thousand dollars in damages should be reversed first of all the district court in bankruptcy court erred in awarding mr julian jackson a fifty percent interest in the music catalog because his claims were dismissed for lack of jurisdiction and his interest in artist routes rights foundation had been properly terminated for his non contribution for expenses the district court in bankruptcy courts erred in finding that collateral estop appellant's from arguing the validity of the assignment because in the california case in applying california law the issues were not identical the district court in bankruptcy court erred in finding fraudulent intent under the texas uniform project transfer act because there was no evidence to show any motive on the part of the opponents to engage in fraud and finally on the issue of damages the district court awarded damages based on improper measure of damages and when there was no evidence of a proper measure of damages i realize that the court is familiar with the background facts but if i may take just a moment to highlight a few facts of this case that i think certainly this my clients were found to have committed fraud really when there was no evidence whatsoever of any motive on their part to commit any fraud this case goes all the way back to one thousand nine hundred eighty eight when the music rights were first a d fast forward to two thousand and four when after six years these music rights had not generated any income whatsoever the laws was in terrible financial condition and was owing taxes to the california border franchise taxes he attempted to have the other member of the company contribute to the outstanding expenses and he sent a request exactly as required by the operating agreement a there was no response he tried to sell the asset to bug music who had been administering the music rights for six years and they declined even to make an offer to purchase these musical rights he didn't turn to the only person he could think of was his father who instead of getting a loan from decided to transfer these interests to him in exchange for a promise to take care of the outstanding franchise taxes into eventually pay expenses  by now it wasn't until about two years after the notice to jackson in about six months after the transfer distributing though that these royalties generated any money at all and at the beginning it was only approximately twenty thousand dollars from bug music who just six months before had said we don't have any earnings history and we're not even willing to offer you anything it was until fifteen months after the transfer that a verdict came down in a copyright infringement case involving the ohio players music when i realized that somebody else was pursuing interests that sokoto own two sevenths and it wasn't that verdict didn't even come out until two thousand and six and at that point when they went after the people who had obtained the verdict is when they actually received any kind of money but that was two years after the transfer and why w profitable and then all of a sudden it was profitable it it just it was a stroke of luck that somebody else had pursued some of the other interest holders of the music catalog had pursued a copyright infringement case and there was zero expectation that they would pay out remember bug music who had administered those rights for six years and never had never been able to collect opinion on them wouldn't even offer anything to buy them and they were in that business that's what they do  enforce royalty interest and go collect and they wouldn't even offer any money on that so miskito to drag him into the bankruptcy court what so help us with what that what the record shows either year to year after the time of the transfer approximately each year after that how much warranties were there you don't have to be exact but give us a ballpark well the first monies didn't come in and i believe it was about six months and it was only twenty thousand from bug music  about fifteen months after the transfer is when it is after this verdict in the copyright case i believe it was about three hundred fifty thousand now much later i don't know exactly how it came in but at the time of trial twenty ten  five years after the transfer the total was about nine hundred different camos to me almost a million and i don't know i do know that within the first fifteen months nothing came in until that except for twenty thousand dollars six months or so he says three about three hundred something thousand and fifteen months thereafter and then what was it what was it the year after that i'm not sure on the breakdown per year all right i do not know that per year how much came i gave mr jackson fifty percent of the music rights of the ohio players basically undoing the terminations in undoing the transfer the problem with that was first of all mr jackson in his pleadings in this case never challenged the validity of the notice letter that mr clause sent him in fact if you read his answer he didn't even specifically denied and i can provide the court later a record cites pacifically but if you read mr jackson's answer he didn't even denied that particular statement that notice had been sent to him and that he didn't respond more importantly his claims were dismissed for lack of so for the district court in bankruptcy court to award to undo the notice that mr clause gave him and to give mr jackson fifty percent of the royalty interest was in error if mr jackson wants to pursue claims in a different venue that does has jurisdiction he certainly welcome to do so but it was a problem on or in this litigation he's not but he has been served with briefs throughout this because he was a party and he's not responded not fil route will or the only owners of these particular music rights so nobody's requested that jackson should get fifty percent and that part of it at a minimum should be reversed the only way to learn a jackson is to uphold you view it seems to me that he had not performed his obligations under the agreement there's never been a court ruling accepting that has or i'm sorry it occurred there ever been a court who has ruled that julian jackson failed to to uphold his obligations under the agreement failed to provide the money the only holding it seems to me is that he never got a notice of claim that he needs to pay him a certain amount of money including tourney's fees of an  stated amount so has ever been a court ruling that julian jackson's interest has been forfeited their position or just is it just your argument it has been there has not been a court ruling but nobody has requested it that he percent no party has requested that he requested it but his claim was dismissed for lack of jurisdiction if he wants to contend that determination was invalid he has the means to do so he can bring that claim in a proper court there would that would be the answer to that but they ownership of the record is that he has the fifty percent and the only thing that would prevent that is if you are correct that we came forth that was forfeit to or failure to comply with his i don't see any way that a court could declare that you your client has the julian jackson interest without a finding that in fact he had forfeited a transfer occurred your honor of all of the  he would have already is in fact you in jackson had forfeited his interest and there's not been a holding finding to that of that's correct your honor if there has not been an affirmative holding but we never repeat nobody ever brought a claim to cup nobody with over whom the court had jurisdiction brought a claim asking that that particular the julian jackson's that the conveyance of julian jackson's interest be set aside it occurred if the district court wants to set aside the transfer with respect to ms catona she asked for it there was jurisdiction fine but with respect to the transfer of any interest jackson might have had if the court didn't have jurisdiction mr jackson didn't have jurisdiction over mr jackson's client so i don't think we needed to get a specific finding that that if that was terminated now we the court to to address  question judge southwick we believe that the evidence actually was completely to the contrary the the evidence was that mr clause complied completely with the operating agreement he set the notice to the address it was required to go  to there was no evidence that they knew it was an incorrect address the only evidence was that they had attempted but were unsuccessful to serve mr jackson in a separate lawsuit and actually the the evidence was that they didn't know whether he received the notice of these other addresses and had to obtain service by publication because they want to able to find that the address was actually an office building we've cited i believe to a website that shows it's an office building not updated his address information much to respond they were actually in litigation at the time so he could have reached that in that california litigation  his law license in two thousand and two after the felony conviction and i think you're claiming that sukarno actually paid him four hundred twenty thousand dollars for our services he was never paid leave all services what we are claiming that that his services certainly brought value and they weren't necessarily legal services this were there for four hundred twenty thousand dollars but he was never paid that your honor he was only paid i think forty eight thousand for out of pocket insists we asserted that the damages assessed against my clients was incorrect because it put does erode value to what mr claus had done they weren't necessarily legal services even the missile catone as expert agreed that certainly he conferred a great value these music rights by exploiting them in doing a lot of work and they agreed that that work even though it wasn't legal work was worth up to two hundred eighty dollars an hour that was her own expert agreeing to that and so that goes to the issue of the damages the under the uniform fraudulent transfer act the measure of damages is the value of the asset at the time of the transfer everybody agrees that at the time of the transfer this asset was essentially worthless miska tonus expert referred to refer to it as a lottery ticket the other expert testimony was without an earnings history its nominal ten thousand dollars now the court did have the ability to adjust that under the equities but there is the section of the the laws were not anything but good faith purchasers miskito has not challenge that in her brief she's not disagreed with that furthermore is the bankruptcy court it said i'm going to in the district court they're going to adjust the value for the equities  they said the proper measure of damages ought to be to restore miss catona to the position she would have been in had the transfer not occurred in other words had the those assets remained with an artist rights foundation well it's undisputed that her interest and artist rights foundation was in economic or transferee and she only had the right to share in profits only profits not gross proceeds but profits that's what would happen so it was incumbent upon ms catona to put on evidence of what lost profits would have been the cases we've cited under texas law evidence of gross receipts is not evidence of profit the bankruptcy court in the district court basically attempted to shift the burden appellant's to prove an offset but that's not the proper way to do it texas law requires that you put on the proper measure of evidence of the proper measure of damages she didn't do that by the way even her own exhibits prove that the most all of the clause family and anybody involved received was six hundred ten thousand of the nearly million dollars that had been collected that was her own evidence that they had if you counted all the money they received it was only six hundred ten thousand so i submit that at the most at the absolute most it ought to be twenty five percent of the number that she was claiming they had actually received i would like to touch just in the last minute or so on the finding of actual fraud on the fraudulent transfer i recognize the evidentiary burden that that is a clear error but under texas law if the evidence stablish is lack of a ten lack of intent it can be decided as a matter evidence that they had any idea at the time of this transfer that those music rights were worth anything at all there was zero evidence that they had any expectation that they would ever pay money so they were simply no the outstanding obligations and actually i believe that the testimony says his intent was for alfred to use it as a tax deduction because it would show that he purchased an asset in he could show that it write it off as a loss  me please the court want to start with them whether there was a motive for fraud your question judge southwick that this court's opinions in fraud cases generally and transfer cases specifically in the appellate reported opinions in the texas courts are filled with examples just like this one where the fraudster comes in after a finding of fact from the trial a court against the fraudster and says but that's not what i intended to do i intended to do something good noble or at least wholesome and that the law is simply if the court knows it's up to bear singh to tell you what you know when the trier fact fines against the fraudster and finds that there is fraud in and as in this case when there are several of the statutory badges of fraud this court simply cannot disturb the trial court's finding several months so the transfer unquestionably is to an insider it's undisputed that the transfer was confined concealed from lisa it was all of the assets of artist rights foundation artists rights didn't own anything other than the catalog of music rights artist rights foundation was without dispute insolvent on the day of the transfer that mr snell says they owed these taxes and i agree with that they had no way to artist rights foundation had no way to pay them it was as a matter of law insolvent where would the then goes back to the mode of the rule wanted those taxes paid popular for years the songs have been playing for years there's no evidence in the record and i personally don't know what happened to the payments or the revenue from all those times the songs ability to grab hold of the road a bit but and record is not there for that current is no evidence of where the revenue was but i think it's a reasonable inference i think it's the inference the courts below made that everyone knew the assets were valuable the assets are the songs the songs play and when the songs play there is a corresponding while to the issue the challenge was to capture the royalty but i think it's a easy inference to say that everyone knew that the songs were valuable and within months within months the money starts flowing and it's matching the royalties now i'm sorry managing the royalties now do things happen with the royalties now judge it up to this is him the first point is important for several reasons it is far as i know and as i think as far as the record shows there are two streams of payments some of the royalties are collected by an administrator called be a mine there is a judgment this is referred to in the record there's a judgment in the bankruptcy court a judgment from which there was never an appeal b m i interplay did the funds that it was holding paid those funds into the registry of the court and agreed to a judgment under which it now continues automatically to pay its collections into the registry of the bankruptcy court there is a bug music art or b m g music is the other administrator that also collects royalties that stream is now impounded at in at budget is not being paid it's been sitting unpaid firm actually before the litigation started is it still being collected it is  and that may well be this is speculation judge southwick that may well be the answer to those dollars may be the dollars from the earlier royalties i don't know and to be clear that's complete speculation i have asked the district court to grant a turnover order and appoint a receiver to collect the funds that are this is not in the record but it's in the record of the district court  that judgment establishes the that the money that comes in and goes is for lasik tonet in julian jackson if that judgment awards relief actually to a court appointed receiver for the benefit of catona in jackson according to their interests no one ever appealed from that judgment and i think it was that judgment that compelled the bankruptcy court to recommend to the district court that they couldn't ignore jackson's interest in the funds because there were there's a judgment in the in the next event is the bankruptcy courts went back to the district court judge hudspeth referred back down to judge king in the next event was judge king's proposed findings and conclusions in which judge king betting in the cases of the time he had stopped i think maybe two distinctions there are a distinction in your question jackson had stopped participating even before that jackson didn't participate in any of the even in the first appeal to from the bankruptcy court to judge hudspeth by then jackson had already stopped participating did jackson cease to be a party well this courts said in its first remain and that there were no there was no jurisdiction over jackson's claims and no one challenge that affirm the judgment and so she ask you to affirm the judge in the judgment includes that award for him v at the i understand the logic in the courts below for including it because of the other judgment the one from which there has never been an appeal the judgment in the b m i enter pleader case in which the  that all parties well it wasn't agree judgment but the bankruptcy court said the money goes to the town and jackson and so i understand why the courts below did what they did  there is a judgment that establishes jackson's interest and from which no one ever challenge the judgment well that jackson wasn't entitled to the fifty percent would your client be entitled to his fifty percent no i don't think property just property rights just dissipate or go away that perhaps they as sheet under some state law and procedure for  they don't just disappear into the air maybe the persuasiveness of the of the earlier decision that that he was entitled to fifty percent so we what your opponent says is that they're entitled to a have a you know they have an assignment of all the interest out of whatever the acronym is a or f or something like that so i'm just troubled about what we can do with his non poor he in this case i find it quite questionable that we could declare  to have that money or should i have that money for that interest that interest but we don't seem to have very many good possibilities here without without jackson being in this case if the court is going to give it to someone give it misc time but but but i mean we would like to but i am a lawyer and i'm supposed to say that but frankly i don't i just don't see the the lawful basis for the court to do i mean there's people in the audience can the court simply divest them of their property they're not parties in this case either i just don't understand how a court does that and  on the trial court's damage method actual damages awarded to miskatonic the reason that the courts below the bankruptcy court first and then judge that the district judge gave for not ducting anything was because there is no credible reliable evidence of what you need deductible expenses would have been and loss statements that they simply have incomplete banking records the expenses they suggested should be deducted or hundreds of thousands of dollars for m supposed services there are no time records there's nothing like a contemporaneous time record there are that they ask the district court to deduct expenses for completely unrelated related litigation they asked that the courts below to deduct the expenses of their lawyers in this litigation they asked the courts below to include expenses for payments that went to run will go on as his mother to alkalis to his girlfriend and two friends from prison and it's simply a check register that is the only evidence of anything like expenses and none of them are legitimate business expenses there are no there are no records of any invoices purchase orders there's nothing like that and the law on this is that it is their burden of proof to have if they're going to claim deductible expenses to have reliable credible evidence of the expense of those expenses and there's nothing like that here judge king found in judge hudspeth adopted the finding that there is no credible evidence of any of that and there is no challenge to that finding out and beyond that in west versus sue was a reported opinion this is cited in the brief and there's others like this when to deduct when when the expenses to be deducted are actually payments to the fraudster then the law is that you do not deduct the expenses because deducting the expenses is really rewarding the fraudster for the fraud for war the misappropriation of the onsets  record or just not the paul of wrong to hang over poor records for those expenses judge there are pretty clear records it's about ten thousand dollars it might be eleven thousand dollars and those are the payments of the artist rights foundation the underlying company the one from which the assets were stolen of their franchise taxes and then those expenses are interesting because the they were paid i think about a year after the transfer and the dollars this is undisputed the dollars that were used to pay those franchise taxes about a year after the transfer transfer were dollars that were then in the accounts of because of the payments that had come in on the musical rights and so what happened was as they used the stolen assets to pay those expenses judge king said and judge hudspeth adopted the finding that the ex a whole nother reason for not deducting any of this a going to expenses was lisa caetano was only responsible for the expenses that were associated with artists rights foundation she never had any responsibility for the expenses of the new companies to go into swans and there is no challenge to that conclusion allah i'd like to address the point that mr lee said that everybody knew that these music interests had great value because everybody knows the ohio players first of all just because a song plays on the radio doesn't mean necessarily even artist rights foundation would necessarily get that money these are complicated assignments and there's often litigation a great deal of litigation to determine who has ownership so but what can you tell us about the b m r enter plater judgment well your honor that's something that occurred after the judgment in this case it's not at all and there's nothing in this record for this court to look at to establish whether that would be collateral estop judicata i mean that it's completely outside of the record that was only an adjudicated rights into certain funds that were being paid into the court registry didn't completely adjudicate all of those who own these musical interests so it's not before the the court there's no record we haven't had the opportunity to argue that before the district court and present argument in have the district court look into the facts of that was a possibility of an inconsistent result of the say we were to agree with you so because you know i believe this would establish ownership and it would be effectively the law of the case it's the same bankruptcy case so maybe we shouldn't be deciding this case if in fact there's evidence in front with respect to jackson's interest here's what i would you asked earlier judge southwick what how we should handle that amount nobody's asking to divest jackson of anything what we're saying is it was improper for the court to rule on that issue when there was jackson there was no jurisdiction over jackson's claim i think the answer is simply if the court were to affirm the judgment of the district court or bankruptcy court just say the transfer is invalid as to leases twenty five percent and that's all that needs to be done that restores lease that make sure whole it and leave it at that that's all that needs to be done and it's improper i think to adjudicate a claim of a person over whom the court has no jurisdiction if mr jackson would like to pursue those  different form that does have jurisdiction that's fine but that form take that up it was just simply no evidence in the record at all that either mr claus or alfred had any idea that these these