Rose v. Gottlieb (In re Khalil)

Citation:
Ninth Circuit Bankruptcy Appellate Panel Case No. CC-14-1253-KiKuD (May 11, 2015)
Tag(s):
Ruling:
In the unpublished Ninth Circuit Bankruptcy Appellate Panel ("BAP"), two issues were presented on appeal. First, did the bankruptcy court err is granting the Chapter 7 Trustee's partial summary summary under Fed.R.Bankr.P. Rule 7056? The BAP affirmed the bankruptcy court's partial summary judgment and the Chapter 7 Trustee was entitled to judgment as a matter of law. The BAP cited to Albino v. Baca, 747 F.3d 1162, 1176 (9th Cir. 2014) (citation omitted), stating "Where the party moving for summary judgment has had a full and fair opportunity to prove its case, but has not succeeded in doing so, a court may enter summary judgment sua sponte for the nonmoving party." The second issue related to whether the bankruptcy court erred in determining that Lawrence D. Rose ("Rose") was entitled to only 50% of the net sale proceeds. The BAP again affirmed the bankruptcy court's order. The Debtor's property right that become part of estate property are determined by applicable nonbankruptcy law. The applicable California law related to real property presumes that when two of more persons take real property as tenants in commons and the conveying document is silent as to ownership, it is presumed the respective persons share equally.
Procedural context:
The bankruptcy court determined that Rose, a co-owner of real property, was entitled to only 50% of the net sale proceeds from Trustee's sale of the property under 11 U.S.C. Sec. 363(h) and not the 80% he claimed. The BAP granted leave to appeal the order to the extent it was interlocutory.
Facts:
In 2008, Rose and the Debtor entered into a written agreement whereby Debtor agreed, as general contractor, to construct a single family residence for Rose. This ended in litigation wherein Rose asserted the Debtor diverted funds in the amount of $250,000. In 2010, in an attempt to resolve the issues, Rose and the Debtor entered into a real estate transaction together, purchasing an investment property in California ("Property"). Rose contributed 80% of the purchase price and the Debtor contributed 20%. The grant deed to Rose and the Debtor was silent as to percentage of ownership and transferred it to Rose and the Debtor as tenants in common. In 2011 Rose and the Debtor entered into a settlement agreement wherein the Debtor agreed to sign a promissory note in the amount of $300,000 (the 80% contributed to purchasing the Property), and the Debtor agreed to execute a promissory note in the amount of $250,000 (amount of original asserted damages). The Debtor further agreed to execute deeds of trust encumbering the Property. The settlement agreement was signed, but never dated; the promissory notes and deeds of trust were signed, but neither dated nor acknowledged; and, deeds of trust were never recorded. In 2012 the Debtor filed Chapter 7 bankruptcy. Rose commenced an adversary against the Debtor asserting claims pursuant to 11 U.S.C. Secs. 523 and 727. Rose filed a motion in the adversary seeking turnover 50% rent proceeds related to the Property. In support of this motion, Rose submitted a declaration asserting that he was "half-owner of the Property". Rose motion was denied in the adversary as it should have been filed in the administrative case; therefore, Rose filed a similar motion in the administrative case the the bankruptcy court addressed as a motion to determine value of co-owner property interest. Rose asserted that since he contributed 80% of the purchase price of the Property, he was entitled to 80% of the sale proceeds.Before the bankruptcy court rules on Rose's motion, the Chapter 7 Trustee commenced an adversary seeking to sell the Property. After the adversary was filed, but before Rose filed his answer, the bankruptcy court determined that Rose is only entitled to 50% of the net sale proceeds. After this determination, Rose filed his answer to the adversary still asserting he is entitled to 80% of the sale proceeds; alternatively, he could purchase the property from the estate for 20% of the Property's value. The bankruptcy court entered an order denying Rose's motion for summary judgment determining that Rose's arguments were based on case law addressing partition of real property, and the present case a third party was involved.
Judge(s):
KIRSCHER, KURTZ and DUNN, Bankruptcy Judges.

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