believe or issues of first impression before the court the primary issue which i was going to address this morning is whether a lawsuit filed to seek a determination as to whether or not property is property of the bankruptcy estate may itself be abandoned that is whether or not the court the bankruptcy court has jurisdiction over the personal property yet to be determined whether it has value and whether the property that is not yet in the bankruptcy estate can be valued or be determined by the bankruptcy court there are other issues which i i if i have time i would like to address including the standing issue we do have before the court a motion to strike with respect to the what i call the target defendants that is the defendants who were in the personal property action deck action are the ones primarily prosecuting these people let me begin by by the origin's and that is that the trustee i'm sorry but bankruptcy court below granted my client derivative standing to bring a declaratory judgment action questioning whether or not certain property that is not was not in the bankruptcy estate should in fact be considered to be in the bankruptcy as a personal property of the debtors and the trust in the debtors children the derivative standing was granted we brought it to clear it to our judgment action we continue with the prosecution of the action for some time before the bankruptcy court and then sort of at the end near the time of the case being having to trial the trust a sorry the order granting derivative standing that order with not just a blanket grant derivative standing what that weren't there restrictions or conditions or terms of the order that retained some power in the trustee well yes with respect to settlement and you know we had to we had to as is is the is the course we had to consult with the trustee with respect to certain  decisions involving settlement whether or not that would be in the best interest of the bankruptcy estate at the at the conclusion of the case as it was proceeding to trial we we were ready to go to trial but the trustee filed a motion to abandon his belief was that the property which had not yet been determined to be property of the bankruptcy state in other words if we were successful that that property would have in consequential value and there's not a bird there was no burden of the two elements of of five forty four aband there is no there was no issue with respect to a bird on the bankruptcy estate because my client was taking the entire laboring war with respect to the litigation we were financing the litigation we were prosecuting the action we were taking all of the risk financial and otherwise with respect to the action the trustee believed that the even if we were to win the action that is prevail and property came into the bankruptcy estate that that property would be of in consequence of value before the bankruptcy court was a lawsuit filed post post bankruptcy that litigation not property of the a stay no the litigation is not property the state property the state is property that can be property that we can exist to pre sition which comes into the bankruptcy state which in that within the definition of section five forty one which says all legal record all interests of the debtor in property as of the commencement of the case and what benefit your client derivative standing from wh creditor from the bankruptcy court well doesn't that mean it's proper your statement where did this come from though the lawsuit is to determine property of the bankruptcy of state was a it's a it's a declaratory judgment action saying asking the court to determine that certain property which existed pre partition and claim to not be bankruptcy state property was in fact bankruptcy estate property and i think the question is is that the only way that you have to prove it is standing and then with the extensions of the order that require the trustee to be involved  the only way that exists is because there is a property interest that belongs to the estate isn't that correct well it without the property interest you don't need to get rid of standing in the trustee has no reason to be involved in finalizing what settlement came so why is the trustee involved why is the bank of the state involved why the court involved why did you need to prove it if standing in this didn't belong to the state well the derivative standing was we may demand upon the trustee to bring an action to determine whether or not the property constituted property of the bankruptcy state the estate didn't have any assets in it at the time the trustee refused to to do so and so we sought rubinstein in the druid of standing is is to determine whether their interest in property of the bankruptcy state that determination is itself a property of the state is it not the right to make that claim and what the trustee subsequently abandoned was the litigation not the actual personal property is that correct no it's not correct i think with the way the bankruptcy code reads in section five forty one we're talking about property as of the commencement of the case this property was not in the bankruptcy estate it was not property of the bankruptcy state at the time we the determination that it was the lawsuit is not itself that it wasn't property of you that a determination of whether or not it was property if they needed to be made because you're not thing that it doesn't belong to the that right now in fact to be correct in fact are argument was that the court should determine that the property comes to the property of the bankruptcy estate that determination had not been made the so therefore our contention is that in order to abandon right the trustee who has  sole right to abandon he key has to be abandoning a state property there had not been a determination that there had been a state property that's why argument in the brief deals with in advisory decision the court essentially speculated  advised sort of a part you what what if it was property then i believe it has no value that's not what the court decided the court the court weighed the trustees request to abandon the property based on the trustees opinion business judgment in his discretion or her discretion i'm unclear on that at this point with respect to the in consequential value of the litigation isn't that correct you're correct your honor that's what judge lot of did but respectfully we believe she erred in doing so you cannot decide whether there is something to be a band  you have to remember we're prosecuting the lawsuit to determine whether or not the property is proper to the bankruptcy estate the trustee comes in and says well in my business judgment ok if this property comes into the bankruptcy of state th don't think it has any value in there is evidence or issues there but but the point is he didn't have any ability to abandon anything whether business judgment or what or not because there was no property in the bankruptcy estate your position is that the real or the personal property is in fact property of the estate which is what you want to actually to determine but that the trustee had to wait until that determination was made in order to abandon that yes because because when that issue was determined then then the trustee can move to abandon it everyone can weigh in on what is the value of that what has happened in the bankruptcy to try to chance to weigh in at the hearing as to whether or not there with value beyond what the trustee was asserting that was a benefit to the state isn't that yes yes and we did over objection the evidence was not of present value the evidence was of value as of the commencement of the case the trustee needed to present i'm sorry nation regarding what you thought the value was or why you thought the trustee he didn't affirmatively present something that with counter to what he used to determine there was no no value because the appraisal was yours so you had an opportunity to address that the trustee thing there is no value here and there actually might be a greater value but you didn't present that you know because we believe the trustee did not meet his burden of value the up in consequential value the trustee put on three pieces of evidence the ira's claim the greer simonton appraisal which was ours and an insurance policy which covered personal property the insurance policy first of all is in each insured value personal property with no itemization of what personal property is involved second is the tax return the i r s has a lien a claim against appropriate state but there are as i explained to judge a lot of there are other things and other actions pending in the bankruptcy court which could then obviate including a potential of a settlement which could obviate the ira's claim the iris claim you cannot look at it in a vacuum you have to look at it in the entirety of the bankruptcy estate and all potential available assets that could satisfy the ira's claim anything could happen with respect to the simonton appraisal trustee offered that evidence though as a basis for his business judgment not as a basis for what the final value which could be determined would be was the basis for his business judgment in abandoning isn't that correct well it really  trustee should have had the right to abandon but the derivative standing order doesn't limit that does it no no and what the trustee was doing was putting on evidence those three pieces of evidence as value not only the the business judgment is a is a cart heart after the horse so to speak what you have is you have the trustee saying i think these assets are going in consequential value i have to establish value then based on what i have as far as value goes then i make the decision you know the business judgment decision as to whether or not those assets could be banded the again the problem is is those assets aren't in the bankruptcy court he is business judgment is about something that doesn't even exist and that's the problem is what the what the bankruptcy court should have done is she should have allowed the lawsuit to continue she should have made a determination it could have very well been that this property was not property of the bankruptcy estate my client was bearing that cost i understand my client was bearing all the cost of the litigation if we lost and the property was not in the bankruptcy estate we're not but if we won in the property is in the bankruptcy estate then the trustee has an opportunity to evaluate it at that to counter the trustee business doesn't what stopped you from doing it at that hearing just the fact that our argument was that the trustee didn't have the he didn't have the right to abandon anything at that point that was argued you chose to only address one part of what you had the ability to do then you think that the whole hearing should not have gone forward well as the hearing was that what the hearing is about with that the trustee was there doing business judgment as a basis for abandonment you knew that you had the ability to address that but instead of addressing that you chose to only address whether or not the hearing should be going forward at all well the burden of proof at the hearing was on the trustee argument was going to be successful and you had an opportunity to make the next argument but you chose not to but we did it we did not put on evidence beyond what the trustee put on in value we our position was a the trustee didn't have the right to do what he was doing b the value that the trustee put on was not the proper valuation well it sounds like you are so are going back and forth if you will between what the trustee actually abandon here and again i think it's is it clear that the trustee abandon litigation and not the actual personal property so it's the litigation that the trustee is focused on this should we continue the process to determine whether this is an asset of the state is it worth it to do that or is it being consequential a value at the end of the day and i'm hearing your arguments they're all focused on you know no we can't do this until you can abandon the personal property until you know the personal property is property of the estate i think i'm i'm and that's correct you're saying yes but if what was abandoned was the cause we assume the burden personally of the cost and expense of pursuing that litigation but the root of a standing order also gave church joint venture an administrative claim if there was a recovery they would get their fees reimbursed out of it so what we have is drew to a standing order which wasn't appealed of course it was filed the main case it was long final and says its cause of action blanks to this title so they pursue the cause of action applebee's follow a motion to dismiss which all come back to that was denied the parties litigated the lawsuit took discovery we show up in court in of property we're fighting over is worth two hundred thousand dollars and administrative fees incurred by a church i'd venture to date is approximately sixty thousand dollars at that site hearing the expresses his concern that this was a pointless lawsuit because the r s client the court adjourned the status conference thirty days at the journal status conference the court then the case of not compel abandonment so trustee files his motion  secured proof of claim for two hundred ninety three thousand trustee states to the court that was two hundred ninety three thousand as of august fifteen zero eight and keep in mind this i do sorry proceed it was wont was filed seven years into a seven case so the trustee says by my calculation with accrued interest the i r s claim is up to four hundred four thousand dollars and the trustee then introduces the with the court mr regulator argues well that wasn't our own expert report but in fact we offered exhibit four which is in the record which was an email from this regulator council some months earlier saying here's my expert report and this i had to search for sitting so expert report values the property at roughly two hundred thousand dollars in round figures which was the figure that mr oakley represented to the court of the december status conference  the trustee from bringing a motion to abandon and do you do you agree that what was abandoned was the litigation claim as opposed to the personal property that absolutely  was nothing nothing in the order that precluded the trustee from abandon in church on rent or didn't argue that in their brief there is case law out there mostly in a chapter eleven context it says even when the creditors committee gets through to standing property that's worth that and all we're stuck with was two hundred thousand dollars and the trustee importantly as part of his business judgment upon his concern that if if the case was litigated to its conclusion  that you'd wind up with property that had been appraised value of two hundred thousand dollars he would then have to liquidate it as a bankruptcy trustee the based on his experience it was unlikely that you would liquidate that in a bankruptcy sale for two hundred thousand dollars he would then have to subtract church joint ventures fees which again as are the stars conference was in the sixty thousand dollars range well then you know whatever additional fees were incurred in trial perspective it wasn't simply was not enough for a church family venture to so you know we're litigating this on our nickel they were certainly advancing that nickel but they were going to get it back if there was or coterie but again from the trustees perspective  there was concern that again we were going to wind up with an administrative way in solving the state we would generate any post petition tax claim and selling this property if they were successful but how do you see this breaking down let's say that what you just mentioned did happen to come to pass the trustee did not abandon this lawsuit to go to trial and concede that the property becomes part of the state were two hundred thousand dollars just  easy number is a cost of living liquidation say ten percent as one hundred ninety thousand left over does all that money then go to the internal revenue service to the ministry of claims get paid first or how does this go forward from your standpoint from my noticed on the drivel standing order and the derivative standing order provided that ok so they had an opportunity to object to it i would say it's tantamount to them being surcharged first occurred creditor recovery by a trustee but they'd still stand  other creditor in this case but doesn't that was not was the trustees conclusion that was his business judgment there was no proof from charge point ventured there was any equity in this lawsuit ever going to be any equity in this lawsuit so at that point it was clear that any recovery was going to simply want to first reimburse church joint venture for its legal fees balanced be sucked up by the i r s a secured claim and then possibly leave the esta what would make which would make a plausible claim of the property was not owned by any of the trust of that was the daughter's contention they had to submit more than just saying i dispute that i disagreed i think i property of the estate but i don't even identify specifically with property that they sued three trust and there's a lawsuit as well as a blessing during the children and said we're going to show you all claim some of this property is yours doesn't so you claim this you claim this you claim this just so there's property out there that the daughter so belong to other people and we still it belongs to the doubters again when you tonight in his motions court devoted one paragraph to the top of the argument basically saying everybody knows what we're talking about here and basically what the court said the court did not undertake any and i also said you know it's been going on for years i'll know what's at issue here well that's not the proper standard for the analyzing twelve b six motion the court did not go through twamley analysis court should not who've gone outside the four  keep in mind we had defendants who were not parties to the bankruptcy or who were not debtors we had them and others children we had three trust which were not in bankruptcy and so from a tumbling from a rule like perspective talking about here but even if this court decides that well there were sufficient factual allegations in the place so there is property in the house but the  boat ownership statute which is part of tennessee's fraudulent conveyance statues and obviously not part of the in a format but it had to tennessee's common law  alleges and what the statute basically says it's a creditors remedy and it basically says if you're a creditor executing on judgment and your judgment debtor has been in possession of personal property for five well only get to that point if they used five forty four is well that's our contention because because they cited in their complaint that the statute is not a statute of adverse possession it's not designed to regulate title to property as between to possess all or in the true rohner it's a creditor's remedy or about to argue about the statue and predict which will get us back to five forty four  so that's their theory was this tense a blunder ship statute a creditor's remedy well how does a bankruptcy trustee invoke a creditor's remedy well the law is pretty clear on that we have section five forty four  section five forty four allows a bankruptcy trustee to step in the shoes of a hypothetical judgment creditor so and in fact there's very little case law in tennessee construing the statute but there are an interest in property under under five forty four using distance blown or ship statute so our argument to the microbes the court was even if it states adequate probably facts the legal theory is  that you're avoiding this because the daughters have been in possession of property for five years and therefore it's deemed to be theirs and the trustee has the right under those terms of blown or ships they don't mention five forty four in the within the confines of the statutory framework and if your legal theory is i can avoid a transfer or seek a determination because i stand in the shoes of creditors under fire forty four other then the court jurisdiction risin follows with the trustees ability to do that question whether or not it really is an avoidance because the argument isn't that the transfer to whatever trust should be undone and if that there there really is well first off in terms of transfers again if you're arguing fraudulent transfer you're still stuck with a two year statute of limitations secondly there's no factual allegations alleging that this is a improper trust so subtle trust there's was devoid of allegations so there's nothing to support the bankruptcy courts determination was but there could be a request for a declaration that it's property of the state without getting into any of the avoidance issues it's almost like you're saying it's fraudulent c the first two cases would you agree that that obviates the need to address your cross appeal well recognizing that this might go up to the  circuit i would say the it doesn't the court should address whether we should have even been forced to do this it provides guidance not only to this court in future courts  as to what one needs to plead to make a claim under tennessee's danceable ownership statute i think the court rather than not addressing it should should in the alternative  if the trustees business judgment was not adequate this  property comes into the estate doesn't the ira's take it all well here here's what we argued and that is that yes perhaps we don't know ok we don't know until that happens but it would reduce the ira's claim the ira's claim is like two hundred three hundred thousand dollars it's not a huge claim anything that draws down on the iris claim reduces the ira's claim and provides a benefit to the bankruptcy estate ok and so you test the value of the of these assets once they're in the bankruptcy estate by putting them in the market place that is the trustee can then decide you know does anyone want to buy these well all of these assets are the assets of the debtors home ok and there were a lot of money in our position has always been that either from a settlement perspective or from a sale perspective they're going to be sold for more than what mr mr simonton said they were worth at the filing of the case we're talking about the two thousand eight value and also mr simon to in his report said he didn't even have access to all the property that was in the estate we subsequently subsequent to two thousand and nine we identified all of the property that was the subject of the personal property claim now on the issue of pleading and in limitations we're talking about a declaratory judgment action all right notice pleading can always follow a motion to reconsider you could take an interlocutory appeal they did nothing and by the way by the way with respect to the pleading issue so much discovery went on in this case that it's pretty much whether whether they knew or should have known is pretty much waved in moot by the fact that they discovered everything they know everything that is the subject of his lawsuit on the limitations issue it's interesting i would argue that the statue limitations issue that mr curry raises is a defensive issue and basically this is a declaratory judgment action and the statue limitations it does not apply to this action and so he this is not an action to a creditor's rights action for fraudulent conveyance or for set aside to say it's an action to decide who owns this property do the debtors in their trust own this property or does this property belong in the bankruptcy estate how we get there is actually limitations for one right and so argument has always been that this this case is was a case was ripe for determination should have been heard so that we could determine whether or not the property at issue was property of the bankruptcy estate the question is was there statute of limitations under the bankruptcy code not applicable to this action it's not an avoidance action it's an action to determine property of the bankruptcy estate in  decision agreed and that was right let's all happier and let you have any further questions i have a question so it seems that you're arguing that there was a value in the ac that is now lost but i'm still not clear why this is where you're making that argument as opposed to setting up that information before the bankruptcy court in addressing and the determination that the trustee was making in his business judgment regarding the value that there was actually value there i'm still not clear why you have you left that argument on the table well if the again i can only say that to answer your question hopefully is that the the action itself is not a property of the you state it's not a valuation issue with respect to the action the action leads to a result that result would have a value to the bankruptcy state but you also didn't argue how that action had value and how it should be maintained and addressing the trustees determination that there really was no value to the state ok i think i understand the question is when we were at the aban hearing we argued that the the lawsuit should remain that the lawsuit itself should not be subject to abandonment we did argue that the trustee put on evidence with respect to the the speculation the property would come into the bankruptcy state at some is a a means to an end and that is that property will come into the bankruptcy state then be subject to a robust sela sales procedure and evaluation at that time once it's in the bankruptcy estate the particular players who are interested in that property that's in the bankruptcy estate that can be liquidated the iris would sit on the sidelines waiting for that determination obviously once the properties in the bankruptcy estate is being liquidated the iris would see what is that what is the result of that in them and then make a cl subject to a distribution but but it doesn't just happen something has to be filed in the bankruptcy to distribute ahead of other creditors distribute their secured something to their secure claims that there had to be a live stay or some motion to distribute the point is it's the process but we don't get to that process until we know what the property is in the estate and what the value that property is going to be and it needs to be tested in that environment claims allowed until it objected to is that correct oh absolutely or we don't you're sure we don't have a problem with the ira's claim my concern is that we never got unfortunately never got to the point where we could then take these assets put them in the right environment to be sold sell that get liquidate the assets with all the different competing interests pay down the ira's claim suddenly the ira's claim could be substantially if not in whole paid off which benefits all the creditors because every other asset in this case your argument that you cannot settle anything ever you cannot make a determination of whether that something has value without exhausting all that a geisha and addressing that thing first and that that's not what you're saying no no no this is not a lawsuit in this case correct we can't the subject of the lawsuit was asking the court for determinations of personal property comes to property the bankruptcy of bankruptcy estate intil that property comes into the bankruptcy estate you cannot determine what its value is you cannot determine what it's what its benefit is because then at that point you would liquidate it and then make your but trophies do that all the time yes they determine that there is a claim that they believe you that it should belong to you think the debtor may or may not agree but rather than go through the litigation process they'll greet to a number to be paid in and it'll be done so that you don't have to have the lawsuit to resolve whether or not there's a benefit to claiming that property and trying to go further in fending money to see if you'll realize the money you get the could've been a settlement here unfortunately the trustee chose a different route to abandon basically taking the money outside of the bankruptcy court and not benefiting the creditors at all so the trophy had a right to act if they thought that you just don't like what they chose to do well there are things that people do in people don't do and we disagree or disagree i think as a matter of law here if you look at that the clear language the clear language of the statute all right this lawsuit is not property of the bankruptcy state that the result of the of the lawsuit would result in property of the bankruptcy estate intil that until we get there there was no abandonment that could take place as a matter of law and judge lotta erred in that regard thank you there is no further questions like that will