[00:00:00] Speaker 02:
Mr. Cross.

[00:00:01] Speaker 04:
Good morning, Your Honors.

[00:00:02] Speaker 04:
Robert Cross representing the Appellant Loan Vest 9 and its general partner, Mr. Cresson, in pro se, is at the table with me, but I will be doing the argument unless the Court has questions for him.

[00:00:18] Speaker 04:
The District Judge Chabria was correct when he said at the beginning of his summary judgment opinion that this has been a long, tortured, and bizarre journey of the case.

[00:00:30] Speaker 04:
stemming from a 2007 loan, which was supported by real properties of two separate affiliated entities, both of which ended up in Chapter 11 bankruptcies, and one of which ends up being in court today with us over an alleged overpayment to the debtor, to the creditor of $455,000 and change.

[00:00:57] Speaker 04:
The judgment

[00:00:58] Speaker 04:
below and the court's opinion, and I believe the briefs of Kensington in this case, fail to realize or distinguish the fact that under a Chapter 11 plan, a new debt, a new obligation is created which supersedes the original debt or the original loan or the original promissory note and has terms of its own which are defined in the plan and which do not relate back to whatever terms might have existed in the original obligation.

[00:01:28] Speaker 04:
Therefore, and particularly in this case, Landmark, the other debtor, which had its own separate bankruptcy case, was never mentioned in the schedules submitted by Kensington as a co-debtor.

[00:01:46] Speaker 04:
In fact, the schedules submitted by Kensington said it had no co-debtor on the loan.

[00:01:50] Speaker 03:
But you knew about Landmark.

[00:01:53] Speaker 04:
We certainly did.

[00:01:53] Speaker 03:
All the way through the bankruptcy proceeding, correct?

[00:01:55] Speaker 03:
Of course we did, Your Honor.

[00:01:57] Speaker 03:
There was no pulling the wool over your eyes, was there?

[00:01:59] Speaker 04:
No, sir.

[00:02:00] Speaker 04:
No, sir.

[00:02:00] Speaker 03:
We are not... So why is it so significant that they weren't listed in the schedule?

[00:02:05] Speaker 04:
It's significant to the bankruptcy court and it's significant to other creditors that there was a separate source of payment to loan vest not disclosed in the schedules, not disclosed in the disclosure statement, not disclosed in the plan.

[00:02:19] Speaker 04:
which whereby other creditors had they so known.

[00:02:22] Speaker 03:
You're the one though that's here today arguing that you're entitled to another payment of 450 some odd thousand dollars.

[00:02:31] Speaker 04:
We are your honor because there is a new debt.

[00:02:33] Speaker 03:
So what case can you point me to that says that in this circumstance you ought to be able to recover twice for the underlying debt?

[00:02:43] Speaker 04:
That assumes, Your Honor, that we are recovering on the same debt twice, but we are not.

[00:02:47] Speaker 03:
We are recovering... Well, there was only one debt here, right?

[00:02:51] Speaker 04:
Before, bankruptcy, yes.

[00:02:52] Speaker 03:
Oh, so you go to bankruptcy court and all of a sudden you're settled with two debts?

[00:02:56] Speaker 04:
There are two bankruptcies, there are two plans, there are now two debts.

[00:03:00] Speaker 04:
And they don't refer to each other, they don't cross-reference each other.

[00:03:03] Speaker 03:
Okay, and what case supports that?

[00:03:06] Speaker 03:
I'm sorry, Your Honor?

[00:03:06] Speaker 03:
What case?

[00:03:07] Speaker 03:
What's your best case that you say, you're going to tell me, Judge, you need to read this case, and if you read this case,

[00:03:13] Speaker 03:
We win.

[00:03:14] Speaker 04:
There is no case that we have found on similar set of facts, because this was an easily correctable problem.

[00:03:23] Speaker 04:
If it could have been corrected before the disclosure statement and plan were proposed, and it could have been corrected after that, at such point as Kensington said, oh, you think you can collect from us, quote, twice, well, we're going to fix that.

[00:03:36] Speaker 04:
We're going to amend our disclosure statement and our plan, and we'll make it clear now that anything that LoanVest pays in its separate case

[00:03:43] Speaker 04:
applies to our liability

[00:04:03] Speaker 04:
almost all of the assets being distributed to creditors.

[00:04:06] Speaker 04:
So there's plenty of opportunity here.

[00:04:08] Speaker 04:
Kensington had the opportunity to fix this problem.

[00:04:10] Speaker 02:
So is that a judicial estoppel argument, essentially?

[00:04:14] Speaker 04:
Well, it's both a judicial estoppel argument, and it's the equities argument that this is not unfair to Kensington.

[00:04:21] Speaker 04:
Kensington had caused this problem, not loan vest.

[00:04:25] Speaker 04:
Kensington could have fixed this problem before or after plan confirmation.

[00:04:29] Speaker 04:
Instead, they did nothing.

[00:04:31] Speaker 04:
And to the court's statement,

[00:04:34] Speaker 04:
The other creditors had the right to know that.

[00:04:37] Speaker 04:
The bankruptcy court had the right to know that.

[00:04:39] Speaker 02:
So, I mean, for judicial estoppel and perhaps also for the sort of, you know, the less well-defined, you know, equitable argument, usually we are concerned with, you know, the party that makes the statement to the court or in this case, you know, fails to make the statement is getting some sort of advantage.

[00:04:57] Speaker 02:
What advantage do you think they got by not identifying landmark?

[00:05:01] Speaker 04:
Well, the potential advantage is this.

[00:05:03] Speaker 04:
If other creditors before voting on the plan and the bankruptcy court before confirming the plan realized that there was a separate source of payment for a major credit claim in this case, namely the loan vest claim, if there was realization among other creditors, hey, they're going to get money from another entity not part of this

[00:05:21] Speaker 04:
which is part of the group, but not part of the plan, we can negotiate better terms.

[00:05:26] Speaker 01:
Right, but that's their prejudice, not yours.

[00:05:30] Speaker 01:
I'm sorry?

[00:05:31] Speaker 01:
That's the prejudice, arguably, to the other creditors.

[00:05:34] Speaker 01:
What judicial estoppel requires is prejudice to you.

[00:05:39] Speaker 01:
How are you prejudiced?

[00:05:41] Speaker 01:
I mean, you had actual knowledge of the debt.

[00:05:45] Speaker 04:
Well, we're prejudiced to the extent that a problem not of our making is

[00:05:49] Speaker 04:
now going to come back and bite us, which is a problem of Kensington's making and which did give it the potential for a better outcome for itself.

[00:05:57] Speaker 04:
Had it had to pay more money into the bankruptcy case because people knew that loan vests could be taken care of by some other entity outside the case, they would have had to pay more money.

[00:06:08] Speaker 04:
They would have ended up worse off and the other creditors would have ended up better off.

[00:06:11] Speaker 04:
So it's the equity argument that Judge Chabria felt that this just isn't fair, doesn't sound right.

[00:06:17] Speaker 04:
is offset by the fact that it is because Kensington concealed the existence of a separate source of payment from everybody else.

[00:06:25] Speaker 04:
We knew about it, of course.

[00:06:26] Speaker 04:
I suppose you could say, oh, we should have gone into court and complained, but we didn't believe we had to complain because the court gave us, the plan gave us the rights it gave us.

[00:06:37] Speaker 04:
And we think because it's a separate new obligation and is not referencing at all whatever is paid to us from Landmark, we had the right to interpret it in our favor.

[00:06:46] Speaker 04:
they had the right to say, ho ho, hold on, we can fix this.

[00:06:51] Speaker 04:
If that's what you think, we'll fix that right fast and say every dollar you get from Landmark is one dollar or less you're going to get under our plan.

[00:06:59] Speaker 04:
They didn't do that.

[00:07:02] Speaker 04:
So I believe the equity arguments and the estoppel arguments converge in the statement that this is how the bankruptcy code works and therefore it should never happen because

[00:07:14] Speaker 04:
Why would two related entities file separate bankruptcy plans not mentioning one another and the source of payment of one another?

[00:07:22] Speaker 04:
They had a reason for it.

[00:07:23] Speaker 04:
I don't know what their reason was, but it did give them the opportunity to save money that they might have had to pay to other creditors had they notified the creditors what landmarks other resources were.

[00:07:36] Speaker 03:
So what you're saying is that the other creditors had no knowledge of Landmark?

[00:07:39] Speaker 04:
There was no way they would have.

[00:07:41] Speaker 04:
They didn't have, they were not in our position of having a jointly secured obligation.

[00:07:47] Speaker 04:
And the schedule state disclosure statement and plan all said there was no co-debtor relationship with our loan vest loan.

[00:07:57] Speaker 03:
And Kensington's proposed plan did not make any reference whatsoever to Landmark?

[00:08:02] Speaker 04:
No reference whatsoever.

[00:08:05] Speaker 04:
It was easy.

[00:08:06] Speaker 04:
easy to fix.

[00:08:06] Speaker 04:
And I don't imagine how the same affiliated entities could accidentally fail to note that and in fact misrepresent that there is no co-debtor on the loan vest loan, which was just false.

[00:08:20] Speaker 04:
The bankruptcy schedules are important because they tell creditors what their potential rights are and whether they should or shouldn't accept the plan.

[00:08:29] Speaker 04:
And if they vote against the plan or negotiate a vote for the plan, they can

[00:08:34] Speaker 04:
get the debtor in most cases to give them more before they can get their vote.

[00:08:39] Speaker 04:
In this case, they didn't have that choice.

[00:08:40] Speaker 04:
I would refer the court to a statement, I think, that applies, although it's not on point, but the principle applies.

[00:08:48] Speaker 04:
It's by Justice Kaminsky in the In re Perez case at 30 Fed 2nd, Fed 3rd, 1209-1217, a 1994 case from this court.

[00:09:01] Speaker 04:
He says,

[00:09:01] Speaker 04:
One obvious injury from inadequate disclosure is, in essence, being tricked.

[00:09:07] Speaker 04:
Quote, I wouldn't have voted the way I did, unquote, one could complain.

[00:09:11] Speaker 04:
Quote, had I known the true facts, unquote.

[00:09:14] Speaker 04:
So in that case, the party involved did know, like Lone Vest did know, but the court pointed out that that didn't mean that other creditors couldn't have been tricked by the failure to properly disclose, or more miraculously, the mis-disclosure

[00:09:30] Speaker 04:
the loan vest co-debtor relationship.

[00:09:34] Speaker 04:
So we believe that on both the interpretation of the bankruptcy code itself and on principles of equity and estoppel, any way you get to that result, loan vest is not in the wrong at taking the plan at its word and requesting that it be paid according to the plan, the new obligation, making no reference to the landmark obligation.

[00:09:58] Speaker 02:
And if we're not persuaded by the sort of estoppel slash equitable arguments and we're then looking at, you know, the obligation which as you've said is a new obligation created by the plan, why shouldn't we understand that new obligation to incorporate the pre-existing, the features of the pre-existing obligation and in particular

[00:10:24] Speaker 04:
The fact that the the pre-existing obligation is now zero because it's been paid by landmark The plan could have said that the the proponent of the plan Kensington could very well have said and probably in hindsight wish they had said There's any money you get from our affiliate landmark reduces our liability under this plan dollar-for-dollar or something or that this incorporates and is subject to the joint and several

[00:10:52] Speaker 04:
liability provisions of the original note.

[00:10:55] Speaker 04:
It could have said that.

[00:10:56] Speaker 04:
It didn't.

[00:10:57] Speaker 04:
No reference whatsoever to that.

[00:10:58] Speaker 04:
So it's not that we caused the problem.

[00:11:00] Speaker 04:
It's that Kensington caused the problem itself for reasons, you know, that we do have to somewhat speculate on, but which were entirely within its own control.

[00:11:09] Speaker 01:
How do you deal with the Schedule H co-debtors where landmarks listed?

[00:11:15] Speaker 04:
How do we deal with it?

[00:11:16] Speaker 01:
We deal with it because it was... I mean, you say they're not mentioned anywhere.

[00:11:19] Speaker 04:
They're listed clearly on Schedule H. Schedules have a checkbox to say, do you have a co-debtor?

[00:11:26] Speaker 04:
And it was not checked.

[00:11:28] Speaker 01:
And so... Well, Schedule H labeled co-debtors.

[00:11:31] Speaker 01:
They're listed.

[00:11:34] Speaker 04:
Well, there was a co-debtor on the original obligation.

[00:11:36] Speaker 04:
Now, if you take the point that this is a new obligation and now is not... Your point is it's not disclosed in the schedules and it looks like it is.

[00:11:46] Speaker 04:
If I'm the bankruptcy lawyer for the debtor, I'm going to want to put every piece of information in there I can, because that way I can't be accused of withholding something that somebody else might have thought material later on.

[00:11:57] Speaker 04:
They didn't.

[00:11:58] Speaker 04:
Why they didn't, that's the question.

[00:12:01] Speaker 04:
But they didn't, and the question then becomes, does the bankruptcy court code and the requirement of full disclosure have any teeth if the debtor can ignore it and then get the benefit of it anyway?

[00:12:16] Speaker 02:
You're down to about three minutes.

[00:12:17] Speaker 02:
Did you want to reserve some time?

[00:12:18] Speaker 04:
I won't reserve any additional time, Your Honor.

[00:12:20] Speaker 04:
I'm fine.

[00:12:20] Speaker 02:
You may.

[00:12:30] Speaker 02:
Mr. Jacobs.

[00:12:31] Speaker 00:
Good morning, Your Honors.

[00:12:32] Speaker 00:
May it please the Court.

[00:12:33] Speaker 00:
My name is Micah Jacobs.

[00:12:34] Speaker 00:
I represent Kensington Apartment Properties LLC as the appellee and appellant on the cross-appeal for the denial of attorney's fees.

[00:12:44] Speaker 00:
and the debtor in this action.

[00:12:48] Speaker 00:
Well, I think as my colleague mentioned, there are no cases on point that stand for the proposition that in this situation where you have two different plans or even Kensington's plan, that it eviscerates or obliterates the underlying joint and several liability component of this original note.

[00:13:11] Speaker 00:
That part is clear.

[00:13:11] Speaker 00:
That's what both the bankruptcy judge Novak

[00:13:14] Speaker 00:
determined and that's what Judge Chabria determined in the summary judgment orders below and in the final judgment.

[00:13:22] Speaker 00:
They considered all of these arguments that Lo Invest is raising now and determined at the end of the day none of them stand for the proposition that the original underlying debt and the joint and several liability component of that debt were removed or terminated or extinguished or obliterated.

[00:13:42] Speaker 00:
This is

[00:13:44] Speaker 00:
consistent with the Ivanhoe decision from the Supreme Court, which has not been overruled by the new Bankruptcy Act.

[00:13:51] Speaker 00:
It is still good law.

[00:13:52] Speaker 00:
It was cited in the Del Baggio case in this district.

[00:13:57] Speaker 00:
And under the Ivanhoe decision, the debtor is still required, still allowed to make the full claim, or the creditor can still make the full claim.

[00:14:06] Speaker 00:
It does not say that a co-debtor has to be revealed in the plan.

[00:14:12] Speaker 00:
They can get 100% of their claim against the debtor, but they cannot recover more.

[00:14:17] Speaker 00:
They cannot recover a double recovery.

[00:14:20] Speaker 03:
So your friendly opposition says that you were, I don't want to say acting deviously or something, but that you were, that you could have avoided this whole problem

[00:14:42] Speaker 03:
by simply disclosing forthrightly the co-obligor on the underlying debt.

[00:14:50] Speaker 03:
And that somehow or other you received an advantage.

[00:14:54] Speaker 03:
What's your response to that?

[00:14:56] Speaker 00:
Well, first of all, there's nothing in the record to indicate there was any advantage that they can cite to.

[00:15:03] Speaker 00:
Likewise, there's nothing in the record here that makes the case that other creditors were harmed by this.

[00:15:12] Speaker 00:
As Your Honor pointed out, the plan itself states nothing herein shall be deemed a release, discharge, or injunction from a creditor's right to collect and enforce its rights against guarantors, co-signers, and non-debtor parties.

[00:15:27] Speaker 00:
The notion that the note was not disclosed at all to the bankruptcy court or to the other creditors is just false.

[00:15:35] Speaker 00:
It's referenced in the original plan under the loan vest claim,

[00:15:42] Speaker 00:
It specifically refers to debtors shall make monthly payments provided in the extant loan documents executed in favor of the holder.

[00:15:53] Speaker 00:
The loan vest amendment to the plan specifically refers to the note as being essential to determine the principal balance.

[00:16:06] Speaker 00:
The loan vest amendment doesn't even provide the principal balance that was owed.

[00:16:10] Speaker 00:
It just says you shall make payments.

[00:16:13] Speaker 00:
and any other charges provided under the loan agreement with the debtor.

[00:16:18] Speaker 00:
So the arguments that this note was never mentioned in any of the plan, either the original plan or the loan vest amendment to the plan, and that the plan, the loan vest amendment did not incorporate or refer to or ratify the underlying note is just false.

[00:16:36] Speaker 00:
It refers directly to the loan agreement in the plan.

[00:16:41] Speaker 01:
So has the plan been substantially consummated?

[00:16:45] Speaker 01:
Yes.

[00:16:47] Speaker 01:
And as I understand the plan, you can correct me if I'm wrong, it provided in Class C for unsecured creditors to receive 100% of their claims.

[00:16:57] Speaker 01:
Is that right?

[00:16:59] Speaker 01:
Exactly right.

[00:17:00] Speaker 01:
So basically this was a full reimbursement Chapter 11, right?

[00:17:05] Speaker 00:
That's exactly right.

[00:17:07] Speaker 00:
So that's consistent with our argument that this

[00:17:10] Speaker 00:
Plan was really not a complete extinguish or termination of the underlying note, rather it was a new payment plan.

[00:17:18] Speaker 00:
They extended the payment terms for 48 months after the plan, but it did not reduce the principle.

[00:17:24] Speaker 00:
The Loan Vest Amendment specifically says it shall not reduce the principle of the underlying note.

[00:17:30] Speaker 00:
And you have to refer to the underlying loan agreement to determine interest costs and attorney's fees.

[00:17:37] Speaker 00:
And that's all set forth in the plan.

[00:17:40] Speaker 00:
In terms of the judicial estoppel arguments, under the Ah Quinn case, most of those cases, as I read them, refer to a debtor that fails to disclose an asset or a litigation, a cause of action.

[00:17:55] Speaker 00:
And that's indeed what was happening in the Ah Quinn case, where the debtor did not disclose she had a lawsuit going on against the third party.

[00:18:03] Speaker 00:
I've not seen any authorities, and certainly my colleagues don't cite any authority,

[00:18:09] Speaker 00:
for failure to disclose a co-debater on a schedule.

[00:18:14] Speaker 00:
And I think there was, again, there's no facts in the record here because this didn't get to trial.

[00:18:20] Speaker 00:
But Judge Chavria noted that there was no incentive or motive to conceal or hide.

[00:18:26] Speaker 00:
This was likely an inadvertent mistake in failing to identify the co-debater.

[00:18:31] Speaker 00:
But as Your Honors pointed out, LoanVest was at the table.

[00:18:34] Speaker 00:
LoanVest was negotiating its plan.

[00:18:37] Speaker 00:
LoanVest knew all about the loan.

[00:18:39] Speaker 00:
and the joint and several liability.

[00:18:42] Speaker 00:
Ah, Quinn also, decision also makes clear that as an equitable doctrine, the court has discretion as when it can be applied and when it cannot be applied.

[00:18:52] Speaker 00:
And here in this case, I think the countervailing equities override the equity of judicial estoppel, and that is to prevent a double recovery in here.

[00:19:02] Speaker 00:
And that's well-established law.

[00:19:04] Speaker 00:
That's what the district court found below.

[00:19:07] Speaker 00:
to apply judicial estoppel here would result in further inequity in allowing Loan Vest to get a double recovery in this situation.

[00:19:19] Speaker 00:
Judge Chabier also noted that they had waived or forfeited the equitable estoppel defense because they did not raise it in opposition to the summary judgment papers.

[00:19:30] Speaker 01:
Right, but they did plead it as an affirmative defense, didn't they?

[00:19:34] Speaker 00:
I believe it was pled as an affirmative defense.

[00:19:36] Speaker 00:
So you're on notice.

[00:19:38] Speaker 00:
We were unnoticed in that regard.

[00:19:42] Speaker 00:
But the language that they cite that a bankruptcy plan constitutes new agreement, a new debt, a new contract, we take issue with that.

[00:19:52] Speaker 00:
I think some of the language, there are certainly quotes that say, you know, a plan is a new contract.

[00:20:00] Speaker 00:
But I think my colleagues on the other side,

[00:20:05] Speaker 00:
A slight of conceptual slight of hand to say that something is new therefore it cannot be the same as the underlying debt is not accurate.

[00:20:13] Speaker 00:
And there is support for the proposition.

[00:20:15] Speaker 00:
This was really a new payment plan.

[00:20:17] Speaker 00:
There was no compromise on the underlying principle balance.

[00:20:19] Speaker 00:
It just affected the payment plans.

[00:20:22] Speaker 00:
And there's no language anywhere that says this eliminates the joint and several liability of that component.

[00:20:33] Speaker 00:
And I would point out that this is also this argument that they've raised for the first time when this lawsuit was filed in 2017 is contrary to their initial payment demand that precipitated this lawsuit.

[00:20:48] Speaker 00:
In that initial payoff demand, which is at 11SER 02173, LoanVest demanded an additional 400, almost $450,000.

[00:21:01] Speaker 00:
And in its payoff demand, it gave a credit for the payment it received from the landmark.

[00:21:07] Speaker 00:
So it knew all along it was going to give a credit to Kensington for that payment.

[00:21:14] Speaker 00:
And its arguments was that even after applying the credit it received from landmark, the $780,000 almost, that Kensington still owed another $450,000 on top of that.

[00:21:28] Speaker 00:
And that $450,000

[00:21:30] Speaker 00:
thousand that they demanded in order to release the lien that they had on the property consisted of what looked to be extra default interest, which we claim default interest was not due under the plan.

[00:21:43] Speaker 00:
And they claimed attorney's fees and costs.

[00:21:47] Speaker 00:
And that's what my client paid under protest under reservation of rights in order to have them release the lien so that they could sell the property.

[00:21:56] Speaker 00:
And then they turned around and sued for a refund.

[00:22:01] Speaker 00:
And this carries over into, I guess, our cross appeal on the denial of attorney's fees, which I can address now.

[00:22:10] Speaker 00:
But in this payoff demand, the loan vest argument was that Kensington owed an additional 450 even after applying the credit from the landmark payment.

[00:22:23] Speaker 00:
They didn't come up with the argument that there's no credit, that these were two now different debts until after this lawsuit was filed.

[00:22:31] Speaker 00:
They asked for attorney's fees, and we thought that that was a question of fact that would have prevented the second summary judgment motion.

[00:22:43] Speaker 00:
Judge Chabria made comments to the effect of denying our motion for fees to the effect that Kensington is the one that drove this litigation, that it could have been resolved much earlier in his order denying our motion for attorney's fees

[00:22:59] Speaker 00:
He actually said, had Kensington explained the law to Lone Vest, perhaps this litigation could have all been avoided.

[00:23:06] Speaker 00:
I don't think there's any support for that in the record.

[00:23:09] Speaker 00:
Part of the reason I made a fairly extensive supplemental excerpts of the record is to kind of show the course of this litigation and how much work there was to be done.

[00:23:20] Speaker 00:
But we did believe that there were questions of fact that would have prevented summary judgment.

[00:23:24] Speaker 00:
That got resolved years later when we showed up for our pretrial conference.

[00:23:29] Speaker 00:
A matter of days before trial was supposed to start, and Judge Trabia, for the first time, asked, what really are the factual disputes here?

[00:23:36] Speaker 00:
Couldn't this be resolved right now?

[00:23:39] Speaker 00:
And really, before I could answer, Mr. Creson, for the defendants, basically said, let me make this easier for you.

[00:23:45] Speaker 00:
I will stipulate to judgment right now and stipulate to alter ego, which was a first.

[00:23:53] Speaker 00:
He really wanted to appeal the summary judgment order.

[00:23:56] Speaker 00:
and he admitted in court at the pre-trial conference, he stipulated that if the summary judgment order was correct, that Kensington would be entitled to a full refund of the $450,000, and that he was basically stipulating to judgment to avoid a trial, and then that's what led to Judge Chabria's final order, addressing that and entering judgment.

[00:24:22] Speaker 00:
So to the extent they're making

[00:24:26] Speaker 00:
appealing some of that later judgment, I would oppose that.

[00:24:31] Speaker 00:
But then we filed the motion for attorney's fees after judgment was entered and Judge Chabria ruled that the only way we could claim attorney's fees was through the bankruptcy plan and that the plan did not have a fee shifting provision.

[00:24:49] Speaker 00:
We oppose that.

[00:24:51] Speaker 00:
In fact, we think that the plan itself

[00:24:54] Speaker 00:
does expressly refer to the underlying note for purposes of post-petition interest and all other charges provided under the loan agreement with debtors.

[00:25:08] Speaker 00:
So that is a reference to an incorporation of the underlying loan document.

[00:25:16] Speaker 00:
In their opposition papers, LoanVest raises arguments that nowhere in the plan

[00:25:23] Speaker 00:
does it refer to the underlying promissory note?

[00:25:27] Speaker 00:
Well, it actually expressly refers to the underlying loan agreement.

[00:25:31] Speaker 00:
And both the summary judgment order found that you had to turn to the underlying note to determine the fees and costs and loan interests, and that that was an important reason to find that the underlying note still exists for purposes of both joint and several liability, and for purposes of attorney's fees and costs.

[00:25:53] Speaker 00:
So we think the district court erred in denying fees as a matter of law and interpreting the note and the bankruptcy plan.

[00:26:02] Speaker 00:
If I can reserve the last minute and a half for rebuttal just on the cross-appeal aspect or I'm not sure how that's the time it's working on that.

[00:26:10] Speaker 02:
You may, yes.

[00:26:12] Speaker 00:
I'm not sure I'll need it.

[00:26:15] Speaker 00:
Thank you, Your Honor.

[00:26:23] Speaker 04:
Thank you, Your Honors.

[00:26:24] Speaker 04:
I will simply address the argument on the attorney fee motion, unless the court have questions on the other, on the merits.

[00:26:33] Speaker 04:
Judge Chabria looked at this and determined in his judgment and discretion that there was not sufficient incorporation of the terms, precise terms of the promissory notes such as the attorney fee provision.

[00:26:47] Speaker 04:
to warrant deviating from the American rule that each party pays its own fees.

[00:26:55] Speaker 04:
We believe that that was within his discretion because to the extent there might have been a random mention of loan agreement in one small phrase, it did not mention the terms regarding fees.

[00:27:09] Speaker 04:
It did not state any specifics as to how that might be incorporated.

[00:27:14] Speaker 04:
And we've, in our response brief,

[00:27:17] Speaker 04:
indicated that for incorporation to occur there must be more than that.

[00:27:22] Speaker 04:
We think that the court was right to not find there was incorporation and I will rest on that point, Your Honor.

[00:27:30] Speaker 00:
Thank you.

[00:27:34] Speaker 00:
One last point, Your Honors.

[00:27:36] Speaker 00:
Judge Traveria cited in the order denying the fee motion, cited the in Ray Pan American case and interestingly in that case the court found that

[00:27:47] Speaker 00:
There are arguments that a plan can replace an underlying note.

[00:27:51] Speaker 00:
However, and according to the decision, this is a quote, these arguments are unavailing if the terms of the plan itself do provide for the recovery of attorney's fees.

[00:28:03] Speaker 00:
And in this case, they actually referred to an underlying deed of trust that had an attorney's fees provision and the Pan American Court wrote in so doing the plan ratified and incorporated the terms of the deed of trust.

[00:28:17] Speaker 00:
And we believe that's exactly what happened here.

[00:28:19] Speaker 00:
The plan here specifically refers to the underlying loan agreement as being important to reference for purposes of determining the principal balance, the appropriate interest rate, and fees and costs.

[00:28:34] Speaker 00:
And we think Judge Chabria missed that.

[00:28:37] Speaker 00:
As a matter of law, contract interpretation, and that we should be entitled to attorney's fees under the agreement, and would ask your honors to remand

[00:28:47] Speaker 00:
with instructions to the district judge to conduct the appropriate load star analysis.

[00:28:53] Speaker 00:
Thank you very much, Your Honor.

[00:28:54] Speaker 02:
Thank you.

[00:28:54] Speaker 02:
We thank both counsel for their helpful arguments, and the case is submitted.