United States Bankruptcy Court Central District of Californiaecf-ciao.cacb.uscourts.gov/Posted/MH_081920.pdf · 6:19-16012 Carlos J Rojas Chapter 7 #11.00 Motion to Compel the Debtor

United States Bankruptcy CourtCentral District of California

Judge Mark Houle, PresidingCourtroom 303 Calendar

Riverside

Wednesday, August 19, 2020 303 Hearing Room

10:00 AMEsmeralda Gonzalez6:20-13968 Chapter 7

#1.00 Reaffirmation Agreement Between Debtor and Toyota Motor Credit Corporation re 2017 Toyota Prius

EH__

8Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Esmeralda Gonzalez Represented ByJoseph C Rosenblit

Trustee(s):

Karl T Anderson (TR) Pro Se

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10:00 AMCristina L Talamantes6:20-13894 Chapter 7

#2.00 Pro se Reaffirmation Agreement Between Debtor and American Honda Finance Corporation re: 2016 Honda Accord

EH___

10Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Cristina L Talamantes Pro Se

Trustee(s):

Larry D Simons (TR) Pro Se

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10:00 AMJose Luis Raygoza and Vera Helen Raygoza6:20-13573 Chapter 7

#3.00 Pro se Reaffirmation Agreement Between Debtor and WELLS FARGO AUTO re 2015 Toyota Prius

EH__

23Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Jose Luis Raygoza Pro Se

Joint Debtor(s):

Vera Helen Raygoza Pro Se

Trustee(s):

Howard B Grobstein (TR) Pro Se

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10:00 AMSandra Valladares6:20-13110 Chapter 7

#4.00 Reaffirmation Agreement Between Debtor and Toyota Motor Credit Corporation re 2013 Toyota Tacoma

EH__

9Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Sandra Valladares Represented ByMarlin Branstetter

Trustee(s):

Todd A. Frealy (TR) Pro Se

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10:00 AMPenni Renee Anwar6:20-12905 Chapter 7

#5.00 Pro se Reaffirmation Agreement Between Debtor and Hyundai Motor Finance re 2019 Hyundai Elantra

EH__

11Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Penni Renee Anwar Represented ByDaniel King

Trustee(s):

Charles W Daff (TR) Pro Se

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11:00 AMJames S Ash, Sr. and Stephanie A Ash6:12-11935 Chapter 7

#6.00 Motion to Avoid Lien with Steven I. Gassner

EH ___

32Docket

8/19/20

BACKGROUND

On January 25, 2012 (hereinafter the "Petition Date"), James S. Ash, Senior (hereinafter "Debtor") and Stephanie A. Ash (hereinafter "Joint Debtor") (collectively hereinafter "Debtors") filed for Chapter 7 voluntary petition.

In their commencement document, Debtors stated that they resided at 1816 Jeanna Place, Upland, CA 91784 (hereinafter the "Property"). The Property was valued at $439,100, and it was held as collateral for numerous claims totaling more than $650,000.00. Debtors received a discharge on May 2, 2012, and their case was closed on May 15, 2012.

Debtors filed a motion to reopen their case on April 6, 2020. The motion was granted, allowing Debtors to attempt to avoid junior liens on their Property. Debtor filed numerous lien avoidance motions, including this one to avoid lien owed to Stephen I. Gassner. Simultaneously, Debtor filed a motion amending their Schedule C. In that amended schedule, Debtors exempted $100.00 pursuant to California Civil Code of Civil Procedure § 703.140(b)(1) in regard to their Property.

DISCUSSION

I. Exemptions

11 U.S.C § 522 is the principal section governing exemptions. 11 U.S.C §

Tentative Ruling:

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11:00 AMJames S Ash, Sr. and Stephanie A AshCONT... Chapter 7

522(d) lists certain types of properties and the amount the Debtor can exempt for such type. However, States have the opportunity to prohibit their residents from choosing the exemption stated in that subsection. 11 U.S.C. § 522(b).

California happens to be one of those States. States that opted-out of the federal exemption provided by 11 U.S.C § 522(d) can limit their residents to the exemptions available under applicable state and non-bankruptcy federal laws. 4 Collier on Bankruptcy ¶ 522.01 (Richard Levin & Henry J. Sommer eds., 16 ed.).

Under Cal. Code of Civ. Proc. §730.050, the determination of whether property is exempt or the amount of an exemption shall be made by application of the exemption statutes in effect at (1) at the time the judgment creditor’s lien was created or (2) if the judgment creditor’s lien on the property is the latest in a series of overlapping liens, at the time the earliest lien in the series of overlapping liens was created.

In this case, the first-lien holder, Indymac Bank/Onewest Bank, recorded its lien on April 27, 2007, the second-lien holder, Bank of America, N.A., recorded its lien on April 27, 2007, and Stephen I. Gassner was awarded a judgment lien on November 1, 2011. Thus, as a series of overlapping liens, the date of the first lien recorded, April 27, 2007, is the determining date of the amount and exemption statute applicable.

Operative since July 1, 1983, California gives its residents one of two options for a homestead exemption: (1) a debtor may elect a set of exemptions under Cal. Code of Civ. Proc. §703.140(b)(1) or (2) claim the benefit of the homestead exemptions available to judgment debtors in Cal. Code of Civ. Proc. §704.730, which provides three different amounts—$75,000, $100,000, and $175,000. In re Pladson, 35 F.3d 462, 464 (9th Cir. Ct. App. 1994).

In this case, Debtors elected the "wildcard exemption." The Debtors are allowed an exemption up to $17,425.00 of their aggregate interest in the Property. Debtors have elected to exempt $100.00

The Court may not refuse to honor the exemption absent a valid statutory basis for doing so. Law v. Siegel, 134 S. Ct. 1188 (2014) (stating a valid statutory basis

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would be for 11 U.S.C §§§ 522(c), 522(o), 522(q)). It appears that the Court has no statutory basis to refuse the exemption.

Furthermore, Pursuant to Federal Rule of Bankruptcy Procedure Rule 4003(b)(3), if an exemption is first claimed after a case is reopened, an objection to the exemption must be filed before the reopened case is closed. 4 Collier on Bankruptcy ¶ 522.05[2][a] (Richard Levin & Henry J. Sommer eds., 16 ed.); see also Taylor v. Freeland & Kronz, 503 U.S. 638 (1992) (stating that "unless a party in interest objects, the property claimed as exempt…is exempt."). No objection has been filed.

II. Valuation of the Property

In 11 U.S.C. § 522(a)(2), "‘value’ is defined as ‘fair market value’ as of the date of the filing of the petition’ unless the property does not enter the estate until after the petition has been filed, in which case the value is determined ‘as of the date such property become property of the estate." 4 Collier on Bankruptcy ¶ 522.03[2] (Richard Levin & Henry J. Sommer eds., 16 ed.). See also Bfp v. Resolution Trust Corp., 511 U.S. 531, 537 (1994).

The Debtor provided a fair market valuation using "desktop valuation." Dkt. No. 32, Ex. 2. A "desktop valuation" is an automated computer valuation done using property data, recent comparable sales and property listing…as the name suggests, the valuation can be done from a desk, without needing a valuer to physically visit the property." Home Loan Experts, What is a desktop valuation? (Aug. 11, 2020, 11:57 AM) https://www.homeloanexperts.com.au/home-loan-articles/desktop-valuation/.

Courts have not agreed on a valuation to be used under 11 U.S.C. §522. Furthermore, "the subsection makes it clear that valuation is to be determined in light of the purpose of the valuation and the proposed disposition or use of the subject property." In re Todd, 194 B.R. 892 (Bankr. MT. 1996) (assessing a value of a home under 11 U.S.C. § 522(a)(2)). Nonetheless, the Court finds it appropriate that a comparable-sales approach may be used to evaluate a property that a debtor resides in.

In addition, the majority of courts have adopted that the appropriate date for valuing a collateral, which fixes a secured creditor’s claim, is the confirmation date or a date close to confirmation. In re Dheming, 2013 Bankr. Lexis 1166 (Bankr. N.D.

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Cal. 2013). In this case, the Court accepts the Debtors’ $400,000.00 valuation effective on January 15, 2012.

III. Lien Avoidance

11. U.S.C § 522(f):

"The debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is…(a) a judicial lien…"

A judicial lien is a "lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceedings." 11 U.S.C. § 101. Debtors provide evidence that a judgment was entered against them, and a lien was awarded to Stephen I. Gassner in the amount of $49,189.72. Dkt. No. 32, Ex. 4. The judicial lien appears of a kind not specified in 11 U.S.C §523(a)(5), domestic support obligation. The Debtor also provided the dates and amounts of when other liens encumbered the property. Dkt. No. 32, Ex 4-5.

It does not matter where the judicial lien is located on the lien hierarchy of the encumbered property. Owen v. Owen, 500 U.S. 305, 311 (1991). What is paramount is "whether the [judicial lien] impairs an exemption to which [the Debtor] would have been entitled to. Id. In this particular case, it does: all current amount of the liens and the exemption, together, total more than $650,000.00.

Thus, the Court has determined that the judicial lien in the amount of $49,189.72 awarded to Stephen I. Gassner impairs the Debtor’s homestead exemption because the lien at issue plus all other liens on the property and the amount of the exemption exceed the value of Debtor’s interest in the property. 11. U.S.C.§522(f)(2).

There possibly is an exception to the requirement to value the property and calculate the amount of the liens as of the petition date. If the debtor moves to avoid a judicial lien post-discharge, as in this case, an exception to the "petition date calculation" could exist. An injured creditor could be prejudiced if the calculation of

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impairment were to be used as of the hearing or motion date. In re Ricks, 62 B.R. 681, 682-83 (Bankr. S.D. Cal. 1986) (where post-discharge motion to avoid lien ruled time-barred if the creditor shows detrimental reliance on debtor's prior inaction in avoiding the lien).

However, the creditor must introduce evidence to demonstrate that it has been prejudiced by the debtors’ delay or relied upon the debtors’ non-action to its detriment. In the current situation, the creditor has neither argued that it has been prejudiced nor has suffered harm due to the debtors’ delay in avoiding the lien. In fact, the creditor did not respond to this motion.

Finally, the Court notes that it deems failure to file opposition to be consent to the relief requested pursuant to Local Rule 9013-1(h).

TENTATIVE RULING

8/19/2020

Opposition: NoneService: Proper

As set forth above, the judicial lien of Stephen I. Gassner impairs the Debtors’ exemption on their Property, and the Court GRANTS this motion, avoiding this lien in its entirety.

APPEARANCES WAIVED. Movant to lodge order within seven days. If oral or written opposition is presented at the hearing, the hearing may be continued.

Party Information

Debtor(s):

James S Ash Sr. Represented ByChantell Gonzalez-NievesPaul Y Lee

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Joint Debtor(s):Stephanie A Ash Represented By

Chantell Gonzalez-NievesPaul Y Lee

Movant(s):

James S Ash Sr. Represented ByChantell Gonzalez-NievesPaul Y Lee

Stephanie A Ash Represented ByChantell Gonzalez-NievesPaul Y Lee

Trustee(s):

Robert L Goodrich (TR) Pro Se

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11:00 AMMonique Ravega6:20-12650 Chapter 7

#7.00 Motion to Avoid Lien with Portfolio Recovery Associates, LLC

EH ___

16Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Monique Ravega Represented ByKeith Q Nguyen

Movant(s):

Monique Ravega Represented ByKeith Q Nguyen

Trustee(s):

Lynda T. Bui (TR) Pro Se

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11:00 AMDonald Sutcliffe6:16-20298 Chapter 7

#8.00 Motion RE: Objection to Claim Number 3 by Claimant United States of America, Department of the Treasury, Internal Revenue Service

EH__

114Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Donald Sutcliffe Represented ByScott Talkov

Movant(s):


Trustee(s):

John P Pringle (TR) Represented ByD Edward HaysDavid WoodTinho Mang

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11:00 AMJuan M Arreola Leon and Maria Sandra Arreola6:19-20072 Chapter 7

#9.00 Trustee's Final Report and Applications for Compensation

EH ___

25Docket

8/19/20

Opposition: NoneService: Proper

The application for compensation of the Trustee has been set for hearing on the notice required by LBR 2016-1. Pursuant to the Trustee’s Final Report, the Court is inclined to APPROVE the following administrative expenses:

Trustee’s Fees: $583.94Trustee’s Expenses: $75.04


Tentative Ruling:

Party Information

Debtor(s):

Juan M Arreola Leon Represented ByJames G. Beirne

Joint Debtor(s):

Maria Sandra Arreola Represented ByJames G. Beirne

Trustee(s):


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11:00 AMJames Dimitri Tsirtsis6:19-19674 Chapter 7

#10.00 Motion Objecting to Debtor's Amended Exemptions

EH___

33Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

James Dimitri Tsirtsis Represented ByDonald W Sieveke

Trustee(s):

Robert Whitmore (TR) Represented ByMichelle A Marchisotto

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11:00 AMCarlos J Rojas6:19-16012 Chapter 7

#11.00 Motion to Compel the Debtor to Appear for his Meeting of Creditors and to Produce Documents Requested by Trustee Pursuant to Pursuant to 11 U.S.C. §341(a), 521 and 542

EH___

25Docket

8/19/20

BACKGROUND

On July 10, 2019 (hereinafter "Petition Date"), Carlos J. Rojas (hereinafter "Debtor") filed a Chapter 7 voluntary petition. Howard B. Grobstein (hereinafter the "Trustee") was appointed to administer this case. Pursuant to 11 U.S.C. § 341(a), a meeting of the creditors was scheduled for August 13, 2019. On that date, Debtor did attend the meeting; and he was asked to produce several documents, including bank statements that account for an entire year.

The meeting was continued to October 22, 2019. Id. Debtor did appear, but failed to produce the documents that were requested of him. The meeting was continued to July 9, 20201. Id. Trustee filed this motion requesting that the Court compel Debtor to appear and produce the bank statements, accounting for an entire year, at the meeting of the creditors. Trustee argues that he is unable to fulfill his obligation pursuant to 11 U.S.C. § 704.

DISCUSSION

11 U.S.C. § 521:

Tentative Ruling:

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11:00 AMCarlos J RojasCONT... Chapter 7

(a) The debtor shall—

(3) if a trustee is serving in the case…cooperate with the trustee as necessary to enable the trustee to perform the trustee’s duties under this title…

(4) if a trustee is serving in the case…surrender to the trustee all property of the estate and any recorded information, including books, documents, records, and papers, relating to property of the estate…

Attaining bank statements, accounting for the entire year, is interdependent with many duties entrusted to the Trustee, such as, but not limited to, investigating the financial affairs of the Debtor. 11 U.S.C. § 704(a)(4). Therefore, when the Trustee ask the Debtor to provide said document and Debtor does not produce said document, Debtor has failed to cooperate with the Trustee and to surrender any recorded information relating to property of the estate.

Debtor has not responded to this motion. Pursuant to LBR 9013-1(h), if a party does not timely file and serve documents, the Court may deem this lack of action to be consent to the granting or denial of the motion.

TENTATIVE RULING

Motion is GRANTED. Debtor has within ten days of the entry of Court order to produce the requested document.


Party Information

Debtor(s):

Carlos J Rojas Represented ByHector Vega

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11:00 AMCarlos J RojasCONT... Chapter 7

Movant(s):Howard B Grobstein (TR) Pro Se

Trustee(s):

Howard B Grobstein (TR) Pro Se

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11:00 AMArlene Burns6:20-13675 Chapter 7

#12.00 Motion to Appoint Armani Burns as Next Friend

EH___

11Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Arlene Burns Represented ByRobert L Firth

Movant(s):

Arlene Burns Represented ByRobert L Firth

Trustee(s):


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11:00 AMRobert Wayne Young6:19-15007 Chapter 7

#13.00 Motion For Sale of Property of the Estate under Section 363(b) - No Fee Chapter 7 Trustee's Notice of Motion and Motion for Order: (1) Authorizing Sale of Real Property Free and Clear of Liens, Claims and Interests Pursuant to 11 U.S.C. §§ 363(b) and (f); (2) Approving Overbid Procedures; (3) Authorizing Distribution of Sales Proceeds; (4) Waiver of Federal Rule of Bankruptcy Procedure 6004(h); (5) Finding Buyer to Be a Good Faith Purchaser Pursuant to 11 U.S.C. § 363(m); and (6) Requiring Debtor to Turnover Property

EH__

54Docket *** VACATED *** REASON: WITHDRAWAL OF MOTION FILED 8/13/20

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Robert Wayne Young Represented ByCynthia A Dunning

Movant(s):

Karl T Anderson (TR) Represented ByRobert P GoeRyan S Riddles

Trustee(s):

Karl T Anderson (TR) Represented ByRobert P GoeRyan S Riddles

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11:00 AMRussell Ray Bomar, Jr.6:20-12197 Chapter 7

#14.00 Order to Show Cause re Contempt and for Sanctions

EH___

0Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Russell Ray Bomar Jr. Represented ByNeil R Hedtke

Trustee(s):


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12:00 PMFasttrak Foods, LLC6:20-15400 Chapter 11

#14.10 Emergency Motion of Debtor and Debtor in Possession for an Order Authorizing Debtor to Pay Pre-Petition: (1) Wages; (2) Employee Deductions; and (3) Authorizing and Directing Applicable Banks and Other Financial Institutions to Receive, Process, Honor, and Pay Checks Presented for Payment and to Honor Funds Transfer Requests Relating to the Foregoing

EH__

18Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Fasttrak Foods, LLC Represented ByCrystle Jane LindseyJames R SelthDaniel J Weintraub

Movant(s):

Fasttrak Foods, LLC Represented ByCrystle Jane LindseyJames R SelthDaniel J Weintraub

Trustee(s):

Caroline Renee Djang (TR) Pro Se

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2:00 PMEddie C. DeGracia, Jr.6:20-13417 Chapter 7

Daff v. DeGraciaAdv#: 6:20-01106

#15.00 CONT Status Conference RE: [1] Adversary case 6:20-ap-01106. Complaint by Charles W. Daff against Satoko DeGracia. (Charge To Estate - $350.00). FOR: 1. Avoidance of Intentional Fraudulent Transfers and Recovery of Same [11 U.S.C. §§ 544, 548, 550, 551; CAL. CIV. CODE §§ 3439.04, 3439.07, 3439.08]; 2. Avoidance of Constructive Fraudulent Transfers and Recovery of Same [11 U.S.C. §§ 544, 548, 550, 551; CAL. CIV. CODE §§ 3439.04, 3439.05, 3439.07, 3439.08, 3439.09]; 3. Disallowance of Claims [11 U.S.C. §502(d)]; 4. Unjust Enrichment [11 U.S.C. § 105]; 5. Declaratory Relief [11 U.S.C. §§ 541, 544, 548; FRBP 7001(9)]; and 6. Turnover of Property of the Estate [11 U.S.C. § 542] Nature of Suit: (01 (Determination of removed claim or cause)),(13 (Recovery of money/property - 548 fraudulent transfer)),(91 (Declaratory judgment)),(11 (Recovery of money/property - 542 turnover of property)) (Iskander, Brandon)

From: 7/22/20

EH__

1Docket *** VACATED *** REASON: CONTINUED TO 10/28/20 AT 2:00 PM

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Eddie C. DeGracia Jr. Represented ByJames D. Hornbuckle

Defendant(s):

Satoko DeGracia Represented ByScott Talkov

Plaintiff(s):

Charles W. Daff Represented ByBrandon J Iskander

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2:00 PMEddie C. DeGracia, Jr.CONT... Chapter 7

Trustee(s):

Charles W Daff (TR) Represented ByBrandon J Iskander

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2:00 PMRonald V. Cruz6:20-11944 Chapter 7

Cruz v. CruzAdv#: 6:20-01112

#16.00 Status Conference RE: [3] Amended Complaint First Amended Complaint by William H Brownstein on behalf of Patricia Marlen Cruz against all defendants. (RE: related document(s)1 Adversary case 6:20-ap-01112. Complaint by Patricia Marlen Cruz against Ronald V. Cruz. false pretenses, false representation, actual fraud)),(67 (Dischargeability - 523(a)(4), fraud as fiduciary, embezzlement, larceny)),(68 (Dischargeability - 523(a)(6), willful and malicious injury)),(64 (Dischargeability - 523(a)(15), divorce/sep property settlement/decree)),(91 (Declaratory judgment)) filed by Plaintiff Patricia Marlen Cruz). (Brownstein, William)

EH__

3Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Ronald V. Cruz Represented ByWalter Scott

Defendant(s):

Ronald V. Cruz Represented ByWalter Scott

Plaintiff(s):

Patricia Moonyeen Cruz Represented ByWilliam H Brownstein

Trustee(s):


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2:00 PMNevin Riad6:19-12819 Chapter 7

Frealy v. RiadAdv#: 6:20-01105

#17.00 CONT Status Conference RE: [1] Adversary case 6:20-ap-01105. Complaint by Todd Frealy against Nevin Riad. (Charge To Estate - $350.00). (Attachments: # 1 Adversary Coversheet) Nature of Suit: (41 (Objection / revocation of discharge - 727(c),(d),(e))) (Pagay, Carmela)

From: 7/22/20

EH__

1Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Nevin Riad Represented ByDaniel S March

Defendant(s):

Nevin Riad Pro Se

Plaintiff(s):

Todd Frealy Represented ByCarmela Pagay

Trustee(s):

Todd A. Frealy (TR) Represented ByCarmela Pagay

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2:00 PMTimothy Mark Aitken6:19-10556 Chapter 7

Grobstein v. AitkenAdv#: 6:20-01022

#18.00 CONT Motion for Default Judgment against defendant Alicia Aitken

From: 7/1/20

Also #19

EH__

12Docket

7/1/2020

BACKGROUND

On January 23, 2019, Timothy & Esmeralda Aitken ("Debtors") filed a pro se Chapter 7 voluntary petition. On April 19, 2019, Trustee filed a notice of assets. On May 1, 2019, Debtors filed an amended Schedule C claiming as exempt equity in real property located at 6919 Elmwood Rd., San Bernardino, CA (the "Property") transferred in 2017. On February 28, 2020, Trustee filed a motion to extent time to objection to Debtors’ claimed exemption. On April 7, 2020, the Court entered an order extending the deadline to object to Debtors’ claimed exemption until October 3, 2020.

On March 3, 2020, Trustee filed a complaint against Alicia Aitken ("Defendant"), Debtors’ daughter, for avoidance and recovery of fraudulent transfer. On April 14, 2020, default was entered against Defendant. On June 9, 2020, Trustee filed a motion for default judgment.

Tentative Ruling:

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2:00 PMTimothy Mark AitkenCONT... Chapter 7

Trustee’s complaint relates to the sale of the Property from Debtors to Defendant on August 31, 2017. Trustee notes that the settlement statement for the sale includes a notation for a gift of equity in the amount of $29,310. It appears from the information provided to the Court that the sale involved Defendant taking out a loan in the amount of $195,400 and paying off the existing mortgage on the Property as well as all costs of sale. After payment of those items, it appears that Defendant retained $29,310 of the remaining $32,551.56 in loan proceeds, with the balance going to Debtors. Trustee then sued Defendant to recover the $29,310.

DISCUSSION

A. Entry of Default

FED. R. CIV. P. Rule 55 states that "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules and that fact is made to appear by affidavit or otherwise, the clerk shall enter the party’s default." Fed. R. Civ. P. 55(a). Local Rule 7055-1 provides further requirements relating to a motion for entry of default judgment, and those requirements have been substantially satisfied here.

B. Motion for Default Judgment

1. Proper Service of Summons and Complaint

FED. R. BANKR. P. Rule 7004(b)(1) states, in part:

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[S]ervice may be made within the United States by first class mail postage prepaid as follows:

(1) Upon an individual other than an infant or incompetent, by mailing a copy of the summons and complaint to the individual’s dwelling house or usual place of abode or to the place where the individual regularly conducts a business or profession.

Here, Defendant was served at the Property. While Defendant clearly purchased the Property, the Court notes that Debtors listed the Property as their address on the bankruptcy petition, and also listed a housing expense on Schedule J, so it appears Defendant may have purchased the Property and began renting it out to Debtors. Trustee to apprise the Court of its attempt to determine a valid service address for Defendant.

2. Merits of Plaintiff’s claim

Upon default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true. TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987); see also Almog v. Golden Summit Investors Group, Ltd., 2012 WL 12867972 at *4 (C.D. Cal. 2012) ("When reviewing a motion for default judgment, the Court must accept the well-pleaded allegations of the complaint relating to liability as true.").

Here, the complaint includes five causes of action. A general problem with all five causes of action is Trustee’s characterization of the "transfer" to be avoided. Trustee has defined the subject transfer as the gift of equity. In so doing, Trustee has bifurcated the sale at issue into two distinct transactions: (1) a sale of the Property for $195,400; and (2) a gift from Debtors to Defendant in the amount of $29,310. This

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would appear to be a distortion of the events which actually occurred, specifically that Defendant took out a loan for $195,400 and purchased the Property for $166,090, retaining the remaining loan proceeds.

Therefore, the operative legal question becomes – to what extent can a transfer be subdivided into various components? The Court notes Trustee’s argument implicitly requires the Court to assume that the $195,400 price of the Property constitutes the fair market value of the Property, but the Court does not have any evidence to support that conclusion. Even accepting that assumption, Trustee’s proposed bifurcation of the sale arrangement results in a fundamental change in the statutory language, for it would force this Court to replace "reasonably equivalent value" with "equivalent value." For in any sale in which the purchase price was less than the fair market value of the property, the sale could be construed as a sale of the property for the fair market value and an accompanying gift of equity; in other words, every transfer in which a debtor received less than "equivalent value" would be subject to attack.1

Therefore, in accordance with the reasoning above and the Court’s understanding of the terms of the sale (reproduced in the final paragraph of the background section), the Court is inclined to consider the transfer at issue to have been the sale of the Property for $166,010. Trustee has not provided any legal argument that would support a conclusion that the sale of the Property for $166,010 constitutes a fraudulent transfer.

TENTATIVE RULING

The Court is inclined to CONTINUE the matter for Trustee to file a supplemental brief responding to the issues raised above.

APPEARANCES REQUIRED.

Party Information

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Debtor(s):Timothy Mark Aitken Pro Se

Defendant(s):

Alicia Aitken Pro Se

Joint Debtor(s):

Esmeralda Aitken Pro Se

Movant(s):

Howard Grobstein Represented ByLarry D Simons

Plaintiff(s):


Trustee(s):

Howard B Grobstein (TR) Represented ByLarry D Simons

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2:00 PMTimothy Mark Aitken6:19-10556 Chapter 7

Grobstein v. AitkenAdv#: 6:20-01022

#19.00 CONT Status Conference RE: [1] Adversary case 6:20-ap-01022. Complaint by Howard Grobstein against Alicia Aitken. (Charge To Estate). with adversary cover sheet Nature of Suit: (13 (Recovery of money/property - 548 fraudulent transfer))

From: 5/6/20, 6/10/20, 7/1/20

Also #18

EH__

1Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Timothy Mark Aitken Pro Se

Defendant(s):

Alicia Aitken Pro Se

Joint Debtor(s):

Esmeralda Aitken Pro Se

Plaintiff(s):


Trustee(s):

Howard B Grobstein (TR) Represented ByLarry D Simons

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2:00 PMMaria Fabiola Marroquin6:18-17820 Chapter 7

Anderson v. Marroquin, Jr.Adv#: 6:19-01131

#20.00 CONT Status Conference RE: [1] Adversary case 6:19-ap-01131. Complaint by Karl T. Anderson against Roderico Marroquin Jr.. (Charge To Estate $350.00). Complaint for: (1) Avoidance and Recovery of Constrictive Fraudulent Transfers; (2) Avoidance and Recovery of Intentional Fraudulent Transfers; (3) Avoidance and Recovery of Property of the Bankruptcy Estate; and (4) Temporary Restraining Order and Preliminary Injunction Nature of Suit: (13 (Recovery of money/property - 548 fraudulent transfer)) (Eastmond, Thomas)

From: 12/4/19, 5/27/20

EH__

1Docket *** VACATED *** REASON: CASE DISMISSED ON 7/14/20

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Maria Fabiola Marroquin Represented ByMark A Mellor

Defendant(s):

Roderico Marroquin Jr. Represented ByAlec L Harshey

Plaintiff(s):

Karl T. Anderson Represented ByThomas J EastmondRobert P GoeRafael R Garcia-Salgado

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2:00 PMMaria Fabiola MarroquinCONT... Chapter 7

Trustee(s):Karl T Anderson (TR) Represented By

Robert P GoeThomas J EastmondRafael R Garcia-Salgado

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2:00 PMDonald Sutcliffe6:16-20298 Chapter 7

Sutcliffe v. Internal Revenue Service et alAdv#: 6:20-01114

#21.00 Motion to Dismiss Plaintiff's Adversary Complaint

Also #22 & #23

EH ___

6Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):


Defendant(s):

Internal Revenue Service Represented ByGavin L Greene

Canadian Revenue Agency Pro Se

JOHN PRINGLE Represented ByD Edward HaysTinho Mang

Movant(s):


Plaintiff(s):

Donald John Sutcliffe Represented ByScott Talkov

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2:00 PMDonald SutcliffeCONT... Chapter 7

Trustee(s):


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#22.00 Motion to Dismiss Complaint Under FRCP 12(b)(1), 12(b)(6)

Also #21 & #23

EH __

8Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):


Defendant(s):




Movant(s):


Plaintiff(s):


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Trustee(s):


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#23.00 Status Conference RE: [1] Adversary case 6:20-ap-01114. Complaint by Donald John Sutcliffe against Internal Revenue Service, Canadian Revenue Agency, JOHN PRINGLE. (Fee Not Required). Nature of Suit: (21 (Validity, priority or extent of lien or other interest in property)),(66 (Dischargeability - 523(a)(1),(14),(14A) priority tax claims)),(91 (Declaratory judgment)) (Talkov, Scott)

Also #21 & #22

EH__

1Docket

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):


Defendant(s):




Plaintiff(s):


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Trustee(s):


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3:00 PMDevore Stop A General Partners6:03-15174 Chapter 7

Morschauser v. Continental Capital LLC et alAdv#: 6:12-01498

#24.00 CONT Status Conference Hearing RE: Complaint by William G Morschauser against Continental Capital LLC , Stephen Collias , Jesse Bojorquez , American Business Investments , Mohammed Abdizadeh

From: 3/11/15, 5/20/15, 7/29/15, 12/16/15, 2/3/16, 3/16/16, 5/11/16, 8/31/16, 11/2/16, 11/16/16, 3/8/17, 6/7/17, 7/26/17, 9/13/17, 3/12/18, 11/13/19, 12/17/19, 1/15/20, 2/12/20, 3/11/20

Also #25

EH ___

1Docket *** VACATED *** REASON: CONTINUED TO 10/28/20 AT 3:00 P.M.

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Devore Stop A General Partners Represented ByArshak Bartoumian - DISBARRED -Newton W Kellam

Devore Stop Represented ByHutchison B Meltzer

Defendant(s):

Continental Capital LLC Represented ByCara J HaganLawrence J KuhlmanReid A Winthrop

Stephen Collias Represented ByCara J Hagan

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3:00 PMDevore Stop A General PartnersCONT... Chapter 7

Lawrence J KuhlmanReid A Winthrop

Jesse Bojorquez Represented ByLawrence J KuhlmanAutumn D Spaeth ESQCara J HaganReid A Winthrop

American Business Investments Represented ByLawrence J KuhlmanAutumn D Spaeth ESQCara J HaganReid A Winthrop

Mohammed Abdizadeh Pro Se

Plaintiff(s):

William G Morschauser Represented ByHutchison B MeltzerReid A WinthropCara J HaganLawrence J Kuhlman

Trustee(s):

Arturo Cisneros (TR) Pro Se

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3:00 PMDevore Stop A General Partners6:03-15174 Chapter 7

Morschauser v. Continental Capital LLC et alAdv#: 6:12-01498

#25.00 CONT Status Conference RE: [29] Crossclaim/Cross-Complaint for: 1 conversion; 2 constructive trust; 3 unjust enrichment; 4 an accounting; 5 declaratory relief; and 6 primary and secondary indemnification and contribution by American Business Investments , Jesse Bojorquez against Stephen Collias , Continental Capital LLC

From: 3/11/15, 5/20/15, 7/29/15, 12/16/15, 2/3/16, 3/16/16, 5/11/16, 8/31/16, 11/2/16, 11/16/16, 3/8/17, 6/7/17, 7/26/17, 9/13/17, 3/12/18, 11/13/19, 12/17/19, 1/15/20, 2/12/20, 3/11/20

Also #24

EH__

29Docket *** VACATED *** REASON: CONTINUED TO 10/28/20 AT 3:00 P.M.

- NONE LISTED -

Tentative Ruling:

Party Information

Debtor(s):

Devore Stop A General Partners Represented ByArshak Bartoumian - DISBARRED -Newton W Kellam

Devore Stop Represented ByHutchison B Meltzer

Defendant(s):

Continental Capital LLC Represented ByCara J HaganLawrence J KuhlmanReid A Winthrop

Stephen Collias Represented ByPage 43 of 448/18/2020 4:12:56 PM



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3:00 PMDevore Stop A General PartnersCONT... Chapter 7

Cara J HaganLawrence J KuhlmanReid A Winthrop

Jesse Bojorquez Represented ByLawrence J KuhlmanAutumn D Spaeth ESQCara J HaganReid A Winthrop

American Business Investments Represented ByLawrence J KuhlmanAutumn D Spaeth ESQCara J HaganReid A Winthrop

Mohammed Abdizadeh Pro Se

Plaintiff(s):

William G Morschauser Represented ByHutchison B MeltzerReid A WinthropCara J HaganLawrence J Kuhlman

Trustee(s):

Arturo Cisneros (TR) Pro Se

Page 44 of 448/18/2020 4:12:56 PM