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1 Thi s di sposi t i on i s not appr opr i at e f or publ i cat i on.Al t hough i t may be ci t ed f or what ever per suasi ve val ue i t may have( see Fed. R. App. P. 32. 1) , i t has no pr ecedent i al val ue. See 9t hCi r . BAP Rul e 8013- 1.
UNITED STATES BANKRUPTCY APPELLATE PANEL
OF THE NINTH CIRCUIT
I n r e: ) BAP No. EC- 11- 1735- Ki DJ u)
BETSEY WARREN LEBBOS, ) Bk. No. 06- 22225- RSB)
Debt or . ) Adv. No. 11- 2386- RSB )
) J OSEPH GI OVANAZZI , Tr ust ee of )t he Ai da Madel ei ne Lebbos )No. 2 Trust ; J OSEPH )GI OVANAZZI , Tr ust ee of t he )Ai da Madel ei ne Lebbos )
Tr ust I I , ) )Appel l ant s, )
)v. ) M E M O R A N D U M 1
)LI NDA SCHUETTE, Chapt er 7 )
Tr ust ee, ) )
Appel l ee. ) ______________________________)
Ar gued and Submi t t ed on Oct ober 19, 2012,at Sacr ament o, Cal i f or ni a
Fi l ed - December 31, 2012
Appeal f r om t he Uni t ed St at es Bankr upt cy Cour tf or t he Eas ter n Di s t r i ct of Cal i f or ni a
Honor abl e Rober t S. Bar dwi l , Bankr upt cy J udge, Pr esi di ng
Appear ances: Nei l Har r i son Lewi s, Esq. ar gued f or appel l ant , J oseph Gi ovanazz i ; Mi chael Paul Dacqui st o, Esq.ar gued f or appel l ee, Li nda Schuet t e.
Bef or e: KI RSCHER, DUNN, and J URY, Bankr upt cy J udges.
FILEDDEC 31 2012
SUSAN M SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT
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2 Unl ess speci f i ed ot her wi se, al l chapt er , code and r ul er ef er ences ar e t o t he Bankr upt cy Code, 11 U. S. C. 101- 1532, andt he Federal Rul es of Bankr upt cy Pr ocedur e, Rul es 1001- 9037. TheFeder al Rul es of Ci vi l Pr ocedur e ar e r ef er r ed t o as Ci vi l Rul es.
3 Lebbos i s a f or mer at t or ney who pr act i ced l aw i n Cal i f or ni af r om 1975 unt i l 1991 when she was di sbar r ed. Gi ovanazzi i s al so aCal i f or ni a l i censed at t or ney, SBN 42827. He was admi t t ed t opr act i ce l aw i n Cal i f or ni a i n 1969. Gi ovanazzi was di sbar r ed i n1990. Hi s l i cense was r ei nst at ed i n 2003. I n connect i on wi t h hi sact i ons sur r oundi ng t he i nst ant adver sary act i on and ot hermat t er s, Gi ovanazzi i s f aci ng mul t i pl e di sci pl i nar y char ges bef or et he Cal i f or ni a St at e Bar Cour t . See Cal i f or ni a St at e Bar websi t eat ht t p: / / member s. cal bar . ca. gov/ f al / Member / Det ai l / 42827.
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Appel l ant , J oseph Gi ovanazzi ( Gi ovanazzi ) , Tr ust ee of t he
Ai da Madel ei ne Lebbos No. 2 Tr ust and t he Ai da Madel ei ne Lebbos
Tr ust I I ( col l ect i vel y t he Tr ust ) , appeal s an or der and j udgment
f r om t he bankr upt cy cour t gr ant i ng t he chapt er 7 2 t r ust ee, Li nda
Schuet t e ( Tr ust ee) , par t i al summar y j udgment on t wo of her t hr ee
cl ai ms agai nst Gi ovanazzi . Gi ovanazzi al so appeal s f r om t he
bankr upt cy cour t : ( 1) t he or der denyi ng hi s mot i on t o di smi ss
Tr ust ee' s adver sar y act i on; ( 2) t he or der s denyi ng hi s mot i ons t o
di squal i f y t he cour t and t r ansf er venue; and ( 3) t he or der s
denyi ng hi s mot i on f or r econsi der at i on of al l of t he above or der s
and j udgment . We AFFI RM i n par t and DI SMI SS i n par t .I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
A. The prior adversary action 07-2006
Debt or , Bet sey War r en Lebbos ( Lebbos) , f i l ed a chapt er 7
bankr upt cy case on J une 26, 2006. 3 On J anuary 3, 2007, Trust ee
f i l ed an avoi dance act i on agai nst Lebbos, Thomas Car t er ( Car t er )
and J ason Gol d ( Gol d) . Gol d i s a l aw school gr aduat e. Lebbos,
Car t er and Gol d wer e ei t her t he sol e or co- t r ust ees of t he Tr ust .Lebbos was s ued i n her i ndi vi dual capaci t y and as t r ust ee of t he
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Tr ust ; Car t er and Gol d wer e sued i n t hei r capaci t i es as t r ust ees
of t he Tr ust . The avoi dance act i on sought t o set asi de t wo
f r audul ent t r ansf er s by Lebbos of a condomi ni um l ocat ed i n Long
Beach, Cal i f or ni a ( Condo) , i nj unct i ve r el i ef , t ur nover of t he
Condo and i t s r ent pr oceeds and ot her addi t i onal r el i ef . The
t r ansf er s at i ssue occur r ed on August 19, 2004 ( f r om Lebbos t o t he
Tr ust ) and May 25, 2005 ( f r om Lebbos as t r ust ee of t he Tr ust t o
Car t er and Gol d, co- t r ust ees of t he Tr ust ) .
On J anuary 4, 2007, Trust ee ser ved a Not i ce of Pendency of
Act i on on Lebbos, Car t er and Gol d ( Li s Pendens) . The Li s
Pendens was r ecor ded i n Los Angel es Count y on Mar ch 14, 2007.On Apr i l 17, 2008, Trust ee obt ai ned a def aul t j udgment
( J udgment ) , wi t h suppor t i ng f i ndi ngs of f act and concl usi ons of
l aw, whi ch ( 1) avoi ded bot h t r ansf er s, ( 2) awar ded r ecover y of al l
r i ght , t i t l e, and i nt er est i n t he Condo hel d by Lebbos, Car t er and
Gol d t o Tr ust ee and ( 3) f ound Tr ust ee' s i nt er est i n t he Condo t o
be super i or t o any r i ght , t i t l e, and i nt er est of Lebbos, Car t er
and Gol d. The def endant s wer e or der ed t o t ur n over t he Condo andal l r ent s i t gener at ed as of J une 26, 2006 ( t he dat e Lebbos f i l ed
her chapt er 7 pet i t i on) , and wer e f ur t her enj oi ned f r om any
ef f or t s t o convey, t r ansf er , encumber or ot her wi se af f ect t he
t i t l e t o or t he encumbr ances on t he Condo.
Lebbos, Car t er and Gol d appeal ed t he J udgment t o t he Uni t ed
St at es Di s t r i c t Cour t , East er n Di st r i c t of Cal i f or ni a, t he Ni nt h
Ci r cui t Cour t of Appeal s and t he Uni t ed St at es Supr eme Cour t .
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4 The di st r i ct cour t af f i r med t he bankrupt cy cour t on J anuar y 26, 2009 ( case no. 08- 912- FCD) . The Ni nt h Ci r cui taf f i r med t he di st r i ct cour t on J anuar y 22, 2010 ( case no. 09-15271) . The U. S. Supr eme Cour t deni ed a pet i t i on f or wr i t of cer t i or ar i on November 10, 2010 ( case no. 10- 6484) .
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Each appeal was unsuccess f ul . 4 The J udgment i s now f i nal .
B. Events leading to the present adversary action 11-2386
On Apr i l 14, 2008, j ust t hr ee days bef or e t he bankr upt cy
cour t ent er ed t he J udgment , a qui t cl ai m deed f r om Car t er and Gol d
t o Gi ovanazzi t r ansf er r i ng t i t l e of t he Condo t o Gi ovanazzi was
r ecor ded i n Los Angel es Count y.
On August 13, 2008, Gi ovanazzi , as t r ust or , si gned a deed of
t r ust pur por t i ng t o encumber t he Condo t o secur e payment of an
al l eged pr omi ssor y not e f or $775, 000. The benef i ci ar i es of t he
deed of t r ust wer e Ai da Madel ei ne Lebbos ( debt or ' s daught er ) ,
Camer on Dacqui l a ( debt or ' s gr anddaught er ) and Br andon Dacqui l a( debt or ' s gr andson) ( col l ect i vel y Benef i ci ar i es) . That deed of
t r ust was r ecor ded i n Los Angel es Count y on Sept ember 19, 2008.
I n J anuar y 2009, Gi ovanazzi f i l ed a qui et t i t l e act i on i n t he
Los Angel es Super i or Cour t agai nst J udges Bar dwi l and Buf f or d,
Tr ust ee and her counsel . That sui t was di smi ssed on i mmuni t y
gr ounds and t he di smi ssal was af f i r med on appeal .
On J ul y 30, 2009, Trust ee advi sed Gi ovanazzi ( and Lebbos,Car t er and Gol d) by l et t er t hat Gi ovanazzi di d not have an
owner shi p i nt er est i n t he Condo and t hat he was not ent i t l ed t o
pur sue any act i ons agai nst i t . Tr ust ee advi sed Gi ovanazzi of t he
same i n a second l et t er dat ed Oct ober 2, 2009.
On August 20, 2009, t he bankr upt cy cour t ent er ed an or der
aut hor i zi ng Tr ust ee t o empl oy a r eal est at e br oker t o sel l t he
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5 Tr ust ee ul t i mat el y di d not seek a j udgment on t he secondcl ai m and wi t hdr ew i t on December 19, 2011. Theref ore, we do notdi scuss t hi s cl ai m, except as necessary.
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Condo. On Apr i l 1, 2010, t he bankr upt cy cour t ent er ed an order
aut hor i zi ng Tr ust ee t o empl oy Haas Management Company as pr oper t y
manager f or t he pur poses of r ent i ng and car i ng f or t he Condo.
On August 27, 2010, Gi ovanazzi , st i l l cl ai mi ng he owned t he
Condo, f i l ed an unl awf ul det ai ner act i on i n Los Angel es Super i or
Cour t seeki ng t o evi ct t he t enant s pl aced i n t he Condo by Tr ust ee
and Haas Management Company.
C. The present adversary action 11-2386
I n r esponse t o Gi ovanazzi ' s act i ons and af t er t he l ast appeal
f r om adver sar y act i on 07- 2006 had been compl et ed, on May 26, 2011,
Tr ust ee f i l ed an adver sar y act i on agai nst Gi ovanazz i ass er t i ngt hr ee cl ai ms. I n her f i r st cl ai m under 551 f or pr eser vat i on of
a pr evi ousl y avoi ded t r ansf er and subsequent t r ansf er , Tr ust ee
sought an order / j udgment ( a) conf i r mi ng t he August 19, 2004 and
May 25, 2005 t r ansf er s of t he Condo had been pr eser ved f or t he
benef i t of t he bankrupt cy est at e, ( b) avoi di ng t he Apr i l 14, 2008
qui t cl ai m deed t o Gi ovanazzi , ( c) avoi di ng t he August 13, 2008
deed of t r ust t o t he Benef i ci ar i es, ( d) decl ar i ng t he unl awf uldet ai ner l awsui t had no f or ce or ef f ect on Tr ust ee or t he Condo,
and ( e) f or i nj unct i ve r el i ef pr event i ng Gi ovanazzi f r om any
f ur t her act i ons af f ect i ng t he Condo. Tr ust ee' s second cl ai m
sought t ur nover of r ent s al l egedl y col l ect ed by Gi ovanazzi on t he
Condo bet ween Apr i l 17, 2008, t he dat e Tr ust ee was awarded t i t l e
t o t he Condo, and J ul y 2009, t he dat e Tr ust ee t ook possess i on. 5
Tr ust ee' s t hi r d cl ai m sought decl ar at or y r el i ef as t o t he i ssues
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bet ween Tr ust ee and Gi ovanazz i and r equest ed an or der / j udgment
pr ovi di ng essent i al l y the same r el i ef sought i n t he f i r st cl ai m.
1. Giovanazzi's motions
I n r esponse t o Tr ust ee' s compl ai nt , Gi ovanazzi , appear i ng pr o
se, f i l ed t hr ee mot i ons: ( 1) a mot i on t o di smi ss under Ci vi l
Rul e 12( b) ( 6) ( Mot i on t o Di smi ss) ; ( 2) a mot i on t o di squal i f y
J udge Bar dwi l ( Recusal Mot i on) ; and ( 3) a mot i on t o t r ansf er
venue ( Venue Mot i on) .
a. Motion to Dismiss
Gi ovanazzi argued t hat adver sar y act i on 11- 2386 shoul d be
di smi ssed f or a mul t i t ude of r easons. He cont ended, gener al l y,t hat because Lebbos never si gned her chapt er 7 pet i t i on, and
because she never r esi ded wi t hi n t he di st r i ct t he requi r ed
180 days, t he bankr upt cy cour t l acked j ur i sdi ct i on t o have ent er ed
t he J udgment . He f ur t her ar gued Trust ee l acked st andi ng and t he
bankrupt cy cour t l acked j ur i sdi ct i on over t hi s mat t er because
Lebbos had been deni ed her di schar ge and t her ef or e no pendi ng
bankr upt cy exi st ed.Speci f i cal l y, Gi ovanazzi cont ended t hat t he J udgment was voi d
as t o hi m and t he Benef i ci ar i es and t hat Tr ust ee s pr eser vat i on
cl ai m under 551 per t ai ned onl y t o Lebbos, Car t er and Gol d - t he
par t i es sued i n Tr ust ee s avoi dance act i on, not Gi ovanazzi and t he
Benef i ci ar i es, who wer e i ndi spensabl e par t i es not j oi ned i n t hat
pr i or act i on. Gi ovanazzi f ur t her cont ended t hat because t he
i nst ant act i on was f i l ed t hr ee year s af t er ent r y of t he J udgment ,
i t was bar r ed by t he one year st at ut e of l i mi t at i ons i n 550( f ) .
I n ot her wor ds, Tr ust ee' s new avoi dance act i on agai nst hi m and
t he Benef i ci ar i es, t he subsequent t r ansf er ees of t he Condo, was
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t i me bar r ed. Al t er nat i vel y, Gi ovanazzi asser t ed Tr ust ee s act i on
was bar r ed by l aches because she wai t ed over t hr ee year s af t er t he
J udgment t o sue hi m and t he Benef i ci ar i es. Fi nal l y, Gi ovanazz i
cont ended t hat Tr ust ee had no cl ai m f or pr eser vat i on under 551
because t he Condo was never pr oper t y of t he est at e, and he f ur t her
di sput ed t he bankrupt cy cour t s j ur i sdi ct i on over t he Condo si nce
i t was l ocat ed i n Los Angel es. Gi ovanazzi summar i l y asser t ed t hat
Tr ust ee' s t hi r d cl ai m f or decl ar at or y r el i ef had t o be di smi ssed
because al l t i t l e r epor t s s howed t hat he owned t he Condo.
Gi ovanazzi ' s Mot i on t o Di smi ss al so asser t ed t hat a case was
pendi ng i n t he U. S. Supr eme Cour t r egardi ng t he cr i mi nal conductof Tr ust ee and her counsel of f abr i cat i ng a wr i t t o t ake
possessi on of t he Condo and st eal t he r ugs, pai nt i ngs, appl i ances
and r ent s f r om t he Benef i ci ar i es. Gi ovanazzi f ur t her asser t ed
t hat a compl ai nt was pendi ng t o t he J udi ci al Conf erence Commi t t ee
concer ni ng J udge Bar dwi l ' s conduct i n i ssui ng t wo ex par t e or der s
t o sel l or l ease t he Condo knowi ng he had no j ur i sdi ct i on t o do so
and never pr ovi di ng any not i ce t o anyone. Tr ust ee opposed t he Mot i on t o Di smi ss, ass er t i ng t hat
Gi ovanazzi ' s ar gument s l acked f oundat i on or f act ual suppor t and
t hat most of t hem wer e f r i vol ous and desi gned sol el y t o del ay.
Speci f i cal l y, Tr ust ee ar gued t hat si nce her cl ai m f or pr eser vat i on
was br ought under 551, i t was not subj ect t o t he one year
st at ut e of l i mi t at i ons i n 550( f ) and, i n any event , no act i on
under 550 was necessary or r equest ed agai nst Gi ovanazzi .
Accor di ng t o Tr ust ee, she di d not need t o sue Gi ovanazzi f or
avoi dance of t he pr e- J udgment t r ansf er t o hi m f r om Car t er and Gol d
because t he J udgment ordered t he avoi dance of t he ear l i er
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t r ansf er s and r ecover y of t he Condo; t hus, she coul d r el y on t he
aut omat i c pr eser vat i on pr ovi si on of 551 f or t he subsequent
t r ansf er t o Gi ovanazzi . Tr ust ee al so r ej ect ed Gi ovanazzi ' s l aches
ar gument , cont endi ng t hat she wai t ed t o sue hi m unt i l t he appeal
of t he J udgment was r esol ved and f i l ed her act i on i n j ust over si x
mont hs f r om t hat dat e, whi ch was t i mel y.
Tr ust ee f ur t her cont ended t hat t he i ssue of whet her t he Condo
was pr oper t y of t he est at e was deci ded i n t he pr i or adver sar y
act i on and af f i r med on appeal . Mor eover , Gi ovanazzi ' s cl ai m t hat
t he owner s of t he Condo wer e never sued was i ncor r ect ; t he
J udgment det er mi ned t hat Lebbos owned t he Condo. Thus, ar gued Tr ust ee, t hese f act ual i ssues wer e l aw of t he case and not subj ect
t o chal l enge. Fur t her , ar gued Tr ust ee, t he deni al of Lebbos' s
di schar ge di d not r emove t he Condo f r om est at e pr oper t y.
As t o Gi ovanazzi ' s asser t i ons t hat t he bankr upt cy cour t
l acked subj ect mat t er j ur i sdi ct i on over t he act i on because
( 1) Lebbos never si gned her bankr upt cy pet i t i on or r esi ded i n t he
di st r i ct , ( 2) t he J udgment had no ef f ect over t he Benef i ci ar i es,( 3) t he Condo was l ocat ed i n Los Angel es and ( 4) t he cour t f ai l ed
t o pr ovi de t he Benef i ci ar i es wi t h any oppor t uni t y t o appear and
def end t hi s act i on, Tr ust ee cont ended t hat such mat t er s wer e bot h
out si de t he al l egat i ons i n t he compl ai nt and t hey had al r eady been
r esol ved i n pr i or cour t r ul i ngs .
b. The Recusal Motion
Gi ovanazzi al l eged t hat J udge Bar dwi l shoul d di squal i f y
hi msel f f r om adver sary act i on 11- 2386 f or a mul t i t ude of r easons:
( 1) he had a f i nanci al i nt er est i n i t s out come, whi ch st emmed f r om
a pr evi ous sui t agai nst hi m by Lebbos, Car t er and Gol d and a new
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6 The r ecor d r ef l ect s t hat t hr ee mot i ons t o di squal i f y wer ef i l ed i n t he mai n case and f i ve mot i ons wer e f i l ed i n adver saryact i on 07- 2006.
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sui t by Gi ovanazzi and t he Benef i ci ar i es; ( 2) he had a pol i t i cal
and per sonal i nt er est i n t he out come si nce hi s conduct of " t aki ng
pr oper t y f r om owner s wi t hout any not i ce was t he subj ect of an
ar t i cl e publ i shed by t he Ni nt h Ci r cui t ent i t l ed " Ambush Owner
Scam; ( 3) he had pr ej udged t he mat t er as r ef l ect ed by hi s
i ssuance of t wo ex par t e order s i n 2009 and 2010 aut hor i zi ng t he
sal e and l ease of t he Condo; ( 4) he had ex par t e cont act s wi t h
Tr ust ee i n connect i on wi t h t hose ex par t e or der s; ( 5) he was
embr oi l ed wi t h Lebbos i n her di scr i mi nat i on case agai nst hi m
pendi ng bef or e t he Ni nt h Ci r cui t ; and ( 6) he had a per vasi ve bi as
agai nst Lebbos, t he pr i or def endant s, Gi ovanazzi and t heBenef i c i ar i es .
Tr ust ee opposed t he Recusal Mot i on, cont endi ng Gi ovanazz i ' s
ar gument s wer e not suppor t ed by any f act s and t hat t he mot i on
f ai l ed t o meet t he r equi r ement s f or r ecusal under 28 U. S. C. 455
and Rul e 5004( a) . Tr ust ee f ur t her not ed t hat Lebbos had f i l ed
si mi l ar r ecusal mot i ons agai nst J udge Bar dwi l i n her bankr upt cy
case and i n adver sar y act i on 07- 2006, each of whi ch was deni ed, 6
and ar gued t hat Gi ovanazzi was mer el y engagi ng i n t he same ant i cs
and r egur gi t at i ng Lebbos s pr i or ar gument s.
c. The Venue Motion
Gi ovanazzi moved t o t r ansf er adver sar y act i on 11- 2386 t o
ei t her Mar yl and or t he Cent r al Di st r i ct of Cal i f or ni a. Gi ovanazzi
cont ended t hat Mar yl and was a pr oper venue because t he Tr ust was
cr eat ed t her e and because t he t hr ee owner s and set t l or of t he
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Tr ust r esi ded t her e. Al t er nat i vel y, he ass er t ed t he Cent r al
Di st r i ct of Cal i f or ni a was t he pr oper venue because t he Condo was
l ocat ed t her e and al l exper t s and ot her wi t nesses wer e i n Los
Angel es. Gi ovanazzi asser t ed vi r t ual l y t he same r easons set f or t h
i n t he Recusal Mot i on and t he Mot i on t o Di smi ss as a basi s t o
gr ant t he Venue Mot i on.
Tr ust ee opposed t he Venue Mot i on, cont endi ng t hat Gi ovanazz i
f ai l ed t o meet hi s bur den of pr oof t o t r ansf er t he case.
2. Trustee's motion for partial summary judgment
Tr ust ee moved f or par t i al summar y j udgment agai nst Gi ovanazz i
on her f i r st and t hi r d cl ai ms ( "PSJ ") . Tr ust ee asser t ed t hat shewas ent i t l ed t o r el i ef on her f i r st cl ai m f or pr eser vat i on under
551 because t he avoi ded t r ansf er s under 544 and 548, as set
f or t h i n t he J udgment , wer e aut omat i cal l y pr eserved f or t he
benef i t of t he bankr upt cy est at e. Tr ust ee ar gued t hat by vi r t ue
of t he J udgment , she became t he owner of t he Condo as of
August 19, 2004, t he dat e of t he f i r st avoi ded t r ansf er , and
t her ef or e any t r ansf er of or l i en pl aced on t he Condo af t er t hatdat e was voi d. As a r esul t , ar gued Tr ust ee, t he Apr i l 14, 2008
qui t cl ai m deed f r om Car t er and Gol d t o Gi ovanazzi and t he
August 13, 2008 deed of t r ust f r om Gi ovanazzi t o t he Benef i ci ar i es
were voi d and of no f or ce or ef f ect . The same was t r ue f or
Gi ovanazzi ' s unl awf ul det ai ner act i on.
Al t er nat i vel y, Tr ust ee cont ended t hat she was ent i t l ed t o
r el i ef on her f i r st cl ai m under Cal i f or ni a l aw. She ar gued t hat
based on t he J udgment and C AL. CODE CI V. PROC. ( " CCP" ) 405. 24, she
obt ai ned t i t l e t o t he Condo when t he Li s Pendens was r ecor ded -
Mar ch 14, 2007. Because t he Li s Pendens was r ecor ded mor e t han
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one year pr i or t o t he t r ansf er t o Gi ovanazzi i n August 2008,
Tr ust ee ar gued t hat Gi ovanazz i and al l ot her s had const r uct i ve
not i ce of t he pendi ng adver sar y act i on and t hat her i nt er est
pr evai l ed over t he l at er - r ecor ded qui t cl ai m deed t o Gi ovanazzi ,
t he deed of t r ust execut ed by Gi ovanazzi and r ecor ded on
Sept ember 19, 2008, and t he unl awf ul det ai ner act i on Gi ovanazzi
f i l ed on August 27, 2010.
For j udgment on her t hi r d cl ai m f or per manent i nj unct i ve
r el i ef , Tr ust ee cont ended t hat based on Gi ovanazzi ' s act i ons of
t aki ng t i t l e t o t he Condo despi t e havi ng not i ce of t he Li s
Pendens, hi s s i gni ng a deed of t r ust t o encumber t he Condo, hi sf i l i ng of an unl awf ul det ai ner act i on t o obt ai n possessi on of t he
Condo and hi s i gnor i ng counsel s l et t er s f r om J ul y and Oct ober
2009 r egar di ng hi s l ack of owner shi p, a r easonabl e l i kel i hood
exi st ed t hat Gi ovanazzi woul d cont i nue t o i nt er f er e wi t h Tr ust ee' s
excl usi ve r i ght t o admi ni st er t he Condo f or t he benef i t of t he
bankr upt cy est at e.
Gi ovanazzi opposed t he PSJ , r ai si ng pr i mar i l y t he samear gument s asser t ed i n hi s Mot i on t o Di smi ss as a basi s f or denyi ng
t he PSJ . Gi ovanazzi addi t i onal l y cont ended t hat because t he Li s
Pendens f ai l ed t o compl y wi t h Cal i f or ni a l aw f or a var i et y of
t echni cal r easons, i t was voi d, and so t he J udgment di d not r el at e
back t o Mar ch 14, 2007. I n suppor t of hi s opposi t i on, Gi ovanazzi
i ncl uded decl ar at i ons f r om Lebbos and Gol d. Bot h Lebbos and Gol d
cl ai med t hey never r ecei ved a copy of t he Li s Pendens or a copy of
Tr ust ee' s counsel ' s J ul y 2009 l et t er .
I n her r epl y t o t he PSJ , Tr ust ee cont ended t hat Gi ovanazzi
had f ai l ed t o asser t any di sput ed mat er i al f act t o def eat i t .
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Speci f i cal l y, ar gued Tr ust ee, Gol d' s s t at ement t hat he never
r ecei ved t he Li s Pendens at hi s addr ess of r ecor d was i r r el evant ;
Gol d was not a def endant i n t hi s act i on and servi ce of t he Li s
Pendens had no bear i ng on t he i ssues r ai sed i n t he PSJ . I n any
event , ar gued Tr ust ee, Gi ovanazzi had const r uct i ve not i ce of t he
Li s Pendens under CCP 405. 24, and he di d not di sput e i t .
Si mi l ar l y, Gol d' s st at ement t hat he never r ecei ved t he J ul y 2009
l et t er f r om Tr ust ee' s counsel was i r r el evant as i t was not bei ng
of f er ed agai nst Gol d; t he l et t er was bei ng of f er ed agai nst
Gi ovanazzi , and he di d not di sput e r ecei vi ng i t . Tr ust ee asser t ed
t he same ar gument s wi t h r espect t o t he Lebbos decl ar at i on.3. The bankruptcy court's decision on the PSJ, Motion to
Dismiss, Recusal Motion, and Venue Motion
Af t er a hear i ng on t he PSJ and t he Mot i on t o Di smi ss on
August 31, 2011, t he bankr upt cy cour t t ook t he mat t er s under
submi ss i on and ent er ed wr i t t en deci si ons on each.
a. The PSJ
The bankr upt cy cour t ent er ed a memor andum deci si on, j udgment( PSJ J udgment ) and order gr ant i ng Trust ee' s PSJ on Sept ember 30,
2011. Bef or e ar t i cul at i ng i t s reasons f or gr ant i ng i t , t he cour t
di scussed t he l engt hy and t umul t uous hi st or y of pr i or adver sary
act i on 07- 2006, t he shenani gans t hat l ed t o def endant s' def aul t
and t he event ual J udgment .
I n t he memorandum, t he cour t expl ai ned t hat af t er Trust ee had
obt ai ned t he def aul t s of Lebbos, Car t er and Gol d, she moved f or
def aul t j udgment agai nst t hem on Mar ch 11, 2008. Al l t hr ee
def endant s f i l ed opposi t i ons t o Tr ust ee' s mot i on. A hear i ng on
Tr ust ee' s mot i on was schedul ed f or Apr i l 9, 2008, but was
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cont i nued t o Apr i l 15, 2008. At t he r equest of Lebbos' s at t or ney,
t he cour t cont i nued t he hear i ng agai n unt i l Apr i l 17, 2008. The
hear i ng went f orward on Apr i l 17, at whi ch Gol d and Lebbos' s
at t orney appear ed. That s ame day, t he bankr upt cy cour t ent er ed
i t s f i ndi ngs and concl usi ons and t he J udgment agai nst Lebbos,
Car t er and Gol d, whi ch avoi ded t he t wo t r ansf er s f r om 2004 and
2005, awarded t i t l e and possessi on of t he Condo t o Tr ust ee, and
f ur t her enj oi ned Lebbos, Car t er and Gol d f r om ef f or t s t o convey,
t r ansf er , encumber or ot her wi se af f ect t he t i t l e t o or t he
encumbrances on t he Condo. The bankrupt cy cour t t hen not ed:
Three days ear l i er , on Apr i l 14, 2008, Gol d and Car t er ,havi ng by t hat t i me par t i ci pat ed heavi l y i n t he adver sarypr oceedi ng, i ncl udi ng seeki ng t o have i t di smi ssed, t ohave t he venue changed, and t o have t hi s j udgedi squal i f i ed; havi ng appeal ed t he deci si ons agai nst t hem;havi ng t hr own up unr el ent i ng r oadbl ocks t o t he t r ust ee' sdi scover y ef f or t s; knowi ng f ul l wel l t hat t hei r def aul t shad been ent er ed over t hei r obj ect i ons; and knowi ng f ul lwel l of t he hear i ng on t he t r ust ee' s mot i on f or def aul t
j udgment - - at t hat t i me, schedul ed f or t he ver y nextday, si gned and caused t o be r ecor ded a qui t cl ai m deedpur por t i ng t o t r ansf er t he [ C] ondo t o Gi ovanazzi . . . .
Mem. ( Sept . 30, 2011) 4: 5- 15. The cour t f ur t her not ed t hatGi ovanazzi was no st r anger t o Lebbos' s bankr upt cy case when t he
Condo was t r ansf er r ed t o hi m i n 2008. He had f i l ed t wo
decl ar at i ons i n her case - one i n suppor t of Lebbos' s mot i on t o
r emove Tr ust ee and t he ot her obj ect i ng t o Tr ust ee' s set t l ement of
a l awsui t br ought by Lebbos i n 2002. Among ot her t hi ngs,
Gi ovanazzi had accused Trust ee and her counsel of f r aud and decei t
because t hey had compr omi sed t he est at e s cl ai ms asser t ed i n t he
2002 sui t . Gi ovanazzi had al so t hr eat ened t o obt ai n ar r est
war r ant s f or Tr ust ee and her counsel .
I n addr essi ng t he mer i t s of t he PSJ , t he bankr upt cy cour t
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7 On a si de not e, t he bankr upt cy cour t quest i oned whet her t het r ansf er of t he qui t cl ai m deed act ual l y ef f ect uat ed a t r ansf er asi t was mer el y f r om t wo i ndi vi dual s as t r ust ees of t he Tr ust t o at hi r d t r ust ee of t he Tr ust .
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r ej ect ed Gi ovanazzi ' s cont ent i on t hat Tr ust ee' s cl ai m f or
pr eser vat i on was t i me bar r ed due t o t he one year st at ut e of
l i mi t at i ons i n 550( f ) . The J udgment accompl i shed bot h avoi dance
and r ecovery under 548 and 550, so Tr ust ee was not r equi r ed t o
" r ecover t he avoi ded t r ansf er s under 550. Thus, 550( f ) was
i r r el evant .
The cour t f ur t her f ound t hat t he J udgment , whi ch was f i nal ,
r el at ed back t o Mar ch 14, 2007 - t he dat e Tr ust ee r ecor ded her Li s
Pendens. Theref ore, at t he t i me Car t er and Gol d si gned and
r ecor ded t he qui t cl ai m deed i n 2008, t hey had no i nt er est t o
convey, and at t he t i me Gi ovanazzi si gned and r ecorded t he deed of t r ust i n 2008, he had no i nt er est t o convey. The f act t hat Gol d
and Car t er si gned and r ecor ded t he qui t cl ai m deed t hr ee days
bef or e t he J udgment had no ef f ect on Tr ust ee' s r i ght s because t he
J udgment r el at ed back t o t he dat e Tr ust ee r ecor ded her Li s
Pendens. CCP 405. 24. Thus, t o t he ext ent Gi ovanazzi was a
" pur chaser or " t r ansf er ee and t he Benef i ci ar i es wer e
" encumbr ancer s, t hey wer e deemed t o have const r uct i ve not i ce of adver sar y act i on 07- 2006 and were t her ef ore unabl e t o acqui r e an
i nt er est i n t he Condo super i or t o t hat of Tr ust ee. Hur st Concr et e
Pr ods. v. Lane ( I n r e Lane) , 980 F. 2d 601, 605 ( 9t h Ci r . 1982) ;
CCP 405. 24; C AL. CI V. CODE 1214. 7
As t o Gi ovanazzi ' s cl ai m t hat t he Li s Pendens was voi d f or
t echni cal r easons, t he bankr upt cy cour t agr eed t hat a l i s pendens
whi ch does not compl y wi t h t he r equi r ement s s et f or t h i n
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CCP 405. 22 may be expunged. However , Gi ovanazz i had not ci t ed,
and t he cour t coul d not l ocat e, any aut hor i t y f or t he pr oposi t i on
t hat a l i s pendens not i n compl i ance wi t h CCP 405. 22 f ai l ed t o
pr ovi de const r uct i ve not i ce t o subsequent pur chaser s or
encumbr ancer s. I n any event , t he cour t f ound t hat none of t he
al l eged def i ci enci es i mpai r ed t he ef f ect i veness of t he Li s Pendens
i n achi evi ng i t s pur pose of not i f yi ng t he publ i c.
The bankr upt cy cour t r ej ect ed Gi ovanazz i ' s cont ent i on t hat
not hi ng was t o be pr eser ved under 551 because Gol d and Car t er
had no i nt er est i n t he Condo when t he J udgment was ent er ed. That
ar gument f ai l ed t o r ecogni ze t hat t he J udgment ef f ect uat ed t heavoi dance of t he t r ansf er by whi ch Gol d and Car t er had acqui r ed
t he Condo and awar ded r ecover y t o Tr ust ee, det er mi ni ng t hat her
i nt er est was super i or t o t hei r s. I n ot her wor ds, ar t i cul at ed t he
cour t , t he ef f ect of t he J udgment was t hat , as of Mar ch 14, 2007,
Tr ust ee st epped i nt o t he shoes of Gol d and Car t er and succeeded t o
t hei r r i ght s i n t he Condo. The cour t al so r ej ect ed Gi ovanazzi ' s
argument t hat t he J udgment had no ef f ect as t o hi m and t heBenef i ci ar i es due t o l ack of not i ce or oppor t uni t y t o def end. To
t he cont r ar y, t he J udgment , whi ch was af f i r med at ever y l evel of
appeal , was f i nal and bound al l par t i es cl ai mi ng an i nt er est
adver se t o t hat of Tr ust ee i n t he Condo.
Fi nal l y, t he bankrupt cy cour t r ej ect ed, as a compl et e
mi sunder st andi ng of bankr upt cy l aw, Gi ovanazzi ' s cl ai ms t hat no
cr edi t or s or bankr upt cy est at e exi st ed due t o Lebbos havi ng been
deni ed a di schar ge. The deni al of di schar ge di d not el i mi nat e t he
exi st ence of t he bankr upt cy est at e or Tr ust ee' s power and dut y t o
cont i nue t o l i qui dat e pr oper t y of t he est at e f or t he benef i t of
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cr edi t or s .
Accor di ngl y, because Tr ust ee had met her bur den of pr oduci ng
evi dence showi ng t hat no genui ne i ssue of mat er i al f act exi st ed,
and because Gi ovanazzi had f ai l ed t o demonst r at e t he exi st ence of
genui ne i ssues f or t r i al , Tr ust ee was ent i t l ed t o j udgment on her
f i r st and t hi r d cl ai ms as a mat t er of l aw. I n t he PSJ J udgment ,
t he bankr upt cy cour t det er mi ned t hat : ( 1) t he t r ansf er s avoi ded i n
t he J udgment wer e pr eser ved f or t he benef i t of t he bankr upt cy
est at e; ( 2) t he qui t cl ai m deed f r om Gol d and Car t er as co- t r ust ees
of t he Tr ust t o Gi ovanazzi as co- t r ust ee of t he Tr ust was voi d and
of no f or ce or ef f ect ; ( 3) t he deed of t r ust f r om Gi ovanazzi t ot he Benef i ci ar i es was voi d and of no f or ce or ef f ect ;
( 4) Gi ovanazzi ' s unl awf ul det ai ner act i on was of no f or ce or
ef f ect and pr ovi ded no evi dence of owner shi p of t he Condo;
( 5) Gi ovanazzi had no r i ght , t i t l e or i nt er est i n or t o, and no
cl ai m t o or agai nst , t he Condo; and ( 6) Gi ovanazzi was per manent l y
enj oi ned f r om any f ur t her act i ons or ef f or t s t o convey, t r ansf er ,
encumber or ot her wi se af f ect t he t i t l e t o or possessi on of t heCondo.
b. The Motion to Dismiss
The bankr upt cy cour t ent er ed a memor andum deci si on and or der
denyi ng Gi ovanazzi ' s Mot i on t o Di smi ss on Oct ober 3, 2011. As a
housekeepi ng mat t er , t he cour t r ej ect ed Gi ovanazzi ' s decl ar at i on
f i l ed i n suppor t because i t di d not f al l wi t hi n t he i ncor por at i on
by r ef er ence doct r i ne, i t consi st ed of i mper mi ssi bl e l egal
concl usi ons, and Gi ovanazzi ' s al l egat i ons r egar di ng t he hi st or y of
t he Tr ust , t he hi st or y of Lebbos' s bankr upt cy case and t he
owner shi p of t he Condo demonst r at ed no per sonal knowl edge. These
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8 Al t hough Tr ust ee l at er di smi ssed her second cl ai m f or
t ur nover , t he bankr upt cy cour t made some i mpor t ant f i ndi ngs i nt hat r egar d whi ch appl y i n t hi s appeal . The cour t f ound t hatLebbos s case was st i l l open and pendi ng despi t e Gi ovanazzi sargument s t o t he cont r ary t hat i t was cl osed because she wasdeni ed a di schar ge. The cour t al so f ound t hat t he Condo wasdet ermi ned t o be pr oper t y of t he est at e i n t he J udgment , whi ch wasaf f i r med on appeal . Fur t her , Gi ovanazzi ' s cont ent i on t hat t he
( cont i nued. . . )
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same i nadmi ssi bl e f act ual al l egat i ons and l egal concl usi ons
pr esent ed i n Gi ovanazzi ' s br i ef wer e al so gi ven no wei ght .
The bankr upt cy cour t r ej ect ed Gi ovanazz i ' s 550( f ) ar gument
f or t he same r easons st at ed i n t he PSJ Memor andum. Sect i on 550( f )
di d not appl y her e because t he J udgment accompl i shed bot h
avoi dance and r ecover y under 548 and 550. The cour t al so
r ej ect ed Gi ovanazzi ' s cont ent i on t hat Tr ust ee f ai l ed t o st at e a
cl ai m f or pr eser vat i on under 551. Fi r st , pr eser vat i on of t he
avoi ded t r ansf er s occur r ed aut omat i cal l y once t he J udgment was
ent er ed; Tr ust ee was mer el y seeki ng a decl ar at i on conf i r mi ng t hat
f act , and Lebbos, Car t er and Gol d di d not have t o be par t i es t ot he i nst ant adver sar y act i on. Second, t he Condo was pr oper t y of
t he est at e under 541( a) ( 4) , whi ch i ncl udes any i nt er est i n
pr oper t y pr eserved f or t he benef i t of t he est at e under 551.
Fi nal l y, t he i ssues of ( 1) whet her Lebbos owned t he Condo ( as
opposed t o t he Tr ust ) and ( 2) whet her t he Benef i ci ar i es of t he
Tr ust ( who wer e not ser ved wi t h t he compl ai nt i n 07- 2006) wer e
i ndi spensabl e par t i es t o t he pr i or adver sary act i on had beenr ai sed dur i ng t hat act i on and wer e pr ecl uded by t he J udgment .
Fur t her mor e, i n t hat par t i cul ar act i on, Cal i f or ni a l aw r equi r ed
ser vi ce of t he compl ai nt onl y on t he t r ust ee, not t he
Benef i c i ar i es . 8
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8( . . . cont i nued)Condo was wor t hl ess because i t was over - encumber ed f ai l ed because,by way of t he PSJ J udgment , t he cour t had det er mi ned hi s deed of
t r ust was voi d and of no f or ce and ef f ect . Fi nal l y, because of t he PSJ J udgment , Trust ee was not r equi r ed t o pr ovi de adequat epr ot ect i on of t he i nt er est s of al l eged owner s of t he Condo.
9 Rul e 7070 pr ovi des t hat t he bankr upt cy cour t may ent er a j udgment di vest i ng t he t i t l e of any par t y and vest i ng t i t l e i not her s whenever t he r eal or per sonal pr oper t y i nvol ved i s wi t hi nt he j ur i sdi ct i on of t he cour t .
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The bankr upt cy cour t al so r ej ect ed Gi ovanazz i s l aches
ar gument as i r oni c, not i ng t hat i f anyone had engaged i n
pr ej udi ci al del ay t act i cs i t was Gi ovanazzi . Fur t her , any del ays
r esul t i ng f r om t he numerous appeal s were not caused by Tr ust ee,
but r at her by t he act i ons of Lebbos, Gi ovanazzi , Car t er and Gol d.
Thus, Gi ovanazz i had f ai l ed t o show Tr ust ee s l ack of di l i gence or
t hat he had suf f er ed any pr ej udi ce as a resul t of i t .
Gi ovanazzi ' s ar gument t hat t he bankr upt cy cour t had no
j ur i sdi ct i on t o change t i t l e t o t he Condo si nce i t was l ocat ed
i n Los Angel es al so f ai l ed. Under Rul e 7070, 9 t he bankr upt cy
cour t was per mi t t ed t o di vest any par t y' s t i t l e and vest t i t l e i nanot her when t he r eal pr oper t y i s wi t hi n t he j ur i sdi ct i on of t he
cour t . Because t he bankr upt cy cour t had j ur i sdi ct i on over t he
Condo by vi r t ue of 541( a) and 28 U. S. C. 1334( e) ( 1) , i t had
j ur i sdi ct i on t o ent er t he J udgment vest i ng t i t l e t o t he Condo i n
Tr ust ee.
Fi nal l y, t he bankrupt cy cour t r ej ect ed Gi ovanazzi ' s s hopwor n
ar gument s pr evi ousl y r ai sed by Lebbos t hat she di d not si gn herbankr upt cy pet i t i on, t hat she never r esi ded i n t he di st r i ct , and
t hat t he cour t had no j ur i sdi ct i on over t he owner s of t he Condo
so t he J udgment was not bi ndi ng on t hem. These i ssues had been
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deci ded i n t he J udgment , whi ch was f i nal and bi ndi ng.
Accor di ngl y, because Tr ust ee s compl ai nt st at ed a cl ai m upon
whi ch r el i ef coul d be gr ant ed, t he Mot i on t o Di smi ss was deni ed.
c. The Recusal Motion and Venue Motion
The bankr upt cy cour t ent er ed ci vi l mi nut e or der s denyi ng bot h
t he Recusal Mot i on and t he Venue Mot i on on Sept ember 6, 2011.
i. The Recusal Motion
The bankr upt cy cour t not ed t hat t he ar gument s r ai sed by
Gi ovanazz i wer e ones Lebbos had made many t i mes i n her chapt er 7
case and var i ous adver sar y pr oceedi ngs. Car t er and Gol d had
br ought s i mi l ar mot i ons. The cour t f ur t her not ed t hatGi ovanazzi ' s decl ar at i on i n suppor t was f ul l of unsuppor t ed
concl usi ons and al l egat i ons of whi ch he f ai l ed t o demonst r at e
per sonal knowl edge. I n shor t , Gi ovanazzi pr esent ed not hi ng new t o
cause t he cour t t o r ul e any di f f er ent l y t han i t had on t he
pr evi ous mot i ons t o di squal i f y. The bankr upt cy cour t r emai ned
per suaded t hat i t was unbi ased and i mpar t i al . Ther ef or e, based on
t he above r easons, Gi ovanazzi had not met hi s bur den f or r ecusalunder 28 U. S. C. 455( a) or ( b) .
ii. Venue Motion
The bankr upt cy cour t f ound t hat Gi ovanazz i ' s decl ar at i on, t he
onl y evi dence i n suppor t of t he Venue Mot i on, f ai l ed t o est abl i sh
he had per sonal knowl edge of t he al l eged f act s. Fur t her , hi s
asser t i on t hat t he Benef i ci ar i es wer e t he onl y r eal par t i es i n
i nt er est was a l egal concl usi on, and an er r oneous one, and he
f ai l ed t o est abl i sh t hat t hese par t i es had anyt hi ng t o cont r i but e
t o t he i nst ant adver sar y act i on. Gi ovanazzi had al so f ai l ed t o
i dent i f y t he exper t s and ot her wi t nesses who woul d t est i f y or
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est abl i sh what evi dence, i f any, mi ght be l ocat ed i n t he Cent r al
Di st r i c t of Cal i f or ni a. Fi nal l y, t he r emai nder of Gi ovanazzi ' s
cont ent i ons, many of whi ch wer e made on i nf ormat i on and bel i ef ,
r ai sed ar gument s t hat had al r eady been deci ded and af f i r med on
appeal . Accor di ngl y, l i ke past si mi l ar venue mot i ons f i l ed by
Lebbos and by Gi ovanazzi ' s pr edecessor s, whi ch wer e consi dered and
deni ed, Gi ovanazzi had pr esent ed not hi ng t o per suade t he cour t t o
r each a di f f er ent r esul t .
4. Giovanazzi's motions to reconsider
a. The motion to reconsider the PSJ Judgment, Recusal Motion, and Venue Motion
Gi ovanazzi f i l ed a mot i on t o r econsi der t he PSJ J udgment and
t he or der s denyi ng t he Recusal Mot i on and t he Venue Mot i on on
Oct ober 13, 2011. He cont ended t hat many di sput ed mat er i al f act s
exi st ed r equi r i ng t he bankr upt cy cour t t o r econsi der t he PSJ
J udgment : ( 1) t he J udgment was a nul l i t y as t o t he Benef i ci ar i es
because t he bankr upt cy cour t never had j ur i sdi ct i on over t he
Tr ust , or t he Condo or t he Condo owner s, and t he di st r i ct cour tand Ni nt h Ci r cui t onl y uphel d t he J udgment agai nst Lebbos, Car t er
and Gol d as i ndi vi dual s, not as t r ust ees; ( 2) because Gi ovanazzi
obt ai ned t he Condo bef ore ent r y of t he J udgment , t he bankr upt cy
cour t had no j ur i sdi ct i on t o avoi d hi s deed or t he deed of t r ust
and decl ar e t hem voi d; ( 3) t he bankr upt cy cour t had no
j ur i sdi ct i on t o r et r oact i vel y change t he dat e of t he J udgment
agai nst Lebbos, Car t er and Gol d wi t hout not i ce or wi t hout mot i ons
f i l ed i n t he pr i or or pr esent adver sar y act i ons; ( 4) t he
bankr upt cy cour t l acked j ur i sdi ct i on t o decl ar e Gi ovanazzi ' s
unl awf ul det ai ner act i on i nval i d; ( 5) t he bankrupt cy cour t coul d
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not enj oi n Gi ovanazzi as i t had no j ur i sdi ct i on over t he Condo or
t he Tr ust ; ( 6) Tr ust ee was r equi r ed t o f i l e a separ at e r ecover y
act i on agai nst Gi ovanazzi and t he Benef i ci ar i es, so t he bankr upt cy
cour t er r ed i n not appl yi ng t he one year st at ut e of l i mi t at i ons i n
550( f ) ; and ( 7) Tr ust ee' s Li s Pendens was voi d due t o i t s
noncompl i ance wi t h CCP 405. 22, so i t f ai l ed t o pr ovi de not i ce t o
anyone.
Al t hough t he mot i on capt i on sought r econsi der at i on of t he
or der s denyi ng t he Recusal Mot i on and t he Venue Mot i on, Gi ovanazzi
di d not pr esent any ar gument as t o why t he bankr upt cy cour t shoul d
r econsi der t hose or der s. He st at ed i n hi s decl ar at i on i n suppor tonl y t hat J udge Bar dwi l had a dut y t o di squal i f y hi msel f because
he had commi t t ed f r aud, encour aged ot her s t o commi t f r aud and he
cal l ed t he di sabl ed debt or vi ci ous names and exhi bi t s an ext r eme
per sonal bi as.
b. The motion to reconsider the Motion to Dismiss
Gi ovanazzi f i l ed a mot i on t o r econsi der t he or der denyi ng t he
Mot i on t o Di smi ss on Oct ober 17, 2011. The mot i on r ai sed many of t he same ar gument s r ai sed i n t he mot i on t o r econsi der t he PSJ
J udgment and i n t he or i gi nal Mot i on t o Di smi ss. I n shor t ,
Gi ovanazzi cont ended t hat t he bankr upt cy cour t had t o gr ant t he
Mot i on t o Di smi ss because: ( 1) i t er r ed i n not consi der i ng hi s
decl ar at i on f i l ed i n suppor t of t he Mot i on t o Di smi ss, whi ch set
f or t h f act s subj ect t o j udi ci al not i ce; ( 2) Lebbos had not si gned
her bankr upt cy pet i t i on or l i ved i n t he di st r i ct t he r equi r ed
180 days, so t he bankrupt cy cour t l acked j ur i sdi ct i on and al l of
i t s deci si ons wer e voi d; ( 3) Tr ust ee was r equi r ed t o f i l e a
separ at e r ecover y act i on agai nst Gi ovanazzi and t he Benef i ci ar i es
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and t he one year st at ut e of l i mi t at i ons f or t hat act i on under
550( f ) had r un; ( 4) l aches bar r ed Tr ust ee' s compl ai nt and t he
cour t er r ed i n f i ndi ng t hat Gi ovanazzi had uncl ean hands;
( 5) Tr ust ee had no cl ai m f or pr eservat i on because she sued onl y
Lebbos, Car t er and Gol d f or avoi dance, not r ecover y, and she never
sued t he owner s of t he Condo f or avoi dance; ( 6) t he J udgment was
not f i nal and bi ndi ng on Gi ovanazzi and t he Benef i ci ar i es as t hey
wer e never j oi ned i n t he pr i or avoi dance act i on; and ( 7) t he
bankr upt cy cour t had no j ur i sdi ct i on over t he Condo under Rul e
7070 as i t asser t ed.
5. The bankruptcy court's decisions on the motions toreconsider
a. The motion to reconsider the Motion to Dismiss
The bankr upt cy cour t ent er ed a ci vi l mi nut e or der denyi ng
Gi ovanazzi ' s mot i on t o r econsi der t he Mot i on t o Di smi ss on
December 19, 2011. Over al l , t he cour t f ound t he mot i on was
l argel y a r ehashi ng of t he ar gument s r ai sed many t i mes bef ore by
bot h Gi ovanazzi i n t he Mot i on t o Di smi ss and by hi s pr edecessort r ust ees Lebbos, Car t er and Gol d. Gi ovanazzi had f ai l ed t o
pr esent any new f act s or i nt er veni ng change i n t he cont r ol l i ng l aw
or show t hat t he cour t had er r ed.
Fi r st , t he cour t r ej ect ed Gi ovanazzi ' s r el i ance on Decker v.
Voi senat ( I n r e Ser r at o) , 214 B. R. 219 ( Bankr . N. D. Cal . 1997) , as
t hat case di d not concer n, l et al one st and f or , t he pr oposi t i on
f or whi ch Gi ovanazzi ci t ed i t .
As f or r ej ect i ng Gi ovanazzi ' s decl ar at i on and hi s r equest f or
j udi ci al not i ce of cer t ai n f act s cont ai ned t her ei n, t he cour t
f ound t hat t he t ype of al l eged f act s of whi ch Gi ovanazzi asked t he
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cour t t o t ake j udi ci al not i ce ei t her f ai l ed t o meet t he st andar ds
of F ED R. EVI D. 201( b) or wer e not appr opr i at e mat t er s f or j udi ci al
not i ce. Fur t her , t hese i ssues had al r eady been r ai sed by Lebbos
and ot her s, consi der ed, and r esol ved agai nst t hem i n t he J udgment ,
whi ch was af f i r med on appeal and was now f i nal and bi ndi ng.
The bankr upt cy cour t al so r ej ect ed as f r i vol ous Gi ovanazz i ' s
cont ent i on t hat t he di st r i ct cour t and Ni nt h Ci r cui t onl y uphel d
t he J udgment agai nst Lebbos, Car t er and Gol d as i ndi vi dual s and
not as t r ust ees of t he Tr ust . Not onl y di d Gi ovanazzi f ai l t o
pr ovi de any document s t o suppor t t hi s proposi t i on, t he r ecor d
showed t hat Lebbos was sued bot h i ndi vi dual l y and as t r ust ee of t he Tr ust ; Gol d and Car t er wer e sued as t r ust ees of t he Tr ust .
Fi nal l y, as t o Gi ovanazzi ' s r epeat ed asser t i on t hat t he
bankr upt cy cour t l acked j ur i sdi ct i on over t he Benef i ci ar i es, t hat
t hey wer e i ndi spensabl e par t i es i n t he pr i or adver sary act i on and,
consequent l y, t hat t he J udgment was not f i nal and bi ndi ng as t o
t hem, t he cour t f ound t hat Gi ovanazzi ' s asser t i ons wer e ei t her not
suppor t ed by any aut hor i t y or t he cases he ci t ed di d not st and f ort he pr oposi t i on f or whi ch he ci t ed t hem. I n shor t , Gi ovanazzi
ci t ed no aut hor i t y t o over come t he cour t ' s concl usi on t hat a
benef i ci ar y of a t r ust i s consi der ed t o be i n pr i vi t y wi t h t he
t r ust ee of t he t r ust and i s bound by j udgment s i n act i ons agai nst
t he t r ust ee, as was t he case her e.
b. The motion to reconsider the PSJ Judgment, Recusal
Motion, and Venue Motion
The bankr upt cy cour t al so ent er ed a ci vi l mi nut e or der
denyi ng Gi ovanazzi ' s mot i on t o r econsi der t he PSJ J udgment , t he
Recusal Mot i on and t he Venue Mot i on on December 19, 2011. To t he
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ext ent Gi ovanazzi ' s mot i on r ai sed t he same ar gument s asser t ed i n
t he mot i on t o r econsi der t he Mot i on t o Di smi ss , t he cour t
i ncor por at ed t he f i ndi ngs and concl usi ons i t made r egar di ng t hat
r econsi der at i on mot i on i n t hi s one. As wi t h t he mot i on t o
r econsi der t he Mot i on t o Di smi ss, t he cour t f ound t hat t hi s
r econsi derat i on mot i on was merel y a r ehashi ng of pr i or ar gument s.
Regar di ng Gi ovanazzi ' s al l egat i ons of t he cour t ' s i l l
t r eat ment of Lebbos, and conspi r acy among t he cour t , Trust ee and
her counsel , t he cour t not ed t hat i t had come t o expect at t acks,
bot h pr of essi onal and per sonal , agai nst i t and ot her s associ at ed
wi t h Lebbos' s case and i t s r el at ed adver sar y pr oceedi ngs byLebbos, t r ust ees Car t er and Gol d and, now, Gi ovanazzi . However ,
Gi ovanazzi ' s accusat i ons di d not change t he cour t s concl usi on
t hat i t r emai ned i mpar t i al . Ther ef or e, t he mot i on t o r econsi der
t he Recusal Mot i on was deni ed. Rel i ef was al so deni ed t o t he
ext ent Gi ovanazzi sought r econsi der at i on of t he or der denyi ng t he
Venue Mot i on.
The cour t r ej ect ed Gi ovanazz i s ar gument t hat t he bankr upt cycour t had no j ur i sdi ct i on t o appl y t he J udgment r et r oact i vel y as
l acki ng any cogni zabl e l egal t heor y or suppor t . I t was mer el y
anot her exampl e of Lebbos s i nt ent i on, now t hat she had exhaust ed
her appeal s, t o dr ag out as l ong as poss i bl e Tr ust ee s enf or cement
of t he J udgment .
Fi nal l y, t he cour t r ej ect ed Gi ovanazzi s cont ent i on t hat al l
t i t l e r epor t s showed t hat Tr ust ee never r ecor ded her Li s Pendens
and t hat he owned t he Condo. The t i t l e r epor t Gi ovanazzi
submi t t ed was not a t i t l e r epor t but r at her a pr oper t y pr of i l e,
whi ch had never been aut hent i cat ed and woul d have l i t t l e
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10 The par t i es have not quest i oned our j ur i sdi ct i on over t hi sappeal , but we have an i ndependent dut y t o exami ne j ur i sdi ct i oni ssues. I n r e Lucas Dal l as, I nc. , 185 B. R. at 804. Whet her abankrupt cy cour t s or der i s f i nal i s a quest i on of l aw r evi ewed denovo. Al exander v. Compt on ( I n r e Bonham) , 229 F. 3d 750, 760- 61( 9t h Ci r . 2000) .
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evi dent i ar y wei ght , as such pr of i l es sel dom r ef er t o al l document s
of r ecor d. By cont r ast , Tr ust ee had f i l ed a r ecor ded copy of t he
Li s Pendens wi t h her PSJ .
Gi ovanazzi t i mel y appeal ed t he PSJ J udgment , t he or der
denyi ng t he Mot i on t o Di smi ss and t he or der s denyi ng t he
r econsi der at i on of t hose mat t er s on December 23, 2011.
II. JURISDICTION
The bankr upt cy cour t had j ur i sdi ct i on under 28 U. S. C.
157( b) ( 2) ( A) and 1334. We her ei n addr ess our j ur i sdi ct i on
under 28 U. S. C. 158.
A. The PSJ Judgment10
Gener al l y, an or der gr ant i ng par t i al summar y j udgment i s not
an appeal abl e f i nal or der . Dannenber g v. Sof t war e Tool wor ks,
I nc. , 16 F. 3d 1073, 1074 ( 9t h Ci r . 1994) ; Bel l i v. Temki m
( I n r e Bel l i ) , 268 B. R. 851, 856- 57 ( 9t h Ci r . BAP 2001) ( or der
gr ant i ng par t i al summar y j udgment wi t hout t he cer t i f i cat i on
r equi r ed by Ci vi l Rul e 54( b) i s not f i nal appeal abl e or der ) .
On t he same day t he bankr upt cy cour t deni ed Gi ovanazzi sr econsi derat i on mot i on r egar di ng t he Mot i on t o Di smi ss -
December 19, 2011 - Tr ust ee f i l ed her not i ce of vol unt ar y
di smi ssal of her r emai ni ng second cl ai m under Rul e
7041( a) ( 1) ( A) ( i ) , as Gi ovanazzi had not f i l ed an answer or a
mot i on f or summary j udgment . The di smi ssal was wi t hout pr ej udi ce.
Si nce t he not i ce compl i es wi t h Rul e 7041( a) ( 1) ( A) ( i ) , i t t ook
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i mmedi at e ef f ect wi t hout f ur t her or der f r om t he bankrupt cy cour t .
Rul e 7041( a) ( 1) ( B) ; Swedberg v. Marot zke, 339 F. 3d 1139, 1142 ( 9t h
Ci r . 2003) . Nonet hel ess, despi t e Tr ust ee s pr oper vol unt ar y
di smi ssal , t he bankr upt cy cour t ent er ed i t s own or der di smi ssi ng
wi t hout pr ej udi ce Tr ust ee s r emai ni ng second cl ai m on December 28,
2011. Ther ef or e, al t hough t hat or der has no ef f ect , t he cour t
appr oved t he di smi ssal wi t hout pr ej udi ce, whi ch di sposed of al l
cl ai ms. As such, not hi ng i s l ef t f or t he bankr upt cy cour t t o
deci de as t o Tr ust ee s compl ai nt .
Thus, we concl ude t hat t he di smi ssal , even t hough wi t hout
pr ej udi ce, ef f ect i vel y made t he PSJ J udgment a f i nal j udgment f orpur poses of appeal . Chr ysl er Mot or s Corp. v. Thomas Aut o Co. ,
939 F. 2d 538, 540 ( 8t h Ci r . 1991) ( f ol l owi ng t he gr ant i ng of a
mot i on f or par t i al summar y j udgment , t he cour t di smi sses wi t hout
pr ej udi ce t he r emai nder of t he case, t he ef f ect of t hat act i on
makes t he j udgment gr ant i ng par t i al summar y j udgment a f i nal
j udgment f or pur poses of appeal ) . See J ames v. Pr i ce St er n Sl oan,
I nc. , 283 F. 3d 1064, 1069- 70 ( 9t h Ci r . 2002) .B. The order denying the Motion to Dismiss
Gener al l y, an or der denyi ng a mot i on t o di smi ss i s not
appeal abl e because i t does not end t he l i t i gat i on on t he mer i t s.
Conf eder at ed Sal i sh v. Si moni ch, 29 F. 3d 1398, 1401- 02 ( 9t h Ci r .
1994) ; Dunkl ey v. Rega Pr ops. , Lt d. ( I n r e Rega Pr ops. , Lt d. ) ,
894 F. 2d 1136 ( 9t h Ci r . 1990) ( or der denyi ng a mot i on t o di smi ss an
adver sary pr oceedi ng i s not a f i nal appeal abl e or der ) .
The or der denyi ng Gi ovanazz i s Mot i on t o Di smi ss was ent er ed
on Oct ober 3, 2011. Hi s t i mel y mot i on t o r econsi der t hat or der
f i l ed on Oct ober 17, 2011, ef f ect i vel y t ol l ed t he appeal t i me of
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t he under l yi ng or der . Rul e 8002( b) ( 2) . The or der denyi ng
r econsi der at i on was ent er ed on December 19, 2011, t he same dat e
Tr ust ee vol unt ar i l y di smi ssed her r emai ni ng second cl ai m. As we
concl uded above, t he PSJ J udgment i s a f i nal j udgment f or pur poses
of appeal . Accor di ngl y, t o t he ext ent t he or der denyi ng t he
Mot i on t o Di smi ss was i nt er l ocut or y, i t mer ged i nt o t he PSJ
J udgment on December 19, 2011, and i s now f i nal . See Am.
I r onwor ks & Er ect or s, I nc. v. N. Am. Const . Co. , 248 F. 3d 892,
897- 98 ( 9t h Ci r . 2001) .
C. We dismiss the appeal of the orders denying the Recusal Motion and the Venue Motion.
The par t i es have not quest i oned our j ur i sdi ct i on over t he
appeal of t he or der s denyi ng t he Recusal Mot i on and Venue Mot i on,
but we have an i ndependent dut y t o exami ne j ur i sdi ct i on i ssues.
Gen. El ec. Capi t al Aut o Lease, I nc. v. Br oach ( I n r e Lucas Dal l as,
I nc. ) , 185 B. R. 801, 804 ( 9t h Ci r . BAP 1995) . I t i s not ent i r el y
cl ear f r om hi s Not i ce of Appeal whet her Gi ovanazzi i s appeal i ng
t hese or der s. However , t o t he ext ent t hat he i s, we DI SMI SS t heappeal as unt i mel y.
Under Rul e 8002( a) , a not i ce of appeal must be f i l ed wi t hi n
14 days of t he ent r y of t he order bei ng appeal ed. The pr ovi si ons
of Rul e 8002 ar e j ur i sdi ct i onal , and t he unt i mel y f i l i ng of a
not i ce of appeal depr i ves t he appel l at e cour t of j ur i sdi ct i on t o
r evi ew t he bankr upt cy cour t ' s or der . Ander son v. Mour adi ck
( I n r e Mour adi ck) , 13 F. 3d 326, 327 ( 9t h Ci r . 1994) . The or der s
denyi ng t he Recusal Mot i on and Venue Mot i on wer e ent er ed on
Sept ember 6, 2011. Gi ovanazzi f i l ed a mot i on t o r econsi der t hose
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11 The PSJ J udgment was ent er ed on Sept ember 30, 2011. Thus,t he mot i on t o r econsi der i t was f i l ed wi t hi n t he r equi r ed 14 daysand t ol l ed t he appeal t i me.
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or der s ( and t he PSJ J udgment ) on Oct ober 13, 2011. 11 Al t hough he
di d not ar t i cul at e any ar gument f or r econsi der i ng t he or der s
denyi ng t he Recusal Mot i on and Venue Mot i on, hi s at t empt t o
chal l enge t he or der s i n hi s mot i on t o r econsi der coul d onl y be
consi der ed a mot i on f or r el i ef f r om j udgment under Ci vi l Rul e
60( b) , i ncor por at ed by Rul e 9024, because i t was not f i l ed wi t hi n
14 days of ent r y of t he or der s. See Ci vi l Rul e 59( e) ,
i ncor por at ed by Rul e 9023.
Under Rul e 8002( b) ( 4) , a mot i on under Rul e 9024 onl y t ol l s
t he appeal t i me of t he under l yi ng or der when i t i s f i l ed wi t hi n
14 days af t er ent r y of t he or der . Ther ef or e, Gi ovanazzi s mot i ont o r econsi der t he or der s denyi ng t he Recusal Mot i on and Venue
Mot i on, f i l ed on Oct ober 13, 2011, di d not t ol l t he appeal t i me of
t he or der s denyi ng t hose mot i ons on Sept ember 6, 2011.
Accor di ngl y, t he appeal of t hese or der s i s unt i mel y, and we must
DI SMI SS t he appeal f or l ack of j ur i sdi ct i on. As a r esul t , we wi l l
not consi der any ar gument s Gi ovanazzi s r ai ses wi t h r espect t o
t hese i ssues. To t he ext ent hi s appeal i s l i ve wi t h r espect t o t he or der
denyi ng r econsi der at i on of t hese or der s, Gi ovanazzi f ai l s t o
pr esent any ar gument as t o how t he bankr upt cy cour t abused i t s
di scr et i on i n denyi ng t he r econsi der at i on mot i on. Ther ef or e, t hi s
i ssue has been wai ved. Ci t y of Emer yvi l l e v. Robi nson, 621 F. 3d
1251, 1261 ( 9t h Ci r . 2010) ( appel l at e cour t i n t hi s ci r cui t wi l l
not r evi ew i ssues whi ch ar e not ar gued speci f i cal l y and di st i nct l y
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i n a par t y s openi ng br i ef . ) .
III. ISSUES
1. Di d t he bankr upt cy cour t er r when i t gr ant ed t he PSJ ?
2. Di d t he bankr upt cy cour t er r when i t deni ed t he Mot i on t o
Di smi ss?
3. Di d t he bankr upt cy cour t abuse i t s di scret i on when i t deni ed
t he mot i ons t o r econsi der t he PSJ J udgment and t he or der denyi ng
t he Mot i on t o Di smi ss?
IV. STANDARDS OF REVIEW
We r evi ew t he bankrupt cy cour t s gr ant of summar y j udgment
de novo. SN I ns. Ser vs. , I nc. v. SNTL Cor p. ( I n r e SNTL Cor p. ) ,380 B. R. 204, 211 ( 9t h Ci r . BAP 2007) . Li kewi se, we r evi ew a
deni al of a mot i on t o di smi ss de novo. SEC v. Col el l o, 139 F. 3d
674, 675 ( 9t h Ci r . 1998) . De novo means r evi ew i s i ndependent ,
wi t h no def er ence gi ven t o t he t r i al cour t ' s concl usi on. Mwangi
v. Wel l s Far go Bank, N. A. ( I n r e Mwangi ) , 432 B. R. 812, 818 ( 9t h
Ci r . BAP 2010) .
The bankr upt cy cour t s deci si on t o gr ant permanent i nj unct i ver el i ef i s r evi ewed f or an abuse of di scr et i on or appl i cat i on of
er r oneous l egal pr i nci pl es. For t yune v. Am. Mul t i - Ci nema, I nc. ,
364 F. 3d 1075, 1079 ( 9t h Ci r . 2004) ( r evi ewi ng summar y j udgment ) .
The bankr upt cy cour t ' s or der denyi ng a mot i on f or r econsi der at i on
i s al so r evi ewed f or an abuse of di scr et i on. Ta Chong Bank Lt d.
v. Hi t achi Hi gh Techs. Am. , I nc. , 610 F. 3d 1063, 1066 ( 9t h Ci r .
2010) . A bankr upt cy cour t abuses i t s di scr et i on i f i t appl i ed t he
wr ong l egal st andar d or i t s f i ndi ngs wer e i l l ogi cal , i mpl ausi bl e,
or wi t hout suppor t i n t he r ecor d. Tr af f i cSchool . com, I nc. v.
Edr i ver I nc. , 653 F. 3d 820, 832 ( 9t h Ci r . 2011) .
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V. DISCUSSION
A. The bankruptcy court did not err in granting the PSJ or indenying the Motion to Dismiss.
1. Civil Rule 12(b)(6) and Civil Rule 56
Under Ci vi l Rul e 56( c) , i ncor por at ed her e by Rul e 7056, t he
appel l at e cour t s r evi ew i s gover ned by t he same st andard used by
t he t r i al cour t . Quest Comm ns, I nc. v. Ber kel ey, 433 F. 3d 1253,
1256 ( 9t h Ci r . 2006) . On r evi ew, t he appel l at e cour t must
det er mi ne, vi ewi ng t he evi dence i n t he l i ght most f avor abl e t o t he
nonmovi ng par t y, whet her any genui ne i ssues of mat er i al f act exi st
and whet her t he bankr upt cy cour t cor r ect l y appl i ed t he r el evantsubst ant i ve l aw. Ol sen v. I daho St at e Bd. of Med. , 363 F. 3d 916,
922 ( 9t h Ci r . 2004) . The cour t must not wei gh t he evi dence or
det ermi ne t he t r ut h of t he mat t er but onl y det ermi ne whet her a
genui ne i ssue f or t r i al exi st ed. Bal i nt v. Car son Ci t y, 180 F. 3d
1047, 1054 ( 9t h Ci r . 1999) . Summar y j udgment may be af f i r med on
any gr ound suppor t ed by t he r ecor d. Enl ow v. Sal em- Kei zer Yel l ow
Cab Co. , 371 F. 3d 645, 649 ( 9t h Ci r . 2004) .When consi der i ng a mot i on t o di smi ss f or f ai l ur e t o st at e a
cl ai m under Ci vi l Rul e 12( b) ( 6) , i ncor por at ed her e by Rul e 7012, a
cour t must t ake as t r ue al l al l egat i ons of mat er i al f act and
const r ue t hem i n a l i ght most f avor abl e t o t he nonmovi ng par t y.
Par ks Sch. of Bus. , I nc. v. Symi ngt on, 51 F. 3d 1480, 1484 ( 9t h
Ci r . 1995) . To sur vi ve a mot i on t o di smi ss, a pl ai nt i f f needs t o
pl ead onl y enough f act s t o st at e a cl ai m t o r el i ef t hat i s
pl ausi bl e on i t s f ace. Bel l At l . Cor p. v. Twombl y, 550 U. S. 544,
570 ( 2007) .
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12 Sect i on 541( a) ( 4) pr ovi des, i n r el evant par t , t hat t hebankrupt cy est at e i ncl udes [ a] ny i nt er est i n pr oper t y pr eser vedf or t he benef i t of . . . t he est at e under sect i on . . . 551 of t hi s t i t l e.
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2. Section 551
Tr ust ee' s f i r st cl ai m sought t o pr eser ve t he t r ansf er s
avoi ded i n t he J udgment under 551. That s t at ut e pr ovi des:
Any t r ansf er avoi ded under sect i on 522, 544, 545, 547,548, 549, or 724( a) of t hi s t i t l e, or any l i en voi d undersect i on 506( d) of t hi s t i t l e, i s pr eser ved f or t hebenef i t of t he est at e but onl y wi t h r espect t o pr oper t yof t he est at e.
Thus, once a t r ust ee r ecover s an ass et f or t he est at e t hr ough one
of t he enumer at ed t r ansf er or l i en avoi dance pr ovi si ons, 551
aut omat i cal l y pr eser ves t he asset f or t he benef i t of t he est at e.
Hei nt z v. Car ey ( I n r e Hei nt z) , 198 B. R. 581, 584 ( 9t h Ci r . BAP
1996) ( ci t i ng I n r e Van De Kamps' s Dut ch Baker i es, 908 F. 2d 517,520 ( 9t h Ci r . 1990) ) ; I n r e Schmi el , 319 B. R. 520, 529 ( Bankr .
E. D. Mi ch. 2005) ( once t he t r ansf er of an asset i s avoi ded, 551
aut omat i cal l y r et ur ns t hat " st i ck" t o t he "bundl e" t hat makes up
est at e pr oper t y and pr eser ves i t f or t he benef i t of t he est at e) .
[ I ] t i s cl ear t hat any i nt er est i n pr oper t y pr eser ved f or t he
benef i t of t he est at e or or der ed t r ansf er r ed t o t he est at e under
sect i on 551 becomes pr oper t y of t he est at e under sect i on541( a) ( 4) . 12 5 C OLLI ER ON BANKRUPTCY 551. 02[ 2] ( Al an N. Resni ck &
Henr y J . Sommer , eds. , 16t h ed. 2012) . Upon avoi dance of a l i en
or f r audul ent t r ansf er , under 551 t he t r ust ee st eps i nt o t he
shoes of t he f or mer l i enhol der or t r ansf er or and enj oys t he same
r i ght s i n t he pr oper t y t hat t he or i gi nal l i enhol der or t r ansf er or
enj oyed. See Mor r i s v. St . J ohn Nat ' l Bank ( I n r e Haber man) ,
516 F. 3d 1207, 1210 ( 10t h Ci r . 2008) .
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13 Sect i on 550( f ) pr ovi des, i n r el evant par t :
An act i on or pr oceedi ng under t hi s sect i on may not becommenced af t er . . .
( cont i nued. . . )
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3. Analysis
The J udgment , ent er ed on Apr i l 17, 2008, avoi ded t wo
t r ansf er s by Lebbos - one on August 19, 2004, and one on May 25,
2005. Those t r ansf er s were avoi ded under 544 and/ or 548.
Cl ear l y, t hese Code sect i ons ar e r ef er enced i n 551. I n addi t i on
t o avoi dance, t he J udgment pr ovi ded Tr ust ee wi t h t he r emedy of
r ecover y of al l r i ght , t i t l e and i nt er est i n t he Condo under
550. Af t er a ser i es of appeal s by def endant s Lebbos, Car t er and
Gol d, al l of whi ch wer e unsuccessf ul , t he J udgment i s now f i nal .
However , j ust t hr ee days pr i or t o ent r y of t he J udgment , a
qui t cl ai m deed f r om Car t er and Gol d t o Gi ovanazzi t r ansf er r i ngt i t l e of t he Condo t o Gi ovanazzi was r ecor ded i n Los Angel es
Count y. Mont hs l at er , i n August 2008, Gi ovanazzi execut ed a deed
of t r ust pur por t i ng t o encumber t he Condo t o secur e payment of an
al l eged pr omi ssor y not e f or $775, 000 f r om t he Benef i ci ar i es. That
deed of t r ust was r ecor ded i n Los Angel es Count y i n Sept ember
2008. These act s pr ovi de t he basi s f or many of Gi ovanazzi s
ar gument s f or why t he bankr upt cy cour t er r ed i n gr ant i ng Tr ust ee sPSJ and denyi ng hi s Mot i on t o Di smi ss . We addr ess each of hi s
ar gument s i n t ur n.
a. Statute of limitations and laches
Gi ovanazzi cont ends t hat Tr ust ee s adver sar y act i on 11- 2386,
br ought t hr ee year s af t er t he J udgment , was bar r ed by t he one year
s t at ut e of l i mi t at i ons i n 550( f ) . 13 Speci f i cal l y, Gi ovanazzi
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13 ( . . . cont i nued)( 1) one year af t er t he avoi dance of t he t r ansf er on accountof whi ch r ecover y under t hi s sect i on i s sought [ . ]
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cont ends t hat because Lebbos, Car t er and Gol d di d not own t he
Condo at t he t i me of J udgment but r at her he, a nonpar t y, di d,
Tr ust ee was r equi r ed t o commence a separ at e r ecover y act i on
agai nst hi m under 550. We di sagr ee.
Her e, t he J udgment accompl i shed bot h an avoi dance and
r ecover y under 548 and 550. An avoi dance set s asi de or
nul l i f i es a t r ansact i on. Nul l i f i cat i on means t hat t he t r ansf er i s
r et r oact i vel y i nef f ect i ve and t hat t he t r ansf er ee l egal l y acqui r ed
not hi ng as a r esul t of t he t r ansf er . 5 C OLLI ER ON BANKRUPTCY at
548. 10[ 1] . I n ot her wor ds, because t he t r ansf er s of 2004 and
2005 were avoi ded, Car t er and Gol d had no i nt er est t o convey t oGi ovanazzi at t he t i me t hey si gned and r ecor ded t he qui t cl ai m
deed, and Gi ovanazzi had no i nt er est t o convey at t he t i me he
si gned and r ecor ded t he deed of t r ust . As a r esul t , Tr ust ee was
not r equi r ed t o r ecover t he Condo f r om Gi ovanazzi ( or any ot her
par t y) under 550. Ther ef or e, t he one year st at ut e of
l i mi t at i ons i n 550( f ) does not appl y. Gi ovanazzi s r el i ance on
I n r e Ser r at o i s mi spl aced. Fi r s t , i t i s not r el evant t o t hei nst ant case. Her e, per t he J udgment , Tr ust ee ef f ect i vel y avoi ded
t he t r ansf er s by Lebbos and r ecover ed t he Condo. As a r esul t , no
subsequent r ecover y act i on was necessary. Second, even i f
I n r e Ser r at o wer e somehow r el evant her e, i t s hol di ng i s not
bi ndi ng on t hi s Panel .
Gi ovanazzi al so cont ends t hat l aches bar r ed adver sary act i on
11- 2386 because Tr ust ee knowi ngl y wai t ed t hr ee year s bef ore
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br i ngi ng i t . He f ur t her cont ends t he bankr upt cy cour t never
addr essed t he l aches cl ai m. Gi ovanazzi i s wr ong on bot h count s.
Lebbos, Car t er and Gol d act i vel y pur sued appeal of t he J udgment t o
t he U. S. Supr eme Cour t , whi ch t ook a l i t t l e over t wo year s.
Gi ovanazzi s r ol e i n r ecor di ng t he qui t cl ai m deed, hi s r ef usal t o
r ecogni ze t he J udgment and i t s ef f ect of enj oi ni ng hi m f r om
encumber i ng or exer ci si ng cont r ol over t he Condo, and hi s unl awf ul
det ai ner act i on at t empt i ng t o r emove Tr ust ee f r om her r i ght f ul
possessi on of t he Condo, al so cont r i but ed t o del ay not
at t r i but abl e t o Tr ust ee. The bankr upt cy cour t f ound Gi ovanazzi s
l aches ar gument i r oni c when consi der i ng t hese and many of hi sot her ant i cs connect ed wi t h t he Lebbos bankr upt cy case. Fur t her ,
af t er t he def endant s had exhaust ed t hei r appeal s of t he J udgment ,
Tr ust ee br ought adver sar y act i on 11- 2386 wi t hi n seven mont hs of
t he U. S. Supr eme Cour t s deni al of t he def endant s pet i t i on f or
wr i t of cer t i or ar i . On t hi s recor d, we f ai l t o see any l ack of
di l i gence by Tr ust ee bar r i ng her act i on agai nst Gi ovanazzi .
b. The Lis Pendens
Gi ovanazzi cont ends t hat because Tr ust ee s Li s Pendens i s
voi d f or a var i et y of t echni cal r easons, t he bankr upt cy cour t
coul d not appl y t he J udgment r et r oact i vel y t o hi m or t he
Benef i ci ar i es and t hey ar e not bound by i t . We di sagr ee.
The pur pose of a l i s pendens i s t o gi ve const r uct i ve not i ce
t o pot ent i al pur chaser s and encumbr ancer s of pendi ng l i t i gat i on so
t hat t he j udgment i n t he act i on wi l l be bi ndi ng on subsequent
par t i es, even i f t hey acqui r e t hei r i nt er est bef or e j udgment i s
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14 CCP 405. 24 pr ovi des: Fr om t he t i me of r ecor di ng t henot i ce of pendency of act i on, a pur chaser , encumbr ancer , or ot hert r ansf er ee of t he r eal pr oper t y descr i bed i n t he not i ce shal l bedeemed t o have const r uct i ve not i ce of t he pendency of t he not i cedact i on as i t r el at es t o t he r eal pr oper t y and onl y of i t s pendencyagai nst par t i es not f i ct i t i ousl y named. The r i ght s and i nt er estof t he cl ai mant i n t he pr oper t y, as ul t i mat el y det er mi ned i n t hependi ng not i ced act i on, shal l r el at e back t o t he dat e of t her ecor di ng of t he not i ce.
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act ual l y r ender ed. CCP 405. 24; 14 Ar r ow Sand & Gr avel , I nc. v.
Super i or Cour t , 700 P. 2d 1290, 1291- 92 ( Cal . 1985) . A r ecor ded
l i s pendens ef f ect i vel y cl ouds t he t i t l e t o t he pr oper t y descr i bed
i n t he not i ce and, as a pr act i cal mat t er , i t i mpedes or pr event s a
sal e or encumbr ance of t he pr oper t y unt i l t he l i t i gat i on i s
r esol ved or t he l i s pendens i s expunged. 5 C AL. REAL EST. 11: 151
( Har r y D. Mi l l er & Mar vi n B. St ar r , eds. , 3d ed. 2009) . A
j udgment i n t he pendi ng act i on t hat det er mi nes t he r i ght s i n t he
pr oper t y f avor abl e t o t he cl ai mant r el at es back t o and r ecei ves
i t s pr i or i t y f r om t he dat e t he l i s pendens i s r ecor ded, and i s
seni or and pr i or t o any i nt er est s i n t he pr oper t y acqui r ed af t ert hat dat e t o pr ecl ude a subsequent pur chaser f r om acqui r i ng a
super i or i nt er es t . I d. ( ci t i ng C AL. CI V. CODE 1214 and CCP
405. 24) . The j udgment has pr i or i t y even i f t he subsequent
i nt er est or l i en i s r ecor ded af t er t he l i s pendens but bef or e t he
j udgment . I d. ( ci t i ng Dobbi ns v. Econ. Gas Co. , 189 P. 1073
( Cal . 1920) , Gol dst ei n v. Ray, 173 Cal . Rpt r . 550 ( Cal . Ct . App.
1981) , and Ahmanson Bank & Tr ust Co. v. Tepper , 74 Cal . Rpt r . 774( Cal . Ct . App. 1969) ) . The j udgment i s bi ndi ng on any per son who
acqui r ed an i nt er est i n t he pr oper t y subj ect t o t he l i s pendens.
5 C AL. REAL EST. 11: 149 ( ci t i ng CCP 1908( a) ( 2) ) . See Sl i nt ak v.
Buckeye Ret . Co. , 43 Cal . Rpt r . 3d 131, 139- 40 ( Cal . Ct . App.
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2006) ( l i s pendens pr ovi des const r uct i ve not i ce of pr oper t y
l i t i gat i on such t hat any j udgment l at er obt ai ned i n t he act i on
r el at es back t o t he f i l i ng of t he l i s pendens and cl ouds t i t l e
unt i l t he l i t i gat i on i s r esol ved or t he l i s pendens i s expunged;
any par t y acqui r i ng an i nt er est i n t he pr oper t y af t er t he act i on
i s f i l ed i s bound by t he j udgment ) .
CCP 405. 20 t hr ough 405. 24 govern a l i s pendens i n
Cal i f or ni a. Fi r st , a par t y t o t he act i on must r ecor d t he not i ce
of pendency of act i on i n t he r ecor der s of f i ce i n whi ch t he r eal
pr oper t y i s l ocat ed, and t he not i ce shal l cont ai n t he names of al l
par t i es af f ect ed by t he act i on as wel l as a descr i pt i on of t hepr oper t y af f ect ed. CCP 405. 20. Her e, Tr ust ee r ecor ded t he Li s
Pendens i n Los Angel es Count y on J anuary 4, 2007, j ust one day
af t er she f i l ed adver sary act i on 07- 2006 agai nst Lebbos, Car t er
and Gol d. The Condo i s l ocat ed i n Los Angel es Count y. The not i ce
cont ai ned a l egal descr i pt i on of t he Condo and t he names of
Lebbos, Car t er and Gol d as t r ust ees. Thus, i t compl i ed wi t h
CCP 405. 20.Second, t he not i ce must be si gned by t he cl ai mant s at t or ney
of r ecor d or , i f t he cl ai mant i s act i ng i n pr opr i a per sona, by t he
cl ai mant wi t h t he appr oval of t he j udge. CCP 405. 21.
Gi ovanazzi cont ends t he Li s Pendens was voi d because t he not i ce
st at es t hat i t was f i l ed by Mi chael P. Dacqui st o, At t or ney f or
Pl ai nt i f f , J ohn W. Reger , and J ohn Reger was not a par t y t o t he
act i on. Al t hough t he si gnat ur e page does r ef l ect t hi s
t ypogr aphi cal er r or , t he capt i on on t he not i ce cl ear l y st at es t hat
Tr ust ee i s t he pl ai nt i f f i n t he act i on and t hat her at t or ney of
r ecor d i s Mi chael P. Dacqui st o. Fur t her , Gi ovanazzi ci t es no
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15 CCP 405. 23 pr ovi des: Any not i ce of pendency of act i onshal l be voi d and i nval i d as t o any adver se par t y or owner of r ecor d unl ess t he r equi r ement s of Sect i on 405. 22 ar e met f or t hatpar t y or owner and a pr oof of ser vi ce i n t he f or m and cont entspeci f i ed i n Sect i on 1013a has been r ecor ded wi t h t he not i ce of pendency of act i on.
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aut hor i t y hol di ng t hat t hi s mi nor er r or r ender s t he Li s Pendens
voi d. Thus, t he not i ce compl i ed wi t h CCP 405. 21.
Thi r d, CCP 405. 22 r equi r es pr oper ser vi ce and pr oof of
ser vi ce of a l i s pendens. Pr i or t o r ecor di ng, a copy of t he
not i ce must be mai l ed by r egi st er ed or cer t i f i ed mai l , r et ur n
r ecei pt r equest ed, t o al l known addr esses of t he par t i es agai nst
whom t he cl ai m i s adver se and t o t he r ecor d owner s of t he pr oper t y
af f ect ed by t he cl ai m i n t he count y assessor s recor ds. Ser vi ce
must al so be made on al l new adver se par t i es as t hey j oi n t he
act i on, and a pr oof of servi ce must be r ecor