this is one of the most high stakes cases that i've ever had to deal with i received a call from a potential client who was on the verge of a heart attack at a judgment entered against him for about to be entered into them for about twenty five million dollars between him personally and it's i thought wow must be a murder case it must be some something out of the ordinary i met with the client the young man a contractor who's been in the industry for ten years never had a lawsuit before approached an individual to develop a house that was red tagged the house itself with me and i have a sears roebuck so build yourself kit my client had no contact with the successor trustee the sister other than the pleasantries while meeting at the house in the property relocating her bent close to a half a million dollars out of his own pocket to develop a property for him or as a shed in a shack to a multimillion dollar home in santa monica california on the days just before close of escrow and in line to handle a check over mr mcguinty for approximately half a million dollars we file the bankruptcy we try to reorganize we had some limits with the debt ceiling we disputed the underlying judgment there was a zero one zero nine evaluation in the first chapter thirteen case we weren't able to reorganize that's not before you what is before you is the subsequent chapter seven case that we filed and i must say even before we got into the procedural issues in this case or the procedural issues in the other cas i called state court counsel i said you did an excellent job you did too good of a job for your client and said how can we possibly resolve a twenty five million dollars judgment case what do you want my doesn't have he had the house that he was prepared to give them the check was almost ready just ready to close us for nothing i said unfortunately i don't know how to do it like my clients blood sweat and tears are in this house i don't have a choice but to file bankruptcy because of not just what happened in your lawsuit but because of everything that he put into this house we talked a little bit and you know we couldn't get much further after that i have a very great bankruptcy counsel that we worked with orgill professional i have nothing bad to say about opposing counsel the facts of this case are a tragedy to my client i can't go back in time nobody can but my client deserves a fresh start and i know you guys say well twenty five million dollar judgment against him how could he be entitle to the fresh start that an honest debtor is entitled to well when i handled the ghomeshi and so on case in the ninth circuit i had a similar contractor case that was also one of my cases that the panel had decided in and gone up to the ninth circuit i dissimilar situation i had a licensing issue with the contractor who built the house for that plant they want to work against my contractor client for discordant and we want all of our money back so they got a two hundred thousand dollars judgment and i said well what are your damages you heartfelt stuff and this is very compelling those arguments that you're making but you know largely these are issues that are issues that you've lost at the state court level at the trial court level and you know arguing to a bankruptcy court you need to focus on the legal issues that are here if you're going to win today it's because you're going to persuade us on one of that on that level not on their quotable the background and i'm not going to focus no i understand you're very persuasive in that regard but it's the wrong road ok i know the panel is prepared i'm expecting to be bombarded with questions but don't let the babyface for you i've been here probably in the last twenty years i see these gardens i feel like i'm in hawaii but  i get more nervous as i get older i thought it easier to come here is not quite that case you're on the crux of this case twenty five million dollars in excess of award to be entered against someone who never had a final opportunity to have the full and final determination of the underlying jury and judgment taken up on appeal my client's entitle to due process he's entitled to have before you apply as you could you could have had that due process you chose to file bankruptcy yes but that you lost control it's not disputed that you lost control of that appeal right when you filed the bankruptcy appeal right wasn't valuable to anybody that that's not the point i mean you should i mean you i did not see the challenge on the denial of the abandonment as part of your appeal that was not an appealable order the case when from the denial of the abandonment fairly quickly to case closure because no one really wanted to buy right now if you were anybody else who said hey we want to buy these rights i'd say you know what maybe there's some value there but it wasn't but there had to be an appealable order at some point i mean there should if there's a final decree in the bankruptcy case you could have appealed from that there's always an avenue to appeal pretty much every order eventually you're going to get a final order so never happened the abandonment didn't happen of the dean to ban meant at the end of the case that are so we don't have to do anything further so you went and i don't want to respond i want to respond to your question about we chose bankruptcy we didn't have very many alternatives we chose the bankruptcy we went through the you had alternatives you just they were bad alternatives i don't know that they were about alternatives your honor we chose the bankruptcy mechanism because the client wanted the fresh start opportunity using the bankruptcy is as  sentially posting a bond how could anybody post a bond for twenty five million dollars that's not quite the analysis you know but that's part of the consideration and there wasn't a judgment entered when the bankruptcy was filed initially so we still didn't get there they filed a motion for early from the automatic stay we said you know what let's go forward so they got the full right to go and take their judgment to phonology and on the backend they come in by the appeal rights or say they're going to rights and they never go through with it we go back to square one my client was going to hand a five hundred thousand dollars check to the sellers just before he passed away instead they litigated this for another four years and the s trustee ended up getting a check for a quarter million dollars the attorney got a check for four hundred thousand dollars appellate counsel gets a check for fifty thousand dollars the other appellate counsel gets another check for fifty thousand dollars and the whole entire process so if only interrupted your best legal argument is that the application of this doctrine is discretionary it's not usually cannot be applied under california law until the appeal is to over with and and in a case where in a bankruptcy case where they get or was not permitted for whatever reason to pursue those appellate rights the court she can should have exercise particular setting would be fair and consistent with sound public policy and that's the in rate case so you about five minutes left you know i do think you  you the court good morning the best legal argument that the opponent has was one that wasn't made and now on appeal the reason and for the first time as i understand it there's an assertion that there's a taking of property home on that on the answer of what was taken it was an assertion that his appellate rights were taken they weren't his rights well let's slide that to a little different analysis continue with counsel's point you agree or do you agree that the bankruptcy court should have examined the exercise of discretion given the  totality of facts on whether to apply issue preclusion now i think that the application the full faith and credit clause required the bankruptcy court to give full faith to that judgment that was honored by a trial that spanned seven weeks under the circumstances of this case there's a trial is fine it's the it's the continuing to vote finale through in a board of appeal process well the constitutional property or the property at issue is those appellate rights and they didn't belong to that and right but there was a motion to compel abandonment because they were valueless to the a state where they  on the basis i'm not sure exactly what that basis was one of those denied by the bankruptcy court i thought the basis was it had value there well i suppose that the price point was too high to who was she bidding against i don't know thank you on the appellate the appeal was dismissed after the state court of appeals issued an order to show ca presenting mr bowser glow with an opportunity to show cause why his appeal should've been dismissed he couldn't because it wasn't his appeal that's in part that's right that's right because it wasn't his property right and so going back to the question whether there's been an unconstitutional taking of property it wasn't his property and i'm not sure the question is unconstitutional it's whether it should have been considered within the by the bankruptcy court navigation of its discretion well here we also should be mindful of the fact that there was an appeal an appeal that was litigated fully to the point of the decision and that this is then that appeal was litigated by a party who was considered to be in and about the transactions involved in this case the alter ego of mr bush the group and that state court of appeal recognize that in his decision and the argument was made by the entity that it had committed no fraud and the state court of appeal dismissed that pretty much out of hand saying there's plenty of evidence that you mr bowser glue had committed a fraud here and so based on the finality of that print principle if anality of judgments the fact that and in all fairness he had his appeal no i don't think the bankruptcy court based on the record before it had discretion to ask what can we can we find that on appeal that in all fairness he had his chance and there's no harm it was a required to be found by the bankruptcy court well i don't think the bankruptcy court was ever pointed in that direction by by booze or glue and so i don't think it's fair to criticize the bankruptcy judge for not doing so here on appeal we certainly can and we've pointed to the decision of the court of appeals which i think that a fair representation of that decision is that that court of appeal wanted to appeal it and his her i should say defense of the poet rights were purchased she applied the bankruptcy court and then to the district court on appeal asserting that there was a violation of due process and that is she was met head on by the district court judge in the central district of california and the argument was rejected the sale in i'm quoting the sale  is no different than the sale of any other property of a daughter the court concludes that there is no basis in the record from which to find any violation of the daughters that their fourteenth amendment rights one more citation  in a footnote the district court said the basic assumption that the debtors have an absolute constitutional right to appeal the state court judgement is flawed due process does not compel an absolute right to appeal  doubters appellate rights were terminated by lawful process of the state courts of california the bankruptcy court properly gave full faith and credit to those actions thank you thank you thank have four minutes and forty two seconds when i started out by saying if anybody else had to bid for these rights that would be something else who'd been fair game their client approached the trustee their client made the offer so to say they didn't want to get into a bidding war and they didn't want to pay offer they said the price they negotiated the terms of theirs declaration by the trustee to say yeah we're willing to buy these rights so they could have avoided and have this come to a head but they chose not to and they did it in the perfect storm where cause because we didn't own the rights at that time now if you're saying the corporation is the alter ego the alter ego well automatics they would apply same bankruptcy issues apply i'm not sure if it is that would be i position a liability it's not bringing that corporation into the bankruptcy is a no not directly bring the corporation into into the bankruptcy i completely understand the automatic stay applies just to the individual or the corporation that's filing i mean that's not before anybody but if you're going to make that argument and say well we've adjudicated it as to the corporation i don't think the appellate court can say in good faith and this doctor had the full something that he could have argued separately in the constitutionality of awarding ten times the compensatory damages i mean those are cysts individual arguments that he could have made along the way i do you know in the bankruptcy  appellate court decision when they elected their remedies they basically said that the plaintiffs waived their compensatory damages i went back and looked at that appellate decision and said well if you waived your compensatory damages because you wanted the property back which they took back and got the rescission award the clerk of the superior for to enter a deed back in their favor lynch and be entitled to any damages what those are the damages well those are the again the crux of the punitive damages is there excessive i mean this is not a murder case i don't know how you get to ten times gross when when the defendant was prepared to issue the check we've said it from day one we're prepared to honor the contract between the parties switches you only get to that if you're allowed to challenge the state court judgment in a bankruptcy court right let me think about your question or we only get to challenge that if well if you want you can only raise the challenge to the punit damages if the state court judgment doesn't have precluded effect correct and that's what we're asking for the only prejudice to these plaintiffs are that they're going to have to proceed on the merits and the going to have to present against it wasn't again when you look at the jury finding what's the misrepresentation what's the concealment what's the fraud is there really is that is there a requirement of that for preclusion purposes of the jury have to say on such and such a date he said this to so and so is that the law  i don't know that that is that it goes to that specific requirement but here you're proceeding as multiple parties with multiple causes of action elder abuse i mean there could be different basis for granting the punitive damage award and we don't get that we don't get that when the jury find it looks to me like  very detailed special verdict that's the way it looks to me that it covers all the elements of the claims and the jury checked all the appropriate boxes i don't think it covered all the elements for the cause of action i went back and looked at the jury verdict this morning again no question every one was there misrepresentation was a fraud or some other concealment yes but what was what did he do as i stand here today i don't know what the basis for the fraud finding is and that's why i think the bankruptcy court needs to find that out and that's why the only prejudice is that we go forward on the merits are you arguing that there could be some some fraud under that verdict that would not be we haven't even gotten there just in a general theoretical