avoidance of personal property transfer

[HRay]

HHM: no probem glad to keep updated, once resolved I will post full report, and if anyone wants an electronic copy of the briefs filed and case law used I will be glad to share that as well. The bottom line is that it looks like we will have a new case law to add to the history of this subject.

[justbroke]

Yes, thank you for updating us. Taking this all the way to the BAP, and perhaps beyond, is very pioneering! I'm glad that some Debtors decide to exhaust all their appellate avenues before giving up!

[HHM]

I am glad you came back and updated on this, I was very interested in knowing how this came out.

[HRay]

The trial was held, trustee won at trial, now before the bap 9th circuit, first two briefs have been filed, more will come as we get ruling from 9th bap.

short version seems to indicate the trustee should have lost and the judge made a mistake in his ruling. case law in California seems to indicate failure to perfect with dmv does not affect who the owner really is.

seems like the trustee shoots first as was mentioned above and might say sorry later.

if you are really interested find gates vs levers case law and In re roosevelt 9th circuit decision.

maybe a few more months we will get ruling and a case law ruling on this from the 9th circuit.

[tigergem]

Yes, the law is the law, but "can" is not the same as "must". Does the morally "right thing" ever come into play?

From what I have been reading... umm... yeah... case law... "sometimes". But it's a crap shoot. "Sometimes" the judge will even acknowledge the "morally correct thing" or the "common sense thing" in issuing his/her decision, and still make his/her ruling "even though...however..." as a result of some procedural error... or precedent...or interpretation of the law. I have learned that in my district the "Unwritten Local Rules of Common Sense" prevail. That's my judge. I love him.

[moonflower]

Yes, the law is the law, but "can" is not the same as "must". Does the morally "right thing" ever come into play?

[HHM]

HHM: You have hit the nail exactly on the head.

So the trustee only needs to get a judge that will also have a twisted vision and mix up a BFP perfected transfer, and ignore the lein creditor argument.

A judge might say, "Mr Father-in-law I agree you were the BFP, but since you failed to register this transfer the son-in-law could have come and borrowed the trailer, took it to dmv, had them bring up the registeration on the computer and then he could have sold the trailer then on the spot and a new person would be the BFP, so you had no protection".

if he said that a person might think the judge is ignoring the senior position of the owner as being superior to the judicial lein creditor and then be forced to file with the BAP.

However, the father-in-law might just agree to pay some money instead of going thru the AP process not knowing the law to this extent. Hence a situation which some might equal to legal extortion.

The problem is, registration (at least in this scenario) has nothing to do with ownership. Registration is about use, not ownership. I highly doubt you will get that far.

The only way you win this is if they have a coward attorney or give in to pressure. If it's a gift, you will have a HARDER time avoiding the transfer. Now you are talking about section 548 fraudulent transfer. If the debtor or debtors were both working at the time, and current on their debts, you lose this issue on them not being insolvent. If I were on the other side, I would certainly make you go to the effort to file the action, and I would take you to a hearing and file a complaint for rule 11 sanctions (no joke), based on the facts that you presented so far, I don't see that you even have a good faith argument to proceed.

[newbie2]

However, the father-in-law might just agree to pay some money instead of going thru the AP process not knowing the law to this extent. Hence a situation which some might equal to legal extortion.

If it walks like a duck and talks like a duck...legal extortion? In my eyes, yes. Except nothing about extortion should ever be sugar coated.

Frankly, it makes me sick that this is even being considered.

Mr. Trustee, drop it already.

[Mensa1]

HHM:
However, the father-in-law might just agree to pay some money instead of going thru the AP process not knowing the law to this extent. Hence a situation which some might equal to legal extortion.

Pretty much what it comes down to isn't it?

Can I get him to buy me off, and hope no one cries foul. Afterall, he doesn't know the law to that extent and you will prolly get away with it. Case closed, decision made, extort away.

[HRay]

Sorry HHM missed the first part of your question.

Specifically on proving the antecedent debt.

Here is a question for us to ponder.

son-in-law quits job to go to Calif Corrections Academy to be a corrections officer. Take a big cut in pay, The house hold the kids, take a big hit in income. The daughter says, dad can we borrow money, (it just would not be right for her to say dad give us some money). Dad says you do not have to borrow, we will help you out and do not worry about repayment. Dad give money several times throughout a 2 year timeframe. Dad considers it a gift, kids consider it a loan. nothing is written down to document the money, a few checks were written for doctor bills on behalf of kids. Later kids are doing well financially, the new cadet is hired in the prison system and they decide to repay dad. Dad needs a trailer, kids tell dad they will either sell trailer and give him money, or he can have trailer.

So legally is dad a creditor, or not, if not, then the trailer was a gift for not apparent value. If gift then reach back still could apply. If loan then avoidance to an insider is warranted.

The reason kids filed is they both worked for the State, both got 15 percent pay cuts, and the daughter was cut to half time. So therefore they could not make payments on mortgage and the consumer debit they ran up to get thru school for the new job. But since the housing market crashed in California the 200K lost equity put them insolvent even at the 16 month prior to filing.

[HRay]

HHM: You have hit the nail exactly on the head.

So the trustee only needs to get a judge that will also have a twisted vision and mix up a BFP perfected transfer, and ignore the lein creditor argument.

A judge might say, "Mr Father-in-law I agree you were the BFP, but since you failed to register this transfer the son-in-law could have come and borrowed the trailer, took it to dmv, had them bring up the registeration on the computer and then he could have sold the trailer then on the spot and a new person would be the BFP, so you had no protection".

if he said that a person might think the judge is ignoring the senior position of the owner as being superior to the judicial lein creditor and then be forced to file with the BAP.

However, the father-in-law might just agree to pay some money instead of going thru the AP process not knowing the law to this extent. Hence a situation which some might equal to legal extortion.

[HHM]

I honestly can't believe you are wasting so much time over this. Let's assume for a moment that the transfer was made within 12 months, do you even have evidence to support the other elements that are REQUIRED for you to prevail

547 preference: the transfer was made...
1. to or for the benefit of a creditor
2. for an antecedent debt
3. made while the debtor was insolvent (my guess is, you will have a tough time on this element).
4. Enables the creditor to receive more than it would have in chap 7, if transfers had not been made, etc.

Realize, you have to PROVE all those elements.

As for 727(a)(2): there is NO WAY (unless there are serious other issues and badges of fraud) you will get a denial of discharge on this issue.

The problem, however, is that there is no recording requirement for this transfer, so the transfer is effective when it is effective between the parties. My sense is, there maybe some confusion or overlap with the requirements to perfect a "security interest" and the requirements for a sale or transfer. The rules of one do not necessarily apply to the other.

[HRay]

Hey Fellow Forum commenters: these are excellent discussions, some of which I will now have to research.

For those of you inclined here is an excellent article I discovered, some of the case law is very interesting, assuming a person likes to read case law.

Thought not exactly on point in this discussion a few of the cases presented in this document could be used to support one side or the other.

http://www-rcf.usc.edu/~usclrev/pdf/072405.pdf

[HHM]

Impractical, maybe; but strategically sometime necessary. It is true that courts are not prone to giving rule 11 sanctions, but if you have a rogue trustee and the U.S. Trustee is not willing to address the issue, then Rule 11 is how you can start fighting back.

It is how you make the trustee think twice before doing the shoot first, ask questions later approach.

[justbroke]

Interesting point, as I have looked at seeking Title 11 sanctions in another court proceeding, (non-Bk), and the move seemed quite impractical; but I am all ears.

Read Federal Rules of Bankruptcy Procedure Rule 9011, which incorporated Fed. R. Civ. P. Rule 11. This is the part of the Bankruptcy rules under which Sanctions are granted. You can't file frivolous proceedings... or even be careless about things when you put your signature on papers submitted to the Court.