 4-16-18)
NATIONSTAR MORTGAGE LLC
Vs DEBTOR
Docket 48
Tentative for 8/28/18: Grant.
Tentative for 4/17/18:
Grant. "Time to complete a loan modification" is not grounds to deny relief of stay. Moreover, $29,608 of post-petition arrears is unacceptable and inconsistent with bona fides required of Chapter 13 debtors.
Debtor(s):
Jesus Jaime Cabrera Represented By Norma Duenas
Movant(s):
Nationstar Mortgage LLC as Represented By Merdaud Jafarnia
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
CALIBER HOME LOANS, INC.
Vs.
DEBTORS
Docket 43
- NONE LISTED -
Debtor(s):
Christopher Clark Fleury Represented By David S Henshaw
Joint Debtor(s):
Annie Erbabian Fleury Represented By David S Henshaw
Movant(s):
Caliber Home Loans, Inc. Represented By Darlene C Vigil Madison C Wilson Christina J O
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
CANYON VIEW CONDOMINIUM ASSOCIATION
Vs.
DEBTOR
Docket 41
Grant unless an APO is agreed.
Debtor(s):
Justin Stumpf Represented By Nima S Vokshori Luke Jackson
Movant(s):
Canyon View Condominium Represented By
Mark Allen Wilson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
BANK OF AMERICA, NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 77
Grant. Appearance is optional.
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
Movant(s):
Bank of America, National Represented By
Erin M McCartney
10:30 AM
THE BANK OF NEW YORK
Vs.
DEBTOR
Docket 145
Grant. Appearance is optional.
Debtor(s):
Jack Richard Finnegan Pro Se
Movant(s):
The Bank of New York Mellon fka Represented By
Erin M McCartney
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
10:30 AM
EAST WEST BANK
Vs DEBTOR
Docket 34
These are the motions of East West Bank for relief of stay regarding its trust deeds against four real properties as listed in the motions. The four interrelated motions are considered together in a single memorandum. The trust deeds secure the sum of approximately $1,916,916 owed under a line of credit extended to the debtor’s accountancy firm, Anton & Chia, LLP. That line of credit was reportedly guaranteed by the debtor. There is, reportedly, no equity in any of the four properties and, in fact, the properties are "upside down" by the amount of $524,959, or "negative equity" in that amount. So, the provisions of 11 U.S.C. §362(d)(2) are met insofar as the movant bears the burden of proving no equity.
Movant also seeks relief under §362(d)(4) based upon a series of deeds from holding companies controlled by the debtor on July 2, 2018, just before the petition in bankruptcy was filed.
Debtor apparently does not contest any of this. Rather, debtor relies on the second prong of §362(d)(2), i.e. that the properties are "necessary to a reorganization." United Sav. Ass'n of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S. 365, 108 S.Ct. 626, 633 (1988). Debtor bears the burden on this issue as provided in §362(g). The only evidence provided by debtor appears in the Declaration of Gregory Wahl. The only reorganization described by the debtor is purely aspirational in that he says he is exploring opportunities and that his wife may realize income on a new consulting contract. Very few details are given.
Moreover, the "reorganization" is not really anything tangible or even within the classic meaning of the term. Rather, it seems that debtor would like to explore refinancing and, if that is not achievable, control the liquidation process in Chapter 11 through" an orderly sale process." While reorganization plans can include liquidation of estate assets, the court
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doubts that is the meaning of the term in this context. But all of this is far too vague and speculative to justify holding off the bank, particularly since debtor makes no proposal of adequate protection payments, thus imposing all continuing risk upon the bank. Further, the court is aware that the Anton & Chia case was recently converted to Chapter 7, thus making any prospect of a business rebound that much more distant. The debtor’s burden on this issue is not carried.
Grant
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:30 AM
EAST WEST BANK
Vs DEBTOR
Docket 35
See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:30 AM
EAST WEST BANK
Vs DEBTOR
Docket 36
See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:30 AM
EAST WEST BANK
Vs DEBTOR
Docket 37
See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:30 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTOR
Docket 24
Grant. Appearance is optional.
Debtor(s):
Roberto Mas Represented By
A Mina Tran
Movant(s):
Wells Fargo Bank, N.A. Represented By Darlene C Vigil
Trustee(s):
Amrane (SA) Cohen (TR) Represented By A Mina Tran
11:00 AM
KAREN SUE NAYLOR, CHAPTER 7 TRUSTEE
GOE & FORSYTHE, LLP, ATTORNEY FOR CHAPTER 7 TRUSTEE HAHN FIFE & COMPANY, LLP, ACCOUNTANT
Docket 75
Allow as prayed. Appearance is optional.
Debtor(s):
Pacific Agency Network, Inc. Represented By Bernard J Frimond
Trustee(s):
Karen S Naylor (TR) Represented By Robert P Goe Charity J Manee
11:00 AM
BURD & NAYLOR, ATTORNEY FOR CHAPTER 7 TRUSTEE HAHN FIFE & COMPANY, LLP, ACCOUNTANT
RINGSTAD & SANDERS, OTHER
Docket 208
Allow as prayed. Appearance is optional.
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Trustee(s):
Karen S Naylor (TR) Represented By William M Burd
Ringstad & Sanders LLP
10:00 AM
Docket 28
- NONE LISTED -
Debtor(s):
Anton & Chia, LLP Represented By Michael R Totaro
10:00 AM
(con't from 8-8-18)
Docket 14
See #7.
Debtor(s):
Anton & Chia, LLP Represented By Michael R Totaro
10:00 AM
(con't from 8-8-18)
Docket 20
Debtor does not provide any details of what the joint administration will mean. A sample caption page is not provided. Presumably joint notices will be provided on motions that affect both cases, and motions will only be filed in the main case, but claims will still be filed in each individual case. If motions only affect one estate and not the other, a box checked should so indicate.
Debtor and Anton &Chia have different counsel so fees should not be a problem. Assuming these are the parameters contemplated, then joint administration could be more efficient and the motion will be granted. An order should be lodged on the Court’s mandatory form. This is administrative, not substantive consolidation. Professionals should scrupulously segregate their time and costs to their respective estates.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
10:00 AM
(con't from 8-29-18)
Docket 1
Tentative for 8/28/18:
Continue for further status conference on November 28, 2018 at 10:00 a.m.
Tentative for 6/27/18: Status? Conversion?
Tentative for 3/20/18: See #15.
Tentative for 1/1618:
Continue to confirmation hearing.
Tentative for 11/1/17:
An updated status report would have been helpful. Does the Trustee foresee a plan? Would a deadline or a continued status hearing help?
Tentative for 8/9/17:
Continue status conference approximately 90 days to November 8, 2017 at 10:00 a.m.
10:00 AM
Tentative for 6/28/17: See #12.
Tentative for 6/7/17:
Continue to June 28, 2017 at 10:00 a.m.
Tentative for 4/26/17:
Deadline for filing plan and disclosure statement: September 30, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: June 1, 2017
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Docket 209
Grant. Appearance is optional.
Debtor(s):
Ruben Corona Jr Represented By Michael R Totaro
Joint Debtor(s):
Maria Elena Corona Represented By Michael R Totaro
10:00 AM
Docket 54
The court notes three principal issues:
A bit more detail should be provided on debtor's occupation and prospects for maintaining sufficient income since the proposed term of this plan is extraordinarily long, i.e. 189 months;
Repayment of arrearage over 189 months push the limits of what could be considered to be in good faith, particularly since all other claims apparently will be paid in a much shorter period; and
The unsecured class is not, in effect, paid in full as the rate quoted in the plan does not yield present value. This will be problematic if there is an objection from this class. 11 U.S.C. 1129(a)(15).
Debtor(s):
Jeff Allan Charity Represented By Michael G Spector Vicki L Schennum
11:00 AM
Docket 31
It is not clear that there is any "cash collateral" here. Moreover, the court needs analysis of whether, given the dispute over ownership and right to file this proceeding, a trustee should be appointed.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
11:00 AM
(OST Signed 8-27-18)
Docket 30
- NONE LISTED -
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
2:00 PM
§ 1127(a)
(con't from 6-28-18)
Docket 419
Tentative for 8/28/18: See #8 & 9.
Tentative for 6/28/18: Status?
Tentative for 6/13/18: Status?
Tentative for 5/23/18: No tentative
Tentative for 4/25/18: See #8.
Tentative for 3/28/18: See #17.
2:00 PM
Tentative for 2/28/18: Is this resolved?
Tentative for 1/24/18: See #10.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
Movant(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Lei Lei Wang Ekvall Robert S Marticello Robert S Marticello David A Kay
David A Kay Steven H Zeigen Steven H Zeigen Michael Simon Michael Simon Kyra E Andrassy Kyra E Andrassy
2:00 PM
(set at conf. hrg. held 1-24-18) (con't from 6-28-18)
Docket 305
Tentative for 6/28/18:
Was there to be an evidentiary hearing regarding the Honda? Other issues?
Tentative for 6/13/18: Status?
Tentative for 5/23/18: No tentative
Tentative for 4/25/18:
This is a further hearing on confirmation of the debtor’s Fourth Amended Plan ("plan"). At the last hearing the court identified two remaining obstacles to confirmation. Those are: (1) does the plan violate the absolute priority rule in that creditors are not being paid in full although the debtor keeps his ongoing appeal, a form of "property" within the meaning of §1129(b)(2)(B)(ii) and (2) does the plan
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impermissibly separately classify the claim of the judgment creditor? The debtor requested an opportunity for further briefing. Note that in earlier hearings the court had analyzed the first question in terms of the quantum of new value assuming that the "new value" exception to the absolute priority rule existed, as described in Bank of America N.T. & S.A. v. 203 N. LaSalle St. Ptsp. 526 U.S.434 (1999). But as La Salle teaches, the new value offered by the debtor has to be more than offered by any other party, i.e. "market tested." But this version of the question has apparently faded into the background as the judgment creditor has filed a rival plan offering a potentially greater recovery to creditors.
Debtor argues in his Supplemental Brief that the prosecution of a "defensive" appeal is not a form of property at all, thus the absolute priority rule is not triggered by his keeping the appeal under his plan (and the house and car he also proposes to keep will be purchased with non-estate funds at established fair values and there is no indication the creditor is willing to pay more for these). The "not property" argument is based primarily on a statutory analysis of California law. While the effort is interesting, even admirable, the court is not convinced in the end. Debtor points out that "an appeal" is nowhere in the California Civil Code specifically identified as "property." But the question is how much can be inferred from its absence in other defined categories. Debtor argues that Civil Code §657 defines all property as either personal or real, and that "personal" property includes "things in action" under Civil Code §14(b)(3). But importantly, the statute §14(b)(3) actually says: "The words ‘personal property’ include money, goods, chattels, things in action, and evidences of debt." So, the question arises about what does "include" mean and whether the definition is exhaustive or in contrast should be read, as "include" is more usually defined, i.e. "including but not limited to….?" Civil Code §953 defines "things in action" as "a right to recover money or other personal property by a judicial proceeding." Debtor argues, perhaps logically, that a defensive appeal does not involve (or at least does not primarily involve) recovery of money. But debtor fails to
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analyze whether "personal property" might include other intangibles, particularly given the exclusive vs. inclusive question highlighted about §14(b)(3) in the discussion above. Debtor also does not analyze the tangential rights on an appeal such as recovery of costs and the like, clearly a right to obtain money if the appeal is successful. See CCP §1032(b). Debtor argues that an appeal is really just a "continuation of a judicial proceeding", open only to those aggrieved, and is purely a question of standing. Debtor then follows a rhetorical path observing that CCP § 700.180(a) provides no method of levy as against an appeal right nor does §708.410 provide a means of obtaining a lien thereon. The implication is that if one cannot levy upon the "right" or obtain a lien thereon it must not be property. No authority is offered for this assertion and the court is not sure that the conclusion follows.
Debtor’s extensive discussion of the Nevada case Butwinick v. Hepner, 128 Nev. 718 (2012) adds little to this analysis since this case stands for the unsurprising proposition that a judgment creditor cannot, through levy of its judgment, short circuit the appeal. The Butwinick court concludes that since an appeal is not a "chose in action" within the meaning of Nevada law and Nevada’s statutes provided no means of levy, the appeal right could not have been reached by the judgment creditor that way. Butwinick and debtor’s other out of state authorities (See e.g. In re Morales, 403
B.R. 629, 632 (Bankr. N.D. Iowa 2009)) also hold that a defensive appeal is not assignable. But the court is not convinced that this lack of assignability (even if that were correct under California law) necessarily means that what is not assignable is necessarily not "property" within the meaning of §1129(b)(2)(B)(ii).
But more importantly, debtor is left to argue that several Ninth Circuit authorities on point interpreting California law are just wrongly decided. Most significant among these is Mozer v. Goldman (In re Mozer), 302 B.R. 892, 895 (C.D. Cal. 2003). But this is not the only one. See also Fridman v. Anderson (In re Fridman), 2016 WL 3961303*8 (9th Cir. BAP 2016); McCarthy v. Goldman (In re McCarthy), 2008 WL 8448338, at *16 (9th Cir. BAP Feb. 19, 2008) aff’d 320 F. App’x 518 (9th Cir 2009); In re Marciano, 2012 WL 4369743 at *1 (Dist. C.D. Cal. Sept. 2012). Debtor argues that these cases other than Mozer should be disregarded
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because they are unpublished. No authority for this proposition is cited and unpublished decisions can and often do provide valuable insight if the facts and analysis are close to those on hand.
In Mozer the District Court analyzed the definition of property found at California Civil §655 which provides that property may include "…rights created or granted by statute." There is no question that the right to appeal is created by statute. See e.g. CCP §902. But more importantly for our analysis, the appeal right has real monetary value. The fact that it might not be reachable by levy or lien does not mean it has no value. And this point becomes obvious in the context of a bankruptcy. As in Mozer and the other Ninth Circuit cases interpreting California law, a trustee as the representative of the estate and successor to the debtor has the power, and even the obligation, to monetize this right (and really all assets) for the maximum benefit of creditors, if possible. Debtor argues that the issue should really be viewed not as a sale of property but one of a compromise of dispute, and that such a hypothetical sale might not be in the best interest of creditors. Neither point is persuasive.
As observed in several of the cases, the sale of rights and/or compromise of disputes in bankruptcy are closely parallel concepts and often both must be analyzed together in the same proposed transaction. Fridman 2016 WL 3961303 at *5 citing Goodwin v. Mickey Thompson Entm't Grp., Inc. (In re Mickey Thompson Entm't Grp., Inc.), 292 B.R. 415, 421 (9th Cir. BAP 2003). In Mickey Thompson the court went so far as to characterize the trustee’s motion to compromise as a sale of assets. Id. at 421. So, little persuasion lies in trying to label the process only as one of compromise and ignore the sale of property aspects. Even less persuasive is to argue that a hypothetical sale might not be in the best interests of the estate, and so therefore the entire approach is flawed. So might a compromise also not be in creditors’ interest?
But such a question must be answered in the context of the facts of a particular motion, and cannot be accepted as a general rule.
Debtor argues alternatively that even if the appeal were property it is automatically exempt and thus not figured into the §1129(b)(2)(B)(ii) analysis. To reach this conclusion debtor relies on CCP §704.210 which provides that "property
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not subject to enforcement of a money judgment is exempt, without making a claim." Debtor goes on to argue that while some judgments for money held by a judgment creditor can be reached by levy or lien, notably absent is a purely defensive appeal.
See CCP §708.410(a). The problems here are that even a defensive appeal can result in a claim for costs and other monies as discussed above and that while under California law a formal claim is not needed, bankruptcy law in contrast requires a formal and affirmative claim of exemption. See 11 U.S.C. §522(b). There has been as yet no such claim in Schedule C. See also FRBP 4003. Moreover, this "automatic exemption" argument relying on CCP §704.210 has been tried before without success in similar contexts. McCarthy, 2008 WL 8448338 at *8, citing In re Petruzelli, 139 B.R. 241, 247 (Bankr. E.D.Cal. 1992)
The court appreciates the attempt, but in the end concludes that the argument that a defensive appeal cannot be a form of property under California law (and thus bankruptcy law) is not watertight. In sum, the court is not persuaded by either debtor’s statutory analysis, or by the out of state authorities cited, that a defensive appeal is not "property" within the meaning of §1129(b)(2)(b)(ii). This conclusion is reinforced by three factors: (1) there is case law almost directly on point interpreting California law (Mozer etc.); (2) there is really no disputing that, however it is described statutorily, even a defensive appeal can yield real value, particularly in a bankruptcy context, and therefore the purpose of the absolute priority rule would be subverted under debtor’s theory if valuable things can be retained and (3) in addition to the authorities construing California law the bulk of out of state authority (mostly Texas) seem to support the conclusion that a defensive appeal can indeed be regarded as a form of property. See e.g. Croft v. Lowry (In re Croft), 737 F. 3d 372, 376 (5th Cir 2013); Valenciana v. Hereford Bi-Products Mgmt., 2005 WL 3803144 (Tex. Ct. App. 2006); Kahn v. Helevetia Asset Recovery, Inc., 475 S.W. 3d 389, 393(Tex. Ct. App. 2015).
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This is still the very close question it started out to be. The court’s previous
tentative decisions are incorporated herein. The question seems to boil down to whether In re Johnston, 21 F. 3d 323, 327 (9th Cir 1994), the only definitive Ninth Circuit authority, can be read so far as to mean that just because a liquidated claim is on appeal, and thus not final, this is sufficient "business" reason for separate classification. Another way to describe the question might be "are litigation claims automatically separately classified (classifiable)" just because the debtor disagrees with them? Of course, Johnston is distinguishable on its facts and much more obvious than is our case. In Johnston the creditor held the debtor’s guaranty of a corporate debt and collateral besides. Here there is no such complication. The only distinction seems to be the litigation source of the claim and that it is on appeal.
Further, all of the cases are uniform "thou shalt not gerrymander to obtain a consenting impaired class." See e.g. Barakat v. Life Ins. Co. of Va. (In re Barakat), 99
F. 3d 1520, 1525, cert. den. 520 U.S. 1143 (1997). The court consequently has two main problems here: 1. How is the court to view the fact that 98+% of the debt, including administrative debt, is represented by the single Hong judgment creditor? 2. Since effectively both classes of unsecured claims are being paid exactly the same (although the judgment creditor’s proceeds are being escrowed) what can possibly be the motive for this classification except to engineer the vote? Isn’t the purpose of voting in Chapter 11 to enfranchise the creditors in deciding the course of the estate? So, shouldn’t the court guard against easy artifices that don’t readily have an alternative explanation grounded in business or economic justifications? Isn’t that really the point of Barakat and Johnston? Debtor tries to make an issue of intent, arguing that intent should be determined when the plan was first filed and at that point in time the Hong creditor claimed secured status (subsequently the ORAP lien was waived in favor of unsecured status). But no authority is cited for this proposition. Moreover, the court doubts this is or should be the law. Confirmation speaks as of the date of confirmation and is guided by circumstances obtaining at that time. Debtor has the affirmative duty to show the elements of §1129(a), including the element of good faith as found at subsection (a)(3).
While not binding on Ninth Circuit courts, courts from outside the Circuit
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have held that appeals alone do not justify separate classification. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E,D,Va. 2004); In re Salem Suede, Inc., 219 B.R. 922, 933 (Bankr. Mass. 1998). Additionally, this was the implicit holding of a Nevada bankruptcy court. In re Zante, Inc., 467 B.R. 216, 219-20 (Bankr. D. Nev.
2012). Debtor’s non-Ninth Circuit or non-California authorities are somewhat less persuasive because in those cases the litigation over the claims was, importantly, in the very early stages, or the claims remained unliquidated and/or subject to substantial counterclaims. See e.g. In re Multuit Corp., 449 B.R. 323, 334-35 (Bankr.
N.D. Ill. 2011); In re Bashas’ Inc., 437 B.R. 874, 904 (Bankr. D. Ariz 2010). In contrast, here we have a liquidated claim but undistinguished from other liquidated claims excepting only the appeal. The court concludes in the end that the mere origin of a liquidated claim through litigation, and the fact that it is not final because appealed, is not, absent other factors not applicable here, a justifiable basis for separate classification. While admittedly a debtor retains substantial discretion in classification of claims, a plausible basis for the separate classification grounded in some business or economic justification apart from voting must be shown. Instead, the court here concludes the likely reason for the separate classification resides not in business or economic justification but in the desire to engineer a consenting impaired class.
Deny
Tentative for 3/28/18:
This is the continued hearing on debtor’s attempt to confirm his Fourth Amended Plan. The hearing has been continued for several times; this last continuance was to consider two points, upon which the court requested further briefing: (1) if the debtor does not keep his practice (the home and Honda having been paid for in cash new value at court-determined values) can the court confirm under 11
U.S.C. §1129(b)(2)(B)(ii) consistent with the absolute priority rule in light of the creditor having just filed a competing plan that offers more to creditors and (2) is
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there a "best interest of creditors" problem? The court also took under submission the pending question of separate classification of the Hong creditor’s claim. The court in meantime ordered the parties to mediation. Apparently, the mediation was unsuccessful.
That the mediation failed is truly unfortunate since the questions presented here are very difficult and the consequences profound.
On the question of best interest of creditors found at 11 U.S.C. §1129(a)(7), the court does not find any application since the comparison is to what creditors would receive in a hypothetical Chapter 7 liquidation. But both plans are demonstrably superior to what would likely be received in liquidation, even considering that the Fourth Amended Plan contemplates some considerable delays in payment.
But on the question of the absolute priority rule and "new value" the debtor has hit a snag. The question is not one of the court’s management of its docket, as debtor in his brief seems to assume. Rather, it is the question of whether the Fourth Amended Plan can be confirmed when the Hong creditor has filed a competing plan offering to pay to the Class Seven creditor body (about $38,690) more than the Fourth Amended Plan. Debtor proposes to pay the Class Seven creditors pro rata in four installments dependent on "Available Cash" and tied to future events such as "Litigation Resolution Date" which could be years in the future. Unless debtor succeeds on his appeal the payment percentage, and the timing of payment, is left vague and uncertain. In contrast, under the Hong plan creditors are offered an option of either 50% of their allowed claims on the effective date ("or as reasonably practicable after the Disbursing Agent has sufficient cash on hand to pay 50%...") or, alternatively, 100% tied to when the disbursing agent has accumulated and is ready to distribute $1 million. Importantly, the Hong creditors subordinate their recovery to those of the other creditors, a not-insignificant point considering they amount to about 98+% of all debt. Given the amounts alleged to be recoverable under various rights of action, it is hard not to see this as a promise of 100% or nearly so for those willing to
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wait.
All of this is important because of the teaching of the Supreme Court in Bank of America Nat’l Trust & Sav. Ass’n. v. 203 N. LaSalle St. P’ship, 526 U.S.434, 453 (1999). In LaSalle the court did not explicitly find that a "new value corollary" to the absolute priority rule actually existed. But if such a corollary existed, the LaSalle court found that the proponent of the plan must show that the quantum of new value was the most/best reasonably available. In making such a determination, the court must find that the quantum of proposed new value has been "market tested" and that no other person is willing to pay more to acquire the bundle of rights that the debtor retains under the plan. The La Salle court was vague as to how one goes about this market test, but the filing of a competing plan is one suggestion. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at §1129(b)(2)(B)(ii). Id. See also In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014).
The keeping of property can include the rights to direct actions, such as an appeal. While the debtor cites to some authorities including from other jurisdictions to the effect that "defensive" appeals are not estate property, this does not appear to be the case in the Ninth Circuit. See e.g. In re Fridman, 2016 WL 3961303 at *7 (9th Cir. BAP July 2016) citing In re McCarthy, 2008 WL 8448338 at *16 (9th Cir BAP Feb.
2008); In re Marciano, 2012 WL 4369743 at *2 (Dist. C.D. Cal. Sept. 2012). In those cited cases the trustees sold pending appeals for money. There is little doubt in the court’s mind that if a creditor wants to pay the estate to make a debtor’s appeal go away, that is a transaction that must be viewed from the standpoint of creditors unless they are paid in full from another source. The debtor must, in effect, pay at least the same in "new value" for the privilege of seeing an appeal to the end. In the Chapter 11 context, if a debtor proposes in a plan to keep an appeal, his plan must offer creditors more for that privilege (in combination with all other retained assets) than is otherwise available. Viewed this way debtor at bar has a problem. The terms of the Hong plan
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offer more to the Class 7 creditors and some of that overage could be viewed as payment for extinguishment of the appeal; but it would appear that the debtor proposes in his plan to keep the appeal going and is not offering anything to creditors for that privilege in contrast to purchase of the Denise property and the Honda.
There is also the question of separate classification. As the court has already said, this is a very close question. The 9th Circuit case law precedent is unclear respecting whether the mere fact that a claim is on appeal (and thus still disputed) should account for enough of a distinction by itself to justify separate classification. If attributes of a claim are not otherwise distinguishable such as having been guaranteed or supported by collateral, the court is left to question what is meant by the "business reasons" spoken of in cases like In re Johnston, 21 F. 3d 323, 327 (9th Cir. 1994).
Surely "business reasons" cannot mean merely that it would be more expedient if a pending appeal resolved in the debtor’s favor would improve ability to repay debt. While that might be a question of "business" the court is hard-pressed to see it as a justification. It is clear in all of the authorities that gerrymandering is not permitted, but since the court cannot look into the debtor’s mind regarding motivations, we are left to examine external reasons claimed as to why the separately classified claim is not "substantially similar" to other debt. In the case at bar this task is made even more difficult since the separately classified claim is 98+% of the body of debt. If the point of this whole inquiry is to make sure that each creditor has a meaningful vote, and to prohibit arbitrary classification as a device to reaching a consenting class, then the debtor’s plan at bar is likened to the tail wagging the dog. While it might be possible for the extremely clever counsel to succeed in effectively disenfranchising 98+% of the creditor vote by separate classification, the court cannot see its clear path to doing so in this case, particularly when the other issues mentioned above weigh against confirmation as well.
Deny
Tentative for 2/28/18:
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This is a continued hearing on confirmation of the Debtor’s Third Amended
Plan. At the court’s request the parties filed briefs on the question of separate classification. Additionally, further evidence is offered by the objecting creditors Yuanda Hong, et al ("Hong creditors") on the question of the values of the Denise property and the Debtor’s medical practice, relevant to the quantum of new value offered under the plan. The court discusses each subject below:
Separate Classification: What qualifies as proper classification of claims under §1122, or stated negatively, what is improper classification and thus rendering a plan in non-confirmable bad faith under §1129(a)(3), is an important question. Unfortunately, it is one that has engendered surprisingly little definitive authority in the Ninth Circuit. The objecting creditors have cited numerous authorities from outside of the Circuit that stand generally for the proposition that separately classifying a claim solely because it is on appeal is not in good faith, mostly because the character of the claim is not, in a legalistic sense, any different from that of the standard commercial claims.. See e.g. In re Paolini, 312 B.R. 295, 315 (Bankr. E.D.Va. 2004); In re Salem Suede, Inc., 219 B.R. 922 (Bankr. D. Mass 1998); In re Local Union 722 Int’l Bhd. Of Teamsters, 414 B.R. 443, 453 (Bankr. N.D. Ill. 2009); Bustop Shelters of Louisville, Inc. v. Classic Homes, Inc., 914 F. 2d 810, 811-12 (6th Cir 1990). But it is not clear that this is the law of the Ninth Circuit.
Nearly all of the cases adopt some version of the Ninth Circuit’s ruling in
Barakat v. Life ins. Co. of Va. (In re Barakat), 99 F. 3d 1520, 1525, cert. den. 520
U.S. 1143(1997), i.e., that separate classification solely to manipulate the vote to obtain a consenting class is not in good faith and will prevent confirmation. But the ambiguity begins with the statute itself. Section 1122 provides that claims may be placed together in a class only if "substantially similar." But whether all similar claims must, in turn, be classified together is not statutorily addressed. Barakat at 1524. Noting that this question has divided courts outside the Circuit, the Barakat court gives us only the limited guidance that classification (determined as a question of fact) solely to manipulate voting to obtain the consenting impaired class is a form of bad faith and is not allowed. But the Barakat court acknowledges that In re Johnston 21 F.
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3d 323, 327 (9th Cir. 1994) provides that separate classification may be justified if "the legal character of their claims is such as to accord them a status different from other unsecured creditors." Id. at 328. Further, as noted in Barakat, Johnston provides that separate classification may be justified if a "business or economic justification" is offered. Barakat at 1526 citing Johnston at 328. The Hong creditors argue correctly that both of Debtor’s cases, Johnston and In re Basha’s, Inc., 437 B.R. 874 (Bankr. D. Ariz. 2010), are factually distinguishable. In Johnston the debt arose from a guaranty, there was collateral involved and it alone among the creditor body was the subject of litigation. Similarly, in Basha’s the class of litigation claims was deservedly separate since the litigation was still in its early stages although it had been pending some time and involved "speculative" claims. In both cases the separate classification withstood scrutiny. But certainly our case is a closer question since we are dealing not with litigation generally but with a judgment on appeal. Whether this latter stage of litigation makes a crucial difference is not clear.
Debtor argues that if intent is the question he is somewhat absolved since the plan in its early iterations treated the objecting creditors’ claims as secured (by reason, one supposes, of recorded abstracts but also because that’s what the claim said) and therefore separate. Barakat can be read to primarily focus on the intent behind the classification. But neither side cites any authority on the question of what happens when, as here, the parties reach an agreement post-petition to surrender the claim of secured status (here because the claimed lien was likely a preference). Is a plan proponent then obliged to drop the separate classification in order to remain "in good faith"? Another question involves the "business or economic justification" as discussed in Barakat and Johnston. Here Debtor in effect argues that separate classification is not only economically justified, it is also very necessary to maintain an operating business on any terms while not adopting either of two unpalatable alternatives, i.e. paying claims before the appeals are resolved and the claims become final, or, alternatively, making all undisputed general unsecured claims wait for an extended period by depositing payment into an escrow on their account. Further, the very size of the Hong creditors’ claim makes it different, although it is not clear that this size question alone works in justifying different classification. The appeal adds
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some weight. But the fact that there reportedly is also still an unresolved counter claim (as reported by Debtor) of the reported parallel fraudulent conveyance action, and the charge that the judgment was amended post-petition in technical violation of the stay, might be seen as additional justifications for the separate classification. In aggregate, the court is inclined to find sufficient justification for the separate classification although it is admittedly a very close question.
The objecting creditors take issue with the valuations presented by the Debtor of his medical practice and of his residence on Denise Avenue in Orange. The values offered by Debtor are $ 5-10,000 and $756,000, respectively, supported by the declarations of Sam Biggs, CPA and John Aust, appraiser. Pinpointing the value of these becomes necessary as the Debtor proposes to keep these assets while not paying all creditors in full under the Plan. The Hong creditors have objected, so confirmation is therefore only possible under the so-called "new value" corollary.to the absolute priority rule. Debtor must under this doctrine provide new value equal to the retained assets of the estate (and not less than any other party is willing to pay). See Bank of America v.203 N. LaSalle Street Ptsp.526 U.S. 434, 456-57 (1999).
Hong creditors offer the declaration of David Hayward for the Denise property "conservatively" at $785,000. This is not far from the Debtor’s valuation but the court is disinclined to choose between these two opinions without cross examination.
Mindful of the cost of a mini trial on this issue, the court encourages a stipulation to split the difference, i.e. $770,500. Otherwise, an evidentiary hearing will have to be scheduled with opportunity for cross examination of live witnesses. Mr. Hayward’s opinion about additional value based on a lot split is too speculative for our purposes.
The business valuation is even more problematic. It is almost certain that both appraisers are off the mark. The Biggs appraisal suffers from the omission of any separate values for hard assets, such as equipment. Presumably, these have a separate value from the value of the ongoing practice, but if so, the court could not find it.
Appraiser Stake observes that something is being depreciated on tax returns,
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suggesting there is missing information. The court sees the nominal amount of $1,500 per year as an equipment "expense" in the forecast, but doubts this equates to a value for all of the existing equipment. Whether the equipment is owned or leased is also a factor. The biggest problem, of course, is what to do with a projected income analysis in the hands of a hypothetical buyer. The court has no doubt that there would be a profound fall off in that the clientele are described as mostly Chinese with limited English skills. Also, one imagines, that an OB/GYN practice has a higher than usual retention problem if/when the familiar physician becomes no longer associated. This probably is exacerbated when the language/cultural issue is also factored in. The Stake declaration strikes the court as making far too little allowance for this factor. It reads primarily just as a clinical analysis of projected income averages assuming more or less the same stream of income (a very large assumption under these facts) multiplied by some sort of capitalization or discount rate. The problem, of course, is the court cannot make a meaningful determination on this sparse record. Again the court encourages a "split the difference" approach, say $50,000, as an alternative to having a mini trial on these issues as well.
Bank of America v. 203 N. La Salle St. Ptsp.
The court has also not yet made a ruling on the question whether the Debtor’s marketing efforts to date are adequate to fix the quantum of value as demanded in the La Salle case. But the court observes that some effort was made to advertise and the Hong creditors have not filed a competing plan although they have been free to do so. The court is inclined to hold that this narrow issue (of whether anyone else would pay more) is resolved.
No tentative on confirmation pending resolution of valuations
Tentative for 1/24/18:
This is the continued hearing on confirmation of the Debtor’s Fourth Amended Plan. It continues to be vigorously opposed by the judgment creditor. While the court
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gave fairly explicit guidelines at the Nov. 29 hearing, and the plan proponent is closer than he was, the court finds the plan is still short of confirmability, for the following reasons:
Unfair Discrimination and Gerrymandering: Since In re Barrakat, 99 F. 3d 1520, 1525 (9th Cir. 1996), it has been the law of this Circuit that separate classification solely to obtain a consenting class on a plan is not permitted and is a form of bad faith under §1129(a)( 3). However, exceptions have been found where a "legitimate business or economic justification" is articulated supporting the separate classification. In re Loop 76, LLC, 465 B.R. 525, 538 (9th Cir. BAP 2012); Steelcase, Inc. v. Johnston (In re Johnston), 21 F. 3d 323, 327 (9th Cir. 1994). Moreover, there is a separate concern in evaluating a "cram down" that a plan may not "unfairly discriminate…with respect to each class of claims or interests that is impaired under…the plan." The court earlier remarked that a legitimate, non-voting basis had probably been articulated for separately classifying the judgment creditor since that claim (unlike all other unsecured creditors) was on appeal and was subject to ongoing litigation. Consequently, unlike the other unsecured claims the judgment claim is not "final." It is perfectly obvious that the entire need for reorganization may rest on the results of the appeal. But what is not sufficiently shown is the need for disparate treatment as provided under the Fourth Amended Plan. Obviously, while the claim is still contested it makes sense to not actually pay the disputed judgment claim. But there are other, better ways to mitigate the disparate treatment. All other claims start getting payments shortly after the effective date. But the dissenting judgment claim gets nothing until 120 days after the "Litigation Resolution Date," which is defined to require that all appeals be exhausted. This is a date potentially years in the future. This has two pernicious effects of concern. First, all of the risk of non-performance is imposed solely on the objecting creditor without any real basis in law for doing so. Second, this can be regarded as a sub rosa attempt to put the Litigation Trustee’s efforts into effective limbo pending the appeal since obviously no liquidation or even attempt to liquidate assets is even needed to
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fulfill the plan until all the appeals are resolved. Perhaps a better approach is to put all creditors on a truly equal footing whereby they all get a pro rata portion of a defined periodic payment, with the judgment creditor’s portion held in an escrow at interest administered by the Litigation Trustee. That way risks are evenly imposed on the creditor body, not solely on the judgment creditor.
Artificial Impairment: The objector is correct that classification of the Honda Finance creditor as the sole member of Class 2 bears some of the aroma of artificial impairment, another form of bad faith, as this court observed in In re NNN Parkway 400 26, LLC, 505 B.R. 277, 284-85(Bankr. C.D. Cal. 2014). The fact that it was incurred the day before the petition is clearly suspicious. However, this "aroma" is largely dissipated when it develops that there is another class of unsecured creditors supporting the plan comprised of several members holding an aggregate of $38,690.83 in claims. The fact that only American Express, a creditor holding only a claim of $110.64, was the only voting member cannot be attributed to bad faith of the debtor. There is no showing that these other creditors’ claims were incurred just to create an impaired class.
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Property and the practice, however. While the single advertisement in The Orange County Register is better than nothing, it seems more a mere fig leaf than anything really designed to elicit a response. Certainly, just as Kelley Blue Book is a recognized source of reliability on vehicle values, either a formal appraisal and/or perhaps a listing for 60 days would be a better source of reliable values for real estate. Debtor offers an appraisal of Mr. Aust at $756,000. The objectors want to engage Mr. Yoshikane for a second opinion. This is appropriate and if a variation of say more than 5% emerges, there should be an evidentiary hearing. On the value of the practice, the objector should have an opportunity to depose Mr. Biggs and offer an alternative valuation, if needed. But the court’s main concern on this topic is with debtor’s premise that he is retaining under the plan only those three enumerated assets. If the court is reading it correctly, debtor actually plans on keeping a great deal more in the form of making the Liquidating Trust pay the debtor’s attorney’s fees and costs on a going forward basis. Presumably, this means that the costs of the appeal are to be borne by the Trust. Since it could be argued that the appeal is being prosecuted primarily if not solely for the debtor’s benefit, this is an indirect way of debtor keeping non-exempt assets. If this reading is correct, debtor is not, in fact, observing the absolute priority rule. The court is not as concerned as it might be since the objector has not filed a competing plan.
Best Interest of Creditors: The objector also argues under §1129(a)(7) that creditors would do better in a Chapter 7 liquidation than under the plan. This may well be so, largely for the reasons articulated in ¶3 above. For debtor’s argument to succeed, one would have to conclude that paying both for Mr. Mosier and his lawyers and accountants and the ongoing appeal costs less than only a Chapter 7 trustee. This is a proposition for which there is no evidence offered. The debtor will have to propose paying for his lawyers either from exempt assets or from no-estate assets for this to work, or prove that a Chapter 7 would be more expensive. The court is less convinced by the objector’s argument that the creditor should consequently steer the litigation at its expense, however. There are countervailing concerns about who should steer
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the litigation beyond the monetary costs.
Early Discharge: Debtor proposes in the plan to obtain a discharge not on conclusion of payments, as required under §1141(d)(5)(A), but rather upon confirmation. While this can theoretically be done if "cause" is shown after notice and a hearing, the question arises whether any such cause is shown here. Debtor argues that the structure of the plan amounts to a form of collateral for the payments, citing In re Sheridan, 391 B.R. 287, 291 (Bankr. E.D.N.C. 2008), thus assuring payment. But the problem with this is that full payment is not assured in this plan despite attempts to improve recoveries if the appeal is lost. Only the right to sue for declaratory relief (and perhaps an injunction against transfer of assets) is provided. But there are a dozen ways this could still go wrong. Ms. Shen could decide to defy the injunction and put the assets in China or Japan. Since the debtor continues to make good money as a physician, the court sees no reason to discharge him until all promised payments are made.
Deny Confirmation
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Tentative for 11/29/17:
Rather than simply continuing the confirmation hearing without direction, the court will want to have a hearing focused on issues raised in the briefs but not fully answered:
In view of the objection raised in the opposition about short notice of the changes found in the Third Amended Plan, does the judgment creditor disagree that the changes are 'non material’, thus avoiding re-balloting, or need for more time to meet the arguments? It would seem that the role of the appointed trustee and fetters, if any, on his responsibility is rather material, but perhaps for no one other than the judgment creditor. Should that matter?
Has the Trust Agreement with Mr. Mosier been finalized and made available for review?
The present value analysis for cram down requires some evidence regarding interest rates and risks being imposed. Merely citing the federal judgment rate (is that where 1.5% comes from?) is wholly inadequate. While the debtor carefully includes an elastic provision that ‘such other rate as the court requires’ is offered, this does not provide any analysis or evidence that could guide the decision. It is also unclear how/whether the judgment creditor is a secured claimant and thus whether analysis of collateral value becomes relevant. But whether proceeding under §1129(b)(2)(A)(i) [secured claims] or (b)(2)(B)(i) [unsecured claims] there is an "as of the effective date" requirement on future payments which translates into a present value analysis. The federal judgment rate is manifestly not sufficient to render present value on a stream of payments such as under a plan. If that were true, in economic terms, the prime rate would be quoted consistent with the federal judgment rate instead of at 4.25% per annum. One holding a judgment presumably has some near prospect of actually levying and getting paid, so the time value of money is further distorted and judgment rates are a poor comparison. One who is obliged to wait for years under a plan has no such prospect and so imposed risk is greater and so must be compensated. This record is inadequate
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upon which to render a decision.
How is the teaching of Bank of America v.203 N. La Salle Ptsp., 526 U.S. 434, 456-57 (1999) being met here? In La Salle we are taught that to the extent that a new value exception to the absolute priority rule exists, a plan cannot be crammed down over the objection of a class of creditors on the strength of a "new value" contribution absent some ability to "market test" the amount of that contribution. As the court observed in In re NNN Parkway, LLC, 505 B.R. 277, 281-82 (2014), the Supreme Court gave us only the vaguest direction on how the market test can be accomplished in any particular case. But the court does not read the difficulty of fashioning an appropriate test to mean that the requirement can be ignored altogether consistent with the absolute priority rule. To do so is to vest in the debtor/ plan proponent a form of uncompensated property, i.e. an option, to direct or determine the amount and source of new value. Debtor attempts to close the gap regarding the family residence, but the plan merely suggests that the relatives will contribute an amount roughly equal to what they contend to be the non-exempt equity. What analysis, if any, is offered regarding the going concern/market value of debtor's medical practice for this purpose? All that is offered is the conclusory argument that as a sole practice it cannot have much value. Really? The court sees professional practice valuations all the time. One method of clarifying the new value question described in La Salle is the possibility of a competing plan. The court is not aware of the current status of the judgment creditor’s ability to propose a competing plan.
Concerning uncompensated imposed risk is the unanswered question regarding alleged community property in the wife’s name. What about the injunction against transfer of wife's alleged separate assets? Is a form of order being offered for review? Only a stipulation is referenced. How does the risk of violation of an injunction translate into cram down interest rate? One supposes that if the appeal is lost the presence of an injunction is some protection against transfers, but hardly a foolproof one. Certainly it is not the same as a
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lien. This does not mean these issues cannot be resolved; it is only to say that they are left unresolved on this record.
Continue for further hearing.
Tentative for 8/23/17:
The remaining issues are best dealt with at confirmation. Approve.
Tentative for 7/12/17:
With some amendments this FADS appears to contain adequate information. Debtor should make it clearer that an early discharge will be requested, but that if the Court does not find cause then the discharge will be entered upon completion of payments. As written the information about the Court finding cause comes at the end of the discussion of the discharge. Debtor has agreed to attach a copy of the Trust Agreement. Debtor provides a sufficient description of the litigation with the Judgment Creditor. Perhaps the plan should be amended so that it provides that the interest rate will be as described or as ordered by the Court. This leaves open the option of litigating the issue of the interest rate at confirmation. There seems to be a reasonable basis for separately classifying the unsecured claim of the Judgment Creditor because the claim is still subject to litigation and so cannot be paid on the same terms as the other unsecured creditors. Debtor should amend the DS to provide that Debtor is retaining his interest in some property. There should also be a more clear discussion of the absolute priority rule. Debtor states that he will amend the DS to make it clear that the plan does not avoid Judgment Creditor’s ORAP lien and that he will correct the errors noted by the Judgment Creditor.
Debtor(s):
Continue for clean up of these disclosure issues.
Long-Dei Liu Represented By
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Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
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Docket 547
There was no objection to confirmation filed. All of the elements of section 1129(a) and (b) appear to be met. While it could be argued that debtor's plan also is confirmable, the court finds that the creditor's plan is demonstrably better for creditors because it offers an earlier and greater percentage recovery. Also, on a percentage basis creditors voting have preferred creditor's plan. So, under the cases interpreting section 1129(c) the creditor's plan should be confirmed because it is the perspective of creditors that controls. See e.g. In re Turner Engineering, Inc., 109 B.R. 956, 961 (Bankr. Mont. 1989).
Debtor(s):
Confirm.
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
Adv#: 8:15-01482 P & A Marketing, Inc. et al v. Gladstone et al
(con't from 1-25-18)
Docket 1
Tentative for 8/30/18:
Continue status conference to January 10, 2019. At that time expect deadlines to be set regarding discovery/pre-trial motions.
Tentative for 1/25/18:
Continue status conference approximately six months.
Tentative for 9/14/17:
No deadlines were fixed at the last conference. Now, six months later, it appears from the joint status report that discovery is only just starting and both parties believe trial should be at least one year away. Would setting of deadlines now assist timely preparation of the case?
Tentative for 3/30/17:
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It would seem too early to fix deadlines. Continue status conference for approximately 6 months hence.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Defendant(s):
Alan Gladstone, Scott Gladstone, Represented By
Cynthia M Cohen
Salus CLO 2012-1, Ltd. Represented By Howard Steinberg
Does 1-25 Pro Se
Fidelity & Guaranty Life Insurance Represented By
Jeffry A Davis Abigail V O'Brient
DCP Linens Lenders, LLC Represented By Howard Steinberg
Salus Capital Partners, LLC Represented By Howard Steinberg
Downtown Capital Partners, LLC Represented By
Howard Steinberg
J.E. Rick Bunka Pro Se
10:00 AM
Shepherd Pryor Pro Se
Kevin Reilly Pro Se
Loren Pannier Pro Se
Scott Gladstone Pro Se
Alan Gladstone Pro Se
Janet Grove Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Steven T Gubner
P & A Marketing, Inc. Represented By Steven T Gubner Michael W Davis Jason B Komorsky
Panda Home Fashions LLC Represented By Steven T Gubner Michael W Davis Jason B Komorsky
Shewak Lajwanti Home Fashions, Represented By
Steven T Gubner Michael W Davis Jason B Komorsky
Welcome Industrial Corporation Represented By
Steven T Gubner Michael W Davis Jason B Komorsky
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr
10:00 AM
Melissa Davis Lowe Steven T Gubner Jason B Komorsky
10:00 AM
Adv#: 8:18-01037 Papac v. Speckmann
(another summons issued 2-14-18)
(con't from 7-12-18)
Docket 1
Tentative for 8/30/18:
Status conference continued to October 11, 2018 at 10:00 a.m. Prove up was expected.
Tentative for 7/12/18: Prove up?
Tentative for 5/3/18:
Status Conference continued to July 12 at 10:00 a.m. with expectation that prove up will occur in meantime.
Debtor(s):
John K. Speckmann Represented By Christine A Kingston
Defendant(s):
John K Speckmann Pro Se
Plaintiff(s):
Linda Papac Represented By
Shelly L Hanke
10:00 AM
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:18-01104 Checkmate King Co., LTD v. Fower
Docket 1
Tentative for 8/30/18:
Status conference continued to December 6, 2018 at 10:00 a.m. Updates on other litigation expected in status report before continued hearing.
Debtor(s):
George Tyler Fower Represented By Vatche Chorbajian
Defendant(s):
George Tyler Fower Pro Se
Plaintiff(s):
Checkmate King Co., LTD Represented By Robert M Aronson
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:18-01105 Jafarinejad v. Garcia
Docket 1
Tentative for 8/30/18:
Status conference continued to October 25, 2018 at 10:00 a.m. Why didn't defendant participate in preparing the status report? Plaintiff should prepare an OSC re sanctions, including striking the answer, for hearing October 25, 2018 at 10:00 a.m.
Debtor(s):
David R. Garcia Represented By Thomas J Tedesco
Defendant(s):
David R. Garcia Pro Se
Plaintiff(s):
Mandana Jafarinejad Represented By Mani Dabiri
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:18-01107 Naylor v. Watanabe
[11 U.S.C. Section 547(b)]; 2. Recover Property Transferred [11 U.S.C. Section 550(a)]
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Neil Watanabe Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01106 Karen Sue Naylor, Chapter 7 Trustee v. FW IL-Riverside/Rivers Edge, LLC
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
FW IL-Riverside/Rivers Edge, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01108 Naylor v. Miller
[11 U.S.C. Section 547(b)]; 2. Recover Property Transferred [11 U.S.C. Section 550(a)]
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Dale Miller Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01109 Naylor v. Gladstone
U.S.C. Section 547(b)]; 2. Recover Property Transferred [11 U.S.C. Section 550(a)]
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Alan Gladstone Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01110 Naylor v. Doll
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Carie Doll Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:16-01138 Bermuda Road Properties, LLC v. Hudson, III et al
(con't from 6-28-18 per order granting stip to cont. ptc ent. 6-15-18)
Docket 1
Tentative for 2/15/18:
Continued to April 26, 2018 at 10:00 a.m.
Tentative for 1/25/18:
By order entered December 15, 2017 the adversary proceeding was stayed for 60 days. Continue to February 15, 2018?
Tentative for 10/26/17:
In view of stay ordered October 23, 2017, continue to January 25, 2018.
Tentative for 8/4/16:
Deadline for completing discovery: December 1, 2016 Last date for filing pre-trial motions: December 15, 2016 Pre-trial conference on: January 12, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
10:00 AM
Debtor(s):
Joseph Roland Hudson III Represented By James C Bastian Jr Rika Kido
Defendant(s):
Joseph Roland Hudson III Pro Se
Diana Hudson Pro Se
Joint Debtor(s):
Diana Hudson Represented By James C Bastian Jr Rika Kido
Plaintiff(s):
Bermuda Road Properties, LLC Represented By Colby Balkenbush Alan J Lefebvre
Trustee(s):
Karen S Naylor (TR) Pro Se
Karen S Naylor (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:17-01039 Marshack v. Movafagh
(set from s/c hearing held on 6-1-17)
(con't from 8-2-18 )
Docket 1
Tentative for 8/30/18: See #12 at 11:00 a.m.
Tentative for 8/2/18:
Where is the joint pre-trial stip/order?
Tentative for 5/3/18:
Discovery deadline is already past. Pretrial conference is Aug. 2 at 10:00a.m. Trustee to give notice.
Tentative for 6/1/17:
Deadline for completing discovery: October 1, 2017 Last date for filing pre-trial motions: October 23, 2017
Pre-trial conference on: November 2, 2017 at 10:00 a.m. Joint pre-trial order due per local rules.
Why did defendant fail to participate in the status report?
Debtor(s):
Fazlollah Movafagh Represented By
10:00 AM
Kaveh Ardalan
Defendant(s):
Fazlollah Movafagh Pro Se
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
11:00 AM
Adv#: 8:17-01039 Marshack v. Movafagh
Docket 19
Tentative for 8/30/18:
How should conditions to dismissal be monitored? The court is willing to afford a reasonable but not unlimited period to accomplish the terms of the settlement/dismissal. Perhaps a continued status conference November 15, 2018 at 10:00 a.m.?
Debtor(s):
Fazlollah Movafagh Represented By Kaveh Ardalan
Defendant(s):
Fazlollah Movafagh Represented By Kaveh Ardalan
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman Kaveh Ardalan
11:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 6-28-18 per order approving stip. to con't ent. 6-19-18)
Docket 83
Tentative for 6/8/17:
Status conference continued to September 7, 2017 at 10:00 a.m. with expectation that involuntary proceeding will be clarified and settlement examined.
Tentative for 2/9/17:
Status Conference continued to May 25, 2017 at 10:00 a.m. Personal appearance not required.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
11:00 AM
Defendant(s):
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se Olive Avenue Investors, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Van Buren Investors, LLC Pro Se
Summerwind Investors, LLC Pro Se
Spanish and Colonial Ladera Pro Se South 7th Street Investments, LLC Pro Se Provo Industrial Parkway, LLC Pro Se
Pinnacle Peak Investors, LLC Pro Se
Park Scottsdale, LLC Pro Se
Palm Springs Country Club Pro Se White Mill Lake Investments, LLC Pro Se El Jardin Atascadero Investments, Pro Se
Enterprise Temecula, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy
11:00 AM
NATIONAL FINANCIAL Represented By Nancy A Conroy
POINT CENTER MORTGAGE Represented By Carlos F Negrete
NATIONAL FINANCIAL Represented By Carlos F Negrete Sean A Okeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A Okeefe
M. Gwen Melanson Represented By Nancy A Conroy
RENE ESPARZA Represented By Nancy A Conroy
Dillon Avenue 44, LLC Pro Se
16th Street San Diego Investors, Pro Se
DOES 1-30, inclusive Pro Se
Altamonte Springs Church Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se
Champagne Blvd Investors, LLC Pro Se
Cobb Parkway Investments, LLC Pro Se
6th & Upas Investments, LLC Pro Se
11:00 AM
Interested Party(s):
Richard K. Diamond Represented By George E Schulman
Courtesy NEF Represented By Monica Rieder Roye Zur Murray M Helm
Jeffrey G Gomberg Rachel A Franzoia
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
Howard B Grobstein (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 6-28-18 per order approving stip. to con't ent. 6-19-18)
Docket 149
- NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se Olive Avenue Investors, LLC Pro Se
Enterprise Temecula, LLC Pro Se
11:00 AM
Palm Springs Country Club Pro Se
Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se South 7th Street Investments, LLC Pro Se Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se
Van Buren Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Park Scottsdale, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se El Jardin Atascadero Investments, Pro Se
Dillon Avenue 44, LLC Pro Se
Altamonte Springs Church Pro Se
6th & Upas Investments, LLC Pro Se
16th Street San Diego Investors, Pro Se
DOES 1-30, inclusive Pro Se
RENE ESPARZA Represented By Nancy A Conroy
M. Gwen Melanson Represented By Nancy A Conroy
Dan J. Harkey Represented By Nancy A Conroy Sean A OKeefe
NATIONAL FINANCIAL Represented By
Carlos F Negrete - INACTIVE -
11:00 AM
Sean A OKeefe
POINT CENTER MORTGAGE Represented By
Carlos F Negrete - INACTIVE - Nancy A Conroy
NATIONAL FINANCIAL Represented By Nancy A Conroy
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy Sean A OKeefe
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se
Champagne Blvd Investors, LLC Pro Se
Cobb Parkway Investments, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman
11:00 AM
Robert G Wilson Monica Rieder Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 6-28-18 per order approving stip. to cont mtn and s/c entered 6-19-18)
Docket 1
- NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
11:00 AM
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 6-28-18 per order approving stip to cont. mtn and s/c entered 6-19-18)
Docket 8
- NONE LISTED -
3rd Party Defendant(s):
Richard Diamond Represented By Aaron E de Leest
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Interested Party(s):
Courtesy NEF Represented By Rodger M Landau Monica Rieder Jack A Reitman Rachel A Franzoia
11:00 AM
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
2:00 PM
Adv#: 8:16-01213 Grobstein v. Charton et al
U.S.C. §510(b)
Docket 34
Grant. Appearance is optional unless late opposition is filed.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
LLOYD CHARTON Represented By Timothy C Aires
ROBERT L. WELLS Represented By Timothy C Aires
Donna Joy Wall Represented By Timothy C Aires
Lorna E Titzer Represented By Timothy C Aires
Gary L Titzer Represented By
Timothy C Aires
WENDY TAKAHASHI Represented By Timothy C Aires
REID TAKAHASHI Represented By
2:00 PM
Timothy C Aires
Frank Soracco Represented By Timothy C Aires
Kurt Sipolski Represented By
Timothy C Aires
Robert M Peppercorn Represented By Timothy C Aires
JON A. NORD Represented By Timothy C Aires
DON MEALING, TRUSTEE Represented By Timothy C Aires
Sid Louie Represented By
Timothy C Aires
Jessica Louie Represented By
Timothy C Aires
Cheryl Licht Represented By
Timothy C Aires
JOHN G. FRY Represented By Timothy C Aires
Daniel K Larson Represented By Timothy C Aires
LRH Operating Group Inc Represented By Timothy C Aires
Jeffrey Gomberg Represented By Jeffrey G Gomberg Timothy C Aires
WILLIAM E. GLYNN Represented By Timothy C Aires
ETTA M. GLYNN Represented By
2:00 PM
Timothy C Aires
Robert Garber Represented By Timothy C Aires
Ana Garber Represented By
Timothy C Aires
Erin Larson Represented By
Timothy C Aires
Raymond Bille Represented By Timothy C Aires
THOMAS F. BEREAN Represented By Timothy C Aires
Monica Bayless Represented By Timothy C Aires
JOHN R. BAYLESS Represented By Timothy C Aires
Kent Azaren Represented By
Timothy C Aires
Lloyd Charton Represented By Timothy C Aires
Plaintiff(s):
Howard B. Grobstein Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
2:00 PM
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
10:30 AM
SUNTRUST BANK
Vs
DEBTORS; RICHARD A. MARSHACK, TRUSTEE
Docket 24
Grant. Appearance is optional.
Debtor(s):
Norman Weaver Jr. Represented By Christine A Kingston
Joint Debtor(s):
Lori C. Weaver Represented By Christine A Kingston
Movant(s):
Suntrust Bank Represented By Jennifer H Wang
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
10:30 AM
ALAMITOS REAL ESTATE PARTNERS II, LP
Vs.
DEBTORS
Docket 125
- NONE LISTED -
Debtor(s):
Daniel J Powers Represented By
Charles W Hokanson
Joint Debtor(s):
Ellen A Powers Represented By
Charles W Hokanson
Movant(s):
Alamitos Real Estate Partners II, LP Represented By
Samuel J St Romain Robert J Stroj
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
SPECIALIZED LOAN SERVICING LLC
Vs.
DEBTOR
Docket 85
Grant. Appearance is optional.
Debtor(s):
Melody Thuy Le Represented By Alex L Benedict
Movant(s):
Specialized Loan Servicing LLC Represented By
Mark S Krause
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 7-31-18)
JPMORGAN CHASE BANK
Vs.
DEBTOR
Docket 65
Grant. Appearance is optional.
Debtor(s):
Terry Gonzalez Represented By Claudia C Osuna
Movant(s):
JPMORGAN CHASE BANK, Represented By Merdaud Jafarnia
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
LAW OFFICE OF WENETA M.A. KOSMALA, Chapter 7 Trustee
WEILAND GOLDEN GOODRICH LLP, Attorney For Trustee HAHN FIFE & COMPAN, LLP, Accountant
Docket 205
Allow as prayed. Appearance is optional.
Debtor(s):
Desiree C Sayre Represented By Andrew Goodman Rudolph E Brandes
Trustee(s):
Weneta M Kosmala (TR) Represented By Reem J Bello Jeffrey I Golden
10:00 AM
(con't from 5-30-18 )
Docket 1
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
(con't from 5-30-18)
Docket 135
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
MICHAEL JAY BERGER, DEBTOR'S ATTORNEY FEE: $55529.33
EXPENSES : $2609.55.
Docket 407
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
MARSHACK HAYS LLP, ATTORNEY FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS
FEES: $106,856.50 EXPENSES: $2,618.59
Docket 412
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
RICHARD J. LASKI, CHAPTER 11 TRUSTEE, FEE: $96,495.93
EXPENSES: $7,103.43
Docket 416
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
ARENT FOX LLP, GENERAL BANKRUPTCY COUNSEL TO THE CHAPTER 11 TRUSTEE:
FEE: $306,971.50
EXPENSES: $9,761.46
Docket 417
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Adv#: 8:18-01102 Karen Sue Naylor, Chapter 7 Trustee v. Pulaski R.E. Partners, LP
(another summons issued 6-20-18)
Docket 5
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Pulaski R.E. Partners, LP Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:17-01221 Millan's Restoration, Inc. v. Manely
(con't from s/c held on 4-26-18)
Docket 1
Tentative for 9/6/18:
Continue for pre-trial conference on November 29, 2018 at 10:00 a.m. Extend all deadlines by 60 days. Plaintiff to submit revised scheduling order.
Tentative for 4/26/18:
Are we ready to set deadlines? Discovery status?
Tentative for 2/1/18:
Would plaintiff prefer deadlines be set now, or continue conference?
Debtor(s):
Feridon M Manely Pro Se
Defendant(s):
Feridon M Manely Pro Se
Plaintiff(s):
Millan's Restoration, Inc. Represented By Paul V Reza
10:00 AM
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:18-01047 Karen Sue Naylor, Chapter 7 Trustee v. Outsourcing Solutions Group, LLC
(set from s/c held on 5-24-18)
Docket 1
Tentative for 5/24/18:
Deadline for completing discovery: 8/18/18
Last Date for filing pre-trial motions: 8/27/18
Pre-trial conference on 9/6/18 at 10:00AM
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Outsourcing Solutions Group, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
10:00 AM
Trustee(s):
Christopher Minier
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:17-01230 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Hoag Memorial Hospital
(con't from 8-9-18 per courts own motion)
Docket 43
This is defendant Newport Healthcare Center, LLC’s ("Newport") and Hoag Memorial Hospital Presbyterian’s ("Hoag Hospital") (collectively "Defendants") Rule 12(b) motion to dismiss the "Amended Complaint" ("AC") filed by Dr. Robert Amster, Robert Amster, M.D., Inc. ("Amster Inc.), Your Neighborhood Urgent Care, LLC ("YNUC"), and the four Hoag Urgent Care Debtors ("HUC Debtors") (collectively "Plaintiffs") on June 25, 2018. On August 30, 2018 a stipulation was filed substituting Richard Marshack, the Chapter 7 Trustee, for the HUC Debtors, as plaintiff for the estates of the HUC Debtors. The Plaintiffs in their AC assert a claim for breach of fiduciary duty that assumes the existence of a joint venture and declaratory relief that the HUC Debtors are third-party beneficiaries of the alleged joint venture. Defendants argue that the filing of the AC is frivolous, the AC does not adequately plead the existence of a joint venture, and that the allegations in the AC are contradicted by its exhibits. Two oppositions have been filed, one by the Trustee and the other by Dr. Amster, Amster M.D. and YNUC.
The Amster parties have attempted to offer additional evidence in the form of the declarations of Dr. Amster and Jennifer Amster to bolster their claims. This is not appropriate at the Rule 12(b) stage and the evidence will not be considered by the court. See Gerritsen v. Warner Bros. Entertainment Inc., 112 F.Supp.3d 1011 (C.D. Cal. 2015) citing City of Royal Oak Retirement System v. Juniper Networks, Inc., 880 F.Supp.2d 1045, 1060 (N.D.Cal.2012) ("Courts regularly decline to consider declarations and exhibits submitted in support of or opposition to a motion to dismiss, however, if they constitute evidence not referenced in the complaint or not a proper subject of judicial notice."…The court should consider the exhibits to the declaration
11:00 AM
to determine whether they should be taken into account.) Consideration of the declarations should not be necessary at this juncture.
The relevant facts do not seem to be contested; rather, it is the legal significance of those facts and intent behind them that is hotly contested. On November 1, 2010, Amster Inc., YNUC, Hoag Hospital, and Newport entered into a Master Urgent Care Development Agreement ("MUCDA"). The MUCDA is attached as Exhibit 1 to the complaint. The MUCDA lays out the plans of the parties to develop several urgent care centers in Orange County. Attached to the MUCDA is an "Acknowledgment and Consent" signed by Dr. Amster on behalf of Hoag Urgent Care – Tustin and Hoag Urgent Care – Orange consenting to the terms of the MUCDA. Exhibit 2 to the complaint is a "Debt Restructuring Agreement" ("Restructuring Agreement) signed on December 1, 2012 by YNUC, Dr. Amster, and
Hoag Hospital. On December 1, 2012, an "Acknowledgment and Consent" was signed by Amster Inc., Newport Healthcare, and the HUC Debtors, confirming duties and obligations under "[d]ocuments" as amended by the Restructuring Agreement. Exhibit 3 to the complaint is an "Agreement Regarding Payoff of Line of Credit and Debt Restructuring Agreement…" ("Payoff Agreement") dated December 2, 2013 and signed by YNUC, Dr. Amster, Hoag Hospital, and Newport.
FRCP 12(b)(6) requires a court to consider whether a complaint fails to state a claim upon which relief may be granted. When considering a motion under FRCP 12(b)(6), a court takes all the allegations of material fact as true and construes them in the light most favorable to the nonmoving party. Parks School of Business v.
Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). A complaint should not be dismissed unless a plaintiff could prove no set of facts in support of his claim that would entitle him to relief. Id. Motions to dismiss are viewed with disfavor in the federal courts because of the basic precept that the primary objective of the law is to obtain a determination of the merits of a claim. Rennie & Laughlin, Inc. v. Chrysler
11:00 AM
Corporation, 242 F.2d 208, 213 (9th Cir. 1957). There are cases that justify, or compel, granting a motion to dismiss. The line between totally unmeritorious claims and others must be carved out case by case by the judgment of trial judges, and that judgment should be exercised cautiously on such a motion. Id.
The standards shifted somewhat about a decade ago in a pair of Supreme Court cases to include a "plausibility" analysis. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554-556, 127 S. Ct. 1955, 1964-65 (2007) A complaint must contain sufficient factual matter to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009) citing Twombly. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. The plausibility standard asks for more than a sheer possibility that a defendant has acted unlawfully. The tenet that a court must accept as true all factual allegations is not applicable to legal conclusions. Threadbare recitals of elements supported by conclusory statements is not sufficient. Id.
Much of what follows turns on standards of what the court is expected to determine at a Rule 12 stage. This is not a Rule 56 Summary Judgment motion supported by evidentiary showings. Nor obviously is it a trial on the merits where credibility can be evaluated. Rather, the court is merely asked to determine whether enough factual material is alleged from which a case could plausibly be stated.
Plaintiffs’ first claim is for breach of fiduciary duty. This claim depends on whether the MUCDA described a joint venture. A joint venture is "an undertaking by two or more persons jointly to carry out a single business enterprise for profit." Second Measure, Inc. v. Kim, 143 F.Supp.3d 961, 970 (N.D. Cal. 2015) citing Weiner
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Fleischman, 54 Cal.3d 476, 482 (1991). Whether a joint venture exists is a question of fact that depends on the intention of the parties. Pellegrini v. Weiss, 165 Cal.App.4th 515, 525 (2008). When determining whether a joint venture exists requires "choosing between opposing inferences as the intentions of the parties" there is a question of fact. If the relationship arises only from a written agreement "which clearly discloses the intentions and understanding of the parties" the question is one of law. People v. Miller, 192 Cal. App. 2d 414 (1961). (emphasis added)
Defendants argue that the AC should be dismissed because Plaintiffs have not alleged sufficient facts to establish a joint venture. They assert that the terms of the MUCDA directly contradict the allegations in the complaint and provide enough basis to dismiss the AC. Defendants disagree, arguing that the AC contains 53 paragraphs of facts that allege the existence of a joint venture. They point to language in the MUCDA stating that the MUCDA is "regarding the joint development of urgent care centers…" [AC, Exh. 1, Bates pg. 000018]. The implication is that use of the words "joint development" sounds like "joint venture." But whether that is true is far from clear and must depend on the facts.
Things are not as simple as Defendants would like them to be here. It would be very simple for the court to just look at the MUCDA and find that since it does not say "joint venture" it is not a joint venture. Given its language, it cannot be said that the intention of the parties is clearly set forth in the MUCDA. This was a complicated transaction and the court must look to the intention of the parties. Plaintiffs have pled that the parties entered into an agreement to carry out a business enterprise – the operation of urgent care centers. The Plaintiffs in the AC allege that the profits of the parties were tied together. [AC ¶ 33] When all the facts pled in the complaint are taken as true and construing them in the light most favorable to Plaintiffs, as is required by FRCP 12(b)(6), Plaintiffs have pled a plausible claim here (barely).
Movants argue there was no mention of profit sharing, co-ownership nor of joint management, hallmarks of joint ventures as spoken of in some of the caselaw. But this overreads the requirements of joint venture under current California law. The presence or absence of any of these indicia is not dispositive as to whether a joint venture was
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formed; rather, the existence of a joint venture depends on the overall set of facts and circumstances. Second Measure, Inc., 143 F. Supp. 3d at 972 citing Holmes v. Lerner, 74 Cal. App. 4th 442, 454 (1999) and Weiner, 54 Cal. 3d at 482-83.
Plaintiffs argue that that the arrangement was designed to produce profits for both sides in that there was a natural source of referrals to Hoag Hospital for medical events that transcend abilities of a neighborhood urgent care facility. On management, Plaintiffs argue that there were numerous instances of personnel at Hoag giving direction as to how the centers would operate, including on data management and that participation on an "advisory board" understates the true level of involvement of hospital management. Plaintiffs in the end may not have enough to show that there was a profit sharing arrangement or other indicia sufficient to amount to a joint venture under California law, of a sort necessary for a fiduciary duty to attach. But they have pled enough to put Defendants on notice of their claims and enough facts that might plausibly support their theory under the Twombly/Iqbal standard. That is all that is required at the Rule 12 stage of these proceedings. The court cannot adjudicate the claims at the 12(b)(6) stage as Defendants seem to be trying to do.
Plaintiffs’ second claim is for declaratory judgment that the HUC Debtors are third party beneficiaries of the joint venture. "The test for determining whether a contract was made for the benefit of a third person is whether an intent to benefit a third person appears from the terms of the contract…If the terms of the contract necessarily require the promisor to confer a benefit on a third person, then the contract, and hence the parties thereto, contemplate a benefit to the third person. The parties are presumed to intend the consequences of a performance of the contract." Spinks v. Equity Residential Briarwood Apartments, 171 Cal. App. 4th 1004, 1022 (2009). The contracting parties must have intended to confer a benefit on the third party, but the third person does not need to be named individually. Id. at 1022-23. "A third party may enforce a contract where he shows that he is a member of a class of persons for whose benefit it was made." Id. at 1023. "[A] third party will qualify as an intended beneficiary where ‘the circumstances indicate that the promise’… ‘intends to
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give the beneficiary the benefit of the promised performance’." Id. "Ultimately, the determination turns on the manifestation of intent to confer a benefit on the third party." Id. "Ascertaining this intent is a question of ordinary contract interpretation." Id. Intent is to be inferred solely from the written contract if possible, but other factors may be considered. Id. "[E]vidence of the circumstances and negotiations of the parties in making the contract is both relevant and admissible." Id. at 1024. Courts may also consider subsequent conduct of the parties. Id. The "contracting ‘parties’ practical construction of a contract, as shown by their actions, is important evidence of their intent." Id. (citations omitted).
At ¶ 25, the AC alleges that Dr. Amster and YNUC believed that the HUC Debtors were third party beneficiaries to the various agreements. Since the question to be answered when determining if a party is a third-party beneficiary is intent, it is not clear what else Plaintiffs needed to plead. They have pled that they intended the HUC Debtors to be third-party beneficiaries. This is supported by their allegations that the HUC Debtors were created pursuant to the MUCDA and each operated an urgent care center as contemplated by the MUCDA. All of the agreements of the parties are attached as exhibits to the complaints. These agreements have attached to them documents titled "Acknowledgment and Consent" that were signed by some of the HUC Debtors [bates 000029], further supporting the claim that there was some intent that they be beneficiaries of the agreements. Moreover, at ¶4 of the MUCDA it is specifically acknowledged that Dr. Amster would: "promptly cause the organization of a new California medical professional corporation for each location, under the name "Hoag Urgent Care Center˗[location]…" and that [Newport and YNUC] "will enter into a sublease for each of the Center locations."
Even if the Defendants did not intend by these recitals to create third party beneficiaries, under California law it is sufficient if the promisee had such intent. Schauer v. Mandarin Gems of Cal., Inc., 125 Cal. App. 4th 949, 958 (2005).
Moreover, intended beneficiaries need not even have come into existence yet (Employment Solutions Mgt., Inc. v. Partners Personnel-Central Valley Corp, 2017 WL 7370971*5-6 (C. D. Cal. 2017)) nor even be named. Spinks v. Equity Residential
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Briarwood Apartments, 171 Cal. App. 4th 1004, 1023-24 (2009). For these reasons Defendants’ standing argument as to the HUC Debtors fails. Defendants argue that Amster Inc. does not have standing. But Amster Inc. signed the MUCDA, not Dr. Amster. Dr. Amster signed subsequent agreements. So, each of these entities has standing.
Plaintiffs seek declaratory relief because there is a dispute over what the parties intended. Plaintiffs have stated a plausible claim for relief under the Iqbal/Twombly standard.
Deny
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar Teresa C Chow
Tiffany Payne Geyer
Defendant(s):
Hoag Memorial Hospital Represented By Randye B Soref
Newport Healthcare Center, LLC Represented By
Randye B Soref
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow Teresa C Chow Faye C Rasch
11:00 AM
Hoag Urgent Care - Huntington Represented By Ashley M McDow Teresa C Chow Faye C Rasch
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Teresa C Chow Faye C Rasch
Dr Robert Amster Represented By Ashley M McDow Teresa C Chow Faye C Rasch
Robert Amster, M.D., Inc. Represented By Ashley M McDow Teresa C Chow Faye C Rasch
Your Neighborhood Urgent Care, Represented By
Ashley M McDow Teresa C Chow Faye C Rasch
Trustee(s):
Richard A Marshack (TR) Represented By Caroline Djang
10:00 AM
Adv#: 8:17-01127 Karen Sue Naylor, Chapter 7 Trustee v. Candyrific, LLC
(cont from 7-16-18 per order on stip to cont. trial entered 6-12-18)
Docket 1
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Candyrific, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe
10:00 AM
Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
(con't from 6-27-18)
Docket 1
Tentative for 6/27/18:
The report suggests a plan and discovery statement will be filed by July 31, 2018. Should that be a deadline per order?
Tentative for 4/4/18:
See #3 - Disclosure Statement.
Tentative for 3/20/18: Status? See #13.
Tentative for 3/7/18:
Continue to coincide with the continued date on reimposition of stay (March 20, 2018 at 10:00 a.m.)
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By
10:00 AM
Michael Jones Sara Tidd
10:00 AM
(con't from 6-27-18)
Docket 33
Tentative for 6/27/18:
Will this be superceded?
This is the Debtors’ Motion for Approval of their Disclosure Statement as containing adequate information within the meaning of 11 U.S.C. §1125. It should be noted that this is the Debtors’ Fifth bankruptcy since 2011. Understandably, there is a degree of skepticism voiced by the parties filing oppositions. In their reply, the Debtors suggest that this Disclosure Statement is more in the nature of a first draft, and they seem to acknowledge a willingness to cooperate on the question of appraisal and a need to have further negotiations on such issues as interest rates. To assist the parties in their discussions the court notes the following points which should be addressed in any further iteration of the disclosure:
There are large questions concerning the absolute priority rule and the quantum of new value. The Debtors may be confused by its proper application in individual cases but that does not change the fact that it is unquestionably the law of the Ninth Circuit. See In re Zachary, 811 F. 3d 1191 (9th Cir 2016). Moreover, this court’s view has been in favor of this interpretation for an even longer time. See In re Kamell, 451 B.R. 505 (Bankr. C.D. Cal. 2011). So the question is not if the doctrine applies but rather how the debtor intends to meet its requirements, lest the plan be regarded as unconfirmable on its face.
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This raises the second question, i.e. the quantum of new value in order to meet the "new value corollary." The Debtors in this draft of the disclosure and plan pick what seems to be an arbitrary sum, $15,000. But arbitrary sums will not do when the confirmation will be opposed as it is likely to be in this case. Instead the Debtors will need to establish not only that the sum is "substantial" and "reasonably equivalent" to whatever interest is retained (See In re Ambanc La Mesa Ltd. Partnership, 115 F. 3d 650, 654 (9th Cir. 1997)) but also that the quantum of new value has been "market tested" within the meaning of Bank of America v. 201 N. LaSalle St. Ptsp., 526 U.S. 434 (1999). The La Salle court does not instruct us as to what exactly must be done to "market test", but the court must reach the conclusion that no one else would pay more for the privilege of directing these affairs in the way proposed by the Debtors. Otherwise it can be argued that the Debtors are retaining something on account of equity, a form of intangible property in the nature of an option. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at § 1129(b)(2)(B)(ii). See also In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014). Market testing can be implemented through a variety of means, such as advertising or the retention of an investment broker. LaSalle at 458; N.N.N Parkway at 283. These issues are not strictly disclosure issues; they could be resolved at confirmation. But the court will have to have a stronger feeling that this plan has a chance for confirmation before it will authorize dissemination of a disclosure statement that assumes a new value exception to absolute priority.
In order to prove that a crammed down plan is "fair and equitable" as to dissenting classes of secured claims, the Debtors must show that the stream of promised future payments has a present value equal to not less than the value of the secured claim. 11 U.S.C. §1129(b)(2)(A)(i). In this regard the plan as written falls far short. Most of the subject properties are fully encumbered, so
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the secured claims are either 100% loan to value, or in the case of the most junior liens, they are behind large senior encumbrances. In either event, the plan imposes upon such creditors a very high degree of risk. Risk equates to interest rates; the higher the imposed risk the higher should be the rate.
Otherwise, the present value of such a stream is less than the secured claim, under the most basic principles of economics. This court has offered the "blended rate" approach as a principled expression of this basic economic concept. See In re North Valley Mall, 432 B.R. 825 (Bankr. C.D.Cal. 2010). In the draft of the plan now on file, the Debtors either offer 5% per annum fixed, or, in the case of HOAs, 0% interest. 5% might work for a conforming
loan (i.e. approximately 70% loan to value) but is not even close for creditors at the 90+% on the value totem pole. Of course, no interest at all on liens to HOAs is a non-starter. Even a riskless loan offers some interest in recognition of the time value of money. Prime borrowers have to pay at least 4.5% and even the U.S. Government offers something on its borrowings (i.e. bonds).
Further to the last point, valuations will be critical. Formal valuation orders under §506 are indispensable in the absence of stipulations.
Deny. Continue for further revisions.
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:30 AM
FIRST INVESTORS SERVICING CORPORAITON
Vs.
DEBTOR
Docket 50
Grant. Appearance is optional.
Debtor(s):
Miguel Medina Represented By Amanda G Billyard Andy C Warshaw
Movant(s):
First Investors Servicing Corporation Represented By
Jennifer H Wang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
AMERICREDIT FINANCIAL SERVICES, INC.
Vs.
DEBTOR
Docket 50
Grant. Appearance is optional.
Debtor(s):
Liza Sandoval Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTOR
Docket 29
Grant. Appearance is optional.
Debtor(s):
Cody Aaron Groth Represented By Halli B Heston
Movant(s):
Toyota Motor Credit Corporation Represented By
Austin P Nagel
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
SCHOOLSFIRST FEDERAL CREDIT UNION
Vs DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Norma Rodriguez Represented By Theresa Hana
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
(con't from 8-7-18)
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 47
Grant. Appearance is optional.
Debtor(s):
Diana Solis Represented By
Bryn C Deb
Movant(s):
U.S. BANK NATIONAL Represented By Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
M&T BANK
Vs.
DEBTOR
Docket 44
Grant unless APO.
Debtor(s):
Ross Paul Kline Represented By Barry E Borowitz
Movant(s):
M&T Bank as Attorney in Fact for Represented By
Nancy L Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
THE BANK OF NEW YORK MELLON
Vs DEBTOR
Docket 12
- NONE LISTED -
Debtor(s):
Gabriela Orozco Pro Se
Movant(s):
The Bank of New York Mellon fka Represented By
Erin M McCartney
Trustee(s):
Richard A Marshack (TR) Pro Se
11:00 AM
Docket 543
Grant. Appearance is optional.
Debtor(s):
Robert A. Ferrante Represented By
Richard M Moneymaker Arash Shirdel
Ryan D ODea
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Thomas A Vogele Kathleen J McCarthy Brendan Loper Steve Burnell
11:00 AM
Docket 19
Grant.
Debtor(s):
Gabriela Orozco Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays
11:00 AM
(set from evidentiary hrg held on 1-26-16)
(con't from 7-10-18 order approving stipulation entered 7-09-18)
Docket 105
Tentative for 9/11/18:
Based on the Trustee's comments, and upon the debtor's declaration, the OSC re contempt is discharged and will be taken off calendar. What about custody of passports still held by Marshal?
Tentative for 5/29/18: Status?
Tentative for 2/27/18:
What would the Trustee suggest be done? Passport in the custody of the Marshal?
Tentative for 10/3/17:
The issue of who holds Debtor's passports still needs to be addressed.
Tentative for 8/1/17: Status?
11:00 AM
Tentative for 4/25/17: Updated status?
Tentative for 7/7/16:
Status? Is Ms. Olson retaining counsel or not?
Tentative for 6/7/16: Status?
Tentative for 4/28/16:
Status? The court is evaluating Debtor's efforts to purge her contempt.
Tentative for 4/7/16:
The trustee's report filed April 6 is not encouraging.
Tentative for 3/29/16: Status?
Tentative for 3/15/16:
Status? The court expects discussion on a workable protective mechanism as requested in paragraph 7 of the order shortening time.
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Tentative for 1/19/16:
A status report would be helpful.
Tentative for 1/5/16:
No tentative. Request update.
Revised tentative for 11/5/15:
This matter is being immediately transferred to Judge Albert, who will hear the matter as scheduled at 10:00 a.m. in Courtroom 5B. A separate transfer order will issue shortly.
************************************************************************* Tentative for 11/5/15:
Physical appearances are required by all parties, including Debtor, in Courtroom 5C, located at 411 West Fourth Street, Santa Ana, CA 92701.
Debtor(s):
Jana W. Olson Represented By Thomas J Polis
Movant(s):
Passport Management, LLC Represented By Philip S Warden
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
11:00 AM
Docket 286
Tentative for 9/11/18: See #12.
Tentative for 5/29/18: Status?
Tentative for 2/27/18: Status?
Tentative for 10/3/17: See #14.
Tentative for 8/1/17:
Status? Where should passports be kept?
Tentative for 4/25/17: Updated status report?
11:00 AM
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16: Status?
Tentative for 5/12/16:
The court has two concerns: (1) by now hopefully the Trustee has more particularized descriptions of the exact items including records to be turned over (e.g. all monthly statements of Bank of America Account ). Some or even most may still not be known to the trustee, but all specificity should be given where possible preliminary to a contempt charge and (2) how do we incorporate mediation efforts before Judge Wallace into this program. This court is reluctant to enter any order that would short circuit that effort.
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah C Boone D Edward Hays
Ashley M Teesdale
11:00 AM
(con't from 7-10-18 order approving stipulation entered 7-09-18)
Docket 0
Tentative for 9/11/18: See #12.
Tentative for 5/29/18: Status?
Tentative for 2/27/18: Status?
Tentative for 10/3/17: See #14.
Tentative for 8/1/17: Status?
Tentative for 4/25/17:
No tentative. Court will hear updated status report from parties.
11:00 AM
Tentative for 7/7/16: No tentative.
Tentative for 6/7/16: Status?
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays
Ashley M Teesdale
11:00 AM
Docket 62
Per OST opposition due at hearing.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:00 AM
Docket 71
- NONE LISTED -
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 6-27-18)
Docket 1
Tentative for 9/12/18: Report? See #3.
Tentative for 6/27/18:
The report suggests a plan and discovery statement will be filed by July 31, 2018. Should that be a deadline per order?
Tentative for 4/4/18:
See #3 - Disclosure Statement.
Tentative for 3/20/18: Status? See #13.
Tentative for 3/7/18:
Continue to coincide with the continued date on reimposition of stay (March 20, 2018 at 10:00 a.m.)
Debtor(s):
John J Trejo Represented By
Michael Jones
10:00 AM
Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 6-27-18)
Docket 79
Tentative for 9/12/18:
This is the continued hearing on adequacy of Debtors’ Disclosure Statement. While not described as an amended disclosure statement, this is Debtors’ second disclosure statement since this case was filed. Perhaps the title of the document should be amended accordingly. No comments or objections have been filed. Overall the document appears to contain adequate information, but the debtor may want to make some minor adjustments as below. Debtors will need to obtain stipulations or file §506 motions where valuation is contemplated. So far, no objection has been raised to the interest rates proposed (all in the 5% range), but it is possible that Debtors will need to provide support or analysis for the rates they have selected if an objection is filed. The court’s view of the necessary rate to cram down on a 100% loan to value loan is pretty well known. The court also makes the following observations:
Debtor proposes to value properties under §506 and treat certain deficiency claims as unsecured. This is not discussed in the description of plan treatment for Class 5. Class 5 are unsecured claims that were discharged by Debtor’s previous Chapter 7 case. See DS p. 37.
DS provides for "intentional liquidation of assets" in Debtors’ discretion. See DS p. 43
There is a brief discussion of the absolute priority rule on p. 56. But Debtors assert that it will not apply because the Class 4 unsecured
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creditors are "being paid in full." That may be a problematic conclusion, particularly if there is an objection. Section 1129(b)(2)(B)(i) provides that payment in full in this context means "property of a value, as of the effective date of the plan, equal to the allowed amount of such claim…" (italics added) The "as of the effective date" is a tipoff that an interest analysis is invoked since manifestly paying a claim a year+ late (or even just the eight months post-petition) is not the same as paying it in full.
The court will approve the statement as including adequate information, leaving it to debtor to decide whether these minor corrections should be made now.
Approve
Tentative for 6/27/18: Will this be superceded?
This is the Debtors’ Motion for Approval of their Disclosure Statement as containing adequate information within the meaning of 11 U.S.C. §1125. It should be noted that this is the Debtors’ Fifth bankruptcy since 2011. Understandably, there is a degree of skepticism voiced by the parties filing oppositions. In their reply, the Debtors suggest that this Disclosure Statement is more in the nature of a first draft, and they seem to acknowledge a willingness to cooperate on the question of appraisal and a need to have further negotiations on such issues as interest rates. To assist the parties in their discussions the court notes the following points which should be addressed in any further iteration of the disclosure:
There are large questions concerning the absolute priority rule and the
10:00 AM
quantum of new value. The Debtors may be confused by its proper application in individual cases but that does not change the fact that it is unquestionably the law of the Ninth Circuit. See In re Zachary, 811 F. 3d 1191 (9th Cir 2016). Moreover, this court’s view has been in favor of this interpretation for an even longer time. See In re Kamell, 451 B.R. 505 (Bankr. C.D. Cal. 2011). So the question is not if the doctrine applies but rather how the debtor intends to meet its requirements, lest the plan be regarded as unconfirmable on its face.
This raises the second question, i.e. the quantum of new value in order to meet the "new value corollary." The Debtors in this draft of the disclosure and plan pick what seems to be an arbitrary sum, $15,000. But arbitrary sums will not do when the confirmation will be opposed as it is likely to be in this case. Instead the Debtors will need to establish not only that the sum is "substantial" and "reasonably equivalent" to whatever interest is retained (See In re Ambanc La Mesa Ltd. Partnership, 115 F. 3d 650, 654 (9th Cir. 1997)) but also that the quantum of new value has been "market tested" within the meaning of Bank of America v. 201 N. LaSalle St. Ptsp., 526 U.S. 434 (1999). The La Salle court does not instruct us as to what exactly must be done to "market test", but the court must reach the conclusion that no one else would pay more for the privilege of directing these affairs in the way proposed by the Debtors. Otherwise it can be argued that the Debtors are retaining something on account of equity, a form of intangible property in the nature of an option. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at § 1129(b)(2)(B)(ii). See also In re NNN Parkway 400 26, LLC, 505 B.R. 277, 281-82 (Bankr. C.D. Cal. 2014). Market testing can be implemented through a variety of means, such as advertising or the retention of an investment broker. LaSalle at 458; N.N.N Parkway at 283. These issues are not strictly disclosure issues; they could be resolved at confirmation. But the court will have to have a stronger feeling that this plan has a chance for confirmation before it will
10:00 AM
authorize dissemination of a disclosure statement that assumes a new value exception to absolute priority.
In order to prove that a crammed down plan is "fair and equitable" as to
dissenting classes of secured claims, the Debtors must show that the stream of promised future payments has a present value equal to not less than the value of the secured claim. 11 U.S.C. §1129(b)(2)(A)(i). In this regard the plan as written falls far short. Most of the subject properties are fully encumbered, so the secured claims are either 100% loan to value, or in the case of the most junior liens, they are behind large senior encumbrances. In either event, the plan imposes upon such creditors a very high degree of risk. Risk equates to interest rates; the higher the imposed risk the higher should be the rate.
Otherwise, the present value of such a stream is less than the secured claim, under the most basic principles of economics. This court has offered the "blended rate" approach as a principled expression of this basic economic concept. See In re North Valley Mall, 432 B.R. 825 (Bankr. C.D.Cal. 2010). In the draft of the plan now on file, the Debtors either offer 5% per annum fixed, or, in the case of HOAs, 0% interest. 5% might work for a conforming loan (i.e. approximately 70% loan to value) but is not even close for creditors at the 90+% on the value totem pole. Of course, no interest at all on liens to HOAs is a non-starter. Even a riskless loan offers some interest in recognition of the time value of money. Prime borrowers have to pay at least 4.5% and even the U.S. Government offers something on its borrowings (i.e. bonds).
Further to the last point, valuations will be critical. Formal valuation orders under §506 are indispensable in the absence of stipulations.
Deny. Continue for further revisions.
Debtor(s):
John J Trejo Represented By
Michael Jones
10:00 AM
Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 8-8-18)
Docket 1
Tentative for 9/12/18:
Continue approximately 60 days to evaluate refinance efforts?
Tentative for 8/18/18: Why no report?
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley
10:00 AM
U.S.C. Section 1112(B)
Docket 172
Grant.
Debtor(s):
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
10:00 AM
Docket 174
Grant.
Debtor(s):
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
10:00 AM
WILLIAM H. BROWNSTEIN, DEBTOR'S ATTORNEY FEE: $224,385.00
EXPENSES : $4,320.19
Docket 124
This is the Interim Application for Fees and Expenses of debtor’s attorney, William H. Brownstein & Assoc. It is opposed by creditors Reuven and Danielle Arad. The application has several infirmities which should be corrected and there are complications.
First, as to a large portion of the time records (pp. 19-115) the reader cannot tell which billing attorney’s time is recorded. One presumes those must be entries of Mr. Brownstein, but only because in contrast Mr. Brannan’s name appears in pages 116-160, while Mr. Brownstein’s name appears on the remaining pages following (160-192). But that is only surmise.
Second, the uniform rate of $525 is quite high, not so much for those matters where a partner level might truly be needed, but for all the ordinary and mundane tasks in Chapter 11 which more usually are handled by paralegals or junior lawyers. At a uniform rate of $525 it is small wonder that the bill is already very high, given this is only an interim application and nothing about a plan or actual reorganization is yet seen. If this case ends up being just a debtor-supervised liquidation, then even more explanation as to the value conferred will be required. This is not necessarily fatal, but at least requires explanation.
Third, the background narrative explaining what the case is about and what
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was required is very sparse.
Fourth, reference in the application is made to a §506(c) surcharge as against the $741,421 proceeds on hand, but proceeding this way is both inappropriate and unsupported. Such a determination must be made by separate motion and a showing should be made as to how the respective lienholders benefitted in this sum, not just by the bankruptcy filing itself as a gnerality, but with particularity as to the respective collateral as to each of the various and sundry entries.
Fifth, the court is concerned by repeated procedural snafus experienced in this case. An example is presented in the following matter on calendar, #8. But it is not the only one. The court will want a careful review that all the time spent was correct and beneficial. Some leeway on procedural mistakes is given unless the rate (as here) is over $500, at which point such mistakes are not expected from (and are not compensable to) experienced lawyers who can command such rates presumably because they don’t make such mistakes.
The court is aware of the difficulty in private practice of carrying large receivables, particularly for small firms. So, an interim award and payment might be appropriate, at least in part. We have the complication here that the objecting creditors’ claimed liens cover most of the available proceeds, so either a §506(c) order or a determination on the lien questions may first be necessary unless there is clearly available unencumbered cash. Debtor argues these "secured" claims are spurious.
While that may prove to be so, the court cannot ignore entitlement of due process based solely on debtor’s unsupported argument. Assuming those questions can be favorably resolved, the court will allow $175,000 on an interim basis and allow payment only of that portion that is demonstrably not encumbered either because a court determination has been made or because a stipulation is received.
Award $175,000 on interim basis subject to determination of unencumbered
assets
10:00 AM
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
$162,235.66
(con't from 7-11-18)
Docket 90
Tentative for 9/12/18:
This is scheduled as an Objection to Claim #3 of Danielle Arad, debtor’s sister. It was continued so that the claimant could obtain counsel. Somehow, for reasons that are unclear, a Rule 12 motion to dismiss an adversary proceeding initiated by Danielle against the debtor and Sara, his mother, was inserted into the objection, as indicated by an exhibit referenced in the "Status Report" filed by debtor. The exhibit appears on the caption of Danielle’s adversary proceeding, but no adversary number is given. The face of the exhibit shows a September 19 hearing date, which is manifestly incorrect (given that the court is away that week). So, one presumes that it will have to be re-noticed for a correct date. Further, the court is informed that that adversary proceeding is currently in default for failure to timely answer, but reportedly a motion by debtor to set aside is also on file. So, before the Rule 12 motion can even be heard the default set aside will have to be heard. But all of that may or may not be determinative of the claim objection, which started out with the rather simple argument that the purported promissory note between the father and the sister, even if genuine, cannot have been secured since no trust deed was ever recorded. In sum, this motion is a procedural mess and the court is in no position to rule upon it. Consequently, the matter will be continued for at least 60 days until the procedural irregularities can be ironed out.
Continue
10:00 AM
Tentative for 7/11/18:
This is debtor's objection to the claim of Danielle Arad. But there is an amended claim which relates back. The amended claim has attached a
$100,000 note signed by Reuven Arad, but referencing that it is secured by 841 N. Orange Street, La Habra, which if it is property of the estate, may suffice to establish a secured claim even if no unsecured claim can be made.
More information is needed. No tentative.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
(con't from 6-27-18)
Docket 185
Tentative for 9/12/18:
Continue to October 10, 2018 at 10:00 a.m.
Tentative for 6/27/18:
Report suggests a final decree motion is to be filed soon. When? Does chart in report imply that payments are in arrears?
Where is the status report?
Debtor(s):
Shahid Chaudhry Represented By Anerio V Altman
10:00 AM
Adv#: 8:13-01256 Wells Fargo Bank, N.A. v. Fu et al
(cont'd from 4-12-18 per order re: stip: re sched. ord. ent. 2-1-18)
Docket 1
Tentative for 4/23/15:
Deadline for completing discovery: September 15, 2015 Last date for filing pre-trial motions: September 30, 2015 Pre-trial conference on: October 8, 2015 at 10:00 a.m.
Joint pre-trial order due per local rules.
Tentative for 10/23/14:
Continued to April 23, 2015 at 10 a.m. to assess disposition of U.S. Trustee's action.
Tentative for 7/31/14:
Continue to follow scheduled MSJ.
Tentative for 1/9/14:
Deadline for completing discovery: June 30, 2014 Last date for filing pre-trial motions: July 14, 2014 Pre-trial conference on: July 31, 2014 at 10:00 a.m. Joint pre-trial order due per local rules.
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Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T. Madden Beth Gaschen
Susann K Narholm - SUSPENDED - Mark Anchor Albert
Defendant(s):
Cheri Fu Represented By
Evan D Smiley Mark Anchor Albert
THOMAS CHIA FU Represented By Milburn Matthew Mark Anchor Albert
Interested Party(s):
Courtesy NEF Represented By Isabelle L Ord
Joint Debtor(s):
Thomas Fu Pro Se
Plaintiff(s):
Wells Fargo Bank, N.A. Represented By Byron B Mauss
Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
James J Joseph (TR) Paul R Shankman
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
10:00 AM
Adv#: 8:17-01074 Marshack v. Stegin
Docket 1
Tentative for 9/13/18:
Status conference continued to November 8, 2018 at 10:00 a.m. Personal appearance is not required. Appearance waived at continued hearing if final payment is received.
Tentative for 8/2/18:
Status conference continued to September 13, 2018 at 10:00 a.m. Appearance on August 2, 2018 excused.
Tentative for 6/7/18:
Status conference continued to August 2, 2018 at 10:00AM. Personal Appearance Not Required.
Tentative for 1/31/18:
Status conference continued to June 7, 2018 at 10:00 a.m. per request. Appearance is optional.
Tentative for 12/14/17:
10:00 AM
Status conference continued to January 31, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to December 14, 2017 at 10:00 a.m. to allow for fulfillment of settlement terms. Appearance is waived.
Debtor(s):
Jana W. Olson Pro Se
Defendant(s):
Elliott G. Stegin Represented By
Natalie B. Daghbandan Sharon Z. Weiss
Plaintiff(s):
Richard A Marshack Represented By
D Edward Hays
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
10:00 AM
Adv#: 8:17-01250 Karen Sue Naylor, Chapter 7 Trustee v. Playhut, Inc.
(con't from 6-7-18)
Docket 1
Tentative for 9/13/18:
Status conference continued to February 28, 2018 at 10:00 a.m.
Tentative for 6/7/18:
Status conference continued to September 13, 2018 at 10:00AM.
Tentative for 3/8/18:
Status conference continued to June 7, 2018 at 10:00 a.m. Appearance is optional.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
10:00 AM
Defendant(s):
Playhut, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:18-01001 Tender Care 24/7 Home Health, Inc. et al v. Misa
(con't from 7-12-18)
Docket 1
Tentative for 9/13/18:
Status conference continued to December 13, 2018 at 10:00 a.m. Personal appearance not required.
Tentative for 7/12/18:
Status conference continued to September 13, 2018 at 10:00AM for purpose of obtaining Superior Court judgment.
Tentative for 5/31/18:
Status Conference continued to July 12, 2018 at 10:00am. Notice to provide that failure to appear may result in striking of answer and entry of default judgment.
Tentative for 3/29/18:
In view of the parallel Superior Court case, should a relief of stay be granted with moratorium of this action pending a judgment in Superior Court?
Debtor(s):
Maria T. Misa Represented By
W. Derek May
10:00 AM
Defendant(s):
Maria T. Misa Pro Se
Plaintiff(s):
Tender Care 24/7 Home Health, Inc. Represented By
Carol G Unruh
Perla Neri Represented By
Carol G Unruh
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:18-01119 Cohen et al v. Dickey's Barbecue Restaurants, Inc.
Docket 1
Tentative for 9/13/18:
Status conference continued to February 28, 2019 at 10:00 a.m. as a holding date. The court approved stay order stipulation.
Debtor(s):
David Wayne Horstman Represented By Michael Jones Sara Tidd
Defendant(s):
Dickey's Barbecue Restaurants, Inc. Pro Se
Joint Debtor(s):
Judy Rosemary Horstman Represented By Michael Jones Sara Tidd
Plaintiff(s):
Amrane Cohen Represented By Michael Jones
David Wayne Horstman Represented By Michael Jones
Judy Rosemary Horstman Represented By
10:00 AM
Michael Jones
RJ's BBQ, LLC Represented By Michael Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:18-01120 American Technologies Inc v. Bubonic et al
Docket 1
Tentative for 9/13/18:
Status conference continued to January 3, 2019 at 10:00 a.m.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by December 1, 2018.
Debtor(s):
Joseph T Bubonic Represented By Julie J Villalobos
Defendant(s):
Joseph T Bubonic Pro Se
Maryann Bubonic Pro Se
Joint Debtor(s):
Mary A Bubonic Represented By Julie J Villalobos
Plaintiff(s):
American Technologies Inc Represented By Edward H Cross
10:00 AM
Adv#: 8:18-01146 Marshack v. Naughton
Docket 3
Tentative for 9/13/18:
Deadline for completing discovery: March 14, 2019 Last date for filing pre-trial motions: March 28, 2019 Pre-trial conference on: May 2, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Skin Care Solutions, LLC Represented By Jeffrey D Cawdrey
Defendant(s):
Gail K. Naughton Pro Se
Plaintiff(s):
Richard A Marshack Represented By Robert P Goe
Trustee(s):
Richard A Marshack (TR) Represented By Robert P Goe
10:00 AM
Adv#: 8:18-01147 Marshack v. W-Staffing, Inc.
Docket 1
- NONE LISTED -
Debtor(s):
Skin Care Solutions, LLC Represented By Jeffrey D Cawdrey
Defendant(s):
W-Staffing, Inc. Pro Se
Plaintiff(s):
Richard A Marshack Represented By Robert P Goe
Trustee(s):
Richard A Marshack (TR) Represented By Robert P Goe
10:00 AM
Adv#: 8:18-01151 Arad v. Arad et al
Docket 1
- NONE LISTED -
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Defendant(s):
Sara Arad Pro Se
Ron S Arad Pro Se
Plaintiff(s):
Danielle Arad Represented By Shalem Shem-Tov
10:00 AM
Adv#: 8:17-01087 Karen Sue Naylor, Chapter 7 Trustee v. Vara Home USA, LLC
(con't from 6-28-18 per Order on Stipulation Entered 6/5/18)
Docket 1
Tentative for 9/28/17:
Deadline for completing discovery: February 28, 2018 Last date for filing pre-trial motions: March 12, 2018 Pre-trial conference on: March 29, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Vara Home USA, LLC Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01127 Karen Sue Naylor, Chapter 7 Trustee v. Candyrific, LLC
(Cont'd from 7-12-18)
Docket 51
Tentative for 7/12/18:
In view of reported settlement, continue approximately 60 days.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Candyrific, LLC Represented By Scott A Schiff
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
(con't from 8-23-18)
Docket 27
This is the defendant’s Rule 12(b) Motion to Dismiss the Second Amended Complaint. A hearing was held May 31, 2018 on the defendant’s Motion to Dismiss the First Amended Complaint. At that hearing the court denied the motion with respect to the §523 aspects of the complaint. But it granted the motion with leave to amend regarding the §727 aspects of the complaint, largely because it was difficult or impossible as first drafted to understand which of the many subsections of §727 related to any particular allegation.
In the Second Amended Complaint this deficiency has been somewhat remedied by breaking the allegations into subject matter headings, and then assigning relevant subsections of §727 at the concluding paragraph for each subject. See e.g. ¶¶ 23(a)(vi), 23(b)(ix), 23(c)(iv), 23(d)(iv), 23(f)(iv), 23(g)(vi), 23(h)(iv) and 23(i)(iv). It would have been better to assign a specific subsection to each of the specific fact allegation, since some theories fit better than others, but the court does not view this "cluster" approach as so difficult or problematic as to warrant dismissing the complaint again.
Defendant argues that the facts alleged are too sparse and that the allegations, in the main, merely parrot the elements of a §727 action. In some areas Defendant argues that the facts given are too implausible to constitute a sufficient allegation consistent with Rule 9 and the Iqbal/Twombley standards. For example, at pages
10-11 of the Motion there are a series of "on what conceivable basis" arguments
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relating to various allegations in the Second Amended Complaint Defendant apparently contends are too remote or immaterial. But this raises the standard too high for a Rule 12 inquiry. The court at this stage does not make evidentiary rulings, only that sufficient facts are alleged that, if true, might support a theory for relief. That any of these allegations of Defendant’s statements or omissions amounted to false oaths is enough, and the court neither needs nor expects overly elaborate statements of the theory for relief nor of every conceivably relevant fact. In some instances, Defendant complains that the alleged events are too remote or are outside a statute of limitations. But Plaintiff counters that a "continuing concealment" doctrine applies, citing In re Lawson, 122 F. 3d 1237, 1240-41 (9th Cir. 1997). The court is disinclined to rule on such questions at the pleading stage as they are fact intensive.
Similarly, the squabble over the fact that Defendant did not reveal (or even file) tax returns because he was allegedly not, as an Israeli citizen, obliged to file, is an interjection of a factual dispute and derived legal conclusion into a Rule 12 motion.
Similarly, Defendant complains that Plaintiff should have had to consult the Kelley Blue Book to determine the market value of a Land Rover automobile to support the allegation that it was undervalued. But again, this interjects a dispute over the facts into a Rule 12 motion. For example, it is not inconceivable that this was a particularly nice Land Rover. It is only necessary that the complaint contain alleged facts that, if true, might support a claim. The motion in several areas requests improperly a prejudgment on the truth effectively either as a matter of law or as would be the case on disputed facts in a Rule 56 motion. Similarly, the dispute over whether Defendant adequately described his Northern Iraq investment, or the patents, are effectively factual disputes. The court has no basis to prejudge whether any information already provided, however elaborately, is legally adequate or not. But as explained below, this inquiry in this context is beyond the province of Rule 12.
After Iqbal and Twombly the court has seen a rash of Rule 12 motions that are, in the court’s view, misguided. Too many parties read into the plausibility requirement a high burden of alleging numerous facts and conclusions of law that are overwhelming or can only be interpreted one way. That is not what is required. Nor is
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Rule 12 a substitute for Rule 56, where the court to a very limited extent can weigh evidence from outside the initial pleadings. All that is required is that enough facts are alleged which, if true, could plausibly support a theory of relief. Like the older, pre Twombly/Iqbal Rule 12 standards, the main purpose at this pleading stage is still to advise the other party of what must be met and that there is (at least minimally) sufficient substance to the complaint so that the defendant and the court are not wasting their time. It is not necessary to allege everything that might conceivably support the case or that would convince the court of the righteousness of either side at the pleading stage. The Second Amended Complaint at bar is not perfect but it contains well enough facts and statement of the corresponding legal theories to pass Rule 12 muster.
Deny. Response due within 21 days.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Represented By David B Shemano
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee Timothy P Dillon
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy Michael Jason Lee
Sunjina Kaur Anand Ahuja
11:00 AM
10:30 AM
(con't from 8-28-18)
VW CREDIT INC.
Vs.
DEBTOR
Docket 34
Tentative for 9/25/18: Status?
Tentative for 8/28/18:
Grant. Appearance is optional.
Debtor(s):
Julie Marie Duncan Represented By Christine A Kingston
Movant(s):
VW Credit, Inc. Represented By Darren J Devlin
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
PARTNERS FEDERAL CREDIT UNION
Vs.
DEBTOR
Docket 10
Grant. Appearance is optional.
Debtor(s):
Steve Garcia Represented By
Marlin Branstetter
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
KNECTA FEDERAL CREDIT UNION
Vs.
DEBTORS
Docket 16
Grant. Appearance is optional.
Debtor(s):
Omar Alexander Batista Represented By Jacqueline D Serrao
Joint Debtor(s):
Lisa Batista Represented By
Jacqueline D Serrao
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
HONDA LEASE TRUST
Vs.
DEBTOR
Docket 9
Grant. Appearance is optional.
Debtor(s):
Takatoshi Saigusa Represented By
D Justin Harelik
Movant(s):
HONDA LEASE TRUST Represented By Vincent V Frounjian
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
WILMINGTON SAVINGS FUND SOCIETY
Vs.
DEBTOR
Docket 70
This is the renewed motion for relief of stay brought by Wilmington Savings. This court denied a similar motion Oct. 11, 2017. That was based on the Chapter 7 trustee’s belief expressed at that time that a sale could be obtained resulting in payment of the creditor in full. The court in that order ruled that absent such a sale the motion could be renewed in 60 days. To its credit Wilmington has waited almost a year before renewing the motion. In the meantime, the trustee has abandoned the property by order entered March 8, 2018.
What makes this case somewhat unusual is that both sides agree that there is some equity in the property, therefore eliminating §362(d)(3) as a possible additional ground for relief. However, there remains the question of whether "cause" is shown under §362(d)(1) or whether, as the movant alleges, this is part of an ongoing scheme to hinder, delay and defraud creditors as Wilmington contends under §362(d)(4). This is, after all, the fifth bankruptcy filed concerning this property starting in 2011.
Further, this is a Chapter 7, and so the purposes to be served are somewhat narrower,
i.e. primarily to afford a reasonable time to sell or otherwise create an estate for creditors. In view of the Trustee’s abandonment that no longer seems to be the case and so this case ends up being a two-party dispute between the borrower and the bank over details of their loan transactions. So, the court asks what bankruptcy purpose would be served by continuing the stay indefinitely as debtor apparently requests? There are disputes described in debtor’s papers over proper accounting, the size of the
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arrearage, whether further "audits" should be had and the like. But this court sees no bankruptcy purpose to be served by delving into such questions. If the debtor thinks he has a case on any of these issues, he has access to the state court and its injunctive powers. Debtor tries to argue that the court should overlook the fact that this is the fifth bankruptcy by blaming inadequate counsel or claiming that it was all just a prolonged extension of the same case. Even if that were true it is not a question that relieves the fact (or the responsibility) of repeated filings nor is it a question of concern to bankruptcy estate, as it should be between attorney and client. Moreover, this is not a young case as it has been now pending for a year and seven months. If a financial solution were possible it should have manifested by now. This bankruptcy case is or should be at an effective end regarding this property and so the court finds "cause" to relieve the stay and application of §362(d)(4) as well.
Grant
Debtor(s):
Timothy Bror Touve Pro Se
Movant(s):
Wilmington Savings Fund Society, Represented By
Angie M Marth
Trustee(s):
Weneta M Kosmala (TR) Represented By Erin P Moriarty
10:30 AM
BAYVIEW LOAN SERVICING, LLC
Vs DEBTORS
Docket 87
Grant. Appearance is optional.
Debtor(s):
Timothy David Morgan Represented By Richard G Heston
Joint Debtor(s):
Susan Kay Morgan Represented By Richard G Heston
Movant(s):
BAYVIEW LOAN SERVICING, Represented By
Edward G Schloss
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
NATIONSTAR MORTGAGE LLC
Vs.
DEBTORS
Docket 91
Grant unless current or APO.
Debtor(s):
Guy A. Rojo Represented By
Joseph A Weber
Joint Debtor(s):
Eva P. Rojo Represented By
Joseph A Weber
Movant(s):
NATIONSTAR MORTGAGE LLC Represented By
Jamie D Hanawalt
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
M&T BANK
Vs.
DEBTOR
Docket 22
- NONE LISTED -
Debtor(s):
Joseph T Bubonic Represented By Julie J Villalobos
Joint Debtor(s):
Mary A Bubonic Represented By Julie J Villalobos
Movant(s):
M&T Bank Represented By
Merdaud Jafarnia
10:30 AM
BANK OF THE WEST
Vs.
DEBTOR
Docket 137
This is the motion for relief of stay filed by Bank of the West regarding its first lien on the property commonly known as 27850 Aleutia Way, Yorba Linda, CA. The Bank is owed about $447,284 and the property is further encumbered by a second lien in favor of Charter One securing an additional $250,750. So the acknowledged liens are about $698,034 and the value is $1,350,000, as admitted in the motion.
Consequently, there is at least $650,000 in equity and more like $902,000 value behind the movant’s lien as adequate protection. Reportedly, the property is being operated as a rental. So, whether viewed through the prism of §362(d)(1) [lack of adequate protection] which is the stated basis for the request for relief in this motion, or under §362(d)(2)[no equity and not necessary to a reorganization], the motion cannot be granted at this time. Debtor goes on at length in his opposition about prospects for reorganization. But debtor must remember that he is only a partial owner, and that the requirement is a reorganization "in prospect." The court understands this to mean it is not enough to argue that a reorganization might be possible but, rather, that one is soon. This reinforces the general precept that reorganization efforts generally do not improve with age or extended delays, and while the bank’s motion might be denied this time, the burden is upon the debtor to show that something good is in immediate prospect such that we should all be made to wait. This means time is not unlimited and debtor must be immediately and constructively engaged in coming up with a plan that can be confirmed. If disputes with co-owners block this effort those impediments must be dealt with post haste.
Deny at this time without prejudice to renewal in 60 days
10:30 AM
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Movant(s):
Bank of the West Represented By Kelly M Raftery
10:30 AM
STANDARD MORTGAGE FINANCIAL SERVICES, INC.
Vs.
DEBTOR
Docket 6
Grant. Appearance is optional.
Debtor(s):
Randall Stephen Held Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 183
Grant. Appearance is optional.
Debtor(s):
Jack Richard Finnegan Pro Se
Movant(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
10:30 AM
U.S.C. 362(j) Or That No Stay Is In Effect Under 11 U.S.C. 362(c)(4)(A)(ii)
Docket 38
Grant. Appearance is optional.
Debtor(s):
Hang Kim Ha Pro Se
Movant(s):
SunTrust Bank Represented By Daniel K Fujimoto
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman Anerio V Altman
11:00 AM
Docket 26
The motion is to sell all estate interests in the property, so no remaining interest is protected by the stay. This should render the opposition moot and abandonment is a meaningless remedy. Grant.
Debtor(s):
Merhe Mourad Represented By Lindsay Jones
Trustee(s):
Weneta M Kosmala (TR) Represented By Erin P Moriarty
11:00 AM
Docket 666
- NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar Teresa C Chow
Tiffany Payne Geyer
Trustee(s):
Richard A Marshack (TR) Represented By Caroline Djang Cathy Ta
11:00 AM
Docket 38
Grant.
Debtor(s):
Adam White Represented By
Ofer M Grossman
Joint Debtor(s):
Carolyn Canning-White Represented By
Ofer M Grossman
Trustee(s):
Richard A Marshack (TR) Pro Se
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Docket 1623
This is the Trustee’s application to employ Gallagher & Kennedy, P.A. on a contingency fee basis to pursue claims based on the sale of land in Arizona by South 7th Street Investments, LLC ("South 7th"), one of the LLCs set up by Debtor to hold title to property after foreclosure. The application is very straightforward and appears to present very little risk to the estate because of its contingency fee arrangement. The Trustee has concluded that it is worth pursuing these claims and counsel must be of the same mind otherwise it would not agree to the employment. The objection does not have any merit. The objecting parties are potential defendants and do not want to be sued. While understandable, this is not a basis for denying an employment application.
Debtor(s):
Grant.
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
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Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
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Docket 53
- NONE LISTED -
Debtor(s):
Gary J. Samaha Represented By Thomas J Tedesco
Joint Debtor(s):
Gigi J. Samaha Represented By Thomas J Tedesco
Trustee(s):
Karen S Naylor (TR) Pro Se
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JEFFREY I. GOLDEN, CHAPTER 7 TRUSTEE
GUMPORT MASTAN, ATTORNEY FOR CHAPTER 7 TRUSTEE HAHN FIFE & COMPANY, LLP, ACCOUNTANT
FRANCHISE TAX BOARD
Docket 101
Allowed as prayed. Appearance is optional.
Debtor(s):
Bad JuJu Games, Inc. Represented By
Thomas D Georgianna
Trustee(s):
Jeffrey I Golden (TR) Represented By Peter J Mastan Claire K Wu
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Docket 17
Sustain. Appearance is optional.
Debtor(s):
Daniel John Lynch Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
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IMPOSSIBILITY RE: Kenneth Gharib aka Kenneth Garrett aka Khosrow Gharib Rashtabadi and Freedom Investment Corporation, a Nevada Corporation In Contempt Of This Court and Imposing Sanctions
(cont'd from 3-6-18 )
Docket 0
Tentative for 9/25/18:
No tentative.
Tentative for 3/6/18:
No tentative.
Tentative for 1/24/17:
This is the oft-continued hearing for status conferences concerning Kenneth Gharib’s ("contemnor"), ongoing contempt, as well as a hearing on his motion late- filed on January 12 as #17 on calendar, styled as: "Notice of Motion and Motion to Dismiss the Sanction Order; Defense of Impossibility to Comply as of January 2017." The court repeats verbatim below the tentative decision from its September 14, 2017 hearings because, regrettably, nothing or almost nothing has changed. For those earlier hearings and conferences the court wrote:
"This is the continued status conference regarding Mr. Gharib’s ongoing contempt, purging the contempt and/or regarding the defense of impossibility. At the last status conference June 16, 2016 the court continued the matter until August 24, 2016. In the meantime the Trustee filed a motion
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for continuance until September 14 and, in turn, Mr. Gharib on August 15
filed a "Motion to Dismiss Sanction Order Due to Impossibility to Comply…" which was not set for separate hearing, but is construed as part of the ongoing issue of the impossibility defense. Mr. Gharib has been in custody under this court’s order since May of 2015.
It is clear that the contemnor has the burden of proving impossibility.
But Mr. Gharib has cited Falstaff Brewing Corp. v. Miller Brewing Co., 702 F. 2d 770 (9th Cir. 1983) for the proposition that impossibility is a complete defense, even if self-induced. Id. at 779-82 n. 7 quoting United States v.
Rylander, 656 F. 2d 1313, 1318 n. 4 (9th Cir. 1981). As the Trustee has argued, this authority is somewhat dubious since the discussion in Falstaff is in dicta and one of the authorities relied upon by the Falstaff court, United States v. Rylander, was later overturned in United States v. Rylander, 460 U.S. 752, 103 S. Ct. 1548 (1983). Further, on the very question before us, i.e. the question of self-induced impossibility, the Ninth Circuit has ruled subsequently to Falstaff in Federal Trade Commission v. Affordable Media, LLC, 179 F. 3d 1228 (9th Cir 1999) that self-induced impossibility, particularly in the asset protection trust context, is not a defense to civil contempt or at least that the contemnor’s burden of proof on the point is very high. Id. at 1239-41. Instead, the contemnor must still prove "categorically and in detail" why he is unable to comply. Id. at 1241 citing Rylander, 460 U.S. at 757, 103 S. Ct. 1548. Moreover, on that point and in that context the court is justified in maintaining a healthy skepticism, as did the Affordable Media court. Id. at 1242. See also In re Marciano, 2013 WL 180057*5 (C.D. Cal.
Jan. 17, 2013); In re Lawrence , 251 B.R. 630, 651-52 (S.D. Fla. 2000);
United States v. Bright, 2009 WL 529153*4-5 (Feb. 27, 2009).
Here, with even a mild degree of skepticism it is sufficient to find that Mr. Gharib has not met his burden of proving "categorically and in detail" why he is unable to purge the contempt. While this is not exactly an asset protection trust context as in Affordable Media, we have a near cousin of this
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phenomenon, i.e. multiple transfers to apparent sham corporations. As near as the court can understand it, Mr. Gharib argues that he has had no access or control over any funds since losing all of the $11.9 million+ he claimed under
penalty of perjury to own in November 2012 in filings made with this court. In previous briefs some of the subject proceeds from the Hillsborough sale were traced by the Trustee into two previously unidentified corporations, Office Corp and D Coffee Shop. In response to this evidence and in Mr. Gharib’s own words:
"In March of 2015, foreigner [sic] investors decided to terminate their contract and business with Gharib. Foreigner investors demanded and instructed Gharib to close all bank accounts of Best Entertainment Corp and Hayward Corporation in Bank of America and transfer the remaining balance to Office Corp. Gharib followed foreigner investors demand and instruction and he closed both bank accounts of Best Entertainment Corp in Bank of America. The remaining balance of approximately six hundred thousand dollars was transferred to Office Corp per foreigner investors’ demand and instruction. Gharib never was the owner of funds or shareholder of Office Corporation. Gharib has no knowledge who owned stocks of Office Corp and foreigner investors never revealed to Gharib either. Shortly after, Gharib was detained in May 2015. While Gharib was in custody, trustee subpoenaed Office Corp bank account in Bank of America (see exhibit "26 and 27").
Office Corp’s bank statements show the authorized signer was Mrs. Firouzabadi. Approximately three hundred thousand dollars of funds in that account was spent in a variety of items and the remaining funds were transferred to D Coffee Shop Corp (see exhibit "26"). Trustee also subpoenaed D Coffee Shop Corporation bank account in Bank of America (See exhibit "28" and "29"). D Coffee Shop Corp’s bank statements show Mr. Rushtabadi was authorized signer and the remaining balance in D Coffee Shop Corp’s account was spent in variety of items, and nothing left over in that account as of December 2015, 8 months ago. Gharib has no information why and for what purpose the funds were spent in both Office Corp and D Coffee Shop
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Corp. Gharib was incarcerated during that period (May to December 2015). Gharib has no information as to identity of stock holder of either Office Corp
or D Coffee Shop Corp. Gharib was not part of any of the above Corporations in any way or shape… Gharib did not have any interest or ownership in any of the above corporations at all. It is undisputable that that all funds (whether proceed of sales of Hillsborough or Foreigner investors’ money) in both corporations were spent and gone (definitely not by Gharib)…."
Gharib’s "Motion to Dismiss…" filed August 15, 2016 at pp. 4-5
Since the last hearing the Trustee has been unable to find or subpoena Mr. Rushtabadi, Gharib’s brother. That a brother would be apparently so indifferent to Mr. Gharib’s ongoing incarceration so as to offer his assistance or at least testimony is by itself rather noteworthy, particularly since Mr.
Rushtabadi does know of the incarceration and makes telephone calls at Gharib’s behest. But the Trustee was able to depose Ms. Firouzabadi August 26, 2016 [See Trustee’s Exhibit "4"]. From her testimony it develops that she had a romantic relationship with Gharib allegedly ending in about 2014 and that, believing he was a successful businessman, she trusted him and allowed him to use her signature on various items and documents on things she apparently does not understand. [Transcript p. 57, line 16-19]. But, importantly, she testified she had absolutely no knowledge of either Office Corp or D Coffee Shop corporations or of any transfers therefrom [Transcript
p. 75, line 6-7] and identified that her purported signature on several of said corporations’ papers offered as exhibits by the Trustee were forgeries. [Transcript at p. 56, line 1-17] Interestingly, she also testified that Mr. Rushtabadi, the brother, requested by telephone just before the deposition that she leave the country. [Transcript pp. 22-23] Why she should leave her home on such short notice at Mr. Rushtabadi’s request was not clarified but the implication is pretty clear, to avoid service just as Mr. Rushtabadi has reportedly done (at least so far).
In sum, the court is even less persuaded than before that Mr. Gharib
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does not have continuing access to funds and the ability to control funds, suing various shills, to purge the contempt either in part or in whole. His stories about what happened to the Hillsborough proceeds, about phantom investments in Iranian real estate, unnamed "foreigner investors" and the like, have absolutely no substance or corroboration and defy all credibility. The few details offered have proven to be either outright lies or very suspect, at best. In sum, Mr. Gharib’s burden of proving impossibility has not been carried."
The only developments that could be construed as "new" do not help the contemnor’s case. The Trustee now reports that his investigation reveals that the contemnor’s brother, Steven Rushtabadi, has depleted all of the remaining money from the account maintained by D Coffee Shop Corporation’s (a subsequent transferee from Office Corporation, itself a transferee from the debtor) at Bank of America in a series of over-the-counter withdrawals, presumably in cash. For a few weeks between January 11 through February 26, 2016 (See, Exhibits"2" and "3" to Trustee’s Declaration) these withdrawals are supported by video evidence of Mr. Rushtabadi receiving the cash. But it appears that the incremental depletion of the account has actually gone on for months earlier in cash withdrawal amounts alternating between
$4500 and $3500. Exhibit "1." But the court notes that all withdrawals appear to be below the regulatory threshold of $10,000. The contemnor argues that it is impossible now to comply with the court’s order because he is indigent and has no control over either his brother’s or Ms. Firouzabadi’s activities (or funds). The contemnor correctly points out that many of these transfers occurred after he was confined. But the court is not so naïve as to believe that transfers to corporations ostensibly controlled by a one-time girlfriend and a brother necessarily means that the contemnor has no ongoing control. At the very least it is the contemnor’s burden to prove this to be the case and that burden is manifestly not carried here. The simple fact that Mr.
Rustabadi refuses to cooperate by giving testimony, either in response to the Trustee’s subpoenas or, conspicuously, even in support of his own brother’s testimony which might relieve contemnor’s incarceration, renders this whole line of excuse very dubious. Equally dubious is the argument that because the contemnor has allegedly not formally communicated with either the girlfriend or the brother in several months
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according to the contemnor’s declaration and the records of the Metropolitan Detention Center, this must mean he has no ongoing control But the court declines to take such an inference. Even less persuasive is the argument that the District Court has approved an in forma pauperis waiver of fees; all this means is that someone at the District Court believes what contemnor has said in an application, not that it is necessarily true. Rather, absent some more compelling and direct evidence to the contrary (such as declarations from Mr. Rustabadi or Ms. Firouzabadi), the court is more inclined to believe the more plausible scenario; i.e. the transfers from debtor to Office Corporation and then to corporations controlled by such close relatives or friends, were not mere coincidences, but were designed to camouflage the contemnor’s ongoing control. Also disturbing is the Trustee’s point made in page 5 of his Opposition: i.e. that several properties which contemnor claims were foreclosed upon as evidence of his indigence were actually transferred to a corporation, Las Vegas Investment, Inc., ostensibly controlled by the brother, Mr. Rushtabadi, using the name Steven Rush. If true this is yet further evidence that contemnor continues to control his investments using his brother as a shill. In sum, the court sees even less reason to find that impossibility has been proven.
Deny motion and confine for further status conference regarding ongoing contempt and/or defense of impossibility
Tentative for 9/14/16:
This is the continued status conference regarding Mr. Gharib’s ongoing contempt, purging the contempt and/or regarding the defense of impossibility. At the last status conference June 16, 2016 the court continued the matter until August 24, 2016. In the meantime the Trustee filed a motion for continuance until September 14 and ,in turn, Mr. Gharib on August 15 filed a "Motion to Dismiss Sanction Order Due to Impossibility to Comply…" which was not set for separate hearing, but is construed as part of the ongoing issue of the impossibility defense. Mr. Gharib has been in custody under this court’s order since May of 2015.
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It is clear that the contemnor has the burden of proving impossibility. But Mr. Gharib has cited Falstaff Brewing Corp. v. Miller Brewing Co., 702 F. 2d 770 (9th Cir. 1983) for the proposition that impossibility is a complete defense, even if self-induced. Id. at 779-82 n. 7 quoting United States v. Rylander, 656 F. 2d 1313, 1318 n. 4 (9th Cir. 1981). As the Trustee has argued, this authority is somewhat dubious since the discussion in Falstaff is in dicta and one of the authorities relied upon by the Falstaff court, United States v. Rylander, was later overturned in United States v. Rylander, 460 U.S. 752, 103 S. Ct. 1548 (1983). Further, on the very question before us, i.e. the question of self-induced impossibility, the Ninth Circuit has ruled subsequently to Falstaff in Federal Trade Commission v. Affordable Media, LLC, 179 F. 3d 1228 (9th Cir 1999) that self-induced impossibility, particularly in the asset protection trust context, is not a defense to civil contempt or at least that the contemnor’s burden of proof on the point is very high. Id. at 1239-41. Instead, the contemnor must still prove "categorically and in detail" why he is unable to comply. Id. at 1241 citing Rylander, 460 U.S. at 757, 103 S. Ct. 1548. Moreover, on that point and in that context the court is justified in maintaining a healthy skepticism, as did the Affordable Media court. Id. at 1242. See also In re Marciano, 2013 WL 180057*5 (C.D. Cal. Jan. 17, 2013); In re Lawrence , 251 B.R. 630, 651-52 (S.D. Fla. 2000); United States v.
Bright, 2009 WL 529153*4-5 (Feb. 27, 2009).
Here, with even a mild degree of skepticism it is sufficient to find that Mr. Gharib has not met his burden of proving "categorically and in detail" why he is unable to purge the contempt. While this is not exactly an asset protection trust context as in Affordable Media, we have a near cousin of this phenomenon, i.e. multiple transfers to apparent sham corporations. As near as the court can understand it, Mr. Gharib argues that he has had no access or control over any funds since losing all of the $11.9 million+ he claimed under penalty of perjury to own in November 2012 in filings made with this court. In previous briefs some of the subject proceeds from the Hillsborough sale were traced by the Trustee into two previously unidentified corporations, Office Corp and D Coffee Shop. In response to this evidence and in Mr. Gharib’s own words:
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"In March of 2015, foreigner [sic] investors decided to terminate their contract and business with Gharib. Foreigner investors demanded and instructed Gharib to close all bank accounts of Best Entertainment Corp and Hayward Corporation in Bank of America and transfer the remaining balance to Office Corp. Gharib followed foreigner investors demand and instruction and he closed both bank accounts of Best Entertainment Corp in Bank of America. The remaining balance of approximately six hundred thousand dollars was transferred to Office Corp per foreigner investors’ demand and instruction. Gharib never was the owner of funds or shareholder of Office Corporation. Gharib has no knowledge who owned stocks of Office Corp and foreigner investors never revealed to Gharib either. Shortly after, Gharib was detained in May 2015. While Gharib was in custody, trustee subpoenaed Office Corp bank account in Bank of America (see exhibit "26 and 27").
Office Corp’s bank statements show the authorized signer was Mrs. Firouzabadi. Approximately three hundred thousand dollars of funds in that account was spent in a variety of items and the remaining funds were
transferred to D Coffee Shop Corp (see exhibit "26"). Trustee also subpoenaed D Coffee Shop Corporation bank account in Bank of America (See exhibit "28" and "29"). D Coffee Shop Corp’s bank statements show Mr. Rushtabadi was authorized signer and the remaining balance in D Coffee Shop Corp’s account was spent in variety of items, and nothing left over in that account as of December 2015, 8 months ago. Gharib has no information why and for what purpose the funds were spent in both Office Corp and D Coffee Shop Corp. Gharib was incarcerated during that period (May to December 2015).
Gharib has no information as to identity of stock holder of either Office Corp or D Coffee Shop Corp. Gharib was not part of any of the above Corporations in any way or shape… Gharib did not have any interest or ownership in any of the above corporations at all. It is undisputable that that all funds (whether proceed of sales of Hillsborough or Foreigner investors’ money) in both corporations were spent and gone (definitely not by Gharib)…."
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Gharib’s "Motion to Dismiss…" filed August 15, 2016 at pp. 4-5
Since the last hearing the Trustee has been unable to find or subpoena Mr.
Rushtabadi, Gharib’s brother. That a brother would be apparently so indifferent to Mr. Gharib’s ongoing incarceration so as to not offer his assistance or at least testimony is by itself rather noteworthy, particularly since Mr. Rushtabadi does know of the incarceration and makes telephone calls at Gharib’s behest. But the Trustee was able to depose Ms. Firouzabadi August 26, 2016 [See Trustee’s Exhibit "4"]. From her testimony it develops that she had a romantic relationship with Gharib allegedly ending in about 2014 and that, believing he was a successful businessman, she trusted him and allowed him to use her signature on various items and documents on things she apparently does not understand. [Transcript p. 57, line 16-19]. But, importantly, she testified she had absolutely no knowledge of either Office Corp or D Coffee Shop corporations or of any transfers therefrom [Transcript p. 75, line 6-7] and identified that her purported signature on several of said corporations’ papers offered as exhibits by the Trustee were forgeries. [Transcript at p. 56, line 1-17] Interestingly, she also testified that Mr. Rushtabadi, the brother, requested by telephone just before the deposition that she leave the country. [Transcript pp. 22-23] Why she should leave her home on such short notice at Mr. Rushtabadi’s request was not clarified but the implication is pretty clear, to avoid service just as Mr. Rushtabadi has reportedly done (at least so far).
In sum, the court is even less persuaded than before that Mr. Gharib does not have continuing access to funds and the ability to control funds, using various shills, to purge the contempt either in part or in whole. His stories about what happened to the Hillsborough proceeds, about phantom investments in Iranian real estate, unnamed "foreigner investors" and the like, have absolutely no substance or corroboration and defy all credibility. The few details offered have proven to be either outright lies or very suspect, at best. In sum, Mr. Gharib’s burden of proving impossibility has not been carried.
Deny motion to dismiss. Continue for further evaluation conference.
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Debtor(s):
Kenny G Enterprises, LLC Represented By Robert P Goe Jeffrey S Souders Raymond H Aver
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey Steve Burnell
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(cont'd from 3-6-18)
Docket 457
Tentative for 9/25/18: No tentative.
Tentative for 3/6/18: No tentative.
Tentative for 1/24/17: See #15.
Tentative for 9/14/16: See #6.
Debtor(s):
Kenny G Enterprises, LLC Represented By Robert P Goe Jeffrey S Souders
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy
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Thomas H Casey Steve Burnell
10:00 AM
Docket 203
- NONE LISTED -
Debtor(s):
Lorraine M. Nichols (Deceased) Represented By Illyssa I Fogel
10:00 AM
Docket 78
Grant. Convert to Chapter 7.
Debtor(s):
John Benjamin Riddle Represented By Stephen L Burton
Trustee(s):
David M Goodrich (TR) Pro Se
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U.S.C. 1112(b); and (2) Judgment for Quarterly Fees Due and Payable to the United States Trustee
Docket 34
Grant.
Debtor(s):
Frank Pestarino Represented By Kevin Tang
10:00 AM
(con't from 8-22-18)
Docket 1
Tentative for 9/26/18: See #3.
Tentative for 8/22/18:
Deadline for filing plan and disclosure statement: December 31, 2018 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: September 1, 2018
Debtor(s):
Frank Pestarino Represented By Kevin Tang
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(con't from 8-22-18 )
Docket 1
Tentative for 9/26/18:
The status report contains what is, in effect, a motion to extend deadlines already set. This is not appropriate. When will the plan be filed?
Tentative for 8/22/18:
Did a scheduling order get filed?
Tentative for 6/28/18: See #16
Tentative for 5/2/18:
Any other comments about status or filing of adversary proceeding?
Deadline for filing plan and disclosure statement: August 1, 2018
Claims bar: 60 days after dispatch of notice to creditors advising of bar date (unless already set per status report).
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Debtor(s):
Ron S Arad Represented By
William H Brownstein
10:00 AM
Docket 1
- NONE LISTED -
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson
10:00 AM
(con't from 9-5-18 )
Docket 1
Tentative for 9/26/18: Status?
Tentative for 5/30/18:
Has a claims bar date been noticed? See Calendar # 3.
Tentative for 4/4/18: Status?
Tentative for 2/7/18:
Deadline for filing plan and disclosure statement: December 31, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: December 1, 2017
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
(con't from 9-5-18)
Docket 135
Tentative for 9/26/18:
This is the debtor’s motion for approval of adequacy of her revised Disclosure Statement dated August 7, 2018. Objections were filed by both the UST and the major creditor, Pacific Western Bank. The objections focus largely on the absolute priority rule and the "new value" corollary. The new value of $25,000 is criticized as "feeble" and, in any event, not adequately market tested as required in Bank of America v. 203 N. LaSalle Street Ptsp,, 506 U.S. 434 (1999). Also, the bank argues that there is a problem with valuing the Spires stock and note at, essentially $0, noting the irony of the debtor’s apparently inconsistent argument that the plan is nevertheless feasible because the continuing monthly payments can be expected on account of either the stock or note as funding for the plan. Further, a gerrymandering question is raised by the separate classification of the bank’s deficiency claim (and of U.S. Bank). While all of these points well be fatal, these are largely confirmation issues, not disclosure issues. It is true that there is authority that manifestly unconfirmable plans should be quashed at the disclosure stage. See, In re Pecht, 57 B.R. 137 (Bankr. E.D.Va. 1985).
On these issues the question is admittedly a close call but should probably be postponed for consideration at confirmation.
But better disclosure is clearly needed on the handling of the adversary proceeding, causes of action and the ill-defined role to be played by the plan agent appointed under the plan. Although not well articulated, apparently Mr. Goodrich will be employed on some basis to either prosecute the alleged
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preference action against the bank, possible actions against insiders Matthew Haretakis and Robert Grant, and/or maybe to liquidate other assets. But all of this is left very unclear. No mention is made of how Mr. Goodrich is to be compensated or what standards (if any) he is to employ in deciding whether litigation is warranted, or, for that matter, what is to become of any proceeds, or who decides on compromises and the like. At a minimum, creditors have a right to know about the claims, how they are valued and what is expected from the liquidation agent. Creditors have a right to know who is entrusted with making decisions and what standards are expected. Further, creditors have a right to know how the litigation, if any, is to be funded and what will become of any proceeds. Apparently, debtor has valued the causes of action as of little or no value, but since some of the defendants are insiders the plan should specify who makes the decisions and on what basis, and there ought to be a clear explanation as to why the decisions made will be impartial and in the best interests of creditors. None of that is articulated, or at least not clearly enough that the court was able to detect it.
Deny
Tentative for 5/30/18:
The debtor’s proposed Disclosure Statement does not contain adequate information and cannot be approved, as apparently even she admits. It appears that it was filed knowing the information was not complete, but was filed to meet a deadline. As a starting point, the form for individual debtors is not a good fit for this case. This is not a straightforward individual case where a debtor is trying to address arrears on real property. This case is more complex and is better suited to a traditional disclosure statement format where Debtor provides a more detailed narrative and can describe the various assets and liabilities. The classes of claims should also be set forth more clearly. The explanation of valuation and how the absolute priority rule will be
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dealt with will be easier to understand in this format as well. This hearing should be continued to give debtor an opportunity to amend. After an amended disclosure is filed the Court should be in a better position to determine whether adequate information has been provided. It is not clear to that the separate classification of PWB will be acceptable. But that is primarily a confirmation issue. Debtor’s own brief at p. 4 lines 11-14 makes it sound like debtor has separately classified in order to gerrymander, which of course is not permitted. But whether there is enough involving arguments about claim of lien, preference and the like to fit within the ruling in In re Johnston, 21 F.
3d 323, 327 (9th Cir. 1994) and similar authority is not clear. But that will be tested at confirmation. The U.S. Bank claim’s separate classification makes a little more sense because payment is allegedly coming from Spires and her liability is as guarantor. But, debtor should first set forth her plan and disclosure in a clear and understandable format, with all of the necessary information included. Then the court will be in a better position to review it.
The report about delays from the accountants/appraisers is disappointing but ultimately the debtor is the responsible party, so further delays on that account should not be expected.
Continue for amendment.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
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DONALD W SIEVEKE, DEBTOR'S ATTORNEY FEE: $38,035.00
EXPENSES: $241.37
Docket 162
Grant on interim basis although payment cannot come from any monies held as possibly subject to Pacific Western Bank's lien.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
SINGER LEWAK, LLP, APPRAISER, FEE: $24,067.50
EXPENSES: $718.39
Docket 183
Allow on same basis as #9.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
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Docket 282
- NONE LISTED -
Debtor(s):
Richard Robert Rule Represented By Derik J Roy III
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(con't from 9-5-18 per order approving stip. to cont. hrgs. entered 9-4-18)
MICHAEL JAY BERGER, DEBTOR'S ATTORNEY FEE: $55529.33
EXPENSES : $2609.55.
Docket 407
This is the Second and Final Application for allowance of fees and costs filed by debtor’s counsel. The application is opposed by not only the U.S. Trustee, but by the appointed trustee and committee as well. The application seeks the sum of
$98,138.88 in total compensation comprised of the $40,000 allowed already on an interim basis, $13,591.33 denied without prejudice on an interim basis and another
$41,938 in fees and $2609.55 in costs for the period 5/11/2017-8/25/ 2017. As is too often the case, the applicant does an admirable job of placing before the court the arithmetic of time recorded at hourly rate and costs advanced. But he does a weak job of explaining how any of this amounts to value contributed. This is maybe understandable in this case as it is, by almost any measure, a disaster of a case. As reported by the U.S. Trustee, the case is administratively insolvent and the only real chance that creditors have is if the post-petition sale, which includes a note for a major portion of the price, actually pays. And if that does pay, reportedly creditors might get around 5%. Of course, the court cannot make professionals guarantors of the success of these cases. But still, the court must examine what was done, tries to evaluate in hindsight whether the services were reasonable and calculated to accomplish an efficient result and evaluates whether sufficient value overall was contributed under the circumstances to merit payment.
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In this case the court first observes that a trustee was appointed because of
several questionable actions by debtor. While the court cannot hold counsel entirely responsible for debtor behavior, the question does arise as to the degree of proper supervision and client control exerted here. The court must depend heavily on counsel in effectively supervising the activities of debtors, particularly debtors in possession, consistent with bankruptcy law. Obviously, something went seriously awry here. But further, $30,000 ended up paid out to a creditor not holding a perfected lien? The lame argument is offered in reply that counsel did its job by reviewing some papers that mentioned a claim of secured status. But apparently (and astonishingly) no one obtained a UCC report which would have shown whether the claim of lien was perfected. Of course, even a law student should know that an unperfected lien in bankruptcy is subject to avoidance, and to make post-petition payments on such claims shows a complete lack of awareness. This is something squarely within the expected expertise of debtor’s counsel, and that such an issue was missed is not good, not at all. This estate could greatly use those missing funds at this point.
Further, the objectors point out that incurring of fees after the appointment of a trustee always merits scrutiny. The trustee was appointed June 28 yet fees and costs through August 25 are requested. The Committee estimates this extra sum to be around $5000. While the court does not expect an immediate cut off and some transitional service is both expected and compensable, such a sum seems excessive.
Overall the results are not impressive, yet the bill is quite high, and for only four months served. As the court stated regarding the first application, the $13,591 was to be reevaluated depending on how creditors fared. That question does not seem promising and applicant offers nothing to suggest otherwise, so those fees are denied with prejudice. Regarding the additional $41,938 in fees, the court sees very little value contributed and will take up the UST’s suggestion of making counsel pay for the missing $30,000 for want of an easier, more efficient approach. Applicant argues the standard should be not whether actual value is conferred but only on whether it seemed reasonably likely at the time. But even under that standard the value is not there. Not obtaining a report showing the true status of lien claims even before the
10:00 AM
case is filed was a serious error and renders all of the services evaluating the early position of the estate, and what should be suggested regarding payment of adequate protection and the like, very suspect. The court cannot fathom how an intelligent approach to reorganization can be fashioned without knowing the true lien picture. Thus, additional fees of $11,938 only are allowed. The costs do not appear controversial and so are allowed as prayed. The total of fees and costs is therefore
$40,000 (from the initial award), $11,938 (for the second period) and costs of
$2609.55 for a grand total of $54,547.55. All other sums are disallowed with prejudice.
Allow $54,547.55 in total inclusive of costs
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
(con't from 9-5-18 per order approving stip. to cont. the hrgs entered 9-4-18)
MARSHACK HAYS LLP, ATTORNEY FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS
FEES: $106,856.50 EXPENSES: $2,618.59
Docket 412
Allw as prayed, with reduction as mentioned in Committee Chair's declaration.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
(con't from 9-5-18 per order approving stip. to cont. hrgs entered 9-4-18)
RICHARD J. LASKI, CHAPTER 11 TRUSTEE, FEE: $96,495.93
EXPENSES: $7,103.43
Docket 416
2 points:
The application is described as "final" but the trustee's duties are not concluded. Is this because, as a practical matter, no additional receipts are expected? Or is this just wrong terminology?
As the UST suggests, the court is still concerned about the unauthorized loan transaction and that in consequence the estate is still not whole.
Accordingly, allow $96,495.93 in fees and $7,103.43 costs. Authorize payment of 50% now and 50% whenever note is paid, but subject to whatever pro ration may be necessary to be calculated using the 50% figure ($51,799.68) not the full $103,599.36.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut
10:00 AM
Aram Ordubegian Christopher K.S. Wong
10:00 AM
(con't from 9-5-18 per order approving stip. to cont. hrgs entered 9-4-18)
ARENT FOX LLP, GENERAL BANKRUPTCY COUNSEL TO THE CHAPTER 11 TRUSTEE:
FEE: $306,971.50
EXPENSES: $9,761.46
Docket 417
Allow $275,000 fees and $9,761.46 costs.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Docket 43
- NONE LISTED -
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
10:00 AM
Approving Procedures Limiting Notice
(OST Signed 7-18-18)
(con't from 8-28-18)
Docket 15
Tentative for 9/26/18: Same.
Tentative for 8/28/18:
As the Anton & Chia case has been converted, what is the continued need for collateral use? No tentative.
Tentative for 8/8/18:
The court will feel better about authorizing continued cash collateral use if it had a better picture of where the case is headed. No status report is on file.
Tentative for 7/20/18: Opposition due at hearing.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
10:00 AM
[RE: 101 Hallmark, Irvine, CA 92620]
(con't from 8-28-18 rlfsty hrg held)
EAST WEST BANK
Vs DEBTOR
Docket 34
Tentative for 9/26/18: Status?
Tentative for 8/28/18:
These are the motions of East West Bank for relief of stay regarding its trust deeds against four real properties as listed in the motions. The four interrelated motions are considered together in a single memorandum. The trust deeds secure the sum of approximately $1,916,916 owed under a line of credit extended to the debtor’s accountancy firm, Anton & Chia, LLP. That line of credit was reportedly guaranteed by the debtor. There is, reportedly, no equity in any of the four properties and, in fact, the properties are "upside down" by the amount of $524,959, or "negative equity" in that amount. So, the provisions of 11 U.S.C. §362(d)(2) are met insofar as the movant bears the burden of proving no equity. Movant also seeks relief under §362(d)(4) based upon a series of deeds from holding companies controlled by the debtor on July 2, 2018, just before the petition in bankruptcy was filed.
10:00 AM
Debtor apparently does not contest any of this. Rather, debtor relies on the
second prong of §362(d)(2), i.e. that the properties are "necessary to a reorganization."
United Sav. Ass'n of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S. 365, 108 S.Ct. 626, 633 (1988). Debtor bears the burden on this issue as provided in § 362(g). The only evidence provided by debtor appears in the Declaration of Gregory Wahl. The only reorganization described by the debtor is purely aspirational in that he says he is exploring opportunities and that his wife may realize income on a new consulting contract. Very few details are given. Moreover, the "reorganization" is not really anything tangible or even within the classic meaning of the term. Rather, it seems that debtor would like to explore refinancing and, if that is not achievable, control the liquidation process in Chapter 11 through" an orderly sale process." While reorganization plans can include liquidation of estate assets, the court doubts that is the meaning of the term in this context. But all of this is far too vague and speculative to justify holding off the bank, particularly since debtor makes no proposal of adequate protection payments, thus imposing all continuing risk upon the bank.
Further, the court is aware that the Anton & Chia case was recently converted to Chapter 7, thus making any prospect of a business rebound that much more distant. The debtor’s burden on this issue is not carried.
Grant
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 952 Balboa Drive, Arcadia, CA 91007]
(con't from 8-28-18 rlfsty hrg held)
EAST WEST BANK
Vs DEBTOR
Docket 35
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 51 Tesoro, Irvine, CA 92618]
(con't from 8-28-18 rlfsty hrg held)
EAST WEST BANK
Vs DEBTOR
Docket 36
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 22765 Lakeway Drive, Unit 428, Diamond Bar, CA 91765]
(con't from 8-28-18 rlfsty hrg held)
EAST WEST BANK
Vs DEBTOR
Docket 37
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
Docket 116
- NONE LISTED -
Debtor(s):
Kent E Salveson Represented By Kent Salveson
10:00 AM
Docket 156
- NONE LISTED -
Debtor(s):
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
10:00 AM
Docket 160
- NONE LISTED -
Debtor(s):
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Arniel Dominguez Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Joint Debtor(s):
Evangelina Ogatis Santos Represented By Raymond J Bulaon
Hasmik Jasmine Papian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 9
Tentative for 4/18/18:
The comments/issues raised by the Trustee must be addressed.
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Movant(s):
Carmen V Anderle Represented By Allan O Cate Allan O Cate Allan O Cate Allan O Cate Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 10
- NONE LISTED -
Debtor(s):
Gilbert Sarmiento Japgos Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 7-18-18)
Docket 23
- NONE LISTED -
Debtor(s):
Roberto Navarro Represented By Patricia A Mireles
Joint Debtor(s):
Margarita Navarro Represented By Patricia A Mireles
Movant(s):
Margarita Navarro Represented By Patricia A Mireles Patricia A Mireles
Roberto Navarro Represented By Patricia A Mireles Patricia A Mireles Patricia A Mireles Patricia A Mireles Patricia A Mireles
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 2
- NONE LISTED -
Debtor(s):
Kevin Michael Melody Represented By Michael Jones
Movant(s):
Kevin Michael Melody Represented By Michael Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 18
- NONE LISTED -
Debtor(s):
Marlene C. Lewis Represented By Joshua L Sternberg
Movant(s):
Marlene C. Lewis Represented By Joshua L Sternberg
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 16
Tentative for 9/26/18:
The trustee has raised valid issues. The Manier trust deed should be explained and the eligibility question addressed.
Debtor(s):
Dana Dion Manier Represented By Brian J Soo-Hoo
Movant(s):
Dana Dion Manier Represented By Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 2
- NONE LISTED -
Debtor(s):
Belinda Caceres Represented By Joseph A Weber
Movant(s):
Belinda Caceres Represented By Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 14
- NONE LISTED -
Debtor(s):
Joanne Harkins Davis Pro Se
Joint Debtor(s):
Jon Clinton Davis Pro Se
Movant(s):
Joanne Harkins Davis Pro Se
Jon Clinton Davis Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 10
- NONE LISTED -
Debtor(s):
Frank Bowers Jr. Represented By Peter Rasla
Movant(s):
Frank Bowers Jr. Represented By Peter Rasla Peter Rasla
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 33
Tentative for 9/26/18:
Clearly there has to be a reconciliation of the discrepancies in arrearage amounts and possibly missing creditors, as noted by the Trustee. But it seems this may be within reach? If additional creditors are to be paid this should also fix Trojan's concern about paying all disposable income?
Debtor(s):
Rose M Magana Represented By Bruce D White
Movant(s):
Rose M Magana Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Edna V. Innerbickler Represented By Christopher P Walker
Movant(s):
Edna V. Innerbickler Represented By Christopher P Walker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 14
- NONE LISTED -
Debtor(s):
Annette Mercado Represented By Christopher J Langley
Movant(s):
Annette Mercado Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Michael John Dozier Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Noah Caplan Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Arniel Dominguez Santos Represented By
Hasmik Jasmine Papian
Joint Debtor(s):
Evangelina Ogatis Santos Represented By
Hasmik Jasmine Papian
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Connie Campos Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 15
- NONE LISTED -
Debtor(s):
Anitra Kay Kyees Represented By Christopher J Langley
Movant(s):
Anitra Kay Kyees Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Timothy James Houseman Represented By Raymond J Seo
Joint Debtor(s):
Sherrylee Lynn Houseman Represented By Raymond J Seo
Movant(s):
Timothy James Houseman Represented By Raymond J Seo Raymond J Seo Raymond J Seo
Sherrylee Lynn Houseman Represented By Raymond J Seo Raymond J Seo Raymond J Seo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Naiades Perez Paule Represented By David A Tilem
Movant(s):
Naiades Perez Paule Represented By David A Tilem
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
Tentative for 9/26/18:
The Trustee's points appear to be well taken, and GM's reqeust for 7% interest seems right also. Response?
Debtor(s):
Karl Webber Represented By
Michael D Franco
Movant(s):
Karl Webber Represented By
Michael D Franco Michael D Franco Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 17
- NONE LISTED -
Debtor(s):
Frank Bezlaj Represented By
Derik N Lewis
Movant(s):
Frank Bezlaj Represented By
Derik N Lewis
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Victor Manuel Mucino Jr Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Arlene L Coleman Represented By Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Lisa Ann Mininsohn Represented By Richard W Snyder
Trustee(s):
Jeffrey I Golden (TR) Pro Se
1:30 PM
Docket 23
Tentative for 9/26/18:
Trustee's points must be addressed.
Debtor(s):
Gurprem Kang Represented By
James D. Hornbuckle
Joint Debtor(s):
Surinder Kang Represented By
James D. Hornbuckle
Movant(s):
Gurprem Kang Represented By
James D. Hornbuckle
Surinder Kang Represented By
James D. Hornbuckle
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 15
- NONE LISTED -
Debtor(s):
Gurprem Kang Represented By
James D. Hornbuckle
Joint Debtor(s):
Surinder Kang Represented By
James D. Hornbuckle
Movant(s):
Gurprem Kang Represented By
James D. Hornbuckle
Surinder Kang Represented By
James D. Hornbuckle
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 21
- NONE LISTED -
Debtor(s):
Kathleen Ohara Represented By Joshua L Sternberg
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
NONE LISTED -
Debtor(s):
Christina Flowers Represented By Anthony P Cara
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 18
NONE LISTED -
Debtor(s):
Alexander S. Lauvao Represented By Alon Darvish
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 7-18-18)
Docket 67
Tentative for 9/26/18: Status of modification?
Tentative for 7/18/18: Same.
Tentative for 6/20/18:
Grant, unless all delinquencies cured.
Debtor(s):
Theresa Sangermano Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 77
NONE LISTED -
Debtor(s):
Theresa Sangermano Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 50
NONE LISTED -
Debtor(s):
Beauford David Johnson Represented By Anita Khachikyan
Joint Debtor(s):
Ruthe Johnson Represented By Anita Khachikyan
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 6-20-18)
Docket 50
Tentative for 9/26/18: Same.
Tentative for 6/20/18:
Grant, unless delinquencies are cured.
Debtor(s):
Gary Brennan Carrizosa Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Honeybee Bendoy-Carrizosa Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
{11 USC Section 1307(c)(6)}
Docket 45
Tentative for 9/26/18: Grant.
Debtor(s):
Eric McKay Represented By
Shawn Dickerson
Joint Debtor(s):
Shanna McKay Represented By Shawn Dickerson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
{11 U.S.C. Section 1307(c)(6)}
Docket 39
Tentative for 9/26/18:
Grant unless all deficiencies, including HOA, are cured.
Debtor(s):
Russell A. Jensen Represented By Tate C Casey
Joint Debtor(s):
Melissa J. Jensen Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
{11 USC Section 1307(c)(6)}
Docket 62
Tentative for 9/26/18: Grant.
Debtor(s):
Manuel Farias - Munoz Represented By John E Mortimer
Randal A Whitecotton
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 72
Tentative for 9/26/18:
Deny if Trustee agrees with Debtor's analysis.
Debtor(s):
Angelita Angeles Labrador Represented By Todd B Becker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 50
Tentative for 9/26/18: Grant unless current.
Debtor(s):
Zenaida S. Trinidad Represented By James D Zhou
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 122
Tentative for 9/26/18: Grant.
Debtor(s):
Karen Pedersen Represented By Karen Geiss
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
{11 USC Section 1307 (c)(6)}
Docket 107
Tentative for 9/26/18: Grant.
Debtor(s):
Elias Ramirez Jr Represented By Bryn C Deb
Joint Debtor(s):
Maria Elena Ramirez Represented By Bryn C Deb
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 50
Tentative for 9/26/18: Grant unless current.
Debtor(s):
Aureliano Gonzalez Represented By
James Geoffrey Beirne
Joint Debtor(s):
Juana Arteaga De Gonzalez Represented By
James Geoffrey Beirne
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 8-22-18)
Docket 61
Tentative for 9/26/18: Same.
Tentative for 8/22/18: Same.
Tentative for 7/18/18:
Grant unless motion to modify on file.
Debtor(s):
Joseph Taylor Represented By
Richard L. Sturdevant
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 45
Tentative for 9/26/18: Status of modification?
Debtor(s):
Rilla Ann Huml Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 42
Debtor claims "hardship" unless her case is reinstated but offers no authority that this is the correct standard. Debtor claims she is in full compliance but trustee disputes this as well (only two of six payments made). Debtor does not address the material issues preventing confirmation. Since full payments of all arrears would, in best case, be a precondition, debtor is likely better off filing a second petition.
Debtor(s):
Deny.
Mary Jo Bryant Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 38
This is the motion of Trojan Capital Investments, LLC for reconsideration of this court’s order entered August 1, 2018 imposing the stay despite previously dismissed cases under §362(c)(3)(B). Trojan argues that the motion was granted under false pretenses because the non-filing husband’s job driving for Uber is new nor consistent. Trojan seems to be arguing that this was neither a true change of circumstances nor in good faith. But debtor reports that Schedule J was amended to show a reduction of education costs from $720 to $0 and an amended plan, increasing payments from $1918 to $2296 for months 4-60.
"Motions for reconsideration under Rule 59 are not at the disposal of an unsuccessful party to ‘rehash’ the same arguments and facts previously presented." Wile v. Household Bank, F.S.B. (In re Wile), 310 B.R. 514, 516 (Bankr. E.D.Pa. 2004) (citing Keyes v. National Railroad Passenger Corporation, 766 F. Supp. 277, 280 (E.D. Pa. 1991)). The Wile court was also mindful that "‘federal district courts should grant such motions sparingly because of their strong interest in finality of judgment.’ " Wile at 516 (quoting Continental Cas. Co. v. Diversified Indus., Inc., 884 F. Supp.
937, 943 (E.D. Pa. 1995)). Furthermore, LBR 9013-1(g) provides replies submitted to the court must only address arguments presented by opposing motions and any new argument or matter addressed in their reply will not be considered by the court. This governs the attempt to introduce the 2017 tax return and the supposed losing nature of the Uber job based thereon.
Although timely submitted, this motion will be denied for the following reasons: (1) Trojan failed to state the basis for the reconsideration; (2) failed to meet their burden for the court to issue a new trial, or amend or alter an order; and (3) new
3:00 PM
arguments submitted in replies in support of a motion are not considered by the court.
A bankruptcy court can grant a new nonjury trial or amend or alter an order under Rule 59 if there is: (1) a clear error of law; (2) newly discovered evidence; (3) an intervening change in controlling law; or (4) a need to prevent manifest injustice. In re Gundrum, 509 B.R. 155, 160 (Bankr. S.D. Ohio 2014). In the Motion for Reconsideration, Trojan fails to state under what basis it seeks the Motion to Impose a Stay to be reconsidered. In other words, it fails to state if the Motion to Stay should be reconsidered because there was a clear error of law, newly discovered evidence, an intervening change in controlling law, or a need to prevent manifest injustice.
Regardless, there is no suggestion of a clear error nor cite to a case establishing an intervening change in controlling law. Furthermore, at no point does Trojan claim any newly discovered evidence that was not previously stated in their motion opposing the Motion to Impose Stay. Rather, it used previous facts that were already considered by the court when it chose to grant the Debtor her Motion for a Stay. At best it could be said that the husband’s ability to contribute much by reason of his sometime Uber job is doubtful. But there seems little doubt that debtor’s financial situation has indeed changed with the reduction of the education costs, and as the court reads it, that alone is sufficient for §362(c)(3)(B) and is evident in the amended plan terms. Finally, there is no indication that a failure in reconsidering the court’s order would cause an injustice. As the court observed, Trojan holds a junior trust deed and appears to be well secured within the value on the residence, so if there is a default under the plan one expects either a relief of stay or dismissal motion, but either way Trojan gets paid. Trojan’s understandable desire to get paid earlier is simply not sufficient to overcome the clear rehabilitative purposes of Chapter 13.
Deny
Debtor(s):
Rose M Magana Represented By Bruce D White
3:00 PM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 23
Is there a question under section 1325 (hanging paragraph)?
Debtor(s):
Kevin Michael Melody Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 13
Grant.
Debtor(s):
Ronald G Nugent Represented By Ronald A Norman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
ANERIO V. ALTMAN, DEBTOR'S ATTORNEY, FEE: $5000.00
EXPENSES: $0.00
Docket 27
Grant.
Debtor(s):
Babacar Thiam Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 54
NONE LISTED -
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 46
NONE LISTED -
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 58
NONE LISTED -
Debtor(s):
Carmen V Anderle Represented By Allan O Cate
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 26
This is premature. The motion can be re-filed when and if a buyer is located. A plan can provide for a sale, as needed.
Debtor(s):
Gurprem Kang Represented By
James D. Hornbuckle
Joint Debtor(s):
Surinder Kang Represented By
James D. Hornbuckle
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 119
Court needs an order on the stipulation filed August 28, 2018 (Docket No. 124).
Debtor(s):
Craig Leroy Wolfram Represented By Matthew D. Resnik Kevin T Simon
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 36
Sustain. Appearance is optional.
Debtor(s):
Christopher Young Callahan Represented By Roger J Plasse
Joint Debtor(s):
Kristine Nielsen Callahan Represented By Roger J Plasse
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:17-01105 Naylor v. Gladstone
(con't from 8-2-18 per order approving. stip. to cont. ent. 7-11-18)
Docket 1
NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Scott Gladstone Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Melissa Davis Lowe
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:18-01070 CMS Engineering, Inc. v. Lloyd
(con't from 8-2-18)(another summons issued on 8-9-18)
Docket 1
Tentative for 9/27/18: Status of service/default?
Tentative for 8/2/18: Status of service/default?
Debtor(s):
Geoffrey David Lloyd Represented By Michael W Collins
Defendant(s):
Geoffrey David Lloyd Pro Se
Plaintiff(s):
CMS Engineering, Inc. Represented By Keith F Elder
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:18-01109 Naylor v. Gladstone
U.S.C. Section 547(b)]; 2. Recover Property Transferred [11 U.S.C. Section 550(a)]
(Con't from 8-30-18 per another summons issued 7/5/18)
Docket 1
NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Alan Gladstone Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:12-01330 Casey v. Ferrante et al
(cont'd from 7-12-18 per order approving stip. signed 7-11-18)
Docket 724
Tentative for 12/14/17:
Was this case settled? If not, where is joint pre-trial stipulation?
Tentative for 2/2/17:
Deadline for completing discovery: August 1, 2017
Last Date for filing pre-trial motions: September 1, 2017 Pre-trial conference on September 28, 2017 at 10:00 am
Tentative for 6/23/16:
This is the motion of Cygni Capital, LLC and Cygni Capital Partners, LLC (collectively "Cygni") for judgment on the pleadings under Rule 12(c). Defendant Ferrante joins in the motion but offers no additional substance. A motion for judgment on the pleadings may be granted only if, taking all the allegations in the pleading as true, the moving party is entitled to judgment as a matter of law. Owens v.
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Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001); Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009). For purposes of a Rule 12(c) motion, the allegations of the non-moving party are accepted as true, and construed in the light most favorable to the non-moving party, and the allegations of the moving party are assumed to be false. Hal Roach Studios, Inc. V. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989); Fleming v. Pickard at 925.
The Second Amended Complaint ("SAC") contains claims for turnover under section 542 and declaratory relief. The Trustee in the SAC alleges that Debtor has hidden and concealed assets in various shell entities, including Cygni, that are controlled by his associates as strawmen, and are established to perpetrate a fraud on Debtor’s creditors. [SAC ¶ 39] It is alleged that many of these entities share the same office address. [Id. at ¶ 40]. In the turnover claim, the Trustee in the SAC alleges that the assets held by each of these entities are held for Debtor’s benefit and that he possesses equitable title. [Id. at ¶ 75]. The Second Claim is for declaratory relief and seeks a determination that each of the entities is the alter ego of Debtor and the bare legal title of any assets can be ignored. [Id. at ¶ 83].
Movants argue that there is no "substantive alter ego" or "general alter ego" theory recognized under California law. Rather, movants argue that the alter ego doctrine as expressed in California is purely procedural, i.e. merely used to implement recovery on a separate theory of recovery. For this proposition movants cite Ahcom, Ltd. v. Smeding, 623 F. 3d 1248, 1251 (9th Cir. 2010). Movants also cite three other cases which they contend are the controlling authority in this area: (1) Stodd v.
Goldberger, 73 Cal. App. 3d 827 (4th Dist. 1977); (2) Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290 (1985) and (3) Shaoxing City Huayue Imp. & Exp. v. Bhaumik, 191 Cal. App. 4th 1189 (2nd. Dist 2011). Movants argue that since the Trustee has not alleged some independent theory of recovery, such as fraudulent conveyance or conversion, there is no legally cognizable purpose for application of alter ego. Apparently, in movant’s view, declaratory relief is not a suitably independent theory of recovery.
The court is not so sure.
First, the court agrees that the law in this area is somewhat unclear,
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contradictory and bewildering to grasp in its full complexity. Attempting to order all the intricacies of "indirect outside piercing" and the like can give one a headache.
However, since each of the authorities cited by the movants is distinguishable in one or more key aspects, and since each case decides a narrower and somewhat different problem from the one presented at bar, the court is not persuaded that the law is quite as limited and cramped as is now urged by the movants. To understand this conclusion, one must first consider the purpose of the alter ego doctrine, at least as it was classically formulated. This purpose is perhaps best expressed by the court in Mesler v. Bragg Management, one of movant’s cited cases, concerning the allied doctrine of "piercing the corporate veil" :
"There is no litmus test to determine when the corporate veil will be pierced: rather the result will depend on the circumstance of each particular case. There are, nevertheless, two general requirements: ‘(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow." (Citing Automotriz etc. de California v. Resnick (1957) 47 Cal. 2d 792, 796).
And ‘only a difference in wording is used in stating the same concept where the entity sought to be held liable is another corporation instead of an individual. ‘citing McLoughlin v. L. Bloom Sons Co., Inc., 206 Cal. App. 2d 848, 851 (1962)….The essence of the alter ego doctrine is that justice be done. "What the formula comes down to, once shorn of verbiage about control, instrumentality, agency and corporate entity, is that liability is imposed to reach an equitable result…thus the corporate from will be disregarded only in narrowly defined circumstance and only when the ends of justice so require.’" (internal citations omitted)
38 Cal. 3d at 300-01
A similar sentiment was expressed in In re Turner, 335 B.R. 140, 147 (2005) concerning the related question of "asset protection" devices:
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"However, an entity or series of entities may not be created with no business purpose and personal assets transferred to them with no relationship to any business purpose, simply as a means of shielding them from creditors. Under such circumstances, the law views the entity as the alter ego of the individual debtor and will disregard it to prevent injustice."
These statements accord with the court’s general understanding. Corporate
form is a privilege, not a right. Those who abuse the corporate form and disregard its separateness in their own activities and purposes can hardly expect the law to uphold the shield of separateness when it comes to the rights of creditors. And the court understands that the alter ego doctrine is an equitable remedy highly dependent upon and adaptable to the circumstances of each case. So the question becomes whether, as movants contend, the law in California has departed from these classic precepts in some way fatal to the Trustee’s case. The court concludes that the answer is "no" for the following reasons.
First, let us consider movants principal case, Ahcom, Ltd. v. Smeding. The facts of Ahcom are adequately stated at p. 6 of the Reply. But Ahcom is primarily a standing case. The defendant shareholders of the corporate judgment debtor argued that the judgment creditor had no standing to pursue them as alter egos of the debtor corporation as that was the sole domain of the bankruptcy trustee. The Ahcom court concluded that under those facts the shareholders’ argument presumed that the trustee had a general alter ego claim precluding individual creditors from asserting the same. The Ahcom court goes on to note that "no California court has recognized a freestanding general alter ego claim that would require a shareholder to be liable for all of a company’s debts and, in fact, the California Supreme Court state that such a cause of action does not exist. " 623 F. 3d at 1252 citing Mesler , 216 Cal. Rptr. 443. But as noted above, there is other language in Mesler and cases cited by the Mesler court that seems supportive of the Trustee’s theory that the doctrine of alter ego is adaptable to circumstances. Of course, our case is the inverse of Ahcom. In our case it is not an attempt to hold the debtor as a shareholder liable for the debts of the corporation, but rather to disregard the corporation altogether as a fraudulent sham.
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There is (or at least may be) in this a distinction with a difference. The Trustee’s case can be construed not so much as an attempt to visit liability onto a corporation under a general alter ego claim but to urge that in justice and equity the corporate privilege should be withdrawn and disregarded altogether as a deliberate device to frustrate creditors. Although the opinions in CBS, Inc. v. Folks (In re Folks), 211 B.R. 378, 387 (9th Cir. BAP 1997) and the similar In re Davey Roofing, Inc., 167 B.R. 604, 608 (Bank. C.D. Cal. 1994) are roundly criticized in Ahcom, the court is not persuaded that Ahcom can be cited for the proposition that a fraudulent sham corporations need to be honored because the bankruptcy trustee lacks a "general alter ego" right of action, or that Folks is not good law, at least in some circumstances. This is a remarkable and unnecessary departure from what the court understands to be established law.
Mesler has already been discussed above. In the court’s view, it is not properly cited for the proposition that there is no such thing as "general alter ego" claim under any circumstances. The actual holding of Mesler is that "under certain circumstances a hole will be drilled in the wall of limited liability erected by the corporate form: for all purposes other than that for which the hole was drilled the wall still stands." 39 Cal 3d at 301 In Mesler it was decided that a release of the corporate subsidiary did not necessarily release the parent who was alleged to be an alter ego. This merely reinforces the notion that alter ego is an equitable doctrine heavily dependent on circumstances and confined to what is necessary to effect justice.
Stodd v. Goldberger is likewise not determinative. It is more properly cited for a more limited proposition, i.e., that an action to disregard a corporate entity or to impose the debts of the debtor corporation upon its principal cannot be maintained absent some allegation that some injury has occurred to the corporate debtor. In this a trustee does not succeed to the various claims of creditors unless they are claims of the estate. But facts of Stodd are different from what is alleged in the case at bar. In effect, the Trustee here alleges that all of the assets of various sham entities belong in truth to the debtor and hence to the estate, and he seeks a declaratory judgment to this effect. Actually, Stodd includes at 73 Cal. App. 3d p. 832-33 a citation to the more
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general principles as quoted above that the two indispensable prerequisites for application of alter ego are: (1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that if the acts are treated as those of the corporation alone, an inequitable result will follow. Citing Automotriz etc. de California v. Resnick, 47 Cal. 2d at 796. The Trustee’s complaint would seem to fall well within those parameters.
Lastly, we consider Shaoxing City Huayue Imp. & Exp. v. Bhaumik. Shaoxing in essence merely repeats the holding of Stodd that an allegation giving the estate a right of action against the defendant is a prerequisite to imposition of alter ego liability. The plaintiff creditor sued the corporation ITC and included allegations that the shareholder, Bhaumik, was the corporation’s alter ego. The shareholder’s argument that the action was stayed by the corporation’s bankruptcy, or that the creditor lacked standing in favor of the corporate bankruptcy trustee, failed for the same reasons articulated in Stodd, i.e., that the trustee has no standing to sue on behalf of creditors but must address wrongs done to the corporation itself. The Shaoxing court at 191 Cal. App. 4th at 1198-99 goes on to state the doctrine of alter ego as a procedural question thusly: "In applying the alter ego doctrine, the issue is not whether the corporation is the alter ego of its shareholders for all purposes, or whether the corporation was organized for the purpose of defrauding the plaintiff, but rather, whether justice and equity are best accomplished in a particular case, and fraud defeated, by disregarding the separate nature of the corporate form as to the claim in that case. " citing Mesler, 39 Cal. 3d at 300. But the court does not read this to mean that in extreme cases (and this is alleged as an extreme case) the court cannot be called upon to consider the possibility that corporations and bogus entities, owned by straw men, cannot be called out for what they really are. Indeed, the language cited suggests that is still the case. Moreover, the court reads the Second Amended Adversary Complaint in this case as meeting all of the requirements. The particularized harm to the debtor, i.e. Ferrante (or more correctly his estate), is alleged to be in creation of bogus loans and artificial entities designed to create apparent (but not real) separation of the estate from its assets while preserving to the person of Ferrante and his family members (and not the estate) beneficial interest in very
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substantial assets which in truth and equity should be liquidated for his creditors. Trustee seeks a declaratory judgment to this effect. The principles of equity are not so constrained as to deny the Trustee access to the court in his attempt to unwind the alleged clever maze of overlapping and interrelated entities to get to the reality of the situation. All of the cases hold that application of the doctrine is dependent on the circumstances, and the circumstances here are that debtor has allegedly woven an almost impenetrable maze of entities. The Trustee seeks assistance from the court in separating reality from fiction. That is all that is required.
Lastly, the court should address what may be the most problematic authority cited by the movants (even though it was not described as one of the determinative cases). That is Postal Instant Press, Inc. v. Kaswa Corporation, 162 Cal. App. 4th 1510, 1518-20 (2008). The Postal court discusses "outside reverse piercing", i.e. "when fairness and justice require that the property of individual stockholders be made subject to the debts of the corporation…" (and presumably the reverse of same). In doubting that such a doctrine exists under California law, the Postal court discusses some of the inherent problems in disregarding the corporate form, such as impinging on the rights of innocent shareholders when the corporation is alleged to be the alter ego. Mostly the Postal court declined to embrace such a doctrine because there was a less invasive remedy available, i.e., levy upon the shares to exercise the rights the obligor shareholder might enjoy in the alleged alter ego corporation. The Postal court also held that in most inverse cases transfer of personal assets to the corporation by the shareholder could be dealt with under traditional claims of fraudulent conveyance and/or conversion. But, of course, ours is a different case and of an entirely different order. What is alleged here is a brazen and wholesale creation of numerous fraudulent entities operated for years by strawmen. Ferrante is alleged to have no shares that might be levied upon. And while it might be said that allegations of specific fraudulent transfers could have helped this case, the court does not read Postal or any of the other cases cited by movants to hold that in suitably extreme situations the court cannot assist in dismantling such a web of intrigue. Indeed, the Postal court at 162 Cal. App. 4th 1519 seems to acknowledge that in extreme circumstances there is room still for the traditional application of alter ego where adherence to the fiction of a
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separate corporate existence ‘would promote an injustice" to the stockholder’s creditors." Citing Taylor v. Newton, 117 Cal. App. 2d 752, 760-61 (1953).
One more point should be made. On this question of whether there is a general alter ego right of action (or not) we need to remember context here. While the parties have all termed the discussion as one about limits under California law on the doctrine of alter ego, or "outside reverse piercing" and the like, it is easy to forget the primary purpose of a trustee in bankruptcy. The trustee is not just another creditor. He is uniquely charged with identifying, gathering and liquidating the assets of the estate. This is so that a dividend on the just claims of all creditors can be maximized. And where the equitable principles of the Code have been violated, the trustee must object to discharge. But trustees must from time to time confront clever debtors who are unwilling to report faithfully all that they hold. Elaborate schemes are sometimes resorted to and the various forms of fraud are infinite. Sometimes the nature and extent of the artifice is not so easy to discern or the date or amount of any transfer easily discovered. This court does not construe the equitable doctrine of alter ego to be so limited or confined as the movants have suggested. Instead, in the court’s view it is (and must be) adaptable to the circumstances. In can be as simple as disregarding corporate form when to recognize it would be to perpetrate fraud and injustice. The cases cited by movants all pertain to a much more specific and limited circumstances on facts very different from the ones alleged at bar. None of the authorities say that all traditional equitable notions of disregarding corporate form when it is abused have been abrogated. Rather, the cases when properly read say that the law must evolve and adapt to the ingenuity of alleged fraudsters. So, it may be that under California law the alter ego doctrine is purely procedural, not substantive, but that does not in the court’s view dictate a different result here as the procedure here is to implement the substantive claim for declaratory relief.
Deny
Attorney(s):
Marilyn Thomassen Represented By
10:00 AM
Shawn P Huston Marilyn R Thomassen
Pacific Premier Law Group Represented By Arash Shirdel
Creditor Atty(s):
Lt. Col. William Seay Represented By Brian Lysaght Jonathan Gura
Debtor(s):
Robert A. Ferrante Represented By
Richard M Moneymaker Arash Shirdel
Defendant(s):
Saxadyne Energy Management, LLC Represented By
Gary C Wykidal
Heritage Garden Properties, Inc. Pro Se
Rising Star Development, LLC Pro Se
American Yacht Charters, Inc. Pro Se
Systems Coordination & Pro Se
Steven Fenzl Represented By
D Edward Hays Martina A Slocomb
Saxadyne Energy Group, LLC Represented By Gary C Wykidal
Gianni Martello Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Robert Ferrante Represented By Dennis D Burns
10:00 AM
Kyra E Andrassy Robert E Huttenhoff Ryan D ODea
Chanel Christine Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Ferrante, Gianni Ferrante, Represented By
Kyra E Andrassy
Mia Ferrante Represented By
D Edward Hays Martina A Slocomb
Cygni Securities, LLC Represented By Gary C Wykidal
Cygni Capital Partners, LLC Represented By Gary C Wykidal Robert P Goe
Envision Consultants, LLC Pro Se
Glinton Energy Group, LLC Represented By Gary C Wykidal
Richard C. Shinn Pro Se
Richard C. Shinn Represented By
Marilyn R Thomassen
Cygni Capital, LLC Represented By Gary C Wykidal Robert P Goe
CAG Development, LLC Pro Se
Envision Investors, LLC Pro Se
Traveland USA, LLC Pro Se
Rising Star Investments, LLC Represented By
10:00 AM
Marilyn R Thomassen
Glinton Energy Management, LLC Represented By
Gary C Wykidal
Oscar Chacon Pro Se
Richard C. Shinn Represented By Shawn P Huston
Global Envision Group, LLC Pro Se
Robert A. Ferrante Represented By
Robert E Huttenhoff Ryan D ODea
Interested Party(s):
United States Marshals Service Pro Se
Plaintiff(s):
Thomas H Casey Represented By Thomas A Vogele Thomas A Vogele Timothy M Kowal Brendan Loper
Trustee(s):
Thomas H Casey (TR) Represented By Thomas A Vogele Brendan Loper Thomas H Casey Kathleen J McCarthy Timothy M Kowal
Thomas H Casey (TR) Represented By Thomas H Casey Thomas A Vogele Kathleen J McCarthy
10:00 AM
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:18-01082 Whipple v. Robertson et al
U.S.C. Sections 157 and 1334
(set from s/c held on 6-14-18)
Docket 1
Tentative for 9/27/18: Set trial date.
Tentative for 6/14/18: Status?
Debtor(s):
Laird Malcolm Robertson Represented By Jeffrey B Smith
Defendant(s):
Laird M Robertson Pro Se
Val Muraoka Pro Se
Plaintiff(s):
Gaylord C. Whipple Represented By Gregory J. Ferruzzo
Misty A Perry Isaacson
Trustee(s):
Richard A Marshack (TR) Represented By
10:00 AM
Misty A Perry Isaacson
11:00 AM
Adv#: 8:13-01117 Padilla, III v. Jakubaitis
(con't from 8-23-18 per order granting stip. to cont. hrg. entered 8-23-18)
Docket 222
Tentative for 9/27/18:
Since the court has abstained in favor of a Superior Court action now reportedly set for trial in February, the court sees little utility in imposing Rule 26 sanctions. Deny.
Tentative for 8/23/18: See #10.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
11:00 AM
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
(con't from 8-23-18 per order granting stip. to cont. hrg. entered 8-23-18)
Docket 282
Tentative for 9/27/18:
Since the court has abstained in favor of a Superior Court action now reportedly set for trial in February, the court sees little utility in imposing Rule 26 sanctions. Deny.
Tentative for 8/23/18:
This motion will be denied as moot. At a hearing on March 8, 2018, this Court abstained from this proceeding after certain limited discovery issues were resolved. An order was entered on May 9, 2018 (prepared by the Court after a proposed order was not lodged). The Court did not want to abstain until Frank Jakubaitis’ deposition had been concluded and sanctions had been paid. These issues are pending in Marshack v. Jakubaitis, 8:15-01426- TA, which remains before this Court. But that those matters are still pending does not resucitate all other aspects of the case, which are remanded to state court. Rule 26 squabbling is in this latter category. The parties have continued the status conference hearings on Mr. Jakubaitis’ deposition and related issues in that adversary twice in the last several months. Based upon what is reported in the opposition to this motion, the parties have picked back up in state court and a trial has been set for early 2019.
Deny as moot.
11:00 AM
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
10:30 AM
BROAD STREET FUNDING TRUST I
Vs DEBTOR
Docket 7
Grant.
Debtor(s):
Denise Rochelle Smith Represented By Tina H Trinh
Movant(s):
Broad Street Funding Trust I Represented By
Dane W Exnowski
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
U.S. BANK Vs. DEBTOR
Docket 12
Grant.
Debtor(s):
Denise Rochelle Smith Represented By Tina H Trinh
Movant(s):
US Bank National Association as Represented By
Diane Weifenbach
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTOR
Docket 38
Grant. Appearance is optional.
Debtor(s):
Lam D. Tran Represented By
Tina H Trinh
Movant(s):
Toyota Motor Credit Corporation, Represented By
Austin P Nagel
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 8-28-18)
NATIONSTAR MORTGAGE LLC
Vs DEBTOR
Docket 48
Tentative for 10/2/18: Status?
Tentative for 8/28/18: Grant.
Tentative for 4/17/18:
Grant. "Time to complete a loan modification" is not grounds to deny relief of stay. Moreover, $29,608 of post-petition arrears is unacceptable and inconsistent with bona fides required of Chapter 13 debtors.
Debtor(s):
Jesus Jaime Cabrera Represented By Norma Duenas
Movant(s):
Nationstar Mortgage LLC as Represented By Merdaud Jafarnia
10:30 AM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WILMINGTON TRUST NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 76
Grant. Appearance is optional.
Debtor(s):
Terry Gonzalez Represented By Claudia C Osuna
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
CAM IX TRUST
Vs DEBTOR
Docket 31
Grant unless current or APO.
Debtor(s):
Jose Navarro Represented By
Christopher J Langley
Movant(s):
CAM IX TRUST, its successors Represented By Reilly D Wilkinson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
(OST Signed 8-21-18)
(con't from 8-27-18)
Docket 74
Tentative for 10/2/18: Status?
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
11:00 AM
RICHARD A. MARSHACK, CHAPTER 7 TRUSTEE HAHN FIFE & COMPANY, LLP, ACCOUNTANT
Docket 41
Allow as prayed. Appearance is optional.
Debtor(s):
Peter George Grossenbacher Represented By David L Gibbs
Joint Debtor(s):
Lisa Jo Grossenbacher Represented By David L Gibbs
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
(con't from 9-26-18 per court)
Docket 282
Because movant has not properly sought to reopen this closed case, the motion must be denied. The motion was also not served on creditors. But denial is without prejudice and procedural only, as the default allegations are indeed serious.
Debtor(s):
Richard Robert Rule Represented By Derik J Roy III
10:00 AM
(con't from 9-26-18 per court order)
Docket 116
This is Debtor’s objection to an administrative tax claim made by the IRS for post-petition income taxes for 2011. For a few reasons this motion is not well taken. First, the case was closed on May 22, 2013 and has not been reopened. Second, the IRS has not filed a request for an administrative claim for the 2011 income tax. The IRS did file a proof of claim on May 20, 2010, which was amended July 9, 2010, in the amount of $2,235.97, but this was for taxes from 2007 and 2008. Debtor attaches as Exhibit 2 a letter from the IRS dated February 26, 2015 that notifies Debtor of his tax liability for 2011. This is not a proof of claim or a request for administrative expense. These are post-petition taxes. If Debtor is not happy with the conclusion the IRS has come to, his remedies lie within their appellate processes, not in this Court. Finally, it is not clear that the IRS has received notice. The address on the proof of service does not match the proof of claim filed in the bankruptcy case or the address listed on the February 26 letter. Debtor has not served the IRS, an agency of the United States, in compliance with FRBP 7004. For all these reasons, the motion should be denied.
Debtor(s):
Deny.
Kent E Salveson Represented By Kent Salveson
10:00 AM
Docket 428
Here, there is no indication by the Claimant on what factual or legal basis the Disputed Claims should be designated or any supporting evidence attached to the Disputed Claims. Thus, the Disputed Claims lack any evidence to set forth the facts necessary to support them and lack validity on its face. Therefore, the prima facie validity cannot be attached to the Disputed Claims, switching the burden to the Claimant to prove with a preponderance of evidence she has a secured interest in them.
Because no opposition was filed by the Claimant to prove she has met her burden, the court will grant the Trustee’s Motion’s and disallow the Disputed Claims.
Debtor(s):
Sustain.
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
10:00 AM
Docket 436
Rule 3001(d) of FRBP provides that if a security interest in property of the debtor is claimed, the proof of claim shall be accompanied by evidence that the security interest has been perfected. Here, the claimant failed to attach any proof to the Disputed Claim that she perfected or took the necessary steps to perfect her security interest in Debtor’s inventory. Thus, there is no proof she has a secured interest in Debtor’s inventory. Consequently, when filing the Disputed Claim, she failed to submit the supporting documents required by Rule 3001 of the FRBP to set forth the facts necessary to prove her claim. As stated by the court In re Circle J. Dairy, Inc., 112 B.R. 297, 300 (W.D. Ark 1989), no prima facie validity will attach to a claim that fails to comply to the rules of the FRBP. Therefore, the prima facie validity cannot be attached to the Disputed Claim, switching the burden to the Claimant to prove with a preponderance of evidence she has a secured interest in her claim.
Because no opposition was filed by the Claimant to prove she has met her burden, the court should grant the Trustee’s Motion’s and disallow the Disputed Claim and reclassify it as a general unsecured claim.
Sustain, allow as unsecured only.
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian
10:00 AM
Christopher K.S. Wong
10:00 AM
(con't from 9-26-18 per court order)
Docket 156
Debtor objects to this claim no. 4-1 as fraudulent, and asserts that no balance was owed on it. His objection is not supported by a declaration or any other evidence. This is a credit card claim. The initial proof of claim complied with FRBP 3001(c)(3)
by attaching a statement with all of the required information. After receiving the objection, Claimant has amended the claim to include additional documentation to support its claim. A claim properly filed, as this was, is entitled to prima facie validity. Debtor has not offered anything to rebut the prima facie validity of this claim. The Trustee appears to agree with this analysis.
Debtor(s):
Overruled.
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
10:00 AM
(con't from 9-26-18 per court order)
Docket 160
Debtor objects to this claim no. 5-1 as fraudulent, and asserts that the amount is incorrect. In support of this argument he attaches three monthly statements that show the principal amount to be $529,892.87. This matches the principal amount on the "Mortgage Proof of Claim Attachment" ("Attachment") filed by Claimant. The amount listed on the proof of claim is higher because interest and fees and costs are included. Everything is listed on the Attachment. Claimant has properly filed a proof of claim with supporting documentation. Debtor has not provided anything that rebuts the presumptive validity of this claim. Debtor has not offered anything to support his claims of fraud. The Trustee appears to support this analysis. It is true that Debtor did not properly serve Claimant, but since Claimant has responded the Court can consider the substantive merits of the objection. Regarding the accrual of interest at attorneys fees, the debtor should understand that attorneys fees and costs are an expected consequence of a litigious approach he has adopted thus far.
Debtor(s):
Overrule.
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
10:00 AM
Adv#: 8:17-01122 Marshack v. Choubey et al
U.S.C. Section 550
(con' from 8-2-18)
(another summons issued on defendant Jitendra Patel on 5-11-18)
Docket 1
Tentative for 8/2/18:
Deadline for completing discovery: October 1, 2018 Last date for filing pre-trial motions: October 31, 2018
Pre-trial conference on: December 6, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Why no participation by defendant?
Tentative for 5/24/18:
In view of the report that Jitendra Patel has not been served, continue to 8/2/18 at 10:00AM.
Tentative for 4/26/18:
Status report? Status of service? Is settlement still in prospect?
Tentative for 2/1/18:
Status conference continued to April 26, 2018 at 10:00 a.m. to allow input
10:00 AM
from any responding party.
Tentative for 11/30/17:
Status conference continued to January 4, 2018 at 10:00 a.m. to accomodate default and prove up.
Debtor(s):
Rahul Choubey Represented By Richard G Heston
Defendant(s):
Rahul Choubey Pro Se
Misha Choubey Pro Se
Shahi K. Pandey Pro Se
Vandana Pandey Pro Se
Jitendra Patel Pro Se
Azahalea Ahumada Pro Se
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
10:00 AM
Adv#: 8:17-01230 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Hoag Memorial Hospital
(Amended Complaint filed 6-25-18) (con't from 8-23-18)
Docket 42
Tentative for 10/4/18:
Deadline for completing discovery: March 25, 2019 Last date for filing pre-trial motions: April 15, 2019 Pre-trial conference on: May 23, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 8/23/18:
Status conference continued to September 6, 2018 at 11:00 a.m. The court expects that the Chapter 7 trustee will substitute in as party in interest (or not?) in the meantime.
Tentative for 5/24/18:
See calendar # 22 at 11:00AM.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
10:00 AM
Defendant(s):
Hoag Memorial Hospital Pro Se
Newport Healthcare Center, LLC Pro Se
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow
Dr Robert Amster Represented By Ashley M McDow
Robert Amster, M.D., Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
10:00 AM
Adv#: 8:17-01241 Hoag Urgent Care - Anaheim Hills, Inc. et al v. Newport Healthcare Center
Declaratory Relief
(con't from 8-23-18)
Docket 1
Tentative for 10/4/18:
Deadline for completing discovery: January 19, 2019 Last date for filing pre-trial motions: February 11, 2019 Pre-trial conference on: March 28, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 8/23/18:
Status conference continued to September 27, 2018 at 10:00 a.m. At the very least we need to know whether the Trustee will be substituting in as real party in interest. The court expects this will be done (or specifically disclaimed) by the continued hearing.
Tentative for 5/24/18:
See calendar #21 at 11:00AM.
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar
10:00 AM
Defendant(s):
Newport Healthcare Center LLC Pro Se
Hoag Memorial Hospital Pro Se
Plaintiff(s):
Hoag Urgent Care - Anaheim Hills, Represented By
Ashley M McDow
Hoag Urgent Care - Huntington Represented By Ashley M McDow
Hoag Urgent Care - Orange, Inc. Represented By
Ashley M McDow
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow
Your Neighborhood Urgent Care, Represented By
Ashley M McDow
10:00 AM
Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
(con't from 8-2-18)(Second Amended Complaint filed 6-20-18)
Docket 1
Tentative for 8/2/18:
Status conference continued to August 23, 2018 at 11:00 a.m.
Tentative for 5/31/18: see calendar # 6
Tentative for 5/24/18: Continue to 5/31/18.
Tentative for 4/12/18:
Status conference continued to May 3, 2018 at 11:00 a.m.
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Pro Se
10:00 AM
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
10:00 AM
Adv#: 8:18-01050 Karen Sue Naylor, Chapter 7 Trustee v. La Alameda, LLC
(con't from 5-24-18)
Docket 1
Tentative for 5/24/18:
Status conference continued to 10/4/18 at 10:00AM.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
La Alameda, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01051 Karen Sue Naylor v. Azalea Joint Venture, LLC
(con't from 5-24-18)
Docket 1
Tentative for 5/24/18:
Status conference continued to 10/4/18 at 10:00AM.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Azalea Joint Venture, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Christopher Minier
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01052 Karen Sue Naylor, Chapter 7 Trustee v. Overland Plaza, LLC
(con't from 5-24-18)
Docket 1
Tentative for 10/4/18:
Status conference continued to December 20, 2018 at 10:00 a.m.
Tentative for 5/24/18:
Status conference continued to 10/4/18 at 10:00AM.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Overland Plaza, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
10:00 AM
Trustee(s):
Christopher Minier
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01079 Caruso v. Olim
(con't from 8-2-18 per order approving stip. to cont' ent. 7-17-18)
Docket 1
Tentative for 10/4/18:
Deadline for completing discovery: January 3, 2019 Last date for filing pre-trial motions: January 22, 2019 Pre-trial conference on: February 7, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Vincent Paul Caruso Represented By Derik J Roy III Shawn M Olson
Defendant(s):
Stephen Olim Pro Se
Plaintiff(s):
Vincent Paul Caruso Represented By Shawn M Olson
Trustee(s):
Karen S Naylor (TR) Represented By Robert P Goe
10:00 AM
Adv#: 8:18-01131 Foley v. US Department of Education et al
Docket 1
- NONE LISTED -
Debtor(s):
Gerri Ann Foley Represented By
Catherine Christiansen
Defendant(s):
US Department of Education Pro Se
Great Lakes Educational Loan Pro Se Deutsche Bank ELT Navient & SLM Pro Se Navient Solutions LLC Pro Se
Strada Education Network Inc Pro Se
Plaintiff(s):
Gerri Ann Foley Represented By
Catherine Christiansen
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:18-01132 Collect Co v. Lim
Docket 1
Tentative for 10/4/18:
Deadline for completing discovery: January 3, 2019 Last date for filing pre-trial motions: January 28, 2019 Pre-trial conference on: March 28, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Patte Lim Represented By
Chris T Nguyen
Defendant(s):
Patte Lim Pro Se
Plaintiff(s):
Collect Co Represented By
Daniel J Griffin
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
Adv#: 8:18-01134 Hile v. Farino
Docket 1
Tentative for 10/4/18:
Deadline for completing discovery: January 7, 2019 Last date for filing pre-trial motions: January 28, 2019
Pre-trial conference on: February 28, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Richard Ryan Farino Represented By Joseph A Weber
Defendant(s):
Richard Ryan Farino Pro Se
Plaintiff(s):
Gary Hile Represented By
William R Cumming
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
Adv#: 8:18-01135 Golden v. Burke Williams & Sorensen, LLP
Docket 1
Tentative for 10/4/18:
Deadline for completing discovery: March 25, 2019 Last date for filing pre-trial motions: April 15, 2019 Pre-trial conference on: May 2, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Custom Cut Abrasives, Inc. Represented By
R Gibson Pagter Jr.
Defendant(s):
Burke Williams & Sorensen, LLP Pro Se
Plaintiff(s):
Jeffrey I Golden Represented By Charity J Manee Robert P Goe
Trustee(s):
Jeffrey I Golden (TR) Represented By Charity J Manee Robert P Goe
10:00 AM
Adv#: 8:18-01136 Golden v. Camel Grinding Wheels, Inc.
Docket 1
Tentative for 10/4/18:
Status conference continued to December 6, 2018 at 10:00 a.m. to allow default and prove up.
Debtor(s):
Custom Cut Abrasives, Inc. Represented By
R Gibson Pagter Jr.
Defendant(s):
Camel Grinding Wheels, Inc. Pro Se
Plaintiff(s):
Jeffrey I Golden Represented By Robert P Goe
Trustee(s):
Jeffrey I Golden (TR) Represented By Charity J Manee Robert P Goe
10:00 AM
Adv#: 8:18-01137 Golden v. Pac Com International, Inc.
Docket 1
Tentative for 10/4/18:
Status conference continued to December 6, 2018 at 10:00 a.m. to allow default and prove up.
Debtor(s):
Custom Cut Abrasives, Inc. Represented By
R Gibson Pagter Jr.
Defendant(s):
Pac Com International, Inc. Pro Se
Plaintiff(s):
Jeffrey I Golden Represented By Robert P Goe
Trustee(s):
Jeffrey I Golden (TR) Represented By Charity J Manee Robert P Goe
10:00 AM
Adv#: 8:18-01138 Golden v. Riken Corundum Company Limited
Docket 1
Tentative for 10/4/18:
Deadline for completing discovery: March 11, 2019 Last date for filing pre-trial motions: March 25, 2019 Pre-trial conference on: April 4, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Custom Cut Abrasives, Inc. Represented By
R Gibson Pagter Jr.
Defendant(s):
Riken Corundum Company Limited Pro Se
Plaintiff(s):
Jeffrey I Golden Represented By Robert P Goe
Trustee(s):
Jeffrey I Golden (TR) Represented By Charity J Manee Robert P Goe
10:00 AM
Adv#: 8:18-01139 Golden v. Starcke Abrasives USA, Inc.
Docket 1
Tentative for 10/4/18:
Deadline for completing discovery: March 11, 2019 Last date for filing pre-trial motions: March 25, 2019 Pre-trial conference on: April 4, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Custom Cut Abrasives, Inc. Represented By
R Gibson Pagter Jr.
Defendant(s):
Starcke Abrasives USA, Inc. Pro Se
Plaintiff(s):
Jeffrey I Golden Represented By Robert P Goe
Trustee(s):
Jeffrey I Golden (TR) Represented By Charity J Manee Robert P Goe
10:00 AM
Adv#: 8:18-01147 Marshack v. W-Staffing, Inc.
Docket 1
- NONE LISTED -
Debtor(s):
Skin Care Solutions, LLC Represented By Jeffrey D Cawdrey
Defendant(s):
W-Staffing, Inc. Pro Se
Plaintiff(s):
Richard A Marshack Represented By Robert P Goe
Trustee(s):
Richard A Marshack (TR) Represented By Robert P Goe
10:00 AM
Adv#: 8:15-01293 Martz-Gomez v. Anna's Linens, Inc.
( set from status conference held on 10-8-15)
(cont'd from 6-7-18 per order appr. stip.to modify scheduling order ent. 1-12-18)
Docket 6
Tentative for 10/8/15:
Deadline for completing discovery: June 1, 2016 Last date for filing pre-trial motions: June 20, 2016 Pre-trial conference on: July 7, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh
Defendant(s):
Anna's Linens, Inc. Pro Se
10:00 AM
Plaintiff(s):
Linda Martz-Gomez Represented By Gail L Chung Jack A Raisner
Rene S Roupinian
U.S. Trustee(s):
United States Trustee (SA) Represented By Michael J Hauser
10:00 AM
Adv#: 8:15-01099 Howard B. Grobstein, Chapter 7 Trustee v. Ponce
(con't from 8-2-18 per order approving stip re continuance ent. 8-3-18)
Docket 1
Tentative for 8/2/18:
The court was under the impression a settlement had been reached, but no updated status report has been received.
Tentative for 8/4/16:
Deadline for completing discovery: November 7, 2016 Pre-trial conference on: December 1, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Raymond E Ponce Represented By Nancy A Conroy
10:00 AM
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Jon L Dalberg
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
10:00 AM
Adv#: 8:16-01213 Grobstein v. Charton et al
U.S.C. Section 502(B)(1) or, In The Alternative, Mandatory Subordination Under 11 U.S.C. Section 510(B)[Relates to Claim Numbers 2, 114, 118, 119, 120, 121, 122, 123, 124, 126, 130, 138, 139, 140, 143, 146, 147, 193, 194, 195, 197, 310, 311, 405, 601, 613, 636]
(con't from 12-14-17 per order approving stip to cont. to s/c ent 12-13-17) (con't from 3-01-18)
Docket 1
Tentative for 3/1/18:
Deadline for completing discovery: September 1, 2018 Last date for filing pre-trial motions: September 17, 2018 Pre-trial conference on: October 4, 2018 at 10:00 a.m.
Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
LLOYD CHARTON Pro Se
ROBERT L. WELLS Pro Se
Donna Joy Wall Pro Se
10:00 AM
Lorna E Titzer Pro Se
Gary L Titzer Pro Se
WENDY TAKAHASHI Pro Se
REID TAKAHASHI Pro Se
Frank Soracco Pro Se
Kurt Sipolski Pro Se
Robert M Peppercorn Pro Se
JON A. NORD Pro Se
DON MEALING, TRUSTEE Pro Se
Sid Louie Pro Se
Jessica Louie Pro Se
Cheryl Licht Pro Se
JOHN G. FRY Pro Se
Daniel K Larson Pro Se
LRH Operating Group Inc Pro Se
Jeffrey Gomberg Pro Se
WILLIAM E. GLYNN Pro Se
ETTA M. GLYNN Pro Se
Robert Garber Pro Se
Ana Garber Pro Se
Erin Larson Pro Se
Raymond Bille Pro Se
THOMAS F. BEREAN Pro Se
Monica Bayless Pro Se
10:00 AM
JOHN R. BAYLESS Pro Se
Kent Azaren Pro Se
Lloyd Charton Pro Se
Plaintiff(s):
Howard B. Grobstein Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
10:00 AM
Adv#: 8:17-01234 Brown v. U.S. Department of Education et al
(set from s/c held on 4-12-18)
Docket 12
Tentative for 4/12/18:
Deadline for completing discovery: September 1, 2018 Last date for filing pre-trial motions: September 24, 2018 Pre-trial conference on: October 4, 2018 at 10:00 a.m.
Joint pre-trial order due per local rules.
Debtor(s):
Hutton Douglas Michael Brown Represented By Christine A Kingston
Defendant(s):
U.S. Department of Education Pro Se
Wells Fargo Education Financial Pro Se
Nel Net Loan Services Pro Se
Plaintiff(s):
Hutton Douglas Michael Brown Represented By Christine A Kingston
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:18-01052 Karen Sue Naylor, Chapter 7 Trustee v. Overland Plaza, LLC
Docket 8
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Overland Plaza, LLC Pro Se
Movant(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
11:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:18-01107 Naylor v. Watanabe
Docket 15
The Chapter 7 Trustee, Karen Sue Naylor ("Trustee"), moves to strike Defendant’s Demand for Jury Trial and Statement of Non-consent to Jury Trial Conducted by the Bankruptcy Court. The Defendant argues he did not by filing a proof of claim waive his right to a jury trial and thus the Trustee’s motion should be denied. The Defendant filed a proof of claim in the Debtor’s bankruptcy case on August 31, 2015. The Trustee filed a complaint against the Defendant on June 13, 2018 seeking to avoid a transfer from the Debtor to the Defendant that the Trustee contends constitutes a preference under section 547. On August 24, 2018, after filing an answer to the preference complaint, the Defendant filed a motion to withdraw the claim as required by FRBP 3006. In part, Defendant argues that the withdrawal motion should be granted because the Trustee will not suffer any legal prejudice insofar as the withdrawal restores Watanabe’s right to a jury trial in this adversary proceeding. The Trustee submits that the Jury Demand should be stricken regardless of whether the court grants the withdrawal motion.
The U.S. Supreme court in Langenkamp v. Culp, 498 U.S. 42, 44, 111 S. Ct. 330, 331, 112 L.Ed.2d 343 (1990), held that by filing a claim against a bankruptcy estate, a creditor triggers the process of "allowance and disallowance of claims," thereby subjecting the creditor to the bankruptcy court’s equitable power. If the creditor is later sued for a preference by the trustee, there is no Seventh Amendment right to a jury trial because the creditor’s claim and the ensuing preference action become integral to the restructuring of the debtor-creditor relationship through the bankruptcy court’s equity jurisdiction. Id. at 44-45. Accordingly, the Defendant in this instant case lost his right to a jury trial in the Trustee’s preference action by filing his
11:00 AM
proof of claim.
But the creditor argues that by withdrawing his claim he should revert to status quo ante. The creditor further argues that he should not be deemed to have waived his right to a jury, largely because he could not reasonably foresee that the Trustee would seek to avoid what amounts to an alleged insider preference. But this is not the law as the court reads it. The court in EXDS, Inc. v. RK Elec., Inc. (In re EXDS, Inc. 301 B.R. 436 (Bankr. Del. 2003), held that a creditor may not restore a lost right to a jury trial lost by withdrawing such claim. Id. at 437. The EXDS court granted the motion to strike jury demand because by filing a proof of claim, the creditor caused its disputes (and this would include what are effectively cross claims for preference avoidance) to be subject to the exclusive jurisdiction of the bankruptcy court and that withdrawal of the proof of claim would not change that result. Id. at 443. The EXDS court further explained that, "it did not believe that a creditor can, for strategic reasons, reverse the result it triggered by filing a proof of claim by later withdrawing the claim." Id. at 440.
Defendant’s major argument is based on waiver and does not work here. The court in EXDS, explains that the Supreme Court in Langenkamp does not speak in terms of a waiver of jury right, rather "it speaks in terms of the equity jurisdiction – where there is no right to a jury trial – being triggered by the filing of a claim in the case." EXDS at 439. The EXDS court further held that the equitable jurisdiction of the bankruptcy court is exclusive once its jurisdiction has been invoked by the filing of a claim. Id.
Defendant’s cases are either distinguishable or, in this court’s view, wrongly decided. In Praidier v. Elespuru, 641 F.2d. 808, 811 (9th Cir. 1981) the defendants were tortfeasors in an automobile accident case seeking a jury trial. The Praidier court held that the jury trial right is such a fundamental right, there should be a presumption against waiver. Id. at 809. This is undoubtedly a true statement of the law, but it is irrelevant here. The operative principle here is not waiver, it is submission by filing of a claim to a court of equity which, in the words of Langencamp, is tasked with the process of "allowance and disallowance of claims" triggered by the claim filing. It is
11:00 AM
not a question of waiving a right to a jury, it is rather a question of submitting in the first instance to a court of equity for purposes of adjusting the debtor/creditor relationship.
Defendant does cite to two cases where a party was granted the right to withdraw a filed claim to preserve a right to a jury trial. In re Maui Industrial Loan & Finance Co., 2012 WL 405056 *3 (Bankr. D. Hawaii 2012) and In re Armstrong, 215
B.R. 730 (Bankr. E.D. Ark. 1997). But the court does not find the reasoning of these cases persuasive. The court in Maui Industrial cites to Praidier, and so implicitly adopts some of its waiver analysis, which as explained above, this court does not see as applicable. The Maui Industrial court further analyzes the question in terms of withdrawing a claim not resulting in legal prejudice to the trustee, again usually a part of the waiver analysis. Id. at *3. Similarly, the Armstrong court also analyzes the question in waiver-like terms, evaluating whether it would cause undue prejudice to the trustee to have to litigate the preference action before a jury. Both Maui Industrial and Armstrong emphasize the importance of the 7th Amendment right to trial by jury, a right too important to be destroyed easily. But therein lies the false premise. No one has a 7th Amendment right to a jury in a court of equity as the language only guarantees this right in "Suits at common law…"
The Supreme Court in Langenkamp teaches a different lesson, i.e. that by filing a proof of claim the creditor enters the court of equity (where no 7th Amendment right to jury exists) and begins the process of adjustment of claims in equity. A subsequent preference action is merely a furtherance of the same question of whether the claim should be allowed. See §502(d) [claims are disallowed so long as transfers avoided under §§547, etc. remain unpaid]. This court sees no reason to erase that submission to equity’s jurisdiction just because the creditor is later sued for being as much a preference debtor as a creditor and for strategic reasons would now prefer a jury. The court is persuaded that EXDS is the better interpretation of Langencamp and thus the better reasoned (and dispositive) line of authority.
Grant
11:00 AM
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Neil Watanabe Represented By Jonathan Shenson
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad Brian R Nelson
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
11:00 AM
(put on cal. by ntc. of hrg. filed 9-20-18)
Docket 2300
The court will grant the motion if the creditor still wants to withdraw his claim, but as explained, this does not reinstate the right to a jury on the preference claim.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
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Todd C. Ringstad Brett Ramsaur
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Adv#: 8:18-01109 Naylor v. Gladstone
Docket 18
When a creditor files a proof of claim against a bankruptcy estate, it "triggers the process of ‘allowance and disallowance of claims,’ subjecting it to the equitable power of the bankruptcy court. Lagenkamp v. Culp, 498 U.S. 42, 44, 111 S.Ct. 330,
112 L.Ed. 2d 343 (1990) citing Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 58-59,
109 S.Ct. 2782, 106 L.Ed.2d 26 (1989). If a trustee files a preference action against a creditor, the action becomes part of the claims allowance process that is triable only in equity. Id. There is no Seventh Amendment right to a jury trial. Id. at 45.
Here, Plaintiff has filed a complaint alleging preference claims under section 547 against Defendant. Defendant has filed a proof of claim in the bankruptcy case. He, therefore, has no right to a jury trial. This motion should be granted.
Debtor(s):
Grant.
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
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Defendant(s):
Alan Gladstone Represented By Jonathan Shenson
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad Brian R Nelson
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
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Adv#: 8:17-01037 Aguilar et al v. Treadway
Docket 49
This is Defendant’s motion in limine to limit trial evidence to information and documents disclosed in discovery. On July 31, 2018, Plaintiffs deposed Ms. Lauren George. During this deposition, Plaintiffs reportedly displayed a video tape for Ms.
George and questioned her regarding the contents of that video tape. This video was not provided to Defendant during discovery. As a result, Defendant moves to limit the scope of admissible evidence at trial to only the evidence produced during discovery (which would exclude the tape). Plaintiffs oppose.
Under FRCP 26(a)(1)(A)(ii), a party must provide to other parties all documents and electronic media in its possession that will be used to support its claim or defense. Defendant served Plaintiffs with discovery requests requesting all documents, information, and electronic media to be used in support of Plaintiff’s defense. Plaintiffs did not comply with the commands of FRCP 26(a)(1)(A)(ii) by failing to produce the video tape that Plaintiffs later used at a deposition. Nor was the tape included in responses to the subsequent request for production of documents.
FRCP 37(c) precludes a party from using at trial any information or the testimony from any witness that was not produced during discovery unless substantially justified or harmless. See, e.g., Benjamin v. B&H Education, Inc., 877 F.3d 1139, 1150-51 (9th Cir. 2017). Plaintiffs, therefore, may not use any information at trial which would have been subject to mandatory disclosure under FRCP 26. The purpose of a motion in limine is to allow the court to rule on the admissibility of anticipated prejudicial evidence before such evidence is offered. Luce v. United States, 469 U.S. 38, 40 n. 2 (1984).
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Plaintiffs oppose Defendant’s motion, arguing it lacks the specificity required
to exclude evidence before trial. Plaintiffs, however, do not cite to any relevant sections of the FRCP to bolster this argument, nor do they attempt to rebut or address Defendant’s arguments. Plaintiffs also fail to address the relevant sections of the FRCP denying admission of documents and information Plaintiffs declined to produce during discovery. Instead, Plaintiffs cite to several older Southern District of New York cases to oppose Defendant’s motion, arguing the motion lacks the specificity required to exclude evidence at trial. Nat’l Union Fire Ins. Co. v. L.E. Myers Co.
Grp., 937 F. Supp. 276, 287 (S.D.N.Y. 1996); see also Wechsler v. Hunt Health Sys., Ltd., No. 94 Civ. 8294(PKL), 2003 WL 21998980, at *3 (S.D.N.Y. Aug. 22, 2003);
Baxter Diagnostics, Inc. v. Novatek Med., Inc., No. 94 Civ. 5520 (AJP), 1998 WL 665138, at *3 (S.D.N.Y. Sept. 25, 1998). But Plaintiffs’ cases were not failure to disclose cases, but rather directed to the somewhat different question of when a court should disqualify in limine large and vague categories of documents on other grounds. In that context it makes sense not to prejudge such matters. But it is entirely different when categories of documents are specifically requested and then not produced in discovery. In our case we have the specific requests and so it is not a vague exercise to simply compare that with what was produced. In short, none of the reasons for declining to exclude as appears in Plaintiffs’ cases are even remotely present here.
Additionally, a specific video tape used during Mr. Lauren George’s July 31, 2018 deposition can and should be excluded from admission at trial because, even allowing arguendo for Plaintiffs’ theories, the tape has been described with specificity and it was not produced as required during discovery. Nor do Plaintiffs even attempt to prove their failure to produce information or documents was substantially justified or harmless.
The closest thing to a real issue is the fact that in many ways this motion in limine resembles a discovery dispute. If so, it should normally be governed by LBR 7026-1(c) which requires meeting of counsel and stipulations narrowing the questions for resolution, none of which happened here. But the court construes the purpose of LBR 7026-1(c) as somewhat different, i.e. before the court undertakes the task of determining whether to compel parties to produce it should be aided by a sincere
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effort to narrow the questions. This does not apply where the requirements of law are specific, but a party simply declines to comply.
Grant
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Defendant(s):
Kevin Michael Treadway Represented By Matthew Grimshaw
Plaintiff(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By Bradley D Blakeley
Trustee(s):
Karen S Naylor (TR) Represented By William M Burd
Ringstad & Sanders LLP
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Adv#: 8:17-01037 Aguilar et al v. Treadway
Docket 48
This is Defendant ‘s motion in limine to exclude evidence plaintiff failed to produce or discuss in their discovery responses or at deposition pursuant to a claim of attorney-client privilege or the attorney work-product doctrine. In many ways this motion is similar to #25 on calendar.
Defendant argues Plaintiffs are using attorney-client privilege and attorney work-product privilege as both a sword and a shield. Relevant case law provides that "[t]he privilege which protects attorney-client communications may not be used both as a sword and a shield." Columbia Pictures Industries v. Krypton Broadcasting of Birmingham, Inc., 259 F.3d 1186, 1196 (9th Cir. 2001); Chevron Corp. v. Pennzoil
Co., 974 F.2d 1156, 1162-63 (9th Cir. 1992) ("Pennzoil cannot invoke the attorney- client privilege to deny Chevron access to the very information that Chevron must refute…"). A person "may not refuse to disclose any relevant fact within his knowledge merely because he incorporated a statement of such fact into his communication to his attorney." Upjohn Co. v. United States, 449 U.S. 383, 396 (1981).
Under FRCP26(b)(5), a party refusing to disclose "information otherwise discoverable" must "(i) expressly make the claim; and (ii) describe the nature of the documents, communications or tangible things not produced or disclosed – and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim." Defendant argues Plaintiffs have not satisfied
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these requirements.
Under FRCP 26(a)(1)(A)(ii), a party must provide to other parties all documents and electronic media in its possession that will be used to support its claim or defense. Defendant served Plaintiffs with discovery requests requesting all documents, information, and electronic media to be used in support of Plaintiff’s defense. FRCP 37(c) precludes a party from using at trial any information or the testimony from any witness that was not produced during discovery. See, e.g., Benjamin v. B&H Education, Inc., 877 F.3d 1139, 1150-51 (9th Cir. 2017). Plaintiffs, therefore, may not use any information at trial which would have been subject to mandatory disclosure under FRCP 26. The purpose of a motion in limine is to allow the court to rule on the admissibility of anticipated prejudicial evidence before such evidence is offered. Luce v. United States, 469 U.S. 38, 40 n. 2 (1984).
Here, Plaintiffs’ invoked their attorney-client and attorney work-product privileges as a shield in refusing to provide answers or information during discovery and depositions. Defendant is correct that case law provides that Plaintiffs cannot invoke their privileges as both a sword and a shield. Because Plaintiffs’ chose to use their attorney-client privilege and attorney work-product privilege as a shield, no information protected under that shield may later be admitted at trial as a "sword."
Similar to their responses to #25 on calendar, Plaintiffs oppose Defendant’s motion, arguing it lacks the specificity required to exclude evidence before trial.
Plaintiffs, however, do not cite to any relevant sections of the FRCP to bolster this argument, nor do they attempt to rebut or address Defendant’s arguments. Plaintiffs also fail to address the relevant sections of the FRCP denying admission of documents and information Plaintiffs declined to produce during discovery. Instead, Plaintiffs cite to several older Southern District of New York cases to oppose Defendant’s motion, stating the motion lacks the specificity required to exclude evidence at trial.
Nat’l Union Fire Ins. Co. v. L.E. Myers Co. Grp., 937 F. Supp. 276, 287 (S.D.N.Y. 1996); see also Wechsler v. Hunt Health Sys., Ltd., No. 94 Civ. 8294(PKL), 2003 WL
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21998980, at *3 (S.D.N.Y. Aug. 22, 2003); Baxter Diagnostics, Inc. v. Novatek Med., Inc., No. 94 Civ. 5520 (AJP), 1998 WL 665138, at *3 (S.D.N.Y. Sept. 25, 1998). But
Plaintiffs’’ cases are all distinguishable. None of those authorities address when (if ever) a party may withhold in discovery relevant documents on grounds of privilege and then try to admit the very same at trial.
Defendant’s request is an appropriate remedy under relevant Supreme Court and Ninth Circuit case law. While this remedy may be extreme given the presumably large swath of information Plaintiffs have withheld and refused to produce, Plaintiffs cannot use their attorney-client privilege and attorney work-product privilege as both sword and shield. They must choose one and live with the consequences.
Grant
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Defendant(s):
Kevin Michael Treadway Represented By Matthew Grimshaw
Plaintiff(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By Bradley D Blakeley
Trustee(s):
Karen S Naylor (TR) Represented By William M Burd
Ringstad & Sanders LLP
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Adv#: 8:18-01145 Cardenas et al v. Abraham
Docket 12
This is the motion of Amira Abraham, as Trustee of the Abrahim Family Trust’s ("Defendant") to abstain and dismiss this adversary proceeding. Defendant argues that this adversary proceeding was filed in bad faith after Kimberly and Luis Cardenas ("Plaintiffs") were denied injunctive relief in state court, and Plaintiffs are forum shopping by trying to get their case away from state court. Plaintiffs have opposed the motion, arguing that abstention does not apply as a matter of law because there is no parallel proceeding.
There does not appear to be any disagreement about the facts or chronology of events. The dispute arises out of a loan that was made by the Abrahim Family Trust to Plaintiffs in 2006. The loan was interest only, with the principal due in five years, and was secured by a deed of trust on Plaintiffs’ residence. Plaintiffs were not able to repay the principal in 2011 but continued making monthly interest-only payments. In October 2017, Plaintiffs first asserted that the interest rate was usurious under California law and stopped making payments. Defendant’s position is that the loan is exempt from the 10% interest rate limit in the California Constitution because it was arranged by a licensed real estate broker. On November 15, 2017, Defendant issued a Balloon Payment Notice letter requesting payment of the original principal balance and all accrued but unpaid interest and late fees by no later than February 19, 2018. Plaintiffs did not cure their default and did not repay the loan. On January 10, 2018, Plaintiffs instead filed an action in Orange County Superior Court. Case No.
30-2018-00966208-CU-CL-CJC (the "State Court Action"), which was assigned to
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Judge Melissa McCormick. Plaintiffs allege three causes of action in the State Court Action involving violation of California’s usury law and seeking declaratory relief. Defendant commenced a nonjudicial foreclosure of Plaintiffs’ residence by recording a Notice of Default on January 22, 2018.
In the State Court Action, Plaintiffs filed three requests for temporary restraining orders seeking to enjoin the foreclosure sale. The first was heard on March 7, 2018 and was denied. A preliminary injunction hearing was held on April 5, 2018, and a minute order was issued denying the preliminary injunction and setting a trial for January 28, 2019. The second request was apparently not heard. The third request was denied at a hearing on May 1, 2018 and a preliminary injunction was denied at a hearing on May 10, 2018.
Defendant agreed to postpone the foreclosure sale to June 7, 2018 to facilitate settlement discussions. Kimberly Cardenas ("Debtor") filed a chapter 11 petition on June 4, 2018. A Notice of Stay of Proceedings was filed in the State Court Action.
On June 15, 2018, the state court issued a Minute Order concluding that the State Court Action was not stayed because Debtor was a plaintiff. The state court ordered that the trial would remain on calendar and set a status conference for August 16, 2018. In a statement filed for that status conference, Plaintiffs conceded that the claims in this adversary proceeding are "substantially similar" to those asserted in the State Court Action. At the status conference, the state court reiterated that the action was not stayed but agreed to continue the trial to April 22, 2019. At the status conference, Defendant’s counsel informed the state court that she would be filing a motion asking the bankruptcy court to abstain. On August 21, 2018, Defendant was served with a Request for Dismissal of the State Court Action from Plaintiffs. The dismissal was entered that day.
Plaintiffs argue, citing In re Lazar, 237 F.3d 967, 981 (9th Cir. 2001), that abstention cannot apply as a matter of law because there is no parallel state court proceeding. This is not the law and is an inaccurate reading of Lazar, which
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discussed abstention in the context of a removed proceeding. See Lazar, 237 F.3d at 981, n. 17 (distinguishing its case from Eastport Associates, where there was no removed proceeding). Whether a parallel state court proceeding exists is but one of 12 factors that are to be evaluated when a court considers discretionary abstention. In re CM Reed Almeda 1-3062, LLC, 2017 WL 1505215, *8 (B.A.P. 9th Cir. Apr. 26,
2017). As discussed in CM Reed Almeda, if a parallel state court proceeding were mandatory for abstention, both seminal cases In re Tucson Estates, Inc., 912 F.2d 1162, 1166–67 (9th Cir. 1990) and Eastport Associates v. City of Los Angeles (In re Eastport Assocs.), 935 F. 2d 1162 (9th Cir 1991) would have made it a prerequisite. This is the only argument raised by Plaintiffs. Having addressed it, the court can move on to considering the factors for abstention.
Defendant argues that mandatory abstention applies to this adversary proceeding. Five elements must be shown for mandatory abstention to apply. They are that: "(a) the motion must be made on a timely basis, (b) the claim must be based on state law, (c) the claim cannot be either based on bankruptcy law or have arisen in a bankruptcy case, (d) the claim must not have been capable of being filed in a federal court absent bankruptcy jurisdiction, and (e) the claim must be capable of being timely adjudicated in state court." Bally Total Fitness Corp. v. Contra Costa Retail Ctr., 384 B.R. 566, 570 (Bankr. N.D. Cal. 2008).
All five elements are satisfied here. First, this motion is timely. It was filed on the last date Defendant had to respond to the complaint. Second, the claims are entirely based on state law. In the first cause of action Plaintiffs assert that the interest charged on the loan was usurious under the California Constitution and in the second they seek declaratory relief regarding their rights and duties under the note and deed and trust given the alleged usurious nature of the interest rate. Third, these claims are not based on bankruptcy law and would not arise in a bankruptcy case.
Plaintiffs argue that this case involves the priority, extent and validity of liens, as described at 28 U.S.C. §157(b)(K) and is thus a "core" proceeding. While that is true this does not translate into the case being based on bankruptcy law. Priority of liens
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is usually (and in this case certainly) a function of state law. Fourth, the claim could not have been filed in federal court absent bankruptcy jurisdiction. The claims are based on state law and there is no diversity jurisdiction. Finally, the claim can be timely adjudicated in state court. It is true that Plaintiffs dismissed the State Court Action, but they could refile in state court and presumably be assigned to the same judge who has all the history of the case. The trial was originally set for January 2019 and was continued to April. There may be some additional delay now associated with the dismissal, but Plaintiffs would likely get a trial in state court before they would in this court. Therefore, the court finds that pursuant to 28 U.S.C. § 1334(c)(2) it must abstain.
Even if mandatory abstention did not apply, based on a review of the factors listed below, discretionary abstention under 28 U.S.C. §1334(c)(1) would certainly apply. The factors when deciding whether to abstain are: "(1) the effect or lack thereof on the efficient administration of the estate if a court recommends abstention,
(2) the extent to which state law issues predominate over bankruptcy issues, (3) the difficulty or unsettled nature of the applicable law, (4) the presence of a related proceeding commenced in state court or other non-bankruptcy court, (5) the jurisdictional basis, if any, other than 28 U.S.C. § 1334, (6) the degree of relatedness or remoteness of the proceeding to the main bankruptcy case, (7) the substance rather than form of an asserted "core" proceeding, (8) the feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court, (9) the burden of [the bankruptcy court's] docket, (10) the likelihood that the commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties, (11) the existence of a right to a jury trial, and (12) the presence in the proceeding of non-debtor parties." In re Tucson Estates, Inc., supra, 912 F. 2d at 1166, citing In re Republic Reader's Serv., Inc., 81 B.R. 422, 429 (Bankr.S.D.Tex.1987). Each Tucson Estate’s factor is analyzed below:
The effect or lack thereof on the efficient administration of the estate if a court
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recommends abstention.
This might tip slightly in favor of abstention. The state court judge assigned to the now dismissed State Court Action was already familiar with the case and had set a trial date. If Plaintiffs were to re-file presumably she would be assigned again, and the parties could get up to speed quickly.
The extent to which state law issues predominate over bankruptcy issues.
This case involves purely state law. There are no bankruptcy issues. This factor favors abstention.
The difficulty or unsettled nature of the applicable law.
The law involved in this case does not seem to be very difficult or unsettled.
This factor is probably neutral or favors abstention.
The presence of a related proceeding commenced in state court or other non-bankruptcy court.
While there is currently no related proceeding pending in state court, there was until it was dismissed by Plainitff on August 21, 2018. This is enough for this factor to favor abstention. See Turturici v. National Mortg. Servicing LP, 2010 WL 3212762, *5 (E.D. Cal. 2010). Plaintiffs could easily re-file their complaint in state court. Plaintiffs’ dismissal of the State Court Action once they were informed that a motion to abstain would be filed in this adversary proceeding looks like (smells like) forum shopping and should not be rewarded.
The jurisdictional basis, if any, other than 28 U.S.C. § 1334.
There would be no jurisdictional basis other than section 1334, and at best there is only "related to" jurisdiction. This factor favors abstention.
The degree of relatedness or remoteness of the proceeding to the main bankruptcy case.
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Aside from the fact that the outcome of these claims affects whether or not
Plaintiffs keep their real property, there is no effect on this bankruptcy case. This tips in favor of abstention.
The substance rather than form of an asserted "core" proceeding. Plaintiffs style their first cause of action as one to "determine the validity,
priority or extent of lien or other interest in property" which would be a "core" proceeding under 28 U.S.C. §157(b)(K). But really it is a claim to determine whether the interest rate charged was usurious under California law. This is a purely state law question that is at most related to the bankruptcy proceedings; the question does not arise under bankruptcy law. While the question may deserve the title of "core" if one assumes arguendo that the amount of the secured claim as reduced by any offset for usury could reduce the creditor’s claim, it is hard to see how this could result in no lien at all or change its priority. In any event this factor alone is insufficient to tip in favor of abstention.
The feasibility of severing state law claims from core bankruptcy matters to allow judgments to be entered in state court with enforcement left to the bankruptcy court.
Any judgment that is issued by the state court could easily be applied in this bankruptcy case under collateral estoppel principles. This factor favors abstention.
The burden on [the bankruptcy court's] docket.
There is not much point in the bankruptcy court starting from scratch in a case where the state court is already familiar and had already set a trial date. This factor favors abstention.
The likelihood that the commencement of the proceeding in bankruptcy court involves forum shopping by one of the parties.
This factor strongly favors abstention. It seems clear here that the filing of this adversary proceeding is forum shopping on Plaintiffs’ part. Their requests for
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injunctions were denied twice before the bankruptcy case was filed. The minute orders issued by the state court are clear that the court does not think Plaintiffs’ have a high likelihood of success on the merits. The State Court Action was dismissed, it appears, so that this abstention motion would fail as Plaintiffs’ sole argument on opposition is that abstention is not permitted where there is no parallel state court action. It looks like Plaintiffs are trying to get a second chance at their claims. This should not be permitted as they had a trial date in state court. They should litigate their claims there.
The existence of a right to a jury trial.
This has not been raised as an issue but even if it were, this would favor litigating in state court where juries are convened routinely.
The presence in the proceeding of non-debtor parties.
Only one of the Plaintiffs is a debtor, but it seems clear that the usury claim is equally available to both spouses and their interests are aligned. This would favor abstention as well.
There is no reason why these claims cannot be adjudicated in state court, where they were recently pending. Plaintiffs’ attempts at forum shopping should not be rewarded.
Grant
Debtor(s):
Kimberly Sue Cardenas Represented By Brett Ramsaur
Defendant(s):
Amira Abraham Represented By
Scott B Lieberman
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Movant(s):
Amira Abraham Represented By
Scott B Lieberman
Plaintiff(s):
Kimberly Cardenas Represented By Brett Ramsaur
Luis Cardenas Represented By Brett Ramsaur
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AMIRA ABRAHAM
Vs.
DEBTOR
Docket 42
This is the motion of creditor Amira Abraham on behalf of the Abrahim Family Trust tor relief of stay. The trust is owed $671,233 secured by a second trust deed on the property commonly known as 6152 Morningside Dr., Huntington Beach, CA ("the property"). The total of liens including two junior tax liens and the
$946,226 first trust deed owed to Ocwen Loan Servicing is about $1,581,780. If the value appearing in the schedules of $1,500,000 is adopted, there is no equity in the property. However, debtor has obtained a broker’s opinion of value for the property at
$1,860,000.
Movant has elected not to proceed under §362(d)(2) [no equity and not necessary to a reorganization] but does request relief under §362(d)(1) [cause including lack of adequate protection]. Movant also argues as a form of "cause" that the entire bankruptcy was filed in bad faith as a stalling tactic although she does not proceed under §362(d)(4) [scheme to hinder, delay and defraud]. Principally, movant argues that debtor’s lawsuit in state court to determine whether the loan held by movant was usurious was dismissed after debtor repeatedly lost her requests for an injunction, and therefore this bankruptcy should be regarded as a bad faith attempt to obtain the injunction by other means. There may be some truth to this assertion, but the court is not inclined to hold that this alone means the case is in bad faith within any definition of "cause" under §362(d)(1). Normally, some leeway is afforded to debtors trying to save their homes.
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But this cannot be construed as an excuse to ignore the real economic
questions ongoing. Debtor will be given a reasonable opportunity to propose a confirmable plan, but cannot gamble entirely with the creditors’ money, as the movant argues. This means that at a minimum the debtor will have to pay adequate protection payments monthly, equal to those payments made before the election to foreclose and resulting lawsuit. The debtor can only expect that the stay will remain while there are earnest attempts at a confirmable reorganization, and time is not unlimited. The court expects either that a consensual arrangement for plan treatment will be obtained, or that takeout financing will be offered, either as part of a plan or otherwise. A cramdown plan involving something other than full payment by refinance or payment seems unlikely since the loan is now reportedly matured and the §1123(b)(5) prohibition against modification would seem to apply. But the point is that debtor has the burden of making something happen and soon. This might include obtaining a judgment under her usury theory in state court [see calendar #27] but she will ironically now have to ask for the earliest trial date she lost when she dismissed her suit. Debtor should not assume that this case can ride in limbo while some extended litigation schedule including appeals is pursued in state court.
The motion will be conditionally denied at this time (but requiring resumption of adequate protection payments) but the motion may, absent default, be renewed in 6 months, whereupon the court will ask the status of the proceedings in state court.
Also, if the creditor secured by the first trust deed seeks to be relieved of the stay this movant may be heard as well at any hearing scheduled in that matter.
Deny without prejudice to renewal in 6 months and conditioned on immediate monthly payments as adequate protection.
Debtor(s):
Kimberly Sue Cardenas Represented By Brett Ramsaur
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Movant(s):
Amira Abraham Represented By
Scott B Lieberman
10:30 AM
JPMORGAN CHASE BANK, N.A.
Vs.
DEBTOR
Docket 233
Grant. Appearance is optional.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Movant(s):
JPMorgan Chase Bank, N.A. Represented By Joseph M Pleasant
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs.
DEBTOR
Docket 8
Grant. Appearance is optional.
Debtor(s):
Nathan Degraw Represented By Andrew Nguyen
Movant(s):
Toyota Motor Credit Corporation, Represented By
Austin P Nagel
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 47
Grant. Appearance is optional.
Debtor(s):
David Denton Represented By Batkhand Zoljargal
Movant(s):
Deutsche Bank National Trust Represented By
Erin M McCartney
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTORS
Docket 67
Grant. Appearance is optional.
Debtor(s):
Frank Kester Represented By
Veronica M Aguilar
Joint Debtor(s):
Gloria Betty Kester Represented By Veronica M Aguilar
Movant(s):
DEUTSCHE BANK NATIONAL Represented By
April Harriott Can Guner Keith Labell Sean C Ferry Theron S Covey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
JPMC SPECIALTY MORTGAGE LLC
Vs.
DEBTORS
Docket 54
Grant. Appearance is optional.
Debtor(s):
Marco T Cortez Represented By Michael R Totaro
Joint Debtor(s):
Dinora Cortez Represented By Michael R Totaro
Movant(s):
JPMC Specialty Mortgage LLC Represented By
Kristin A Zilberstein Ann Nguyen
Nancy L Lee Caryn Barron Bubba Fangman Jamie D Hanawalt
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
The Automatic Stay As The Court Deems Appropriate All Property Of The Estate .
Docket 14
Grant. Appearance is optional.
Debtor(s):
Francisco Aguero Represented By Rebecca Tomilowitz
Movant(s):
Francisco Aguero Represented By Rebecca Tomilowitz Rebecca Tomilowitz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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Payne Hicks Beach , Special Estate Counsel to Chapter 7 Trustee Fee: $5,871.61, Expenses: $0
Docket 100
Allow as prayed. Appearance is optional.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
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Danning, Gill, Diamond & Kollitz, LLP, As General Counsel To Chapter 7 Trustee
Fee: $81,232.50, Expenses: $3,049.37.
Docket 99
Allow as prayed. Appearance is optional.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
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(con't from 8-7-18 per stip & order to cont. hearing entered 7-30-18)
Docket 2032
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
10:00 AM
(con't from 9-12-18)
Docket 185
Tentative for 10/10/18: See #2 on calendar.
Tentative for 9/12/18:
Continue to October 10, 2018 at 10:00 a.m.
Tentative for 6/27/18:
Report suggests a final decree motion is to be filed soon. When? Does chart in report imply that payments are in arrears?
Where is the status report?
Debtor(s):
Shahid Chaudhry Represented By Anerio V Altman
10:00 AM
Docket 212
Grant.
Debtor(s):
Shahid Chaudhry Represented By Anerio V Altman
10:00 AM
Docket 1
Tentative for 10/10/18:
Why no report? Continue to October 24, 2018 at 10:00 a.m.
Debtor(s):
Demar Energy LLC Represented By Kent Salveson
10:00 AM
Docket 57
- NONE LISTED -
Debtor(s):
Jeff Allan Charity Represented By Michael G Spector Vicki L Schennum
10:00 AM
(con't from 8-22-18)
ROSENBERG, SHPALL & ZEIGEN, APLC, SPECIAL COUNSEL FEES: $57,206.25
EXPENSES: $24,227.97
Docket 561
Same as # 7 and 8 - put off to final fee application.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
SMILEY WANG-EKVALL, LLP, DEBTOR'S ATTORNEY FEES: $165,935.00
EXPENSES: $7,818.96
Docket 562
Same as #7-9. Continue to a final fee application given proximity of plan confirmation.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(con't from 8-22-18)
DAVID A. KAY, SPECIAL COUNSEL Fees: $23,782.50
Expenses: $769.83
Docket 557
Same comment as #7 - may make more sense to defer to final fee application?
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
Docket 304
- NONE LISTED -
Debtor(s):
Rafik Youssef Kamell Represented By Robert P Goe
10:00 AM
(con't from 8-22-18)
SL BIGGS, ACCOUNTANT Fee: $22,009.50
Expenses: $391.62
Docket 556
The court has two concerns. First, is it true that net income during the case was only $18,500? Second, since we appear at the threshold of plan confirmation, does it make more sense to postpone for single omnibus final fee application?
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
[RE: 51 Tesoro, Irvine, CA 92618]
(con't from 9-26-18)
EAST WEST BANK
Vs DEBTOR
Docket 36
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 952 Balboa Drive, Arcadia, CA 91007]
(con't from 9-26-18)
EAST WEST BANK
Vs DEBTOR
Docket 35
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 22765 Lakeway Drive, Unit 428, Diamond Bar, CA 91765]
(con't from 9-26-18)
EAST WEST BANK
Vs DEBTOR
Docket 37
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
10:00 AM
[RE: 101 Hallmark, Irvine, CA 92620]
(con't from 9-26-18)
EAST WEST BANK
Vs DEBTOR
Docket 34
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18:
These are the motions of East West Bank for relief of stay regarding its trust deeds against four real properties as listed in the motions. The four interrelated motions are considered together in a single memorandum. The trust deeds secure the sum of approximately $1,916,916 owed under a line of credit extended to the debtor’s accountancy firm, Anton & Chia, LLP. That line of credit was reportedly guaranteed by the debtor. There is, reportedly, no equity in any of the four properties and, in fact, the properties are "upside down" by the amount of $524,959, or "negative equity" in that amount. So, the provisions of 11 U.S.C. §362(d)(2) are met insofar as the movant
10:00 AM
bears the burden of proving no equity. Movant also seeks relief under §362(d)(4) based upon a series of deeds from holding companies controlled by the debtor on July 2, 2018, just before the petition in bankruptcy was filed.
Debtor apparently does not contest any of this. Rather, debtor relies on the second prong of §362(d)(2), i.e. that the properties are "necessary to a reorganization." United Sav. Ass'n of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S.
365, 108 S.Ct. 626, 633 (1988). Debtor bears the burden on this issue as provided in § 362(g). The only evidence provided by debtor appears in the Declaration of Gregory Wahl. The only reorganization described by the debtor is purely aspirational in that he says he is exploring opportunities and that his wife may realize income on a new consulting contract. Very few details are given. Moreover, the "reorganization" is not really anything tangible or even within the classic meaning of the term. Rather, it seems that debtor would like to explore refinancing and, if that is not achievable, control the liquidation process in Chapter 11 through" an orderly sale process." While reorganization plans can include liquidation of estate assets, the court doubts that is the meaning of the term in this context. But all of this is far too vague and speculative to justify holding off the bank, particularly since debtor makes no proposal of adequate protection payments, thus imposing all continuing risk upon the bank.
Further, the court is aware that the Anton & Chia case was recently converted to Chapter 7, thus making any prospect of a business rebound that much more distant. The debtor’s burden on this issue is not carried.
Grant
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By
10:00 AM
Scott O Smith
11:00 AM
(con't from 9-11-18)
Docket 19
Grant.
Debtor(s):
Gabriela Orozco Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays
11:00 AM
(set from hrg held on 8-29-18 re: cash collateral)
(advanced from 10-24-18 per order on stipulation entered 9-18-18)
Docket 31
Tentative for 10/10/18: See #17.
Tentative for 8/29/18:
It is not clear that there is any "cash collateral" here. Moreover, the court needs analysis of whether, given the dispute over ownership and right to file this proceeding, a trustee should be appointed.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
11:00 AM
#16.00 STATUS CONFERENCE RE: Debtor's Emergency Motion To Dismiss Or In Alternative Appoint of Operating Trustee Pursuant to 11 USC Section 1104 (OST Signed 8-27-18)
(set from hrg held on 8-29-18 mtn to dismiss) (advanced from 10-24-18 per order on stip. ent. 9-18-18)
Docket 30
Tentative for 10/10/18: See #17.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
11:00 AM
(con't from 8-29-18 hrg held results)
(advanced from 10-24-18 per order entered 9-18-18)
Docket 1
The court is interested in hearing from all parties as to their views as to how this case should proceed. It would appear from the trustee's report that operations are somewhat manageable but there may be recurring operations shocks and shortfall of cash to meet certain pressing obligations, such as overdue lease payments.
The court is not encouraged that the ordered mediation has not occurred. It was an order not a suggestion. The lack of clarity over ownership will be both expensive and problematic going forward. If the parties are not willing or able to work this out promptly, the trustee will be instructed to proceed with all aspects of reorganization, not just as a custodian, which may or may not yield anything for equity.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson
10:00 AM
Adv#: 8:17-01245 Little v. Clarke
(con't from 3-8-18)
Docket 1
Tentative for 10/11/18:
Does plaintiff agree that a further delay pending appeal is the best course?
Tentative for 3/8/18: Why no status report?
Debtor(s):
Elmer Clarke Represented By
Patrick J D'Arcy
Defendant(s):
Elmer Clarke Pro Se
Plaintiff(s):
Katie L. Little Represented By
R Grace Rodriguez
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
Adv#: 8:17-01122 Marshack v. Choubey et al
U.S.C. Section 550
(another summons issued on defendant Jitendra Patel on 5-11-18) (con't from 8-2-18)
Docket 1
Tentative for 10/11/18: Why no status report?
Tentative for 8/2/18:
Deadline for completing discovery: October 1, 2018 Last date for filing pre-trial motions: October 31, 2018
Pre-trial conference on: December 6, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Why no participation by defendant?
Tentative for 5/24/18:
In view of the report that Jitendra Patel has not been served, continue to 8/2/18 at 10:00AM.
Tentative for 4/26/18:
Status report? Status of service? Is settlement still in prospect?
10:00 AM
Tentative for 2/1/18:
Status conference continued to April 26, 2018 at 10:00 a.m. to allow input from any responding party.
Tentative for 11/30/17:
Status conference continued to January 4, 2018 at 10:00 a.m. to accomodate default and prove up.
Debtor(s):
Rahul Choubey Represented By Richard G Heston
Defendant(s):
Rahul Choubey Pro Se
Misha Choubey Pro Se
Shahi K. Pandey Pro Se
Vandana Pandey Pro Se
Jitendra Patel Pro Se
Azahalea Ahumada Pro Se
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
10:00 AM
Adv#: 8:18-01037 Papac v. Speckmann
(another summons issued 2-14-18)
(con't from 8-30-18)
Docket 1
Tentative for 10/11/18:
What is status of prove up? Was a form of judgment lodged?
Tentative for 8/30/18:
Status conference continued to October 11, 2018 at 10:00 a.m. Prove up was expected.
Tentative for 7/12/18: Prove up?
Tentative for 5/3/18:
Status Conference continued to July 12 at 10:00 a.m. with expectation that prove up will occur in meantime.
Debtor(s):
John K. Speckmann Represented By Christine A Kingston
10:00 AM
Defendant(s):
John K Speckmann Pro Se
Plaintiff(s):
Linda Papac Represented By
Shelly L Hanke
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:18-01145 Cardenas et al v. Abraham
Docket 1
- NONE LISTED -
Debtor(s):
Kimberly Sue Cardenas Represented By Brett Ramsaur
Defendant(s):
Amira Abraham Pro Se
Plaintiff(s):
Kimberly Cardenas Represented By Brett Ramsaur
Luis Cardenas Represented By Brett Ramsaur
10:00 AM
Adv#: 8:18-01149 Smith et al v. Phan
Docket 1
- NONE LISTED -
Debtor(s):
Chau Phan Represented By
Jeffrey S Shinbrot
Defendant(s):
Chau Phan Pro Se
Plaintiff(s):
Freddie Smith Represented By Mary L Fickel
Lue Vail Smith Represented By Mary L Fickel
CLG Law Group, Inc. Represented By Mary L Fickel
Mauriello Law Firm, APC Represented By Mary L Fickel
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
Adv#: 8:16-01042 Howard Grobstein, as Chapter 7 trustee v. POINT CENTER MORTGAGE
Answer to Complaint for Avoidance and Recovery of Fraudulent Transfers; Counterclaims and Third Party Complaint filed 10-5-17
Docket 1
Tentative for 6/7/18:
See Motion to Dismiss Counterclaim (Calendar # 13 at 11:00AM)
Tentative for 2/15/18: Status? Why no report?
Tentative for 10/12/17: See #11.
Tentative for 6/8/17:
A stay was entered March 21 but is up soon. What next?
Tentative for 2/9/17:
10:00 AM
Status Conference continued to June 8, 2017 at 10:00 a.m. Is a stay appropriate?
Tentative for 11/10/16: No tentative.
Tentative for 8/25/16:
Status conference continued to November 10, 2016 at 10:00 a.m. with stay of proceedings extended in interim, per trustee's request.
Tentative for 5/5/16:
Deadline for completing discovery: October 1, 2016 Last date for filing pre-trial motions: October 24, 2016
Pre-trial conference on: November 10, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
POINT CENTER MORTGAGE Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
10:00 AM
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:13-01255 City National Bank, a national banking association v. Fu et al
(set from status conference held on 3-3-16)
(con't from 7-12-18 per order approving stip continuing conf. ent. 6-26-18)
Docket 1
Tentative for 1/5/17:
Continue to date following likely resolution of appeal.
Tentative for 3/3/16:
Deadline for completing discovery: June 1, 2016 Last date for filing pre-trial motions: June 13, 2016 Pre-trial conference on: June 30, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 11/5/15:
Status conference continued to March 3, 2016 at 2:00 p.m.
Tentative for 8/27/15:
Continue to November 5, 2015 at 2:00 p.m.
Tentative for 6/25/15:
10:00 AM
Continue to coincide with MSJ on August 27, 2015 at 2:00 p.m.
Tentative for 4/23/15:
Continue to June 25, 2015 at 2:00 p.m.
Tentative for 12/4/14: See #25, 26 and 27.
Tentative for 9/4/14:
Status conference continued to December 4, 2014 at 2:00 p.m. to coincide with MSJ.
Tentative for 5/29/14:
Status conference continued to September 4, 2014 at 10:00 a.m. More delays should not be expected.
Tentative for 4/2/14:
No status report. When can we expect a resolution of this?
Tentative for 12/5/13:
Status conference continued to April 2, 2014 at 10:00 a.m. to follow motion for summary judgment.
10:00 AM
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T Madden Beth Gaschen Susann K Narholm
Defendant(s):
Cheri Fu Pro Se
Thomas Fu Pro Se
Joint Debtor(s):
Thomas Fu Represented By
Evan D Smiley
Plaintiff(s):
City National Bank, a national Represented By Evan C Borges
Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
James J Joseph (TR)
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:17-01134 Karen Sue Naylor, Chapter 7 Trustee v. Ivie and Associates, Inc.
(con't from 7-12-18 per order on stip. to extend scheduling order dates entered 5-18-18)
Docket 1
Tentative for 10/26/17:
Deadline for completing discovery: March 16, 2018 Last date for filing pre-trial motions: March 30, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Ivie and Associates, Inc. Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
11:00 AM
Adv#: 8:18-01158 Smith v. Eftekhari
Docket 6
This is the motion of Debtor, Mohammad Eftekhari ("Debtor") to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rules of Civil Procedure 12(b)(6). FRCP 12(b)(6) is made applicable to this adversary proceeding through FRBP 7012(b). Debtor asserts Plaintiff’s Complaint must be dismissed according to FRBP 4007(c) as the Complaint was not filed within sixty- days of the §341 meeting as required by the Rule.
The pivotal issue here is whether Plaintiff’s proposed remedy under FRCP 60(b)(1) is able to cure her untimely filed Complaint. Under FRBP 4007(c), Plaintiff had sixty days from the first meeting of creditors to file her dischargeability Complaint. Plaintiff missed this deadline due to a clerical scanning error, resulting in her filing the Complaint one day late. Plaintiff cites to FRCP 60(b)(1) to remedy the late filing but offers little to elaborate on its applicability. Plaintiff does not cite to any other authority or cases in support of her request.
Unfortunately for Plaintiff, the law in this area is not friendly to late filers.
Under FRBP 4007(c), a "complaint to determine the dischargeability of a debt under §523(c) shall be filed no later than 60 days after the first date set for the meeting of creditors under §341(a)." FRBP 4007(c) further states that time extensions may be granted but must be done on motion before the deadline has expired. Here, Plaintiff did not submit a motion to extend the deadline. The issue is whether FRCP 60(b)(1) provides a remedy for Plaintiff’s error. Under FRCP 60(b)(1), a court may relieve a party from a final order, judgment, or proceeding for mistake, inadvertence, surprise, or excusable neglect.
We must first determine whether FRBP 4007(c) allows for such relief in this
11:00 AM
context. Several cases within the Ninth Circuit hold that Rule 4007(c) does not allow FRCP 60(b) relief. On the contrary, Rule 4007(c) contains a hard deadline that cannot be extended without motion before the deadline expires. See Anwar v. Johnson (In re Johnson), 720 F.3d 1183, 1186–87 (9th Cir. 2013); Willms v. Sanderson (In re
Sanderson), 723 F.3d 1094, 1100 (9th Cir. 2013); Allred v. Kennerley (In re
Kennerley), 995 F.2d 145, 147 (9th Cir.1993); In re Santos, 112 B.R. 1001, 1007 (B.A.P. 9th Cir. 1990); In re Del Valle, 577 B.R. 789, 814 (Bankr. C.D. Cal. 2017); In
re Chin Kun An, 526 B.R. 24, 29 (Bankr. C.D. Cal. 2015).
In addressing the plain language of FRBP 4007(c), the Ninth Circuit has repeatedly held the sixty-day deadline to be strict, without qualification, and incapable of extension without timely motion before the sixty-day deadline expires. Anwar v.
Johnson, 720 F.3d at 1186–87. "Ninth Circuit law ... strictly construes Rule 4007(c)" and courts "cannot extend [its] time limit implicitly" where no such motion is made. Willms v. Sanderson, 723 F.3d at 1100 (citing Allred v. Kennerley, 995 F.2d at 147). The Ninth Circuit BAP has held that bankruptcy courts lack the discretion to grant relief from filing deadlines under FRBP 4007(c) unless a motion to extend is filed within the sixty-day deadline. Santos, 112 B.R. at 1007. Nor may courts extend this deadline for equitable factors. Del Valle, 577 B.R. at 814.
According to the plain language of FRBP 4007(c), and numerous Ninth Circuit decisions, bankruptcy courts cannot extend the sixty-day deadline without a timely motion to extend. "This requirement distinguishes FRBP 4007(c)'s deadline from most others set by the bankruptcy rules, which bankruptcy courts may extend at any time upon a showing of good cause or excusable neglect." Anwar v. Johnson, 720 F.3d at 1186–87.
Plaintiff argues her untimely filing was due to a clerical scanning error, and as such, should be excused under FRCP 60(b)(1) as excusable neglect. Unfortunately for Plaintiff, FRBP 4007(c) and relevant case law hold the opposite. Contrary to Plaintiff’s argument, FRBP 4007(c) does not allow courts to extend the deadline or
11:00 AM
relieve untimely filing of dischargeability complaints due to excusable negligence. As such, Plaintiff’s Complaint must be dismissed as untimely because it was filed after the sixty-day deadline expired under FRBP 4007(c).
One more issue on this subject must be mentioned. Plaintiff argues that she was assured by the clerk at the filing window that a later facsimile of the missing pages received that day accompanied by "wet" signatures the following day (August 7) would result in the complaint being "deemed filed" on August 6, and thus timely.
Allegedly, Plaintiff through her attorney service attempted indeed to fax file the missing pages, but for some reason (largely unexplained) that failed also, and so the completed document was not filed until August 7, one day late. First, the court notes that none of these alleged circumstances are supported by evidence, i.e. no declaration, and so cannot serve as a basis for invoking Rule 60(b) in any event. But second, the court does not in this context rely upon such vague elaborations on the bright line rule imposed in the Ninth Circuit, particularly such unsubstantiated ones. A complaint is either filed or it is not, and the filing stamp of the clerk’s office is (absent circumstances not shown here) determinative.
Debtor next argues Plaintiff’s Complaint must be dismissed for failing to state a claim upon which relief can be granted according to FRCP 12(b)(6). Debtor bases this assertion not on the substance of the claim in Plaintiff’s Complaint, but upon its untimely filing. But analysis on these points is unnecessary because Plaintiff’s Complaint was filed after the deadline expired.
Grant
Debtor(s):
Mohammad H Eftekhari Represented By Marc A Goldbach
Defendant(s):
Mohammad Eftekhari Represented By
11:00 AM
Christopher P Walker
Plaintiff(s):
Peggy Smith Represented By
Alison S Gokal
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:18-01119 Cohen et al v. Dickey's Barbecue Restaurants, Inc.
Docket 19
- NONE LISTED -
Debtor(s):
David Wayne Horstman Represented By Michael Jones Sara Tidd
Defendant(s):
Dickey's Barbecue Restaurants, Inc. Represented By
Michael Hogue
Joint Debtor(s):
Judy Rosemary Horstman Represented By Michael Jones Sara Tidd
Plaintiff(s):
Amrane Cohen Represented By Michael Jones
David Wayne Horstman Represented By Michael Jones Sara Tidd
11:00 AM
Judy Rosemary Horstman Represented By Michael Jones Sara Tidd
RJ's BBQ, LLC Represented By Michael Jones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Adv#: 8:18-01151 Arad v. Arad et al
5. Imposition of Equitable Lien; 6. Intentional Interference with Contractual Relations
Docket 27
- NONE LISTED -
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Defendant(s):
Ron S Arad Represented By
William H Brownstein
Sara Arad Pro Se
Plaintiff(s):
Danielle Arad Represented By Shalem Shem-Tov
10:00 AM
Adv#: 8:17-01006 Lim v. Le et al
(set from pre-trial conference hrg held on 5-10-18)
Docket 3
Debtor(s):
David Thien Le Represented By Roman Quang Vu
Defendant(s):
David Thien Le Represented By Roman Quang Vu
Kimmie Thien Le Represented By Roman Quang Vu
Joint Debtor(s):
Kimmie Thien Le Represented By Roman Quang Vu
Plaintiff(s):
Phuong X. Lim Represented By Marcello M Di Mauro Marcello M Di Mauro Roman Quang Vu
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
HUNG DANG; KATIE LAM
Vs.
DEBTOR
Docket 6
Grant. Appearance is optional.
Debtor(s):
Gabe Lee Perkins Pro Se
Movant(s):
Hung Dang; Katie Lam Represented By Edward T Weber
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
BMW BANK OF NORTH AMERICA
Vs.
DEBTOR
Docket 14
Grant. Appearance is optional.
Debtor(s):
Elizabeth Garcia Perez Represented By Bryn C Deb
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTORS
Docket 9
Grant. Appearance is optional.
Debtor(s):
Lucia Santiago Represented By Kevin J Kunde
Joint Debtor(s):
Felipe Santiago Represented By Kevin J Kunde
Movant(s):
Wells Fargo Bank, N.A. dba Wells Represented By
Sheryl K Ith
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
FIFTH THIRD Bank
Vs.
DEBTOR
Docket 9
Grant. Appearance is optional.
Debtor(s):
Siavash Kakavand Pro Se
Joint Debtor(s):
Noushin Shahabeddin Pro Se
Movant(s):
Fifth Third Bank Represented By Darren J Devlin
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
US BANK N.A.
Vs.
DEBTORS
Docket 57
Grant unless current or APO.
Debtor(s):
Gary Brennan Carrizosa Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Honeybee Bendoy-Carrizosa Represented By Michael Jones Sara Tidd
Movant(s):
U.S. BANK NATIONAL Represented By Sean C Ferry
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
(con't from 10-02-18)
NATIONSTAR MORTGAGE LLC
Vs DEBTOR
Docket 48
Tentative for 10/2/18: Status?
Tentative for 8/28/18: Grant.
Tentative for 4/17/18:
Grant. "Time to complete a loan modification" is not grounds to deny relief of stay. Moreover, $29,608 of post-petition arrears is unacceptable and inconsistent with bona fides required of Chapter 13 debtors.
Debtor(s):
Jesus Jaime Cabrera Represented By Norma Duenas
Movant(s):
Nationstar Mortgage LLC as Represented By Merdaud Jafarnia
10:00 AM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
(con't from 9-11-18)
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 47
Grant. Appearance is optional.
Debtor(s):
Diana Solis Represented By
Bryn C Deb
Movant(s):
U.S. BANK NATIONAL Represented By Alexander K Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A.
Vs.
DEBTORS
Docket 26
Grant unless current or APO.
Debtor(s):
Alfredo P Orduna Represented By Christopher J Langley
Joint Debtor(s):
Maria D Torres De Orduna Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
FULMER CONSTRUCTION V.
DEBTOR
Docket 237
Grant on limited basis as described in motion. Appearance is optional.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
10:00 AM
Docket 13
Grant - adequate protection payments equal to contract required. Appearance is optional.
Debtor(s):
Christina Flowers Represented By Anerio V Altman
Movant(s):
Christina Flowers Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:17-01006 Lim v. Le et al
(set from pre-trial conference hrg held on 5-10-18)
Docket 3
Tentative for 5/10/18:
This is the oft-continued Pre-Trial Conference. The court has requested that the parties work on filing a Joint Pre Trial Stipulation. The court even entered an Order on March 29, 2018 from the last Pre-Trial Conference setting forth a timetable for good faith review of the latest in drafts of Joint Pre-trial Stipulations. Despite all of this we still have only two unilateral proposed Pre-Trial Stipulations. Both sides continue their finger- pointing and invective and blame the other for this failure. To add salt, both sides seek an award of sanctions from the other.
The court is tired and disgusted. As near as the court can discern, the major point of contention goes to whether certain questions were covered by Requests for Admission and either omitted from the proposed stipulations or are disputed as admissions. Defendant argues that ¶33 (¶s 16, 17, 21 as well) of Plaintiff’s draft should be omitted from agreed facts and moved to disputed facts. Plaintiff argues instead that failure to address certain requests for admission should have consequence, and seeks to force that conclusion by including them within a stipulation. The court disagrees. A stipulation, by definition, is a voluntary attempt to narrow issues, not create them. If there should be a "deemed admitted" consequence, that can be addressed by other means, such as motion in limine. But in meantime the obvious solution is to move these items to the disputed category, so at least we can get to a
10:00 AM
point where a trial can be scheduled and this matter can move along. Stipulations are not the place for enforcing discovery sanctions.
Adopt defendants’ version. Sanctions denied.
Tentative for 3/29/18:
Why shouldn't the court adopt the unilateral pre-trial stipulation as filed by defendants?
Tentative for 10/26/17:
Continue to November 9, 2017 at 11:00 a.m. to evaluate whether trial can be set.
Tentative for 6/8/17: See #12.
Tentative for 4/13/17:
Status conference continued to June 8, 2017 at 2:00 p.m.
Debtor(s):
David Thien Le Represented By Roman Quang Vu
Defendant(s):
David Thien Le Represented By Roman Quang Vu
Kimmie Thien Le Represented By Roman Quang Vu
10:00 AM
Joint Debtor(s):
Kimmie Thien Le Represented By Roman Quang Vu
Plaintiff(s):
Phuong X. Lim Represented By Marcello M Di Mauro Marcello M Di Mauro Roman Quang Vu
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
RE:2005 GMC Sierra - $4822.68
(con't from 9-19-18)
Docket 12
- NONE LISTED -
Debtor(s):
Luis Gerardo Camacho Represented By Lauren M Foley
Trustee(s):
Thomas H Casey (TR) Pro Se
9:30 AM
RE: $16,216.11 - 2011 BMW 5 Series [SC CASE]
Docket 19
- NONE LISTED -
Debtor(s):
Masoumeh Afshar Pro Se
Joint Debtor(s):
Seyed Mohammad Ahmad Zadeh Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
9:30 AM
RE: 2001 Toyota - $3357.87
Docket 9
- NONE LISTED -
Debtor(s):
William Banos Represented By Marlin Branstetter
Trustee(s):
Karen S Naylor (TR) Pro Se
9:30 AM
Re: 2009 Ford F150 - $6,846.01 [ES CASE]
Docket 9
- NONE LISTED -
Debtor(s):
Michael Paul Vasquez Represented By Dina Farhat
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
RE: 2014 GMC Sierra 1500 - $20,024.04 [CB CASE]
Docket 12
- NONE LISTED -
Debtor(s):
Julio David Cabrera Represented By Nicholas W Gebelt
Joint Debtor(s):
Bunnie Dee Marie Cabrera Represented By Nicholas W Gebelt
Trustee(s):
Jeffrey I Golden (TR) Pro Se
9:30 AM
RE: 2016 Ford Fiesta - $12,768.10 [ES CASE]
Docket 10
- NONE LISTED -
Debtor(s):
Tania DuPlessis Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
9:30 AM
RE: 2015 Nissan Altima - $17,370.87 [CB CASE]
Docket 14
- NONE LISTED -
Debtor(s):
Susana Palomares Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
9:30 AM
Docket 10
- NONE LISTED -
Debtor(s):
Miguel Angel Vargas Represented By Marlin Branstetter
Trustee(s):
Weneta M Kosmala (TR) Pro Se
9:30 AM
Re: 2016 Dodge Grand Caravan - $9,845.32
Docket 7
- NONE LISTED -
Debtor(s):
Richard Soo Kim Pro Se
Trustee(s):
Richard A Marshack (TR) Pro Se
9:30 AM
Re: 2016 Toyota Camry - $14,040.37 [SC CASE] CASE WAS DISMISSED ON 9-12-18
Docket 19
- NONE LISTED -
Debtor(s):
Anwer A Bickiya Represented By Sean S Vahdat
Joint Debtor(s):
Reshma A Bickiya Represented By Sean S Vahdat
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:17-01006 Lim v. Le et al
(set from pre-trial conference hrg held on 5-10-18)
Docket 3
Tentative for 5/10/18:
This is the oft-continued Pre-Trial Conference. The court has requested that the parties work on filing a Joint Pre Trial Stipulation. The court even entered an Order on March 29, 2018 from the last Pre-Trial Conference setting forth a timetable for good faith review of the latest in drafts of Joint Pre-trial Stipulations. Despite all of this we still have only two unilateral proposed Pre-Trial Stipulations. Both sides continue their finger- pointing and invective and blame the other for this failure. To add salt, both sides seek an award of sanctions from the other.
The court is tired and disgusted. As near as the court can discern, the major point of contention goes to whether certain questions were covered by Requests for Admission and either omitted from the proposed stipulations or are disputed as admissions. Defendant argues that ¶33 (¶s 16, 17, 21 as well) of Plaintiff’s draft should be omitted from agreed facts and moved to disputed facts. Plaintiff argues instead that failure to address certain requests for admission should have consequence, and seeks to force that conclusion by including them within a stipulation. The court disagrees. A stipulation, by definition, is a voluntary attempt to narrow issues, not create them. If there should be a "deemed admitted" consequence, that can be addressed by other means, such as motion in limine. But in meantime the obvious solution is to move these items to the disputed category, so at least we can get to a
10:00 AM
point where a trial can be scheduled and this matter can move along. Stipulations are not the place for enforcing discovery sanctions.
Adopt defendants’ version. Sanctions denied.
Tentative for 3/29/18:
Why shouldn't the court adopt the unilateral pre-trial stipulation as filed by defendants?
Tentative for 10/26/17:
Continue to November 9, 2017 at 11:00 a.m. to evaluate whether trial can be set.
Tentative for 6/8/17: See #12.
Tentative for 4/13/17:
Status conference continued to June 8, 2017 at 2:00 p.m.
Debtor(s):
David Thien Le Represented By Roman Quang Vu
Defendant(s):
David Thien Le Represented By Roman Quang Vu
Kimmie Thien Le Represented By Roman Quang Vu
10:00 AM
Joint Debtor(s):
Kimmie Thien Le Represented By Roman Quang Vu
Plaintiff(s):
Phuong X. Lim Represented By Marcello M Di Mauro Marcello M Di Mauro Roman Quang Vu
Trustee(s):
Richard A Marshack (TR) Pro Se
1:30 PM
(con't from 9-26-18)
Docket 18
- NONE LISTED -
Debtor(s):
Marlene C. Lewis Represented By Joshua L Sternberg
Movant(s):
Marlene C. Lewis Represented By Joshua L Sternberg
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 9-26-18)
Docket 2
Tentative for 10/17/18:
The court may be misreading this, but it appears to be a great deal about nothing. As near as the court can determine, the dispute concerns whether, because the debtor’s automatic $586.27 monthly payments were interrupted for the months of either May or June 2018 by the May 22, 2018 filing of the petition and consequent imposition of a stay. that this results in an "arrearage" on the secured claim of Fifth Third Bank, the financier of the debtor’s vehicle. At most the arrearage would be the one payment, and debtor contends, persuasively, that there really is no arrearage at all, despite the creditor’s claim that says so for $586.27. But even if that is so, debtor argues, the plan can/should provide for the payment in full of the arrearage from funds on hand through the plan, probably in one payment. This seems entirely logical and would be obvious except for application of LBR 3015-1(e) which seems to require that if there are any arrearages whatsoever on a vehicle loan, then all payments owed to the secured creditor must be paid through the Chapter 13 Trustee and not, as debtor here proposes, directly from the debtor.
Under the limited circumstances here, i.e. one payment apparently inadvertently tangled up by the automatic stay and for which payments were continually made, without interruption, the court believes the most equitable and logical solution is to invoke LBR 1001-1(d) which provides that "The court may waive the application of any Local Bankruptcy Rule in any case or proceeding, or make additional orders as it deems appropriate, in the interest of justice." To do otherwise is to raise procedure above logic or justice, and to
1:30 PM
needlessly impose expenses upon debtors and their creditors without serving any legitimate purpose. This is, however, the exception and not to be read expansively or interpreted to mean that this court does not enforce the LBRs. Rather, it is to recognize that the paramount purpose of the LBRs is: " to be construed consistent with, and subordinate to, the FRBP and F.R. Civ. P. and to promote just, speedy and economic determination of every case and proceeding." LBR 1001-1(b)(1) (italics added).
Overrule objection based on the arrearage question
Debtor(s):
Belinda Caceres Represented By Joseph A Weber
Movant(s):
Belinda Caceres Represented By Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 12
- NONE LISTED -
Debtor(s):
Victor Arreola Represented By Christopher J Langley
Joint Debtor(s):
Cindy Morelos Arreola Represented By Christopher J Langley
Movant(s):
Victor Arreola Represented By Christopher J Langley
Cindy Morelos Arreola Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 3
Tentative for 10/17/18:
The previous comment about the plan does not adequately provide for secured claims, and failure to provide time limits on sale, still apply.
On the eligibility question, everything turns on whether debtor is a co- obligor or a guarantor. Only if the latter characterization applies can debtor claim the debt is "contingent."
Tentative for 8/22/18:
The plan as written reads more like a draft than a serious attempt at confirmation. It lacks two or maybe three essentials: (a) it does not fully provide for secured claims in that it does not clearly provide for the ongoing payments; (b) a sale is proposed but no time limits are given; and (c) there is a question of eligibility as to amount of unsecured debt. Deny.
Debtor(s):
Justin Ha Represented By
Anerio V Altman
Joint Debtor(s):
Jane Ha Represented By
Anerio V Altman
Movant(s):
Justin Ha Represented By
Anerio V Altman
1:30 PM
Anerio V Altman
Jane Ha Represented By
Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 23
Tentative for 8/22/18:
Isn't notice of confirmation (August 9) short? Should it matter that debtor claims no unsecured creditors? No tentative.
Debtor(s):
Michael Y Ruiz Represented By Shawn M Olson
Movant(s):
Michael Y Ruiz Represented By Shawn M Olson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 8-22-18)
Docket 2
- NONE LISTED -
Debtor(s):
William C Lanning Represented By Julie J Villalobos
Movant(s):
William C Lanning Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 9-26-18)
Docket 33
Tentative for 10/17/18:
It is not that complicated. If debtor is not paying her full dispoable income, then the promise of "100% payment" is insufficient if what is meant by that is principal only. According to Trojan another $439 should be available in disposable monthly income. So, the plan should be amended to provide interest, say 4.5%.
Tentative for 9/26/18:
Clearly there has to be a reconciliation of the discrepancies in arrearage amounts and possibly missing creditors, as noted by the Trustee. But it seems this may be within reach? If additional creditors are to be paid this should also fix Trojan's concern about paying all disposable income?
Debtor(s):
Rose M Magana Represented By Bruce D White
Movant(s):
Rose M Magana Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 9-26-18)
Docket 15
- NONE LISTED -
Debtor(s):
Anitra Kay Kyees Represented By Christopher J Langley
Movant(s):
Anitra Kay Kyees Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 12
- NONE LISTED -
Debtor(s):
Eric Lewis Lover Represented By Christopher J Langley
Movant(s):
Eric Lewis Lover Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 9-26-18)
Docket 21
- NONE LISTED -
Debtor(s):
Kathleen Ohara Represented By Joshua L Sternberg
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 17
- NONE LISTED -
Debtor(s):
Charles Thomas Navarro Represented By Roya Rohani
Joint Debtor(s):
Debra Leo Navarro Represented By Roya Rohani
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 19
- NONE LISTED -
Debtor(s):
Roberto Mas Represented By
A Mina Tran
Movant(s):
Roberto Mas Represented By
A Mina Tran
Trustee(s):
Amrane (SA) Cohen (TR) Represented By A Mina Tran
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Brenda Lee St George Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Mark David Van Meeveren Represented By Raymond J Seo
Joint Debtor(s):
Cindy Ann Van Meeveren Represented By Raymond J Seo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 15
- NONE LISTED -
Debtor(s):
Jack Gibson Represented By
Anthony P Cara
Movant(s):
Jack Gibson Represented By
Anthony P Cara
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 20
- NONE LISTED -
Debtor(s):
Daniel Lackey Represented By Julie J Villalobos
Joint Debtor(s):
Andrea Lackey Represented By Julie J Villalobos
Movant(s):
Daniel Lackey Represented By Julie J Villalobos
Andrea Lackey Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 1
- NONE LISTED -
Debtor(s):
Carolyn Ngoc Le Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 1
Debtor(s):
Ronald G Nugent Represented By Ronald A Norman
Movant(s):
Ronald G Nugent Represented By Ronald A Norman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 1
Debtor(s):
James Kim Pro Se
Movant(s):
James Kim Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 1
Debtor(s):
Randall Stephen Held Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 7
- NONE LISTED -
Debtor(s):
Eldia Maria Lawrence Represented By Jacqueline D Serrao
Movant(s):
Eldia Maria Lawrence Represented By Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Hao Thi Ngoc Nguyen Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 16
- NONE LISTED -
Debtor(s):
Nancy Karen Chambers Represented By Michael D Franco
Movant(s):
Nancy Karen Chambers Represented By Michael D Franco Michael D Franco Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Kathleen Abbey Youngsma Represented By John D Sarai
Movant(s):
Kathleen Abbey Youngsma Represented By John D Sarai
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
David B Popa Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
- NONE LISTED -
Debtor(s):
Karen Osborn Represented By Erika Luna
Movant(s):
Karen Osborn Represented By Erika Luna Erika Luna
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Amalia Feruglio Netto Represented By Christopher J Langley
Movant(s):
Amalia Feruglio Netto Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 15
- NONE LISTED -
Debtor(s):
Maridon P Iya Represented By Brian J Soo-Hoo
Movant(s):
Maridon P Iya Represented By Brian J Soo-Hoo Brian J Soo-Hoo Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 61
Tentative for 10/17/18: Grant.
Debtor(s):
Paul P. Jaramillo Represented By
James D. Hornbuckle
Joint Debtor(s):
Dianna L. Jaramillo Represented By
James D. Hornbuckle
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 9-26-18)
Docket 67
Tentative for 10/17/18:
Grant unless current or motion to modify on file.
Tentative for 9/26/18: Status of modification?
Tentative for 7/18/18: Same.
Tentative for 6/20/18:
Grant, unless all delinquencies cured.
Debtor(s):
Theresa Sangermano Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
{11 U.S.C. Section 1307(c)(6)}
(con't from 9-26-18)
Docket 39
Tentative for 9/26/18:
Grant unless all deficiencies, including HOA, are cured.
Debtor(s):
Russell A. Jensen Represented By Tate C Casey
Joint Debtor(s):
Melissa J. Jensen Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 46
Tentative for 10/17/18:
Deny without prejudice since Trustee has withdrawn. Claimant may notice its own motion.
Debtor(s):
Russell A. Jensen Represented By Tate C Casey
Joint Debtor(s):
Melissa J. Jensen Represented By Tate C Casey
Movant(s):
Meadowood Community Represented By Michael R Perry
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 42
- NONE LISTED -
Debtor(s):
Jeong G Hwang Represented By Rex Tran
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 9-26-18)
Docket 72
Tentative for 10/17/18:
Withdraw in favor of modification?
Tentative for 9/26/18:
Deny if Trustee agrees with Debtor's analysis.
Debtor(s):
Angelita Angeles Labrador Represented By Todd B Becker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 71
Tentative for 10/17/18:
Grant unless modification motion is on file.
Debtor(s):
Jose Angel Gutierrez Represented By
Ramiro Flores Munoz
Joint Debtor(s):
Rosa Galvan Gutierrez Represented By
Ramiro Flores Munoz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 190
Tentative for 10/17/18:
Continue to November 14, 2018 at 3:00 p.m.
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 190
- NONE LISTED -
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 62
Tentative for 10/17/18:
Grant unless current or motion on file.
Debtor(s):
Michael Kevin Fountain Represented By Richard G Heston
Joint Debtor(s):
Wendy L. Christensen Fountain Represented By Richard G Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(oppos filed 9-5-18)
Docket 67
- NONE LISTED -
Debtor(s):
Harry L. Williams Represented By Mufthiha Sabaratnam
Joint Debtor(s):
Laurel Williams Represented By Mufthiha Sabaratnam
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 69
- NONE LISTED -
Debtor(s):
Harry L. Williams Represented By Mufthiha Sabaratnam
Joint Debtor(s):
Laurel Williams Represented By Mufthiha Sabaratnam
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 61
Tentative for 10/17/18: Grant.
Debtor(s):
Randy G Bunney Represented By Dennis Connelly
Joint Debtor(s):
Kathleen M Bunney Represented By Dennis Connelly
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 9-26-18)
Docket 50
Tentative for 10/17/18: Same.
Tentative for 9/26/18: Grant unless current.
Debtor(s):
Aureliano Gonzalez Represented By
James Geoffrey Beirne
Joint Debtor(s):
Juana Arteaga De Gonzalez Represented By
James Geoffrey Beirne
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 51
- NONE LISTED -
Debtor(s):
Ross Paul Kline Represented By Barry E Borowitz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 71
Tentative for 10/17/18:
Grant unless debtor can show that she is, indeed, current.
Debtor(s):
Tineke Inkiriwang Represented By Jeffrey J Hagen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 8-22-18)
Docket 44
Tentative for 10/17/18:
Is this matter moot in view of motion to modify/suspend granted by order entered September 14, 2018?
Tentative for 8/22/18:
Grant unless current or conversion.
Debtor(s):
Darryl Samuel Taylor Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 65
Tentative for 10/17/18:
Deny for failure to properly notice for hearing.
Debtor(s):
Frank Kester Represented By
Veronica M Aguilar
Joint Debtor(s):
Gloria Betty Kester Represented By Veronica M Aguilar
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 59
Tentative for 10/17/18:
Sustain, allowed as unsecured only.
Debtor(s):
Rigoberto Martinez Represented By
David Samuel Shevitz
Joint Debtor(s):
Geena Martinez Represented By
David Samuel Shevitz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
& 523(a)(6) and (2) Objection to Discharge Pursuant to 11 U.S.C. Sections 727(a)(2), 727(c)(1) & 727(c)(2)
(set at s/c held 8-2-18)
Docket 1
Tentative for 8/2/18:
An order adopting the stipulation should be lodged. Set trial date.
Tentative for 6/15/17:
Why no status report? Should the court rely on the February 15, 2017 version?
Tentative for 3/2/17:
Status Conference continued to June 15, 2017 at 10:00 a.m.
Refer to Mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by June 1, 2017.
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Nezamiddin Farmanfarmaian Pro Se
10:00 AM
Plaintiff(s):
Omni Steel Company, Inc. Represented By Sean A Topp
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
10:00 AM
Adv#: 8:18-01151 Arad v. Arad et al
(con't from 9-13-18 per court order entered on 9-12-18)
Docket 1
Tentative for 10/18/18: See #3 and 4.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Defendant(s):
Ron S Arad Pro Se
Sara Arad Pro Se
Plaintiff(s):
Danielle Arad Represented By Shalem Shem-Tov
10:00 AM
Adv#: 8:18-01151 Arad v. Arad et al
Docket 43
The debtor, Ron Arad ("Debtor"), filed his voluntary Chapter 11 petition on February 14, 2018. The plaintiff, Danielle Arad ("Plaintiff") filed Proof of Claim Number 3 ("POC") on May 13, 2018, and an amendment to the POC on August 14, 2018. The amendment included a document stating the basis of the POC and referenced an adversary proceeding number 8: 18-ap-01151TA ("Adv. Proceeding"), which was followed by a copy of the corresponding complaint. On July 30, 2018 the Plaintiff filed the complaint, Adversary Case No. 8:18-ap-01151, ("Complaint") and an Answer was due by August 29, 2018 ("Due Date"). No answer or response to the Complaint was filed by the Debtor or his counsel until August 30, 2018, when Debtor filed a motion to dismiss the Complaint (but in the main case, not in the adversary proceeding).
When no answer was timely filed by the Defendant or his counsel, the Plaintiff filed a Request for Entry of Default Under Local Bankruptcy Rule 7055-1 ("Request for Default") on August 31, 2018. The Entry of Default against Debtor and Sara Arad ("Default Entries") was entered by the clerk on September 6, 2018.
As mentioned above, on August 30, 2018, the Defendants incorrectly filed a Motion to Dismiss [Docket No. 132] in response to the Complaint in the main bankruptcy case, Bankruptcy Case No. 8:18-bk-10486-TA and a Memorandum of the Motion to Dismiss in the adversary proceeding [Docket No. 13]. Both were rejected; the Motion to Dismiss was rejected because it was filed in the wrong proceeding and the Memorandum was rejected because of an error in the proposed scheduled hearing
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date. Defendants were notified promptly on August 31, 2018 and instructed to re-file immediately. (See Main Petition Docket No. 135 and Adversary Proceeding Docket No. 19). Defendants re-filed the Motion to Dismiss on September 7, 2018 and subsequently filed this Motion to Set Aside Default Judgment (sic) entered on August 31, 2018 against him and Sara Arad ("Motion to Set Aside"). Plaintiff filed an Opposition to Motion to Set Aside Default Judgments ("Opposition Motion") on October 3, 2018.
Rule 7004(g) of the FRBP provides, that if a debtor is represented by his attorney, whenever service is made upon the debtor under this Rule, service shall also be made upon the Debtor’s attorney by any means authorized under Rule 5(b) of the FRCP. Rule 5(b)(3) states, if a local rule so authorizes, a party may use the court’s transmission facilities to make service under Rule 5(b)(2)(E), which allows electronic service to attorneys if they consented. FRCP §§ 5(b)(2)(E) and (3). But it is unclear whether this also governs service of summons which is governed by FRCP Rule 4 and LBR 7004(e). Our local bankruptcy rule provides service of "pleadings" may be accomplished via NEF if the recipients have registered as a CM/ECF user. LBR § 9013-3(a). Because there exists a local bankruptcy rule that permits CM/ECF user to be the appropriate method to deliver electronic service, it is at least arguable such method may be used to under Rule 5(b) of the FRCP to deliver adequate service of a summons and complaint to an attorney.
As Plaintiff argues in her Opposition, Debtor and his counsel were included in the CM/ECF system. (Opposition Motion, 4:3-16; Exhibit C). Therefore, Debtor’s counsel arguably received adequate notice by electronic transmission of the Plaintiff’s Complaint and Amendment to the Plaintiff’s Proof of Claim - containing a copy of the Complaint (but reportedly without a adv. case number). Regardless of whether the proof of service was signed or attached to the Complaint, because an electronic service is an adequate form of notice to counsel, Debtor’s counsel was put on at least inquiry notice on two separate occasions of the existence of the Complaint before the
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Due Date to respond expired.
Defendant argues the clerk erroneously entered the Default Entries against Debtor and Sara Arad after the desultory attempts to interject a written opposition. LBR 7055-1 states a request for the clerk to enter default must comply with FRCP 55(a). LBR § 7055-1(a). FRCP 55(a), made applicable in bankruptcy proceedings by FRBP 7055, provides that a clerk must enter default against the party who fails to plead or defend against a judgment or relief sought after them. So, the question arises whether a response improperly filed and thus rejected by the clerk, and after the Due Date in any event, should have extended Defendant’s opportunity to respond to the Complaint. The further question arises whether, even if not extended as a matter of right, is there still room for relief as a matter of grace?
Rule 55(c) clearly states the grounds on which a court will set aside a Default or Default Judgment. Of course, we do not have a default judgment in this case (yet) so really the question should be whether the entry of default should be set aside, irrespective of Defendant’s wrong labels on the pleadings. Rule 55 (c) provides that an entry of default may be set aside for ‘good cause’ and a default judgment may be set aside under Rule 60(b). But Defendants’ counsel cites to Rule 55(a) regarding setting aside entry of default (Motion to Set Aside, p. 4:19-21), yet, seeks relief from a Default Judgment in the caption of his pleadings. Defendants fail to state under what grounds he is proceeding, but one presumes that since there is no judgment it must be the ‘good cause’ approach, so we will assume he is seeking relief from the Entry of Default. As a practical matter, the court views the standards as substantially similar in this context. The ‘good cause’ standard is the same as that governing vacating a default judgment under Rule 60(b). Franchise Holding II, LLC, Huntington Restaurants Group, Inc., 375 F.3d 922, 956 (9th Cir. 2004).
Three factors are analyzed: (1) whether defendant engaged in culpable conduct that led to the default; (2) whether defendant had a meritorious defense; and (3) whether reopening the default judgment (or in this context entry of default) would prejudice plaintiff. Id. at 926. A court may deny the motion if it finds any to be true. The defendant bears the burden on showing that any of these factors favor setting
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aside the default. Id. Neither side contests the second or third elements. The parties contest the third "culpability" element.
The court in Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 816 (9th Cir.
1985) (an authority cited by both sides ), affirmed the lower court’s decision in denying the motion to set aside default judgment because of the defendant’s own culpable neglect that led to the entry of default judgment. The Pena court further held, in determining whether defendant’s culpable conduct led to the default judgment, the court will look at whether defendant received actual or constructive notice of the filing of the action. Id. at 815. As previously noted, Defendant’s counsel was placed on at least inquiry notice on two separate occasions via electronic service. In addition, the Plaintiff attached as Exhibit A and Exhibit B in her Opposition Motion two email communications between opposing counsel referencing the Complaint. Both emails were dispatched before the Due Date to respond to the Complaint. But the question before the court is whether, in this context, the failure to file something earlier was truly "culpable."
Our facts are not nearly as stark as those in Pena. First, Defendant wasted no time in attempting first to interject a response and then to set aside the default when those attempts proved unsuccessful. Second, there was the confusion over whether the adversary proceeding had been filed, and when, since the copy attached to the proof of claimed did not include an adversary number. Third, although Defendant’s counsel may have had inquiry notice, there seems little question that the service of summons never happened properly under FRBP 7004 as is usually done; rather, we are left to debate whether under the LBR 9013-1 provision the requirements for service of a summons can by bypassed using NEF. This was not an issue in Pena where service was accomplished correctly. These factors persuade the court that the paramount concerns of the law that matters should be decided on their merits, not on procedure, and doubts in setting aside default should be resolved in favor of the movant, should prevail. Pena at 814, citing Schwab v. Bullock’s Inc., 508 F. 2d 353, 355 (9th Cir. 1974). Rather than ‘culpability’ the court sees what amounts to ineptitude.
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An argument is raised as to whether the default should be set aside as against
Defendant Sara Arad since Mr. Brownstein’s office is debtor’s counsel. This goes nowhere since in the body of the Motion to Set Aside, page 2, line 2, Sara is identified as a movant.
See item #4 on calendar.
Grant
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Defendant(s):
Ron S Arad Represented By
William H Brownstein
Sara Arad Pro Se
Plaintiff(s):
Danielle Arad Represented By Shalem Shem-Tov
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Adv#: 8:18-01151 Arad v. Arad et al
5. Imposition of Equitable Lien; 6. Intentional Interference with Contractual Relations
(con't from 10-11-18 per court re: hrg held on 9-12-18)
Docket 27
This is the Rule 12(b)(6) motion of Defendant Ron Arad ("Debtor") to dismiss the complaint filed by his sister, Danielle Arad, ("Plaintiff"). Plaintiff’s mother, Sara Arad, ("Sara") is also named as a defendant. At pages 40 and 41 of the Memorandum of Points and Authorities filed by Debtor, Docket No. 27, is a Joinder signed by Sara in pro per. In the motion Debtor argues that the complaint is really an amendment of the proof of claim filed by Plaintiff on May 18, 2018, that Plaintiff missed the deadline to file a 11 U.S.C. § 523 complaint, and that the other claims are barred by applicable statutes of limitations and the statute of frauds. Debtor also provides a declaration to contradict the allegations made in the complaint.
It is alleged in the complaint that Plaintiff loaned $100,000 to her father, Reuven Arad ("Reuven") and to Debtor to facilitate purchase property located at 841
N. Orange Street, La Habra, as the father and brother did not have the funds for the down payment. This property was recently sold by order of this court and funds are being held in a blocked DIP account. Plaintiff alleges that Debtor and Reuven orally agreed that Plaintiff would be paid back in full with interest. When Plaintiff insisted, Reuven agreed to sign a promissory note, which is attached as an exhibit to the complaint. Plaintiff argues that the agreement was a joint venture between the parties.
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Debtor disagrees with Plaintiff’s version of the facts, asserts that he did not sign the note and that it was not recorded.
As a starting point, Debtor’s testimony as presented in his declaration will not be considered by the court at this time. It is not appropriate at this stage. See Gerritsen
v. Warner Bros. Entertainment Inc., 112 F.Supp.3d 1011 (C.D. Cal. 2015) citing City of Royal Oak Retirement System v. Juniper Networks, Inc., 880 F.Supp.2d 1045, 1060 (N.D.Cal.2012) ("Courts regularly decline to consider declarations and exhibits submitted in support of or opposition to a motion to dismiss, however, if they constitute evidence not referenced in the complaint or not a proper subject of judicial notice."…The court should consider the exhibits to the declaration to determine whether they should be taken into account.) If this complaint survives the pleading stage, factual disputes over whether there was an agreement and who the parties were will be determined at that later stage and in a different context.
Debtor also argues that the complaint has not been assigned an adversary proceeding number and should be considered an amendment to Plaintiff’s proof of claim. This is incorrect. Plaintiff’s complaint was filed on July 30, 2018 and initiated adversary proceeding number 8:18-ap-01151-TA. Debtor or his counsel may have gotten confused because there is a docket entry in the main case stating that the complaint was filed [Docket No. 118], but that docket entry itself lists the adversary case number. It is perhaps this confusion that led to Debtor initially filing his motion to dismiss in the main case rather than the adversary proceeding. It is also true that an unsigned copy of the complaint without case number was attached to the amended proof of claim which may have added to the confusion. However, this dispute is far too fact-intensive to be treated as a summary claims matter, and the court would in any event treat it as an adversary proceeding.
FRCP 12(b)(6) requires that a court to consider whether a complaint fails to state a claim upon which relief may be granted. When considering a motion under FRCP 12(b)(6), a court takes all the allegations of material fact as true and construes
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them in the light most favorable to the nonmoving party. Parks School of Business v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995). A complaint should not be dismissed unless a plaintiff could prove no set of facts in support of his claim that would entitle him to relief. Id. Motions to dismiss are viewed with disfavor in the federal courts because of the basic precept that the primary objective of the law is to obtain a determination of the merits of a claim. Rennie & Laughlin, Inc. v. Chrysler Corporation, 242 F.2d 208, 213 (9th Cir. 1957). There are cases that justify, or compel, granting a motion to dismiss. The line between totally unmeritorious claims and others must be carved out case by case by the judgment of trial judges, and that judgment should be exercised cautiously on such a motion. Id. FRCP 8 requires that a pleading set forth a claim for relief to contain as a short and plain statement of the claim showing that the pleader is entitled to relief. It is not necessary at the pleading stage to plead evidentiary detail, but facts must be alleged to sufficiently apprise the defendant of the complaint against him. Kubick v. F.D.I.C. (In re Kubick), 171 B.R. 658, 660 (9th Cir. BAP 1994). Clarification, greater particularity, and other refinements in pleading are accomplished through motions, discovery, pretrial orders, and liberal toleration of amendments. Yadidi v. Herzlich (In re Yadidi), 274 B.R. 843, 849 (9th Cir. BAP 2002).
About a decade ago the standards shifted somewhat by inclusion of a "plausibility" requirement in a pair of cases from the Supreme Court. "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 554-556, 127 S. Ct. 1955, 1964-65 (2007) A complaint must contain sufficient factual matter to state a claim to relief that is plausible on its face. Ashcroft v. Iqbal, 556 U.S. 662 129 S. Ct. 1937, 1949 (2009) citing Twombly. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged. Id. The plausibility standard asks for more than a sheer possibility that a defendant has acted unlawfully. Id. The tenet that a court must accept as true all factual allegations is not
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applicable to legal conclusions. Id. Threadbare recitals of elements supported by conclusory statements is not sufficient. Id. We now apply these standards to the Complaint.
Debtor argues that the breach of oral contract claim must be dismissed because it violates the statute of frauds and is barred by the statute of limitations. In the complaint, Plaintiff alleges that she filed a proof of claim and Debtor has objected, which is an "anticipatory breach" of the oral agreement to repay the $100,000 loan.
"The elements of a breach of oral contract claim are the same as those for a breach of written contract: a contract; its performance or excuse for nonperformance; breach; and damages." Plaintiff has alleged that there was an agreement for a loan of
$100,000 to be repaid by Debtor and Reuven, that she loaned the money, that Debtor has indicated an intention not to repay, and that she will be damaged if she is not repaid. Plaintiff has pled sufficient facts to support this claim.
The statute of frauds, found at Cal. Civ. Code §1624(a), covers a variety of contracts, mostly involving real property and commercial matters. In re Marriage of Benson, 36 Cal. 4th 1096, 1108 (2005). "The statute requires either a written contract or ‘some note or memorandum’ subscribed by the party to be charged." Id. The statute of frauds serves to prove that a contract exists, so the writing only needs to mention "certain ‘essential’ or ‘meaningful’ terms." Id. (citations omitted). "Ambiguities can be resolved by extrinsic evidence, which serves as a reliable indicator of the parties' intent in commercial or other arms' length transactions." Id. (citations omitted). If asserting the statute of frauds would "cause unconscionable injury, part performance allows specific enforcement of a contract that lacks the requisite writing." Id. (citations omitted). The part performance must "either ‘unequivocally refer’ to the contract, or ‘clearly relate’ to its terms." Id. (citations omitted). The "conduct" satisfies the evidentiary function of the statute of frauds by showing that a bargain was
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reached. Id.
Overall, this complaint is clear and not very complicated. Defendants should have no problem understanding the claims against them. Plaintiff has alleged that there was an agreement to loan and repay money, and that a note was executed to commemorate the arrangement. She has pled that there is "some note or memorandum" that shows that the agreement exists. She has also alleged that Debtor breached the agreement by objecting to her claim, indicating that he did not intend to repay her, causing her damage in the form of the loss of her $100,000. This is enough for the pleading stage. This is not a comment on whether any of this is more than barely plausible.
This claim is arguably also not barred by the statute of limitations. Cal. Civ.
Code § 339 provides that an action upon a contract must be brought within two years, but that the action is not deemed to have accrued until the loss or damage is discovered. Here, the property was recently sold through Debtor’s bankruptcy, and Plaintiff alleges that Debtor’s objection to her claim for payment is a breach of their oral contract. Plaintiff has brought her claim within two years of its alleged discovery. The court notes that objection to a claim brought by a DIP as a trustee may implicate other issues that do not well fit within this alleged anticipatory breach paradigm, but since the parties do not raise this issue the court will delay its consideration for a later time. The statute of frauds also requires a memorandum "subscribed by the party to be charged." Here, Plaintiff argues in her memorandum that Ron signed as "agent" for Debtor. This invokes a factual controversy but may be sufficient at this pleading stage (but see discussion below for the need to allege agency in the complaint). The note mentions a security interest in the property (although whether this will prove sufficient in the end to establish an indefeasible interest in land or its proceeds is also very unclear). Whether the DIP will also initiate an action under §544(a) is also very unclear. But at this stage, the court is only tasked with evaluating whether these claims are supported by enough alleged facts to clear a minimal plausibility test. Just enough is given so that the court cannot hold that the claims are inherently implausible within the Twombly and Iqbal standards, but as discussed below, the
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agency must be specifically alleged in the complaint, not in ancillary documents.
Pursuant to Cal. Civ. Code §1621, the existence and terms of an implied contract are "manifested by conduct." An implied-in-fact contract "requires an ascertained agreement of the parties." Unilab Corp. v. Angeles-IPA, 244 Cal. App. 4th 622, 636 (2016). Whether such a contract exists is usually a question of fact for the trial court. Id.
As discussed above, the allegations in the complaint are sufficient (barely) in most respects. Plaintiff has pled that there was an agreement between the parties, that she performed, and Debtor breached. In her opposition, Plaintiff asserts that the note was executed by Reuven as agent for Debtor. Importantly, this allegation is not in the complaint, and Plaintiff should amend as she suggests in the opposition. Otherwise, Plaintiff has pled sufficient facts to survive Rule 12(b)(6).
In the complaint Plaintiff alleges that Plaintiff, Debtor, and Reuven entered into a joint venture, and thus owed one another a fiduciary duty. Plaintiff also alleges that the debt should therefore be non-dischargeable under 11 U.S.C. §523(a)(4).
Debtor argues that this claim should be dismissed because there is nothing to establish that there was ever a fiduciary duty and because the section 523 claim is time barred.
Pursuant to section 523(c), a complaint to determine non-dischargeability must be filed within 60 days of the first 341(a) meeting. In this case, a notice was sent by the clerk’s office February 21, 2018 with the date of May 18, 2018 as the deadline for filing non-dischargeability complaints. [Docket No. 20] Plaintiff was not listed in Debtor’s schedules and was not served with this notice. [Docket No. 23] But, Plaintiff did file a proof of claim on May 13, 2018, and so was aware of the bankruptcy case. "[I]t is incumbent on the creditor to institute an action to have the debt declared exempt from the bankruptcy proceedings, provided that he has notice or actual
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knowledge that the debtor is in bankruptcy." Lompa v. Price (In re Price), 871 F.2d 97, 98 (9th Cir. 1989). The fact that Plaintiff was not listed in the schedules did not relieve her of her obligation to protect her claim. Id. Here, Plaintiff knew about the bankruptcy case because she filed a proof of claim May 13 before the deadline. There are cases that hold that actual notice must be in sufficient time to file a non- dischargebility complaint (See e.g. In re Dewalt, 961 F. 2d 848 ( 9th Cir.1992)[7 days’ notice insufficient]. But she is represented here by the same counsel that represents Reuven, who was served earlier with the notice of the bar date and which counsel indisputably had notice well before the deadline. Consequently, notice is imputed to Plaintiff and the § 523 claims are time-barred.
The breach of fiduciary duty claim is based on the assertion that there was a joint venture. A joint venture is "an undertaking by two or more persons jointly to carry out a single business enterprise for profit." Second Measure, Inc. v. Kim, 143 F.Supp.3d 961, 970 (N.D. Cal. 2015) citing Weiner v. Fleischman, 54 Cal.3d 476, 482 (1991). Whether a joint venture exists is a question of fact that depends on the intention of the parties. Pellegrini v. Weiss, 165 Cal.App.4th 515, 525 (2008). When determining whether a joint venture exists requires "choosing between opposing inferences as the intentions of the parties" there is a question of fact. If the relationship arises only from a written agreement "which clearly discloses the intentions and understanding of the parties" the question is one of law. People v. Miller, 192 Cal.
App. 2d 414 (1961).
In the complaint, Plaintiff alleges that the agreement and note are a joint venture, but she does not allege further facts that go to what the business enterprise for profit was. It is not enough to simply allege that there was a joint venture without alleging further facts to support that conclusion. Perhaps such additional facts can be alleged. This claim will be dismissed with prejudice as to section 523(a)(4) and with leave to amend as to the breach of fiduciary duty portion.
Debtor argues that this claim fails because the loan was never secured by the
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property and it is barred by the applicable statute of limitations. In the complaint, Plaintiff alleges that Debtor breached his fiduciary duties to Plaintiff and violated her trust, and that he is wrongfully detaining funds by refusing to pay Plaintiff back.
A constructive trust is an equitable remedy imposed to prevent unjust enrichment… California has codified the definition of a constructive trust in two statutes. The first provides that "[o]ne who wrongfully detains a thing is an involuntary trustee thereof, for the benefit of the owner." Cal. Civ. Code § 2223. The second provides: One who gains a thing by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act, is, unless he or she has some other and better right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would otherwise have had it. Cal. Civ. Code § 2224. Taylor Assocs. v.
Diamant (In re Advent Mgmt. Corp.), 178 B.R. 480, 486 (B.A.P. 9th Cir. 1995) (citations omitted). Plaintiff has alleged that Debtor owes her money and has indicated that he does not intend to repay her. While as alluded to above the court has concerns over the question of whether a DIP by objecting to a claim fulfills the anticipatory breach paradigm, the allegations are sufficient at this pleading stage. Debtor’s arguments about the merits of this claim are for a different time.
Debtor argues that the claim for imposition of an equitable lien is barred by the applicable statute of limitations and that there is no support for the conclusion that the parties intended to give Plaintiff a lien. In the complaint Plaintiff alleges that the terms of the note provide that it is secured by the property and that the intention of the parties, despite the lack of recording, was that the note be secured.
"An equitable lien is a right to subject property not in the possession of the lienor to the payment of a debt as a charge against that property. It may arise from a contract which reveals an intent to charge particular property with a debt or ‘out of general considerations of right and justice as applied to the relations of the parties and the circumstances of their dealings.’" Farmers Ins. Exch. v. Zerin, 53 Cal. App. 4th 445, 453 (1997) (citations omitted). Plaintiff has alleged that the note indicates an
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intent that it be secured by the property. In her opposition, since the note is signed by Reuven and not Debtor, Plaintiff makes arguments about how Reuven Arad acted as an agent of Debtor. These allegations are not in the complaint and the complaint should be amended to so allege. The motion to dismiss should be granted with leave to amend. As further noted above, there is an entirely separate and important implication of the trustee’s avoiding powers as found in §544(a), but that will have to be decided when (if) it is properly raised. Debtor’s argument that there should at most be a six -year statute of limitations does not make sense because this note was not payable at a definite time.
This claim is against Sara only. While she did not separately file a joinder to the motion to dismiss, there is one attached to the motion. For the sake of expediency, the court will accept it and consider it as part of the motion to dismiss. Sara argues that this claim should be dismissed because it is based on the breach of fiduciary duty claim. In the complaint, Plaintiff alleges that there is a contract between Plaintiff and Debtor that Sara knew of, and that Sara conspired with or induced Debtor to breach his agreement and refuse to repay Plaintiff. Plaintiff alleges that Sara intended for Debtor to breach the agreement with Plaintiff, and that Plaintiff has sustained damage as a result.
The elements of the tort for intentional interference with the performance of a contract are: "(1) a valid contract between plaintiff and another party; (2) defendant's knowledge of the contract; (3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage. In this way, the ‘expectation that the parties will honor the terms of the contract is protected against officious intermeddlers.’" Asahi Kasei Pharma Corp. v. Actelion Ltd., 222 Cal. App. 4th 945, 958 (2013), as modified on denial of reh'g (Jan. 16, 2014) (citations omitted).
Plaintiff has alleged sufficient facts to meet each of these elements, assuming
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the amendments discussed above are made. This claim should be dismissed with leave to as it relies on other claims in the complaint and Plaintiff may refile it along with her amended complaint.
Grant in part, deny in part. Dismiss without prejudice as to Claims 1, 2 (agency issue), 3(dischargeable breach of fiduciary duty only) and 6. Dismiss without leave as to Claim 3 (non-dischargeability portion). Deny as to all others.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
Defendant(s):
Ron S Arad Represented By
William H Brownstein
Sara Arad Pro Se
Plaintiff(s):
Danielle Arad Represented By Shalem Shem-Tov
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$162,235.66
(con't from 9-12-18)
Docket 90
Tentative for 10/18/18: See #3 and 4.
Tentative for 9/12/18:
This is scheduled as an Objection to Claim #3 of Danielle Arad, debtor’s sister. It was continued so that the claimant could obtain counsel. Somehow, for reasons that are unclear, a Rule 12 motion to dismiss an adversary proceeding initiated by Danielle against the debtor and Sara, his mother, was inserted into the objection, as indicated by an exhibit referenced in the "Status Report" filed by debtor. The exhibit appears on the caption of Danielle’s adversary proceeding, but no adversary number is given. The face of the exhibit shows a September 19 hearing date, which is manifestly incorrect (given that the court is away that week). So, one presumes that it will have to be re-noticed for a correct date. Further, the court is informed that that adversary proceeding is currently in default for failure to timely answer, but reportedly a motion by debtor to set aside is also on file. So, before the Rule 12 motion can even be heard the default set aside will have to be heard. But all of that may or may not be determinative of the claim objection, which started out with the rather simple argument that the purported promissory note between the father and the sister, even if genuine, cannot have been secured since no trust deed was ever recorded. In sum, this motion is a procedural mess and the court is in no position to rule upon it. Consequently, the matter will be continued for at least 60 days until the procedural
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irregularities can be ironed out.
Continue
Tentative for 7/11/18:
This is debtor's objection to the claim of Danielle Arad. But there is an amended claim which relates back. The amended claim has attached a
$100,000 note signed by Reuven Arad, but referencing that it is secured by 841 N. Orange Street, La Habra, which if it is property of the estate, may suffice to establish a secured claim even if no unsecured claim can be made.
More information is needed. No tentative.
Debtor(s):
Ron S Arad Represented By
William H Brownstein
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Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
& 523(a)(6) and (2) Objection to Discharge Pursuant to 11 U.S.C. Sections 727(a)(2), 727(c)(1) & 727(c)(2)
(set at s/c held 8-2-18)
Docket 1
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Nezamiddin Farmanfarmaian Pro Se
Plaintiff(s):
Omni Steel Company, Inc. Represented By Sean A Topp
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
10:00 AM
Adv#: 8:16-01260 Omni Steel Company, Inc. v. Farmanfarmaian
& 523(a)(6) and (2) Objection to Discharge Pursuant to 11 U.S.C. Sections 727(a)(2), 727(c)(1) & 727(c)(2)
(set at s/c held 8-2-18)
Docket 1
Debtor(s):
Nezamiddin Farmanfarmaian Represented By Timothy McFarlin
Defendant(s):
Nezamiddin Farmanfarmaian Pro Se
Plaintiff(s):
Omni Steel Company, Inc. Represented By Sean A Topp
Trustee(s):
Jeffrey I Golden (TR) Represented By Eric P Israel Aaron E de Leest
10:30 AM
THE RUSSELL FISCHER PARTNERSHIP, LP
Vs.
DEBTOR
Docket 6
Grant. Appearance is optional.
Debtor(s):
El Zocalo, Inc. Represented By Michael A Cisneros
Movant(s):
The Russell Fischer Partnership, LP Represented By
Joseph Cruz
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
TOYOTA MOTOR CREDIT CORPORATION
Vs DEBTORS
Docket 65
Grant. Appearance is optional.
Debtor(s):
Wayne Torrisi Represented By David S Henshaw
Joint Debtor(s):
Lori Torrisi Represented By
David S Henshaw Kimberlee Fenicle
Movant(s):
Toyota Motor Credit Corporation Represented By
Austin P Nagel
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs
DEBTORS
Docket 11
Grant. Appearance is optional.
Debtor(s):
Jennifer Munoz Represented By Alaa A Ibrahim
Joint Debtor(s):
Alvaro Cruz Represented By
Alaa A Ibrahim
Movant(s):
U.S. Bank National Association Represented By Robert P Zahradka
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
FOURSIGHT CAPITAL, LLC
Vs.
DEBTOR
Docket 11
Grant. Appearance is optional.
Debtor(s):
Kelly R Manson Represented By Bert Briones
Movant(s):
FOURSIGHT CAPITAL, LLC Represented By
Michael D Vanlochem
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTORS
Docket 67
Tentative for 10/23/18:
Same. It is not necessary to join the pilot program if the parties are agreed on a modification. Such authority motions are routine.
Tentative for 10/9/18:
Grant. Appearance is optional.
Debtor(s):
Frank Kester Represented By
Veronica M Aguilar
Joint Debtor(s):
Gloria Betty Kester Represented By Veronica M Aguilar
Movant(s):
DEUTSCHE BANK NATIONAL Represented By
April Harriott Can Guner Keith Labell
10:30 AM
Trustee(s):
Sean C Ferry Theron S Covey
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
US BANK TRUST NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 52
Grant. Appearance is optional.
Debtor(s):
Aida L. Plotena Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 9-25-18)
NATIONSTAR MORTGAGE LLC
Vs.
DEBTORS
Docket 91
Tentative for 10/23/18: Status? Is an APO offered?
Tentative for 9/25/18:
Grant unless current or APO.
Debtor(s):
Guy A. Rojo Represented By
Joseph A Weber
Joint Debtor(s):
Eva P. Rojo Represented By
Joseph A Weber
Movant(s):
NATIONSTAR MORTGAGE LLC Represented By
Jamie D Hanawalt
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WILMINGTON TRUST, NATIONAL ASSOCIATION
Vs DEBTOR
Docket 46
Deny if Debtor is current on adequate protection payments. Per plan, stay is relieved at year end.
Debtor(s):
Unsoon Kwon Kang Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
M&T BANK
Vs.
DEBTOR
Docket 22
Status of sale efforts? The unconfirmed plan makes no provision for adequate protection payments. Moreover, debtor has burden of showing reorganization is "in prospect" and that is very questionable. Lastly, the valuation offered by debtor is unsupported by admissible evidence and is suspect since it substantially differs from earlier values. Grant unless adequate protection payments of $7,200 re-commence November 1, 2018, and then the stay will only last so long as such payments are timely made until June 1, 2019, at which time stay is relieved. If the property cannot be sold by then, alleged value is illusory.
Debtor(s):
Joseph T Bubonic Represented By Julie J Villalobos
Joint Debtor(s):
Mary A Bubonic Represented By Julie J Villalobos
Movant(s):
M&T Bank Represented By
Merdaud Jafarnia
10:30 AM
U.S. BANK TRUST, N.A. Vs
DEBTOR
Docket 38
Grant. Appearance is optional.
Debtor(s):
Lisa Ann Mininsohn Represented By Richard W Snyder
Trustee(s):
Jeffrey I Golden (TR) Pro Se
11:00 AM
Docket 248
Grant. Appearance is optional.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
11:00 AM
Docket 55
- NONE LISTED -
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
11:00 AM
Docket 56
- NONE LISTED -
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
11:00 AM
Docket 20
Grant. Appearance is optional.
Debtor(s):
Evans Sporting Goods, Inc Represented By Charles W Daff
Trustee(s):
Thomas H Casey (TR) Pro Se
10:00 AM
Docket 15
The court recognizes the related case of Nasco Petroleum appears vigorously contested, so lack of opposition is surprising. Will this dismissal adversely affect Nasco case? Clearly the defiance of the usual requirements cannot go unremediated, but given impending mediation efforts the court will hear argument as to whether dismissal or conversion should away mediation results?
Debtor(s):
Demar Energy LLC Represented By Kent Salveson
10:00 AM
(con't from 6-27-18)
Docket 1
Tentative for 10/24/18:
Has plan been filed? If so, continue to coincide with disclosure statement hearing.
Tentative for 6/27/18:
Deadline for filing plan and disclosure statement: October 19, 2018.
Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of the deadline by: August 1, 2018.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones
10:00 AM
Docket 25
This Disclosure Statement cannot be approved as written. All of the UST's objections are well taken and must be addressed. More information about the potential sale of the residence is needed and Debtors need to employ their real estate broker. Further, there are fundamental problems with the case. The court sees no provision for adequate protection payments and that imposes a serious (probably unconfirmable) burden on junior lienholders. This issue is made worse by the lack of an appraisal showing that a projected price of $3,500,000 is realistic. Deny.
Debtor(s):
Joseph T Bubonic Represented By Julie J Villalobos
Joint Debtor(s):
Mary A Bubonic Represented By Julie J Villalobos
10:00 AM
(con't from 6-27-18)
Docket 1
Tentative for 10/24/18:
Schedule final ? status conference January 31, 2018 at 10:00 a.m.
Tentative for 6/27/18:
A final decree motion seems appropriate as soon as tax claim is resolved.
Tentative for 3/7/18: See #6.
Tentative for 1/10/18:
Estimate approximate timeline to confirmation.
Tentative for 9/27/17:
Continue until early 2018 to allow consideration of whether plan can be confirmed.
Tentative for 3/28/17:
Deadline for filing plan and disclosure statement: September 1, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date Debtor to give notice of the deadline by May 1, 2017
10:00 AM
Debtor(s):
Casa Ranchero, Inc. Represented By Robert P Goe Charity J Miller
10:00 AM
(con't from 10-10-18 per order approving stip. to cont. entered 10-09-18)
Docket 57
- NONE LISTED -
Debtor(s):
Jeff Allan Charity Represented By Michael G Spector Vicki L Schennum
10:00 AM
Docket 94
Did any secured creditor get notice?
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
Docket 96
No tentative pending update on results of parties' discussions. If none, grant.
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 9-26-18 per scheduling order entered 9-11-18)
Docket 43
- NONE LISTED -
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
(con't from 8-22-18) per order entered 9-11-18
Docket 0
Tentative for 8/22/18:
Are the parties willing to extend existing cash collateral orders to a date reasonably beyond a scheduled confirmation hearing?
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
U.S.C. Section 305 and 1112
(con't from 8-22-18)
Docket 37
This is the motion of Opus Bank in these administratively consolidated Chapter 11cases for dismissal under §§305 and 1112. In its initial motion Opus Bank hits hard on the theme that the debtors are late in filing their proposed plan and disclosure. This is clearly true although there is room for argument whether there was ever any clear deadline established by order. It is undeniable that counsel’s various promises were not met and the plan and disclosure statement once actually filed August 8 was at least 60 days late. Pushing one’s luck seems to be a recurrent theme.
In its Reply the bank hits on another theme, i.e. that the late-filed plan as written is probably infeasible and in any case, is grossly inequitable. The bank argues that the plan as written front loads payment of professional fees while paying interest only on its secured claim. The bank may well be correct but the question is whether this is the time and place to sort out these questions. The court notes that there is a hearing scheduled on adequacy of disclosure September 26, 2018 at 10:00 a.m. That might not be the time either for determination of confirmation issues unless the plan is obviously unconfirmable as various authorities have established. Since the bank’s points are mostly confirmation issues, the court does not feel inclined to decide them now. Dismissals (or conversion) on an interim basis are reserved for cases involving misbehavior or where the results of operations are a loss, or terms proposed for reorganization are so obviously unlikely, as to warrant cutting short the effort to staunch some bleeding. According to the somewhat sketchy reports found in the status report, the debtors are operating profitably. Whether there is enough to build a
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feasible plan upon, or whether the forecasted increases are real, is another question. But despite the disappointing failure to meet timetables, the court does not see anything warranting an abrupt termination of the cases, at least not at this moment.
However, in the interest of getting sooner to a point where a plan might actually be confirmed, the debtors should make note of some points. First, they have used up just about all the grace available. The failure to follow through on the promised timetable might not have been fatal (this time), but it also instills no confidence either. Second, the debtors are apparently only now commencing the reorganization effort in earnest, well into the second year of these cases. More time should therefore not be assumed. That we are still going into the second autumn of these cases is itself a minor miracle. Third, there may be only one shot at confirmation, so they should make a maximum effort to get it right the first time.
Paying professionals before everyone else just fundamentally smells bad, particularly considering the astounding amounts involved (accrued but not finally allowed).
Maybe the better part of valor would be to align the schedules more closely so that all the risk is not imposed on creditors. The court is not prejudging confirmation issues here, but merely warning debtors that it should not be assumed that there will be prolonged and repeated opportunity to slice the salami.
Continue to coincide with adequacy hearing September 26.
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
(con't from 8-29-18 hrg held results)
Docket 1
- NONE LISTED -
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson
11:00 AM
#12.00 STATUS CONFERENCE RE: Debtor's Emergency Motion To Dismiss Or In Alternative Appoint of Operating Trustee Pursuant to 11 USC Section 1104 (OST Signed 8-27-18)
(set from hrg held on 8-29-18 mtn to dismiss)
Docket 30
- NONE LISTED -
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
11:00 AM
(set from hrg held on 8-29-18 re: cash collateral)
Docket 31
It is not clear that there is any "cash collateral" here. Moreover, the court needs analysis of whether, given the dispute over ownership and right to file this proceeding, a trustee should be appointed.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
10:00 AM
Adv#: 8:18-01070 CMS Engineering, Inc. v. Lloyd
(con't from 9-27-18)(another summons issued on 8-9-18)
Docket 1
Tentative for 10/25/18:
Status conference continued to January 3, 2019 at 10:00 a.m. Status of service/default?
Tentative for 9/27/18: Status of service/default?
Tentative for 8/2/18: Status of service/default?
Debtor(s):
Geoffrey David Lloyd Represented By Michael W Collins
Defendant(s):
Geoffrey David Lloyd Pro Se
Plaintiff(s):
CMS Engineering, Inc. Represented By Keith F Elder
10:00 AM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:18-01105 Jafarinejad v. Garcia
(con't from 8-30-18)
Docket 1
Tentative for 10/25/18:
Status conference continued to November 29, 2018 at 2:00 p.m. to coincide with OSC, now that one will be lodged as requested.
Tentative for 8/30/18:
Status conference continued to October 25, 2018 at 10:00 a.m. Why didn't defendant participate in preparing the status report? Plaintiff should prepare an OSC re sanctions, including striking the answer, for hearing October 25, 2018 at 10:00 a.m.
Debtor(s):
David R. Garcia Represented By Thomas J Tedesco
Defendant(s):
David R. Garcia Pro Se
Plaintiff(s):
Mandana Jafarinejad Represented By Mani Dabiri
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:18-01152 Duran v. NAVIENT SOLUTIONS INC et al
Docket 1
Tentative for 10/25/18:
Deadline for completing discovery: March 4, 2019 Last date for filing pre-trial motions: March 18, 2019 Pre-trial conference on: April 4, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Status of service on other defendants?
Debtor(s):
Diana V Duran Pro Se
Defendant(s):
NAVIENT SOLUTIONS INC Pro Se
JP MORGAN CHASE, N.A., Pro Se
First Mark Services Pro Se
The Student Loan Corporation Pro Se
DISCOVER BANK, N.A. Pro Se
CITIBANK, N.A. Pro Se
Plaintiff(s):
Diana Duran Represented By
Leigh E Ferrin
10:00 AM
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:18-01153 NextGear Capital, Inc. v. Eftekhari
Docket 1
Tentative for 10/25/18:
Deadline for completing discovery: March 4, 2019 Last date for filing pre-trial motions: March 18, 2019 Pre-trial conference on: April 4, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Mohammad H Eftekhari Represented By Marc A Goldbach
Defendant(s):
Mohammad H Eftekhari Pro Se
Plaintiff(s):
NextGear Capital, Inc. Represented By
Tom Roddy Normandin
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:18-01158 Smith v. Eftekhari
Docket 1
- NONE LISTED -
Debtor(s):
Mohammad H Eftekhari Represented By Marc A Goldbach
Defendant(s):
Mohammad Eftekhari Pro Se
Plaintiff(s):
Peggy Smith Represented By
Alison S Gokal
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
U.S.C. Section 510 (C); (5) For an Award of Damages Resulting from Unlawful Modification of Principal Balance of JPMorgan Chase Bank, N.A.'s Claim; and
(6) Relief from Order Avoiding Plaintiff's Lien
(set from s/c hearing held on 1-26-17)
(con't from 8-2-18 per Order Approving Stipulation entered 6/12/18 )
Docket 82
Tentative for 3/1/18:
Discovery already ended? Continue to April 26, 2018 at 10:00 a.m. for pre- trial conference.
Tentative for 1/26/17:
Deadline for completing discovery: July 1, 2017. Last Date for filing pre-trial motions: July 24, 2017.
Pre-trial conference on August 10, 2017 at 10:00 a.m.
Tentative for 12/15/16:
Status Conference continued to January 26, 2017 at 10:00 am after amended compalint is filed.
10:00 AM
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo
Virgil Theodore Hernandez and Aleli Pro Se Virgil Theodore Hernandez Pro Se
Aleli A. Hernandez Pro Se
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:17-01037 Aguilar et al v. Treadway
(2) Deny discharge of Debtor under 11 U.S.C. Sections 727(a)(2)(A) and 727(a) (4)(A)
(set from s/c hearing held on 6-1-17)
(con't from 8-23-18 per stip & order entered 8-1-18 )
Docket 1
Tentative for 10/25/18:
Still no pre-trial stip? Continue to November 29, 2018 at 2:00 p.m.
Tentative for 6/1/17:
Deadline for completing discovery: January 15, 2018 Last date for filing pre-trial motions: January 29, 2018 Pre-trial conference on:February 8, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by September 1, 2017.
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Defendant(s):
Kevin Michael Treadway Pro Se
Plaintiff(s):
Shawn A Aguilar Represented By
10:00 AM
Bradley D Blakeley
Dish Television, Inc. Represented By Bradley D Blakeley
Trustee(s):
Karen S Naylor (TR) Represented By Burd & Naylor
10:00 AM
Adv#: 8:17-01240 Pacific Western Bank v. Haretakis
(set at s/c held 4-5-18)
Docket 1
Tentative for 4/5/18:
Parties are to submit an order consolidating the contested matter regarding the homestead with this dischargeability/denial of discharge adversary proceeding;
Deadline for completing discovery: September 1, 2018 Last date for filing pre-trial motions: September 24, 2018 Pre-trial conference on: October 25, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
Defendant(s):
Catherine M Haretakis Pro Se
Plaintiff(s):
Pacific Western Bank Represented By Kenneth Hennesay
10:00 AM
Adv#: 8:18-01013 Haretakis v. Pacific Western Bank
(con't from 4-12-18)
Docket 1
Tentative for 4/12/18:
Deadline for completing discovery: September 30, 2018 Last date for filing pre-trial motions: October 15, 2018 Pre-trial conference on: October 25, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
Defendant(s):
Pacific Western Bank Pro Se
Plaintiff(s):
Catherine M Haretakis Represented By Donald W Sieveke
11:00 AM
Adv#: 8:16-01238 Newport Crest Homeowners Association, Inc. v. Adams
Docket 144
In view of further appeal to Ninth Circuit, continue or go off calendar?
Debtor(s):
Kristine Lynne Adams Pro Se
Defendant(s):
Kristine Lynne Adams Pro Se
Plaintiff(s):
Newport Crest Homeowners Represented By Todd C. Ringstad Brian R Nelson
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
Adv#: 8:18-01079 Caruso v. Olim
Docket 11
This is the Defendant’s Motion to Dismiss the First Claim for Relief. This first Claim is based on alleged violation of the automatic stay of 11 U.S.C. §362(a). Much ink is wasted in response on whether this is a Motion to Dismiss under rule 12(b)(6). At no point does the Defendant actually call his motion one brought under rule 12(b)(6). Presumably, this argument is raised because the Defendant also filed an answer (the initial pleading) and thus is outside the strict language of the Rule. But at most this would mean that the court would construe the motion as one under Rule 12(c) for Judgment on the Pleadings. In any event this procedural argument is pointless and is overruled.
The substance of the Motion is not much better. Olim seems to argue that the First Claim for Relief is inappropriate because the order reopening the case only speaks of enforcement of the discharge injunction, and since violation of the stay could only have happened up until the time of the discharge (11 U.S.C. §363(c)(2) (C)), at which point the injunction takes over, this is outside the re-opening authority. Olim reads way too much into the language of the re-opening order, even forgetting that both theories of relief are logically very much the same. Re-opening is a "ministerial act" and determines nothing on the merits of the underlying litigation. In re Germaine, 152 B.R. 619, 624 (9th Cir BAP 1993). In response Olim argues that re- opening does not engraft substantive elements onto a cause of action, citing In re DeVore, 223 B.R. 193 (9th Cir. BAP 1998) and In re Daniels, 34 B.R. 782 (9th Cir BAP 1983). This general proposition is undoubtedly true but has little relevance to our case. DeVore involved an attempt by a trustee to administer litigation proceeds that had been technically abandoned when the case was closed. The DeVore court ruled
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that the re-opening did not cure that the asset (a judgment) properly listed on the schedules was deemed abandoned to the debtor under §554(c). The mere act of reopening does not cure that problem. Id. at 199. Similarly, in Daniels a creditor attempted to re-open to file litigation. But the Daniels court unsurprisingly ruled that the mere order of reopening did not serve to extend statutes of limitation that had already run.
But neither of these is even remotely like our case. Nothing is argued to have changed by the reopening, nor are rights subtracted or augmented. All that is done is the case is reopened so that the court may procedurally consider the complaint of the debtor. Whether relief is appropriate will depend entirely on the evidence.
Deny
Debtor(s):
Vincent Paul Caruso Represented By Derik J Roy III Shawn M Olson
Defendant(s):
Stephen Olim Represented By Harlene Miller
Plaintiff(s):
Vincent Paul Caruso Represented By Shawn M Olson
Trustee(s):
Karen S Naylor (TR) Represented By Robert P Goe
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
(con't from 8-2-18 per order granting stp. to cont. ent. 7-31-18)
Docket 1
Tentative for 10/25/18:
The court needs a status report. Are we going to trial in state court? Has the inadequate discovery been cured? If not, should the answer be stricken?
Tentative for 2/15/18:
No tentative. The court wants to discuss the future of these cases.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
11:00 AM
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 1
Tentative for 10/25/18: See #12.
Tentative for 2/15/18: Status?
Tentative for 1/25/18:
What update can be given on Frank's deposition?
Should this be continued to coordinate with item #11.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled with discovery incomplete?
Tentative for 7/13/17:
It would appear that discovery disputes must be ironed out before any firm date can be set.
11:00 AM
Tentative for 5/4/17:
Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
Tentative for 3/23/17:
The failure of defendants to participte in preparation of joint status report, and reported lack of discovery cooperation is troubling. Should the answer be stricken?
Tentative for 12/8/16: No status report?
Tentative for 3/10/16:
It sounds from the report that dispositive motions are being prepared on both sides. So, a continuance as requested by Plaintiff has some appeal, although the court notes this case has been pending one year.
Tentative for 1/28/16:
Why no status report? Have issues described from October 29, 2015 docket entry been addressed?
Tentative for 10/29/15:
Why has there been no apparent update, report or progress?
11:00 AM
Tentative for 8/27/15: Status of service/default?
Tentative for 4/23/15:
Status conference continued to August 27, 2015 at 10:00 a.m. to afford time to resolve dismissal motions.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller
Defendant(s):
Frank Jakubaitis Pro Se
Tara Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR)
Jeffrey I Golden (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
11:00 AM
Adv#: 8:15-01020 Padilla III et al v. Jakubaitis et al
Docket 110
Tentative for 10/25/18: See #12.
Tentative for 2/15/18:
Status? Agreed protective order?
Tentative for 1/25/18: Status?
Tentative for 9/14/17:
Status of discovery and cooperation?
Tentative for 7/13/17: Status?
11:00 AM
Tentative for 5/4/17: See #10.
Tentative for 4/13/17:
This is a hearing on the sanctions portion of the motion first heard February 2, 2017. As usual, this motion is plagued by the mess and finger pointing that these adversary proceedings have become.
The deposition of Frank Jakubaitis was to have been conducted within 45 days of the February 2 date, as required by an Order Granting Motion to Compel Production of documents entered February 3 as #123 on the docket, compelling the deposition at its page two. The form of that order originally submitted by Attorney Shirdel had to be almost completely rewritten as it did not match the results of the hearing, but only addressed the documents portion. On the adversary 8:15-ap-01426 TA, concerning another order more narrowly addressing the deposition of Frank Jakubaitis, the court’s judicial assistant, Ms. Hong, telephoned Attorney Shirdel and advised that the order was being held as this was a contested Motion (Opposition being filed by Attorney Firman on February 27, 2017 at #66 on the Court’s docket). As required by the LBRs, the order needed to be held for the 7-day period to see if the opposing side would object to the form of order. Also, Ms. Hong notified Attorney Shirdel that there was a procedural defect in that no Notice of Lodgment was filed with the Order--so the opposing party was not even aware an Order had been uploaded to which they could object. Attorney Shirdel’s staff told Ms. Hong that they would check on this procedural defect and get back to her. Attorney Shirdel finally uploaded the Notice of Lodgment of the Order Granting Motion to Compel Deposition on April 4, 2017 as #76 on the docket. That Order Granting Motion to Compel Deposition of Frank Jakubaitis was finally entered on April 5, 2017 with "as soon as possible" listed as the date the deposition was to be conducted by in place of the stricken "by March
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19, 2017," as so much time had elapsed as to make the original date of March 19 (the 45th day from February 2) impossible. But, of course, none of this changed the original order entered February 3 which separately required the deposition within 45 days, except to make everything confused.
In meantime, one gathers from the briefs on the question of sanctions, it appears that defendant would like to impose conditions upon the deposition that the plaintiff, Mr. Padilla, not attend and that the deposition not be videotaped. These are not agreed to by plaintiff. Moreover, absent a protective order, there is no requirement in law that either condition be imposed. However, the question of the parties seeking a protective order is alluded to in the February 3 Order. It appears to the court’s ongoing dismay that these parties are unable to cooperate in virtually anything but rather constantly resort to court intervention, even for the basics. The strategy of the court had been to allow a reasonable time for matters to be set straight before the unpleasant question of sanctions is considered, and so an amount appropriate to the circumstances, if any, could be imposed. But that approach has failed because we are still not even at square one and no deposition has occurred. All we have is the usual finger pointing notwithstanding the court’s firm directive February 2 that a deposition must occur within 45 days. Looked at differently, one could say that the defendant has decided to double down his bet on obtaining the relief requested in the protective order motion scheduled 5/4/17 by studiously not giving a deposition in the meantime. He was not privileged to do this.
What is the court to do with these parties? The court can only steer this case using blunt instruments, which in normal cases should not be necessary. But this is not a normal case. The appropriate amount of sanctions for failure to give a deposition cannot be easily determined now because the matter has been so awkwardly handled in that we have two orders addressing essentially the same question. But the court is not inclined to reward defendant for his non-cooperation either. So we are left with the dilemma, and no easy answer except to continue the matter yet again until after the protective order is considered May 4. We should also continue this motion to a date certain after that protective order hearing so that a deposition might actually occur in
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the meantime, with any protective provisions that the court may or may not direct.
Continue
Tentative for 2/2/17:
The court has had just about enough of the petty, unprofessional squabbling which has plagued this case from the outset. As explained below, the conduct of both sides falls far below what the court should be able to expect. This latest is a motion to compel attendance of Mr. Jakubaitis at deposition and for $3307.50 in sanctions.
On January 5, 2017, Plaintiffs served a notice of deposition on Debtor’s counsel Mr. Fritz Firman ("Firman") indicating that Plaintiffs would depose Debtor on January 19, 2017. Plaintiffs’ counsel Mr. Shirdel ("Shirdel") argues that he did not receive notice Debtor would be unable to attend the deposition until the eve of the deposition. According to Plaintiffs, they received objections at 4:00 p.m. on January 18, 2017, which objections asserted insufficient notice, failure to consult regarding the deposition dates, unavailability of counsel, and that Debtor was unable to be properly deposed because he was taking prescription medication. Shirdel contends he attempted to confer with Firman after receiving the objections, but to no avail.
According to Debtor, Plaintiffs purposefully scheduled the deposition for January 19, 2017 knowing that Debtor would be unable to attend, so this motion has been brought in bad faith. In support, Debtor explains that he successfully brought an anti-SLAPP motion against Plaintiff Carlos Padilla’s defamation claim in state court (Shirdel represents Carlos Padilla III in this adversary proceeding and in the state
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court action). Because Debtor prevailed, Debtor was permitted to seek recovery of attorney fees. Debtor filed a motion seeking recovery of attorney fees, with the hearing on this motion scheduled for January 5, 2017. Shirdel then sent a notice of deposition for January 5, 2017 (one infers the scheduling was intended to interfere with the motion?). On December 29, 2016, Firman responded that he and Debtor would be unable to attend the deposition on January 5, 2017. Debtor now argues that because Shirdel had notice Debtor was unable to attend the January 5, 2017 deposition, Plaintiffs were somehow on constructive notice that Debtor and Firman would be unable to attend the deposition on January 19, 2016, some two weeks later. To call that argument thin is being generous.
Failure of a party to attend a properly noticed deposition without first obtaining a protective order will subject that party to sanctions under Rule 37(d). In re Honda, 106 B.R. 209, 211 (Bankr. Haw.1989). Here, Debtor’s counsel received proper and reasonable notice, as the proof of service indicates notice of the deposition was delivered by email on January 5, 2017, approximately two weeks before the deposition at issue was to take place. Thus, absent a finding Firman was substantially justified or that Shirdel did not confer in good faith, Firman and /or Defendant should be liable for the costs of bringing this motion to compel. The argument that Plainitff was on constructive notice of Debtor’s unavailability and thus gave a notice of deposition for that time in bad faith is unpersuasive. Firman makes reference to a deposition that was scheduled for January 5, 2017. Although not entirely clear, it appears this deposition is related to the state court action as the notice of the January 5 deposition was sent to Debtor’s state court counsel. Firman argues that Shirdel knew Debtor would be unable to attend the January 5 Deposition, as this was the same day the motion for recovery of attorney fees in the state court action was set for hearing. In addition, Firman also asserts that Shirdel received objections to the January 5 Deposition on December 29, 2016. But it is unclear why Debtor’s unavailability on January 5, 2017 somehow provides constructive notice Debtor would be unavailable on January 19, 2017, two weeks later. Firman points to no additional hearings or related proceedings in the state court action that were to occur on January 19, 2017.
Consequently, the argument that Plaintiff should have known Debtor was unavailable
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on January 19, 2017 is not supported. That Defendant responded at 4:00 p.m. on the eve of the deposition further undermines this contention. Plaintiff does not appear to have acted in bad faith in scheduling the deposition. If Debtor had issues with the deposition, his recourse was to have filed a motion for a protective order.
An argument is also raised that Plaintiff should have sought leave to request this deposition, as multiple depositions have already occurred. But the examples of other depositions Defendant highlights are not persuasive. Defendant argues that the § 341(a) meeting should be treated as a deposition because Shirdel conducted questioning at the meeting. In addition, Defendant argues that a judgment debtor’s examination should also be treated as a deposition. However, Defendant cites to no authority in support of these dubious propositions. Finally, the papers do not appear to raise any argument as to why Firman and Debtor were substantially justified in not attending the deposition, aside from Firman’s declaration that he was appearing before Judge Smith at this time. Thus, Defendant has not met his burden and cannot avoid sanctions on these grounds.
Distressingly, Plaintiff did not perform much better. Under Rule 37, failure to appear at the deposition would ordinarily warrant an award of the costs in bringing this motion to compel. However, in order to award sanctions, the party seeking sanctions must also demonstrate they have not "filed the motion before attempting in good faith to obtain the disclosure or discovery without court action." Fed. R. Civ. P. 37(a)(5)(A)(i). Here, Shirdel appears to have sent Firman an email on January 18, 2017 at approximately 4:41 p.m. The email plainly states, "If [D]ebtor does not appear at the deposition, we’ll take a non-appearance and we’ll move to compel and seek sanctions." This language hardly demonstrates Shirdel attempted in good faith to resolve the discovery dispute before filing the instant motion. This language, coupled with the fact that this motion was filed only one day after the email was sent suggest Plaintiff failed to engage in a meaningful good faith effort actually designed to resolve this discovery dispute without involving the court, as required under the Rule 37. In this view, the costs and fees associated with bringing this motion should either not be awarded, or perhaps awarded only in part.
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Therefore, the court will forbear from awarding sanctions at this time but will
instead reserve the question until after one additional opportunity to cooperate with discovery requirements as compelled below is given to Defendant. The court will then evaluate the question of appropriate sanctions after the fact. The parties are admonished not to test the court’s patience any further.
Deposition is compelled and is to be given within thirty days as scheduled by Plaintiff after consulting with respective calendars. The deposition is to last no longer than 7 hours and is to be completed within one day unless otherwise agreed. The question of sanctions is to be continued about 45 days to evaluate compliance with these requirements.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Jeffery Golden Represented By Arash Shirdel
Richard Marshack Represented By Arash Shirdel
11:00 AM
Trustee(s):
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:15-01426 Marshack v. Jakubaitis et al
(Order entered 2-5-18)
(con't from 8-2-18 per order granting stip. to continue hrgs ent. 7-31-18)
Docket 1
Tentative for 10/25/18: See #12.
Tentative for 2/15/18:
No tentative. The court wants to discuss the future of these cases.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
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Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
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Adv#: 8:15-01426 Marshack v. Jakubaitis et al
U.S.C. Section 544; 3. Revocation of Discharge - 11 U.S.C. Section 727(d)
(con't from 8-2-18 per order granting stip. to continue hrgs ent. 7-31-18)
Docket 1
Tentative for 10/25/18: See #12.
Tentative for 2/15/18: Status?
Tentative for 1/25/18: See #11, 12 and 13.
Tentative for 9/14/17:
Why no status report from defendant? Should trial be scheduled before discovery is complete?
Tentative for 7/13/17:
It looks like discovery disputes must be resolved before any hard dates can be set.
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Tentative for 5/4/17:
Status conference continued to June 29, 2017 at 10:00 a.m. Do deadlines make sense at this juncture given the ongoing disputes over even commencing discovery?
Tentative for 3/23/17: See #13.1
Tentative for 12/8/16: No status report?
Tentative for 3/10/16: See #6 and 7.
Tentative for 1/14/16:
Status conference continued to March 10, 2016 at 11:00 a.m. to coincide with motion to dismiss.
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Pro Se
Frank Jakubaitis Pro Se
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Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Pro Se
Richard A Marshack (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:15-01426 Marshack v. Jakubaitis et al
Docket 60
Tentative for 10/25/18: See #12.
Tentative for 2/15/18: Status?
Tentative for 1/25/18: See #11.
Tentative for 9/14/17: Status?
Tentative for 7/13/17:
It would appear that discovery disputes must be first resolved and a motion to compel is reportedly forthcoming.
Tentative for 5/4/17:
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See #10.
Tentative for 4/13/17: See #18.
Tentative for 3/2/17:
An objection to the Shirdel declaration was filed but otherwise the court sees no opposition. It would seem the issues are the same as discussed in the February 2 tentative in Padilla v. Jakubaitis and the February 3 order in the Golden v. Jakubaitis case. Therefore, the order should be the same. The question of monetary sanctions is reserved until the April 13 hearing, and will be evaluated in view of cooperation, if any, in meantime.
Debtor(s):
Grant
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Tara Jakubaitis Represented By Fritz J Firman
Frank Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Richard Marshack Represented By Arash Shirdel
11:00 AM
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
11:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 8-30-18 per order approving stip. to con't ent. 8-17-18)
Docket 83
Tentative for 6/8/17:
Status conference continued to September 7, 2017 at 10:00 a.m. with expectation that involuntary proceeding will be clarified and settlement examined.
Tentative for 2/9/17:
Status Conference continued to May 25, 2017 at 10:00 a.m. Personal appearance not required.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
11:00 AM
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se
Olive Avenue Investors, LLC Represented By Jonathan Shenson
Enterprise Temecula, LLC Pro Se
Palm Springs Country Club Pro Se
Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se
South 7th Street Investments, LLC Represented By
Jonathan Shenson
Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se
Van Buren Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Park Scottsdale, LLC Pro Se Encinitas Ocean Investments, LLC Pro Se El Jardin Atascadero Investments, Pro Se
Dillon Avenue 44, LLC Pro Se
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy Sean A OKeefe
NATIONAL FINANCIAL Represented By
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Nancy A Conroy
POINT CENTER MORTGAGE Represented By
Carlos F Negrete - INACTIVE - Nancy A Conroy
Jonathan Shenson
NATIONAL FINANCIAL Represented By
Carlos F Negrete - INACTIVE - Sean A OKeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A OKeefe
M. Gwen Melanson Represented By Nancy A Conroy
RENE ESPARZA Represented By Nancy A Conroy
DOES 1-30, inclusive Pro Se
16th Street San Diego Investors, Pro Se
6th & Upas Investments, LLC Pro Se
Altamonte Springs Church Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se Champagne Blvd Investors, LLC Represented By
Jonathan Shenson
Cobb Parkway Investments, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
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Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman
Robert G Wilson - SUSPENDED - Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
11:00 AM
Adv#: 8:15-01089 Howard B. Grobstein, Chapter 7 Trustee v. CALCOMM CAPITAL, INC., a
(con't from 8-30-18 per order approving stip. to con't ent. 8-17-18)
Docket 149
NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Defendant(s):
Estancia Atascadero Investments, Pro Se
Georgetown Commercial Center, Pro Se
Island Way Investments I, LLC Pro Se
Island Way Investments II, LLC Pro Se
Lake Olympia Missouri City Pro Se
Michigan Avenue Grand Terrace Pro Se Mission Ridge Ladera Ranch, LLC Pro Se
Olive Avenue Investors, LLC Represented By Jonathan Shenson
Enterprise Temecula, LLC Pro Se
Palm Springs Country Club Pro Se
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Pinnacle Peak Investors, LLC Pro Se
Provo Industrial Parkway, LLC Pro Se
South 7th Street Investments, LLC Represented By
Jonathan Shenson
Spanish and Colonial Ladera Pro Se
Summerwind Investors, LLC Pro Se
Van Buren Investors, LLC Pro Se White Mill Lake Investments, LLC Pro Se Richard K. Diamond, solely in his Pro Se Park Scottsdale, LLC Pro Se
El Jardin Atascadero Investments, Pro Se Encinitas Ocean Investments, LLC Pro Se 16th Street San Diego Investors, Pro Se
NATIONAL FINANCIAL Represented By Nancy A Conroy
POINT CENTER MORTGAGE Represented By
Carlos F Negrete - INACTIVE - Nancy A Conroy
Jonathan Shenson
NATIONAL FINANCIAL Represented By
Carlos F Negrete - INACTIVE - Sean A OKeefe
Dan J. Harkey Represented By Nancy A Conroy Sean A OKeefe
M. Gwen Melanson Represented By Nancy A Conroy
RENE ESPARZA Represented By
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Nancy A Conroy
DOES 1-30, inclusive Pro Se
Dillon Avenue 44, LLC Pro Se
CALCOMM CAPITAL, INC., a Represented By Nancy A Conroy Sean A OKeefe
6th & Upas Investments, LLC Pro Se
Andalucia Investors, LLC Pro Se
Anthem Office Investors, LLC Pro Se
Buckeye Investors, LLC Pro Se
Calhoun Investments, LLC Pro Se
Capital Hotel Investors, LLC Pro Se Champagne Blvd Investors, LLC Represented By
Jonathan Shenson
Cobb Parkway Investments, LLC Pro Se
Deer Canyon Investments, LLC Pro Se
Altamonte Springs Church Pro Se
Movant(s):
Richard K. Diamond Represented By George E Schulman
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
John P Reitman Rodger M Landau Roye Zur Monica Rieder
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Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman
Robert G Wilson - SUSPENDED - Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman
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Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 8-30-18 per order approving stip. to cont. mtn and s/c entered 8-17-18)
Docket 1
NONE LISTED -
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By Roye Zur
Trustee(s):
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman
11:00 AM
Robert G Wilson Monica Rieder Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
11:00 AM
Adv#: 8:16-01041 Howard Grobstein, as Chapter 7 trustee v. NATIONAL FINANCIAL
(cont'd from 8-30-18 per order approving stip to cont. mtn and s/c entered 8-17-18)
Docket 8
- NONE LISTED -
3rd Party Defendant(s):
Richard Diamond Represented By Aaron E de Leest
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
NATIONAL FINANCIAL Pro Se
Interested Party(s):
Courtesy NEF Represented By Rodger M Landau Monica Rieder Jack A Reitman Rachel A Franzoia
Plaintiff(s):
Howard Grobstein, as Chapter 7 Represented By
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Trustee(s):
Roye Zur
Howard B Grobstein (TR) Pro Se
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:30 AM
KINECTA FEDERAL CREDIT UNION
Vs.
DEBTOR
Docket 17
Grant. Appearance is optional.
Debtor(s):
William Junior Roman Represented By Robert N Phan
Movant(s):
Kinecta Federal Credit Union Represented By
Bruce P. Needleman
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
BANK OF AMERICA, N.A.
Vs.
DEBTORS
Docket 23
Grant. Appearance is optional.
Debtor(s):
Mark Allen Johnson Represented By Rachelle Shakoori
Joint Debtor(s):
Mary Ellen Johnson Represented By Rachelle Shakoori
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTORS
Docket 67
Tentative for 10/30/18: Status?
Tentative for 10/23/18:
Same. It is not necessary to join the pilot program if the parties are agreed on a modification. Such authority motions are routine.
Tentative for 10/9/18:
Grant. Appearance is optional.
Debtor(s):
Frank Kester Represented By
Veronica M Aguilar
Joint Debtor(s):
Gloria Betty Kester Represented By Veronica M Aguilar
10:30 AM
Movant(s):
DEUTSCHE BANK NATIONAL Represented By
April Harriott Can Guner Keith Labell Sean C Ferry Theron S Covey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 38
Grant unless current or APO.
Debtor(s):
Ana Cabus Represented By
Luis G Torres Todd L Turoci
Movant(s):
U.S. Bank National Association, as Represented By
Nancy L Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 10-02-18)
CAM IX TRUST
Vs DEBTOR
Docket 31
Grant unless current or APO.
Debtor(s):
Jose Navarro Represented By
Christopher J Langley
Movant(s):
CAM IX TRUST, its successors Represented By Reilly D Wilkinson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 24
Continue for notice to Debtor.
Debtor(s):
Stephen Nguyen Represented By Daniel King
Movant(s):
Fidelity National Title Insurance Represented By
Sheri Kanesaka
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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Docket 46
This is Bijan Jon Mahdavi’s motion to reopen the bankruptcy case so that he may file a non-dischargeability complaint. Movant asserts that he loaned Debtor Fariborz Wosoughkia money and was not repaid, and that Debtor made misrepresentations to Movant to obtain the loan. Movant was not scheduled as a creditor and movant alleges that he did not have timely notice of the bankruptcy.
Debtor opposes the motion but does not seem to contest that Movant was not scheduled. Debtor asserts instead that Movant was aware of the bankruptcy, but this is not supported by any evidence. Debtor asserts that the case should not be reopened because it was a no asset case and a discharge was entered, so under the teaching of In re Beezley, 994 F.2d 1433 (9th Cir. 1993), there is no need.
Under §350(b), a case may be reopened "to administer assets, to accord relief to the debtor, or for other cause." Reopening is "merely a ministerial or mechanical act which allows the court file to be retrieved from the stacks of closed cases to enable the court to receive a new request for relief; the reopening, by itself, has no independent legal significance and determines nothing with respect to the merits of the case." In re DeVore, 223 B.R. 193, 198 (B.A.P. 9th Cir. 1998).
Movant here wishes to file a complaint under §§523(a) (2),(4) or (6), and possibly under §727, although which or all is not made entirely clear in the papers. Movant declares that he did not have notice of the bankruptcy in time to file within the required time limits of FRBP 4007(c). Debtor argues that reopening is not necessary because all his pre-petition claims are discharged anyway as found in Beezley. But the Beezley analysis does not govern here. Unlike Beezley, this is not a
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case where a debtor is asking to schedule a claim so that it will be included in the discharge. Rather, an unscheduled creditor is asking for an opportunity to prove that he is entitled to a non-dischargeable claim under §§523(a)(2), (4), or (6). He can propose to do this because of §523(a)(3)(B), which provides that if a claim is of that nature it is not discharged unless his claim was listed in time to file a non- dischargeability action. See Urbatek Systems, Inc. v. Lochrie (In re Lochrie), 78 B.R. 257, 259-60 (B.A.P. 9th Cir. 1987). The Lochrie court held: "Section 523(a)(3)(B) does not create a separate exception from discharge merely for the debtor's failure to schedule a creditor. Instead, the creditor must also have a cause of action under § 523(a)(2), (4), or (6). Mere allegations of a cause of action are not sufficient. ‘It remains necessary for the creditor to prove its case under either code § 523(a)(2), (4), or (6) because 11 U.S.C. § 523(a)(3)(B) only applies if such a case can be established.’ Citation omitted." Id. at 259.
Therefore, it is appropriate to re-open so that movant may attempt to prove that the claim is of a sort that would be non-dischargeable under §523(a)(2)(4) or (6) and, importantly, that he lacked notice in time to file his action.
Grant
Debtor(s):
Fariborz Wosoughkia Represented By
Carlos F Negrete - INACTIVE -
Joint Debtor(s):
Natasha Wosoughkia Represented By
Carlos F Negrete - INACTIVE -
Trustee(s):
Charles W Daff (TR) Represented By
Charles W Daff (TR) Kevin E. Monson
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Docket 55
- NONE LISTED -
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
11:00 AM
Docket 56
- NONE LISTED -
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
11:00 AM
(con't from 9-25-18 per order appr. stip. to con't hrg. ent. 9-24-18)
Docket 666
Is this moot under the October 10, 2018 settlement?
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar Teresa C Chow
Tiffany Payne Geyer
Trustee(s):
Richard A Marshack (TR) Represented By Caroline Djang Cathy Ta
10:00 AM
(con't from 9-12-18)
Docket 1
Tentative for 10/31/18: See #2.
Tentative for 9/12/18: Report? See #3.
Tentative for 6/27/18:
The report suggests a plan and discovery statement will be filed by July 31, 2018. Should that be a deadline per order?
Tentative for 4/4/18:
See #3 - Disclosure Statement.
Tentative for 3/20/18: Status? See #13.
Tentative for 3/7/18:
Continue to coincide with the continued date on reimposition of stay (March 20, 2018 at 10:00 a.m.)
10:00 AM
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
(set from discl. stmt hrg held on 9-12-18)
Docket 78
Tentative for 10/31/18: Continue as requested.
Tentative for 9/12/18:
This is the continued hearing on adequacy of Debtors’ Disclosure Statement. While not described as an amended disclosure statement, this is Debtors’ second disclosure statement since this case was filed. Perhaps the title of the document should be amended accordingly. No comments or objections have been filed. Overall the document appears to contain adequate information, but the debtor may want to make some minor adjustments as below. Debtors will need to obtain stipulations or file §506 motions where valuation is contemplated. So far, no objection has been raised to the interest rates proposed (all in the 5% range), but it is possible that Debtors will need to provide support or analysis for the rates they have selected if an objection is filed. The court’s view of the necessary rate to cram down on a 100% loan to value loan is pretty well known. The court also makes the following observations:
Debtor proposes to value properties under §506 and treat certain deficiency claims as unsecured. This is not discussed in the description of plan treatment for Class 5. Class 5 are unsecured claims that were discharged by Debtor’s previous Chapter 7 case. See DS p. 37.
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DS provides for "intentional liquidation of assets" in Debtors’
discretion. See DS p. 43
There is a brief discussion of the absolute priority rule on p. 56. But Debtors assert that it will not apply because the Class 4 unsecured creditors are "being paid in full." That may be a problematic conclusion, particularly if there is an objection. Section 1129(b)(2)(B)(i) provides that payment in full in this context means "property of a value, as of the effective date of the plan, equal to the allowed amount of such claim…" (italics added) The "as of the effective date" is a tipoff that an interest analysis is invoked since manifestly paying a claim a year+ late (or even just the eight months post-petition) is not the same as paying it in full.
The court will approve the statement as including adequate information, leaving it to debtor to decide whether these minor corrections should be made now.
Approve
Tentative for 6/27/18: Will this be superceded?
This is the Debtors’ Motion for Approval of their Disclosure Statement as containing adequate information within the meaning of 11 U.S.C. §1125. It should be noted that this is the Debtors’ Fifth bankruptcy since 2011. Understandably, there is a degree of skepticism voiced by the parties filing oppositions. In their reply, the Debtors suggest that this Disclosure Statement is more in the nature of a first draft, and they seem to acknowledge a willingness to cooperate on the question of appraisal and a need to
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have further negotiations on such issues as interest rates. To assist the parties in their discussions the court notes the following points which should be addressed in any further iteration of the disclosure:
There are large questions concerning the absolute priority rule and the quantum of new value. The Debtors may be confused by its proper application in individual cases but that does not change the fact that it is unquestionably the law of the Ninth Circuit. See In re Zachary, 811 F. 3d 1191 (9th Cir 2016). Moreover, this court’s view has been in favor of this interpretation for an even longer time. See In re Kamell, 451 B.R. 505 (Bankr. C.D. Cal. 2011). So the question is not if the doctrine applies but rather how the debtor intends to meet its requirements, lest the plan be regarded as unconfirmable on its face.
This raises the second question, i.e. the quantum of new value in order to meet the "new value corollary." The Debtors in this draft of the disclosure and plan pick what seems to be an arbitrary sum, $15,000. But arbitrary sums will not do when the confirmation will be opposed as it is likely to be in this case. Instead the Debtors will need to establish not only that the sum is "substantial" and "reasonably equivalent" to whatever interest is retained (See In re Ambanc La Mesa Ltd. Partnership, 115 F. 3d 650, 654 (9th Cir. 1997)) but also that the quantum of new value has been "market tested" within the meaning of Bank of America v. 201 N. LaSalle St. Ptsp., 526 U.S. 434 (1999). The La Salle court does not instruct us as to what exactly must be done to "market test", but the court must reach the conclusion that no one else would pay more for the privilege of directing these affairs in the way proposed by the Debtors. Otherwise it can be argued that the Debtors are retaining something on account of equity, a form of intangible property in the nature of an option. Id. at 458. If another party is willing to pay more, when viewed from the standpoint of creditors, then the difference being kept by the debtor under his plan is not on account of the new value but must instead be on account of his existing equity interest; this is forbidden under the absolute priority rule as embodied at § 1129(b)(2)(B)(ii). See also In re NNN Parkway 400 26, LLC, 505 B.R. 277,
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281-82 (Bankr. C.D. Cal. 2014). Market testing can be implemented through a variety of means, such as advertising or the retention of an investment broker. LaSalle at 458; N.N.N Parkway at 283. These issues are not strictly disclosure issues; they could be resolved at confirmation. But the court will have to have a stronger feeling that this plan has a chance for confirmation before it will authorize dissemination of a disclosure statement that assumes a new value exception to absolute priority.
In order to prove that a crammed down plan is "fair and equitable" as to dissenting classes of secured claims, the Debtors must show that the stream of promised future payments has a present value equal to not less than the value of the secured claim. 11 U.S.C. §1129(b)(2)(A)(i). In this regard the plan as written falls far short. Most of the subject properties are fully encumbered, so the secured claims are either 100% loan to value, or in the case of the most junior liens, they are behind large senior encumbrances. In either event, the plan imposes upon such creditors a very high degree of risk. Risk equates to interest rates; the higher the imposed risk the higher should be the rate. Otherwise, the present value of such a stream is less than the secured claim, under the most basic principles of economics. This court has offered the "blended rate" approach as a principled expression of this basic economic concept. See In re North Valley Mall, 432 B.R. 825 (Bankr. C.D.Cal. 2010). In the draft of the plan now on file, the Debtors either offer 5% per annum fixed, or, in the case of HOAs, 0% interest. 5% might work for a conforming loan (i.e. approximately 70% loan to value) but is not even close for creditors at the 90+% on the value totem pole. Of course, no interest at all on liens to HOAs is a non-starter. Even a riskless loan offers some interest in recognition of the time value of money. Prime borrowers have to pay at least 4.5% and even the U.S. Government offers something on its borrowings (i.e. bonds).
Further to the last point, valuations will be critical. Formal valuation orders under §506 are indispensable in the absence of stipulations.
Deny. Continue for further revisions.
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Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 10-24-18)
Docket 96
Tentative for 10/31/18:
This was already granted last time?
Tentative for 10/24/18:
No tentative pending update on results of parties' discussions. If none, grant.
Debtor(s):
John J Trejo Represented By
Michael Jones Sara Tidd
Joint Debtor(s):
Elsie Alfeche Baclayon Represented By Michael Jones Sara Tidd
10:00 AM
SMILEY WANG-EKVALL, LLP, DEBTOR'S ATTORNEY FEES: $165,935.00
EXPENSES: $7,818.96
Docket 562
Tentative for 10/31/18:
Smiley Wang-Ekvall, LLP ("SWE") by this application seeks final approval of all interim awards of fees and costs and approval on a final basis of the fees sought in its Fourth Interim Application filed August 1, 2018. The interim awards total
$616,460 in fees and $26,881.46 in expenses. The Fourth Interim Application seeks fees of $157,638.25 and expenses of $8,296.75. If allowed in full, the grand total would be $774,098.25 in fees and $35,178.21 in expenses. The Hong Judgment Creditors ("Judgment Creditors") have filed a lengthy and detailed objection to the fee request.
Pursuant to §330(a), the court may award "reasonable compensation for actual necessary services." Compensation should not be awarded for services that were not "reasonably likely to benefit the debtor’s estate;" or "necessary to the administration of the estate" but are designed primarily to benefit the debtor. See e.g. In re Horizon Ridge Medical & Corporate Ctr., LLC, 2016 WL 742716*7(9th Cir BAP2016); In re Love, 163 B.R. 164, 176 (Bankr. D. Mont. 1993). Judgment Creditors state that they have no objection to the quality of the services, but they do suggest that many of the services benefitted Debtor individually, not the estate and creditors. SWE has filed a
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response to the objection in which it agrees to voluntarily reduce its request by $1,257 because 2.4 hours of time for preparing fee application responses was inadvertently included.
Judgment Creditors have spent considerable effort analyzing SWE’s fee application to support their objection. But the primary premise is that the services benefitted only Debtor individually or his spouse, and not the estate and creditors. But this is a difficult question for the court to analyze. The court has the highest respect for the SWE firm and its lawyers. Their work is first-rate, as even the Judgment Creditors admit. But on the other hand, $809,276.46 is quite a high fee, and when the other professionals are considered, the total of over $1 million is eye-watering, particularly when one considers that the total of all other unsecured creditors is only about $30,000. Therefore, almost by definition, the vast bulk of the fee (some 26 times the amount of the entire other unsecured body) must have been spent in holding the Judgment Creditors at bay. So, the vexing question is, how does the court properly evaluate this effort from an estate’s standpoint? Can/should the court say, in retrospect, that everyone would have been vastly better off by the DIP simply surrendering and saving this vast expenditure to pay creditors? How does the court evaluate, in perfect hindsight, a reorganization attempt that in large part failed, but was tenaciously well-fought and may have had ancillary benefits? How much of this Pyrrhic result is at least partly the fault of the Judgment Creditors? Is such a hypothetically efficient but one-sided result practical in any DIP case like the one at bar, where the great majority of the debt is held by one creditor and is disputed? The court’s thoughts on this quandary appear below:
Judgment Creditors offer no real basis for awarding only half of the fees for administrative tasks, as they request, and they even admit at one point that extensive administrative effort was certainly required. The main objection seems to be in the rates charged, as appears at p. 17 of the Opposition. In this the Judgment Creditors may have a point, or at least as to some categories. For example, in the category "Preparation of Monthly Operating Reports" reportedly $37,518.50 was billed for
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101.6 hours, yielding a blended rate of $369.28 per hour. In the category "Miscellaneous" the request is for $100,969 for 246.20 hours spent, or a blended rate of $410.11. In "Amendments to schedules" 21 hours were reportedly spent for $9,973, yielding an hourly rate of $474.85. In the category "Employment & fee applications for SL Biggs" $2663 is sought for 4.4 hours, or an hourly rate of $605.23. Similar examples appear at page 25 of the Opposition where some questionable billings at rates of over $600 appear to be for some straightforward issues regarding correspondence. These are very high rates, particularly if much of the time was (or should have been) spent by paralegals. SWE performed the tasks that were necessary to administer this Chapter 11 case and should be compensated for its services as requested, but the rates might be quite high in some categories. Consequently, the court will impose an arbitrary adjustment of $5000.
SWE in its Reply adequately addresses why it responded to the adversary proceeding, Rule 2004 examination and a motion for contempt, showing that it was participating where Debtor’s interests needed to be protected. Judgment Creditors argue that the DIP should have simply acquiesced in their efforts to sue Shu Shen over characterization of her claimed separate property since, by definition, anything that could have been extracted from her claimed separate property stood to benefit the estate. This argument highlights one of the practical problems in evaluating a case like this one. The debtor was not wrong in arguing that the Judgment Creditors lacked standing. Moreover, the court cannot evaluate such matters in an antiseptic vacuum or only from the standpoint of who might benefit monetarily. Other considerations such as the fact that the defendant was his wife and that he, apparently believed her testimony as to the source of the assets, all play a role. This becomes even more meaningful if an earn-out reorganization is contemplated, as may have been the case early on. It is unrealistic to expect that the debtor’s only proper course was to acquiesce to his antagonist’s demands. All must be considered against the back drop that the claim was still hotly disputed, and, presumably the appeal was undertaken in good faith. While there were about $30,000 of other unsecured creditors, much of the
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effort was really spent in defending Dr. Liu’s and his family’s future. The court is aware of the case law cited above that says efforts solely benefitting a debtor as opposed to his creditors is not compensable. But here it is argued that both categories were benefitted (although wildly expensive given the relatively small amount of all other unsecured creditors). Maybe a trustee should have been appointed early to solve the obvious conflict, or maybe the parties should have sought a moratorium until the appeal was decided, but that is 20/20 hindsight. The resistance against the motion to confer derivative standing is in the same category; as it developed, this became one of the major questions in the two competing plans. As it developed, choosing a litigation/liquidation trustee to manage either the litigation or liquidation to pay for any award through a confirmed plan was the best course, and that’s what happened in the end. Although certainly everyone agrees that hindsight is 20/20, the court sees no basis for an adjustment.
This is the largest and, in many ways, the most difficult issue. According to the Judgment Creditors’ analysis at pp. 19-22 of the Opposition, some $351,477.50 is sought in this category, and another $17,901 is sought in opposing the Judgment Creditors’ Disclosure Statement. Judgment Creditors argue that none of the Debtor’s four amended plans were ever confirmed, and it was obvious that the Judgment Creditors’ Plan (which was ultimately confirmed) was better for unsecured creditors. While there is some truth to this it overlooks the point made by the Debtor, that it is very likely that Judgment Creditor was only motivated to file a plan in competition to the Debtor’s effort. Further, the court cannot have expected the Debtor to sit idly by as the months passed. Indeed, as is well known, this court takes a very dim view of debtors who park in Chapter 11 without providing the earnest and reciprocal effort to reorganize, the raison d’etre of Chapter 11. In truth and in retrospect, it might have made more sense for both parties to come forward with a moratorium request given that so much would turn on whether the judgment was affirmed on appeal. But the court cannot impose this kind of 20/20 hindsight and so must evaluate services considering what the parties knew and expected at the time. At this level the court
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cannot say that the services were not reasonably likely to confer a benefit upon the estate.
While it is true that the Debtor had to amend four times, it is not wrong that Debtor came very close to achieving confirmation. Some cutting-edge issues regarding gerrymandering of a consenting class and absolute priority turning on whether a defensive appeal is property of the estate, ultimately blocked the effort. But SWE argued the points as well as could be expected. In the end, the Judgment Creditors held an insuperable advantage by reason of their easy ability to subordinate to as much as 100% of the claims of all other creditors as necessary, as is shown in the confirmed plan. It is not wrong to argue that Judgment Creditors had to be coaxed into putting forth their best effort. Judgment Creditors filed their plan on the eve of a confirmation hearing. It is reasonable for SWE to suggest that Debtor’s efforts toward confirming a plan influenced the plan that Judgment Creditors ultimately proposed and were able to confirm. When it came to the last confirmation hearing, when it was clear that Judgment Creditors had the votes to confirm a plan, Debtor wisely stopped pursuing his plan., and that is to the credit of SWE. The court cannot reward only winning efforts, only those reasonably calculated to succeed; it only hopes that lawyers appearing before it will choose their battles wisely and efficiently, with the best interest of their constituents in mind. The court does not see any adjustment in order on this category.
There are some objections that make sense. If SWE is charging for pleadings that were never filed they should not be compensated, absent better explanation (not offered here). SWE has already agreed to reduce its fees by the amount for defending fee applications ($1,257? see p. 29 of Opposition) under the Baker Botts ruling, but another $2294 as explained at page 26 of the Opposition would be in order as well, assuming the report that these pleadings were never filed is accurate. Consequently, the adjustment for these will be $3551.
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SWE apparently prepared and submitted the applications for employment of
Rosenberg, Shpall & Zeigen, PLC as defense counsel defending Dr. Liu’s license before the California Medical Board and of David Kay to prosecute the appeal of the Judgment Creditors’ judgment. The amounts requested are $11,077.50 and $20,796, respectively. The necessity for employment these professionals for the reorganization effort is treated separately in items #4 and 5 on the calendar and will not be repeated here. But there is a point that troubles the court. The sum of over $31,000 to obtain employment of two professionals is quite high, but the court is used to allowing fees for expert services well-rendered. The problem here is that there was a fee-sharing arrangement which should simply not have been permitted at all under §504. It is true that the arrangement is revealed (somewhat obliquely) in the Kay application and the court approved the engagement. It is not discussed in the Rule 2014 statements of the applicants and does not appear at all in the RSZ application. But the court simply missed the point in signing the employment orders. The truth is that the court relies very heavily on DIP counsel to vet these issues, and if such are not flagged for the court this kind of thing will likely slip by. The court has no doubt the time was spent but the rate charged by SWE implies that the bankruptcy law surrounding the engagements will have been carefully reviewed by experts. That apparently did not happen here. The court cannot visit the entirety of this failing on SWE, but it is not consistent either with paying top rates. An arbitrary $15,000 adjustment is in order.
This was a hard-fought case. SWE did its utmost to achieve a favorable result for its client but this was ultimately not to be. If any criticism is in order, it lies not in the execution of the labors undertaken (with some modest exceptions) but maybe in the overall strategy, or of analysis at the outset of what could reasonably have been accomplished given the enormous odds faced….and the cost such an approach would incur. The court finds that this kind of case eludes easy analysis. What is counsel to do when an individual DIP faces a determined and well-represented adversary on a disputed claim? The problem is exaggerated when the disputed claim is 99% of all
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debt and the source of recovery is most likely the spouses’ claimed separate property. What is a court to expect of counsel in such a case? Immediate request for a trustee? Settlement at any price? It is reported that every effort to settle or mediate was undertaken, unsuccessfully. In sum, the court does not believe the cost of such an effort cannot in any circumstances be compensated, only that every effort should be made to carefully judge the alternatives before the costs become so heavy that every party in interest becomes, in the end, a practical loser by reason of the enormous administrative costs imposed.
Allow as prayed minus aggregate adjustments of $23,551
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(con't from 10-10-18 per order appr. stip to cont hrg ent. 9-24-18)
ROSENBERG, SHPALL & ZEIGEN, APLC, SPECIAL COUNSEL FEES: $57,206.25
EXPENSES: $24,227.97
Docket 561
Tentative for 10/31/18:
Rosenberg, Shpall & Zeigen ("RSZ") by this application seeks final approval of the first interim award of fees and costs and approval and on a final basis of the fees sought in its second Interim Application filed August 1, 2018. The interim award totals $48,795 in fees and $265.56 in expenses. The second Interim Application seeks fees of $57,206.25 and expenses of
$24,227.97. If allowed in full, the grand total would be $106,001.25 in fees and $24,493.53 in expenses. These fees are presumably in addition to any fees RSZ has already been paid by drawing down retainers. Judgment Creditors have filed an objection to the fee request.
According to the terms of RSZ’s employment application filed July 28, 2016, RSZ was not required to file interim or final fee applications unless the fees exceeded the retainers. [Debtor’s Reply, Exh. 7, p. 89] This application was approved by order entered August 22, 2016. [Docket No. 156] An amended employment application was filed on October 12, 2017, authorizing an additional retainer and the same arrangement for fee applications. [Debtor’s Reply, Exh. 8, p. 110-111] An order approving the amended application was entered November 9, 2017. [Docket No. 373]
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On May 3, 2016, an application to employ David Kay was filed.
[Debtor’s Reply, Exh. 9] The application was approved by order entered May 27, 2016. [Docket No. 72] In the application it is disclosed that "[t]he terms of Mr. Kay’s employment include a referral fee to David Rosenberg of 15% of all sums paid for attorneys’ fees." [Debtor’s Reply, Exh. 9, p. 156] Although the RSZ employment applications were filed after Kay’s application, the referral fee is not disclosed in the RSZ applications.
Pursuant to 11 U.S.C. §330(a), the court may award "reasonable compensation for actual necessary services." Compensation should not be awarded for services that were not "reasonably likely to benefit the debtor’s estate;" or "necessary to the administration of the estate." Judgment Creditors state that they have no objection to the quality of the services, but they argue that many of the services only benefitted Debtor individually, not the estate and creditors. Judgment Creditor also suggests that all fees should be disallowed because RSZ did not disclose a referral fee arrangement with David Kay and RSZ drew down on retainers without court approval. A response by Debtor is included in the reply filed by SWE. Judgment Creditor also raises some discrepancies in RSZ’s fee applications at pages 5-6 of the objection. RSZ has not addressed these.
Judgment Creditor’s objection to the drawing down of retainers without court approval likely does not warrant disallowance of fees entirely because the procedure was approved by the employment orders entered August 22, 2016 and November 9, 2017. RSZ probably could have provided better disclosure of what has been drawn down once a fee application became necessary, but under the terms of the employment order it does not seem that it was necessary.
It is more concerning to the court that the referral fee was not disclosed in either of the RSZ employment applications. FRBP Rule 2014 requires that an application to employ contain all of the applicants "connections with the
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debtor, creditors, any other party in interest, their respective attorneys and accountants, the United States trustee, or any person employed in the office of the United States trustee." Debtor’s response states that the referral fee was disclosed in the Kay application. While this is so, and the fee sharing was being done by Kay, this is still a connection with an attorney in the case that should have been disclosed. In In re Park-Helena Corp., 63 F.3d 877, 880 (9th Cir. 1995), the Ninth Circuit explained:
The bankruptcy court must ensure that attorneys who represent the debtor do so in the best interests of the bankruptcy estate… To facilitate the court's policing responsibilities, the Bankruptcy Code and Federal Rules of Bankruptcy Procedure impose several disclosure requirements on attorneys who seek to represent a debtor and who seek to recover fees. See 11 U.S.C. § 329; Fed.R.Bankr.P. 2014 & 2016. The disclosure rules impose upon attorneys an independent responsibility. Thus, failure to comply with the disclosure rules is a sanctionable violation, even if proper disclosure would have shown that the attorney had not actually violated any Bankruptcy Code provision or any Bankruptcy Rule. …
The disclosure rules are applied literally, even if the results are sometimes harsh. Negligent or inadvertent omissions "do not vitiate the failure to disclose." Similarly, a disclosure violation may result in sanctions "regardless of actual harm to the estate." (citations omitted)
Professionals must disclose all connections with the debtor, creditors and parties in interest, no matter how irrelevant or trivial those connections may seem. In re Mehdipour, 202 B.R. 474, 480 (B.A.P. 9th Cir. 1996), aff'd, 139 F.3d 1303 (9th Cir. 1998). The trial court is in the best position to resolve disputes over fees. In re Film Ventures Intern., Inc., 75 B.R. 250, 253 (B.A.P.
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9th Cir. 1987). The excessiveness or reasonableness of fees is not always irrelevant. If appropriate, a court should inquire into these when deciding whether and how much to disgorge. In re Lewis, 113 F.3d 1040, 1045 (9th Cir. 1997). The court would have grounds to disallow fees entirely if it wished to do so.
Additional grounds for disallowing fees might also appear in §504, which prohibits a person receiving compensation under §§503(b)(2) or (b)(4) from sharing or agreeing to share compensation or reimbursement with another person. Here, there is an agreement for David Kay to share 15% of his fees with David Rosenberg. See also, Matter of Futuronics Corp., 655 F.2d 463, 470 (2nd Cir. 1981).
But on the §504 issue, and the failure in the RSZ applications to disclose the fee sharing the court must observe that there was some attempt to make disclosure, even if it was in the Kay application. The court is disappointed that debtor’s general counsel did not highlight these issues, as they are more properly charged with being bankruptcy experts than are RSZ or Mr. Kay, but in the end, the court did approve the arrangement. So, in that case it is inappropriate to visit the harshest consequences on the applicants.
Finally, there is the argument here that the services of RSZ benefitted only Debtor individually, rather than the estate and creditors, although this might be selective hindsight being 20/20. We should remember than when the case started it was not entirely clear how the reorganization would be accomplished, and the possibility of an earn-out approach did not seem entirely unlikely. While the net revenue was not as significant as the volume of fees might suggest, it is unfair to take a one-year snapshot. Even as confirmed there might be some effort to sell the practice, the record is unclear. So, retaining his license was of great importance and while Debtor was prosecuting his appeal, he would have needed to do what was needed to maintain his medical license. In retrospect this case would become a controlled liquidation, but the court does not agree that creditors never had
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any prospect of benefit from Dr. Liu’s continued status as a licensed M.D.
Combining all issues, the court believes an adjustment is appropriate, lest attorney’s ignore these important issues in future cases and perhaps in recognition that most of the benefit did end up being for Debtor, not his creditors.
Allow fees of $95,000 (an $11,001.25 reduction) and costs of
$24,493.53
Tentative for 8/22/18:
Same as # 7 and 8 - put off to final fee application.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(con't from 10-10-18 per order appr. stip to cont hrg ent. 9-24-18)
DAVID A. KAY, SPECIAL COUNSEL Fees: $23,782.50
Expenses: $769.83
Docket 557
Tentative for 10/31/18:
The reader is invited to review item #4 on the calendar, as many of the court’s observations, authorities and analysis are the same for this, the application for final fees of special counsel, David A. Kay. Applicant seeks final allowance of $153,854.13 in fees. Applicant’s primary services were in all aspects of the appeal of the judgment in favor of the judgment creditors. The appeal was unsuccessful, and the judgment was confirmed.
Like #4, the judgment creditors argue that the fees should be disallowed. Here, the creditors argue that: 1. the applicant failed to disclose the 15% referral arrangement with RSZ in the Rule 2014 statement (it was disclosed in the body of the application); 2. applicant failed to inform the court of $93,750 in retainer funds and failed to disclose prepetition payment of
$18,290 in addition to the $20,000 in other prepetition retainer receipts; 3. applicant failed to note that fee-sharing among professionals is forbidden altogether under 11 U.S.C.§504 and 4. the lack of benefit to the estate in an unsuccessful appeal, taken together with the other irregularities, mean that applicant should be denied any compensation. As in calendar #4, complete
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denial would be too harsh a remedy.
The court did approve the application for employment which contained a fee-sharing disclosure. So, it is hardly appropriate to visit all consequences of that upon the applicant. The point could/should have been highlighted better, and for this the court wishes debtor’s counsel as the bankruptcy expert had been more proactive (but then so could have objectors). The lack of candor about the totality of retainers and payment of same is also disturbing. But on the question of lack of benefit, the objecting creditor fails to see the point except through their own narrow lenses. Had the appeal succeeded, all creditors other than the objectors would have stood to recover 100%. Had there been a remand, likely a compromise would have been reached and retrial and/or the whole bankruptcy case might have been unnecessary. But the court must judge these questions from the standpoint of the professionals at the time the services were rendered, not in hindsight. The court sees no argument that the appeal was frivolous and so it is not surprising that every effort was made to win.
As in #4, some adjustment for the noted irregularities is appropriate, lest professionals come to believe that the rules are mere suggestions.
Allow $142,000, a $11,854.13 reduction.
Tentative for 8/22/18
Same comment as #7 - may make more sense to defer to final fee application?
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello
10:00 AM
David A Kay Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(con't from 10-10-18 per order appr. stip to cont hrg ent. 9-24-18)
SL BIGGS, ACCOUNTANT Fee: $22,009.50
Expenses: $391.62
Docket 556
Tentative for 10/31/18:
Allow as prayed. Appearance is optional.
Tentative for 8/22/18:
The court has two concerns. First, is it true that net income during the case was only $18,500? Second, since we appear at the threshold of plan confirmation, does it make more sense to postpone for single omnibus final fee application?
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(con't from 10-24-18)
Docket 25
Tentative for 10/31/18: Status?
Tentative for 10/24/18:
This Disclosure Statement cannot be approved as written. All of the UST's objections are well taken and must be addressed. More information about the potential sale of the residence is needed and Debtors need to employ their real estate broker. Further, there are fundamental problems with the case. The court sees no provision for adequate protection payments and that imposes a serious (probably unconfirmable) burden on junior lienholders. This issue is made worse by the lack of an appraisal showing that a projected price of $3,500,000 is realistic. Deny.
Debtor(s):
Joseph T Bubonic Represented By Julie J Villalobos
Joint Debtor(s):
Mary A Bubonic Represented By Julie J Villalobos
10:00 AM
(con't from 9-12-18)
Docket 1
Tentative for 11/7/18: Status of take out loans?
Tentative for 9/12/18:
Continue approximately 60 days to evaluate refinance efforts?
Tentative for 8/18/18: Why no report?
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley
10:00 AM
Docket 1
Deadline for filing plan and disclosure statement: January 2, 2019
Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: December 1, 2018
Debtor(s):
Giao Van Le Represented By
Michael Jones
10:00 AM
Docket 97
Can the court be reassured that actual interest incurred would be minimal by prompt payment each month? Will no finance company offer a traditional credit line? Will stay be relieved by stip to afford prompt repayment without incurring fees, etc.? No tentative.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
Movant(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 10-24-18 per amended scheduling order entered 9-18-18)
Docket 43
- NONE LISTED -
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
10:00 AM
(con't from 10-24-18 per order approving stip. to cont. entered 10-23-18)
Docket 57
Tentative for 11/7/18:
So, in effect the arrearage portion has been added to the balance and interest on the whole at 6.5% is agreed? If so, confirm.
Debtor(s):
Jeff Allan Charity Represented By Michael G Spector Vicki L Schennum
11:00 AM
(con't from 10-24-18 per amended scheduling order entered 9-18-18)
Docket 0
Tentative for 8/22/18:
Are the parties willing to extend existing cash collateral orders to a date reasonably beyond a scheduled confirmation hearing?
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
U.S.C. Section 305 and 1112
(con't from 10-24-18 per amended scheduling order entered 9-18-18)
Docket 37
This is the motion of Opus Bank in these administratively consolidated Chapter 11cases for dismissal under §§305 and 1112. In its initial motion Opus Bank hits hard on the theme that the debtors are late in filing their proposed plan and disclosure. This is clearly true although there is room for argument whether there was ever any clear deadline established by order. It is undeniable that counsel’s various promises were not met and the plan and disclosure statement once actually filed August 8 was at least 60 days late. Pushing one’s luck seems to be a recurrent theme.
In its Reply the bank hits on another theme, i.e. that the late-filed plan as written is probably infeasible and in any case, is grossly inequitable. The bank argues that the plan as written front loads payment of professional fees while paying interest only on its secured claim. The bank may well be correct but the question is whether this is the time and place to sort out these questions. The court notes that there is a hearing scheduled on adequacy of disclosure September 26, 2018 at 10:00 a.m. That might not be the time either for determination of confirmation issues unless the plan is obviously unconfirmable as various authorities have established. Since the bank’s points are mostly confirmation issues, the court does not feel inclined to decide them now. Dismissals (or conversion) on an interim basis are reserved for cases involving misbehavior or where the results of operations are a loss, or terms proposed for reorganization are so obviously unlikely, as to warrant cutting short the effort to staunch some bleeding. According to the somewhat sketchy reports found in the status report, the debtors are operating profitably. Whether there is enough to build a feasible plan upon, or whether the forecasted increases are real, is another question.
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But despite the disappointing failure to meet timetables, the court does not see anything warranting an abrupt termination of the cases, at least not at this moment.
However, in the interest of getting sooner to a point where a plan might actually be confirmed, the debtors should make note of some points. First, they have used up just about all the grace available. The failure to follow through on the promised timetable might not have been fatal (this time), but it also instills no confidence either. Second, the debtors are apparently only now commencing the reorganization effort in earnest, well into the second year of these cases. More time should therefore not be assumed. That we are still going into the second autumn of these cases is itself a minor miracle. Third, there may be only one shot at confirmation, so they should make a maximum effort to get it right the first time.
Paying professionals before everyone else just fundamentally smells bad, particularly considering the astounding amounts involved (accrued but not finally allowed).
Maybe the better part of valor would be to align the schedules more closely so that all the risk is not imposed on creditors. The court is not prejudging confirmation issues here, but merely warning debtors that it should not be assumed that there will be prolonged and repeated opportunity to slice the salami.
Continue to coincide with adequacy hearing September 26.
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
10:00 AM
Adv#: 8:13-01247 U.S. Trustee v. Shyu et al
(cont'd from 2-15-18) (changed to a s/c per order approv. stip. ent. 12-19-17)
Docket 2
Tentative for 11/8/18:
Can someone explain why we are litigating denial of discharge against a debtor who is deceased?
Tentative for 2/15/18:
How much time to continued pre-trial conference?
Tentative for 12/11/14:
Deadline for completing discovery: September 1, 2015 Last date for filing pre-trial motions: September 21, 2015 Pre-trial conference on: October 1, 2015 at 10:00 a.m.
Joint pre-trial order due per local rules.
Tentative for 9/4/14:
Status conference in part continued to December 11, 2014 at 10:00 a.m. Court understands that MSJ will be argued on the section 727(b)(4) theory. All other portions continued for further status conference.
10:00 AM
Tentative for 5/29/14:
Status conference continued to September 4, 2014 at 10:00 a.m. More delays should not be expected.
Tentative for 3/27/14:
Status conference continued to May 29, 2014 at 10:00 a.m. to accomodate Rule 56 motion.
Tentative for 12/12/13:
Status conference continued to February 27, 2014 at 10:00 a.m. to allow motion for summary judgment to be heard.
Tentative for 10/24/13:
Status conference continued to December 2, 2013 at 10:00 a.m.
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T Madden Beth Gaschen Susann K Narholm
Defendant(s):
Cheri L Shyu Pro Se
THOMAS CHIA FU Pro Se
Joint Debtor(s):
Thomas Fu Represented By
10:00 AM
Evan D Smiley
Plaintiff(s):
U.S. Trustee Represented By
Frank Cadigan
Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
James J Joseph (TR)
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:17-01074 Marshack v. Stegin
Docket 1
Tentative for 9/13/18:
Status conference continued to November 8, 2018 at 10:00 a.m. Personal appearance is not required. Appearance waived at continued hearing if final payment is received.
Tentative for 8/2/18:
Status conference continued to September 13, 2018 at 10:00 a.m. Appearance on August 2, 2018 excused.
Tentative for 6/7/18:
Status conference continued to August 2, 2018 at 10:00AM. Personal Appearance Not Required.
Tentative for 1/31/18:
Status conference continued to June 7, 2018 at 10:00 a.m. per request. Appearance is optional.
10:00 AM
Tentative for 12/14/17:
Status conference continued to January 31, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to December 14, 2017 at 10:00 a.m. to allow for fulfillment of settlement terms. Appearance is waived.
Debtor(s):
Jana W. Olson Pro Se
Defendant(s):
Elliott G. Stegin Represented By
Natalie B. Daghbandan Sharon Z. Weiss
Plaintiff(s):
Richard A Marshack Represented By
D Edward Hays
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
10:00 AM
Adv#: 8:17-01085 Karen Sue Naylor, Chapter 7 Trustee v. Home Trends International Inc.
(con't from 5-31-18)
Docket 2
Tentative for 11/8/18:
Status conference continued to June 27, 2018 at 10:00 a.m.
Tentative for 5/31/18:
Status conference continued to November 8, 2018 at 10:00 a.m.
Tentative for 3/29/18:
Status conference continued to May 31, 2018 at 10:00 a.m.
Tentative for 2/1/18:
Status conference continued to March 29, 2018 at 10:00 a.m.
Tentative for 10/26/17:
Status conference continued to February 1, 2018 at 10:00 a.m.
Tentative for 8/31/17:
Status conference continued to October 26, 2017 at 10:00 a.m.
10:00 AM
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Home Trends International Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier Nanette D Sanders
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01122 Marshack v. Choubey et al
U.S.C. Section 550
(another summons issued on defendant Jitendra Patel on 5-11-18) (con't from 10-11-18)
Docket 1
Tentative for 11/8/18:
Are we just awaiting results of a mediation? If so, does a continuance make most sense?
Tentative for 10/11/18: Why no status report?
Tentative for 8/2/18:
Deadline for completing discovery: October 1, 2018 Last date for filing pre-trial motions: October 31, 2018
Pre-trial conference on: December 6, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Why no participation by defendant?
Tentative for 5/24/18:
In view of the report that Jitendra Patel has not been served, continue to 8/2/18 at 10:00AM.
10:00 AM
Tentative for 4/26/18:
Status report? Status of service? Is settlement still in prospect?
Tentative for 2/1/18:
Status conference continued to April 26, 2018 at 10:00 a.m. to allow input from any responding party.
Tentative for 11/30/17:
Status conference continued to January 4, 2018 at 10:00 a.m. to accomodate default and prove up.
Debtor(s):
Rahul Choubey Represented By Richard G Heston
Defendant(s):
Rahul Choubey Pro Se
Misha Choubey Pro Se
Shahi K. Pandey Pro Se
Vandana Pandey Pro Se
Jitendra Patel Pro Se
Azahalea Ahumada Pro Se
Plaintiff(s):
Richard A Marshack Represented By Anerio V Altman
10:00 AM
Trustee(s):
Richard A Marshack (TR) Represented By Anerio V Altman
10:00 AM
Adv#: 8:18-01011 Hybrid, LTD. v. Shlaimoun
(Second Amended Complaint filed 6-20-18) (con't from 10-4-18)
Docket 1
Tentative for 11/8/18:
Deadline for completing discovery: May 15, 2019 Last date for filing pre-trial motions: June 3, 2019 Pre-trial conference on: June 27, 2019 @ 10:00 a.m. Joint pre-trial order due per local rules.
Tentative for 8/2/18:
Status conference continued to August 23, 2018 at 11:00 a.m.
Tentative for 5/31/18: see calendar # 6
Tentative for 5/24/18: Continue to 5/31/18.
Tentative for 4/12/18:
Status conference continued to May 3, 2018 at 11:00 a.m.
10:00 AM
Debtor(s):
Zia Shlaimoun Represented By Charles Shamash
Defendant(s):
Zia Shlaimoun Pro Se
Plaintiff(s):
Hybrid, LTD. Represented By
Michael J Lee
Trustee(s):
Thomas H Casey (TR) Represented By Thomas H Casey Kathleen J McCarthy
10:00 AM
Adv#: 8:18-01037 Papac v. Speckmann
(another summons issued 2-14-18)
(con't from 10-11-18)
Docket 1
Tentative for 10/11/18:
What is status of prove up? Was a form of judgment lodged?
Tentative for 8/30/18:
Status conference continued to October 11, 2018 at 10:00 a.m. Prove up was expected.
Tentative for 7/12/18: Prove up?
Tentative for 5/3/18:
Status Conference continued to July 12 at 10:00 a.m. with expectation that prove up will occur in meantime.
Debtor(s):
John K. Speckmann Represented By Christine A Kingston
10:00 AM
Defendant(s):
John K Speckmann Pro Se
Plaintiff(s):
Linda Papac Represented By
Shelly L Hanke
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
Adv#: 8:18-01100 Karen Sue Naylor v. Logility, Inc.
(con't from 8-23-18 per order on stipulation to cont entered 8-6-18)
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Logility, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01102 Karen Sue Naylor, Chapter 7 Trustee v. Pulaski R.E. Partners, LP
(another summons issued 6-20-18)
(con't from 9-6-18 per order on stip to cont. s/c entered 8-6-18)
Docket 5
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Pulaski R.E. Partners, LP Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
10:00 AM
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01106 Karen Sue Naylor, Chapter 7 Trustee v. FW IL-Riverside/Rivers Edge, LLC
(con't from 8-30-18 per order on stipulation to cont. s/c entered 8-06-18)
Docket 1
Tentative for 11/8/18:
Status conference continued to February 28, 2019 at 10:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
FW IL-Riverside/Rivers Edge, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:00 AM
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:00 AM
Adv#: 8:18-01131 Foley v. US Department of Education et al
(con't from 10-4-18 per order appr. stip. to cont. ent. 9-25-18)
Docket 1
- NONE LISTED -
Debtor(s):
Gerri Ann Foley Represented By
Catherine Christiansen
Defendant(s):
US Department of Education Pro Se
Great Lakes Educational Loan Pro Se Deutsche Bank ELT Navient & SLM Pro Se Navient Solutions LLC Pro Se
Strada Education Network Inc Pro Se
Plaintiff(s):
Gerri Ann Foley Represented By
Catherine Christiansen
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
Adv#: 8:17-01037 Aguilar et al v. Treadway
(2) Deny discharge of Debtor under 11 U.S.C. Sections 727(a)(2)(A) and 727(a) (4)(A)
(set from s/c hearing held on 6-1-17) (con't from 10-25-18 )
Docket 1
Tentative for 11/8/18:
So, should the court adopt the unilateral version of the pre-trial stip?
Tentative for 10/25/18:
Still no pre-trial stip? Continue to November 29, 2018 at 2:00 p.m.
Tentative for 6/1/17:
Deadline for completing discovery: January 15, 2018 Last date for filing pre-trial motions: January 29, 2018 Pre-trial conference on:February 8, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by plaintiff within 10 days. One day of mediation to be completed by September 1, 2017.
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
10:00 AM
Defendant(s):
Kevin Michael Treadway Pro Se
Plaintiff(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By Bradley D Blakeley
Trustee(s):
Karen S Naylor (TR) Represented By Burd & Naylor
10:00 AM
Adv#: 8:18-01045 Karen Sue Naylor, Chapter 7 Trustee v. Brentwood Originals, Inc.
(set from s/c held on 5-24-18)
Docket 1
Tentative for 5/24/18:
Deadline for completing discovery: 10/12/18
Last Date for filing pre-trial motions: 10/29/18
Pre-trial conference on 11/8/18 at 10:00AM
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Brentwood Originals, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
10:00 AM
Trustee(s):
Christopher Minier
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:18-01052 Karen Sue Naylor, Chapter 7 Trustee v. Overland Plaza, LLC
(con't from 10-4-18 per order on stipulation entered 10-1-18)
Docket 8
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Overland Plaza, LLC Pro Se
Movant(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
11:00 AM
Trustee(s):
Christopher Minier
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:18-01107 Naylor v. Watanabe
Docket 24
This is the Defendant’s Motion for Judgment on the Pleadings brought under Rule 12(c). The argument turns on the question of whether Defendant, formerly a Chief Financial Officer, was an "insider" when the transfer on or near July 23, 2014 (August 18, 2014 is also mentioned) of $236,590.31. Unless Defendant held status as an insider the one-year limitation found at §547(b)(4)(B) would not apply although the alleged transfer was clearly within one year of the June 14, 2015 petition date.
Defendant tries to make much of the fact that Defendant allegedly resigned June 18, 2014 (a date still within the year but earlier than the alleged transfer).
A motion for judgment on the pleadings under Rule 12(c) "is properly granted when, accepting all factual allegations in the complaint as true, there is no issue of material fact in dispute, and the moving party is entitled to judgment as a matter of law." Chavez v. United States, 683 F. 3d 1102, 1108-09 (9th Cir. 2012). The analysis under a Rule 12(c) motion is substantially identical to a Rule 12(b)(6) motion because "under both rules, a court must determine whether the facts alleged in the complaint, taken as true, entitle the plaintiff to legal remedy." Id. Applying the 12(b) standards, the court need not accept conclusory allegations, and instead focuses on whether the plaintiff has alleged sufficient facts that add up to "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
The first question is whether the court can take cognizance of any of the Defendant’s various arguments in a Rule 12(c) motion, since the Trustee clearly alleges in the Complaint that Defendant was an "insider" at all relevant times. See ¶¶ 10 and 35. The court usually confines its analysis to the four corners of the Complaint in a Rule 12 motion. That these allegations might be disputed is a factual question not
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determinable in a Rule 12 motion. But it is true that the court may "consider unattached evidence on which the complaint ‘necessarily relies’ if: (1) the complaint refers to the document; (2) the document is central to the plaintiff’s claim; and (3) no party questions the authenticity of the document." United States ex rel. Lee v.
Corinthian Colleges, 655 F. 3d 984, 999 (9th Cir. Cal. 2011). Although not specifically stated, the Defendant seems to argue that because the Trustee referred obliquely in the Complaint to Debtor’s Statement of Financial Affairs (Complaint ¶ 30), the court should also consider this document as well to find that the Defendant was not an officer at the time of the alleged transfer, thus not an insider for purposes of 11 U.S.C. § 547(b)(4). But this argument is weak at best. There might not be a dispute as to whether the Statement of Financial Affairs is genuine, i.e. "authentic",
i.e. not counterfeit, but it is unclear that it is either "central" to the Trustee’s claim or is one upon which the Trustee relies, particularly on the question of insider status. Many of the allegations regarding Defendant and his insider status do not reference the Statement of Financial Affairs; in fact, the only apparent purpose for citation to the Statement in the Complaint was its characterization of the transfer as "Deferred Compensation Plan Distribution." Indeed, as the Trustee argues in his footnote 2 of the Opposition, schedules and Statements of Financial Affairs are often riddled with inaccuracies and the Debtor had amended its schedules at least twice in this proceeding. Moreover, the court strongly doubts that it can take judicial notice of issues discussed in the Statement of Affairs. Judicial notice is reserved for those matters "not subject to reasonable dispute." Rule 201, Fed. R. Evid. While it is true that the court can take judicial notice of its own files including the fact that a pleading has been filed, this is not the same thing as taking judicial notice of things stated therein as being beyond reasonable doubt. The fallacy of this proposition should be self -evident; something does not gain undoubted veracity merely because it is contained within a pleading that has been filed. Pleadings duly filed contain mistakes, misstatements and lies all the time.
Additionally, the parties argue at length over the fascinating question of whether the transfer was "arranged" while Defendant was an insider and that should inform on the question of when the "transfer" occurred for preference analysis. See
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e.g. In re EECO, Inc., 138 B.R. 260, 263 (Bankr. C.D. Cal. 1992). The Trustee argues persuasively that clearly Defendant was an insider when the debtor’s Deferred Compensation scheme was created in 2010, the date of resignation may be part of an expansive definition of what is meant by "arranged" and it is illogical (almost laughable) to believe that Defendant could defeat this status by simply resigning only a few days or weeks before actually receiving the funds.
While the court could delve into the split of authority on this question, it really does not need to. That is for the simple reason that the preamble to §101(31) provides:
"The term ‘insider’ includes‒
if the debtor is a corporation-
(ii) officer of the debtor…." (italics added)
This language has been interpreted as illustrative, not exclusive, and requires a factual inquiry and determination where the policy and logic of the Code require that certain persons be treated as insiders although not strictly within the enumerated categories of §101(31). See e.g. Shubert v. Lucent Technologies, Inc. (In re Winstar Communications, Inc.), 554 F. 3d 382, 394-96 (3d Cir. 2009); In re O’Neill, 550 B.R. 482, 516 (Dist. N.D. 2016); Damir v. Trans-Pacific National Bank (In re Kong), 196
B.R. 167, 171 (N.D. Cal. 1996); In re Orsa Associates, 99 B.R. 609, 621 (Bankr. E.D. Pa. 1989); In re Babcock Dairy, 70 B.R. 657, 660 (Bankr. N.D. Ohio 1986). So, whether Defendant might be an "insider" as alleged does not depend wholly on his status as an officer, even if that date could be pinpointed for purposes of a Rule 12(c) motion without resort to facts outside the pleadings. In the end these will all be factual questions inappropriate for a Rule 12(c) motion.
Deny
Debtor(s):
Anna's Linens, Inc. Represented By
11:00 AM
David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Neil Watanabe Represented By Jonathan Shenson
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad Brian R Nelson
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
11:00 AM
Adv#: 8:18-01107 Naylor v. Watanabe
[11 U.S.C. Section 547(b)]; 2. Recover Property Transferred [11 U.S.C. Section 550(a)]
(con't from 11-01-18)
Docket 1
Tentative for 11/8/18:
Status conference continued to February 28, 2019 at 10:00 a.m.
Tentative for 11/1/18:
Status conference continued to November 8, 2018 at 11:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Neil Watanabe Pro Se
11:00 AM
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:18-01108 Naylor v. Miller
Docket 17
This is the Defendant’s Rule 12(c) motion for Judgment on the Pleadings.
Although the facts are slightly different (director vs CFO), the analysis is the same as matter #14 on calendar Naylor v. Watanabe. For the reasons discussed in #14 the motion will be……
Denied
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Dale Miller Represented By
Jonathan Shenson
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad
11:00 AM
Trustee(s):
Brian R Nelson
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
11:00 AM
Adv#: 8:18-01108 Naylor v. Miller
[11 U.S.C. Section 547(b)]; 2. Recover Property Transferred [11 U.S.C. Section 550(a)]
(con't from 11-01-18 )
Docket 1
Tentative for 11/8/18:
Status conference continued to February 28, 2018 at 10:00 a.m.
Tentative for 11/1/18:
Status conference continued to November 8, 2018 at 11:00 a.m.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Dale Miller Pro Se
11:00 AM
Plaintiff(s):
Karen Sue Naylor Represented By Todd C. Ringstad
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:13-01117 Padilla, III v. Jakubaitis
(con't from 9-27-18 per order granting stip. to cont. hrg. entered 9-27-18)
Docket 222
Tentative for 11/8/18: Same.
Tentative for 9/27/18:
Since the court has abstained in favor of a Superior Court action now reportedly set for trial in February, the court sees little utility in imposing Rule 26 sanctions. Deny.
Tentative for 8/23/18: See #10.
Debtor(s):
Frank Jakubaitis Represented By Harlene Miller Fritz J Firman Arash Shirdel
Defendant(s):
Frank Jakubaitis Pro Se
Plaintiff(s):
Carlos Padilla III Represented By
11:00 AM
Trustee(s):
Arash Shirdel
Jeffrey I Golden (TR) Represented By
Jeffrey I Golden (TR) Arash Shirdel
11:00 AM
Adv#: 8:14-01007 Padilla, III v. Wecosign, Inc., et al
(con't from 9-27-18 per order granting stip. to cont. hrg. entered 9-27-18)
Docket 282
Tentative for 11/8/18: Same.
Tentative for 9/27/18:
Since the court has abstained in favor of a Superior Court action now reportedly set for trial in February, the court sees little utility in imposing Rule 26 sanctions. Deny.
Tentative for 8/23/18:
This motion will be denied as moot. At a hearing on March 8, 2018, this Court abstained from this proceeding after certain limited discovery issues were resolved. An order was entered on May 9, 2018 (prepared by the Court after a proposed order was not lodged). The Court did not want to abstain until Frank Jakubaitis’ deposition had been concluded and sanctions had been paid. These issues are pending in Marshack v. Jakubaitis, 8:15-01426- TA, which remains before this Court. But that those matters are still pending does not resucitate all other aspects of the case, which are remanded to state court. Rule 26 squabbling is in this latter category. The parties have continued the status conference hearings on Mr. Jakubaitis’ deposition and related issues in that adversary twice in the last several months. Based upon what is reported in the opposition to this motion, the parties have picked back up in state court and a trial has been set for early 2019.
Deny as moot.
11:00 AM
Debtor(s):
Tara Jakubaitis Represented By Christopher P Walker Fritz J Firman Benjamin R Heston
Defendant(s):
Wecosign, Inc., Pro Se
Wecosign Services, Inc., Pro Se
PNC National, Inc., Pro Se
Frank Jakubaitis Represented By Fritz J Firman
Tara Jakubaitis Represented By Fritz J Firman
Plaintiff(s):
Carlos Padilla III Represented By Arash Shirdel
Trustee(s):
Richard A Marshack (TR) Represented By Arash Shirdel
10:00 AM
Docket 156
Per OST, oppositions due at hearing.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
10:00 AM
(con't from 11-07-18)
Docket 1
Tentative for 11/9/18: No tentative.
Tentative for 11/7/18: Status of take out loans?
Tentative for 9/12/18:
Continue approximately 60 days to evaluate refinance efforts?
Tentative for 8/18/18: Why no report?
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley
11:00 AM
[RE: 101 Hallmark, Irvine, CA 92620]
(con't from 10-10-18)
EAST WEST BANK
Vs DEBTOR
Docket 34
Tentative for 11/9/18:
No tentative.
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18:
These are the motions of East West Bank for relief of stay regarding its trust deeds against four real properties as listed in the motions. The four interrelated motions are considered together in a single memorandum. The trust deeds secure the
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sum of approximately $1,916,916 owed under a line of credit extended to the debtor’s accountancy firm, Anton & Chia, LLP. That line of credit was reportedly guaranteed by the debtor. There is, reportedly, no equity in any of the four properties and, in fact, the properties are "upside down" by the amount of $524,959, or "negative equity" in that amount. So, the provisions of 11 U.S.C. §362(d)(2) are met insofar as the movant bears the burden of proving no equity. Movant also seeks relief under §362(d)(4) based upon a series of deeds from holding companies controlled by the debtor on July 2, 2018, just before the petition in bankruptcy was filed.
Debtor apparently does not contest any of this. Rather, debtor relies on the second prong of §362(d)(2), i.e. that the properties are "necessary to a reorganization." United Sav. Ass'n of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S.
365, 108 S.Ct. 626, 633 (1988). Debtor bears the burden on this issue as provided in § 362(g). The only evidence provided by debtor appears in the Declaration of Gregory Wahl. The only reorganization described by the debtor is purely aspirational in that he says he is exploring opportunities and that his wife may realize income on a new consulting contract. Very few details are given. Moreover, the "reorganization" is not really anything tangible or even within the classic meaning of the term. Rather, it seems that debtor would like to explore refinancing and, if that is not achievable, control the liquidation process in Chapter 11 through" an orderly sale process." While reorganization plans can include liquidation of estate assets, the court doubts that is the meaning of the term in this context. But all of this is far too vague and speculative to justify holding off the bank, particularly since debtor makes no proposal of adequate protection payments, thus imposing all continuing risk upon the bank.
Further, the court is aware that the Anton & Chia case was recently converted to Chapter 7, thus making any prospect of a business rebound that much more distant. The debtor’s burden on this issue is not carried.
Grant
Debtor(s):
Gregory Anton Wahl Represented By
11:00 AM
Movant(s):
Christopher J Langley Donald Reid
EAST WEST BANK Represented By Scott O Smith
11:00 AM
[RE: 952 Balboa Drive, Arcadia, CA 91007]
(con't from 10-10-18)
EAST WEST BANK
Vs DEBTOR
Docket 35
Tentative for 11/9/18: No tentative.
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
11:00 AM
Movant(s):
EAST WEST BANK Represented By Scott O Smith
11:00 AM
[RE: 51 Tesoro, Irvine, CA 92618]
(con't from 10-10-18)
EAST WEST BANK
Vs DEBTOR
Docket 36
Tentative for 11/9/18: No tentative.
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
11:00 AM
Movant(s):
EAST WEST BANK Represented By Scott O Smith
11:00 AM
[RE: 22765 Lakeway Drive, Unit 428, Diamond Bar, CA 91765]
(con't from 10-10-18)
EAST WEST BANK
Vs DEBTOR
Docket 37
Tentative for 11/9/18: No tentative.
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley
11:00 AM
Movant(s):
Donald Reid
EAST WEST BANK Represented By Scott O Smith
10:00 AM
CBT INVESTMENTS, LLC
Vs.
DEBTOR
Docket 15
While debtor may be correct that an unlawful detainer judgment is subject to the stay if involving commercial property (11 U.S.C. 362(b)(22)) under Windmill Farms, 841 F.2d 1467 (9th Cir. 1987) there is no exteant lease and thus no cognizable reason to leave any stay in place. Grant.
Debtor(s):
Marguerite Karamanlian Represented By Julie Nong
Movant(s):
CBT Investments, LLC Represented By Cynthia S Poer
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
BMW BANK OF NORTH AMERICA
Vs DEBTORS
Docket 70
Grant. Appearance is optional.
Debtor(s):
Lea Puno Deaton Represented By Michael R Totaro
Joint Debtor(s):
Patrick Sean Deaton Represented By Michael R Totaro
Movant(s):
BMW Bank of North America Represented By Dipika Parmar Cheryl A Skigin
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
WELLS FARGO BANK, N.A. d/b/a WELLS FARGO AUTO
Vs DEBTOR
Docket 58
Grant. Appearance is optional.
Debtor(s):
Ross Paul Kline Represented By Barry E Borowitz
Movant(s):
Wells Fargo Bank, N.A. d/b/a Wells Represented By
Jennifer H Wang
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
HONDA LEASE TRUST
Vs
DEBTORS' AND RICHARD A. MARSHACK, CHAPTER 7 TRUSTEE
Docket 13
Grant. Appearance is optional.
Debtor(s):
Jennifer Munoz Represented By Alaa A Ibrahim
Joint Debtor(s):
Alvaro Cruz Represented By
Alaa A Ibrahim
Movant(s):
HONDA LEASE TRUST Represented By Vincent V Frounjian
Trustee(s):
Richard A Marshack (TR) Pro Se
10:00 AM
FINANCIAL SERVICES VEHICLE TRUST
Vs.
DEBTORS
Docket 13
Grant. Appearance is optional.
Debtor(s):
Siavash Kakavand Pro Se
Joint Debtor(s):
Noushin Shahabeddin Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
10:00 AM
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Vs.
DEBTOR
Docket 47
Grant. Appearance is optional.
Debtor(s):
Cynthia A. Taplin Represented By Benjamin H Berkley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
JPMC SPECIALTY MORTGAGE LLC
Vs.
DEBTORS
Docket 54
Tentative for 11/13/18: Status? If no stip, grant.
Tentative for 10/9/18:
Grant. Appearance is optional.
Debtor(s):
Marco T Cortez Represented By Michael R Totaro
Joint Debtor(s):
Dinora Cortez Represented By Michael R Totaro
Movant(s):
JPMC Specialty Mortgage LLC Represented By
Kristin A Zilberstein Ann Nguyen
Nancy L Lee Caryn Barron
10:00 AM
Trustee(s):
Bubba Fangman Jamie D Hanawalt
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
MTGLQ Investors, L.P. Vs
Debtors
Docket 40
Grant. Appearance is optional.
Debtor(s):
Pedro Rodriguez Guillen Represented By Sundee M Teeple
Joint Debtor(s):
Esther Guillen Represented By Sundee M Teeple
Movant(s):
MTGLQ INVESTORS, L.P. Represented By Angie M Marth
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
DITECH FINANCIAL LLC,
Vs.
DEBTOR
Docket 28
Grant unless current or APO.
Debtor(s):
Yoshiko N Hafer Represented By Christopher J Langley
Movant(s):
DITECH FINANCIAL LLC Represented By Renee M Parker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
BAYVIEW LOAN SERVICING LLC
Vs.
DEBTOR
Docket 12
Grant. Appearance is optional.
Debtor(s):
Voichita Ranca Represented By Stirling J Hopson
Movant(s):
BAYVIEW LOAN SERVICING, Represented By
Edward G Schloss
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Docket 20
Problems. (1) Was service of the Notice of Hearing made upon Ford Motor Credit? (2) Section 722 only applies if the car is claimed exempt or abandoned.
Debtor(s):
Rafael Ramon Garcia Pro Se
Movant(s):
Rafael Ramon Garcia Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
1:30 PM
(con't from 9-26-18)
Docket 10
- NONE LISTED -
Debtor(s):
Frank Bowers Jr. Represented By Peter Rasla
Movant(s):
Frank Bowers Jr. Represented By Peter Rasla Peter Rasla
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 9-26-18)
Docket 2
Tentative for 9/26/18:
The Trustee's points appear to be well taken, and GM's reqeust for 7% interest seems right also. Response?
Debtor(s):
Karl Webber Represented By
Michael D Franco
Movant(s):
Karl Webber Represented By
Michael D Franco Michael D Franco Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(Cont'd from 10-17-18)
Docket 12
- NONE LISTED -
Debtor(s):
Eric Lewis Lover Represented By Christopher J Langley
Movant(s):
Eric Lewis Lover Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(Cont'd from 10/17-18)
Docket 2
- NONE LISTED -
Debtor(s):
Mark David Van Meeveren Represented By Raymond J Seo
Joint Debtor(s):
Cindy Ann Van Meeveren Represented By Raymond J Seo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(Cont'd from 10-17-18)
Docket 2
- NONE LISTED -
Debtor(s):
Kathleen Abbey Youngsma Represented By John D Sarai
Movant(s):
Kathleen Abbey Youngsma Represented By John D Sarai
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 5
- NONE LISTED -
Debtor(s):
Vickie Ann Valdez Represented By
Misty A Perry Isaacson
Movant(s):
Vickie Ann Valdez Represented By
Misty A Perry Isaacson Misty A Perry Isaacson Misty A Perry Isaacson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Sedighi Houman Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 17
- NONE LISTED -
Debtor(s):
Emily Frevert Represented By Christopher P Walker
Movant(s):
Emily Frevert Represented By Christopher P Walker
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
- NONE LISTED -
Debtor(s):
Danielle Bianchini Represented By Bert Briones
Movant(s):
Danielle Bianchini Represented By Bert Briones
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Martha Alonso-Servin Represented By James F Drake
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Martha Alonso-Servin Represented By James F Drake
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 6
- NONE LISTED -
Debtor(s):
Ronald Morales Jr Represented By Charles W Daff
Movant(s):
Ronald Morales Jr Represented By Charles W Daff
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Philip Q Dowsing Represented By Julie J Villalobos
Movant(s):
Philip Q Dowsing Represented By Julie J Villalobos Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
- NONE LISTED -
Debtor(s):
Raul Rodolfo Palazuelos Jr. Represented By Seema N Sood
Movant(s):
Raul Rodolfo Palazuelos Jr. Represented By Seema N Sood Seema N Sood Seema N Sood Seema N Sood Seema N Sood Seema N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 11
- NONE LISTED -
Debtor(s):
Gerry Taemoon Pak Represented By Brian J Soo-Hoo
Movant(s):
Gerry Taemoon Pak Represented By Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 36
- NONE LISTED -
Debtor(s):
April Joy Gonzales Alvarado Represented By
Diane L Mancinelli
Movant(s):
April Joy Gonzales Alvarado Represented By
Diane L Mancinelli Diane L Mancinelli
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Phuong Nguyen Huynh Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Victor Manuel Mucino Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 17
- NONE LISTED -
Debtor(s):
Amir Vafa Fakhri Pro Se
Movant(s):
Amir Vafa Fakhri Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Jeremy James Bradley Represented By Rex Tran
Movant(s):
Jeremy James Bradley Represented By Rex Tran
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 16
- NONE LISTED -
Debtor(s):
Yasmin A Manely Pro Se
Movant(s):
Yasmin A Manely Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Albert F Stone Pro Se
Joint Debtor(s):
Terri L Stone Pro Se
Trustee(s):
Karen S Naylor (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Chad James Carter Represented By Joseph A Weber
Joint Debtor(s):
Terah Rose Carter Represented By Joseph A Weber
Movant(s):
Terah Rose Carter Represented By Joseph A Weber
Chad James Carter Represented By Joseph A Weber Joseph A Weber Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 11
- NONE LISTED -
Debtor(s):
William Rafael Castro Represented By Amanda G Billyard
Joint Debtor(s):
Marylyn Helen McCormack De Represented By Amanda G Billyard
Movant(s):
William Rafael Castro Represented By Amanda G Billyard
Marylyn Helen McCormack De Represented By Amanda G Billyard Amanda G Billyard
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 18
- NONE LISTED -
Debtor(s):
Marchell Kay Housden Represented By Michael Jones Sara Tidd
Movant(s):
Marchell Kay Housden Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
- NONE LISTED -
Debtor(s):
Lazaro Madrid Manzo Represented By David R Chase
Movant(s):
Lazaro Madrid Manzo Represented By David R Chase
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
- NONE LISTED -
Debtor(s):
Michelle Susan Curiale Represented By Brian J Soo-Hoo
Movant(s):
Michelle Susan Curiale Represented By Brian J Soo-Hoo
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 10-17-18)
Docket 67
Tentative for 11/14/18: Same.
Tentative for 10/17/18:
Grant unless current or motion to modify on file.
Tentative for 9/26/18: Status of modification?
Tentative for 7/18/18: Same.
Tentative for 6/20/18:
Grant, unless all delinquencies cured.
Debtor(s):
Theresa Sangermano Represented By Michael D Franco
3:00 PM
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 9-26-18)
Docket 50
Tentative for 11/14/18: Same.
Tentative for 9/26/18: Same.
Tentative for 6/20/18:
Grant, unless delinquencies are cured.
Debtor(s):
Gary Brennan Carrizosa Represented By Michael Jones Sara Tidd
Joint Debtor(s):
Honeybee Bendoy-Carrizosa Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
{11 USC Section 1307(c)(6)}
(con't from 9-26-18)
Docket 45
Tentative for 11/14/18:
Have all deficiencies been cured? If not, grant.
Tentative for 9/26/18: Grant.
Debtor(s):
Eric McKay Represented By
Shawn Dickerson
Joint Debtor(s):
Shanna McKay Represented By Shawn Dickerson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(Cont'd from 10-17-18)
Docket 46
Tentative for 11/14/18: Status?
Tentative for 10/17/18:
Deny without prejudice since Trustee has withdrawn. Claimant may notice its own motion.
Debtor(s):
Russell A. Jensen Represented By Tate C Casey
Joint Debtor(s):
Melissa J. Jensen Represented By Tate C Casey
Movant(s):
Meadowood Community Represented By Michael R Perry
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 83
Tentative for 11/14/18: Grant.
Debtor(s):
Trung M. Nguyen Represented By Joseph C Rosenblit
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(Cont'd from 10-17-18)
Docket 71
Tentative for 11/14/18:
Does modification resolve motion?
Tentative for 10/17/18:
Grant unless modification motion is on file.
Debtor(s):
Jose Angel Gutierrez Represented By
Ramiro Flores Munoz
Joint Debtor(s):
Rosa Galvan Gutierrez Represented By
Ramiro Flores Munoz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(Con't from 10-17-18)
Docket 61
Tentative for 11/14/18:
Status of modification? Does this resolve trustee's motion?
Tentative for 10/17/18: Grant.
Debtor(s):
Randy G Bunney Represented By Dennis Connelly
Joint Debtor(s):
Kathleen M Bunney Represented By Dennis Connelly
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 38
- NONE LISTED -
Debtor(s):
Susan Chloe Tuttle Represented By Brett F Bodie
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 64
- NONE LISTED -
Debtor(s):
Andrew John Kelley Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(Cont'd from 10-17-18)
Docket 71
Tentative for 11/14/18: Same.
Tentative for 10/17/18:
Grant unless debtor can show that she is, indeed, current.
Debtor(s):
Tineke Inkiriwang Represented By Jeffrey J Hagen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 56
- NONE LISTED -
Debtor(s):
Maria Esther Zavala Represented By Andrew Moher
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 43
Tentative for 11/14/18: Grant unless current.
Debtor(s):
Yolanda Carpino Represented By Gary Polston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 34
- NONE LISTED -
Debtor(s):
Farzad Farahbod Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 25
- NONE LISTED -
Debtor(s):
Stephen Nguyen Represented By Daniel King
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 22
There are a number of issues here: (1) Does the "hanging paragraph" of section 1325(a) apply? (2) the Trustee's point is valid concerning what appears to be a form of double-dipping, i.e. adequate protection that looks like interest (it should be one or the other, and is not appropriate unless there is equity in the collateral). Moreover, (3) if this is not a 100% plan, then the creditor body has a stake and this should be part of a plan noticed to all creditors.
Debtor(s):
This has to be better explained.
Marchell Kay Housden Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(OST Signed 11-02-18)
Docket 9
Grant.
Debtor(s):
Daniel J Powers Represented By
Charles W Hokanson
Joint Debtor(s):
Ellen A Powers Represented By
Charles W Hokanson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 201
Sustained as to in personam liability of debtor. Avoidance of lien remains subject to completion of plan.
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 24
Has recent amendment rendered the objection moot?
Debtor(s):
Eric Lewis Lover Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 21
- NONE LISTED -
Debtor(s):
Ronald Morales Jr Represented By Charles W Daff
Movant(s):
Ronald Morales Jr Represented By Charles W Daff
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:18-01048 Karen Sue Naylor, Chapter 7 Trustee v. Red 288 Invest, LTD.
and Recover Preferential Transfer
(con't from 8-09-18)
Docket 1
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Red 288 Invest, LTD. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson
10:00 AM
James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:30 AM
(con't from 10-30-18)
Docket 24
Tentative for 11/20/18: Grant.
Tentative for 10/30/18:
Continue for notice to Debtor.
Debtor(s):
Stephen Nguyen Represented By Daniel King
Movant(s):
Fidelity National Title Insurance Represented By
Sheri Kanesaka
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
(con't from 10-30-18 hrg held on mtn for relief from stay )
Docket 25
Grant or convert to Chapter 7 as may be in best interests of creditors.
Debtor(s):
Stephen Nguyen Represented By Daniel King
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S.C. Sec. 707, 523 & 727
(OST Signed 11-16-18)
Docket 88
Per OST, opposition due at hearing.
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
10:30 AM
NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA
Vs.
DEBTOR
Docket 2335
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky
10:30 AM
Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
10:30 AM
FINANCIAL SERVICES VEHICLE TRUST
Vs.
DEBTOR
Docket 32
Grant. Appearance is optional.
Debtor(s):
Kenneth David Bishop Represented By Leonard M Shulman
Trustee(s):
Richard A Marshack (TR) Represented By Robert P Goe
10:30 AM
FORD MOTOR CREDIT COMPANY LLC
Vs.
DEBTOR
Docket 9
Grant. Appearance is optional.
Debtor(s):
Michael W Harp Represented By Parisa Fishback
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
HONDA LEASE TRUST
Vs.
DEBTOR
Docket 9
- NONE LISTED -
Debtor(s):
Raven Nguyen Represented By Gary Polston
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
BANK OF THE WEST
Vs.
DEBTOR
Docket 11
Grant. Appearance is optional.
Debtor(s):
Hambler Isai Zetina Pro Se
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:30 AM
JPMORGAN CHASE BANK
Vs.
DEBTOR
Docket 41
Grant unless current.
Debtor(s):
Chih Lee Represented By
Nathan Fransen
Movant(s):
JPMorgan Chase Bank, National Represented By
Nancy L Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK TRUSTEE, N.A. Vs.
DEBTOR
Docket 31
- NONE LISTED -
Debtor(s):
Eric Lewis Lover Represented By Christopher J Langley
Movant(s):
U.S. Bank Trust, N.A., as Trustee for Represented By
Christina J O
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
WILMINGTON TRUST, NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 9
Grant. Appearance is optional.
Debtor(s):
Kimberly Renee Quintanar Represented By Christopher J Langley
Movant(s):
Wilmington Trust, National Represented By Darlene C Vigil
Trustee(s):
Karen S Naylor (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTORS
Docket 60
Grant. Appearance is optional.
Debtor(s):
Aureliano Gonzalez Represented By
James Geoffrey Beirne
Joint Debtor(s):
Juana Arteaga De Gonzalez Represented By
James Geoffrey Beirne
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK, NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 11
Grant with (d)(4) relief. Appearance is optional.
Debtor(s):
Mark Hill Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
HSBC BANK USA, NATIONAL ASSOCIATION
Vs.
DEBTOR
Docket 19
Grant with (d)(4) relief. Appearance is optional.
Debtor(s):
Mark Hill Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
KEVIN OGAR
Vs.
DEBTOR
Docket 8
Kevin Ogar in this motion for relief of stay seeks leave to proceed to trial and possible judgment in the action Ogar v. OC Throwdown, et al., 30-2016-00828804 ("state court action") pending in the Orange County Superior Court. Debtor is a defendant in that action. Reportedly, plaintiff Ogar was severely injured during a weightlifting contest and debtor was a host or sponsor of the event. Trial was scheduled for just before the petition was filed. Movant acknowledges that by this motion at most he might obtain leave to obtain a judgment in the state court action but does not by this motion seek leave to commence levies, and, of course, this motion does not determine dischargeability of the claim. Since debtor alleges this is a "no asset" case the dispute seems to be mostly about possible liability under an insurance policy debtor procured before the weightlifting event. Movant alleges he needs a determination of fault by debtor to trigger coverage under the policy.
Debtor opposes the motion. The Chapter 7 Trustee has not responded. Debtor argues that the insurance company has denied coverage and that he lacks assets to either pay any judgment, or even to obtain counsel. For these reasons debtor asserts it would be a waste of resources to pursue the state court action.
The bankruptcy questions posed are not really complicated but nevertheless both sides miss the pivotal points. First, while it is true that bankruptcy petitions filed on the eve of trial are always suspect, it is vast overstatement to argue, as movant does, that this petition under these facts, is necessarily in bad faith. Reportedly, debtor
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has no administrable assets and does not wish to expend his limited resources in fighting the state court action. A discharge in bankruptcy is not outside of the expected results here, and it is largely why Chapter 7 exists. Consequently, movants "bad faith" argument for §362(d)(1) cause is not really sustained.
But debtor misses the point also. He might think there is no point in further pursuing the state court action, but this is not his call to make. Moreover, there might be legitimate questions about whether there is, or is not, insurance coverage. Movant should be free to seek to determine the question of fault in the state court action, and whatever preclusive effect that might have on insurance coverage should be determined either in the state court action or in separate proceedings. But in either event they are of no consequence here since, as the court understands it, the allegations in the state court action do not involve willful or malicious injury as would be necessary to reach the dischargeability question under §523(a)(6). Since the question of willful and malicious is not already raised, if plaintiff Ogar wants to pursue those issues that must be by separate adversary proceeding filed timely in the bankruptcy court. But a determination of liability might be important for insurance coverage quite aside from discharge. In effect, if this were an asset case, the plaintiff/movant Ogar would have the right (or even the requirement) to timely file a proof of claim, which could be contested, if appropriate, by debtor or the Trustee. All the court requires in this context (since proofs of claim are not needed because there are no assets) is that such a disputed claim be litigated elsewhere between affected parties, since the result really does not go to any relevant bankruptcy issue. Of course, relief of stay is limited to that question only and would not include levies or other enforcement against debtor or the estate.
Grant as explained above.
Debtor(s):
Darren Dean McGuire Pro Se
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Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
Docket 9
Grant. Appearance is optional.
Debtor(s):
Sean Patrick Lohr Represented By Christopher J Langley
Joint Debtor(s):
Veronica Lohr Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 11
Grant. Appearance is optional.
Debtor(s):
Victor Arreola Represented By Christopher J Langley
Joint Debtor(s):
Cindy Morelos Arreola Represented By Christopher J Langley
Movant(s):
Victor Arreola Represented By Christopher J Langley
Cindy Morelos Arreola Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
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(OST Signed 8-21-18)
(con't from 10-02-18)
Docket 74
Tentative for 11/27/18:
Status? Is there any reason not to continue the TPO in effect?
Tentative for 10/2/18: Status?
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
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MARSHACK HAYS LLP AS GENERAL COUNSEL FOR OFFICIAL COMMITTEE OF UNSECURED CREDITORS
FEE: $300,046.00
EXPENSES: $4,826.02
Docket 1637
This is the First and Final application for allowance of fees and costs of Marshack Hays, LLP, counsel for the Committee of Creditors. $300,046 in fees and
$4,826.02 in costs are sought.
Two minor points and one major concern must be addressed. The application should be supported by the client ‘s written declaration if the application is interim. LBR 2016-1(J). In contrast, if a final award is sought it is supposed to be timed to coincide with the Chapter 7 Trustee’s Final Report. LBR 2016-1(c)(4). The court sees no such report from the Chapter 7 trustee, but in his reply the Trustee seems to suggest he will have no opposition to an interim distribution. The court will hear argument as to whether there are good reasons notwithstanding to depart from the LBRs as the supporting declaration from the Chair of the Committee. Second, the court cannot discern whether under the category "Fee/Employment Applications" summarized at pp.12 and 399 of the Application in the sum of $12,620.50 there is any portion which can be construed as defense of Applicant’s own fees. If so, these must be excised under the Supreme Court’s teaching in Baker Botts, LLP v. Asarco, LLC, 135 S. Ct.
2158 (2015). The Applicant unfortunately does not segregate individual time entries by category, but merely attempts a summary in the places cited, leaving it to the reviewer to attempt to find the individual corresponding time entries from an undifferentiated mass of 320 + pages of time entries [Exhibit "1"]. This is not a
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preferred method. In any event, the court will leave it to Applicant to report whether any of the entries must be excised under Baker Botts.
Now, the more serious concern. There is a single opposition filed by Richard Kipperman, post judgment receiver on behalf of the The Brewer Group, who reportedly hold judgments for an unstated aggregate amount against the debtor. The objection is not to allowance but instead to the source of payment of any allowed fees. The Brewer Group reportedly hold an ORAP lien in unspecified assets of the estate which may be traceable to funds now held by the Trustee from which payment would be made. The opposition goes into considerable length debating the timing of attachment of the ORAP liens and arguing over whether the liens once attached relate back in time to entry of the supporting judgments (notwithstanding that the creation of the lien arises upon service perCCP§708.110(d)). The controversy arises because of attempts by Mr. Harkey to assign various operating agreements which created accounts receivable for fees away from the debtor to Cal Comm, a Harkey-controlled entity on or about March 15 of 2012. While the court has many deep concerns and doubts over the Brewer arguments (particularly as to the "relation back" theory on ORAP liens), this may neither be the time nor the place to resolve them. The argument at bar seemingly differs from the one dealt with by the court regarding the Jack Rabbit/Timeteo proceeds which became the subject of the "Order on Brewer Group’s Claim of Lien as Pertains to Fee Award" entered October 13, 2016 in several respects. In that case we had a defined pot of money traceable to a defined transaction, so we had a defined timeline and seemingly no co-mingling. The court is also informed that there has been an appeal to the Ninth Circuit yet unresolved, so the court may have no jurisdiction to resolve the Brewer Group’s lien argument.
Moreover, this time the focus seems to be on ORAP liens, which may function differently from judgment liens, and there has been evolution in the law regarding treatment of ORAP liens besides. See Good v. Daff (In re Swintek, 906 F.3d 1100 (9th Cir 2018). Absent a thorough tracing, and resolution of the legal questions, there cannot be a payment from allegedly encumbered monies at this time. But allowance, and maybe payment at least in part, might be appropriate, assuming the court’s
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concerns are addressed.
No tentative
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice
Carlos F Negrete - INACTIVE -
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman
Robert G Wilson - SUSPENDED - Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein Jack A Reitman Thomas A Maraz
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Docket 38
Reconcile discrepancy between what Sheriff holds ($12,965) and amount claimed exempt on Schedule C as IRA ($5,600) allegedly levied by Sheriff. Is the difference a "wildcard" exemption? If so, section 703.140(b)(1) and (5) should have been cited.
Debtor(s):
Ninie Chang Represented By
Joy M Johnson
Trustee(s):
Karen S Naylor (TR) Pro Se
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(con't from 10-11-18 per stip & order to cont. hearing entered 10-1-18)
Docket 2032
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
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(con't from 10-30-18 per order approv. stip. to cont hrgs. ent. 10-25-18)
Docket 55
- NONE LISTED -
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
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Docket 56
- NONE LISTED -
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
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Docket 10
- NONE LISTED -
Debtor(s):
Mounir Djotni Represented By Brian C Fenn
Trustee(s):
Thomas H Casey (TR) Pro Se
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Docket 225
This is the Chapter 7 trustee’s motion to "clarify" that this court’s order entered August 3, 2018 authorizing the firm of Marshack Hays, LLP to serve as general counsel remains in effect notwithstanding that since entry of the employment order, on September 14, 2018, the case was converted to Chapter 7, at the trustee’s request. The same trustee was appointed in Chapter 7. The trustee is correct to seek clarification since assisting the duties of a Chapter 11 trustee are not necessarily the same as assisting with duties of the Chapter 7 trustee, thus some vagueness might arise regarding expectations of counsel under 11 U.S.C. §327(a). However, in this case there is little or nothing to be gained in requiring a new application which, likely, would recite the same or similar facts as appeared in the first employment application.
The motion is opposed by the debtor. However, the opposition says little or nothing about the question raised in the motion. Rather, the debtor continues his polemical arguments about how this court is disqualified, how this court is disobedient to law and to rules and/or that the appointment of a trustee was in error in the first place. Debtor focuses on the "on request of a party in interest" language appearing in §§1104 and 1112, and he claims, in effect, no "party in interest" ever requested an appointment. But this argument is unpersuasive for several reasons: (1) Debtor’s appeal on the trustee appointment order was dismissed as untimely by the BAP in its Order Dismissing Appeal filed September 4, 2018. Therefore, this court’s May 25, 2018 appointment order is now final and law of the case; (2) This court’s "Order Setting Scheduling and Case Management Conference" dated March 7, 2018 specifically notifies debtor that the court might without further notice either convert or appoint a Chapter 11 trustee. That hearing was continued from April 4, 2018 to May
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23. 2018 accompanied by an April 5 "Amended Order to Show Cause Why Bankruptcy Case Should Not be Dismissed or Converted" lodged by the United States Trustee. This postponement was given so that debtor could retain counsel (as strongly suggested from the bench), but Debtor did not obtain counsel as of the continued hearing, and (3) the law in the Ninth Circuit is clear that the court may sua sponte appoint a Chapter 11 trustee. Fukutomi v. United States Trustee (In re Bibo, Inc.), 76
F. 3d 256 (9th Cir. 1996). So, even if there had been no prior notice, and even if there had been no request for the appointment, the court would have been within its power to appoint a trustee. But even assuming any of those points arguendo, debtor’s point are not supported factually.
To the extent the argument focuses on trustee appointment rather than dismissal or conversion, this option is given to the court in the best interest of creditors and the estate, as described in §1112(b)(1). On the question of "request of a party in interest and after notice and a hearing" the docket reflects item # 88: "Application for Order Approving Appointment of Trustee and Fixing Bond" filed by the U.S. Trustee. To the extent a formal written "request" is needed (and under Fukutomi it clearly is not), this could suffice (albeit after the hearing), but, more importantly, the U.S. Trustee also appeared at both the April and May hearings and on May 23 he verbally supported appointment of a trustee (either in Chapter 7 or 11).
Moreover, "party in interest" is augmented by specific reference to the United States Trustee at §1104(a) and, further, §105(a) [as discussed below] provides that the court can take any action as may be necessary to implement court orders or rules, or to prevent abuse of process, irrespective of requests by parties in interest. See Fukutomi, 76 F. 3d at 258. Appointment of a Chapter 11 trustee clearly "implemented" that which Debtor was warned about in the March 7, 2018 Scheduling Order, and as amplified at the April 4 hearing. Debtor seemingly has little appreciation or understanding of how difficult it would be to confirm a Chapter 11 plan in this case that did not result in prompt payment in full of all allowed claims, which is accomplished much more easily and quickly in Chapter 7. Such difficulty would be true even in the hands of skilled professionals with a cooperative creditor body, but far more so by a layman against hostile creditors with whom he has been at proverbial
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legal war for some time. Nevertheless, the court gave him one opportunity to get counsel to assess these chances, however remote. To have persisted in Chapter 11 in pro se , without a neutral evaluation of the various causes of action listed in the schedules, under these facts would have amounted to abuse of process.
The "after notice and a hearing" requirement is defined at §102(1) to authorize such notice as is appropriate under the circumstances. The circumstances presented here suggest no further need for notices and hearings beyond those given to the debtor already. The appointment of a trustee was done so that the court could get a reliable analysis of what was going on with the estate, to obtain a neutral evaluation whether the complication and expense of reorganization proceedings were justified and because the debtor acting in pro se was clearly way over his head. The appointed trustee investigated and, at the request of the court, reported back within 60 days on the viability of the various items of pending litigation and on the other estate assets.
That report led directly to the conversion to Chapter 7. Since the debtor had repeated notice of the possibility of conversion or appointment, and even an extension to obtain counsel, his arguments regarding lack of due process on these grounds now ring hollow.
Debtor also argues that some unspecified authority on consideration of recusal/disqualification requests was somehow violated, ignoring that this issue was handled under Bankruptcy Court protocols which closely parallel the District Court’s General Order No. 16-05. Under those protocols Judge Clarkson was chosen at random by the clerk’s office to hear the disqualification/recusal motion. Debtor in his amended version of his Opposition filed November 19 cites "Rule 4 of General Order 224" but fails to specify which general order of which court he is referencing. The court was unable to locate such an authority. In any case, the recusal/disqualification motion was carefully considered and denied by Judge Clarkson. Reportedly, Debtor did not even attend the hearing on his own motion. Debtor also cites 28 U.S.C. § 157(c) for the dubious proposition that all orders of the Bankruptcy Court (presumably including those at issue here) need to be submitted to the District Court. Debtor is mistaken since this provision applies only to non-core matters and
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appointment of a trustee is demonstrably a core matter under §157(b)(2)(A), i.e." matters concerning the administration of the estate…."
In his unique fashion, Debtor also string cites to 11 U.S.C. §§102(1)(A)(B), 103(g), 105(a), 362(d), 1104(a)(1)(2)(A)(B), and 1112(b)(1). The marginal relevance of §§102(1)(A) and (B), 1104 and 1112 are discussed above. Insofar as the court can determine, none of the other authorities have any relevance at all to the questions at hand except, perhaps, that §105(a) makes clear that no provision of the Code that requires an issue be raised by a ‘party in interest’ (such as found in §§ 1104 and 1112) "shall be construed to preclude the court from, sua sponte, taking any action or making any determination necessary or appropriate to enforce or implement court orders or rules, or to prevent an abuse of process." See also Fukutomi, supra at 258. It would seem, if anything (and in addition to the points made above), such authority bolsters the view that the court could appoint a Chapter 11 trustee irrespective of request from a party in interest, undercutting one of Debtor’s main arguments
In sum, no intelligible reason, and certainly no good reason, is given not to grant this motion.
Grant
Debtor(s):
Jack Richard Finnegan Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays Laila Masud
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Docket 164
- NONE LISTED -
Debtor(s):
Ron S Arad Represented By
William H Brownstein
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(con't from 8-29-18)
Docket 1
Tentative for 11/28/18:
Continue status conference to March 27, 2019 at 10:00 a.m.
Tentative for 8/28/18:
Continue for further status conference on November 28, 2018 at 10:00 a.m.
Tentative for 6/27/18: Status? Conversion?
Tentative for 3/20/18: See #15.
Tentative for 1/1618:
Continue to confirmation hearing.
Tentative for 11/1/17:
An updated status report would have been helpful. Does the Trustee foresee a plan? Would a deadline or a continued status hearing help?
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Tentative for 8/9/17:
Continue status conference approximately 90 days to November 8, 2017 at 10:00 a.m.
Tentative for 6/28/17: See #12.
Tentative for 6/7/17:
Continue to June 28, 2017 at 10:00 a.m.
Tentative for 4/26/17:
Deadline for filing plan and disclosure statement: September 30, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: June 1, 2017
Debtor(s):
Vitargo Global Sciences, Inc. Represented By Michael Jay Berger
Trustee(s):
Richard J Laski (TR) Represented By
M Douglas Flahaut Aram Ordubegian Christopher K.S. Wong
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(con't from 8-22-18)
Docket 1
Tentative for 11/28/18:
Is the plan deadline of January 31 going to be met?
Tentative for 8/22/18:
Deadline for filing plan and disclosure statement: November 30, 2018. Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: September 1, 2018.
Debtor(s):
Dale Garfield Knox Represented By Andrew S Bisom
Joint Debtor(s):
Cheryl Lynn Knox Represented By Andrew S Bisom
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Docket 1
Deadline for filing plan and disclosure statement: March 29, 2019
Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: December 31, 2018
Debtor(s):
Raif Wadie Iskander Represented By Michael Jones
10:00 AM
(con't from 10-24-18)
Docket 1
Tentative for 11/28/18:
Continue to December 12, 2018 at 10:00 a.m.
Tentative for 10/24/18:
Has plan been filed? If so, continue to coincide with disclosure statement hearing.
Tentative for 6/27/18:
Deadline for filing plan and disclosure statement: October 19, 2018.
Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of the deadline by: August 1, 2018.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones
10:00 AM
FOX ROTHSCHILD LLP AS COUNSEL FOR THE OFFICIAL COMMITTEE OF UNSECURED CREDITOR
FEE: $24,646.50
EXPENSES: $50.00
Docket 112
Allow as prayed; payment should follow DIP's cash management discretion absent either further order or confirmation order.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
10:00 AM
M. JONES AND ASSOCIATES PC, DEBTOR'S ATTORNEY
FEE: $54570.00
EXPENSES: $475.90
Docket 116
Allow as prayed. See #6 for cash management question on payment. Need supporting declaration from client.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 11-07-18)
Docket 97
Tentative for 11/28/18:
Continue to December 12, 2018 at 10:00 a.m.
Tentative for 11/7/18:
Can the court be reassured that actual interest incurred would be minimal by prompt payment each month? Will no finance company offer a traditional credit line? Will stay be relieved by stip to afford prompt repayment without incurring fees, etc.? No tentative.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
Movant(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
10:00 AM
Docket 96
- NONE LISTED -
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
Movant(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
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Docket 51
Grant.
Debtor(s):
Joseph T Bubonic Represented By Julie J Villalobos
Joint Debtor(s):
Mary A Bubonic Represented By Julie J Villalobos
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Docket 629
Grant.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
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Docket 632
Grant.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
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Docket 634
In this motion the plan proponent and judgment creditor Yuanda Hong, individually and as guardian ad litem for Harry and William Hong (collectively" judgment creditor") seeks authority for the plan agent to accept a credit bid against the judgment creditor’s $6.2 million+ unsecured claim in the plan agent’s sale of the property commonly known as 2628 E. Denise Avenue, Orange, CA "the property").
The property is scheduled at a value of $650,000. There are no liens of record. After the homestead all proceeds under the plan are to be paid to the various classes of unsecured creditors, of which the judgment creditor represents approximately 99.5%. The motion is opposed by the debtor.
There are several problems with this approach. First, the court does not look to §105 to create authority not specifically enumerated elsewhere, and so that citation is unavailing. Second, credit bids are specifically authorized only for secured claims under §363(k). Third, despite the judgment creditor’s argument regarding setoff, there is no specific plan term allowing credit bids on unsecured claims. The closest is at pp. 14-15 where the agent is permitted to set off any claim that the agent holds (on behalf of the creditor body) against claims entitled to payment under the plan. But this scenario is not the archetype of set off envisioned under §553(a). Such set offs are only permitted where the claim arose before the commencement of the proceeding. As classically formulated three conditions must be satisfied: (1) the debtor owes the creditor a prepetition debt; (2) the creditor woes the debtor a prepetition debt and (3) the debts are mutual. United States v. Carey (In re Wade Cook Fin. Corp), 375 B.R. 580, 594 (9th Cir. 2007). Obviously, what is envisioned here is setoff against a post- petition created claim, i.e. the price for the property. Thus, timing and mutuality are lacking. The prospective debts in question are not owed between debtor and judgment creditor, but between creditor and plan agent, and are thus not mutual. Fourth, the
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judgment creditor’s cited authority is inapposite. In re Western Funding, Inc., 550
B.R. 841, 854 (9th Cir. BAP 2016) does not establish a power to accept credit bids from unsecured creditors. Western establishes closer to the opposite, i.e. that the plan agent is not obligated to consider a credit bid from an unsecured creditor. This arises in part from valuation difficulties in that an unsecured claim against an insolvent trust is worth less than is a fully secured claim. This is true here even though the claim is 99.5% of the whole. Lastly, the court shares some of the concerns raised in the Opposition. There is an air of vindictiveness which has nothing to do with the legitimate purposes of the trust created under the confirmed plan, i.e. to liquidate to cash the administrable property of the estate. That goal is best accomplished by selling the property for cash through the efforts of a broker.
One additional point should be made. On calendar is a separate motion for turnover (#12). An allegation is made that debtor is hindering the agent’s sale efforts and therefore depressing the price. If that continues then judgment creditor is invited to re-file this motion, in which case the court may take a second look at allowing credit bids not as a right but as a remedy to deal with ongoing damage to the estate.
Deny without prejudice as discussed
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
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(con't from 11-09-18)
Docket 1
Tentative for 11/28/18: Status?
Tentative for 11/9/18: No tentative.
Tentative for 11/7/18: Status of take out loans?
Tentative for 9/12/18:
Continue approximately 60 days to evaluate refinance efforts?
Tentative for 8/18/18: Why no report?
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley
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[RE: 101 Hallmark, Irvine, CA 92620]
(set from rlfsty hrg held on 8-28-18)
EAST WEST BANK
Vs DEBTOR
Docket 34
Tentative for 11/28/18: See #16.
Prior Tentative:
These are the motions of East West Bank for relief of stay regarding its trust deeds against four real properties as listed in the motions. The four interrelated motions are considered together in a single memorandum. The trust deeds secure the sum of approximately $1,916,916 owed under a line of credit extended to the debtor’s accountancy firm, Anton & Chia, LLP. That line of credit was reportedly guaranteed by the debtor. There is, reportedly, no equity in any of the four properties and, in fact, the properties are "upside down" by the amount of $524,959, or "negative equity" in that amount. So, the provisions of 11 U.S.C. §362(d)(2) are met insofar as the movant bears the burden of proving no equity. Movant also seeks relief under §362(d)(4) based upon a series of deeds from holding companies controlled by the debtor on July 2, 2018, just before the petition in bankruptcy was filed.
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Debtor apparently does not contest any of this. Rather, debtor relies on the
second prong of §362(d)(2), i.e. that the properties are "necessary to a reorganization."
United Sav. Ass'n of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S. 365, 108 S.Ct. 626, 633 (1988). Debtor bears the burden on this issue as provided in § 362(g). The only evidence provided by debtor appears in the Declaration of Gregory Wahl. The only reorganization described by the debtor is purely aspirational in that he says he is exploring opportunities and that his wife may realize income on a new consulting contract. Very few details are given. Moreover, the "reorganization" is not really anything tangible or even within the classic meaning of the term. Rather, it seems that debtor would like to explore refinancing and, if that is not achievable, control the liquidation process in Chapter 11 through" an orderly sale process." While reorganization plans can include liquidation of estate assets, the court doubts that is the meaning of the term in this context. But all of this is far too vague and speculative to justify holding off the bank, particularly since debtor makes no proposal of adequate protection payments, thus imposing all continuing risk upon the bank.
Further, the court is aware that the Anton & Chia case was recently converted to Chapter 7, thus making any prospect of a business rebound that much more distant. The debtor’s burden on this issue is not carried.
Grant
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
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[RE: 101 Hallmark, Irvine, CA 92620]
(con't from 11-09-18)
EAST WEST BANK
Vs DEBTOR
Docket 34
Tentative for 11/28/18: Status?
Tentative for 11/9/18:
No tentative.
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
10:00 AM
Tentative for 8/28/18:
These are the motions of East West Bank for relief of stay regarding its trust deeds against four real properties as listed in the motions. The four interrelated motions are considered together in a single memorandum. The trust deeds secure the sum of approximately $1,916,916 owed under a line of credit extended to the debtor’s accountancy firm, Anton & Chia, LLP. That line of credit was reportedly guaranteed by the debtor. There is, reportedly, no equity in any of the four properties and, in fact, the properties are "upside down" by the amount of $524,959, or "negative equity" in that amount. So, the provisions of 11 U.S.C. §362(d)(2) are met insofar as the movant bears the burden of proving no equity. Movant also seeks relief under §362(d)(4) based upon a series of deeds from holding companies controlled by the debtor on July 2, 2018, just before the petition in bankruptcy was filed.
Debtor apparently does not contest any of this. Rather, debtor relies on the second prong of §362(d)(2), i.e. that the properties are "necessary to a reorganization." United Sav. Ass'n of Texas v. Timbers of Inwood Forest Associates, Ltd., 484 U.S.
365, 108 S.Ct. 626, 633 (1988). Debtor bears the burden on this issue as provided in § 362(g). The only evidence provided by debtor appears in the Declaration of Gregory Wahl. The only reorganization described by the debtor is purely aspirational in that he says he is exploring opportunities and that his wife may realize income on a new consulting contract. Very few details are given. Moreover, the "reorganization" is not really anything tangible or even within the classic meaning of the term. Rather, it seems that debtor would like to explore refinancing and, if that is not achievable, control the liquidation process in Chapter 11 through" an orderly sale process." While reorganization plans can include liquidation of estate assets, the court doubts that is the meaning of the term in this context. But all of this is far too vague and speculative to justify holding off the bank, particularly since debtor makes no proposal of adequate protection payments, thus imposing all continuing risk upon the bank.
Further, the court is aware that the Anton & Chia case was recently converted to Chapter 7, thus making any prospect of a business rebound that much more distant. The debtor’s burden on this issue is not carried.
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Grant
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 952 Balboa Drive, Arcadia, CA 91007]
(con't from 8-28-18 rlfsty hrg held)
EAST WEST BANK
Vs DEBTOR
Docket 35
Tentative for 11/28/18: See #18.
Prior Tentative: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 952 Balboa Drive, Arcadia, CA 91007]
(con't from 11-09-18)
EAST WEST BANK
Vs DEBTOR
Docket 35
Tentative for 11/28/18: Status?
Tentative for 11/9/18: No tentative.
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18:
See #9.
10:00 AM
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 51 Tesoro, Irvine, CA 92618]
(con't from 8-28-18)
EAST WEST BANK
Vs DEBTOR
Docket 36
Tentative for 11/28/18: See #10.
Prior Tentative: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 51 Tesoro, Irvine, CA 92618]
(con't from 11-09-18)
EAST WEST BANK
Vs DEBTOR
Docket 36
Tentative for 11/28/18: Status?
Tentative for 11/9/18: No tentative.
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18:
See #9.
10:00 AM
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 22765 Lakeway Drive, Unit 428, Diamond Bar, CA 91765]
(con't from 8-28-18 rlfsty hrg held)
EAST WEST BANK
Vs DEBTOR
Docket 37
Tentative for 11/28/18: See #22.
Prior Tentative: See #9.
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
[RE: 22765 Lakeway Drive, Unit 428, Diamond Bar, CA 91765]
(con't from 11-09-18)
EAST WEST BANK
Vs DEBTOR
Docket 37
Tentative for 11/28/18: Status?
Tentative for 11/9/18: No tentative.
Tentative for 10/10/18: Status?
Tentative for 9/26/18: Status?
Tentative for 8/28/18: See #9.
10:00 AM
Debtor(s):
Gregory Anton Wahl Represented By Christopher J Langley Donald Reid
Movant(s):
EAST WEST BANK Represented By Scott O Smith
10:00 AM
Adv#: 8:16-01098 Joseph v. United States Of America
Docket 1
Tentative for 11/30/17:
Status conference continued to March 29, 2017 at 10:00 a.m.
Tentative for 8/10/17:
Status conference continued to November 28, 2017 at 10:00 a.m. Personal appearance not required.
Tentative for 3/30/17:
Status Conference continued to August 10, 2017 at 10:00 a.m.
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T. Madden Beth Gaschen
Susann K Narholm - SUSPENDED - Mark Anchor Albert
Defendant(s):
10:00 AM
United States Of America Pro Se
Joint Debtor(s):
Thomas Fu Pro Se
Plaintiff(s):
James J Joseph Represented By
A. Lavar Taylor
Trustee(s):
James J Joseph (TR) Pro Se
James J Joseph (TR) Represented By
James J Joseph (TR) Paul R Shankman Lisa Nelson
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:17-01105 Naylor v. Gladstone
(con't from 9-27-18 per order approving. stip. to cont. ent. 8-06-18)
Docket 1
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Scott Gladstone Pro Se
Plaintiff(s):
Karen Sue Naylor Represented By Melissa Davis Lowe
Trustee(s):
Karen S Naylor (TR) Represented By
10:00 AM
Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:18-01149 Smith et al v. Phan
(con't from 10-11-18)
Docket 1
Tentative for 11/29/18:
Deadline for completing discovery: February 28, 2019 Last date for filing pre-trial motions: March 18, 2019 Pre-trial conference on: March 28, 2019
Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by February 28, 2019.
Debtor(s):
Chau Phan Represented By
Jeffrey S Shinbrot
Defendant(s):
Chau Phan Pro Se
Plaintiff(s):
Freddie Smith Represented By Mary L Fickel
Lue Vail Smith Represented By Mary L Fickel
CLG Law Group, Inc. Represented By Mary L Fickel
Mauriello Law Firm, APC Represented By
10:00 AM
Trustee(s):
Mary L Fickel
Jeffrey I Golden (TR) Pro Se
10:00 AM
Adv#: 8:18-01173 Cardinali v. Newport Orthopedic Institute
Docket 1
Tentative for 11/29/18:
Status conference continued to February 28, 2019 at 10:00 a.m. (holding date pending prove up).
Debtor(s):
Paolo Cardinali Represented By Anerio V Altman
Defendant(s):
Newport Orthopedic Institute Pro Se
Plaintiff(s):
Paolo Cardinali Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:18-01175 Marshack v. Whitcher et al
Docket 1
Tentative for 11/29/18:
Deadline for completing discovery: March 21, 2019 Last date for filing pre-trial motions: March 29, 2019 Pre-trial conference on: April 25, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Refer to mediation. Order appointing mediator to be lodged by Plaintiff within 10 days. One day of mediation to be completed by February 28, 2019.
Debtor(s):
Sonder, LLC Represented By
Stewart H Lim
Defendant(s):
Grant Whitcher Pro Se
Magnum Capital Investments, Inc. Pro Se Cole Robert Whitcher Pro Se
Plaintiff(s):
Richard A Marshack Represented By Donald W Sieveke
Trustee(s):
Richard A Marshack (TR) Represented By Donald W Sieveke
10:00 AM
Adv#: 8:12-01330 Casey v. Ferrante et al
(cont'd from 9-27-18 per order approving stip. signed 9-25-18)
Docket 724
Tentative for 12/14/17:
Was this case settled? If not, where is joint pre-trial stipulation?
Tentative for 2/2/17:
Deadline for completing discovery: August 1, 2017
Last Date for filing pre-trial motions: September 1, 2017 Pre-trial conference on September 28, 2017 at 10:00 am
Tentative for 6/23/16:
This is the motion of Cygni Capital, LLC and Cygni Capital Partners, LLC (collectively "Cygni") for judgment on the pleadings under Rule 12(c). Defendant Ferrante joins in the motion but offers no additional substance. A motion for judgment on the pleadings may be granted only if, taking all the allegations in the pleading as true, the moving party is entitled to judgment as a matter of law. Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 713 (9th Cir. 2001); Fleming v.
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Pickard, 581 F.3d 922, 925 (9th Cir. 2009). For purposes of a Rule 12(c) motion, the allegations of the non-moving party are accepted as true, and construed in the light most favorable to the non-moving party, and the allegations of the moving party are assumed to be false. Hal Roach Studios, Inc. V. Richard Feiner & Co., 896 F.2d 1542, 1550 (9th Cir. 1989); Fleming v. Pickard at 925.
The Second Amended Complaint ("SAC") contains claims for turnover under section 542 and declaratory relief. The Trustee in the SAC alleges that Debtor has hidden and concealed assets in various shell entities, including Cygni, that are controlled by his associates as strawmen, and are established to perpetrate a fraud on Debtor’s creditors. [SAC ¶ 39] It is alleged that many of these entities share the same office address. [Id. at ¶ 40]. In the turnover claim, the Trustee in the SAC alleges that the assets held by each of these entities are held for Debtor’s benefit and that he possesses equitable title. [Id. at ¶ 75]. The Second Claim is for declaratory relief and seeks a determination that each of the entities is the alter ego of Debtor and the bare legal title of any assets can be ignored. [Id. at ¶ 83].
Movants argue that there is no "substantive alter ego" or "general alter ego" theory recognized under California law. Rather, movants argue that the alter ego doctrine as expressed in California is purely procedural, i.e. merely used to implement recovery on a separate theory of recovery. For this proposition movants cite Ahcom, Ltd. v. Smeding, 623 F. 3d 1248, 1251 (9th Cir. 2010). Movants also cite three other cases which they contend are the controlling authority in this area: (1) Stodd v.
Goldberger, 73 Cal. App. 3d 827 (4th Dist. 1977); (2) Mesler v. Bragg Mgmt. Co., 39 Cal. 3d 290 (1985) and (3) Shaoxing City Huayue Imp. & Exp. v. Bhaumik, 191 Cal. App. 4th 1189 (2nd. Dist 2011). Movants argue that since the Trustee has not alleged some independent theory of recovery, such as fraudulent conveyance or conversion, there is no legally cognizable purpose for application of alter ego. Apparently, in movant’s view, declaratory relief is not a suitably independent theory of recovery.
The court is not so sure.
First, the court agrees that the law in this area is somewhat unclear, contradictory and bewildering to grasp in its full complexity. Attempting to order all
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the intricacies of "indirect outside piercing" and the like can give one a headache. However, since each of the authorities cited by the movants is distinguishable in one or more key aspects, and since each case decides a narrower and somewhat different problem from the one presented at bar, the court is not persuaded that the law is quite as limited and cramped as is now urged by the movants. To understand this conclusion, one must first consider the purpose of the alter ego doctrine, at least as it was classically formulated. This purpose is perhaps best expressed by the court in Mesler v. Bragg Management, one of movant’s cited cases, concerning the allied doctrine of "piercing the corporate veil" :
"There is no litmus test to determine when the corporate veil will be pierced: rather the result will depend on the circumstance of each particular case. There are, nevertheless, two general requirements: ‘(1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that, if the acts are treated as those of the corporation alone, an inequitable result will follow." (Citing Automotriz etc. de California v. Resnick (1957) 47 Cal. 2d 792, 796).
And ‘only a difference in wording is used in stating the same concept where the entity sought to be held liable is another corporation instead of an individual. ‘citing McLoughlin v. L. Bloom Sons Co., Inc., 206 Cal. App. 2d 848, 851 (1962)….The essence of the alter ego doctrine is that justice be done. "What the formula comes down to, once shorn of verbiage about control, instrumentality, agency and corporate entity, is that liability is imposed to reach an equitable result…thus the corporate from will be disregarded only in narrowly defined circumstance and only when the ends of justice so require.’" (internal citations omitted)
38 Cal. 3d at 300-01
A similar sentiment was expressed in In re Turner, 335 B.R. 140, 147 (2005) concerning the related question of "asset protection" devices:
"However, an entity or series of entities may not be created with no
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business purpose and personal assets transferred to them with no relationship to any business purpose, simply as a means of shielding them from creditors. Under such circumstances, the law views the entity as the alter ego of the individual debtor and will disregard it to prevent injustice."
These statements accord with the court’s general understanding. Corporate
form is a privilege, not a right. Those who abuse the corporate form and disregard its separateness in their own activities and purposes can hardly expect the law to uphold the shield of separateness when it comes to the rights of creditors. And the court understands that the alter ego doctrine is an equitable remedy highly dependent upon and adaptable to the circumstances of each case. So the question becomes whether, as movants contend, the law in California has departed from these classic precepts in some way fatal to the Trustee’s case. The court concludes that the answer is "no" for the following reasons.
First, let us consider movants principal case, Ahcom, Ltd. v. Smeding. The facts of Ahcom are adequately stated at p. 6 of the Reply. But Ahcom is primarily a standing case. The defendant shareholders of the corporate judgment debtor argued that the judgment creditor had no standing to pursue them as alter egos of the debtor corporation as that was the sole domain of the bankruptcy trustee. The Ahcom court concluded that under those facts the shareholders’ argument presumed that the trustee had a general alter ego claim precluding individual creditors from asserting the same. The Ahcom court goes on to note that "no California court has recognized a freestanding general alter ego claim that would require a shareholder to be liable for all of a company’s debts and, in fact, the California Supreme Court state that such a cause of action does not exist. " 623 F. 3d at 1252 citing Mesler , 216 Cal. Rptr. 443. But as noted above, there is other language in Mesler and cases cited by the Mesler court that seems supportive of the Trustee’s theory that the doctrine of alter ego is adaptable to circumstances. Of course, our case is the inverse of Ahcom. In our case it is not an attempt to hold the debtor as a shareholder liable for the debts of the corporation, but rather to disregard the corporation altogether as a fraudulent sham.
There is (or at least may be) in this a distinction with a difference. The Trustee’s case
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can be construed not so much as an attempt to visit liability onto a corporation under a general alter ego claim but to urge that in justice and equity the corporate privilege should be withdrawn and disregarded altogether as a deliberate device to frustrate creditors. Although the opinions in CBS, Inc. v. Folks (In re Folks), 211 B.R. 378, 387 (9th Cir. BAP 1997) and the similar In re Davey Roofing, Inc., 167 B.R. 604, 608 (Bank. C.D. Cal. 1994) are roundly criticized in Ahcom, the court is not persuaded that Ahcom can be cited for the proposition that a fraudulent sham corporations need to be honored because the bankruptcy trustee lacks a "general alter ego" right of action, or that Folks is not good law, at least in some circumstances. This is a remarkable and unnecessary departure from what the court understands to be established law.
Mesler has already been discussed above. In the court’s view, it is not properly cited for the proposition that there is no such thing as "general alter ego" claim under any circumstances. The actual holding of Mesler is that "under certain circumstances a hole will be drilled in the wall of limited liability erected by the corporate form: for all purposes other than that for which the hole was drilled the wall still stands." 39 Cal 3d at 301 In Mesler it was decided that a release of the corporate subsidiary did not necessarily release the parent who was alleged to be an alter ego. This merely reinforces the notion that alter ego is an equitable doctrine heavily dependent on circumstances and confined to what is necessary to effect justice.
Stodd v. Goldberger is likewise not determinative. It is more properly cited for a more limited proposition, i.e., that an action to disregard a corporate entity or to impose the debts of the debtor corporation upon its principal cannot be maintained absent some allegation that some injury has occurred to the corporate debtor. In this a trustee does not succeed to the various claims of creditors unless they are claims of the estate. But facts of Stodd are different from what is alleged in the case at bar. In effect, the Trustee here alleges that all of the assets of various sham entities belong in truth to the debtor and hence to the estate, and he seeks a declaratory judgment to this effect. Actually, Stodd includes at 73 Cal. App. 3d p. 832-33 a citation to the more general principles as quoted above that the two indispensable prerequisites for
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application of alter ego are: (1) that there be such unity of interest and ownership that the separate personalities of the corporation and the individual no longer exist and (2) that if the acts are treated as those of the corporation alone, an inequitable result will follow. Citing Automotriz etc. de California v. Resnick, 47 Cal. 2d at 796. The Trustee’s complaint would seem to fall well within those parameters.
Lastly, we consider Shaoxing City Huayue Imp. & Exp. v. Bhaumik. Shaoxing in essence merely repeats the holding of Stodd that an allegation giving the estate a right of action against the defendant is a prerequisite to imposition of alter ego liability. The plaintiff creditor sued the corporation ITC and included allegations that the shareholder, Bhaumik, was the corporation’s alter ego. The shareholder’s argument that the action was stayed by the corporation’s bankruptcy, or that the creditor lacked standing in favor of the corporate bankruptcy trustee, failed for the same reasons articulated in Stodd, i.e., that the trustee has no standing to sue on behalf of creditors but must address wrongs done to the corporation itself. The Shaoxing court at 191 Cal. App. 4th at 1198-99 goes on to state the doctrine of alter ego as a procedural question thusly: "In applying the alter ego doctrine, the issue is not whether the corporation is the alter ego of its shareholders for all purposes, or whether the corporation was organized for the purpose of defrauding the plaintiff, but rather, whether justice and equity are best accomplished in a particular case, and fraud defeated, by disregarding the separate nature of the corporate form as to the claim in that case. " citing Mesler, 39 Cal. 3d at 300. But the court does not read this to mean that in extreme cases (and this is alleged as an extreme case) the court cannot be called upon to consider the possibility that corporations and bogus entities, owned by straw men, cannot be called out for what they really are. Indeed, the language cited suggests that is still the case. Moreover, the court reads the Second Amended Adversary Complaint in this case as meeting all of the requirements. The particularized harm to the debtor, i.e. Ferrante (or more correctly his estate), is alleged to be in creation of bogus loans and artificial entities designed to create apparent (but not real) separation of the estate from its assets while preserving to the person of Ferrante and his family members (and not the estate) beneficial interest in very substantial assets which in truth and equity should be liquidated for his creditors.
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Trustee seeks a declaratory judgment to this effect. The principles of equity are not so constrained as to deny the Trustee access to the court in his attempt to unwind the alleged clever maze of overlapping and interrelated entities to get to the reality of the situation. All of the cases hold that application of the doctrine is dependent on the circumstances, and the circumstances here are that debtor has allegedly woven an almost impenetrable maze of entities. The Trustee seeks assistance from the court in separating reality from fiction. That is all that is required.
Lastly, the court should address what may be the most problematic authority cited by the movants (even though it was not described as one of the determinative cases). That is Postal Instant Press, Inc. v. Kaswa Corporation, 162 Cal. App. 4th 1510, 1518-20 (2008). The Postal court discusses "outside reverse piercing", i.e. "when fairness and justice require that the property of individual stockholders be made subject to the debts of the corporation…" (and presumably the reverse of same). In doubting that such a doctrine exists under California law, the Postal court discusses some of the inherent problems in disregarding the corporate form, such as impinging on the rights of innocent shareholders when the corporation is alleged to be the alter ego. Mostly the Postal court declined to embrace such a doctrine because there was a less invasive remedy available, i.e., levy upon the shares to exercise the rights the obligor shareholder might enjoy in the alleged alter ego corporation. The Postal court also held that in most inverse cases transfer of personal assets to the corporation by the shareholder could be dealt with under traditional claims of fraudulent conveyance and/or conversion. But, of course, ours is a different case and of an entirely different order. What is alleged here is a brazen and wholesale creation of numerous fraudulent entities operated for years by strawmen. Ferrante is alleged to have no shares that might be levied upon. And while it might be said that allegations of specific fraudulent transfers could have helped this case, the court does not read Postal or any of the other cases cited by movants to hold that in suitably extreme situations the court cannot assist in dismantling such a web of intrigue. Indeed, the Postal court at 162 Cal. App. 4th 1519 seems to acknowledge that in extreme circumstances there is room still for the traditional application of alter ego where adherence to the fiction of a separate corporate existence ‘would promote an injustice" to the stockholder’s
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creditors." Citing Taylor v. Newton, 117 Cal. App. 2d 752, 760-61 (1953).
One more point should be made. On this question of whether there is a general alter ego right of action (or not) we need to remember context here. While the parties have all termed the discussion as one about limits under California law on the doctrine of alter ego, or "outside reverse piercing" and the like, it is easy to forget the primary purpose of a trustee in bankruptcy. The trustee is not just another creditor. He is uniquely charged with identifying, gathering and liquidating the assets of the estate. This is so that a dividend on the just claims of all creditors can be maximized. And where the equitable principles of the Code have been violated, the trustee must object to discharge. But trustees must from time to time confront clever debtors who are unwilling to report faithfully all that they hold. Elaborate schemes are sometimes resorted to and the various forms of fraud are infinite. Sometimes the nature and extent of the artifice is not so easy to discern or the date or amount of any transfer easily discovered. This court does not construe the equitable doctrine of alter ego to be so limited or confined as the movants have suggested. Instead, in the court’s view it is (and must be) adaptable to the circumstances. In can be as simple as disregarding corporate form when to recognize it would be to perpetrate fraud and injustice. The cases cited by movants all pertain to a much more specific and limited circumstances on facts very different from the ones alleged at bar. None of the authorities say that all traditional equitable notions of disregarding corporate form when it is abused have been abrogated. Rather, the cases when properly read say that the law must evolve and adapt to the ingenuity of alleged fraudsters. So, it may be that under California law the alter ego doctrine is purely procedural, not substantive, but that does not in the court’s view dictate a different result here as the procedure here is to implement the substantive claim for declaratory relief.
Deny
Attorney(s):
Marilyn Thomassen Represented By Shawn P Huston
10:00 AM
Marilyn R Thomassen
Pacific Premier Law Group Represented By Arash Shirdel
Creditor Atty(s):
Lt. Col. William Seay Represented By Brian Lysaght Jonathan Gura
Debtor(s):
Robert A. Ferrante Represented By
Richard M Moneymaker Arash Shirdel
Defendant(s):
Saxadyne Energy Management, LLC Represented By
Gary C Wykidal
Heritage Garden Properties, Inc. Pro Se
Rising Star Development, LLC Pro Se
American Yacht Charters, Inc. Pro Se
Systems Coordination & Pro Se
Steven Fenzl Represented By
D Edward Hays Martina A Slocomb
Saxadyne Energy Group, LLC Represented By Gary C Wykidal
Gianni Martello Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Robert Ferrante Represented By Dennis D Burns Kyra E Andrassy
10:00 AM
Robert E Huttenhoff Ryan D ODea
Chanel Christine Ferrante Represented By Dennis D Burns Kyra E Andrassy
Armani Ferrante, Gianni Ferrante, Represented By
Kyra E Andrassy
Mia Ferrante Represented By
D Edward Hays Martina A Slocomb
Cygni Securities, LLC Represented By Gary C Wykidal
Cygni Capital Partners, LLC Represented By Gary C Wykidal Robert P Goe
Envision Consultants, LLC Pro Se
Glinton Energy Group, LLC Represented By Gary C Wykidal
Richard C. Shinn Pro Se
Richard C. Shinn Represented By
Marilyn R Thomassen
Cygni Capital, LLC Represented By Gary C Wykidal Robert P Goe
CAG Development, LLC Pro Se
Envision Investors, LLC Pro Se
Traveland USA, LLC Pro Se
Rising Star Investments, LLC Represented By
Marilyn R Thomassen
10:00 AM
Glinton Energy Management, LLC Represented By
Gary C Wykidal
Oscar Chacon Pro Se
Richard C. Shinn Represented By Shawn P Huston
Global Envision Group, LLC Pro Se
Robert A. Ferrante Represented By
Robert E Huttenhoff Ryan D ODea
Interested Party(s):
United States Marshals Service Pro Se
Plaintiff(s):
Thomas H Casey Represented By Thomas A Vogele Thomas A Vogele Timothy M Kowal Brendan Loper
Trustee(s):
Thomas H Casey (TR) Represented By Thomas A Vogele Brendan Loper Thomas H Casey Kathleen J McCarthy Timothy M Kowal
Thomas H Casey (TR) Represented By Thomas H Casey Thomas A Vogele Kathleen J McCarthy
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
10:00 AM
Adv#: 8:17-01221 Millan's Restoration, Inc. v. Manely
(con't from 9-6-18 )
Docket 1
Tentative for 11/29/18: Why no pre-trial stip?
Tentative for 9/6/18:
Continue for pre-trial conference on November 29, 2018 at 10:00 a.m. All other deadlines are extended 60 days. Plaintiff to submit revised scheduling order.
Tentative for 4/26/18:
Are we ready to set deadlines? Discovery status?
Tentative for 2/1/18:
Would plaintiff prefer deadlines be set now, or continue conference?
Debtor(s):
Feridon M Manely Pro Se
Defendant(s):
Feridon M Manely Pro Se
10:00 AM
Plaintiff(s):
Millan's Restoration, Inc. Represented By Paul V Reza
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
Adv#: 8:15-01482 P & A Marketing, Inc. et al v. Gladstone et al
Docket 194
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Alan Gladstone, Scott Gladstone, Represented By
Cynthia M Cohen Peter M Bransten
Salus CLO 2012-1, Ltd. Represented By Howard Steinberg Joseph P Davis Scott D Bertzyk
11:00 AM
Does 1-25 Pro Se
Fidelity & Guaranty Life Insurance Represented By
Jeffry A Davis Abigail V O'Brient
DCP Linens Lenders, LLC Represented By Howard Steinberg Joseph P Davis Scott D Bertzyk
Salus Capital Partners, LLC Represented By Howard Steinberg Joseph P Davis Scott D Bertzyk
Downtown Capital Partners, LLC Represented By
Howard Steinberg Joseph P Davis Scott D Bertzyk
J.E. Rick Bunka Represented By Cynthia M Cohen Peter M Bransten
Shepherd Pryor Represented By Cynthia M Cohen Peter M Bransten
Kevin Reilly Represented By
Cynthia M Cohen Peter M Bransten
Loren Pannier Represented By Cynthia M Cohen Peter M Bransten
Scott Gladstone Represented By Cynthia M Cohen
Alan Gladstone Represented By
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Cynthia M Cohen
Janet Grove Represented By
Cynthia M Cohen Peter M Bransten
Plaintiff(s):
Karen Sue Naylor Represented By Steven T Gubner Jerrold L Bregman Jason B Komorsky Robyn B Sokol
P & A Marketing, Inc. Represented By Steven T Gubner Michael W Davis Jason B Komorsky Jerrold L Bregman Robyn B Sokol
Panda Home Fashions LLC Represented By Steven T Gubner Michael W Davis Jason B Komorsky Jerrold L Bregman Robyn B Sokol
Shewak Lajwanti Home Fashions, Represented By
Steven T Gubner Michael W Davis Jason B Komorsky Jerrold L Bregman Robyn B Sokol
Welcome Industrial Corporation Represented By
Steven T Gubner Michael W Davis Jason B Komorsky Jerrold L Bregman
11:00 AM
Trustee(s):
Robyn B Sokol
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
11:00 AM
Adv#: 8:17-01105 Naylor v. Gladstone
Docket 53
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Scott Gladstone Represented By Kenneth E Johnson
Plaintiff(s):
Karen Sue Naylor Represented By Melissa Davis Lowe
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
11:00 AM
Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
2:00 PM
Adv#: 8:18-01105 Jafarinejad v. Garcia
Docket 1
Sanctions? What amount? Strike answer?
Debtor(s):
David R. Garcia Represented By Thomas J Tedesco
Defendant(s):
David R. Garcia Pro Se
Plaintiff(s):
Mandana Jafarinejad Represented By Mani Dabiri
Trustee(s):
Weneta M Kosmala (TR) Pro Se
2:00 PM
Adv#: 8:18-01105 Jafarinejad v. Garcia
(con't from 10-25-18)
Docket 1
Tentative for 11/29/18: See #10.
Tentative for 10/25/18:
Status conference continued to November 29, 2018 at 2:00 p.m. to coincide with OSC, now that one will be lodged as requested.
Tentative for 8/30/18:
Status conference continued to October 25, 2018 at 10:00 a.m. Why didn't defendant participate in preparing the status report? Plaintiff should prepare an OSC re sanctions, including striking the answer, for hearing October 25, 2018 at 10:00 a.m.
Debtor(s):
David R. Garcia Represented By Thomas J Tedesco
Defendant(s):
David R. Garcia Pro Se
Plaintiff(s):
Mandana Jafarinejad Represented By Mani Dabiri
2:00 PM
Trustee(s):
Weneta M Kosmala (TR) Pro Se
2:00 PM
Adv#: 8:17-01037 Aguilar et al v. Treadway
Docket 50
- NONE LISTED -
Debtor(s):
Kevin Michael Treadway Represented By Michael R Totaro
Defendant(s):
Kevin Michael Treadway Represented By Matthew Grimshaw
Plaintiff(s):
Shawn A Aguilar Represented By Bradley D Blakeley
Dish Television, Inc. Represented By Bradley D Blakeley
Trustee(s):
Karen S Naylor (TR) Represented By William M Burd
Ringstad & Sanders LLP
10:30 AM
CAPITAL ONE AUTO FINANCE
Vs.
DEBTOR
Docket 51
Grant unless current or APO.
Debtor(s):
Adrienne Y. Turner Represented By Joseph A Weber
Movant(s):
Capital One Auto Finance, a division Represented By
Cheryl A Skigin
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
GOLDEN STAR DEVELOPMENT, INC.
Vs.
DEBTOR
Docket 68
Although the timeline is a bit vague, it appears in this case that debtors signed a home improvement contract with the movant, a contractor, on or about September 4, 2018 under which movant performed labors of home improvement and delivered materials to the debtors’ residence commonly known as 1744 Norfolk Lane, Anaheim ("residence"). This was almost two years after the petition and well after the confirmation of a plan January 18, 2017. This work was required after an electrical fire occurred at the residence in May 2018. Apparently, disputes broke out over the services performed and movant alleges the debtors did not even inform movant they were in Chapter 13. In consequence, debtors terminated movant September 10, 2018 and, when debtors ceased paying for the work performed, the movant filed its "Notice of Perfection of Security Interest in Debtors’ Real Property Based Upon Mechanics Lien and Tolling of Actions" on November 1, 2018. Although it also prepared and threatened to record a mechanics lien against the residence, reportedly an actual recording has not occurred. Instead, movants took the cautious approach and filed this motion for relief of stay.
The short answer is there is likely no stay in this proceeding against these actions since the debt and lien all arose post-petition. 11 USC §362(a)(5) or (6) only bars actions to create, perfect or enforce a lien securing a debt arising before commencement of the proceeding or to take actions to collect on a debt arising pre- petition. Admittedly, some vagueness is created because §362(a)(4) forbids "any act to
10:30 AM
create, perfect, or enforce any lien against property of the estate" without qualification as to when the debt arose. Thus, the motion is appropriately brought. But the underlying logic suggests that movant should be free to at least record the mechanics lien so long as more drastic steps such as foreclosing the lien await further order. This is especially so since under California law time limits may apply as to when such a mechanics lien can be effective. This logic is bolstered since under §362(b)(3) a hiatus is provided to complete steps to perfect even on a prepetition debt interrupted by imposition of the automatic stay. Much more so, then, for debts arising post-petition.
The only defense seems to be a vague request that debtors be permitted to avoid distraction on this issue in favor of performing under the plan, presumably for the term of the plan. But the problem is this argument ignores reality (as well as law). Chapter 13 debtors are not given an invulnerability cloak just because they have filed a petition or confirmed a plan. Having contracted with movant post-petition (without leave of court, by the way) debtors cannot now display such an imaginary shield and say "oh, but we’re in bankruptcy…. (didn’t we tell you?)." There might be some equitable standing under §362(a)(4) to prevent a foreclosure without further order, or maybe to hold off levy except as to insurance proceeds until further order, but debtors will have to confront the problem head on. Even if debtors genuinely dispute the claim, movant has a right to liquidate that claim in Superior Court and certainly does not have to wait until the plan ends. Debtors are not entitled to a multi-year hiatus from the post-petition reality they have created, so they will have to defend in Superior Court as well. If this creates some kind of insuperable difficulty, §1329 exists for that purpose.
Grant on limited basis. No levy (except as to insurance) or foreclosure until further order of this court.
Debtor(s):
Edward Michael Worrel Represented By Michael Jones Sara Tidd
10:30 AM
Joint Debtor(s):
Eunice Santos Worrel Represented By Michael Jones Sara Tidd
Movant(s):
Golden Star Development Inc. Represented By Eric A Mitnick
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
U.S. BANK NATIONAL ASSOCIATION Vs.
DEBTOR
Docket 38
Tentative for 12/4/18: Same.
Tentative for 10/30/18:
Grant unless current or APO.
Debtor(s):
Ana Cabus Represented By
Luis G Torres Todd L Turoci
Movant(s):
U.S. Bank National Association, as Represented By
Nancy L Lee
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 47
Grant unless current.
Debtor(s):
Chih Lee Represented By
Nathan Fransen
Movant(s):
Deutsche Bank National Trust Represented By Sean C Ferry
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
BAYVIEW LOAN SERVICING,LLC
Vs.
DEBTOR
Docket 60
Grant. Appearance is optional.
Debtor(s):
Dana Dion Manier Represented By Brian J Soo-Hoo
Movant(s):
Bayview Loan Servicing, LLC., as Represented By
Kelsey X Luu
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
ASPEN PROPERTIES GROUP, LLC
Vs.
DEBTOR
Docket 15
Grant. Appearance is optional.
Debtor(s):
Voichita Ranca Represented By Stirling J Hopson
Movant(s):
ASPEN PROPERTIES GROUP, Represented By
Joshua L Scheer Erica T Loftis
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
INSURED/DEFENDANT SHAMROCK GROUP INC
Vs.
DEBTOR
Docket 275
Grant as to insurance only. Appearance is optional.
Debtor(s):
Shamrock Group, Inc. Represented By David M Goodrich Beth Gaschen
Trustee(s):
Thomas H Casey (TR) Represented By Kathleen J McCarthy Thomas H Casey
11:00 AM
Docket 26
Grant unless some reasonable explanation is given concerning the unfortunate timing.
Debtor(s):
Roberto Belleza Tolentino Represented By Rodolfo T Bunagan
Joint Debtor(s):
Lalaine Tolentino Represented By Rodolfo T Bunagan
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Docket 25
Grant.
Debtor(s):
Roberto Belleza Tolentino Represented By Rodolfo T Bunagan
Joint Debtor(s):
Lalaine Tolentino Represented By Rodolfo T Bunagan
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
GROBSTEIN TEEPLE LLP AS ACCOUNTANTS FOR THE CHAPTER 7 TRUSTEE
FEE: $5,972.50
EXPENSES: $10.35
Docket 935
Allow as prayed. Appearance is optional.
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
11:00 AM
MARSHACK HAYS LLP, TRUSTEE'S ATTORNEY FEE: $113,834.00
EXPENSES: $1,294.46
Docket 936
Allow as prayed. Appearance is optional.
Debtor(s):
Jana W. Olson Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By Sarah Cate Hays D Edward Hays Laila Masud
11:00 AM
Docket 40
Grant. While not making a determination at this time, further extensions should not be expected absent extraordinary circumstances.
Debtor(s):
Harry Berkowitz Represented By Christopher P Walker
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
(con't from 10-10-18)
Docket 19
Tentative for 12/4/18: Same.
Tentative for 10/10/18: Grant.
Debtor(s):
Gabriela Orozco Pro Se
Trustee(s):
Richard A Marshack (TR) Represented By
D Edward Hays
10:00 AM
Docket 107
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
10:00 AM
Docket 0
Debtor(s):
Ruben Corona Jr Represented By Michael R Totaro
Joint Debtor(s):
Maria Elena Corona Represented By Michael R Totaro
10:00 AM
(con't from 11-28-18)
Docket 629
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(con't from 11-28-18)
Docket 632
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(con't from 11-28-18)
Docket 634
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
11:00 AM
(con't from 11-07-18 per court order)
Docket 1
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
Docket 101
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
U.S.C. Section 305 and 1112
(con't from 11-7-18 per amended scheduling order entered 10-16-18)
Docket 37
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
10:00 AM
Adv#: 8:16-01138 Bermuda Road Properties, LLC v. Hudson, III et al
(con't from 11-01-18 per order granting stip to cont. s/c ent.10-25-18)
Docket 1
Tentative for 2/15/18:
Continued to April 26, 2018 at 10:00 a.m.
Tentative for 1/25/18:
By order entered December 15, 2017 the adversary proceeding was stayed for 60 days. Continue to February 15, 2018?
Tentative for 10/26/17:
In view of stay ordered October 23, 2017, continue to January 25, 2018.
Tentative for 8/4/16:
Deadline for completing discovery: December 1, 2016 Last date for filing pre-trial motions: December 15, 2016 Pre-trial conference on: January 12, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Joseph Roland Hudson III Represented By
10:00 AM
James C Bastian Jr Rika Kido
Defendant(s):
Joseph Roland Hudson III Pro Se
Diana Hudson Pro Se
Joint Debtor(s):
Diana Hudson Represented By James C Bastian Jr Rika Kido
Plaintiff(s):
Bermuda Road Properties, LLC Represented By Colby Balkenbush Alan J Lefebvre
Trustee(s):
Karen S Naylor (TR) Pro Se
Karen S Naylor (TR) Pro Se
U.S. Trustee(s):
United States Trustee (SA) Pro Se
10:00 AM
Adv#: 8:18-01104 Checkmate King Co., LTD v. Fower
(con't from 8-30-18)
Docket 1
Tentative for 12/6/18:
Status conference continued to April 2, 2019 at 10:00 a.m. for evaluation after other adversary proceeding nears conclusion.
Tentative for 8/30/18:
Status conference continued to December 6, 2018 at 10:00 a.m. Updates on other litigation expected in status report before continued hearing.
Debtor(s):
George Tyler Fower Represented By Vatche Chorbajian
Defendant(s):
George Tyler Fower Pro Se
Plaintiff(s):
Checkmate King Co., LTD Represented By Robert M Aronson
10:00 AM
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:18-01136 Golden v. Camel Grinding Wheels, Inc.
Disallowance of Claims - HOLDING DATE (con't from 10-04-18)
Docket 1
Tentative for 12/6/18:
Status conference continued to January 31, 2019 at 10:00 a.m. as a holding date to accommodate settlement motions.
Tentative for 10/4/18:
Status conference continued to December 6, 2018 at 10:00 a.m. to allow default and prove up.
Debtor(s):
Custom Cut Abrasives, Inc. Represented By
R Gibson Pagter Jr.
Defendant(s):
Camel Grinding Wheels, Inc. Pro Se
Plaintiff(s):
Jeffrey I Golden Represented By Robert P Goe
Trustee(s):
Jeffrey I Golden (TR) Represented By Charity J Manee
10:00 AM
Robert P Goe
10:00 AM
Adv#: 8:18-01137 Golden v. Pac Com International, Inc.
Disallowance of Claims - HOLDING DATE (con't from 10-4-18)
Docket 1
Tentative for 12/6/18:
Status conference continued to February 7, 2019 at 10:00 a.m.
Tentative for 10/4/18:
Status conference continued to December 6, 2018 at 10:00 a.m. to allow default and prove up.
Debtor(s):
Custom Cut Abrasives, Inc. Represented By
R Gibson Pagter Jr.
Defendant(s):
Pac Com International, Inc. Pro Se
Plaintiff(s):
Jeffrey I Golden Represented By Robert P Goe
Trustee(s):
Jeffrey I Golden (TR) Represented By Charity J Manee Robert P Goe
10:00 AM
Adv#: 8:18-01147 Marshack v. W-Staffing, Inc.
(con't from 10-4-18 per order granting stip. to extend time & cont. s/c entered 9-27-18) (First Amended Complaint Filed 9-27-18)
Docket 1
Tentative for 12/6/18:
Deadline for completing discovery: May 31, 2019 Last date for filing pre-trial motions: June 17, 2019 Pre-trial conference on: June 27, 2019 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Skin Care Solutions, LLC Represented By Jeffrey D Cawdrey
Defendant(s):
W-Staffing, Inc. Pro Se
Plaintiff(s):
Richard A Marshack Represented By Robert P Goe
Trustee(s):
Richard A Marshack (TR) Represented By Robert P Goe
10:00 AM
Adv#: 8:15-01099 Howard B. Grobstein, Chapter 7 Trustee v. Ponce
(con't from 10-4-18 per order approving stip re continuance ent. 9-25-18)
Docket 1
Tentative for 12/6/18: Status?
Tentative for 8/2/18:
The court was under the impression a settlement had been reached, but no updated status report has been received.
Tentative for 8/4/16:
Deadline for completing discovery: November 7, 2016 Pre-trial conference on: December 1, 2016 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Point Center Financial, Inc. Represented By Robert P Goe Jeffrey S Benice Carlos F Negrete
Defendant(s):
Raymond E Ponce Represented By Nancy A Conroy
10:00 AM
Plaintiff(s):
Howard B. Grobstein, Chapter 7 Represented By
Jon L Dalberg
Trustee(s):
Howard B Grobstein (TR) Represented By Rodger M Landau Roye Zur
Kathy Bazoian Phelps John P Reitman Robert G Wilson Monica Rieder
Jon L Dalberg Michael G Spector Peter J Gurfein
10:00 AM
Adv#: 8:17-01240 Pacific Western Bank v. Haretakis
(set at s/c held 4-5-18)
(con't from 10-25-18 per order re: stip. to cont pre-trial conf. entered 8-28-18)
Docket 1
Tentative for 4/5/18:
Parties are to submit an order consolidating the contested matter regarding the homestead with this dischargeability/denial of discharge adversary proceeding;
Deadline for completing discovery: September 1, 2018 Last date for filing pre-trial motions: September 24, 2018 Pre-trial conference on: October 25, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
Defendant(s):
Catherine M Haretakis Pro Se
Plaintiff(s):
Pacific Western Bank Represented By
10:00 AM
Kenneth Hennesay
10:00 AM
Adv#: 8:18-01013 Haretakis v. Pacific Western Bank
(con't from 10-25-18 per stip. to cont. deadlines & pre-trial conf. entered 8-27-18 )
Docket 1
Tentative for 4/12/18:
Deadline for completing discovery: September 30, 2018 Last date for filing pre-trial motions: October 15, 2018 Pre-trial conference on: October 25, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
Defendant(s):
Pacific Western Bank Pro Se
Plaintiff(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
Adv#: 8:18-01047 Karen Sue Naylor, Chapter 7 Trustee v. Outsourcing Solutions Group, LLC
(set from s/c held on 5-24-18)
(con't from 9-6-18 per order on stip. between plaintiff and defendant to extend the: discovery cutoff deadlines & cont. pre-trial conf. entered
8-20-18)
Docket 1
Tentative for 5/24/18:
Deadline for completing discovery: 8/18/18
Last Date for filing pre-trial motions: 8/27/18
Pre-trial conference on 9/6/18 at 10:00AM
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Outsourcing Solutions Group, LLC Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
11:00 AM
Adv#: 8:18-01082 Whipple v. Robertson et al
Docket 128
This is Defendant Val Muraoka’s ("Defendant") motion to bifurcate the liability and punitive damages phases of the trial that is set to commence April 19, 2019. Defendant seeks to exclude evidence concerning her finances from the liability phase of trial, claiming that it is irrelevant and will promote judicial economy. She also argues that the Trustee is not entitled to collect punitive damages. The Trustee/Plaintiff opposes the requested relief, arguing that Defendant and Debtor’s finances are relevant to the liability portion of the trial, and that bifurcating the issues will be inefficient and redundant.
FRBP 42(b), made applicable to bankruptcy proceedings by FRBP 7042, provides that a separate trial on certain issues may be ordered "for convenience, to avoid prejudice, or to expedite and economize." But there does not seem to be any convenience or economy to be gained from bifurcating the liability and damages issues in this case. Defendant has put her finances at issue by asserting that there was no fraudulent conveyance because the transfer was repayment of a series of informal loans. Financial information will be needed to evaluate this defense. Whether or not the Trustee is entitled to punitive damages is something that will be addressed at trial, not in this summary proceeding. The court fully understands the argument that § 544(b) only speaks of avoidance of transfers of interests, not other remedies such as punitive damages which might arguably be available under state law. But none of the authorities cited is necessarily conclusive on the point, and since defendant’s finances are integral to determination of her defense anyway, there is just not much expedience in bifurcation.
Deny
11:00 AM
Debtor(s):
Laird Malcolm Robertson Represented By Jeffrey B Smith
Defendant(s):
Laird M Robertson Pro Se
Val Muraoka Represented By
Marc D. Alexander
Plaintiff(s):
Gaylord C. Whipple Represented By Gregory J Ferruzzo Jillian P Harris
Trustee(s):
Richard A Marshack (TR) Represented By
Misty A Perry Isaacson
11:00 AM
Adv#: 8:18-01082 Whipple v. Robertson et al
Docket 129
This is Defendant Muraoka’s motion in limine to exclude evidence regarding the Mary Robertson Trust. In many ways this is like #10 on calendar. Defendant Muraoka argues that the existence of the trust, and the relevant amendments of the trust, are irrelevant to the issues in the trial. Defendant’s argument is largely focused on the property of the estate question such as was determined in cases like Zimmerman v. Spencer (In re Spencer), 306 B.R. 328 (Bankr. C. D. Cal. 2004). But this argument misses the point. The court does not read the Trustee to be arguing that there is a property of the estate interest in question regarding the trust. Rather, the Trustee focuses more on evidentiary value concerning the two relevant amendments made by Ms. Robertson to her trust, i.e. occurring in March 2013 weeks after the arbitrator’s award and just after debtor executed a deed to the Garth Avenue property, and again in September 2017, just after he filed his petition in bankruptcy, respectively. The Trustee apparently argues that the timing was not a mere coincidence. Rather, the Trustee apparently urges that the timing goes to questions of intent, which may very well be highly relevant. It is unavailing to argue, as Defendant Muraoka does, that the corpus of the trust would have remained in any event outside the estate given the spendthrift clause, unless and until it is also shown that Defendant (and debtor and possibly Ms. Robertson as well) knew that. Even if it were a closer question, the purposes of Federal Rule of Evidence 403 (which allows for exclusion of evidence that will unduly waste time or confuse) is not furthered here. This court is well able to keep focused on the pivotal issues without concern of distraction or confusion.
11:00 AM
Deny
Debtor(s):
Laird Malcolm Robertson Represented By Jeffrey B Smith
Defendant(s):
Laird M Robertson Pro Se
Val Muraoka Represented By
Marc D. Alexander
Plaintiff(s):
Gaylord C. Whipple Represented By Gregory J Ferruzzo Jillian P Harris
Trustee(s):
Richard A Marshack (TR) Represented By
Misty A Perry Isaacson
11:00 AM
(con't from 12-05-18 per order of court due to closing of court re: President Bush Passing)
Docket 629
Tentative for 12/6/18: Status?
Tentative for 11/28/18: Grant.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
11:00 AM
(con't from 12-05-18 per order of court due to closing of court re: President Bush Passing)
Docket 632
Tentative for 12/6/18: Status?
Tentative for 11/28/18: Grant.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
11:00 AM
(con't from 12-05-18 per order of court due to closing of court re: President Bush Passing)
Docket 634
Tentative for 12/6/18: Status?
Tentative for 11/28/18:
In this motion the plan proponent and judgment creditor Yuanda Hong, individually and as guardian ad litem for Harry and William Hong (collectively" judgment creditor") seeks authority for the plan agent to accept a credit bid against the judgment creditor’s $6.2 million+ unsecured claim in the plan agent’s sale of the property commonly known as 2628 E. Denise Avenue, Orange, CA "the property").
The property is scheduled at a value of $650,000. There are no liens of record. After the homestead all proceeds under the plan are to be paid to the various classes of unsecured creditors, of which the judgment creditor represents approximately 99.5%. The motion is opposed by the debtor.
There are several problems with this approach. First, the court does not look to §105 to create authority not specifically enumerated elsewhere, and so that citation is unavailing. Second, credit bids are specifically authorized only for secured claims under §363(k). Third, despite the judgment creditor’s argument regarding setoff, there is no specific plan term allowing credit bids on unsecured claims. The closest is at pp. 14-15 where the agent is permitted to set off any claim that the agent holds (on behalf of the creditor body) against claims entitled to payment under the plan. But this
11:00 AM
scenario is not the archetype of set off envisioned under §553(a). Such set offs are only permitted where the claim arose before the commencement of the proceeding. As classically formulated three conditions must be satisfied: (1) the debtor owes the creditor a prepetition debt; (2) the creditor woes the debtor a prepetition debt and (3) the debts are mutual. United States v. Carey (In re Wade Cook Fin. Corp), 375 B.R. 580, 594 (9th Cir. 2007). Obviously, what is envisioned here is setoff against a post- petition created claim, i.e. the price for the property. Thus, timing and mutuality are lacking. The prospective debts in question are not owed between debtor and judgment creditor, but between creditor and plan agent, and are thus not mutual. Fourth, the judgment creditor’s cited authority is inapposite. In re Western Funding, Inc., 550
B.R. 841, 854 (9th Cir. BAP 2016) does not establish a power to accept credit bids from unsecured creditors. Western establishes closer to the opposite, i.e. that the plan agent is not obligated to consider a credit bid from an unsecured creditor. This arises in part from valuation difficulties in that an unsecured claim against an insolvent trust is worth less than is a fully secured claim. This is true here even though the claim is 99.5% of the whole. Lastly, the court shares some of the concerns raised in the Opposition. There is an air of vindictiveness which has nothing to do with the legitimate purposes of the trust created under the confirmed plan, i.e. to liquidate to cash the administrable property of the estate. That goal is best accomplished by selling the property for cash through the efforts of a broker.
One additional point should be made. On calendar is a separate motion for turnover (#12). An allegation is made that debtor is hindering the agent’s sale efforts and therefore depressing the price. If that continues then judgment creditor is invited to re-file this motion, in which case the court may take a second look at allowing credit bids not as a right but as a remedy to deal with ongoing damage to the estate.
Deny without prejudice as discussed
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall
11:00 AM
Robert S Marticello David A Kay Steven H Zeigen Michael Simon Kyra E Andrassy
11:00 AM
Adv#: 8:17-01230 Amster et al v. Hoag Memorial Hospital Presbyterian et al
Docket 84
- NONE LISTED -
Debtor(s):
Hoag Urgent Care-Tustin, Inc. Represented By Ashley M McDow Michael T Delaney Fahim Farivar Teresa C Chow
Tiffany Payne Geyer
Defendant(s):
Hoag Memorial Hospital Represented By Randye B Soref
Newport Healthcare Center, LLC Represented By
Randye B Soref
Plaintiff(s):
Dr Robert Amster Represented By Ashley M McDow Teresa C Chow Faye C Rasch
Robert Amster, M.D., Inc. Represented By
11:00 AM
Ashley M McDow Teresa C Chow Faye C Rasch
Your Neighborhood Urgent Care, Represented By
Ashley M McDow Teresa C Chow Faye C Rasch
Richard A Marshack Represented By Caroline Djang
Trustee(s):
Richard A Marshack (TR) Represented By Caroline Djang Cathy Ta Elizabeth A Green
11:00 AM
Docket 220
- NONE LISTED -
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
11:00 AM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
(set from order approving stip. entered 9-24-18)
Docket 0
- NONE LISTED -
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo William J Idleman
Virgil Theodore Hernandez and Aleli Pro Se
Virgil Theodore Hernandez Represented By Gregory M Salvato Joseph Boufadel
Aleli A. Hernandez Represented By Gregory M Salvato Joseph Boufadel
11:00 AM
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush Louis H Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
2:00 PM
Adv#: 8:17-01225 The Kiken Group v. Bloom et al
(another summons issued on 12-12-17) (con't from 8-09-18)
Docket 1
Tentative for 12/6/18:
This pre-trial conference is continued as a holding date to January 31, 2019 at 10:00 a.m. to allow for documentation of settlement. Appearances waived.
Tentative for 8/9/18:
See #5. Mediation would seem in order.
Tentative for 6/7/18:
Continue to August 9, 2018 at 2:00PM. Schedule trial for any remaning issues not resolved in Motion for Summary Judgment.
Tentative for 3/1/18:
Deadline for completing discovery: May 1, 2018 Last date for filing pre-trial motions: May 21, 2018 Pre-trial conference on: June 7, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Jay Lewis Bloom Pro Se
2:00 PM
Defendant(s):
Jay Lewis Bloom Pro Se
Tina Margaret Bloom Pro Se
Joint Debtor(s):
Tina Margaret Bloom Pro Se
Plaintiff(s):
The Kiken Group Represented By Dale A Kiken
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
FIFTH THIRD BANK
Vs.
DEBTOR
Docket 25
Grant. Appearance is optional.
Debtor(s):
Rodney Kinnett Represented By Christopher P Walker
Movant(s):
Fifth Third Bank Represented By Darren J Devlin
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
JPMORGAN CHASE BANK, N.A.
Vs.
DEBTOR
Docket 49
- NONE LISTED -
Debtor(s):
Paul Yong Kim Pro Se
Movant(s):
JPMorgan Chase Bank, N.A. Represented By Joseph M Pleasant
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:30 AM
DAIMLER TRUST
Vs.
DEBTOR
Docket 10
Grant. Appearance is optional.
Debtor(s):
Hao Thi Ngoc Nguyen Represented By Christopher J Langley
Trustee(s):
Thomas H Casey (TR) Pro Se
10:30 AM
FORD MOTOR CREDIT COMPANY LLC
Vs DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Cyrus Levaye Mokhtari Represented By Richard G Heston
Trustee(s):
Richard A Marshack (TR) Pro Se
10:30 AM
MAS FINANCIAL SERVICES
Vs.
DEBTOR
Docket 7
Grant. Appearance is optional.
Debtor(s):
Billy Richard Duckett Represented By Brian J Soo-Hoo
Movant(s):
MAS Financial Services Represented By Paul V Reza
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:30 AM
(con't from 8-21-18 per order approving stip. to cont hrg entered 8-15-18)
DEUTSCHE BANK NATIONAL TRUST COMPANY
Vs.
DEBTOR
Docket 17
This is the continued motion (from 8/21) for relief of stay brought by Deutsche Bank, the holder of the first trust deed against the property commonly known as 20 Foxboro, Irvine, CA. The bank is owed approximately $930,000 but the property is alleged by the Trustee to have a value of about $1,799,000. Consequently, the motion is opposed by both the Trustee and the debtor.
The bank proceeds under alternative theories found at 11 U.S.C. §§362(d)(1) [cause including lack of adequate protection] and 362(d)(2) [no equity and not necessary to a reorganization]. The "cause" standard is somewhat difficult to meet since even under the bank’s valuation, there is considerable value (at least $500,000) behind the bank’s position on the property. Consequently, the status quo could theoretically go on for many months with steady accrual of interest, fees, insurance, etc. before that cushion would be eroded to the point that ultimate payment of the bank in full was no longer assured.
But the alternative theory, i.e. no equity and not necessary to a reorganization found at §362(d)(d) is more complicated. It is manifest that the property is not necessary to a reorganization given this is a Chapter 7 liquidation. The Trustee and debtor argue, however, that the bank has not shown the "no equity" prong. Although the property is apparently encumbered by numerous junior tax liens and a $10,531,180 judgment in favor of the SEC in third position, the conclusion that there is nothing
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here for unsecured creditors may not be correct. This is because, as reported by the Trustee, at least part of the judgment lien is avoidable under §722(f), and both the tax liens and the judgment lien may secure penalties which are avoidable under §724(a) and preserved for the estate. See Gill v. Kirresh (In re Gill), 574 B.R. 709 (9th Cir.
BAP 2017). Moreover, the debtor reports he is willing to use his homestead exemption for benefit of his unsecured creditors as "restitution." Few details are given.
But the court cautions the Trustee (and debtor) that just because there are possible theories for production of a recovery for the unsecureds does not translate into a license to take as much time as is comfortable, while the debtor continues to reside in the property but paying nothing. Indisputably the bank’s position continues to erode. The real estate market is thought generally to be softening. So, speed, diligence and realistic approach to price are indicated because if the matter comes back before the court again in several months without demonstrable progress, or suitable explanation, the balance may shift against the estate.
Deny. A renewed motion may be filed in 60 days.
Debtor(s):
Bruce Howard Haglund Represented By Joseph A Weber
Movant(s):
DEUTSCHE BANK NATIONAL Represented By
Sean C Ferry
Trustee(s):
Richard A Marshack (TR) Represented By David M Goodrich
10:30 AM
ALAMITOS REAL ESTATE PARTNERS II,LP
Vs.
DEBTORS
Docket 22
Grant unless Debtors are current. No (d)(4) relief.
Debtor(s):
Daniel J Powers Represented By
Charles W Hokanson
Joint Debtor(s):
Ellen A Powers Represented By
Charles W Hokanson
Movant(s):
Alamitos Real Estate Partners II, LP Represented By
Robert J Stroj
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:30 AM
Docket 14
Grant. Appearance is optional.
Debtor(s):
Ray Salamie Represented By
Joseph Arthur Roberts
Movant(s):
Ray Salamie Represented By
Joseph Arthur Roberts
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Docket 37
- NONE LISTED -
Debtor(s):
Nicolas Edward Siligo Represented By Michael Jones Sara Tidd
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
Docket 14
- NONE LISTED -
Debtor(s):
Melissa Rae Michael Represented By Anerio V Altman
Trustee(s):
Weneta M Kosmala (TR) Pro Se
11:00 AM
Docket 0
- NONE LISTED -
Debtor(s):
Rafael Ramon Garcia Pro Se
Trustee(s):
Thomas H Casey (TR) Pro Se
11:00 AM
HAHN FIFE & COMPANY, ACCOUNTANT
FEE: $7,812.00
EXPENSES: $0.00
Docket 2342
Allow as prayed provided applicant can verify notice was given (none seen on docket).
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner
11:00 AM
Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
11:00 AM
RINGSTAD & SANDERS LLP, TRUSTEE'S ATTORNEY
FEE: $375,795.50
EXPENSES: $2721.54
Docket 2343
Allow as prayed, provided notice to creditors is verified (not on docket).
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner
11:00 AM
Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
11:00 AM
KAREN S NAYLOR, TRUSTEE
FEE: $18830.25 EXPENSES: $319.04
Docket 2344
Allow as prayed provided notice to creditors verified (none on docket).
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner
11:00 AM
Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
11:00 AM
Docket 65
Grant. Appearance is optional.
Debtor(s):
Ericka Lynne Zenz Represented By Leonard M Shulman
Trustee(s):
Richard A Marshack (TR) Represented By Robert P Goe
11:00 AM
(2) Approving Sale Free & Clear Of Liens; (3) Authorizing Payment Of Real Property Taxes Through Escrow And Capital Gains Taxes; (4) Finding Buyer A Good Faith Purchaser; And (5) Authorizing Payment Of Real Estate Agents Commission And Costs
Docket 61
Grant. The lien attaching to proceeds and/or payment from escrow of amounts not disputed are presumed, and if not, explanation expected.
Debtor(s):
Ericka Lynne Zenz Represented By Leonard M Shulman
Trustee(s):
Richard A Marshack (TR) Represented By Robert P Goe
2:00 PM
(con't from 10-10-18 )
Docket 1
Tentative for 12/11/18:
Continue for further status in about 90 days. See #s 22 and 23.
Tentative for 10/10/18:
The court is interested in hearing from all parties as to their views as to how this case should proceed. It would appear from the trustee's report that operations are somewhat manageable but there may be recurring operations shocks and shortfall of cash to meet certain pressing obligations, such as overdue lease payments.
The court is not encouraged that the ordered mediation has not occurred. It was an order not a suggestion. The lack of clarity over ownership will be both expensive and problematic going forward. If the parties are not willing or able to work this out promptly, the trustee will be instructed to proceed with all aspects of reorganization, not just as a custodian, which may or may not yield anything for equity.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson
2:00 PM
(set from hrg held on 8-29-18 re: cash collateral)
(advanced from 10-24-18 per order on stipulation entered 9-18-18) (con't from 10-10-18)
Docket 31
Tentative for 12/11/18: See #22 and 23.
Tentative for 10/10/18: See #17.
Tentative for 8/29/18:
It is not clear that there is any "cash collateral" here. Moreover, the court needs analysis of whether, given the dispute over ownership and right to file this proceeding, a trustee should be appointed.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
2:00 PM
(OST Signed 11-19-18)
Docket 106
- NONE LISTED -
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
2:00 PM
(con't from 10-10-18)
Docket 1
Tentative for 12/11/18: See #22 and 23.
Tentative for 10/10/18:
Why no report? Continue to October 24, 2018 at 10:00 a.m.
Debtor(s):
Demar Energy LLC Represented By Kent Salveson
2:00 PM
Trustee At The Time Of The Hearing
(con't from 10-24-18)
Docket 15
Tentative for 12/11/18:
This is the motion of the UST to dismiss for various failures, including failure to pay fees, failure to engage counsel and failure to submit timely reports. Any of these would be sufficient grounds for dismissal, especially since the motion is not opposed. The court’s only hesitation goes to the question of whether by dismissing the court loses jurisdiction to determine the summary judgment motions on calendar.
No tentative
Tentative for 10/24/18:
The court recognizes the related case of Nasco Petroleum appears vigorously contested, so lack of opposition is surprising. Will this dismissal adversely affect Nasco case? Clearly the defiance of the usual requirements cannot go unremediated, but given impending mediation efforts the court will hear argument as to whether dismissal or conversion should away mediation results?
Debtor(s):
Demar Energy LLC Represented By Kent Salveson
2:00 PM
Adv#: 8:18-01196 DTLA TD Energy, LLC, a Delaware limited liability v. Demar Energy, LLC
Docket 2
These are cross motions for summary judgment.
Over the course of several hearings, it became clear that there were convoluted issues of ownership of Nasco Petroleum, LLC ("Nasco"), the first Chapter 11 debtor to file, and Demar Energy, LLC ("DeMar"), the second, that needed to be resolved before either case could progress. The court set a date for a summary judgment hearing and indicated that at least one adversary proceeding should be initiated, and motion(s) filed, so that these ownership issues could be resolved. The parties were also ordered to mediation, which was apparently not successful. DTLA TD Energy, LLC, TopNotch DTLA US, LLC, ALKM Financial Services, LLC, Ehud Gilboa, and Ronen Twito (collectively "DTLA Movants") filed a "Motion for Summary Judgment on Declaratory Relief and Injunctive Relief" (the "DTLA Motion") on October 30, 2018 in adversary proceeding 8:18-ap-01196-TA. DeMar Energy LLC filed its own "Motion for Summary Judgment in Regard to First and Fourth Cause of Action of the Complaint Where No Dispute Exists" on November 8, 2018 in adversary proceeding 8:18-ap-01202-TA ("DeMar motion"). DTLA Movants filed an Opposition to the DeMar Motion on November 20, 2018 and DeMar filed a Reply on November 30, 2018. DeMar filed a late Opposition to the DTLA Motion on November 30, 2018, to which DTLA Movants filed a Reply on December 4, 2018. The opposition filed to the DTLA Motion appears to be identical to the reply filed to the DeMar Motion. The issues in these two motions are largely the same and will therefore be considered
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together in this single memorandum.
To preserve the going concern value during this turmoil, the court appointed a Chapter 11 trustee while the ownership dispute is being sorted out. Karen Naylor has served as that Chapter 11 trustee.
There does not appear to be any dispute as to the following facts, although significance of several facts appears strongly disputed.
Derek LaMarque and Marshall Diamond-Goldberg were members of DeMar. In late 2017 DeMar became aware of an opportunity to acquire certain oil well leases and working rights in downtown Los Angeles ("oil rights") and all of the membership interests in Nasco (collectively the "Assets"). Nasco appears to have been only the operating entity but the exact demarcations on ownership of Assets at that stage remain unclear. In exchange for a membership interest in DeMar, Amit Yonay ("Yonay") arranged a joint venture between LaMarque and Goldberg, as agents for DeMar, Yonay, Ronen Twito, and Ehud Gilboa to acquire the Assets. The agreement for a joint venture provided that the Assets would be acquired through DTLA, a new limited liability company to be formed. TopNotch, another new limited liability company that would be controlled by Twito and Gilboa would provide 75% of the
$2,400,000 original price needed to acquire and operate the Assets and would receive 75% of DTLA’s membership interest. DeMar would provide the other 25% and would receive 25% of the membership interests. The "TopNotch-DeMar Agreement" dated January 19, 2018 [Exhibit 1 to Gilboa Declaration] provided that DeMar would enter into a Purchase and Sale Agreement ("PSA") for the benefit and on behalf of DTLA, and that immediately after closing DTLA would be the sole owner of the rights and assets that are the subject of the PSA. DeMar agreed to execute any documentation needed so that DTLA would be the sole owner immediately after closing. [Gilboa Declaration Exhibit 1, p. 11]. DeMar entered into the PSA with Delco Petroleum
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California, LLC, Nasco, ATCO Energy, LLC, and YN 8600 Wilshire, LLC effective January 1, 2018 [Id., Exhibit 2] and the "Purchase and Sale Agreement Addendum" dated January 23, 2018 [Id., Exhibit 3]. The total purchase price as modified in the Addendum was a $50,000 deposit, payment of $2,110,000 at closing in cash, and assumption of accounts payable totaling $877,833.26. [Id., Exhibit 2, p. 23; Exhibit 3,
p. 99]. DTLA and TopNotch were formed on January 29, 2018. The DTLA Limited Liability Company Agreement, which is executed by members of TopNotch and DeMar, states:
Whereas, pursuant to that certain letter agreement dated as of January 19, 2018 by and between DeMar and DTLA TD ENERGY LLC (the "LLC"), which at such time, was under formation, DeMar executed and entered into the PSA on behalf and for the benefit of the LLC which, upon formation, would assume all rights and obligations under the PSA…(emphasis added)
[Id., Exhibit 5].
On February 16, 2018, TopNotch wired $1,582,500.21 to counsel for DeMar and DTLA for its 75% share of the cash portion of the purchase price. TopNotch also wired $100,000 on March 1, 2018, $75,000 on March 16, 2018, and $42,500 on July 26, 2018 to make its total contribution $1,800,000 (this is 75% of $2,400,000). [Decl. of Ehud Gilboa, ¶¶ 33-34]. An "Assignment and Bill of Sale" was executed by sellers. [Id., Exhibit 10]. The Nasco Shares were transferred to DeMar "and/or" DTLA by a separate "Agreement, Assignment, and Bill of Sale" executed on February 20, 2018. [Id., Exhibit 12] This Assignment also contains a recital that all "obligations arising from, all agreement to which Assignor is party relating to the leases, Lands or Wells…" are also assigned. As near as the court can determine, these two assignments
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taken in conjunction deal with all of the Assets and corresponding liabilities.
On February 20, 2018, an "Action by Written Consent of the Manager and the Members of DTLA TD Energy LLC in Lieu of Special Meeting" ("Written Consent") was executed, providing for the assignment of the rights acquired under the PSA to DTLA. [Id., Exhibit 13]. Representatives for DeMar and DTLA also executed an "Assignment and Assumption Agreement" ("Assumption Agreement") providing for the assignment of all DeMar’s rights and obligations under the PSA to DTLA. [Id., Exhibit 14] The Assumption Agreement provides:
Effective Date: Notwithstanding Assignor’s and Assignee’s execution and delivery of this Agreement, this Agreement shall not be effective and shall not have any force or effect, unless and until Seller delivers its acknowledgment and consent to this Agreement, as indicated on the signature pages hereto. The date of Seller’s acknowledgment and consent shall constitute the "Effective Date." (emphasis added)
[Id.] The Assumption Agreement is signed by DeMar and DTLA, but there is no place for seller to sign as referenced in the agreement. DeMar asserts that this lack of a signing by the seller means that title to the Assets has not yet been transferred, leaving DeMar in ownership position.
To fund its 25% share of the Assets, DeMar took four loans from parties affiliated with Yonay (the "Yonay Lenders"). In exchange for each loan, DeMar gave a convertible promissory note and an equity interest in DeMar ranging from 2% to 6% ("DeMar Notes"). DTLA Movants assert that the Yonay Lenders assigned their rights, except for the equity interests, under the DeMar Notes to ALKM on June 27, 2018.
When DeMar defaulted and did not cure the default, DTLA Movants claim that ALKM converted the DeMar Notes to equity as provided for in Section 5(b) of the
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DeMar Notes. [Id., Exhibit 18, p. 210; Exhibit 21 & 22]. In contrast, DeMar asserts in its argument that it converted the DeMar Notes to equity under Section 5(a) of the notes prior to the default, which extinguished the debt. See DeMar motion Exhibit 14.
FRBP 7056 makes FRCP 56 applicable in bankruptcy proceedings. FRCP 56(c) provides that judgment shall be rendered if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. FRCP 56(e) provides that supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein, and that sworn or certified copies of all papers or parts thereof referred to in an affidavit shall be attached thereto or served forthwith. FRCP 56(e) further provides that when a motion is made and supported as required, an adverse party may not rest upon mere allegations or denials but must set forth specific facts showing that there is a genuine issue for trial. FRCP 56(f) provides that if the opposing party cannot present facts essential to justify its opposition, the court may refuse the application for judgment or continue the motion as is just.
A party seeking summary judgment bears the initial responsibility of demonstrating the absence of a genuine issue of material fact and establishing that it is entitled to judgment as a matter of law as to those matters upon which it has the burden of proof. Celotex Corporation v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548,
2553 (1986); British Airways Board v. Boeing Co., 585 F.2d 946, 951 (9th Cir. 1978). The opposing party must make an affirmative showing on all matters placed in issue by the motion as to which it has the burden of proof at trial. Celotex, 477 U.S. at 324. The substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Anderson v. Liberty Lobby, Inc.,477 U.S.
242, 248,106 S. Ct. 2505, 2510 (1986). A factual dispute is genuine where the
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evidence is such that a reasonable jury could return a verdict for the nonmoving party. Id. The court must view the evidence presented on the motion in the light most favorable to the opposing party. Id. If reasonable minds could differ on the inferences to be drawn from those facts, summary judgment should be denied.
Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S. Ct. 1598, 1608 (1970).
The issues to be resolved, as framed by DTLA Movants and DeMar, are: (1) whether the Assets were vested in DTLA; (2) if they did not, and are held in trust for DTLA by DeMar, should the court complete the transfer to DTLA; and (3) who owns what percentage interests in DeMar.
These adversary proceedings were initiated, and these motions were filed, so that this question could be answered, because there is a dispute over who controls Nasco and whether the bankruptcy filing was authorized. DTLA Movants assert that it is clear from the various contracts entered by the parties that DTLA would own the Assets, and TopNotch would own 75% of DTLA and DeMar 25%. This does appear to be the case. The TopNotch-DeMar Agreement dated January 19, 2018 [Exhibit 1 to Gilboa Declaration] provides that the PSA was entered into for the benefit of DTLA, and that after the closing DTLA would be the sole owner of the Assets. The "Agreement, Assignment, and Bill of Sale" executed on February 20, 2018. [Id., Exhibit 12] provided for ownership of the Assets to be vested in DeMar and/or DTLA. The "Assignment and Assumption Agreement" [Id. Exhibit 14] and "The Action by Written Consent" signed by the members of DeMar and DTLA [Id. Exhibit 13] also signed February 20, 2018 indicate that title of the Assets was vested in DTLA. All the writings between the parties reflect the intention for the Assets to be vested in DTLA
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and that DeMar was acting for the benefit of DTLA in acquiring the Assets.
DeMar argues that the seller consent provision in the Assignment and Assumption Agreement [Id. Exhibit 14] was not satisfied, so no assignment has yet occurred. The DTLA Movants represent that the Assumption and Assignment Agreement was prepared before the sale closed, and so it included the provision for sellers’ consent, but this became unnecessary. DTLA Movants suggest that once the sale closed, the Assets were transferred to DeMar on behalf of DTLA and the consent provision became null and void. According to DTLA Movants, title to the Assets vested in DTLA on February 20, 2018. This appears to be the more plausible reading. Since the "Agreement, Assignment and Bill of Sale" [Id. Exhibit 12] is signed February 20 by Aziz Delrahim on behalf of Nasco, and, except for a provision about DOGGR and City of Los Angeles bonds, that document speaks in the present tense. Similarly, the "Assignment and Bill of Sale [Id. Exhibit 10] signed by the sellers on February 17 also speaks of vesting of all the assignor’s right, title and interest in the Assets as of the effective date, which is either when it is signed, February 20 (or February 17) or "as of" January 1, 2018 which is a reference to the date of the PSA entered into by DeMar on behalf of "a Joint Venture…" with effective date of January 1 [Id. Exhibit 2 at ¶V.1(a)] But in no case does either the "Agreement, Assignment and Bill of Sale" or the "Assignment and Bill of Sale" support DeMar’s theory that the sale remained open and subject to a condition subsequent, requiring a future signature by Nasco or any other seller. The closest that we come to support for such a theory appears either at: (a) ¶XVI.16 of the PSA, which provides that the agreement is not assignable without the consent of other party, or (b) the bizarre definition of "Effective date" appearing in the "Assignment and Assumption Agreement" [Id.
Exhibit 14]. But any force that these arguments might have had is vastly diminished considering the surrounding circumstances. First, Mr. Delrahim and the other sellers (some of whom acted through Delrahim) signed a Bill of Sale in the "Agreement, Assignment and Bill of Sale" [Id. Exhibit 12] or "Assignment and Bill of Sale" [Id. Exhibit 10]. Normally a Bill of Sale operates like a deed; it operates as the instrument of transfer. Black’s Law Dictionary Eighth Ed. West Publishing Co. 2004. Second, the correspondence from Nasco’s attorney on February 21 [Id. Exhibit 11] mentions
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"the final wire" and "considers the transaction closed." Although reference is made in this correspondence to receipt of "the Nasco assignment executed by Demar and DTLA" one is given no indication that anything further is expected from the sellers; indeed, the "assignment" obliquely mentioned in this correspondence might be the very "Assignment and Assumption Agreement" [Id. Exhibit 14] which curiously never even had a place for Nasco to sign but was signed by DeMar and DTLA, but upon which DeMar now relies so heavily for its condition subsequent argument. So, there is just nothing in the documents supporting DeMar’s argument.
But DeMar argues that there are liabilities that were assumed by DeMar under the PSA that do not pass to DTLA. According to DeMar, this leaves the liabilities with DeMar while DTLA gets the Assets, a concept repugnant to equity. DeMar argues that it is impermissible under California law, Civil Code §1457 to separate the assets from corresponding burdens without the consent of the party holding the benefit. Whatever validity might attach in a general sense to this proposition it does not hold up under the documents here. First, under both Bills of Sale [Id. Exhibits 10 and 12] the assignee assumes the obligations. For the same reason, it can be argued that the party benefitted consents. The PSA likewise has an assumption of debt [Id.
Exhibit 2, ¶XIV.1] and it is rights (and responsibilities) under the PSA that are assigned. Moreover, the "Assignment and Assumption Agreement" makes explicit that DTLA has succeeded to both assets and responsibilities under the PSA.
DeMar admits that it intended to enter into a joint venture agreement, but that DTLA embezzled and stole money and failed to fund a portion of the $1,800,000 it has promised. DeMar has not offered any evidence to support these claims. Movants have offered testimony that they made wire transfers totaling $1,800,000. Some of the payments were made after the February 20, 2018 closing of the sale, but from what the court can tell sufficient funds were wired to make the cash payment. One assumes this reading is correct because the sellers moved forward with closing the sale. DeMar asserts that (in addition to the above arguments) the PSA is executory because there are questions about whether the PSA, and /or the Assignment and Assumption Agreement [Id. Exhibit 14] have been fully performed. DeMar asserts that $550,000
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(and maybe a corresponding account?) of royalty payments have been discovered that need to be assumed along with the $877,000 in trade debt. But there is no evidence to support these claims. Moreover, since the documents show that the Assets were transferred (but excluding cash) it is not clear that if an account ever existed holding the $550,000 that needed to be transferred in the first place. If it is an unfunded liability, then it is clearly part of the obligations assumed by DTLA along with the
$877,000. DeMar also asserts that there is an outstanding obligation to replace bonds. Movants have provided evidence that the bonds (or at least some of them) were replaced and/or that an extension on replacement has been granted to December 31, 2018 by Nasco. [Id., Exhibit 15, 16 & 17].
But none of these points supports DeMar’s theory of an executory contract. By all indications the PSA and all attendant contracts, assignments and Bills of Sale were and are fully performed.
Apparently somehow related to its theory of an executory contract, DeMar argues that there has been fraud, embezzlement and /or a scheme to squeeze out Messrs. DeMarque and Goldberg. While the court doubts that this is logically connected to "executoriness," DeMar has not offered any admissible evidence to support any of the allegations it raises in its pleadings. There is mention of offering witnesses at the hearing to cure this. But that is not correct procedure. Nor is failure to include the mandatory Statement of Uncontroverted Facts and Conclusions of Law required by LBR 7056-1(b)(2)(A). Without evidence, there is no genuine dispute of material fact. The contracts are clear. DeMar admits that it intended to enter into a joint venture with TopNotch to form DTLA and that the Assets were to be vested in DTLA. It sounds like what has happened is there have been disagreements in running the business after the sale closed, so DeMar is now trying to reverse and say that the assignment never happened. If it wants to show that the assignment never happened it needs evidence, of which there is none at this time. If fraud and /or embezzlement, whether the subject of Corporations Code §16404 or otherwise has occurred in operation of the debtors, that is properly the subject of an action for damages. But based on the evidence properly before the court, the sale of assets and the assignment
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to DTLA are fully consummated, with DTLA now the correct owner of the Assets, including all the shares in Nasco. If dismissal is sought by DTLA, that must be the subject of a separate hearing.
DeMar raises several additional arguments, none of which have any merit.
These include:
Standing: DeMar argues that DTLA and/or TopNotch lack the capacity to file their motions or even to be heard. For this reason, DeMar also argues that any attempt to enter into the various agreements concerning the formation of DTLA and or to receive assignment of the Assets, are null and void. DeMar bases this argument on the theory that none of these entities are registered to do business in California. For purposes of this litigation, the fact that DTLA Movants are allegedly not registered with the California Secretary of State should not matter because pursuant to Cal. Civ. Code § 191(c)(1), a business is not considered to be "transacting intrastate business" if it maintains or defends an action on a claim or dispute. Moreover, the evidence that Movants are not registered with the Secretary of State is not admissible because it has not been authenticated (screenshots of the Secretary of State’s webpage unsupported by declaration are not admissible evidence). DTLA also suggests that this requirement does not apply to it because it has only entered into one transaction, the acquisition of the Assets, not "repeated and successive transactions of business" as defined by Cal. Civ. Code §191(a). While this might be so, the conclusion of who is running the business and whether this requires registration are factual questions unsuited for summary judgment. Further, the court agrees that White Dragon Prods, Inc. v. Performance Guaranties, Inc., 196 Cal. App. 3d 163, 171 (1987), cited by DeMar is scant authority. White Dragon was heavily criticized in Ogden Martin Systems, Inc. v.
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San Bernardino County, 932 F. 2d 1284 (9th Cir. 1991). In Ogden the Ninth Circuit interpreted California’s laws on foreign corporations as ones instituted to enforce California’s franchise taxes and suspension as requiring an affirmative exercise of discretion by the Secretary of State, not one of a private litigant seeking to void a contract. Id. at 1288-90. This approach in Ogden appears the
better course to this court. Certainly, DeMar cannot carry the day simply over the question of registration to do business in California, or because of tax returns not yet due.
Preference: This argument is puzzling. DeMar argues, the assignment of Assets by DeMar to DTLA, or perhaps the conversion of shares within DeMar under the convertible notes (which is left unclear in the papers), somehow, cannot have been accomplished because to do so would have been a preference. But this argument is almost certainly wrong. First, if it is argued that transfer of property of DeMar (such as the Assets) amounted to a preference, that fails because DeMar received the Assets as nominee on behalf of DTLA, as discussed above. Bankruptcy Code § 541(d) makes clear that assets over which the debtor has only bare legal title and not the equitable interest are not property of the estate which might trigger the provisions of §547. See e.g. In re Zwagerman, 115 B.R. 540 (Bankr. W.D. Mich. 1990) [bailed property not recoverable as a preference]; In re San Diego Realty Exchange, Inc., 132 B.R. 424 (Bankr. S.D. Cal. 1991) [property held in trust not recoverable as preference]. If the transfer referenced is intended to refer to issuance of membership interests in DeMar, through exercise of the convertible
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notes or otherwise, this fails also because such transfers of shares are not avoidable in a bankruptcy of the entity as the entity is not deemed to have an
avoidable property interest in mere evidence of its members’ ownership. Cf. In re Cardinal Industries, Inc., 142 B.R. 807, 809-10 (Bankr. S.D. Ohio 1992) [debtor could not seek avoidance as preference of transfer of the non-debtor partnership’s property merely because it was general partner].
The parties disagree about the percentage of membership interests in DeMar.
In exchange for the loans taken from the Yonay Parties, DeMar issued convertible notes and gave equity interests. DTLA Movants assert that the convertible notes were assigned to ALKM on June 27, 2018 and that, upon DeMar’s alleged default, ALKM gave notice that the debt was converted to equity pursuant to section 5(b) of the notes. These claims are supported by the letters and emails attached as Exhibits 21 and 22 to the Gilboa Declaration. Movants provide a chart with which they believe show the equity breakdown is at p. 21-22 of the DTLA Motion. DeMar asserts that it exercised on July 1, 2018 its rights under section 5(a) of the notes to convert the notes to equity prior to the alleged default and election to convert. See DeMar Motion Exhibit 14; the exhibit is not authenticated. This seems questionable because it is not clear that DeMar would have met the requirements to do so. DeMar offers no evidence that it generated $125,000 per quarter in net operating revenues for two consecutive quarters. Some vague reference is made to monies on deposit, but neither are these authenticated nor is the difference between monies on deposit and net revenues explored by any admissible evidence. Again, unauthenticated copies of excel spreadsheets and bank statements collected as Exhibits 15 to DeMar’s motion prove almost nothing on the question of net revenue. Based on the math provided by DTLA Movants this is not possible (or at least highly unlikely). But in any event, whether the attempted conversion by DeMar was effective or not is a contested factual issue.
DeMar has also claimed that it received a $3,000,000 capital contribution from Alliance Energy Solutions, which would alter the percentages of ownership. Again,
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there is no admissible evidence to support this claim. But neither have the DTLA parties proven that net revenue was not hindered by embezzlement, as alleged by DeMar, nor what the actual net revenues in fact were, nor what might be the effect of the undated Alliance Energy Solutions "Addendum to Power Purchase Agreement "[DeMar Exhibit 17], if any.
In sum, the court sees far too many factual issues to resolve the question of ownership of DeMar in a summary judgment motion.
Grant DTLA motion regarding ownership of Assets. Deny all other motions including regarding percentage ownership of DeMar.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
Defendant(s):
Demar Energy, LLC Pro Se Nasco Petroleum, LLC, a Delaware Pro Se Derek LaMarque Pro Se
Marshall Diamond-Goldberg Pro Se
Plaintiff(s):
DTLA TD Energy, LLC, a Delaware Represented By
Garrick A Hollander
TopNotch DTLA US, LLC Represented By Garrick A Hollander
ALKM Financial Services, LLC Represented By Garrick A Hollander
Ehud Gilboa Represented By
2:00 PM
Garrick A Hollander
Ronen Twito Represented By
Garrick A Hollander
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
2:00 PM
Adv#: 8:18-01202 Demar Energy LLC v. TopNotch TDLA US llc et al
(set from order approving stip to shorten time for hrg on mtns entered 11-20-18)
Docket 2
See #22.
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
Defendant(s):
TopNotch TDLA US llc Pro Se
TDLA TD Energy llc Pro Se
AKLM Financial Services Pro Se
Ronen Twito Pro Se
Aziz Delrahim Pro Se
Plaintiff(s):
Demar Energy LLC Represented By Kent Salveson
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
10:00 AM
(con't from 9-26-18 )
Docket 1
Tentative for 9/26/18: Status?
Tentative for 5/30/18:
Has a claims bar date been noticed? See Calendar # 3.
Tentative for 4/4/18: Status?
Tentative for 2/7/18:
Deadline for filing plan and disclosure statement: December 31, 2017 Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of claims bar deadline by: December 1, 2017
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
(con't from 9-26-18)
Docket 135
Tentative for 9/26/18:
This is the debtor’s motion for approval of adequacy of her revised Disclosure Statement dated August 7, 2018. Objections were filed by both the UST and the major creditor, Pacific Western Bank. The objections focus largely on the absolute priority rule and the "new value" corollary. The new value of $25,000 is criticized as "feeble" and, in any event, not adequately market tested as required in Bank of America v. 203 N. LaSalle Street Ptsp,, 506 U.S. 434 (1999). Also, the bank argues that there is a problem with valuing the Spires stock and note at, essentially $0, noting the irony of the debtor’s apparently inconsistent argument that the plan is nevertheless feasible because the continuing monthly payments can be expected on account of either the stock or note as funding for the plan. Further, a gerrymandering question is raised by the separate classification of the bank’s deficiency claim (and of U.S. Bank). While all of these points well be fatal, these are largely confirmation issues, not disclosure issues. It is true that there is authority that manifestly unconfirmable plans should be quashed at the disclosure stage. See, In re Pecht, 57 B.R. 137 (Bankr. E.D.Va. 1985).
On these issues the question is admittedly a close call but should probably be postponed for consideration at confirmation.
But better disclosure is clearly needed on the handling of the adversary proceeding, causes of action and the ill-defined role to be played by the plan agent appointed under the plan. Although not well articulated, apparently Mr.
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Goodrich will be employed on some basis to either prosecute the alleged preference action against the bank, possible actions against insiders Matthew Haretakis and Robert Grant, and/or maybe to liquidate other assets. But all of this is left very unclear. No mention is made of how Mr. Goodrich is to be compensated or what standards (if any) he is to employ in deciding whether litigation is warranted, or, for that matter, what is to become of any proceeds, or who decides on compromises and the like. At a minimum, creditors have a right to know about the claims, how they are valued and what is expected from the liquidation agent. Creditors have a right to know who is entrusted with making decisions and what standards are expected. Further, creditors have a right to know how the litigation, if any, is to be funded and what will become of any proceeds. Apparently, debtor has valued the causes of action as of little or no value, but since some of the defendants are insiders the plan should specify who makes the decisions and on what basis, and there ought to be a clear explanation as to why the decisions made will be impartial and in the best interests of creditors. None of that is articulated, or at least not clearly enough that the court was able to detect it.
Deny
Tentative for 5/30/18:
The debtor’s proposed Disclosure Statement does not contain adequate information and cannot be approved, as apparently even she admits. It appears that it was filed knowing the information was not complete, but was filed to meet a deadline. As a starting point, the form for individual debtors is not a good fit for this case. This is not a straightforward individual case where a debtor is trying to address arrears on real property. This case is more complex and is better suited to a traditional disclosure statement format where Debtor provides a more detailed narrative and can describe the various assets and liabilities. The classes of claims should also be set forth more
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clearly. The explanation of valuation and how the absolute priority rule will be dealt with will be easier to understand in this format as well. This hearing should be continued to give debtor an opportunity to amend. After an amended disclosure is filed the Court should be in a better position to determine whether adequate information has been provided. It is not clear to that the separate classification of PWB will be acceptable. But that is primarily a confirmation issue. Debtor’s own brief at p. 4 lines 11-14 makes it sound like debtor has separately classified in order to gerrymander, which of course is not permitted. But whether there is enough involving arguments about claim of lien, preference and the like to fit within the ruling in In re Johnston, 21 F.
3d 323, 327 (9th Cir. 1994) and similar authority is not clear. But that will be tested at confirmation. The U.S. Bank claim’s separate classification makes a little more sense because payment is allegedly coming from Spires and her liability is as guarantor. But, debtor should first set forth her plan and disclosure in a clear and understandable format, with all of the necessary information included. Then the court will be in a better position to review it.
The report about delays from the accountants/appraisers is disappointing but ultimately the debtor is the responsible party, so further delays on that account should not be expected.
Continue for amendment.
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
Docket 215
- NONE LISTED -
Debtor(s):
Catherine M Haretakis Represented By Donald W Sieveke
10:00 AM
(con't from 11-28-18)
Docket 1
Tentative for 12/12/18: Status?
Tentative for 11/28/18:
Continue to December 12, 2018 at 10:00 a.m.
Tentative for 10/24/18:
Has plan been filed? If so, continue to coincide with disclosure statement hearing.
Tentative for 6/27/18:
Deadline for filing plan and disclosure statement: October 19, 2018.
Claims bar: 60 days after dispatch of notice to creditors advising of bar date. Debtor to give notice of the deadline by: August 1, 2018.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones
10:00 AM
(con't from 11-28-18 per order granting stip. to continue ent. 11-15-18)
Docket 96
- NONE LISTED -
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
Movant(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
10:00 AM
(con't from 11-28-18)
Docket 97
Tentative for 12/12/18: Status?
Tentative for 11/28/18:
Continue to December 12, 2018 at 10:00 a.m.
Tentative for 11/7/18:
Can the court be reassured that actual interest incurred would be minimal by prompt payment each month? Will no finance company offer a traditional credit line? Will stay be relieved by stip to afford prompt repayment without incurring fees, etc.? No tentative.
Debtor(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
Movant(s):
Heavenly Couture, Inc. Represented By Michael Jones Sara Tidd
10:00 AM
Docket 642
Grant.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(con't from 12-05-18 per order of court due to closing of court re: President Bush Passing)
(con't from 12-06-18)
Docket 629
Tentative for 12/12/18:
Status? What is highest bid from family?
Tentative for 12/6/18: Status?
Tentative for 11/28/18: Grant.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
10:00 AM
(con't from 12-05-18 per order of court due to closing of court re: President Bush Passing)
(con't from 12-06-18)
Docket 632
Tentative for 12/12/18:
If family does not acquire the property are they committed to move?
Tentative for 12/6/18: Status?
Tentative for 11/28/18: Grant.
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
(con't from 12-05-18 per order of court due to closing of court re: President Bush Passing)
(con't from 12-06-18)
Docket 634
Tentative for 12/12/18:
What are highest respective bids?
Tentative for 12/6/18: Status?
Tentative for 11/28/18:
In this motion the plan proponent and judgment creditor Yuanda Hong, individually and as guardian ad litem for Harry and William Hong (collectively" judgment creditor") seeks authority for the plan agent to accept a credit bid against the judgment creditor’s $6.2 million+ unsecured claim in the plan agent’s sale of the property commonly known as 2628 E. Denise Avenue, Orange, CA "the property"). The property is scheduled at a value of $650,000. There are no liens of record. After the homestead all proceeds under the plan are to be paid to the various classes of unsecured creditors, of which the judgment creditor represents approximately 99.5%. The motion is opposed by the debtor.
There are several problems with this approach. First, the court does
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not look to §105 to create authority not specifically enumerated elsewhere, and so that citation is unavailing. Second, credit bids are specifically authorized only for secured claims under §363(k). Third, despite the judgment creditor’s argument regarding setoff, there is no specific plan term allowing credit bids on unsecured claims. The closest is at pp. 14-15 where the agent is permitted to set off any claim that the agent holds (on behalf of the creditor body) against claims entitled to payment under the plan. But this scenario is not the archetype of set off envisioned under §553(a). Such set offs are only permitted where the claim arose before the commencement of the proceeding. As classically formulated three conditions must be satisfied:
(1) the debtor owes the creditor a prepetition debt; (2) the creditor woes the debtor a prepetition debt and (3) the debts are mutual. United States v. Carey (In re Wade Cook Fin. Corp), 375 B.R. 580, 594 (9th Cir. 2007). Obviously, what is envisioned here is setoff against a post- petition created claim, i.e. the price for the property. Thus, timing and mutuality are lacking. The prospective debts in question are not owed between debtor and judgment creditor, but between creditor and plan agent, and are thus not mutual. Fourth, the judgment creditor’s cited authority is inapposite. In re Western Funding, Inc., 550 B.R. 841, 854 (9th Cir. BAP 2016) does not establish a power to accept credit bids from unsecured creditors. Western establishes closer to the opposite, i.e. that the plan agent is not obligated to consider a credit bid from an unsecured creditor. This arises in part from valuation difficulties in that an unsecured claim against an insolvent trust is worth less than is a fully secured claim. This is true here even though the claim is 99.5% of the whole. Lastly, the court shares some of the concerns raised in the Opposition. There is an air of vindictiveness which has nothing to do with the legitimate purposes of the trust created under the confirmed plan, i.e. to liquidate to cash the administrable property of the estate. That goal is best accomplished by selling the property for cash through the efforts of a broker.
One additional point should be made. On calendar is a separate
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motion for turnover (#12). An allegation is made that debtor is hindering the agent’s sale efforts and therefore depressing the price. If that continues then judgment creditor is invited to re-file this motion, in which case the court may take a second look at allowing credit bids not as a right but as a remedy to deal with ongoing damage to the estate.
Deny without prejudice as discussed
Debtor(s):
Long-Dei Liu Represented By
Lei Lei Wang Ekvall Robert S Marticello David A Kay
Steven H Zeigen Michael Simon Kyra E Andrassy
10:00 AM
LAW OFFICES OF MICHAEL G. SPECTOR, DEBTOR'S ATTORNEY
FEE: $19,110.00
EXPENSES: $603.47
Docket 86
Allow as prayed. Appearance is optional.
Debtor(s):
Jeff Allan Charity Represented By Michael G Spector Vicki L Schennum
11:00 AM
(con't from 12-05-18 per order of court due to closing of court re: President Bush Passing)
Docket 1
Tentative for 12/12/18:
Continue on same terms for, say, 60 days pending confirmation process?
Tentative for 8/22/18:
Are the parties willing to extend existing cash collateral orders to a date reasonably beyond a scheduled confirmation hearing?
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
Dana Urgent Care, Inc., Dated November 14, 2018
(con't from 12-05-18 per order of court due to closing of court re: President Bush Passing)
Docket 101
The parties have reportedly made progress, but there are some changes that should be made to this First Amended Disclosure Statement. Debtors have already agreed to make several the changes that Opus requests. The only sticking point seems to be the amount of fees to include in the Opus claim. Opus will need to substantiate the amount it is owed to have it included; for purposes of disclosure, it might be appropriate to estimate the fee component with verbiage that the final number is subject to allowance hearing.
There are a couple of typos: (1) There is no "e" in "Theodor;" and (2) at pg. 18, lines 17-18, and 25 the courtroom information is incorrect’
Debtors should also provide more detail about their businesses, what went wrong, and what they are doing to fix it. The information that is provided on pg. 5 of the reply would be useful to include in an amended disclosure.
There should also be more information about management and their compensation. There should also be some sort of tabular description of the liquidation analysis in the disclosure document itself, rather than just referring to an exhibit to the plan.
Either approve conditionally or continue briefly.
11:00 AM
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
11:00 AM
U.S.C. Section 305 and 1112
(con't from 12-05-18 per order of court due to closing of court re: President Bush Passing)
Docket 37
Tentative for 12/12/18: See #10.
Tentative for 8/22/18:
This is the motion of Opus Bank in these administratively consolidated Chapter 11cases for dismissal under §§305 and 1112. In its initial motion Opus Bank hits hard on the theme that the debtors are late in filing their proposed plan and disclosure. This is clearly true although there is room for argument whether there was ever any clear deadline established by order. It is undeniable that counsel’s various promises were not met and the plan and disclosure statement once actually filed August 8 was at least 60 days late.
Pushing one’s luck seems to be a recurrent theme.
In its Reply the bank hits on another theme, i.e. that the late-filed plan as written is probably infeasible and in any case, is grossly inequitable. The bank argues that the plan as written front loads payment of professional fees while paying interest only on its secured claim. The bank may well be correct but the question is whether this is the time and place to sort out these questions. The court notes that there is a hearing scheduled on adequacy of disclosure September 26, 2018 at 10:00 a.m. That might not be the time
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either for determination of confirmation issues unless the plan is obviously unconfirmable as various authorities have established. Since the bank’s points are mostly confirmation issues, the court does not feel inclined to decide them now. Dismissals (or conversion) on an interim basis are reserved for cases involving misbehavior or where the results of operations are a loss, or terms proposed for reorganization are so obviously unlikely, as to warrant cutting short the effort to staunch some bleeding. According to the somewhat sketchy reports found in the status report, the debtors are operating profitably. Whether there is enough to build a feasible plan upon, or whether the forecasted increases are real, is another question. But despite the disappointing failure to meet timetables, the court does not see anything warranting an abrupt termination of the cases, at least not at this moment.
However, in the interest of getting sooner to a point where a plan might actually be confirmed, the debtors should make note of some points. First, they have used up just about all the grace available. The failure to follow through on the promised timetable might not have been fatal (this time), but it also instills no confidence either. Second, the debtors are apparently only now commencing the reorganization effort in earnest, well into the second year of these cases. More time should therefore not be assumed. That we are still going into the second autumn of these cases is itself a minor miracle.
Third, there may be only one shot at confirmation, so they should make a maximum effort to get it right the first time. Paying professionals before everyone else just fundamentally smells bad, particularly considering the astounding amounts involved (accrued but not finally allowed). Maybe the better part of valor would be to align the schedules more closely so that all the risk is not imposed on creditors. The court is not prejudging confirmation issues here, but merely warning debtors that it should not be assumed that there will be prolonged and repeated opportunity to slice the salami.
Continue to coincide with adequacy hearing September 26.
11:00 AM
Debtor(s):
Cypress Urgent Care, Inc. Represented By Ashley M McDow Michael T Delaney
10:00 AM
Adv#: 8:13-01255 City National Bank, a national banking association v. Fu et al
(set per order entered 11-01-18)
Docket 0
Tentative for 12/13/18:
Deadline for completing discovery: September 4, 2019 Last date for filing pre-trial motions: September 23, 2019 Pre-trial conference on: October 3, 2019 at 10:00 a.m.
Joint pre-trial order due per local rules.
Debtor(s):
Cheri Fu Represented By
Evan D Smiley John T. Madden Beth Gaschen
Susann K Narholm - SUSPENDED - Mark Anchor Albert
Defendant(s):
Cheri Fu Represented By
Mark Anchor Albert
Thomas Fu (Deceased) Represented By
Mark Anchor Albert
Joint Debtor(s):
Thomas Fu (Deceased) Pro Se
10:00 AM
Plaintiff(s):
City National Bank, a national Represented By Evan C Borges Kerri A Lyman Jeffrey M. Reisner
Trustee(s):
James J Joseph (TR) Represented By
James J Joseph (TR) Paul R Shankman Lisa Nelson
10:00 AM
Adv#: 8:17-01248 Karen Sue Naylor, Chapter 7 Trustee v. Lewis Hyman, Inc.
(con't from 6-7-18)
Docket 1
Tentative for 6/7/18:
Status conference continued to December 13, 2018 at 10:00AM
Tentative for 3/8/18:
Status conference continued to June 7, 2018 at 10:00 a.m. Appearance is optional.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Lewis Hyman, Inc. Pro Se
10:00 AM
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:18-01001 Tender Care 24/7 Home Health, Inc. et al v. Misa
(con't from 9-13-18)
Docket 1
Tentative for 12/13/18:
Status conference continued to March 7, 2019 at 10:00 a.m. for purposes of filing and hearing a motion for summary judgment.
Tentative for 9/13/18:
Status conference continued to December 13, 2018 at 10:00 a.m. Personal appearance not required.
Tentative for 7/12/18:
Status conference continued to September 13, 2018 at 10:00AM for purpose of obtaining Superior Court judgment.
Tentative for 5/31/18:
Status Conference continued to July 12, 2018 at 10:00am. Notice to provide that failure to appear may result in striking of answer and entry of default judgment.
Tentative for 3/29/18:
In view of the parallel Superior Court case, should a relief of stay be granted with moratorium of this action pending a judgment in Superior Court?
10:00 AM
Debtor(s):
Maria T. Misa Represented By
W. Derek May
Defendant(s):
Maria T. Misa Pro Se
Plaintiff(s):
Tender Care 24/7 Home Health, Inc. Represented By
Carol G Unruh
Perla Neri Represented By
Carol G Unruh
Trustee(s):
Weneta M Kosmala (TR) Pro Se
10:00 AM
Adv#: 8:17-01087 Karen Sue Naylor, Chapter 7 Trustee v. Vara Home USA, LLC
(con't from 9-13-18 per order on stip. entered 7/31/18)
Docket 1
Tentative for 9/28/17:
Deadline for completing discovery: February 28, 2018 Last date for filing pre-trial motions: March 12, 2018 Pre-trial conference on: March 29, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Vara Home USA, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
10:00 AM
Trustee(s):
Nanette D Sanders
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01134 Karen Sue Naylor, Chapter 7 Trustee v. Ivie and Associates, Inc.
(con't from 10-11-18 per order on third stip. to continue ent. 10-1-18)
Docket 1
Tentative for 10/26/17:
Deadline for completing discovery: March 16, 2018 Last date for filing pre-trial motions: March 30, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Ivie and Associates, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
10:00 AM
Trustee(s):
Nanette D Sanders
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
10:00 AM
Adv#: 8:17-01129 Karen Sue Naylor, Chapter 7 Trustee v. Housewares International, Inc.
(set from pre-trial conference held on 6-07-18 )
(con't from 8-27-18 per order on stip. to cont. trial entered 8-23-18)
Docket 1
Tentative for 6/7/18: Schedule trial.
Tentative for 4/12/18:
Where's the joint pre-trial stip/order? While the court is not happy with the parties' seeming indifference to the timing requirements of the LBRs, the minor points raised by defendant can be dealt with by means other than quibbling over the pre-trial stipulation.
Tentative for 10/26/17:
Deadline for completing discovery: March 16, 2018 Last date for filing pre-trial motions: March 30, 2018 Pre-trial conference on: April 12, 2018 at 10:00 a.m. Joint pre-trial order due per local rules.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
10:00 AM
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Housewares International, Inc. Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman
11:00 AM
Adv#: 8:15-01482 P & A Marketing, Inc. et al v. Gladstone et al
Parties In Pending Adversary Proceeding
(con't from 11-29-18 per order approving stip. to cont. entered 11-27-18)
Docket 194
- NONE LISTED -
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
Defendant(s):
Alan Gladstone, Scott Gladstone, Represented By
Cynthia M Cohen Peter M Bransten
Salus CLO 2012-1, Ltd. Represented By Howard Steinberg Joseph P Davis Scott D Bertzyk
11:00 AM
Does 1-25 Pro Se
Fidelity & Guaranty Life Insurance Represented By
Jeffry A Davis Abigail V O'Brient
DCP Linens Lenders, LLC Represented By Howard Steinberg Joseph P Davis Scott D Bertzyk
Salus Capital Partners, LLC Represented By Howard Steinberg Joseph P Davis Scott D Bertzyk
Downtown Capital Partners, LLC Represented By
Howard Steinberg Joseph P Davis Scott D Bertzyk
J.E. Rick Bunka Represented By Cynthia M Cohen Peter M Bransten
Shepherd Pryor Represented By Cynthia M Cohen Peter M Bransten
Kevin Reilly Represented By
Cynthia M Cohen Peter M Bransten
Loren Pannier Represented By Cynthia M Cohen Peter M Bransten
Scott Gladstone Represented By Cynthia M Cohen
Alan Gladstone Represented By
11:00 AM
Cynthia M Cohen
Janet Grove Represented By
Cynthia M Cohen Peter M Bransten
Plaintiff(s):
Karen Sue Naylor Represented By Steven T Gubner Jerrold L Bregman Jason B Komorsky Robyn B Sokol
P & A Marketing, Inc. Represented By Steven T Gubner Michael W Davis Jason B Komorsky Jerrold L Bregman Robyn B Sokol
Panda Home Fashions LLC Represented By Steven T Gubner Michael W Davis Jason B Komorsky Jerrold L Bregman Robyn B Sokol
Shewak Lajwanti Home Fashions, Represented By
Steven T Gubner Michael W Davis Jason B Komorsky Jerrold L Bregman Robyn B Sokol
Welcome Industrial Corporation Represented By
Steven T Gubner Michael W Davis Jason B Komorsky Jerrold L Bregman
11:00 AM
Trustee(s):
Robyn B Sokol
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad Brett Ramsaur
11:00 AM
Adv#: 8:18-01179 Ace Wireless & Trading Co., Inc. et al v. Nguyen
Docket 4
- NONE LISTED -
Debtor(s):
Cat Kenny Nguyen Represented By Gregory L Bosse
Defendant(s):
Cat Kenny Nguyen Represented By Gregory L Bosse
Plaintiff(s):
Ace Wireless & Trading Co., Inc. Represented By
Douglas A Plazak
Ace Wireless & Trading Co., LLC Represented By
Douglas A Plazak
Trustee(s):
Karen S Naylor (TR) Pro Se
11:00 AM
(con't from 11-27-18 per order approv. stip. to cont hrgs. ent. 11-07-18)
Docket 55
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
11:00 AM
(con't from 11-27-18 per order approv. stip. to cont hrgs. ent. 11-07-18)
Docket 56
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
1:30 PM
(con't from 9-26-18)
Docket 14
- NONE LISTED -
Debtor(s):
Joanne Harkins Davis Pro Se
Joint Debtor(s):
Jon Clinton Davis Pro Se
Movant(s):
Jon Clinton Davis Pro Se
Joanne Harkins Davis Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 10-17-18)
Docket 3
Tentative for 10/17/18:
The previous comment about the plan does not adequately provide for secured claims, and failure to provide time limits on sale, still apply.
On the eligibility question, everything turns on whether debtor is a co- obligor or a guarantor. Only if the latter characterization applies can debtor claim the debt is "contingent."
Tentative for 8/22/18:
The plan as written reads more like a draft than a serious attempt at confirmation. It lacks two or maybe three essentials: (a) it does not fully provide for secured claims in that it does not clearly provide for the ongoing payments; (b) a sale is proposed but no time limits are given; and (c) there is a question of eligibility as to amount of unsecured debt. Deny.
Debtor(s):
Justin Ha Represented By
Anerio V Altman
Joint Debtor(s):
Jane Ha Represented By
Anerio V Altman
Movant(s):
Justin Ha Represented By
Anerio V Altman
1:30 PM
Anerio V Altman
Jane Ha Represented By
Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 11-14-18)
Docket 2
Tentative for 9/26/18:
The Trustee's points appear to be well taken, and GM's reqeust for 7% interest seems right also. Response?
Debtor(s):
Karl Webber Represented By
Michael D Franco
Movant(s):
Karl Webber Represented By
Michael D Franco Michael D Franco Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 10-17-18)
Docket 21
- NONE LISTED -
Debtor(s):
Kathleen Ohara Represented By Joshua L Sternberg
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(Cont'd from 10-17-18)
Docket 16
- NONE LISTED -
Debtor(s):
Nancy Karen Chambers Represented By Michael D Franco
Movant(s):
Nancy Karen Chambers Represented By Michael D Franco Michael D Franco Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(Cont'd from 11-14-18)
Docket 2
- NONE LISTED -
Debtor(s):
Kathleen Abbey Youngsma Represented By John D Sarai
Movant(s):
Kathleen Abbey Youngsma Represented By John D Sarai
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 11-14-18)
Docket 2
- NONE LISTED -
Debtor(s):
Philip Q Dowsing Represented By Julie J Villalobos
Movant(s):
Philip Q Dowsing Represented By Julie J Villalobos Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 11-14-18)
Docket 13
- NONE LISTED -
Debtor(s):
Raul Rodolfo Palazuelos Jr. Represented By Seema N Sood
Movant(s):
Raul Rodolfo Palazuelos Jr. Represented By Seema N Sood Seema N Sood Seema N Sood Seema N Sood Seema N Sood Seema N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
(con't from 11-14-18)
Docket 2
- NONE LISTED -
Debtor(s):
Chad James Carter Represented By Joseph A Weber
Joint Debtor(s):
Terah Rose Carter Represented By Joseph A Weber
Movant(s):
Chad James Carter Represented By Joseph A Weber Joseph A Weber Joseph A Weber
Terah Rose Carter Represented By Joseph A Weber
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 12
- NONE LISTED -
Debtor(s):
Chales Drew Simpson Represented By Christopher J Langley
Joint Debtor(s):
June P Simpson Represented By Christopher J Langley
Movant(s):
June P Simpson Represented By Christopher J Langley Christopher J Langley
Chales Drew Simpson Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Martha S Cazares Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Shelley M Spear Represented By Sunita N Sood
Movant(s):
Shelley M Spear Represented By Sunita N Sood
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 20
- NONE LISTED -
Debtor(s):
Francisco Aguero Represented By Rebecca Tomilowitz
Movant(s):
Francisco Aguero Represented By Rebecca Tomilowitz Rebecca Tomilowitz
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Stephen Nguyen Represented By Daniel King
Movant(s):
Stephen Nguyen Represented By Daniel King
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Jim Park Represented By
James D. Hornbuckle
Joint Debtor(s):
Rosalva Park Represented By
James D. Hornbuckle
Trustee(s):
Jeffrey I Golden (TR) Pro Se
1:30 PM
Docket 18
- NONE LISTED -
Debtor(s):
Alfredo Javier Talavera Represented By Christopher J Langley
Movant(s):
Alfredo Javier Talavera Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Diane Weinsheimer Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Keith Alan Miles Represented By Christopher J Langley
Joint Debtor(s):
Jennifer Ann Miles Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Dale Grabinski Represented By Christopher J Langley
Movant(s):
Dale Grabinski Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Fidel Carrera Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 24
- NONE LISTED -
Debtor(s):
Manuel Florence Represented By Peter C Wittlin
Movant(s):
Manuel Florence Represented By Peter C Wittlin Peter C Wittlin
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Clarence George Krueger Jr Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 11
- NONE LISTED -
Debtor(s):
Carrie Diane Lemmons Represented By Stephen Parry
Movant(s):
Carrie Diane Lemmons Represented By Stephen Parry
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 21
- NONE LISTED -
Debtor(s):
Jesus Gabriel Vargas Represented By
Lisa F Collins-Williams
Movant(s):
Jesus Gabriel Vargas Represented By
Lisa F Collins-Williams
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 13
- NONE LISTED -
Debtor(s):
Joseph A Vales Represented By Ronda N Edgar
Movant(s):
Joseph A Vales Represented By Ronda N Edgar
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 7
Tentative for 12/19/18:
Confirmation denied. Dismissed with 180-day bar.
Debtor(s):
Christina Flowers Represented By Anerio V Altman
Movant(s):
Christina Flowers Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Alan Joseph Copeland Represented By Steven A Alpert
Joint Debtor(s):
Judith Ann Copeland Represented By Steven A Alpert
Movant(s):
Alan Joseph Copeland Represented By Steven A Alpert
Judith Ann Copeland Represented By Steven A Alpert
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Stefanie Wickwire Represented By Julie J Villalobos
Movant(s):
Stefanie Wickwire Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 18
- NONE LISTED -
Debtor(s):
Denyse Marie Kielb Represented By Andy C Warshaw
Movant(s):
Denyse Marie Kielb Represented By Andy C Warshaw
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 17
- NONE LISTED -
Debtor(s):
Bradley Ray Fox Pro Se
Movant(s):
Bradley Ray Fox Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 10
- NONE LISTED -
Debtor(s):
Juan A. Salas Represented By
Benjamin R Heston
Joint Debtor(s):
Maricela Salas Represented By Benjamin R Heston
Movant(s):
Maricela Salas Represented By Benjamin R Heston Benjamin R Heston
Juan A. Salas Represented By
Benjamin R Heston Benjamin R Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 19
- NONE LISTED -
Debtor(s):
Juan A. Salas Represented By
Benjamin R Heston
Joint Debtor(s):
Maricela Salas Represented By Benjamin R Heston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 2
- NONE LISTED -
Debtor(s):
Richard Dayao Represented By Andy C Warshaw
Movant(s):
Richard Dayao Represented By Andy C Warshaw Andy C Warshaw
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Israel Sandoval Cantu Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 11
- NONE LISTED -
Debtor(s):
Emilia Vourakis Pro Se
Movant(s):
Emilia Vourakis Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 14
- NONE LISTED -
Debtor(s):
Michael Simon Represented By Anerio V Altman
Movant(s):
Michael Simon Represented By Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 15
- NONE LISTED -
Debtor(s):
Frank Pestarino Represented By Krystina T Tran
Movant(s):
Frank Pestarino Represented By Krystina T Tran
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 20
- NONE LISTED -
Debtor(s):
Gloria Banez Represented By
Leo Fasen
Movant(s):
Gloria Banez Represented By
Leo Fasen
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Mark Hill Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 31
- NONE LISTED -
Debtor(s):
Susan D Aronson Represented By Anerio V Altman
Movant(s):
Susan D Aronson Represented By Anerio V Altman Anerio V Altman Anerio V Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 0
- NONE LISTED -
Debtor(s):
Sedighi Houman Pro Se
Trustee(s):
Amrane (RS) Cohen (TR) Pro Se
1:30 PM
Docket 11
- NONE LISTED -
Debtor(s):
Glen William Carnes Pro Se
Movant(s):
Glen William Carnes Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 7
- NONE LISTED -
Debtor(s):
Margoth Angelica Esquivel Represented By LeRoy Roberson
Movant(s):
Margoth Angelica Esquivel Represented By LeRoy Roberson LeRoy Roberson LeRoy Roberson
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 11
- NONE LISTED -
Debtor(s):
Richard L. Ketcham Represented By Christopher J Langley
Movant(s):
Richard L. Ketcham Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
1:30 PM
Docket 12
NONE LISTED -
Debtor(s):
Joseph A Vales Represented By Ronda N Edgar
Movant(s):
Joseph A Vales Represented By Ronda N Edgar
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(Cont'd from 10-17-18)
Docket 61
Tentative for 12/19/18: See #46.
Tentative for 10/17/18: Grant.
Debtor(s):
Paul P. Jaramillo Represented By
James D. Hornbuckle
Joint Debtor(s):
Dianna L. Jaramillo Represented By
James D. Hornbuckle
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 64
This is the objection to allowance of the claim of Household Finance Corporation, Claim #9 in the sum of $427,602.06. The proof of claim filed April 10, 2013 includes what is described as $60,692.65 in accrued interest, of which $29,489,27 is described on the proof as "simple interest." Debtors point to a statement describing the amount past due as of 9/23/2012 as
$30,363.25 representing 13 past due installments as of that date. Presumably those installments were part principal and mostly interest. So, debtors argue that Household is in effect trying to collect interest twice. Further, debtors argue they have paid through the plan $34,436.33, we are approaching conclusion of a five year plan and so, they claim, the past due interest portion should have already been paid in full.
The problem here is that both sides might be partly right, and the court cannot quite tell from this sparse record what is going on. First, the court assumes that this is a mortgage on the principal residence, so no modification can be accomplished in this Chapter 13 under §1322(b)(2) although under subsection (5) arrearages can be cured during the term of the plan. The issue left out of focus is whether debtor is arguing that it can simply amortize the arrearage over five years without payment of any additional element of interest thereon? Clearly a sum of interest (and principal as well) owed in a sum certain five years ago is not static, and to the extent that it is amortized over 60 months there must be an additional element of interest on that sum as well or else, logically, some portion is left, effectively, unpaid. This is the logical conclusion from the provisions of §1325(a)(5(B)(II)(ii)) that requires that secured claims (and the arrearage is a secured claim) paid over time
3:00 PM
under the plan be paid "present value", i.e. "value as of the effective date…" of the secured claim. Normally, bank software calculates interest on an ongoing basis based on the whole balance, so we can have a true representation of what was owed and what was paid on the loan as originally written, or if separate payments were made directed solely to the arrearages of principal and interest to "cure a default" perhaps at a different rate as Chapter 13 allows at §1322(b)(5), we can have a present balance owing adjusted for that fact (i.e. essentially a rewritten loan using the arrearage as a separate ‘principal’). But the creditor has not filed a response and the debtor does not deal with this issue, so the court is left in the dark.
While the court could simply treat this as a default in favor of debtor, it would be more instructive (and certainly more correct) if the creditor were directed to give an updated accounting with the above principles in mind, and then if there is still disagreement, a further hearing.
Continue for further hearing, as necessary.
Debtor(s):
Paul P. Jaramillo Represented By
James D. Hornbuckle
Joint Debtor(s):
Dianna L. Jaramillo Represented By
James D. Hornbuckle
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 189
Tentative for 12/19/18: Grant unless current.
Debtor(s):
Randy R. Reynoso Represented By Bruce D White
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 88
Tentative for 12/19/18: Grant unless default cured.
Debtor(s):
Charles Edward Coull Jr. Represented By Michael Jones Matthew Rosene Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(Cont'd from 10-17-18)
Docket 190
Tentative for 12/19/18: Status?
Tentative for 10/17/18:
Continue to November 14, 2018 at 3:00 p.m.
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(con't from 11-14-18 per notice of cont. hearing filed 11-13-18)
Docket 201
Tentative for 12/19/18:
This is the debtor’s very late objection to the residual unsecured claim of Asset Management Holdings, Inc. ("AMH"). The court says "very late" because had there been better diligence on debtor’s part some of this mess could have been avoided.
As near as the court can make out from the pleadings, the following facts are undisputed. AMH filed on June 15, 2015 its proof of claim asserting a second position secured claim for $459,221. The debtor obtained an order of this court entered July 31, 2015 [Exhibit "E" to the Objection] stripping the junior lien of SW Linear for $459,221 as not an allowed secured claim ("Lien Strip Order"). SW Linear is presumably a predecessor holder of the junior note. This result arose because the subject property commonly known as 22851 Maiden Lane, Mission Viejo, CA was only worth $950,000 (as shown in the Order) and was subject to a senior lien that eclipsed all the property’s value. Consequently, under established authority such as In re Zimmer, 313
F. 3d 1220 (9th Cir. 2002), the lien is expunged provided the plan is fully performed. Full performance of the plan is still a requirement although entitlement to a discharge is not. See In re Boukatch, 533 B.R. 292 (9th Cir. BAP 2015). So, whether the debtor here is entitled to discharge in this "Chapter 20" case, having already received a Chapter 7 discharge 8/17 in her case no.SA 10-15427TA, is not the issue, and, apparently, AMH concedes that debtor has no in personam liability.
The problem arises, apparently, from the language of the Lien Strip
3:00 PM
Order which is a form order and contains a standard ¶4. B. (4) which provides" Any filed proof of claim of the junior lienholder is to be treated as an unsecured claim and is to be paid through the plan pro rata with all other unsecured claims." Obviously, the form order does not contemplate the somewhat unusual case like this one where debtor is already discharged from her in personam liability and thus should not expect a windfall dividend from the Chapter 13 estate. To make matters worse here, we are now 30 months into the plan. According to AMH the trustee has been making payments to AMH all this time although it only discovered this in March 2018 . So, the question becomes what does the court do now?
The objection to the unsecured claim of AMH is sustained since, as discussed above, there is no in personam liability, and therefore AMH should not have been receiving payments. However, the request for disgorgement order appearing at the end of the debtor’s Reply is denied. This is not because the court buys the specious argument that there was somehow a reaffirmation or through silence a voluntary adoption of the unsecured claim. Rather, all parties concerned should treat it for what it is, i.e. a failure of diligence in policing what was going on in this Chapter 13. Debtor bears the primary responsibility for this. It is not a question of being untimely in a formal sense of limitations; rather, there is a practical dimension of not knowing what is going on in the monthly payments and failing to make sure that the trustee is disbursing only to those entitled to payments. Obviously, waiting over two years into a plan is a recipe for disaster. The court is not happy either with AMH for not realizing earlier that it had no right to the payments. It should have been immediately disclaimed and returned; that would have been the correct, even decent thing to do. However, if the debtor now wants to utilize court process in obtaining return of these funds, it will have to initiate an adversary proceeding as the court is not inclined to deal with it in summary proceedings such as in this objection.
Sustain objection. Deny turnover absent adversary proceedings.
3:00 PM
Tentative for 11/14/18:
Sustained as to in personam liability of debtor. Avoidance of lien remains subject to completion of plan.
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
(Con't from 11-14-18)
Docket 61
Tentative for 12/19/18:
Does order granting motion to modify entered November 16 render this moot?
Tentative for 11/14/18:
Status of modification? Does this resolve trustee's motion?
Tentative for 10/17/18: Grant.
Debtor(s):
Randy G Bunney Represented By Dennis Connelly
Joint Debtor(s):
Kathleen M Bunney Represented By Dennis Connelly
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 32
Tentative for 12/19/18:
Grant unless current or motion on file.
Debtor(s):
Daniel F. Cordier Represented By Jacqueline D Serrao
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 38
Tentative for 12/19/18:
Grant unless current or motion on file.
Debtor(s):
Arthur Alvarez Represented By Michael Jones Sara Tidd
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 94
Tentative for 12/19/18:
Grant unless current or motion on file.
Debtor(s):
Guy A. Rojo Represented By
Joseph A Weber Fritz J Firman
Joint Debtor(s):
Eva P. Rojo Represented By
Joseph A Weber Fritz J Firman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 56
Tentative for 12/19/18: Grant unless current.
Debtor(s):
Angelica Zamorano Represented By Julie J Villalobos
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 54
Tentative for 12/19/18:
Grant unless current or motion on file.
Debtor(s):
Richard Collins Jr. Represented By Andrew Moher
Joint Debtor(s):
Kristi Collins Represented By
Andrew Moher
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 30
Tentative for 12/19/18:
Grant unless current or motion on file.
Debtor(s):
Kirk T Catlin Represented By
Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 58
Tentative for 12/19/18:
Grant unless current or motion on file.
Debtor(s):
Kirk P Howland Represented By Christopher J Langley
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
83-3.1 Of The Local Rules Of The Central District Of California And Why Janet Day Aka Janet E. Levy [Texas State Bar No.: 12265600] Should Not Be Referred To The Texas State Bar And/Or Fined By This Court For Engaging In The Unauthorized Practice Of Law
Docket 81
Tentative for 12/19/18:
This is a continued hearing on the U.S. Trustee’s "Motion to Show Cause ("OSC") Why Veronica Aguilar Should not be Referred to State Bar…" While styled as an OSC it is really only in the nature of a disciplinary motion brought by the United States Trustee as no OSC was ever submitted or issued. That procedural nuance is somewhat unfortunate since one of the parties deserving discipline, Janet Day/Levy, is not before the court although the notice of motion was served at three different addresses in Texas.
The court has reviewed the Opposition filed by Ms. Aguilar and, although not without some uncertainty, the following picture emerges. Ms. Aguilar filed two separate Chapter 13s as counsel on behalf of the debtors. The first one was dismissed after only four months; why is not made clear in the papers. But the second Chapter 13 (the instant case) was filed 16 days after the first dismissal on 7/9/2014. Starting in about December 2017, about three years into the plan, the debtors through Ms. Aguilar attempted to file a motion to authorize a loan modification. This should have been good news since reportedly the bank had after much negotiation agreed to try a loan modification. But with a Chapter 13 pending, apparently someone (again, it is
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not clear in the papers) concluded the court needed to be informed and perhaps permission for the modification obtained. This is where things fell badly off the rails. Certainly, if all that was being asked was for permission to reduce payments made on the secured claim with consent of the lender which would not have affected other plan terms, such leave would have been granted for the asking. Whether a Plan Modification under §1329 would have been required is unclear. But why not since saving homes is largely the point of Chapter 13? However, the debtors had no money (or at least not much money) to pay for lawyers. Further, someone (exactly who is not clear) wrongly concluded this meant that the debtors would need to participate in the court’s pilot loan modification program. The pilot loan modification program is an entirely different thing and is largely unnecessary here where there is agreement between the parties. It is useful primarily in that it provides a software portal where the parties can closely monitor how payments are being made compared to other expenses and supervision by the court, designed to create confidence in the lenders. But more importantly, only one judge in the Santa Ana District participates in the pilot, Judge Bauer.
Rather than declining the engagement because the clients could not afford payment of fees, or properly understanding that what was really required was very straightforward and simple, Ms. Aguilar cast about for assistance, reportedly because she felt badly for her clients. Ms. Aguilar found Ms. Day/Levy on Craigslist as a "contract lawyer." Reportedly unknown to Ms. Aguilar, not only was Ms. Day not in Orange County where the ad was placed, but Ms. Day was not even a lawyer at all having resigned the Texas bar in lieu of discipline. This might explain why Ms. Day was the lowest "bid." What followed was worse. The financial arrangement was reportedly made directly between Ms. Day and the debtors, except perhaps for a filing fee which was made on Ms. Aguilar’s credit card. But the "Motion to Authorize Loan Modification" was filed December 13, 2017 using Ms. Aguilar’s e-filing number and she remained attorney of record. The motion was denied as procedurally improper. An objection to GE Money Bank’s claim was filed
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August 8, apparently over the counter, but under the name of Ms. Aguilar. It is unclear whether she ever signed or reviewed this pleading as it was prepared by Ms. Day, and the signature block shows what purports to be Ms. Aguilar’s signature. But it was denied as also procedurally improper as it was not noticed for hearing. Lastly, an opposition to the bank’s motion for relief of stay was filed 10/5/18 was prepared, apparently by Ms. Levy, but under the name of Ms. Aguilar. No one showed up at the October 10 hearing for the debtors.
The debtors have since retained new, competent counsel and, reportedly, Ms. Aguilar has refunded all attorney’s fees paid by the debtors in the sum of $8,913.
Ms. Aguilar is contrite in her pleadings and has voluntarily made restitution of fees paid. Whether terminal damage is done to the debtors’ position is not clear from the papers. Ms. Aguilar reports she only had noble motives and regrets any hardship caused. That is the good side of the ledger. On the bad side, this is not the first time this court has had to consider discipline, and regrettably, on nearly the same issue. In another of this court’s cases, In re Severiano, No. 15-12110TA Ms. Aguilar stipulated to a 2-year hiatus from bankruptcy practice for failure to properly supervise the filing activities of a paralegal using her e-filing number. In the case at bar the offenses are regrettably very similar. Nor is it persuasive to hear that Ms.
Aguilar did not know Ms. Levy was unlicensed. State Bar Rules of Professional Conduct, Rule 1-311(B) prohibits a member from employing or aiding a person the member knows or reasonably should know is disbarred, suspended, resigned or involuntarily inactive. Of course, Ms. Day never was a member of the California bar, only insofar as the court is aware, the Texas bar, where she resigned. The point is "reasonably should have known" ought to mean something more, some small amount of investigation or diligence, more than hiring off a Craigslist ad. And the point from the Severiano case seems to have been missed or forgotten. Consequently, the court will accept as a full disposition of this matter Ms. Aguilar’s agreement to resign from
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practice before the U.S, Bankruptcy Court permanently.
Ms. Aguilar is barred permanently from appearance before any U.S. Bankruptcy Court absent further order of a court of proper jurisdiction.
Debtor(s):
Frank Kester Represented By
Michael D Franco
Joint Debtor(s):
Gloria Betty Kester Represented By Michael D Franco
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 61
Tentative for 12/19/18:
Denied for failure to prosecute motion to vacate.
Debtor(s):
Mark Trujillo Pro Se
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 77
Tentative for 12/19/18: Grant - vacate 180-day bar.
Debtor(s):
James C. Nguyen Represented By Michael E Plotkin
Joint Debtor(s):
Tina U. Dao Represented By
Michael E Plotkin
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 18
Tentative for 12/19/18:
Grant, assuming movant confirms "hanging paragraph" of section 1325 does not apply.
Debtor(s):
Carrie Diane Lemmons Represented By Stephen Parry
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
3:00 PM
Docket 34
Tentative for 12/19/18:
Sustained. Appearance is optional.
Debtor(s):
Jack Dennis Mitchell Represented By Nicholas M Wajda
Joint Debtor(s):
Kathleen Marie Mitchell Represented By Nicholas M Wajda
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
10:00 AM
Adv#: 8:18-01009 Millan v. Kasiano et al
(con't from 11-1-18)
Docket 1
Tentative for 12/20/18:
Why no updated status report?
Tentative for 11/1/18:
Status conference continued to December 20, 2018 at 10:00 a.m. as a holding date to allow stipulation to be signed and entered.
Tentative for 8/2/18:
See #23 - motion for summary judgment.
Tentative for 5/24/18: Continue to 8/2/18 at 2:00PM
Tentative for 3/29/18:
Will a Rule 56 motion on collateral estoppel be filed?
Debtor(s):
Pio Kasiano Pro Se
10:00 AM
Defendant(s):
Pio Kasiano Pro Se
Kiele Kathleen-Akiona Kasiano Pro Se
Joint Debtor(s):
Kiele Kathleen-Akiona Kasiano Pro Se
Plaintiff(s):
Chad Millan Represented By
Heidi M Plummer Michael C Bock
Trustee(s):
Jeffrey I Golden (TR) Pro Se
10:00 AM
Adv#: 8:18-01052 Karen Sue Naylor, Chapter 7 Trustee v. Overland Plaza, LLC
(con't from 10-04-18)
Docket 1
Tentative for 12/20/18:
Status conference continued to February 28, 2018 at 10:00 a.m. to accomodate settlement.
Tentative for 10/4/18:
Status conference continued to December 20, 2018 at 10:00 a.m.
Tentative for 5/24/18:
Status conference continued to 10/4/18 at 10:00AM.
Debtor(s):
Anna's Linens, Inc. Represented By David B Golubchik Lindsey L Smith Eve H Karasik
John-Patrick M Fritz Todd M Arnold
Ian Landsberg Juliet Y Oh Jeffrey S Kwong
Daniel J Weintraub
10:00 AM
Defendant(s):
Overland Plaza, LLC Pro Se
Plaintiff(s):
Karen Sue Naylor, Chapter 7 Trustee Represented By
Christopher Minier
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders Brian R Nelson James C Bastian Jr Melissa Davis Lowe Steven T Gubner Jason B Komorsky Christopher Minier Jerrold L Bregman Todd C. Ringstad
10:30 AM
U.S. BANK NATIONAL ASSOC Vs.
DEBTOR
Docket 33
Grant.
Debtor(s):
Larry D. Ybarra Represented By Christine A Kingston
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
11:00 AM
Docket 421
NONE LISTED -
Debtor(s):
Troy John Rodarmel Represented By
Carlos F Negrete - INACTIVE -
Trustee(s):
John M Wolfe (TR) Represented By Andy Kong
Aram Ordubegian Annie Y Stoops
11:00 AM
(con't from 12-18-18 per court order )
Docket 55
NONE LISTED -
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
11:00 AM
(con't from 12-18-18 per court order )
Docket 56
NONE LISTED -
Debtor(s):
Norman Weaver Jr. Represented By Michael F Chekian
Joint Debtor(s):
Lori C. Weaver Represented By Michael F Chekian
Trustee(s):
Richard A Marshack (TR) Represented By Chad V Haes
D Edward Hays
11:00 AM
Adv#: 8:15-01355 Asset Management Holdings, LLC v. JPMORGAN CHASE BANK, N.A. et
(set from order approving stip. entered 9-24-18)
(con't from 12-06-18 per order approving stip. entered 11-13-18)
Docket 0
This hearing was set to resolve the issues that remained after the Court heard summary judgment motions in this adversary proceeding on July 19, 2018. Pursuant to the order entered October 10, 2018, Chase and the Hernandez Defendants’ motion was denied as to the Second and Sixth claims for relief because there was a question of fact as to Chase’s chain of title. Chase has filed evidence that shows that it is the servicer of the loan and has been in possession of the note since May 2010. It follows that Chase has the authority to file a proof of claim on behalf of the beneficial owner of the loan. The Hernandez defendants have joined the Chase brief. Plaintiff Asset Management has filed a brief admitting it has had an opportunity to inspect the note, and that it does not disagree with the evidence presented by Chase. There is no longer any dispute as to the material facts here. The Second claim for relief is an objection to the proof of claim. Since Chase had the authority to file the claim as servicer, judgment should be entered in Defendants’ favor and the objection to claim denied. The Sixth claim for relief seeks relief from an avoidance order that relegated Asset Management to an effectively unsecured status (because of the senior lien serviced by Chase eclipsing all value). There is no basis for a judgment on the Sixth claim because judgment has been entered in Defendants’ favor on all the other claims establishing that indeed Chase’s lien is superior. Judgment should be entered in Defendants’ favor on the Sixth claim as well. Defendants ask for dismissal with prejudice, but this is not procedurally correct because judgment is being entered by motion, not a dismissal. The Adversary proceeding will be
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closed once judgment is entered.
Grant in favor of defendants on second and sixth claims for relief.
Debtor(s):
Aleli A. Hernandez Represented By Tate C Casey
Defendant(s):
JPMORGAN CHASE BANK, N.A. Represented By
Sheri Kanesaka Heather E Stern
Rafael R Garcia-Salgado Bryant S Delgadillo William J Idleman
Virgil Theodore Hernandez and Aleli Pro Se
Virgil Theodore Hernandez Represented By Gregory M Salvato Joseph Boufadel
Aleli A. Hernandez Represented By Gregory M Salvato Joseph Boufadel
Plaintiff(s):
Asset Management Holdings, LLC Represented By
Vanessa M Haberbush Louis H Altman
Trustee(s):
Amrane (SA) Cohen (TR) Pro Se
2:00 PM
(OST Signed 12-14-18)
Docket 126
NONE LISTED -
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
2:00 PM
(OST Signed 12-19-18)
Docket 134
NONE LISTED -
Debtor(s):
Nasco Petroleum LLC Represented By Kent Salveson Min Kyung Kim
Trustee(s):
Karen S Naylor (TR) Represented By Nanette D Sanders
3:00 PM
(OST Signed 12-19-18)
Docket 5
Per OST opposition due at the hearing.
Debtor(s):
Susan D Aronson Represented By Anerio V Altman
Movant(s):
Susan D Aronson Represented By Anerio V Altman Anerio V Altman Anerio V Altman
Trustee(s):
Weneta M Kosmala (TR) Pro Se