Fuchs & Associates, Inc. v. Lesso (In re Lesso)
- Citation:
- BAP No. CC-12-1515 (9th Cir. BAP) (entered May 10, 2013)(Unpublished)
- Tag(s):
-
- Ruling:
- Appellant law firm, Fuchs & Associates, Inc. ("FAAI"), has no standing to object or receive proceeds to Elke Lesso's ("Debtor") section 363(f) sale of real property "free and clear" because the Family Court held that FAAI was not a bona fide Judgement creditor and a state court enforced Arbitration Award deemed FAAI's Charging Lien to be invalid as both tribunals held that FAAI is not a true creditor of a Family Court attorney fee award pursuant to Cal. Fam. Code sec. 2030(a)(1).
- Procedural context:
- On Appeal from the Bankruptcy Court for the Central District of California, the 9th Circuit BAP affirmed Bankruptcy Judge Sandra R. Kline's decision. This decision is not binding and not to be published.
- Facts:
- FAAI, In representing the Debtor in divorce proceedings, amassed over $400,000 in attorney's fees and alleged an additional $375,000 unpaid. The Family Court issued an order ("375,000 Judgement") against the spouse of Debtor that awarded Debtor fee's under Cal. Fam Code sec 2030(a)(1), as pendente lite attorney's fees, on account of fees the Debtor owed FAAI and fees she expected to owe FAAI in the future. The Judgement stated the fee's were awarded to the Debtor. Since the fees went to the benefit of FAAI, FAAI asserted that they are the creditor under the Judgement and not the Debtor who won the fees but must contribute the fee's to attorney costs.
Subsequently, FAAI sought to collect an assignment of rents from real property of the Debtor pursuant to the Family Court Judgement. The Family Court denied assignment of rents ruling that FAAI was not a bona fide judgment creditor and was not entitled to rents. Thereafter, Debtor filed her Chapter 11 Bankruptcy case on May 26, 2011 and moved to sell certain real property of her estate via section 363(f). FAAI objected to the sale but the motion was denied. The properties were sold "free and clear" and FAAI subsequently alleged a portion of sale proceeds pursuant to their alleged judgement/charging lien status.
- Judge(s):
- Markell, Taylor, Montali (9th Cir. BAP)
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