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Case 16-50644-btb Doc 56 Entered 09/25/19 16:31:34 Page 1 of 8
Matthew D. Francis
Nevada Bar No. 6978
Arthur A. Zorio
Nevada Bar No. 6547
Samantha J. Reviglio
Nevada Bar No. 14258
BROWNSTEIN HYATT FARBER SCHRECK, LLP
5371 Kietzke Lane
Reno, NV 89511
Telephone: 775-324-4100
Facsimile: 775-333-8171
Email:
mfrancis@bhfs.com
azorio@bhfs.com
sreviglio@bhfs.com
Attorneys for JED MARGOLIN
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEVADA
Case No. BK-N-16-50644-BTB
Chapter 15
Hearing Date: October 1, 2019
Hearing Time: 2:00 PM
Estimated Time for hearing: 1 hour
IN RE:
GHOLAM REZA JAZI ZANDIAN,
Debtor in Foreign Proceeding.
REPLY TO CANET’S OPPOSITION TO MOTION TO DISMISS
Jed Margolin (“Mr. Margolin”), by and through his attorneys Brownstein Hyatt Farber Schreck, LLP, hereby files the following Reply to Patrick Canet’s (“Canet”) Opposition to Motion to Dismiss. As discussed below, Canet’s Opposition arguments are without merit.
I. REPLY ARGUMENTS
As a threshold matter, Canet does not address or oppose Mr. Margolin’s arguments that this proceeding should be dismissed pursuant to Section 1517(d) of the Bankruptcy Code because: (1) Zandian’s Center of Main Interests (“COMI”) was not France at the time Canet filed his Petition for Recognition; (2) Canet has already collected enough money from Zandian to pay the approved creditors from the 1998 French Action and double dipping is prohibited by Bankruptcy Code § 1532; and (3), Canet has not produced any evidence that Zandian is insolvent.
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Instead, Canet argues that this proceeding should not be dismissed because: (A) his counsel’s failure to prosecute this action for three (3) years was due to Mr. Hartman’s “inadvertence”; (B) he has been in settlement discussions with 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 (“Sadri and Koroghli”); and (C), Mr. Margolin has not filed a claim against the purported French Proceeding. None of these arguments come close to providing a basis why this proceeding should not be dismissed.
A. CANET’S “INADVERTANCE” ARGUMENTS ARE NOT SUPPORTED BY THE RECORD AND ARE NOT CREDIBLE
As stated in Mr. Margolin’s Motion, Canet’s counsel represented to this Court on September 6, 2016 that he was going to proceed with either a proceeding against Zandian under Sections 303 or 301 and seek to have a trustee appointed. Adv. No. 35-1, July 30, 2019 Declaration of Matthew D. Francis, Exhibit A. Canet’s counsel specifically represented that “if the Court is to - - Court determines to grant our petition for foreign recognition, then under Section 1511 we would commence either an involuntary proceeding against Mr. Zandian under Section 303; or if he were to consent to being a debtor under Chapter 7, then we would proceed under Section 301. In either case, we would seek to have a trustee appointed to administer the assets that are located in the state of Nevada.” Id. at 6:4-11. Canet’s/Zandian’s counsel has done neither of these things, and has taken no action – none – for more than 3 years even though the Court relied on Canet’s counsel’s representations and anticipated that a Chapter 7 (voluntary or involuntary) proceeding where Mr. Zandian is an actual debtor would be commenced and a Chapter 7 trustee would be appointed shortly after the September 6, 2016 hearing.
In Canet’s Opposition, Canet’s counsel initially blames the fact that he has not taken any action for over three (3) years on his own inadvertence in not filing a draft Order that was approved as to form only by Mr. Margolin’s counsel. See Adv. No. 49, 49-1, 49-2. First of all, Canet is deemed to have withdrawn the petition for recognition. Local Rule 9021(a)(5) (“Unless otherwise ordered, if no proposed Order is submitted within thirty-five (35) days of a hearing, the motion or other matter may be deemed withdrawn, without prejudice, subject to a motion under
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Fed. R. Bankr. P. 9024.”). Second, this Order only purported to recognize Canet as the Foreign Representative in the French Proceeding as a foreign main proceeding. As stated in the proposed Order, Mr. Margolin objected to, and continues to object to, recognition of Canet as a Foreign Representative and the French Proceeding as a foreign main proceeding. Third, nothing in the proposed Order served or serves as any type of waiver of any argument belonging to Mr. Margolin, but only to approve as to form the Order that contains the Order of this Court. Local Rule 9021(b)(3) (“Approval indicates only that the proposed Order accurately reflects the ruling of the court and does not constitute agreement with the ruling or waive any rights of appeal”).[1] Fourth, Canet’s counsel’s claims of inadvertence, i.e. that he forgot to file an Order three (3) years ago are not credible since he was reminded of his failure to prosecute during the Adversary Proceeding on multiple occasions.
First, in paragraph 56 of Mr. Margolin’s August 18, 2017, ANSWER AND AFFIRMATIVE DEFENSES OF JED MARGOLIN TO THE CROSS CLAIMS OF PATRICK CANET, Mr. Margolin stated:
56. Margolin admits that this Court granted Canet’s request for recognition of the foreign proceeding in September 2016, but the hearing where Canet’s Chapter 15 Petition was granted was held on September 6, 2016. Margolin notes that it was at the same hearing where Canet promised the Court that if Canet’s Chapter 15 Petition were granted, he would file a Chapter 7 bankruptcy for Zandian. This has not been done.
(Emphasis added).
Second, Canet’s counsel was reminded of his failure to take any action in this proceeding again during discovery in the Adversary case, when he admitted that he had not taken any action:
REQUEST NO. 10: Admit that at the September 6, 2016 hearing in U.S. Bankruptcy Court your counsel promised the Court that if your Chapter 15 Petition were granted, then under Section 1511 your counsel would commence either an involuntary proceeding against ZANDIAN under Section 303; or if he were to consent to being a debtor under Chapter 7, then your counsel would proceed under Section 301.
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[1] Contrary to Mr. Hartman’s arguments, the draft order that was sent to Mr. Margolin’s counsel Steve Abelman was not an “Order Granting Petition For Recognition And Chapter 11 Relief.” To the contrary, it was a proposed “Order Granting Petition For Recognition and Chapter 15 Relief.” See Adv. No. 49, 49-1.
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RESPONSE: Admit. CANET relied on counsel with respect to the Chapter 15 Petition.
REQUEST NO. 11: Admit that it has been more than 12 months since your counsel has made the above promise to the Court and your counsel has failed to commence either of the above actions.
RESPONSE: Admit. CANET relied on counsel with respect to the Chapter 15 Petition.
September 25, 2019 declaration of Matthew D. Francis, Exhibit A. There is no excusable explanation for Canet’s and his counsel’s failure to prosecute this proceeding or respond to Mr. Margolin’s COMI and other arguments contained in his Motion. Mr. Margolin’s Motion as it pertains to Canet’s failure to prosecute should be granted.
B. CANET’S ALLEGED “RECENT” SETTLEMENT DISCUSSIONS WITH JUDGMENT CREDITORS DOES NOT EXCUSE HIS FAILURE TO PROSECUTE THIS CASE
Canet argues that since he has been in settlement discussions “recently” (whatever that means) in the Adversary Proceeding with Sadri and Koroghli that his failure to prosecute this case should be excused. Even if Canet has been in settlement discussions with Sadri and Koroghli, Canet offers zero authority for the proposition that settlement discussions should suspend action on an underlying bankruptcy.
Furthermore, while it is true that the Court entered a non-final, interlocutory partial summary judgment order on September 20, 2018 in the Adversary Proceeding (“Summary Judgment Order”), that is not a basis for Canet’s three (3) year delay. Canet cites no authority to support this position either.
Finally, Canet’s claim that he intends to file more adversary proceedings, file more motions and engage in discovery is highly questionable given his track record of inaction and is more importantly not an excuse that supports inaction on this bankruptcy proceeding. Canet cites no authority to support his vague position and it must be rejected out of hand.
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C. MR. MARGOLIN’S FAILURE TO FILE A CLAIM IN THE FRENCH PROCEEDING DOES NOT EXCUSE CANET’S AND HIS COUNSEL’S INACTION, AND MR. MARGOLIN NEVER CONSENTED TO THE LEGITIMACY OF THIS PROCEEDING
Canet claims that someone with the name of Jean-Marie Hyest has submitted an inadmissible hearsay statement in the form of a letter that states that Mr. Margolin has not filed a claim against Zandian in the French Proceeding, that Mr. Margolin’s Motion should be denied. The Hyest letter is inadmissible and does not comply with 28 U.S.C. § 1746(1).
Even if the Hyest letter was considered – which it should not be – it does not provide any basis why Mr. Margolin’s Motion should be denied. Whether Mr. Margolin filed a claim in the French Proceeding has nothing to do with Canet and his counsel’s failure to prosecute this action, whether Zandian’s Center of Main Interests (“COMI”) was France at the time Canet filed his Petition for Recognition (it was not), whether Canet has already collected enough money from Zandian to pay the approved creditors from the 1998 French Action (he has), and whether Zandian is insolvent (he is not). Canet fails to rebut any of the evidence or arguments presented by Mr. Margolin regarding these arguments and Canet’s “failure to file claim in France” argument is irrelevant. There is no requirement whatsoever for Mr. Margolin to file anything in the French matter related to Mr. Margolin’s interests in real property in the United States, nor with regard to his judgment against Mr. Zandian properly issued by a court in the United States. Furthermore, because Mr. Canet has not initiated a voluntary or involuntary bankruptcy with Zandian as a debtor in this Court pursuant to Code Section 1520(c), there is no procedure for or requirement for Mr. Margolin to file a proof of claim in the instant proceedings, and Canet has cited no such procedure or requirement.
“Chapter 15 was added to the Bankruptcy Code by title VIII of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the ‘2005 Act’) to encourage cooperation between the United States and foreign countries with respect to transnational insolvency cases. Chapter 15 incorporates the Model Law on Cross-Border Insolvency promulgated in 1997 by the United Nations Commission on International Trade Law (‘UNCITRAL’).” 8 Collier on Bankruptcy P 1501.01 (16th 2019). Code Sections 1525-1527 provide the ability of this Court
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and the French court to communicate directly or through a trustee for the purpose of coordinating the foreign proceeding in accord with the United Nations Commission on International Trade Law, as adopted in the 2005 BAPCPA. “Under section 1525(a) of the Bankruptcy Code, courts must ‘cooperate to the maximum extent possible’ with foreign courts and foreign representatives and may do so either directly or through the trustee.” 8 Collier on Bankruptcy P 1525.01 (16th 2019). “Section 1525(b) entitles courts to ‘communicate directly with, or to request information or assistance directly from, a foreign court or a foreign representative.’ Although communication with other courts worldwide is of paramount importance, such rights must be exercised with due regard to the rights of the parties.” Id.; see also Bankruptcy Court Rule 2002(q)(2). However, there have been no such communications or any effort to coordinate the foreign proceeding at all. Mr. Canet has done nothing in this Court with respect to the foreign proceeding. He has only filed the petition to provide Mr. Zandian the ability to frustrate Mr. Margolin’s efforts to collect his valid judgment against Mr. Zandian.
Finally, Mr. Canet’s argument that Mr. Margolin has somehow waived all arguments relating to the legitimacy of this proceeding because his counsel agreed to the form of the proposed Order that was never entered after the contested September 6, 2016 hearing on Mr. Canet’s Verified Petition for Recognition and Chapter 15 Relief is specious. See Local Rule 9021(a)(5); Local Rule 9021(b)(3). Again, the proposed Order itself states that Mr. Margolin objected to the Verified Petition. Adv. No. 49-1.
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II. CONCLUSION
For all of the foregoing reasons, Mr. Margolin’s Amended Motion to Dismiss Chapter 15 Case should be granted in the manner requested.
DATED: This 25th day of September, 2019.
BROWNSTEIN HYATT FARBER SCHRECK, LLP
By: /s/Matthew D. Francis
Matthew D. Francis
Arthur A. Zorio
Samantha J. Reviglio
5371 Kietzke Lane
Reno, NV 89511
Attorneys for JED MARGOLIN
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CERTIFICATE OF SERVICE
Pursuant to Fed. R. Civ. P. 5(b), I certify that I am an employee of BROWNSTEIN HYATT FARBER SCHRECK, LLP, and on this 25th day of September, 2019, I served the document entitled REPLY TO CANET’S OPPOSITION TO MOTION TO DISMISS on the parties listed below via the following:
Dana Jonathon Nitz, Esq.
Yanxiong Li, Esq.
Wright, Finlay & Zak, LLP
7785 W. Sahara Avenue., Suite 200
Las Vegas, NV 89117
yli@wrightlegal.net
Jeffrey L. Hartman, Esq.
HARMAN & HARTMAN
510 West Plumb Lane, Suite B
Reno, NV 89509
notices@bankruptcyreno.com
[ ] VIA FIRST CLASS U.S. MAIL: by placing a true copy thereof enclosed in a sealed envelope with postage thereon fully prepaid, in the United States mail at Reno, Nevada, addressed to the foregoing parties.
[ ] BY PERSONAL SERVICE: by personally hand-delivering or causing to be hand delivered by such designated individual whose particular duties include delivery of such on behalf of the firm, addressed to the individual(s) listed, signed by such individual or his/her representative accepting on his/her behalf. A receipt of copy signed and dated by such an individual confirming delivery of the document will be maintained with the document and is attached.
[ ] VIA COURIER: by delivering a copy of the document to a courier service for over-night delivery to the foregoing parties.
[X] VIA ELECTRONIC SERVICE: by electronically filing the document with the Clerk of the Court using the CM/ECF system which served the foregoing parties electronically.
/s/ Jeff Tillison
Employee of Brownstein Hyatt Farber
Schreck, LLP
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