Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 1 of 22

{Converted to html. The PDF is the controlling document. JM}

Jeffrey L. Hartman, Esq., #1607

HARTMAN & HARTMAN

510 West Plumb Lane, Suite B

Reno, Nevada 89509

Telephone: (775) 324-2800

Fax: (775) 324-1818

E-mail: notices@bankruptcyreno.com

Attorney for Patrick Canet,

Judicial Liquidator and Foreign Representative

UNITED STATES BANKRUPTCY COURT

DISTRICT OF NEVADA

CASE NO. BK-N-16-50644-BTB

CHAPTER 15

Adv. Proc. No. 17-05016-BTB

CROSS-CLAIMANT PATRICK, CANET’S OPPOSITION TO CROSS DEFENDANT JED MARGOLIN’S MOTION FOR SUMMARY JUDGMENT

COUNTER MOTION FOR SUMMARY JUDGMENT

Hearing Date: May 24, 2018

Hearing Time:10:00 a.m.

IN RE:

JAZI GHOLAMREZA ZANDIAN,

Debtor.

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,

Plaintiffs,

JED MARGOLIN; JAZI GHOLALREZA ZANDIAN; and all other parties claiming an interest in the real properties described in this action,

Defendants.

________________________________/

PATRICK CANET,

Counterclaimant

FRED SADRI, INDIVIDUALLY AND AS TRUSTEE FOR THE STAR LIVING TRUST; RAY KOROGHLI, INDIVIDUALLY, RAY KOROGHLI AND SATHSOWI T. KOROGHLI, AS MANAGING TRUSTEES FOR KOROGHLI MANAGEMENT TRUST,

Counter-defendants.

________________________________/

PATRICK CANET,

Cross-Claimant,

JED MARGOLIN,

Cross-Defendant. /

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 2 of 22

In accordance with F.R.Bankr.P. 7056, Cross Claimant Patrick Canet opposes the Motion For Summary Judgment (“MSJ”), filed by Cross Defendant Jed Margolin

(“Margolin”), DE 23, and files his Counter Motion For Summary Judgment. This Opposition and Counter Motion is accompanied by separately filed Statement of Undisputed Facts and Disputed Facts.

SUMMARY

The primary issue in this proceeding is whether the recordation of a default judgment in several counties, and the follow-on execution process was valid. Canet contends that Margolin failed to comply with certain of the statutory requirements in the default judgment and execution process, with the result that both are fatally flawed, leaving Margolin as an unsecured creditor. Because the issues are fundamentally the same, Canet’s Opposition also demonstrates the basis for his Counter Motion.

SUMMARY JUDGMENT STANDARD

Under F.R.Civ.P. 56 (made applicable by F.R.Bankr.P. 7056), the standard for granting summary judgment is “that there is no genuine dispute as to any material fact and that the moving party is entitled to judgment as a matter of law.” F.RCiv.P. 56. 10-7056 Collier on Bankruptcy P 7056.03 (16th ed.). As stated by the United States Supreme Court, “at the summary judgment stage the judge’s function is not himself to weight the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106. S. Ct. 2505, 2511, 91 L. Ed. 2d 202, 212 (1986). Therefore, under the Supreme Court’s standard, the court cannot grant summary judgment if there is a genuinely disputed issue of material fact.

“The proponent of a summary judgment motion bears a heavy burden to show that there are no disputed facts warranting disposition of the case on the law without trial.” Younie v. Gonya (In re Younie), 211 B.R. 367, 373 (9th Cir. BAP 1997) (quoting Grzybowski v. Aquaslide “N” Dive Corp. (In re Aquaslide “N” Dive Corp.), 85 B.R. 545, 547 (9th Cir.

-2-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 3 of 22

BAP 1987)); In re Jarvar, 422 B.R. 242 (Bankr. D. Mont. 2009). “The manner in which this burden is proven depends on which party has the burden on a particular claim or defense at the time of trial.”

If the moving party will bear the burden of persuasion at trial, that party must support its motion with credible evidence-using any of the materials specified in Rule 56(c)-that would entitle it to a directed verdict if not controverted at trial. Such an affirmative showing shifts the burden of production to the party opposing the motion and requires that party either to produce evidentiary materials that demonstrate the existence of a “genuine issue” for trial to or submit an affidavit requesting additional time for discovery. If the burden of persuasion at trial would be on the non-moving party, the partymoving for summary judgment may satisfy Rule 56’s burden of production in either of two ways. First, the moving party may submit affirmative evidence that negates an essential element of the nonmoving party’s claim. Second, the moving party may demonstrate to the Court that the non-moving party’s evidence is insufficient to establish an essential element of the nonmoving party’s claim.

In re Jarvar, 422 B.R. at 246, quoting Celotex Corp. v. Catrett, 477 U.S. 317, 330-34, 106 S. Ct. 2548, 2557, 91 L.Ed. 2d 265 (1986)(Brennan dissent)(citations omitted). See also, Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc., 210 F.3d 1099, 1102-06 (9th Cir. 2000) (discussing burdens for withstanding summary judgment).

Canet disputes Margolin’s contention that he is entitled to summary judgment. And, as set forth herein, Canet contends that Margolin has failed to establish compliance with the statutory requirements for execution on a judgment and that Canet is entitled to summary judgment as a matter of law. If Canet is correct, then he is entitled to summary judgment in his favor.

Margolin filed two Declarations in support of his MSJ, the McMillen Declaration, DE 25 and the Francis Declaration, DE 26. The McMillen Declaration references five Exhibits consisting of five Sheriff’s Certificates of Sale, one for Clark County and four for Washoe County. The Francis Declaration references seven Exhibits. Exhibit A includes the Default Judgment upon which the underlying Margolin claim is based. Exhibit A also includes subparts, i.e., copies of the Default Judgment evidencing recordation in Washoe County, Clark County, Lyon County, Churchill County, and Elko County. Exhibit B is a copy of the Order Re: Writ of Execution issued by Judge Russell in August 2014. The

-3-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 4 of 22

remainder of the Exhibits attached to the Francis Declaration are copies of discovery propounded to Canet and several e-mails exchanged between Margolin’s counsel and Canet’s counsel and will be addressed below.

LR 7056(a) provides:

a) Motions. Each motion for summary judgment must be accompanied by aseparately filed “Statement of Undisputed Facts” which must specify each of thematerial facts relied upon in support of the motion, and which cites to the particularportions of any pleading, affidavit, declaration, deposition, interrogatory answer, admission or other document relied upon to establish that fact. The moving party must file as an exhibit to the statement all of the evidentiary documents that are cited in the moving papers. Based upon the requirement of Rule 7056(a), Canet asserts that the papers attached to the McMillen Declaration and the Francis Declaration do not support the relief requested by Margolin. In fact, the absence of significant documentation from Margolin requires a conclusion that, as a matter of law, the Sheriff’s Deeds recorded by Margolin must be declared void ab initio.

ANALYSIS

The Execution Efforts By Margolin Failed To Strictly Comply With Statutory Requirements

On August 16, 2013, Margolin recorded his June 24, 2013 Default Judgment in Washoe County against Zandian as document no. 4269631 (“Default Judgment”). The

Default Judgment was recorded in Clark County four days later on August 20, 2013 as document no. 201308200001370. The McMillen Declaration, DE 25, references the following documents:

Exhibit A is a Clark County Sheriff’s Certificate of Sale Of Real Property filed with the First Judicial District Court in Carson City in case no.090C00579 1B on January 8, 2015 affecting APN 071-02-000-005;[1]

Exhibit B is a Certificate of Sale recorded in Washoe County on April 9, 2015 as document no. 4456021 affecting APN 084-130-07;

_______________

[1] Canet will seek leave under F.R.Civ.P. 15 and F.R.Bankr.P. 15 to amend his Cross Claims against Margolin to also include reference to separate APN 071-02-000-013 located in Clark County, Nevada.

-4-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 5 of 22

Exhibit C is a Certificate of Sale recorded in Washoe County on April 9, 2015 as document no. 4456020 affecting APN 079-15-10;

Exhibit D is a Certificate of Sale recorded in Washoe County on April 9, 2015 as document no. 4456032 affecting APN 084-040-02, and

Exhibit E is a Certificate of Sale recorded in Washoe County on April 9, 2015 as document no. 4456017 affecting APN 079-150-12.

Canet asserts that these documents fail to evidence compliance with applicable statutory requirements and, as such, do not support the MSJ.

A. NRS 17.150.

NRS 17.150. Docketing of judgments of state and federal courts; recording of transcripts, abstracts and copies of judgments; liens on real property;

duration of liens; affidavit required of judgment credit or who records judgment or decree.

1. Immediately after filing a judgment roll, the clerk shall make the proper entries of the judgment, under appropriate heads, in the docket kept by the clerk, noting thereon the hour and minutes of the day of such entries.

2. A transcript of the original docket or an abstract or copy of any judgment or decree of a district court of the State of Nevada or the District Court or other court of the United States in and for the District of Nevada, the enforcement of which has not been stayed on appeal, certified by the clerk of the court where the judgment or decree was rendered, may be recorded in the office of the county recorder in any county, and when so recorded it becomes a lien upon all the real property of the judgment debtor not exempt from execution in that county, owned by the judgment debtor at the time, or which the judgment debtor may afterward acquire, until the lien expires. The lien continues for 6 years after the date the judgment or decree was docketed, and is continued each time the judgment or decree is renewed, unless:

(a) The enforcement of the judgment or decree is stayed on appeal by the execution of a sufficient undertaking as provided in the Nevada Rules of Appellate Procedure or by the Statutes of the United States, in which case the lien of the judgment or decree and any lien by virtue of an attachment that has been issued and levied in the actions ceases;

(b) The judgment is for arrearages in the payment of child support, in which case the lien continues until the judgment is satisfied;

(d) The lien is otherwise discharged.

The time during which the execution of the judgment is suspended by appeal, action

-5-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 6 of 22

of the court or defendant must not be counted in computing the time of expiration.

3. The abstract described in subsection 2 must contain the:

(a) Title of the court and the title and number of the action;

(b) Date of entry of the judgment or decree;

(d) Amount of the judgment or decree; and

(e) Location where the judgment or decree is entered in the minutes or judgment docket.

Subparagraph 17.150(4), which mandates that the judgment creditor record an affidavit, provides, in pertinent part:

In addition to recording the information described in subsection 2, a judgment creditor who records a judgment or decree for the purpose of creating a lien upon the real property of the judgment debtor pursuant to subsection 2 shall record at that time an affidavit of judgment stating:

(a) The name and address of the judgment debtor;

(b) If the judgment debtor is a natural person:

(1) The last four digits of the judgment debtor’s driver’s license number or identification card number and the state of issuance; or

(2) The last four digits of the judgment debtor’s social security number;

(c) If the lien is against real property which the judgment debtor owns at the time the affidavit of judgment is recorded, the assessor’s parcel number and the address of the real property and a statement that the judgment creditor has confirmed that the judgment debtor is the legal owner of that real property;

and

All information included in an affidavit of judgment recorded pursuant to this subsection must be based on the personal knowledge of the affiant, and not upon information and belief.

(Emphasis added).

There is no form of affidavit attached to the McMillen Declaration or the Francis Declaration, demonstrating compliance with subpart (4). It is apparent that Margolin did not record an affidavit with the county recorders complying with any of the requirements of NRS 17.150(4) (a), (b) or (c). It was not enough for Margolin to record the Default

-6-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 7 of 22

Judgment in various counties in 2013; the statute mandates a separate recording, i.e., an affidavit containing the information delineated in subpart (4). No such affidavit was recorded.

Canet asserts that failure to comply with NRS 17.150(4) (a), (b) or (c) renders void the recording of the Default Judgment in every county, i.e., Washoe County, Clark County, Lyon County, Churchill County, and Elko County.

B. NRS 21.130.

NRS 21.130. Notice of sale under execution; separate notice for residential foreclosure.[2]

Subparagraphs (c)(1), (2), (3) and (4) of paragraph 1, relevant here, provide:

Before the sale of property on execution, notice of the sale, in addition to the notice required pursuant to NRS 21.075 and 21.076, must be given as follows:

(1) Personal service upon each judgment debtor or by registered mail to the last known address of each judgment debtor and, if the property of the judgment debtor is operated as a facility licensed under chapter 449 of NRS, upon the State Board of Health;

(2) Posting a similar notice particularly describing the property, for 20 days successively, in three public places of the township or city where the property is situated and where the property is to be sold;

(3) Publishing a copy of the notice three times, once each week, for 3 successive weeks, in a newspaper, if there is one in the county. The cost of publication must not exceed the rate for legal advertising as provided in NRS 238.070. If the newspaper authorized by this section to publish the notice of sale neglects or refuses from any cause to make the publication, then the posting of notices as provided in this section shall be deemed sufficient notice. Notice of the sale of property on execution upon a judgment for any sum less than $500, exclusive of costs, must be given only by posting in three public places in the county, one of which must be the courthouse;

(4) Recording a copy of the notice in the office of the county recorder, and . . . .

NRS 21.130, paragraph 4 provides:

The sheriff shall not conduct a sale of the property on execution or deliver the judgment debtor’s property to the judgment creditor if the judgment debtor or any

_______________

[2] A copy of NRS 21.130 is attached as Appendix A.

-7-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 8 of 22

other person entitled to notice has not been properly notified as required in this section and NRS 21.075 and 21.076.

The Certificates of Sale, recorded in early 2015, are attached to the McMillen Declaration as Exhibits A through E. NRS 21.130 requires that before a sale of property on execution, four conjunctive requirements must be satisfied. There is no evidence included in either the McMillen Declaration or the Francis Declaration demonstrating that the four requirements of NRS 21.130(1) through (4), related to notice, were satisfied.

These provisions go directly to the question of notice.

C. NRS 21.075

NRS 21.075. Notice of writ of execution: Service required; form; contents.[3]

1. Execution on the writ of execution by levying on the property of the judgment debtor may occur only if the sheriff serves the judgment debtor with a notice of the writ of execution pursuant to NRS 21.076 and a copy of the writ. The notice must describe the types of property exempt from execution and explain the procedure for claiming those exemptions in the manner required in subsection 2. The clerk of the court shall attach the notice to the writ of execution at the time the writ is issued.

2. The notice required pursuant to subsection 1 must be substantially in the following form: See, Appendix B.

There is no evidence in either the McMillen Declaration or the Francis Declaration that notice of the writ, together with a copy of the writ, which required compliance with subpart 2, was served on the judgment debtor by the sheriff.

D. NRS 21.076

NRS 21.076 Notice of writ of execution: Manner and time of service.

The notice required by NRS 21.075 must be served by the sheriff on the judgment debtor by regular mail at the debtor’s last known address or, if the debtor is represented by an attorney, at the attorney’s office. The service must be mailed by the next business day after the day the writ of execution was served.

There is no evidence in either the McMillen Declaration or the Francis Declaration that

_______________

[3] A copy of NRS 21.075 is attached as Appendix B.

-8-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 9 of 22

notice of the writ, together with a copy of the writ, which included compliance with subpart 2, was served on the judgment debtor by the sheriff.

This provision goes directly to the question of notice.

E. NRS 21.200 Real property sold subject to redemption; who may redeem; redemptioner defined.

NRS 21.200 provides:

1. Property sold subject to redemption, as provided in NRS 21.190, or any part sold separately, may be redeemed in the manner hereinafter provided by the following persons or their successors in interest:

(a) The judgment debtor or the judgment debtor’s successor in interest, in the whole or any part of the property.

(b) A creditor having a lien by judgment or mortgage on the property sold, or on some share or part thereof, subsequent to that on which the property was sold.

2. The person mentioned in paragraph (b) of subsection 1 is termed a“redemptioner” in this chapter.

In this case, the Sheriff’s Certificates of Sale of Property each included a provision which states: “If the sale was of real property, said sale is subject to redemption as provided in NRS Chapter 21. Canet asserts that failure by Margolin to strictly comply with the execution statutes failed to trigger the redemption period and improperly cut off rights of redemption which would otherwise inure to the benefit of Canet. See, In re Bialac, 712 F.2d 426 (9th Cir. 1983).

This provision goes directly to the question of notice.

APPLICABLE CASE LAW

Failure To Strictly Comply With Statutory Requirements Means That The Execution Sale Process Is Void

The Nevada statutory scheme sets forth clear and specific requirements for conducting execution sales. In the recent case of Pawlik v. Shyang-Fenn Deng, 2018 Nev.

LEXIS 15, 134 Nev. Adv. Rep. 11 (Nev. March 1, 2018), the Supreme Court was called

-9-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 10 of 22

upon to resolve a dispute regarding redemption rights under a Nevada tax sale statute, NRS 271.595. Pawlik purchased property at a duly noticed tax sale on January 27, 2014. On January 7, 2016, just short of the expiration of the 2 year redemption period (January 26, 2016), Pawlik gave notice to the Dengs that he intended to apply for a tax deed. Sixty-seven (67) days later, Pawlik applied for issuance of his deed. Pawlik argued that he had substantially complied with the statute but the Court concluded that the statute in question required strict compliance and that he had prematurely requested issuance of the deed.

As we have explained, “[a] [statute] may contain both mandatory and directory provisions.” Markowitz v. Saxon Special Servicing, 129 Nev. 660, 664, 310 P.3d569, 571 (2013) (citing Leven, 123 Nev. at 408 n.31, 168 P.3d at 718 n.31; see also Einhorn v. BAC Home Loans Servicing, LP, 128 Nev. 689, 696, 290 P.3d 249, 254(2012)). A statute’s provisions are mandatory “when its language states a specific time and manner for performance.” Id. at 664, 310 P.3d at 572 (internal quotation omitted). “Time and manner refers to when performance must take place and the way in which the deadline must be met.” Id. In contrast, directory provisions are those governing “form and content,” which “dictate who must take action and what information that party is required to provide” and “do not implicate notice.” Id. at 664-65, 310 P.3d at 572 (internal quotations omitted). An additional consideration is that “the right to redeem . . . will not be taken away except upon strict compliance with steps necessary to divest it.” Robinson, 83 Nev. at 355, 432 P.2d at 86. Pawlik, 2018 Nev. LEXIS at 12-13.4 Emphasis added.

Canet contends that NRS 17.150(4) is mandatory in that it states the judgment creditor “shall” record an affidavit with specified information. Canet contends that all

requirements of the statute are mandatory; none are optional. It is undisputed that Margolin did not record the affidavit required by NRS 17.150 (4) which begins:

“in addition to recording the information described in subsection 2, a judgment creditor who records a judgment or decree for the purpose of creating a lien upon the real property of the judgment debtor pursuant to subsection 2 shall record at that time an affidavit of judgment stating . . . .

NRS 17.150 (2) goes directly to the time of the event, i.e., the recordation of the judgment. With respect to the affidavit, NRS 17.150 (4) states shall record at that time an affidavit of judgment stating:

________________

[4] The Supreme Court reached the same conclusion in Leven v. Frey, 123 Nev. 399 (2007).

-10-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 11 of 22

(a) The name and address of the judgment debtor;

(b) If the judgment debtor is a natural person:

(1) The last four digits of the judgment debtor’s driver’s license number or identification card number and the state of issuance; or

(2) The last four digits of the judgment debtor’s social security number;

All information included in an affidavit of judgment recorded pursuant to this subsection must be based on the personal knowledge of the affiant, and not upon information and belief.

Statutory provisions should, whenever possible, be read in harmony provided that doing so does not violate the ascertained spirit and intent of the legislature. Pawlik at page

21. Here, the legislature was very specific in setting forth the requirements for recording a judgment. Margolin cannot contend that the affidavit requirement is optional.

CONCLUSION ON SUMMARY JUDGMENT

Canet asserts that the MSJ is not supported by admissible evidence which demonstrates compliance with all of the required statutory provisions for an execution sale.

To the contrary, Canet asserts that Margolin’s failure to comply with the strict legislative requirements of NRS 17.150 renders void the recording of the initial default judgment. In addition, substantially all of the subsequent actions appear to have procedural or noticing flaws which render the entire execution process invalid.

Accordingly, Canet requests the Court enter summary judgment in his favor determining that the entire process from the recording of the Default Judgment in Washoe

County, Clark County, Lyon County, Churchill County, and Elko County is void as are the subsequent Sheriffs’ certificates of sale and the Sheriffs’ deeds which followed.

///

-11-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 12 of 22

MARGOLIN’S REQUESTS FOR SANCTIONS

1. To the extent that the Motion includes a request for sanctions, it was not properly noticed.

2. Margolin elected to not file a motion to compel compliance with discovery.

3. As the Court is aware, Mr. Canet resides in Paris, France where he is overseeing the collection and liquidation of Reza Zandian’s assets. Mr. Canet has no documentation related to Zandian’s activities in Nevada. And, in fact, the documents related to the instant Motion For Summary Judgment and the Counter Motion For Summary Judgment are all in the hands of Margolin.

4. Hartman acknowledges that he did not respond to the First Set of Interrogatories and the Request For Production of Documents propounded by Margolin. A simple review demonstrates that of the 21 Interrogatories propounded, all but five are wholly irrelevant to the pending adversary proceeding. The five remaining interrogatories each request identity of documents supporting Canet’s two Cross-Claims. As is apparent from Canet’s Counter Motion, his position relies upon the absence of critical documents regarding compliance with the default judgment and execution process.

DATED: April 11, 2018.

HARTMAN & HARTMAN

/S/ Jeffrey L. Hartman

Jeffrey L. Hartman, Esq.

Attorney for Patrick Canet,

Foreign Representative

-12-

Case 17-05016-btb Doc 34 Entered 04/11/18 18:26:12 Page 13 of 22

CERTIFICATE OF SERVICE

I certify that I am an employee of Hartman & Hartman, and that on April 11, 2018, I caused to be served the foregoing document by the following means to the persons as listed below:

[X] a. Electronically, via the Court’s ECF System, to

MATTHEW D. FRANCIS on behalf of Cross Defendant JED MARGOLIN

mfrancis@bhfs.com;nlindsley@bhfs.com, rnofederal@bhfs.com

MATTHEW D. FRANCIS on behalf of Defendant JED MARGOLIN

mfrancis@bhfs.com;nlindsley@bhfs.com, rnofederal@bhfs.com

JEFFREY L HARTMAN on behalf of Cross-Claimant PATRICK CANET

notices@bankruptcyreno.com, sji@bankruptcyreno.com

YANXIONG LI on behalf of Counter-Defendant FRED SADRI