case of perlman vs reliance insurance however the result in permanent was solely based on equitable principles of the court in that case evaluated the equities as between a concluded that when you like o paid and surety bond obligations as a matter of law it automatically became the sole owner whole property wherever it was and to the full extent of its payment to the automatic exclusion of the lawyers whose labors obtain the funds in the trial court determination was by definition in correct there is no such law there is no statute that would lead to that result the result again perlman was soley based on equitable not legal principles and the trial court's ultimate error was in failing to consider equity  from pursuing the surety directly in a separate proceeding with respect to your unpaid legal fees well of course it is conceivable we could pursue years to sure however the appropriate way is for the surety to pay the money back into the bankruptcy court and for the bankruptcy court to distribute it in the way it should have now you like the bankruptcy court first of all the term and that wasn't the state property which is it conclusion that simply is not support was not part of the bankruptcy the trial court concluded that because of an equitable right of subrogation somehow that property which was a colt a debt to cult to the de somehow automatically became you like it was property that simply cannot be it was in fact a state property like at by forty one also says that if your legal title in  holds a legal title now at the bank the judge in the court here ruled in essence is that all the old subrogation is originally an equitable playing at the time they pay they take the equitable claim but they also got the lien releases which which of course are to clear statement of title to a leean but the bankruptcy appellate panel and the ninth circuit have recognized that that a dead end in kuwait right to a mechanic's lien others the time has expired yet to record the liam gives you the right to prevail against the estate and what the bankruptcy court here rule was that in essence that equitable reich ripe lien releases they had the right to decide whether to pursue they had the right to decide who to hire as an attorney they have the right to approve a settlement you got a settlement but you did it without surety consent to either your retention or yourself well if the surety the surety you know exactly what was going on chose not to pursue these rights if we had not done so the money never would have been collected this year you have an equitable claim against the surety but you would certainly in order to get it right the neck of a claim against the charity you would have had to approach them and say is that ok if we keep going on this effort is it ok more importantly that we settle here right well of course we could make that request we couldn't first proceed against you like go into bankruptcy court however i still believe that the court sitting in on these motions was a court in equity and the basic premise in programming was that as between two challenging titles to this property and equity balance was struck in favor of the surety and against general court creditors and i think the trial court here should have struck equity and should have the state and why isn't that perfectly equitable because the insurance company paid for it they paid for it they paid to buy the claim in essence under their contract und er equitable title they paid for the right not only to pursue it to decide who to retain as counsel when they bought the right don't but they didn't pursue it and it would not have occurred without our efforts and as a further equitable principle to consider here you know it's hard enough for a bankruptcy court under these circumstances to get retain counsel where you only get paid if you prevail and then only your hourly rate and then only if it's considered reasonable to throw this roadblock in as well what might law firm would ever in their right minds represent the state in these circumstances if  especially as to the post petition fees which is how the bankruptcy court ruled here that it's governed by the bankruptcy code of the federal rules the bank of the procedure and the bankruptcy courts order under which mightily on and mccrory was authorized to act as special counsel and it's just happened that it ultimately settled after the bankruptcy filing arisen out of the construction contracts from years before the bankruptcy well let me your direct this law firm has expended professional services in bringing a benefit to this bank bankruptcy what is your position with respect to when or if those fees will ever be compensated well first of all not only on in the car i was ready awarded in this case by the bankruptcy could only attach to property or the trustees property which is that the property of this state because that's who its client and the law firms client was not you like all the bankruptcy court ruled that the selling of funds at least a portion of it the five hundred approximately five hundred thousand dollar amount if you like those property under the affable supplication like you and his lien attach in the rain to the claim that he was pursuing under california law assume it goes and there's two types your client it wasn't a windfall the ruling at the bankruptcy court level was for you likely to get approximately five hundred thousand dollars as the court has pointed out was paid by you like a lot of you like those funds to material suppliers on three few months before the bankruptcy filing was awarded attorney's fees which i think was about one hundred thousand dollars and merrill lynch which was another secured creditor of coles was awarded i don't know the exact dollar figure but i think it was around eighty thousand dollars some contractors and materials suppliers because provisions of all three construction contracts at issue here which is glendale fashion center long beach town center in san diego town center provided that called as a subcontractor to general contractors are dingy construction don't work construction and another general had to provide had to finish the projects lien free it before it was get paid final retention and the rest of its progress or payments called didn't do that was unable to pay its sub sub contractors and materials suppliers and pursuant to the bonds you likely had it pay over five hundred thousand dollars to those entities in order for the owners to ultimately release money and for the project to be completed so we never would have even got to the point of call being able to sue for change orders or cult been able to sue for delay or disruption damages which is where the settlement process came from if you like though didn't in essence complete the project by paying off the subs and the materials suppliers to help those lings and they were all recorded collected and was in the los angeles superior court in which we resisted the like o motion do attach successfully preserving it for the bankruptcy state we generated five hundred and fifty thousand approximately in other lawsuits in which in driving a firm was not involved in any way in disputed long litigation and recovered those funds you know we one thing we have addressed here is the context this is a this was a motion to lift state you filed a motion to lift state and maybe it's arguable that you should have been allowed at least to go into the state courts the judge had ruled previously and i think counsel probably right it was  no representation of prior leean ownership or lawyers leon and therefore i'm going to make you go through the state i'm sorry and there's pretty broad discretion on the stay or let's stay issue that's the context and how do you get around that couple of things your honor first of all of the adversary proceeding in which the court determined it was you like those private property we were not a party to it was not binding honest and it was not binding on the court on these motions and moreover it was only attorney pardon you were the attorney for the state trustee no no your honor we were special counsel hired by the trustee to prosecute these cases we were not at the adversary party proceeding we were not a party to it we didn't even know about so that result was not binding on ice in these motions moreover it was the court when it issued that order so that it was subject to its order was subject to the priority payments under the bankruptcy court that may be found to exist which is one one of which was ours and the court remember the nevertheless assuming you're right what's wrong with my statement that here the context is live state in the bankruptcy judge has pretty broad discretion basically the banks you get say you've got to come to the state i'm sorry not to let you go directly in st case just argued will be submitted for decision and we will hear arguments in the jeff goodrich bankruptcy versus the union planners