good morning your honour's my name is richard my son and i am the attorney for the appellant the laura stout kaufman group incorporated this case is one about a motion for summary judgment the issue before this court is the findings by the district court as well as the bankruptcy appellate panel that found that the partial summary judgment that was granted by the district court was proper disputes or conflicts between the evidence that the evidence is to be believed by the nonmoving party also with regards to that when there is declarations even though they may be self serving the court is not to challenge the credibility as to what has been put before the court in relation to that of the elephant in the room here is it seems really difficult to reconcile the two find that the summary judgment and the trial and so but i guess the summary judgment happened first right that is correct you're ok so can we properly consider the bankrupt bankruptcy court decision in the discharge adversary and reviewing the merits of the bankrupt bank rep sees courts earlier decision in the preference adversary know what happened after what happened here because what what happened in the trial i v asli doesn't seem to it you could say from that well there must have been tribal issues because the court found the other way but but can you really consider what happened after as you know i guess arguably what was presented on summary judgment could have been different that's what i think they're arguing and that if you could have not created a tribal issue and then later the travel issue came up so can we really can we consider what happened after to look at what happened here i think that the court needs to consider what happened what is it a do you have for that consider necessarily the authority perceval what i have in relation to whether or not the issue is related to the motion for summary judgment the issue however is the court should consider it because it shows that the the motion for summary judgment should not have been is and it could have been but that wasn't the case here in fact there was declarations by both the debtor as well as the my client the laura stout as well as a witness robert k for which specifically says provided direct evidence i think they even point out that there is some sense of the court taking a liberty of just disregarding what evidence was presented during the motion for summary judgment in fact the court states on page thirty three of its opinion and i'm referring to the bad that it says that the first four paragraphs to laura seeks to manufacture a genuine issue of fact and they're stating that based upon the declarations as well as the depositions which in the case of ny grover's a sears and roebuck the course pacifically said that declarations are intended to be self serving provided that there is actual so fording facts to to to support the arguments in the motion for s so if we put aside the bench trial we put aside the later decision of the court and look just at the the summary judgment what in the materials that were presented to the bankruptcy court create a new an issue material fact yes in addition to that you had the corporate tax returns as well as the testimony of all of the parties and witnesses that it was owned by the corporation in fact even in the babson opinion they know that the asset had been transferred at some point in time but they're not sure when that even if it was transferred to fell within the preferential period of time because it was a secured interest there was the u to the creditor or entered to the adversary party dolores down the doors and then to coffin group incorporate ok so so when i went through the paper trail i didn't see any transfer of the assets from applied to edward stout well actually wrecked right there it was never transferred to edward stout the actual debtor never owned the property what the court grabbed a hold of which was improper based on a motion for summary judgment was the language used within certain documents that were made between the my client and the debtor and what the court found was well i'm going to read this document in this manner and i'm going to make this inference the problem was that in the back opinion what the court did was disregard some of the statements within those documents for example there were two long documents in two thousand and five one loan document was between my client who was had loaned two hundred fifty thousand dollars that said that the that she was taking a secured interest against the properties owned by the corporations so you have that testimony right there that shows that the corporation owned it what the court did was disregard that loan document and focused on another loan document as well as along with the other documents that were presented with the motion for summary judgment the fact is that as doubt maintain the corporations as separate entities that they had separate corporate books that they if you look at the excerpt of record five twenty seven of page one twenty five in her deposition dolores state she understood the business assets to have been owned by the debtor can we take that statement as a concession that the debtor own the business equipment at issue but it also goes to a situation of putting it into context of what did a seventy plus year old woman during her deposition that was asked questions over and over again maybe she confused the issue but the issue comes down about the assets that were originally owned by quell tack and then we're transferred via the asset purchase agreement to apply are we talking about any other property well issues that they the bankruptcy judge picked up on the summary judgment is that it looked like that there were multiple efforts to try to foreclose on the same assets that appeared to be jointly owned by several and then the bill of sale transferred the assets those assets directly to apply and i saw no where in any chain of title that those assets were ever transferred to mr stat i mean ultimately they were transferred to happens is that there's then once there's a lot then there's lawsuits pending against the corporations and it's now he dissolves all the entities well that happens much later i think your timeline is off so in the end of two thousand and eight according to his it says you have to wind up the business of the corporations and you pay out the creditors first so there's no automatic ownership to be the shareholder of the assets until after the winding up well no but it's an equitable right it's and that's that's the point is that you have to have an equitable right it's an equitable right now the property of the corporation so he would hold it as a trust according to california law and he would hold it as a trustee correct or the creditors and it wouldn't be property of the state under under bankruptcy law well as we were saying it would be because he dissolved it before the bank right that he would be holding any assets i mean to the extent that happened which is i don't see how that creates a general issue material fact because we don't know according to the the documents  his view of them or the evidence he plays it was all transferred to loris long before he does all of the corporations well at this and that his theory of the case so there were there were multiple agreements that the judge was focused on is that irrespective of the bill of sale documents is that you have these contracts being entered into with the debtor and his mother where there's recitals indicating that he's got an ownership right in the property and she's taking steps and filing you see when documents as if there's a joint ownership i think humans were pretty ambiguous i'm having trouble seeing why the bankruptcy court didn't get it wrong in saying there was no genuine issue of material fact and there's nothing that clearly shows that the the assets belong to mr step out there could be arguments that are made as you're making them now but that's not enough for a summary judgment in favor of the trustee as well and that's what i'm getting back to is that he did the did the trustee have an ownership interest in his what when basically what happened here in effect is debtor has owns all the stock and all the corporations has full control of all the corporations strips out all the assets were to affirm that summary judgment what are you going to come back and do well what are you going to go back and claim that means well i mean claim that the trustee then has has the right to those assets and then the  do you reconcile that with what happened in the bench trial on the other one well well that it's a one of the reasons why and repealing that is well that's a we have firm on that but we affirm on this which seem to be irreconcilable then you're going to go back and then you're going to try to claim that you have that the a state has what in the other one the a state doesn't have right what yeah but i think that what the best you're going to do that with authority and at the top of your there's not a full disposition the record and the judge is making a call based on the evidence before it and then later on if you have a full blown trial the judge might go well you know looking at that you know i might i might of gone the other way but you're looking at two different eviden considered proper for preference purposes perhaps than for seven twenty seven and is there a case that explains that the property of the other is different for in those two statutes you know but that's but it seems that when you get when you through it it seems that the definition of property or speech construed more broadly for preference purposes than it is for seven twenty i mean that wasn't her the basis for her explanation of why she reached a different result she said she read a new case which rejected plaintiff's argument that transfers persuasive well i think that was right to do the alter ego issue and that's that's that was that was more developed there and that's what she was dealing on the alter ego issue she didn't really address the issues more focused on the evidence that was and the debt or that there was an intent to transfer assets that belongs to the debtor the debtor had full control over that and that the including like the u c c one where it listed the same assets  bottle just really quickly your honor as i think the court has got the tone of the issue that before it the fact of the matter is is that in this situation my client has  denied the opportunity to present all the facts and information before the court and before the trial or a fact and at the end of the day the court disregarded that there is a genuine issue of material fact and denied deny my client that opportunity present summit thank you we thank both of you and i will hear part  so this is now over on the the issue on the seven seven twenty seven and here is where the judge found expressly that the debtor intentionally transferred these assets of his of corporations that he was the sole shareholder officer and director of fully control to his mother thought of creditors and the issuer that the court came up as we believe with the legal areas that were addressing on this appeal is that the court did not believe that the evidence was sufficient to make a finding of alter ego and the first prong into california law under bankruptcy law  egos governed by the law of the state and that means california law controls just to make sure i understand what we're reviewing the bankruptcy courts factual findings here on alter ego for clear way that a debtor could be liable for the debts of a corporation even involving a fraudulent transfer like she found is if the corporation was set up as a fraud from its is it's an old case admittedly but i think it's the case it's the closest some point to the point i'm trying to make and it's minute fever says rally one eighty seven cal four eighty one and and there the california supreme court talks about there's there's two standards you know first there has to be a sufficient unity of interest between the  shareholder and the corporation and secondly that you have to find that the there was some type of maybe not outright fraudulent conduct or in equity or in justice if the corporate formality was was of hel the record below show that the judge was convinced that there was a purpose intent of these transfers was to treat fraud the lane hender creditors and schmidt expressed findings that you know pick a verb and she found that all of them were there  but was she was she concerned with was well how do i you know yet to part one of the unity of interest you know and mina fee what the court said is there there was a gentleman who had almost all the shares of a corporation but he had given a couple of shares to a couple of different directors but the allegation was that he controlled the board of directors he was the only one who had an interest in the corporation and he made all the decisions for the corporation and based on that the california supreme court said that was enough to meet the first prong and that was something that we had argued to judge smith and saying look there's you know say  want there was no other shareholder at the time of these transfers to mr stoute he was the officer and director of these corporations you have full control of him no one had an interest in these businesses but him he had full authority to do whatever he wanted with them  he so he had the control and that was enough to meet the first prong of the alter ego doctrine and what the and there was and i will concede that there was evidence submitted that there were corporate minutes and that at least at the supreme court has applied the doctrine of alter ego and so here we have a situation getting back the point i was making earlier was you have you have a debtor who's got these debts he has these corporations this should make sure you're you're saying that you think that california law says that if you have a sole shareholder of a corporation and the corporation transfers property that would be useful in the shareholders privacy that that's enough to establish the shareholder is the alter ego of the corporation the effect alone it's a sole shareholder of the corporation and the transfer of the assets it's almost the first half of eretz essential what you're saying well i'm saying there's two prongs and the first prong is is there's sufficient unity of ownership and interest and a sole shareholder as it would be because the second part only eighty said you could do it that way no other case since then has said you that would be an improper way or that there is that right there reasoning or that rule is called into doubt because really what the court was saying is like saying if you have full control  then it's like you're double because it's you you have an interest you make all the decisions you know and so that is that's or that's a risk they're kind of going down on your time i want to ask you about the time and if so if your appeal you seem like there might be a problem there you did not it is heard them together and issued one opinion but it didn't state we're consolidating these cases isn't that right that's what the opposing counsel argues that seems to be correct now that was not my understanding but is there a consolidation order i'd have i'd have to look i didn't i didn't really i did the party is different in the two cases yes the parties are different though the app referred to them as two related the order of appeals where they filed their appeal of the b a p order and then after they filed an order an appeal to be pure we also follow the cross a place just seems to me that the back and the bankruptcy court emphasized that the two adversaries are separate cases and decided them in separate records just happened to be but they're different records so it was across appeal of the three seven so they have peeled the ruling on the the five forty seven b case you can cross  on that that will appeal then your own case a seven twenty seven a case correct yes to the to be a p we both we both filed appeals to the to be right that yours was more than thirty days from the decision and that's the argument they're making not not from that not from the initial order to the b a p they're saying is that our appeal from the b a p to the to here right was was like  least i did not participate in the preference action he was not given that had the motion to consolidate them drop below short we could have been granted and then he would have been participating in that action so it's fundamentally unfair to do it after the fact now when he was deprived of that before had he been in that case and we end up at this place then that's more compelling argument stiction all courts have more discretion to reach the merits whereas here a timeless objection has been raised right yes ok what about this this whole thing about do you agree that the bankruptcy court's judgment in the discharge adversary is in conflict with the district court's judgment in the preference of the sciri particularly on the issue of whether the business assets or the debtors in other words if we affirm the seven twenty seven then we'll be final you know and when the time for petitioning for cert runs out which i'm sure the supreme court will want to hear this one right and so then you'll go you'll try to move in the the preference action to say there's a final orders i had property of the debtors at is that what you're saying i believe would be mr mistah who would be doing that but yes that seems to be the next logical step if was argued to some extent below but part of the problem with that argument for the mr armstrong's case is that he it was waived below in the closing trial briefs he suggested to the trial court that she not even reached that issue i think that is because he realized there was no evidence in the record to support it and i think that was a waiver of that issue below it was also situation is not enough by itself you've got to look at all the other factors and this in this trial we presented on my side the mountain of evidence or referred to in the brief that the bankruptcy court calmly took the time to review and she agreed it was a mountain of unopposed evidence showing that all the copper from maladies into separate separateness of the entities were maintained for years and years and years so i don't think the alter ego issue is preserved and there's certainly no evidence in the record to support it the what one factual issue if i may just digress to the other case a little bit your honor i was in his declaration this just adds to the both applied in e c s transferred all of their assets including those in question to the s i and december thirty first two thousand and eight is my note wrong or is am i misunderstanding that in the day if that's what it but this unity of interest issue was refuted first of all there was no argument no evidence at the truck level and it was  refuted through the extensive direct testimony of my client mr stout his mother the largest doubt and some other witnesses and then the boatload of corporate records we bared everything in discovery we presented to the judge here so i don't see how you get unity of interest just from the sole shareholder issue and that theory that they're arguing about an equitable interest doesn't surely doesn't find of the seven twenty seven cases i've cited thurman from the tenth circuit the up in the ninth circuit has addressed them in this court doesn't appear to have yet clearly there's a long line of cases that have been called black letter law at this point by the bankruptcy courts that say under seven twenty seven there is no equitable or derivative interest considered at all for the corporations that wasn't the issue the issue was who really had control of these of these entities and that's what the menifee case was about and that and the case the judge smith cited relied on in her orders and judgments expressly talk about this issue of corporate for maladies and that was my point is that under california law that that is not the only standard but she felt based on prior net circuit precedent she had to go that way unless there was some re submitted that includes the calendar for this morning return