[00:00:02] Speaker 03:
Inray John E. King.

[00:00:04] Speaker 03:
Myron Moskovitz for Appellant.

[00:00:08] Speaker 03:
William Bell for Appellee.

[00:00:11] Speaker 02:
Mr. Moskovitz, you want to reserve some time for rebuttal?

[00:00:14] Speaker 03:
Yes, Your Honor.

[00:00:15] Speaker 03:
I'd like to reserve five minutes.

[00:00:17] Speaker 02:
Very good.

[00:00:18] Speaker 02:
Go ahead, please.

[00:00:22] Speaker 03:
Good morning, Your Honor.

[00:00:24] Speaker 03:
Myron Moskovitz for the Appellant.

[00:00:26] Speaker 03:
Will Verene.

[00:00:28] Speaker 03:
In this case, here's the key issue.

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Wolverine filed its petition for involuntary bankruptcy on August 31, 2022.

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And John moved to dismiss it for the following reason.

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He had more than 12 creditors, which triggered the requirement that Wolverine have at least three.

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Wolverine had three petitioners, including a jointer by a company called Fence Factory.

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Two of them

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of the creditors were big judgments.

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Wolverine had over $7 million judgment, and the insurance company of the West had about $11 million.

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There were actually three other large judgments, and Wolverine could have gotten one of them to join.

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The problem was that the debtor, John, had arranged for his son

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to purchase those debts and that stood as an obstacle to everything that Wolverine was trying to do in this case.

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So the only choice that Wolverine had was to get one of the small debtors

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John had listed something like 44 small creditors in a list he furnished the court.

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One of them was Fence Factory.

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John had asserted that this was an ongoing relationship with ongoing debts.

[00:02:17] Speaker 02:
Go ahead, please.

[00:02:18] Speaker 02:
Sorry.

[00:02:20] Speaker 02:
I prefer that you use last names just as a matter of courtesy.

[00:02:23] Speaker 02:
I'd appreciate sticking to last names, please.

[00:02:27] Speaker 03:
Well, we have two people named King.

[00:02:29] Speaker 03:
That's why... How about Mr.?

[00:02:31] Speaker 03:
Yeah.

[00:02:32] Speaker 03:
We're just doing one at a time.

[00:02:33] Speaker 02:
Okay.

[00:02:34] Speaker 03:
I'll be happy to do that.

[00:02:35] Speaker 03:
Thank you.

[00:02:36] Speaker 03:
So Mr. King listed Fence Factory as one of his creditors.

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Wolverine saw that and went to Fence Factory, said, would you like to join?

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They joined.

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And now you have three.

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And now Mr. King claimed that, well, the debt that he had to Fence Factory on the day of the petition had been paid.

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It was only $44, and it was recurring debt every month for the rental of Fence.

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and he had paid it so Fence Factory was no longer qualified.

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Do you know whether we can tell from the record whether that rent was to be paid in advance or in arrears?

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No, there's testimony on that from the CEO of Fence Factory about how that was done.

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The billing was

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Let me see if I can get the citation of the record on that.

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This was Mr. Bennett, and he testified that the way they did it was they billed at the end of the month for the prior month's usage.

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And this is at the Reporters Transcript of October 3, 2023 at page 254, 255.

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So that's how they did it.

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So at the time that the defense factory joined the petition, yes, the bill that was due at the time the petition was originally filed had been paid.

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We have three contentions about that.

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One is that's good enough in itself.

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The fact that the debt was due on the date the petition was filed is adequate under Section 303C because he was the holder of that particular debt.

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And the statute doesn't say it has to be done on the date of the jointer.

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which is what the trial court held, the statute doesn't say that.

[00:05:02] Speaker 04:
Well, the statute also said you're supposed to judge these things from the joiner's perspective as if it were on the petition date, right?

[00:05:10] Speaker 04:
That's a shorthand version of the statute?

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Yeah.

[00:05:15] Speaker 03:
That's exactly right.

[00:05:16] Speaker 04:
OK.

[00:05:17] Speaker 04:
I mean, I don't want to take all the dramatic out of your next argument, but I think that's where you were going.

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That is.

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And there's a very good reason for that.

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If you don't have that rule,

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then the debtor who wants to manipulate things and get rid of this involuntary petition can simply pay off all these very small debtors and block the petitioner who's bringing it from going ahead with it.

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And that's exactly what happened here.

[00:05:48] Speaker 00:
That seems kind of the reverse here.

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I understand that if someone joins and then is later paid.

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But Fence Factor was not an original petitioner.

[00:06:00] Speaker 00:
It joined after it was paid, which seems like if you're looking at abuse, that's the potential for abuse there, having creditors that no longer have an interest.

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And that gets you to the recurring nature, which I think maybe is where I'd like to hear some additional.

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But I mean, if it was not for the recurring,

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Your point is that it was still valid for a fence factor to join, notwithstanding the fact it would not have any dog in that hunt anymore, would it?

[00:06:35] Speaker 03:
Well, here's the problem.

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You talk about the potential for abuse.

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The potential for abuse

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And we contend there was actual abuse here, not just potential abuse.

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Mr. King purchased the big debtors' judgments, big creditors' judgments, which would have solved this whole problem.

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So there was only two big ones.

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And then he lists the little ones.

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Now, one of the purposes of having the debtor list all the creditors is to give the petitioner the opportunity to bring in one of those.

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And that's exactly what Wolverine did.

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They found one.

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And then what happens?

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He pays them off.

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Mr. King pays them off.

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So there's the potential for abuse.

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And the statute is not clear on this.

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uses the word holder, holding, but it doesn't, statute doesn't really say on what date.

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So as a matter of policy, I think the court should hold in this situation, it relates back.

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And there are cases that we cite in our brief that hold that.

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Now, you mentioned a recurring debt, and that is what we have here.

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So on the date of the jointer, there actually were two debts that

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Mr. King owed to Fence Factory.

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One was the outstanding bill that was for another $44.

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And that was, let me get the dates on that for you.

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This was on May 1, 2023.

[00:08:23] Speaker 00:
Can I interrupt and ask you, one of the things that confuses me is the record isn't clear what the underlying debt emanates from.

[00:08:32] Speaker 00:
It's for the fence.

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Does the record indicate whether there was a long-term agreement?

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Is this month to month?

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What is the actual nature of the obligation?

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And is it in the record?

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I don't think it's in the record.

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But it was going on for a long time.

[00:08:51] Speaker 00:
Is there a difference, though, between if it is pursuant to a long-term obligation such that that obligation pre-petition was known and was not contingent but had not matured versus what might effectively be a month-to-month obligation, which only arises if it is continued for the next month, in which case it might be contingent?

[00:09:13] Speaker 03:
Well, that's a very good point, Your Honor.

[00:09:16] Speaker 03:
apparently was overlooked by trial counsel, and the evidence on that was never developed.

[00:09:23] Speaker 04:
Can I follow up with that?

[00:09:25] Speaker 03:
I've got no indication of any long-term lease.

[00:09:29] Speaker 04:
To the extent there were some disputes here, there was not a dispute about liability or amount, right, with respect to France Factory?

[00:09:37] Speaker 04:
Correct?

[00:09:40] Speaker 04:
Yeah, there was no dispute of a liability or amount, right?

[00:09:42] Speaker 04:
I mean, that was not part of the dispute.

[00:09:44] Speaker 04:
OK, OK.

[00:09:45] Speaker 04:
So I think Judge Breaker's question is a great one.

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What's the nature of the debt?

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But one way or the other, it appears to be recurring, which I think is really the question that we're trying to focus in and on here, that something holding is one thing, but it modifies the term claim, which is awfully broad.

[00:10:03] Speaker 04:
And what I think we're trying to figure out here is, how do we think about a recurring debt like this?

[00:10:08] Speaker 04:
So go ahead and give us your thoughts about that.

[00:10:11] Speaker 03:
OK, but look, when we're talking about the evidence, we should keep in mind that this arose on a motion for summary judgment by the debtor.

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And that's what the debtor himself characterized it as, and that's what the trial judge said in his opinion.

[00:10:29] Speaker 04:
Yeah, but can I just try to give you a hand here?

[00:10:32] Speaker 04:
I wouldn't worry about that.

[00:10:33] Speaker 04:
I mean, there was a trial, number one.

[00:10:35] Speaker 04:
I'm not sure there's any disputed questions or fact here one way or the other.

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And you're within your five minutes if you want to reserve it.

[00:10:41] Speaker 03:
The point is, in a summary judgment motion, the person bringing the motion has the burden of proof, all right?

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So, for example, with this issue I'm talking about now, this GAAP claim, about the May 1, 2023 billing for the past month, there's no evidence that it was paid.

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And that defect falls on John.

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He had the burden of proof that he had paid.

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He didn't do it.

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So we have to assume that that May 1, 2023 debt was not paid.

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And so that debt was pending at the time Fence Factory joined.

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And in addition, there's another gap claim, and that is the

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Fence Factory joined on May 12th, so there are 12 days in May that were also accrued as a debt and not paid.

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Now, you know, we're talking about two very large claims here by the petitioners, $7 million and $11 million, and here we are fussing about $44, and it seems strange, but it's the debtor that put us in this situation.

[00:12:08] Speaker 03:
buying up the other multi-million dollar debts and listing Fence Factory in his list of creditors.

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So we end up quarreling and fighting over this tiny debt, which has huge consequences for my client, Wolverine.

[00:12:24] Speaker 02:
Wolverine has been trying to- You have about three minutes left.

[00:12:28] Speaker 02:
I just want to remind you, if you want to reserve that time, you could stop now or you can keep going.

[00:12:31] Speaker 02:
It's up to you.

[00:12:33] Speaker 03:
I'll stop now.

[00:12:34] Speaker 02:
Okay.

[00:12:34] Speaker 02:
All right.

[00:12:34] Speaker 02:
Thank you.

[00:12:36] Speaker 01:
Mr. Beal.

[00:12:39] Speaker 01:
Yes.

[00:12:39] Speaker 01:
Good morning.

[00:12:40] Speaker 01:
May it please the court.

[00:12:41] Speaker 01:
I'm William Bell.

[00:12:42] Speaker 01:
Bell and Burkhardt.

[00:12:43] Speaker 01:
I'm here on behalf of John King.

[00:12:45] Speaker 01:
So let's start by talking about Fence Factory.

[00:12:48] Speaker 01:
I mean, there's a paucity of authority for this kind of a situation.

[00:12:51] Speaker 04:
Well, congratulations.

[00:12:52] Speaker 04:
We couldn't find any either.

[00:12:54] Speaker 04:
And there we are.

[00:12:55] Speaker 01:
Because it would never happen.

[00:12:57] Speaker 01:
And frankly, I know I had a couple of opportunities to talk to Mr. Bennett on deposition.

[00:13:02] Speaker 01:
And then I examined him at the trial.

[00:13:04] Speaker 01:
And he never would admit that anything happened.

[00:13:09] Speaker 01:
But something had to happen.

[00:13:12] Speaker 01:
Why in the world would a creditor who's been paid join a case and insert themselves into a litigation?

[00:13:18] Speaker 01:
He admitted, both at deposition and at trial, that it was a fiduciary default by him in his capacity as president of his corporation to have joined and inserted himself into this thing.

[00:13:32] Speaker 01:
So something had to happen.

[00:13:34] Speaker 01:
And whether it was the silver tongue of Mr. O'Neill, who's the principal of Wolverine.

[00:13:38] Speaker 02:
What does that go to?

[00:13:40] Speaker 01:
It goes to one thing.

[00:13:41] Speaker 01:
It goes to Mr. Moskowitz's policy argument.

[00:13:45] Speaker 01:
Why would one want to protect fence factory and let a creditor who's already been paid insert themselves into a case?

[00:13:51] Speaker 04:
Because there are bigger fishes to fry and they're voluntary.

[00:13:54] Speaker 01:
That's why.

[00:13:55] Speaker 01:
That's why you need three.

[00:13:56] Speaker 01:
right and they knew they needed but let's let's can I ask you a favor sure let's go to the question of holding versus the recurring claim sure that's where I think we really need your help okay yeah and that's the well first of all there's no evidence of a recurring claim and and and that's the problem because there is because there's evidence a few of later payments

[00:14:18] Speaker 00:
No, right.

[00:14:19] Speaker 00:
I don't believe that well obligation and it's it's in the record that that there there's another debt All of these things and it seems implicit from the testimony that was taken He doesn't say at trial and first of all one thing.

[00:14:33] Speaker 01:
Mr. Moskovitz doesn't refer to at all is the pretrial stipulation I mean we entered into a 25 page pretrial stipulation with hundreds of admitted facts and a few disputed facts and

[00:14:43] Speaker 01:
And there is absolutely nothing in there about this gap period claim.

[00:14:48] Speaker 01:
Nothing.

[00:14:48] Speaker 01:
There is no stipulated fact.

[00:14:50] Speaker 01:
There is no fact to be disputed about whether there was a claim in May or in March.

[00:14:54] Speaker 01:
One of the things, they talk about May as the day to join her, but Mr. Bennett signed to join her back in March.

[00:15:02] Speaker 01:
And Wolverine held on to it for tactical reasons for 60 days before filing it.

[00:15:08] Speaker 01:
So is it March when he signed it?

[00:15:10] Speaker 00:
Is it May when it got filed?

[00:15:11] Speaker 00:
I'm looking at page 254 of the transcript, and the question was asked, as of May 12, 2023, when you, when we filed the jointer, did you retain offense?

[00:15:19] Speaker 00:
Did you rent offense to the king?

[00:15:20] Speaker 00:
Yes.

[00:15:22] Speaker 01:
OK, but it doesn't say there was a debt and it doesn't say that when the payments were made.

[00:15:26] Speaker 00:
I think there's a fair inference that if there was a fence from this company, there was some payment that was associated with it.

[00:15:35] Speaker 01:
I'm just saying if the gap period claim was to be used by the petitioning creditors as a third creditor, they had to raise that in the pretrial stipulation.

[00:15:43] Speaker 01:
The pretrial stipulation says these are the issues to be tried and no others.

[00:15:50] Speaker 02:
I have a question.

[00:15:51] Speaker 02:
Everybody talks about this, both you and Mr. Moskovitz, as if there's maybe multiple claims, $44 a month for some number of months.

[00:15:59] Speaker 02:
I agree.

[00:15:59] Speaker 02:
You seem to think there may not have been evidence a few further months.

[00:16:04] Speaker 02:
But I'm not sure that's the case.

[00:16:05] Speaker 02:
I mean, if there is a written or an oral lease or a rental agreement or whatever, I think there's just one claim with installments coming on.

[00:16:15] Speaker 02:
It's not multiple debts.

[00:16:17] Speaker 02:
So the fact that one month's

[00:16:19] Speaker 02:
rent was paid doesn't mean there's no claim left, unless the fence got returned.

[00:16:25] Speaker 01:
Well, the fence did eventually get returned.

[00:16:27] Speaker 01:
It's not in the record, though, is it?

[00:16:30] Speaker 01:
No, of course not.

[00:16:30] Speaker 01:
But then again, what the situation was in March or in May is not in the record either, and it's not raised as an issue.

[00:16:37] Speaker 01:
And that's huge.

[00:16:38] Speaker 01:
I mean, because if they were going to say that the gap period claim is one of those... Can I stop you for a second?

[00:16:43] Speaker 04:
I'm trying to interrupt you.

[00:16:44] Speaker 04:
conceptually play along with this here.

[00:16:48] Speaker 04:
There's a difference between whether there was a gap period claim, which goes to the way Judge Farris framed the question, and whether this is a recurring debt, such that you may be invoiced in one month and another.

[00:16:58] Speaker 04:
It doesn't change the fact that

[00:17:00] Speaker 04:
It's a recurring claim because there is this arrangement somebody's still using that fence.

[00:17:05] Speaker 04:
I mean there's a difference between those concepts, right?

[00:17:08] Speaker 01:
Well, yes, but I'm going back to what Judge Spraker asked Mr. Moskowitz.

[00:17:12] Speaker 01:
So there's a difference between a lease which says for 12 months you're going to rent the whole room and you got to make 12 payments and a month-to-month agreement where at the end of any month you can give the fence back.

[00:17:23] Speaker 04:
But they didn't, as far as we know.

[00:17:24] Speaker 01:
Right, but the point is that as of the petition date, there's only the current month.

[00:17:30] Speaker 04:
But the point is, to Judge Ferris's point, there's a difference between billing and conceding, thinking every one of those is a separate claim, and looking at the nature of this, which is it is a recurring claim.

[00:17:42] Speaker 04:
It's simply unmajored.

[00:17:44] Speaker 04:
That's the difference.

[00:17:45] Speaker 04:
So help me out with that part.

[00:17:47] Speaker 01:
Well, I don't know.

[00:17:48] Speaker 01:
I mean, I really I don't think that that's true.

[00:17:50] Speaker 01:
I don't think, for example, if you live in an apartment and you owe the land and you file a bankruptcy case, yes, maybe your current rent is something that the landlord can claim.

[00:18:01] Speaker 01:
But if you have a month to month tenancy next month, although you're not planning on moving, but the second and the third and the fourth month, those are not claims in the case.

[00:18:09] Speaker 04:
Yeah, but we're talking about something that's essentially a standing argument here.

[00:18:12] Speaker 04:
Can one commence an involuntary?

[00:18:15] Speaker 04:
That's a different matter, right?

[00:18:16] Speaker 04:
You're disenfranchising somebody on the theory that the fact you were paid this increment on this date disenfranchises you.

[00:18:22] Speaker 04:
That's the argument, right?

[00:18:23] Speaker 01:
Well, yes.

[00:18:25] Speaker 01:
But again, what happened was, and first of all, to talk about the whole issue, I mean, there's a number of cases.

[00:18:30] Speaker 01:
Vortex is probably the leading case in the Ninth Circuit to talk about.

[00:18:34] Speaker 01:
You can't pay the joining

[00:18:36] Speaker 01:
You can't pay the petitioning creditor off and have them lose standing.

[00:18:40] Speaker 01:
We all understand that.

[00:18:41] Speaker 01:
We all know that's the law.

[00:18:43] Speaker 01:
But we have to look at the dates here.

[00:18:44] Speaker 01:
The invoice was August 31st, the payment was September 2nd, and the service of the involuntary was September 9th.

[00:18:53] Speaker 01:
So that this is the exact opposite of any manipulation by the debtors.

[00:18:58] Speaker 04:
Well, if you're focusing simply on what was owed at the petition date as one claim, yes, I agree.

[00:19:05] Speaker 01:
I mean, they didn't even know there was a case when this claim got paid.

[00:19:09] Speaker 02:
And the other thing that's important is they talk about how... Wasn't there eight or nine days of rent, depending on how you count, due on September 9th?

[00:19:21] Speaker 02:
Or owed, excuse me, owed on September 9th?

[00:19:27] Speaker 01:
I don't know.

[00:19:28] Speaker 01:
It's hard to say.

[00:19:29] Speaker 01:
And I mean, you know, I mean, that it's it's difficult to say because whether whether the invoice matters or not, I that

[00:19:38] Speaker 01:
I mean, that's an arguable point.

[00:19:40] Speaker 04:
By the way, don't take any, I mean, we're struggling with this as, there's no hostility here.

[00:19:44] Speaker 04:
We're trying to figure out something.

[00:19:45] Speaker 04:
There's simply nothing guiding us.

[00:19:47] Speaker 01:
And I have to take exception with Mr. Moskovitz's statement that there's nothing in the code because 303C says that at the time of the jointer,

[00:19:57] Speaker 01:
The joining party has to be holding a claim, not to have held a claim on the petition date, holding.

[00:20:04] Speaker 01:
And that's where Judge Clifford went.

[00:20:06] Speaker 01:
Again, the reason that there's no law on this is because nobody would ever do what Mr. Bennett, what Fence Factory did.

[00:20:12] Speaker 01:
Nobody would ever do this.

[00:20:14] Speaker 01:
And we don't know why they did it.

[00:20:16] Speaker 02:
Well, I'm- If you follow the theory, which you probably don't, if you follow the theory that the rent sort of accrues daily, and they've

[00:20:27] Speaker 02:
filed their adjoinder in the middle of a month.

[00:20:30] Speaker 02:
Wouldn't that suggest that they were holding a claim on that date?

[00:20:33] Speaker 02:
Maybe not the $44 that was paid before.

[00:20:37] Speaker 01:
Just telling you that there was no evidence of that.

[00:20:40] Speaker 01:
It was not put into the trial.

[00:20:41] Speaker 01:
It was not raised as an issue by the petitioning creditors who all signed a 25-page pretrial stipulation that said these are the issues.

[00:20:49] Speaker 01:
They didn't raise it.

[00:20:50] Speaker 01:
They didn't prove it.

[00:20:52] Speaker 01:
And this comes back to this whole

[00:20:55] Speaker 01:
conniption that the appellant gets into to try to shift the burden of proof from them proving Fence Factory had a claim to me proving Fence Factory didn't have a claim.

[00:21:07] Speaker 01:
I mean, that's the whole part of whether they say it was summary judgment.

[00:21:11] Speaker 01:
I mean, we have a pretrial stipulation in which the parties all admitted that we were having a trial.

[00:21:16] Speaker 01:
They said, these are the issues we're trying.

[00:21:18] Speaker 01:
We're going to trial.

[00:21:19] Speaker 01:
There were trials used in here, I don't know, 40 times.

[00:21:22] Speaker 01:
And so the idea that it was, I mean, I know Judge Clifford said he was deciding a summary judgment motion.

[00:21:29] Speaker 01:
And the other thing is in the reply brief, there was a ton of argument about how the court, if it was going to do a trial, needed to decide whether the debtors were generally paying their debts as they become due.

[00:21:42] Speaker 01:
And he said, and you didn't even do that, therefore you can tell there wasn't a trial.

[00:21:45] Speaker 01:
there's, I don't know, 12 stipulated facts about that issue in the pretrial stipulation.

[00:21:52] Speaker 01:
It's an issue in the pretrial stipulation.

[00:21:54] Speaker 01:
And Judge Clifford just said, I don't need to reach it because I find that there aren't three creditors.

[00:21:59] Speaker 01:
And there really weren't

[00:22:01] Speaker 01:
Any facts at dispute about that?

[00:22:03] Speaker 04:
I mean, that didn't get it.

[00:22:04] Speaker 04:
You're not arguing that's harmless, Sarah, because it also got adjudicated.

[00:22:07] Speaker 04:
You're arguing he never got there, right?

[00:22:09] Speaker 04:
He didn't get there.

[00:22:10] Speaker 01:
But I think that the facts are the facts.

[00:22:12] Speaker 01:
And the facts are that we have, like the King's had, these judgment claims that aren't getting paid and dozens of people that are getting paid.

[00:22:23] Speaker 01:
And is that generally paying your debts as they become due or not?

[00:22:28] Speaker 01:
And frankly,

[00:22:29] Speaker 01:
Those facts were all admitted.

[00:22:31] Speaker 01:
There's no dispute about that.

[00:22:33] Speaker 01:
And the court could find that that is an additional grounds for affirmance, because the kings were generally paying their debts as they become due.

[00:22:41] Speaker 01:
I think that that's within the power of this panel.

[00:22:44] Speaker 01:
The court can certainly affirm a lower court judgment based on any ground that's in the record.

[00:22:53] Speaker 04:
Given what was actually raised, if we were to disagree with you,

[00:22:57] Speaker 04:
And if we were to reverse on the question of fence factories standing, I mean, Judge Clifford still has to decide the issue of a fence factory withdrawing the petition, right?

[00:23:07] Speaker 04:
Withdrawing the jointer.

[00:23:08] Speaker 04:
We would remand for him to do that, wouldn't we?

[00:23:11] Speaker 01:
In addition, Vortex says that if you have been misled into joining, you can withdraw.

[00:23:18] Speaker 04:
Well, my point is that would be the next logical step.

[00:23:21] Speaker 04:
Were we to agree with Mr. Moskowitz?

[00:23:23] Speaker 01:
Well, we have two arguments on that.

[00:23:24] Speaker 01:
The other thing is Fence Factory brought in—sorry, Wolverine brought in East West Bank.

[00:23:29] Speaker 01:
So at the time that Fence Factory was trying to withdraw, there were four alleged petitioning creditors.

[00:23:36] Speaker 01:
And so the argument that I can't allow them to withdraw because then there wouldn't be three— But my point is only that's a Judge Clifford decision, not us, right?

[00:23:44] Speaker 01:
I guess.

[00:23:46] Speaker 01:
I mean, we cross appealed on that issue.

[00:23:48] Speaker 01:
So the court could reverse him on his decision not to accept their withdrawal.

[00:23:56] Speaker 01:
Yeah, I got that right.

[00:23:58] Speaker 01:
I think I didn't have the wrong number of negatives in that statement.

[00:24:02] Speaker 01:
But I think that 90% of the appellant's argument is completely eviscerated by the fact that they entered into a stipulated pretrial statement.

[00:24:14] Speaker 01:
And that was, in fact, made an order by the court.

[00:24:19] Speaker 01:
And I think that that's an extremely important thing.

[00:24:22] Speaker 01:
These issues were not tried.

[00:24:24] Speaker 01:
They were not raised.

[00:24:26] Speaker 01:
And therefore, they can't be brought up on appeal.

[00:24:29] Speaker 01:
And I mean, I don't think that anybody disagrees with that statement of the law.

[00:24:34] Speaker 01:
And there's just nothing.

[00:24:39] Speaker 01:
in their briefs about this pretrial stipulation.

[00:24:43] Speaker 01:
I don't know your districts as well as I know the central district, but this pretrial stipulation is a huge document for us in the central district.

[00:24:51] Speaker 01:
Every single trial, and this is why we try cases in a day or in two days that in the Superior Court would take a month, because we admit everything.

[00:25:00] Speaker 01:
And typically, we admit all the documents.

[00:25:03] Speaker 01:
And one of the interesting things about this case is that Wolverine sent 200 subpoenas out for documents to everybody that the Kings had ever done business with, and they put in one piece of paper as evidence in their trial.

[00:25:25] Speaker 01:
One document, which they didn't get with any of the 200 subpoenas,

[00:25:29] Speaker 01:
a one-page statement of the fictitious business name statement that said that King Ventures was a John King entity.

[00:25:38] Speaker 01:
That's the only document that they submitted, the only one.

[00:25:45] Speaker 01:
But this is all done the pre,

[00:25:47] Speaker 01:
Pre authentication of the documents.

[00:25:49] Speaker 01:
This is how we do things these pretrial stipulations and they say that right in there.

[00:25:54] Speaker 01:
They say, you know, unless it's for the these these are the admissions.

[00:26:00] Speaker 01:
These are the facts.

[00:26:01] Speaker 01:
This is everything that's going to be tried.

[00:26:04] Speaker 01:
And stipulated to by Wolverine.

[00:26:07] Speaker 01:
So I think it's really, really important.

[00:26:10] Speaker 01:
And again, I'm not sure whether your courts have these tremendously detailed pretrial stipulations, whether that's common to federal court or it's just a central district thing.

[00:26:19] Speaker 01:
But you can't look at any trial that happens without looking at the four corners of the pretrial stipulation, because that's everything that was at issue.

[00:26:30] Speaker 04:
I have one quick one for you.

[00:26:33] Speaker 04:
I think that Mr. Moskowitz is making the argument that if you read 303C intelligently, the question is whether the petitioning, the adjoining creditor had a claim as of the petition date.

[00:26:42] Speaker 04:
Do you disagree with that interpretation?

[00:26:44] Speaker 01:
I disagree with the interpretation.

[00:26:46] Speaker 01:
And so did Judge Clifford, because it says holding, not held.

[00:26:48] Speaker 04:
No, no, no.

[00:26:49] Speaker 04:
That's a different question.

[00:26:51] Speaker 04:
I mean, the point of 303C is to judge this as of the petition date.

[00:26:57] Speaker 04:
Was that claim paid as of the petition date or later?

[00:27:00] Speaker 01:
It was paid later.

[00:27:01] Speaker 04:
Yeah, OK.

[00:27:02] Speaker 04:
That's my question.

[00:27:02] Speaker 01:
Yeah.

[00:27:03] Speaker 01:
And one of the things I think, oh, I'm sorry.

[00:27:10] Speaker 01:
I lost my train of thought on that.

[00:27:11] Speaker 02:
Let me ask you a question.

[00:27:12] Speaker 01:
Yeah.

[00:27:13] Speaker 02:
So is it the implication of your argument that the joining creditor has to, at that point, hold a claim

[00:27:21] Speaker 02:
that was a claim at the petition date?

[00:27:23] Speaker 02:
In other words, do both dates apply?

[00:27:25] Speaker 02:
I mean, suppose somebody came in with a brand new post-petition claim and said, I want to join.

[00:27:30] Speaker 01:
Well, if it's a gap period claim, maybe.

[00:27:33] Speaker 01:
But again, one of the things that I think that one has to realize here, and this is all part of the bad faith argument, which is going on and being continued, continued, continued by Wolverine,

[00:27:45] Speaker 01:
They're desperately hoping that this panel is going to reverse Judge Clifford so they never have to deal with it.

[00:27:52] Speaker 01:
But the bad faith stuff is before the bankruptcy court.

[00:27:55] Speaker 01:
And they knew darn well that they needed three creditors when they filed this case.

[00:28:01] Speaker 01:
They did.

[00:28:02] Speaker 01:
They had, I mean, I've got strings of emails between Wolverine and Insurance Company of the West where the Insurance Company of the West lawyer is going, we're not filing, we're not doing it, we're not doing this until you get a third, you got to get a third, you got to get a third, you got to get a third, you got to get a third.

[00:28:15] Speaker 01:
And then Wolverine finally goes, oh, we'll go by what John King said and we'll pretend that there aren't 12 creditors and therefore.

[00:28:22] Speaker 02:
I'll let you finish your thought, but you are past your time.

[00:28:25] Speaker 01:
Okay, I'm sorry.

[00:28:27] Speaker 01:
This whole problem was created by Wolverine not bringing in three creditors on the petition date because they didn't have them.

[00:28:35] Speaker 01:
Thank you.

[00:28:38] Speaker 02:
Okay, Mr. Moskovitz, you have two minutes and 45 seconds.

[00:28:42] Speaker 02:
Please go ahead.

[00:28:43] Speaker 03:
I'll make it quick.

[00:28:46] Speaker 03:
Let me review the dates again.

[00:28:48] Speaker 03:
So Wolverine filed his petition on August 31, 2022, and the debtor, Mr. King, paid it off three days later at the fence factory, that $44 debt.

[00:29:05] Speaker 03:
And that payment was on September 2, 2022.

[00:29:10] Speaker 03:
Now,

[00:29:13] Speaker 03:
Mr. King's counsel just argued that that's the end of it.

[00:29:17] Speaker 03:
As soon as Mr. King paid, Fence Factory is no longer a creditor as of the date that they paid, September 2, 2022.

[00:29:29] Speaker 03:
But I'm looking at the list of creditors that Mr. King filed on October 5, 2022, several months later.

[00:29:40] Speaker 03:
And on line 20, it lists as a creditor

[00:29:43] Speaker 03:
fence factory ongoing.

[00:29:46] Speaker 03:
Now why would they do it if they didn't believe that fence factory then had a claim against Mr. King, which is exactly our theory.

[00:29:58] Speaker 03:
It's exactly what we're saying.

[00:30:00] Speaker 03:
in our second two arguments, ignoring the first one, that what counts is whether there was a debt on the date of the petition.

[00:30:09] Speaker 03:
This was ongoing.

[00:30:11] Speaker 03:
And we have two pieces of evidence that showed that Mr. King owed Fence Factory on those subsequent dates.

[00:30:21] Speaker 03:
And what Mr. King put in his list of creditors is totally consistent with that, and it admits it.

[00:30:29] Speaker 03:
On this question of the stipulation that Council keeps harping on, take a look at it.

[00:30:37] Speaker 03:
I'm reading from page 18 of the stipulation, legal issues related to the debtor, whether there are three qualifying petitioning creditors, including, without limitation, the sub-issue of whether Fence Factory may withdraw its joiner and whether Fence Factory

[00:30:57] Speaker 03:
was an appropriate petitioning creditor at the time of its jointer.

[00:31:02] Speaker 03:
Okay, so it was raised.

[00:31:04] Speaker 03:
This was preserved.

[00:31:05] Speaker 03:
And let me go back to the point I made earlier that I think has more significance when given to it.

[00:31:13] Speaker 03:
The court mentioned several times to opposing counsel, the record is unclear on this.

[00:31:20] Speaker 03:
We don't know whether there's a long-term lease or a month-to-month

[00:31:24] Speaker 03:
And all of those defects fall on them because this was a motion for summary judgment.

[00:31:31] Speaker 03:
They have an obligation to show there's no tribal issue of fact on any of Wolverine's claims.

[00:31:41] Speaker 03:
And they didn't do it.

[00:31:43] Speaker 03:
And that's the end of it.

[00:31:45] Speaker 03:
It's a tribal issue of fact.

[00:31:47] Speaker 03:
I just want to end with one short statement.

[00:31:51] Speaker 03:
And this case is all about manipulation.

[00:31:54] Speaker 03:
Wolverine has tried to enforce its judgment in California state courts and several lawsuits in San Luis Obispo and San Francisco.

[00:32:04] Speaker 03:
And Mr. King has successfully blocked those partly by using these other judgments he had a son buy from the creditors.

[00:32:15] Speaker 03:
And finally, Wolverine got fed up.

[00:32:18] Speaker 03:
We need the assistance of the bankruptcy court to bring all these issues together and get justice here.

[00:32:25] Speaker 03:
Which, I mean, this man has spent tons of money on attorney's fees to block all these things.

[00:32:32] Speaker 03:
He testified at the order of examination that

[00:32:36] Speaker 03:
He's not going to take this judgment.

[00:32:38] Speaker 03:
It's unfair.

[00:32:40] Speaker 03:
It's a moral stigma.

[00:32:43] Speaker 02:
I'm going to stop you because you've exhausted your time, but thank you very much.

[00:32:46] Speaker 02:
I appreciate both of your good arguments, and we'll take the matter under submission.

[00:32:50] Speaker 02:
Thank you.

[00:32:51] Speaker 03:
Thank you, Your Honor.

[00:32:53] Speaker 02:
We can call the next case, which is the same lawyers anyway.