[00:00:00] Speaker 00:
All right, good morning, Mr. Jaffe.

[00:00:03] Speaker 00:
I'm not gonna ask you if you want to reserve any time for rebuttal, so please go ahead.

[00:00:08] Speaker 02:
Thank you, thank you.

[00:00:10] Speaker 02:
Good morning and I represent the appellant and secured creditor, Mario Montes Mora.

[00:00:17] Speaker 02:
Given this court's de novo review and the disfavor for rule 12b6 motions to dismiss, the decision dismissing Mora's adversary proceeding should be reversed.

[00:00:31] Speaker 02:
The lower court's decision reads more like a decision on summary judgment rather than a motion to dismiss.

[00:00:39] Speaker 01:
Counsel, I appreciate that your opening statement, but again, kind of emblematic of this case, you're going to need to give us more than that.

[00:00:49] Speaker 01:
We need specifics.

[00:00:51] Speaker 01:
This is not an instance where the plaintiff was denied a chance to revise and amend a complaint

[00:01:00] Speaker 01:
There was numerous opportunities given here.

[00:01:02] Speaker 01:
What specifically was the errors in the judge's dismissal after the third amended complaint was filed?

[00:01:15] Speaker 02:
First example, the debtor didn't disclose his interest in Pacific Stone Crab LLC.

[00:01:23] Speaker 02:
Why is that material?

[00:01:25] Speaker 02:
It's material because that was the joint venture company that my client and the debtor were going to use to sell seafood.

[00:01:42] Speaker 02:
And then it's our contention in this adversary complaint that he's continued to use that company

[00:01:51] Speaker 01:
Blue crab.

[00:01:52] Speaker 02:
Filling seafood under this, what was supposed to be a joint venture, using the 100,000 in seafood that my client supplied with equipment that my client, all a part of the joint venture.

[00:02:10] Speaker 02:
That's why it's material.

[00:02:12] Speaker 02:
And the court's decision was, well, it's inactive.

[00:02:17] Speaker 02:
It would hardly bring in material value to creditors.

[00:02:21] Speaker 02:
I don't think that could be decided on a motion to dismiss.

[00:02:27] Speaker 02:
And it's not inactive.

[00:02:29] Speaker 02:
It was never formed.

[00:02:33] Speaker 02:
No, it was suspended for failure to pay taxes.

[00:02:37] Speaker 01:
Was that alleged?

[00:02:44] Speaker 02:
No, the court, I'm just saying the court's decision was it was inactive, so it doesn't matter.

[00:02:51] Speaker 02:
whether he disclosed his interest in Pacific Stone Crab LLC, we're saying the only way that came up was in the court's decision after we had argued the third amended adversary complaint.

[00:03:13] Speaker 02:
And it's not inactive.

[00:03:14] Speaker 02:
It's just suspended for failure to pay taxes.

[00:03:20] Speaker 02:
As another example,

[00:03:22] Speaker 02:
The debtor has an interest in 1687 Melrose Avenue Drive.

[00:03:27] Speaker 02:
The court said, well, it's not in his name, so it doesn't support the adversary complaint.

[00:03:35] Speaker 02:
Again, that's a summary judgment issue.

[00:03:37] Speaker 02:
We have that the debtor didn't list any residential address.

[00:03:43] Speaker 02:
He only listed the address of the business.

[00:03:47] Speaker 02:
So he doesn't list where he's actually living.

[00:03:50] Speaker 02:
He was served there.

[00:03:52] Speaker 02:
It's in his brother's name.

[00:03:55] Speaker 02:
We know as part of the adversary complaint, it's our contention that what this debtor has done is continue to operate the business that they were operating before with his brothers, but he got a stipulated judgment that didn't include his brothers.

[00:04:13] Speaker 02:
So it was only against him, but then he just fraudulently transfers all the assets of him and the company, which we have a judgment against.

[00:04:23] Speaker 01:
Again, what are all the fraudulently transferred assets?

[00:04:27] Speaker 02:
We're talking about the freezer, the walk-in freezer, the ice machine, the cooler that he listed, this debtor.

[00:04:39] Speaker 02:
listed they were worth more than $20,000 originally in his schedules.

[00:04:47] Speaker 02:
Then later he said, amended said, no, they're not my property without any explanation.

[00:04:54] Speaker 02:
We have put in the adversary complaint that they were his property, just as he said they were, and just simply putting in an amendment later

[00:05:06] Speaker 02:
doesn't isn't sufficient and there's an inference that he said it was his property to begin with.

[00:05:12] Speaker 02:
Therefore, it supports the adversary complaint.

[00:05:33] Speaker 02:
But those are specific examples we feel that support the adversary complaint.

[00:05:42] Speaker 02:
We also feel that because we had a judgment that included fraud, that that should have also supported the adversary complaint under 523 for fraud.

[00:05:57] Speaker 01:
Didn't he list you as an unsecured creditor?

[00:06:03] Speaker 02:
not exactly as an unsecured creditor rather than a secured creditor.

[00:06:08] Speaker 01:
And you should lose this discharge because of that.

[00:06:11] Speaker 02:
It's part of what we're saying is his misrepresentations, along with- Wait, wait, wait, wait, wait, wait, before you get there.

[00:06:18] Speaker 01:
Misrepresentation implies a knowing and fraudulent statement that is false with the intent to deceive.

[00:06:25] Speaker 01:
So I think part of Judge Lasem's problem is, what was the knowing and fraudulent allegations that miscategorizing your client as an unsecured creditor warrants denial of the discharge?

[00:06:43] Speaker 02:
It's one of the items when you take it with everything else.

[00:06:49] Speaker 02:
You know, we're building it layer by layer and fact by fact.

[00:06:53] Speaker 02:
And for him to say that he didn't have a secure judgment, for him not to disclose his divorce judgment, for him to not disclose the other items that we've talked about in the third amendment complaint, taken together shows an intent to mislead.

[00:07:12] Speaker 01:
Well, I think that brings you back to Iqbal and Twombly, right?

[00:07:15] Speaker 01:
Because I believe reading Judge Latham's decisions, he's saying, reading between the lines, OK, that's possible.

[00:07:23] Speaker 01:
Why is it plausible?

[00:07:29] Speaker 02:
I think it's certainly plausible that he is, that this debtor,

[00:07:37] Speaker 02:
has transferred all of the assets of what was the joint venture with my client and is now using all that equipment using

[00:07:50] Speaker 02:
What was the joint venture to avoid my client's judgment?

[00:07:55] Speaker 01:
But part of that problem is it gets back to the other problem that Judge Latham had, which is the timing.

[00:08:01] Speaker 01:
As to all of the equipment, when was it transferred if the debtor upon filing bankruptcy said that that was his equipment and only later amended it?

[00:08:11] Speaker 01:
When exactly did that transfer happen and where is that allegation in the third amended complaint?

[00:08:18] Speaker 02:
We're talking that he did that in response to us getting a stipulated judgment.

[00:08:27] Speaker 01:
But where is the allegation of the specific transfer?

[00:08:31] Speaker 01:
To whom?

[00:08:49] Speaker 02:
Paragraph 33 says Ocean's best seafood was owned by Aguirre and its assets were fraudulently transferred to Ocean's best community fish market at the direction of Aguirre to try and avoid the stipulated judgment.

[00:09:08] Speaker 02:
That's right after the prior paragraph that talks about the things that happened in

[00:09:14] Speaker 02:
2023 and then later into 2024.

[00:09:17] Speaker 01:
Where is the allegation that gives me a specific date as to that transfer?

[00:09:36] Speaker 01:
And the other thing while you're asking is I do not, I'm having trouble understanding how an alleged transfer to the debtor is fraudulent.

[00:09:49] Speaker 01:
It may be fraudulent to Ocean Pacific.

[00:09:52] Speaker 01:
It may be fraudulent to Ocean Best Seafoods creditors.

[00:09:58] Speaker 01:
But as to the debtor, the debtor now had individual assets.

[00:10:04] Speaker 01:
which would appear to benefit the debtor's estate, subject to their recovery, of course.

[00:10:10] Speaker 01:
So how is that even a fraudulent transfer to the debtor?

[00:10:17] Speaker 02:
It's a transfer to the new company that he has formed.

[00:10:22] Speaker 01:
But Community Fish is his whole proprietorship.

[00:10:25] Speaker 02:
No.

[00:10:25] Speaker 02:
If you look on page 254 going on to 255, the judge

[00:10:33] Speaker 02:
specifically said Ocean's Best Community Fish Market, Inc.

[00:10:38] Speaker 02:
is registered with the California Secretary of State.

[00:10:42] Speaker 01:
That's Inc.

[00:10:42] Speaker 02:
An active stock corporation.

[00:10:45] Speaker 01:
But you have alleged that Community Fish Market is his whole proprietorship.

[00:10:49] Speaker 02:
We thought it was, but it's clearly he formed a corporation to perpetuate this fraud.

[00:10:57] Speaker 01:
But that's not what you alleged.

[00:11:00] Speaker 01:
And then we're on the motion to dismiss.

[00:11:02] Speaker 01:
Aren't we stuck with that?

[00:11:05] Speaker 02:
I don't think so, since the decision by the lower court specifically references Community Fish Market Inc.

[00:11:13] Speaker 02:
as a active, registered California corporation.

[00:11:22] Speaker 01:
And did the decision say when that was actually registered?

[00:11:31] Speaker 02:
No, but it said it

[00:11:33] Speaker 02:
It said it went on its own investigation to look at the California Secretary of State's website, and I believe it says that was in 2022.

[00:11:43] Speaker 01:
And by investigation, you meant he took judicial notice of the Secretary of State documents, correct?

[00:11:55] Speaker 02:
The judge said that in a footnote, yes.

[00:12:03] Speaker 02:
So we've given more, we provided facts as much as we can about the lease that's ongoing for this business that he's doing, but we needed more.

[00:12:26] Speaker 02:
I don't think we can put forth all of the facts and I don't think that's the requirement.

[00:12:31] Speaker 02:
in an adversary complaint to have all the facts we're saying, here's what we believe is going on.

[00:12:40] Speaker 02:
With regard to amending, things happened after this adversary complaint was dismissed that we feel would support a further amendment.

[00:12:53] Speaker 02:
That was that this debtor said originally

[00:12:59] Speaker 02:
with a spousal waiver that he had no homestead interest in property at 1939 through 41 Ensenada Street.

[00:13:15] Speaker 02:
Then after the adversary complaint was dismissed, he put in a amendment.

[00:13:23] Speaker 02:
Now he says that there is a homestead exemption

[00:13:28] Speaker 02:
We have investigated the representations that he made with regard to claiming that amendment.

[00:13:37] Speaker 02:
And we believe that they support fraud and misrepresentations to the court regarding his interest in that property.

[00:13:46] Speaker 02:
And we believe that we can still assert an adversary complaint at the very least based upon that.

[00:13:56] Speaker 02:
Thank you.

[00:13:58] Speaker 00:
Any questions?

[00:14:00] Speaker 00:
Thank you very much.

[00:14:01] Speaker 01:
Thank you.

[00:14:04] Speaker 00:
This matter is submitted.

[00:14:05] Speaker 00:
Let's call the next case.