In re: Doron Ezra Nava Tomer Ezra, 9th Cir. BAP (2015)

7/25/2019 In re: Doron Ezra Nava Tomer Ezra, 9th Cir. BAP (2015)

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FILED

SEP 22 2015

SUSAN M. SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

I n r e: ) BAP No. CC- 14- 1563- KuPeTa)

DORON EZRA; NAVA TOMER EZRA, ) Bk. No. 1: 11- 12168- MT)

Debt or s. ) Adv. No. 1: 12- 01001- MT______________________________)

)SHOSHANA EZRA, )

)Appel l ant , )

)

v. ) OPINION)DAVI D SEROR, Chapt er 7 )Tr ust ee, )

)Appel l ee. )

______________________________)

Ar gued and Submi t t ed on J ul y 23, 2015at Pasadena, Cal i f or ni a

Fi l ed Sept ember 22, 2015

Appeal f r om t he Uni t ed St at es Bankrupt cy Cour tf or t he Cent r al Di str i ct of Cal i f or ni a

Honor abl e Maur een A. Ti ghe, Bankrupt cy J udge, Presi di ng

Appear ances: Shal em Shem- Tov of Net zah & Shem- Tov, I nc. ar guedf or appel l ant Shoshana Ezr a; Ri char d D. Bur st ei nof Ezr a Br ut zkus Gubner LLP ar gued f or appel l eeDavi d Ser or , chapt er 7 t r ust ee.

Bef ore: KURTZ, PERRI S* and TAYLOR, Bankr upt cy J udges.

* Hon. El i zabet h L. Per r i s, Uni t ed St at es Bankrupt cy J udgef or t he Di st r i ct of Or egon, si t t i ng by desi gnat i on.


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KURTZ, Bankr upt cy J udge:

INTRODUCTION

Shoshana Ezr a appeal s f r omt he bankr upt cy cour t s j udgmentavoi di ng as f r audul ent t r ansf er s t wo deeds of t r ust t he debt or s

Doron Ezr a and Nava Tomer - Ezr a execut ed i n her f avor . Shoshana1

cont ends t hat at l east some of t he avoi dance cl ai ms brought

agai nst her by t he chapt er 72 t r ust ee Davi d Ser or wer e t i me

bar r ed, t hat t her e was i nsuf f i ci ent evi dence t he debt or s made the

t r ansf er s wi t h t he i nt ent t o hi nder , del ay or def r aud t hei r

cr edi t or s, and t hat t her e was no evi dence of t he debt or s

i nsol vency.

We di sagr ee wi t h Shoshana s posi t i on on i nt ent . As f or t he

speci f i c l i mi t at i ons def ense she di scusses i n her openi ng appeal

br i ef , i t di f f er s f r om t he st at ut e of r epose i ssue she r ai sed i n

t he bankrupt cy cour t . We decl i ne t o addr ess t he l i mi t at i ons

def ense on appeal because i t was not suf f i ci ent l y rai sed i n t hebankrupt cy cour t f or t he bankrupt cy cour t t o deci de i t . As f or

her st at ut e of r epose i ssue, she di d not r ai se i t i n her openi ng

appeal br i ef ; she onl y r ai sed i t i n her appel l at e r epl y br i ef .

Thi s i s i mproper , and we si mi l ar l y decl i ne t o address i t . On

t hese gr ounds, we AFFI RM.

1 For t he sake of cl ar i t y, we r ef er t o t he Ezr as by t hei rf i r st names. No di sr espect i s i nt ended.

2 Unl ess speci f i ed ot her wi se, al l chapt er and sect i onr ef er ences are t o t he Bankrupt cy Code, 11 U. S. C. 101- 1532, andal l Rul e r ef er ences ar e t o t he Feder al Rul es of Bankrupt cyProcedur e, Rul es 1001- 9037.

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FACTS

Doron and Nava pur chased t hei r r esi dence i n 1996. Si nce

t hen, t he r esi dence has been t he subj ect of sever al t r ansact i ons

i nvol vi ng var i ous Ezr a f ami l y members. On Oct ober 17, 2001,Dor on qui t cl ai med hi s i nt er est i n t he r esi dence t o Nava i n her

name al one, but a week l ater Nava executed a new qui t cl ai m deed

t r ansf er r i ng t i t l e t o t he r esi dence back to her and Dor on as

husband and wi f e. I n J anuary 2010, Doron once agai n qui t cl ai med

hi s i nt er est t o Nava i n her name al one. At t he t i me of t hei r

j oi nt bankr upt cy f i l i ng i n Februar y 2011, Nava st i l l hel d t i t l e

t o t he resi dence i n her name al one.

I n addi t i on t o t he t i t l e t r ansf er s, f our deeds of t r ust wer e

of r ecor d at t he t i me of t he commencement of t he debt ors

bankrupt cy case. Of t hese f our , t he f i r st and t hi r d deeds of

t r ust were hel d by banks and were not cont est ed by Seror i n t he

debt or s bankrupt cy case. The ot her t wo deeds of t r ust of r ecor d

were both hel d by Shoshana and are descr i bed as f ol l ows:1. A second deed of t r ust r ecor ded i n Apr i l 2004 i n f avor of

Dor on s mot her Shoshana, as benef i ci ar y, pur por t edl y secur i ng a

debt i n t he amount of $500, 000; and

2. A f our t h deed of t r ust r ecor ded i n J une 2009 i n f avor of

Shoshana, as benef i ci ar y, pur por t edl y secur i ng a debt i n t he

amount of $500, 000.

I n J anuar y 2012, Ser or f i l ed hi s compl ai nt seeki ng t o avoi d

as f r audul ent t r ansf er s t he 2004 and 2009 deeds of t r ust i n f avor

of Shoshana. He al so sought t o r ecover t he t r ansf er s f or t he

benef i t of t he est at e pur suant t o 550( a) . I n r el evant par t ,

Ser or al l eged t hat t he debt or s di d not r ecei ve r easonabl y

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equi val ent val ue i n exchange f or t he 2009 deed of t r ust and t hat

t he debt ors were i nsol vent at t he t i me or t hat t he 2009 deed of

t r ust r ender ed t hem i nsol vent . Ser or f ur t her al l eged t hat , at

t he t i me both t r ansf ers were made, t he debt ors f aced demandsand/ or pot ent i al or pendi ng l i t i gat i on and t hat t he debt or s made

t he t r ansf er s f or t he pur pose of shi el di ng f r om cr edi t or s any

equi t y i n t hei r r esi dence. Based on t hese and ot her al l egat i ons,

Seror asser t ed t hat he was ent i t l ed t o avoi d t he 2009 deed of

t r ust as an act ual and const r uct i ve f r audul ent t r ansf er ei t her

under 548( a) ( 1) ( A) and ( B) or under 544( b) and Cal . Ci v. Code

3439. 04( a) and 3439. 05. Ser or f ur t her cl ai med t hat he was

ent i t l ed t o avoi d t he 2004 deed of t r ust as an act ual f r audul ent

t r ansf er under 544( b) and Cal . Ci v. Code 3439. 04( a) .

Shoshana f i l ed a summar y j udgment mot i on seeki ng di smi ssal

of Ser or s l awsui t . Shoshana pr i mar i l y ar gued t hat Ser or s

cl ai ms seeki ng avoi dance of t he 2004 deed of t r ust under

Cal i f or ni a l aw wer e t i me bar r ed under t he seven year st at ut e ofr epose set f or t h i n Cal . Ci v. Code 3439. 09( c) , whi ch st at es:

( c) Not wi t hst andi ng any ot her pr ovi si on of l aw, a causeof act i on wi t h r espect t o a f r audul ent t r ansf er orobl i gat i on i s ext i ngui shed i f no act i on i s br ought orl evy made wi t hi n seven year s af t er t he t r ansf er wasmade or t he obl i gat i on was i ncur r ed.

Cal . Ci v. Code 3439. 09( c) . 3 Accor di ng t o Shoshana, because

more t han seven years had el apsed between the recordi ng of t he

3 Recent l y, t he Cal i f or ni a l egi sl at ur e amended t heCal i f or ni a Uni f or m Fr audul ent Tr ansf er Act . The amendment s maker el at i vel y mi nor changes t o t he Act , and none of t hose changesaf f ect our anal ysi s i n t hi s appeal . Mor eover , t he amendment sgener al l y do not appl y t o t r ansf er s made bef or e t he ef f ect i vedate of t he amendment s. See 2015 Cal . Legi s. Serv. Ch. 44 ( S. B.161) .

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( Apr i l ) 2004 deed of t r ust and Ser or s J anuar y 2012 f i l i ng of hi s

compl ai nt , Ser or s f r audul ent t r ansf er cl ai ms ar i si ng f r om t he

2004 deed of t r ust had been ext i ngui shed by operat i on of l aw.

The bankr upt cy cour t deni ed Shoshana s summar y j udgment mot i on,hol di ng t hat t he seven year s pr ovi ded by Cal i f or ni a s st at ut e of

r epose had not been exceeded because t he debtor s had commenced

t hei r Febr uar y 2011 bankrupt cy case wi t hi n seven year s of t he

t r ansf er .

Presumabl y because t he st atut e of r epose i ssue under Cal .

Ci v. Code 3439. 09( c) was deci ded as a mat t er of l aw i n t he

summary j udgment mot i on, Shoshana di d not r ai se any f act ual or

l egal i ssues r egar di ng t hi s def ense i n t he pr et r i al st i pul at i on

or i n her t r i al document s. Nor di d she r ai se dur i ng t he pr et r i al

or t r i al pr oceedi ngs any i ssue r el at ed t o t he st at ut e of

l i mi t at i ons def ense set f or t h i n Cal . Ci v. Code 3439. 09( a) ,

whi ch pr ovi des:

A cause of act i on wi t h r espect t o a f r audul ent t r ansf eror obl i gat i on under t hi s chapt er i s ext i ngui shed unl essact i on i s br ought pur suant t o subdi vi si on ( a) ofSect i on 3439. 07 or l evy made as provi ded i n subdi vi si on( b) or ( c) of Sect i on 3439. 07:

( a) Under par agr aph ( 1) of subdi vi si on ( a) of Sect i on3439. 04, wi t hi n f our year s af t er t he t r ansf er was madeor t he obl i gat i on was i ncur r ed or , i f l at er , wi t hi n oneyear af t er t he t r ansf er or obl i gat i on was or coul dr easonabl y have been di scover ed by t he cl ai mant .

Cal . Ci v. Code 3439. 09( a) . 4

4 Shoshana s answer t o Ser or s compl ai nt i ncl uded anaf f i r mat i ve def ense al l egi ng t hat Ser or s cl ai ms wer e bar r edunder t he appl i cabl e st at ut e of l i mi t at i ons. Nonet hel ess, t he

( cont i nued. . . )

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At t he concl usi on of t r i al , t he bankr upt cy cour t st at ed

i t s f i ndi ngs of f act and concl usi ons of l aw on t he r ecor d. The

cour t f ound not cr edi bl e Dor on s t est i mony that hi s mot her

Shoshana and hi s ( now) deceased f at her Shl omo expect ed r epaymentof amount s Doron and Nava spent on f ami l y t r i ps t o I sr ael and on

gr ocer i es whi l e i n I sr ael and t hat t he t wo deeds of t r ust secur ed

r epayment of t hose amount s. Accordi ng t o t he cour t , Doron s

t est i mony was bot h bi zar r e and i nconsi st ent r egar di ng whet her

t hese amount s wer e gi f t s or l oans. The cour t f ur t her f ound t hat

Dor on s gi f t s and I sr ael expl anat i on di d not j i be wi t h Dor on s

al t er nat e st or y t hat hi s par ent s l ent hi m t he money f or var i ous

r eal est at e t r ansact i ons. I n f act , t he cour t expl ai ned, Dor on s

vague and i nconsi st ent t est i mony about t he bank account s he used

t o par t i al l y f und some of hi s r eal est at e t r ansact i ons l ed t he

cour t t o concl ude t hat al l of t he account s Dor on r ef er enced

ef f ect i vel y bel onged t o Doron even t hose bank account s he

cl ai med bel onged t o hi s par ent s. As t he bankrupt cy cour t put i t : . . . he j ust used t hose account s of hi s par ent s f or

hi s own pur poses and t hey wer e ef f ect i vel y hi s account sand was not cl ear t hat t he money comi ng out of t heaccount s was even f r om t he parent s or somethi ng t hat hehad put i n ear l i er . There was no at t empt t o show t hef unds suppl i ed by t he par ent s. The st at ement s al l camet o [ Dor on s] addr ess, ei t her t he home or t he busi nessaddr ess.

4( . . . cont i nued)

par t i es pr et r i al st i pul at i on, appr oved by t he cour t , di d notr ef er ence t hi s def ense, and t he st i pul at i on expl i ci t l y pr ovi dedt hat i t superseded t he pl eadi ngs and was t o govern t he cour se oft r i al . See Pat t er son v. Hughes Ai r cr af t Co. , 11 F. 3d 948, 950( 9t h Ci r . 1993) ( A pr et r i al or der gener al l y super sedes t hepl eadi ngs, and t he par t i es are bound by i t s cont ent s. ) .

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Tr . Tr ans. ( Nov. 3, 2014) at p. 35: 10- 17.

The bankrupt cy cour t al so di d not bel i eve Dor on s st at ement s

t hat hi s f at her Shl omo had kept l edger s and t hat he ( Dor on) l ost

t he t wo pr omi ssory notes memor i al i zi ng t he l oans supposedl ysecur ed by t he t wo deeds of t r ust . As t he bankr upt cy cour t

expl ai ned, Dor on was an exper i enced busi nessman who had made a

l i vi ng engagi ng i n sophi st i cat ed r eal est at e t r ansact i ons. I n

l i ght of t hi s backgr ound, t he cour t f ound i t except i onal l y har d

t o bel i eve ( and di d not bel i eve) i n t he exi st ence of t he l edger

and t he not es gi ven Dor on s i nabi l i t y t o pr oduce t hem. The cour t

f ound t hat Dor on had not cr edi bl y reconci l ed hi s 20 year s of

exper i ence as a r eal est at e i nvest ment pr of essi onal - who owned

i nt er est s i n and/ or par t i al l y cont r ol l ed a number of r eal est at e

i nvest ment ent i t i es wi t h hi s appar ent l y nonchal ant at t i t ude

wi t h r espect t o t he f i nanci ng of one of hi s f ami l y s most

i mpor t ant asset s: t he f ami l y r esi dence.

As f or t he i nt ent t o hi nder , del ay or def r aud t hei rcredi t or s, t he cour t f ound t hat t he debt or s i nt ent l ar gel y was

est abl i shed by t hei r pat t er n and pr act i ce of : ( 1) ensur i ng t hat

asset s of val ue were kept i n t he name of other f ami l y members,

even t hough t hey cont i nued t o exer ci se cont r ol over t he asset s;

and ( 2) ensur i ng t hat any cur r ent or f ut ur e equi t y the debt or s

may have had i n t hei r r esi dence was f ul l y encumbered. The cour t

i nf er r ed t hat t he debt or s pr act i ce was i ni t i al l y mot i vat ed by

Dor on s concer n over t he l i t i gi ous nat ur e of t he busi ness he was

engaged i n and l ater by actual demands and l awsui t s t he debt ors

f aced.

The bankrupt cy cour t al so f ound t hat t he debt or s r ecei ved

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l ess t han reasonabl y equi val ent val ue i n exchange f or bot h deeds

of t r ust . The cour t f ur t her f ound, wi t h r espect t o t he 2009 deed

of t r ust , t hat t he debt or s wer e i nsol vent at t he t i me of t he

t r ansact i on or wer e r ender ed i nsol vent by the t r ansact i on, wer el ef t wi t h i nsuf f i ci ent asset s i n l i ght of t he busi ness or

t r ansact i on i n whi ch t hey were engaged, and i nt ended t o i ncur or

r easonabl y shoul d have bel i eved t hey woul d i ncur debt s beyond

t hei r abi l i t y t o pay as t hey came due. However , t he cour t

answer ed each of t hese f i nanci al st at us quest i ons i n t he negat i ve

wi t h r espect t o t he 2004 deed of t r ust .

Based on t hese f i ndi ngs, t he bankrupt cy cour t ent er ed

j udgment agai nst Shoshana avoi di ng t he 2004 deed of t r ust as an

act ual f r audul ent t r ansf er under 544( b) and Cal . Ci v. Code

3439. 04( a) ( 1) and avoi di ng the 2009 deed of t r ust as bot h an

act ual and const r uct i ve f r audul ent t r ansf er under 11 U. S. C.

544( b) and 548, as wel l as Cal . Ci v. Code 3439. 04( a) ( 1) ,

( a) ( 2) ( A) , ( a) ( 2) ( B) and 3439. 05. The bankrupt cy cour t f ur t heror der ed bot h t r ansf er s r ecover ed f or t he benef i t of t he est at e

pur suant t o 550( a) . On November 26, 2014, Shoshana t i mel y

f i l ed her not i ce of appeal .

JURISDICTION

The bankrupt cy cour t had j ur i sdi ct i on pur suant t o 28 U. S. C.

1334 and 157( b) ( 2) ( H) . We have j ur i sdi ct i on under 28 U. S. C.

158.

ISSUE

Di d the bankrupt cy cour t cor r ect l y r ul e t hat t he 2004 and

2009 deeds of t r ust wer e f r audul ent t r ansf er s?

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STANDARD OF REVIEW

I n appeal s f r om j udgment s di sposi ng of f r audul ent t r ansf er

cl ai ms, t he bankrupt cy cour t s f i ndi ngs of f act ar e r evi ewed

under t he cl ear l y er r oneous st andar d and i t s concl usi ons of l awar e r evi ewed de novo. Decker v. Tr ami el ( I n r e J TS Cor p. ) , 617

F. 3d 1102, 1109 ( 9t h Ci r . 2010) .

A bankr upt cy cour t s f act ual f i ndi ngs ar e not cl ear l y

er r oneous unl ess t hey ar e i l l ogi cal , i mpl ausi bl e or wi t hout

suppor t i n t he r ecor d. Ret z v. Samson ( I n r e Ret z) , 606 F. 3d

1189, 1196 ( 9t h Ci r . 2010) .

DISCUSSION

A. Overview

As set f or t h above, t he bankrupt cy cour t avoi ded bot h t he

2004 deed of t r ust and t he 2009 deed of t r ust as act ual

f r audul ent t r ansf er s under 544( b) and Cal i f or ni a Ci vi l Code

3439. 04( a) ( 1) . To t he ext ent we can uphol d t he bankr upt cy

cour t s act ual f r audul ent t r ansf er det er mi nat i on, we need notr each t he cour t s const r uct i ve f r audul ent t r ansf er det er mi nat i on,

whi ch onl y per t ai ned t o t he 2009 deed of t r ust .

Under 544( b) , a chapt er 7 t r ust ee may exer ci se t he

avoi di ng power s conf er r ed upon cr edi t or s by Cal i f or ni a s ver si on

of t he Uni f or m Fraudul ent Tr ansf er Act , Cal . Ci v. Code 3439, et

seq. , t o t he same ext ent t hose powers coul d have been exer ci sed

by a cr edi t or hol di ng an al l owabl e unsecur ed cl ai m agai nst t he

debt or s bankrupt cy est at e. Wol kowi t z v. Bever l y ( I n r e

Bever l y) , 374 B. R. 221, 232 ( 9t h Ci r . BAP 2007) , af f d i n par t

and adopt ed, 551 F. 3d 1092 ( 9t h Ci r . 2008) ; see al so I n r e J TS

Corp. , 617 F. 3d at 1111 ( Sect i on 544 enabl es a bankr upt cy

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t r ust ee t o avoi d any t r ansf er of pr oper t y that an unsecur ed

cr edi t or wi t h an al l owabl e cl ai m coul d have avoi ded under

appl i cabl e st at e l aw. ) .

To deci de whet her a t r ansf er i s avoi dabl e under Cal i f or ni a sUni f or m Fraudul ent Tr ansf er Act , we must i nt er pr et Cal i f or ni a

l aw. I n r e Bever l y, 374 B. R. at 232. We must answer any

quest i ons of l aw ar i si ng f r om t he Act based on how t he Cal i f or ni a

Supr eme Cour t woul d deci de t hem. I d. I f t he Cal i f or ni a Supr eme

Cour t has not yet r eached t he i ssue i n quest i on, our j ob i s t o

pr edi ct how t he Cal i f or ni a Supr eme Cour t woul d deci de i t .

KekauohaAl i sa v. Amer i quest Mor t g. Co. ( I n r e KekauohaAl i sa) ,

674 F. 3d 1083, 1087- 88 ( 9t h Ci r . 2012) ( ci t i ng Sec. Pac. Nat l

Bank v. Ki r kl and ( I n r e Ki r kl and) , 915 F. 2d 1236, 1239 ( 9t h Ci r .

1990) ) .

B. Intent to Hinder, Delay or Defraud

The Act provi des i n r el evant par t t hat a t r ansf er i s

f r audul ent as t o a credi t or , r egar dl ess of when t he credi t or scl ai m ar ose, i f t he debt or made t he t r ansf er wi t h t he act ual

i nt ent t o hi nder , del ay, or def r aud any credi t or . Cal . Ci v. Code

3439. 04( a) ( 1) . Bankrupt cy cour t s exami ni ng t r ansf er s under

t hi s pr ovi si on must f ocus on t he debt or s st at e of mi nd. I n r e

Bever l y, 374 B. R. at 235. As l ong as t he debt or had t he

r equi si t e i nt ent , a t r ansf er wi l l qual i f y as actual l y f r audul ent

even i f r easonabl y equi val ent val ue was pr ovi ded. I d. Because

3439. 04( a) ( 1) s l anguage r egar di ng t he debt or s st at e of mi nd

i s st at ed i n t he di sj unct i ve, i nt ent t o def r aud a credi t or i s not

r equi r ed. Ei t her an i nt ent t o hi nder or an i nt ent t o del ay a

credi t or al so wi l l suf f i ce. I d.

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As t he pl ai nt i f f , Ser or had t he bur den of pr oof t o est abl i sh

by a pr eponder ance of t he evi dence t he exi st ence of t he r equi si t e

st at e of mi nd. I d. Because di r ect evi dence r egar di ng t he

debt or s f r audul ent or obst r uct i ve i nt ent r ar el y i s avai l abl e,cour t s t ypi cal l y i nf er t he debt or s i nt ent f r om t he sur r oundi ng

ci r cumst ances. I d. To f aci l i t at e t hi s pr ocess, t he Act

enumer at es el even non- excl usi ve badges of f r aud f act or s t he

cour t can consi der i n deci di ng whet her t he requi si t e i nt ent

exi st ed. Cal . Ci v. Code 3439. 04( b) . These f act or s i ncl ude t he

f ol l owi ng:

( 1) Whet her t he t r ansf er or obl i gat i on was t o ani nsi der .( 2) Whet her t he debt or r et ai ned possessi on or cont r olof t he pr oper t y t r ansf er r ed af t er t he t r ansf er .( 3) Whet her t he t r ansf er or obl i gat i on was di scl osed orconceal ed.( 4) Whet her bef or e the t r ansf er was made or obl i gat i onwas i ncur r ed, t he debt or had been sued or t hr eat enedwi t h sui t .( 5) Whet her t he t r ansf er was of subst ant i al l y al l t hedebt or s asset s.( 6) Whether t he debt or absconded.

( 7) Whether t he debt or r emoved or conceal ed asset s.( 8) Whet her t he val ue of t he consi der at i on r ecei ved byt he debt or was r easonabl y equi val ent t o t he val ue oft he asset t r ansf er r ed or t he amount of t he obl i gat i oni ncur r ed.( 9) Whether t he debt or was i nsol vent or becamei nsol vent shor t l y af t er t he t r ansf er was made or t heobl i gat i on was i ncur r ed.( 10) Whet her t he t r ansf er occur r ed shor t l y bef or e orshor t l y af t er a subst ant i al debt was i ncur r ed.( 11) Whet her t he debt or t r ansf er r ed t he essent i alassets of t he busi ness t o a l i enhol der who t r ansf er r edt he asset s t o an i nsi der of t he debt or .

Cal . Ci v. Code 3439. 04( b) .

Not wi t hst andi ng t he i ncl usi on of t hi s l i st i n t he st at ut e,

t he l i st does not set i n concrete the f actor s t he t r i er of f act

can or must consi der t o ascer t ai n t he debt or s i nt ent . No si ngl e

f act or necessar i l y i s det er mi nat i ve, and no mi ni mum or maxi mum

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number of f act or s di ct at es a par t i cul ar out come. As we expl ai ned

i n I n r e Bever l y, t he l i st shoul d not be appl i ed f or mul ai cal l y.

I n r e Bever l y, 374 B. R. at 236. I nst ead, t he t r i er of f act

shoul d consi der al l of t he r el evant ci r cumst ances sur r oundi ng t het r ansf er . I d. ( ci t i ng Fi l i p v. Bucur enci u, 129 Cal . App. 4t h 825,

834 ( 2005) ) .

Shoshana argues on appeal t hat t he bankr upt cy cour t s i nt ent

f i ndi ngs wer e cl ear l y er r oneous. Wi t h r espect t o t he 2004 deed

of t r ust , she st at es t hat t he evi dence r egar di ng val ue gi ven i n

exchange f or t he 2004 deed of t r ust mi ght have been equi vocal ,

but i nadequat e consi der at i on al one cannot suppor t a f i ndi ng of

act ual i nt ent t o hi nder , del ay or def r aud cr edi t or s. Shoshana

al so poi nt s t o ot her badges of f r aud f act or s and cor r ect l y

not es t hat t her e i s no evi dence i n t he r ecor d t hat t he debt or s

were i nsol vent i n 2004 or t hat t hey were pl agued by pendi ng

l awsui t s at t hat t i me. I n f act , whi l e Shoshana di d not ment i on

i t i n her appeal br i ef , we f ur t her not e t hat t her e was noevi dence of conceal ment of t he 2004 deed of t r ust , no evi dence

t hat t he 2004 deed of t r ust t r ansf er r ed subst ant i al l y al l of t he

debt or s asset s, and no evi dence t hat t he debt or s wer e i n t he

pr ocess of abscondi ng at t he t i me.

Even so, Shoshana s i nt ent ar gument compl et el y ( and f at al l y)

i gnor es t he key f i ndi ngs on whi ch t he bankrupt cy cour t based i t s

i nt ent det er mi nat i on. The bankrupt cy cour t f ound t hat t he

debt or s, par t i cul ar l y Dor on, wer e engaged i n a pat t er n and

pr act i ce of shi el di ng t hei r asset s f r om credi t or s. The cour t

i nf er r ed f r om t he ent i r et y of t he debt or s conduct t hat t he

var i ous t r ansf er s t he debt or s made af f ect i ng t i t l e t o and

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encumbr ances agai nst t hei r r esi dence i ncl udi ng t he 2004 deed of

t r ust wer e made f or t he pur pose of keepi ng any equi t y i n t hei r

r esi dence as f ar away f r om t hei r cr edi t or s as possi bl e. The

bankr upt cy cour t acknowl edged t he absence of evi dence of pendi ngor i mmi nent l y t hr eat ened l i t i gat i on at t he t i me of t he 2004 deed

of t r ust . The cour t nonet hel ess i nf er r ed f r om al l of t he

ci r cumst ances t hat Doron r eal i zed at t he t i me of t he 2004 deed of

t r ust t hat he was engaged i n l i nes of busi ness r eal est at e

l endi ng and r eal est at e i nvest ment t hat wer e i nher ent l y

l i t i gi ous and t hat t hi s gener i c l i t i gat i on r i sk const ant l y pl aced

hi s f ami l y s asset s at r i sk. As a r esul t , t he cour t concl uded,

t hi s gener i c l i t i gat i on r i sk mot i vat ed t he debt or s t o execut e and

r ecor d t he 2004 deed of t r ust .

Shoshana has not of f ered us any r eason why we shoul d

concl ude t hat t he bankrupt cy cour t s i nt ent - r el at ed f i ndi ngs wi t h

r espect t o t he 2004 deed of t r ust wer e i l l ogi cal , i mpl ausi bl e or

wi t hout support i n t he r ecor d. Nor are we aware of any suchr easons. Ther ef or e, t hese i nt ent - r el at ed f i ndi ngs wer e not

cl ear l y er r oneous.

Shoshana of f ers even l ess ar gument i n her openi ng br i ef

chal l engi ng t he bankr upt cy cour t s i nt ent - r el at ed f i ndi ngs

per t ai ni ng t o t he 2009 deed of t r ust . I ndeed, her ar gument i s

l i mi t ed t o a si ngl e par agr aph, as f ol l ows:

Ther e was l i kewi se no evi dence of bad f ai t h as t ot he 2009 Deed of Trust . That deed of t r ust was cr eat edby t he Debt or because he err oneousl y bel i eved t hat t he2004 Deed of Trust had been r econveyed. For t he samer easons t he 2004 Deed of Trust has no i ndi ci a of badf ai t h or f r audul ent i nt ent , t he 2009 Deed of Tr ust ,i nt ended mer el y t o r epl ace i t , l i kewi se coul d not havebeen t he pr oduct of any bad f ai t h or f r audul ent i nt ent .

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Apl t . Opn. Br . at 27 ( ci t at i on omi t t ed) .

The bankrupt cy cour t s i ntent - r el at ed f i ndi ngs per t ai ni ng t o

t he 2009 deed of t r ust general l y hi nged on t he same ci r cumst ances

t he cour t r el i ed upon i n f i ndi ng t he r equi si t e i nt ent wi t hr espect t o t he 2004 deed of t r ust . However , i n addi t i on t o t he

gener i c l i t i gat i on r i sk not ed above, t he bankr upt cy cour t al so

f ound t hat , by t he t i me of t he 2009 deed of t r ust , t he debt or s

f i nanci al condi t i on had det er i or at ed and t he t hr eat of l i t i gat i on

ar i si ng f r om speci f i c cl ai ms had si gni f i cant l y i ncreased, whi ch

onl y served t o r ei nf or ce t he bankrupt cy cour t s det er mi nat i on

t hat t he debt or s execut ed t he 2009 deed of t r ust f or t he pur pose

of keepi ng any equi t y i n t hei r r esi dence as f ar away f r om t hei r

cr edi t or s as possi bl e. For t he same r easons we concl ude t hat t he

bankr upt cy cour t s i nt ent - r el at ed f i ndi ngs wi t h r espect t o t he

2004 deed of t r ust wer e not cl ear l y er r oneous, we si mi l ar l y

concl ude that i t s i nt ent - r el at ed f i ndi ngs wi t h r espect t o t he

2009 deed of t r ust wer e not cl ear l y er r oneous.C. Limitations Defense Under Cal. Civ. Code 3439.09(a) - Does

the One Year Limitation Run from Discovery of the Transferor Discovery of the Fraud?

The onl y ot her chal l enge of Shoshana s t hat we need t o

di scuss concer ns t he t i mel i ness of Ser or s cl ai m under 544( b)

and Cal . Ci v. Code 3439. 04( a) ( 1) wi t h r espect t o the 2004 deed

of t r ust . I n her openi ng appeal br i ef , Shoshana ar gues f or t he

f i r st t i me t hat t hi s cl ai m of Ser or s was unt i mel y under Cal .

Ci v. Code 3439. 09( a) .

Nei t her i n her summar y j udgment mot i on nor at t r i al di d

Shoshana def end agai nst Ser or s cl ai m based on Cal . Ci v. Code

3439. 09( a) . Nor di d t he par t i es pr et r i al st i pul at i on i dent i f y

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any i ssue of l aw or f act t hat r equi r ed t he bankrupt cy cour t t o

addr ess t he st at ut e of l i mi t at i ons set f or t h i n Cal . Ci v. Code

3439. 09( a) .

Or di nar i l y, f eder al appel l at e cour t s wi l l not consi deri ssues not pr oper l y r ai sed i n t he t r i al cour t s. O Rour ke v.

Seaboar d Sur . Co. ( I n r e E. R. Feger t , I nc. ) , 887 F. 2d 955, 957

( 9t h Ci r . 1989) ; see al so Mol do v. Mat sco, I nc. ( I n r e Cyber net i c

Ser vs. , I nc. ) , 252 F. 3d 1039, 1045 n. 3 ( 9t h Ci r . 2001) ( st at i ng

t hat appel l at e cour t woul d not expl or e rami f i cat i ons of ar gument

because i t was not r ai sed i n t he bankrupt cy cour t ) ; Scovi s v.

Henr i chsen ( I n r e Scovi s) , 249 F. 3d 975, 984 ( 9t h Ci r . 2001)

( st at i ng t hat cour t woul d not consi der i ssue r ai sed f or f i r st

t i me on appeal absent except i onal ci r cumst ances) . An i ssue onl y

i s pr oper l y r ai sed i f i t i s rai sed suf f i ci ent l y t o per mi t t he

t r i al cour t t o r ul e upon i t . I n r e E. R. Feger t , I nc. , 887 F. 2d

at 957.

Not wi t hst andi ng t hi s gener al r ul e, [ a] r evi ewi ng cour t mayconsi der an i ssue r ai sed f or t he f i r st t i me on appeal i f

( 1) t her e ar e except i onal ci r cumst ances why t he i ssue was not

r ai sed i n t he t r i al cour t , ( 2) t he new i ssue ar i ses whi l e t he

appeal i s pendi ng because of a change i n t he l aw, or ( 3) t he

i ssue pr esent ed i s pur el y one of l aw and t he opposi ng par t y wi l l

suf f er no pr ej udi ce as a r esul t of t he f ai l ur e t o r ai se t he i ssue

i n t he t r i al cour t . Fr anchi se Tax Bd. v. Rober t s (I n r e

Rober t s) , 175 B. R. 339, 345 ( 9t h Ci r . BAP 1994) ( i nt er nal

quot at i ons omi t t ed) ( ci t i ng Uni t ed St at es v. Car l son, 900 F. 2d

1346, 1349 ( 9t h Ci r . 1990) ) .

Shoshana has not i dent i f i ed any except i onal ci r cumst ances

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t hat pr event ed her f r om r ai si ng t he st at ut e of l i mi t at i ons i ssue

under Cal . Ci v. Code 3439. 09( a) i n t he bankrupt cy cour t . Nor

di d a change i n l aw spawn t he i ssue. Nor i s t he i ssue pur el y

one of l aw. The st at ut e of l i mi t at i ons i ssue r ai ses t hesubsi di ar y quest i on of when t he f r audul ent t r ansf er coul d

r easonabl y have been di scover ed. Cal . Ci v. Code 3439. 09( a) .

Accor di ng to Shoshana, as a mat t er of l aw, because the 2004 deed

of t r ust was r ecor ded i n 2004, any and al l cr edi t or s of t he

debt ors r easonabl y shoul d have di scover ed the transfer wi t hi n one

year of t he 2004 r ecor dat i on. But we do not r ead t he di scover y

pr ovi si on cont ai ned i n Cal . Ci v. Code 3439. 09( a) as l i t er al l y

as Shoshana does. We bel i eve t hat t he oneyear per i od under Cal .

Ci v. Code 3439. 09( a) s di scovery rul e does not commence unt i l

t he pl ai nt i f f has r eason t o di scover the fraudulent nature of the

transfer.

The Cal i f or ni a Supreme Cour t has not yet const r ued t he

di scover y pr ovi si on as set f or t h i n Cal . Ci v. Code 3439. 09( a) .Nor have we f ound any publ i shed deci si ons f r om t he Cal i f or ni a

Cour t s of Appeal on t hi s i ssue. 5 Consequent l y, as noted above,

we must pr edi ct how t he Cal i f or ni a Supr eme Cour t wi l l deci de t hi s

i ssue. I n i nt er pr et i ng Cal i f or ni a s ver si on of t he Uni f or m

5 We are aware of one unpubl i shed Cal i f orni a Cour t of

Appeal deci si on, Hu v. Wang, 2009 WL 1919367, at *6 ( Cal . Ct .App. J ul y 6, 2009) , whi ch hel d i n par t t hat Cal . Ci v. Code 3439. 09( a) s di scover y r ul e means and r ef er s t o di scover y oft he f r audul ent nat ur e of t he t r ansf er and not j ust di scover y oft he t r ansf er i t sel f . I n pr edi ct i ng t he Cal i f or ni a Supr emeCour t s i nt er pr et at i on of Cal . Ci v. Code 3439. 09( a) , we do notr el y upon Hu because i t i s an unpubl i shed deci si on, and i t maynot be ci t ed by Cal i f or ni a st at e cour t s. See Cal . Rul es of Cour tRul e 8. 1115.

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Fraudul ent Tr ansf er Act , t he Cal i f or ni a Supr eme Cour t has sai d

t hat cour t s shoul d pr i mar i l y f ocus on t he st at ut or y t ext Mej i a

v. Reed, 31 Cal . 4t h 657, 663 ( 2003) . As Mej i a expl ai ned, gi vi ng

t he t ext i t s usual , or di nar y and cont ext ual meani ng i s t he f i r stand most i mpor t ant par t of t he st at ut or y const r uct i on pr ocess.

I d. As Mej i a put i t :

Because t he st at ut or y l anguage i s gener al l y t he mostrel i abl e i ndi cat or of l egi s l at i ve i nt ent , we f i rs texami ne t he wor ds t hemsel ves, gi vi ng them t hei r usualand ordi nary meani ng and const r ui ng t hemi n cont ext .Ever y st at ut e shoul d be const r ued wi t h r ef er ence to t hewhol e syst em of l aw of whi ch i t i s a par t , so t hat al lmay be har moni zed and have ef f ect .

I d. ( ci t at i ons and i nt er nal quot at i on mar ks omi t t ed) . Mej i a

f ur t her i ndi cat ed t hat , when t he cont extual meani ng of t he

st at ut or y text i s suf f i ci ent t o answer t he st at ut or y const r uct i on

quest i on pr esent ed, i t gener al l y i s unnecessar y t o consi der

secondar y st at ut or y const r uct i on ai ds l i ke maxi ms of

const r ucti on, l egi sl at i ve hi st or y and publ i c pol i cy. I d.

Even t hough t he Cal i f or ni a cour t s have not addr essed t hequest i on of t he meani ng of t he di scover y pr ovi si on set f or t h i n

Cal . Ci v. Code 3439. 09( a) , we are not worki ng i n a vacuum. A

number of cour t s f r om ot her j ur i sdi ct i ons have const r ued t he same

l anguage i n t hei r ver si ons of t he Uni f or m Fraudul ent Tr ansf er

Act . See Fi el d v. Est at e of Kepoi kai ( I n r e Maui I ndus. Loan &

Fi n. Co. ) , 454 B. R. 133, 137 ( Bankr. D. Haw. 2011) ( l i st i ng

cases) . Some of t hese cour t s have st r i ct l y const r ued t he

st at ut or y text and have hel d t hat t he l i t er al l anguage of t he

Act s di scover y pr ovi si on r equi r es cour t s t o f ocus sol el y on

di scover y of t he t r ansf er i t sel f . See i d. ( l i st i ng cases).

Ot her cour t s have mor e l i ber al l y const r ued t he t ext and have hel d

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t hat a cont ext ual r eadi ng of t he st at ut e r equi r es cour t s t o f ocus

on di scover y of t he f r audul ent nat ur e of t he t r ansf er ; mer e

di scover y of t he t r ansf er i t sel f i s not enough. See, e. g. ,

Schmi dt v. HSC, I nc. , 319 P. 3d 416, 426- 27 (Haw. Ct . 2014) ;Fr ei t ag v. McGhi e, 947 P. 2d 1186, 1189- 90 ( Wash. Ct . 1997) .

We f i nd t he r easoni ng of t he Schmi dt - Frei t ag l i ne of cases

compel l i ng. As expl ai ned i n det ai l i n Schmi dt , a cont extual

r eadi ng of t he st atut e as wel l as common sense and t he pur pose of

t he Uni f or m Fraudul ent Tr ansf er Act t o pr ovi de r el i ef t o

vi cti ms of f r audul ent t r ansf er s al l mi l i t at e i n f avor of a

l i ber al const r uct i on of t he di scover y r ul e. Schmi dt , 319 P. 3d at

426- 27 ( ci t i ng Frei t ag, 47 P. 2d at 1189- 90) .

Wi t h t he except i on of di f f er ent st at ut e number i ng, t he

Hawai i di scover y pr ovi si on at i ssue i n Schmi dt and t he Washi ngt on

di scover y pr ovi si on at i ssue i n Fr ei t ag ar e i dent i cal t o

Cal i f or ni a s di scover y pr ovi si on as set f or t h i n Cal . Ci v. Code

3439. 09( a) . Nor do we per cei ve any mat er i al di f f er ence i nunder l yi ng pur pose bet ween Cal i f or ni a s ver si on of t he Uni f or m

Fraudul ent Tr ansf er Act and t he ver si ons of t he Act codi f i ed i n

Washi ngt on and Hawai i . Compar e Schmi dt , 319 P. 3d at 426 ( t he

obvi ous pur pose of t he UFTA i s t o pr event f r aud and t o pr ovi de a

r emedy to t hose who ar e vi ct i ms of f r audul ent t r ansf er s) wi t h

Mej i a v. Reed, 31 Cal . 4t h 657, 664 ( 2003) ( Thi s Act , l i ke i t s

pr edecessor and t he St at ut e of 13 El i zabet h, decl ar es r i ght s and

pr ovi des r emedi es f or unsecur ed cr edi t or s agai nst t r ansf er s t hat

i mpede t hem i n t he col l ect i on of t hei r cl ai ms. ) ( quot i ng Legi s.

Comm. Cmt . accompanyi ng Cal . Ci v. Code 3439. 01) .

Fur t her mor e, adopt i on of t he l i ber al i nt er pr et at i on of Cal .

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Ci v. Code 3439. 09( a) woul d be consi st ent wi t h Cal i f or ni a case

l aw bef or e the enact ment of t he Uni f or m Fraudul ent Tr ansf er Act ,

whi ch appl i ed t he gener i c f r aud di scover y r ul e cont ai ned i n Cal .

Code Ci v. Pr oc. 338( 4) now 338( d) t o pr e- Act f r audul entt r ansf er act i ons. See Adams v. Bel l , 5 Cal . 2d 697, 703 ( 1936)

( ci t i ng Cal . Code Ci v. Pr oc. 338( 4) and st at i ng i f t he

cr edi t or knows not hi ng about t he f r audul ent conveyance, t he cause

( i n t he absence of l aches) does not ar i se until he discovers the

fraud by whi ch hi s r i ght s have been i nvaded. ) ( emphasi s added) .

Based on t he persuasi veness of cases l i ke Schmi dt and

Frei t ag, supr a, we pr edi ct t hat t he Cal i f or ni a Supr eme Cour t

ul t i mat el y wi l l hol d t hat t he oneyear per i od under Cal . Ci v.

Code 3439. 09( a) s di scover y rul e does not commence unt i l t he

pl ai nt i f f has r eason t o di scover t he f r audul ent nat ur e of t he

t r ansf er . Thus, any quest i on r egar di ng di scover y of t he

f r audul ent nat ur e of t he 2004 deed of t r ust i s a f act ual

quest i on, and so the except i on per mi t t i ng consi der at i on ofpur el y l egal i ssues r ai sed f or t he f i r st t i me on appeal does

not appl y her e. Accor di ngl y, we decl i ne t o r esol ve Shoshana s

Cal . Ci v. Code 3439. 09( a) i ssue f or t he f i r st t i me on appeal .

D. Limitations Defense Under Cal. Civ. Code 3439.09(c) -Statute of Repose

We acknowl edge t hat Shoshana di d argue i n t he bankrupt cy

cour t , i n her summar y j udgment mot i on, t hat t he st at ut e of r epose

set f or t h i n Cal . Ci v. Code 3439. 09( c) bar r ed Ser or f r om

pur sui ng t hi s cl ai m. However , t he st at ut e of r epose i ssue under

Cal . Ci v. Code 3439. 09( c) and t he st at ut e of l i mi t at i ons i ssue

under Cal . Ci v. Code 3439. 09( a) ar e f act ual l y and l egal l y

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di st i nct i ssues. See Rund v. Bank of Am. Cor p. ( I n r e EPD I nv.

Co. , LLC) , 523 B. R. 680, 685- 88 ( 9t h Ci r . BAP 2015) .

Shoshana di d not di scuss her argument under Cal . Ci v. Code

3439. 09( c) i n her openi ng appeal br i ef . I nst ead, she wai t edunt i l her r epl y br i ef t o addr ess t he Cal . Ci v. Code 3439. 09( c)

st at ut e of r epose i ssue. Thi s woul d be suf f i ci ent gr ounds f or us

t o decl i ne t o consi der t he st at ut e of r epose i ssue. See

Chr i st i an Legal Soc y v. Wu, 626 F. 3d 483, 48788 ( 9t h Ci r .

2010) ; Br ownf i el d v. Ci t y of Yaki ma, 612 F. 3d 1140, 1149 n. 4 ( 9t h

Ci r . 2010) .

I n any event , even i f we wer e t o consi der t hi s i ssue, t hi s

panel r ecent l y hel d t hat Cal . Ci v. Code 3439. 09( c) s seven- year

st at ut e of r epose does not bar a cl ai m under 544( b) and Cal .

Ci v. Code 3439. 04 so l ong as t he cl ai m ar ose l ess t han seven

year s bef or e t he debt or s bankrupt cy f i l i ng. I n r e EPD I nv. Co. ,

LLC, 523 B. R. at 691- 92. Here, t he debt or s Febr uar y 2011

bankrupt cy case was f i l ed wi t hi n seven year s of t he Apr i l 2004deed of t r ust , so Cal . Ci v. Code 3439. 09( c) s st at ut e of r epose

di d not bar Ser or s Cal . Ci v. Code 3439. 04 cl ai m wi t h r espect

t o t he 2004 deed of t r ust .

CONCLUSION

For t he r easons set f or t h above, we AFFI RM t he bankrupt cy

cour t s j udgment avoi di ng t he 2004 deed of t r ust and t he 2009

deed of t r ust and r ecover i ng t hose t r ansf er s f or t he benef i t of

t he est at e.

20

In re: Doron Ezra Nava Tomer Ezra, 9th Cir. BAP (2015)

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