# F IL ED

M AR 29 2019
SUSAN M . SPRAUL, CLERK U. S. BKCY

. APP. PANEL O F T HE NI NT H CI RCUI T 

### NOT FOR PU BLICA TION

U NIT E D ST A T E S BA NK RU PT CYA PPE L L A T E PA N E L

OF T HE NINT H CIRCU IT In re: C EC C HI GO R IPIC TU R ES; C EC C HI GO R IU SA, IN C ., Deb to rs. G& G PRO DU C TIO N S, LLC ; GA BRIELE ISRA ILO VIC I; GIOVA N N I N A PPI,

A p pellants, v. C EC C HI GO R IPIC TU R ES; C EC C HI GO R IU SA, IN C ., A p pellees. BA P N o . N C -18-1042-KuFB Bk. N o s. 16-53499-MEH 16-53500-MEH A dv. N o . 17-05007-MEH

M E M O RA ND U M *

A rgued o n N o vemb er 29, 2018 at San Franc isc o, C alifo rnia Sub m itted o n March 28, 2019 Filed – March 29, 2019 A ppeal fro m the United States Bankruptcy C o urt

*Thi s di sposi ti on i s not appr opr i ate for publi cati on. Although i t may be ci ted for whatev er per suasiv e v alue i t may hav e, seeFed. R. App. P. 32.1, i t has no pr ecedenti al v alue, see9th Ci r . BAP Rule 8024-1.fo r the N o rthern Distric t o f C alifo rnia

Ho no rab le M. Elaine Ham m o nd, Bankruptcy Judge, Presiding A ppearanc es: Michael H. W eiss o f W eiss &Spees, LLP argued fo r

appellants G& G Pro duc tio ns, LLC, Gab riel E. Israilo vic i, and Gio vanni N appi; O ri K atz o f Sheppard Mullin Richter & Ham pto n LLP argued fo r appellees C ec chi Go ri Pic tures and C ec chi Go r i U SA, Inc

.
Befo r e: KU RT Z, FA R IS, and BRA N D, Bankruptcy Judges. C ec chi Go ri Pic tures (C GP) and C ec chi Go ri U SA, Inc . (C GU SA ) (c o llec tively Deb to rs) filed an adversary c o m plaint against G& G Pro duc tio ns, LLC(G& G) and Gab riele Israilo vic i (c o llec t ively Defendants), 1 alleging c laim s fo r, am o ng o thers, avo idanc e and rec o very o f a c o nstruc tive fraudulent transfer under § 548(a)(1)(B) 2 and C a lifo rnia law. Deb to rs
m o ved fo r partial sum m ary judgm ent o n these c laim s. The b ankruptcy
c o u rt granted Deb to r s' m o tio n and o rdered turno ver o f the transferred pro perty. Defendants appeal fro mthis ruling. Fo r the reaso ns explained

1 Debtor s also named Gi ov anni e Nappiand Vi ttor i o CecchiGor ias defendants. Mr . Gor idefaulted on all clai ms again st hi m. Mr . Nappiwas not named in the constr ucti v e fr a u dulent tr ansferclai ms at i ssue in thi s appeal.

2 Unless specifi ed other wi se, all chapterand secti on r efer ences ar e to the Bankr uptcy Code, 11 U.S

. C. §§ 101-1532, "Rule" r efer ences ar e to the Feder al Rules of Bankr uptcy Pr ocedur e, and "Ci v i l Rule" r efer ences ar e to the Feder al Rules of Ci v i l Pr ocedur e. 2b elo w, we R EVER SE. FA CT S

A . Prepetition E v e nts Deb to rs, b o th C alifo rnia c o rpo ratio ns, were part o f a c o rpo rate fam ily
o f vario us entities that were o wned o r c o ntro lled b y Mr. Go ri, an Italian filmpro duc er and po litic ian. Deb t o rs pro duc ed and develo ped m o tio n pic tures and alsoheld rights to sc ripts and o ther intellec tual pro perty that po tentially c o uld b e m ade into m o vies. C GU SAserved as the ho lding
c o m p any, o wning the vario us sc ript related rights; C GP alsohad so m e interest in tho se rights. In 2006, Mr. Go ri's large pro duc tio n ho lding c o m pany Fin.Ma.Vi S.p.A(FIN MA VI) filed b ankruptcy in Italy with $927 m illio n in deb t
. Mr. Go r i was indic ted fo r c rim inal fraud in Italy in c o nnec t io n with FIN MA VI's c o llapse. While Mr. Go ri was preo c cupied with FIN MA V I's b ankruptcy, he b ec am e invo lved in a dispute with Gianni N u nnari, Deb to rs' C EO . Mr. Go ri alleged that Mr. N unnari had engaged in self-dealing and vio lated his fiduc iary ob ligatio ns to Deb to rs b y trying to divert filmpro jec ts to his o wn pro duc tio n c o m p a ny. Mr. Go ri term inated Mr. N unnari. In turn, Mr. N unnari sued fo r wro ngful term inatio n in the C alifo rnia c o urt, and Mr. Go r i filed c laim s against himfo rfraud, b reach o f fiduc iary duty and
o thers.

3Sinc e Mr. Go ri's assets were fro zen due to FIN MA VI's b ankruptcy

and the N unnari litigatio n was o n-go ing, Mr. Go ri turned to Mr. Israilo vic i to pro vide c o nsulting servic es fo r Deb to rs and fo r financ ial help. In July 2009, Deb to r s entered into a c o nsulting agreem ent with Mr. Israilo vic i whereb y he was to ac t as a liaison b etween Deb t o rs and Mr. Go ri b ec ause Mr. Go r i seldo mtraveled to the United States and had little c o m m and o f the English language. 1. T he L oan Fro mN o vemb er 2009 toO c tob er 2, 2011, Mr. Israilovic i lent Deb to rs a to t al o f $1.5 m illio n. Fo r each lo an, Mr. Go ri signed and dated rec eipts perso nally and in the nam e o f, and o n b ehalf o f, Deb to rs, which he delivered to Mr. Israilo vic i. Mr. Go ri represented to Mr. Israilo vic i that Deb to rs wo uld use the advanc es to c o ver the atto rney's fees and expenses to the law firmW o lf, Rifkin, Shapiro , Schulm an &R ab kin, LLP (W o lf Rifkin) in c o nnec tio n with the N unnari litigatio n and pay c ertain o perating expenses. Mr. Go ri later adm itted that he did no t use the funds fo r tho se purpo ses and that Deb to rs rec eived no ne o f the funds. 2. T he Prom is s ory Note Apro m isso ry no te dated N o vemb er 20, 2012 (N o te) evidenc ing the lo an defined the "Bo r r o wer" as Mr. Go ri, C GP and C GU SA . The Bo rro wer granted Mr. Israilo vic i a security interest in "sc ripts, c o ntrac ts, b rands" (Sec urity) until the N o te was paid in full. The N o t e had a m aturity date o f

4January 15, 2015. If the Bo rro wer defaulted in paym ent under the term s o f

the N o te o r after dem and fo r ten days, the Security wo uld b e im m ediately pro vided to the lender, Mr. Israilo vic i. Mr. Go ri signed the N o t e in his individual c apac ity and o n b ehalf o f Deb to rs. Mr. Israilo vic i later testified that he do cum ented the lo an at this tim e b ec ause Mr. Go r i failed to pay himfo r c o nsulting servic es that he pro vided to Deb to rs even tho ugh the N unnari litigatio n had settled fo r o ver $5.45 m illio n. 3. T he Priv ate A g reem ent O n N o vemb er 29, 2012, Mr. Go ri, perso nally and as C EOo f Deb to rs, entered into a private agreem ent with Mr. Israilo vic i (Private A greem ent). Mr. Go r i ac kno w ledged the $1.5 m illio n lo an m a de b y Mr. Israilo vic i and pro m ised to pay that lo an and the $1 m illio n o w ed to Mr. Israilo vic i fo r
c o nsulting servic es. Mr. Go ri also gave Mr. Israilo vic i the autho r ity to
o perate Deb to r s fo r the purpo se o f m a king a numb er o f film s ab ro ad and transferred the "C ec chi Go ri" tradem ark "im m ediately" to Mr. Israilo vic i. The Private A greem ent stated that if Mr. Go ri did no t pay Mr. Israilo vic i $2.5 m illio n b y January 15, 2015, Mr. Go ri wo uld transfer toMr. Israilo vic i (1) all the rights pertaining to the sc ripts listed in the attachm ent to the agreem ent; (2) all the rights pertaining to rem akes o f the film s pro duc ed b y Mr. Go r i o r his c o m panies; and (3) the rights deriving fro mthe filmentitled S ilence

. Mr. Israilo vic i later dec lared in c o nnec tio n with the sum m ary

5judgm ent pro c eedings that the C ec chi Go r i tradem ark rights and rights

pertaining to the rem akes o f Mr. Go ri's film s that were transferred tohim in the Private A greem ent had no t b een previo usly transferred to Deb to rs. A c c o rdingly, Mr. Israilo vic i m aintained that these rights were the separate rights o f Mr. Go r i (Separate Go ri Pro perty) and did no tb elo ng to Deb to rs. 4. T he Firs t A s s ig nm ent Mr. Go ri did no t pay Mr. Israilo vic i b y the January 15, 2015 due date. A c c o rdingly, o n A pril 1, 2015, Mr. Go ri, ac ting fo rDeb to rs, transferred
so m e o r all o f Deb to r s' assets c o nsisting o f (1) fo rty-two film pro j ec ts (A ssets); (2) filmrights pertaining to the rem akes o f film s pro duc ed b y Mr. Go r i o r his c o m panies; (3) all Mr. Go r i's rights derived fro m the film entitled S ilence

, inc luding b ut no t lim ited to all Mr. Go ri's rights pertaining to a purchase agreem ent dated A ugust 9, 2013, b etween Mr. Go ri, as
o wner, and Geo rgia FilmFund Twenty One, LLC, as purchaser; (4) intellec tual pro perty rights inc luding the tradem ark and b rand nam e C ec chi Go ri; and (5) Mr. Go ri's c o ntrac tual rights arising o ut o f c ertain settlem ent agreem ents (First A ssignm ent). The First A ssignm ent ac kno wledged that the parties entered into the Private A greem ent dated N o vemb er 29, 2012, whereb y Mr. Go ri, C GP and C GU SA, defined as the "A ssigno r," agreed to repay Mr. Israilo vic i c ertain
m o nies b y January 15, 2015 and, if they failed tom a ke that paym ent, the transfer o f the assets reflec ted in the Private A greem ent b ec am e effec tive

6January 15, 2015. The First A ssignm ent further stated that it was an

agreem ent to "fo rm ally c o dify the transfer o f any and all rights held b y the A ssigno r in tho se assets describ ed in the 2012 [Private] A greem ent, as well as any and all rights held b y A ssigno r in c ertain o ther assets," a c o m p lete list o f which was attached as Exhib it A . That exhib it listed fo r ty-two sc ripts, filmrights, intellec tual pro perty rights, and c o ntrac tual rights. The First A ssignm ent further stated: [F]o r go o d and valuab le c o nsideratio n, the m u tual rec eipt and suffic ienc y o f which is hereb y ac kno wledged, the Parties hereto agree as fo llo ws:

. . . 2. C o nsideratio n: In c o nsideratio n fo rA ssigno r's assignm ent o f the A ssets, A ssignee has paid toA ssigno r as full c o m pensatio n O ne Do llar ($1.00), the rec eipt and suffic ienc y o f which is hereb y ac kno wledged.

. . . 8. Entire A greem ent: This A greem ent (to gether with all attachm ents hereto ) expresses the entire understanding o f the parties hereto with respec t to the m atters c o ntained herein and supersedes any fo rm er agreem ents, understandings and representatio ns relating to the subjec t m atter hereo f. This A greem ent c a nno t b e m o dified o r am ended exc ept b y an instrum ent in writing signed b y the parties hereto . This agreem ent m a y b e exec uted in c o unterparts, and faxed o r elec tro nicsignatures are effec tive. 5. T he Sec ond A s s ig nm ent O n the sam e day as the First A ssignm ent, Mr. Israilo vic i and Mr. Go r i's perso nal atto rney, Mr. N appi, fo rm ed G& G. Mr. Israilo vic i then
7im m ediately re-transferred the A ssets and Separate Go ri Pro perty to G& G

under an assignm ent and assum ptio n agreem ent. G& G's o perating agreem ent sho wed that Mr. Israilo vic i and Mr. N appi were the so le m emb ers o f G& G, with Mr. Israilo vic i ac ting as
m anager (O perating A greem ent). Mr. Israilo vic i and Mr. N appi each held 50% o f the m emb ership interests in G& G. Mr. Israilo vic i's c o ntrib utio n o f the A ssets was valued at $2 millio n and Mr. N appi's c o ntrib utio n,
c o nsisting o f all his rights to a Jean-Michel Basquiat painting entitled W ine
o f Ba bylo n , was alsovalued at $2 m illio n. 6. Sale of the A s s ets to Fabric a Servic es , Inc . Ayear after the First and Sec o nd A s signm ents, o n A p ril 16, 2016, G& G so ld the A ssets and Separate Go ri Pro perty to Fab ric a Servic es, Inc

. (Fab ric a) fo r $300,000, with additional paym ents to fo llo w per agreem ent b etween the parties (Fab ric a A greem ent). Fab ric a's initial $300,000 payment was allo c ated as fo llo ws: $150,000 fo r a 50% interest in o ne asset (the pro j ec t kno wn as The Ea sy Life ), $30,000 fo r the rights to the C ec chi Go ri N am e, and $120,000 fo r exc lusivity fo r five years in c o nnec tio n with the lic ensing to third parties o r ac quisitio n b y Fab ric a o f c ertain rights to the A ssets. B. Bankruptcy E v ents C GP and C GU SAfiled their c hapter 11 petitio ns in Dec emb er 2016. The b ankruptcy c o urt entered an o rder direc t ing the jo int adm inistratio n o f

8the estates.

O n A p ril 6, 2017, Mr. Israilovic i filed a pro o f o f c laimfo r $2.5 m illio n b ased o n the $1 m illio n due to himfo r c o nsulting servic es and the $1.5
m illio n due under the N o te. 1. T he A dv ers ary Proc e eding In Feb ruary 2017, Deb to rs filed an adversary pro c eeding against the Defendants. Deb to rs alleged eight c laim s fo rrelief, o nly two o f which are relevant here. In the third c laimfo r relief, Deb to r s alleged that the transfer
o f the A ssets was c o nstruc t ively fraudulent under § 548(a)(1)(B). In the fifth
c laimfo r relief, Deb to r s alleged that the transfer o f the A ssets was
c o nstruc tively fraudulent under C al. C iv. C o de §§ 3439.04(a)(2). In b o th
c laim s, Deb to rs so ught to avo id and rec o ver the A ssets fro mMr. Israilo vic i, the initial transferee, and G& G, the sub sequent transferee. Defendants answered the c o m plaint with b lanket denials and asserted num ero us affirm ative defenses, inc luding that Mr. Israilo vic i
c anc elled his prio r$1.5 m illio n lo an to Deb to rs in exchange fo r the transfer
o f the A ssets. 2. D ebtors ' M otion For Partial Sum m ary Judgm ent Deb to rs m o ved fo r partial sum m a ry judgm ent o n their c o nstruc tive fraudulent transfer c laim s. Deb t o rs m aintained that it was undisputed that there was a transfer fro mDeb to rs to Defendants and that Deb to rs were rendered inso lvent o n the date o f and after the transfer o f the A ssets.

9They further argued that there was no dispute that Deb to rs rec eived

$1.00 in c o nsideratio n o f the transfer as stated in the First A s signm ent, and that this was essentially "no value." Deb to rs argued that the analysis fo r "reaso nab ly equivalent value" b egan and ended with the First A s signm ent b ec ause it was fully integrated b y its term s and m ade no m entio n o f the satisfac tio n o f any present o r antec edent deb t o wing b y Deb t o rs to Mr. Israilo vic i. Deb t o rs m aintained that the b a nkruptc y c o urt was pro hib ited fro mc o nsidering any extrinsicevidenc e to the c o ntrary. Deb to rs further asserted that the c o nduc t and adm issio ns o f b o th G& G and Mr. Israilo vic i sho wed that the value o f the A ssets was m aterially in exc ess o f $1.00. They po inted to the O perating A greem ent where the A ssets were given a fair m arket value o f $2 m illio n at the tim e o f the transfer. They further no ted that the Fab ric aA greem ent sho w ed that $150,000 was allo c ated fo r a 50% interest in o ne o f the A ssets ( The E a sy Life ). A c c o rding to Deb t o rs, this evidenc e estab lished that the fair valuatio n o f a
sm all po rtio n o f the A ssets was wo rth m o re than $1.00. Finally, Deb to r s m aintained that the transfer o f the A s sets did no t result in paym ent o f pre-existing deb tallegedly o wed b y Deb to rs to Mr. Israilo vic i and that his lo ans neither direc tly no r indirec tly b enefitted Deb to rs sinc e no ne o f the m o nies went to them

. Deb to rs sub m itted several dec laratio ns in suppo rt o f their m o tio n. Dec laratio n o f Mr. K atz: The dec laratio n o f Mr. O ri K atz, c o unsel fo r
10Deb to rs, attached a c o py o f (1) Mr. Israilo vic i's dec laratio n filed in the

adversary pro c eeding; (2) the First A ssignm ent; (3) the agreem ent that G& G entered into with Fab r ic a; (4) the O perating A greem ent o f G& G; (5) an ac c o unting o f the initial $300,000 paym ent Fab ric a m ade to G& G in
c o nnec tio n with the Fab ric a A greem ent; (7) the spec ificpages o f Mr. Israilo vic i's depo sitio n taken March 24, 2016 filed in G& G Pro ds., LLC v. R usic, N o . 15-02796, 2016 WL 38803032 (C .D. C al. July 6, 2016); and (8) the spec ificpages o f Mr. N appi's depo sitio n taken May 7, 2016, filed in the R usicm atter. Dec laratio n o f Mr. de C am ara: Andrew de C am a ra, the chief
exec u tive o ffic er fo r b o th Deb to rs, testified that Deb to rs had noassets o f
m aterial value after the transac tio n o n A pril 1, 2015, whereb y Deb to rs assigned the A ssets toMr. Israilo vic i. He further testified that a review o f all depo sits to D eb to rs o f $10,000 o r m o re sho w ed that no ne o f the m o ney
m ade its way direc tly fro mMr. Israilo vic i o r in the fo rm o f transfer thro ugh Mr. Go r i, to either deb to r o r W o lf Rifkin fo r purpo s es o f the N unnari litigatio n. Dec laratio n o f Mr. R o senb aum : Mark R o senb aum, a partner with the law firmo f W o lf Rifkin, ac ted as c o unsel to Deb to r s and Mr. Go ri during the perio d fro mA pril 2009 toN o vemb er 2012 in c o nnec tio n with the N unnari litigatio n. Mr. R o senb aumdec lared that after June 24, 2009, W o lf Rifkin rec eived no paym ents in c o nnec tio n with the N unnari litigatio n

11fro mMr. Go ri o r Deb t o r s.

Dec laratio n o f Mr. Jayarantna: Padm al Jayarantna, an em plo yee o f C ity N atio nal Bank (C N B) filed a dec laratio n pertaining to the b ank
ac c o u nts o f Deb to rs and attached statem ents, chec ks and wires fo r the tim e perio ds reflec ted. This dec laratio n was sub m itted to sho w that Deb to rs' b ank ac c o unt at C N B had a de m inim is b alanc e at all relevant tim es until it
was c lo sed in July 2015. 3. D efendants ' Oppos ition In their o ppo sitio n, Defendants c o nc eded the fo llo w ing: (1) there was a transfer; (2) Deb to rs were o r were rendered inso lvent at the tim e o f the transfer; and (3) despite Mr. Go r i's representatio ns, they c o uld lo c ate no evidenc e that the funds advanc ed b y Mr. Israilo vic i b enefitted Deb to rs. Defendants did no t c laimthat Deb to rs rec eived an "indirec t b enefit" fro m the advanc es. Defendants argued, ho wever, that there were triab le issues o f fac t o n whether Mr. Israilo vic i had given reaso nab ly equivalent value to Deb to rs in exchange fo r the A ssets. First, Defendants asserted that the transfer was in satisfac tio n o f a valid ob ligatio n o f Deb to rs to Mr. Israilo vic i fo r $1.5
m illio n. Defendants further explained that Mr. Israilo vic i initially did no t
rec all that he had surrendered the o riginal N o te to Mr. Go ri when he filed his pro o f o f c laim . Ho wever, Mr. Go r i c o nfirm ed that he ob tained the
o riginal N o te sho rtly after the First A ssignm ent. A c c o rding to Defendants,

12o nc e the b ankruptcy c o u rt to o k the surrender o f the N o te into ac c o unt, an

issue o f fac t aro se as towhether Deb to rs rec eived value fo r the A s sets. Defendants also m a intained that there was a triab le issue o f fac t as to whether the A s sets had any value fo r Deb to r s' c redito r s. Defendants argued that if the $1.5 m illio n deb t was discharged, the alleged $2 m illio n value as reflec ted in the G& G c o ntrib utio n agreem ent m ight still b e
c o nsidered reaso nab ly equivalent. Defendants further po inted o ut that Deb to rs sub m itted no expert evidenc e o n the value o f the A ssets. A c c o rding to Defendants, the A ssets had alm o st no independent value to
c redito rs o f Deb to rs unless c o upled with the Separate Go ri Pro p erty whic h was transferred toMr. Israilo vic i in the 2012 Private A greem ent; i.e., the tradem ark rights to the C ec chi Go r i nam e and rights pertaining to the
rem ake o f o ver three hundred film s pro d uc ed b y Mr. Go r i o r his
c o m p anies. Defendants argued that these separate rights, which were transferred to Fab ric a, did no t b elo ng to Deb to rs. Defendants po inted to the dec laratio n o f Mr. Pavlo vich, the princ ipal o f Fab ric a, who dec lared that the A ssets had no value to Fab ric a witho ut the Separate Go ri Pro perty; i.e.,
use o f the C ec chi Go ri tradem ark. N ext, Defendants asserted that the sc r ipt rights Deb to rs transferred to Mr. Israilo vic i were "c o ntingent" and thus it was nec essary todisc o u nt the fac e value o f the A ssets, if any, b y the prob ab ility that the c o ntingenc y
wo uld o c cur. Defendants explained that whether the A ssets c o uld b e

13turned into c ash depended upo n whether a pro duc tio n c o m p any agreed to

b uy a sc ript o r pro

jec t fo rwhich pro d uc tio n financ ing had b een arranged and the sc ript b ec o m es a suc c essful film . Defendants argued that Deb to rs had to sho w whether any such c o ntingenc y m ight o c cur at the tim e o f the First A ssignm ent o n A pril 1, 2015. Witho ut evidenc e that the c o ntingenc y
m ight o c cur, Defendants c o ntended that the expec ted value was zero, c iting H ayden v. D eno s (In re H

ayden) , Bankr. N o . 1:14-BK-11187-MT, A dv. N o . 1:14-ap-01182-MT, 2015 W L 9491310, at *11 (Bankr. C .D. C al. Dec . 28, 2015)(in inso lvenc y analysis, the c o u rt ob served that if there was a
c o ntingent asset o r c o ntingent liab ility, that asset o r liab ility m ust b e reduc ed to its present, o r expec ted value) (c iting S ierraS teel, Inc. v. To tten Tubes, Inc. (In re S ierraS teel, Inc.) , 96 B.R

. 275, 278 (9th BA PC ir.1989) (reduc ing value o f a c o ntingent liab ility to a present value o f zero where evidenc e sho ws zero liab ility o n c laim ) (c iting In re Xo nics Pho to chem ica l, Inc. , 841 F.2d 198, 200 (7th Cir. 1988) (hypo thesizing that where there was a 1% chanc e that a c o ntingenc y wo uld o c cu r, the liab ility is disc o unted to reflec t that chanc e)). Lastly, Defendants asserted that unless Deb to rs had a c lear chain o f title to the sc ripts, they had no value. Defendants m aintained that o f the fo rty-two filmpro

jec ts transferred, thirteen o f tho se pro jec ts had novalue sinc e they had b een m ade and Deb to rs expec ted no further paym ents. Fo r fifteen o f the projec ts, Deb to rs lac ked a c lear chain o f title and thus were

14wo rthless. Defendants c o nc eded that Deb to r s m ay have o wned fo urteen

pro jec ts with c lear title, b ut explained that independent film pro jec ts have value o nly if the c hain o f title analysis is perfo rm ed b y independent perso ns such as Tho m so n C o m pum ark o r Dennis A ngel. N either o f these independent perso ns pro vided a chain o f title analysis. Defendants
c o m p lained that the lim ited chain o f title analysis was done b y a lawyer that wo rked fo r Mr. Go r i o r Deb to rs. A c c o r ding to Defendants, witho ut pro o f that Deb t o rs had c lear title to the fo urteen pro jec t s, it was im po ssib le to spec ify a value. Defendants sub m itted the fo llo wing dec laratio ns in suppo rt o f their
o ppo sitio n: Dec laratio n o f Brian L. Berlandi: Brian L. Berlandi served as transac tio nal c o unsel to Mr. Go ri and Deb t o rs fro mJune 2013 toFeb ruary 2015. Mr. Berlandi declared that there were o nly twelve titles with apparently c lear chain o f title transferred to G& G thro ugh the A pril 2015 transfer, b ut the exhib it attached to his dec laratio n sho wed fo urteen sc ripts
were o wned b y Deb to rs. Mr. Berlandi further o pined that Deb to rs did no t
o wn thirteen o f the titles and that o wnership o f fifteen sc r ipts were unc lear b ec ause there were no chain o f title do cum ents. Dec laratio n o f Mr. Pavlo vich: Mr. Pavlo vich testified that the prim a ry
m o tive o f Fab ric a in entering into the Fab ric aA greem ent was toac quire the rights to rem ake The Ea s y Life, o ne o f Mr. Go ri's separate rights. A c c o rding

15to Mr. Pavlo vich, Fab ric a b elieved that the rights to rem ake The Ea sy Life

b elo nged to Mr. Go ri. W itho ut the rem ake rights to The Ea sy Lifeand the
use o f the "C ec chi Go ri" likeness, Fab ric aviewed the film pro jec ts as having
no independent value. Dec laratio n o f Mr. Go ri: Mr. Go ri's dec laratio n verified the am o unts lo aned b y Mr. Israilo vic i fo rthe purpo se o f funding the N unnari litigatio n and Deb to rs' o peratio ns. He dec lared that he did no t use the m o ney to fund Deb to rs' o peratio ns o r the N unnari litigatio n. He further dec lared that the Private A greem ent sho wed that the A ssets and Separate Go ri Pro perty
wo uld b e transferred to Mr. Israilo vic i if the N o te and $1 m illio n o wed fo r Mr. Israilo vic i's c o nsulting fees were no t paid b y January 15, 2015. A c c o rding to Mr. Go ri, the am o unts were no t paid b y that date and thus the parties entered into the First A ssignm ent. Finally, Mr. Go ri dec lared that sho rtly after the exec utio n o f the First A ssignm ent o n A pril 1, 2015,
so m eo ne fro mMr. Israilo vic i's o ffic e delivered the o riginal N o te to himin R o m e. Supplem ental Dec laratio n o f Mr. Israilo vic i: Mr. Israilo vic i's dec laratio n reiterated much o f what was said b y Mr. Go ri with respec t to their vario us agreem ents. Mr. Israilo vic i further dec lared that when he had filed his pro o f o f c laimhe did no tkno w that he had surrendered the
o riginal N o te o r that po s s essio n o f the o riginal was nec essary toenfo rc e it. Mr. Israilo vic i also explained that develo ping sc r ipt rights entails

16num ero us c o sts which c an b e rec o uped o nly if a pro duc tio n c o m pany

dec ides to m o ve fo rward with the pro jec t and ob tains financ ing. Even then, there was no guarantee that the sc ript rights o wner will rec eive full reimb ursem ent fo r its sunk c o sts. Mr. Israilo vic i dec lared that there were vast unc ertainties o f getting a film pro duc ed and even greater unc ertainty that the filmwo uld suc c eed. A c c o rdingly, he c o nc luded that the value o f a
sc ript right was highly c o ntingent. Mr. Israilo vic i further dec lared that ab sent independent pro o f that Deb to rs had c lean title to each o f the filmpro j ec ts, it was im po ssib le to value these assets. Finally, he dec lared that Mr. Go r i's perso nal right to rem ake o ver three hundred film s already pro d uc ed was inc luded in the rights transferred in the First A ssignm ent. Mr. Israilo vic i dec lared that Mr. Go ri had no t previo usly transferred these rights to Deb to rs prio r to their N o vemb er 29, 2012 agreem ent. He stated that the part o f the rem ake rights to The Ea sy Lifeb elo nged to himb ec a use he ac quired themfro m Mr. Go ri
o n N o vemb er 29, 2012; whereas, Deb to rs' rights were lim ited to a new
sc ript b ased o n the c o nc ept o f the earlier m o vie. A c c o rding to Mr. Israilo vic i, witho ut b o th rights, neither party c o uld c laimc lear title and thus c o uld no t m ake the m o vie. Mr. Israilo vic i also dec lared that the $2 m illio n value attrib uted to the A ssets and o ther rights c o ntrib uted to G& G represented his appro xim ate

17"c o st b asis" o r "b o o k value" o f tho se assets; i.e., the appro xim ate am o unt he

had paid fo r o r invested in them, no t his assessm ent o f the then-c urrent fair
m arket o f the A ssets. A c c o rding to Mr. Israilo vic i, the value assigned was attrib uted to a c o mb inatio n o f Deb to rs' A ssets with the Separate Go ri Pro perty which sub stantially enhanc ed their value. 4
. T he Bankruptcy Court' s Ruling A fter a hearing, the b ankruptcy c o urt to o k the m atter under sub m issio n. O n Feb ruary 2, 2018, the b ankruptcy c o urt granted Deb to rs'
m o tio n fo r partial sum m a ry judgm ent finding that Deb to rs had sho wn there was no genuine dispute o f m aterial fac t o n any elem ent o f a
c o nstruc tive fraudulent transfer c laimunder § 548(a)(1)(B). The c o urt first no ted that Defendants c o nc eded that Deb to r s transferred sub stantially all o f their assets toMr. Israilo vic i o n A p ril 1, 2015, less than twoyears fro mthe petitio n date, and that Deb to rs were inso lvent o n the date o f that transfer. In additio n, the b ankruptcy c o urt fo und that Deb to rs did no t rec eive
reaso nab ly equivalent value fo r the transfer o f the A ssets. U sing the two

step analysis fo r determ ining reaso nab le equivalent value that is em plo yed in this C ircuit, the b ankruptcy c o urt c o nsidered whether value was given in exchange fo r s ub stantially all o f Deb t o rs' A ssets. U ltim ately, the c o urt
c o nc luded that the value given was $1.00 as reflected in the First A ssignm ent.

18The c o urt reached this c o nc lusio n fo r two reaso ns. First, it rejec ted

Defendants' argum ent that m o re than $1.00 value was given b ec ause Defendants surrendered the N o te to Mr. Go r i thereb y suggesting that the $1.5 m illio n deb twas satisfied. The b ankruptcy c o urt reaso ned that the First A ssignm ent was a fully integrated agreem ent and thus paro l evidenc e was inadm issib le. W itho ut paro l evidenc e, the c o urt fo und that there was
no evidenc e to suppo rt Defendants' assertio n that the A ssets were transferred in satisfac t io n o f a deb t. N ext, the c o urt held, as a m atter o f law, that the underlying N o te was
no t discharged b y surrender to Mr. Go ri as it was no t a nego tiab le instrum ent under C alifo rnia law. The b ankruptcy c o u rt no t ed that C al. C o m . C o de § 3604 perm its a lender to discharge an instrum ent b y surrender. An instrum ent is defined in C al. C o m . C o de § 3104(b ) as a nego tiab le instrum ent. C al. C o m m . C o de § 3104(a) defines a nego tiab le instrum ent as, am o ng o ther things, an unc o nditio nal pro m ise o r o rder to pay a fixed am o u nt o f m o ney, payab le to a b earer o r to o rder at the tim e it is issued o r first c o m es into po ssessio n o f a ho lder. The b ankruptcy c o urt held that the N o te was no t m ade payab le to b earer. The c o urt also no t ed that to qualify as m ade "to o rder," the N o te
m ust c o ntain the language "payab le to the o r der o f" o r sim ilar language. S ee Co o pera tieve Centra le R a i ffeisen-Bo erenleenba nk B.A. v. Ba ily , 710 F. Supp. 737, 738-39 (C .D. C al. 1989); Ba nco Merca ntil S .A. v. S a uls, Inc. , 140 C al. A pp. 2d

19316, 318-19 (1956); C al. C o m . C o de § 3109. Sinc e the N o te m erely stated that

it was payab le to Lender, it was no t a nego tiab le instrum ent and its surrender, witho ut m o re, did no t c o nstitute discharge. A c c o rdingly, the
o nly value given b y Mr. Israilo vic i in exchange fo r the A ssets was $1.00 as reflec ted in the First A ssignm ent. Turning to the sec o nd step o f the analysis, the b ankruptcy c o urt
c o nsidered whether th e $1.00 value given was reasonab ly equivalent to the value o f the A ssets. There was nodirec t evidenc e o f the value o f the A ssets. Instead, the c o urt relied upo n c ircum s tantial evidenc e fro mwhich it m ade inferenc es o f value. The b ankruptcy c o urt ob served that Mr. Israilo vic i's
c o ntem po raneo u s c apital c o ntrib utio n o f the A ssets toG& G which were valued at $2 m illio n was evidenc e that the A ssets were wo rth m o re than $1.00. The b ankruptcy c o urt rejec ted Defendants' argum ent that Mr. Israilo vic i's c o ntrib utio n was no t reflec tive o f m arket value, b ut instead b ased o n b o o k value, b ec ause this was c o ntrary to the language in the O perating A greem ent and C o ntrib utio n A greem ent which referred to fair
m arket value o f the pro p erty c o ntrib uted. The b ankruptcy c o urt alsoc o nsidered whether the Separate Go ri Pro perty, which was part o f Mr. Israilo vic i's c apital c o ntrib utio n to G& G,
was wo rth $2.0 m illio n thereb y leaving the A s sets wo rth no thing o r c lo se to $1.00, o r whether the value o f the separate pro perty was inseparab le fro m the A ssets such that o ne c o uld no t determ ine if they were wo rth m o re than

20$1.00. The b ankruptcy c o urt fo und that per the term s o f the Fab ric a

A greem ent, Fab ric a paid $30,000 fo r use o f the C ec chi Go ri nam e in 2016. A c c o rding to the c o urt, if the C ec chi Go r i nam e was only wo r th $30,000 in a sub sequent sale toFab ric a, Defendants' argum ent m eant that the Separate Go ri Pro perty was wo rth ab o ut $1,970,000.00. The co urt fo u nd no evidenc e sho wing, direc tly o r indirec tly, that these vario us rights were wo rth that
am o u nt. In additio n, the c o urt no ted that the Fab ric a A greem ent delineated a $5,000 paym ent fo r each o ne o f the A ssets that held "ac tivity o rinterest," which was further indic atio n that the A ssets them s elves held so m e value, whether it b e $5,000 per pro jec t as dec ided b y the Fab ric aA greem ent, o r
so m e o ther am o unt. In the end, the c o urt c o nc luded that the First A s signm ent's net effec t was a drain on the estate, as it resulted in all o f Deb to rs' assets b eing transferred away. Mo reo ver, the b ankruptcy c o urt no ted that the questio n b efo r e it was m erely whether the A ssets were wo r th m o re than $1.00. Mr. Israilo vic i's c apital c o ntrib utio n and am o unts rec eived fro mthe Fab ric a A greem ent were prob a tive evidenc e that the A ssets were wo rth m o re than $1.00 and this evidenc e was undisputed. A c c o r dingly, the b ankruptcy c o urt fo und that Deb to r s did no t rec eive reaso nab ly equivalent value fo r the A ssets. The b ankruptcy c o urt then fo u nd that the Fab ric a A greem ent sho wed

21there was a m a rket fo rthe A ssets and that the m arket was willing to o ffer

m o re than $1.00. A ltho ugh the c o urt fo und that the Fab r ic a A greem ent was relevant to the finding o f value, the c o urt no ted that it was no t dispo sitive b ec ause it o c curred o ver a year after the First A ssignm ent and O perating A greem ent. N o netheless, the sub sequent sale toFab ric aindic ated that the A ssets were no t b lindly unlo aded to G& G in an effo rt to lighten a sinking ship - c learly, the A ssets were wo rth a sec o nd m arketing and sale effo rt. In additio n, the b ankruptcy c o urt fo und no evidenc e in the rec o rd indic ating that the A ssets were wo rthless o r sho u ld b e disc o unted to zero to reflec t their c o ntingent value at the tim e o f the transfer; i.e., that their value was dependent o n their future purchase b y a pro duc tio n c o m pany o r
o n o ther develo pm ent. The c o urt distinguished the vario u s c ases c ited and
no ted that altho ugh the full po tential o f the A ssets' value m ay o nly b e realized upo n sale and pro duc tio n, they retained so m e value independent
o f these events. The b ankruptcy c o urt alsorejec t ed Defendants' argum ent that the value o f the A ssets sho uld b e disc o unted to no thing b ec ause at least twenty-eight o f the filmrights lac ked a c lear chain o f title. The c o urt fo und that, even assum ing that the twenty-eight projec ts were who lly wo rthless, at least fo urteen o f the rem aining projec ts were free fro mtitle issues. The b ankruptcy c o urt no ted that a lim ited chain o f title analysis had b een perfo rm ed o n these pro jec ts and that they were later so ld under the Fab r ic a

22A greem ent, which was further evidenc e o f so m e value.

Finally, the b a nkruptc y c o urt fo und that Mr. Pavlo vich's dec laratio n
was no t adm issib le to re-interpret the values assigned within the Fab ric a A greem ent b ec ause the agreem ent was integrated and there were no
amb iguities. In sum, the b ankruptcy c o urt fo und that Defendants had no tsho wn any disputed issues o f m aterial fac t regarding the value o f the A ssets. Therefo re, as a m a tter o f law, it was reasonab le to infer fro mthe evidenc e pro vided b y Deb to rs that the A ssets transferred were wo r th m o re than $1.00 and thus Deb to rs did no t rec eive reaso nab ly equivalent value in
exchange. O n Feb ruary 8, 2018, the b ankruptcy c o urt entered judgm ent in favo r
o f Deb to rs. The judgm ent, which c o ntained a C ivil Rule 54(b ) c ertific atio n, stated that the transfer o f the A ssets toDefendants was fo und fraudulent under § 548(a)(1)(B) and C al. C iv. C o de § 3439.04(a)(2). Defendants filed a tim ely appeal. JU RISD ICT ION The b ankruptcy c o urt had jurisdic tio n pursuant to28 U .S.C . §§ 1334 and 157(b )(2)(H). W e have jurisdic tio n under 28 U .S.C . § 158. ISSU E S Whether the b a nkruptcy c o urt erred in finding that, as a m atter o f law, Mr. Israilo vic i gave $1.00 in "value" in exchange fo r the A ssets; and

23Whether the b a nkruptcy c o urt erred in finding that, as a m atter o f

law, the $1.00 given in value was no t reaso nab ly equivalent to what Defendants rec eived. ST A ND A RD OF RE V I E W W e review de no vo a b ankruptcy c o urt's dec isio n to grant sum m ary judgm ent. Ma r cia no v. Fa hs (In re Ma rcia no ) , 459 B.R

. 27, 35 (9th C ir. BA P 2011), a ff'd, 708 F.3d 1123 (9th Cir. 2013). De no vo review requires that "we
c o nsider a m atter anew, as if nodec isio n had b een rendered previo usly." Mele v. Mele (In re Mele) , 501 B.R . 357, 362 (9th C ir. BA P 2013). D ISCU SSION A . L eg al Standards : Sum m ary Judgm ent In reviewing the b ankruptcy c o urt's dec isio n o n a m o t io n fo r
sum m ary judgm ent, we apply the sam e standards as the b ankruptcy c o urt. Sum m ary judgm ent is pro perly granted when no genuine and disputed issues o f m aterial fac t rem ain, and, when viewing the evidenc e m o st favo rab ly to the no n-m o ving party, the m o vant is entitled to prevail as a
m atter o f law. Celo tex Co rp. v. Ca trett, 477 U .S. 317, 322-23 (1986). Material fac t s which wo uld prec lude entry o f sum m a ry judgm ent are tho se which, under applic ab le sub stantive law, c o uld affec t the o utc o m e o f the c a se. The sub stantive law will identify which fac ts are m aterial. Anderso n v. Liberty Lo bby, Inc. , 477 U .S. 242, 248 (1986). At the sum m ary judgm ent stage, the
c o u rt do es no t weigh the evidenc e and determ ine the truth o f the m atter,

24b ut determ ines whether there is a genuine issue fo r trial. Id. at 249.

The m o ving party b ears the initial b u rden o f sho wing that there is no
m aterial fac tual dispute. If the m o ving party m eets its initial b urden, the b urden then shifts to the no n-m o ving party to set o ut, b y affidavits o r adm issib le disc o very m aterial, spec ificfac ts sho wing a genuine issue fo r trial. Ce lo tex, 477 U .S. at 324. The party o p po sing sum m ary judgm ent m ust pro duc e affirm ative evidenc e that is suffic iently prob ative o n the issue that a jury reaso nab ly c o uld rely o n that evidenc e to dec ide the issue in his favo r at trial. Ma tsushitaElec. Indust. Co ., Inc. v. Zenith R a dio Co rp. , 475 U .S. 574, 588 (1986). Witho ut such evidenc e, there is no reaso n fo r a trial. Celo tex, 477 U .S. at 323. Finally, the evidenc e presented b y the parties m ust b e adm issib le. O rr v. Ba nk o f Am

. , N T &S A , 285 F.3d 764, 773 (9th Cir. 2002) ("Atrial c o urt c an [ ] c o nsider [o nly] adm issib le evidenc e in ruling o n a m o tio n fo rsum m ary judgm ent."). B. W hether Sum m ary Judgm ent W as A ppropriate Sec tio n 548(a)(1)(B) o f the Bankruptc y C o de pro vides that a transfer
o f pro perty o f the deb to r c an b e avo ided b y the trustee if (1) it o c curred within two years o f the petitio n date; (2) the deb to rwas inso lvent o n the date that such transfer was m ade o r such ob ligatio n inc urred, o r b ec am e inso lvent as a result o f it; and (3) the deb to r rec eived less than reaso nab ly equivalent value in exchange. S ee§ 548(a)(1)(B); s ee a lso O fficia l Co m m . o

f

25Unsecured Credito rs v. H a nco ck Pa rk Capita lII, L.P. (In re F itness H o ldings Int'l, Inc. ), 714 F.3d 1141, 1145 (9th Cir. 2013). Here, it is undisputed that Deb to rs had so m e interest in the fo rty-two
sc ripts which were transferred to Mr. Israilo vic i o n A p ril 1, 2015, thro ugh the First A ssignm ent. 3 This was less than twoyears fro mthe petitio n date, and Deb to rs were inso lvent o n o r after that date. Therefo re, o nly the third elem ent, whether Deb to rs rec eived less than reaso nab ly equivalent value in
exchange fo r the transfer, is at issue. A n exam inatio n into reaso nab ly equivalent value inc ludes two inquires: (1) whether value was given in exchange fo r the transfer and (2) whether the value o f what was transferred was reasonab ly equivalent to what the deb to r rec eived. Greenspa n v. O rrick , H erringto n &S utcliffe LLP (In re Bro beck

, Phleger &

H a r riso n LLP) , 408 B.R . 318, 341 (Bankr. N .D. C al. 2009). "By its term s and applic atio n, the c o nc ept o f 'reaso nab ly equivalent value' do es no t dem and a prec ise do llar-fo r-do llar exchange." H a sse v. R a insdo n (In re Pringle) , 495 B.R . 447, 463 (9th C ir. BA P 2013).

3 We obser v e that under the ter ms of the Note, Debtor s gav e Mr . Isr ai lov i cia secur i ty i nter est in the Assets. The bankr uptcy cour t di d not av oi d thi s tr ansfer or deci de that the secur i ty inter est was unenfor ceable. A tr ansferof collater al to a secur ed cr edi tor i s not a fr audulent tr ansfer, so long as the secur i ty i nter est i s enfor c eable and the debtor gets appr opr i ate cr edi t agai nst the debt. See In re Fitness Holdings Int'l, Inc. , 714 F.3d at 1145-46 ("to the extent a tr ansferconsti tutes r epayment of the debtor ’s antecedent or pr esent debt, the tr ansferi s not constr ucti vely fr audulent"). 261. V a lue

A s to the first inquiry, "value" fo r purpo ses o f fraudulent transfer law
m eans "pro p erty, o r satisfac tio n o r securing o f a present o r antec edent deb t
o f the deb to r." § 548(d)(2). The parties dispute the am o unt Mr. Israilo vic i gave in exc hange fo r the A ssets. Deb to rs take the po s itio n that Mr. Israilo vic i gave $1.00 in exchange fo r the A ssets as a m atter o f law b ec ause that am o unt was reflec ted in the First A ssignm ent— an integrated agreem ent, which m ade no m entio n that the transfer was m ade in satisfac tio n o f a deb t. Defendants argue that the paro l evidenc e rule do es
no t b ar evidenc e that a particular transac t io n is a fraudulent transfer. They further c o ntend that o nc e all the adm issib le evidenc e is c o nsidered, it sho ws there is a genuine dispute fo r trial as towhether Deb to rs' transfer o f the A ssets was in satisfactio n o f the $1.5 m illio n deb t o wed to Mr. Israilo vic i. Befo re c o nsidering the sum m ary judgm ent evidenc e, we address the applic ab ility o f the paro l evidenc e rule. A c c o r ding to the First A ssignm ent, C alifo rnia law go verns the interpretatio n and enfo rc em ent o f the agreem ent b etween the parties. The paro l evidenc e rule, c o dified in C alifo rnia C o d e o f C ivil Pro c edure §§ 1856 4 and 1625, 5 generally pro hib its

4 Cal. Code Ci v . Pr oc. § 1856 enti tled "Ter ms in wr i ti ng intended as final expr essi on of agr eement; exclusi on of par ol ev i dence; excepti ons" pr ov i d es: (continued...) 27the intro duc tio n o f either o ral o r written extrinsicevidenc e to vary, alter, o r

add tothe term s o f an integrated written agreem ent. Ca s a H e rrera , Inc. v. Beydo un , 32 C al. 4th 336, 343 (2004). The rule is o ne o f sub stantive law b ased o n the c o nc ept that a written integrated c o ntrac t estab lishes the term s o f the agreem ent b etween the parties and evidenc e that c o ntradic ts the written term s is irrelevant. Id. at 343–44. The paro l evidenc e rule has no applic ab ility under these
c ircu m stanc es. First, this is no t a c o ntrac t ac tio n. The b ankruptcy c o urt was
no t required to interpret the First A ssignm ent to determ ine the rights and liab ilities o f the parties. Instead, the c o urt was required todeterm ine whether Deb to rs' transfer o f the A ssets to Mr. Israilo vic i was fo r reaso nab ly equivalent value. The b ankruptcy c o urt c o uld adm it any testim o ny and extrinsicevidenc e that was prob ative o n this inquiry. S ee In re Bro beck , Phleger H

a rriso n LLP, 408 B.R . at 341 (in c o nstruc t ive fraudulent transfer

4 (...continued) (a) Ter ms set for th ina wr i ti ng intended by the par ti es as a final expr essi on of thei r agr eement wi th r espect to the ter ms included ther ein may not be contr adi cted by ev i d ence of a pr i or agr eement or of a contempor aneous or al agr eement.

5 Cal. Code Ci v . Pr oc. § 1625 enti tled "Wr i tten contr acts; effect on negoti ati ons or sti pulati ons" pr ov i des: The executi on of a contr act in wr i ti ng, whether the law r equi r es i t to be wr i tten or not, super sedes all the negoti a ti ons or sti pulati ons concer ning i ts matter whi ch pr eceded or accompani ed the executi on of the instr ument. 28analysis, the c o urt exam ines all the c ircum stanc es surro unding the

transac tio n); see a lso Bro wn v. R aygo z a (In re Addinto n) , Bankr. N o . 12-10029, 2015 WL 3404505, at *4 (Bankr. E.D. K y. May 27, 2015) (no t ing that a fraudulent transfer adversary pro c eeding go es tothe sub s tanc e o f the transac tio n, no t the interpretatio n o f the parties' c o ntrac t). Sec o nd, the existenc e o f an integratio n c lause in a c o ntrac t do es no t, in and b y itself, exc lude paro l evidenc e. C alifo rnia law pro vides an
exc eptio n to the paro l evidenc e rule that allo ws parties toc o ntradic t a
rec ital o f exec uted c o nsideratio n, i.e., m o ney which the c o ntrac t states has b een rec eived. D o r iav. Int'l Unio n, Allied Ind. W o rkers o f Am ., AFL-CIO, 196 C al. A pp. 2d 22, 39 (1961); s ee a l so S hiver v. Liberty Bldg.-Loa n Assn., 16 C al.2d 296, 299 (1940)

; S im m o ns v. Ca l. Inst. o

f Tech., 3 4C al. 2d 264, 272 (1949). Here, the $1.00 sho wn as c o nsideratio n is a rec ital o r m ere statem ent
o f the rec eipt o f m o ney and no t a c o ntrac tterm . A c c o rdingly, the $1.00
c o nsideratio n is no tc o nc lusive and Mr. Israilo vic i m a y present extrinsic evidenc e to sho w the true value exchanged. In sum, the b ankruptcy c o urt erred b y exc luding adm issib le evidenc e o n the issue o f "value" b y applic atio n o f the paro l evidenc e rule. Mo reo ver, "a c o ntrac t m ay validly inc lude the pro visio ns o f a do cum ent no t physic ally a part o f the b a sicc o ntrac t . . . .'It is, o f c o urse, the law that the parties m ay inc o rpo rate b y referenc e into their c o ntrac t the term s o f so m e o ther do cum ent.'" S ha wv. R egents o f Univ. o f Ca l. , 58 C al.

29A pp. 4th 44, 54 (1997). "The co ntrac t need no t rec ite that it 'inc o rpo rates'

ano ther do cum ent, so lo ng as it 'guide[s] the reader tothe inc o rpo rated do cum ent.'" Id. Here, the First A ssignm ent refers to the Private A greem ent. In that agreem ent, the parties agreed that Deb to rs wo uld pay Mr. Israilo vic i $1.5
m illio n fo r his lo an and $1 m illio n fo r his c o nsulting servic es no later than January 15, 2015. And, if they failed to m ake that paym ent, the transfer o f the assets reflec ted in the Private A greem ent b ec a m e effec tive January 15, 2015. The First A s signm ent go es o n to say that it is an agreem ent to "fo rm ally c o dify" the transfer o f tho se assets in the 2012 Private A greem ent as well as o thers. It is unc lear whether the b ankruptcy c o u rt c o nsidered this language and the Private A greem ent which sho wed the transfer o f the A ssets was in satisfactio n o f a deb t o wed b y Deb to r s to Mr. Israilo vic i if no t repaid b y January 15, 2015. Finally, Defendants argue that delivery o f the o riginal N o te to Mr. Go r i sho ws that Mr. Israilo vic i intended the transfer o f the A ssets to satisfy the $1.5 m illio n deb t. Defendants argue that c o mb ined with o ther adm issib le evidenc e such as Mr. Israilo vic i's lien o n the A ssets as evidenc ed b y the N o te, and Mr. Go ri's testim o ny that the o riginal N o te was surrendered at o r aro und the tim e o f the First A ssignm ent, a trier o f fac t
c o u ld reaso nab ly infer that Mr. Israilo vic i intended to c anc el the deb t b y delivering the N o te.

30Granted, there is c o ntrary evidenc e in the rec o r d fro mwhich a trier o f

fac tc o uld alsoreaso nab ly infer that Mr. Israilo vic i did no t intend to c anc el the deb t in exchange fo r the A ssets. He filed a pro o f o f c laimsho wing that he was o wed the deb t and dec lared that he did no t rem emb er delivering the N o te to Mr. Go r i at the tim e he filed his c laim

. Further, Mr. Israilo vic i did no t sub m it a dec laratio n in o ppo sitio n to the sum m a ry judgm ent stating that he intended to c anc el the N o te in exchange fo r the A ssets. Presented with the c o ntrary evidenc e, a c o u rt's ro le is o nly to determ ine whether a genuine issue o f m aterial fac ts exists, no t to m ake determ inatio ns o f c redib ility o r weigh c o nflic ting evidenc e. Anderso n , 477 U .S. at 255. And the c o urt is required to draw all justifiab le inferenc es in favo r o f the no nm o vants. Id. Here, a genuine triab le issue rem ains as to whether the "value" given fo r the transfer was satisfactio n o f the $1.5
m illio n deb t. If the underlying deb t is valid, delivery o f the N o te c o u pled with the transfer o f the A ssets toMr. Israilo vic i as c o ntem plated b y the First A ssignm ent, Mr. Israilo vic i's lien o n the A ssets, and the sub sequent delivery o f the N o te to Mr. Go ri, pro vide suffic ient evidenc e to raise an inferenc e that Deb to rs' transfer o f the A ssets to Mr. Israilo vic i was in satisfac tio n o f the $1.5 m illio n deb t. Bec ause o f this evidenc e, a c o ntrary inferenc e fro m Mr. Israilo vic i's pro o f o f c laimand the lac k o f a dec laratio n regarding intent c anno t b e m ade as a m atter o f law. A c c o rdingly, sum m ary judgm ent was no t appro p r iate.

312. Reas onably E quiv alent to W h a t W as Rec eiv ed

Bec ause o f o ur dec isio n to reverse the b ankruptcy c o urt's ruling with respec t to the "value" pro ng o f the reaso nab ly equivalent value analysis, it is prem ature to address any rem aining issues relevant to the sec o nd pro ng - whether the value o f what was transferred was reasonab ly equivalent to what Deb to r s rec eived. A ltho ugh the b ankruptcy c o urt c o rrec tly fo und that the fo rty-two sc ripts had value o ver $1.00, a m o re prec ise value m a y b e required. CONCL U SION Fo r the reaso ns explained ab o ve, we R EVER SE.

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