[00:00:00] Speaker 04:
All right. Thank you. 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. Is there any time that you would like to reserve for reply?

[00:00:14] Speaker 01:
Yes, there is.

[00:00:16] Speaker 01:
I'll be very brief.

[00:00:20] Speaker 00:
How much time? How much time would you like?

[00:00:25] Speaker 00:
In minutes. In minutes, if possible. Five, seven...

[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. You may proceed. Okay.

[00:00:39] Speaker 01:
My appeal relies on two cases, PGA v. Holden 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, So 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 I know that for $4 million, she essentially pledged all of her equity in her property to guarantee that I would be paid so that I wouldn't quit.

[00:01:19] Speaker 04:
But the problem, sir, is that that underlying claim has been adjudicated in the prior case and has been decided against you.

[00:01:28] Speaker 04:
this panel has affirmed that decision on the claim objection.

[00:01:33] Speaker 01:
Well, that's true, but under PGA, the note, if it's worth nothing, is irrelevant if you can't get rid of the... No, that's wrong, sir.

[00:01:45] Speaker 04:
The note is the obligation and the debt. The lien is the security. 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, and PGA won that case and took title to the property. 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.

[00:02:22] Speaker 01:
The Mork, 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, has ruled is worth zero. 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. Now the bankruptcy court. Initially said that that didn't apply. PGA didn't apply. Unless fraud was.

[00:03:09] Speaker 04:
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. It says that.

[00:03:22] Speaker 04:
I'm looking at the statute. And the statute says. unless these actions are taken in seven years under this chapter, right? 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. And I conform my behavior to what the bankruptcy judge who co-authored the Momentum case had written. 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? Well,

[00:04:22] Speaker 01:
I was given a deed of trust, a note in a deed of trust that said, I'll pay you if you don't quit. 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.

[00:04:40] 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 the first 2019 and that would have been within the court's four year look back period but with respect to the deed of trust no there's a you know as California law states specifically the transfer occurs on the date the deed is recorded and the obligation incurred occurs on the date it's due so Based upon that, 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 controlled.

[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. In PGA, they foreclose 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 the estate constituted a frivolous action and it awarded damages. 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. So could you address the merits of this particular appeal?

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

[00:06:37] 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. Likewise, the bankruptcy judge said that as well. On page eight of the momentum case, it says that somebody can attack the note and then go on later and get the deed removed. But if you can't get the deed removed, then that's the end of it. 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. 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. Because on September the 9th, 2024, that's exactly what the Ninth Circuit ruled.

[00:08:00] Speaker 01:
So I'm being penalized. You know, I can't blame the judge for not believing me when I told him that. But he gets if you bring two bankruptcy cases within a month with fraudulent intent, the case should not have been allowed to proceed. And if had that occurred, then I wouldn't have had to fight this thing as long as I have. But I think the PGA case is very clear and substantiates my position.

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

[00:08:34] Speaker 04:
All right. Thank you. We'll give you the rest of the time in your reply. Mr. Maher.

[00:08:42] Speaker 03:
Good morning. May it please the court. This, once again, I think has been briefed pretty well.

[00:08:49] Speaker 03:
If the panel has questions, I'm here. Any questions?

[00:08:55] Speaker 04:
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 Probably seven minutes of time left. 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 25th, 2010. The court's authority to set aside that deed of trust expired on June 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. 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. But once again, PGA is applicable.

[00:10:14] Speaker 01:
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. And that's what occurred in that case. And that's all I have to say.

[00:10:27] Speaker 04:
All right. Thank you very much.

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

[00:10:31] Speaker 04:
The matter will be deemed submitted, and we'll try to get a decision as soon as possible. Thank you for your argument.

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