[00:00:14] Speaker 01:
Just one minute, please.

[00:00:15] Speaker 01:
We're still shuffling papers, and that will be on the recording.

[00:00:18] Speaker 01:
We're not careful.

[00:00:29] Speaker 01:
We're ready for your argument when you are.

[00:00:33] Speaker 02:
Good morning, Your Honors, and may it please the Court.

[00:00:36] Speaker 02:
I am Reno Fernandez for the appellants.

[00:00:40] Speaker 02:
I would like to reserve five minutes for rebuttal, please.

[00:00:42] Speaker 01:
Just keep an eye on the clock.

[00:00:45] Speaker 02:
The panel's focus letter asked whether the plaintiff must show harm to a creditor.

[00:00:52] Speaker 02:
The answer is yes.

[00:00:54] Speaker 02:
And here, where the debtor is solvent both before and after the transfer, there is no harm and there's no standing.

[00:01:01] Speaker 01:
What about the harm to the estate?

[00:01:03] Speaker 01:
What about the trustee's duty to protect the estate?

[00:01:06] Speaker 02:
Yes, Your Honor.

[00:01:07] Speaker 02:
In this case, the trustee has two factual

[00:01:12] Speaker 02:
Theories of harm, but both of them don't demonstrate any harm when you look at them carefully.

[00:01:21] Speaker 02:
The first theory is that not the estate, but a secured creditor was harmed.

[00:01:27] Speaker 02:
The second theory is that the estate was harmed.

[00:01:30] Speaker 02:
On the first theory, that the secured creditor was harmed, there's two problems with that argument.

[00:01:37] Speaker 02:
First, it turns out that Mr. Reynolds did not hold a valid claim from the get-go.

[00:01:42] Speaker 05:
That remains disputed, correct?

[00:01:45] Speaker 02:
No, and we filed a request for judicial notice because after the appeal was filed, the claim of Mr. Reynolds was disallowed.

[00:01:55] Speaker 05:
Isn't that under further appeal, however?

[00:01:58] Speaker 02:
It is under further appeal.

[00:01:59] Speaker 05:
But still in dispute?

[00:02:01] Speaker 02:
Well, in that sense, Your Honor, yes.

[00:02:03] Speaker 05:
Yeah, that's a pretty real sense.

[00:02:06] Speaker 05:
We've already heard argument in one case this morning where

[00:02:10] Speaker 05:
I'm sorry, that was yesterday where a bankruptcy judge's interim decision was overturned.

[00:02:18] Speaker 01:
So anyway, that's your first theory.

[00:02:20] Speaker 01:
Your contention is that that claim was disproved and disallowed.

[00:02:24] Speaker 01:
And what's your second point?

[00:02:24] Speaker 02:
Well, there's a second problem with that argument about the secured creditor, and that is the secured creditor remained a secured creditor before and after the transfer.

[00:02:34] Speaker 02:
The secured creditor was over-secured by plenty of equity.

[00:02:38] Speaker 01:
Right.

[00:02:38] Speaker 01:
We understand.

[00:02:39] Speaker 02:
As to the estate, the creditors in this case add up to a grand total of about $47,000.

[00:02:49] Speaker 02:
The plaintiff's briefs make it seem like the entire property was transferred, but that's not the case.

[00:02:55] Speaker 02:
Only an 80% interest in the property was transferred.

[00:02:58] Speaker 02:
The debtor retained a 20% interest, plus a $239,000 priority distribution, a right to a priority distribution on the sale of the property.

[00:03:06] Speaker 01:
And an asset worth, as far as I can tell, about $2.5 million.

[00:03:09] Speaker 01:
We don't really know.

[00:03:10] Speaker 01:
Remember, we only have what's in the record.

[00:03:12] Speaker 01:
and the record tells us there was an asset worth about 250, sorry, two and a half million dollars, right?

[00:03:18] Speaker 01:
There's this $80,000 lien that we've been talking about that is still in limbo, or at least it was disallowed, but that is on appeal, right?

[00:03:25] Speaker 01:
There's a number of other claims, 13, 12 or 13 other claims that all together, I'm gonna say, maybe $50,000.

[00:03:34] Speaker 01:
Is that about right?

[00:03:35] Speaker 01:
That's about right.

[00:03:37] Speaker 02:
So the 20% interest that the debtor retained and the $239,000 priority distribution, the right to a priority distribution, dwarf the $47,000, $50,000 in unsecured claims.

[00:03:50] Speaker 01:
We understand the math, but I think this still comes back to the real problem in the case for me.

[00:03:55] Speaker 01:
You've taken the position that the trustee cannot act to set aside unless the trustee is acting on behalf of a creditor.

[00:04:04] Speaker 01:
Unless the creditor was harmed, yes.

[00:04:05] Speaker 01:
So what's the strongest authority for that?

[00:04:08] Speaker 01:
Where have we said that?

[00:04:10] Speaker 02:
Spokio is the controlling authority.

[00:04:12] Speaker 02:
Spokio requires that there be an actual eminent harm that is particularized in concrete.

[00:04:20] Speaker 01:
If there's one thing we know, it's the elements that we need to tick off for standing.

[00:04:23] Speaker 01:
So where have we said that this is all premised upon your theory?

[00:04:27] Speaker 01:
right, that it has to be the creditor that is harmed, as opposed to the estate that suffers or is at risk of suffering imminent harm?

[00:04:36] Speaker 02:
Well, the estate is the representative of creditors.

[00:04:40] Speaker 02:
The estate is comprised of the creditors.

[00:04:42] Speaker 02:
And if the creditors would be paid one way or the other, regardless of the transfer, then there's no harm to creditors and there's no harm to the estate.

[00:04:51] Speaker 05:
Mr. Fernandez, I've got a practical problem and a doctrinal problem, and maybe you can address those.

[00:04:58] Speaker 05:
The doctrinal problem is, would you agree that standing can be shown by the risk of harm?

[00:05:08] Speaker 02:
Under some circumstances, yes.

[00:05:10] Speaker 05:
That is, it doesn't have to have already been inflicted, right?

[00:05:14] Speaker 01:
That's why they call it imminent injury, risk of imminent injury, right?

[00:05:18] Speaker 05:
Okay?

[00:05:19] Speaker 05:
And the practical problem that I have with this is that when a debtor declares bankruptcy, the trustee has to step in to try to protect the interests of creditors and the estate under circumstances where there's lots of uncertainty.

[00:05:40] Speaker 05:
Who knows how valid various claims are?

[00:05:44] Speaker 05:
Who knows how valuable various assets will be?

[00:05:47] Speaker 05:
We have, you get the schedules with the filing and so on, but all of that is subject to discovery, debate, and maybe further litigation.

[00:05:58] Speaker 05:
So, are you saying, maybe you can maybe disagree with me, but if that perspective is correct, your theory would seem to require the trustee

[00:06:10] Speaker 05:
to wait before pursuing a fraudulent conveyance theory until uncertainties had all been removed.

[00:06:19] Speaker 05:
What am I not understanding correctly here?

[00:06:21] Speaker 02:
Two things, Your Honor.

[00:06:26] Speaker 02:
There is a theory of imminent injury, but it has to be more than hypothetical, more than speculative.

[00:06:33] Speaker 04:
But it wasn't the affidavit of Gorman that she owed the money to Reynolds and that she was attempting to impede his collection?

[00:06:43] Speaker 04:
Isn't that the mission of a party litigant or a party in interest, that she actually owed the money to Reynolds?

[00:06:53] Speaker 02:
Well, these are two different issues, and I'd like to get to them in turn.

[00:07:01] Speaker 02:
Back to your questions, Judge Hamilton.

[00:07:04] Speaker 02:
There is a theory of imminent injury, but it has to be more than hypothetical, more than speculative.

[00:07:10] Speaker 02:
This court's decision in East Coast Foods, 66th, fed forth, 1214, is instructive.

[00:07:22] Speaker 02:
In that case, there was a potential 100% distribution to creditors contemplated by a Chapter 11 plan.

[00:07:31] Speaker 02:
and it was decided that a distribution to a trustee of more than a million dollars in fees was appealed and the appellant was determined to lack standing because the plan contemplated a 100% distribution.

[00:07:51] Speaker 02:
Now the appellant argued

[00:07:53] Speaker 02:
well, there's a huge risk here.

[00:07:55] Speaker 02:
There's a risk of harm to me, to the creditor, because if there's not 100% distribution, then any money paid to the trustee is going to come out of that pot.

[00:08:07] Speaker 02:
And this court decided, notwithstanding the risk,

[00:08:11] Speaker 02:
of harm, there's still lack standing.

[00:08:13] Speaker 02:
There was no standing because of the contemplated 100% distribution.

[00:08:18] Speaker 02:
So that's one issue.

[00:08:20] Speaker 02:
Your Honor, the second issue, does a trustee need to wait?

[00:08:24] Speaker 02:
Well, there's three things.

[00:08:27] Speaker 02:
One is, this isn't one of those cases where the facts are confusing or unknowable.

[00:08:34] Speaker 02:
When the debtor filed her schedules, she disclosed all her creditors.

[00:08:39] Speaker 01:
Can I interrupt you there, because that's a perfect segue to Judge Baia's question, which really focuses on the debtor's own affidavit.

[00:08:47] Speaker 01:
Could you respond to that?

[00:08:49] Speaker 02:
Well, the debtor's affidavit is a little bit inconsistent, because the debtor contended that Mr. Reynolds' claim was invalid in her letter.

[00:09:02] Speaker 02:
No, she didn't.

[00:09:03] Speaker 04:
She said she wanted to impede his recovery of the debt.

[00:09:08] Speaker 04:
But she didn't say she hadn't signed the promissory note and she didn't know the money.

[00:09:15] Speaker 02:
No, not in that declaration, Your Honor.

[00:09:17] Speaker 04:
So what you're really talking about is an after-discovered fact by the trustee, by Hoffman.

[00:09:24] Speaker 04:
In stage A in January, he says, she owes the money, and this transaction is to frustrate the collection of that money.

[00:09:35] Speaker 04:
In stage B in August, the trustee says, he doesn't really owe the money at all.

[00:09:42] Speaker 04:
So if he knew that in stage A, then he wasn't protecting any creditors, and his summary judgment should not have been granted.

[00:09:56] Speaker 04:
But that wasn't the case with the bankruptcy judge.

[00:10:00] Speaker 04:
There was no evidence in stage A that she didn't owe the money.

[00:10:05] Speaker 04:
It only came in stage B.

[00:10:08] Speaker 04:
Well, Your Honor, this... Of which you ask us to take judicial notice?

[00:10:11] Speaker 04:
We probably will.

[00:10:12] Speaker 04:
Okay.

[00:10:13] Speaker 02:
Yes.

[00:10:15] Speaker 02:
What we have here, a problem with the debtor is that she says different things at different times.

[00:10:22] Speaker 04:
How strange.

[00:10:23] Speaker 04:
That never happens before in any debtor.

[00:10:26] Speaker 02:
Before she executed that declaration, which was prepared for litigation, she signed a letter in June of 2021 saying that she disputes that claim and is going to mount a legal defense to it.

[00:10:38] Speaker 04:
Is that presented to the district court judge on the motion of summary judgment?

[00:10:41] Speaker 02:
Yes.

[00:10:43] Speaker 04:
And he found the evidence didn't raise a tribal issue of fact as to whether she owed the money or not.

[00:10:50] Speaker 02:
Yes.

[00:10:50] Speaker 02:
But that goes to the heart of our argument.

[00:10:52] Speaker 02:
The judge ignored that conflicting evidence in the record.

[00:10:57] Speaker 04:
You think that that raises a tribal issue of fact as to whether she owed the money at all?

[00:11:01] Speaker 02:
Yes.

[00:11:09] Speaker 02:
The second problem with that secured claim also is whether it was a valid claim or not.

[00:11:17] Speaker 02:
Let's assume that it was a valid claim.

[00:11:21] Speaker 02:
The claim was not harmed in any fashion.

[00:11:24] Speaker 02:
The claim was secured both before and after the transfer.

[00:11:28] Speaker 02:
The lien followed the property.

[00:11:30] Speaker 02:
The property wasn't transferred free of that lien.

[00:11:33] Speaker 01:
We understand the facts.

[00:11:34] Speaker 01:
I'm just wondering, did you want to reserve the five minutes that you

[00:11:37] Speaker 01:
You're under that under four minutes now.

[00:11:39] Speaker 01:
Did you want to reserve it or?

[00:11:40] Speaker 01:
Yes, please.

[00:11:41] Speaker 01:
OK.

[00:11:51] Speaker 03:
May it please the court?

[00:11:53] Speaker 03:
My name is Charles Meyer.

[00:11:54] Speaker 03:
I represent the bankruptcy trustee, Mr. Hoffman.

[00:11:57] Speaker 03:
I wanted to address the court's February 2 order about whether actual injury is an element of an intentionally fraudulent transfer claim under 548A1A.

[00:12:11] Speaker 03:
The answer to that question is actual injury need not be shown.

[00:12:20] Speaker 03:
The bankruptcy appellate panel in its decision made reference to Henry Medina, a prior FAP decision that was published.

[00:12:32] Speaker 03:
And the appellant in that case appealed that decision to the Ninth Circuit.

[00:12:40] Speaker 03:
And in an unpublished opinion that I think local rule 36-3 allows me to talk about,

[00:12:51] Speaker 03:
there was an affirmance and there was a reference to actual harm not being required.

[00:12:59] Speaker 03:
There's not a direct published Ninth Circuit case holding that.

[00:13:06] Speaker 03:
Medina made reference to an Eighth Circuit case called Henry Sherman that did make that statement on 542A1A.

[00:13:14] Speaker 03:
The citation is here somewhere, but I believe

[00:13:22] Speaker 03:
I believe it's a move.

[00:13:28] Speaker 03:
Of course, this always happens.

[00:13:29] Speaker 01:
So I appreciate your point that this was not an element.

[00:13:33] Speaker 01:
And yes, it always happens.

[00:13:34] Speaker 01:
But you're doing fine.

[00:13:35] Speaker 01:
So I appreciate that point.

[00:13:38] Speaker 01:
And as you know, what we have to deal with, one of the things that makes our jobs challenging these days is there's this shift in what we mean by standing and by injury.

[00:13:49] Speaker 01:
And I'm sure you're very familiar with this, the Lexmark cases and the whole series of cases that have come forward.

[00:13:55] Speaker 01:
So it seems to me that when this case was before the bankruptcy court, the question was whether showing harm to a creditor was an element.

[00:14:04] Speaker 01:
And on appeal, that seems to be rejiggered.

[00:14:06] Speaker 01:
And the focus is on whether or not there was injury for purposes of standing.

[00:14:12] Speaker 01:
So the BAP didn't address this standing argument.

[00:14:15] Speaker 01:
And you have authority, at least unpublished authority, that the BAP relied on.

[00:14:20] Speaker 01:
And there's out-of-circuit authority, too, on this point about whether showing harm to the creditor matters.

[00:14:27] Speaker 01:
But we do have this slightly different focus here.

[00:14:30] Speaker 01:
So under your view, then we wouldn't have a problem as long as there's a potential injury to the estate.

[00:14:36] Speaker 01:
I'm wondering if you could discuss the sequence in which all of this rolled out, because the trustee had to act at the outset and, as you know, then other

[00:14:45] Speaker 01:
evidence rolled out later.

[00:14:48] Speaker 03:
Well, what we knew is we had this transfer and all of the elements of the intentionally fraudulent transfer.

[00:15:00] Speaker 03:
I was in discussions with Mr. Reynolds pretty frequently at the time, and I was asking him to show me proof of his claim.

[00:15:10] Speaker 03:
The debtor believed there was a claim that he had.

[00:15:14] Speaker 03:
The trustee believed there was a claim.

[00:15:17] Speaker 03:
We just didn't have all the evidence we needed.

[00:15:19] Speaker 04:
How do you handle that letter that your friend mentioned where she said that she didn't owe the letter?

[00:15:26] Speaker 04:
Was that presented to the district court?

[00:15:32] Speaker 03:
That was in the documents that I submitted in support of the summary judgment motion.

[00:15:43] Speaker 04:
Whether she owes the debt or not, is that not a triable issue of fact that goes to your Hoffman standing?

[00:15:51] Speaker 03:
I don't remember that she said she didn't owe the money.

[00:15:56] Speaker 03:
And maybe I'm just not recalling the record well enough.

[00:16:00] Speaker 03:
She believed that, my recollection, she believed she did owe the money.

[00:16:05] Speaker 03:
The amount was in dispute because he had this theory that he was owed $5,500 a month in perpetuity and there was no evidence of that.

[00:16:18] Speaker 03:
But, I mean, there is a document in the record where she writes to him, I believe it's in 2013, saying you haven't been paid in a while and what you're owed is secured by the deed of trust.

[00:16:34] Speaker 03:
So, I believe she did think she owed him money, but there wasn't an agreement on how much it was.

[00:16:43] Speaker 04:
But anyway, we... You can't put your finger on the letter to which Mr. Fernandez... I know what the letter is.

[00:16:51] Speaker 03:
I have it.

[00:16:54] Speaker 03:
Well, I'm not sure which letter that is, quite frankly.

[00:16:57] Speaker 01:
There's more than one letter.

[00:16:58] Speaker 01:
I was just going to ask you for the ER site to make sure.

[00:17:00] Speaker 01:
I wonder if we're talking about different letters.

[00:17:02] Speaker 03:
Maybe.

[00:17:06] Speaker 03:
There's a letter that was erroneously dated June 30 of 2020, when it was actually 2021.

[00:17:15] Speaker 03:
2021, yes.

[00:17:17] Speaker 03:
It was signed and someone just made a mistake.

[00:17:22] Speaker 01:
I said that's ER 106.

[00:17:24] Speaker 03:
Okay.

[00:17:25] Speaker 03:
And that's the one that I have.

[00:17:29] Speaker 01:
That's the one signed by Orgorman.

[00:17:31] Speaker 01:
And I guess I'm not sure.

[00:17:32] Speaker 01:
It was written by Mr. Myer?

[00:17:35] Speaker 03:
Yeah.

[00:17:35] Speaker 03:
Yes.

[00:17:35] Speaker 03:
It was written by him.

[00:17:37] Speaker 03:
OK.

[00:17:37] Speaker 03:
And she signed it.

[00:17:39] Speaker 03:
And she later disavowed parts of it.

[00:17:43] Speaker 01:
So did the trial court, is there another letter that the trial court had at the time of the ruling?

[00:17:51] Speaker 03:
There was an initial letter when the representation was taken on, as I recall.

[00:17:59] Speaker 03:
But the complete record from summary judge in motion is in the record on appeal.

[00:18:05] Speaker 03:
There's nothing that's omitted.

[00:18:07] Speaker 03:
Mr. Fernandez did a very good job of including everything.

[00:18:14] Speaker 03:
With Mr. Reynolds, I was convinced he was owed money.

[00:18:20] Speaker 03:
I was also convinced that he hadn't given me what I needed to have his claim allowed, and I questioned the amount of the claim.

[00:18:30] Speaker 03:
sometime two months after the summary judgment ruling, I filed an objection because I got him to explain to me that he had already given me all of the documents.

[00:18:41] Speaker 03:
And the basis of the claim objection was the deed of trust and the promissory note didn't amount to an agreement by the debtor to pay him a monthly sum.

[00:19:00] Speaker 04:
And, but... Directly to say that you didn't object on the grounds that the note was invalid?

[00:19:07] Speaker 03:
We did object to it on the grounds that the note was... No money had ever been lent.

[00:19:13] Speaker 01:
No money had ever what?

[00:19:14] Speaker 03:
Lent.

[00:19:15] Speaker 01:
Yes, and no improvements to the property.

[00:19:17] Speaker 03:
And there were no improvements to the property, but I think the improvements to the property are...

[00:19:24] Speaker 03:
the appellants.

[00:19:25] Speaker 03:
That's the issue with the appellants.

[00:19:27] Speaker 03:
But Mr. Reynolds got the debtor to sign this note in deed of trust.

[00:19:33] Speaker 01:
Oh, you're speaking of Mr. Reynolds, not, forgive me, okay.

[00:19:35] Speaker 04:
Correct.

[00:19:35] Speaker 04:
But Mr. Reynolds had paid $300,000 to the first.

[00:19:39] Speaker 03:
To satisfy.

[00:19:40] Speaker 03:
Yes, some figure around that.

[00:19:43] Speaker 03:
And that looked like a debt to me.

[00:19:46] Speaker 03:
But he didn't do his documentation right, and it was not enforceable.

[00:19:51] Speaker 03:
And in the claim objection, I did raise that if any agreement existed, it was an oral agreement, and any statute of limitations had passed.

[00:20:02] Speaker 01:
So that's on appeal?

[00:20:04] Speaker 03:
That claim objection is on appeal at the BAP.

[00:20:07] Speaker 05:
So help us out with the standing problem then.

[00:20:10] Speaker 05:
And if I can go back, your client, the trustee, has to act immediately without knowing for certain how this is all going to shake out, correct?

[00:20:22] Speaker 05:
That's correct.

[00:20:24] Speaker 04:
Mr. Bauer, I have a problem.

[00:20:26] Speaker 04:
If the $300,000 paid by rentals to remove the note in the first deed of trust, quote, looked like a debt to me, right?

[00:20:40] Speaker 04:
That's what you said.

[00:20:43] Speaker 04:
Why didn't you tell that to the

[00:20:45] Speaker 04:
the bankruptcy court on your objection.

[00:20:49] Speaker 04:
If it looked like a debt to you, then it was a debt.

[00:20:52] Speaker 03:
An unenforceable debt.

[00:20:54] Speaker 01:
You thought it was an oral promise?

[00:20:56] Speaker 03:
Yes.

[00:20:57] Speaker 01:
And he hadn't done his paperwork, is what I understand.

[00:21:00] Speaker 01:
That was your position then, not that... Anyway, that was your position then?

[00:21:05] Speaker 01:
Yes, that was the position then, is that he... So you didn't tell the judge that this was owed because you thought it wasn't?

[00:21:11] Speaker 03:
I thought it was not an enforceable debt any longer.

[00:21:15] Speaker 01:
Okay.

[00:21:15] Speaker 04:
Because of the statute of limitations 339.

[00:21:17] Speaker 03:
Statutory limitations.

[00:21:20] Speaker 01:
Okay.

[00:21:20] Speaker 01:
All right.

[00:21:20] Speaker 01:
So can we, I appreciate your valiant efforts to get back to Judge Hamilton's questions.

[00:21:26] Speaker 01:
He's trying to, so.

[00:21:28] Speaker 03:
Well, maybe Judge Hamilton should repeat the question.

[00:21:34] Speaker 05:
Well, my question, in essence, has to do with if we're in this brave new world of post-Spokeo and trans-union standing.

[00:21:47] Speaker 05:
And we've got arguments on the other side here that this estate was always going to be solvent.

[00:21:56] Speaker 05:
And so no creditors could possibly have been hurt by this conveyance.

[00:22:02] Speaker 05:
And I'm trying to go back to, just as a practical matter, to think how do we do that in bankruptcy cases?

[00:22:10] Speaker 05:
How do we apply those standards for standing in bankruptcy cases?

[00:22:15] Speaker 05:
where a trustee has to act quickly to get hold of estate assets and to protect the interests of the state and creditors before those are all sorted out.

[00:22:29] Speaker 03:
Well, if the conclusion after all these cases are considered is that a trustee doesn't have standing, then the fraudulent conveyance statutes and probably the preference statutes will be invalidated.

[00:22:42] Speaker 05:
This would be very difficult to enforce.

[00:22:44] Speaker 03:
Yes.

[00:22:45] Speaker 03:
Yeah.

[00:22:45] Speaker 03:
OK.

[00:22:46] Speaker 03:
But there was damage because there were creditors.

[00:22:49] Speaker 03:
The trustee is the sole representative of bankruptcy estate under Section 323 of the Bankruptcy Code.

[00:22:57] Speaker 03:
The thing that's missing that is in the record is Mr. Reynolds actually foreclosed, foreclosed on August 20 of 2021.

[00:23:06] Speaker 03:
The bankruptcy was filed one day earlier.

[00:23:12] Speaker 01:
That's what prompted the filing, yes?

[00:23:14] Speaker 01:
Or was it simultaneous?

[00:23:15] Speaker 03:
That was the reason for the filing.

[00:23:17] Speaker 03:
And Mr. Reynolds ultimately realized that it was probably a violation of the automatic stay, and he reversed

[00:23:27] Speaker 03:
the foreclosure.

[00:23:28] Speaker 03:
But if the bankruptcy hadn't been filed, the property would have been lost.

[00:23:33] Speaker 03:
And so no creditor would have been paid anything.

[00:23:36] Speaker 03:
And there's nothing in the record that says that there was going to be a payment to creditors from any sum that the debtor might ultimately get.

[00:23:47] Speaker 05:
Mr. Maher, I'm afraid I have to ask one more unfortunate question here about appellate jurisdiction here.

[00:23:54] Speaker 05:
and that is, as I understand it, you dismissed without prejudice your claim for constructive fraudulent conveyance and your 547 claim.

[00:24:04] Speaker 05:
Is that right?

[00:24:07] Speaker 05:
Now, the law of different circuits varies on this.

[00:24:12] Speaker 05:
At the risk of sounding like an unwelcome guest, I would say in the Seventh Circuit, we would dismiss this, saying, because of the danger that if we were to reverse here,

[00:24:24] Speaker 05:
You would then be pursuing those other claims, the constructive fraudulent conveyance and the 547 claim, and we'd have the prospect of one or two more appeals involving the same transaction.

[00:24:39] Speaker 03:
The statute of limitations under Section 546 is already expired, so those are dead claims.

[00:24:46] Speaker 05:
even though they were asserted?

[00:24:48] Speaker 05:
Yes.

[00:24:48] Speaker 05:
And then dismissed without prejudice?

[00:24:49] Speaker 03:
I believe they, I believe, yes.

[00:24:52] Speaker 05:
And how about the 548A1B?

[00:24:57] Speaker 05:
Same.

[00:24:58] Speaker 05:
Okay.

[00:24:58] Speaker 05:
So there's no prospect.

[00:25:00] Speaker 03:
This is the, this is the last appeal.

[00:25:01] Speaker 05:
This is it?

[00:25:02] Speaker 05:
Okay.

[00:25:02] Speaker 05:
That, that would be a sufficient answer even in the Seventh Circuit.

[00:25:05] Speaker 05:
Thank you.

[00:25:07] Speaker 01:
Did you have another question, Judge Bayh?

[00:25:08] Speaker 01:
No.

[00:25:09] Speaker 01:
Anything further?

[00:25:10] Speaker 03:
I don't think so.

[00:25:11] Speaker 03:
Thank you very much.

[00:25:12] Speaker 01:
You're welcome.

[00:25:18] Speaker 02:
I want to talk about this notion that a trustee must act immediately.

[00:25:24] Speaker 02:
That's not true.

[00:25:25] Speaker 02:
There is a two-year period in which to bring fraudulent transfer claims.

[00:25:29] Speaker 02:
There's also a proof of claims deadline that happens early on in a bankruptcy case where all claims must be filed.

[00:25:35] Speaker 02:
And at that point, the trustee can ascertain what claims there are and what there aren't.

[00:25:39] Speaker 01:
Is it your position that it's not possible for another creditor to appear later?

[00:25:45] Speaker 02:
not after the proof of claims bar date, unless they move for relief from that bar date.

[00:25:49] Speaker 01:
Exactly.

[00:25:50] Speaker 02:
Right, which is very difficult to do.

[00:25:54] Speaker 02:
Not only that, but this is not one of those

[00:26:00] Speaker 02:
uncertain cases where we don't know what the claims are from the outset.

[00:26:04] Speaker 02:
This debtor filed her schedules immediately when she filed the case, so it was clear to see that she was solvent from the get-go.

[00:26:12] Speaker 05:
The claims that were filed weren't... Well, why didn't you just move to dismiss the bankruptcy if she was always solvent?

[00:26:19] Speaker 02:
She filed the case.

[00:26:22] Speaker 05:
Well, if it's a solvent estate, what's the basis for the bankruptcy?

[00:26:30] Speaker 02:
There is no solvency requirement in bankruptcy.

[00:26:32] Speaker 02:
She filed the case in order to forestall the foreclosure.

[00:26:38] Speaker 02:
I mean, it would be our position that the case should be dismissed for a variety of reasons.

[00:26:42] Speaker 05:
Yeah.

[00:26:42] Speaker 05:
There are plenty of reasons to say under those circumstances it should be dismissed.

[00:26:46] Speaker 05:
Why isn't that the sufficient answer here?

[00:26:49] Speaker 02:
Because it didn't happen.

[00:26:50] Speaker 02:
She didn't dismiss the case.

[00:26:51] Speaker 05:
But you could have.

[00:26:52] Speaker 05:
Couldn't you seek dismissal?

[00:26:55] Speaker 02:
arguably, but counsel for the appellants of the time did not seek dismissal.

[00:27:01] Speaker 04:
What remedy exactly do you wish this Court to give you, Mr. Fernandez?

[00:27:07] Speaker 02:
To order that the case be dismissed.

[00:27:10] Speaker 02:
To reverse with instructions to dismiss the case.

[00:27:12] Speaker 02:
I'm sorry, excuse me, not the bankruptcy case.

[00:27:14] Speaker 02:
To reverse with instructions to dismiss the adversary proceeding for lack of standing.

[00:27:22] Speaker 02:
Also,

[00:27:25] Speaker 04:
If you dismiss the adversary proceeding, the effect of that would be to reverse the grant of motion of summary judgment, correct?

[00:27:34] Speaker 02:
Yes.

[00:27:37] Speaker 04:
Not just to remand it for further proceedings to determine any tribal issues of fact, but to reverse it.

[00:27:47] Speaker 02:
Yes.

[00:27:49] Speaker 02:
Also, a plaintiff can lose standing.

[00:27:52] Speaker 02:
There may be uncertainty at the outset of a case.

[00:27:55] Speaker 02:
But a plaintiff can definitely lose standing when it becomes clear that there is no creditor that's going to be harmed.

[00:28:01] Speaker 02:
And we have to remember that the burden is on the plaintiff to establish standing.

[00:28:06] Speaker 02:
So any ambiguity, I would submit, must be resolved against the plaintiff, the one who's asserting standing.

[00:28:13] Speaker 02:
Thank you, Your Honors.

[00:28:14] Speaker 01:
You're welcome.

[00:28:15] Speaker 01:
Thank you both for your advocacy.

[00:28:16] Speaker 01:
We appreciate it very much.

[00:28:18] Speaker 01:
We'll take that case under advisement, and we'll stand in recess.

[00:28:34] Speaker 00:
Hear ye, hear ye, all persons having had business with the Honorable the United States Court of Appeals for the Ninth Circuit will now depart for this session now stands adjourned.