Court Opinion

ID: 2682042
Source: CourtListenerOpinion
Date Created: 2014-07-07 18:00:29.285771+00
Date Added: 2024-06-11T13:12:30.052139
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

IN THE MATTER OF: JERRY              No. 10-55933
LEE ICENHOWER, etc., et al.,
                    Debtors,           D.C. No.
                                 3:08-cv-01446-BTM-
                                         BLM
KISMET ACQUISITION, LLC,
         Plaintiff-Appellee,
                                       OPINION
             v.

JERRY L. ICENHOWER;
DONNA L. ICENHOWER;
CRAIG KELLEY,
               Defendants,

            and

ALEJANDRO DIAZ-BARBA;
MARTHA MARGARITA BARBA
DE LA TORRE,
      Defendants-Appellants.

      Appeal from the United States District Court
         for the Southern District of California
     Barry T. Moskowitz, District Judge, Presiding

                Argued and Submitted
       February 11, 2014—Pasadena, California
2                       IN RE: ICENHOWER

                         Filed July 3, 2014

            Before: Jerome Farris, N. Randy Smith,
             and Paul J. Watford, Circuit Judges.

                     Opinion by Judge Farris

                           SUMMARY*

                            Bankruptcy

    The panel affirmed the district court’s affirmance of the
bankruptcy court’s judgment (1) invalidating the transfer to
Alejandro Diaz-Barba and Martha Barba de la Torre (the
“Diaz Defendants”) of a Mexican coastal villa owned by
debtors Jerry and Donna Icenhower and (2) requiring the
Diaz Defendants to transfer the property to Kismet
Acquisition, LLC, for the benefit of debtors’ bankruptcy
estate.

    The debtors transferred the property to H&G, a shell
company they had purchased. After the debtors filed for
bankruptcy, H&G sold the property to the Diaz Defendants.
The bankruptcy trustee filed a fraudulent conveyance action
seeking to avoid the sale of the villa to H&G as a fraudulent
pre-petition transfer. The bankruptcy trustee also filed an
action seeking to avoid the sale to the Diaz Defendants on the
basis that H&G was the debtors’ alter ego and that the sale
was an unauthorized postpetition transfer.

  *
    This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                     IN RE: ICENHOWER                         3

    The panel affirmed the bankruptcy court’s judgment on
the postpetition transfer action. It held that the Diaz
Defendants had waived any objection they could have raised
to the bankruptcy court’s Article III authority to enter final
judgment. The panel held that since the bankruptcy court’s
judgment for Kismet was the same in both actions, the
panel’s judgment rendered the fraudulent conveyance action
moot.

    The panel held that the bankruptcy court did not err by
exercising jurisdiction over Mexican land. The panel held
that the local action doctrine was preempted by statute and
that 28 U.S.C. § 1334(e) granted the bankruptcy court
exclusive in rem jurisdiction over the villa interest. The panel
also held that the bankruptcy court did not improperly apply
U.S. law extraterritorially because Congress intended
extraterritorial application of the Bankruptcy Code as it
applies to property of the estate. Given the bankruptcy
court’s ruling that H&G was the debtors’ alter ego and its
substantive consolidation of H&G with the bankruptcy estate,
the villa interest was property of the estate as of the petition
date.

    The panel held that the bankruptcy court did not abuse its
discretion by failing to honor the contractual selection of a
Mexican forum. The bankruptcy court also did not err by
declining to abstain from ordering recovery of the property
based on international comity because there was no true
conflict of law. The panel held that Mexico was not a
necessary and indispensable party. Distinguishing In re
Tippett, 542 F.3d 684 (9th Cir. 2008), the panel held that the
bankruptcy court did not err in applying U.S. law instead of
Mexican law to determine whether the Diaz Defendants were
good faith purchasers. Finally, the panel held that the
4                    IN RE: ICENHOWER

bankruptcy court did not clearly err in finding that Martha
Barba de la Torre purchased the villa in bad faith.

                         COUNSEL

Edward I. Silverman (argued), Sandler Lasry Laube Byer &
Valdez LLP, San Diego, California, for Defendant-Appellant
Alejandro Diaz-Barba.

D. Anthony Gaston (argued), San Diego, California, for
Defendant-Appellant Martha Margarita Barba de la Torre.

Mathieu G. Blackston and Jeffrey Isaacs, Procopio, Cory,
Hargreaves & Savitch LLP, San Diego, California; Geraldine
A. Valdez, Financial Law Group, La Jolla, California, for
Defendants-Appellants.

Ali M.M. Mojdehi (argued), Janet D. Gertz, Brian W. Byun,
and Allison M. Rego, Cooley LLP, San Diego, California, for
Plaintiff-Appellee.

                         OPINION

FARRIS, Circuit Judge:

    Alejandro Diaz-Barba and Martha Barba de la Torre
(collectively, the “Diaz Defendants”) challenge the
bankruptcy court’s and district court’s orders invalidating the
transfer to them of a Mexican coastal villa owned by Jerry
and Donna Icenhower and requiring them to convey the
property to Kismet Acquisition, LLC for the benefit of
Debtors’ bankruptcy estate.        According to the Diaz
                     IN RE: ICENHOWER                         5

Defendants, the bankruptcy court erred by: (1) exercising
jurisdiction over Mexican land, contrary to the local action
doctrine; (2) applying U.S. law extraterritorially;
(3) declining to honor the forum selection clauses in the
Mexican contracts effecting the property’s sale; (4) declining
to abstain from ordering recovery of the property based on
international comity; (5) entering judgment without Mexico,
allegedly a necessary and indispensable party, having been
joined; (6) applying U.S. law, rather than Mexican law, to
determine whether the Diaz Defendants were good faith
purchasers of the property; and (7) finding that Martha Barba
de la Torre purchased the property in bad faith. We affirm.

                               I.

                     A. Factual History

    In 1995, Debtors purchased from D. Donald Lonie and the
D. Donald Lonie, Jr., Family Trust their interest in Vista
Hermosa, a coastal villa in Jalisco, Mexico. The interest
conveyed was not fee simple, as Mexican law prohibits
foreign nationals from owning title to land within 100
kilometers of the border or 50 kilometers of the coast. See
Brady v. Brown, 51 F.3d 810, 814, 817 n.8 (9th Cir. 1995).
Rather, Debtors received the beneficial interest in a
fideicomiso trust — an arrangement wherein a Mexican bank
holds title to property and a foreign national is granted the
right to its use. See id. A fideicomiso trust may be created
only with a permit issued by the Mexican Ministry of Foreign
Affairs. See id.

    On March 24, 2000, the Lonies sued Debtors in the
Southern District of California, seeking, inter alia, a
determination of the parties’ respective rights and interests in
6                     IN RE: ICENHOWER

the Villa interest and injunctive relief. On November 24,
2003, the district court entered judgment for the Lonies,
directing Debtors either to pay damages of $1,356,830.32 or
to return the Villa interest.

    On March 4, 2002, while the Lonies’ action against them
was pending, Debtors purchased H&G, a shell company
created by Laughlin International, Inc. The same day,
Debtors executed an agreement to transfer the Villa interest,
along with another property interest, to H&G in exchange for
$100,000 and H&G’s assumption of $140,000 of debt.
However, the bankruptcy court found “no evidence that H&G
paid any of the recited consideration,” and it noted that, even
after the sale, Mr. Icenhower retained “absolute control over
the operation of the Villa Property” and “the right to all rental
income from the villa.” Further, in light of H&G’s lack of
capitalization beyond $3,424 contributed by Debtors, and the
fact that Craig Kelley, its president and sole officer and
director, served in a purely titular capacity and took orders
from Mr. Icenhower, the bankruptcy court concluded that
“H&G had no real corporate existence apart from Mr.
Icenhower” and “had no business purpose other than as a
sham company to hold the Debtors’ assets.”

    Debtors filed for bankruptcy protection on December 15,
2003. In a closing ceremony in San Diego on June 7, 2004,
H&G sold the Villa interest to the Diaz Defendants for $1.5
million. Although H&G was represented by Mr. Kelley, the
closing was controlled by Mr. Icenhower.

    Prior to the closing, numerous red flags had arisen. First,
although the Villa interest was purportedly sold by H&G, Mr.
Icenhower was able to lower the purchase price to account for
a debt he personally owed Mr. Diaz. Second, the Diaz
                      IN RE: ICENHOWER                         7

Defendants were on notice of Debtors’ bankruptcy and of the
possibility of litigation to avoid Debtors’ transfer of the Villa
interest to H&G and to tie Debtors to H&G. Third, the Villa
interest was essentially H&G’s only asset, but its sale was not
authorized by a shareholder resolution, as required by Nevada
law and H&G’s Articles of Incorporation. Finally, the Diaz
Defendants were instructed to pay most of the consideration
to entities other than H&G, including an entity associated
with Mr. Icenhower.

                   B. Procedural History

    In January 2004, Debtors disclosed to their creditors their
March 2002 sale of the Villa interest to H&G. On August 23,
2004, the bankruptcy trustee filed an action to avoid the sale
from Debtors to H&G, alleging that the sale was a fraudulent
pre-petition transfer (the “fraudulent conveyance action”).
On August 3, 2006, the trustee filed an action to avoid the
sale from H&G to the Diaz Defendants, alleging that H&G
was Debtors’ alter ego and that the sale from H&G to the
Diaz Defendants was an unauthorized postpetition transfer
(the “postpetition transfer action”). H&G did not appear in
either action. By agreement approved by the bankruptcy
court on November 30, 2006, Kismet purchased the estate’s
assets and was substituted for the trustee in both actions.

    Following a bench trial, on June 2, 2008, the bankruptcy
court issued consolidated findings of fact and conclusions of
law in the two actions. First, the court ruled for Kismet in the
postpetition transfer action. The court found that H&G was
Debtors’ alter ego and substantively consolidated H&G with
the bankruptcy estate, such that the Villa interest was part of
the estate nunc pro tunc to the petition date. As such, the
transfer of the interest to the Diaz Defendants was an
8                    IN RE: ICENHOWER

unauthorized postpetition transfer avoidable under § 549(a).
The Diaz Defendants had no defense to avoidance under
§ 549(c) since they were aware of Debtors’ bankruptcy prior
to the closing. Further, as initial transferees of the interest,
they were strictly liable under § 550(a)(1) to return the
interest or its value to the estate.

    Alternatively, the bankruptcy court held that Kismet was
entitled to judgement on the fraudulent conveyance action.
Pursuant to § 544(b)(1) and California law, Debtors’ transfer
of the Villa interest to H&G was avoidable as a fraudulent
transfer. Under § 550(a)(2), Kismet could recover the Villa
interest from the Diaz Defendants, subsequent transferees not
in good faith.

    The bankruptcy court ruled that, under either action,
Kismet was entitled to recover “either the Villa Property or
its value at the time of judgment from any combination of
transferees.” However, “the equities favor an order directing
the return of the Villa Property where it appears Mr. Diaz
conspired with Mr. Icenhower to use the clear title in Mexico
to defeat the Trustee.”

   On the same day it issued its decision, the court issued a
separate judgment. In the postpetition transfer action, the
Diaz Defendants were ordered:

       [a] to take all actions necessary to execute and
       deliver any and all documents needed to undo
       the avoided transfer, and to take all actions
       necessary to cause the property to be
       reconveyed to a fideicomiso trust naming
       [Kismet] as the sole beneficiary for the benefit
       of the bankruptcy estate; or
                      IN RE: ICENHOWER                          9

        [b] alternatively, at [Kismet]’s sole option
        made upon proper noticed motion, the court
        reserves jurisdiction to enter a monetary
        judgment in favor of Kismet, and against
        Defendants, in an amount necessary to make
        the estate whole at the time of judgment.

A substantially similar order was issued in the fraudulent
conveyance action. Finally, the court “reserve[d] jurisdiction
to issue any and all orders necessary to carry out and enforce
this judgment.” On July 30, 2008, the court filed an amended
consolidated judgment in which it clarified that the Villa
interest was an interest in a fideicomiso trust, not a fee simple,
and extended the deadline for compliance. The bankruptcy
court’s judgment was affirmed by the district court on May
21, 2010.

                               II.

    Our role in a bankruptcy appeal is “essentially the same”
as that of the district court, In re Caneva, 550 F.3d 755, 760
(9th Cir. 2008) (quoting Parker v. Cmty. First Bank, 123 F.3d
1243, 1245 (9th Cir. 1997)), thus we “directly review the
bankruptcy court’s decision,” id. We review findings of fact
for clear error and conclusions of law and of mixed questions
of law and fact de novo. Banks v. Gill Distrib. Ctrs., Inc., 263
F.3d 862, 867 (9th Cir. 2001). Matters committed to the
bankruptcy court’s discretion, such as whether to abstain
based on comity or to enforce a forum selection clause, are
reviewed for abuse of discretion. Vasquez v. Rackauckas,
734 F.3d 1025, 1036 (9th Cir. 2013); Fireman’s Fund Ins.
Co. v. M.V. DSR Atl., 131 F.3d 1336, 1338 (9th Cir. 1997).
10                    IN RE: ICENHOWER

                               III.

    We affirm the bankruptcy court’s judgment on the
postpetition transfer action. We need not decide whether the
bankruptcy court had authority to enter a final judgment in
the postpetition transfer action. The Diaz Defendants
concede that they waived any objection they could have
raised under Stern v. Marshall, 131 S. Ct. 2594 (2011), to the
bankruptcy court’s entry of final judgment. See Exec.
Benefits Ins. Agency v. Arkison, 702 F.3d 553, 566–70 (9th
Cir. 2012), aff’d on other grounds, 573 U.S. ___ (2014).
Since the bankruptcy court’s judgment for Kismet was the
same in both actions, our judgment here renders the
fraudulent conveyance action moot. See Dhangu v. I.N.S.,
812 F.2d 455, 459–60 (9th Cir. 1987) (citing 13A C. Wright,
A. Miller, E. Cooper, Federal Practice & Procedure § 3533.2
at 241–45 (1984)).

                               A.

    We begin with the local action doctrine, a federal
common law rule barring district courts from exercising
jurisdiction over actions directly affecting land in a different
state. See United States v. Byrne, 291 F.3d 1056, 1060 (9th
Cir. 2002).

    In the context of a postpetition transfer action, this rule is
preempted by statute. See City of Milwaukee v. Illinois &
Michigan, 451 U.S. 304, 313 (1981). Specifically, 28 U.S.C.
§ 1334(e) grants the bankruptcy court “exclusive jurisdiction
— (1) of all the property, wherever located, of the debtor as
of the commencement of such case, and of property of the
estate.” 28 U.S.C. § 1334(e); see also In re Simon, 153 F.3d
991, 996 (9th Cir. 1998). Property of the estate includes “all
                      IN RE: ICENHOWER                         11

legal or equitable interests of the debtor in property as of the
commencement of the case,” “wherever located and by
whomever held.” 11 U.S.C. § 541(a). Here, on the petition
date, the Villa interest was held by H&G. But the bankruptcy
court ruled that H&G was Debtors’ alter ego and
substantively consolidated H&G with the bankruptcy estate
nunc pro tunc to the petition date. The Diaz Defendants have
not demonstrated that this ruling should be overturned. Thus,
the Villa interest was property of the estate as of the petition
date. Notwithstanding the local action doctrine, 28 U.S.C.
§ 1334(e) granted the bankruptcy court exclusive in rem
jurisdiction over the Villa interest.

                               B.

    We next address the Diaz Defendants’ argument that the
bankruptcy court improperly applied U.S. law
extraterritorially. In Morrison v. National Australia Bank
Ltd., 130 S. Ct. 2869 (2010), the Supreme Court established
a two-part test for deciding extraterritoriality questions. First,
unless Congress clearly expressed its intent to apply a statute
extraterritorially, a court “must presume [the statute] is
primarily concerned with domestic conditions.” Id. at 2877
(quoting E.E.O.C. v. Arabian Am. Oil Co. (“Aramco”),
499 U.S. 244, 248 (1991)). Second, if a statute applies only
domestically, the question becomes: which domestic acts “are
the objects of the statute’s solicitude”? Id. at 2884. Which
domestic acts does “the statute seek[] to ‘regulate’”? Id. Not
merely any contact by a defendant with the United States is
sufficient; rather, the defendants’ domestic conduct must
implicate “the ‘focus’ of congressional concern.” Id. (quoting
Aramco, 499 U.S. at 255).
12                   IN RE: ICENHOWER

    In the postpetition transfer action, the bankruptcy court’s
order was proper. “Congress intended extraterritorial
application of the Bankruptcy Code as it applies to property
of the estate.” In re Simon, 153 F.3d 991, 996 (9th Cir.
1998); see also 28 U.S.C. § 1334(e). Here, given the court’s
ruling that H&G was Debtors’ alter ego and its substantive
consolidation of H&G with the bankruptcy estate, the Villa
interest was property of the estate as of the petition date.

                              C.

    We turn now to the Diaz Defendants’ argument that the
bankruptcy court abused its discretion by failing to honor the
contractual selection of a Mexican forum. The transfers of
the Villa interest from the Lonie family to Debtors and from
Debtors to H&G, and the transfer of title from the bank to the
Diaz Defendants, were formalized through escrituras, or
Mexican contracts. Each escritura contained a clause
selecting a Mexican forum for resolving disputes related to
the “interpretation” of or “compliance” with the agreement.

     A court may decline to enforce a forum selection clause
if, inter alia, “‘enforcement would contravene a strong public
policy of the forum in which suit is brought.’” Petersen v.
Boeing Co., 715 F.3d 276, 280 (9th Cir. 2013) (quoting
Murphy v. Schneider Nat’l, Inc., 362 F.3d 1133, 1140 (9th
Cir. 2003)). One of the Bankruptcy Code’s primary
objectives is “centralization of disputes concerning a debtor’s
legal obligations.” In re Eber, 687 F.3d 1123, 1131 (9th Cir.
2012); see also In re Rader, 488 B.R. 406, 416 (B.A.P. 9th
Cir. 2013). Thus, courts in which a bankruptcy proceeding is
pending have declined to honor contractual selections of other
forums where the matters at issue constitute core proceedings
and are not inextricably intertwined with non-core
                      IN RE: ICENHOWER                         13

proceedings. See, e.g., In re Iridium Operating LLC, 285
B.R. 822, 836–37 (S.D.N.Y. 2002) (citing cases). Here, both
actions are core proceedings and are not inextricably
intertwined with non-core proceedings. See 28 U.S.C.
§ 157(b)(2); In re Jones, Nos. CC–06–1105–MoBK,
CC–06–1106–MoBK, 2006 WL 6810992, at *3–*4 (B.A.P.
9th Cir. Dec. 6, 2006). The bankruptcy court properly
declined to enforce the forum selection clauses.

                               D.

     We next consider comity, a doctrine which effectuates
“the recognition which one nation allows within its territory
to the legislative, executive or judicial acts of another nation.”
In re Simon, 153 F.3d 991, 998 (9th Cir. 1998) (quoting
Hilton v. Guyot, 159 U.S. 113, 163–64 (1895)). The doctrine
applies only if there is “a true conflict” between domestic and
foreign law, id. at 999 (quoting Hartford Fire Ins. Co. v.
California, 509 U.S. 764, 798 (1993)), which there is not if “a
person subject to regulation by two states can comply with
the laws of both.” Hartford, 509 U.S. at 799 (quoting
Restatement (Third) of Foreign Relations Law § 403,
Comment e).

    Here, there is no true conflict. Mexican law permitted the
Diaz Defendants to convey the Villa interest to Kismet. See
Brady v. Brown, 51 F.3d 810, 815, 819 (9th Cir. 1995)
(holding that a district court order requiring defendants “to
execute irrevocable powers of attorney to an agent to transfer
the [Mexican property at issue] into a Mexican government-
approved trust, or ‘fideicomiso,’ for the benefit of
[plaintiffs]” “did not violate Mexican law”). Further,
although the bankruptcy court ordered the Diaz Defendants
“to take all actions necessary” to create a fideicomiso trust, it
14                   IN RE: ICENHOWER

did not require the Mexican government to approve the trust
or to recognize or enforce its judgment. Thus, there is no true
conflict, and comity is not implicated.

                              E.

    We turn now to the Diaz Defendants’ argument that the
bankruptcy court’s order should be vacated since Mexico is
a necessary and indispensable party, yet is immune from suit
as a sovereign nation. Under Rule 19(a) of the Federal Rules
of Civil Procedure, a party is necessary if:

       (A) in that person’s absence, the court cannot
       accord complete relief among existing parties;
       or

       (B) that person claims an interest relating to
       the subject of the action and is so situated that
       disposing of the action in the person’s absence
       may:

       (i) as a practical matter impair or impede the
       person’s ability to protect the interest; or

       (ii) leave an existing party subject to a
       substantial risk of incurring double, multiple,
       or otherwise inconsistent obligations because
       of the interest.

Fed. R. Civ. P. 19(a).

   Here, Mexico is not a necessary party. First, the
bankruptcy court was capable of awarding complete relief in
Mexico’s absence. If the Mexican government was amenable
                     IN RE: ICENHOWER                        15

to the fideicomiso, the Diaz Defendants’ compliance with the
judgment would have led to the trust being created. If the
government was not amenable, the bankruptcy court could
have issued a further order, pursuant to its reservation of
jurisdiction “to issue any and all orders necessary to carry out
and enforce [its] judgment,” requiring the Diaz Defendants to
pay Kismet the value of the Villa interest. See 11 U.S.C.
§ 550. Second, even if Mexico has a cognizable interest in
who owns coastal real property, the bankruptcy court’s order
did not impede Mexico’s ability to protect this interest.
Rather, the court crafted a remedy consistent with Mexico’s
fideicomiso system. Further, the court did not require Mexico
to approve the fideicomiso trust that the Diaz Defendants
were ordered to create. Finally, the Diaz Defendants have not
identified any sense in which the court’s order left them at
risk of incurring multiple or inconsistent obligations.

                              F.

    We next consider the Diaz Defendants’ argument that the
bankruptcy court erred in applying U.S. law instead of
Mexican law to determine whether they were good faith
purchasers. Although this argument relies exclusively on In
re Tippett, 542 F.3d 684 (9th Cir. 2008), that case is
distinguishable.

     In Tippett, the debtors sold their California home after
filing their bankruptcy petition. Id. at 687. Although the
parties agreed that, under California law, the buyer was a
bona fide purchaser, id. at 686, the trustee argued that “the
Bankruptcy Code occupies the field of title transfers initiated
by Chapter 7 debtors and accordingly preempts California’s
statute protecting bona fide purchasers such as [the buyer].”
Id. at 689. This argument was rejected. Id. With the
16                    IN RE: ICENHOWER

preemption issue settled, there was apparently no dispute that
California law applied to determine whether the buyer was a
bona fide purchaser.

    Here, unlike in Tippett, the parties do not agree that,
absent preemption, Mexican law determines whether the Diaz
Defendants purchased the Villa in good faith. Rather, Kismet
argues that the bankruptcy court properly applied U.S. law,
specifically 11 U.S.C. §§ 549(c) and 550(b). This position is
at least colorable, as H&G’s sale of the Villa interest to the
Diaz Defendants closed in San Diego. Thus, Tippett does
not establish that Mexican law determines whether the Diaz
Defendants were good faith purchasers. Citing no other
authority, the Diaz Defendants have failed to show that the
bankruptcy court erred.

                               G.

    Finally, we address the Diaz Defendants’ argument that,
since Martha Barba de la Torre was insulated from the
interactions and due diligence leading up to her purchase of
the Villa, the bankruptcy court clearly erred in finding that
she purchased the Villa in bad faith. This argument fails. A
party “is considered to have ‘notice of all facts, notice of
which can be charged upon [her] attorney.’” Garcia v. I.N.S.,
222 F.3d 1208, 1209 (9th Cir. 2000) (per curiam) (quoting
Link v. Wabash R.R., 370 U.S. 626, 634 (1962)). Here, the
bankruptcy court found that Martha “relied on her son and
their attorney to handle all aspects of the transaction for her.”
The attorney had notice of numerous red flags surrounding
the sale, thus Martha is charged with notice of those red flags.
This conclusion is not disturbed by the “equal dignities
rule,”which mandates that “an authority to enter into a
contract required by law to be in writing can only be given by
                     IN RE: ICENHOWER                      17

an instrument in writing.” Cal. Civ. Code § 2309. The
imputation of notice to Martha is based, not on her attorney’s
execution of a contract on her behalf, but rather on her
attorney’s investigation leading up to the sale of the Villa
interest. Even beyond the attorney-client relationship,
moreover, Martha would have had personal knowledge of the
red flags if she had exercised reasonable diligence. See In re
Richmond Produce Co., 195 B.R. 455, 464 (N.D. Cal. 1996)
(citing Bonded Fin. Servs., Inc. v. European Am. Bank,
838 F.2d 890, 897–98 (7th Cir. 1988)).

    Finally, the Diaz Defendants’ argument that Martha never
received the beneficial interest from H&G, but rather
received only title from the bank, is unconvincing. As a court
of equity, the bankruptcy court properly looked past the
formalities of Mexican law to recognize the reality that each
of the Diaz Defendants received the Villa interest from H&G.

    We AFFIRM the bankruptcy court’s judgment with
respect to the postpetition transfer action. The fraudulent
conveyance action is moot as a result. We grant the requests
for judicial notice filed by Kismet and the Diaz Defendants.