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Case 16-50644-btb Doc 42 Entered 09/17/19 16:38:01 Page 1 of 6
WRIGHT, FINLAY & ZAK, LLP
Yanxiong Li, Esq.
702) 475-7964; Fax: (702) 946-1345
yli@wrightlegal.net
Attorney for Fred Sadri, as Trustee for The Star Living Trust, dated April 14, 1997 and Ray Koroghli and Sathsowi T. Koroghli, as Managing Trustees for Koroghli Management Trust
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
Case No.: 16-50644-btb
Chapter 15
Hearing Date: October 1, 2019
Hearing Time: 2:00 PM
LIMITED OPPOSITION TO AMENDED MOTION TO DISMISS CHAPTER 15 CASE
In re:
JAZI GHOLAMREZA ZANDIAN,
Debtor in Foreign Proceeding.
Fred Sadri as Trustee for The Star Living Trust, dated April 14, 1997; Ray Koroghli and Sathsowi T. Koroghli as Managing Trustees for Koroghli Management Trust (“Judgment Creditors”), by and through their undersigned counsels of record and files this Limited Opposition to Amended Motion to Dismiss (“Opposition”).
This Opposition is made and based upon the attached Memorandum of Points and Authorities, Exhibits attached hereto, judicial notice of any pleadings and papers on file in this case, and any oral arguments this court may entertain at the time of hearing the underlying Motion.
DATED this 17th day of September, 2019.
WRIGHT, FINLAY & ZAK, LLP
/s/ Yanxiong Li, Esq.
Yanxiong Li, Esq.
Attorney for Plaintiffs/Counter-Defendants
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MEMORANDUM OF POINTS AND AUTHORITIES
INTRODUCTION
To the extent Margolin’s Amended Motion to Dismiss seeks dismissal of the Adversary Proceeding No. 17-05016-BTB and the September 20, 2018 Order granting summary judgment in favor of Judgment Creditors [Bankr. No. 38, at 6:21-23], Margolin’s Motion should be denied for reasons detailed herein.
As a threshold matter, this Court should strike Margolin’s request for relief from judgment entered in the Adversary Proceeding as it relies on bare citation without factual support. Nor is it procedurally proper to seek an order setting aside summary judgment by moving in the underlying Bankruptcy Case.
Even if this Court considers Margolin’s request, Margolin’s Amended Motion to Dismiss should be denied because: (1) the plain language of 11 U.S.C. § 349(b)(1) shows it is inapposite because it addresses liens voided pursuant to Section 506(d); (2) similarly, 11 U.S.C. § 349(b)(2) does not apply because summary judgment at issue was not based on any of the substantive grounds referenced therein. Importantly, summary judgment voiding Margolin’s lien was based on violation of NRS 17.150(4). Thus, Margolin’s request to “dismiss” summary judgment in favor of Judgment Creditors is legally flawed.
Nor is there language under § 349(b) authorizing dismissal of the Adversary Proceeding.
Finally, even assuming § 349(b) provides support for Margolin’s request, cause exists to limit relief to apply against Debtor only given the absence of any dilatory conduct on the part of Judgment Creditors. Indeed, since entry of summary judgment, Judgment Creditors have worked diligently to work out a compromise of remaining claims pending in the Adversary Proceeding with counsels for Margolin and Chapter 15 Debtor.
Accordingly, Judgment Creditors respectfully request that the Court deny Margolin’s Amended Motion to Dismiss to the extent Margolin seeks relief from the favorable summary judgment entered in the Adversary Proceeding and/or dismissal of the Adversary Proceeding.
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LEGAL ARGUMENT
A. MARGOLIN’S REQUEST TO DISMISS ADVERSARY PROCEEDING AND SUMMARY JUDGMENT ENTERED IN FAVOR OF JUDGMENT CREDITORS SHOULD BE STRICKEN UNDER LR 9014(C)(1)
As a threshold matter, Margolin’s request is supported by bare citation to 11 U.S.C. §349(b) without any factual support or analysis. See LR 9014(c)(1) (The motion must state fact on which it is based…); see also Bankr. No. 38, at 6:20-23. In fact, none of the offending conduct/omission alleged in Margolin’s Amended Motion are attributable to Judgment Creditors. Rather, Margolin’s Amended Motion is limited to discussing obligations and dilatory conduct of the Chapter 15 Debtor, Foreign Representative and/or counsel for said representative. See generally Bankr. No. 38, at 4:10-6: 23. Indeed, counsel for Judgment Creditor (Yanxiong Li, Esq.) has reached out to both counsels for Margolin (Matthew Francis, Esq. and Arthur Zorio, Esq.) and Foreign Representative (Jeffrey L. Hartmann, Esq.) to resolve remaining claims pending in the Adversary Proceeding so parties may move forward with this Bankruptcy Case. Upon this Court’s request, Judgment Creditor will submit these emails for the Court’s review in camera due to their confidential nature as settlement related communications. Thus, Margolin’s requested relief, to the extent it prejudices Judgment Creditors, lack any factual support, and should be stricken without consideration.
B. §349(b) DOES NOT APPLY TO SUMMARY JUDGMENT VOIDING LIEN BASED ON VIOLATION OF NRS 17.150(4)
Even if the Court considers Margolin’s request for relief of matters adjudicated in the Adversary Proceeding, Margolin’s request still fails because §349(b) does not afford legal support for Margolin’s request to set aside judgment voiding lien based on violation of NRS 17.150(4). Initially, 11 U.S.C. § 349(b)(1) is inapposite because, on its face, the statute is limited to “any lien voided under section 506(d) of [Title 11 or Bankruptcy Code].” Section 506(d) generally entitles the Debtor (not Creditor) to strip-down a portion of the lien or strip-off a second lien that is wholly unsecured by any equity in Debtor’s real property. This, however, is not the substantive basis upon which summary judgment was entered in the Adversary
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Proceeding voiding Margolin’s lien; rather, the operative judgment is based on Margolin’s failure to comply with state law requirements for creating his judgment lien under NRS 17.150(4). Similarly, § 349(b)(2) also does not support Margolin’s request. 11 U.S.C. § 349(b)(2) incorporates four substantive basis, all of which rooted in Bankruptcy Code provisions, for voiding liens: § 522(i)(1) (trustee’s right to avoid transfers or recover setoffs); § 542 (trustee’s right to compel turnover of non-estate property); § 550 (trustee’s right to avoid fraudulent transfers against non-debtor transferee); or § 553 (creditor’s right to offset a mutual debt against debtor’s claim against said creditor). However, nothing in plain language of § 349(b)(2) suggests it also applies to judgments based on violation of state statutory requirements for creating a judgment lien. Finally, there is no reference to any legal basis for dismissing adversary claims by one creditor against another creditor in § 349(b).
Accordingly, this Court should deny Margolin’s request to set aside the judgment voiding lien based in NRS 17.150(4) and dismissal of Adversary Proceeding.
C. EVEN IF THIS COURT GRANTS RELIEF REQUESTED PURSUANT TO §349(B), CAUSE EXISTS TO SHIELD JUDGMENT CREDITOR’S INTEREST AND RIGHTS IN THE SUMMARY JUDGMENT AND ADVERSARY PROCEEDING FROM ENFORCEMENT OF RELIEF GRANTED TO MARGOLIN
§ 349(b) is not mandatory, and
the Court, for cause, may limit the scope of any order to clarify that relief
is limited against the Chapter 15 Debtor, Foreign Representative, and/or
counsel, and not against Judgment Creditors. See, e.g., 11 U.S.C. § 349(b)
(“Unless the court, for cause, orders otherwise,...); see also In re Johnson, 565 B.R. 417, 425, 77 Collier
Bankr. Cas. 2d 624, 63 Bankr.
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“‘Cause’ under § 349(b) means an
acceptable reason.” Matter of Sadler, 935 F.2d
918, 921, 60 USLW 2036, 24 Collier Bankr. Cas. 2d 2017, 21 Bankr.
Here, even if section 349(b)’s presumption applies to summary judgment quieting title in favor of Judgement Creditors and against Margolin entered in the related Adversary Proceeding (it does not), cause exists to reject Margolin’s request to reinstate the its defective lien in violation of NRS 17.150(4). As mentioned, the judgment does not fall within any of the enumerated substantive grounds for lien/transfer avoidance. Moreover, like in Standard State Bank, Margolin received ample notice and opportunity to litigate the issues surrounding his defective lien. There is no special windfall accruing to Judgment Creditors that warrants reinstating Margolin’s lien as the relief granted in favor of Judgment Creditors was based on failure of Margolin to properly create a judgment lien, rather than Judgment Creditor’s abuse of bankruptcy process.
Accordingly, the circumstances surrounding the summary judgment in favor of Judgment Creditors and against Margolin constitutes sufficient cause to deny reinstatement of Margolin’s lien/vacating summary judgment entered in the Adversary Proceeding.
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CONCLUSION
For reasons stated above, this Court should deny Margolin’s request to set aside summary judgment in favor of Judgment Creditors and dismiss the pending Adversary Proceeding.
DATED this 17th day of September, 2019.
WRIGHT, FINLAY & ZAK, LLP
/s/ Yanxiong Li, Esq.
Yanxiong Li, Esq.
Attorney for Plaintiffs/Counter-Defendants
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