[00:00:00] Speaker 03:
Call our first case.

[00:00:02] Speaker 00:
Enray Klein, 25-1002.

[00:00:07] Speaker 00:
Eric J. Olson, appearing for appellant.

[00:00:10] Speaker 00:
John Lucas, appearing for appellee.

[00:00:14] Speaker 03:
Okay, good morning.

[00:00:15] Speaker 03:
Mr. Olson, would you like to reserve some time for rebuttal?

[00:00:19] Speaker 04:
Yes, I'd like to reserve five minutes.

[00:00:21] Speaker 03:
Five minutes, okay.

[00:00:22] Speaker 03:
Please go ahead.

[00:00:23] Speaker 04:
Yes.

[00:00:28] Speaker 04:
It appears in

[00:00:30] Speaker 04:
the briefs that both I and the trustee agree with the proposition that in a quiet title action under California law is recognized in the bankruptcy.

[00:00:44] Speaker 04:
A party claiming an interest who is not named in the quiet title action is not bound by

[00:00:59] Speaker 04:
the judgment.

[00:01:04] Speaker 04:
I called out in my brief at page 10 that at the end of the argument to the bankruptcy court, I asked the bankruptcy judge to acknowledge that the five people

[00:01:27] Speaker 04:
the five beneficiaries of the trust who were not made as parties were not bound by the results of this judgment.

[00:01:38] Speaker 04:
I am frankly confused as to what that might mean.

[00:01:41] Speaker 05:
Why don't you, you know, I think the trustee may not see this quite the way you do.

[00:01:48] Speaker 05:
So maybe what you wanna do is reserve this issue for your rebuttal.

[00:01:51] Speaker 05:
I think you're gonna hear a different version of this from the trustee.

[00:01:55] Speaker 05:
I read that transcript as well,

[00:01:57] Speaker 05:
And I don't think I quite came to the same conclusion you did either.

[00:02:00] Speaker 05:
But this might be more effectively dealt with in your rebuttal.

[00:02:04] Speaker 04:
I will do that.

[00:02:07] Speaker 04:
I think the other primary item that is called out is that the judge below characterized

[00:02:27] Speaker 04:
trust as a self-settled trust, whereas on the face of it, both the credit trust and the marital deduction trust are to be fully funded by the interest of Erica, the late wife.

[00:02:57] Speaker 05:
Why don't you stop there and why don't you tell us why the judge said that and why you think that was a mistake?

[00:03:03] Speaker 05:
Because that was not at all clear from your brief.

[00:03:07] Speaker 04:
Well, I think it's a mistake because the trust explicitly says that the

[00:03:22] Speaker 04:
the Maryland Abduction Trust.

[00:03:26] Speaker 05:
Who's the trustee of every one of those trusts?

[00:03:31] Speaker 05:
The trust.

[00:03:36] Speaker 05:
That'd be Leslie Fine, wouldn't it?

[00:03:38] Speaker 04:
Yeah.

[00:03:38] Speaker 05:
Okay.

[00:03:39] Speaker 05:
Who's the beneficiary of every one of those trusts?

[00:03:42] Speaker 04:
Okay.

[00:03:43] Speaker 04:
Following the death of Erica Flying, her husband, Leslie,

[00:03:50] Speaker 04:
Yeah.

[00:03:52] Speaker 04:
Is the trustee of those?

[00:03:54] Speaker 05:
I agree with you about that.

[00:03:55] Speaker 05:
Who's the beneficiary?

[00:03:59] Speaker 04:
The beneficiary of the Merrill induction and credit trust as far as it relates to the house, he is given

[00:04:19] Speaker 04:
the right to live in the house for the remainder of his life.

[00:04:23] Speaker 05:
That's not the question, that's a different question, okay?

[00:04:26] Speaker 05:
Who is the beneficiary of the trust?

[00:04:31] Speaker 05:
It's Leslie Klein, right?

[00:04:32] Speaker 05:
And who has the power to control the trust?

[00:04:34] Speaker 05:
Leslie Klein, right?

[00:04:36] Speaker 05:
That's what Judge Klein seemed to be relying on, so you gotta tell us why that was a mistake.

[00:04:42] Speaker 04:
Well, as we read it, Mr. Klein has a very limited interest, a life interest.

[00:04:49] Speaker 04:
in the house, which is what we are talking about here.

[00:04:53] Speaker 04:
So that's what you think the mistake was?

[00:04:55] Speaker 04:
Then it passes on to the four children who were not named.

[00:05:00] Speaker 04:
Okay.

[00:05:02] Speaker 03:
Under the terms of the trust, couldn't Leslie Klein sell the house and spend the money on himself during his lifetime?

[00:05:10] Speaker 04:
I think that's the subject of argument, a tribal issue, actually.

[00:05:15] Speaker 04:
As we called out,

[00:05:20] Speaker 05:
Well, that's where we need your help.

[00:05:22] Speaker 05:
What is the disputed issue of material fact about that?

[00:05:30] Speaker 04:
Mr. Klein's declaration indicates that his understanding of his rights and obligations as to the House is that he has the limited right to live in the House and on his passing that the House

[00:05:51] Speaker 04:
goes to the children of him and Erica.

[00:05:56] Speaker 03:
But the thing is, that's just not what the trust agreement says.

[00:05:59] Speaker 03:
I mean, the trust agreement says that during their lifetimes, the clients, Mr. Klein and Erica could use the property of the trust to maintain at a minimum their accustomed manner of living.

[00:06:14] Speaker 03:
And they had the power to sell abandoned property, et cetera.

[00:06:19] Speaker 03:
I just don't see how

[00:06:21] Speaker 03:
Mr. Klein's testimony declaration contradicting the pretty plain language of the trust agreement is even admissible.

[00:06:32] Speaker 04:
The idea that it was not admissible, it's never raised in any place that I can recall.

[00:06:37] Speaker 04:
The trust insofar as it, you know,

[00:06:47] Speaker 04:
As Eric, his share of the community property, all community property becomes irrevocable on her passing.

[00:07:05] Speaker 05:
Well, again, I think what I think Judge Klein relied on, and you're free to tell us why it's wrong, is that Mr. Klein was the trustee.

[00:07:13] Speaker 05:
Mr. Klein was the beneficiary.

[00:07:14] Speaker 05:
Mr. Klein basically had unlimited power to dispose of assets of the trust.

[00:07:20] Speaker 05:
And the children were going to benefit from this when he passed, but not before.

[00:07:25] Speaker 05:
So I think she based her initial conclusion on that.

[00:07:29] Speaker 05:
If you think his subjective belief about something would overcome that, you got to tell us why.

[00:07:35] Speaker 04:
Well, there's one added thing.

[00:07:41] Speaker 04:
The credit trust holds it on her passing.

[00:07:50] Speaker 04:
The credit trust and Leslie are co-beneficiaries.

[00:07:59] Speaker 04:
I call these lists out.

[00:08:04] Speaker 04:
at pages 12 to 13 and 17.

[00:08:14] Speaker 04:
And in that sense, I read it that the interest of the children comes through the

[00:08:34] Speaker 05:
Among other arguments, Judge Fine was concerned that there was a proper estoppel here because of other statements about who owned the property.

[00:08:43] Speaker 05:
So do you want to tell us why that was wrong?

[00:08:54] Speaker 04:
Well, I think,

[00:09:06] Speaker 04:
I think we're talking about two things.

[00:09:12] Speaker 01:
Well, what about the fact that he claimed a homestead in the property?

[00:09:16] Speaker 01:
If he didn't own the property, how could he claim a homestead?

[00:09:25] Speaker 04:
I don't know, I was not his counsel at that time and didn't have anything to do with.

[00:09:30] Speaker 05:
That's what Judge Klein seemed to be concerned about, that he had taken a position that benefited him, which was fine, and he was probably entitled to it.

[00:09:36] Speaker 05:
But then the position changed and that sets up an estoppel.

[00:09:40] Speaker 04:
But the fact that he may have said something, whether correctly or incorrectly,

[00:09:57] Speaker 04:
should not be attributed to all the other people that have interests in the property, particularly if they are not joined to make those arguments.

[00:10:09] Speaker 04:
I find, I don't have a big background in bankruptcy, but people who are not the debtor seem to have the debtor's words put into their mouths.

[00:10:24] Speaker 04:
And I think that's what's happened to a great extent in this case.

[00:10:30] Speaker 04:
And I don't know why this tendency appears, but it does appear.

[00:10:36] Speaker 04:
The point of the quiet title action is that at the party who, at the instance of the party who wants to phrase it, in this case, trustee,

[00:10:53] Speaker 04:
they can name everybody, in this case, look at the trust and see every name that shows up as a party.

[00:11:02] Speaker 04:
And then if you want to bind them, you can bind them.

[00:11:07] Speaker 01:
But to say that somebody who was never named as a party... But the children that aren't named as a party, okay, how is it different when you look at the language of the trust that says, Mr. Klein,

[00:11:24] Speaker 01:
could sell the property for his own purposes.

[00:11:29] Speaker 01:
How is that any different just than a regular fee, simple ownership, where children hope there's going to be something left for them, but their father can sell the property?

[00:11:39] Speaker 01:
Here under the trust, the trust language says that he could do what he wanted with the property in essence, didn't it?

[00:11:47] Speaker 04:
Well, you have the conflicting language that

[00:11:54] Speaker 04:
The states that on the passing of Erica, the credit trust becomes a co-beneficiary.

[00:12:16] Speaker 04:
And I don't think that that

[00:12:22] Speaker 04:
That means that he, particularly when he states what he is understanding of his rights and responsibilities for what was free to or anybody ever imagined that he was going to sell the house.

[00:12:39] Speaker 03:
I'll just break in and point out you have a little less than three minutes left.

[00:12:42] Speaker 03:
You want to reserve the rest of your time?

[00:12:45] Speaker 03:
Yes.

[00:12:46] Speaker 03:
Okay.

[00:12:47] Speaker 03:
Great.

[00:12:47] Speaker 03:
Thank you.

[00:12:49] Speaker 03:
Okay.

[00:12:50] Speaker 03:
Mr. Lucas, please go ahead.

[00:12:52] Speaker 02:
Thank you, John Lukasz Pichulski-Stang-Zion Jones.

[00:12:55] Speaker 02:
I represent Bradley Sharp, who's the appellee in the court appointed chapter 11 trustee of Leslie Klein's chapter 11 case.

[00:13:01] Speaker 02:
Our answering brief is broken up into the factual record section, a summary, and a brief that addressed each of the seven issues raised by the appellants in the opening brief.

[00:13:11] Speaker 02:
One thing I think it's important to point out at the outset is that the appellant's attempt to dispute issues were based on nothing more than mere denials and not upon any admitted or probative evidence.

[00:13:23] Speaker 02:
Disputes over irrelevant or unnecessary facts should not preclude summary judgment.

[00:13:28] Speaker 02:
and below, the burden shifted to the appellants to supply specific facts showing that there's a genuine issue for trial and none of that was done.

[00:13:37] Speaker 02:
And so as a result, the appellants can assert some mere existence of some alleged factual dispute as Mr. Olson is trying to argue here.

[00:13:45] Speaker 02:
And they can't sort of rest on mere allegations or denials for there's something to be genuine.

[00:13:51] Speaker 02:
There must be real evidence that a reasonable jury could reach a verdict in favor of the non-moving party.

[00:13:57] Speaker 03:
What about the declaration that Mr. Olson referred to about Mr. Klein's intentions or interpretation, whatever you call it, concerning the trust in his powers?

[00:14:07] Speaker 02:
it contradicts the express unclear, the express clear words of the trust itself.

[00:14:13] Speaker 02:
They're self-serving, they're a sham in our opinion.

[00:14:16] Speaker 02:
We don't accord any weight to them and nor did the bankruptcy judge.

[00:14:21] Speaker 05:
And I think that- Had there been something associated with the trust that clarified what he believed his role was as opposed to his declaration and litigation, we might be somewhere else, right?

[00:14:33] Speaker 05:
Is that fair?

[00:14:34] Speaker 05:
Yes, that is fair.

[00:14:36] Speaker 05:
But your point is that it's not really associated with the trust one way or the other.

[00:14:39] Speaker 05:
It's what it's his explanation now, which is a little bit different, right?

[00:14:44] Speaker 02:
Correct.

[00:14:44] Speaker 02:
And it flies in the face of the clear words in the unambiguous words of the trust itself, which is unchanged since 1990.

[00:14:54] Speaker 02:
As for the quiet title claims, and this is what was set out at the outset of the argument by the appellate, the trustee sued, blessed the client, the debtor, the second amended client living trust, the mayoral deduction trust, the survivors trust and Barbara Klein, the debtor's current spouse.

[00:15:10] Speaker 02:
The quiet title claim is intended to bind all the appellants.

[00:15:16] Speaker 02:
The appellee understands that the order does not bind parties that are not named in the complaint, and the account for quiet title doesn't fail because there might be some other party out in the world that claims an interest in the disputed properly.

[00:15:28] Speaker 02:
It simply doesn't bind that party, but it does bind the parties so named.

[00:15:34] Speaker 02:
And so that's the first primary issue.

[00:15:37] Speaker 05:
Could I break that in pieces?

[00:15:39] Speaker 05:
If Judge Klein made a ruling about a fact as opposed to a conclusion of law, would that bind somebody coming along later or not?

[00:15:50] Speaker 02:
Do you mean, would it bind somebody who's named in the complaint?

[00:15:54] Speaker 02:
Yes.

[00:15:55] Speaker 02:
I'm not looking, I'm going to say no.

[00:15:57] Speaker 02:
Okay, that's simple, thank you.

[00:15:59] Speaker 02:
Yeah, I'm gonna say no.

[00:16:00] Speaker 02:
I'm only looking to bind parties in the complaint.

[00:16:03] Speaker 02:
Got it, got it, got it.

[00:16:03] Speaker 02:
There's some other law that allows me to do it, but that's not my argument here, and I don't think that's what I need.

[00:16:10] Speaker 05:
Got it, okay.

[00:16:10] Speaker 05:
Well, that should be simple, Mr. Olson.

[00:16:11] Speaker 03:
Okay.

[00:16:11] Speaker 03:
All right, well, what would happen if one of the children, one of the offspring, one of the named beneficiaries were to file a lawsuit against the trustee or somebody saying, hey, that property's partly mine?

[00:16:25] Speaker 02:
I think I said something to that effect in our answering brief, where I said, if one of the children, he or she believes that they have an interest in the home, then they should file an adversary proceeding seeking a declaratory judgment to prove up that interest.

[00:16:38] Speaker 03:
Right now, when- But the court's decision in this case, the one that we have before us, wouldn't be binding in that subsequent adversary proceeding?

[00:16:49] Speaker 02:
We might get to a quick answer in the adversary proceeding, but I'm not here to argue that

[00:16:54] Speaker 02:
Judge Klein's judgment below binds the children as to the June Street home being property of the estate.

[00:17:05] Speaker 02:
It is property of the estate right now.

[00:17:08] Speaker 05:
Are there law of the case implications to this, if not exactly, you know, final preclusion or initial preclusion?

[00:17:17] Speaker 02:
Your honor, there might be law of the case preclusions, but again, I'm not asking for the relief and I'm not asking for this court to interpret to be any broader than the defendants in the complaint.

[00:17:31] Speaker 02:
I'm just trying to be careful and I'm not trying to overreach.

[00:17:39] Speaker 02:
Importantly, and this wasn't raised in oral argument from the appellate side, the trustee named those parties in the complaint, and we're told that the trustee can't sue the trust but must sue the trustees.

[00:17:50] Speaker 02:
However, the trustees of each of the trusts executed the extension stipulation which provided them extra time to answer the complaint.

[00:17:58] Speaker 02:
They signed it as trustee.

[00:18:01] Speaker 02:
They appeared in the case as trustee.

[00:18:03] Speaker 02:
And importantly, none of the trusts ever made a direct negative averment as we put forth in our paper that they have no capacity to be sued.

[00:18:11] Speaker 02:
And as a result, under the case file that cited in our brief, they're without that right.

[00:18:16] Speaker 02:
They have waived that right because it has never been raised below and it was only first raised

[00:18:21] Speaker 02:
in this piece.

[00:18:22] Speaker 05:
And maybe even more fundamentally to the extent that we read the Palin is saying basically this is a jurisdictional flaw.

[00:18:30] Speaker 05:
would you take the position that whatever else it is, it's not a jurisdiction.

[00:18:34] Speaker 05:
It's not as if the court had no power to proceed with the matter under orders, right?

[00:18:38] Speaker 02:
Oh, no, I don't believe it's a jurisdictional flaw.

[00:18:40] Speaker 02:
That's why I was curious for your response, okay.

[00:18:42] Speaker 02:
It's a defense.

[00:18:43] Speaker 02:
Right.

[00:18:44] Speaker 02:
It's a defense and the defense has been waived.

[00:18:46] Speaker 02:
Okay.

[00:18:47] Speaker 02:
To the extent that even applies.

[00:18:48] Speaker 02:
I mean, the trustee was signing the execution stipulation as trustee of those various trusts.

[00:18:54] Speaker 02:
It's hard to understand how they didn't appear.

[00:18:58] Speaker 02:
So as to the self-settled issue, at the outset of the bankruptcy case, the debtor's schedules reflected that the property was half owned by the estate and half owned by his late wife.

[00:19:09] Speaker 02:
But in response to our complaint, the appellants alleged that the entire property was owned by the debtor's late wife's mayoral deduction trust, but no documentation was ever supplied.

[00:19:18] Speaker 02:
But importantly, the real property deeds reflect that the property is owned by this segmented client of interest.

[00:19:25] Speaker 02:
The California evidence code provides that the owner of legal title of the property is presumed to be the owner of the full beneficial title.

[00:19:32] Speaker 02:
The presumption may only be rebutted by clear and convincing evidence.

[00:19:36] Speaker 02:
No such evidence was ever supplied before the bankruptcy court.

[00:19:39] Speaker 02:
Thus, the June straight deed reflects that the property is owned by the second amended client living trust.

[00:19:46] Speaker 02:
Going beyond that, as to the self-settled issue, any spend provision in the trust, we believe, is illegal, not enforceable.

[00:19:55] Speaker 02:
As the panel before me was recognizing earlier, the trust was formed by the debtor and his former spouse.

[00:20:04] Speaker 02:
They were co-trustees until the former spouse's death.

[00:20:07] Speaker 02:
And then the debtor assumed the role of trustee.

[00:20:10] Speaker 02:
And then he is the sole income and principal beneficiary under all the trust, including the mayoral deduction trust, which purports to own the property.

[00:20:20] Speaker 02:
And he has unfettered discretion to self-deal.

[00:20:23] Speaker 02:
That's one provision in the trust, but not just to self-deal, but to use and dispose of all the assets.

[00:20:28] Speaker 02:
He could have burned the house down.

[00:20:30] Speaker 02:
He could have given it away.

[00:20:32] Speaker 02:
I'm sorry?

[00:20:32] Speaker 02:
He could have given it away.

[00:20:34] Speaker 02:
Could have given it away, could have given it to his children.

[00:20:36] Speaker 02:
And so on this point in response to the panel's questions earlier about, you know, the kids being beneficiaries of the credit trust, well, that's all well and fine.

[00:20:49] Speaker 02:
But when Mr. Klein passes, there could very well be nothing in the credit trust.

[00:20:54] Speaker 02:
That's because Mr. Klein could have used and absorbed all the assets in the credit trust, and that assumes that there's even anything put into the credit trust.

[00:21:02] Speaker 02:
It's the trustees, that is, it's the appellee's view, not to mix up too many trustees, it's the appellee's view that there's nothing in the other trust, nothing was ever put in the other trust, and that the only thing is the second amended claim.

[00:21:16] Speaker 05:
And that was certainly a basis for Judge Klein's moving, correct?

[00:21:20] Speaker 05:
I believe so, yes.

[00:21:23] Speaker 02:
And so, in the end, a debtor can insulate assets by putting them in the trust only for him to have full access and enjoyment while at the same time insulating them from his own.

[00:21:33] Speaker 02:
And so, even if the property was owned by the Meryl deduction trust itself settled, it would nevertheless be.

[00:21:41] Speaker 02:
Um, this is down to the 4th argument.

[00:21:44] Speaker 02:
The appellants rely on the estate effects ad and I believe it's displaced.

[00:21:48] Speaker 02:
That case stands for the proposition that a properly executed and valid declaration of trust may convey a real property into a trust when the settler of the property is also the trustee, but also that the trust expressly provides that it holds a legal title for another.

[00:22:03] Speaker 02:
There's no evidence in the trust on the record of appeal or anywhere for that matter that the second amended flying living trust somehow conveyed the property to the Merrill deduction trust upon the passing of Erica Klein, nor is there any any doc, any information in any of the trust that reflect that they're holding the property for another.

[00:22:22] Speaker 02:
And plus, there's no granting language.

[00:22:24] Speaker 02:
There's nothing that you would ordinarily see upon the transfer of property.

[00:22:30] Speaker 02:
The trust do not contain any self effectuating language transferring the property.

[00:22:35] Speaker 02:
This is the 5th argument.

[00:22:39] Speaker 02:
The Second Amendment Client Living Trust is in the same form that it is in today that it was in 1990.

[00:22:46] Speaker 02:
And while the primary trust and the sub-trust permit transfer of property for the avoiding or minimizing of federal income taxes, there is no evidence that the property was ever transferred, which is supported by the fact that the deed is in the name that it is today.

[00:23:01] Speaker 02:
And so there are permissive provisions.

[00:23:03] Speaker 02:
that allow the trustee to do this, but there is no evidence that we need the profiter and there's any documentation moving the property from one trustee.

[00:23:12] Speaker 02:
Plus, this goes to the estoppel point, the debtor's schedules and statements filed at the outside of the bankruptcy case reflect that he hadn't transferred the property in the 10 years before the bankruptcy case.

[00:23:23] Speaker 02:
They allege that the property was perhaps transferred in April of 2013 when the document was recorded, four months after the death of the former Mrs. Klein.

[00:23:36] Speaker 02:
And under that question in the SOFA,

[00:23:41] Speaker 02:
he represented that there had been no transfer of the money.

[00:23:45] Speaker 02:
In addition to taking the homestead, which was another point that Judge Kleinvolo also relied on.

[00:23:52] Speaker 05:
Let me play out a little bit there, because one of the responses from Mr. Olson was, well, that's fine for the debtor, but there are other people involved here.

[00:24:03] Speaker 05:
If you could only stop the debtor, I guess one question would be, well, who other than the debtor would be speaking for the Marital Settlement Trust now?

[00:24:10] Speaker 05:
at this point, right?

[00:24:12] Speaker 05:
And who out of them the debtor now would be speaking for the credit trust?

[00:24:17] Speaker 02:
There is nobody else because the debtor wears all hats.

[00:24:24] Speaker 02:
That's my question.

[00:24:25] Speaker 02:
Yes, yes.

[00:24:26] Speaker 05:
Mr. Olsen will probably tell us that the children might have been able to say something, but you would say that at the moment, they really have no rights to speak for the credit.

[00:24:38] Speaker 02:
At best, the children, solely with respect to the credit trust, are contingent beneficiaries.

[00:24:44] Speaker 02:
Understood.

[00:24:45] Speaker 02:
Yeah.

[00:24:46] Speaker 02:
And for all we know, tomorrow, the trust could, you know, the trust itself could be changed and no longer be a beneficiary.

[00:24:53] Speaker 01:
Is this really any different than if there wasn't a trust, if somebody just had the ownership interest, and there's children that hope that there'll be something left that their father won't dispose of at all in his lifetime so that they will inherit something?

[00:25:05] Speaker 01:
Here, all the children had was a hope, right?

[00:25:09] Speaker 01:
They hoped that their father wouldn't dispose of, use up,

[00:25:15] Speaker 01:
the value of the house in his lifetime.

[00:25:18] Speaker 02:
I agree 100%.

[00:25:19] Speaker 02:
There's no difference.

[00:25:20] Speaker 02:
There's just some documentation that gives somebody some hope that's memorialized as opposed to just something being out there.

[00:25:27] Speaker 02:
And I hope that I inherit that at someday.

[00:25:29] Speaker 02:
I agree, Your Honor.

[00:25:32] Speaker 02:
So moving on, and this was raised in the oral argument, this goes to the life estate of the debtor's current wife or spouse, Barbara.

[00:25:43] Speaker 02:
I'm using Barbara.

[00:25:44] Speaker 02:
There's so many clients here, even the bankruptcy judge down below was Klein, and so I'm trying to use first names.

[00:25:50] Speaker 02:
There was a premarital agreement that already provided Barbara with a life estate and a property, but it was never recorded.

[00:25:57] Speaker 02:
No documents ever showed it was recorded.

[00:25:59] Speaker 02:
And as a result, there's a junior interest that can be avoided by the trustee for argument set forth under 544A3, the bankruptcy code.

[00:26:08] Speaker 02:
There's no constructive notice.

[00:26:09] Speaker 02:
The only constructive notice that was out there was the deed itself.

[00:26:12] Speaker 02:
And it doesn't reflect that Barbara had any interest in the home.

[00:26:18] Speaker 02:
And the fact that she lived there isn't sufficient to put the trustee on constructive notice that she might have some sort of legal title or interest in the home.

[00:26:26] Speaker 05:
Well, I mean, it doesn't indicate any sort of adverse interest to the title owner, right?

[00:26:31] Speaker 02:
No, no, no.

[00:26:33] Speaker 02:
And so in the last argument is the is the estoppel argument, which I've sort of been had sort of off and on here through there.

[00:26:40] Speaker 02:
You know, we believe that that the debtor is stopped from arguing otherwise from

[00:26:46] Speaker 02:
the contrary positions that he took at the outset of the case.

[00:26:49] Speaker 02:
On the one hand, he says that the property was never transferred.

[00:26:53] Speaker 02:
At one point, he says that it's 50% owned by him, 50% owned by the Merrill Deduction Trust.

[00:26:58] Speaker 02:
And then he says it's owned all by the Merrill Deduction Trust.

[00:27:02] Speaker 02:
The debtor does not have a good track record.

[00:27:04] Speaker 02:
And in part, that's why there's a Chapter 11 trustee in this case, because he was unable to administer his case in the way in which he was required to in the bankruptcy code.

[00:27:13] Speaker 02:
I see that my time is closing to an end, and I'm happy to answer any questions that the panel may have.

[00:27:20] Speaker 03:
Any questions?

[00:27:21] Speaker 05:
Thank you, Judge Ferris.

[00:27:22] Speaker 05:
No, not for me.

[00:27:23] Speaker 03:
Okay.

[00:27:24] Speaker 03:
All right.

[00:27:24] Speaker 03:
Thank you very much, Mr. Lucas.

[00:27:26] Speaker 03:
Thank you very much.

[00:27:27] Speaker 03:
We'll go back to Mr. Olson.

[00:27:29] Speaker 03:
You've got a little over two and a half minutes, so please go ahead.

[00:27:35] Speaker 04:
Thank you, Your Honor.

[00:27:36] Speaker 04:
Okay.

[00:27:36] Speaker 04:
First of all, I'm glad that we clarified the issue that

[00:27:41] Speaker 04:
I started out with, which is to say, is this decision somehow intended to be binding on the unnamed beneficiaries of the Second Amendment trust?

[00:27:58] Speaker 04:
And counsel, I think has clearly said, no, they are not making that contention.

[00:28:03] Speaker 01:
Well, in a second here, listen, there's no order from Judge Klein

[00:28:10] Speaker 01:
saying that the children have no interest in this property.

[00:28:17] Speaker 01:
There's no order like that.

[00:28:18] Speaker 01:
We all see that.

[00:28:19] Speaker 01:
But that doesn't mean that if the children say we have an interest, that that's not going to be blown out of the water in some future place.

[00:28:27] Speaker 01:
That's just not before us today.

[00:28:30] Speaker 01:
The same arguments go.

[00:28:31] Speaker 01:
They could make a lawsuit, but that doesn't mean that, you know, the trustees not acquiescing to the fact that they have a claim.

[00:28:41] Speaker 04:
the, well, in the words of the code commissioner, the children and the credit trust are not bound by the judgment that they were not named in the accident.

[00:29:03] Speaker 05:
Judge Corbett's point, you may find yourself facing a motion to dismiss for lack of standing.

[00:29:09] Speaker 05:
You'll see, right?

[00:29:12] Speaker 05:
I don't see how, if they were to bring... I'm not telling you what the answer is.

[00:29:22] Speaker 05:
I'm telling you nothing prevents the trustee from alleging they have no standing, right?

[00:29:31] Speaker 04:
I suppose the trustee can ledge what he wishes to.

[00:29:36] Speaker 04:
And if he does,

[00:29:38] Speaker 04:
If I were involved, I would respond appropriately at the time.

[00:29:45] Speaker 04:
But I think it is resolved that Judge Klein's order does not purport to state that it is binding on.

[00:30:00] Speaker 01:
But the order doesn't say that the children have a right.

[00:30:11] Speaker 04:
Yeah, I think maybe we're saying things around various ways.

[00:30:16] Speaker 04:
I just wanted to, you know, one other thing that you mentioned, the under California law under the famous Eggstead case, and used every day in every probate department, the naming

[00:30:41] Speaker 04:
a declaration of trust by the trustors, which names as property in the trust, no matter what property, in this case, the house, sufficient to transfer the title to the trust.

[00:31:04] Speaker 03:
Okay, I'm going to stop you because I've let you go almost a minute over time, but thank you very much for your argument and thank you, Mr. Lucas.

[00:31:13] Speaker 03:
Also, the matter submitted and we'll get you a written decision as soon as we can.

[00:31:18] Speaker 02:
Thank you.

[00:31:18] Speaker 02:
Thank you.

[00:31:19] Speaker 02:
Thank you very much for your time today.

[00:31:20] Speaker 02:
Thank you.