U.S. Bankruptcy Court For the District of Nevada
Case: 16-50644-btb
Chapter 15
Reza Zandian debtor
Hearing held on 01/02/2020
This is an unofficial transcript. I bought a copy of the recording of the hearing, converted it to mp3, and sent it to GoTranscript.com . I then spent some time correcting it. I believe this is an accurate transcript of the hearing. You can always listen to it yourself. It is only 26:39 minutes. JM
THE COURT: Next we have Patrick Canet and a name I can't pronounce, I apologize. 16-50644 amended motion to dismiss case.
MR. HARTMAN: Good afternoon, Your Honor. Jeff Hartman on behalf of Mr. Canet.
MR. ZORIO: Good afternoon, Your Honor. Arthur Zorio on behalf of Mr. Jed Margolin.
THE COURT: Thank you.
MR. FRANCIS: Good afternoon, Your Honor. Matthew Francis on behalf of Mr. Margolin.
THE COURT: Mr. Hartman, my notes indicate that you're asking for a 30-day continuance.
MR. HOLLEY Your Honor --
THE COURT: Oh, I'm sorry, and I couldn't see you, Mr. Holley, sorry.
MR. HOLLEY This is just like being at home, Your Honor.
THE COURT: [laughs].
MR. HOLLEY I'm forgotten there as well. Your Honor, Happy New Year to you as well. I'm Richard Holley on behalf of Fred Sadri as trustee of the Star Living Trust and Ray and Sathsowi Koroghli as trustees of the Koroghli Management Trust.
THE COURT: Okay.
MR. HARTMAN: Your Honor, at the prior hearing you continued matters until today.
THE COURT: Okay.
MR. HARTMAN: My task was to try and get a report from the proceedings in Paris. I’ve sent two communications over, asking for that report and that information so that I could file it here. I've gotten no response, so I can't oppose the dismissal-
THE COURT: Okay.
MR. HARTMAN: - in good faith.
THE COURT: I appreciate that. Anyone opposing dismissal?
MR. HOLLEY No.
THE COURT: [laughs] Mr. Holley says no.
MR. HOLLEY Well, no. Maybe.
THE COURT: [laughs]
MR. HOLLEY How's that?
THE COURT: Pretty good.
MR. HOLLEY: Your Honor, I've had the opportunity to speak with Mr Margolini's Counsel and it may very well be that we don't have any issues between ourselves. We filed a response to the Supplemental filing, Your Honor, to highlight a couple of things for the Court that are our concerns. I know nothing about what is transpiring in France. I'm not here to advocate on the part of the debtor, but we do have a particular concern, and that concern, Your Honor, concerns the ownership interest in what we identify as the PahRah property, which the Court focused on in the cross-motions for summary judgment that were filed in this case. And rather than refer to each one of the parcels separately, I'll just refer to it as the PahRah property, Your Honor.
THE COURT: Okay.
MR. HOLLEY: And, our concern, Your Honor, is that we were involved in a proceeding where the court made some very specific findings of fact with respect to ownership in that property and specifically finding that the Star Living Trust, which I'll refer to as SLT, has a one third ownership interest in the property and that's pursuant to a Grand Bargain and Sale Deed that was recorded on August 6, 2003.
And that the Koroghli Management Trust, Your Honor, which I'll refer to as KMT also had a one-third ownership interest in that same property pursuant to the Grant Bargain and Sale Deed and then a subsequent quitclaim deed taking it out of the name of Mr. Koroghli individually and putting it into the KMT - or into KMT.
When Mr., Margolin obtained a default judgment against the debtor back in June of 2013, and then obtained a default judgment and then proceeded to execute on that default judgment, and as part of that execution Mr. Margolin conducted some Sheriff's sales with respect to parcels two, four, and eight within the PahRah property. And rather than foreclosing simply on the debtor's interest in those properties these Sheriff's Deed reflects a sale of the entire parcels of property including the one-third interest owned by SKT - or SLT - and the one-third interest owned by KMT. And so we want to avoid future litigation, Your Honor, over the ownership issue, and so in light of that we filed our response and then Mr. Margolin filed a reply to our response.
And in the reply he stated that Mr. Margolin, or at least Counsel, stated that Mr. Margolin - it says it has already agreed that they, meaning my clients, each have their one-third interest in this property with Mr. Margolin having the remaining one-third interest in the properties meaning that, you know, as referenced in the findings of fact and conclusions of law in the Adversary, which are Adversary ECF number 60.
In prior filings with the Court, Your Honor, Mr. Margolin had given more equivocal statements in terms of this particular ownership issue involving my clients.
In an opposition to a motion for summary judgment, which is docket number 53 in the Adversary proceeding, Mr. Margolin basically stated that if my clients had a two-third interest in the nine parcels or in the PahRah property prior to the recordation of his judgment, a point that we must prove, then in that case, Mr. Margolin would not contest or that in that case, our two-thirds ownership interests collectively would be preserved. And so since the statement in docket number 73 regarding this agreement caught my attention because I wasn't aware of any such agreement between the parties. I hadn't seen anything.
THE COURT: Could you hold on for one second? I cannot pull up-
MR. HOLLEY Yes.
THE COURT: - any of this stuff on my screen, so could you print 73 for me?
THE CLERK: Yes.
THE COURT: I love computers.
MR. ZORIO: Your Honor, I think it was docket 53.
THE COURT: 53, I apologize. I can't open that either.
MR. HOLLEY: Yes, 53 was the opposition to the motion of summary judgment and the reply in support of the supplemental points and authorities to dismiss is docket number 73, Your Honor.
THE COURT: And what am I looking at? 53 is incorrect? No, that's the notice of entry.
MR. HOLLEY: No, docket number 53 in the Adversary-
THE CLERK: Mmm.
MR. HOLLEY: - which is Adversary number 17-05016.
THE COURT: I'm looking at the petition, not just the petition page, so-- all right, I'm looking at docket 53.
MR. HOLLEY Yeah, so if you-
THE COURT: - and what should I be looking at?
MR. HOLLEY - If you went over to page three, Your Honor, beginning on lines 9 through 15, I think you'll see see a Roman numeral number two Reply Arguments and Argument Number 1 - or A, "Plaintiff's two-thirds interest, if any, is-
THE COURT: Yeah, I don't know what I'm seeing.
MR. HOLLEY: - limited to the limited parcels."
THE COURT: But he wants you to prove some aspect of it.
MR. HOLLEY: Well, and so based upon this, Your Honor, we had- we did cross-motion, we had the cross-motions for summary judgment and demonstrated the ownership interests of my clients in the property-
THE COURT: Okay.
MR. HOLLEY: - which are reflected in the court's findings of fact and conclusions of law, which is docket number 60.
THE COURT: Could you please print that for me? Sorry for the glitch.
MR. HOLLEY: No problem at all, Your Honor.
THE COURT: It probably didn't go over to 2020. It's probably still on 2019.
[laughter]
MR. HOLLEY: Right, right.
THE COURT: I had no idea.
[silence]
THE COURT: Thank you. I've got it here, thank you.
MR. HOLLEY: Okay, so in the findings of fact and conclusions of law which are reflected in docket number 60, Your Honor-
THE COURT: Yes, sir.
MR. HOLLEY: - particularly if you go to page four and refer to paragraphs two, three, four, five.
[silence]
THE COURT: Okay.
MR. HOLLEY: The Court makes findings with respect to the ownership interests of my clients in the property that was the subject of the Sheriff's sale, and then the Court proceeds to invalidate the Sheriff's sale. And I'm not focusing on trying to invalidate the Sheriff’s sale in its entirety. I'm not trying to preserve or argue who has the other one-third interest owned by the debtor, but my concern, Your Honor, is that now with docket number 73, we are told that Mr. Margolian now agrees that we each have our one-third interest. And I just want to make sure and, but it's not supported by a declaration or anything else by Mr. Margolian, and so what I'd like to see, Your Honor, is if- we want to avoid future litigation over the ownership issue because correcting the Sheriff’s Deed to reflect proper ownership is probably a fairly easy thing. I'm told by my transactional folks that quitclaim deeds can repair basically anything, except our relationships as was pointed out to me by our- [chuckles] with our spouses as it was pointed out to me by Counsel earlier today.
THE COURT: Did you have a bad New Years?
[laughter]
MR. HOLLEY: Not yet, but, uh--
[laughter]
MR. ZORIO: That was a privileged conversation, I think.
THE COURT: [laughs]
MR. HOLLEY: Yeah, so I'm trying-- what I'm- trying to do, Your Honor, is I want to make sure I preserve some record here, and I want to avoid future litigation over the ownership interest in this PahRah property. And I think if I can get an affirmation from Counsel that at least these findings are correct in terms of ownership interest, then we can go about, you know, revising the Sheriff's Deeds to reflect the appropriate ownership interest, and then we can move on. If Counsel can't do that or is not authorized to do that, then I'm afraid I need to jump into some of the arguments in terms of having a structured dismissal under section 1517 and by analogy, section 349 of the Bankruptcy Code.
THE COURT: Counsel.
MR. ZORIO: Thank you, Your Honor. From our perspective, this case has been a bit of a head-scratcher with regard to Sadri and Koroghli. The opposition and motion for summary judgment document number 53. If you continue down that same page, page three.
THE COURT: Yes.
MR. ZORIO: You'll see a truism that we reported to the Court on line 23. Each of the Sheriff's Deeds state, "The interest executed on is that of the judgment debtor," not of claims. I'm at a loss to understand how the sheriff's deeds, referring specifically to the judgment debtors that don't include Sadri and Koroghli or their entities has somehow conveyed their interest in the property. I do have a copy of some of the, three of the sheriff's deeds in document 40 that's attached to the statement of undisputed facts and support of Sadri and Koroghli’s motion for partial summary judgment, and I can provide you a quick copy of those, Your Honor.
THE COURT: Yes, please.
MR. ZORIO: May I approach?
THE COURT: Yes, please. So, Mr. Holley, I'm looking at docket number 40.
MR. ZORIO: And I didn't print out all of it, Your Honor. It’s rather lengthy.
THE COURT: That's all right, and my number of exhibits which were attached to exhibits one through, it looks like nine, are attached to it. Maybe 10. No, nine.
MR. ZORIO: And specifically, Your Honor.
THE COURT: Look, let's see if Mr. Holley, he has a copy of it.
MR. ZORIO: Sure.
MR. HOLLEY: I probably have, I don't have a copy of that docket number, Your Honor, but I do have docket number 42, which is my client's statement of undisputed facts. And we do attach, as exhibits, copies of the Sheriff's Deeds that I believe Mr. Rossler [Zorio] is referring to. And I'm happy to highlight for the Court, you know, my concern is when you look at the Sheriff's Deeds, it has a description of the property. And you can look at the ones that you have. I'm looking at one, Your Honor, that deals with APN number 084-130-07.
THE COURT: I have that one. Okay, thank you, go ahead.
MR. HOLLEY: And maybe Mr. Rossler [Zorio] can point you to that one.
THE COURT: I got it.
MR. HOLLEY: 32 of 138.
THE COURT: Okay.
MR. HOLLEY: And my concern, Your Honor, is that, um, if you look at on the Sheriff's Deed, it references the property and it doesn't refer to the debtor's interest in APN 84-130-07. It identifies the entirety of the property as the subject of the Sheriff's Deed, and then if you go down to the recitals portion, Your Honor, again, my concern is that, again, in Recital A, it references the property which is undefined other than as I referenced above, which identifies the entire parcel, not just the debtor's interest in the parcel.
Looking again at Recital B, it refers to a sale of the property and when it was conducted. Again, it doesn't specify that it was a sale only of the debtor's interest in the property, but a sale of the property. And then in Recital C, we get the same affirmation about a sale of the property, and so based on this, Your Honor, my concern is that if I take this to a title company and my client says we own a one-third interest in the parcels that were the subject of the Sheriff's Deeds, that title company is going to say, "No, you don't because we have a copy of these Sheriff's Deeds, and it refers to the property, and identities the property by the APN number in its entirety."
And so if we can get an agreement today in the hearing that, of these parcels that were the subject of the trustee's deed, we can simply employ a mechanism to make sure it's clear that my client's one-third interest was not the subject of those sales, then I'm perfectly content with that, Your Honor, and I'm fine with having the case dismissed. But if we can't get that type of an agreement, then I really am concerned that I'm going to have to re-litigate these issues all over again, which I really don't want to do, and I don't think I should have to do, particularly where, in the adversary, all of the parties participated, they all filed cross-motions for summary judgment, so there were no issues of fact before the court, and the court issued extensive findings of fact and conclusions of law.
THE COURT: Counsel?
MR. ZORIO: If we look at the specific paragraph talking about what is being conveyed.
THE COURT: Show me.
MR. ZORIO: It's this paragraph under the word 'conveyance.' It says, "The Sheriff of Washoe County for valuable consideration and received, hereby grants and conveys to grantee all the rights titled 'interesting claim' belonging to judgment debtors" and it names the judgment debtors. It is limited solely to the interest of the judgment debtors, which again, is why, from my client's perspective, this has been a bit of a head-scratcher. Uh, the document specifically conveys only the interest of the judgment debtors.
So, in dismissing this case and voiding the interlocutory order that was entered in the adversary proceeding pursuant to code section 349(B)(3), is of no prejudice whatsoever to Sadri and Koroghli. Their interest in the property, as indicated in the deed and the certificates of sale, are not affected by the deed and certificates of sale. Rather, their interests remain as they were at the time of the sale of the properties. So I don't think we need something additional on the record here. Like counsel has stated, in the opposition of motion for summary judgment, we stated that, at document 53, page three, line 23, that the Sheriff's Deeds only convey an interest of the judgment debtor, not of the plaintiff of Sadri and Koroghli. And in page four, we say Mr. Margolin will accept the client's representation to this court that clients collectively hold two-thirds interest in the nine Washoe County properties. So again, it's a bit of a head-scratcher as to why there's a concern for the interlocutory order to be voided pursuant to Code Section 349(B)(3).
We don't think that there's any prejudice for that, for Sadri and Koroghli when those orders are voided, when that order is voided. One of the reasons why I can't stand here and say, "Well, we can just dismiss the Chapter 15 and leave that order intact" is because that order affects a great deal more than these nine properties. And we've been fighting with Mr. Zandian for over a decade to get paid on the default judgment. There's currently - this bankruptcy proceeding put a stop to Judge Russell entering an order to convey properties that he was dealing with.
There's a great deal more going on, so the most equitable thing to do, and not to prejudice Mr. Margolin, who has been fighting Mr. Zandian for years, who's had to litigate these proceedings since 2016 that have had no basis whatsoever to initiate a Chapter 15 and exercise a subject matter of jurisdiction in this court, we believe that the- what should be done is the chapter 15 dismissed, Section 349 be given the express purpose and intent the Congress gave for it and void the interlocutory order that was entered in the adversary proceeding.
I'm happy to work with Mr. Holley if he believes that something more specific needs to be done in order for his clients to be satisfied about their rights, but again, I don't think there's- I really don't see the issue because I think the deeds and the, particularly the judgment that never named Sadri and Koroghli, have anything whatsoever to do with their interest in these properties.
THE COURT: So, Mr. Holley?
MR. HOLLEY: And again, Your Honor, really what I'm asking for is an affirmation, Your Honor, that's Mr. Mongolin recognizes the two-thirds interest or one-third respective interests of my clients and the subject parcels. If he will tell me that, then I'm perfectly fine with moving on.
MR. ZORIO: May I ask Mr.-- May I address Mr. Holley?
THE COURT: Yes, you may.
MR. ZORIO: Thank you, Your Honor. If you're saying moving on, you're content with the Chapter 15 being dismissed and the interlocutory order voided?
MR. HOLLEY: Yes, but I can't have any-- I really at best, I think these trustees- these trustees may create some confusion, Your Honor, because of how property is referred to back and forth in the recitals, and the actual Sheriff's Deed, the actual Sheriff's sale itself. And then based upon papers that have been filed with this Court, Your Honor, there's some equivocation in terms of recognizing the interest and some not.
And I just simply don't want to have to litigate this all over again, and at least this way, I can go, you know, we can sit down and we can work together, and I can refer to a transcript if I do have to litigate it again. And I can go in and just say, "Look, this was an affirmation that our, you know, my client's interest in this property exists, it's the one-third interest of both SLT and the Korogoli Management Trust."
And then I'm fine with that, but if Counsel can't do that or is not willing to do that, then it puts me in a hard spot, Your Honor, where I'm left to rely upon, hopefully, the goodwill of someone who I don't - I don't know Mr. Margolin - we've never had any dealings with him, and I'm just trying to avoid that situation, Your Honor.
THE COURT: So let me ask you this. What makes sense for me to continue this for a week perhaps in Las Vegas, and I think I'll be in Las Vegas next week, to see if you guys can come up with an agreed statement or agreed order?
MR. HOLLEY: I don't think so, Your Honor, let me confirm with my colleague for just a moment.
THE COURT: Sure.
MR. HOLLEY: I think we'll be okay.
THE COURT: Okay.
MR. ZORIO: Yes, if I understand, Mr. Holley correctly that he consents to the motion to dismiss, and also all orders in the ancillary Adversary proceedings being voided, he has my commitment that, and how we want to put it, so I'm going to say it on the record that, you know, the one-third interest of his clients were not affected by those deeds. And, like I said earlier, I'm happy to work with him if he - if he feels - there needs to be something in addition to that.
THE COURT: Mr. Holley?
MR. HOLLEY: And, Your Honor, really, this may be a matter of semantics, but I appreciate the commitment of Counsel.
THE COURT: Yeah.
MR. HOLLEY: But they really would like as a representation that the - my clients - have that one-third interest in those parcels that were the subject of this Sheriff's Sale.
THE COURT: So just hang on.
MR. HOLLEY: Thank you.
MR. ZORIO: My colleague presented something to me, can Mr. Holley and I have a week to discuss the issue. I think we're there, Your Honor, but--
THE COURT: No, I think, I mean, I think you will be better off sitting face to face-
MR. ZORIO: Sure.
THE COURT: drafting something, putting it in final form.
MR. ZORIO: And that way everybody's comfortable with the language and what's being stated, yeah.
THE COURT: So let's do this, let's continue this for 10 days.
MR. ZORIO: That should be plenty. Mr. Holley, you're around the next 10 days? I am.
MR. HOLLEY: Yes, so, this should be plenty of time, Your Honor.
THE COURT: I don't know if that's in the middle of a weekend, we better check.
MR. HOLLEY: Let's see, I think-- I know the court is-- [crosstalk]
THE CLERK: The 10-day mark does fall on a weekend, Your Honor. We can do next Friday, January the 10th.
MR. ZORIO: Can I turn my phone on, Your Honor?
THE COURT: Sure, please.
THE CLERK: It's a little bit shy of the 10-day mark, but if we do Friday, January the 10th, we can do 10:00 AM.
THE COURT: No, am I in Las Vegas that day?
THE CLERK: You were supposed to be, Your Honor, but [inaudible 00:25:10]
THE COURT: Oh, good.
THE CLERK: [inaudible 00:25:12]
THE COURT: Fantastic.
THE CLERK: Otherwise, we can - otherwise, we can do it via video on January the 15th.
MR. ZORIO: I apologize, I--
MR. HOLLEY: I really do think Friday the 10th is going to give us plenty of time, Your Honor.
THE COURT: Okay, let's do Friday 10th, 10:00 AM?
THE CLERK: Yes, sir, 10:00 AM.
THE COURT: And I hope you have a resolution. I mean, you sound as though - you sound as though you're awfully close.
MR. ZORIO: I think--
MR. HOLLEY: I really do think it's not going to be an issue, Your Honor, but I need to button this down otherwise.
MR. ZORIO: My phone has come back on. Let me just confirm that.
THE COURT: That's fine.
MR. ZORIO: Thank you, Your Honor.
MR. HARTMAN: Your Honor, may I be excused from attending that hearing?
THE COURT: Yes.
MR. ZORIO: No objection.
MR. HOLLEY: No objection from me either, Your Honor.
[laughter]
MR. HOLLEY: To the extent Mr. Hartman needs my consent.
THE COURT: I was not aware that he needed your help.
MR. HARTMAN: I'm going to ask for [crosstalk].
[laughter]
MR. HOLLEY: I'm here for him.
MR. ZORIO: January 10th at 10:00 AM works fine, Your Honor, thank you.
THE COURT: January 10th at 10:00 AM.
MR. HOLLEY: Okay.
THE COURT: All right, thank you guys very much. It sounds to me like you're going to get this resolved.
MR. ZORIO: I think so, Your Honor, and you can suspend preparing an order until after that continued hearing.
MR. HOLLEY: That's fine.
THE COURT: Okay, Mr. Holley, are you okay?
MR. HOLLEY: Thank you, Your Honor.
THE COURT: Good luck. Thank you.
MR. ZORIO: Yes, thank you so much.
THE COURT: Anything further on the two o'clock hour?
THE CLERK: No, Your Honor.
THE COURT: We'll be in recess.
THE CLERK: Thank you. All rise.
[00:26:40] [END OF AUDIO]