[00:00:04] Speaker 04:
Okay, go ahead.

[00:00:06] Speaker 04:
I'm sorry.

[00:00:06] Speaker 04:
Go ahead, please.

[00:00:08] Speaker 00:
Next, we have two client matters.

[00:00:10] Speaker 00:
The first is in Ray Klein num BAP CC 25-1037.

[00:00:14] Speaker 00:
Eric Olson appearing for appellants, which include the second amended client living trust at all.

[00:00:24] Speaker 00:
John Lucas appearing for appellee.

[00:00:28] Speaker 04:
Okay, let me begin by asking.

[00:00:30] Speaker 04:
These are two separate appeals, but they're pretty closely related.

[00:00:34] Speaker 04:
They overlap quite a bit.

[00:00:36] Speaker 04:
And there's also a prior recent decision in another appeal in this case.

[00:00:40] Speaker 04:
So I am wondering whether the parties would agree to just combine the two oral arguments.

[00:00:45] Speaker 04:
Does anybody have a problem with doing it that way, Mr. Olson?

[00:00:49] Speaker 05:
I don't have a problem with it.

[00:00:52] Speaker 05:
The person that 1037 is

[00:00:57] Speaker 05:
closely tied to your decision of approximately a week ago.

[00:01:03] Speaker 05:
And sorry, I perceive that there are important issues that were not handled.

[00:01:10] Speaker 05:
And so I'm going to move for reconsideration.

[00:01:13] Speaker 05:
But I think that the result in 1037 follows in the end from, I think it's.

[00:01:26] Speaker 04:
I understand your view.

[00:01:28] Speaker 04:
Okay, good.

[00:01:28] Speaker 04:
Mr. Lucas, do you think that the 15 minutes total would be fine for both of these appeals?

[00:01:34] Speaker 01:
I do, but with one comment.

[00:01:37] Speaker 01:
I believe that 1037, which is the first matter up, is very related to the prior decision that was issued in 1002, substantially related.

[00:01:49] Speaker 01:
However, I don't think that there's a lot of overlap between 1037 and 1042.

[00:01:55] Speaker 01:
There are some of the same arguments that the property that's subject to 1042, which is a different property,

[00:02:04] Speaker 01:
is subject to the same trust arguments that was being made with respect to the property that's subject to the turnover motion in the June Street property.

[00:02:14] Speaker 01:
So I don't think that there's a lot of overlap in that respect, but I'm happy to deal with it in any manner that this panel would like.

[00:02:23] Speaker 04:
Okay.

[00:02:24] Speaker 04:
Let's just go with 15 minutes aside for the two appeals combined.

[00:02:29] Speaker 04:
I will be perhaps a little more generous than usual at the end of the 15 minutes.

[00:02:32] Speaker 04:
If somebody's running over and let's just see how that goes.

[00:02:36] Speaker 04:
So Mr. Olson, do you want to reserve some time for rebuttal?

[00:02:41] Speaker 05:
Yes.

[00:02:43] Speaker 05:
Let me reserve 10 minutes.

[00:02:48] Speaker 04:
10 minutes.

[00:02:49] Speaker 04:
Okay.

[00:02:49] Speaker 04:
Very good.

[00:02:50] Speaker 04:
Go ahead.

[00:02:50] Speaker 05:
Yes.

[00:02:53] Speaker 05:
Okay.

[00:02:53] Speaker 05:
I've already stated and I think council has basically agreed with me that 1037 tied deeply to all of the same issues that are in 1002.

[00:03:17] Speaker 05:
And frankly, I think that it ought to

[00:03:22] Speaker 05:
by the result in 2002.

[00:03:27] Speaker 05:
The other case is really different.

[00:03:30] Speaker 05:
There was an apartment or condo in Jerusalem.

[00:03:42] Speaker 05:
The appellants here are not Mr. Klein, the debtor.

[00:03:50] Speaker 05:
They are

[00:03:52] Speaker 05:
Two trusts who contend that the trusts as a result of the Second Amendment trust.

[00:04:02] Speaker 05:
Well, the property belongs to those trusts.

[00:04:14] Speaker 05:
We essentially made three points.

[00:04:17] Speaker 05:
First, that it belonged to them and that under the circumstances, the debtor should not be selling it.

[00:04:26] Speaker 05:
Secondly, that if the trustee had made a sufficient showing to at least have the authority to sell them, that the funds ought to be somehow sequestered for determination of who owns them.

[00:04:42] Speaker 05:
And then finally,

[00:04:45] Speaker 05:
there was significant payments that were made in order to sort of like a homeowner association dues, only they were a lot bigger than that.

[00:04:58] Speaker 05:
And those payments were, the trustee does not claim that he paid any of those payments for the approximately two years that the bankruptcy was there.

[00:05:15] Speaker 02:
Mr. Olson, can I interrupt?

[00:05:17] Speaker 02:
Because that, I understand your point and it's made in the brief, but I mean, isn't that really a matter for another day?

[00:05:24] Speaker 02:
Isn't that really a question of whether the trust have a administrative expense against the estate for the benefit of that?

[00:05:37] Speaker 05:
If the board feels that that's the appropriate way to deal with it, that takes care of the problem.

[00:05:43] Speaker 02:
It seems to kind of work backwards on your points, because it really seemed from reading your brief that the issue is where the funds go, largely because the Israeli court previously approved the sale of the property.

[00:06:01] Speaker 02:
So are you really contesting the actual sale, or is this really about where the money goes?

[00:06:09] Speaker 05:
I think considering that I am sure that the sale has been consummated by now, it's a question of where the money goes.

[00:06:18] Speaker ?:
Okay.

[00:06:18] Speaker 02:
All right.

[00:06:19] Speaker 02:
Thank you.

[00:06:20] Speaker 05:
And I will note your procedural point that may solve our problem.

[00:06:33] Speaker 02:
But I mean, to your point, there's a difference between we get all the money or we get, you know, the trust get all the money versus the trust get reimbursed for the post-petition payments they made on the $2,500 a month.

[00:06:48] Speaker 05:
Yes.

[00:06:50] Speaker 05:
Okay.

[00:06:52] Speaker 05:
Those two possibilities, but they both address the money that, the proceeds of the sale.

[00:07:02] Speaker 02:
But the court did determine that the Jerusalem property was property of the estate based largely upon the registry of ownership that was presented and some of the statements made in the schedules of statements in the first three versions anyway.

[00:07:21] Speaker 02:
So that's really what we're here today about though, isn't it?

[00:07:30] Speaker 05:
whether the court explicitly determined that the condo was owned by the debtor and thence the bankruptcy trustee certainly is tacitly daring the court permitting the sale to go forward can't get there without

[00:07:59] Speaker 02:
I believe the court actually in the oral ruling made a finding, specific finding that it was owned individually.

[00:08:06] Speaker 02:
I mean, there was a determination of ownership, I believe.

[00:08:09] Speaker 05:
You may be right.

[00:08:10] Speaker 05:
I would not make a big deal of that.

[00:08:14] Speaker 05:
But you're right.

[00:08:15] Speaker 05:
We have two potential claims to the proceeds, either that we get them all or at least a reimbursement for.

[00:08:28] Speaker 02:
but was paid by- I don't want to invade your 10 minutes too much, but critically, looking at the judge's decision, it looks like she had the registry from the trustee and the statements in favor of the ownership

[00:08:49] Speaker 02:
by Mr. Klein, including the fact that pre-petition, he was responsible for making those 2,500 a month payments.

[00:08:56] Speaker 02:
And then you presented the ledger, which has been addressed at length in the prior decision that you referenced.

[00:09:03] Speaker 02:
And the court came out and said, basically, I haven't changed my opinion on the ledger.

[00:09:09] Speaker 02:
So why is that wrong that she had two sets of facts and she picked the set of facts on the ownership that favored the trustee?

[00:09:16] Speaker 02:
Why was that error?

[00:09:23] Speaker 05:
The court fastens on this question of whether the ledger represents a transfer of the property from the second amended trust, which is a reported document, which sets forth that on the passing of the first of the trust doors,

[00:09:53] Speaker 05:
Erica Klein in this case, her community passes through these trusts.

[00:10:12] Speaker 05:
It's not something that's going on just by the leisure.

[00:10:17] Speaker 02:
But there was nothing to indicate, I mean, there's a difference there, I think, between the June property subject to that, subject to the statement of in the trust that was recorded, and the Jerusalem property was never subject to any officially recorded document within the client to even get to that point, notwithstanding the court's decision in the prior as to the effect of that and the other matters, is there?

[00:10:42] Speaker 02:
I believe you're right on that, Your Honor.

[00:10:46] Speaker 02:
And I think I've taken you way into your 10 minutes.

[00:10:49] Speaker 05:
So if you want to reserve the, uh, I'll hear what the council has to say and deal with it.

[00:10:58] Speaker 04:
Thank you.

[00:10:58] Speaker 04:
Okay.

[00:10:58] Speaker 04:
Very good.

[00:10:59] Speaker 04:
Thank you.

[00:11:00] Speaker 04:
Mr. Lucas, please go ahead.

[00:11:04] Speaker 04:
I'm sorry.

[00:11:04] Speaker 04:
You're still muted.

[00:11:07] Speaker 01:
following the rules.

[00:11:09] Speaker 01:
John Lucas Pichulski saying Zealand Jones, I represent Bradley Sharp, who's the appellee in this matter.

[00:11:16] Speaker 01:
Because we're combining both matters and just for some shorthand and for some exactness in my references, when I'm talking about 1037, I'll say the turnover motion.

[00:11:27] Speaker 01:
And when I'm talking about 1042, I'll call it the Leonardo sale.

[00:11:32] Speaker 01:
Insofar as the turnover motion is concerned, as this panel is aware, in December of 24, bankruptcy judge Sandra Klein approved the appellee's summary judgment motion in determining that the June Street property is property of the estate.

[00:11:50] Speaker 01:
Most recently, a panel of this court on June 5th affirmed the bankruptcy court's ruling in its entirety.

[00:11:59] Speaker 01:
Subsequent to the approval of the summary judgment motion, the appellee filed a motion for turnover, and after the debtor refused to tender possession, we sought another contempt order, basically, empowering the trustee to use the United States Marshals to compel their turnover of the property.

[00:12:22] Speaker 03:
Can I stop you there?

[00:12:25] Speaker 03:
Two things.

[00:12:26] Speaker 03:
didn't give you all the relief you were trying to get the first time through and whether that's right or wrong is maybe not for us to say.

[00:12:33] Speaker 03:
But what's actually on appeal now?

[00:12:35] Speaker 03:
Are both of the orders you're referencing on appeal or just the turnover order?

[00:12:38] Speaker 01:
That's an excellent question and I'm glad that you asked the question.

[00:12:42] Speaker 01:
The turnover order, which is ER 5 to 7 for the record, is the order that's on appeal.

[00:12:50] Speaker 01:
That order set March 17, 2025, for the last day by which for the occupants to turn over possession of the June Street property.

[00:12:59] Speaker 01:
That day came and went.

[00:13:02] Speaker 01:
And the appellee sceptically filed a contempt motion seeking further relief.

[00:13:08] Speaker 01:
And we obtained that relief for end of the first week of April.

[00:13:13] Speaker 01:
And then the U.S.

[00:13:14] Speaker 01:
Marshal set a notice for the vacancy of the property the end of the first week of May.

[00:13:20] Speaker 01:
Right.

[00:13:22] Speaker 01:
And so is that it or may I go on?

[00:13:26] Speaker 01:
I've had it.

[00:13:27] Speaker 01:
OK.

[00:13:28] Speaker 01:
So, you know, a proper element for a turnover motion is that the request for turnover must occur during the bankruptcy case, it must involve property of the estate, and the party targeted by the motion must turn over the request or have had possession of the property during the case, and it must be the type of property that a trustee would use pursuant to 363, the bankruptcy code, and it can't have inconsequential value.

[00:13:52] Speaker 01:
I think our brief goes through the elements in the court in ER 419 through 438, goes through all those elements and addresses the factual support for satisfying each of those elements.

[00:14:06] Speaker 01:
The debtor was in possession of the property.

[00:14:08] Speaker 01:
She had already determined this is property of the estate.

[00:14:10] Speaker 01:
Now this panel has already, or a panel of this court has already determined that it's property of the estate.

[00:14:15] Speaker 01:
It has substantial value, probably in excess of $6 million.

[00:14:19] Speaker 01:
And the trustee is going to use that to liquidate it and to pay the claims of the loud creditors in this case.

[00:14:25] Speaker 01:
um there's nothing in the brief in the opening brief that discusses the elements of turnover um it's just really sort of devoid of that it is nothing more than a rehash of the june street appeal at docket number 25-1002 um which i believe this has already been settled law

[00:14:44] Speaker 01:
And some of the things that we are critical of in the opening brief is that there are no citations to the record of appeal.

[00:14:53] Speaker 01:
And we cite that and cite support for remedies or consequences for doing that.

[00:14:59] Speaker 01:
And as I just said, the opening brief is really essentially a collateral attack on now sort of two court decisions, the summary judgment order, and also a panel of this court's ruling affirming the summary judgment order.

[00:15:16] Speaker 01:
Given that a panel of this court's affirmance of the summary judgment order, I don't think it's a good use of my time to sort of go through all of that again.

[00:15:23] Speaker 01:
And so I'm going to turn to the Leonardo matter unless the panel has any questions.

[00:15:32] Speaker 01:
The Tidal Registry in Israel reflects that the property located, Suite 1323, Leonardo Plaza in Jerusalem, Israel, is owned by the debtor.

[00:15:45] Speaker 01:
And that's in the record at ER 28 and 29.

[00:15:48] Speaker 01:
And the agreement by which the property was purchased by the debtor

[00:15:52] Speaker 01:
which is ER 21 to 27, also reflects that the debtor purchased it.

[00:15:57] Speaker 01:
And there's no other record to reflect that any other party, trust, or entity owns the Leonardo property than the debtor.

[00:16:06] Speaker 01:
The property was, so the trust, the appellee as trustee, chapter 11 trustee in the debtor's case, commenced a foreign proceeding in Israel to deal with this property and the other property located in Israel.

[00:16:22] Speaker 01:
It's the counterpart to a chapter 15, which would be filed here.

[00:16:27] Speaker 01:
The appellants never contested the sale in Israel.

[00:16:30] Speaker 01:
I mean, the sale was administered by a court, an independent court in Israel, that it had jurisdiction over the Leonardo apartment.

[00:16:39] Speaker 01:
There were no objections.

[00:16:41] Speaker 01:
And the court approved it.

[00:16:44] Speaker 01:
And in response to that, at an abundance of caution, because

[00:16:49] Speaker 01:
the property of the estate is worldwide and the automatic stay is worldwide.

[00:16:53] Speaker 01:
We sought the bankruptcy court here in the United States authorization to, I don't wanna say rubber stamp, but to go through and to make sure that we were checking all the correct boxes and there was any procedural error.

[00:17:05] Speaker 03:
Can I ask you a question?

[00:17:06] Speaker 03:
Just to probably just put something off to the side that I noticed.

[00:17:12] Speaker 03:
You're right, two different courts bless this, right?

[00:17:15] Speaker 03:
You asked for a 363M finding and you got one.

[00:17:19] Speaker 03:
and nobody's arguing this is statutorily moot, right?

[00:17:22] Speaker 03:
I mean, if that's just off the table, we don't have to worry about it.

[00:17:24] Speaker 03:
Just tell me that.

[00:17:25] Speaker 03:
No, it's not off the table, that's an excellent- Was that raised in anybody's briefs?

[00:17:29] Speaker 03:
I didn't see it.

[00:17:30] Speaker 01:
No, it wasn't.

[00:17:32] Speaker 03:
It's not jurisdictional, the Supreme Court tells us, right?

[00:17:34] Speaker 01:
Understood it's not jurisdictional, but an appellate court has discretion under 363M to dismiss the appeal for permutance concerns.

[00:17:41] Speaker 01:
And that's something that we are going to do.

[00:17:43] Speaker 01:
We've been extremely concerted with respect to that.

[00:17:45] Speaker 01:
So the buyers of the leader department have the keys to the apartment, are in the apartment, and are remodeling the apartment.

[00:17:53] Speaker 01:
It's theirs.

[00:17:54] Speaker 02:
Well, doesn't this go to my question, Mr. Olson?

[00:17:57] Speaker 02:
Really, isn't this dispute about the distribution?

[00:18:00] Speaker 02:
That's what I'm getting.

[00:18:01] Speaker 02:
Thank you.

[00:18:04] Speaker 01:
There isn't a dispute about the distribution as far as I'm concerned.

[00:18:07] Speaker 01:
I understand maybe there's going to be one, but as things- Well, it comes to the ownership.

[00:18:11] Speaker 02:
I mean, it follows.

[00:18:13] Speaker 02:
And that's really what there is.

[00:18:14] Speaker 02:
And that was the request that Mr. Olson made in his reply.

[00:18:17] Speaker 02:
You know, if it's been sold, you'll hold the money so that we can figure, you know, fully litigate the ownership.

[00:18:26] Speaker 02:
And that's the point.

[00:18:27] Speaker 02:
The ownership is really the question before the court here, isn't it?

[00:18:32] Speaker 01:
I think that the ownership is clear as day.

[00:18:37] Speaker 01:
The appellee here, as chapter 11.

[00:18:40] Speaker 02:
That just means that the court didn't err.

[00:18:42] Speaker 02:
and you should affirm, right?

[00:18:45] Speaker 02:
I mean, it's a little nuance here in that, yes, you brought a motion to sell, but the motion to sell was really the proxy to determine ownership.

[00:18:55] Speaker 01:
I'm sorry.

[00:18:57] Speaker 01:
Can you ask that question again?

[00:18:58] Speaker 01:
I'm not sure if I understood it.

[00:18:59] Speaker 02:
Well, you brought a motion to sell, but the property was already sold.

[00:19:03] Speaker 02:
Really, what you were doing, you say balance the spenders to make sure it was all compliant, but you were determining ownership, which has the effect of adjudicating and establishing where the money goes.

[00:19:16] Speaker 01:
I don't think that we were

[00:19:19] Speaker 01:
seeking a declaratory ruling.

[00:19:22] Speaker 01:
Well, you couldn't sell anything that you didn't own.

[00:19:24] Speaker 01:
That's correct.

[00:19:25] Speaker 01:
And I don't think that anybody submitted any evidence.

[00:19:29] Speaker 01:
If a debtor or a Chapter 11 trustee goes to move to sell property to the estate pursuant to Section 363 of the Bankruptcy Code, the debtor or the trustee isn't required to first file an adversary proceeding under 7001,

[00:19:45] Speaker 02:
Well, pop a canon would suggest that maybe you do if there is a good faith dispute.

[00:19:51] Speaker 02:
The point here is that there never was a good faith dispute.

[00:19:55] Speaker 01:
You took the words out of my mouth.

[00:19:56] Speaker 01:
There is not a good faith dispute here.

[00:19:58] Speaker 01:
I mean, we are working off the Israeli registry records and the sale documents, and we are dealing here with a debtor who was taken out of possession, who is a

[00:20:17] Speaker 01:
a perennial affinity fraudster who will say anything and do anything to cloud title for his benefit to delay things.

[00:20:29] Speaker 01:
Just with respect to the June Street Home, and I realize this is a different thing, he executed a grant deed purporting to transfer the property that the bankruptcy court, and this panel has already determined is property of the estate.

[00:20:43] Speaker 01:
We can't be hamstrung

[00:20:45] Speaker 01:
by frivolous and fraudulent efforts and to have to commit to adversary proceedings, which are going to cost hundreds of thousands of dollars to determine and appeals to the Ninth Circuit when there is absolutely no good faith basis to say that the Leonardo apartment is owned by anybody else other than the debtor.

[00:21:10] Speaker 04:
Is the question of payment of those post-petition, I've forgotten what they're called, the administrative charges for the hotel, is that still an issue to be determined in your view, or has the court already decided that?

[00:21:25] Speaker 01:
Um, I don't think that there's been a request to the court to address it.

[00:21:30] Speaker 01:
I don't believe that there's anything before the court.

[00:21:33] Speaker 01:
The court has not been moved in that respect.

[00:21:35] Speaker 01:
It might've been an objection or an issue raised in the objection, but there's nothing before the court asking for an administrative expense.

[00:21:43] Speaker 03:
Can I, can I turn the question around and see if I understand it?

[00:21:46] Speaker 03:
Are you, are you telling us that, well, then nothing in the court sentence so far precludes that inquiry?

[00:21:52] Speaker 01:
I think that's correct.

[00:21:53] Speaker 03:
Okay.

[00:21:55] Speaker 01:
Yes.

[00:22:01] Speaker 01:
But I have, unless the panel has any other questions, I have nothing further on the Leonardo or the turnover matter.

[00:22:12] Speaker 01:
Pelli believes that both of these, while a little bit convoluted, they're convoluted on account of our adversary, unfortunately, in which we are trying to straighten out.

[00:22:27] Speaker 04:
Okay, thank you.

[00:22:27] Speaker 04:
Any further questions from the panel?

[00:22:30] Speaker 04:
Okay, very good.

[00:22:31] Speaker 04:
Thank you very much.

[00:22:32] Speaker 04:
Mr. Olson, back to you.

[00:22:34] Speaker 04:
You've got, let's see, about seven minutes.

[00:22:39] Speaker 04:
So please go ahead.

[00:22:41] Speaker 04:
You're muted, by the way.

[00:22:56] Speaker 05:
As far as the property in Jerusalem, the statements that council made, I was going to have two comments.

[00:23:08] Speaker 05:
One of them has been mooted that I should seek the payments that were made as an administrative claim.

[00:23:17] Speaker 05:
It's no longer part of this.

[00:23:19] Speaker 05:
That takes care of that.

[00:23:21] Speaker 05:
I would object, however, that

[00:23:26] Speaker 05:
there were many pejorative and beyond the record arguments characterizing the debtor.

[00:23:41] Speaker 05:
And I suppose by implication, the other parties who are the actual parties cases.

[00:23:52] Speaker 05:
The

[00:23:56] Speaker 05:
In 1037, the June street, in the end, that stands on whether the order for summary judgment stands, that case is still alive.

[00:24:19] Speaker 05:
And I think to abide the event, it would be,

[00:24:25] Speaker 05:
operating backwards to turn this into a ruling on the motion for summary judgment, which is itself on appeal.

[00:24:36] Speaker 04:
Can I just ask who is in possession currently of the June Street property?

[00:24:42] Speaker 05:
Oh, the council is correct.

[00:24:46] Speaker 05:
The possession, well, it's in the possession of the trustee in bankruptcy.

[00:24:55] Speaker 04:
So the clients have moved out?

[00:24:57] Speaker 05:
Yes, they have.

[00:24:58] Speaker 04:
Okay, thank you.

[00:25:00] Speaker 04:
Consensually, sorry.

[00:25:06] Speaker 04:
All right, anything further, Mr. Olson?

[00:25:08] Speaker 04:
No.

[00:25:09] Speaker 04:
Okay, all right, thank you very much.

[00:25:12] Speaker 04:
I appreciate both of you being efficient and agreeing to my last minute proposal.

[00:25:17] Speaker 04:
So thank you very much, the matter is submitted.

[00:25:20] Speaker 04:
Thank you.

[00:25:20] Speaker 01:
Thank you.

[00:25:21] Speaker 01:
Thank you, your honors.

[00:25:22] Speaker 01:
Thank you.

[00:25:22] Speaker 04:
All right.

[00:25:22] Speaker 04:
And that is the end of our calendar.

[00:25:24] Speaker 04:
So courts and recess.