[00:00:05] Speaker 01:
Henry Sterenberger, Michiko Sterenberger, appellant appearing pro se, Tommy O. Sterenberger, appellee appearing pro se, and Alexander Cavall, counsel for Anna Christine Sterenberger appearing as well.

[00:00:19] Speaker 03:
Okay, we got a couple of housekeeping matters.

[00:00:22] Speaker 03:
Ms.

[00:00:22] Speaker 03:
Sterenberger, do you want to reserve some time for rebuttal?

[00:00:25] Speaker 06:
Yes, Your Honor, if I could just split the time in half, so seven and a half minutes.

[00:00:28] Speaker 03:
I'm sorry?

[00:00:29] Speaker 06:
If I could split the time in half, so seven and a half minutes.

[00:00:32] Speaker 03:
Seven and a half for the initial part, okay.

[00:00:34] Speaker 03:
Again, we'll try to give you a heads up when you're getting close to that, but that's on you to regulate there, okay?

[00:00:39] Speaker 03:
And with respect to the appellees, I understand you folks have decided to divvy up your time?

[00:00:44] Speaker 07:
That's correct, Your Honor.

[00:00:46] Speaker 03:
Okay.

[00:00:47] Speaker 07:
Alexandra Caval, I will go first.

[00:00:49] Speaker 07:
I will take 10 minutes and then reserving five minutes for Tamiyo.

[00:00:53] Speaker 03:
Okay, well that's fine and welcome to both of you.

[00:00:56] Speaker 03:
And if you go a little over the 10 minutes, again, that's gonna be on you, okay?

[00:01:01] Speaker 03:
If you're exceeding it by some margin, I might just give you a reminder, but that's up to you folks, okay?

[00:01:08] Speaker 03:
Thank you.

[00:01:08] Speaker 03:
Okay, let's begin.

[00:01:08] Speaker 03:
Ms.

[00:01:09] Speaker 03:
Sternberger, go ahead.

[00:01:10] Speaker 05:
Good morning, Your Honors, may it please the court?

[00:01:13] Speaker 05:
This is Ms.

[00:01:13] Speaker 05:
Sheikah Sternberger.

[00:01:14] Speaker 05:
I'm the appellant and the creditor in this case.

[00:01:17] Speaker 05:
The opposing parties are the debtor, my younger brother, Tommy O. Sternberger,

[00:01:21] Speaker 05:
and his former wife, my former sister-in-law, Anna Sternberger.

[00:01:25] Speaker 05:
I understand that the court is probably more familiar with the briefs than I am.

[00:01:30] Speaker 05:
I would like to ask if there are any questions right off the bat before I go into any summary of the issues.

[00:01:39] Speaker 02:
Well, I guess I don't have so much a question, but a suggestion.

[00:01:42] Speaker 02:
I think we understand quite well your position on subsections 2, 4, and 6, so you probably want to spend most of your time on 19.

[00:01:50] Speaker 05:
Okay.

[00:01:51] Speaker 05:
Thank you.

[00:01:52] Speaker 05:
There is also an A to B that's related to a different matter.

[00:01:57] Speaker 05:
Okay.

[00:01:58] Speaker 05:
Right.

[00:01:58] Speaker 05:
Right.

[00:01:59] Speaker 05:
Okay.

[00:01:59] Speaker 05:
So there's been enormous amounts of briefing on the split of authority about this dueling statutory interpretations among the bankruptcy courts of 523A19B.

[00:02:13] Speaker 05:
I collected about 27 cases.

[00:02:15] Speaker 05:
I checked Lexis and Westall yesterday.

[00:02:17] Speaker 05:
There does not appear to be anything new.

[00:02:21] Speaker 03:
Well, and there's nothing governing per se, right?

[00:02:24] Speaker 03:
The Ninth Circuit's not giving us any great clues here.

[00:02:26] Speaker 03:
So this is an open question.

[00:02:27] Speaker 05:
Fair?

[00:02:28] Speaker 05:
My understanding is an open question.

[00:02:30] Speaker 03:
Right.

[00:02:30] Speaker 03:
OK, great.

[00:02:30] Speaker 03:
Great.

[00:02:31] Speaker 05:
OK.

[00:02:31] Speaker 05:
So I'll just, in shorthand, I'll say NRA CHUE, C-H-U-I, that stands for the line of cases that do give the bankruptcy court's jurisdiction to impose liability

[00:02:42] Speaker 05:
And in shorthand Anderson or Jafari, which stand for the opposition, that there is no jurisdiction.

[00:02:49] Speaker 05:
I'm asking the court to decide that Chewy, that line of decisions, governs that the courts do have jurisdiction.

[00:02:58] Speaker 05:
And if we go forward from that line, we'll go to both.

[00:03:01] Speaker 05:
That we then accord full faith and credit under 28 USC 1738 to the Utah State courts.

[00:03:08] Speaker 05:
order imposing liability against the managers of the investment company, Star Mountain, that we then ask that we then use the bankruptcy court's findings and the trial testimony that both of the debtors, Tommy O. Sterenberger and Anna Sterenberger, admitted that they are the managers, that they were the managers during the time Star Mountain sold securities.

[00:03:28] Speaker 05:
and that they each played an active role in selling the star mountain securities to Mexica.

[00:03:33] Speaker 02:
Let me jump in.

[00:03:34] Speaker 02:
Didn't the Utah State Court set aside the part of its order that held Tamiyo and Anna personally liable?

[00:03:41] Speaker 05:
Yes, it did.

[00:03:43] Speaker 05:
Where it left off, there was a 2018 verbal ruling.

[00:03:48] Speaker 05:
In that case, that's when the Utah Court adjusted it to

[00:03:52] Speaker 05:
of only the managers and members, leaving for trial the determination of identity of who are the managers and the members.

[00:04:00] Speaker 05:
At that time, the court had also taken judicial notice that the public records did show that Tommi and Stearnaker.

[00:04:05] Speaker 02:
But what I'm driving at is it doesn't seem to me there is a state court decision that Tommi and Anna are personally liable, correct?

[00:04:12] Speaker 05:
That is correct, yes.

[00:04:13] Speaker 02:
Okay.

[00:04:14] Speaker 05:
And that is why I'm asking under Chewy that if the court decides that

[00:04:18] Speaker 05:
the bankruptcy courts and the court here have jurisdiction that they be able to use that full faith and credit for the Utah State courts in position of liability against the managers, plus the adversary case trial, the bankruptcy court's findings, that Tommy O. Sternberger and Anna Sternberger are those managers, and then impose the liability, apply the damages testimony, and award a judgment, and declare it non-dischargeable under 523A.

[00:04:46] Speaker 03:
Okay, so just to clarify one other matter, is it your position that the evidence that was deduced at the trial in the Bankruptcy Court would be sufficient to get you a judgment?

[00:04:55] Speaker 03:
Because I think that was one of the issues that the Bankruptcy Court probably didn't go the way you would have liked, right?

[00:05:00] Speaker 03:
The Bankruptcy Court, I think, believed that there had not been a sufficient showing.

[00:05:04] Speaker 03:
So is your first argument that, yes, there was, and we should simply make a finding of li... Well, actually, we shouldn't make a finding of liability.

[00:05:10] Speaker 03:
We should basically affirm what you think the Bankruptcy Court did, or is it something else?

[00:05:15] Speaker 05:
Okay, it's a two-part.

[00:05:17] Speaker 05:
One is, and thank you for that question, one is that I do believe that it's a strict liability provision under the Utah Securities Act which would allow this court or the bankruptcy court to get to the imposition of liability.

[00:05:30] Speaker 05:
However, if not all of those elements are met, I would ask even under CHUE and even under the jurisdiction that this dismissal be reversed and allowed to go back to the Utah State Court to obtain any missing pieces.

[00:05:43] Speaker 03:
Okay.

[00:05:44] Speaker 03:
I'm sorry.

[00:05:46] Speaker 03:
Maybe more particularly, maybe it would be, and this is a bit of a technical piece, if the bankruptcy court determined that there had not been sufficient evidence, you might be arguing that what we ought to do is vacate and confirm that the bankruptcy court had the authority to go ahead and try that issue and make a determination about it.

[00:06:05] Speaker 03:
And you should have a chance to do that on remand.

[00:06:07] Speaker 03:
Is that fair?

[00:06:08] Speaker 03:
Is that what you're suggesting to us?

[00:06:10] Speaker 05:
Yes.

[00:06:10] Speaker 05:
If you don't mind my asking a question back, by vacating, are you saying that there would be further proceedings or that the case would still be dismissed?

[00:06:16] Speaker 05:
regardless of whether or not the bankruptcy court has jurisdiction.

[00:06:22] Speaker 03:
Okay.

[00:06:22] Speaker 02:
Vacate basically means the bankruptcy court gets to start over on the issue that we vacate.

[00:06:29] Speaker 05:
Okay, okay, thank you.

[00:06:30] Speaker 05:
So yes, I would be asking for that.

[00:06:33] Speaker 05:
The separate line of thinking that the bankruptcy courts do not have jurisdiction under Anderson or Jafari, just to be candid, I think under each one of these that the 523A19 claim should survive dismissal under either of them.

[00:06:50] Speaker 05:
So the Anderson and Jafari line of thinking, if the bankruptcy court does not have jurisdiction, asking for the same thing to please

[00:06:58] Speaker 05:
allow the creditor to go back to the Utah State Court case and obtain those missing pieces for this.

[00:07:06] Speaker 05:
The reason I'm sort of looking at that is if there is no jurisdiction, that the bankruptcy court just dismissed it without abstaining, just kind of let that claim just it's in procedural limbo right now.

[00:07:18] Speaker 05:
Bankruptcy rule 4007B allows it to be

[00:07:21] Speaker 05:
re-brought later, but without a modification of the discharge injunction.

[00:07:25] Speaker 05:
It's just frozen in time.

[00:07:27] Speaker 02:
Can't go back to that.

[00:07:28] Speaker 02:
What authority does the bankruptcy court have to modify the discharge injunction?

[00:07:33] Speaker 05:
My understanding was just from some case law under the 11 USC 105A, the inherent authority to move the case forward to be able to get to a resolution for the parties.

[00:07:47] Speaker 05:
It's kind of a catch-all provision.

[00:07:50] Speaker 02:
Well, we have BAP case law that says that, I think the word is, the discharge is set in statutory concrete.

[00:07:58] Speaker 02:
It doesn't go away.

[00:07:59] Speaker 02:
But if your claim is not discharged by virtue of 19, it's not discharged.

[00:08:06] Speaker 02:
And the state court could decide that as well as anybody else.

[00:08:08] Speaker 02:
But that's more of a comment than a question again.

[00:08:12] Speaker 05:
I appreciate the comment.

[00:08:13] Speaker 05:
Thank you.

[00:08:13] Speaker 05:
Because I've kind of been going a few circles with that.

[00:08:16] Speaker 05:
I think it was in Remunios I was looking at.

[00:08:20] Speaker 05:
that as well which is chicken or the egg we don't know if it's non-dischargeable therefore if the creditor of me were to proceed in the state court would be at risk of violating the charge injunction so it would be a huge risk and that's why I would be asking for some sort of guidance whether for me or for a bankruptcy court as to how to address that so it's not stuck in limbo.

[00:08:48] Speaker 02:
If I can jump in, you're at your seven and a half minutes if you want to stop now.

[00:08:52] Speaker 05:
Okay.

[00:08:52] Speaker 05:
I'll just briefly address the, since we're not going to talk about the A46 at two, four and six, other than just to say I'm asking for remand so that the bankruptcy court can apply the correct legal standard under the Utah Securities Act to those claims.

[00:09:05] Speaker 05:
And then to the EAG private lender claim, I'm just in summary asking for the court here to find that all elements have been met because of the

[00:09:14] Speaker 05:
corroborated testimony that our Tommy O. Sternberger had mislabeled the investment account statement with his name and that that $2.2 million did not actually belong to him and therefore the lender reasonably relied on, sorry, reasonably relied upon his representations.

[00:09:33] Speaker 05:
Thank you.

[00:09:35] Speaker 03:
Okay, Ms.

[00:09:35] Speaker 03:
Kaval.

[00:09:37] Speaker 07:
Thank you.

[00:09:38] Speaker 07:
Good morning and may it please the court.

[00:09:39] Speaker 07:
My name is Alexandra Cavall and I'm here appearing on behalf of Anna Sternberger.

[00:09:44] Speaker 07:
And the focus of my argument is really 523A19.

[00:09:48] Speaker 07:
The bankruptcy court correctly dismissed that 523A19 claim after trial because the plaintiff did fail to produce a final judgment obtained from a non-bankruptcy forum imposing liability on Anna or Tomeo for the violation of state securities law.

[00:10:05] Speaker 02:
Let me ask you this, cutting right to the heart of it from my point of view.

[00:10:09] Speaker 02:
What language, what words in the current version of A-19 says it has to be a non-bankruptcy forum judgment?

[00:10:19] Speaker 07:
It is, so it is the language, so that statute, 523-819 existed before BAPSIPA passed in 2005, and the language in that decision, let me just flip through to 523-819.

[00:10:44] Speaker 07:
So the language says,

[00:10:50] Speaker 02:
And what I'm driving at is it says any federal or state court or administrative form, et cetera, any.

[00:10:57] Speaker 02:
So if you just look at that, how do you come up with the conclusion that a bankruptcy court can't be the court that enters that determination?

[00:11:09] Speaker 07:
So if you look at the history of that statute, that language that you're referencing existed before BAPSEPA passed, where the change of BAPSEPA added the before, on, or after the date which the petition was filed.

[00:11:26] Speaker 07:
So before that, that language had to have meant a non-bankruptcy forum decision.

[00:11:31] Speaker 07:
Since BAPSEPA didn't change that particular language, the reasoning would be that that still requires a non-bankruptcy

[00:11:38] Speaker 07:
a decision from a court outside of the bankruptcy court.

[00:11:43] Speaker 02:
Don't you think that Congress probably figured that if this determination could be made after the bankruptcy court, after the bankruptcy was filed,

[00:11:53] Speaker 02:
then the bankruptcy court could be such a forum because Congress still says any federal or state court.

[00:12:01] Speaker 02:
I mean, isn't it kind of logical to presuppose that the meaning of any was the same?

[00:12:07] Speaker 02:
The only difference is that the timing changed and made it impossible for a bankruptcy court to be involved under the prior language.

[00:12:15] Speaker 02:
Don't you think Congress would have expected this?

[00:12:16] Speaker 02:
I guess what I'm coming up against.

[00:12:18] Speaker 07:
Well, no, because the idea behind 523A19 was basically statutory issue preclusion where you have the judgment already and you don't go to state court to relitigate security violations issues.

[00:12:33] Speaker 07:
The origin of that coming from the Sarbanes-Oxley Act.

[00:12:39] Speaker 07:
The legislative history of that statute was have your decision beforehand, don't have to litigate it in bankruptcy court again, and that's consistent.

[00:12:49] Speaker 02:
Legislative history meaning committee reports and those sorts of things, which basically the Supreme Court has taught us we're not supposed to look at unless there's an ambiguity.

[00:13:02] Speaker 02:
How do we know that the provision was that limited beforehand?

[00:13:05] Speaker 02:
It certainly had the effect of making it easier for securities plaintiffs to win, but why was it limited to this idea of having people not have to prove the elements of preclusion?

[00:13:20] Speaker 02:
Why not just apply that as it is?

[00:13:25] Speaker 07:
I'm not sure I understand your question.

[00:13:26] Speaker 02:
I'm not sure either.

[00:13:27] Speaker 02:
I mean, you're saying that the only purpose of A-19 was to make it easier for plaintiffs to prevail in these securities cases because they didn't have to meet the preclusion tests.

[00:13:39] Speaker 02:
It's tied, in your view, tied to the preclusion point.

[00:13:42] Speaker 02:
But of course, that's not what the prior version of A-19 said either.

[00:13:46] Speaker 02:
Why is it limited to keeping people from having to establish the elements of preclusion?

[00:13:51] Speaker 02:
Why does it just meet what it says?

[00:13:54] Speaker 07:
Well, because the language of that statute, like other subsections in 523.19, required some sort of order or decision by an entity other than the bankruptcy court, and that didn't change Fab Sifa.

[00:14:10] Speaker 00:
Yeah, well, so those that refer to, for instance, criminal restitution, we know that the bankruptcy court doesn't have jurisdiction over criminal matters and doesn't have any adjudicative authority.

[00:14:25] Speaker 00:
But isn't that fundamentally different than the language in A-19, which talks generally of a state or federal court in a civil matter?

[00:14:41] Speaker 07:
I mean, I think when you look at the Jafari line of cases, it addresses that.

[00:14:46] Speaker 07:
But there are certain statutes in 523.19 that require an A11, the one that I think you're referencing, Your Honor, is one of them.

[00:14:55] Speaker 07:
But there are other ones that ask for some determination, whether it be the assessment of a fine or

[00:15:04] Speaker 07:
uh, something else of that nature, that's going to require a determination by a third party non-bankruptcy court.

[00:15:12] Speaker 03:
Well, let me, can I put it a little bit differently, but I think it's, it's a similar point.

[00:15:16] Speaker 03:
The 523 contemplates in most circumstances that the bankruptcy court can both adjudicate the claim and determine that it's non-dischargeable.

[00:15:27] Speaker 03:
certainly with respect to contract claims, tort claims, landlord, tenant, on and on and on and on, right?

[00:15:32] Speaker 03:
So I think it is – I don't think it's unfair to say that it is the norm that the bankruptcy court in most instances, unless otherwise, you know, statutorily set forth or for other reasons that we can all agree on, the particular expertise of a different court, the bankruptcy court has the ability to simply adjudicate a claim.

[00:15:51] Speaker 03:
Now, we don't do that in criminal matters.

[00:15:52] Speaker 03:
We don't do that in family law matters.

[00:15:55] Speaker 03:
Would you agree that the gestalt otherwise is we get to do that?

[00:16:01] Speaker 03:
And is there a reason why we shouldn't be able to do that in connection with the securities violation?

[00:16:08] Speaker 07:
I think if we're talking broadly, 523.19, not every single... I'm not talking broadly.

[00:16:13] Speaker 03:
I'm talking 523.

[00:16:14] Speaker 03:
I'm talking what is the structure of the statute?

[00:16:18] Speaker 03:
The structure of the statute is, in most instances, we can adjudicate the claim and find it's non-dischargeable.

[00:16:24] Speaker 03:
So give me... I mean, you may have a great reason why securities laws violations ought to be different.

[00:16:29] Speaker 07:
What is it?

[00:16:35] Speaker 07:
For the securities violations, I mean, in this particular subsection, it's not going to be different than the subsections in 523, whether it is a 7, a 11, a 13, or a 17 that require a determination in the sense of an assessment of a fine or an assessment of liability by some third party.

[00:17:00] Speaker 07:
Other sections in 523A don't require that.

[00:17:04] Speaker 07:
For example, 523A2 don't require that.

[00:17:07] Speaker 03:
So in situations where... Well, no, no, it absolutely does.

[00:17:09] Speaker 03:
It requires a determination of how the damages were, whether attorney's fees should be, whether there's another penalty.

[00:17:16] Speaker 03:
It absolutely does.

[00:17:17] Speaker 03:
So, I mean, my question is A19 simply doesn't say what you say it says.

[00:17:21] Speaker 03:
It doesn't exclude the bankruptcy court.

[00:17:23] Speaker 03:
But you may have a great policy reason why that should be the answer.

[00:17:26] Speaker 03:
So that's what I'm looking for.

[00:17:30] Speaker 07:
The history of that statute, the legislative history of that statute, and this court's prior decision in Rodriguez suggests that it is simply an issue of preclusion statute.

[00:17:45] Speaker 07:
In that particular case in Rodriguez, the language used was, if I can find it here real quickly,

[00:18:08] Speaker 02:
You're referring to the VAP decision in Rodriguez?

[00:18:11] Speaker 07:
Yes, the Rodriguez versus Hotchkiss one.

[00:18:14] Speaker 07:
In that particular case, this court noted that as evidenced by the plain language of the statute, 523A19AIMBI set forth an expedited process that accord preclusive effect to appropriately memorialize judgments arising from liability

[00:18:32] Speaker 07:
for security law violations and securities fraud.

[00:18:35] Speaker 00:
But weren't the facts different in Rodriguez?

[00:18:37] Speaker 00:
There was such an order in Rodriguez.

[00:18:40] Speaker 00:
And so it seems to me that Rodriguez didn't necessarily decide the question that's before us, but instead was sort of generally stating the law, how it worked in that context where there was a prior order.

[00:18:57] Speaker 07:
I mean, in that case, there was a prior order, but the language I think still applies in that it requires that determination to be a memorialized judgment from a rising for liability for security violations from some outside entity, outside forum.

[00:19:21] Speaker 07:
And to answer one of the questions that, I mean, one of the fundamental issues in this particular case is that the issue of that non-final judgment was raised early on and the plaintiff waited until 60 days before trial to raise the issue of letting the issue be decided by, well,

[00:19:43] Speaker 07:
That issue, this issue could have been raised and addressed at the very beginning of the case where she could have sought stay relief to pursue the matter had she so chosen.

[00:19:54] Speaker 07:
But she was adamant, plaintiff was adamant that she had a final judgment and did not.

[00:20:01] Speaker 07:
So I'm looking at the time.

[00:20:03] Speaker 03:
Yeah, if you wanna hand off to your worthy co-padre there, that's fine.

[00:20:12] Speaker 03:
Okay.

[00:20:12] Speaker 04:
Hello, Your Honor.

[00:20:16] Speaker 04:
Hello, Your Honors.

[00:20:17] Speaker 04:
I feel like I'm in this position where I'm in over my head with this.

[00:20:23] Speaker 04:
I don't know if it would be the best use of time to talk about what I prepared for this, to talk about the history of this case that spans 14 years and what we've been through to get to this point.

[00:20:35] Speaker 04:
I don't know if what I can offer will

[00:20:38] Speaker 04:
benefit anything about what Miss Cavall has said.

[00:20:41] Speaker 04:
I don't know if you would like to ask more questions to her about that.

[00:20:45] Speaker 04:
I think that might be a better use of time than what I have prepared.

[00:20:50] Speaker 03:
It's entirely up to you.

[00:20:51] Speaker 03:
If you'd like to defer back to your co-counsel here, that's perfectly fine.

[00:20:57] Speaker 03:
But we're very interested in anything you have to say.

[00:20:59] Speaker 03:
So this is your time, and if there's a point you want to make or something you want to make sure we remember,

[00:21:05] Speaker 03:
Feel free, and I promise we'll listen.

[00:21:07] Speaker 03:
And if you want to cede your time back to Ms.

[00:21:09] Speaker 03:
Gavall, that's fine, too.

[00:21:10] Speaker 03:
It's wholly up to you.

[00:21:12] Speaker 04:
Okay, well, I will cut this down immensely simply to say this started in 2009.

[00:21:17] Speaker 04:
The case was dismissed in 2015 because of Apolin Machico's failure to prosecute for almost four years, during which time she was in another Washington state appeals case.

[00:21:32] Speaker 04:
She refiled this case.

[00:21:33] Speaker 04:
We recommenced it.

[00:21:36] Speaker 04:
And in 2019, we sought for bankruptcy protection.

[00:21:40] Speaker 04:
We went through the adversary proceedings of several years to reiterate what Ms.

[00:21:46] Speaker 04:
Cavall said.

[00:21:47] Speaker 04:
I think the judge did a good job explaining where and why he came up with this decision to dismiss all of her claims.

[00:21:53] Speaker 04:
Here we are in the appeals panel, and we have several motions in front of us.

[00:22:01] Speaker 04:
The patterns we have seen in these almost three different cases, this coming to fourth,

[00:22:08] Speaker 04:
very litigious.

[00:22:10] Speaker 04:
The appellant, Machigo, has a history of vexatious litigating, and she's in currently two other lawsuits, one in the field in Austin and another case in Idaho.

[00:22:23] Speaker 02:
Yeah, I need to caution you.

[00:22:24] Speaker 02:
You need to stick to what's in the record of this case.

[00:22:27] Speaker 02:
I'm not sure a lot of things you've said were brought before the bankruptcy court.

[00:22:31] Speaker 02:
Go ahead.

[00:22:33] Speaker 04:
Okay, I would simply just then close to say I feel she's had adamant time in the case in the court case and had her day twice in Utah case I was dismissed and she had her chance and in the adversary proceedings case and here we are today.

[00:22:48] Speaker 04:
I will close with that and turn back over the time to any other questions you might have.

[00:22:53] Speaker 03:
Okay, thank you.

[00:22:55] Speaker 03:
Ms.

[00:22:56] Speaker 03:
Cavall.

[00:22:58] Speaker 08:
I don't think I have anything further to add unless the court or the panel has questions for me.

[00:23:04] Speaker 00:
I have a question.

[00:23:05] Speaker 00:
If at the end of the day, the panel disagrees on the legal point 523A19, what's the appropriate disposition of the case?

[00:23:20] Speaker 00:
Is it that it ought to go back, or do you think that the appellant had an opportunity

[00:23:27] Speaker 00:
to litigate the A-19 issue factually?

[00:23:35] Speaker 07:
The facts that gave rise to the 523A-19 also gave rise in the state court litigation to her 523A-2A claim and her A-24 claim.

[00:23:48] Speaker 07:
and her A-6 claim.

[00:23:53] Speaker 07:
So that same set of facts, she tried under four different theory, non-dischargeability theories.

[00:24:00] Speaker 07:
I mean, I think she has clearly failed on two, four, and six if this panel reverses and finds that the bankruptcy court has the ability to

[00:24:16] Speaker 07:
decide a 523A19 to try it or to enter the liability determination, then I think it is possible to vacate on that ground, but the underlying facts have already been determined to not be sufficient for an A246 non-dischargeability action.

[00:24:43] Speaker 03:
Okay.

[00:24:44] Speaker 03:
Any other questions?

[00:24:45] Speaker 03:
Anybody?

[00:24:46] Speaker 03:
Not for me.

[00:24:46] Speaker 03:
Thank you.

[00:24:47] Speaker 03:
Thank you very much.

[00:24:48] Speaker 03:
Okay.

[00:24:49] Speaker 03:
Ms.

[00:24:50] Speaker 03:
Sternberger, you've got six and a half minutes, a little more than that.

[00:24:54] Speaker 06:
Thank you.

[00:24:54] Speaker 02:
I want to ask you a question right off the top, and that is, let's assume for the moment that we end up agreeing with you and holding that the bankruptcy court can enter the order that A-19 requires.

[00:25:06] Speaker 02:
Let's assume we agree with you on that.

[00:25:09] Speaker 02:
What additional evidence would you offer, if any, to establish that there was a Utah securities violation or other securities violation that you didn't offer previously?

[00:25:20] Speaker 05:
Thank you, Your Honor.

[00:25:21] Speaker 05:
That's an excellent question.

[00:25:22] Speaker 05:
In the state court, that was timely pledged, so those were preserved.

[00:25:26] Speaker 05:
The debtors, Tommy Stamberger and Anna Stamberger, were not licensed to sell securities.

[00:25:32] Speaker 05:
The Starr Mountain

[00:25:33] Speaker 05:
offering was not a registered investment.

[00:25:37] Speaker 05:
There were other steps along the way where there were misrepresentations or omissions in terms of... And these are points that you did not offer evidence to the bankruptcy court on?

[00:25:46] Speaker 02:
It's not already in the record?

[00:25:48] Speaker 05:
No, those were actually could still be decided in the Utah State Court, but they were not pursued in the adversary case.

[00:25:54] Speaker 05:
If I may add, I

[00:25:56] Speaker 05:
In looking at Bankruptcy Rule 4007B, it seems like it would allow it to be brought back with further muscle to it.

[00:26:04] Speaker 05:
Once it's been decided in the Utah State Court, it does seem like there would be, the rules would allow there to be a stronger case made with additional evidence.

[00:26:15] Speaker 03:
Didn't the Bankruptcy Court remark, among other things, that you made an argument that there were some registration requirements, but you didn't provide any authority for that?

[00:26:25] Speaker 03:
So I mean, would that give you the chance to say, well, Judge, here's the authority, for example?

[00:26:30] Speaker 05:
It would.

[00:26:31] Speaker 05:
OK.

[00:26:32] Speaker 05:
Yeah, footnote, sorry.

[00:26:35] Speaker 05:
OK.

[00:26:36] Speaker 05:
I was just going to address Ms.

[00:26:37] Speaker 05:
Cavall's comment about I never represented to the court that there was a final judgment.

[00:26:43] Speaker 05:
It was always an order.

[00:26:45] Speaker 05:
And it was a matter of, can the bankruptcy court connect the order imposing liability against the managers with finding that

[00:26:53] Speaker 05:
So there was never any representation by me that that was final judgment.

[00:27:01] Speaker 05:
I would say that during the first 839 days in the case.

[00:27:04] Speaker 05:
The bankruptcy court could have raised the issue.

[00:27:07] Speaker 05:
I think federal courts are required to examine their own jurisdiction.

[00:27:10] Speaker 05:
I'm not trying to blame the bankruptcy court, Judge, but I think the delay was on both sides because Ms.

[00:27:16] Speaker 05:
Cabal brought two motions to dismiss challenging the bankruptcy court's jurisdiction under that exact provision, 523A19B.

[00:27:25] Speaker 05:
The bankruptcy court denied her motions to dismiss on that jurisdictional challenge, which signaled, it seemed, for the bulk of the case,

[00:27:33] Speaker 05:
that the bankruptcy court did believe that it did does have jurisdiction.

[00:27:37] Speaker 05:
It was only late in the case, just 40 days before trial, that it examined Anderson and made that determination that it felt that it lacked jurisdiction.

[00:27:47] Speaker 05:
At that point, it was after 10 days after the pretrial motions deadline had already expired.

[00:27:52] Speaker 05:
So the bankruptcy court decided that the fine motion for a mandatory abstention under 13, sorry, 28 USC 1334 C2

[00:28:01] Speaker 05:
was untimely.

[00:28:04] Speaker 05:
I bring that up as under that provision 1332C2 as well as Bankruptcy Rule 5011.

[00:28:12] Speaker 05:
Regarding abstention, there's no time limit regarding what constitutes a timely motion.

[00:28:19] Speaker 05:
I don't want to assume which way the court will go on this, but if the court were to decide that the bankruptcy courts do not have jurisdiction

[00:28:27] Speaker 05:
Would a bankruptcy court be required to abstain because of that lack of jurisdiction?

[00:28:32] Speaker 05:
And are there any factors or is there any test for what constitutes a timely motion so that myself and other predators wouldn't be caught in this kind of upheaval about the split of authority that was the cause of the delay during the first eight hundred thirty nine days?

[00:28:48] Speaker 05:
So I would ask for guidance on that abstention for

[00:28:51] Speaker 05:
for the bankruptcy courts if that is an issue, if they do lack jurisdiction.

[00:28:55] Speaker 05:
And just to emphasize that I never misrepresented the court, that I had a final judgment.

[00:29:00] Speaker 00:
Can I ask, even putting aside the abstention issue, let's suppose that the panel finds no error in the abstention decision.

[00:29:11] Speaker 00:
Your argument is it not that you want to be able to go back at the very least to the bankruptcy court and prove to the bankruptcy court

[00:29:20] Speaker 00:
that there was a state securities violation.

[00:29:25] Speaker 00:
Do I understand that correctly?

[00:29:27] Speaker 05:
Yes, I would.

[00:29:28] Speaker 05:
Whether that be asking the being allowed to go back to the Utah court to go get all of that in great detail to bring back to the bankruptcy court or if the bankruptcy court has jurisdiction, I guess to bring that forward in the adversary case.

[00:29:41] Speaker 05:
Did I answer that correctly?

[00:29:42] Speaker 00:
Yeah, I understand.

[00:29:48] Speaker 03:
Okay, if you have concluded your argument, I would ask my colleagues if there are any more questions.

[00:29:53] Speaker 03:
Not from me.

[00:29:54] Speaker 03:
Okay.

[00:29:55] Speaker 03:
All right.

[00:29:55] Speaker 03:
Well, if you're concluded, that's fine.

[00:29:57] Speaker 03:
Is that correct?

[00:30:00] Speaker 03:
Anything else you want to offer us, Ms.

[00:30:02] Speaker 03:
Sternberger?

[00:30:03] Speaker 05:
Thank you.

[00:30:03] Speaker 05:
Just to reemphasize that the A2, A4, and A6 claims, those failed because the bankruptcy court applied what I believe to be the wrong legal standard.

[00:30:12] Speaker 05:
The judge sidestepped any mention of the Utah Securities Act because I think people

[00:30:16] Speaker 05:
of that concern about that he lacked jurisdiction.

[00:30:18] Speaker 05:
And so that analysis was, I think, done under the wrong standard.

[00:30:23] Speaker 05:
That's why they failed.

[00:30:24] Speaker 05:
Thank you.

[00:30:25] Speaker 03:
OK.

[00:30:25] Speaker 03:
Thank you very much.

[00:30:26] Speaker 03:
The matter is submitted.

[00:30:27] Speaker 03:
We'll get you a written decision as soon as we can.

[00:30:29] Speaker 03:
Thank you very much.

[00:30:29] Speaker 03:
Thank you for your very good arguments, all of you.

[00:30:31] Speaker 03:
Appreciate it.

[00:30:32] Speaker 03:
Thank you.

[00:30:32] Speaker 05:
Thank you.

[00:30:33] Speaker 05:
Thank you so much.

[00:30:33] Speaker 03:
Thanks.

[00:30:41] Speaker 03:
OK.

[00:30:45] Speaker 03:
Should we call the next matter?