[00:00:00] Speaker 04:
All right.

[00:00:00] Speaker 04:
Thank you.

[00:00:01] Speaker 04:
Mr. Reynolds, can you hear us okay?

[00:00:03] Speaker 01:
Yes, I can, Your Honor, and thank you for allowing me to appear today.

[00:00:09] Speaker 04:
Thank you.

[00:00:09] Speaker 04:
Is there any time that you would like to reserve for a reply?

[00:00:13] Speaker 01:
Yes, there is.

[00:00:15] Speaker 01:
I'll be very brief.

[00:00:19] Speaker 00:
How much time?

[00:00:22] Speaker 00:
How much time would you like?

[00:00:25] Speaker 00:
In minutes.

[00:00:26] Speaker 00:
In minutes, if possible.

[00:00:27] Speaker 00:
Five, seven.

[00:00:28] Speaker 00:
Ten, fifteen.

[00:00:29] Speaker 00:
What do you want?

[00:00:34] Speaker 01:
Five minutes is fine.

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

[00:00:35] Speaker 01:
Go ahead.

[00:00:36] Speaker 01:
You may proceed.

[00:00:37] Speaker 01:
Okay.

[00:00:39] Speaker 01:
My appeal relies on two cases, PGA v. Holbin and a subsequent case of momentum development, which is included in the brief.

[00:00:54] Speaker 01:
At the start of the case through now, the facts are plain.

[00:01:02] Speaker 01:
When the debtor ran out of money and couldn't pay me, she gave me a deed of trust and a note for $4 million.

[00:01:10] Speaker 01:
She essentially pledged all of her equity and her property to guarantee that I would be paid.

[00:01:17] Speaker 01:
so that I wouldn't quit.

[00:01:19] Speaker 04:
Well, that's true, but under PGA, the note

[00:01:38] Speaker 01:
If it's worth nothing, it's irrelevant if you can't get rid of the... No, that's wrong, sir.

[00:01:44] Speaker 04:
I mean, the note is the obligation and the debt.

[00:01:47] Speaker 04:
The lien is the security.

[00:01:49] Speaker 04:
If there's no debt, you may have a lien, but it secures nothing and it has to yield to the fact that there's nothing owed.

[00:01:56] Speaker 01:
Under PGA, the trial court ruled that the note was worthless, that the transaction was a sham.

[00:02:05] Speaker 01:
PGA won that case and took title to the property.

[00:02:12] Speaker 01:
And then when they tried to get rid of the deed of trust, the state court said, no, you can't remove it because you're barred by the statute of repose.

[00:02:21] Speaker 01:
The morgue, the fellow who recorded the fraudulent transaction foreclosed on his deed of trust for the face value of the note, which the trial court, as in the bankruptcy court,

[00:02:35] Speaker 01:
as ruled is worth zero.

[00:02:38] Speaker 01:
So based upon the PGA case, the value of the note is irrelevant if you don't get rid of the deed of trust, because even if the note is worth zero, you can't get rid of the deed of trust seven years after it's recorded.

[00:02:58] Speaker 01:
And that's what happened in PGA.

[00:03:01] Speaker 01:
Now, the Bankruptcy Court initially said that that didn't apply, PGA didn't apply, unless fraud was... Fraudulent transfer.

[00:03:11] Speaker 01:
Yeah.

[00:03:12] Speaker 04:
This is not a fraudulent transfer though.

[00:03:15] Speaker 01:
Well, it doesn't matter on page 8 of the momentum case.

[00:03:20] Speaker 04:
It says that... Well, I'm looking at the statute and the statute says, unless these actions are taken seven years under this chapter,

[00:03:29] Speaker 04:
And you'll agree with me that the chapter that's referencing is fraudulent transactions, correct?

[00:03:36] Speaker 01:
No, I don't agree with that because under the Momentum case written by the bankruptcy judge that I confronted, it says that it's not limited to fraudulent transfers.

[00:03:50] Speaker 01:
And I conform my behavior to what the bankruptcy judge who co-authored the Momentum case had written.

[00:03:58] Speaker 01:
And so the uniform statute applies to all transfers.

[00:04:09] Speaker 01:
And I think that's included in the statute.

[00:04:13] Speaker 04:
And what was the transfer here that you're complaining about, that is being complained about?

[00:04:19] Speaker 01:
Well, I was given a deed of trust, a note in the deed of trust that said, I'll pay you if you don't quit.

[00:04:27] Speaker 01:
And that's the only contract that I had with the debtor.

[00:04:32] Speaker 01:
And the date the obligation became due was on June the 1st, 2015.

[00:04:39] Speaker 01:
I didn't challenge the court's jurisdiction on that simply because the four-year statute on the note would have run on June 1st, 2019.

[00:04:53] Speaker 01:
And that would have been within the courts for your look back period.

[00:04:59] Speaker 01:
But with respect to the deed of trust, no.

[00:05:03] Speaker 01:
As California law states specifically, the transfer occurs on the date the deed's recorded and the obligation occurs on the date it's due.

[00:05:19] Speaker 01:
So based upon that,

[00:05:23] Speaker 01:
You can't, the statute of repose bars courts from setting aside the deed of trust under PGA.

[00:05:32] Speaker 01:
It's irrelevant as to whether the promissory note's worth anything at all, because in that case, it wasn't.

[00:05:41] Speaker 01:
And under PGA, it was the deed of trust that control.

[00:05:47] Speaker 02:
In foreclosing a deed of trust though, don't you have to identify what debt is owed?

[00:05:54] Speaker 01:
Absolutely.

[00:05:55] Speaker 01:
And PGA, they foreclosed on the face value of the note, which was, I think, $600,000, even though no consideration had been paid.

[00:06:05] Speaker 00:
But Mr. Reynolds, excuse me, it appears that this appeal is about a determination by the bankruptcy court that your continued action against the estate constituted a frivolous action and it awarded damages.

[00:06:21] Speaker 00:
This is not a question of whether or not your deed of trust is valid and foreclosable or whether you could or couldn't take actions as you suggested.

[00:06:30] Speaker 00:
So could you address the merits of this particular appeal?

[00:06:34] Speaker 01:
Well, sure.

[00:06:35] Speaker 01:
If the court would have decided its jurisdiction at the beginning of the case, there wouldn't have been any attorney fees accrued at all.

[00:06:46] Speaker 01:
I'm challenging jurisdiction.

[00:06:49] Speaker 01:
When the BAP ruled on this on the prior case, they said that the trustee was not attacking the deed of trust.

[00:06:56] Speaker 01:
Likewise, the bankruptcy judge said that as well.

[00:07:01] Speaker 01:
On page eight of the momentum case, it says that

[00:07:05] Speaker 01:
somebody can attack the note and then go well in the later and get the deed removed.

[00:07:13] Speaker 01:
But if you can't get the deed removed, then that's the end of it.

[00:07:18] Speaker 01:
They didn't have jurisdiction to do this.

[00:07:21] Speaker 01:
I might also add that the trustee filed a motion for mootness with the Ninth Circuit.

[00:07:27] Speaker 01:
The Ninth Circuit said it wasn't moot, therefore it's not frivolous.

[00:07:34] Speaker 01:
And beyond that, I would say that when I told the judge at the start of the case that the debtor had filed two bankruptcy cases within one month, and that those cases were brought with fraudulent intent, that I was telling the truth.

[00:07:54] Speaker 01:
Because on September the 9th, 2024, that's exactly what the Ninth Circuit ruled.

[00:08:00] Speaker 01:
So I'm being penalized.

[00:08:02] Speaker 01:
You know, I can't blame the judge for not believing me when I told him that.

[00:08:07] Speaker 01:
But he gets, if you bring two bankruptcy cases within a month with fraudulent intent, the case should not have been allowed to proceed.

[00:08:18] Speaker 01:
And had that occurred, then I wouldn't have had to fight this thing as long as I have.

[00:08:25] Speaker 01:
But I think the PGA case is very clear, and it substantiates my position.

[00:08:32] Speaker 01:
And that's all I have to say for now.

[00:08:35] Speaker 04:
All right.

[00:08:35] Speaker 04:
Thank you.

[00:08:36] Speaker 04:
We'll give you the rest of the time in your reply.

[00:08:39] Speaker 04:
Mr. Maher.

[00:08:42] Speaker 03:
Good morning.

[00:08:43] Speaker 03:
May it please the court.

[00:08:44] Speaker 03:
This, once again, I think, has been briefed pretty well.

[00:08:50] Speaker 03:
The court, the panel has questions.

[00:08:52] Speaker 03:
I'm here.

[00:08:53] Speaker 03:
Any questions?

[00:08:55] Speaker 03:
I don't.

[00:08:56] Speaker 03:
Any questions?

[00:08:58] Speaker 04:
I think we've read the briefs and have a pretty good understanding of the situation.

[00:09:03] Speaker 03:
Thank you.

[00:09:06] Speaker 04:
Mr. Reynolds, you do have roughly seven minutes of time left.

[00:09:10] Speaker 04:
There wasn't much to reply to, but if you want to add anything, I'll give you that opportunity.

[00:09:15] Speaker 01:
Sure, I appreciate the opportunity.

[00:09:20] Speaker 01:
The bottom line is simple.

[00:09:22] Speaker 01:
The deed of trust was recorded on June

[00:09:26] Speaker 01:
The court's authority to set aside that deed of trust expired on June the 25th, 2017.

[00:09:39] Speaker 01:
That's more than four years outside the trustee's look back window.

[00:09:46] Speaker 01:
And with respect to the obligation incurred, that was on June 1st, 2015.

[00:09:57] Speaker 01:
Even if you want to extend it to the four year statute running on the note, that would be June 1st, 2019, which would be in the trustees four year look back window.

[00:10:10] Speaker 01:
But once again, PGA is applicable and under PGA, if you can't get rid of the deed of trust, the foreclosure is allowed to go forward for the face value of the note.

[00:10:24] Speaker 01:
And that's what occurred in that case.

[00:10:26] Speaker 01:
And that's all I have to say.

[00:10:27] Speaker 01:
All right.

[00:10:29] Speaker 01:
Thank you very much.

[00:10:30] Speaker 01:
Thank you.

[00:10:31] Speaker 04:
The matter will be deemed submitted.

[00:10:32] Speaker 04:
We'll try to get a decision as soon as possible.

[00:10:34] Speaker 04:
Thank you for your argument.

[00:10:35] Speaker 01:
Thank you.