[00:00:03] Speaker 01:
Next by zoom we have in Ray Regan Kwan Corey Parker appearing for appellants Alan when occur appearing for appellee.

[00:00:16] Speaker 04:
Good morning your honors may it please the court my name is Corey Parker and I would respectfully reserve 5 minutes for rebuttal.

[00:00:25] Speaker 04:
Your Honors, I represent the appellants Olivia Rigone and Christine Kwan.

[00:00:31] Speaker 04:
This appeal challenges the Bankruptcy Court's entry of a money judgment in favor of Europa Kids Preschool LLC, which we contend was issued without subject matter jurisdiction and without legally sufficient evidentiary support.

[00:00:47] Speaker 04:
And I'll address both of those in term.

[00:00:49] Speaker 02:
Mr. Parker, let me ask you just at the outset.

[00:00:53] Speaker 02:
Do you agree that subject matter jurisdiction is measured at the time the complaint was filed?

[00:01:00] Speaker 04:
I do not, Your Honor.

[00:01:02] Speaker 04:
I believe that the test here is whether it's a core bankruptcy matter.

[00:01:08] Speaker 04:
So even in the event that an adversary proceeding is pending, there's plenty of case law to illustrate that once there's a discharge, unless... I'm going to the time, okay.

[00:01:25] Speaker 02:
You think you lose jurisdiction, but don't you measure it?

[00:01:28] Speaker 02:
Hasn't the Ninth Circuit told us that

[00:01:30] Speaker 02:
you measure that, whether you have jurisdiction at the time the complaint is filed?

[00:01:36] Speaker 04:
Yes, Your Honor.

[00:01:37] Speaker 04:
Initially, yes.

[00:01:38] Speaker 04:
I would agree with that.

[00:01:40] Speaker 04:
But I also think there's a lot of case law to point to, notably, N. Ray Dites, N. Ray Sassen,

[00:01:48] Speaker 04:
stating that bankruptcy courts may liquidate a debt only when necessary to decide dischargeability.

[00:01:56] Speaker 04:
At this point, that matter was moot because there was a discharge.

[00:02:01] Speaker 04:
And there was a denial of discharge.

[00:02:04] Speaker 04:
Yes, thank you, Your Honors.

[00:02:05] Speaker 04:
There was a denial of discharge.

[00:02:08] Speaker 04:
And the Ninth Circuit, as I noted, has long held that a bankruptcy court's authority to liquidate a state law claim is inextricably tied to its determination

[00:02:17] Speaker 04:
of dischargeability.

[00:02:18] Speaker 04:
And I would cite N. Ray Kennedy, where this court stated that it is, you know, quote, impossible to separate the determination of dischargeability from the function of fixing the amount of the non-dischargeable debt.

[00:02:32] Speaker 04:
I also cited N. Ray Deitz, where the court reaffirmed that a bankruptcy court's jurisdiction to enter a money judgment exists only in conjunction with determining that the debt is

[00:02:43] Speaker 04:
accepted from discharge.

[00:02:45] Speaker 02:
Now, opposing, the opposing party... How do you square those, that argument with the Ninth Circuit's conclusion that bankruptcy courts are not automatically divested of jurisdiction over related cases when the underlying bankruptcy case has been dismissed?

[00:03:04] Speaker 04:
Your honor, I would again turn towards the definition of what's a core bankruptcy matter, and that in the event that that a core bankruptcy matter is, you know, defined in Henry Harris arises under the bankruptcy code.

[00:03:18] Speaker 04:
So a proceeding is core if it either arises under the bankruptcy code or arises in a bankruptcy case where it could only exist in bankruptcy.

[00:03:28] Speaker 04:
So this state contract claim clearly could exist outside of the bankruptcy court.

[00:03:33] Speaker 04:
It did not arise under the bankruptcy code.

[00:03:36] Speaker 03:
But counsel, it was filed as a 523A2A claim.

[00:03:42] Speaker 03:
Correct?

[00:03:43] Speaker 03:
Yes, sir.

[00:03:44] Speaker 03:
There was a stay agreed between the parties that it would not proceed until there was some determination made under 727, correct?

[00:03:54] Speaker 04:
Correct, your honor.

[00:03:55] Speaker 03:
There was a determination made under 727, and the debtors got the creditor to agree to not pursue this 523 claim, but instead to simply pursue the contract claim.

[00:04:10] Speaker 03:
They didn't dismiss the 523 claim, but they didn't pursue putting on any evidence about it.

[00:04:18] Speaker 03:
They made a determination that they would just ask the court to enter a judgment on the contract claim, not the fraud claim, right?

[00:04:28] Speaker 04:
That's correct, Your Honor.

[00:04:29] Speaker 03:
The debtors agreed to that.

[00:04:31] Speaker 03:
The debtors wanted that result rather than have them continue to litigate the 523-A2A claim.

[00:04:38] Speaker 04:
Correct, Your Honor.

[00:04:39] Speaker 03:
523 a to a claim was never dismissed That's right your honor so the judgment is the result of their prosecution to some finality of an originally established jurisdictional claim under 523 a to a Never never altered because you never dismissed that claim they never dismissed that claim correct

[00:05:07] Speaker 04:
That is correct, Your Honor.

[00:05:08] Speaker 04:
I would absolutely agree with you that there was in fact jurisdiction, that the proceedings as you outlined it occurred.

[00:05:17] Speaker 04:
But our argument here is that nevertheless, there's a swath of case law to show

[00:05:24] Speaker 04:
that the court should have lost jurisdiction at that point.

[00:05:28] Speaker 04:
That the court, because this wasn't a core matter, regardless of how the parties navigated it, regardless of the procedural posture, that the Ninth Circuit has long held, again, that a bankruptcy court's authority to liquidate a state law claim is tied to its determination of dischargeability.

[00:05:47] Speaker 04:
You know, it's possible that opposing party will point to a nuance here,

[00:05:51] Speaker 04:
But I haven't seen any case law cited by opposing counsel that shows where this occurred and that it was codified by this court or any other court.

[00:06:04] Speaker 02:
Let me ask you, you talk about nuances and you said the court should have, not must or was required to.

[00:06:16] Speaker 02:
dismiss the 523 action.

[00:06:18] Speaker 02:
So if we start with the premise that subject matter jurisdiction is measured at the time the complaint was filed, then we get to the point where the relevant question is not whether the bankruptcy court had jurisdiction but whether the bankruptcy court properly retained jurisdiction.

[00:06:37] Speaker 04:
Yes.

[00:06:37] Speaker 04:
Yes, Your Honor.

[00:06:38] Speaker 04:
That is the question at hand is whether they properly retain it.

[00:06:41] Speaker 02:
So why would, you know, there's the Casamont Investors case.

[00:06:45] Speaker 02:
I mean, why wouldn't we look at those factors, you know, of economy, convenience, and fairness, and comedy, look at those factors to determine whether or not the judge made the right decision?

[00:06:57] Speaker 04:
We should look at those factors your honor but I think here we have a clear non discharge ability determination.

[00:07:05] Speaker 04:
And as the Supreme Court explained in Stern versus Marshall, you know bankruptcy courts are non article three tribunals with limited jurisdiction.

[00:07:13] Speaker 04:
They have an ongoing duty to ensure subject matter jurisdiction exists at all stages of the proceedings.

[00:07:21] Speaker 04:
So in this matter, regardless of the posture, once the dischargeability issue was resolved in the 727 case, the bankruptcy... But it wasn't resolved in the 727 case, was it?

[00:07:32] Speaker 03:
727 just simply said in this proceeding, it's not an enforceable claim.

[00:07:37] Speaker 03:
But 523 says that debt is non-dischargeable in any subsequent proceeding or in any other proceeding, such that it's different than a 727 determination.

[00:07:50] Speaker 03:
That is not an appropriate argument to make that these are the same.

[00:07:54] Speaker 03:
They're different.

[00:07:55] Speaker 03:
They serve different purposes.

[00:07:57] Speaker 03:
I understand that distinction your honor and I and I agree and it's important to your clients because there's a still the possibility that another proceeding could be filed and this is now a contract action correct correct and so the if there's no determination that 523 a 2a applies that fraud claim is gone potentially the statute of limitations possibly right

[00:08:26] Speaker 03:
Well, it depends.

[00:08:29] Speaker 03:
Correct?

[00:08:30] Speaker 04:
That's correct.

[00:08:32] Speaker 03:
And so it's critical because the original action was never dismissed.

[00:08:36] Speaker 03:
This proceeded on the same theory that it would have if it was a 523 claim, and if they hadn't put on any evidence and the court ruled, because you have put on no evidence of fraud, I'm going to rule against you on the 523 claim, that would have been the same posture the case was in when the judge entered the judgment in this case.

[00:08:55] Speaker 03:
The only difference is you entered into a stipulation with them so that they would not pursue the 523 claim.

[00:09:03] Speaker 03:
You induce them to not proceed with a determination of fraud, but it's the same as if they didn't put on any evidence of fraud.

[00:09:13] Speaker 03:
But the 523 claim still perpetuated.

[00:09:15] Speaker 03:
There was no dismissal of it.

[00:09:17] Speaker 03:
There's nothing that had altered the original jurisdiction of the court, and it continued until the judgment was entered.

[00:09:24] Speaker 04:
Understood, Your Honor, and I wanted, just because my time is limited here, move to the second argument of the sufficiency of the summary judgment evidence that the bankruptcy courts reliance on the unnotarized declaration.

[00:09:36] Speaker 03:
It didn't have to though, didn't it?

[00:09:37] Speaker 03:
This was simply a contract.

[00:09:40] Speaker 03:
Right?

[00:09:40] Speaker 03:
It was an agreement to loan money at a certain price, and the judgment simply reflects the mathematical calculation, which was already liquidated, could have been liquidated, but they didn't have a judgment for it.

[00:09:52] Speaker 03:
It didn't require anything other than take the amount that was owed, add the interest rate, and come to a final number.

[00:10:00] Speaker 03:
Those are already liquidated facts, aren't they?

[00:10:03] Speaker 04:
I hear you, Your Honor, and I understand your position there.

[00:10:08] Speaker 04:
I would just argue that in this particular case, if you look at the Columbia Pictures Industries case, this court rejected a declaration that was based on, quote, information and belief.

[00:10:20] Speaker 04:
And I understand Your Honor's point.

[00:10:22] Speaker 04:
that maybe a declaration wasn't required at all.

[00:10:24] Speaker 04:
But in this particular case, you know, we would argue that there had to be some evidence and that with an unnotarized declaration and then I know the other question is whether or not this was raised in the lower court and the argument is that it can be

[00:10:39] Speaker 04:
raised for the first time on appeal if they involve pure questions of law, and the opposing party will not be prejudiced, and we believe that's the case here.

[00:10:47] Speaker 04:
So for all those reasons, Your Honor, we're respectfully requesting that this court reverse the bankruptcy court's judgment, direct Europa Kids to return all sums collected under the judgment, and deny Europa Kids' request for attorney's fees on appeal.

[00:11:00] Speaker 04:
And I'll reserve the rest of my time for the law.

[00:11:02] Speaker 02:
Thank you.

[00:11:03] Speaker 02:
Let me ask you one more question, though.

[00:11:05] Speaker 02:
Certainly, Your Honor.

[00:11:06] Speaker 02:
Is it relevant that the claim was allowed?

[00:11:11] Speaker 04:
I suppose it's relevant.

[00:11:17] Speaker 02:
There was a distribution on an allowed claim here.

[00:11:20] Speaker 02:
I mean, it wasn't a moot issue.

[00:11:22] Speaker 02:
I mean, sometimes you don't object to a claim when there's not going to be any distribution.

[00:11:27] Speaker 02:
But there was, I don't know, there was nickels on the dollar or not, but there was a small distribution to the plaintiffs on their claim.

[00:11:37] Speaker 04:
Understood, Your Honor.

[00:11:38] Speaker 04:
I can see how that's relevant.

[00:11:40] Speaker 04:
But again, our argument remains that based on the strong case law here, that there was not summary judgment, subject matter jurisdiction rather, and that the legal sufficiency of the evidence was not there.

[00:11:55] Speaker 02:
I appreciate it.

[00:11:56] Speaker 02:
I'll let you have your three and a half minutes for rebuttal.

[00:11:58] Speaker 02:
But I'll be interested in you commenting on the strong case law.

[00:12:03] Speaker 02:
I'm not sure that I see strong case law that supports your position.

[00:12:09] Speaker 02:
Thank you.

[00:12:10] Speaker 04:
Understood, Your Honor.

[00:12:10] Speaker 04:
Thank you.

[00:12:16] Speaker 00:
Good morning, Your Honor.

[00:12:19] Speaker 00:
Here was a situation when Judge Alston heard my client, Europa Kids, summary judgment motion.

[00:12:26] Speaker 00:
We had an adversary that was a court proceeding to determine discharge of the debt and to liquidate the claim and enter a money judgment.

[00:12:33] Speaker 00:
That was in the complaint.

[00:12:35] Speaker 00:
The debtors disputed liability in their answer.

[00:12:39] Speaker 00:
They consented to the court entering a final judgment.

[00:12:43] Speaker 00:
We put the matter on a stay while the US trustees adversary proceeding under 727 played out.

[00:12:51] Speaker 00:
That was to the benefit of all parties in the court.

[00:12:55] Speaker 00:
bankruptcy court then found that the debtors had intentionally and fraudulently acted in a way that their discharge should be denied.

[00:13:01] Speaker 00:
We moved to reopen the case to liquidate the claim.

[00:13:07] Speaker 00:
The debtors raised a question about jurisdiction but never filed a motion to dismiss or abstain.

[00:13:14] Speaker 00:
The plaintiffs

[00:13:17] Speaker 00:
presented, my client presented the court with evidence of the validity and amount of the debt, and there was no challenge to any of that.

[00:13:27] Speaker 00:
So it was entirely proper to enter a money judgment, a final judgment in this case, to complete litigation that had been started nearly three years prior.

[00:13:38] Speaker 00:
These debtors would have this panel carve out a new exception to the rule that bankruptcy courts may enter money judgments in court proceedings.

[00:13:49] Speaker 00:
The proposed exception is that if the debtors lose their discharge because of their bad actions, then the court is suddenly divested as a matter of law from completing the litigation.

[00:14:03] Speaker 00:
There's no support in the case law for this proposition.

[00:14:06] Speaker 00:
In fact, if you look at Kennedy, while Kennedy's

[00:14:10] Speaker 00:
context is a 523 case.

[00:14:12] Speaker 00:
Kennedy basically stands for the proposition that a bankruptcy court may enter a money judgment in a core adversary proceeding.

[00:14:21] Speaker 00:
The language in Kennedy is not restricted just to 523 cases, but even if you try to restrict that to the context, what Kennedy says is that

[00:14:37] Speaker 00:
It is okay for bankruptcy court, appropriate for bankruptcy court, to make a finding in conjunction, I'm sorry, money judgment, in conjunction with a finding of dischargability.

[00:14:48] Speaker 00:
Well, what happened here?

[00:14:50] Speaker 00:
There was a conjunction with the other adversary proceeding, U.S.

[00:14:55] Speaker 00:
trustees proceeding.

[00:14:57] Speaker 00:
It was all within the main case.

[00:14:59] Speaker 00:
There was a finding of non-dischargeability, well, specifically a finding that no debts would be dischargeable.

[00:15:05] Speaker 00:
And that opened the door for my clients to complete the litigation by having a money judgment.

[00:15:14] Speaker 00:
If the rule was once a 727 action is decided not in the debtor's favor, a bankruptcy court is suddenly divested of its original court jurisdiction, then it creates some pretty strange inequities.

[00:15:31] Speaker 00:
It would force a client like mine to actually litigate the 523 case, which may ultimately be irrelevant if the debtors are not entitled to any sort of discharge.

[00:15:42] Speaker 00:
at the risk of not being able to complete their litigation if the debtors lose a 727 case.

[00:15:50] Speaker 00:
Or if my clients had added a 727 claim in their complaint and had enough

[00:15:56] Speaker 00:
uh... basis in fact the law to move for summary judgment on that and one would they then be prohibited from completing the other aspects of their litigation that is the kind of rule that's being proposed by the debtors and again there's there's no authority for that

[00:16:15] Speaker 00:
even if suddenly court jurisdiction vanished, there would still be supplemental jurisdiction to decide based on the equities of the case.

[00:16:27] Speaker 00:
And Judge Alston essentially said that when he cited to the Porges case out of the Second Circuit where the court had entered a

[00:16:37] Speaker 00:
money judgment on a claim objection even though the underlying case had been dismissed.

[00:16:42] Speaker 00:
And the court, the Second Circuit in that case, found that it would be a waste of judicial resources and unfair to force the parties to re-litigate in state court where the debtor had submitted voluntarily to the bankruptcy court and forced the creditor to litigate in bankruptcy court.

[00:17:00] Speaker 00:
Again, that is what happened here.

[00:17:01] Speaker 00:
The debtors voluntarily filed a bankruptcy putting their discharge and putting all the underlying issues related to discharge and related to creditor claims at issue.

[00:17:13] Speaker 00:
My clients filed a proper core adversary proceeding and were entitled to complete the litigation.

[00:17:26] Speaker 00:
There was no question that they were entitled to a money judgment.

[00:17:29] Speaker 00:
There was no dispute regarding that.

[00:17:30] Speaker 00:
The bankruptcy court did not have two sides to even weigh regarding what the facts in the law were.

[00:17:36] Speaker 00:
It was an unopposed motion.

[00:17:40] Speaker 03:
Council, just a question is that the contract, the loan agreement between the debtors and your clients was of record, was part of the complaint or it was produced as part of the summary judgment.

[00:17:52] Speaker 00:
The promissory note is actually attached to the complaint.

[00:17:55] Speaker 00:
The summary judgment motion included the declaration of Kelly Milbrant, the member and manager of the LLC.

[00:18:03] Speaker 00:
She attested in her declaration to the contractual relationship, attached a copy of the loan term sheet that both sides signed, attached the promissory note

[00:18:16] Speaker 00:
that Ms.

[00:18:18] Speaker 00:
Kwan signed and that had the guarantee language and that was initialed by Ms.

[00:18:23] Speaker 00:
Milbrandt.

[00:18:24] Speaker 00:
So all of that was in the court record, yes.

[00:18:27] Speaker 03:
What I'm trying to get at is the court knew that there was an admission there had been no, there was a default.

[00:18:33] Speaker 03:
The default triggered the guarantee.

[00:18:35] Speaker 03:
The default then triggered the right to calculate the damages.

[00:18:40] Speaker 03:
The damages calculation were set forth in the note that was attached.

[00:18:43] Speaker 03:
It was all,

[00:18:44] Speaker 00:
Effectively irrespective of whatever she had in her declaration the court could have determined this based on just the documents that were produced Correct your honor there was never any challenge to the sufficiency of the record there was never any challenge to the sufficiency of the documents The the court had everything it needed And there was there there are other opportunities to object to me there was never any objection to the claim I

[00:19:12] Speaker 00:
I mean, there was a lot of... There was never any objection to the right of my clients to have a money judgment.

[00:19:19] Speaker 00:
What the debtors are arguing before this panel is that, irrespective of all that, irrespective of the matter being properly teed up in front of the bankruptcy judge, irrespective of the lack of any objection to or challenge to the right to obtain a money judgment,

[00:19:40] Speaker 00:
My client should have been forced to go into state court and file a new lawsuit to prove up what they had already proved up.

[00:19:51] Speaker 00:
And that, I can't imagine why the bankruptcy court would not have jurisdiction under those circumstances.

[00:20:00] Speaker 00:
The debtors in their reply brief talk about supplemental jurisdiction.

[00:20:09] Speaker 00:
and basically asked this court to this panel to look to evaluate whether cases like Pegasus Gold are mere dicta that this panel should not follow or whether it should otherwise decide that the judge erred in

[00:20:32] Speaker 00:
retaining jurisdiction to complete the litigation.

[00:20:35] Speaker 00:
But what the Pegasus case actually says is not what the debtors refer to in their brief as seemingly gratuitous determination as to jurisdiction.

[00:20:47] Speaker 00:
It's not dicta at all.

[00:20:48] Speaker 00:
What the Ninth Circuit decided in Pegasus is that they were required to resolve the issue of subject matter jurisdiction before they got to the secondary issue in the case, which was sovereign immunity, because they had to first decide whether they had jurisdiction in the case before they could address the underlying immunity issue.

[00:21:11] Speaker 00:
So it's not dicta.

[00:21:12] Speaker 00:
It's well established now in the Ninth Circuit.

[00:21:15] Speaker 00:
that bankruptcy courts have supplemental jurisdiction to decide remaining matters in the case that would ordinarily be expected to be resolved in the judicial proceeding.

[00:21:27] Speaker 00:
And both parties agreed from the get-go

[00:21:32] Speaker 00:
that the amount and validity of my client's claim would be resolved in this adversary proceeding.

[00:21:39] Speaker 00:
It was expected.

[00:21:41] Speaker 00:
It was expected when the matter was stayed.

[00:21:45] Speaker 00:
It was expected in the complaint and in the answer.

[00:21:48] Speaker 00:
And it was all presented in front of the judge.

[00:21:51] Speaker 00:
And there was no objection to the dollar amount or validity of the judgment claim.

[00:22:00] Speaker 00:
And bankruptcy courts, as you well know, are courts of equity.

[00:22:03] Speaker 00:
What is the equity in reversing and requiring my clients to get a new judgment in state court?

[00:22:10] Speaker 00:
They already have one, and there was nothing wrong with that.

[00:22:19] Speaker 00:
With respect to the quality of the Milbrandt Declaration, I mean, this is a new argument on appeal, right?

[00:22:28] Speaker 00:
At no point in the

[00:22:31] Speaker 00:
briefing in front of Bankruptcy Judge Alston was the sufficiency of the Milbrandt Declaration challenged.

[00:22:40] Speaker 00:
It wasn't raised at any point in time.

[00:22:43] Speaker 00:
It wasn't raised in the Statement of Issues on Appeal.

[00:22:46] Speaker 00:
It wasn't raised in any of the briefing before the Bankruptcy Judge.

[00:22:52] Speaker 00:
The first time we see this argument is in the opening brief on appeal.

[00:22:56] Speaker 00:
It's plainly a new argument on appeal.

[00:22:59] Speaker 00:
and the court should not consider it at all.

[00:23:05] Speaker 00:
The standard for raising new arguments on appeal are if it's purely an issue of law, which this is not, because the bankruptcy judge would have to have evaluated the sufficiency of what is stated in the declaration, and that's a discretionary issue.

[00:23:25] Speaker 00:
It would be potentially okay to raise a new issue on appeal if there's no prejudice to Europa kids.

[00:23:35] Speaker 00:
But here had the issue been raised in front of Judge Alston.

[00:23:39] Speaker 00:
And if there was any question regarding the sufficiency of what Ms.

[00:23:42] Speaker 00:
Milgrant was saying in her declaration, she could have filed a corrective or supplemental declaration clarifying that she is speaking from personal knowledge.

[00:23:53] Speaker 00:
But in any event, she was speaking from personal knowledge.

[00:23:56] Speaker 00:
It's plain from the declaration that she was.

[00:23:59] Speaker 00:
She states that she's a member and manager of the LLC.

[00:24:03] Speaker 00:
She states that she met Ms.

[00:24:06] Speaker 00:
Kwan and discussed the debt.

[00:24:09] Speaker 00:
She states that they entered into a contract.

[00:24:11] Speaker 00:
She attaches copies of the term sheet and the loan.

[00:24:14] Speaker 00:
She calculates the, she does the math, calculates the judgment.

[00:24:21] Speaker 00:
And again, there's no opposition to any of that.

[00:24:28] Speaker 00:
There was jurisdiction from the outset in summation.

[00:24:33] Speaker 00:
There was jurisdiction from the outset that jurisdiction to decide was put on hold by agreement of the parties.

[00:24:41] Speaker 00:
The debtors consented to final entry of the judgment.

[00:24:47] Speaker 00:
The debtors did not oppose the entry of the judgment.

[00:24:50] Speaker 00:
There's simply nothing wrong here.

[00:24:52] Speaker 00:
So unless the court has any other questions, I'd ask that the court affirm.

[00:24:57] Speaker 00:
I'd also ask that the court grant attorney's fees, both because the contract provides for that explicitly, including in bankruptcy and on appeal, and because especially with respect to this new argument on appeal, it is frivolous.

[00:25:18] Speaker 00:
I filed a motion under Rule 8020.

[00:25:23] Speaker 00:
The debtors have challenged whether that is procedurally proper.

[00:25:26] Speaker 00:
If it is not procedurally proper, then the panel can tell me that and hopefully grant me leave to file a new motion after the opinion is granted.

[00:25:36] Speaker 02:
I do have a question.

[00:25:37] Speaker 02:
Let's talk about fees a little bit.

[00:25:39] Speaker 02:
You've got another minute and three quarters here.

[00:25:43] Speaker 02:
Even if you persuade us that we should affirm, that doesn't necessarily mean you're entitled to attorney's fees, correct?

[00:25:49] Speaker 00:
It is correct.

[00:25:51] Speaker 02:
And the attorney's fees is not automatic.

[00:25:54] Speaker 02:
Right.

[00:25:54] Speaker 02:
I mean, don't we have here a situation where we don't really have a really clear case from the 9th Circuit on point?

[00:26:05] Speaker 02:
We're having to extrapolate from other cases to get to this result.

[00:26:11] Speaker 02:
the result that you asked us to reach.

[00:26:13] Speaker 00:
I would say that is true with respect to the jurisdiction issue.

[00:26:19] Speaker 00:
I would say that is not true with respect to the sufficiency of the Milbrandt Declaration, this new argument on appeal.

[00:26:25] Speaker 00:
So with respect to frivolity, frivolous appeal, I would not be submitting a request.

[00:26:33] Speaker 00:
I would

[00:26:35] Speaker 00:
asked for less than my total fees on that issue.

[00:26:40] Speaker 00:
However, there is a fee award provided for in the contract, so I would still be requesting all of the fees on appeal related to the contract claim.

[00:26:49] Speaker 02:
Okay.

[00:26:49] Speaker 02:
All right.

[00:26:50] Speaker 02:
Thank you.

[00:26:51] Speaker 00:
Thank you.

[00:26:55] Speaker 04:
Your Honors,

[00:26:57] Speaker 04:
As was stated by your Honours and Opposing Council, essentially conceding, this is, as we stated before, a nuanced case.

[00:27:08] Speaker 04:
This is a fact pattern that can't extrapolate exactly out of any particular Ninth Circuit line of cases at this point.

[00:27:17] Speaker 04:
In Ray Awazi's 2021 Ninth Circuit bankruptcy panel case, there's some analogous facts there where the debtor filed a Chapter 13 bankruptcy case.

[00:27:33] Speaker 04:
While the bankruptcy was pending, he filed an adversary proceeding against U.S.

[00:27:38] Speaker 04:
bank asserting purely state law claims, things like fraud, wrongful foreclosure, contract-based allegations,

[00:27:45] Speaker 04:
These claims did not arise under the bankruptcy code like our case and did not depend on bankruptcy law like our case.

[00:27:52] Speaker 04:
They were ordinary state law disputes that could have been brought in state court and then later the bankruptcy case was dismissed.

[00:27:58] Speaker 04:
Despite the dismissal in that case, the bankruptcy court kept the adversary proceeding like in this case and continued to adjudicate the state law claims.

[00:28:07] Speaker 04:
Then on appeal, the argument was that the bankruptcy court lost jurisdiction once the bankruptcy case was dismissed.

[00:28:14] Speaker 04:
and the Ninth Circuit bankruptcy panel, this panel in that matter agreed with him.

[00:28:20] Speaker 04:
So I do see some distinctions between that case and this case, and again, the procedural posture.

[00:28:26] Speaker 04:
But certainly, we would contend that this was not a frivolous appeal with respect to the declaration.

[00:28:34] Speaker 04:
We made the argument that if the appeal involves pure questions of law and the opposing party will not be prejudiced, that that is in fact a standard

[00:28:43] Speaker 04:
that can be arrested on and, you know, we certainly don't think that there's any frivolous intent here or that the court could deem this as frivolous, especially, you know, as the court noted, there's nothing directly on point.

[00:28:58] Speaker 04:
We would, again, you know, maybe at this point, look at public policy, right?

[00:29:01] Speaker 04:
The public policy of a bankruptcy court retaining jurisdiction

[00:29:06] Speaker 04:
over a case that should be litigated in state court and the downstream effects of that, right?

[00:29:14] Speaker 04:
The slippery slope that that could, the precedent that that could create, if that were to be extended, you know, further, then very rare circumstances where, again, where the core bankruptcy that's been

[00:29:28] Speaker 04:
codified by this court and the Ninth Circuit, you know, is defined kind of if we deviate from that, which I don't think that we should do.

[00:29:38] Speaker 04:
And, you know, on my client's behalf, we would argue that certainly they had to contend with that state law claim, but the bankruptcy court was not the proper forum for it.

[00:29:50] Speaker 04:
And simply because the matter was filed there,

[00:29:53] Speaker 04:
In the first place, and there was jurisdiction initially, the court still has to retain jurisdiction.

[00:29:59] Speaker 04:
And there are a number of circumstances where the court doesn't retain jurisdiction after a discharge is denied or dismissed.

[00:30:08] Speaker 04:
So for all those reasons, Your Honor, we would ask the court once again to not award attorney's fees to the other side if the court believes that

[00:30:18] Speaker 04:
sides with the other side.

[00:30:19] Speaker 04:
And we believe that the court should reverse the bankruptcy court's judgment.

[00:30:23] Speaker 04:
And we'd ask that you really take a hard look at the line of cases around what's considered core and bankruptcy court retaining jurisdiction and direct Europa Kids to return all the sums collected under the judgment and again, deny their request for attorney's fees.

[00:30:42] Speaker 04:
And thank you for your time today.

[00:30:45] Speaker 03:
Thank you.

[00:30:46] Speaker 03:
We will take this matter under submission and we'll issue a decision as quickly as we can.

[00:30:51] Speaker 03:
Thank you.

[00:30:51] Speaker 03:
Thank you both for your arguments.

[00:30:53] Speaker 00:
Thank you.

[00:30:56] Speaker 03:
You're free to disconnect.

[00:31:01] Speaker 01:
Court is in recess.

[00:31:03] Speaker 03:
Thank you.

[00:31:09] Speaker 01:
We're going to do a quick picture in the library.

[00:31:13] Speaker 01:
I actually saw the other panel walk in there right now.

[00:31:16] Speaker 01:
So don't unroll.

[00:31:17] Speaker 03:
Don't take your robes off and come into the library.

[00:31:21] Speaker 01:
Got it.