in re: betsey warren lebbos, 9th cir. bap (2012)

7/25/2019 In re: Betsey Warren Lebbos, 9th Cir. BAP (2012)

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1 Thi s di sposi t i on i s not appr opr i at e f or publ i cat i on.Al t hough i t may be ci t ed f or what ever per suasi ve val ue i t may have( see Fed. R. App. P. 32. 1) , i t has no pr ecedent i al val ue. See 9t hCi r . BAP Rul e 8013- 1.

UNITED STATES BANKRUPTCY APPELLATE PANEL

OF THE NINTH CIRCUIT

I n r e: ) BAP No. EC- 11- 1735- Ki DJ u)

BETSEY WARREN LEBBOS, ) Bk. No. 06- 22225- RSB)

Debt or . ) Adv. No. 11- 2386- RSB )

) J OSEPH GI OVANAZZI , Tr ust ee of )t he Ai da Madel ei ne Lebbos )No. 2 Trust ; J OSEPH )GI OVANAZZI , Tr ust ee of t he )Ai da Madel ei ne Lebbos )

Tr ust I I , ) )Appel l ant s, )

)v. ) M E M O R A N D U M 1

)LI NDA SCHUETTE, Chapt er 7 )

Tr ust ee, ) )

Appel l ee. ) ______________________________)

Ar gued and Submi t t ed on Oct ober 19, 2012,at Sacr ament o, Cal i f or ni a

Fi l ed - December 31, 2012

Appeal f r om t he Uni t ed St at es Bankr upt cy Cour tf or t he Eas ter n Di s t r i ct of Cal i f or ni a

Honor abl e Rober t S. Bar dwi l , Bankr upt cy J udge, Pr esi di ng

Appear ances: Nei l Har r i son Lewi s, Esq. ar gued f or appel l ant , J oseph Gi ovanazz i ; Mi chael Paul Dacqui st o, Esq.ar gued f or appel l ee, Li nda Schuet t e.

Bef or e: KI RSCHER, DUNN, and J URY, Bankr upt cy J udges.

FILEDDEC 31 2012

SUSAN M SPRAUL, CLERKU.S. BKCY. APP. PANELOF THE NINTH CIRCUIT


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2 Unl ess speci f i ed ot her wi se, al l chapt er , code and r ul er ef er ences ar e t o t he Bankr upt cy Code, 11 U. S. C. 101- 1532, andt he Federal Rul es of Bankr upt cy Pr ocedur e, Rul es 1001- 9037. TheFeder al Rul es of Ci vi l Pr ocedur e ar e r ef er r ed t o as Ci vi l Rul es.

3 Lebbos i s a f or mer at t or ney who pr act i ced l aw i n Cal i f or ni af r om 1975 unt i l 1991 when she was di sbar r ed. Gi ovanazzi i s al so aCal i f or ni a l i censed at t or ney, SBN 42827. He was admi t t ed t opr act i ce l aw i n Cal i f or ni a i n 1969. Gi ovanazzi was di sbar r ed i n1990. Hi s l i cense was r ei nst at ed i n 2003. I n connect i on wi t h hi sact i ons sur r oundi ng t he i nst ant adver sary act i on and ot hermat t er s, Gi ovanazzi i s f aci ng mul t i pl e di sci pl i nar y char ges bef or et he Cal i f or ni a St at e Bar Cour t . See Cal i f or ni a St at e Bar websi t eat ht t p: / / member s. cal bar . ca. gov/ f al / Member / Det ai l / 42827.

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Appel l ant , J oseph Gi ovanazzi ( Gi ovanazzi ) , Tr ust ee of t he

Ai da Madel ei ne Lebbos No. 2 Tr ust and t he Ai da Madel ei ne Lebbos

Tr ust I I ( col l ect i vel y t he Tr ust ) , appeal s an or der and j udgment

f r om t he bankr upt cy cour t gr ant i ng t he chapt er 7 2 t r ust ee, Li nda

Schuet t e ( Tr ust ee) , par t i al summar y j udgment on t wo of her t hr ee

cl ai ms agai nst Gi ovanazzi . Gi ovanazzi al so appeal s f r om t he

bankr upt cy cour t : ( 1) t he or der denyi ng hi s mot i on t o di smi ss

Tr ust ee' s adver sar y act i on; ( 2) t he or der s denyi ng hi s mot i ons t o

di squal i f y t he cour t and t r ansf er venue; and ( 3) t he or der s

denyi ng hi s mot i on f or r econsi der at i on of al l of t he above or der s

and j udgment . We AFFI RM i n par t and DI SMI SS i n par t .I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. The prior adversary action 07-2006

Debt or , Bet sey War r en Lebbos ( Lebbos) , f i l ed a chapt er 7

bankr upt cy case on J une 26, 2006. 3 On J anuary 3, 2007, Trust ee

f i l ed an avoi dance act i on agai nst Lebbos, Thomas Car t er ( Car t er )

and J ason Gol d ( Gol d) . Gol d i s a l aw school gr aduat e. Lebbos,

Car t er and Gol d wer e ei t her t he sol e or co- t r ust ees of t he Tr ust .Lebbos was s ued i n her i ndi vi dual capaci t y and as t r ust ee of t he


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Tr ust ; Car t er and Gol d wer e sued i n t hei r capaci t i es as t r ust ees

of t he Tr ust . The avoi dance act i on sought t o set asi de t wo

f r audul ent t r ansf er s by Lebbos of a condomi ni um l ocat ed i n Long

Beach, Cal i f or ni a ( Condo) , i nj unct i ve r el i ef , t ur nover of t he

Condo and i t s r ent pr oceeds and ot her addi t i onal r el i ef . The

t r ansf er s at i ssue occur r ed on August 19, 2004 ( f r om Lebbos t o t he

Tr ust ) and May 25, 2005 ( f r om Lebbos as t r ust ee of t he Tr ust t o

Car t er and Gol d, co- t r ust ees of t he Tr ust ) .

On J anuary 4, 2007, Trust ee ser ved a Not i ce of Pendency of

Act i on on Lebbos, Car t er and Gol d ( Li s Pendens) . The Li s

Pendens was r ecor ded i n Los Angel es Count y on Mar ch 14, 2007.On Apr i l 17, 2008, Trust ee obt ai ned a def aul t j udgment

( J udgment ) , wi t h suppor t i ng f i ndi ngs of f act and concl usi ons of

l aw, whi ch ( 1) avoi ded bot h t r ansf er s, ( 2) awar ded r ecover y of al l

r i ght , t i t l e, and i nt er est i n t he Condo hel d by Lebbos, Car t er and

Gol d t o Tr ust ee and ( 3) f ound Tr ust ee' s i nt er est i n t he Condo t o

be super i or t o any r i ght , t i t l e, and i nt er est of Lebbos, Car t er

and Gol d. The def endant s wer e or der ed t o t ur n over t he Condo andal l r ent s i t gener at ed as of J une 26, 2006 ( t he dat e Lebbos f i l ed

her chapt er 7 pet i t i on) , and wer e f ur t her enj oi ned f r om any

ef f or t s t o convey, t r ansf er , encumber or ot her wi se af f ect t he

t i t l e t o or t he encumbr ances on t he Condo.

Lebbos, Car t er and Gol d appeal ed t he J udgment t o t he Uni t ed

St at es Di s t r i c t Cour t , East er n Di st r i c t of Cal i f or ni a, t he Ni nt h

Ci r cui t Cour t of Appeal s and t he Uni t ed St at es Supr eme Cour t .


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4 The di st r i ct cour t af f i r med t he bankrupt cy cour t on J anuar y 26, 2009 ( case no. 08- 912- FCD) . The Ni nt h Ci r cui taf f i r med t he di st r i ct cour t on J anuar y 22, 2010 ( case no. 09-15271) . The U. S. Supr eme Cour t deni ed a pet i t i on f or wr i t of cer t i or ar i on November 10, 2010 ( case no. 10- 6484) .

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Each appeal was unsuccess f ul . 4 The J udgment i s now f i nal .

B. Events leading to the present adversary action 11-2386

On Apr i l 14, 2008, j ust t hr ee days bef or e t he bankr upt cy

cour t ent er ed t he J udgment , a qui t cl ai m deed f r om Car t er and Gol d

t o Gi ovanazzi t r ansf er r i ng t i t l e of t he Condo t o Gi ovanazzi was

r ecor ded i n Los Angel es Count y.

On August 13, 2008, Gi ovanazzi , as t r ust or , si gned a deed of

t r ust pur por t i ng t o encumber t he Condo t o secur e payment of an

al l eged pr omi ssor y not e f or $775, 000. The benef i ci ar i es of t he

deed of t r ust wer e Ai da Madel ei ne Lebbos ( debt or ' s daught er ) ,

Camer on Dacqui l a ( debt or ' s gr anddaught er ) and Br andon Dacqui l a( debt or ' s gr andson) ( col l ect i vel y Benef i ci ar i es) . That deed of

t r ust was r ecor ded i n Los Angel es Count y on Sept ember 19, 2008.

I n J anuar y 2009, Gi ovanazzi f i l ed a qui et t i t l e act i on i n t he

Los Angel es Super i or Cour t agai nst J udges Bar dwi l and Buf f or d,

Tr ust ee and her counsel . That sui t was di smi ssed on i mmuni t y

gr ounds and t he di smi ssal was af f i r med on appeal .

On J ul y 30, 2009, Trust ee advi sed Gi ovanazzi ( and Lebbos,Car t er and Gol d) by l et t er t hat Gi ovanazzi di d not have an

owner shi p i nt er est i n t he Condo and t hat he was not ent i t l ed t o

pur sue any act i ons agai nst i t . Tr ust ee advi sed Gi ovanazzi of t he

same i n a second l et t er dat ed Oct ober 2, 2009.

On August 20, 2009, t he bankr upt cy cour t ent er ed an or der

aut hor i zi ng Tr ust ee t o empl oy a r eal est at e br oker t o sel l t he


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5 Tr ust ee ul t i mat el y di d not seek a j udgment on t he secondcl ai m and wi t hdr ew i t on December 19, 2011. Theref ore, we do notdi scuss t hi s cl ai m, except as necessary.

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Condo. On Apr i l 1, 2010, t he bankr upt cy cour t ent er ed an order

aut hor i zi ng Tr ust ee t o empl oy Haas Management Company as pr oper t y

manager f or t he pur poses of r ent i ng and car i ng f or t he Condo.

On August 27, 2010, Gi ovanazzi , st i l l cl ai mi ng he owned t he

Condo, f i l ed an unl awf ul det ai ner act i on i n Los Angel es Super i or

Cour t seeki ng t o evi ct t he t enant s pl aced i n t he Condo by Tr ust ee

and Haas Management Company.

C. The present adversary action 11-2386

I n r esponse t o Gi ovanazzi ' s act i ons and af t er t he l ast appeal

f r om adver sar y act i on 07- 2006 had been compl et ed, on May 26, 2011,

Tr ust ee f i l ed an adver sar y act i on agai nst Gi ovanazz i ass er t i ngt hr ee cl ai ms. I n her f i r st cl ai m under 551 f or pr eser vat i on of

a pr evi ousl y avoi ded t r ansf er and subsequent t r ansf er , Tr ust ee

sought an order / j udgment ( a) conf i r mi ng t he August 19, 2004 and

May 25, 2005 t r ansf er s of t he Condo had been pr eser ved f or t he

benef i t of t he bankrupt cy est at e, ( b) avoi di ng t he Apr i l 14, 2008

qui t cl ai m deed t o Gi ovanazzi , ( c) avoi di ng t he August 13, 2008

deed of t r ust t o t he Benef i ci ar i es, ( d) decl ar i ng t he unl awf uldet ai ner l awsui t had no f or ce or ef f ect on Tr ust ee or t he Condo,

and ( e) f or i nj unct i ve r el i ef pr event i ng Gi ovanazzi f r om any

f ur t her act i ons af f ect i ng t he Condo. Tr ust ee' s second cl ai m

sought t ur nover of r ent s al l egedl y col l ect ed by Gi ovanazzi on t he

Condo bet ween Apr i l 17, 2008, t he dat e Tr ust ee was awarded t i t l e

t o t he Condo, and J ul y 2009, t he dat e Tr ust ee t ook possess i on. 5

Tr ust ee' s t hi r d cl ai m sought decl ar at or y r el i ef as t o t he i ssues


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bet ween Tr ust ee and Gi ovanazz i and r equest ed an or der / j udgment

pr ovi di ng essent i al l y the same r el i ef sought i n t he f i r st cl ai m.

1. Giovanazzi's motions

I n r esponse t o Tr ust ee' s compl ai nt , Gi ovanazzi , appear i ng pr o

se, f i l ed t hr ee mot i ons: ( 1) a mot i on t o di smi ss under Ci vi l

Rul e 12( b) ( 6) ( Mot i on t o Di smi ss) ; ( 2) a mot i on t o di squal i f y

J udge Bar dwi l ( Recusal Mot i on) ; and ( 3) a mot i on t o t r ansf er

venue ( Venue Mot i on) .

a. Motion to Dismiss

Gi ovanazzi argued t hat adver sar y act i on 11- 2386 shoul d be

di smi ssed f or a mul t i t ude of r easons. He cont ended, gener al l y,t hat because Lebbos never si gned her chapt er 7 pet i t i on, and

because she never r esi ded wi t hi n t he di st r i ct t he requi r ed

180 days, t he bankr upt cy cour t l acked j ur i sdi ct i on t o have ent er ed

t he J udgment . He f ur t her ar gued Trust ee l acked st andi ng and t he

bankrupt cy cour t l acked j ur i sdi ct i on over t hi s mat t er because

Lebbos had been deni ed her di schar ge and t her ef or e no pendi ng

bankr upt cy exi st ed.Speci f i cal l y, Gi ovanazzi cont ended t hat t he J udgment was voi d

as t o hi m and t he Benef i ci ar i es and t hat Tr ust ee s pr eser vat i on

cl ai m under 551 per t ai ned onl y t o Lebbos, Car t er and Gol d - t he

par t i es sued i n Tr ust ee s avoi dance act i on, not Gi ovanazzi and t he

Benef i ci ar i es, who wer e i ndi spensabl e par t i es not j oi ned i n t hat

pr i or act i on. Gi ovanazzi f ur t her cont ended t hat because t he

i nst ant act i on was f i l ed t hr ee year s af t er ent r y of t he J udgment ,

i t was bar r ed by t he one year st at ut e of l i mi t at i ons i n 550( f ) .

I n ot her wor ds, Tr ust ee' s new avoi dance act i on agai nst hi m and

t he Benef i ci ar i es, t he subsequent t r ansf er ees of t he Condo, was


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t i me bar r ed. Al t er nat i vel y, Gi ovanazzi asser t ed Tr ust ee s act i on

was bar r ed by l aches because she wai t ed over t hr ee year s af t er t he

J udgment t o sue hi m and t he Benef i ci ar i es. Fi nal l y, Gi ovanazz i

cont ended t hat Tr ust ee had no cl ai m f or pr eser vat i on under 551

because t he Condo was never pr oper t y of t he est at e, and he f ur t her

di sput ed t he bankrupt cy cour t s j ur i sdi ct i on over t he Condo si nce

i t was l ocat ed i n Los Angel es. Gi ovanazzi summar i l y asser t ed t hat

Tr ust ee' s t hi r d cl ai m f or decl ar at or y r el i ef had t o be di smi ssed

because al l t i t l e r epor t s s howed t hat he owned t he Condo.

Gi ovanazzi ' s Mot i on t o Di smi ss al so asser t ed t hat a case was

pendi ng i n t he U. S. Supr eme Cour t r egardi ng t he cr i mi nal conductof Tr ust ee and her counsel of f abr i cat i ng a wr i t t o t ake

possessi on of t he Condo and st eal t he r ugs, pai nt i ngs, appl i ances

and r ent s f r om t he Benef i ci ar i es. Gi ovanazzi f ur t her asser t ed

t hat a compl ai nt was pendi ng t o t he J udi ci al Conf erence Commi t t ee

concer ni ng J udge Bar dwi l ' s conduct i n i ssui ng t wo ex par t e or der s

t o sel l or l ease t he Condo knowi ng he had no j ur i sdi ct i on t o do so

and never pr ovi di ng any not i ce t o anyone. Tr ust ee opposed t he Mot i on t o Di smi ss, ass er t i ng t hat

Gi ovanazzi ' s ar gument s l acked f oundat i on or f act ual suppor t and

t hat most of t hem wer e f r i vol ous and desi gned sol el y t o del ay.

Speci f i cal l y, Tr ust ee ar gued t hat si nce her cl ai m f or pr eser vat i on

was br ought under 551, i t was not subj ect t o t he one year

st at ut e of l i mi t at i ons i n 550( f ) and, i n any event , no act i on

under 550 was necessary or r equest ed agai nst Gi ovanazzi .

Accor di ng t o Tr ust ee, she di d not need t o sue Gi ovanazzi f or

avoi dance of t he pr e- J udgment t r ansf er t o hi m f r om Car t er and Gol d

because t he J udgment ordered t he avoi dance of t he ear l i er


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t r ansf er s and r ecover y of t he Condo; t hus, she coul d r el y on t he

aut omat i c pr eser vat i on pr ovi si on of 551 f or t he subsequent

t r ansf er t o Gi ovanazzi . Tr ust ee al so r ej ect ed Gi ovanazzi ' s l aches

ar gument , cont endi ng t hat she wai t ed t o sue hi m unt i l t he appeal

of t he J udgment was r esol ved and f i l ed her act i on i n j ust over si x

mont hs f r om t hat dat e, whi ch was t i mel y.

Tr ust ee f ur t her cont ended t hat t he i ssue of whet her t he Condo

was pr oper t y of t he est at e was deci ded i n t he pr i or adver sar y

act i on and af f i r med on appeal . Mor eover , Gi ovanazzi ' s cl ai m t hat

t he owner s of t he Condo wer e never sued was i ncor r ect ; t he

J udgment det er mi ned t hat Lebbos owned t he Condo. Thus, ar gued Tr ust ee, t hese f act ual i ssues wer e l aw of t he case and not subj ect

t o chal l enge. Fur t her , ar gued Tr ust ee, t he deni al of Lebbos' s

di schar ge di d not r emove t he Condo f r om est at e pr oper t y.

As t o Gi ovanazzi ' s asser t i ons t hat t he bankr upt cy cour t

l acked subj ect mat t er j ur i sdi ct i on over t he act i on because

( 1) Lebbos never si gned her bankr upt cy pet i t i on or r esi ded i n t he

di st r i ct , ( 2) t he J udgment had no ef f ect over t he Benef i ci ar i es,( 3) t he Condo was l ocat ed i n Los Angel es and ( 4) t he cour t f ai l ed

t o pr ovi de t he Benef i ci ar i es wi t h any oppor t uni t y t o appear and

def end t hi s act i on, Tr ust ee cont ended t hat such mat t er s wer e bot h

out si de t he al l egat i ons i n t he compl ai nt and t hey had al r eady been

r esol ved i n pr i or cour t r ul i ngs .

b. The Recusal Motion

Gi ovanazzi al l eged t hat J udge Bar dwi l shoul d di squal i f y

hi msel f f r om adver sary act i on 11- 2386 f or a mul t i t ude of r easons:

( 1) he had a f i nanci al i nt er est i n i t s out come, whi ch st emmed f r om

a pr evi ous sui t agai nst hi m by Lebbos, Car t er and Gol d and a new


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6 The r ecor d r ef l ect s t hat t hr ee mot i ons t o di squal i f y wer ef i l ed i n t he mai n case and f i ve mot i ons wer e f i l ed i n adver saryact i on 07- 2006.

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sui t by Gi ovanazzi and t he Benef i ci ar i es; ( 2) he had a pol i t i cal

and per sonal i nt er est i n t he out come si nce hi s conduct of " t aki ng

pr oper t y f r om owner s wi t hout any not i ce was t he subj ect of an

ar t i cl e publ i shed by t he Ni nt h Ci r cui t ent i t l ed " Ambush Owner

Scam; ( 3) he had pr ej udged t he mat t er as r ef l ect ed by hi s

i ssuance of t wo ex par t e order s i n 2009 and 2010 aut hor i zi ng t he

sal e and l ease of t he Condo; ( 4) he had ex par t e cont act s wi t h

Tr ust ee i n connect i on wi t h t hose ex par t e or der s; ( 5) he was

embr oi l ed wi t h Lebbos i n her di scr i mi nat i on case agai nst hi m

pendi ng bef or e t he Ni nt h Ci r cui t ; and ( 6) he had a per vasi ve bi as

agai nst Lebbos, t he pr i or def endant s, Gi ovanazzi and t heBenef i c i ar i es .

Tr ust ee opposed t he Recusal Mot i on, cont endi ng Gi ovanazz i ' s

ar gument s wer e not suppor t ed by any f act s and t hat t he mot i on

f ai l ed t o meet t he r equi r ement s f or r ecusal under 28 U. S. C. 455

and Rul e 5004( a) . Tr ust ee f ur t her not ed t hat Lebbos had f i l ed

si mi l ar r ecusal mot i ons agai nst J udge Bar dwi l i n her bankr upt cy

case and i n adver sar y act i on 07- 2006, each of whi ch was deni ed, 6

and ar gued t hat Gi ovanazzi was mer el y engagi ng i n t he same ant i cs

and r egur gi t at i ng Lebbos s pr i or ar gument s.

c. The Venue Motion

Gi ovanazzi moved t o t r ansf er adver sar y act i on 11- 2386 t o

ei t her Mar yl and or t he Cent r al Di st r i ct of Cal i f or ni a. Gi ovanazzi

cont ended t hat Mar yl and was a pr oper venue because t he Tr ust was

cr eat ed t her e and because t he t hr ee owner s and set t l or of t he


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Tr ust r esi ded t her e. Al t er nat i vel y, he ass er t ed t he Cent r al

Di st r i ct of Cal i f or ni a was t he pr oper venue because t he Condo was

l ocat ed t her e and al l exper t s and ot her wi t nesses wer e i n Los

Angel es. Gi ovanazzi asser t ed vi r t ual l y t he same r easons set f or t h

i n t he Recusal Mot i on and t he Mot i on t o Di smi ss as a basi s t o

gr ant t he Venue Mot i on.

Tr ust ee opposed t he Venue Mot i on, cont endi ng t hat Gi ovanazz i

f ai l ed t o meet hi s bur den of pr oof t o t r ansf er t he case.

2. Trustee's motion for partial summary judgment

Tr ust ee moved f or par t i al summar y j udgment agai nst Gi ovanazz i

on her f i r st and t hi r d cl ai ms ( "PSJ ") . Tr ust ee asser t ed t hat shewas ent i t l ed t o r el i ef on her f i r st cl ai m f or pr eser vat i on under

551 because t he avoi ded t r ansf er s under 544 and 548, as set

f or t h i n t he J udgment , wer e aut omat i cal l y pr eserved f or t he

benef i t of t he bankr upt cy est at e. Tr ust ee ar gued t hat by vi r t ue

of t he J udgment , she became t he owner of t he Condo as of

August 19, 2004, t he dat e of t he f i r st avoi ded t r ansf er , and

t her ef or e any t r ansf er of or l i en pl aced on t he Condo af t er t hatdat e was voi d. As a r esul t , ar gued Tr ust ee, t he Apr i l 14, 2008

qui t cl ai m deed f r om Car t er and Gol d t o Gi ovanazzi and t he

August 13, 2008 deed of t r ust f r om Gi ovanazzi t o t he Benef i ci ar i es

were voi d and of no f or ce or ef f ect . The same was t r ue f or

Gi ovanazzi ' s unl awf ul det ai ner act i on.

Al t er nat i vel y, Tr ust ee cont ended t hat she was ent i t l ed t o

r el i ef on her f i r st cl ai m under Cal i f or ni a l aw. She ar gued t hat

based on t he J udgment and C AL. CODE CI V. PROC. ( " CCP" ) 405. 24, she

obt ai ned t i t l e t o t he Condo when t he Li s Pendens was r ecor ded -

Mar ch 14, 2007. Because t he Li s Pendens was r ecor ded mor e t han


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one year pr i or t o t he t r ansf er t o Gi ovanazzi i n August 2008,

Tr ust ee ar gued t hat Gi ovanazz i and al l ot her s had const r uct i ve

not i ce of t he pendi ng adver sar y act i on and t hat her i nt er est

pr evai l ed over t he l at er - r ecor ded qui t cl ai m deed t o Gi ovanazzi ,

t he deed of t r ust execut ed by Gi ovanazzi and r ecor ded on

Sept ember 19, 2008, and t he unl awf ul det ai ner act i on Gi ovanazzi

f i l ed on August 27, 2010.

For j udgment on her t hi r d cl ai m f or per manent i nj unct i ve

r el i ef , Tr ust ee cont ended t hat based on Gi ovanazzi ' s act i ons of

t aki ng t i t l e t o t he Condo despi t e havi ng not i ce of t he Li s

Pendens, hi s s i gni ng a deed of t r ust t o encumber t he Condo, hi sf i l i ng of an unl awf ul det ai ner act i on t o obt ai n possessi on of t he

Condo and hi s i gnor i ng counsel s l et t er s f r om J ul y and Oct ober

2009 r egar di ng hi s l ack of owner shi p, a r easonabl e l i kel i hood

exi st ed t hat Gi ovanazzi woul d cont i nue t o i nt er f er e wi t h Tr ust ee' s

excl usi ve r i ght t o admi ni st er t he Condo f or t he benef i t of t he

bankr upt cy est at e.

Gi ovanazzi opposed t he PSJ , r ai si ng pr i mar i l y t he samear gument s asser t ed i n hi s Mot i on t o Di smi ss as a basi s f or denyi ng

t he PSJ . Gi ovanazzi addi t i onal l y cont ended t hat because t he Li s

Pendens f ai l ed t o compl y wi t h Cal i f or ni a l aw f or a var i et y of

t echni cal r easons, i t was voi d, and so t he J udgment di d not r el at e

back t o Mar ch 14, 2007. I n suppor t of hi s opposi t i on, Gi ovanazzi

i ncl uded decl ar at i ons f r om Lebbos and Gol d. Bot h Lebbos and Gol d

cl ai med t hey never r ecei ved a copy of t he Li s Pendens or a copy of

Tr ust ee' s counsel ' s J ul y 2009 l et t er .

I n her r epl y t o t he PSJ , Tr ust ee cont ended t hat Gi ovanazzi

had f ai l ed t o asser t any di sput ed mat er i al f act t o def eat i t .


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Speci f i cal l y, ar gued Tr ust ee, Gol d' s s t at ement t hat he never

r ecei ved t he Li s Pendens at hi s addr ess of r ecor d was i r r el evant ;

Gol d was not a def endant i n t hi s act i on and servi ce of t he Li s

Pendens had no bear i ng on t he i ssues r ai sed i n t he PSJ . I n any

event , ar gued Tr ust ee, Gi ovanazzi had const r uct i ve not i ce of t he

Li s Pendens under CCP 405. 24, and he di d not di sput e i t .

Si mi l ar l y, Gol d' s st at ement t hat he never r ecei ved t he J ul y 2009

l et t er f r om Tr ust ee' s counsel was i r r el evant as i t was not bei ng

of f er ed agai nst Gol d; t he l et t er was bei ng of f er ed agai nst

Gi ovanazzi , and he di d not di sput e r ecei vi ng i t . Tr ust ee asser t ed

t he same ar gument s wi t h r espect t o t he Lebbos decl ar at i on.3. The bankruptcy court's decision on the PSJ, Motion to

Dismiss, Recusal Motion, and Venue Motion

Af t er a hear i ng on t he PSJ and t he Mot i on t o Di smi ss on

August 31, 2011, t he bankr upt cy cour t t ook t he mat t er s under

submi ss i on and ent er ed wr i t t en deci si ons on each.

a. The PSJ

The bankr upt cy cour t ent er ed a memor andum deci si on, j udgment( PSJ J udgment ) and order gr ant i ng Trust ee' s PSJ on Sept ember 30,

2011. Bef or e ar t i cul at i ng i t s reasons f or gr ant i ng i t , t he cour t

di scussed t he l engt hy and t umul t uous hi st or y of pr i or adver sary

act i on 07- 2006, t he shenani gans t hat l ed t o def endant s' def aul t

and t he event ual J udgment .

I n t he memorandum, t he cour t expl ai ned t hat af t er Trust ee had

obt ai ned t he def aul t s of Lebbos, Car t er and Gol d, she moved f or

def aul t j udgment agai nst t hem on Mar ch 11, 2008. Al l t hr ee

def endant s f i l ed opposi t i ons t o Tr ust ee' s mot i on. A hear i ng on

Tr ust ee' s mot i on was schedul ed f or Apr i l 9, 2008, but was


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cont i nued t o Apr i l 15, 2008. At t he r equest of Lebbos' s at t or ney,

t he cour t cont i nued t he hear i ng agai n unt i l Apr i l 17, 2008. The

hear i ng went f orward on Apr i l 17, at whi ch Gol d and Lebbos' s

at t orney appear ed. That s ame day, t he bankr upt cy cour t ent er ed

i t s f i ndi ngs and concl usi ons and t he J udgment agai nst Lebbos,

Car t er and Gol d, whi ch avoi ded t he t wo t r ansf er s f r om 2004 and

2005, awarded t i t l e and possessi on of t he Condo t o Tr ust ee, and

f ur t her enj oi ned Lebbos, Car t er and Gol d f r om ef f or t s t o convey,

t r ansf er , encumber or ot her wi se af f ect t he t i t l e t o or t he

encumbrances on t he Condo. The bankrupt cy cour t t hen not ed:

Three days ear l i er , on Apr i l 14, 2008, Gol d and Car t er ,havi ng by t hat t i me par t i ci pat ed heavi l y i n t he adver sarypr oceedi ng, i ncl udi ng seeki ng t o have i t di smi ssed, t ohave t he venue changed, and t o have t hi s j udgedi squal i f i ed; havi ng appeal ed t he deci si ons agai nst t hem;havi ng t hr own up unr el ent i ng r oadbl ocks t o t he t r ust ee' sdi scover y ef f or t s; knowi ng f ul l wel l t hat t hei r def aul t shad been ent er ed over t hei r obj ect i ons; and knowi ng f ul lwel l of t he hear i ng on t he t r ust ee' s mot i on f or def aul t

j udgment - - at t hat t i me, schedul ed f or t he ver y nextday, si gned and caused t o be r ecor ded a qui t cl ai m deedpur por t i ng t o t r ansf er t he [ C] ondo t o Gi ovanazzi . . . .

Mem. ( Sept . 30, 2011) 4: 5- 15. The cour t f ur t her not ed t hatGi ovanazzi was no st r anger t o Lebbos' s bankr upt cy case when t he

Condo was t r ansf er r ed t o hi m i n 2008. He had f i l ed t wo

decl ar at i ons i n her case - one i n suppor t of Lebbos' s mot i on t o

r emove Tr ust ee and t he ot her obj ect i ng t o Tr ust ee' s set t l ement of

a l awsui t br ought by Lebbos i n 2002. Among ot her t hi ngs,

Gi ovanazzi had accused Trust ee and her counsel of f r aud and decei t

because t hey had compr omi sed t he est at e s cl ai ms asser t ed i n t he

2002 sui t . Gi ovanazzi had al so t hr eat ened t o obt ai n ar r est

war r ant s f or Tr ust ee and her counsel .

I n addr essi ng t he mer i t s of t he PSJ , t he bankr upt cy cour t


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7 On a si de not e, t he bankr upt cy cour t quest i oned whet her t het r ansf er of t he qui t cl ai m deed act ual l y ef f ect uat ed a t r ansf er asi t was mer el y f r om t wo i ndi vi dual s as t r ust ees of t he Tr ust t o at hi r d t r ust ee of t he Tr ust .

- 14-

r ej ect ed Gi ovanazzi ' s cont ent i on t hat Tr ust ee' s cl ai m f or

pr eser vat i on was t i me bar r ed due t o t he one year st at ut e of

l i mi t at i ons i n 550( f ) . The J udgment accompl i shed bot h avoi dance

and r ecovery under 548 and 550, so Tr ust ee was not r equi r ed t o

" r ecover t he avoi ded t r ansf er s under 550. Thus, 550( f ) was

i r r el evant .

The cour t f ur t her f ound t hat t he J udgment , whi ch was f i nal ,

r el at ed back t o Mar ch 14, 2007 - t he dat e Tr ust ee r ecor ded her Li s

Pendens. Theref ore, at t he t i me Car t er and Gol d si gned and

r ecor ded t he qui t cl ai m deed i n 2008, t hey had no i nt er est t o

convey, and at t he t i me Gi ovanazzi si gned and r ecorded t he deed of t r ust i n 2008, he had no i nt er est t o convey. The f act t hat Gol d

and Car t er si gned and r ecor ded t he qui t cl ai m deed t hr ee days

bef or e t he J udgment had no ef f ect on Tr ust ee' s r i ght s because t he

J udgment r el at ed back t o t he dat e Tr ust ee r ecor ded her Li s

Pendens. CCP 405. 24. Thus, t o t he ext ent Gi ovanazzi was a

" pur chaser or " t r ansf er ee and t he Benef i ci ar i es wer e

" encumbr ancer s, t hey wer e deemed t o have const r uct i ve not i ce of adver sar y act i on 07- 2006 and were t her ef ore unabl e t o acqui r e an

i nt er est i n t he Condo super i or t o t hat of Tr ust ee. Hur st Concr et e

Pr ods. v. Lane ( I n r e Lane) , 980 F. 2d 601, 605 ( 9t h Ci r . 1982) ;

CCP 405. 24; C AL. CI V. CODE 1214. 7

As t o Gi ovanazzi ' s cl ai m t hat t he Li s Pendens was voi d f or

t echni cal r easons, t he bankr upt cy cour t agr eed t hat a l i s pendens

whi ch does not compl y wi t h t he r equi r ement s s et f or t h i n


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CCP 405. 22 may be expunged. However , Gi ovanazz i had not ci t ed,

and t he cour t coul d not l ocat e, any aut hor i t y f or t he pr oposi t i on

t hat a l i s pendens not i n compl i ance wi t h CCP 405. 22 f ai l ed t o

pr ovi de const r uct i ve not i ce t o subsequent pur chaser s or

encumbr ancer s. I n any event , t he cour t f ound t hat none of t he

al l eged def i ci enci es i mpai r ed t he ef f ect i veness of t he Li s Pendens

i n achi evi ng i t s pur pose of not i f yi ng t he publ i c.

The bankr upt cy cour t r ej ect ed Gi ovanazz i ' s cont ent i on t hat

not hi ng was t o be pr eser ved under 551 because Gol d and Car t er

had no i nt er est i n t he Condo when t he J udgment was ent er ed. That

ar gument f ai l ed t o r ecogni ze t hat t he J udgment ef f ect uat ed t heavoi dance of t he t r ansf er by whi ch Gol d and Car t er had acqui r ed

t he Condo and awar ded r ecover y t o Tr ust ee, det er mi ni ng t hat her

i nt er est was super i or t o t hei r s. I n ot her wor ds, ar t i cul at ed t he

cour t , t he ef f ect of t he J udgment was t hat , as of Mar ch 14, 2007,

Tr ust ee st epped i nt o t he shoes of Gol d and Car t er and succeeded t o

t hei r r i ght s i n t he Condo. The cour t al so r ej ect ed Gi ovanazzi ' s

argument t hat t he J udgment had no ef f ect as t o hi m and t heBenef i ci ar i es due t o l ack of not i ce or oppor t uni t y t o def end. To

t he cont r ar y, t he J udgment , whi ch was af f i r med at ever y l evel of

appeal , was f i nal and bound al l par t i es cl ai mi ng an i nt er est

adver se t o t hat of Tr ust ee i n t he Condo.

Fi nal l y, t he bankrupt cy cour t r ej ect ed, as a compl et e

mi sunder st andi ng of bankr upt cy l aw, Gi ovanazzi ' s cl ai ms t hat no

cr edi t or s or bankr upt cy est at e exi st ed due t o Lebbos havi ng been

deni ed a di schar ge. The deni al of di schar ge di d not el i mi nat e t he

exi st ence of t he bankr upt cy est at e or Tr ust ee' s power and dut y t o

cont i nue t o l i qui dat e pr oper t y of t he est at e f or t he benef i t of


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cr edi t or s .

Accor di ngl y, because Tr ust ee had met her bur den of pr oduci ng

evi dence showi ng t hat no genui ne i ssue of mat er i al f act exi st ed,

and because Gi ovanazzi had f ai l ed t o demonst r at e t he exi st ence of

genui ne i ssues f or t r i al , Tr ust ee was ent i t l ed t o j udgment on her

f i r st and t hi r d cl ai ms as a mat t er of l aw. I n t he PSJ J udgment ,

t he bankr upt cy cour t det er mi ned t hat : ( 1) t he t r ansf er s avoi ded i n

t he J udgment wer e pr eser ved f or t he benef i t of t he bankr upt cy

est at e; ( 2) t he qui t cl ai m deed f r om Gol d and Car t er as co- t r ust ees

of t he Tr ust t o Gi ovanazzi as co- t r ust ee of t he Tr ust was voi d and

of no f or ce or ef f ect ; ( 3) t he deed of t r ust f r om Gi ovanazzi t ot he Benef i ci ar i es was voi d and of no f or ce or ef f ect ;

( 4) Gi ovanazzi ' s unl awf ul det ai ner act i on was of no f or ce or

ef f ect and pr ovi ded no evi dence of owner shi p of t he Condo;

( 5) Gi ovanazzi had no r i ght , t i t l e or i nt er est i n or t o, and no

cl ai m t o or agai nst , t he Condo; and ( 6) Gi ovanazzi was per manent l y

enj oi ned f r om any f ur t her act i ons or ef f or t s t o convey, t r ansf er ,

encumber or ot her wi se af f ect t he t i t l e t o or possessi on of t heCondo.

b. The Motion to Dismiss

The bankr upt cy cour t ent er ed a memor andum deci si on and or der

denyi ng Gi ovanazzi ' s Mot i on t o Di smi ss on Oct ober 3, 2011. As a

housekeepi ng mat t er , t he cour t r ej ect ed Gi ovanazzi ' s decl ar at i on

f i l ed i n suppor t because i t di d not f al l wi t hi n t he i ncor por at i on

by r ef er ence doct r i ne, i t consi st ed of i mper mi ssi bl e l egal

concl usi ons, and Gi ovanazzi ' s al l egat i ons r egar di ng t he hi st or y of

t he Tr ust , t he hi st or y of Lebbos' s bankr upt cy case and t he

owner shi p of t he Condo demonst r at ed no per sonal knowl edge. These


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8 Al t hough Tr ust ee l at er di smi ssed her second cl ai m f or

t ur nover , t he bankr upt cy cour t made some i mpor t ant f i ndi ngs i nt hat r egar d whi ch appl y i n t hi s appeal . The cour t f ound t hatLebbos s case was st i l l open and pendi ng despi t e Gi ovanazzi sargument s t o t he cont r ary t hat i t was cl osed because she wasdeni ed a di schar ge. The cour t al so f ound t hat t he Condo wasdet ermi ned t o be pr oper t y of t he est at e i n t he J udgment , whi ch wasaf f i r med on appeal . Fur t her , Gi ovanazzi ' s cont ent i on t hat t he

( cont i nued. . . )

- 17-

same i nadmi ssi bl e f act ual al l egat i ons and l egal concl usi ons

pr esent ed i n Gi ovanazzi ' s br i ef wer e al so gi ven no wei ght .

The bankr upt cy cour t r ej ect ed Gi ovanazz i ' s 550( f ) ar gument

f or t he same r easons st at ed i n t he PSJ Memor andum. Sect i on 550( f )

di d not appl y her e because t he J udgment accompl i shed bot h

avoi dance and r ecover y under 548 and 550. The cour t al so

r ej ect ed Gi ovanazzi ' s cont ent i on t hat Tr ust ee f ai l ed t o st at e a

cl ai m f or pr eser vat i on under 551. Fi r st , pr eser vat i on of t he

avoi ded t r ansf er s occur r ed aut omat i cal l y once t he J udgment was

ent er ed; Tr ust ee was mer el y seeki ng a decl ar at i on conf i r mi ng t hat

f act , and Lebbos, Car t er and Gol d di d not have t o be par t i es t ot he i nst ant adver sar y act i on. Second, t he Condo was pr oper t y of

t he est at e under 541( a) ( 4) , whi ch i ncl udes any i nt er est i n

pr oper t y pr eserved f or t he benef i t of t he est at e under 551.

Fi nal l y, t he i ssues of ( 1) whet her Lebbos owned t he Condo ( as

opposed t o t he Tr ust ) and ( 2) whet her t he Benef i ci ar i es of t he

Tr ust ( who wer e not ser ved wi t h t he compl ai nt i n 07- 2006) wer e

i ndi spensabl e par t i es t o t he pr i or adver sary act i on had beenr ai sed dur i ng t hat act i on and wer e pr ecl uded by t he J udgment .

Fur t her mor e, i n t hat par t i cul ar act i on, Cal i f or ni a l aw r equi r ed

ser vi ce of t he compl ai nt onl y on t he t r ust ee, not t he

Benef i c i ar i es . 8


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8( . . . cont i nued)Condo was wor t hl ess because i t was over - encumber ed f ai l ed because,by way of t he PSJ J udgment , t he cour t had det er mi ned hi s deed of

t r ust was voi d and of no f or ce and ef f ect . Fi nal l y, because of t he PSJ J udgment , Trust ee was not r equi r ed t o pr ovi de adequat epr ot ect i on of t he i nt er est s of al l eged owner s of t he Condo.

9 Rul e 7070 pr ovi des t hat t he bankr upt cy cour t may ent er a j udgment di vest i ng t he t i t l e of any par t y and vest i ng t i t l e i not her s whenever t he r eal or per sonal pr oper t y i nvol ved i s wi t hi nt he j ur i sdi ct i on of t he cour t .

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The bankr upt cy cour t al so r ej ect ed Gi ovanazz i s l aches

ar gument as i r oni c, not i ng t hat i f anyone had engaged i n

pr ej udi ci al del ay t act i cs i t was Gi ovanazzi . Fur t her , any del ays

r esul t i ng f r om t he numerous appeal s were not caused by Tr ust ee,

but r at her by t he act i ons of Lebbos, Gi ovanazzi , Car t er and Gol d.

Thus, Gi ovanazz i had f ai l ed t o show Tr ust ee s l ack of di l i gence or

t hat he had suf f er ed any pr ej udi ce as a resul t of i t .

Gi ovanazzi ' s ar gument t hat t he bankr upt cy cour t had no

j ur i sdi ct i on t o change t i t l e t o t he Condo si nce i t was l ocat ed

i n Los Angel es al so f ai l ed. Under Rul e 7070, 9 t he bankr upt cy

cour t was per mi t t ed t o di vest any par t y' s t i t l e and vest t i t l e i nanot her when t he r eal pr oper t y i s wi t hi n t he j ur i sdi ct i on of t he

cour t . Because t he bankr upt cy cour t had j ur i sdi ct i on over t he

Condo by vi r t ue of 541( a) and 28 U. S. C. 1334( e) ( 1) , i t had

j ur i sdi ct i on t o ent er t he J udgment vest i ng t i t l e t o t he Condo i n

Tr ust ee.

Fi nal l y, t he bankrupt cy cour t r ej ect ed Gi ovanazzi ' s s hopwor n

ar gument s pr evi ousl y r ai sed by Lebbos t hat she di d not si gn herbankr upt cy pet i t i on, t hat she never r esi ded i n t he di st r i ct , and

t hat t he cour t had no j ur i sdi ct i on over t he owner s of t he Condo

so t he J udgment was not bi ndi ng on t hem. These i ssues had been


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deci ded i n t he J udgment , whi ch was f i nal and bi ndi ng.

Accor di ngl y, because Tr ust ee s compl ai nt st at ed a cl ai m upon

whi ch r el i ef coul d be gr ant ed, t he Mot i on t o Di smi ss was deni ed.

c. The Recusal Motion and Venue Motion

The bankr upt cy cour t ent er ed ci vi l mi nut e or der s denyi ng bot h

t he Recusal Mot i on and t he Venue Mot i on on Sept ember 6, 2011.

i. The Recusal Motion

The bankr upt cy cour t not ed t hat t he ar gument s r ai sed by

Gi ovanazz i wer e ones Lebbos had made many t i mes i n her chapt er 7

case and var i ous adver sar y pr oceedi ngs. Car t er and Gol d had

br ought s i mi l ar mot i ons. The cour t f ur t her not ed t hatGi ovanazzi ' s decl ar at i on i n suppor t was f ul l of unsuppor t ed

concl usi ons and al l egat i ons of whi ch he f ai l ed t o demonst r at e

per sonal knowl edge. I n shor t , Gi ovanazzi pr esent ed not hi ng new t o

cause t he cour t t o r ul e any di f f er ent l y t han i t had on t he

pr evi ous mot i ons t o di squal i f y. The bankr upt cy cour t r emai ned

per suaded t hat i t was unbi ased and i mpar t i al . Ther ef or e, based on

t he above r easons, Gi ovanazzi had not met hi s bur den f or r ecusalunder 28 U. S. C. 455( a) or ( b) .

ii. Venue Motion

The bankr upt cy cour t f ound t hat Gi ovanazz i ' s decl ar at i on, t he

onl y evi dence i n suppor t of t he Venue Mot i on, f ai l ed t o est abl i sh

he had per sonal knowl edge of t he al l eged f act s. Fur t her , hi s

asser t i on t hat t he Benef i ci ar i es wer e t he onl y r eal par t i es i n

i nt er est was a l egal concl usi on, and an er r oneous one, and he

f ai l ed t o est abl i sh t hat t hese par t i es had anyt hi ng t o cont r i but e

t o t he i nst ant adver sar y act i on. Gi ovanazzi had al so f ai l ed t o

i dent i f y t he exper t s and ot her wi t nesses who woul d t est i f y or


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est abl i sh what evi dence, i f any, mi ght be l ocat ed i n t he Cent r al

Di st r i c t of Cal i f or ni a. Fi nal l y, t he r emai nder of Gi ovanazzi ' s

cont ent i ons, many of whi ch wer e made on i nf ormat i on and bel i ef ,

r ai sed ar gument s t hat had al r eady been deci ded and af f i r med on

appeal . Accor di ngl y, l i ke past si mi l ar venue mot i ons f i l ed by

Lebbos and by Gi ovanazzi ' s pr edecessor s, whi ch wer e consi dered and

deni ed, Gi ovanazzi had pr esent ed not hi ng t o per suade t he cour t t o

r each a di f f er ent r esul t .

4. Giovanazzi's motions to reconsider

a. The motion to reconsider the PSJ Judgment, Recusal Motion, and Venue Motion

Gi ovanazzi f i l ed a mot i on t o r econsi der t he PSJ J udgment and

t he or der s denyi ng t he Recusal Mot i on and t he Venue Mot i on on

Oct ober 13, 2011. He cont ended t hat many di sput ed mat er i al f act s

exi st ed r equi r i ng t he bankr upt cy cour t t o r econsi der t he PSJ

J udgment : ( 1) t he J udgment was a nul l i t y as t o t he Benef i ci ar i es

because t he bankr upt cy cour t never had j ur i sdi ct i on over t he

Tr ust , or t he Condo or t he Condo owner s, and t he di st r i ct cour tand Ni nt h Ci r cui t onl y uphel d t he J udgment agai nst Lebbos, Car t er

and Gol d as i ndi vi dual s, not as t r ust ees; ( 2) because Gi ovanazzi

obt ai ned t he Condo bef ore ent r y of t he J udgment , t he bankr upt cy

cour t had no j ur i sdi ct i on t o avoi d hi s deed or t he deed of t r ust

and decl ar e t hem voi d; ( 3) t he bankr upt cy cour t had no

j ur i sdi ct i on t o r et r oact i vel y change t he dat e of t he J udgment

agai nst Lebbos, Car t er and Gol d wi t hout not i ce or wi t hout mot i ons

f i l ed i n t he pr i or or pr esent adver sar y act i ons; ( 4) t he

bankr upt cy cour t l acked j ur i sdi ct i on t o decl ar e Gi ovanazzi ' s

unl awf ul det ai ner act i on i nval i d; ( 5) t he bankrupt cy cour t coul d


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not enj oi n Gi ovanazzi as i t had no j ur i sdi ct i on over t he Condo or

t he Tr ust ; ( 6) Tr ust ee was r equi r ed t o f i l e a separ at e r ecover y

act i on agai nst Gi ovanazzi and t he Benef i ci ar i es, so t he bankr upt cy

cour t er r ed i n not appl yi ng t he one year st at ut e of l i mi t at i ons i n

550( f ) ; and ( 7) Tr ust ee' s Li s Pendens was voi d due t o i t s

noncompl i ance wi t h CCP 405. 22, so i t f ai l ed t o pr ovi de not i ce t o

anyone.

Al t hough t he mot i on capt i on sought r econsi der at i on of t he

or der s denyi ng t he Recusal Mot i on and t he Venue Mot i on, Gi ovanazzi

di d not pr esent any ar gument as t o why t he bankr upt cy cour t shoul d

r econsi der t hose or der s. He st at ed i n hi s decl ar at i on i n suppor tonl y t hat J udge Bar dwi l had a dut y t o di squal i f y hi msel f because

he had commi t t ed f r aud, encour aged ot her s t o commi t f r aud and he

cal l ed t he di sabl ed debt or vi ci ous names and exhi bi t s an ext r eme

per sonal bi as.

b. The motion to reconsider the Motion to Dismiss

Gi ovanazzi f i l ed a mot i on t o r econsi der t he or der denyi ng t he

Mot i on t o Di smi ss on Oct ober 17, 2011. The mot i on r ai sed many of t he same ar gument s r ai sed i n t he mot i on t o r econsi der t he PSJ

J udgment and i n t he or i gi nal Mot i on t o Di smi ss. I n shor t ,

Gi ovanazzi cont ended t hat t he bankr upt cy cour t had t o gr ant t he

Mot i on t o Di smi ss because: ( 1) i t er r ed i n not consi der i ng hi s

decl ar at i on f i l ed i n suppor t of t he Mot i on t o Di smi ss, whi ch set

f or t h f act s subj ect t o j udi ci al not i ce; ( 2) Lebbos had not si gned

her bankr upt cy pet i t i on or l i ved i n t he di st r i ct t he r equi r ed

180 days, so t he bankrupt cy cour t l acked j ur i sdi ct i on and al l of

i t s deci si ons wer e voi d; ( 3) Tr ust ee was r equi r ed t o f i l e a

separ at e r ecover y act i on agai nst Gi ovanazzi and t he Benef i ci ar i es


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and t he one year st at ut e of l i mi t at i ons f or t hat act i on under

550( f ) had r un; ( 4) l aches bar r ed Tr ust ee' s compl ai nt and t he

cour t er r ed i n f i ndi ng t hat Gi ovanazzi had uncl ean hands;

( 5) Tr ust ee had no cl ai m f or pr eservat i on because she sued onl y

Lebbos, Car t er and Gol d f or avoi dance, not r ecover y, and she never

sued t he owner s of t he Condo f or avoi dance; ( 6) t he J udgment was

not f i nal and bi ndi ng on Gi ovanazzi and t he Benef i ci ar i es as t hey

wer e never j oi ned i n t he pr i or avoi dance act i on; and ( 7) t he

bankr upt cy cour t had no j ur i sdi ct i on over t he Condo under Rul e

7070 as i t asser t ed.

5. The bankruptcy court's decisions on the motions toreconsider

a. The motion to reconsider the Motion to Dismiss

The bankr upt cy cour t ent er ed a ci vi l mi nut e or der denyi ng

Gi ovanazzi ' s mot i on t o r econsi der t he Mot i on t o Di smi ss on

December 19, 2011. Over al l , t he cour t f ound t he mot i on was

l argel y a r ehashi ng of t he ar gument s r ai sed many t i mes bef ore by

bot h Gi ovanazzi i n t he Mot i on t o Di smi ss and by hi s pr edecessort r ust ees Lebbos, Car t er and Gol d. Gi ovanazzi had f ai l ed t o

pr esent any new f act s or i nt er veni ng change i n t he cont r ol l i ng l aw

or show t hat t he cour t had er r ed.

Fi r st , t he cour t r ej ect ed Gi ovanazzi ' s r el i ance on Decker v.

Voi senat ( I n r e Ser r at o) , 214 B. R. 219 ( Bankr . N. D. Cal . 1997) , as

t hat case di d not concer n, l et al one st and f or , t he pr oposi t i on

f or whi ch Gi ovanazzi ci t ed i t .

As f or r ej ect i ng Gi ovanazzi ' s decl ar at i on and hi s r equest f or

j udi ci al not i ce of cer t ai n f act s cont ai ned t her ei n, t he cour t

f ound t hat t he t ype of al l eged f act s of whi ch Gi ovanazzi asked t he


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cour t t o t ake j udi ci al not i ce ei t her f ai l ed t o meet t he st andar ds

of F ED R. EVI D. 201( b) or wer e not appr opr i at e mat t er s f or j udi ci al

not i ce. Fur t her , t hese i ssues had al r eady been r ai sed by Lebbos

and ot her s, consi der ed, and r esol ved agai nst t hem i n t he J udgment ,

whi ch was af f i r med on appeal and was now f i nal and bi ndi ng.

The bankr upt cy cour t al so r ej ect ed as f r i vol ous Gi ovanazz i ' s

cont ent i on t hat t he di st r i ct cour t and Ni nt h Ci r cui t onl y uphel d

t he J udgment agai nst Lebbos, Car t er and Gol d as i ndi vi dual s and

not as t r ust ees of t he Tr ust . Not onl y di d Gi ovanazzi f ai l t o

pr ovi de any document s t o suppor t t hi s proposi t i on, t he r ecor d

showed t hat Lebbos was sued bot h i ndi vi dual l y and as t r ust ee of t he Tr ust ; Gol d and Car t er wer e sued as t r ust ees of t he Tr ust .

Fi nal l y, as t o Gi ovanazzi ' s r epeat ed asser t i on t hat t he

bankr upt cy cour t l acked j ur i sdi ct i on over t he Benef i ci ar i es, t hat

t hey wer e i ndi spensabl e par t i es i n t he pr i or adver sary act i on and,

consequent l y, t hat t he J udgment was not f i nal and bi ndi ng as t o

t hem, t he cour t f ound t hat Gi ovanazzi ' s asser t i ons wer e ei t her not

suppor t ed by any aut hor i t y or t he cases he ci t ed di d not st and f ort he pr oposi t i on f or whi ch he ci t ed t hem. I n shor t , Gi ovanazzi

ci t ed no aut hor i t y t o over come t he cour t ' s concl usi on t hat a

benef i ci ar y of a t r ust i s consi der ed t o be i n pr i vi t y wi t h t he

t r ust ee of t he t r ust and i s bound by j udgment s i n act i ons agai nst

t he t r ust ee, as was t he case her e.

b. The motion to reconsider the PSJ Judgment, Recusal

Motion, and Venue Motion

The bankr upt cy cour t al so ent er ed a ci vi l mi nut e or der

denyi ng Gi ovanazzi ' s mot i on t o r econsi der t he PSJ J udgment , t he

Recusal Mot i on and t he Venue Mot i on on December 19, 2011. To t he


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ext ent Gi ovanazzi ' s mot i on r ai sed t he same ar gument s asser t ed i n

t he mot i on t o r econsi der t he Mot i on t o Di smi ss , t he cour t

i ncor por at ed t he f i ndi ngs and concl usi ons i t made r egar di ng t hat

r econsi der at i on mot i on i n t hi s one. As wi t h t he mot i on t o

r econsi der t he Mot i on t o Di smi ss, t he cour t f ound t hat t hi s

r econsi derat i on mot i on was merel y a r ehashi ng of pr i or ar gument s.

Regar di ng Gi ovanazzi ' s al l egat i ons of t he cour t ' s i l l

t r eat ment of Lebbos, and conspi r acy among t he cour t , Trust ee and

her counsel , t he cour t not ed t hat i t had come t o expect at t acks,

bot h pr of essi onal and per sonal , agai nst i t and ot her s associ at ed

wi t h Lebbos' s case and i t s r el at ed adver sar y pr oceedi ngs byLebbos, t r ust ees Car t er and Gol d and, now, Gi ovanazzi . However ,

Gi ovanazzi ' s accusat i ons di d not change t he cour t s concl usi on

t hat i t r emai ned i mpar t i al . Ther ef or e, t he mot i on t o r econsi der

t he Recusal Mot i on was deni ed. Rel i ef was al so deni ed t o t he

ext ent Gi ovanazzi sought r econsi der at i on of t he or der denyi ng t he

Venue Mot i on.

The cour t r ej ect ed Gi ovanazz i s ar gument t hat t he bankr upt cycour t had no j ur i sdi ct i on t o appl y t he J udgment r et r oact i vel y as

l acki ng any cogni zabl e l egal t heor y or suppor t . I t was mer el y

anot her exampl e of Lebbos s i nt ent i on, now t hat she had exhaust ed

her appeal s, t o dr ag out as l ong as poss i bl e Tr ust ee s enf or cement

of t he J udgment .

Fi nal l y, t he cour t r ej ect ed Gi ovanazzi s cont ent i on t hat al l

t i t l e r epor t s showed t hat Tr ust ee never r ecor ded her Li s Pendens

and t hat he owned t he Condo. The t i t l e r epor t Gi ovanazzi

submi t t ed was not a t i t l e r epor t but r at her a pr oper t y pr of i l e,

whi ch had never been aut hent i cat ed and woul d have l i t t l e


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10 The par t i es have not quest i oned our j ur i sdi ct i on over t hi sappeal , but we have an i ndependent dut y t o exami ne j ur i sdi ct i oni ssues. I n r e Lucas Dal l as, I nc. , 185 B. R. at 804. Whet her abankrupt cy cour t s or der i s f i nal i s a quest i on of l aw r evi ewed denovo. Al exander v. Compt on ( I n r e Bonham) , 229 F. 3d 750, 760- 61( 9t h Ci r . 2000) .

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evi dent i ar y wei ght , as such pr of i l es sel dom r ef er t o al l document s

of r ecor d. By cont r ast , Tr ust ee had f i l ed a r ecor ded copy of t he

Li s Pendens wi t h her PSJ .

Gi ovanazzi t i mel y appeal ed t he PSJ J udgment , t he or der

denyi ng t he Mot i on t o Di smi ss and t he or der s denyi ng t he

r econsi der at i on of t hose mat t er s on December 23, 2011.

II. JURISDICTION

The bankr upt cy cour t had j ur i sdi ct i on under 28 U. S. C.

157( b) ( 2) ( A) and 1334. We her ei n addr ess our j ur i sdi ct i on

under 28 U. S. C. 158.

A. The PSJ Judgment10

Gener al l y, an or der gr ant i ng par t i al summar y j udgment i s not

an appeal abl e f i nal or der . Dannenber g v. Sof t war e Tool wor ks,

I nc. , 16 F. 3d 1073, 1074 ( 9t h Ci r . 1994) ; Bel l i v. Temki m

( I n r e Bel l i ) , 268 B. R. 851, 856- 57 ( 9t h Ci r . BAP 2001) ( or der

gr ant i ng par t i al summar y j udgment wi t hout t he cer t i f i cat i on

r equi r ed by Ci vi l Rul e 54( b) i s not f i nal appeal abl e or der ) .

On t he same day t he bankr upt cy cour t deni ed Gi ovanazzi sr econsi derat i on mot i on r egar di ng t he Mot i on t o Di smi ss -

December 19, 2011 - Tr ust ee f i l ed her not i ce of vol unt ar y

di smi ssal of her r emai ni ng second cl ai m under Rul e

7041( a) ( 1) ( A) ( i ) , as Gi ovanazzi had not f i l ed an answer or a

mot i on f or summary j udgment . The di smi ssal was wi t hout pr ej udi ce.

Si nce t he not i ce compl i es wi t h Rul e 7041( a) ( 1) ( A) ( i ) , i t t ook


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i mmedi at e ef f ect wi t hout f ur t her or der f r om t he bankrupt cy cour t .

Rul e 7041( a) ( 1) ( B) ; Swedberg v. Marot zke, 339 F. 3d 1139, 1142 ( 9t h

Ci r . 2003) . Nonet hel ess, despi t e Tr ust ee s pr oper vol unt ar y

di smi ssal , t he bankr upt cy cour t ent er ed i t s own or der di smi ssi ng

wi t hout pr ej udi ce Tr ust ee s r emai ni ng second cl ai m on December 28,

2011. Ther ef or e, al t hough t hat or der has no ef f ect , t he cour t

appr oved t he di smi ssal wi t hout pr ej udi ce, whi ch di sposed of al l

cl ai ms. As such, not hi ng i s l ef t f or t he bankr upt cy cour t t o

deci de as t o Tr ust ee s compl ai nt .

Thus, we concl ude t hat t he di smi ssal , even t hough wi t hout

pr ej udi ce, ef f ect i vel y made t he PSJ J udgment a f i nal j udgment f orpur poses of appeal . Chr ysl er Mot or s Corp. v. Thomas Aut o Co. ,

939 F. 2d 538, 540 ( 8t h Ci r . 1991) ( f ol l owi ng t he gr ant i ng of a

mot i on f or par t i al summar y j udgment , t he cour t di smi sses wi t hout

pr ej udi ce t he r emai nder of t he case, t he ef f ect of t hat act i on

makes t he j udgment gr ant i ng par t i al summar y j udgment a f i nal

j udgment f or pur poses of appeal ) . See J ames v. Pr i ce St er n Sl oan,

I nc. , 283 F. 3d 1064, 1069- 70 ( 9t h Ci r . 2002) .B. The order denying the Motion to Dismiss

Gener al l y, an or der denyi ng a mot i on t o di smi ss i s not

appeal abl e because i t does not end t he l i t i gat i on on t he mer i t s.

Conf eder at ed Sal i sh v. Si moni ch, 29 F. 3d 1398, 1401- 02 ( 9t h Ci r .

1994) ; Dunkl ey v. Rega Pr ops. , Lt d. ( I n r e Rega Pr ops. , Lt d. ) ,

894 F. 2d 1136 ( 9t h Ci r . 1990) ( or der denyi ng a mot i on t o di smi ss an

adver sary pr oceedi ng i s not a f i nal appeal abl e or der ) .

The or der denyi ng Gi ovanazz i s Mot i on t o Di smi ss was ent er ed

on Oct ober 3, 2011. Hi s t i mel y mot i on t o r econsi der t hat or der

f i l ed on Oct ober 17, 2011, ef f ect i vel y t ol l ed t he appeal t i me of


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t he under l yi ng or der . Rul e 8002( b) ( 2) . The or der denyi ng

r econsi der at i on was ent er ed on December 19, 2011, t he same dat e

Tr ust ee vol unt ar i l y di smi ssed her r emai ni ng second cl ai m. As we

concl uded above, t he PSJ J udgment i s a f i nal j udgment f or pur poses

of appeal . Accor di ngl y, t o t he ext ent t he or der denyi ng t he

Mot i on t o Di smi ss was i nt er l ocut or y, i t mer ged i nt o t he PSJ

J udgment on December 19, 2011, and i s now f i nal . See Am.

I r onwor ks & Er ect or s, I nc. v. N. Am. Const . Co. , 248 F. 3d 892,

897- 98 ( 9t h Ci r . 2001) .

C. We dismiss the appeal of the orders denying the Recusal Motion and the Venue Motion.

The par t i es have not quest i oned our j ur i sdi ct i on over t he

appeal of t he or der s denyi ng t he Recusal Mot i on and Venue Mot i on,

but we have an i ndependent dut y t o exami ne j ur i sdi ct i on i ssues.

Gen. El ec. Capi t al Aut o Lease, I nc. v. Br oach ( I n r e Lucas Dal l as,

I nc. ) , 185 B. R. 801, 804 ( 9t h Ci r . BAP 1995) . I t i s not ent i r el y

cl ear f r om hi s Not i ce of Appeal whet her Gi ovanazzi i s appeal i ng

t hese or der s. However , t o t he ext ent t hat he i s, we DI SMI SS t heappeal as unt i mel y.

Under Rul e 8002( a) , a not i ce of appeal must be f i l ed wi t hi n

14 days of t he ent r y of t he order bei ng appeal ed. The pr ovi si ons

of Rul e 8002 ar e j ur i sdi ct i onal , and t he unt i mel y f i l i ng of a

not i ce of appeal depr i ves t he appel l at e cour t of j ur i sdi ct i on t o

r evi ew t he bankr upt cy cour t ' s or der . Ander son v. Mour adi ck

( I n r e Mour adi ck) , 13 F. 3d 326, 327 ( 9t h Ci r . 1994) . The or der s

denyi ng t he Recusal Mot i on and Venue Mot i on wer e ent er ed on

Sept ember 6, 2011. Gi ovanazzi f i l ed a mot i on t o r econsi der t hose


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11 The PSJ J udgment was ent er ed on Sept ember 30, 2011. Thus,t he mot i on t o r econsi der i t was f i l ed wi t hi n t he r equi r ed 14 daysand t ol l ed t he appeal t i me.

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or der s ( and t he PSJ J udgment ) on Oct ober 13, 2011. 11 Al t hough he

di d not ar t i cul at e any ar gument f or r econsi der i ng t he or der s

denyi ng t he Recusal Mot i on and Venue Mot i on, hi s at t empt t o

chal l enge t he or der s i n hi s mot i on t o r econsi der coul d onl y be

consi der ed a mot i on f or r el i ef f r om j udgment under Ci vi l Rul e

60( b) , i ncor por at ed by Rul e 9024, because i t was not f i l ed wi t hi n

14 days of ent r y of t he or der s. See Ci vi l Rul e 59( e) ,

i ncor por at ed by Rul e 9023.

Under Rul e 8002( b) ( 4) , a mot i on under Rul e 9024 onl y t ol l s

t he appeal t i me of t he under l yi ng or der when i t i s f i l ed wi t hi n

14 days af t er ent r y of t he or der . Ther ef or e, Gi ovanazzi s mot i ont o r econsi der t he or der s denyi ng t he Recusal Mot i on and Venue

Mot i on, f i l ed on Oct ober 13, 2011, di d not t ol l t he appeal t i me of

t he or der s denyi ng t hose mot i ons on Sept ember 6, 2011.

Accor di ngl y, t he appeal of t hese or der s i s unt i mel y, and we must

DI SMI SS t he appeal f or l ack of j ur i sdi ct i on. As a r esul t , we wi l l

not consi der any ar gument s Gi ovanazzi s r ai ses wi t h r espect t o

t hese i ssues. To t he ext ent hi s appeal i s l i ve wi t h r espect t o t he or der

denyi ng r econsi der at i on of t hese or der s, Gi ovanazzi f ai l s t o

pr esent any ar gument as t o how t he bankr upt cy cour t abused i t s

di scr et i on i n denyi ng t he r econsi der at i on mot i on. Ther ef or e, t hi s

i ssue has been wai ved. Ci t y of Emer yvi l l e v. Robi nson, 621 F. 3d

1251, 1261 ( 9t h Ci r . 2010) ( appel l at e cour t i n t hi s ci r cui t wi l l

not r evi ew i ssues whi ch ar e not ar gued speci f i cal l y and di st i nct l y


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i n a par t y s openi ng br i ef . ) .

III. ISSUES

1. Di d t he bankr upt cy cour t er r when i t gr ant ed t he PSJ ?

2. Di d t he bankr upt cy cour t er r when i t deni ed t he Mot i on t o

Di smi ss?

3. Di d t he bankr upt cy cour t abuse i t s di scret i on when i t deni ed

t he mot i ons t o r econsi der t he PSJ J udgment and t he or der denyi ng

t he Mot i on t o Di smi ss?

IV. STANDARDS OF REVIEW

We r evi ew t he bankrupt cy cour t s gr ant of summar y j udgment

de novo. SN I ns. Ser vs. , I nc. v. SNTL Cor p. ( I n r e SNTL Cor p. ) ,380 B. R. 204, 211 ( 9t h Ci r . BAP 2007) . Li kewi se, we r evi ew a

deni al of a mot i on t o di smi ss de novo. SEC v. Col el l o, 139 F. 3d

674, 675 ( 9t h Ci r . 1998) . De novo means r evi ew i s i ndependent ,

wi t h no def er ence gi ven t o t he t r i al cour t ' s concl usi on. Mwangi

v. Wel l s Far go Bank, N. A. ( I n r e Mwangi ) , 432 B. R. 812, 818 ( 9t h

Ci r . BAP 2010) .

The bankr upt cy cour t s deci si on t o gr ant permanent i nj unct i ver el i ef i s r evi ewed f or an abuse of di scr et i on or appl i cat i on of

er r oneous l egal pr i nci pl es. For t yune v. Am. Mul t i - Ci nema, I nc. ,

364 F. 3d 1075, 1079 ( 9t h Ci r . 2004) ( r evi ewi ng summar y j udgment ) .

The bankr upt cy cour t ' s or der denyi ng a mot i on f or r econsi der at i on

i s al so r evi ewed f or an abuse of di scr et i on. Ta Chong Bank Lt d.

v. Hi t achi Hi gh Techs. Am. , I nc. , 610 F. 3d 1063, 1066 ( 9t h Ci r .

2010) . A bankr upt cy cour t abuses i t s di scr et i on i f i t appl i ed t he

wr ong l egal st andar d or i t s f i ndi ngs wer e i l l ogi cal , i mpl ausi bl e,

or wi t hout suppor t i n t he r ecor d. Tr af f i cSchool . com, I nc. v.

Edr i ver I nc. , 653 F. 3d 820, 832 ( 9t h Ci r . 2011) .


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V. DISCUSSION

A. The bankruptcy court did not err in granting the PSJ or indenying the Motion to Dismiss.

1. Civil Rule 12(b)(6) and Civil Rule 56

Under Ci vi l Rul e 56( c) , i ncor por at ed her e by Rul e 7056, t he

appel l at e cour t s r evi ew i s gover ned by t he same st andard used by

t he t r i al cour t . Quest Comm ns, I nc. v. Ber kel ey, 433 F. 3d 1253,

1256 ( 9t h Ci r . 2006) . On r evi ew, t he appel l at e cour t must

det er mi ne, vi ewi ng t he evi dence i n t he l i ght most f avor abl e t o t he

nonmovi ng par t y, whet her any genui ne i ssues of mat er i al f act exi st

and whet her t he bankr upt cy cour t cor r ect l y appl i ed t he r el evantsubst ant i ve l aw. Ol sen v. I daho St at e Bd. of Med. , 363 F. 3d 916,

922 ( 9t h Ci r . 2004) . The cour t must not wei gh t he evi dence or

det ermi ne t he t r ut h of t he mat t er but onl y det ermi ne whet her a

genui ne i ssue f or t r i al exi st ed. Bal i nt v. Car son Ci t y, 180 F. 3d

1047, 1054 ( 9t h Ci r . 1999) . Summar y j udgment may be af f i r med on

any gr ound suppor t ed by t he r ecor d. Enl ow v. Sal em- Kei zer Yel l ow

Cab Co. , 371 F. 3d 645, 649 ( 9t h Ci r . 2004) .When consi der i ng a mot i on t o di smi ss f or f ai l ur e t o st at e a

cl ai m under Ci vi l Rul e 12( b) ( 6) , i ncor por at ed her e by Rul e 7012, a

cour t must t ake as t r ue al l al l egat i ons of mat er i al f act and

const r ue t hem i n a l i ght most f avor abl e t o t he nonmovi ng par t y.

Par ks Sch. of Bus. , I nc. v. Symi ngt on, 51 F. 3d 1480, 1484 ( 9t h

Ci r . 1995) . To sur vi ve a mot i on t o di smi ss, a pl ai nt i f f needs t o

pl ead onl y enough f act s t o st at e a cl ai m t o r el i ef t hat i s

pl ausi bl e on i t s f ace. Bel l At l . Cor p. v. Twombl y, 550 U. S. 544,

570 ( 2007) .


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12 Sect i on 541( a) ( 4) pr ovi des, i n r el evant par t , t hat t hebankrupt cy est at e i ncl udes [ a] ny i nt er est i n pr oper t y pr eser vedf or t he benef i t of . . . t he est at e under sect i on . . . 551 of t hi s t i t l e.

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2. Section 551

Tr ust ee' s f i r st cl ai m sought t o pr eser ve t he t r ansf er s

avoi ded i n t he J udgment under 551. That s t at ut e pr ovi des:

Any t r ansf er avoi ded under sect i on 522, 544, 545, 547,548, 549, or 724( a) of t hi s t i t l e, or any l i en voi d undersect i on 506( d) of t hi s t i t l e, i s pr eser ved f or t hebenef i t of t he est at e but onl y wi t h r espect t o pr oper t yof t he est at e.

Thus, once a t r ust ee r ecover s an ass et f or t he est at e t hr ough one

of t he enumer at ed t r ansf er or l i en avoi dance pr ovi si ons, 551

aut omat i cal l y pr eser ves t he asset f or t he benef i t of t he est at e.

Hei nt z v. Car ey ( I n r e Hei nt z) , 198 B. R. 581, 584 ( 9t h Ci r . BAP

1996) ( ci t i ng I n r e Van De Kamps' s Dut ch Baker i es, 908 F. 2d 517,520 ( 9t h Ci r . 1990) ) ; I n r e Schmi el , 319 B. R. 520, 529 ( Bankr .

E. D. Mi ch. 2005) ( once t he t r ansf er of an asset i s avoi ded, 551

aut omat i cal l y r et ur ns t hat " st i ck" t o t he "bundl e" t hat makes up

est at e pr oper t y and pr eser ves i t f or t he benef i t of t he est at e) .

[ I ] t i s cl ear t hat any i nt er est i n pr oper t y pr eser ved f or t he

benef i t of t he est at e or or der ed t r ansf er r ed t o t he est at e under

sect i on 551 becomes pr oper t y of t he est at e under sect i on541( a) ( 4) . 12 5 C OLLI ER ON BANKRUPTCY 551. 02[ 2] ( Al an N. Resni ck &

Henr y J . Sommer , eds. , 16t h ed. 2012) . Upon avoi dance of a l i en

or f r audul ent t r ansf er , under 551 t he t r ust ee st eps i nt o t he

shoes of t he f or mer l i enhol der or t r ansf er or and enj oys t he same

r i ght s i n t he pr oper t y t hat t he or i gi nal l i enhol der or t r ansf er or

enj oyed. See Mor r i s v. St . J ohn Nat ' l Bank ( I n r e Haber man) ,

516 F. 3d 1207, 1210 ( 10t h Ci r . 2008) .


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13 Sect i on 550( f ) pr ovi des, i n r el evant par t :

An act i on or pr oceedi ng under t hi s sect i on may not becommenced af t er . . .

( cont i nued. . . )

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3. Analysis

The J udgment , ent er ed on Apr i l 17, 2008, avoi ded t wo

t r ansf er s by Lebbos - one on August 19, 2004, and one on May 25,

2005. Those t r ansf er s were avoi ded under 544 and/ or 548.

Cl ear l y, t hese Code sect i ons ar e r ef er enced i n 551. I n addi t i on

t o avoi dance, t he J udgment pr ovi ded Tr ust ee wi t h t he r emedy of

r ecover y of al l r i ght , t i t l e and i nt er est i n t he Condo under

550. Af t er a ser i es of appeal s by def endant s Lebbos, Car t er and

Gol d, al l of whi ch wer e unsuccessf ul , t he J udgment i s now f i nal .

However , j ust t hr ee days pr i or t o ent r y of t he J udgment , a

qui t cl ai m deed f r om Car t er and Gol d t o Gi ovanazzi t r ansf er r i ngt i t l e of t he Condo t o Gi ovanazzi was r ecor ded i n Los Angel es

Count y. Mont hs l at er , i n August 2008, Gi ovanazzi execut ed a deed

of t r ust pur por t i ng t o encumber t he Condo t o secur e payment of an

al l eged pr omi ssor y not e f or $775, 000 f r om t he Benef i ci ar i es. That

deed of t r ust was r ecor ded i n Los Angel es Count y i n Sept ember

2008. These act s pr ovi de t he basi s f or many of Gi ovanazzi s

ar gument s f or why t he bankr upt cy cour t er r ed i n gr ant i ng Tr ust ee sPSJ and denyi ng hi s Mot i on t o Di smi ss . We addr ess each of hi s

ar gument s i n t ur n.

a. Statute of limitations and laches

Gi ovanazzi cont ends t hat Tr ust ee s adver sar y act i on 11- 2386,

br ought t hr ee year s af t er t he J udgment , was bar r ed by t he one year

s t at ut e of l i mi t at i ons i n 550( f ) . 13 Speci f i cal l y, Gi ovanazzi


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13 ( . . . cont i nued)( 1) one year af t er t he avoi dance of t he t r ansf er on accountof whi ch r ecover y under t hi s sect i on i s sought [ . ]

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cont ends t hat because Lebbos, Car t er and Gol d di d not own t he

Condo at t he t i me of J udgment but r at her he, a nonpar t y, di d,

Tr ust ee was r equi r ed t o commence a separ at e r ecover y act i on

agai nst hi m under 550. We di sagr ee.

Her e, t he J udgment accompl i shed bot h an avoi dance and

r ecover y under 548 and 550. An avoi dance set s asi de or

nul l i f i es a t r ansact i on. Nul l i f i cat i on means t hat t he t r ansf er i s

r et r oact i vel y i nef f ect i ve and t hat t he t r ansf er ee l egal l y acqui r ed

not hi ng as a r esul t of t he t r ansf er . 5 C OLLI ER ON BANKRUPTCY at

548. 10[ 1] . I n ot her wor ds, because t he t r ansf er s of 2004 and

2005 were avoi ded, Car t er and Gol d had no i nt er est t o convey t oGi ovanazzi at t he t i me t hey si gned and r ecor ded t he qui t cl ai m

deed, and Gi ovanazzi had no i nt er est t o convey at t he t i me he

si gned and r ecor ded t he deed of t r ust . As a r esul t , Tr ust ee was

not r equi r ed t o r ecover t he Condo f r om Gi ovanazzi ( or any ot her

par t y) under 550. Ther ef or e, t he one year st at ut e of

l i mi t at i ons i n 550( f ) does not appl y. Gi ovanazzi s r el i ance on

I n r e Ser r at o i s mi spl aced. Fi r s t , i t i s not r el evant t o t hei nst ant case. Her e, per t he J udgment , Tr ust ee ef f ect i vel y avoi ded

t he t r ansf er s by Lebbos and r ecover ed t he Condo. As a r esul t , no

subsequent r ecover y act i on was necessary. Second, even i f

I n r e Ser r at o wer e somehow r el evant her e, i t s hol di ng i s not

bi ndi ng on t hi s Panel .

Gi ovanazzi al so cont ends t hat l aches bar r ed adver sary act i on

11- 2386 because Tr ust ee knowi ngl y wai t ed t hr ee year s bef ore


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br i ngi ng i t . He f ur t her cont ends t he bankr upt cy cour t never

addr essed t he l aches cl ai m. Gi ovanazzi i s wr ong on bot h count s.

Lebbos, Car t er and Gol d act i vel y pur sued appeal of t he J udgment t o

t he U. S. Supr eme Cour t , whi ch t ook a l i t t l e over t wo year s.

Gi ovanazzi s r ol e i n r ecor di ng t he qui t cl ai m deed, hi s r ef usal t o

r ecogni ze t he J udgment and i t s ef f ect of enj oi ni ng hi m f r om

encumber i ng or exer ci si ng cont r ol over t he Condo, and hi s unl awf ul

det ai ner act i on at t empt i ng t o r emove Tr ust ee f r om her r i ght f ul

possessi on of t he Condo, al so cont r i but ed t o del ay not

at t r i but abl e t o Tr ust ee. The bankr upt cy cour t f ound Gi ovanazzi s

l aches ar gument i r oni c when consi der i ng t hese and many of hi sot her ant i cs connect ed wi t h t he Lebbos bankr upt cy case. Fur t her ,

af t er t he def endant s had exhaust ed t hei r appeal s of t he J udgment ,

Tr ust ee br ought adver sar y act i on 11- 2386 wi t hi n seven mont hs of

t he U. S. Supr eme Cour t s deni al of t he def endant s pet i t i on f or

wr i t of cer t i or ar i . On t hi s recor d, we f ai l t o see any l ack of

di l i gence by Tr ust ee bar r i ng her act i on agai nst Gi ovanazzi .

b. The Lis Pendens

Gi ovanazzi cont ends t hat because Tr ust ee s Li s Pendens i s

voi d f or a var i et y of t echni cal r easons, t he bankr upt cy cour t

coul d not appl y t he J udgment r et r oact i vel y t o hi m or t he

Benef i ci ar i es and t hey ar e not bound by i t . We di sagr ee.

The pur pose of a l i s pendens i s t o gi ve const r uct i ve not i ce

t o pot ent i al pur chaser s and encumbr ancer s of pendi ng l i t i gat i on so

t hat t he j udgment i n t he act i on wi l l be bi ndi ng on subsequent

par t i es, even i f t hey acqui r e t hei r i nt er est bef or e j udgment i s


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14 CCP 405. 24 pr ovi des: Fr om t he t i me of r ecor di ng t henot i ce of pendency of act i on, a pur chaser , encumbr ancer , or ot hert r ansf er ee of t he r eal pr oper t y descr i bed i n t he not i ce shal l bedeemed t o have const r uct i ve not i ce of t he pendency of t he not i cedact i on as i t r el at es t o t he r eal pr oper t y and onl y of i t s pendencyagai nst par t i es not f i ct i t i ousl y named. The r i ght s and i nt er estof t he cl ai mant i n t he pr oper t y, as ul t i mat el y det er mi ned i n t hependi ng not i ced act i on, shal l r el at e back t o t he dat e of t her ecor di ng of t he not i ce.

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act ual l y r ender ed. CCP 405. 24; 14 Ar r ow Sand & Gr avel , I nc. v.

Super i or Cour t , 700 P. 2d 1290, 1291- 92 ( Cal . 1985) . A r ecor ded

l i s pendens ef f ect i vel y cl ouds t he t i t l e t o t he pr oper t y descr i bed

i n t he not i ce and, as a pr act i cal mat t er , i t i mpedes or pr event s a

sal e or encumbr ance of t he pr oper t y unt i l t he l i t i gat i on i s

r esol ved or t he l i s pendens i s expunged. 5 C AL. REAL EST. 11: 151

( Har r y D. Mi l l er & Mar vi n B. St ar r , eds. , 3d ed. 2009) . A

j udgment i n t he pendi ng act i on t hat det er mi nes t he r i ght s i n t he

pr oper t y f avor abl e t o t he cl ai mant r el at es back t o and r ecei ves

i t s pr i or i t y f r om t he dat e t he l i s pendens i s r ecor ded, and i s

seni or and pr i or t o any i nt er est s i n t he pr oper t y acqui r ed af t ert hat dat e t o pr ecl ude a subsequent pur chaser f r om acqui r i ng a

super i or i nt er es t . I d. ( ci t i ng C AL. CI V. CODE 1214 and CCP

405. 24) . The j udgment has pr i or i t y even i f t he subsequent

i nt er est or l i en i s r ecor ded af t er t he l i s pendens but bef or e t he

j udgment . I d. ( ci t i ng Dobbi ns v. Econ. Gas Co. , 189 P. 1073

( Cal . 1920) , Gol dst ei n v. Ray, 173 Cal . Rpt r . 550 ( Cal . Ct . App.

1981) , and Ahmanson Bank & Tr ust Co. v. Tepper , 74 Cal . Rpt r . 774( Cal . Ct . App. 1969) ) . The j udgment i s bi ndi ng on any per son who

acqui r ed an i nt er est i n t he pr oper t y subj ect t o t he l i s pendens.

5 C AL. REAL EST. 11: 149 ( ci t i ng CCP 1908( a) ( 2) ) . See Sl i nt ak v.

Buckeye Ret . Co. , 43 Cal . Rpt r . 3d 131, 139- 40 ( Cal . Ct . App.


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2006) ( l i s pendens pr ovi des const r uct i ve not i ce of pr oper t y

l i t i gat i on such t hat any j udgment l at er obt ai ned i n t he act i on

r el at es back t o t he f i l i ng of t he l i s pendens and cl ouds t i t l e

unt i l t he l i t i gat i on i s r esol ved or t he l i s pendens i s expunged;

any par t y acqui r i ng an i nt er est i n t he pr oper t y af t er t he act i on

i s f i l ed i s bound by t he j udgment ) .

CCP 405. 20 t hr ough 405. 24 govern a l i s pendens i n

Cal i f or ni a. Fi r st , a par t y t o t he act i on must r ecor d t he not i ce

of pendency of act i on i n t he r ecor der s of f i ce i n whi ch t he r eal

pr oper t y i s l ocat ed, and t he not i ce shal l cont ai n t he names of al l

par t i es af f ect ed by t he act i on as wel l as a descr i pt i on of t hepr oper t y af f ect ed. CCP 405. 20. Her e, Tr ust ee r ecor ded t he Li s

Pendens i n Los Angel es Count y on J anuary 4, 2007, j ust one day

af t er she f i l ed adver sary act i on 07- 2006 agai nst Lebbos, Car t er

and Gol d. The Condo i s l ocat ed i n Los Angel es Count y. The not i ce

cont ai ned a l egal descr i pt i on of t he Condo and t he names of

Lebbos, Car t er and Gol d as t r ust ees. Thus, i t compl i ed wi t h

CCP 405. 20.Second, t he not i ce must be si gned by t he cl ai mant s at t or ney

of r ecor d or , i f t he cl ai mant i s act i ng i n pr opr i a per sona, by t he

cl ai mant wi t h t he appr oval of t he j udge. CCP 405. 21.

Gi ovanazzi cont ends t he Li s Pendens was voi d because t he not i ce

st at es t hat i t was f i l ed by Mi chael P. Dacqui st o, At t or ney f or

Pl ai nt i f f , J ohn W. Reger , and J ohn Reger was not a par t y t o t he

act i on. Al t hough t he si gnat ur e page does r ef l ect t hi s

t ypogr aphi cal er r or , t he capt i on on t he not i ce cl ear l y st at es t hat

Tr ust ee i s t he pl ai nt i f f i n t he act i on and t hat her at t or ney of

r ecor d i s Mi chael P. Dacqui st o. Fur t her , Gi ovanazzi ci t es no


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15 CCP 405. 23 pr ovi des: Any not i ce of pendency of act i onshal l be voi d and i nval i d as t o any adver se par t y or owner of r ecor d unl ess t he r equi r ement s of Sect i on 405. 22 ar e met f or t hatpar t y or owner and a pr oof of ser vi ce i n t he f or m and cont entspeci f i ed i n Sect i on 1013a has been r ecor ded wi t h t he not i ce of pendency of act i on.

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aut hor i t y hol di ng t hat t hi s mi nor er r or r ender s t he Li s Pendens

voi d. Thus, t he not i ce compl i ed wi t h CCP 405. 21.

Thi r d, CCP 405. 22 r equi r es pr oper ser vi ce and pr oof of

ser vi ce of a l i s pendens. Pr i or t o r ecor di ng, a copy of t he

not i ce must be mai l ed by r egi st er ed or cer t i f i ed mai l , r et ur n

r ecei pt r equest ed, t o al l known addr esses of t he par t i es agai nst

whom t he cl ai m i s adver se and t o t he r ecor d owner s of t he pr oper t y

af f ect ed by t he cl ai m i n t he count y assessor s recor ds. Ser vi ce

must al so be made on al l new adver se par t i es as t hey j oi n t he

act i on, and a pr oof of servi ce must be r ecor

in re: betsey warren lebbos, 9th cir. bap (2012)

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